<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON JUNE 18, 1999
1933 ACT FILE NO. 333-77839
1940 ACT FILE NO. 811-08702
___________________________________________________________
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2
(CHECK APPROPRIATE BOX OR BOXES)
/ / REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
/X/ PRE-EFFECTIVE AMENDMENT NO. 1
/ / POST-EFFECTIVE AMENDMENT NO.
AND/OR
/ / REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
/X/ AMENDMENT NO. 4
EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER:
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
ADDRESS OF PRINCIPAL EXECUTIVE OFFICES
(NUMBER, STREET, CITY, STATE, ZIP CODE):
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(212) 969-1000
NAME AND ADDRESS (NUMBER, STREET, CITY, STATE, ZIP CODE)
OF AGENT FOR SERVICE:
EDMUND P. BERGAN, JR.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
ALLIANCE FUND DISTRIBUTORS, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
WITH COPIES TO:
PATRICIA A. POGLINCO LEONARD B. MACKEY, JR.
SEWARD & KISSEL LLP ROGERS & WELLS, LLP
ONE BATTERY PARK PLAZA 200 PARK AVENUE
NEW YORK, NEW YORK 10004 NEW YORK, NEW YORK 10166
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF
<PAGE>
THIS REGISTRATION STATEMENT.
IF ANY SECURITIES BEING REGISTERED ON THIS FORM WILL BE OFFERED
ON A DELAYED OR CONTINUOUS BASIS IN RELIANCE ON RULE 415 UNDER
THE SECURITIES ACT OF 1933, OTHER THAN SECURITIES OFFERED IN
CONNECTION WITH A DIVIDEND REINVESTMENT PLAN, CHECK THE FOLLOWING
BOX. /X/
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
Proposed Maximum
Title of Proposed Maximum Aggregate
Securities Amount Offering Amount of Registra-
Being Being Price Offering tion
Registered Registered Per Unit Price Fee
______________ ___________ ____________ _____________ ___________
Common Stock,
$.01 par value 1,048,230 $47.0625 (1) $49,332,325 (1) $13,714.39(2)
8,770 44.1563 (a) $ 387250.75(a) $ 110.00(b)
1,057,000* $49,719,575.75* $13,824.39
The registrant hereby amends this Registration Statement under
the Securities Act of 1933 on such date or dates as may be
necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or
until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to Section 8(a), may
determine.
___________________
(1) Estimated pursuant to Rule 457(c) under the Securities Act
of 1933 on the basis of a market price per share on May 3, 1999
for filing of the Fund's Registration Statement on May 5, 1999.
(2) Previously paid pursuant to filing of the Fund's Registration
Statement on May 5, 1999.
(a) Estimated pursuant to Rule 457(c) under the Securities Act
of 1933 on the basis of a market price per share on June 15, 1999
for filing of the Pre-Effective Amendment No. 1 to the Fund's
Registration Statement on June 17, 1999.
(b) Paid herewith.
* Total
2
<PAGE>
845,600 SHARES OF COMMON STOCK
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
ISSUABLE UPON EXERCISE OF
RIGHTS TO SUBSCRIBE FOR
SUCH SECURITIES
PROSPECTUS
DEALER MANAGER
PAINEWEBBER INCORPORATED
June [__], 1999
3
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUMMARY.......................................... 8
EXPENSE INFORMATION......................................... 17
FINANCIAL HIGHLIGHTS........................................ 20
THE FUND.................................................... 24
THE OFFER................................................... 24
USE OF PROCEEDS............................................. 38
INVESTMENT OBJECTIVE AND POLICIES........................... 38
RISK FACTORS AND SPECIAL CONSIDERATIONS..................... 57
MANAGEMENT OF THE FUND...................................... 64
PORTFOLIO TRADING........................................... 74
DETERMINATION OF NAV........................................ 77
TENDER OFFERS AND SHARE REPURCHASES......................... 79
DIVIDENDS AND DISTRIBUTIONS; DIVIDEND REINVESTMENT PLAN..... 82
FEDERAL TAXATION............................................ 85
DESCRIPTION OF COMMON STOCK................................. 91
CUSTODIAN, TRANSFER AGENT, DIVIDEND DISBURSING AGENT,
REGISTRAR AND SHAREHOLDER SERVICING AGENT................. 94
LEGAL MATTERS............................................... 95
REPORTS TO STOCKHOLDERS..................................... 95
EXPERTS..................................................... 95
FURTHER INFORMATION......................................... 95
FINANCIAL STATEMENTS........................................ 97
4
<PAGE>
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
845,600 Shares of Common Stock
Issuable upon Exercise of
Rights to Subscribe for These Shares
_____________________________
Alliance All-Market Advantage Fund, Inc., referred to in
this Prospectus as the Fund, is issuing non-transferable rights
to its stockholders. You will receive one right for each share
you own at the close of business on the record date, June 21,
1999. These rights will entitle you to subscribe for one new
share of the Fund's common stock for every three rights you
receive. Record date stockholders who receive less than three
rights will be entitled to purchase one share. Record date
stockholders who exercise all their rights may purchase shares
not acquired by other record date stockholders in this rights
offering subject to limitations described in this Prospectus.
The Fund may increase the number of shares that may be subscribed
for in this offering by up to 25% of the primary subscription (as
defined in this Prospectus), or an additional 211,400 shares, for
a total of 1,057,000 shares, to honor record date stockholder
requests to purchase more shares. Unless extended as described
in this Prospectus, this offer will expire at 5:00 P.M., New York
City time, on July 16, 1999.
The rights are non-transferable and therefore may not be
purchased or sold. The rights will not be admitted for trading
on the New York Stock Exchange, known as the NYSE, or any other
exchange. The Fund's outstanding shares are listed, and the
shares issued in this offer will be listed, on the NYSE under the
symbol "AMO." On [________], 1999, the net asset value per Fund
share, or NAV, was $[____], and the last reported sales price of
a share on the NYSE was $[____].
The purchase price per share referred to in this
Prospectus as the Subscription Price will be 95% of the lower of
(1) the average of the last reported sales price per share on the
NYSE for the five trading days ending with the day the offer
expires and (2) the NAV as of the close of trading on the NYSE on
that day.
Per Share Total
Estimated Subscription Price
Sales Load
Proceeds to the Fund*
The estimated subscription price is based on 95% of the
[NAV] [last reported sales price per share on the NYSE]
on [________], 1999. The proceeds to the Fund assumes
5
<PAGE>
all 845,600 shares are purchased at this estimated
price. If the Fund increases the number of shares
subject to subscription by up to 211,400 as described
above, the proceeds to the Fund would be
$[________].
* Before deduction of expenses incurred by the Fund
related to the offer estimated at $500,000, including an
aggregate of up to $100,000 to be paid to the Dealer
Manager as partial reimbursement for its expenses.
The Fund is a non-diversified, closed-end management
investment company. The Fund's investment objective is to
provide long-term growth of capital through all market
conditions. Consistent with the investment style of Alliance
Capital Management's "Large Cap Growth Group," the Fund invests
primarily in the equity securities of a limited number of large,
intensively researched, high-quality companies that are judged
likely to achieve superior earnings growth. Alliance Capital
Management L.P. has served as the Fund's investment adviser since
the Fund's inception in 1994.
The value of an investment in the Fund changes with
changes in the values of the Fund's investments. Many factors
can affect those values. An investment in the Fund involves
certain risks. Among the principal risks of investing in the
Fund is market risk. Because the Fund uses derivatives
strategies and other leveraging techniques speculatively to
enhance returns, it is subject to greater risk and its returns
may be more volatile than other funds, particularly in periods of
market declines. SEE "RISK FACTORS AND SPECIAL CONSIDERATIONS"
BEGINNING ON PAGE 8 OR PAGE 34 OF THIS PROSPECTUS.
If you do not exercise your rights, you will, upon the
completion of the offer, own a smaller proportional interest in
the Fund than you do now. Because the subscription price per
share will be less than the NAV on the expiration date and
because the Fund will incur expenses related to the offering,
record date stockholders will also experience an immediate
dilution, which could be substantial, of the aggregate NAV of
their shares. This dilution will disproportionately affect
record date stockholders who do not exercise their rights in
full. In addition, there also may be substantial dilution to the
extent that the Fund increases the number of shares subject to
subscription by up to 25% in order to satisfy over-subscription
requests. The Fund cannot state precisely the extent of this
dilution because the Fund does not know what the NAV will be when
the offer expires, how many rights will be exercised or the exact
expenses of the offer.
_____________________________
6
<PAGE>
Neither the Securities and Exchange Commission nor any
state securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
Prospectus. Any representation to the contrary is a criminal
offense.
_____________________________
This Prospectus sets forth concisely the information
about the Fund that a prospective investor ought to know before
investing. Investors are advised to read and retain it for
future reference.
PAINEWEBBER INCORPORATED
THE DATE OF THIS PROSPECTUS IS JUNE [__], 1999
7
<PAGE>
PROSPECTUS SUMMARY
This portion of the Prospectus summarizes information
contained elsewhere in the Prospectus. The summary is not
complete and does not contain all of the information that you
should consider before purchasing Fund shares. You should read
the entire Prospectus carefully, especially the risks of
investing in the shares discussed under "Risk Factors and Special
Considerations."
PURPOSES OF THE OFFER
The Board of Directors of the Fund has determined that
it is in the best interests of the Fund and its existing
stockholders to increase the assets of the Fund available for
investment, thereby allowing the Fund to more fully take
advantage of available investment opportunities, reduce the
relative significance of certain large positions in its portfolio
and improve the portfolio's tax efficiency. In reaching its
decision, the Board of Directors was advised by Alliance Capital
Management L.P., the Fund's investment adviser, referred to in
this Prospectus as Alliance, or the Adviser, that the
availability of new assets would give the Fund additional
investment flexibility to take advantage of what Alliance
believes to be attractive investment opportunities without being
required to sell current portfolio positions that it desires to
retain and which, if sold, could cause the realization of
significant capital gains by the Fund and its stockholders. The
Board of Directors also took into account that a well-subscribed
rights offering would likely reduce the Fund's expense ratio,
which would be of long-term benefit to stockholders. In
addition, the Board of Directors considered that this rights
offering could result in an improvement in the liquidity of the
trading market for the Fund's shares on the NYSE. The Board also
considered that this rights offering would give record date
stockholders the opportunity to purchase shares at a price below
market price per share and/or NAV, and might increase the level
of market interest in the Fund. The Board also considered the
proposed terms of the offer, the expenses of the offer, and its
dilutive effect, on exercising and non-exercising record date
stockholders.
There can be no assurance that the offer will be
successful or that by increasing the size of the Fund, the Fund's
aggregate expenses, and correspondingly, its expense ratio will
be lowered.
Alliance, as well as PaineWebber Incorporated, the
Dealer Manager for the offer who also serves as the shareholder
servicing agent for the Fund, will benefit from the offer because
they receive fees based in part on the average net assets of the
8
<PAGE>
Fund, which will increase as a result of the offer. In addition,
PaineWebber Incorporated will receive a dealer manager fee and
soliciting dealer fees as described below.
IMPORTANT TERMS OF THE OFFER
Aggregate number of shares offered.. 845,600 (not including up to
211,400 additional shares
the Fund may issue to cover
over-subscription requests)
Number of non-transferable rights
issued to each record date
stockholder......................... One right for each whole
share owned on the record
date
Subscription ratio.................. One share for every three
rights (1-for-3); record
date stockholders issued
fewer than three rights may
purchase one share
Subscription price per share........ 95% of the lower of (1) the
average of the last reported
sales price of a Fund share
on the NYSE for the five
trading days ending with the
day the offer expires and
(2) the NAV as of the close
of trading on the NYSE on
that date
Expiration date..................... 5:00 P.M., New York City
time, on July 16, 1999,
unless the offer is
extended.
OVER-SUBSCRIPTION PRIVILEGE
Record date stockholders who fully exercise all of the
rights issued to them may subscribe for shares that were not
subscribed for by other record date stockholders. If enough
shares are available, all of these requests will be honored in
full. If these requests for shares exceed the shares available,
the Fund may determine after the expiration of the offer, in the
discretion of the Board of Directors, to issue up to an
additional 25% of the shares available pursuant to the offer (up
to an additional 211,400 shares) in order to cover these
requests. Regardless of whether the Fund issues such additional
9
<PAGE>
shares, to the extent shares are not available to honor all
requests, the available shares will be allocated pro rata among
those record date stockholders who over-subscribe based on the
number of rights originally issued to them by the Fund.
IMPORTANT DATES TO REMEMBER
Record Date....................... June 21, 1999
Subscription Period............... June 21, 1999 - July 16, 1999*
Expiration Date and Pricing Date. July 16, 1999*
Subscription Certificates and
Payment for Shares Due**.......... July 16, 1999*
Notice of Guaranteed Delivery Due. July 16, 1999*
Subscription Certificates and
Payment for Guarantees of Delivery
Due............................... July 21, 1999*
Confirmation Mailed to
Participants...................... July 28, 1999*
Final Payment for Shares***....... August 11, 1999*
* Unless the offer is extended.
** A record date stockholder exercising rights must deliver by
the expiration date either (i) a Subscription Certificate
and payment for shares or (ii) a Notice of Guaranteed
Delivery.
*** Additional amount due (in the event the subscription price
exceeds the estimated subscription price).
A more detailed description of the Subscription
Certificate and Notice of Guaranteed Delivery can be found on
page 19.
NON-TRANSFERABILITY OF RIGHTS
The rights are non-transferable and, therefore, may not
be purchased or sold. Rights not exercised will expire without
residual value when the offer expires. The rights will not be
listed for trading on the NYSE or any other securities exchange.
The shares to be issued pursuant to the offer will be listed for
trading on the NYSE, subject to notice of issuance.
METHODS FOR EXERCISING RIGHTS
The rights are evidenced by Subscription Certificates
that will be mailed to record date stockholders or their
nominees, except foreign record date stockholders and their
nominees. If you wish to exercise your rights, you may do so in
the following ways:
1. Complete and sign the Subscription Certificate.
Mail it in the envelope provided or deliver the
10
<PAGE>
completed and signed Subscription Certificate with
payment in full to The Bank of New York at the
address indicated on the Subscription Certificate.
Your completed and signed Subscription Certificate
and payment must be received by the expiration of
the offer (5:00 P.M., New York City time, on July
16, 1999, unless the offer is extended); or
2. Contact your broker, banker or trust company which
can arrange, on your behalf, pursuant to a Notice
of Guaranteed Delivery, to guarantee delivery of
payment and delivery of a properly completed and
executed Subscription Certificate by the close of
business on the third business day after the
expiration date of the offer. A fee may be charged
for this service. The Notice of Guaranteed
Delivery must be received on or before the
expiration of the offer.
Fractional shares will not be issued. After the
exercise of rights, record date stockholders who have remaining
less than three rights will not be able to purchase a share upon
exercise of these remaining rights, which will expire without any
residual value. Record date stockholders who receive less than
three rights, however, may purchase one share. Record date
stockholders may request additional shares under the over-
subscription privilege.
OFFERING FEES AND EXPENSES
The Fund has agreed to pay the Dealer Manager a fee for
its financial advisory and marketing services equal to 3.75% of
the aggregate subscription price for each share issued pursuant
to the offer. The Dealer Manager will reallow a part of its fees
to other broker-dealers which have assisted in soliciting the
exercise of rights as described in this Prospectus. Other
offering expenses incurred by the Fund are estimated at $500,000,
which includes up to $100,000 that may be paid to the Dealer
Manager as partial reimbursement for its expenses relating to the
offer.
FOREIGN RESTRICTIONS
The Fund will not mail Subscription Certificates to
record date stockholders whose record addresses are outside the
United States. Foreign record date stockholders or their
nominees will receive written notice of the offer. Their rights
will be held by The Bank of New York, the Subscription Agent,
until instructions are received to exercise the rights. If no
instructions are received prior to or on the expiration date, the
rights will expire.
11
<PAGE>
USE OF PROCEEDS
Based on the estimated subscription price of $[__] per
share, the estimated net proceeds of the offer are approximately
$[________]. This amount assumes that all 845,600 shares offered
in the primary subscription are sold and that the offering
expenses are $500,000. If, as described above, the Fund
increases the number of shares subject to subscription by 25% in
order to satisfy over-subscription requests, the additional net
proceeds will be approximately $[________].
The Fund's investment adviser anticipates that, under
current market conditions, the Fund will take up to 30 days to
invest or employ the offer proceeds consistent with the Fund's
investment objective and policies. This process will not take
longer than three months. Until invested, the proceeds of the
offer will be held in U.S. Government securities and other high-
quality, short-term money market instruments. These temporary
investments will not be consistent with the Fund's objective of
long-term growth of capital through all market conditions.
INFORMATION AGENT
Please direct all questions or inquiries relating to the
offer to the Fund's Information Agent at:
Shareholder Communications Corporation
17 State Street
New York, New York 10004
Toll Free: (800) 645-8640
Brokers and banks please call (212) 805-7113
Stockholders may also contact their brokers or nominees
for information with respect to the offer.
INFORMATION REGARDING THE FUND
The Fund has been a non-diversified, closed-end
management investment company since its initial public offering
in 1994. The Fund's investment objective is long-term growth of
capital through all market conditions. Consistent with the
investment style of Alliance's Large Cap Growth Group, the Fund
will invest in a "Core Portfolio" of equity securities of large,
intensively researched, high-quality companies that are judged
likely to achieve superior earnings growth. In the Adviser's
view, high-quality companies are larger capitalization companies
(companies with market capitalizations generally expected to
exceed $5 billion) that possess, among other things, relatively
long operating histories, strong management, superior industry
positions and excellent balance sheets. The Fund will seek to
take advantage of what the Adviser believes are opportunities
12
<PAGE>
presented by unwarranted fluctuations in the prices of
securities, both to purchase or increase positions on weakness
and to sell or reduce overpriced holdings. To take advantage of
investment opportunities in both rising and declining markets,
the Fund may make substantial use of options, including
purchasing and writing call and put options, and may engage in
short selling and use certain other investment practices,
including futures and forward contracts, and leverage.
The Fund's Core Portfolio, which will constitute at
least the majority of, and at times may constitute substantially
all of, its total assets, will normally consist of the equity
securities of the approximately 25 companies that are most highly
regarded by Alliance's Large Cap Growth Group. These Core
Portfolio companies will be predominantly U.S. companies. The
balance of the portion of the Fund's portfolio that is invested
in equity securities will be invested in equity securities of
other U.S. and non-U.S. companies that the Adviser considers to
have exceptional growth potential.
Normally, about 40-60 companies will be represented in
the Fund's portfolio. The Fund thus differs from more typical
equity investment companies because it invests most of its assets
in a relatively small number of intensively researched companies.
The Fund may invest up to 35% of its total assets in equity
securities of non-U.S. companies. Equity securities of non-U.S.
companies will be selected by the Adviser for investment by the
Fund on the basis of the same growth potential and other
characteristics as equity securities of U.S. companies.
The Fund has implemented a quarterly distribution policy
pursuant to which it makes quarterly distributions of 2.5% of the
Fund's NAV as of the beginning of each of the first three
calendar quarters each year and of at least 2.5% of the Fund's
NAV as of the beginning of the fourth calendar quarter. If
distributions for any quarter exceed the Fund's net investment
income and net realized short-term capital gains, the difference
would be treated as distributions of the Fund's net realized
long-term capital gains and, to the extent of the amount of any
distributions in excess of such gains, as a return of the
stockholder's capital.
INFORMATION REGARDING THE ADVISER
The Fund's investment adviser is Alliance Capital
Management L.P., a leading international investment adviser
managing client accounts with assets as of March 31, 1999
totaling more than $301 billion (of which approximately $127
billion represented assets of investment companies). As of
March 31, 1999, the Adviser managed retirement assets for many of
the largest public and private employee benefit plans (including
13
<PAGE>
30 of the nation's Fortune 100 companies), for public employee
retirement funds in 32 out of the 50 states, for investment
companies, and for foundations, endowments, banks and insurance
companies worldwide. The 54 registered investment companies,
with more than 119 separate portfolios, managed by the Adviser
currently have over 4 million shareholder accounts.
The persons primarily responsible for the day-to-day
management of the Fund are Alfred Harrison, Vice Chairman of
Alliance Capital Management Corporation, the Adviser's general
partner, and Michael J. Reilly, Senior Vice President of Alliance
Capital Management Corporation. Both Messrs. Harrison and Reilly
are members of Alliance's Large Cap Growth Group and have been
associated with Alliance since prior to 1994.
RISK FACTORS AND SPECIAL CONSIDERATIONS
You should consider the following factors, as well as
the other information in this Prospectus, before making an
investment in the Fund under this offer.
The offer will result in dilution.
Upon completion of the offer, stockholders who do not
fully exercise their rights will own a smaller proportional
interest in the Fund than would be the case if the offer had not
been made. Furthermore the subscription price per share for the
offer will be lower than the Fund's NAV. Any rights offering
priced at a discount to the Fund's NAV and involving payment of
expenses by the Fund entails some dilution in the NAV. Dilution
is the decrease in NAV that results from the Fund's issuance of
new shares at a discount to NAV when the rights are exercised and
from the Fund's payment of the expenses of the offer. The offer
will result in a dilution of NAV for all stockholders, which will
disproportionately affect stockholders who do not exercise their
rights. In addition, there also may be substantial dilution to
the extent that the Fund increases the number of shares subject
to subscription by up to 25% in order to satisfy over-
subscription requests. Although it is not possible to state
precisely the amount of the decrease in NAV because it is not
known at the date of this Prospectus how many shares will be
subscribed for, or what the subscription price will be, the
dilution might be substantial.
Principal risks.
In this Summary, we describe the principal risks that
may affect the Fund's portfolio as a whole. The Fund could be
subject to additional principal risks because the types of
investments made by the Fund can change over time. This
Prospectus has additional descriptions of investments that appear
14
<PAGE>
in bold type in the discussions under "Certain Investment
Practices" or "Risk Factors and Special Considerations." These
sections also include more information about the Fund, its
investments and related risks.
Other important things for you to note:
You may lose money by investing in the Fund.
An investment in the Fund is not a deposit in a
bank and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other
government agency.
Among the principal risks of investing in the Fund is
market risk, which is the risk that the value of your investment
may fluctuate as stock markets fluctuate. Because the Fund uses
derivatives strategies and other leveraging techniques
speculatively to enhance returns, it is subject to greater risk
and its returns may be more volatile than other funds,
particularly in periods of market declines. The Fund is "non-
diversified", which means that it invests in a smaller number of
securities than many other equity funds. As a result, changes in
the value of a single security may have a more significant
effect, either negative or positive, on the Fund's NAV. The
Fund's investments in foreign securities have foreign risk, which
is the risk that investments in issuers located in foreign
countries may have greater price volatility and less liquidity.
Foreign risk includes currency risk, which is the risk that
fluctuations in the exchange rates between the U.S. dollar and
foreign currencies could negatively affect the value of the
Fund's investments. Certain of the Fund's investments have
interest rate risk, which is the risk that changes in interest
rates will affect the value of the Fund's investments in income
producing, fixed-income securities. Increases in interest rates
may cause the value of the Fund's investments to decline. In
addition, certain of the Fund's investments have credit risk,
which is the risk that the issuer of a security will be unable or
unwilling to make timely payments of interest or principal, or to
otherwise honor its obligations.
The Fund's shares may trade at a discount to NAV.
Shares of closed-end management investment companies
frequently trade at a discount from their NAV (the market price
per share is less than the value per share of the net assets).
This characteristic is a risk separate and distinct from the risk
that the Fund's NAV will decrease as a result of its investment
activities and may be greater for investors expecting to sell
their shares relatively soon after completion of this offering.
15
<PAGE>
The Fund cannot predict whether its shares will trade at, above
or below NAV in the future.
An alternative investment option to the Fund is the
Alliance Select Investor Series, Premier Portfolio, a portfolio
of an open-end management investment company with substantially
the same investment objective and policies as the Fund. Because
the Premier Portfolio is a portfolio of an open-end investment
company, you may invest in it at the Premier Portfolio's NAV
without the risk of the shares trading at a discount to the
Premier Portfolio's NAV. An investment in the Premier Portfolio
may be redeemed at any time at the Premier Portfolio's NAV. The
Premier Portfolio, however, has a minimum initial investment
amount of $50,000 and it is not possible to invest in the Premier
Portfolio at a discount to its NAV (as is possible with respect
to an investment in the Fund by subscribing for shares in this
offering).
There is no guarantee that the Fund will be able to
maintain its current level of dividends and distributions. Based
on information provided by the Adviser, the Board of Directors
believes that the offer will not result in a change in the Fund's
current level of dividends per share for the foreseeable future.
There can be no assurance, however, that the Fund will be able to
maintain its current level of dividends per share, and the Board
of Directors may, at its sole discretion, change the Fund's
current dividend policy or its current level of dividends per
share in response to market or other conditions.
16
<PAGE>
EXPENSE INFORMATION
FEE TABLE
The following tables are intended to assist investors in
understanding the various costs and expenses that an investor in
this offer will bear, directly or indirectly.
SHAREHOLDER TRANSACTION EXPENSES
Sales Load (as a percentage of
subscription price paid directly
from your investment)* 3.75%
ANNUAL EXPENSES (as a percentage of net assets
attributable to common shares)**
Management Fees*** 1.73%
Administration Fees**** 0.25%
Other Expenses***** 0.33%
TOTAL ANNUAL EXPENSES 2.31%
____________________
* The Fund has agreed to pay PaineWebber Incorporated, the
Dealer Manager, a fee for its financial advisory and
marketing services equal to 3.75% of the aggregate
subscription price for each share issued pursuant to the
offer. The Dealer Manager will reallow to other broker-
dealers solicitation fees equal to 2.50% of the
subscription price per share for each share issued
pursuant to the offer as a result of their soliciting
efforts. Other offering expenses to be incurred by the
Fund are estimated at $500,000, which includes up to
$100,000 that may be paid to the Dealer Manager as partial
reimbursement for its expenses relating to the offer.
These fees and expenses will be borne by the Fund and
indirectly by all of the Fund's stockholders, including
those stockholders who do not exercise their rights.
** Amounts are estimated for the Fund's current fiscal year
after giving effect to anticipated net proceeds of the
offer assuming that all of the rights are exercised, that
the maximum number of over-subscription shares are issued
and that the Fund incurs estimated offering expenses of
$500,000.
17
<PAGE>
*** The Adviser receives a monthly basic fee at an annualized
rate of 1.50% of the Fund's average net assets and an
adjustment to the basic fee based on the investment
performance of the Fund in relation to the investment
record of the Russell 1000 Growth(R) Index for certain
prescribed periods. The adjustment can cause the
Adviser's management fee to range from 1.20% to 1.80% of
the Fund's average net assets.
**** Alliance also receives a monthly fee at the annual rate of
.25% of the Fund's average weekly net assets for acting as
the Fund's Administrator.
***** Includes interest paid by the Fund in connection with
short sales.
18
<PAGE>
EXAMPLE
The following Example demonstrates the projected dollar
amount of total cumulative expenses that would be incurred over
various periods with respect to a hypothetical investment in the
Fund through this offering. The amounts are based upon payment
by the Fund of operating expenses at the levels set forth in the
above table.
1 Year 3 Years 5 Years 10 Years
An investor would
directly or indirectly
pay the following
expenses on a $1,000
investment in the Fund,
assuming a 5% annual $60 $107 $156 $292
return throughout the
relevant period and
reinvestment of all
dividends and other
distributions at NAV:
The foregoing fee table and example are intended to
assist investors in understanding the costs and expenses that an
investor in the Fund will bear directly or indirectly.
The Example set forth above assumes reinvestment of all
dividends and other distributions at NAV, payment of a 3.75%
sales load and annual expense ratio of 2.31%. The table above
and the assumption in the Example of a 5% annual return are
required by SEC regulations applicable to all management
investment companies. Your annual return may be more or less
than the 5% used in this Example. In addition, while the Example
assumes reinvestment of all dividends and other distributions at
NAV, participants in the Dividend Reinvestment Plan may receive
shares purchased or issued at a price or value different from
NAV.
The Example should not be considered a representation of
future expenses, and the Fund's actual expenses may be more or
less than those shown.
19
<PAGE>
FINANCIAL HIGHLIGHTS
The table below sets forth certain specified information for a
share outstanding throughout each period presented. Except for
the period from October 1, 1998 through March 31, 1999, the
financial highlights for each period presented have been audited
by PricewaterhouseCoopers LLP, the Fund's independent
accountants, whose unqualified report is included in the Fund's
September 30, 1998 Annual Report and is incorporated into this
Prospectus by reference. The financial highlights should be read
in conjunction with the financial statements and notes thereto,
which are set forth in this Prospectus and included in the Fund's
September 30, 1998 Annual Report and March 31, 1999 Semi-Annual
Report, each of which is available without charge by calling the
Fund at (212) 969-2232 or by contacting the Fund at 1345 Avenue
of the Americas, New York, New York 10105.
SELECTED DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT
EACH PERIOD
SIX MONTHS YEAR ENDED NOVEMBER 4,
ENDED SEPTEMBER 30, 1994(a) TO
MARCH 31, 1999 SEPTEMBER 30,
(UNAUDITED) 1998 1997 1996 1995
______________ _______ _______ _______ ______________
Net asset value,
beginning of period $32.52 $33.72 $ 22.19 $23.78 $19.70(b)
INCOME FROM
INVESTMENT OPERATIONS
Net investment loss (.41) (.77) (.58) (.48) (.09)
Net realized and
unrealized gain on
investment transactions 16.86 4.73 14.40 1.86 5.65
Net increase in net
asset value from
operations 16.45 3.96 13.82 1.38 5.56
LESS: DISTRIBUTIONS
Distributions from net
realized gains (1.88) (5.16) (2.29) (2.97) (1.48)
Net asset value, end of
period $47.09 $ 32.52 $33.72 $22.19 $23.78
Market value, end of
period $48.875 $36.875 $31.188 $19.00 $19.50
20
<PAGE>
TOTAL RETURN
Total investment return
based on: (c)
Market value 37.89% 37.40% 79.27% 13.26% 5.46%
Net asset value 50.77% 12.49% 65.66% 8.10% 28.60%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted) $118,471 $81,552 $84,477 $55,582 $59,561
Ratio of expenses to
average net assets 2.47%(d) 2.57% 2.48% 2.87% 2.00%(d)
Ratio of expenses to
average net assets
excluding interest
expense 2.47%(d) 2.52%(e) 2.43%(e) 2.62%(e) 2.00%(d)
Ratio of net investment
loss to average net
assets (2.02)%(d) (2.18)% (2.07)% (2.11)% (.48)%(d)
Portfolio turnover rate 59% 96% 105% 199% 140%(a)
_______________________
(a) Commencement of operations.
(b) Net of offering costs of $0.30.
(c) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day of
each period reported. Dividends and distributions, if any, are assumed for
purposes of this calculation, to be reinvested at prices obtained under the
Fund's dividend reinvestment plan. Generally, total investment return based on
net asset value will be higher than total investment return based on market
value in periods where there is an increase in the discount or a decrease in
the premium of the market value to the net asset value from the beginning to
the end of such periods. Conversely, total investment return based on the net
asset value will be lower than total investment return based on market value
in periods where there is a decrease in the discount or an increase in the
premium of the market value to the net asset value from the beginning to the
end of such periods. Total return for a period of less than one year is not
annualized.
(d) Annualized.
21
<PAGE>
(e) Net of interest expense of 0.05%, 0.05% and 0.25%, respectively, on short
sales.
22
<PAGE>
CAPITALIZATION AT JUNE 1, 1999
________________________________________________________________
(1) (2) (3) (4)
AMOUNT
OUTSTANDING AMOUNT
HELD BY OUTSTANDING
AMOUNT FUND FOR ITS EXCLUSIVE OF
TITLE OF CLASS AUTHORIZED OWN ACCOUNT AMOUNT UNDER (3)
_______________ ___________ _____________ ________________
Common stock,
$0.01 par value 300,000,000 0 2,515,754
______________ ___________ _____________ ________________
TRADING AND NAV INFORMATION
In the past, the Fund's shares have traded both at a
premium and at a discount in relation to NAV. The Fund's shares
recently have been trading at times at a discount and at times at
a premium to NAV. As discussed above, shares of closed-end
investment companies frequently trade at a discount from NAV.
The shares are listed and traded on the NYSE under the
ticker symbol "AMO." The rights will not be admitted for trading
on the NYSE or any other stock exchange. The following table
shows the high and low sales prices of the Fund's shares on the
NYSE, the high and low NAV per share, and the high and low
premium or discount at which the Fund's shares were trading for
each fiscal quarter during its two most recent fiscal years and
since the beginning of the current fiscal year.
23
<PAGE>
QUARTER ENDED MARKET PRICE* NAV PREMIUM/(DISCOUNT)
TO NAV
HIGH LOW HIGH LOW HIGH LOW
_______ ________ ______ ______ ________ ________
December 31, 1996 $21 1/4 $19 $25.75 $22.80 (19.49)% (14.27)%
March 31, 1997 23 3/8 20 3/4 27.94 24.49 (19.07) (14.06)
June 30, 1997 28 3/8 20 1/4 31.02 24.28 (20.32) (5.81)
September 30, 1997 31 5/8 27 5/8 34.76 31.32 (13.57) (7.21)
December 31, 1997 33 3/8 28 11/16 35.37 29.42 0.19 (8.57)
March 31, 1998 37 5/8 28 1/23 7.30 29.13 2.29 (7.05)
June 30, 1998 41 3/16 35 11/16 39.88 35.91 5.05 (2.26)
September 30, 1998 47 7/16 34 3/8 43.87 31.71 12.77 2.15
December 31, 1998 43 5/16 28 7/16 42.99 27.32 15.35 (1.36)
March 31, 1999 49 7/8 42 1/2 48.43 42.55 6.59 0.59
___________________
Source:
* NYSE
The Fund's NAV at the close of business on April 14,
1999 (the last trading date on which the Fund publicly reported
its NAV prior to the announcement of the offer) and on
[________], 1999 (the last trading date on which the Fund
publicly reported its NAV prior to the date of this Prospectus)
was $46.71 and $[____], respectively. The last reported sales
price of the Fund's shares on the NYSE on those dates was $48.25
and $[____], respectively.
24
<PAGE>
THE FUND
The Fund was organized as a corporation under the laws
of Maryland on August 16, 1994 and has registered with the
Securities and Exchange Commission, or the SEC, under the
Investment Company Act of 1940, as amended, known as the 1940
Act, as an investment company. The Fund's principal office is
located at 1345 Avenue of the Americas, New York, NY 10105. The
Adviser is registered with the SEC under the Investment Advisers
Act of 1940, as amended.
The Fund is a closed-end management investment company.
These companies differ from open-end management investment
companies or mutual funds because closed-end investment companies
have a fixed capital base and do not redeem shares at NAV. Many
closed-end funds trade on the NYSE. Mutual funds issue
securities redeemable at NAV at any time at the option of the
stockholder and typically engage in a continuous offering of
their shares. For these reasons, mutual funds are subject to
periodic asset in-flows and out-flows that can complicate
portfolio management. Closed-end investment companies do not
face the prospect of having to liquidate portfolio holdings to
satisfy redemptions at the option of stockholders or to maintain
cash positions to meet the possibility of redemptions and can
therefore remain fully invested.
THE OFFER
PURPOSES OF THE OFFER
The Board of Directors of the Fund has determined that
it is in the best interests of the Fund and its existing
stockholders to increase the assets of the Fund available for
investment, thereby allowing the Fund to more fully take
advantage of available investment opportunities, reduce the
relative significance of certain large positions in its portfolio
and improve the portfolio's tax efficiency. In reaching its
decision, the Board of Directors was advised by the Adviser that
the availability of new assets would give the Fund additional
investment flexibility to take advantage of what the Adviser
believes to be attractive investment opportunities without being
required to sell current portfolio positions that it desires to
retain, and which, if sold, could cause the realization of
significant capital gains by the Fund and its stockholders. The
Board of Directors also took into account that a well-subscribed
rights offering would likely reduce the Fund's expense ratio,
which would be of long-term benefit to stockholders. In
addition, the Board of Directors considered that this rights
offering could result in an improvement in the liquidity of the
trading market for the Fund's shares on the NYSE. The Board also
considered that this rights offering would give record date
25
<PAGE>
stockholders the opportunity to purchase shares at a price below
market price per share and/or NAV, and might increase the level
of market interest in the Fund. The Board also considered the
proposed terms of the offer, the expenses of the offer, and its
dilutive effect on exercising and non-exercising record date
stockholders.
There can be no assurance that the offer will be
successful or that by increasing the size of the Fund, the Fund's
aggregate expenses, and correspondingly, its expense ratio will
be lowered.
The Fund may, in the future and at its discretion,
choose to make additional rights offerings of shares from time to
time for a number of shares and on terms that may or may not be
similar to this offer. Any such future offering will be made in
accordance with the 1940 Act.
TERMS OF THE OFFER
The Fund is issuing to its stockholders of record as of
the close of business on June 21, 1999, non-transferable rights
entitling the holders to subscribe for an aggregate of 845,600
shares of the Fund's common stock 1,057,000 shares if the Fund
increases the number of shares available by up to 25% in
connection with the over-subscription privilege described below).
The Fund is issuing to each record date stockholder one right for
each whole share owned as of the record date. Only record date
stockholders will be issued rights and will be entitled to
participate in the offer. Three rights entitle the holder to
subscribe for one Fund share (1-for-3). A record date
stockholder's right to acquire, during the subscription period at
the subscription price, one share for every three rights held is
referred to in this Prospectus as the primary subscription.
Record date stockholders who receive less than three rights will
be entitled to purchase one share at the subscription price.
The rights may be exercised at any time during the
subscription period, which commences on June 21, 1999 and ends at
5:00 P.M., New York City time, on July 16, 1999, unless the
subscription period is extended. The rights are evidenced by
Subscription Certificates that will be mailed to record date
stockholders, except foreign record date stockholders.
Unsubscribed shares will be offered, by means of an
over-subscription privilege, to those record date stockholders
who have exercised all rights issued to them and who wish to
acquire more than the number of shares they are otherwise
entitled to purchase pursuant to the primary subscription. Over-
subscription shares will be allotted as more fully discussed
below.
26
<PAGE>
The first regular quarterly dividend to be paid on
shares acquired upon exercise of rights will be the third
quarterly dividend, the record date for which occurs after the
issuance of the shares. The Fund's present policy is to pay
dividends on the last business day, generally any day the NYSE is
open, of each quarter to stockholders of record approximately 10
days prior to the payment date. It is expected that the first
dividend received by stockholders with respect to shares acquired
in the offer will be paid on the last business day of September,
1999.
Fractional shares will not be issued on the exercise of
fractional rights. Accordingly, shares may be purchased in the
primary subscription only pursuant to the exercise of whole
rights. For example, if a record date stockholder owns 100
shares, that record date stockholder will receive 100 rights,
although the record date stockholder may exercise 33.33 rights
that record date stockholder will only be able to purchase 33
shares, with the unexercised fractional rights expiring.
However, record date stockholders holding fewer than three shares
will be entitled to subscribe for one share pursuant to the
primary subscription.
There is no minimum number of rights that must be
exercised in order for the offer to close.
OVER-SUBSCRIPTION PRIVILEGE
If record date stockholders do not exercise all the
rights issued to them, any shares represented by unexercised
rights will be offered by means of the over-subscription
privilege to the record date stockholders who have exercised all
the rights issued to them and who wish to subscribe for
additional shares. Only record date stockholders who exercise
all the rights issued to them may indicate on the Subscription
Certificate, which they or their nominees submit with respect to
the exercise of the rights issued to them, how many shares they
desire to purchase pursuant to the over-subscription privilege.
If sufficient shares remain after completion of the primary
subscription, all over-subscription requests will be honored in
full. If sufficient shares are not available after completion of
the primary subscription to honor all over-subscription requests,
the Fund may determine after the expiration of the offer, in the
discretion of the Board of Directors, to issue up to an
additional 25% of the shares available pursuant to the offer (up
to an additional 211,400 shares) in order to cover the over-
subscription requests. Regardless of whether the Fund issues
such additional shares, and to the extent shares are not
available to honor all over-subscription requests, the available
shares will be allocated among those who over-subscribe so that
the number of shares issued to participating record date
27
<PAGE>
stockholders will generally be in proportion to the number of
shares owned by such stockholders on the record date. The
allocation process may involve a series of allocations in order
to assure that the total number of shares available for over-
subscription is distributed on a pro rata basis.
Banks, brokers, trustees and other nominee holders of
rights will be required to certify to the subscription agent,
before any over-subscription privilege may be exercised with
respect to any particular beneficial owner, as to the aggregate
number of rights exercised pursuant to the primary subscription
and the number of shares subscribed for pursuant to the over-
subscription privilege by such beneficial owner and that such
beneficial owner's primary subscription was exercised in full.
Nominee Holder Over-Subscription Forms and Beneficial Owner
Certification Forms will be distributed to banks, brokers,
trustees and other nominee holders of rights with the
Subscription Certificates.
The Fund will not offer or sell any shares that are not
subscribed for pursuant to the primary subscription or the over-
subscription privilege.
SUBSCRIPTION PRICE
The subscription price for each share to be issued
pursuant to the offer will be 95% of the lower of (1) the average
of the last reported sales price of a Fund share on the NYSE for
the five trading days ending with the day the offer expires and
(2) the NAV as of the close of trading on the NYSE on that day.
For example, if the average of the last reported sales price per
share on the NYSE on the expiration date and on the four
preceding business days is $[____], and the closing NAV per share
on the expiration date is $[____], the subscription price will be
$[____] ([__]% of $[____]). If, however, the average of the last
reported sales price per share on the NYSE on the expiration date
and on the four preceding business days is $[____], and the
closing NAV per share on the expiration date is $[____], the
subscription price will be $[____] ([__]% of $[____]).
The Fund announced the offer on April 15, 1999. The
Fund's NAV at the close of business on April 14, 1999 (the last
trading date on which the Fund publicly reported its NAV prior to
the announcement) and on [________], 1999 (the last trading date
on which the Fund publicly reported its NAV prior to the date of
this Prospectus) was $46.71 and $[____], respectively. The last
reported sales price of the Fund's shares on these dates was
$48.25 and $[____], respectively.
28
<PAGE>
NON-TRANSFERABILITY OF RIGHTS
The rights are non-transferable and, therefore, may not
be purchased or sold. Rights not exercised will expire without
residual value when the offer expires. The rights will not be
listed for trading on the NYSE or any other securities exchange.
However, the shares to be issued pursuant to the offer will be
listed for trading on the NYSE, subject to notice of issuance.
EXPIRATION OF THE OFFER
The offer will expire at 5:00 P.M., New York City time,
on July 16, 1999, unless the offer is extended. The rights will
expire on the expiration date. Because the offer expires and the
shares will be priced on the same date, record date stockholders
who decide to acquire shares in the primary subscription or
pursuant to the over-subscription privilege will not know the
subscription price of the shares when they make their decision.
Any extension of the offer will be followed as promptly as
practicable by an announcement of that fact. The announcement
will be issued no later than 9:00 A.M., New York City time, on
the next business day following the expiration date. The Fund
may make any announcement regarding the extension of the offer by
a release to the Dow Jones News Service or other means as the
Fund deems appropriate.
SUBSCRIPTION AGENT
The Subscription Agent is The Bank of New York. The
Subscription Agent will receive for its administrative,
processing, invoicing and other services as Subscription Agent, a
fee estimated to be approximately $15,000, plus reimbursement for
its out-of-pocket expenses related to the offer estimated to be
approximately $10,000. The Subscription Agent is also the Fund's
transfer agent, dividend-paying agent and registrar for the
shares. Questions regarding the Subscription Certificates should
be directed to (800)-507-9357 (toll free); stockholders may also
consult their brokers or nominees.
Completed Subscription Certificates must be sent
together with proper payment of the subscription price for all
shares subscribed for in the primary subscription and pursuant to
the over-subscription privilege (for record date stockholders) to
the Subscription Agent by one of the methods described below.
Alternatively, Notice of Guaranteed Delivery may be sent
by facsimile to (212) 815-9357 to be received by the Subscription
Agent prior to 5:00 P.M., New York City time, on the expiration
date. Facsimiles should be confirmed by telephone at (800)-507-
9357 . The Fund will accept only properly completed and executed
Subscription Certificates actually received at any of the
29
<PAGE>
addresses listed below, prior to 5:00 P.M., New York City time,
on the expiration date or by the close of business on the third
business day after the expiration date following timely receipt
of a Notice of Guaranteed Delivery.
BY FIRST CLASS MAIL: BY HAND OR OVERNIGHT COURIER:
The Bank of New York The Bank of New York
P.O. Box 11248 101 Barclay Street
Church Street Station Receive & Deliver Window
New York, NY 10286-1248 New York, NY 10286
DELIVERY TO AN ADDRESS OTHER THAN ONE OF THE ADDRESSES LISTED
ABOVE WILL NOT CONSTITUTE VALID DELIVERY.
METHOD FOR EXERCISING RIGHTS
Rights are evidenced by Subscription Certificates that,
except as described below under "Foreign Restrictions," will be
mailed to record date stockholders or, if a record date
stockholder's shares are held by Cede or any other depository or
nominee on their behalf, to Cede or such depository or nominee.
Rights may be exercised by completing and signing the
Subscription Certificate that accompanies this Prospectus and
mailing it in the envelope provided, or otherwise delivering the
completed and signed Subscription Certificate to the Subscription
Agent, together with payment in full for the shares at the
estimated subscription price by the expiration date. Rights may
also be exercised by contacting your broker, banker or trust
company, which can arrange, on your behalf, to guarantee payment
and delivery of a properly completed and executed Subscription
Certificate pursuant to a Notice of Guaranteed Delivery by the
close of business on the third business day after the expiration
date. A fee may be charged for this service. Because fractional
shares will not be issued, record date stockholders who have
remaining, after exercising rights, less than three rights, will
be unable to purchase a share upon the exercise of these
remaining rights. These remaining rights will expire without
residual value and stockholders will not be entitled to receive
any cash in lieu thereof. For example, if a record date
stockholder owns 301 shares, that record date stockholder will
receive 301 rights, but may only exercise 300 rights for the
purchase of 100 shares, with the unexercised remaining rights
expiring. However, record date stockholders who receive fewer
than three shares will be entitled to subscribe for one share
pursuant to the primary subscription. Record date stockholders
who fully exercise their rights may request additional rights
pursuant to the over-subscription privilege. Completed
Subscription Certificates must be received by the Subscription
Agent prior to 5:00 P.M., New York City time, on the expiration
date at one of the addresses set forth above (unless the
30
<PAGE>
guaranteed delivery procedures are complied with as described
below under "Payment for Shares").
Stockholders Who are Record Owners. To exercise their
rights, record date stockholders may choose between either option
to exercise their rights set forth under "Payment for Shares"
below. If time is of the essence, option (2) under "Payment for
Shares" below will permit delivery of the Subscription
Certificate and payment after the expiration date.
Stockholders Whose Shares are Held By a Nominee. Record
date stockholders whose shares are held by a nominee such as a
bank, broker or trustee must contact that nominee to exercise
their rights. In that case, the nominee will complete the
Subscription Certificate on behalf of the record date stockholder
and arrange for proper payment by one of the methods set forth
under "Payment for Shares" below.
Nominees. Nominees who hold shares for the account of
others should notify the respective beneficial owners of such
shares as soon as possible to ascertain the beneficial owners'
intentions and to obtain instructions with respect to the rights.
If the beneficial owner so instructs, the nominee should complete
the Subscription Certificate and submit it to the Subscription
Agent with the proper payment as described under "Payment for
Shares" below.
INFORMATION AGENT
Any questions or requests for assistance concerning the
method of subscribing for shares or for additional copies of this
Prospectus or Subscription Certificates or Notices of Guaranteed
Delivery may be directed to the Information Agent at its
telephone number and address listed below:
Shareholder Communications Corporation
17 State Street
New York, NY 10004
Toll Free: (800) 645-8640
Brokers and banks, please call: (212) 805-7113
Record date stockholders may also contact their brokers
or nominees for information with respect to the offer. The
Information Agent will receive a fee estimated to be $7,500, plus
reimbursement for its out-of-pocket expenses related to the
offer, estimated to be a maximum of $17,500.
31
<PAGE>
PAYMENT FOR SHARES
Record date stockholders who wish to acquire shares in
the primary subscription and pursuant to the over-subscription
privilege may choose between the following methods of payment:
(1) A record date stockholder may send the
Subscription Certificate together with payment for the shares
acquired in the primary subscription and any additional shares
subscribed for pursuant to the over-subscription privilege to the
subscription agent. Payment should be calculated on the basis of
the estimated subscription price of $[____] per share for all
shares subscribed. A subscription will be accepted when payment,
together with a properly completed and executed Subscription
Certificate, is received by the Subscription Agent's office at
one of the addresses set forth above no later than 5:00 P.M., New
York City time, on the expiration date. The Subscription Agent
will deposit all checks and money orders received by it for the
purchase of shares into a segregated interest-bearing account
(the interest from which will inure to the benefit of the Fund)
pending proration and distribution of shares. A PAYMENT PURSUANT
TO THIS METHOD MUST BE IN U.S. DOLLARS BY MONEY ORDER OR CHECK
DRAWN ON A BANK OR BRANCH LOCATED IN THE UNITED STATES, MUST BE
PAYABLE TO "ALLIANCE ALL-MARKET ADVANTAGE FUND" AND MUST
ACCOMPANY A PROPERLY COMPLETED AND EXECUTED SUBSCRIPTION
CERTIFICATE FOR SUCH PAYMENT TO BE ACCEPTED. EXERCISE BY THIS
METHOD IS SUBJECT TO ACTUAL COLLECTION OF CHECKS BY 5:00 P.M.,
NEW YORK CITY TIME, ON THE EXPIRATION DATE. BECAUSE UNCERTIFIED
PERSONAL CHECKS MAY TAKE AT LEAST FIVE BUSINESS DAYS TO CLEAR,
STOCKHOLDERS ARE STRONGLY URGED TO PAY, OR ARRANGE FOR PAYMENT,
BY MEANS OF A CERTIFIED OR CASHIER'S CHECK OR MONEY ORDER.
(2) Alternatively, a bank, a trust company or a
NYSE member subscription will be accepted by the Subscription
Agent if, prior to 5:00 P.M., New York City time, on the
expiration date, the Subscription Agent has received a Notice of
Guaranteed Delivery by facsimile or otherwise from a bank, a
trust company or a NYSE member, guaranteeing delivery of
(i) payment of the estimated subscription price of $[____] per
share for the shares subscribed for in the primary subscription
and any additional shares requested pursuant to the over-
subscription privilege, and (ii) a properly completed and
executed Subscription Certificate. The Subscription Agent will
not honor a Notice of Guaranteed Delivery unless a properly
completed and executed Subscription Certificate and full payment
for the shares is received by the Subscription Agent by the close
of business on the third business day after the expiration date
(July 21, 1999, unless the offer is extended).
Within eight business days after the expiration date,
(July 28, 1999, unless the offer is extended), the confirmation
32
<PAGE>
date, a confirmation will be sent by the Subscription Agent to
each subscribing record date stockholder (or, if the
stockholder's shares are held by Cede or any other depository or
nominee on such record date stockholder's behalf, to Cede or such
depository or nominee), showing (i) the number of shares acquired
in the primary subscription, (ii) the number of shares, if any,
acquired pursuant to the over-subscription privilege, (iii) the
subscription price per share and total purchase price of the
shares, and (iv) any additional amount payable by such record
date stockholder to the Fund or any excess to be refunded by the
Fund to such stockholder, in each case based on the subscription
price. If any record date stockholder exercises his or her right
to acquire shares pursuant to the over-subscription privilege,
any such excess payment that would otherwise be refunded to the
record date stockholder will be applied by the Fund toward
payment for shares acquired pursuant to the exercise of the over-
subscription privilege. Any additional payment required from a
record date stockholder must be received by the subscription
agent within ten business days after the confirmation date
(August 11, 1999, unless the offer is extended). Any excess
payment to be refunded by the Fund to a record date stockholder
will be mailed by the Subscription Agent to such record date
stockholder as promptly as possible. All payments by a record
date stockholder must be in U.S. dollars by money order or check
drawn on a bank or branch located in the United States and
payable to "ALLIANCE ALL-MARKET ADVANTAGE FUND."
The Subscription Agent will deposit all checks received
by it prior to the final payment date into a segregated interest-
bearing account (which interest will inure to the benefit of the
Fund) pending proration and distribution of the shares.
Whichever of the two methods described above is used,
issuance and delivery of certificates for the shares purchased
are subject to collection of checks and actual payment pursuant
to any Notice of Guaranteed Delivery.
If a record date stockholder who acquires shares
pursuant to the primary subscription or the over-subscription
privilege does not make payment of any additional amounts due by
the tenth business day after the confirmation date, the Fund
reserves the right to take any or all of the following actions:
(i) sell such subscribed and unpaid-for shares to other record
date stockholders, (ii) apply any payment actually received
toward the purchase of the greatest whole number of shares that
could be acquired by such record date stockholder upon the
exercise of the primary subscription and/or over-subscription
privilege, and/or (iii) exercise any and all other rights or
remedies to which the Fund may be entitled.
33
<PAGE>
THE METHOD OF DELIVERY TO THE FUND OF SUBSCRIPTION
CERTIFICATES AND PAYMENT OF THE SUBSCRIPTION PRICE WILL BE AT THE
ELECTION AND RISK OF THE EXERCISING RIGHTS HOLDERS, BUT IF SENT
BY MAIL IT IS RECOMMENDED THAT SUCH CERTIFICATES AND PAYMENTS BE
SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED TO
ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF
PAYMENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION
DATE. BECAUSE UNCERTIFIED PERSONAL CHECKS MAY TAKE AT LEAST FIVE
BUSINESS DAYS TO CLEAR, YOU ARE STRONGLY URGED TO PAY, OR ARRANGE
FOR PAYMENT, BY MEANS OF CERTIFIED OR CASHIER'S CHECK OR MONEY
ORDER.
All questions concerning the timeliness, validity, form
and eligibility of any exercise of rights will be determined by
the Fund, whose determinations will be final and binding. The
Fund in its sole discretion may waive any defect or irregularity,
or permit a defect or irregularity to be corrected within such
time as it may determine, or reject the purported exercise of any
right. Subscriptions will not be deemed to have been received or
accepted until all irregularities have been waived or cured
within such time as the Subscription Agent determines in its sole
discretion. The Subscription Agent will not be under any duty to
give notification of any defect or irregularity in connection
with the submission of Subscription Certificates or incur any
liability for failure to give such notification.
EXERCISING RIGHTS HOLDERS WILL HAVE NO RIGHT TO RESCIND
THEIR SUBSCRIPTION AFTER RECEIPT OF THEIR PAYMENT FOR SHARES BY
THE SUBSCRIPTION AGENT, EXCEPT AS PROVIDED BELOW UNDER "NOTICE OF
NET ASSET VALUE DECLINE."
DELIVERY OF SHARE CERTIFICATES
Certificates representing shares acquired in the primary
subscription will be mailed promptly after the expiration of the
offer once full payment for such shares has been received and
cleared. Certificates representing shares acquired pursuant to
the over-subscription privilege will be mailed as soon as
practicable after full payment for such shares has been received
and cleared and all allocations have been completed.
Participants in the Dividend Reinvestment Plan will have any
shares acquired in the primary subscription and pursuant to the
over-subscription privilege credited to their accounts under the
Dividend Reinvestment Plan. Participants in the Dividend
Reinvestment Plan wishing to exercise rights issued with respect
to the shares held in their accounts under the Dividend
Reinvestment Plan must exercise such rights in accordance with
the procedures set forth above. Record date stockholders whose
shares are held of record by Cede or by any other depository or
nominee on their behalf or their broker-dealer's behalf will have
34
<PAGE>
any shares acquired in the primary subscription credited to the
account of Cede or such other depository or nominee. Shares
acquired pursuant to the over-subscription privilege will be
certificated, and certificates representing such shares will be
sent directly to Cede or such other depository or nominee. Share
certificates will not be issued for shares credited to Dividend
Reinvestment Plan accounts.
FOREIGN RESTRICTIONS
Subscription Certificates will not be mailed to record
date stockholders whose record addresses are outside the United
States. Foreign record date stockholders or their nominees will
receive written notice of the offer. The rights issued to
foreign record date stockholders will be held by the Subscription
Agent for their accounts until instructions are received to
exercise the rights. Rights issued to foreign record date
stockholders will expire unexercised if instructions are not
submitted to the Subscription Agent prior to or on the expiration
date.
FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER
The following is a general summary of the material
federal income tax consequences of the offer under the provisions
of the U.S. Internal Revenue Code of 1986, as amended, referred
to below as the Code, and the regulations thereunder as now in
effect that are generally applicable to record date stockholders
that are United States persons within the meaning of the Code,
and does not cover foreign, state or local taxes. The Code and
regulations are subject to change by legislative or
administrative action, which may be retroactive. Exercising
rights holders should consult their tax advisers regarding
specific questions as to foreign, federal, state or local taxes.
Stockholders will not recognize any taxable income
either upon the receipt or the exercise of the rights. If the
fair market value of the rights on the date of distribution is
less than 15% of the fair market of the stockholder's shares of
the Fund's common stock to which the rights relate and the
stockholder does not make the election described below, the
stockholder's basis in the rights is zero. A stockholder may,
however, irrevocably elect to allocate its existing basis in the
related shares between such shares and the rights based upon the
relative fair market values of such shares and the rights as of
the date of their issuance. The stockholder's basis in the
shares would then be reduced by an amount equal to the basis
allocated to the rights. This election must be made in a
statement attached to the stockholder's federal income tax return
for the year in which the rights are received. If the fair
market value of the rights on the date of distribution is equal
35
<PAGE>
to at least 15% of the stockholder's shares to which they relate,
the stockholder will be required to allocate its existing basis
in those shares between such shares and the rights based upon the
relative fair market values of such shares and the rights as of
the date of their issuance. As with respect to the election
described above, the stockholder's basis in the shares would then
be reduced by an amount equal to the basis allocated to the
rights. The basis of any shares acquired by a stockholder's
exercise of its rights will be equal to the sum of the
subscription price of the shares, the basis of the rights and any
servicing fee charged to the stockholder by the stockholder's
broker, bank or trust company. The gain or loss recognized by a
stockholder upon the sale of a share acquired by the exercise of
a right will be capital gain or loss (assuming the share is held
as a capital asset at the time of sale). This gain or loss will
be long-term capital gain or loss if the share has been held for
more than one year at the time of sale. A stockholder's holding
period for a share acquired upon the exercise of a right begins
with the date of exercise. No loss will be realized if rights
which have a tax basis expire without exercise. In such event,
the basis in the unexercised rights will be added back to the
stockholder's basis in the related shares.
NOTICE OF NAV DECLINE
The Fund has undertaken to suspend the offer until it
amends this Prospectus if, subsequent to June [__], 1999 (the
effective date of the Fund's registration statement), the Fund's
NAV declines more than 10% from its NAV as of that date. In such
event, the Fund would extend the expiration date and notify
record date stockholders that the NAV has declined more than 10%,
that the offer is suspended and that exercising rights holders
may cancel their exercise of rights.
EMPLOYEE BENEFIT PLAN CONSIDERATIONS
Stockholders who are employee benefit plans subject to
the Employee Retirement Income Security Act of 1974, as amended,
(including corporate savings and 401(k) plans), Keogh or H.R. 10
plans of self-employed individuals and individual retirement
accounts, collectively, retirement plans, should be aware that
additions to the retirement plan (other than rollovers or
trustee-to-trustee transfers from another retirement plans) in
order to exercise rights would be treated as contributions to the
retirement plan and, when taken together with contributions
previously made, may result in, among other things, excise taxes
for excess or nondeductible contributions. In the case of
retirement plans qualified under section 401(a) of the Code and
certain other retirement plans, additional cash contributions
could cause the maximum contribution limitations of section 415
of the Code or other qualification rules to be violated. They
36
<PAGE>
may also be a reportable distribution and there may be other
adverse tax and ERISA consequences if rights are sold or
transferred by a retirement plan.
Retirement plans and other tax exempt entities, should
also be aware that if they borrow in order to finance their
exercise of rights, they may become subject to the tax on
unrelated business taxable income under section 511 of the Code.
ERISA contains fiduciary responsibility requirements,
and ERISA and the Code contain prohibited transaction rules, that
may bear upon the exercise of rights. Due to the complexity of
these rules and the penalties for noncompliance, retirement plans
should consult with their counsel and other advisors regarding
the consequences under ERISA and the Code of their exercise of
rights.
DISTRIBUTION ARRANGEMENTS
PaineWebber Incorporated, 1285 Avenue of the Americas,
New York, New York, a broker-dealer and member of the National
Association of Securities Dealers, Inc., will act as the Dealer
Manager for the offer. The Dealer Manager is also the Fund's
Shareholder Servicing Agent. Under the terms and subject to the
conditions contained in the Dealer Manager Agreement dated the
date hereof, the Dealer Manager will provide financial advisory
and marketing services in connection with the offer and will
solicit the exercise of rights and participation in the over-
subscription privilege by record date stockholders. The offer is
not contingent upon any number of rights being exercised. The
Fund has agreed to pay the Dealer Manager a fee for financial
advisory and marketing services equal to 3.75% of the aggregate
subscription price for each share issued pursuant to the offer.
The Dealer Manager will reallow to other broker-dealers
solicitation fees equal to 2.50% of the subscription price per
share for each share issued pursuant to the offer as a result of
their soliciting efforts.
In addition, the Fund has agreed to reimburse the Dealer
Manager up to an aggregate of $100,000 for its reasonable
expenses incurred in connection with the offer. The Fund and the
Adviser have each agreed to indemnify the Dealer Manager or
contribute to losses arising out of certain liabilities including
liabilities under the Securities Act. The Dealer Manager
Agreement also provides that the Dealer Manager will not be
subject to any liability to the Fund in rendering the services
contemplated by such agreement except for any act of bad faith,
willful misconduct or gross negligence of the Dealer Manager or
reckless disregard by the Dealer Manager of its obligations and
duties under such agreement.
37
<PAGE>
The Fund has agreed not to offer or sell, or enter into
any agreement to sell, any equity or equity-related securities of
the Fund or securities convertible into such securities for a
period of 180 days after the date of the Dealer Manager
Agreement, except for the shares issued in reinvestment of
dividends or other distributions or other limited circumstances.
38
<PAGE>
USE OF PROCEEDS
If all the rights are exercised in full at the
subscription price of $[____] per share, the net proceeds of the
offer to the Fund assuming all 845,600 shares offered in the
primary subscription are sold are estimated to be approximately
$500,000, after deducting offering expenses payable by the Fund
estimated at approximately $[________]. If the Fund increases
the number of shares subject to subscription by up to 25%, or
211,400 shares, in order to satisfy over-subscription requests,
the additional net proceeds will be approximately $[________].
The Adviser anticipates that the Fund will take up to 30 days
from its receipt of the net proceeds of the offer to invest such
proceeds, but in no event will any such use of proceeds take
longer than three months. Pending the use of the proceeds of the
offer, the proceeds will be held in U.S. Government securities
and other high-quality, short-term money market instruments.
These temporary investments will not be consistent with the
Fund's objective of long-term growth of capital through all
market conditions.
INVESTMENT OBJECTIVE AND POLICIES
INVESTMENT OBJECTIVE AND STRATEGY
The Fund's investment objective is to provide long-term
growth of capital through all market conditions. Consistent with
the investment style of Alliance's Large Cap Growth Group, the
Fund will invest in a "Core Portfolio" of equity securities
(common stocks, securities convertible into common stocks and
rights and warrants to subscribe for or purchase common stocks)
of large, intensively researched, high-quality companies that are
judged likely to achieve superior earnings growth. In the
Adviser's view, high-quality companies are larger capitalization
companies (companies with market capitalizations generally
expected to exceed $5 billion) that possess, among other things,
relatively long operating histories, strong management, superior
industry positions and excellent balance sheets. The term "high
quality" does not reflect ratings from any rating agency. The
Fund will seek to take advantage of what the Adviser believes are
opportunities presented by unwarranted fluctuations in the prices
of securities, both to purchase or increase positions on weakness
and to sell or reduce overpriced holdings. To take advantage of
investment opportunities in both rising and declining markets,
the Fund may make substantial use of options, including
purchasing and writing call and put options, and may engage in
short selling and may use certain other investment practices,
including futures and forward contracts, and leverage.
The Fund's Core Portfolio, which will constitute at
least the majority of, and at times may constitute substantially
39
<PAGE>
all of, its total assets, will normally consist of the equity
securities of the approximately 25 companies that are most highly
regarded by Alliance's Large Cap Growth Group. These Core
Portfolio companies will be predominantly U.S. companies. The
balance of the portion of the Fund's portfolio that is invested
in equity securities will be invested in equity securities of
other U.S. and non-U.S. companies that the Adviser considers to
have exceptional growth potential.
Normally, about 40-60 companies will be represented in
the Fund's portfolio. The Fund thus differs from more typical
equity investment companies because it invests most of its assets
in a relatively small number of intensively researched companies.
The Fund may invest up to 35% of its total assets in equity
securities of non-U.S. companies. The Fund defines non-U.S.
companies to be entities (i) that are organized under the laws of
a country other than the United States and have their principal
office in a country other than the United States, or (ii) the
equity securities of which are traded principally in securities
markets outside the United States. Equity securities of non-U.S.
companies will be selected by the Adviser for investment by the
Fund on the basis of the same growth potential and other
characteristics as equity securities of U.S. companies. The Fund
may invest up to 5% of its total assets in illiquid
securities.
Alfred Harrison, Vice Chairman of Alliance Capital
Management Corporation, the general partner of Alliance, and
Michael J. Reilly, Senior Vice President of Alliance Capital
Management Corporation, make day-to-day investment decisions for
the Fund. Both Messrs. Harrison and Reilly are members of
Alliance's Large Cap Growth Group. Alliance depends heavily upon
the fundamental analysis and research of its large internal
research staff in making investment decisions for the Fund. The
research staff generally follows a primary research universe of
approximately 600 companies that are considered by the Adviser to
have strong management, superior industry positions, excellent
balance sheets, and the ability to demonstrate superior earnings
growth. As one of the largest multi-national investment firms,
the Adviser has access to considerable information concerning all
of the companies it follows, an in-depth understanding of the
products, services, markets, and competition of these companies,
and a good knowledge of most of these companies' managements.
The Adviser's analysts prepare their own earnings
estimates and financial models for each company followed. While
each analyst has responsibility for following companies in one or
more identified sectors and/or industries, the lateral structure
of the Adviser's research organization and constant communication
among the analysts result in decision-making based on the
relative attractiveness of stocks among industry sectors. The
40
<PAGE>
focus during this process is on the early recognition of change
on the premise that value is created through the dynamics of
changing company, industry, and economic fundamentals. The
Adviser's research emphasizes identifying companies whose
substantially above average prospective earnings growth is not
fully reflected in current market valuations.
The Adviser continually reviews its primary research
universe of approximately 600 companies to maintain a list of
favored securities, the "Alliance 100," considered by the Adviser
to have the most clearly superior earnings potential and
valuation attraction. The Adviser's concentration on a limited
universe of companies allows it to devote its extensive resources
to constant intensive research of these companies. Companies are
continually added to and deleted from the Alliance 100 as
fundamentals and valuations change. Alliance's Large Cap Growth
Group, in turn, further refines, on a weekly basis, the selection
process for the Fund, with each portfolio manager in the Group
selecting the 25 such companies which appear to the manager most
attractive at current prices. These individual ratings are then
aggregated and ranked to produce a composite list of
approximately the 25 most highly regarded stocks, the Favored 25.
As noted above, the Fund's Core Portfolio will be invested in the
Favored 25 and will constitute at least the majority of, and at
times may constitute substantially all of, the Fund's total
assets.
In the management of the Fund's investment portfolio,
the Adviser will seek to utilize market volatility judiciously
(assuming no change in company fundamentals) to adjust the Fund's
portfolio positions. The Fund will strive to capitalize on
unwarranted price fluctuations, both to purchase or increase
positions on weakness and to sell or reduce overpriced holdings.
Under normal circumstances, the Fund will remain substantially
fully invested and will not take significant cash positions for
market timing purposes. Rather, during a market decline, while
adding to positions in favored stocks, the Fund will tend to
become somewhat more aggressive, gradually reducing the number of
companies represented in the Fund's portfolio. Conversely, in
rising markets, while reducing or eliminating fully valued
positions, the Fund will tend to become somewhat more
conservative, gradually increasing the number of companies
represented in the Fund's portfolio. Through this "buying into
declines" and "selling into strength," the Adviser seeks to gain
positive returns in good markets while providing some measure of
protection in poor markets.
The Fund's investment objective and its policy of
investing, under normal circumstances, at least 65% of the value
of its total assets in the equity securities of companies that,
in the Adviser's opinion, are likely to achieve superior earnings
41
<PAGE>
growth are fundamental and cannot be changed without the approval
of the Fund's stockholders. The Fund's investment policies that
are not designated as fundamental policies may be changed by the
Fund without stockholder approval, but the Fund will not change
its investment policies without contemporaneous notice to its
stockholders. The Fund is designed primarily for long-term
investment and investors should not consider it a trading
vehicle. As with all investment companies, there can be no
assurance that the Fund's investment objective will be achieved.
The Fund also may:
- engage in short sales of securities with respect to up
to 30% of its total assets;
- invest up to 20% of its total assets in convertible
securities of companies whose common stocks are eligible
for purchase by the Fund;
- invest up to 5% of its total assets in rights or
warrants with respect to equity securities deemed
appropriate for inclusion in the Fund's portfolio;
- write covered put and call options and purchase put and
call options on securities of the type in which the Fund
may invest, on U.S. and foreign securities exchanges and
over the counter, including options on market indices,
and write uncovered options for cross hedging purposes;
- enter into contracts for the purchase and sale for
future delivery of common stocks and purchase and write
put and call options on such futures contracts;
- enter into contracts for the purchase and sale for the
future delivery of foreign currencies or contracts based
on financial indices, including any index of U.S.
Government securities or securities issued by foreign
government entities and write put and call options on
such futures contracts;
- purchase and sell stock index futures for hedging
purposes against movements in the equity markets;
- purchase and write put and call options on foreign
currencies;
- purchase or sell forward foreign currency exchange
contracts;
- enter into forward commitments for the purchase or sale
of securities up to 30% of its total assets;
- enter into reverse repurchase agreements and dollar
rolls;
- enter into standby commitment agreements;
- enter into currency swaps for hedging purposes;
- make secured loans of its securities of up to 30% of its
total assets; and
- enter into repurchase agreements.
42
<PAGE>
There can be no assurance that at any given time the Fund will
engage in any of these practices even if they are available or,
if the Fund does utilize a particular practice, that its use will
achieve the desired result.
Because the Fund is non-diversified and invests in a
smaller number of securities than many other equity funds, your
investment has the risk that changes in the value of a single
security may have a significant effect, either negative or
positive, on the Fund's NAV. In addition, because the Fund may
borrow money or leverage its portfolio, the value of an
investment in the Fund will be more volatile and all other risks
will tend to be compounded. The Fund may create leverage by
using reverse repurchase agreements, derivatives or by borrowing
money. The Fund has, at times, made substantial use of its
ability to leverage its portfolio through borrowing money and
engaging in short sales.
CERTAIN INVESTMENT PRACTICES
The Fund may engage in the following investment
practices:
CONVERTIBLE SECURITIES. The Fund may invest up to 20%
of its total assets in the convertible securities of companies
whose common stocks are eligible for purchase by the Fund.
Convertible securities include bonds, debentures, corporate notes
and preferred stocks that are convertible into common stock.
Prior to conversion, convertible securities have the same general
characteristics as non-convertible debt securities, which
generally provide a stable stream of income with generally higher
yields than those of equity securities of the same or similar
issuers. The price of a convertible security will normally vary
with changes in the price of the underlying common stock,
although the higher yield tends to make the price of the
convertible security less volatile than that of the underlying
equity security. As with debt securities, the market values of
convertible securities tend to decrease as interest rates rise
and increase as interest rates fall. While convertible
securities generally offer lower interest yields than non-
convertible debt securities of similar quality, they offer
investors the potential to benefit from increases in the market
prices of the underlying common stock.
The Fund will not invest in convertible debt securities
rated below Baa by Moody's and BBB by S&P, or, if not rated,
determined by Alliance to be of equivalent quality. Securities
rated Baa by Moody's or BBB by S&P, and comparable unrated
securities as determined by Alliance are considered to have
speculative characteristics. Sustained periods of deteriorating
43
<PAGE>
economic conditions or rising interest rates are more likely to
lead to a weakening in the issuer's capacity to pay interest and
repay principal than in the case of higher-rated securities. The
Fund will not retain a convertible debt security that is
downgraded below Baa or BBB, or, if unrated, determined by
Alliance to have undergone similar credit quality deterioration
subsequent to purchase by the Fund.
CURRENCY SWAPS. Currency swaps involve the individually
negotiated exchange by the Fund with another party of a series of
payments in specified currencies. A currency swap may involve
the delivery at the end of the exchange period of a substantial
amount of one designated currency in exchange for the other
designated currency. Therefore, the entire principal value of a
currency swap is subject to the risk that the swap counterparty
will default on its contractual delivery obligations. The net
amount of the excess, if any, of the Fund's obligations over its
entitlements with respect to each currency swap will be accrued
on a daily basis and an amount of liquid assets having an
aggregate net asset value at least equal to the accrued excess
will be maintained in a segregated account by the Fund's
custodian. The Fund will enter into currency swaps for hedging
purposes only. The Fund will not enter into any currency swap
unless the credit quality of the unsecured senior debt or the
claims-paying ability of the counterparty is rated in the highest
rating category of at least one nationally recognized rating
organization at the time of entering into the transaction. If
there is a default by the other party to such a transaction, the
Fund will have contractual remedies pursuant to the agreements
related to the transactions.
FORWARD COMMITMENTS. Forward commitments for the
purchase or sale of securities may include purchases on a "when-
issued" basis or purchases or sales on a "delayed delivery"
basis. In some cases, a forward commitment may be conditioned
upon the occurrence of a subsequent event, such as approval and
consummation of a merger, corporate reorganization or debt
restructuring (i.e., a "when, as and if issued" trade).
When forward commitment transactions are negotiated, the
price is fixed at the time the commitment is made, but delivery
and payment for the securities take place at a later date.
Normally, the settlement date occurs within two months after the
transaction, but the Fund may negotiate settlements beyond two
months. Securities purchased or sold under a forward commitment
are subject to market fluctuation, and no interest or dividends
accrue to the purchaser prior to the settlement date.
When-issued securities and forward commitments may be
sold prior to the settlement date, but the Fund enters into when-
issued and forward commitments only with the intention of
44
<PAGE>
actually receiving securities or delivering them, as the case may
be. If the Fund chose to dispose of the right to acquire a when-
issued security prior to its acquisition or dispose of its right
to deliver or receive against a forward commitment, it may
realize a gain or incur a loss. Any significant commitment of
Fund assets to the purchase of securities on a "when, as and if
issued" basis may increase the volatility of the Fund's net asset
value. No forward commitments will be entered into if, as a
result, the Fund's aggregate commitments under the transactions
would be more than 30% of its total assets. In the event the
other party to a forward commitment transaction were to default,
the Fund might lose the opportunity to invest money at favorable
rates or to dispose of securities at favorable prices.
The Fund's custodian will maintain, in a segregated
account of the Fund, liquid assets having value equal to, or
greater than, any commitments to purchase securities on a forward
commitment basis and, with respect to forward commitments to sell
portfolio securities of the Fund, the portfolio securities
themselves.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. The Fund
may purchase or sell forward foreign currency exchange contracts
to attempt to minimize the risk of adverse changes in the
relationship between the U.S. dollar and other currencies. A
forward contract is an obligation to purchase or sell a specific
currency for an agreed price at a future date, and is
individually negotiated and privately traded.
The Fund may enter into a forward contract, for example,
when it enters into a contract for the purchase or sale of a
security denominated in a foreign currency in order to "lock in"
the U.S. dollar price of the security ("transaction hedge"). The
Fund may not engage in transaction hedges with respect to the
currency of a particular country to an extent greater than the
aggregate amount of the Fund's transactions in that currency.
When the Fund believes that a foreign currency may suffer a
substantial decline against the U.S. dollar, it may enter into a
forward sale contract to sell an amount of that foreign currency
approximating the value of some or all of the Fund's portfolio
securities denominated in such foreign currency; or when the Fund
believes that the U.S. dollar may suffer a substantial decline
against a foreign currency, it may enter into a forward purchase
contract to buy that foreign currency for a fixed dollar amount
("position hedge"). The Fund will not position hedge with
respect to a particular currency to an extent greater than the
aggregate market value (at the time of making such sale) of the
securities held in its portfolio denominated or quoted in that
currency. Instead of entering into a position hedge, the Fund
may, in the alternative, enter into a forward contract to sell a
different foreign currency for a fixed U.S. dollar amount where
45
<PAGE>
the Fund believes that the U.S. dollar value of the currency to
be sold pursuant to the forward contract will fall whenever there
is a decline in the U.S. dollar value of the currency in which
portfolio securities of the Fund are denominated ("cross-hedge").
Unanticipated changes in currency prices may result in poorer
overall performance for the Fund than if it does not enter into
forward contracts.
The Fund's custodian will place liquid assets in a
segregated account of the Fund having a value equal to the
aggregate amount of the Fund's commitments under forward
contracts entered into with respect to position hedges and cross-
hedges. If the value of the securities placed in a segregated
account declines, additional cash or securities will be placed in
the account on a daily basis so that the value of the account
will equal the amount of the Fund's commitments with respect to
such contracts. As an alternative to maintaining all or part of
the segregated account, the Fund may purchase a call option
permitting the Fund to purchase the amount of foreign currency
being hedged by a forward sale contract at a price no higher than
the forward contract price or the Fund may purchase a put option
permitting the Fund to sell the amount of foreign currency
subject to a forward purchase contract at a price as high or
higher than the forward contract price. Unanticipated changes in
currency prices may result in poorer overall performance for the
Fund than if it had not entered into such contracts.
Hedging against a decline in the value of a currency
does not eliminate fluctuations in the prices of portfolio
securities or prevent losses if the prices of securities decline.
These transactions also preclude the opportunity for gain if the
value of the hedge currency should rise. Moreover, it may not be
possible for the Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to
sell the currency at a price above the anticipated devaluation
level.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. A
"sale" of a futures contract means the acquisition of a
contractual obligation to deliver the securities or foreign
currency or other commodity called for by the contract at a
specified price on a specified date. A "purchase" of a futures
contract means the incurring of an obligation to acquire the
securities or foreign currency or other commodity called for by
the contract at a specified price on a specified date. The
purchaser of a futures contract on an index agrees to take or
make delivery of an amount of cash equal to the difference
between a specified dollar multiple of the value of the index on
the expiration date of the contract ("current contract value")
and the price at which the contract was originally struck. No
physical delivery of the securities underlying the index is made.
46
<PAGE>
The Fund will purchase options on futures contracts
written or purchased that are traded on U.S. or foreign exchanges
or over-the-counter. These investment techniques will be used
only to hedge against anticipated future changes in market
conditions and interest or exchange rates which otherwise might
either adversely affect the value of the Fund's portfolio
securities or adversely affect the prices of securities which the
Fund intends to purchase at a later date.
The Fund will not enter into any futures contracts or
options on futures contracts if immediately thereafter the market
values of the outstanding futures contracts of the Fund and the
currencies and futures contracts subject to outstanding options
written by the Fund would exceed 50% of the market value of its
total assets.
The Fund's custodian will place liquid assets in a
separate account of the Fund having a value equal to the
aggregate amount of the Fund's commitments under futures
contracts.
ILLIQUID SECURITIES. The Fund may invest up to 5% of
its total assets in illiquid securities. Illiquid securities
generally include (i) direct placements or other securities that
are subject to legal or contractual restrictions on resale or for
which there is no readily available market (e.g., when trading in
the security is suspended or, in the case of unlisted securities,
when market makers do not exist or will not entertain bids or
offers), including many individually negotiated currency swaps
and any assets used to cover currency swaps, (ii) over-the-
counter options and assets used to cover over-the-counter
options, and (iii) repurchase agreements not terminable within
seven days.
Because of the absence of a trading market for illiquid
securities, the Fund may not be able to realize the price at
which they are carried on the Fund's books upon sale. Alliance
will monitor the illiquidity of the Fund's investments in such
securities. To the extent permitted by applicable law,
securities that may be resold pursuant to Rule 144A of the
Securities Act will not be treated as "illiquid" for purposes of
the foregoing restriction so long as such securities meet
liquidity guidelines established by the Fund's Directors.
The Fund may not be able to readily sell securities for
which there is no ready market. To the extent that these
securities are foreign securities, there is no law in many of the
countries in which the Fund may invest similar to the Securities
Act requiring an issuer to register the sale of securities with a
governmental agency or imposing legal restrictions on resales of
securities, either as to length of time the securities may be
47
<PAGE>
held or manner of resale. There may, however, be contractual
restrictions on resale of securities.
LOANS OF PORTFOLIO SECURITIES. The Fund may make
secured loans of its portfolio securities to entities with which
it can enter into repurchase agreements, provided that cash
and/or liquid high grade debt securities equal to at least 100%
of the market value of the securities loaned are deposited and
maintained by the borrower with the Fund. The risk in lending
portfolio securities, as with other extensions of credit,
consists of the possible loss of rights in the collateral should
the borrower fail financially. In determining whether to lend
securities to a particular borrower, Alliance will consider all
relevant facts and circumstances, including the creditworthiness
of the borrower. While securities are on loan, the borrower will
pay the Fund any income from the securities. The Fund may invest
any cash collateral in portfolio securities and earn additional
income, or receive an agreed-upon amount of income from a
borrower who has delivered equivalent collateral. The Fund will
have the right to regain record ownership of loaned securities to
exercise beneficial rights such as voting rights, subscription
rights, and rights to dividends, interest or distributions. The
Fund may pay reasonable finders', administrative, and custodial
fees in connection with a loan. The Fund will not lend portfolio
securities in excess of 30% of the value of its total assets nor
will the Fund lend its portfolio securities to any officer,
director, employee or affiliate of the Fund or of the Adviser.
OPTIONS ON SECURITIES. An option gives the purchaser of
the option, upon payment of a premium, the right to deliver to
(in the case of a put) or receive from (in the case of a call)
the writer of the option a specified amount of a security on or
before a fixed date at a predetermined price. A call option
written by the Fund is "covered" if the Fund owns the underlying
security, has an absolute and immediate right to acquire that
security without additional cash consideration (or for additional
cash consideration held in a segregated account by its custodian)
upon conversion or exchange of another security it holds, or
holds a call option on the underlying security with an exercise
price equal to or less than that of the call option it has
written or is greater than the exercise price of the call written
if the difference is maintained by the Fund in liquid assets in a
segregated account with its custodian. A put option written by
the Fund is "covered" if the Fund maintains liquid assets with a
value equal to the exercise price in a segregated account with
its custodian, or else holds a put on the underlying securities
with an exercise price equal to or greater than that of the put
option it has written.
A call option is for cross-hedging purposes if the Fund
does not own the underlying security and is designed to provide a
48
<PAGE>
hedge against a decline in value in another security which the
Fund owns or has the right to acquire. In such circumstances,
the Fund collateralizes its obligation under the option by
maintaining in a segregated account with the Fund's custodian
liquid assets in an amount not less than the market value of the
underlying security, marked to market daily. The Fund will only
write "covered" put and call options unless such options are for
cross-hedging purposes. The Fund would write a call option for
cross-hedging purposes, instead of writing a covered call option,
when the premium to be received from the cross-hedge transaction
would exceed that which would be received from writing a covered
call option, while at the same time achieving the desired hedge.
In purchasing an option, the Fund would be in a position
to realize a gain if, during the option period, the price of the
underlying security increased (in the case of a call) or
decreased (in the case of a put) by an amount in excess of the
premium paid; otherwise the Fund would experience a loss equal to
the premium paid for the option.
If an option written by the Fund were exercised, the
Fund would be obligated to purchase (in the case of a put) or
sell (in the case of a call) the underlying security at the
exercise price. The risk involved in writing an option is that,
if the option is exercised, the underlying security would then be
purchased or sold by the Fund at a disadvantageous price.
Entering into a closing transaction (i.e., by disposing of the
option prior to its exercise) could reduce these risks. The Fund
retains the premium received from writing a put or call option
whether or not the option is exercised. The writing of call
options could result in increases in the Fund's portfolio
turnover rate, especially during periods when market prices of
the underlying securities appreciate.
The Fund will purchase or write options on securities of
the types in which it is permitted to invest in privately
negotiated (i.e., over-the-counter) transactions only with
investment dealers and other financial institutions (such as
commercial banks or savings and loan institutions) deemed
creditworthy by Alliance. Alliance has adopted procedures for
monitoring the creditworthiness of such entities. Options
purchased or written by the Fund in negotiated transactions are
illiquid and it may not be possible for the Fund to effect a
closing transaction at an advantageous time.
Options on Securities Indices. An option on a
securities index is similar to an option on a security except
that, rather than the right to take or make delivery of a
security at a specified price, an option on a securities index
gives the holder the right to receive, upon exercise of the
option, an amount of cash if the closing level of the chosen
49
<PAGE>
index is greater than (in the case of a call) or less than (in
the case of a put) the exercise price of the option.
Options on Foreign Currencies. The Fund may purchase
and write put and call options on foreign currencies for the
purpose of protecting against declines in the U.S. dollar value
of foreign currency denominated portfolio securities and against
increases in the U.S. dollar cost of securities to be acquired.
As in the case of other kinds of options, the writing of an
option on a foreign currency constitutes only a partial hedge, up
to the amount of the premium received, and the Fund could be
required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The
purchase of an option on a foreign currency may constitute an
effective hedge against fluctuations in exchange rates, although,
in the event of rate movements adverse to the Fund's position,
the Fund may forfeit the entire amount of the premium plus
related transaction costs.
REPURCHASE AGREEMENTS. The Fund may enter into
repurchase agreements pertaining to U.S. Government Securities
with member banks of the Federal Reserve System or "primary
dealers" in such securities. A repurchase agreement arises when
a buyer purchases a security and simultaneously agrees to resell
it to the vendor at an agreed-upon future date, normally a day or
a few days later. The resale price is greater than the purchase
price, reflecting an agreed-upon interest rate for the period the
buyer's money is invested in the security. Such agreements permit
the Fund to keep all of its assets at work while retaining
"overnight" flexibility in pursuit of investments of a longer-
term nature. The Fund requires continual maintenance by its
custodian for its account in the Federal Reserve/Treasury Book
entry System of collateral in an amount equal to, or in excess
of, the resale price. If a vendor defaults on its repurchase
obligation, the Fund would suffer a loss to the extent that the
proceeds from the sale of the collateral were less than the
repurchase price. If a vendor goes bankrupt, the Fund might be
delayed in, or be prevented from, selling the collateral for its
benefit.
REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS. Reverse
repurchase agreements involve sales by the Fund of portfolio
assets concurrently with an agreement by the Fund to repurchase
the same assets at a later date at a fixed price. During the
reverse repurchase agreement period, the Fund continues to
receive principal and interest payments on these securities.
Generally, the effect of such a transaction is that the Fund can
recover all or most of the cash invested in the portfolio
securities involved during the term of the reverse repurchase
agreement, while it will be able to keep the interest income
associated with those portfolio securities. Such transactions
50
<PAGE>
are only advantageous if the interest cost to the Fund of the
reverse repurchase transaction is less than the cost of otherwise
obtaining the cash.
Dollar rolls involve sales by the Fund of securities for
delivery in the current month and the Fund's simultaneously
contracting to repurchase substantially similar (same type and
coupon) securities on a specified future date. During the roll
period, the Fund forgoes principal and interest paid on the
securities. The Fund is compensated by the difference between
the current sales price and the lower forward price for the
future purchase (often referred to as the "drop") as well as by
the interest earned on the cash proceeds of the initial sale.
The Fund will establish a segregated account with its
custodian in which it will maintain liquid assets equal in value
to its obligations in respect of reverse repurchase agreements
and dollar rolls. Reverse repurchase agreements and dollar rolls
involve the risk that the market value of the securities the Fund
is obligated to repurchase under the agreement may decline below
the repurchase price. In the event the buyer of securities under
a reverse repurchase agreement or dollar roll files for
bankruptcy or becomes insolvent, the Fund's use of the proceeds
of the agreement may be restricted pending a determination by the
other party, or its trustee or receiver, whether to enforce the
Fund's obligation to repurchase the securities. Reverse
repurchase agreements and dollar rolls are speculative techniques
and are considered borrowings by the Fund.
RIGHTS AND WARRANTS. The Fund will invest in rights or
warrants only if the underlying equity securities themselves are
deemed appropriate by Alliance for inclusion in the Fund's
portfolio. Rights and warrants entitle the holder to buy equity
securities at a specific price for a specific period of time.
Rights are similar to warrants except that they have a
substantially shorter duration. Rights and warrants may be
considered more speculative than certain other types of
investments in that they do not entitle a holder to dividends or
voting rights with respect to the underlying securities nor do
they represent any rights in the assets of the issuing company.
The value of a right or warrant does not necessarily change with
the value of the underlying securities, although the value of a
right or warrant may decline because of a decrease in the value
of the underlying stock, the passage of time, or a change in
perception as to the potential of the underlying stock, or any
combination of these factors.
If the market price of the underlying security is below
the exercise price of the warrant on the expiration date, the
warrant will expire worthless. Moreover, a right or warrant
51
<PAGE>
ceases to have value if it is not exercised prior to the
expiration date.
SHORT SALES. The Fund will utilize short selling in
order to attempt both to protect its portfolio against the
effects of potential downtrends in the securities markets and as
a means of enhancing its overall performance. In identifying
short selling opportunities, Alliance's Large Cap Growth Group
will use the fundamental analysis and investment research
strategy described above to identify a small group of companies
that it believes may decline in price as a result of fundamental
or market developments. The Fund is permitted to engage in short
sales of its securities with respect to up to 30% of its total
assets.
A short sale is a transaction in which the Fund sells a
security it does not own but has borrowed in anticipation that
the market price of that security will decline. The Fund may be
required to pay a fee to borrow the security and to pay over to
the lender any payments received on the security.
If the price of the security sold short increases
between the time of the short sale and the time the Fund replaces
the borrowed security, the Fund will incur a loss; conversely, if
the price declines, the Fund will realize a capital gain.
Although the Fund's gain is limited by the price at which it sold
the security short, its potential loss is unlimited.
In order to defer realization of gain or loss for U.S.
federal income tax purposes, the Fund may also make short sales
"against the box". In this type of short sale, at the time of
the sale, the Fund owns or has the immediate and unconditional
right to acquire at no additional cost the identical security.
STANDBY COMMITMENT AGREEMENTS. Standby commitment
agreements commit the Fund, for a stated period of time, to
purchase a stated amount of a security that may be issued and
sold to the Fund at the option of the issuer. The price and
coupon of the security are fixed at the time of the commitment.
At the time of entering into the agreement, the Fund is paid a
commitment fee, regardless of whether the security ultimately is
issued, typically equal to approximately 0.5% of the aggregate
purchase price of the security the Fund has committed to
purchase. The Fund will enter into such agreements only for the
purpose of investing in the security underlying the commitment at
a yield and price considered advantageous to the Fund and
unavailable on a firm commitment basis. The Fund will not enter
into a standby commitment with a remaining term in excess of 45
days and will limit its investment in such commitments so that
the aggregate purchase price of the securities subject to the
commitments will not exceed 50% of its assets taken at the time
52
<PAGE>
of making the commitment. The Fund will at all times maintain a
segregated account with its custodian of liquid assets in an
aggregate amount equal to the purchase price of the securities
underlying the commitment.
There is no guarantee that the securities subject to a
standby commitment will be issued, and the value of the security,
if issued, on the delivery date may be more or less than its
purchase price. Since the issuance of the security underlying
the commitment is at the option of the issuer, the Fund will bear
the risk of capital loss in the event the value of the security
declines and may not benefit from an appreciation in the value of
the security during the commitment period if the issuer decides
not to issue and sell the security to the Fund.
STOCK INDEX FUTURES. The Fund may purchase and sell
stock index futures as a hedge against movements in the equity
markets. There are several risks in connection with the use of
stock index futures by the Fund as a hedging device. One risk
arises because of the imperfect correlation between movements in
the price of a stock index future and movements in the price of
the securities which are the subject of the hedge. The price of
a stock index future may move more than or less than the price of
the securities being hedged. If the price of a stock index
future moves less than the price of the securities which are the
subject of the hedge, the hedge will not be fully effective but,
if the price of the securities being hedged has moved in an
unfavorable direction, the Fund would be in a better position
than if it had not hedged at all. If the price of the securities
being hedged has moved in a favorable direction, this advantage
will be partially offset by the loss on the index futures
contract. If the price of the index future moves more than the
price of the stock, the Fund will experience either a loss or
gain on the futures contract which will not be completely offset
by movements in the price of the securities which are subject to
the hedge.
To compensate for the imperfect correlation of movements
in the price of securities being hedged and movements in the
price of a stock index future, the Fund may buy or sell stock
index futures contracts in a greater dollar amount than the
dollar amount of securities being hedged if the volatility over a
particular time period of the prices of such securities has been
greater than the volatility over such time period of the stock
index, or if otherwise deemed to be appropriate by Alliance.
Conversely, the Fund may buy or sell fewer stock index futures
contracts if the volatility over a particular time period of the
prices of the securities being hedged is less than the volatility
over such time period of the stock index, or it is otherwise
deemed to be appropriate by Alliance. It is also possible that,
where the Fund has sold futures to hedge its portfolio against a
53
<PAGE>
decline in the market, the market may advance and the value of
securities held in the Fund may decline. If this occurred, the
Fund would lose money on the futures and also experience a
decline in value in its portfolio securities. However, over time
the value of a diversified portfolio should tend to move in the
same direction as the market indices upon which the index futures
are based, although there may be deviations arising from
differences between the composition of the Fund and the stocks
comprising the index.
Where a stock index futures contract is purchased to
hedge against a possible increase in the price of stock before
the Fund is able to invest its cash (or cash equivalents) in
stocks (or options) in an orderly fashion, it is possible that
the market may decline instead. If the Fund then concludes not
to invest in stock or options at that time because of concern as
to possible further market decline or for other reasons, the Fund
will realize a loss on the futures contract that is not offset by
a reduction in the price of securities purchased.
In addition to the possibility that there may be an
imperfect correlation, or no correlation at all, between
movements in stock index futures and the portion of the portfolio
being hedged, the price of stock index futures may not correlate
perfectly with movement in the stock index due to certain market
distortions. Rather than meeting additional margin deposit
requirements, investors may close futures contracts through
offsetting transactions which could distort the normal
relationship between the index and futures markets. From the
point of view of speculators, the deposit requirements in the
futures market are less onerous than margin requirements in the
securities market. Therefore, increased participation by
speculators in the futures market may also cause temporary price
distortions. Due to the possibility of price distortion in the
futures market, and because of the imperfect correlation between
the movements in a stock index and movements in the price of
stock index futures, a correct forecast of general market trends
by the investment adviser may still not result in a successful
hedging transaction over a short time frame.
Positions in stock index futures may be closed out only
on an exchange or board of trade which provides a secondary
market for such futures. Although the Fund intends to purchase
or sell futures only on exchanges or boards of trade where there
appear to be active secondary markets, there is no assurance that
a liquid secondary market on any exchange or board of trade will
exist for any particular futures contract or at any particular
time. In such event, it may not be possible to close a futures
investment position, and in the event of adverse price movements,
the Fund would continue to be required to make daily cash
payments of variation margin. However, in the event futures
54
<PAGE>
contracts have been used to hedge portfolio securities, such
securities will not be sold until the futures contract can be
terminated. In such circumstances, an increase in the price of
the securities, if any, may partially or completely offset losses
on the futures contract. As described above, however, there is
no guarantee that the price of the securities will in fact
correlate with the price movements in the futures contract and
thus provide an offset on a futures contract.
General. The successful use of the foregoing investment
practices draws upon Alliance's special skills and experience
with respect to such instruments and usually depends on
Alliance's ability to forecast price movements or currency
exchange rate movements correctly. Should prices or exchange
rates move unexpectedly, the Fund may not achieve the anticipated
benefits of the transactions or may realize losses and thus be in
a worse position than if such strategies had not been used.
Unlike many exchange-traded futures contracts and options on
futures contracts, there are no daily price fluctuation limits
with respect to options on currencies and forward contracts, and
adverse market movements could therefore continue to an unlimited
extent over a period of time. In addition, the correlation
between movements in the prices of such instruments and movements
in the prices of the securities and currencies hedged or used for
cover will not be perfect and could produce unanticipated losses.
The Fund's ability to dispose of its positions in
futures contracts, options and forward contracts depends on the
availability of liquid markets in such instruments. Markets in
options and futures with respect to a number of types of
securities and currencies are relatively new and still
developing, and there is no public market for forward contracts.
It is impossible to predict the amount of trading interest that
may exist in various types of futures contracts, options and
forward contracts. If a secondary market does not exist with
respect to an option purchased or written by the Fund, it might
not be possible to effect a closing transaction in the option
(i.e., dispose of the option) with the result that (i) an option
purchased by the Fund would have to be exercised in order for the
Fund to realize any profit and (ii) the Fund may not be able to
sell portfolio securities or currencies covering an option
written by the Fund until the option expires or it delivers the
underlying security, currency or futures contract upon exercise.
Therefore, no assurance can be given that the Fund will be able
to utilize these instruments effectively. In addition, the
Fund's ability to engage in options and futures transactions may
be limited by tax considerations and the use of certain hedging
techniques may adversely impact the characterization of income to
the Fund for U.S. federal income tax purposes.
55
<PAGE>
Future Developments. The Fund may, following written
notice to its stockholders, take advantage of other investment
practices that are not currently contemplated for use by the Fund
or are not available but may yet be developed, to the extent such
investment practices are consistent with the Fund's investment
objective and legally permissible for the Fund. Such investment
practices, if they arise, may involve risks that exceed those
involved in the activities described above.
Temporary Defensive Position. For temporary defensive
purposes, the Fund may reduce its position in equity securities
and invest in, without limit, certain types of short-term,
liquid, high-grade or high quality debt securities. These
securities may include U.S. Government securities, qualifying
bank deposits, money market instruments, prime commercial paper
and other types of short-term debt securities, including notes
and bonds. While the Fund is investing for temporary defensive
purposes, it may not meet its investment objective.
Portfolio Turnover. The portfolio turnover rate for the
Fund is included in the Financial Highlights section. The Fund
is actively managed and, in some cases in response to market
conditions, the Fund's portfolio turnover may exceed 100%. A
higher rate of portfolio turnover increases brokerage and other
expenses, which must be borne by the Fund and its stockholders.
High portfolio turnover also may result in realization of
substantial net short-term capital gains, which, when
distributed, are taxable to stockholders.
INVESTMENT RESTRICTIONS
The Fund has adopted certain fundamental investment
policies listed below, which may not be changed without the
approval of its stockholders. The percentage limitations set
forth below, as well as those described elsewhere in this
Prospectus, apply only at the time an investment is made or other
relevant action is taken by the Fund.
The Fund may not:
1. Purchase more than 10% of the outstanding voting
securities of any one issuer;
2. Invest 25% or more of its total assets in securities of
issuers conducting their principal business activities
in the same industry, except that this restriction does
not apply to U.S. Government securities;
3. Make loans except through (a) the purchase of debt
obligations in accordance with its investment objective
56
<PAGE>
and policies; (b) the lending of portfolio securities;
or (c) the use of repurchase agreements;
4. Borrow money or issue senior securities except the Fund
may, in accordance with the provisions of the 1940 Act,
(i) borrow from a bank or other entity in a privately
arranged transaction or through reverse repurchase
agreements or dollar rolls if after such borrowing there
is asset coverage of at least 300% as defined in the
1940 Act and (ii) borrow for temporary purposes in an
amount not exceeding 5% of the value of the total assets
of the Fund;
5. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except to secure permitted borrowings;
6. Invest in companies for the purpose of exercising
control; or
7. (a) Purchase or sell real estate, except that it may
purchase and sell securities of companies which deal in
real estate or interests therein and securities that are
secured by real estate, provided such securities are
securities of the type in which the Fund may invest;
(b) purchase or sell commodities or commodity contracts,
including futures contracts (except foreign currencies,
foreign currency options and futures, options and
futures on securities and securities indices and forward
contracts or contracts for the future acquisition or
delivery of securities and foreign currencies and
related options on futures contracts and other similar
contracts); (c) invest in interests in oil, gas, or
other mineral exploration or development programs;
(d) purchase securities on margin, except for such
short-term credits as may be necessary for the clearance
of transactions; and (e) act as an underwriter of
securities, except that the Fund may acquire restricted
securities under circumstances in which, if such
securities were sold, the Fund might be deemed to be an
underwriter for purposes of the Securities Act.
57
<PAGE>
RISK FACTORS AND SPECIAL CONSIDERATIONS
Investment in the Fund is subject to a number of risks
and special considerations, including the following:
MARKET RISK
This is the risk that the value of the Fund's
investments will fluctuate as the stock or bond markets fluctuate
and that prices overall will decline over short or longer-term
periods.
CREDIT RISK
This is the risk that the issuer of a security will be
unable or unwilling to make timely payments of interest or
principal, or to otherwise honor its obligations. The degree of
risk for a particular security may be reflected in its credit
rating.
INTEREST RATE RISK
This is the risk that changes in interest rates will
affect the value of a Fund's investments in income-producing,
fixed-income (i.e., debt) securities. Increases in interest
rates may cause the value of a Fund's investments to decline.
DILUTION
Upon completion of the offer, stockholders who do not
fully exercise their rights will own a smaller proportional
interest in the Fund than would be the case if the offer had not
been made. The subscription price per share is 95% of the lower
of (1) the average of the last reported sales price of a Fund
share on the NYSE for the five trading days ending with the day
the offer expires and (2) the NAV as of the close of trading on
the NYSE on that date. The subscription price is lower than the
Fund's NAV. Any rights offering priced at a discount to the
Fund's NAV entails some dilution in the NAV. Dilution is the
decrease in NAV that results from the Fund's issuance of new
shares at a discount to NAV when the rights are exercised and
from the Fund's payment of the expenses of the offer. The offer
will result in a dilution of NAV for all Fund stockholders, which
will disproportionately affect stockholders who do not exercise
their rights. In addition, there also may be substantial dilution
to the extent that the Fund increases the number of shares
subject to subscription by up to 25% in order to satisfy over-
subscription requests. Although it is not possible to state
precisely the amount of the decrease in NAV because it is not
known at the date of this Prospectus how many shares will be
subscribed for, or what the subscription price will be, the
58
<PAGE>
dilution could be substantial. For example, assuming all the
rights are exercised at the estimated subscription price of
$[____] which is [__]% of the Fund's NAV as of [________], 1999
and after deducting all expenses related to the issuance of the
shares, the Fund's NAV per share would be reduced by
approximately $[____] per share or [__]%. This dilution of NAV
will disproportionately affect stockholders who do not exercise
their rights.
FOREIGN SECURITIES
Alliance will select investments of non-U.S. companies
on the basis of the same growth potential and other
characteristics as investments in U.S. companies. Investment in
equity securities of non-U.S. companies, however, involves
special considerations not generally associated with a portfolio
invested only in equity securities of U.S. companies. The
economies of individual foreign countries may differ favorably or
unfavorably from the U.S. economy in such respects as growth of
gross domestic product or gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and
balance of payments position. Issuers of securities in foreign
jurisdictions are generally not subject to the same degree of
regulation as are U.S. issuers with respect to such matters as
insider trading rules, restrictions on market manipulation,
stockholder proxy requirements and timely disclosure of
information. The reporting, accounting and auditing standards of
foreign countries may differ, in some cases significantly, from
U.S. standards in important respects and less information may be
available to investors in foreign securities than to investors in
U.S. securities. Substantially less information is publicly
available about certain non-U.S. issuers than is available about
U.S. issuers. Nationalization, expropriation or confiscatory
taxation, currency blockage, political changes, government
regulation, political or social instability or diplomatic
developments could affect adversely the economy of a foreign
country or the Fund's investments in such country. In the event
of expropriation, nationalization or other confiscation, the Fund
could lose its entire investment in the country involved. In
addition, laws in foreign countries governing business
organizations, bankruptcy and insolvency may provide less
protection to security holders such as the Fund than that
provided by U.S. laws. The Fund is also subject to currency risk
which is the risk that fluctuations in the exchange rates between
the U.S. Dollar and foreign currencies may negatively affect the
value of the Fund's investments.
59
<PAGE>
MANAGEMENT RISK
The Fund is subject to management risk because it is an
actively managed investment fund. Alliance will apply its
investment techniques and risk analyses in making investment
decisions for the Fund, but there is no guarantee that its
techniques will produce the intended result.
DERIVATIVE AND LEVERAGE RISK
The Fund may, when Alliance believes that market
conditions are appropriate, utilize the market technique of
borrowing in order to take full advantage of available investment
opportunities. The Fund may also make substantial use of
derivatives and employ specialized trading techniques such as
short sales, options, futures and forwards to increase its
exposure to certain selected securities. The Fund may, although
it has no present intention of doing so, borrow money from a bank
or other entity in a privately arranged transaction to increase
the money available to the Fund to invest in securities when the
Fund believes that the return from the securities financed will
be greater than the interest expense paid on the borrowing. The
Fund also may borrow to finance repurchases of or tender offers
for its shares when the Fund deems it desirable in order to avoid
the untimely disposition of portfolio securities. Such
borrowings involve additional risk to the Fund, since the
interest expense may be greater than the income from or
appreciation of the securities carried by the borrowings and
since the value of the securities carried may decline below the
amount borrowed. Alliance employs these trading techniques
speculatively to enhance returns and not merely as hedging tools.
These techniques are riskier than many investment strategies and
will result in greater volatility for the Fund, particularly in
periods of market declines.
The 1940 Act requires the Fund to maintain "asset
coverage" of not less than 300% of its "senior securities
representing indebtedness," as those terms are defined and used
in the 1940 Act. In addition, the Fund may not make any cash
distributions to its stockholders if, after the distribution,
there would be less than 300% asset coverage of a senior security
representing indebtedness for borrowings (excluding for this
purpose certain evidences of indebtedness made by a bank or other
entity and privately arranged, and not intended to be publicly
distributed). This limitation on the Fund's ability to make
distributions could under certain circumstances impair the Fund's
ability to maintain its qualification for taxation as a
"regulated investment company".
Any investment gains made with the proceeds obtained
from borrowings in excess of interest paid on the borrowings will
60
<PAGE>
cause the net income per share and the NAV of the Fund's common
stock to be greater than would otherwise be the case. On the
other hand, if the investment performance of the additional
securities purchased fails to cover their cost (including any
interest paid on the money borrowed) to the Fund, then the net
income per share and NAV of the Fund's shares will be less than
would otherwise be the case. This is the speculative factor
known as leverage.
Borrowing is a form of leverage and as such will pose
certain risks for the Fund's stockholders, including the
possibility of higher volatility of both the NAV and market value
of the Fund's shares. There can be no assurance that the Fund
will be able to realize a higher net return on its investment
portfolio than the then current interest rate on any borrowing.
Any decline in the value of the Fund's assets will be borne
entirely by stockholders in the form of reductions in the Fund's
NAV, and any requirement that the Fund sell assets at a loss in
order to repay any borrowing or for other reasons would make it
more difficult for the NAV to recover. Accordingly, the effect
of leverage in a declining market may result in a greater decline
in the NAV of the Fund's share than if the Fund were not
leveraged, which may be reflected in a greater decline in the
market price of the Fund's shares.
ANTI-TAKEOVER PROVISIONS OF THE FUND'S ARTICLES OF INCORPORATION
AND BY-LAWS MAY LIMIT CERTAIN THIRD-PARTY ACTIONS.
The Fund's Articles of Incorporation and By-Laws
referred to in this Prospectus as the charter documents, contain
certain "anti-takeover" provisions that limit (i) the ability of
other entities or persons to acquire control of the Fund,
(ii) the Fund's freedom to engage in certain transactions, and
(iii) the ability of the Board or the Fund's stockholders to
amend the charter documents or to effect changes in the Fund's
management. These provisions also may dissuade third parties
from making offers to purchase shares at a premium over market
price.
DISCOUNT FROM NAV
Shares of closed-end funds frequently trade at a market
price that is less than the value of the net assets attributable
to those shares. The possibility that shares of the Fund will
trade at a discount from NAV is a separate risk from the risk
that the Fund's NAV will decrease. In some cases, shares of
closed-end funds may trade at a premium to NAV. The Fund's shares
have traded in the market above, at, and below NAV since the
commencement of the Fund's operations. The Fund cannot predict
whether its shares will trade below, at, or above NAV in the
future.
61
<PAGE>
The risk of purchasing shares of a closed-end investment
company that might trade at a discount is more pronounced for
investors who wish to sell their shares in a relatively short
period of time. For those investors, realization of gain or loss
on their investments is likely to be more dependent upon the
existence of a premium or discount than upon portfolio
performance.
NON-DIVERSIFIED STATUS
The Fund is a "non-diversified" investment company,
which means the Fund is not limited in the proportion of its
assets that may be invested in the securities of a single issuer.
Because the Fund, as a non-diversified investment company, may
invest in a smaller number of individual issuers than a
diversified investment company, an investment in the Fund may,
under certain circumstances, present greater risk to an investor
than an investment in a diversified investment company.
QUARTERLY DISTRIBUTIONS
The Fund has implemented a quarterly distribution policy
pursuant to which the Fund distributes quarterly each year to
stockholders (i) with respect to each of the first three calendar
quarters of the year, an amount equal to 2.5% of the Fund's NAV
determined as of the beginning of the quarter, and (ii) with
respect to the fourth calendar quarter of each year, an amount
equal to at least 2.5% of the Fund's NAV as of the beginning of
that quarter. If distributions for any quarter exceed the Fund's
net investment income and net realized short-term capital gains,
the difference would be treated as distributions of the Fund's
net realized long-term capital gains and, to the extent of the
amount of any distributions in excess of such gains, as a return
of the stockholder's capital. The reduction of the Fund's assets
by the amount of the excess will have the likely effect of
increasing the Fund's expense ratio. In order to make
distributions, the Fund may have to sell a portion of its
investment portfolio at a time when independent investment
judgment might not suggest that action. The Fund's final
distribution for each calendar year will include any remaining
undistributed net investment income and net realized short-term
capital gains and long-term capital gains realized during the
year, provided that if the Fund's undistributed net investment
income and net realized short-term and long-term capital gains
for the year exceeded the minimum required amount for the
previous quarters' distributions as described above, the Fund
might choose not to distribute all or a portion of such excess
equal to the Fund's net realized long-term capital gains for the
year.
62
<PAGE>
Based on information provided by the Adviser, the Board
of Directors believes that the offer will not result in a change
in the Fund's current level of dividends per share for the
foreseeable future. There can be no assurance, however, that the
Fund will be able to maintain its current level of dividends per
share, and the Board of Directors may, in its sole discretion,
change the Fund's current dividend policy or its current level of
dividends per share in response to market or other conditions.
YEAR 2000
Many computer systems and applications in use today
process transactions using two-digit date fields for the year of
the transaction, rather than the full four digits. If these
systems are not modified or replaced, transactions occurring
after 1999 could be processed as year "1900," which could result
in processing inaccuracies and computer system failures at or
after the Year 2000. This is commonly known as the Year 2000
problem. The Fund and its major service providers, including
Alliance, utilize a number of computer systems and applications
that have been either developed internally or licensed from third
party suppliers. In addition, the Fund and its major service
providers, including Alliance, are dependent on third party
suppliers for certain systems applications and for electronic
receipt of information critical to their business. Should any of
the computer systems employed by the Fund or its major service
providers, including Alliance, fail to process year 2000 related
information properly, that could have a significant negative
impact on the Fund's operations and the services that are
provided to the Fund's stockholders. To the extent that the
operations of issuers of securities held by the Fund are impaired
by the Year 2000 problem, the value of the Fund's shares may be
materially affected. In addition, for the Fund's investments in
foreign markets, it is possible that foreign companies and
markets will not be as prepared for Year 2000 as domestic
companies and markets.
The Year 2000 issue is a high priority for the Fund and
Alliance. The Fund has been advised that, during 1997, Alliance
began a formal year 2000 initiative which established a
structured and coordinated process to deal with the Year 2000
issue. As part of its initiative, Alliance established a Year
2000 project office to manage the Year 2000 initiative, focusing
on both information technology and non-information technology
systems. Alliance has also retained the services of a number of
consulting firms which have expertise in advising and assisting
with regard to Year 2000 issues. Alliance reports that by
June 30, 1998 it had completed its inventory and assessment of
its domestic and international computer systems and applications,
identified mission critical systems and non-mission critical
systems and determined which of these systems are not Year 2000
63
<PAGE>
compliant. All third party suppliers of mission critical
computer systems and applications have been contacted to verify
whether their systems and applications will be Year 2000
compliant and their responses are being evaluated. Substantially
all of those contacted have responded and approximately 90% have
informed Alliance that their systems and applications are or will
be Year 2000 compliant. Alliance will seek alternative solutions
or third party suppliers for all suppliers who do not furnish a
satisfactory response by June 30, 1999. The same process is
being performed for non-mission critical systems and is estimated
to be completed by June 30, 1999. Alliance has remediated,
replaced or retired all of its non-compliant mission critical
systems and applications which can impact the Fund. The same
process is being performed for non-mission critical systems and
is estimated to be completed by June 30, 1999. After each system
has been remediated, it is tested with 19XX dates to determine if
it still performs its intended business function correctly.
Next, each system undergoes a simulation test using dates
occurring after December 31, 1999. Inclusive of the replacement
and retirement of some of its systems, Alliance has completed
these testing phases for approximately 98% of mission critical
systems and approximately 89% of non-mission critical systems.
Integrated systems tests will then be conducted to verify that
the systems will continue to work together. Full integration
testing of all mission critical and non-mission critical systems
is estimated to be completed by June 30, 1999. Testing of
interfaces with third-party suppliers has begun and will continue
throughout 1999. Alliance reports that it has completed an
inventory of its facilities and related technology applications
and has begun to evaluate and test these systems. Alliance
reports that it anticipates that these systems will be fully
operable in the year 2000. Alliance, with the assistance of a
consulting firm, is developing Year 2000 specific contingency
plans with emphasis on mission critical functions. These plans
seek to provide alternative methods of processing in the event of
a failure that is outside Alliance's control. The estimated date
for the completion of these plans is June 30, 1999.
There are many risks associated with Year 2000 issues,
including the risks that the computer systems and applications
used by the Fund and its major service providers including
Alliance will not operate as intended and that the systems and
applications of third party providers to the Fund and its service
providers including Alliance will not be Year 2000 compliant.
Likewise there can be no assurance the compliance schedules
outlined above will be met or that the actual cost incurred will
not exceed current cost estimates. Should the significant
computer systems and applications used by the Fund, or its major
service providers, or the systems of its important third party
suppliers be unable to process date sensitive information
accurately after 1999, the Fund and/or its service providers may
64
<PAGE>
be unable to conduct its normal business operations and to
provide stockholders with the required services. In addition,
the Fund and its service providers may incur unanticipated
expenses, regulatory actions and legal liabilities. The Fund and
Alliance cannot determine which risks, if any, are most
reasonably likely to occur or the effects of any particular
failure to be Year 2000 compliant.
Certain statements provided by Alliance in this section
entitled "Year 2000", as such statements relate to Alliance, are
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. To the fullest extent
permitted by law, the foregoing Year 2000 discussion is a "Year
2000 Readiness Disclosure" within the meaning of the Year 2000
Information and Readiness Disclosure Act, 15 U.S.C. Sec 1 (1998).
MANAGEMENT OF THE FUND
THE INVESTMENT ADVISER
The Fund's Adviser, Alliance Capital Management L.P.,
1345 Avenue of the Americas, New York, New York 10105, is a
leading international investment adviser managing client accounts
with assets as of March 31, 1999 totaling more than $301 billion
(of which approximately $127 billion represented the assets of
investment companies). As of March 31, 1999, Alliance managed
retirement assets for many of the largest public and private
employee benefit plans (including 30 of the nation's Fortune 100
companies), for public employee retirement funds in 32 out of the
50 states, for investment companies, and for foundations,
endowments, banks and insurance companies worldwide. The 54
registered investment companies managed by Alliance comprising
more than 119 separate investment portfolios currently have over
4 million shareholder accounts.
The Adviser determines the composition of the Fund's
portfolio, places all orders for the purchase and sale of
securities and for other transactions, and oversees the
settlement of the Fund's securities and other portfolio
transactions. The Adviser also provides administrative services
to the Fund. These include, among other things, providing
officers and office space, preparing or assisting in preparing
materials for stockholder and regulatory bodies and overseeing
the provision to the Fund of custodial and accounting services.
The persons primarily responsible for the day-to day
management of the Fund are Alfred Harrison, Vice Chairman of
Alliance Capital Management Corporation and Michael J. Reilly,
Senior Vice President of Alliance Capital Management Corporation.
Both Messrs. Harrison and Reilly are members of Alliance's Large
65
<PAGE>
Cap Growth Group and, as such, have had management responsibility
with respect to the Fund since its inception.
Alliance Capital Management Corporation ("ACMC"), the
sole general partner of, and the owner of a 1% general
partnership interest in the Adviser, is an indirect wholly-owned
subsidiary of The Equitable Life Assurance Society of the United
States ("Equitable"), one of the largest life insurance companies
in the United States and a wholly-owned subsidiary of The
Equitable Companies Incorporated ("ECI"). ECI is a holding
company controlled by AXA, a French insurance holding company.
As of March 1, 1999 AXA and certain of its subsidiaries
beneficially owned approximately 58.4% of ECI's outstanding
common stock. ECI is a public company with shares traded on the
New York Stock Exchange.
AXA, a French company, is the holding company for an
international group of insurance and related financial services
companies. AXA's insurance operations include activities in life
insurance, property and casualty insurance and reinsurance. The
insurance operations are diverse geographically with activities
principally in Western Europe, North America, the Asia/Pacific
area and, to a lesser extent, in Africa and South America. AXA
is also engaged in asset management, investment banking,
securities trading, brokerage, real estate and other financial
services activities principally in the United States, as well as
in Western Europe and the Asia/Pacific area.
For insurance regulatory purposes the shares of capital
stock of ECI beneficially owned by AXA and its subsidiaries have
been deposited into a voting trust which has an initial term of
10 years commencing in 1992. The trustees of the voting trust
(the "Voting Trustees") have agreed to protect the legitimate
economic interests of AXA, but with a view of ensuring that
certain minority shareholders of AXA do not exercise control over
ECI or certain of its insurance subsidiaries. As of March 1,
1999, AXA, ECI, Equitable and certain subsidiaries of Equitable
were the beneficial owners of approximately 56.6% of the issued
and outstanding units representing assignments of beneficial
ownership of limited partnership interests ("Units") in the
Adviser.
Based on information provided by AXA, on March 1, 1999,
approximately 20.7% of the issued ordinary shares (representing
32.7% of the voting power) of AXA were owned directly and
indirectly by Finaxa, a French holding company. As of March 1,
1999, 61.7% of the shares (representing 72.3% of the voting
power) of Finaxa were owned by four French mutual insurance
companies (the "Mutuelles AXA") (one of which, AXA Assurances
I.A.R.D. Mutuelle, owned 35.4% of the shares, representing 41.5%
of the voting power of Finaxa, and 22.7% of the shares of Finaxa
66
<PAGE>
(representing 13.7% of the voting power) were owned by Paribas, a
French bank. Including the ordinary shares owned by Finaxa, on
March 1, 1999, the Mutuelles AXA directly and indirectly owned
approximately 23.9% of the issued ordinary shares (representing
37.6% of the voting power) of AXA. The Voting Trustees may be
deemed to be beneficial owners of all Units beneficially owned by
AXA and its subsidiaries. In addition, the Mutuelles AXA, as a
group, and Finaxa may be deemed to be beneficial owners of all
Units beneficially owned by AXA and its subsidiaries. By virtue
of the provisions of the voting trust agreement, AXA may be
deemed to have shared voting power with respect to the Units.
AXA and its subsidiaries have the power to dispose or direct the
disposition of all shares of the capital stock of ECI deposited
in the voting trust. The Mutuelles AXA, as a group, and Finaxa
may be deemed to share the power to vote or to direct the vote
and to dispose or to direct the disposition of all the Units of
the Adviser beneficially owned by AXA and its subsidiaries. By
reason of their relationship, AXA, the voting Trustees, the
Mutuelles AXA, Finaxa, ECI, Equitable, Equitable Holdings,
L.L.C., Equitable Investment Corporation, Alliance Capital
Management Corporation and Equitable Capital Management
Corporation may be deemed to share the power to vote or to direct
the vote and to dispose or direct the disposition of all or a
portion of the Units beneficially owned by AXA and its
subsidiaries.
INVESTMENT ADVISORY AGREEMENT
The Advisory Agreement between the Fund and the Adviser
provides that the Adviser furnishes investment advice and
recommendations to the Fund. Under the Advisory Agreement, the
Adviser receives a basic fee at an annualized rate of 1.50% of
the Fund's average net assets and an adjustment to the basic fee
based on the investment performance of the Fund in relation to
the investment record of the Russell 1000 Growth Index (the
"Index") for certain prescribed periods as described below.
The Russell 1000(R) universe of securities is compiled
by Frank Russell Company and is segmented into two style indices,
the Russell 1000 Growth Index and the Russell 1000 Value(R)
Index, both based on the capitalization-weighted median price-to-
book of each of the securities. At each reconstitution, the
Russell 1000 constituents are ranked by their adjusted price-to-
book ratio and their I/B/E/S forecast long-term growth mean.
These rankings are converted to standardized units and combined
to produce a composite value score or CVS. The securities are
then ranked by their CVS, and a probability algorithm is applied
to the CVS distribution to assign growth and value weights to
each security. In general, securities with lower CVS are
considered growth, securities with higher CVS are considered
value, and securities with a CVS in the middle are considered to
67
<PAGE>
have both growth and value characteristics, and are weighted
proportionately in the growth and value index. The Russell 1000
Growth Index is, accordingly, designed to include those Russell
1000 securities with a greater-than-average growth orientation.
In contrast with the securities in the Russell 1000 Value Index,
companies in the Russell 1000 Growth Index tend to exhibit higher
price-to-book and price-earnings ratios, lower dividend yields
and higher forecast growth values. The Russell 1000 Growth Index
reflects changes in market prices, and assumes reinvestment of
investment income.
The basic fee is a monthly fee equal to 1/12th of 1.5%
(1.5% on an annualized basis) of the average of the net assets of
the Fund at the end of each month included in the applicable
performance period. The performance period is a rolling 36 month
period ending with the most recent calendar month. The basic fee
for each such month may be increased or decreased at the rate of
1/12th of .05% per percentage point, depending on the extent, if
any, by which the investment performance of the Fund, measured by
the percentage change in the Fund's NAV, exceeds by more than two
percentage points, or is exceeded by more than two percentage
points by, the percentage change in the investment record of the
Index for such performance period. The maximum increase or
decrease in the basic fee for any month may not exceed 1/12th of
.30%. Accordingly, for each month the maximum monthly fee as
adjusted for performance is 1/12th of 1.80% and is payable if the
investment performance of the Fund exceeded the percentage change
in the investment record of the Index by eight or more percentage
points for the performance period, and the minimum monthly fee
rate as adjusted for performance is 1/12th of 1.20% and is
payable if the percentage change in the investment record of the
Russell 1000 Growth Index exceeded the investment performance of
the Fund by eight or more percentage points for the performance
period.
The following table illustrates the full range of
permitted increases or decreases to the basic fee.
68
<PAGE>
Difference Between
the Percentage change in
NAV of the Fund and
Percentage change in the Adjustment
Russell 1000 Growth to 1.50% Annual Fee
Index* Basic Fee Rate as Adjusted
________________________ __________ ________________
+8 +.30% 1.80%
+7 +.25% 1.75%
+6 +.20% 1.70%
+5 +.15% 1.65%
+4 +.10% 1.60%
+3 +.05% 1.55%
+/-2 0 1.50%
-3 -.05% 1.45%
-4 -.10% 1.40%
-5 -.15% 1.35%
-6 -.20% 1.30%
-7 -.25% 1.25%
-8 -.30% 1.20%
____________________
* Measured over the performance period, which will be a rolling
36-month period ending with the most recent calendar month.
In calculating the investment performance of the Fund
and the Index, all dividends and distributions during the
performance period will treated as having been reinvested, and no
effect will be given to gain or loss resulting from any issuance,
sale or repurchase of the Fund's shares. Fractions of a
percentage point will be rounded to the nearer whole point (to
the higher point if exactly one-half).
For the fiscal years ended September 30, 1998,
September 30, 1997 and September 30, 1996, the Fund paid total
advisory fees to the Adviser of $1,528,461, $1,101,452 and
$879,811, respectively.
The Adviser will benefit from the offer because the
Adviser's fee is based on the average of the net assets of the
Fund at the end of each month included in the applicable
performance period. It is not possible to state precisely the
amount of additional compensation the Adviser will receive as a
result of the offer because it is not known how many shares will
be subscribed for and because the proceeds of the offer will be
invested in additional portfolio securities which will fluctuate
in value. However, based on the estimated proceeds from the
offer assuming all the rights are exercised in full at the
estimated subscription price of $[____] per share, the Adviser
69
<PAGE>
would receive additional annual advisory fees based on the basic
fee of approximately $[________] as a result of the increase in
assets under management over the Fund's current assets under
management.
The Fund bears all costs of its operation other than
those incurred by the Adviser under the Investment Advisory
Agreement. In particular, the Fund pays: brokerage and
commission expenses; federal, state, local (if any) and foreign
taxes, including issue and transfer taxes, incurred by or levied
on the Fund; interest charges on borrowings; the organizational
and offering expenses of the Fund; fees and expenses of
registering or qualifying the shares of the Fund under the
appropriate federal and state securities laws; fees and expenses
of listing and maintaining the listing of the Fund's shares on
any securities exchange; expenses of printing and distributing
reports to stockholders; costs of proxy solicitation; fees,
charges and expenses of the Fund's administrator, custodian,
registrar, transfer and dividend paying agent and shareholder
servicing agent; compensation of directors, officers and
employees who do not devote any part of their time to the affairs
of the Adviser or its affiliates; legal and auditing expenses;
the cost of stock certificates representing the Fund's shares;
and costs of stationery and supplies. Under the Investment
Advisory Agreement, the Adviser provides the Fund with office
space, facilities and business equipment and provides the
services of executive and clerical personnel for administering
certain of the other affairs of the Fund. The Adviser
compensates Directors of the Fund if such persons are employed by
the Adviser or its affiliates.
The Investment Advisory Agreement provides that the
Adviser shall only be liable for willful misfeasance, bad faith,
gross negligence or reckless disregard of its duties and
obligations under the Investment Advisory Agreement.
DIRECTORS AND OFFICERS
The Directors and officers of the Fund, and their
addresses, ages and principal occupations for at least the past
five years are set forth below. Unless otherwise specified, the
address of each of the following persons is 1345 Avenue of the
Americas, New York, New York 10105.
DIRECTORS
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME AND ADDRESS WITH REGISTRANT AGE DURING PAST 5 YEARS
___________________ _______________ ___ ________________________
John D. Carifa* Chairman of the 54 President and Chief
70
<PAGE>
Board and Operating Officer and a
President Director of Alliance Capital
Management Corporation
("ACMC"), the general partner
of the Adviser, with which he
has been associated since
prior to 1994
Ruth Block Director 68 Formerly an Executive
P.O. Box 4623 Vice-President and
Stamford, Connecticut 06903 Chief Insurance Officer of
The Equitable Life Assurance
Society of the United States.
She is a Director of Ecolab
Incorporated (specialty
chemicals) and BP Amoco
Corporation (oil and gas).
David H. Dievler Director 69 Independent
P.O. Box 167 Consultant Formerly a
Spring Lake, New Jersey 07762 Senior Vice President of ACMC
until December 1994.
John H. Dobkin Director 57 Formerly President of
150 White Plains Road Historic Hudson Valley
Tarrytown, New York 10591 (historic preservation) from
1994 through May 1999.
Previously, he was Director
of the National Academy of
Design.
William H. Foulk, Jr. Director 66 Investment Adviser and
Room 1000 Independent Consultant.
2 Greenwich Plaza He was formerly Senior
Greenwich, Connecticut 06830 Manager of Barrett
Associates, Inc., a
registered investment
adviser, with which he had
been associated since prior
to 1994.
Dr. James Hester Director 75 President of the Harry
25 Cleveland Lane Frank Guggenheim
Princeton, New Jersey 08540 Foundation, with which he has
been associated since prior
to 1994. He was formerly
President of New York
University and The New York
Botanical Garden and Rector
of the United Nations
University.
71
<PAGE>
Clifford L. Michel Director 59 Member of the law firm
St. Bernard's Road of Cahill Gordon &
Gladstone, New Jersey 07934 Reindel, with which he has
been associated since prior
to 1994. He is President and
Chief Executive Officer of
Wenonah Development Company
(investments) and a Director
of Placer Dome, Inc (mining).
Donald J. Robinson Director 64 Senior Counsel of the
98 Hell's Peak Road law firm of Orrick,
Weston, Vermont 05161 Herrington & Sutcliffe since
January of 1995. He was
formerly a senior partner and
member of the Executive
Committee of that firm. He
was also a Trustee of the
Museum of the City of New
York from 1977-1995.
Robert C. White Director 78 Formerly Assistant
30835 Rivercrossing Treasurer of Ford Motor
Bingham Farms, MI 48025 Company and until September
30, 1994, a Vice President
and the Chief Financial
Officer of the Howard Hughes
Medical Institute.
72
<PAGE>
OFFICERS
POSITIONS HELD PRINCIPAL OCCUPATIONS
NAME AND ADDRESS WITH REGISTRANT AGE DURING PAST 5 YEARS
___________________ _______________ ___ ________________________
John D. Carifa Chairman of 53 See biography under
the Board "Directors," above.
and President
Kathleen A. Corbet Senior Vice 39 Executive Vice President
President of ACMC, with which she has
been associated since prior
to 1994.
Alfred Harrison Senior Vice 61 Vice Chairman of the
President Board of ACMC, with which he
has been associated since
prior to 1994.
Thomas J. Bardong Vice President 54 Senior Vice President of
ACMC, with which he has been
associated since prior to
1994.
John A. Koltes Vice President 56 Senior Vice President of
ACMC, with which he has been
associated since prior to
1994.
Michael J. Reilly Vice President 34 Senior Vice President of
ACMC, with which he has been
associated since prior to
1994.
Edmund P. Bergan, Jr. Secretary 49 Senior Vice President and the
General Counsel of Alliance
Fund Distributors, Inc.
("AFD") and Alliance Fund
Services, Inc. ("AFS") and
Vice President and Assistant
General Counsel of ACMC, with
which he has been associated
since prior to 1994.
Mark D. Gersten Treasurer and 48 Senior Vice President of
500 Plaza Drive Chief Financial AFS, with which he has
Secaucus, New Jersey 07094 Officer been associated since prior
to 1994.
73
<PAGE>
Vincent S. Noto Controller 34 Vice President of AFS,
500 Plaza Drive with which he has been
Secaucus, New Jersey 07094 associated since prior to
1994.
____________________
* An "interested person" of the Fund, as defined in the 1940 Act.
74
<PAGE>
The Board of Directors is divided into three classes,
each class having a term of three years. Each year the term of
one class expires. The Fund does not pay any fees to, or
reimburse expenses of, its Directors who are considered
"interested persons" of the Fund, as defined in the 1940 Act.
The table below indicates the aggregate compensation
paid by the Fund to each of the Directors during its fiscal year
ended September 30, 1998, the aggregate compensation paid to each
of the Directors during calendar year 1998 by all of the funds to
which Alliance provides investment advisory services, referred to
below as the Alliance Fund Complex, and the total number of funds
in the Alliance Fund Complex for which each of the Directors
serves as a director or trustee. Neither the Fund nor any other
fund in the Alliance Fund Complex provides compensation in the
form of pension or retirement benefits to any of its directors or
trustees.
Total Number
of Investment
Companies in
Total the Alliance
Compensation Fund Complex,
from the including the
Aggregate Alliance Fund Fund, as to
Compensation Complex, which the
from the Fund including the Director is a
Name of Director for the Fiscal Fund during Director of
or Officer Year 1998 1998 Trustee
__________________ ______________ _____________ _____________
John D. Carifa 0 0 50
Ruth Block $4,376 $164,000 37
David Dievler $4,376 $188,500 43
John H. Dobkin $4,379 $126,500 41
William H. Foulk, Jr. $4,373 $149,145 45
Dr. James M. Hester $4,379 $156,500 37
Clifford L. Michel $4,379 $194,500 38
Donald J. Robinson $4,376 $217,358 41
Robert C. White $8,500 $ 88,500 10
HOLDINGS OF FUND SHARES
As far as is known to the Fund, no person owned
beneficially five percent or more of the outstanding shares of
the Fund at June 1, 1999. The Depository Trust Company ("DTC")
held of record 97.80% of the outstanding shares at June 1, 1999.
As far as is known to the Fund, no person other than DTC owned of
record shares of the Fund representing more than five percent of
the voting power of the Fund's outstanding shares at June 1,
1999. The Adviser of the Fund beneficially owned 5,000 shares at
June 1, 1999.
75
<PAGE>
As of June 1, 1999, all Directors and officers of the
Fund owned in the aggregate less than 1% of the Fund's
shares.
ADMINISTRATOR
The Adviser is also the Fund's Administrator and as such
performs or arranges for the performance of the following
services:
- prepares and assembles reports required to be sent to
Fund stockholders and arranges for the printing and
dissemination of such reports;
- assembles reports required to be filed with the SEC and
files such completed reports with the SEC;
- arranges for the dissemination to stockholders of the
Fund's proxy materials and oversees the tabulation of
proxies by the Fund's transfer agent;
- negotiates the terms and conditions under which
custodian services will be provided to the Fund and the
fees to be paid by the Fund to its custodian;
- negotiates the dividend disbursing services fees to be
paid by the Fund and reviews the provision of dividend
disbursing services to the Fund;
- calculates, or arranges for the calculation of, the NAV
of the Fund's shares;
- calculates the basic fee payable to the Adviser and the
adjustment to the basic fee based on the investment
performance of the Fund in relation to the investment
record of the Russell 1000 Growth Index;
- determines the amounts available for distribution as
dividends and distributions to be paid by the Fund to
its stockholders; prepares and arranges for the printing
of dividend notices to stockholders; and provides the
Fund's dividend disbursing agent and custodian with such
information as is required for them to effect the
payment of dividends and distributions and to implement
the Fund's dividend reinvestment plan;
- assists in providing to the Fund's independent
accountants such information as is necessary for such
accountants to prepare and file the Fund's federal
income and excise tax returns and the Fund's state and
local tax returns;
- monitors compliance of the Fund's operation with the
1940 Act and with its investment policies and
limitations;
- monitors compliance of the Fund's operations, with
respect to engaging in short sales, with the 1940 Act
and the Code;
- provides accounting and bookkeeping services (including
the maintenance of such accounts, books and records of
76
<PAGE>
the Fund as may be required by Section 31(a) of the 1940
Act and the rules and regulations thereunder); and
- makes such reports and recommendations to the Fund's
Board of Directors as the Board reasonably requests or
deems appropriate.
The Administrator will benefit from the offer because it
will receive fees based in part on the average net assets of the
Fund. For the services rendered to the Fund and related expenses
borne by the Administrator, the Fund pays the Administrator a
monthly fee at the annual rate of .25 of 1% of the Fund's average
weekly net assets. For the fiscal years ended September 30,
1998, September 30, 1997 and September 30, 1996, the Fund paid
total administrative fees to the Administrator of $221,977,
$174,039 and $142,915, respectively. For purposes of the
calculation of the fee payable to the Administrator, average
weekly net assets are determined on the basis of the average net
assets of the Fund for each weekly period (ending on Friday)
ending during the month. The net assets for each weekly period
are determined by averaging the net assets on Friday of such
weekly period with the net assets on Friday of the immediately
preceding weekly period. If a Friday is not a Fund business day,
then the calculation will be based on the net assets of the Fund
on the Fund business day immediately preceding such Friday.
PORTFOLIO TRADING
Subject to the general supervision of the Board of
Directors, the Adviser is responsible for decisions to buy and
sell securities and other portfolio holdings for the Fund, the
selection of brokers and dealers to effect the transactions and
the negotiation of brokerage commissions. It is the Fund's
general policy to seek favorable net prices and prompt reliable
execution in connection with the purchase or sale of all
portfolio securities. In the purchase and sale of over-the-
counter securities, it is the Fund's policy to use the primary
market makers except when a better price can be obtained by using
a broker. The use of brokers who supply supplemental research
and analysis and other services may result in the payment of
higher commissions than those available from other brokers and
dealers who provide only the execution of portfolio transactions.
In addition, the supplemental research and analysis and other
services that may be obtained from brokers and dealers through
which brokerage transactions are effected may be useful to the
Adviser in connection with advisory clients other than the Fund.
Investment decisions for the Fund are made independently
from those for other investment companies and other advisory
accounts managed by the Adviser. It may happen, on occasion,
that the same security is held in the portfolio of the Fund and
one or more of such other companies or accounts. Simultaneous
77
<PAGE>
transactions are likely when several funds or accounts are
managed by the same adviser, particularly when a security is
suitable for the investment objectives of more than one of such
companies or accounts. When two or more companies or accounts
managed by the Adviser are simultaneously engaged in the purchase
or sale of the same security, the transactions are allocated to
the respective companies or accounts both as to amount and price,
in accordance with a method deemed equitable to each company or
account. In some cases this system may adversely affect the
price paid or received by the Fund or the size of the position
obtainable for the Fund.
Allocations are made by the officers of the Fund or of
the Adviser. Purchases and sales of portfolio securities are
determined by the Adviser and are placed with broker-dealers by
the order department of the Adviser.
The extent to which commissions that will be charged by
broker-dealers selected by the Fund may reflect an element of
value for research cannot presently be determined. To the extent
that research services of value are provided by broker-dealers
with or through whom the Fund places portfolio transactions, the
Adviser may be relieved of expenses which it might otherwise
bear. Research services furnished by broker-dealers could be
useful and of value to the Adviser in servicing its other clients
as well as the Fund; but, on the other hand, certain research
services obtained by the Adviser as a result of the placement of
portfolio brokerage of other clients could be useful and of value
to it in serving the Fund. Consistent with the Conduct Rules of
the National Association of Securities Dealers, Inc., and subject
to seeking best execution, the Fund may consider sales of shares
of the Fund or other investment companies managed by the Adviser
as a factor in the selection of brokers to execute portfolio
transactions for the Fund.
The Fund may from time to time place orders for the
purchase or sale of securities (including listed call options)
with Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"),
an affiliate of the Adviser, and with brokers which may have
their transactions cleared or settled, or both, by the Pershing
Division of DLJ, for which DLJ may receive a portion of the
brokerage commissions. In such instances, the placement of
orders with such brokers would be consistent with the Fund's
objective of obtaining best execution and would not be dependent
upon the fact that DLJ is an affiliate of the Adviser.
During the fiscal periods ended September 30, 1996, 1997
and 1998 the Fund incurred brokerage commissions amounting in the
aggregate to $195,295, $216,191, and $250,574, respectively.
During the fiscal periods ended September 30, 1996, 1997 and
1998, brokerage commissions amounting in the aggregate to $0, $0,
78
<PAGE>
and $0, respectively were paid to DLJ and brokerage commissions
amounting in the aggregate to $0 were paid to brokers utilizing
the Pershing Division of DLJ. During the fiscal period ended
September 30, 1998, the brokerage commissions paid to DLJ
constituted 0% of the Fund's aggregate brokerage commissions and
the brokerage commissions paid to brokers utilizing the Pershing
Division of DLJ constituted 0% of the Fund's aggregate brokerage
commissions. During the fiscal period ended September 30, 1998,
of the Fund's aggregate dollar amount of brokerage transactions
involving the payment of commissions, 0% were effected through
DLJ and 0% were effected through brokers utilizing the Pershing
Division of DLJ. During the fiscal period ended September 30,
1998, transactions in portfolio securities of the Fund
aggregating $210,314,741 with associated brokerage commissions of
approximately $78,014 were allocated to persons of firms
supplying research services to the Fund or the Adviser.
Some of the Fund's portfolio transactions in equity
securities may occur on foreign stock exchanges. Transactions on
stock exchanges involve the payment of brokerage commissions. On
many foreign stock exchanges these commissions are fixed.
Securities traded in foreign over-the-counter markets (including
most fixed-income securities) are purchased from and sold to
dealers acting as principal. Over-the-counter transactions
generally do not involve the payment of a stated commission, but
the price usually includes an undisclosed commission or markup.
The prices of underwritten offerings, however, generally include
a stated underwriter's discount. The Adviser expects to effect
the bulk of its transactions in securities of companies based in
foreign countries through brokers, dealers or underwriters
located in such countries. U.S. Government or other U.S.
securities constituting permissible investments will be purchased
and sold through U.S. brokers, dealers or underwriters.
79
<PAGE>
DETERMINATION OF NAV
The Fund determines NAV no less frequently than the
close of trading on the NYSE (generally 4:00 P.M. New York City
time) on the last business day of each week (generally Friday).
The Fund's per share net asset value is calculated by dividing
the value of the Fund's total assets, less its liabilities, by
the total number of its shares then outstanding. A Fund business
day is any weekday on which the NYSE is open for trading.
In accordance with applicable rules under the 1940 Act,
portfolio securities are valued at current market value or at
fair value as determined in good faith by the Board of Directors.
The Board of Directors has delegated to the Adviser certain of
the Board's duties with respect to the following procedures.
Readily marketable securities listed on the NYSE or on a foreign
securities NYSE (other than foreign securities exchanges whose
operations are similar to those of the United States over-the-
counter market) are valued, except as indicted below, at the last
sale price reflected on the consolidated tape at the close of the
NYSE or, in the case of a foreign securities exchange, at the
last quoted sale price, in each case on the business day as of
which such value is being determined. If there has been no sale
on such day, the securities are valued at the mean of the closing
bid and asked prices on such day. If no bid or asked prices are
quoted on such day, then the security is valued in good faith at
fair value by, or in accordance with procedures established by,
the Board of Directors. Readily marketable securities not listed
on the NYSE or on a foreign securities exchange but listed on
other United States national securities exchanges or traded on
The Nasdaq Stock Market, Inc. are valued in like manner.
Portfolio securities traded on the NYSE and on one or more
foreign or other national securities exchanges, and portfolio
securities not traded on the NYSE but traded on one or more
foreign or other national securities exchanges are valued in
accordance with these procedures by reference to the principal
exchange on which the securities are traded.
Readily marketable securities traded in the over-the-
counter market, securities listed on a foreign securities
exchange whose operations are similar to those of the United
States over-the-counter market, and securities listed on a U.S.
national securities exchange whose primary market is believed to
be over-the-counter (but excluding securities traded on The
Nasdaq Stock Market, Inc.), are valued at the mean of the current
bid and asked prices as reported by Nasdaq or, in the case of
securities not quoted by Nasdaq, the National Quotation Bureau or
another comparable source.
Listed put or call options purchased by the Fund are
valued at the last sale price. If there has been no sale on that
80
<PAGE>
day, such securities will be valued at the closing bid prices on
that day.
Open futures contracts and options thereon will be
valued using the closing settlement price or, in the absence of
such a price, the most recent quoted bid price, If there are no
quotations available for the day of valuations, the last
available closing settlement price will be used.
U.S. Government securities and other debt instruments
having 60 days or less remaining until maturity are valued at
amortized cost if their original maturity was 60 days or less, or
by amortizing their fair value as of the 61st day prior to
maturity if their original term to maturity exceeded 60 days
(unless in either case the Board of Directors determines that
this method does not represent fair value).
Fixed-income securities may be valued on the basis of
prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities. The
prices provided by pricing service take into account many
factors, including institutional size trading in similar groups
of securities and any developments related to specific
securities.
All other assets of the Fund are valued in good faith at
fair value by, or in accordance with procedures established by,
the Board of Directors.
Trading in securities on Far Eastern and European
securities exchanges and over-the-counter markets is normally
completed well before the close of business of each Fund business
day. In addition, trading in foreign markets may not take place
on all Fund business days. Furthermore, trading may take place
in various foreign markets on days that are not Fund business
days. The Fund's calculation of the net asset value per share,
therefore, does not always take place contemporaneously with the
most recent determination of the prices of portfolio securities
in these markets. Events affecting the values of these portfolio
securities that occur between the time their prices are
determined in accordance with the above procedures and the close
of the NYSE will not be reflected in the Fund's calculation of
net asset value unless it is believed that these prices do not
reflect current market value, in which case the securities will
be valued in good faith by, or in accordance with procedures
established by, the Board of Directors at fair value.
For purposes of determining the Fund's net asset value
per share, all assets and liabilities initially expressed in a
foreign currency will be converted into U.S. dollars at the mean
of the current bid and asked prices of such currency against the
81
<PAGE>
U.S. dollar last quoted by a major bank that is a regular
participant in the relevant foreign exchange market or on the
basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If such quotations are
not available as of the close of the NYSE, the rate of exchange
will be determined in good faith by, or under the direction of,
the Board of Directors.
TENDER OFFER AND SHARE REPURCHASES
As discussed above, shares of closed-end investment
companies frequently trade at a discount from NAV. To address
this possibility, the Board of Directors presently contemplates
that the Fund may from time to time consider either the
repurchase or tender offer of its shares on the open market.
Since commencement of the Fund's operations, no such open market
purchases or tender offers have been made. The Fund may borrow
money to finance the repurchase of shares.
There can be no assurance that repurchases or tenders
will result in the Fund's shares trading at a price which is
equal to its NAV. The Fund anticipates that the market price of
the Fund's shares will usually vary from NAV. The market price
of the Fund's shares will be determined, among other things, by
the relative demand for and supply of the Fund's shares in the
market, the Fund's investment performance, the Fund's dividends
and yield and investor perception of the Fund's overall
attractiveness as an investment as compared with other investment
alternatives. Nevertheless, the fact that the Fund's shares may
be the subject of repurchases or tender offers from time to time
may enhance its attractiveness to investors and thus reduce the
spread between market price and NAV that may otherwise exist.
Although the Board of Directors believes that share
repurchases and tenders generally would have a favorable effect
on the market price of the Fund's shares, it should be recognized
that the acquisition of shares of the Fund will decrease the
total assets of the Fund and therefore have the effect of
increasing the Fund's expense ratio. Furthermore, any interest
on borrowings to finance Fund shares from repurchase transactions
will reduce the Fund's net income.
Even if a tender offer has been made, it is the Board of
Directors' announced policy, which may be changed by the Board of
Directors, not to accept tenders or effect repurchases if
(1) such transactions, if consummated, would (a) result in the
delisting of the Fund's shares from the NYSE (the NYSE having
advised the Fund that it would consider delisting if the
aggregate market value of the Fund's outstanding publicly held
common stock is less than $5.0 million, the number of publicly
held shares of common stock falls below 600,000 or the number of
82
<PAGE>
round-lot holders falls below 1,200), (b) result in a violation
of applicable asset coverage requirements, (c) impair the Fund's
status as a regulated investment company under the Code (which
would make the Fund a taxable entity, causing the Fund's income
to be taxed at the corporate level in addition to the taxation of
stockholders who receive dividends from the Fund); (2) the Fund
would not be able to liquidate portfolio securities in an orderly
manner and consistent with the Fund's investment objective and
policies in order to repurchase shares; or (3) there is, in the
Board's judgment, any (a) material legal action or proceeding
instituted or threatened challenging, in the Board's judgment,
such transactions or otherwise materially adversely affecting the
Fund, (b) suspension of or limitation on prices for trading
securities generally on the NYSE or any foreign exchange on which
portfolio securities of the Fund are traded, (c) declaration of a
banking moratorium by federal, state or foreign authorities or
any suspension of payment by banks in the United States, New York
State or foreign countries in which the Fund invests,
(d) limitation affecting the Fund or issuers of its portfolio
securities imposed by federal, state or foreign authorities on
the extension of credit by lending institutions or on the
exchange of foreign currency, (e) commencement of war, armed
hostilities or other international or national calamity directly
or indirectly involving the United States or other countries in
which the Fund invests, or (f) other event or condition which
would have a material adverse effect on the Fund or its
stockholders if shares were repurchased. The Board of Directors
may modify these conditions from time to time in light of
experience and may determine to make a tender offer even if one
of the above conditions exists.
Any tender offer made by the Fund will be at a price
equal to the NAV of the shares as of the close of business on the
date the offer ends. Each offering document will contain such
information as is required under the federal securities law.
Each offering document will also disclose the federal income tax
consequences of the Fund's repurchase of shares pursuant to the
tender offer. When a tender offer is authorized to be made by
the Board a stockholder wishing to accept the offer will be
required to tender all (but not less than all) of their shares.
The Fund will purchase shares tendered by a stockholder at any
time during the period of the tender offer in accordance with the
terms of the offer unless it determines to accept none of them
(based upon one of the conditions set forth above). Each person
tendering shares will be required to submit a check in an amount
not to exceed $25 payable to the Fund, which will be used to help
defray the costs associated with effecting the tender offer.
This fee will be imposed upon each tendering stockholder whose
tendered shares are purchased in the tender offer and will be
imposed regardless of the number of shares purchased. The Fund
expects the cost to the Fund of effecting a tender offer will be
83
<PAGE>
greater than the aggregate of all service charges received from
those who tender their shares. Costs associated with the tender
offer will be charged against capital of the Fund. During the
period of a tender offer, the Fund's stockholders will be able to
obtain the Fund's current NAV by use of a toll-free telephone
number.
Shares that have been purchased by the Fund will be
retired and will be authorized but unissued shares. The purchase
of shares by the Fund will reduce the Fund's net asset value.
The portfolio turnover rate of the Fund may or may not be
affected by the Fund's repurchase of shares pursuant to a tender
offer.
84
<PAGE>
DIVIDENDS AND DISTRIBUTIONS; DIVIDEND REINVESTMENT PLAN
The Fund has implemented a quarterly distribution policy
that distributes quarterly each year to stockholders (i) with
respect to each of the first three calendar quarters of the year,
an amount equal to 2.5% of the Fund's NAV determined as of the
beginning of the quarter, and (ii) with respect to the fourth
calendar quarter of each year, an amount equal to at least 2.5%
of the Fund's NAV as of the beginning of that quarter. If
distributions for any quarter exceed the Fund's net investment
income and net realized short-term capital gains, the difference
would be treated as distributed from net realized long-term
capital gains if sufficient and to the extent not sufficient from
other Fund assets as a return of capital. The reduction of the
Fund's assets by the amount of the excess will have the likely
effect of increasing the Fund's expense ratio. In order to make
distributions, the Fund may have to sell investments at an
inopportune time. The Fund's final distribution for each
calendar year will include remaining undistributed net investment
income, realized short-term capital gains, and realized long-term
capital gains, provided that if the Fund's undistributed net
investment income and net realized short-term and long-term
capital gains for the year exceeded the minimum required amount
for the previous quarters distributions as described above, the
Fund might choose not to distribute all or a portion of such
excess equal to the Fund's net realized long-term capital gains
for the year.
If, for any calendar year, for U.S. federal income tax
purposes, the total amount distributed exceeds the aggregate of
net investment income and net realized capital gains, the
difference, distributed from the Fund's assets, will generally be
treated as a tax-free return of capital (up to the amount of the
stockholder's tax basis in his shares). You are advised to
consult your own advisers with respect to the particular tax
consequences to you of these distributions. The Fund's Board of
Directors may change its distribution policy without stockholder
approval.
Under the Fund's Dividend Reinvestment Plan or plan, all
stockholders whose shares are registered in their own names will
have all distributions reinvested automatically in additional
shares of the Fund by The Bank of New York, as plan agent under
the plan, unless a stockholder elects to receive cash. An
election to receive cash may be revoked or reinstated at the
option of the stockholder. Stockholders whose shares are held in
the name of a broker or nominee will have distributions
reinvested automatically by the broker or nominee in additional
shares under the plan, unless the service is not provided by the
broker or nominee, or unless the stockholder elects to receive
distributions in cash. If the service is not available, such
85
<PAGE>
distributions will be paid in cash. Stockholders whose shares
are held in the name of a broker or nominee should contact the
broker or nominee for details. All distributions to investors
who elect not to participate (or whose broker or nominee elects
not to participate) in the plan, will be paid by check mailed
directly to the recordholder by the plan agent, as dividend
paying agent.
If the Board declares a dividend or capital gains
distribution payable either in Fund shares or in cash, as
stockholders may have elected, then nonparticipants in the plan
will receive cash and participants in the plan will receive the
equivalent in Fund shares valued at the lower of market price or
NAV. Whenever market price is equal to or exceeds NAV at the
time shares are valued for the purpose of determining the number
of shares equivalent to the cash dividend or capital gains
distribution, participants will be issued shares at the NAV most
recently determined as described above, but in no event less than
95% of the market price. If the NAV of Fund shares at such time
exceeds the market price of the shares at such time, or if the
Fund should declare a dividend or capital gains distribution
payable only in cash, the plan agent will buy Fund shares in the
open market, on the NYSE or elsewhere, for the participants'
accounts. If, before the plan agent has completed its purchases,
the market price exceeds the Fund's NAV, the average per share
purchase price paid by the plan agent may exceed the Fund's NAV,
resulting in the acquisition of fewer shares than if the dividend
or capital gains distribution had been paid in Fund shares issued
by the Fund. The plan agent will apply all cash received as a
dividend or capital gains distribution to purchase shares on the
open market as soon as practicable after the payment date of such
dividend or capital gains distribution, but in no event later
than 30 days after such date, except where necessary to comply
with applicable provisions of the federal securities laws.
The plan agent maintains all stockholder accounts in the
plan and furnishes written confirmations of all transactions in
such accounts, including information needed by stockholders for
personal and tax records. Fund shares in the account of each
plan participant are held by the plan agent in noncertificated
form in the name of the participant, and each participant's proxy
will include those shares purchased pursuant to the plan.
There is no charge to participants for reinvesting
dividends or capital gains distributions. The plan agent's fees
for handling the reinvestment of dividends and capital gains
distributions are paid by the Fund. There are no brokerage
charges with respect to shares issued directly by the Fund as a
result of dividends or capital gains distributions payable either
in stock or in cash. However, each participant is to pay a pro
rata share of brokerage commissions incurred with respect to the
86
<PAGE>
plan agent's open market purchases in connection with the
reinvestment of dividends and capital gains distributions.
The automatic reinvestment of dividends and capital
gains distributions does not relieve participants of any income
tax which may be payable on such dividends or distributions.
Experience under the plan may indicate that changes are
desirable. Accordingly, the Fund has reserved the right to amend
or terminate the plan as applied to any dividend or capital gains
distribution paid after written notice of the change sent to the
members of the plan at least 90 days before the record date for
such dividend or capital gains distribution. The plan also may
be amended or terminated by the plan agent, with the Fund's prior
written consent but, except when necessary or appropriate to
comply with applicable law or the rules or policies of a
regulatory body, only on at least 90 days' written notice to
participants in the plan. All correspondence concerning the plan
should be directed to The Bank of New York, 101 Barclay Street,
New York, New York 10286.
87
<PAGE>
FEDERAL TAXATION
The following summary addresses only principal United
States federal income tax considerations pertinent to the Fund
and to stockholders of the Fund who are United States citizens or
residents or United States corporations. The effects of federal
income tax law on stockholders who are nonresident alien
individuals, foreign corporations or other foreign persons may be
substantially different. The summary is based upon the advice of
counsel for the Fund and upon current law and interpretations
thereof. No confirmation has been obtained from the relevant tax
authorities. There is no assurance that the applicable laws and
interpretations will not change.
In view of the individual nature of tax consequences,
each stockholder is advised to consult the stockholder's own tax
adviser with respect to the specific consequences of being a
stockholder of the Fund, including the effect and applicability
of federal, state, local, foreign and other tax laws and the
effects of changes therein.
UNITED STATES FEDERAL INCOME TAXATION OF DIVIDENDS AND
DISTRIBUTIONS
General. The Fund intends for each taxable year to
qualify to be taxed as a "regulated investment company." To so
qualify, the Fund must, among other things, (i) derive at least
90% of its gross income in each taxable year from dividends,
interest, payments with respect to securities loans, gains from
the sale or other disposition of stock, securities or foreign
currency, or certain other income (including, but not limited to,
gains from options, futures and forwards contracts) derived with
respect to its business of investing in stock, securities or
currency; and (ii) diversify its holdings so that, at the end of
each quarter of its taxable year, the following two conditions
are met: (a) at least 50% of the value of the Fund's assets is
represented by cash, U.S. Government securities, securities of
other regulated investment companies and other securities, with
respect to which the Fund's investment is limited, in respect of
any one issuer, to an amount not greater than 5% of the Fund's
assets and 10% of the outstanding voting securities of such
issuer, and (b) not more than 25% of the value of the Fund's
assets is invested in securities of any one issuer (other than
U.S. Government securities or the securities of other regulated
investment companies) or of two or more issuers which the Fund
controls and which are determined to be engaged in the same or
similar trades or businesses or related trades or businesses.
If the Fund qualifies as a regulated investment company
for any taxable year and makes timely distributions to its
stockholders of 90% or more of its investment company taxable
88
<PAGE>
income for that year (calculated without regard to its net
capital gain, i.e., the excess of its net long-term capital gain
over its net short-term capital loss), it will not be subject to
federal income tax on the portion of its taxable income for the
year (including any net capital gain) that it distributes to
stockholders. If the Fund retains such taxable income, it will
be subject under current rates to federal income tax on the
amount retained at a maximum rate of 35%.
The Fund will also avoid the 4% federal excise tax that
would otherwise apply to certain undistributed income for a given
calendar year if it makes timely distributions to the
stockholders equal to at least the sum of (i) 98% of its ordinary
income for the calendar year, (ii) 98% of its capital gain net
income and foreign currency gains for the twelve-month period
ending on October 31 of that year; and (iii) any ordinary income
and capital gain net income from the preceding calendar year that
was not distributed during that year. For this purpose, income
or gain retained by the Fund that is subject to corporate income
tax will be considered to have been distributed by the Fund by
year-end. For federal income and excise tax purposes, dividends
declared and payable to stockholders of record as of a date in
October, November or December of a given year but actually paid
during the immediately following January will be treated as if
paid by the Fund on December 31 of that calendar year, and will
be taxable to these stockholders for the year declared, and not
for the year in which the stockholders actually receive the
dividend.
The Fund intends to make timely distributions of the
Fund's taxable income (including any net capital gain) so that
the Fund will not be subject to federal income or excise taxes.
However, exchange control or other regulations on the
repatriation of investment income, capital or the proceeds of
securities sales, if any exist or are enacted in the future, may
limit the Fund's ability to make distributions sufficient in
amount to avoid being subject to one or both of such federal
taxes.
If in any taxable year the Fund fails to qualify as a
regulated investment company, the Fund will be taxed in the same
manner as an ordinary corporation, and distributions to it
stockholders will not be deductible by the Fund in computing its
taxable income. In addition, in the event of failure to qualify,
the Fund's distributions, to the extent derived from the Fund's
current or accumulated earnings and profits, will constitute
dividends (eligible for the corporate dividends-received
deduction, subject to certain requirements) which are taxable to
stockholders as ordinary income, even though those distributions
might otherwise (at least in part) have been treated in the
stockholders' hands as long-term capital gains.
89
<PAGE>
If the Fund fails to qualify as a regulated investment
company for any year, it generally must pay out its earnings and
profits accumulated in that year less an interest charge payable
to the external Revenue Sources on 50% of such earnings and
profits before it can again qualify as a regulated investment
company.
Dividends and Distributions. Dividends of the Fund's
net ordinary income and distributions of any net realized short-
term capital gain will be taxable to stockholders as ordinary
income to the extent of the Fund's current and accumulated
earnings and profits for the year of the distribution period.
Distributions of net capital gain (i.e., the excess of net long-
term capital gain over net short-term capital loss) are taxable
as long-term capital gain, regardless of how long a stockholder
has held shares in the Fund. If, because of the Fund's
distribution policies, the amount of the distributions by the
Fund with respect to any calendar year exceed the sum of the
Fund's ordinary income and net realized gains for the year, the
amount of such excess will be treated as a nontaxable return of
capital to the stockholder to the extent of the stockholder's tax
basis in his shares in the Fund. The amount of any distributions
in excess of such tax basis will be taxed as capital gain or loss
assuming the stockholder holds such shares as a capital
asset.
Any dividend or distribution received by a stockholder
on shares of the Fund will have the effect of reducing the net
asset value of such shares by the amount of such dividend or
distribution. Furthermore, a dividend or distribution made
shortly after the purchase of such shares by a stockholder,
although in effect a return of capital to that particular
stockholder, would be taxable to the stockholder as described
above. Dividends are taxable in the manner discussed above
regardless of whether they are paid to the stockholder in cash or
are reinvested in additional shares of the Fund. The investment
objective of the Fund is such that only a small portion, if any,
of the Fund's distributions is expected to qualify for dividends-
received deduction for corporate stockholders.
After the end of the taxable year, the Fund will notify
stockholders of the federal income tax status of any
distributions made by the Fund to stockholders during such year.
A dividend or capital gains distribution with respect to
shares of the Fund held by a tax-deferred or qualified plan, such
as an individual retirement account, 403(b)(7) retirement plan or
corporate pension or profit-sharing plan, generally will not be
taxable to the plan. Distributions from such plans will be
taxable to individual participants under applicable tax rules
90
<PAGE>
without regard to the character of the income earned by the
qualified plan.
Sales and Redemptions. A stockholder will realize gain
or loss on the sale or redemption of Fund shares in an amount
equal to the difference between the stockholder's adjusted tax
basis in the shares sold or redeemed and the amount realized on
their disposition. Such gain or loss generally will be capital
gain or loss except in the case of dealers or certain financial
institutions. Such gain or loss will be long-term capital gain
or loss if the stockholder has held such shares for more than one
year at the time of the sale or redemption and short-term capital
gain or loss if the holding period is one year or less. If a
stockholder has held shares in the Fund for six months or less
and during that period has received a distribution of net capital
gain, any loss recognized by the stockholder on the sale of those
shares during the six-month period will be treated as a long-term
capital loss to the extent of the distribution. In determining
the holding period of such shares for this purpose, any period
during which a stockholder's risk of loss is offset by means of
options, short sales or similar transactions is not counted.
Any loss realized by a stockholder on a sale or exchange
of shares of the Fund will be disallowed to the extent the shares
disposed of are replaced within a period of 61 days beginning 30
days before and ending 30 days after the shares are sold or
exchanged. For this purpose, acquisitions pursuant to the
Dividend Reinvestment Plan would constitute a replacement if made
within the period. If disallowed, the loss will be reflected in
an upward adjustment to the tax basis of the shares acquired.
Foreign Taxes. Income received by the Fund also may be
subject to foreign income taxes, including withholding taxes. It
is not possible to determine the effective rate of foreign tax in
advance since the amount of the Fund's assets to be invested
within various countries is not known.
Backup Withholding. The Fund may be required to
withhold for federal income tax at the rate of 31% of all taxable
distributions payable to noncorporate stockholders who fail to
provide the Fund with their correct taxpayer identification
numbers or to make required certifications, or who have been
notified by the Internal Revenue Service that they are subject to
backup withholding. Corporate stockholders and certain other
stockholders specified in the Code are exempt from such backup
withholding. Backup withholding is not an additional tax; any
amounts so withheld may be credited against the stockholder's
federal income tax liability or refunded.
91
<PAGE>
UNITED STATES FEDERAL INCOME TAXATION OF THE FUND
The following discussion related to certain significant
United States federal income tax consequences to the Fund with
respect to the determination of its "investment company taxable
income" each year. This discussion assumes that the Fund will be
taxed as a regulated investment company for each of its taxable
years.
Currency Fluctuations, "Section 988" Gains or Losses.
Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time the Fund accrues
interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the
Fund actually collects such receivables or pays such liabilities
are treated as ordinary income or ordinary loss. Similarly,
gains or losses from the disposition of foreign currencies, from
the disposition of debt securities denominated in a foreign
currency, or from the disposition of a forward contract
denominated in a foreign currency, which are attributable to
fluctuations in the value of the foreign currency between the
date of acquisition of the asset and the date of disposition also
are treated as ordinary gain or loss. These gains or losses,
referred to under the Code as "section 988" gains or losses,
increase or decrease the amount of the Fund's investment company
taxable income available to be distributed to its stockholders as
ordinary income, rather than increasing or decreasing the amount
of the Fund's net capital gain. Because section 988 losses
reduce the amount of ordinary dividends the Fund will be allowed
to distribute for a taxable year, such section 988 losses may
result in all or a portion of prior dividend distributions for
such year being recharacterized as nontaxable return of capital
to stockholders, rather than as an ordinary dividend, reducing
each stockholder's basis in his Fund shares. If such
distributions exceed such stockholder's basis, such excess will
be treated as a gain from the sale of shares.
Options, Futures and Forward Contracts. Certain listed
options, regulated futures contracts, and forward foreign
currency contracts are considered "section 1256 contracts" for
federal income tax purposes. Section 1256 contracts held by the
Fund at the end of each taxable year will be "marked to market"
and treated for federal income tax purposes as though sold for
fair market value on the last business day of such taxable year.
Gain or loss realized by the Fund on section 1256 contracts other
than forward foreign currency contracts will be considered 60%
long-term and 40% short-term capital gain or loss. Gain or loss
realized by the Fund on forward foreign currency contracts
generally will be treated as section 988 gain or loss and will
therefore be characterized as ordinary income or loss and will
increase or decrease the amount of the Fund's net investment
92
<PAGE>
income available to be distributed to stockholders as ordinary
income, as described above. The Fund can elect to exempt its
section 1256 contracts which are part of a "mixed straddle" (as
described below) from the application of section 1256.
With respect to equity options or options traded over-
the-counter on certain foreign exchanges, gain or loss realized
by the Fund upon the lapse or sale of such options held by the
Fund will be either long-term or short-term capital gain or loss
depending upon the Fund's holding period with respect to such
option. However, gain or loss realized upon the lapse or closing
out of such options that are written by the Fund will be treated
as short-term capital gain or loss. In general, if the Fund
exercises an option, or an option that the Fund has written is
exercised, gain or loss on the option will not be separately
recognized but the premium received or paid will be included in
the calculation of gain or loss upon disposition of the property
underlying the option.
Gain or loss realized by the Fund on the lapse or sale
of put and call options on foreign currencies which are traded
over-the-counter or on certain foreign exchanges will be treated
as section 988 gain or loss and will therefore be characterized
as ordinary income or loss and will increase or decrease the
amount of the Fund's net investment income available to be
distributed to stockholders as ordinary income, as described
above. The amount of such gain or loss shall be determined by
subtracting the amount paid, if any, for or with respect to the
option (including any amount paid by the Fund upon termination of
an option written by the Fund) from the amount received, if any,
for or with respect to the option (including any amount received
by the Fund upon termination of an option held by the Fund). In
general, if the Fund exercises such an option on a foreign
currency, or such an option that the Fund has written is
exercised, gain or loss on the option will be recognized in the
same manner as if the Fund had sold the option (or paid another
person to assume the Fund's obligation to make delivery under the
option) on the date on which the option is exercised, for the
fair market value of the option. The foregoing rules will also
apply to other put and call options and which are traded over-
the-counter or on certain foreign exchanges to the extent gain or
loss with respect to such options is attributable to fluctuations
in foreign currency exchange rates.
Tax Straddles. Any option, futures contract, forward
foreign currency contract, currency swap, or other position
entered into or held by the Fund in conjunction with any other
position held by the Fund may constitute a "straddle" for federal
income tax purposes. A straddle of which at least one, but not
all, the positions are section 1256 contracts may constitute a
"mixed straddle." In general, straddles are subject to certain
93
<PAGE>
rules that may affect the character and timing of the Fund's
gains and losses with respect to straddle positions by requiring,
among other things, that (i) loss realized on disposition of one
position of a straddle not be recognized to the extent that the
Fund has unrealized gains with respect to the other position in
such straddle; (ii) the Fund's holding period in straddle
positions be suspended while the straddle exists (possibly
resulting in gain being treated as short-term capital gain rather
than long-term capital gain); (iii) losses recognized with
respect to certain straddle positions which are part of a mixed
straddle and which are non-section 1256 positions be treated as
60% long-term and 40% short-term capital loss; (iv) losses
recognized with respect to certain straddle positions which would
otherwise constitute short-term capital losses be treated as
long-term capital losses; and (v) the deduction of interest and
carrying charges attributable to certain straddle positions may
be deferred. The Treasury Department is authorized to issue
regulations providing for the proper treatment of a mixed
straddle where at least one position is ordinary and at least one
position is capital. No such regulations have yet been issued.
Various elections are available to the Fund which may mitigate
the effects of the straddle rules, particularly with respect to
mixed straddles. In general, the straddle rules described above
do not apply to any straddles held by the Fund all of the
offsetting positions of which consist of section 1256 contracts.
The Fund may be subject to other state and local taxes
than those discussed above. Also, distributions by the Fund may
be subject to additional state, local and foreign taxes depending
on each stockholder's particular circumstances.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The authorized capital stock of the Fund consists of
300,000,000 shares of common stock, $0.01 par value. As of the
date of this Prospectus, 2,515,754 shares are outstanding.
DESCRIPTION OF FUND SHARES
Each share has equal voting, dividend, distribution and
liquidation rights. The shares outstanding are, and the shares
offered hereby when issued will be, fully paid and nonassessable.
Stockholders are entitled to one vote per share. All voting
rights for the election of Directors are noncumulative, which
means that the holders of more than 50% of the shares can elect
100% of the Directors then nominated for election if they choose
to do so and, in that event, the holders of the remaining shares
will not be able to elect any Directors. The foregoing
description and the description under "Certain Anti-Takeover
94
<PAGE>
Provisions of the Articles of Incorporation and Bylaws" are
subject to the provisions contained in the Fund's Articles of
Incorporation and Bylaws.
CERTAIN ANTI-TAKEOVER PROVISIONS OF THE ARTICLES OF INCORPORATION
AND BYLAWS
The Fund presently has provisions in its Articles of
Incorporation and Bylaws (together, the "Charter Documents") that
are intended to limit (i) the ability of other entities or
persons to acquire control of the Fund, (ii) the Fund's freedom
to engage in certain transactions and (iii) the ability of the
Fund's Directors or stockholders to amend the Charter Documents
or effect changes in the Fund's management. These provisions of
the Charter Document may be regarded as "anti-takeover"
provisions. At the first annual meeting of stockholders, the
Board of Directors was divided into three classes. Upon the
expiration of the term of office of each class the Directors in
such class will be elected for a term of three years to succeed
the Directors whose terms of office expire. Accordingly, only
those Directors in one class may be changed in any one year, and
it would require two years to change a majority of the Board of
Directors (although under Maryland law procedures are available
for the removal of Directors for cause even if they are not then
standing for re-elections, and under Securities and Exchange
Commission regulations, procedures are available for including
stockholder proposals in management's annual proxy statement).
Such system of electing Directors is intended to have the effect
of maintaining the continuity of management and, thus, make it
more difficult for the Fund's stockholders to change the majority
of the Directors. A director may be removed from office only for
cause and by a vote of at least 75% of the outstanding shares of
the Fund entitled to vote for the election of Directors. Under
Maryland law and the Fund's Articles of Incorporation, the
affirmative vote of the holders of a majority of the votes
entitled to be cast is required for the consolidation of the Fund
with another corporation, a merger of the Fund with or into
another corporation (except for certain mergers in which the Fund
is the successor), a statutory share exchange in which the Fund
is not the successor, a sale or transfer of all or substantially
all of the Fund's assets and any amendment to the Fund's Articles
of Incorporation (except for amendments to certain provisions of
the Articles of Incorporation that require the affirmative vote
of 75% of the votes entitled to be cast). The affirmative vote
of 75% (which is higher than that required under Maryland law or
the 1940 Act) of the outstanding shares of the Fund is required
to authorize the liquidation or dissolution of the Fund in the
absence of approval of the liquidation or dissolution by a
majority of the Continuing Directors of the Fund (defined for
this purpose as those Directors who are either members of the
Board of Directors on the date of closing of the initial public
95
<PAGE>
offering of the shares of the Fund or subsequently become
Directors and whose elections are approved by a majority of the
Continuing Directors then on the Board. If a majority of the
Continuing Directors approve the liquidation or dissolution of
the Fund, then such action shall require an affirmative vote of a
majority of the outstanding shares of the Fund. In addition, the
affirmative vote of 75% (which is higher than that required under
Maryland law or the 1940 Act) of the outstanding shares of the
Fund is required generally to authorize any of the following
transactions involving a corporation, person or entity, that is
directly or indirectly through affiliates, the beneficial owner
of more than 5% of the outstanding shares of the Fund (a
"Principal Stockholder"), or to amend the provisions of the
Articles of Incorporation relating to such transactions:
i. merger, consolidation or statutory share exchange of the
Fund with or into any Principal Stockholder;
ii. issuance of any securities of the Fund to any Principal
Stockholder for cash except upon (a) reinvestment of
dividends pursuant to a dividend reinvestment plan,
(b) issuance of any securities pursuant to the exercise
of any stock subscription rights distributed by the Fund
or (c) a public offering by the Fund registered under
the Securities Act;
iii. sale, lease or exchange of all or any substantial part
of the assets of the Fund to any Principal Stockholder
(except assets having an aggregate fair market value of
less than $1,000,000);
iv. sale, lease or exchange to the Fund, in exchange for
securities of the Fund, of any assets of any Principal
Stockholder (except assets having an aggregate fair
market value of less than $1,000,000).
However, such vote would not be required when, under
certain conditions, the Continuing Directors approve the
transactions described in (i)-(iv) above, although in certain
cases involving merger, consolidation or statutory share exchange
or sale of all or substantially all of the Fund's assets, the
affirmative vote of a majority of the outstanding shares of the
Fund would nevertheless be required. The affirmative vote of 75%
(which is higher than that under Maryland law or the 1940 Act) of
the outstanding shares of the Fund is required to convert the
Fund to an open-end investment company and to amend the Fund's
Articles of Incorporation to effect any such conversion. For the
full text of these provisions, reference is made to the Articles
of Incorporation and Bylaws of the Fund, on file with the
Securities and Exchange Commission.
96
<PAGE>
The provisions of the Charter Documents described above
could have the effect of depriving the owners of shares of the
Fund of opportunities to sell their shares at a premium over
prevailing market prices by discouraging a third party from
seeking to obtain control of the Fund in a tender offer or
similar transaction. See "Tender Offers and Repurchase of
Shares." The overall effect of these provisions is to render
more difficult the accomplishment of a merger or the assumption
of control by a Principal Stockholder. The Board of Directors of
the Fund has considered the foregoing anti-takeover provisions
and concluded that they are in the best interests of the Fund and
its stockholders.
The Fund is required by the rules of the NYSE to hold
annual meetings of stockholders. The most recent annual meeting
of stockholders was held on March 9, 1999. The next annual
meeting of stockholders will be held between March 9, 2000 and
April 9, 2000.
CUSTODIAN, TRANSFER AGENT, DIVIDEND
DISBURSING AGENT, REGISTRAR AND
SHAREHOLDER SERVICING AGENT
The Bank of New York, 101 Barclay Street, New York, New
York 10286, acts as the Fund's custodian, transfer agent,
dividend paying agent and registrar. The Fund's portfolio of
securities and cash, when invested in securities of foreign
countries, will be held by its subcustodians, subject to approval
by the Board of Directors of the Fund as and when appropriate in
accordance with the rules of the SEC.
The Dealer Manager also acts as shareholder servicing
agent for the Fund and (i) provides services and makes efforts to
publicize the Fund on an ongoing basis to investors, including
both clients of the shareholder servicing agent and other
investors, and reminds investors, and prospective investors of
the Fund's features and benefits, including communications with
clients and their representatives, periodic seminars or
conference calls, internal and external publications,
presentations at retail system meetings, responses to questions
from potential or current stockholders and specific stockholder
contact where appropriate; (ii) makes available to brokers and
investors market price, NAV and yield information regarding the
Fund for the purpose of helping to maintain the visibility of the
Fund to brokers and clients (including investors and prospective
investors in the Fund); and (iii) provides financial advice and
consultation at the request of the Fund with respect of the Fund
with respect to consideration by the Board of Directors of the
Fund of share repurchases or tender offers. For these services,
the Fund pays the shareholder servicing agent a fee equal on an
annual basis to .10 of 1% of the Fund's average weekly net assets
97
<PAGE>
and payable at the end of each calendar month. The shareholder
servicing agreement by its terms continues until September 30,
1999 and thereafter for successive one year periods unless
terminated by either party upon written notice 60 days prior to
the anniversary date thereof. In this regard, as part of its
ongoing oversight responsibilities, the Board of Directors will
monitor the performance of the shareholder servicing agent and
the continuing appropriateness of that agreement.
LEGAL MATTERS
The validity of the shares offered hereby will be passed
upon for the Fund by Seward & Kissel LLP, New York, New York.
Certain matters will be passed upon for the Dealer Manager by
Rogers & Wells LLP, New York, New York. Seward & Kissel will
rely upon the opinion of Venable, Baetjer and Howard, LLP for
matters relating to Maryland law.
REPORTS TO STOCKHOLDERS
The Fund will send semi-annual and audited annual
reports to its stockholders, including a list of investments
held. A copy of the Fund's annual report for the fiscal year
ended September 30, 1998 was mailed to stockholders on November
30, 1998 and its semi-annual report for the six months ended
March 31, 1999 was mailed to stockholders on May 28, 1999.
EXPERTS
The audited Financial Statements included in this
Prospectus have been audited by PricewaterhouseCoopers LLP,
independent public accountants, as indicated in their reports and
are included in reliance upon the authority of the firm as
experts in giving the report. The address of
PricewaterhouseCoopers LLP is 1177 Avenue of the Americas, New
York, NY 10036-2798.
FURTHER INFORMATION
On occasion, the Fund may compare its performance to
performance data published by Lipper Analytical Services, Inc.,
Morningstar Publications, Inc. or other industry publications.
As with other performance data, performance comparisons should
not be considered indicative of the Fund's relative performance
for any future period.
The Fund has filed with the SEC, Washington, D.C. 20549,
a registration statement under the Securities Act relating to the
shares offered by this Prospectus. Further information
concerning these shares and the Fund may be found in that
registration statement on file with the SEC, of which this
98
<PAGE>
Prospectus constitutes a part. The Fund also files reports and
other information with the SEC. The registration statements and
these reports and other information can be inspected, without
charge, and copied, for a fee, at the public reference facilities
maintained by the SEC at 450 5th Street, Washington, D.C. 20549.
The Fund's filings are also available to the public on the SEC's
internet site (http://www.sec.gov). The reports and other
information concerning the Fund may also be inspected at the
offices of the NYSE.
No one has been authorized to give any information or to
make any representation other than those contained in this
Prospectus in connection with this offer. If information is
given or other representations are made, such information or
representations must not be relied upon since neither was
authorized by the Fund, the Adviser, or the Dealer Manager. This
Prospectus does not constitute an offer to sell or the
solicitation of any offer to buy any security other than the
Fund's shares, as described in this Prospectus. This Prospectus
also does not constitute an offer to sell or a solicitation of
any offer to buy the Fund's shares, as described in this
Prospectus, by anyone in any state in which the person making
such offer or solicitation is not qualified to do so, or to any
such person to whom it is illegal to make such offer or
solicitation. The information in this Prospectus may no longer
be correct after the date on the Prospectus. However, if any
material change occurs during the period in which this Prospectus
is legally required to be delivered, the Prospectus will be
amended or supplemented accordingly.
99
<PAGE>
FINANCIAL STATEMENTS
<PAGE>
SEMI-ANNUAL REPORT
MARCH 31, 1999
ALLIANCE CAPITAL
<PAGE>
PORTFOLIO OF INVESTMENTS
MARCH 31, 1999 (UNAUDITED) ALLIANCE ALL-MARKET ADVANTAGE FUND
- ----------------------------------------------------------------
SHARES VALUE
- ----------------------------------------------------------------
COMMON STOCKS-77.4%
TECHNOLOGY-35.7%
COMMUNICATION EQUIPMENT-13.4%
EMC Corp.(a) 37,700 $ 4,816,175
Lucent Technologies, Inc. 13,000 1,400,750
Nokia Corp. ADR (Finland) 62,000 9,656,500
------------
15,873,425
COMPUTER HARDWARE-7.6%
Dell Computer Corp.(b) 190,000 7,766,250
Sun Microsystems, Inc. (a)(b) 10,300 1,286,856
------------
9,053,106
COMPUTER SOFTWARE-4.2%
Microsoft Corp.(a)(b) 55,200 4,947,300
INTERNET CONTENT-0.1%
Ziff-Davis, Inc. (b) 2,500 90,000
NETWORKING SOFTWARE-6.4%
Ascend Communications, Inc. (b) 8,000 669,500
Cisco Systems, Inc.(a)(b) 63,050 6,907,916
------------
7,577,416
SEMICONDUCTOR COMPONENTS-4.0%
Intel Corp. (a) 39,500 4,695,562
------------
42,236,809
HEALTHCARE-15.5%
DRUGS-9.8%
Bristol-Myers Squibb Co. (a) 36,000 2,315,250
Schering-Plough Corp. (a) 85,000 4,701,563
Pfizer, Inc. (a) 33,500 4,648,125
------------
11,664,938
MEDICAL PRODUCTS-5.7%
IMS Health, Inc. 30,000 993,750
Mckesson HBOC, Inc. 72,522 4,786,452
Medtronic, Inc. (a) 13,400 961,450
------------
6,741,652
------------
3
<PAGE>
18,406,590
CONSUMER SERVICES-15.4%
BROADCASTING & CABLE-6.9%
AirTouch Communications,
Inc.(a)(b) 30,000 2,898,750
AT&T Corp - Liberty Media
Group Cl. A 61,500 3,236,437
Chancellor Media Corp.
Cl. A (a)(b) 43,200 2,035,800
------------
8,170,987
RETAIL - GENERAL MERCHANDISE-8.5%
Dayton Hudson Corp. (a) 20,000 1,332,500
Home Depot, Inc. (a) 105,000 6,536,250
Kohl's Corp. (a) 30,400 2,154,600
------------
10,023,350
------------
18,194,337
FINANCE-7.1%
BANKING - REGIONAL-0.6%
Wells Fargo Co. 19,500 683,719
BROKERAGE & MONEY MANAGEMENT-1.2%
Morgan Stanley, Dean Witter
& Co. (a) 14,000 1,399,125
INSURANCE-0.8%
Citigroup, Inc. 16,000 1,022,000
MORTGAGE BANKING-1.6%
Fannie Mae Corp. 27,000 1,869,750
4
<PAGE>
PORTFOLIO OF INVESTMENTS
(CONTINUED) ALLIANCE ALL-MARKET ADVANTAGE FUND
- ----------------------------------------------------------------
SHARES OR
CONTRACTS (C) VALUE
- ----------------------------------------------------------------
MISCELLANEOUS-2.9%
MBNA Corp. (a) 143,225 $ 3,419,497
------------
8,394,091
MULTI-INDUSTRY-1.5%
CAPITAL GOODS-1.5%
Tyco International, Ltd. (a) 25,200 1,808,100
CONSUMER GOODS-1.1%
ELECTRICAL EQUIPMENT-0.4%
General Electric Co. 5,000 553,125
MISCELLANEOUS-0.7%
United Technologies Corp. (a) 6,000 812,625
------------
1,365,750
UTILITIES-1.1%
TELEPHONE UTILITY-1.1%
MCI WorldCom, Inc. (b) 14,300 1,266,444
Total Common Stocks
(cost $43,169,880) 1,311,997 91,672,121
CALL OPTIONS PURCHASED-25.1%(B)
AirTouch Communications, Inc.
expiring Jul '99 @ $10 500 2,365,625
expiring Jan '00 @ $20 150 1,162,500
Associates First Capital
Corp. Cl. A
expiring Jan '00 @ $20 300 768,750
expiring Jan '00 @ $22.50 300 710,625
BankAmerica Corp.
expiring Jan '00 @ $40 305 972,188
Bristol-Myers Squibb Co.
expiring Jan '00 @ $30 200 707,500
expiring Jan '00 @ $40 100 260,000
expiring Jan '01 @ $35 100 321,250
Citigroup, Inc.
expiring Jan '00 @ $35 150 451,875
Colgate-Palmolive Co.
expiring Jan '00 @ $60 75 258,750
Dayton Hudson Corp.
expiring Jan '00 @ $27.50 200 800,000
Fannie Mae Corp.
expiring Jan '00 @ $35 300 705,000
General Electric Co.
expiring Jan '00 @ $50 100 620,000
Home Depot, Inc.
5
<PAGE>
expiring Jan '00 @ $17.50 250 1,128,125
IBM Corp.
expiring Jan '00 @ $90 80 730,000
Kroger Co.
expiring Jan '00 @ $30 150 468,750
Lowe's Cos., Inc.
expiring Jan '00 @ $30 300 967,500
expiring Jan '00 @ $37.50 100 256,250
MBNA Corp.
expiring Jan '00 @ $15 1,230 1,199,250
MCI WorldCom, Inc.
expiring Jan '00 @ $25 190 1,230,250
expiring Jan '00 @ $40 90 473,625
expiring Jan '00 @ $50 75 311,250
Merck & Co., Inc.
expiring Jan '00 @ $40 150 618,750
Merrill Lynch & Co., Inc.
expiring Jan '00 @ $50 135 555,187
Morgan Stanley, Dean Witter & Co.
expiring Jan. '00 @ $50 100 518,750
Nokia Corp. (ADR)
expiring Jan '00 @ $60 70 687,750
expiring Jan '00 @ $70 80 708,000
Pfizer, Inc.
expiring Jan '00 @ $70 100 716,250
Philip Morris Cos., Inc.
expiring Jan '00 @ $30 300 232,500
expiring Jan '00 @ $35 200 87,500
Time Warner, Inc.
expiring Jan '00 @ $32.50 150 598,125
expiring Jan '00 @ $35 75 280,312
Tyco International, Ltd.
expiring Jan '00 @ $30 640 2,776,000
expiring Jan '00 @ $40 200 700,000
6
<PAGE>
ALLIANCE ALL-MARKET ADVANTAGE FUND
- ----------------------------------------------------------------
CONTRACTS (C) OR
PRINCIPAL
AMOUNT
(000) VALUE
- ----------------------------------------------------------------
United Technologies Corp.
expiring Jan '00 @ $70 210 1,425,375
Wal-Mart Stores, Inc.
expiring Jan '00 @ $30 50 316,250
expiring Jan '00 @ $35 350 2,058,438
expiring Jan '00 @ $40 50 269,375
Waste Management
expiring Jan '00 @ $30 195 318,094
Total Call Options Purchased
(cost $22,665,670) 29,735,719
PUT OPTIONS PURCHASED-0.5%(B)
Standard & Poor's 500 Index
expiring Apr '99 @ $1,350 10 61,000
expiring Apr '99 @ $1,390 10 76,000
expiring Apr '99 @ $1,400 30 344,250
expiring Jun '99 @ $1,450 5 80,062
Total Put Options Purchased
(cost $527,486) 561,312
SHORT TERM INVESTMENT-0.3%
COMMERCIAL PAPER-0.3%
General Electric Capital Corp.
5.03%, 4/01/99
(amortized cost $401,000) $401 401,000
TOTAL INVESTMENTS-103.3%
(cost $66,764,036)
122,370,152
CALL OPTIONS WRITTEN-(0.8%)(B)
Chicago Board Options Exchange
NASDAQ 100 Index
expiring Apr '99 @ $1,980 10 (183,000)
expiring Apr '99 @ $2,020 10 (127,875)
expiring Apr '99 @ $2,040 20 (197,000)
expiring Apr '99 @ $2,060 20 (184,250)
Cisco Systems, Inc.
expiring Apr '99 @ $105 70 (44,625)
Microsoft Corp.
expiring Apr '99 @ $82.50 70 (54,250)
expiring Apr '99 @ $87.50 70 (28,000)
Standard & Poor's 500 Index
expiring Apr '99 @ $1,275 10 (37,500)
expiring Apr '99 @ $1,300 35 (51,625)
Total Call Options Written
(premiums received $762,814) (908,125)
TOTAL INVESTMENTS, NET OF OUTSTANDING
7
<PAGE>
CALL OPTIONS WRITTEN-102.5%
(cost $66,001,222) 121,462,027
Other assets less liabilities-(2.5%) (2,990,855)
NET ASSETS-100% $ 118,471,172
(a) Security, or a portion thereof, has been segregated to
collateralize open options written. This collateral has a total
market value of approximately $23,824,041.
(b) Non-income producing.
(c) One contract relates to 100 shares unless otherwise
indicated.
Glossary:
ADR - American Depositary Receipt.
See notes to financial statements.
8
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
(UNAUDITED) ALLIANCE ALL-MARKET ADVANTAGE FUND
- ----------------------------------------------------------------
ASSETS
Investments in securities, at value
(cost $66,764,036) $ 122,370,152
Cash 183,952
Receivable for investment securities sold 268,691
Dividends receivable 91,099
Deferred organization expenses and other assets 12,397
Total assets 122,926,291
LIABILITIES
Outstanding call options written, at value
(premiums received $762,814) 908,125
Dividend payable 2,688,838
Payable for investment securities purchased 489,244
Advisory fee payable 167,698
Administration fee payable 24,657
Accrued expenses and other liabilities 176,557
Total liabilities 4,455,119
NET ASSETS $ 118,471,172
COMPOSITION OF NET ASSETS
Capital stock, at par $ 25,157
Additional paid-in capital 49,741,734
Undistributed net investment loss (5,740,917)
Accumulated net realized gain on
investment transactions 18,984,393
Net unrealized appreciation of
investments and options written 55,460,805
$ 118,471,172
NET ASSET VALUE PER SHARE (based on 2,515,686 shares
outstanding) $47.09
See notes to financial statements.
9
<PAGE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MARCH 31, 1999 (UNAUDITED)
ALLIANCE ALL-MARKET ADVANTAGE FUND
- ----------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 214,044
Interest 17,641 $ 231,685
EXPENSES
Advisory fee 884,555
Administrative 128,673
Custodian 74,141
Audit and legal 52,151
Shareholder servicing 51,470
Printing 33,525
Directors' fees and expenses 24,000
Registration 4,720
Transfer agency 2,824
Amortization of organization
expenses 1,995
Miscellaneous 3,310
Total expenses before interest 1.261.364
Interest expense on short sales 2,223
Total expenses 1,263,587
Net investment loss (1,031,902)
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS,SHORT SALES AND OPTIONS WRITTEN
Net realized gain on long transactions 21,532,569
Net realized gain on short sale transactions 33,773
Net realized loss on written option
transactions (668,578)
Net change in unrealized appreciation of
investments and options written 21,491,287
Net gain on investments 42,389,051
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 41,357,149
See notes to financial statements.
10
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
ALLIANCE ALL-MARKET ADVANTAGE FUND
- ----------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
MARCH 31, 1999 SEPTEMBER 30,
(UNAUDITED) 1998
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $ (1,031,902) $ (1,932,651)
Net realized gain on
investment, short
sale and written option
transactions 20,897,764 8,866,477
Net change in unrealized
appreciation of
investments and options written 21,491,287 2,937,240
Net increase in net assets from
operations 41,357,149 9,871,066
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net realized gain on
investments (4,709,015) (12,924,008)
COMMON STOCK TRANSACTIONS
Reinvestment of dividends resulting in
issuance of common stock 271,019 127,507
Total increase (decrease) 36,919,153 (2,925,435)
NET ASSETS
Beginning of year 81,552,019 84,477,454
End of period $ 118,471,172 $ 81,552,019
See notes to financial statements.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999 (UNAUDITED)
ALLIANCE ALL-MARKET ADVANTAGE FUND
- ----------------------------------------------------------------
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance All-Market Advantage Fund, Inc. (the "Fund") was
incorporated under the laws of the state of Maryland on August
16, 1994 and is registered under the Investment Company Act of
1940 as a non-diversified, closed-end management investment
company. The financial statements have been prepared in
conformity with generally accepted accounting principles which
require management to make certain estimates and assumptions that
affect the reported amounts of assets and liabilities in the
financial statements and amounts of income and expenses during
the reporting period. Actual results could differ from those
estimates. The following is a summary of significant accounting
policies followed by the Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange or
on a foreign securities exchange (other than foreign securities
exchanges whose operations are similar to those of the United
States over-the-counter market) are generally valued at the last
reported sales price or if no sale occurred, at the mean of the
closing bid and asked prices on that day. Readily marketable
securities traded in the over-the-counter market, securities
listed on a foreign securities exchange whose operations are
similar to the U.S. over-the-counter market, and securities
listed on a national securities exchange whose primary market is
believed to be over-the-counter, are valued at the mean of the
current bid and asked prices. U.S. government and fixed income
securities which mature in 60 days or less are valued at
amortized cost, unless this method does not represent fair value.
Securities for which current market quotations are not readily
available are valued at their fair value as determined in good
faith by, or in accordance with procedures adopted by, the Board
of Directors. Fixed income securities may be valued on the basis
of prices obtained from a pricing service when such prices are
believed to reflect the fair market value of such securities.
2. TAXES
It is the Fund's policy to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all of its investment company taxable income and net
realized gains, if applicable, to shareholders. Therefore, no
provision for federal income or excise taxes is required.
12
<PAGE>
3. ORGANIZATION EXPENSES
Organization expenses of approximately $20,000 have been deferred
and are being amortized on a straight-line basis through
November, 1999.
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Dividend income (or expense on securities sold short) is recorded
on the ex-dividend date. Investment transactions are accounted
for on the date securities are purchased or sold. Investment
gains and losses are determined on the identified cost basis.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the
ex-dividend date. Income and capital gains distributions are
determined in accordance with federal tax regulations and may
differ from those determined in accordance with generally
accepted accounting principles. To the extent these differences
are permanent, such amounts are reclassified within the capital
accounts based on their federal tax basis treatment; temporary
differences do not require such reclassification.
NOTE B: ADVISORY, ADMINISTRATIVE FEES AND OTHER AFFILIATED
TRANSACTIONS Under the terms of an Investment Advisory Agreement,
the Fund pays Alliance Capital Management L.P. (the "Investment
Adviser") a monthly fee at an annualized rate of 1.50% of the
Fund's average weekly net assets (the "Basic Fee") and an
adjustment to the Basic Fee based upon the investment performance
of the Fund in relation to the investment record of the Russell
1000 Growth Index for certain prescribed periods. During the six
months ended March 31, 1999, the fee as adjusted, amounted to
1.73% of the Fund's average net assets.
Under the terms of an Administrative Agreement, the Fund pays its
Administrator, Alliance Capital Management L.P., a monthly fee
equal to the annualized rate of .25 of 1% of the Fund's average
weekly net assets. The Administrator provides administrative
functions to the Fund as well as other clerical services. The
Administrator also prepares financial and regulatory reports for
the Fund.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE ALL-MARKET ADVANTAGE FUND
- ----------------------------------------------------------------
Under the terms of a Shareholder Inquiry Agency Agreement with
Alliance Fund Services, Inc. ("AFS"), an affiliate of the
Investment Adviser, the Fund reimburses AFS for costs relating to
servicing phone inquiries for the Fund. During the six months
ended March 31, 1999, there was no reimbursement paid to AFS.
Under terms of a Shareholder Servicing Agreement, the Fund pays
its Shareholder Servicing Agent, Paine Webber Inc. a quarterly
fee equal to the annualized rate of .10 of 1% of the Fund's
average weekly net assets.
Brokerage commissions paid on investment transactions for the six
months ended March 31, 1999 amounted to $121,209, none of which
was paid to brokers utilizing the services of the Pershing
Division of Donaldson, Lufkin & Jenrette Securities Corp., an
affiliate of the Adviser.
NOTE C: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-
term investments, short-term options, and U.S. government
securities) aggregated $58,573,860 and $71,963,350, respectively,
for the six months ended March 31, 1999. There were no purchases
or sales of U.S. government or government agency obligations for
the six months ended March 31, 1999.
At March 31, 1999, the cost of investments for federal income tax
purposes was substantially the same as the cost for financial
reporting purposes. Accordingly, gross unrealized appreciation of
investments was $57,453,728 and gross unrealized depreciation of
investments was $1,847,612 resulting in net unrealized
appreciation of $55,606,116.
1. OPTIONS TRANSACTIONS
The Fund purchases and writes (sells) options on market indices
and covered put and call options on U.S. securities that are
traded on U.S. securities exchanges and over-the-counter markets.
The risk associated with purchasing an option is that the Fund
pays a premium whether or not the option is exercised.
Additionally, the Fund bears the risk of loss of the premium and
any change in market value should the counterparty not perform
under the contract. Put and call options purchased are accounted
for in the same manner as portfolio securities. The cost of
securities acquired through the exercise of call options is
increased by premiums paid. The proceeds from securities sold
through the exercise of put options are decreased by the premiums
paid.
14
<PAGE>
When the Fund writes an option, the premium received by the Fund
is recorded as a liability and is subsequently adjusted to the
current market value of the option written.
Premiums received from writing options which expire unexercised
are recorded by the Fund on the expiration date as realized gains
from option transactions. The difference between the premium and
the amount paid on effecting a closing purchase transaction,
including brokerage commissions, is also treated as a realized
gain, or if the premium is less than the amount paid for the
closing purchase transaction, as a realized loss. If a written
call option is exercised, the premium is added to the proceeds
from the sale of the underlying security in determining whether
the Fund has realized a gain or loss. If a written put option is
exercised, the premium reduces the cost basis of the security
purchased by the Fund. In writing covered options, the Fund bears
the market risk of an unfavorable change in the price of the
security underlying the written option. Exercise of an option
written by the Fund could result in the Fund selling or buying a
security at a price different from the current market value.
Losses from written market index options may be unlimited.
Transactions in options written for the six months ended March
31, 1999 were as follows:
NUMBER PREMIUMS
OF CONTRACTS RECEIVED
------------ ----------
Options outstanding at
beginning of year 885 $ 1,306,240
Options written 3,460 6,301,198
Options terminated in closing purchase
transactions (4,030) (6,844,624)
Options outstanding at
March 31, 1999 315 $ 762,814
2. SECURITIES SOLD SHORT
The Fund may sell securities short. A short sale is a transaction
in which the Fund sells securities it does not own, but has
borrowed, in anticipation of a decline in the market price of the
securities. The Fund is obligated to replace the borrowed
securities at their market price at the time of replacement. The
Fund's obligation to replace the securities borrowed in
connection with a short sale will be fully secured by collateral
deposited with the broker. In addition, the Fund will consider
the short sale to be a borrowing by the Fund that is subject to
the asset coverage requirements of the 1940 Act. Short sales by
the Fund involve certain risks and special considerations.
Possible losses from short sales differ from losses that could be
incurred from a purchase of a security because losses from short
sales may be unlimited, whereas losses from purchases can not
15
<PAGE>
exceed the total amount invested. The Fund is currently paying an
interest expense of 5.59% to the prospective brokers on the
market value of the short sales.
NOTE D: CAPITAL STOCK
There are 300,000,000 shares of $.01 par value common stock
authorized. Of the 2,515,686 shares outstanding at March 31,
1999, the Investment Adviser owned 5,000 shares. During the six
months ended March 31, 1999, the Fund issued 7,669 shares in
connection with the Fund's dividend reinvestment plan.
NOTE E: YEAR 2000
Many computer systems and applications in use today process
transactions using two-digit date fields for the year of the
transaction, rather than the full four digits. If these systems
are not modified or replaced, transactions occurring after 1999
could be processed as year "1900," which could result in
processing inaccuracies and computer system failures. This is
commonly known as the year 2000 problem. Should any of the
computer systems employed by the Fund's major service providers
fail to process Year 2000 related information properly, that
could have a significant negative impact on the Fund's operations
and the services that are provided to the Fund's shareholders. In
addition, to the extent that the operations of issuers of
securities held by the Fund are impaired by the Year 2000
problem, or prices of securities held by the Fund decline as a
result of real or perceived problems relating to the Year 2000,
the value of the Fund's shares may be materially affected.
With respect to the Year 2000, the Fund has been advised that
Alliance, the Fund's Investment Manager, began to address the
year 2000 issue several years ago in connection with the
replacement or upgrading of certain computer systems and
applications. During 1997, Alliance began a formal Year 2000
initiative, which established a structured and coordinated
process to deal with the Year 2000 issues. Alliance reports that
it has completed its assessment of the Year 2000 issues on its
domestic and international computer systems and applications.
Currently, management of Alliance expects that the required
modifications for the majority of its significant systems and
applications that will be in use on January 1, 2000, will be
completed and tested in early 1999. Full integration testing of
these systems and testing of interfaces with third-party
suppliers will continue through 1999. At this time, management of
Alliance believes that the costs associated with resolving this
issue will not have a material adverse effect on its operations
or on its ability to provide the level of services it currently
provides to the Fund.
The Fund and Alliance have been advised by the Fund's Transfer
Agent and Custodian that they are also in the process of
reviewing their systems with the same goals. As of the date of
16
<PAGE>
this report, the Fund and Alliance have no reason to believe that
the Transfer Agent and Custodian will be unable to achieve these
goals.
17
<PAGE>
18
00250205.AS4
100
<PAGE>
PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
1. FINANCIAL STATEMENTS
Included in Part A:
Financial Highlights and Financial Statements
2. EXHIBITS.
(a) Articles of Incorporation1
(b) By-Laws2
(c) Not applicable.
(d)(1) Form of Subscription Certificate
(2) Form of Notice of Guaranteed Delivery
(3) DTC Participant Over-Subscription Certificate and
Nominee Holder Over-Subscription Certificate
(4) Subscription Rights Agency Agreement
(e) Dividend Reinvestment Plan3
(f) Not applicable
(g) Investment Advisory Agreement4
____________________
1. Previously filed as Exhibit A to the Registrant's
Registration Statement filed August 16, 1994 (File No. 33-
82896, 811-08702); filed electronically as an Exhibit
herewith in accordance with Regulation Sec. 232.102.
2. Previously filed as Exhibit B to the Registrant's
Registration Statement filed August 16, 1994 (File No. 33-
82896, 811-08702); filed electronically as an Exhibit
herewith in accordance with Regulation Sec. 232.102.
3. Previously filed as Exhibit E to Pre-Effective Amendment No.
1 of the Registrant's Registration Statement filed September
23, 1994 (File No. 33-82896, 811-08702); filed electronically
as an Exhibit herewith in accordance with Regulation Sec.
232.102.
4. Previously filed as Exhibit G to Pre-Effective Amendment No.
1 of the Registrant's Registration Statement filed September
(Footnote continued)
C-1
<PAGE>
(h)(1) Dealer Manager Agreement
(2) Soliciting Dealer Agreement
(i) Not applicable
(j) Custodian Agreement5
(k) (1) Transfer Agency Agreement6
(2) Administration Agreement7
(3) Shareholder Servicing Agreement8
(4) Shareholder Inquiry Agency Agreement
(5) Information Agent Agreement
(l) (1) Opinion and Consent of Seward & Kissel LLP (to be
filed by subsequent pre-effective amendment
____________________
(Footnote continued)
23, 1994 (File No. 33-82896, 811-08702); filed electronically
as an Exhibit herewith in accordance with Regulation Sec.
232.102.
5. Previously filed as Exhibit J to Pre-Effective Amendment No.
1 of the Registrant's Registration Statement filed September
23, 1994 (File No. 33-82896, 811-08702); filed electronically
as an Exhibit herewith in accordance with Regulation Sec.
232.102.
6. Previously filed as Exhibit K(1) to Pre-Effective Amendment
No. 1 of the Registrant's Registration Statement filed
September 23, 1994 (File No. 33-82896, 811-08702); filed
electronically as an Exhibit herewith in accordance with
Regulation Sec. 232.102.
7. Previously filed as Exhibit K(2) to Pre-Effective Amendment
No. 1 of the Registrant's Registration Statement filed
September 23, 1994 (File No. 33-82896, 811-08702); filed
electronically as an Exhibit herewith in accordance with
Regulation Sec. 232.102.
8. Previously filed as Exhibit K(3) to Pre-Effective Amendment
No. 1 of the Registrant's Registration Statement filed
September 23, 1994 (File No. 33-82896, 811-08702); filed
electronically as an Exhibit herewith in accordance with
Regulation Sec. 232.102.
C-2
<PAGE>
(2) Opinion and Consent of Venable, Baetjer and Howard,
LLP (to be filed by subsequent pre-effective
amendment)
(m) Not applicable
(n) Consent of Independent Auditors
(o) Not applicable
(p) Investment Representation Letter9
(q) Not applicable
(r) Financial Data Schedule
ITEM 25. MARKETING ARRANGEMENTS
See Dealer Manager Agreement filed as Exhibit (h)(1).
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC Registration fees $ 10,000
New York Stock Exchange listing fees $ 9,000
National Association of Securities Dealers, Inc. fees $ 6,000
Printing $100,000
Legal fees and expenses $200,000
Dealer Manager expenses $100,000
Auditing fees and expenses $ 20,000
Subscription Agent fees and expenses $ 25,000
Information Agent fees and expenses $ 25,000
Miscellaneous $ 5,000
Total $500,000
ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
Not applicable
____________________
9. Previously filed as Exhibit P to Pre-Effective Amendment No.
2 of the Registrant's Registration Statement filed October
28, 1994 (File No. 33-82896, 811-08702); filed electronically
as an Exhibit herewith in accordance with Regulation Sec.
232.102.
C-3
<PAGE>
ITEM 28. NUMBER OF HOLDERS OF SECURITIES (as of June 1, 1999)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Common Stock ($0.01 par value per share) 112
ITEM 29. INDEMNIFICATION
It is the Registrant's policy to indemnify its directors
and officers, employees and other agents to the maximum extent
permitted by Section 2-418 of the General Corporation Law of the
State of Maryland and as set forth in Article EIGHTH of
Registrant's Articles of Incorporation to be filed as Exhibit
(a),10 Article IX of the Registrant's Bylaws to be filed as
Exhibit (b)11 and Section 7 of the Dealer Manager Agreement
filed as Exhibit (h)(1). The Adviser's liability for any loss
suffered by the Registrant or its stockholders is set forth in
Section 4 of the Investment Advisory Agreement filed as Exhibit
(g) to this Registration Statement.12 The Administrator's
liability for any loss suffered by the Registrant or its
stockholders is set forth in Section 6 of the Administration
Agreement filed as Exhibit (k)(2). 13
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF ALLIANCE
The description of Alliance Capital Management L.P.
under the caption "Management of the Fund-Investment Adviser" in
the Prospectus is incorporated by reference herein.
____________________
10. Previously filed as Exhibit A to the Registrant's
Registration Statement filed August 16, 1994 (File No. 33-
82896, 811-08702); filed electronically as an Exhibit
herewith in accordance with Regulation Sec. 232.102.
11. Previously filed as Exhibit B to the Registrant's
Registration Statement filed August 16, 1994 (File No. 33-
82896, 811-08702); filed electronically as an Exhibit
herewith in accordance with Regulation Sec. 232.102.
12. Previously filed as Exhibit G to Pre-Effective Amendment No.
1 of the Registrant's Registration Statement filed September
23, 1994 (File No. 33-82896, 811-08702); filed electronically
as an Exhibit herewith in accordance with Regulation Sec.
232.102.
13. Previously filed as Exhibit K(2) to Pre-Effective Amendment
No. 1 of the Registrant's Registration Statement filed
September 23, 1994 (File No. 33-82896, 811-08702); filed
electronically as an Exhibit herewith in accordance with
Regulation Sec. 232.102.
C-4
<PAGE>
The information as to the directors and executive
officers of Alliance Capital Management Corporation, the general
partner of Alliance, set forth in Alliance Capital Management
L.P.'s Form ADV filed with the Securities and Exchange Commission
on April 21, 1988 (File No. 801-32361) and as amended through the
date hereof is incorporated by reference herein.
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940
and the Rules thereunder are maintained as follows: journals,
ledgers, securities records and other original records are
maintained principally at the offices of Alliance Capital
Management L.P., 500 Plaza Drive, Secaucus, New Jersey 07094, and
at the offices of The Bank of New York, the Registrant's
Custodian, Transfer Agent, Dividend-Disbursing Agent and
Registrar, 101 Barclay Street, New York 10286. All other records
so required to be maintained are maintained at the offices of
Alliance Capital Management L.P., 1345 Avenue of the Americas,
New York, New York 10105.
ITEM 32. MANAGEMENT SERVICES
Not applicable.
ITEM 33. UNDERTAKINGS
1. Registrant undertakes to suspend offering of the shares
covered hereby until it amends its Prospectus contained
herein if subsequent to the effective date of this
Registration Statement, its net asset value per share
declines more than 10 percent from its net asset value per
share as of the effective date of this Registration
Statement.
2. Registrant hereby undertakes:
(1) that for purposes of determining any liability under
the Securities Act of 1933, the information omitted
from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A
and contained in a form of prospectus filed by the
Registrant pursuant to Rule 497(h) under the
Securities Act shall be deemed to be part of this
Registration Statement as of the time it was
declared effective.
(2) that for the purpose of determining any liability
under the Securities Act of 1933, each post-
effective amendment that contains a form of
C-5
<PAGE>
prospectus shall be deemed to be a new registration
statement relating to the securities offered
therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide
offering thereof.
3. Not applicable
4. (a) Registrant undertakes to file, during any period in
which offers or sales are being made, a post-
effective amendment to this Registration Statement:
(1) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(2) to reflect in the prospectus any facts or
events after the effective date of this
Registration Statement (or the most recent
post-effective amendment hereof) which,
individually or in the aggregate, represent a
fundamental change in the information set
forth in this Registration Statement; and
(3) to include any material information with
respect to the plan of distribution not
previously disclosed in this Registration
Statement or any material change to such
information in this Registration Statement.
(4) (a) Registrant undertakes to file, during
any period in which offers or sales are being
made, a post-effective amendment to this
Registration Statement:
(1) to include any prospectus required by
Section 10(a)(3) of the Securities Act
of 1933;
(2) to reflect in the prospectus any facts
or events after the effective date of
this Registration (or the most recent
post-effective amendment hereof)
which, individually or in the
aggregate, represent a fundamental
change in the information set forth in
this Registration Statement; and
(3) to include any material information
with respect to the plan of
distribution not previously disclosed
in this Registration Statement or any
C-6
<PAGE>
material change to such information in
this Registration Statement.
(b) Registrant undertakes that, for the purpose of determining
any liability under the Securities Act of 1933, each subsequent
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of those securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Registrant undertakes to remove from registration by means of
a post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
5. Not applicable
6. Not applicable
C-7
<PAGE>
EXHIBIT INDEX
EXHIBIT SEQUENTIALLY NUMBERED PAGE
(a) Articles of Incorporation
(b) By-laws
(d)(1) Form of Subscription Certificate
(d)(2) Form of Notice of Guaranteed Delivery
(d)(3) DTC Participant Over-Subscription
Certificate and Nominee Holder Over-
Subscription Certificate
(d)(4) Subscription Rights Agency Agreement
(e) Dividend Reinvestment Plan
(g) Investment Advisory Agreement
(h)(1) Form of Dealer Manager Agreement
(h)(2) Soliciting Dealer Agreement
(j) Custodian Agreement
(k)(1) Transfer Agency Agreement
(k)(2) Administration Agreement
(k)(3) Shareholder Servicing Agreement
(k)(4) Shareholder Inquiry Agency Agreement
(k)(5) Information Agent Agreement
(n) Consent of Independent Auditors
(p) Investment Representation Letter
(r) Financial Data Schedule
C-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as
amended, the Registrant has duly caused the Pre-Effective
Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in The City
of New York and the State of New York, on the 18th day of June
1999.
Alliance All-Market Advantage Fund, Inc.
By /s/ John D. Carifa
_____________________
John D. Carifa
Chairman
Pursuant to the requirements of the Securities Act of
1933, as amended, the Pre-Effective Amendment No. 1 to the
Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
Signature Title Date
_________ _____ ____
(1) Principal Executive Chairman 6/18/99
/s/ John D. Carifa
__________________
John D. Carifa
(2) Principal Financial Treasurer 6/18/99
and Accounting and Chief
Officer: Financial
Officer
/s/ Mark D. Gersten
___________________
Mark D. Gersten
(3) Majority of the Directors: 6/18/99
John D. Carifa*
Ruth Block *
David H. Dievler*
John H. Dobkin*
William H. Foulk, Jr.*
Dr. James M. Hester*
Clifford L. Michel*
Robert C. White *
C-9
<PAGE>
Donald J. Robinson
*By /s/ Edmund P. Bergan, Jr.
____________________________
Edmund P. Bergan, Jr.
Attorney-in-fact
C-10
00250205.AT0
<PAGE>
ARTICLES OF INCORPORATION
OF
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
FIRST: (1)The name of the incorporator is David M.
Russell.
(2)The incorporator's post office address is
One Battery Park Plaza, New York, New York 10004.
(3)The incorporator is over eighteen years of
age.
(4)The incorporator is forming the corporation
named in these Articles of Incorporation under the general laws
of the State of Maryland.
SECOND: The name of the corporation (hereinafter
called the "Corporation") is Alliance All-Market Advantage Fund,
Inc.
THIRD: The purpose for which the Corporation is
formed is to conduct and carry on the business of an investment
company registered under the Investment Company Act of 1940. The
Corporation shall have all of the powers granted to corporations
by the Maryland General Corporation Law now or hereafter in
force.
FOURTH: The post office address of the principal
office of the Corporation within the State of Maryland is
32 South Street, Baltimore, Maryland 21202, in care of The
Corporation Trust Incorporated.
The resident agent of the Corporation in the State of
Maryland is The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202.
FIFTH: (1)The total number of shares of capital stock
which the Corporation shall have authority to issue is Three
Hundred Million (300,000,000), all of which initially shall be
Common Stock having a par value of one cent ($.01) per share and
an aggregate par value of Three Million Dollars ($3,000,000)
subject to the following provisions:
(2) The Corporation may issue
shares of stock in fractional denominations to the same
extent as its whole shares, and shares in fractional
denominations shall be shares of stock having propor-
<PAGE>
tionately to the respective fractions represented
thereby all the rights of whole shares, including with-
out limitation, the right to vote, the right to receive
dividends and distributions, and the right to partici-
pate upon liquidation of the Corporation, but excluding
the right to receive a stock certificate representing
fractional shares.
(3) No holder of any shares of stock of
the Corporation shall be entitled to any preemptive rights
except those that the Board of Directors may determine from
time to time.
(4) All persons who shall acquire stock
or other securities of the Corporation shall acquire the
same subject to the provisions of these Articles of Incorpo-
ration, as from time to time amended.
(5) Dividends payable in cash declared
by the Board of Directors shall be automatically invested in
shares of Common Stock pursuant to a Dividend Reinvestment
Plan to be adopted by the Board of Directors, as modified or
amended from time time, but which must contain provisions
permitting stockholders to elect not to participate in such
Plan. If the Board of Directors determines not to implement
or to terminate such Dividend Reinvestment Plan, dividends
declared and payable in cash shall be paid to stockholders
in cash. The Board of Directors may appoint a Plan Agent
for the Dividend Reinvestment Plan. Appointment of the Plan
Agent by the Board of Directors shall also constitute
appointment of the Plan Agent by the participants in the
Dividend Reinvestment Plan. If additional classes of stock
are issued, dividends declared in respect of such classes
shall not be subject to this Section.
SIXTH: (1) The Corporation initially shall have
one director. The number of directors of the Corporation
may be changed pursuant to the Bylaws of the Corporation,
but the number of directors shall never be less than the
number prescribed by the Maryland General Corporation Law
and shall never be more than twenty. The term of office of
a director in office at the time of any decrease in the
number of directors shall not be affected as a result
thereof. The name of the initial director of the
Corporation is Edmund P. Bergan, Jr.
(2) Beginning with the first annual
meeting of stockholders held after the initial public
offering of the shares of stock of the Corporation (the
"Initial Annual Meeting") the Board of Directors shall be
divided into three classes. Within the limits specified in
2
<PAGE>
Section (1) of this Article SIXTH and the Bylaws of the
Corporation, the number of directors in each class shall be
determined by resolution of the Board of Directors. The
term of office of each director in the first class shall
continue to the date of the annual meeting of stockholders
held one year after the Initial Annual Meeting and until his
successor is elected and qualified. The term of office of
each director in the second class shall continue to the date
of the annual meeting of stockholders held two years after
the Initial Annual Meeting and until his successor is
elected and qualified. The term of office of each director
in the third class shall continue to the date of the annual
meeting of stockholders held three years after the Initial
Annual Meeting and until his successor is elected and
qualified. Upon expiration of the term of office of each
class as set forth above, the number of directors in such
class, as determined by the Board of Directors, shall be
elected for a term of three years to succeed the directors
whose terms of office expire. The number of directorships
shall be apportioned among the classes so as to maintain the
classes as nearly equal in number as possible.
(3) A director may be removed only by
the affirmative vote of seventy-five percent (75%) of the
votes entitled to be cast for the election of such director.
SEVENTH: The following provisions are inserted for
the purpose of defining, limiting and regulating the powers
of the Corporation, the Board of Directors and the stock-
holders.
(1) The business and affairs of the
Corporation shall be managed under the direction of the
Board of Directors which shall have and may exercise all
powers of the Corporation except those powers which are by
law, by these Articles of Incorporation or by the Bylaws
conferred upon or reserved to the stockholders. In further-
ance and not in limitation of the powers conferred by law,
the Board of Directors shall have power:
(a) to make, alter and repeal the
Bylaws of the Corporation;
(b) to issue and sell, from time to
time, shares of any class of the Corporation's
stock in such amounts and on such terms and
conditions, and for such amount and kind of
consideration, as the Board of Directors shall
determine;
3
<PAGE>
(c) from time to time to determine
the net asset value per share of the Corpora-
tion's stock or to establish methods to be
used by the Corporation's officers, employees
or agents for determining the net asset value
per share of the Corporation's stock;
(d) from time to time to determine
to what extent and at what times and places
and under what conditions and regulations the
accounts, books and records of the Corpora-
tion, or any of them, shall be open to the
inspection of the stockholders; and no
stockholder shall have any right to inspect
any account or book or document of the Corpo-
ration, except as conferred by the laws of the
State of Maryland, unless and until authorized
to do so by resolution of the Board of Direc-
tors; and
(e) to classify or to reclassify,
from time to time, any unissued shares of
stock of the Corporation, whether now or
hereafter authorized, by setting, changing or
eliminating the preferences, conversion or
other rights, voting powers, restrictions,
limitations as to dividends, qualifications or
terms and conditions of or rights to require
redemption of the stock.
(2) Except as provided in Article SIXTH,
Sections (3), (4) and (6) of this Article SEVENTH and in
Article NINTH, notwithstanding any provision of the Maryland
General Corporation Law requiring a greater proportion than
a majority of the votes of the Corporation's stock entitled
to be cast in order to take or authorize any action, any
such action may be taken or authorized upon the concurrence
of a majority of the aggregate number of votes entitled to
be cast thereon subject to any applicable requirements of
the Investment Company Act of 1940, as in effect from time
to time, or rules, regulations or orders thereunder
promulgated by the Securities and Exchange Commission or any
successor thereto.
(3) Notwithstanding any other provisions
of these Articles of Incorporation, the conversion of the
Corporation from a closed-end company to an open-end company
and any amendment to these Articles of Incorporation of the
Corporation to effect any such conversion, shall require the
affirmative vote of seventy-five percent (75%) of the
outstanding shares of capital stock the Corporation. Such
4
<PAGE>
affirmative vote shall be in addition to the vote of the
holders of the Common Stock of the Corporation otherwise
required by law or any agreement between the Corporation and
any national securities exchange.
(4) (a) Notwithstanding any other
provision of these Articles of Incorporation, and subject to
the exceptions provided in Paragraph (d) of this
Section (4), the types of transactions described in
Paragraph (c) of this Section (4) shall require the
affirmative vote of seventy-five percent (75%) of the
outstanding shares of Common Stock of the Corporation when a
Principal Shareholder (as defined in Paragraph (b) of this
Section (4)) is a party to the transaction. Such
affirmative vote shall be in addition to the vote of the
holders of the stock of the Corporation otherwise required
by law or any agreement between the Corporation and any
national securities exchange.
(b) The term "Principal Shareholder"
shall mean any corporation, person or other entity which is
the beneficial owner, directly or indirectly, of more than
five percent (5%) of the outstanding shares of stock of the
Corporation and shall include any affiliate or associate, as
such terms are defined in clause (B) below, of a Principal
Shareholder. For the purposes of this Section (4), in
addition to the shares of stock which a corporation, person
or other entity beneficially owns directly, (i) any
corporation, person or other entity shall be deemed to be
the beneficial owner of any shares of stock of the
Corporation (A) which it has the right to acquire pursuant
to any agreement or upon exercise of conversion rights or
warrants, or otherwise (but excluding stock options granted
by the Corporation) or (B) which are beneficially owned,
directly or indirectly (including shares deemed owned
through application of clause (A) above), by any other
corporation, person or entity with which it or its
"affiliate" or "associate" (as defined below) has any
agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of stock of the
Corporation, or which is its "affiliate" or "associate" as
those terms are defined in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934 as
in effect from time to time, and (ii) the outstanding shares
of any class of stock of the Corporation shall include
shares deemed owned through application of clauses (A) and
(B) above but shall not include any other shares which may
be issuable pursuant to any agreement, or upon exercise of
conversion rights or warrants, or otherwise.
5
<PAGE>
(c) This Section (4) shall apply to the
following transactions:
(i) The merger, consolidation or
statutory share exchange of the Corporation with or
into any Principal Shareholder.
(ii) The issuance of any securities
of the Corporation to any Principal Shareholder for
cash except upon (1) reinvestment of dividends
pursuant to a dividend reinvestment plan of the
Corporation or (2) issuance of any securities of
the Corporation upon the exercise of any stock
subscription rights distributed by the Corporation
or (3) a public offering by the Corporation
registered under the Securities Act of 1933.
(iii) The sale, lease or exchange of
all or any substantial part of the assets of the
Corporation to any Principal Shareholder (except
assets having an aggregate fair market value of
less than $1,000,000, aggregating for the purpose
of such computation all assets sold, leased or
exchanged in any series of similar transactions
within a twelve-month period).
(iv) The sale, lease or exchange to
the Corporation or any subsidiary thereof, in
exchange for securities of the Corporation, of any
assets of any Principal Shareholder (except assets
having an aggregate fair market value of less than
$1,000,000, aggregating for the purposes of such
computation all assets sold, leased or exchanged in
any series of similar transactions within a twelve-
month period).
(d) The provisions of this Section (4)
shall not be applicable to (i) any of the transactions
described in Paragraph (c) of this Section if the Continuing
Directors of the Corporation (as defined below) shall by
resolution have approved a memorandum of understanding with
such Principal Shareholder with respect to and substantially
consistent with such transaction, or (ii) any such
transaction with any corporation of which a majority of the
outstanding shares of all classes of stock normally entitled
to vote in elections of directors is owned of record or
beneficially by the Corporation and its subsidiaries. A
"Continuing Director" is a Director who (i) was a Director
on the date of the closing of the initial public offering of
the Corporation's Common Stock or (ii) subsequently became a
Director and whose election, or nomination for election by
6
<PAGE>
the Corporation's stockholders, was approved by a vote of a
majority of the Continuing Directors then on the Board of
Directors.
(e) The Board of Directors shall have
the power and duty to determine for the purposes of this
Section 4 on the basis of information known to the
Corporation, whether (i) a corporation, person or entity
beneficially owns more than five percent (5%) of the
outstanding shares of any class of stock of the Corporation,
(ii) a corporation, person or entity is an "affiliate" or
"associate" (as defined above) of another, (iii) the assets
being acquired or leased to or by the Corporation, or any
subsidiary thereof, constitute a substantial part of the
assets of the Corporation and have an aggregate fair market
value of less than $1,000,000, and (iv) the memorandum of
understanding referred to in Paragraph (d) hereof is
substantially consistent with the transaction covered
thereby. Any such determination shall be conclusive and
binding for all purposes of this Article.
(5) Any determination made in good faith
by or pursuant to the direction of the Board of Directors,
as to the amount of the assets, debts, obligations, or
liabilities of the Corporation, as to the amount of any
reserves or charges set up and the propriety thereof, as to
the time of or purpose for creating such reserves or
charges, as to the use, alteration or cancellation of any
reserves or charges (whether or not any debt, obligation or
liability for which such reserves or charges shall have been
created shall have been paid or discharged or shall be then
or thereafter required to be paid or discharged), as to the
value of or the method of valuing any investment owned or
held by the Corporation, as to the market value or fair
value of any investment or fair value of any other asset of
the Corporation, as to the number of shares of the Corpora-
tion outstanding, as to the estimated expense to the Corpo-
ration in connection with purchases of its shares, as to the
ability to liquidate investments in an orderly fashion, or
as to any other matters relating to the issue, sale,
purchase or other acquisition or disposition of investments
or shares of the Corporation, shall be final and conclusive
and shall be binding upon the Corporation and all holders of
its shares, past, present and future, and shares of the
Corporation are issued and sold on the condition and
understanding that any and all such determinations shall be
binding as aforesaid.
(6) The liquidation or dissolution of
the Corporation and any amendments to these Articles of
Incorporation to terminate the Corporation's existence shall
7
<PAGE>
require the affirmative vote of seventy-five percent (75%)
of the outstanding shares of Common Stock of the
Corporation, provided that if a majority of the Continuing
Directors shall have approved the liquidation or dissolution
of the Corporation, such action shall require the
affirmative vote of a majority of the votes entitled to be
cast.
EIGHTH: (1) To the fullest extent that
limitations on the liability of directors and officers are
permitted by the Maryland General Corporation Law, no
director or officer of the Corporation shall have any
liability to the Corporation or its shareholders for
damages. This limitation on liability applies to events
occurring at the time a person serves as a director or
officer of the Corporation whether or not such person is a
director or officer at the time of any proceeding in which
liability is asserted.
(2) The Corporation shall indemnify and
advance expenses to its currently acting and its former
directors to the fullest extent that indemnification of
directors is permitted by the Maryland General Corporation
Law. The Corporation shall indemnify and advance expenses
to its officers to the same extent as its directors and to
such further extent as is consistent with law. The Board of
Directors may by Bylaw, resolution or agreement make further
provisions for indemnification of directors, officers,
employees and agents to the fullest extent permitted by the
Maryland General Corporation Law.
(3) No provision of this Article EIGHTH
shall be effective to protect or purport to protect any
director or officer of the Corporation against any liability
to the Corporation or its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct to his office.
(4) References to the Maryland General
Corporation Law in this Article EIGHTH are to that law as
from time to time amended. No amendment to these Articles
of Incorporation of the Corporation shall affect any right
of any person under this Article EIGHTH based on any event,
omission or proceeding prior to the amendment.
NINTH: (1) The Corporation reserves the right
to amend, alter, change or repeal any provision contained in
the Charter of the Corporation in the manner now or
hereafter prescribed by the laws of the State of Maryland,
including any amendment which alters the contract rights, as
8
<PAGE>
expressly set forth in the Charter, of any outstanding
stock, and all rights conferred upon stockholders herein are
granted subject to this reservation.
(2) Notwithstanding Section (1) of this
Article NINTH or any other provisions of these Articles of
Incorporation, no amendment to these Articles of Incor-
poration of the Corporation shall amend, alter, change or
repeal any of the provisions of Article THIRD, Article
SIXTH, Sections (3), (4) and (6) of Article SEVENTH and this
Article NINTH unless the amendment effecting such amendment,
alteration, change or repeal shall receive the affirmative
vote of seventy-five percent (75%) of the outstanding shares
of Common Stock of the Corporation. Such affirmative vote
shall be in addition to the vote of the holders of the stock
of the Corporation otherwise required by law or any
agreement between the Corporation and any national
securities exchange.
9
<PAGE>
IN WITNESS WHEREOF, the undersigned, being the
incorporator of the Corporation, has adopted and signed
these Articles of Incorporation for the purpose of forming
the corporation described herein pursuant to the Maryland
General Corporation Law and does hereby acknowledge that
said adoption and signing are his act.
/s/David M. Russell
_____________________
David M. Russell
Dated: August 16, 1994
10
00250205.AB6
<PAGE>
BYLAWS
OF
THE ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
________________
ARTICLE I
Offices
Section 1. Principal Office in Maryland. The
Corporation shall have a principal office in the City of
Baltimore, State of Maryland.
Section 2. Other Offices. The Corporation may
have offices also at such other places within and without
the State of Maryland as the Board of Directors may from
time to time determine or as the business of the Corporation
may require.
ARTICLE II
Meetings of Stockholders
Section 1. Place of Meeting. Meetings of stock-
holders shall be held at such place, either within the State
of Maryland or at such other place within the United States,
as shall be fixed from time to time by the Board of
Directors.
Section 2. Annual Meetings. Annual meetings of
stockholders shall be held on a date fixed from time to time
by the Board of Directors not less than ninety nor more than
one hundred twenty days following the end of each fiscal
year of the Corporation, for the election of directors and
<PAGE>
the transaction of any other business within the powers of
the Corporation.
Section 3. Notice of Annual Meeting. Written or
printed notice of the annual meeting, stating the place,
date and hour thereof, shall be given to each stockholder
entitled to vote thereat and each other shareholder entitled
to notice thereof not less than ten nor more than ninety
days before the date of the meeting.
Section 4. Special Meetings. Special meetings of
stockholders may be called by the chairman, the president or
by the Board of Directors and shall be called by the secre-
tary upon the written request of holders of shares entitled
to cast not less than twenty-five percent of all the votes
entitled to be cast at such meeting. Such request shall
state the purpose or purposes of such meeting and the
matters proposed to be acted on thereat. In the case of
such request for a special meeting, upon payment by such
stockholders to the Corporation of the estimated reasonable
cost of preparing and mailing a notice of such meeting, the
secretary shall give the notice of such meeting. The secre-
tary shall not be required to call a special meeting to
consider any matter which is substantially the same as a
matter acted upon at any special meeting of stockholders
held within the preceding twelve months unless requested to
2
<PAGE>
do so by holders of shares entitled to cast not less than a
majority of all votes entitled to be cast at such meeting.
Section 5. Notice of Special Meeting. Written or
printed notice of a special meeting of stockholders, stating
the place, date, hour and purpose thereof, shall be given by
the secretary to each stockholder entitled to vote thereat
and each other shareholder entitled to notice thereof not
less than ten nor more than ninety days before the date
fixed for the meeting.
Section 6. Business of Special Meetings. Business
transacted at any special meeting of stockholders shall be
limited to the purposes stated in the notice thereof.
Section 7. Quorum. The holders of a majority of
the stock issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for
the transaction of business.
Section 8. Voting. When a quorum is present at
any meeting, the affirmative vote of a majority of the votes
cast shall decide any question brought before such meeting
(except that directors may be elected by the affirmative
vote of a plurality of the votes cast), unless the question
is one upon which by express provision of the Investment
Company Act of 1940, as from time to time in effect, or
other statutes or rules or orders of the Securities and
3
<PAGE>
Exchange Commission or any successor thereto or of the
Articles of Incorporation a different vote is required, in
which case such express provision shall govern and control
the decision of such question.
Section 9. Proxies. Each stockholder shall at
every meeting of stockholders be entitled to one vote in
person or by proxy for each share of the stock having voting
power held by such stockholder, but no proxy shall be voted
after eleven months from its date, unless otherwise provided
in the proxy.
Section 10. Record Date. In order that the Cor-
poration may determine the stockholders entitled to notice
of or to vote at any meeting of stockholders or any adjourn-
ment thereof, to express consent to corporate action in
writing without a meeting, or to receive payment of any
dividend or other distribution or allotment of any rights,
or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in
advance, a record date which shall be not more than ninety
days and, in the case of a meeting of stockholders, not less
than ten days prior to the date on which the particular
action requiring such determination of stockholders is to be
taken. In lieu of fixing a record date, the Board of Direc-
tors may provide that the stock transfer books shall be
4
<PAGE>
closed for a stated period, but not to exceed, in any case,
twenty days. If the stock transfer books are closed for the
purpose of determining stockholders entitled to notice of or
to vote at a meeting of stockholders, such books shall be
closed for at least ten days immediately preceding such
meeting. If no record date is fixed and the stock transfer
books are not closed for the determination of stockholders:
(1) The record date for the determination of stockholders
entitled to notice of, or to vote at, a meeting of stock-
holders shall be at the close of business on the day on
which notice of the meeting of stockholders is mailed or the
day thirty days before the meeting, whichever is the closer
date to the meeting; and (2) The record date for the deter-
mination of stockholders entitled to receive payment of a
dividend or an allotment of any rights shall be at the close
of business on the day on which the resolution of the Board
of Directors, declaring the dividend or allotment of rights,
is adopted, provided that the payment or allotment date
shall not be more than sixty days after the date of the
adoption of such resolution.
Section 11. Inspectors of Election. The direc-
tors, in advance of any meeting, may, but need not, appoint
one or more inspectors to act at the meeting or any adjourn-
ment thereof. If an inspector or inspectors are not
appointed, the person presiding at the meeting may, but need
5
<PAGE>
not, appoint one or more inspectors. In case any person who
may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors
in advance of the meeting or at the meeting by the person
presiding thereat. Each inspector, if any, before entering
upon the discharge of his duties, shall take and sign an
oath faithfully to execute the duties of inspector at such
meeting with strict impartiality and according to the best
of his ability. The inspectors, if any, shall determine the
number of shares outstanding and the voting power of each,
the shares represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine all
challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are
proper to conduct the election or vote with fairness to all
stockholders. On request of the person presiding at the
meeting or any stockholder, the inspector or inspectors, if
any, shall make a report in writing of any challenge, ques-
tion or matter determined by him or them and execute a cer-
tificate of any fact found by him or them.
Section 12. Informal Action by Stockholders.
Except to the extent prohibited by the Investment Company
Act of 1940, as from time to time in effect, or rules or
6
<PAGE>
orders of the Securities and Exchange Commission or any
successor thereto, any action required or permitted to be
taken at any meeting of stockholders may be taken without a
meeting if a consent in writing, setting forth such action,
is signed by all the stockholders entitled to vote on the
subject matter thereof and any other stockholders entitled
to notice of a meeting of stockholders (but not to vote
thereat) have waived in writing any rights which they may
have to dissent from such action, and such consent and
waiver are filed with the records of the Corporation.
ARTICLE III
Board of Directors
Section 1. Number of Directors. The number of
directors constituting the entire Board of Directors (which
initially was fixed at one in the Corporation's Articles of
Incorporation) may be increased or decreased from time to
time by the vote of a majority of the entire Board of
Directors within the limits permitted by law but at no time
may there be more than twenty as provided in the Articles of
Incorporation, but the tenure of office of a director in
office at the time of any decrease in the number of
directors shall not be affected as a result thereof. If the
Corporation shall have issued shares of preferred stock,
while any such shares remain outstanding, the number of
directors shall not be less than six. Beginning with the
7
<PAGE>
first annual meeting of stockholders held after the initial
public offering of the shares of stock of the Corporation
("the initial annual meeting") the Board of Directors shall
be divided into three classes. Within the limits above
specified, the number of directors in each class shall be
determined by resolution of the Board of Directors or by the
stockholders at the annual meeting thereof. The term of
office of each director in the first class shall continue to
the date of the annual meeting held one year after the
initial annual meeting and until his successor is elected
and qualified. The term of office of each director of the
second class shall continue to the date of the annual
meeting of stockholders held two years after the initial
annual meeting and until his successor is elected and
qualified. The term of office of each director of the third
class shall continue to the date of the annual meeting of
stockholders held three years after the initial annual
meeting and until his successor is elected and qualified.
Upon expiration of the term of office of each class as set
forth above, the number of directors in such class, as
determined by the Board of Directors, shall be elected for a
term of three years to succeed the directors whose terms of
office expire. The directors shall be elected at the annual
meeting of stockholders, except as provided in Section 2 of
this Article, and each director elected shall hold office
8
<PAGE>
until his successor shall have been elected and shall have
qualified. Any director may resign at any time upon written
notice to the Corporation. Any director may be removed,
either with or without cause, at any meeting of stockholders
duly called and at which a quorum is present by the
affirmative vote of seventy-five percent of the votes
entitled to be cast thereon, and the vacancy in the Board of
Directors caused by such removal may be filled by the
stockholders at the time of such removal. Directors need
not be stockholders.
Section 2. Vacancies and Newly-Created Director-
ships. Any vacancy occurring in the Board of Directors for
any cause other than by reason of an increase in the number
of directors may be filled by a majority of the remaining
members of the Board of Directors although such majority is
less than a quorum. Any vacancy occurring by reason of an
increase in the number of directors may be filled by a
majority of the entire Board of Directors then in office. A
director elected by the Board of Directors to fill a vacancy
shall be elected to hold office until the next annual
meeting of stockholders or until his successor is elected
and qualifies.
Section 3. Powers. The business and affairs of
the Corporation shall be managed by or under the direction
of the Board of Directors which may exercise all such powers
9
<PAGE>
of the Corporation and do all such lawful acts and things as
are not by statute or by the Articles of Incorporation or by
these By-Laws conferred upon or reserved to the stock-
holders.
Section 4. Annual Meeting. The annual meeting of
the Board of Directors shall be held immediately following
the adjournment of the annual meeting of stockholders and at
the place thereof. No notice of such meeting to the direc-
tors shall be necessary in order legally to constitute the
meeting, provided a quorum shall be present. In the event
such meeting is not so held, the meeting may be held at such
time and place as shall be specified in a notice given as
hereinafter provided for special meetings of the Board of
Directors.
Section 5. Other Meetings. The Board of Directors
of the Corporation or any committee thereof may hold
meetings, both regular and special, either within or without
the State of Maryland. Regular meetings of the Board of
Directors may be held without notice at such time and at
such place as shall from time to time be determined by the
Board of Directors. Special meetings of the Board of Direc-
tors may be called by the chairman, the president or by two
or more directors. Notice of special meetings of the Board
of Directors shall be given by the secretary to each direc-
tor at least three days before the meeting if by mail or at
10
<PAGE>
least 24 hours before the meeting if given in person or by
telephone or by telegraph. The notice need not specify the
business to be transacted.
Section 6. Quorum and Voting. During such times
when the Board of Directors shall consist of more than one
director, a quorum for the transaction of business at meet-
ings of the Board of Directors shall consist of a majority
of the entire Board of Directors, but in no event shall a
quorum consist of less than two directors. The action of a
majority of the directors present at a meeting at which a
quorum is present shall be the action of the Board of
Directors. If a quorum shall not be present at any meeting
of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be
present.
Section 7. Committees. The Board of Directors may
appoint from among its members an executive committee and
other committees of the Board of Directors, each committee
to be composed of two or more of the directors of the Cor-
poration. The Board of Directors may delegate to such
committees any of the powers of the Board of Directors
except those which may not by law be delegated to a
committee. Such committee or committees shall have the name
or names as may be determined from time to time by
11
<PAGE>
resolution adopted by the Board of Directors. Unless the
Board of Directors designates one or more directors as
alternate members of any committee, who may replace an
absent or disqualified member at any meeting of the
committee, the members of any such committee present at any
meeting and not disqualified from voting may, whether or not
they constitute a quorum, appoint another member of the
Board of Directors to act at the meeting in the place of any
absent or disqualified member of such committee. At
meetings of any such committee, a majority of the members or
alternate members of such committee shall constitute a
quorum for the transaction of business and the act of a
majority of the members or alternate members present at any
meeting at which a quorum is present shall be the act of the
committee.
Section 8. Minutes of Committee Meetings. The
committees shall keep regular minutes of their proceedings.
Section 9. Informal Action by Board of Directors
and Committees. Any action required or permitted to be
taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if a
written consent thereto is signed by all members of the
Board of Directors or of such committee, as the case may be,
and such written consent is filed with the minutes of pro-
ceedings of the Board of Directors or committee, provided,
12
<PAGE>
however, that such written consent shall not constitute
approval of any matter which pursuant to the Investment
Company Act of 1940 and the rules thereunder requires the
approval of directors by vote cast in person at a meeting.
Section 10. Meetings by Conference Telephone. The
members of the Board of Directors or any committee thereof
may participate in a meeting of the Board of Directors or
committee by means of a conference telephone or similar
communications equipment by means of which all persons par-
ticipating in the meeting can hear each other at the same
times and such participation shall constitute presence in
person at such meeting, provided, however, that such
participation shall not constitute presence in person with
respect to matters which pursuant to the Investment Company
Act of 1940 and the rules thereunder require the approval of
directors by vote cast in person at a meeting.
Section 11. Fees and Expenses. The directors may
be paid their expenses of attendance at each meeting of the
Board of Directors and may be paid a fixed sum for attend-
ance at each meeting of the Board of Directors, a stated
salary as director or such other compensation as the Board
of Directors may approve. No such payment shall preclude
any director from serving the Corporation in any other
capacity and receiving compensation therefor. Members of
special or standing committees may be allowed like
13
<PAGE>
reimbursement and compensation for attending committee
meetings.
ARTICLE IV
Notices
Section 1. General. Notices to directors and
stockholders mailed to them at their post office addresses
appearing on the books of the Corporation shall be deemed to
be given at the time when deposited in the United States
mail.
Section 2. Waiver of Notice. Whenever any notice
is required to be given under the provisions of the
statutes, of the Articles of Incorporation or of these By-
Laws, a waiver thereof in writing, signed by the person or
persons entitled to said notice, whether before or after the
time stated therein, shall be deemed the equivalent of
notice and such waiver shall be filed with the records of
the meeting. Attendance of a person at a meeting shall con-
stitute a waiver of notice of such meeting except when the
person attends a meeting for the express purpose of object-
ing, at the beginning of the meeting, to the transaction of
any business because the meeting is not lawfully called or
convened.
14
<PAGE>
ARTICLE V
Officers
Section 1. General. The officers of the Corpo-
ration shall be chosen by the Board of Directors at its
first meeting after each annual meeting of stockholders and
shall be a chairman of the Board of Directors, a president,
a secretary and a treasurer. The Board of Directors may
choose also such vice presidents and additional officers or
assistant officers as it may deem advisable. Any number of
offices, except the offices of president and vice president
and chairman and vice president, may be held by the same
person. No officer shall execute, acknowledge or verify any
instrument in more than one capacity if such instrument is
required by law to be executed, acknowledged or verified by
two or more officers.
Section 2. Other Officers and Agents. The Board
of Directors may appoint such other officers and agents as
it desires who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall
be determined from time to time by the Board of Directors.
Section 3. Tenure of Officers. The officers of
the Corporation shall hold office at the pleasure of the
Board of Directors. Each officer shall hold his office
until his successor is elected and qualifies or until his
earlier resignation or removal. Any officer may resign at
15
<PAGE>
any time upon written notice to the Corporation. Any
officer elected or appointed by the Board of Directors may
be removed at any time by the Board of Directors when, in
its judgment, the best interests of the Corporation will be
served thereby. Any vacancy occurring in any office of the
Corporation by death, resignation, removal or otherwise
shall be filled by the Board of Directors.
Section 4. Chairman of the Board of Directors.
The chairman of the Board of Directors shall preside at all
meetings of the stockholders and of the Board of Directors.
He shall be the chief executive officer and shall have
general and active management of the business of the
Corporation and shall see that all orders and resolutions of
the Board of Directors are carried into effect. In the
absence or disability of the president, the chairman shall
perform the duties and exercise the powers of the president.
He shall be ex officio a member of all committees designated
by the Board of Directors except as otherwise determined by
the Board of Directors. He shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the
Corporation, except where required or permitted by law to be
otherwise signed and executed and except where the signing
and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the
Corporation.
16
<PAGE>
Section 5. President. The president shall, in the
absence of the chairman, preside at all meetings of the
stockholders or of the Board of Directors. In the absence
or disability of the chairman, the president shall perform
the duties and exercise the powers of the chairman. He
shall execute on behalf of the Corporation, and may affix
the seal or cause the seal to be affixed to, all instruments
requiring such execution except to the extent that signing
and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the
Corporation.
Section 6. Vice Presidents. The vice presidents
shall act under the direction of the chairman and the
president and in the absence or disability of the chairman
and the president shall perform the duties and exercise the
powers of both such offices. They shall perform such other
duties and have such other powers as the chairman, the
president or the Board of Directors may from time to time
prescribe. The Board of Directors may designate one or more
executive vice presidents or may otherwise specify the order
of seniority of the vice presidents and, in that event, the
duties and powers of the chairman and the president shall
descend to the vice presidents in the specified order of
seniority.
17
<PAGE>
Section 7. Secretary. The secretary shall act
under the direction of the chairman and the president.
Subject to the direction of the chairman or the president he
shall attend all meetings of the Board of Directors and all
meetings of stockholders and record the proceedings in a
book to be kept for that purpose and shall perform like
duties for the committees designated by the Board of
Directors when required. He shall give, or cause to be
given, notice of all meetings of stockholders and special
meetings of the Board of Directors, and shall perform such
other duties as may be prescribed by the chairman or the
president or the Board of Directors. He shall keep in safe
custody the seal of the Corporation and shall affix the seal
or cause it to be affixed to any instrument requiring it.
Section 8. Assistant Secretaries. The assistant
secretaries in the order of their seniority, unless other-
wise determined by the chairman, the president or the Board
of Directors, shall, in the absence or disability of the
secretary, perform the duties and exercise the powers of the
secretary. They shall perform such other duties and have
such other powers as the chairman, the president or the
Board of Directors may from time to time prescribe.
Section 9. Treasurer. The treasurer shall act
under the direction of the chairman and the president.
Subject to the direction of the chairman or the president he
18
<PAGE>
shall have the custody of the corporate funds and securities
and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and
shall deposit all moneys and other valuable effects in the
name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors.
He shall disburse the funds of the Corporation as may be
ordered by the chairman, the president or the Board of
Directors, taking proper vouchers for such disbursements,
and shall render to the chairman, the president and the
Board of Directors, at its regular meetings, or when the
Board of Directors so requires, an account of all his
transactions as treasurer and of the financial condition of
the Corporation.
Section 10. Assistant Treasurers. The assistant
treasurers in the order of their seniority, unless otherwise
determined by the chairman, the president or the Board of
Directors, shall, in the absence or disability of the
treasurer, perform the duties and exercise the powers of the
treasurer. They shall perform such other duties and have
such other powers as the chairman, the president or the
Board of Directors may from time to time prescribe.
19
<PAGE>
ARTICLE VI
Certificates of Stock
Section 1. General. Every holder of stock of the
Corporation who has made full payment of the consideration
for such stock shall be entitled upon request to have a
certificate, signed by, or in the name of the Corporation
by, the chairman, the president or a vice president and
countersigned by the treasurer or an assistant treasurer or
the secretary or an assistant secretary of the Corporation,
certifying the number and class of whole shares of stock
owned by him in the Corporation.
Section 2. Fractional Share Interests. The Cor-
poration may issue fractions of a share of stock.
Fractional shares of stock shall have proportionately to the
respective fractions represented thereby all the rights of
whole shares, including the right to vote, the right to
receive dividends and distributions and the right to
participate upon liquidation of the Corporation, excluding,
however, the right to receive a stock certificate
representing such fractional shares.
Section 3. Signatures on Certificates. Any of or
all the signatures on a certificate may be a facsimile. In
case any officer who has signed or whose facsimile signature
has been placed upon a certificate shall cease to be such
officer before such certificate is issued, it may be issued
20
<PAGE>
with the same effect as if he were such officer at the date
of issue. The seal of the Corporation or a facsimile there-
of may, but need not, be affixed to certificates of stock.
Section 4. Lost, Stolen or Destroyed Certificates.
The Board of Directors may direct a new certificate or cer-
tificates to be issued in place of any certificate or cer-
tificates theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon the making of any
affidavit of that fact by the person claiming the certifi-
cate or certificates to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a con-
dition precedent to the issuance thereof, require the owner
of such lost, stolen or destroyed certificate or certifi-
cates, or his legal representative, to give the Corporation
a bond in such sum as it may direct as indemnity against any
claim that may be made against the Corporation with respect
to the certificate or certificates alleged to have been
lost, stolen or destroyed.
Section 5. Transfer of Shares. Upon request by
the registered owner of shares, and if a certificate has
been issued to represent such shares upon surrender to the
Corporation or a transfer agent of the Corporation of a
certificate for shares of stock duly endorsed or accompanied
by proper evidence of succession, assignment or authority to
21
<PAGE>
transfer, it shall be the duty of the Corporation, if it is
satisfied that all provisions of the Articles of Incorpora-
tion, of the By-Laws and of the law regarding the transfer
of shares have been duly complied with, to record the trans-
action upon its books, issue a new certificate to the person
entitled thereto upon request for such certificate, and
cancel the old certificate, if any.
Section 6. Registered Owners. The Corporation
shall be entitled to recognize the person registered on its
books as the owner of shares to be the exclusive owner for
all purposes including voting and dividends, and the Corpo-
ration shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the
part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise
provided by the laws of Maryland.
ARTICLE VII
Net Asset Value
The net asset value of a share of Common Stock of
the Corporation as at the time of a particular determination
shall be the quotient obtained by dividing the value at such
time of the net assets of the Corporation (i.e., the value
of the assets belonging to the Corporation less its liabil-
ities exclusive of capital and surplus) by the total number
22
<PAGE>
of shares of Common Stock outstanding at such time, all
determined and computed as follows:
(1) The assets of the Corporation
shall be deemed to include (A) all cash
on hand, on deposit, or on call, (B) all
bills and notes and accounts receivable,
(C) all securities owned or contracted
for by the Corporation, other than shares
of its own Common Stock, (D) all interest
accrued on any interest bearing securi-
ties owned by the Corporation and (E) all
other property of every kind and nature
including prepaid expenses. Portfolio
securities for which market quotations
are readily available shall be valued at
market value. All other investment
assets of the Corporation, including
restricted securities, shall be valued in
such manner as the Board of Directors of
the Corporation in good faith shall deem
appropriate to reflect such securities'
fair value.
(2) The liabilities of the Corpora-
tion shall include (A) all bills and
notes and accounts payable, (B) all
administrative expenses payable and/or
accrued (including management and
advisory fees payable and/or accrued,
including in the case of any contingent
feature thereof, an estimate based on the
facts existing at the time), (C) all
contractual obligations for the payment
of money or property, including any
amounts owing under contracts for the
purchase of securities and the amount of
any unpaid dividend declared upon the
Corporation's Common Stock, (D) all
reserves, if any, authorized or approved
by the Board of Directors for taxes,
including reserves for taxes at current
rates based on any unrealized
appreciation in the value of the assets
of the Corporation and (E) all other
liabilities of the Corporation of
whatsoever kind and nature except
liabilities represented by outstanding
capital stock and surplus of the
Corporation.
23
<PAGE>
(3) For the purposes thereof
(A) Changes in the holdings of
the Corporation's portfolio securities
shall be accounted for on a trade date
basis.
(B) Expenses, including
management and advisory fees, shall be
included to date of calculation.
In addition to the foregoing, the Board of Directors is
empowered, subject to applicable legal requirements, in its
absolute discretion, to establish other methods for deter-
mining the net asset value of each share of Common Stock of
the Corporation.
ARTICLE VIII
Miscellaneous
Section 1. Reserves. There may be set aside out
of any funds of the Corporation available for dividends such
sum or sums as the Board of Directors from time to time, in
their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for such other purpose as
the Board of Directors shall think conducive to the interest
of the Corporation, and the Board of Directors may modify or
abolish any such reserve.
Section 2. Dividends. Dividends or distributions
upon the stock by the Corporation may, subject to the
provisions of the Articles of Incorporation and of the
provisions of applicable law, be declared by the Board of
Directors at any time. Dividends may be paid in cash, in
24
<PAGE>
property or in shares of the Corporation's stock, subject to
the provisions of the Articles of Incorporation and of
applicable law.
Section 3. Capital Gains Distributions. The
amount and number of capital gains distributions paid to the
stockholders during each fiscal year shall be determined by
the Board of Directors. Each such payment shall be accom-
panied by a statement as to the source of such payment, to
the extent required by law.
Section 4. Checks. All checks or demands for
money and notes of the Corporation shall be signed by such
officer or officers or such other person or persons as the
Board of Directors may from time to time designate.
Section 5. Fiscal Year. The fiscal year of the
Corporation shall be fixed by resolution of the Board of
Directors.
Section 6. Seal. The corporate seal shall have
inscribed thereon the name of the Corporation, the year of
its organization and the words "Corporate Seal, Maryland."
The seal may be used by causing it or a facsimile thereof to
be impressed or affixed or in another manner reproduced.
Section 7. Insurance Against Certain Liabilities.
The Corporation shall not bear the cost of insurance that
protects or purports to protect directors and officers of
the Corporation against any liabilities to the Corporation
25
<PAGE>
or its security holders to which any such director or
officer would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office.
ARTICLE IX
Indemnification
Section 1. Indemnification of Directors and
Officers. The Corporation shall indemnify its directors to
the fullest extent that indemnification of directors is
permitted by the Maryland General Corporation Law. The
Corporation shall indemnify its officers to the same extent
as its directors and to such further extent as is consistent
with law. The Corporation shall indemnify its directors and
officers who while serving as directors or officers also
serve at the request of the Corporation as a director,
officer, partner, trustee, employee, agent or fiduciary of
another corporation, partnership, joint venture, trust,
other enterprise or employee benefit plan to the fullest
extent consistent with law. The indemnification and other
rights provided by this Article shall continue as to a
person who has ceased to be a director or officer and shall
inure to the benefit of the heirs, executors and
administrators of such a person. This Article shall not
protect any such person against any liability to the
26
<PAGE>
Corporation or any stockholder thereof to which such person
would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office ("disabling
conduct").
Section 2. Advances. Any current or former
director or officer of the Corporation seeking
indemnification within the scope of this Article shall be
entitled to advances from the Corporation for payment of the
reasonable expenses incurred by him in connection with the
matter as to which he is seeking indemnification in the
manner and to the fullest extent permissible under the
Maryland General Corporation Law. The person seeking
indemnification shall provide to the Corporation a written
affirmation of his good faith belief that the standard of
conduct necessary for indemnification by the Corporation has
been met and a written undertaking to repay any such advance
if it should ultimately be determined that the standard of
conduct has not been met. In addition, at least one of the
following additional conditions shall be met: (a) the
person seeking indemnification shall provide a security in
form and amount acceptable to the Corporation for his
undertaking; (b) the Corporation is insured against losses
arising by reason of the advance; or (c) a majority of a
quorum of directors of the Corporation who are neither
27
<PAGE>
"interested persons" as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended, nor parties to
the proceeding ("disinterested non-party directors"), or
independent legal counsel, in a written opinion, shall have
determined, based on a review of facts readily available to
the Corporation at the time the advance is proposed to be
made, that there is reason to believe that the person
seeking indemnification will ultimately be found to be
entitled to indemnification.
Section 3. Procedure. At the request of any
person claiming indemnification under this Article, the
Board of Directors shall determine, or cause to be
determined, in a manner consistent with the Maryland General
Corporation Law, whether the standards required by this
Article have been met. Indemnification shall be made only
following: (a) a final decision on the merits by a court or
other body before whom the proceeding was brought that the
person to be indemnified was not liable by reason of
disabling conduct or (b) in the absence of such a decision,
a reasonable determination, based upon a review of the
facts, that the person to be indemnified was not liable by
reason of disabling conduct by (i) the vote of a majority of
a quorum of disinterested non-party directors or (ii) an
independent legal counsel in a written opinion.
28
<PAGE>
Section 4. Indemnification of Employees and
Agents. Employees and agents who are not officers or
directors of the Corporation may be indemnified, and
reasonable expenses may be advanced to such employees or
agents, as may be provided by action of the Board of
Directors or by contract, subject to any limitations imposed
by the Investment Company Act of 1940.
Section 5. Other Rights. The Board of Directors
may make further provision consistent with law for
indemnification and advance of expenses to directors,
officers, employees and agents by resolution, agreement or
otherwise. The indemnification provided by this Article
shall not be deemed exclusive of any other right, with
respect to indemnification or otherwise, to which those
seeking indemnification may be entitled under any insurance
or other agreement or resolution of stockholders or
disinterested directors or otherwise. The rights provided
to any person by this Article shall be enforceable against
the Corporation by such person who shall be presumed to have
relied upon it in serving or continuing to serve as a
director, officer, employee, or agent as provided above.
Section 6. Amendments. References in this Article
are to the Maryland General Corporation Law and to the
Investment Company Act of 1940 as from time to time amended.
No amendment of these By-laws shall effect any right of any
29
<PAGE>
person under this Article based on any event, omission or
proceeding prior to the amendment.
ARTICLE X
Amendments
The Board of Directors shall have the exclusive
power to make, alter and repeal by-laws of the Corporation.
30
00250205.AB5
<PAGE>
Account No. ________________ Control No. ______________
THE OFFER EXPIRES AT 5:00 P.M.,
NEW YORK CITY TIME, ON JULY 16,1999
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
RIGHTS FOR COMMON STOCK
Subscription Certificate
Dear Stockholder:
You are entitled to exercise the Rights issued to you as
of June 21, 1999, the Record Date for the Fund's rights offering,
to subscribe for the number of Shares of Common Stock of Alliance
All-Market Advantage Fund, Inc. shown on this Subscription
Certificate pursuant to the Primary Subscription upon the terms
and conditions specified in the Fund's Prospectus dated June [__}
1999 (the "Prospectus"). The terms and conditions of the rights
offering (the "Offer") set forth in the Prospectus are
incorporated herein by reference. Capitalized terms not defined
herein have the meanings attributed to them in the Prospectus. In
accordance with the Over-Subscription Privilege, as a Record Date
Stockholder, you are also entitled to subscribe for additional
Shares if Shares remaining after exercise of Rights pursuant to
the Primary Subscription are available and if you have fully
exercised all Rights issued to you. If sufficient Shares remain
after completion of the Primary Subscription, all over-
subscriptions will be honored in full. If sufficient Shares are
not available after completion of the Primary Subscription to
honor all over-subscriptions, the Fund may, at the discretion of
the Board of Directors, issue shares of Common Stock up to an
additional 25% of the Shares available pursuant to the Offer (up
to an additional 211,400 Shares) in order to cover such
oversubscription requests. To the extent that the Fund determines
not to issue additional Shares to honor all over-subscriptions or
Shares are not available to honor all requests, the available
Shares will be allocated pro rata among those record date
stockholders who over-subscribe based on the number of rights
originally issued to them by the Fund. The Fund will not offer or
sell any Shares which are not subscribed for pursuant to the
Primary Subscription or the Over-Subscription Privilege.
SAMPLE CALCULATION
Primary Subscription Entitlement (1-for-3)
No. of shares owned on the Record Date 300 / 3 = 100 new Shares
(equals no. of Rights issued) (ignore fractions)
<PAGE>
NOTE: $[ ] per Share is an estimated price only. The
Subscription Price will be determined on July 16, 1999, the
Pricing Date (which is the same as the Expiration Date, unless
extended), and could be higher or lower depending on the changes
in the net asset value and market price of the Common Stock.
THESE RIGHTS ARE NON-TRANSFERABLE
................................................................
PLEASE PRINT ALL INFORMATION CLEARLY AND LEGIBLY
SECTION 1: DETAILS OF SUBSCRIPTION
IF YOU WISH TO SUBSCRIBE FOR YOUR FULL ENTITLEMENT:
A: I apply for ALL of my entitlement of
new Shares pursuant to the Primary
Subscription _________________ X $[ ] = ________
(no. of new Shares)
B: I apply for new Shares pursuant
to the Over-Subscription
Privilege* _________________ X $[ ] = ________
AMOUNT ENCLOSED $____________________
*You can only oversubscribe if you have fully exercised your
Primary Subscription Rights.
IF YOU DO NOT WISH TO APPLY FOR YOUR FULL ENTITLEMENT: C: I apply
for _________________________________ X $[ ] = ________
(no. of new Shares)
Control #:_________
Number of Rights Issued:_________
2
<PAGE>
SUBSCRIPTION PRICE
The Subscription Price will be 95% of the lower of (1)
the average of the last reported sales price per share on the
NYSE for the five trading days ending with the day the offer
expires and (2) the NAV as of the close of trading on the NYSE on
that day.
METHOD OF EXERCISE OF RIGHTS
IN ORDER TO EXERCISE YOUR RIGHTS, YOU MUST EITHER (i)
COMPLETE AND SIGN THIS SUBSCRIPTION CERTIFICATE ON THE BACK AND
RETURN IT TOGETHER WITH PAYMENT AT THE ESTIMATED SUBSCRIPTION
PRICE FOR THE SHARES, OR (ii) PRESENT A PROPERLY COMPLETED NOTICE
OF GUARANTEED DELIVERY, IN EITHER CASE TO THE SUBSCRIPTION AGENT,
THE BANK OF NEW YORK, BEFORE 5:00 P.M., NEW YORK CITY TIME, ON
JULY 16,1999 ("THE EXPIRATION DATE").
By First Class Mail: By Facsimile: By Hand, Express Mail or
The Bank of New York (Telecopier): Overnight Courier:
Tender and Exchange (212) 815-6213
Department Confirm by Telephone The Bank of New York
P.O. Box 11248 (800) 507-9357 Tender and Exchange
Church Street Station Department
Church Street Station 101 Barclay Street
New York, New York Receive and Delivery
10286-1248 Window
New York, New York 10286
Delivery to an address other than one of the addresses listed
above will not constitute valid delivery.
Full payment of the Estimated Subscription Price per Share for
all Shares subscribed for pursuant to both the Primary
Subscription and Over-Subscription Privilege must accompany this
Subscription Certificate and must be made payable in United
States dollars by money order or check drawn on a bank located in
the United States payable to Alliance All-Market Advantage Fund,
Inc. Because uncertified personal checks may take at least five
business days to clear, we recommend you pay or arrange for
payment by means of certified or cashier's check or money order.
Alternatively, if a Notice of Guaranteed Delivery is used, a
properly completed and executed Subscription Certificate, and
full payment, as described in such notice, must be received by
the Subscription Agent no later than the close of business on the
third business day after the Expiration Date. For additional
information, see the Prospectus.
Certificates for the Shares acquired on Primary Subscription will
be mailed promptly after the expiration of the Offer and full
3
<PAGE>
payment for the Shares subscribed for has been received and
cleared. Certificates representing Shares acquired pursuant to
the Over-Subscription Privilege will be mailed as soon as
practicable after full payment has been received and cleared and
all allocations have been effected. Any excess payment to be
refunded by the Fund to a stockholder will be mailed by the
Subscription Agent to such stockholder as promptly as possible.
_____________________________
* Unless the offer is extended.
Any questions regarding this Subscription Certificate and the
Offer may be directed to the Information Agent, Shareholder
Communications Corporation. Toll-free at (800) 645-8640
- ---------------------------------------------------------------
SECTION 2: TO SUBSCRIBE
I acknowledge that I have received the Prospectus for this Offer
and I hereby irrevocably subscribe for the number of Shares
indicated above as a total of A and B or C, on the terms and
conditions specified in the Prospectus relating to the Primary
Subscription and the Over-Subscription Privilege. I understand
and agree that I will be obligated to pay any additional amount
to the Fund if the Subscription Price as determined on the
Pricing Date is in excess of the [$39.60] Subscription Price per
Share.
I hereby agree that if I fail to pay in full for the Shares for
which I have subscribed, the Fund may exercise any of the
remedies set forth for in the Prospectus.
Signature of Subscriber(s)
________________________________________________________________
________________________________________________________________
________________________________________________________________
Telephone number (including area code): ( ) ____________________
If you wish to have your shares and refund check (if any)
delivered to an address other than that listed on the
Subscription Certificate, you must have your signature guaranteed
by a member of the New York Stock Exchange or a bank or trust
company. Pleases provide the delivery address below and note if
it is a permanent change.
________________________________________________________________
4
<PAGE>
SECTION 3: DESIGNATION OF BROKER-DEALER
The following broker-dealer is hereby designated as having been
instrumental in the exercise of the Rights hereby exercised:
FIRM:___________________________________________________________
REPRESENTATIVE NAME:____________________________________________
REPRESENTATIVE NUMBER:__________________________________________
5
00250205.AT1
<PAGE>
NOTICE OF GUARANTEED DELIVERY FOR SHARES
OF COMMON STOCK OF ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
SUBSCRIBED FOR PURSUANT TO THE PRIMARY SUBSCRIPTION
AND THE OVER-SUBSCRIPTION PRIVILEGE
Alliance All-Market Advantage Fund, Inc. Rights Offering
As set forth in the Fund's Prospectus dated June , 1999
(the "Prospectus") under "The Offer - Payment for Shares," this
form or one substantially equivalent hereto may be used as a
means of effecting subscription and payment for all shares of
Alliance All-Market Advantage Fund, Inc. Common Stock subscribed
for by exercise of Rights pursuant to the Primary Subscription
and the Over-Subscription Privilege. Such form may be delivered
by hand or sent by facsimile transmission, overnight courier or
mail to the Subscription Agent and must be received prior to 5:00
p.m. New York City time on July 16, 1999 (the "Expiration
Date").* The terms and conditions of the Offer set forth in the
Prospectus are incorporated by reference herein. Capitalized
terms not defined herein have the meanings attributed to them in
the Prospectus.
The Subscription Agent is:
THE BANK OF NEW YORK
Attention: Tender and Exchange Department
By First Class Mail: By Facsimile: By Hand, Express Mail or
The Bank of New York (Telecopier): Overnight Courier:
Tender and Exchange (212) 815-6213
Department Confirm by Telephone The Bank of New York
P.O. Box 11248 (800) 507-9357 Tender and Exchange
Church Street Station Department
Church Street Station 101 Barclay Street
New York, New York Receive and Delivery
10286-1248 Window
New York, New York 10286
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION
OF INSTRUCTIONS VIA A TELECOPY OR FACSIMILE NUMBER, OTHER
THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A VALID DELIVERY.
The New York Stock Exchange member firm or bank or trust
company which completes this form must communicate the guarantee
and the number of shares subscribed for under both the Primary
Subscription and the Over-Subscription Privilege to the
Subscription Agent and must deliver this Notice of Guaranteed
Delivery guaranteeing delivery of (i) payment in full for all
subscribed shares and (ii) a properly completed and executed
Subscription Certificate to the Subscription Agent prior to 5:00
p.m., New York City time, on the Expiration Date.* The
<PAGE>
Subscription Certificate and full payment must then be delivered
by the close of business on the third business day after the
Expiration Date (July 16, 1999) to the Subscription Agent.
Failure to do so will result in a forfeiture of the Rights.
(continued on other side)
___________________________
* Unless extended by the Fund.
2
<PAGE>
GUARANTEE
The undersigned, a member firm of the New York Stock
Exchange or a bank or trust company guarantees delivery of
payment to the Subscription Agent by the close of business (5:00
p.m., New York City time) on the third business day (July 21,
1999) after the Expiration Date (July 16, 1999, unless extended)
of (i) a properly completed and executed Subscription Certificate
and (ii) payment of the full Subscription Price for share
subscribed for on Primary Subscription and pursuant to the Over-
Subscription Privilege, if applicable, as subscription for such
shares is indicated herein or in the Subscription Certificate.
1. Primary
Subscription Number of Rights Number of Primary Payment to be
to be exercised Shares requested made in
_________ Rights for which you are connection with
guaranteeing Primary Shares
delivery of $______________
Rights and Payment
__________ Shares
(Rights divided by 3)
2. Over
Subscription Number of Over- Payment to be
Subscription Shares made in
requested for which connection with
you are guaranteeing Over-Subscription
payment ___________ Shares
Shares
3. Totals Total Number of $______________
Rights to be Total Payment
Delivered __________
Rights
- -----------------------------------------------------------------------------
Method of Delivery of Rights (circle one) A. Through the Depository
Trust Company ("DTC")*
B. Direct to the
Subscription Agent
Please note that if you are guaranteeing for Over-
Subscription Shares and are a DTC participant, you must also
execute and forward to The Bank of New York a Nominee Holder
Over-Subscription Exercise Form.
3
<PAGE>
_______________________________ _____________________________
Name of Firm Authorized Signature
______________________________ _____________________________
Address Title
______________________________ _____________________________
Zip Code Name (Please Type or Print)
______________________________
Name of Registered Holder
(if Applicable)
______________________________ _____________________________
Telephone Number Date
*IF THE RIGHTS ARE TO BE DELIVERED THROUGH DTC, CALL THE
SUBSCRIPTION AGENT TO OBTAIN A PROTECT IDENTIFICATION NUMBER,
WHICH NEEDS TO BE COMMUNICATED BY YOU TO DTC.
4
00250205.AT4
<PAGE>
DTC PARTICIPANT OVER-SUBSCRIPTION EXERCISE FORM
NOMINEE HOLDER OVER-SUBSCRIPTION EXERCISE FORM
Alliance All-Market Advantage Fund, Inc.
Right Offering for Common Stock
This form is to be used only by nominee holders or by
the Depository Trust Company ("DTC") participants to exercise the
Over-Subscription Privilege in respect of Rights with respect to
which the Primary Subscription Privilege was exercised in full
and delivered through the facilities of a common depository or
DTC. All other exercises of Over-Subscription Privileges must be
effected by the delivery of the Subscription Certificate.
The terms and conditions of the rights offering are set
forth in the Fund's Prospectus dated June [ ], 1999 (the
"Prospectus") and are incorporated herein by reference. Copies of
the Prospectus are available upon request from the Information
Agent.
PLEASE COMPLETE ALL APPLICABLE INFORMATION
Void unless received by the Subscription Agent with
payment in full or with a properly completed Notice of Guaranteed
Delivery before 5:00 p.m., New York City time, on July 16, 1999
(the "Expiration Date"), unless extended by the Fund.
By First Class Mail: By Facsimile: By Hand, Express Mail or
The Bank of New York (Telecopier): Overnight Courier:
Tender and Exchange (212) 815-6213
Department Confirm by Telephone The Bank of New York
P.O. Box 11248 (800) 507-9357 Tender and Exchange
Church Street Station Department
Church Street Station 101 Barclay Street
New York, New York Receive and Delivery
10286-1248 Window
New York, New York 10286
1. The undersigned hereby certifies to the Subscription
Agent that it is a participant in
[Name of Depository] (the "Depository") and that it has either
(i) exercised the Primary Subscription in respect of the Rights
and delivered such exercised Rights to the Subscription Agent by
means of transfer to the Depository Account of the Fund or (ii)
delivered to the Subscription Agent a Notice of Guaranteed
Delivery in respect of the exercise of the Primary Subscription
Privilege and will deliver the Rights called for in such Notice
of Guaranteed Delivery to the Subscription Agent by means of
transfer to such Depository Account of the Fund.
<PAGE>
2. The undersigned hereby exercises the Over-
Subscription Privilege to purchase, to the extent available,
shares of Common Stock and certifies to the Subscription Agent
that such Over-Subscription Privilege is being exercised for the
account or accounts of persons (which may include the
undersigned) on whose behalf all Primary Subscription Rights have
been exercised.
3. The undersigned understands that payment of the
Estimated Subscription Price of [$ ] per share for each Share
of Common Stock subscribed for pursuant to the Over-Subscription
Privilege must be received by the Subscription Agent before 5:00
p.m., New York City time, on the Expiration Date, unless a Notice
of Guaranteed Delivery is used, in which case, payment in full
must be received by the Subscription Agent not later than the
close of business on the third business day after the Expiration
Date. The undersigned represents that such payment, in the
aggregate amount of $ either
Continued on other side)
2
<PAGE>
(check appropriate box):
\ \ has been or is being delivered to the Subscription Agent
pursuant to the Notice of Guaranteed Delivery referred to above
\ \ is being delivered to the Subscription Agent herewith
\ \ has been separately delivered to the Subscription Agent
_______________________________________ ___________________________________
Primary Subscription Confirmation Number Name of Nominee Holder
_______________________________________ ___________________________________
Depository Participant Number Address
Contact Name___________________________ ___________________________________
city State Zip Code
Phone Number___________________________ By:________________________________
Dated:____________________, 1999 Name:______________________________
Title:_____________________________
PLEASE ATTACH A BENEFICIAL OWNER LISTING CONTAINING THE RECORD
DATE POSITION OF RIGHTS OWNED, THE NUMBER OF PRIMARY SHARES
SUBSCRIBED AND THE NUMBER OF OVER- SUBSCRIPTION SHARES, IF
APPLICABLE, REQUESTED BY EACH SUCH OWNER.
PLEASE NOTE: THIS FORM WILL NOT BE ACCEPTED AS VALID UNLESS THE
FOLLOWING INFORMA- TION IS PROVIDED FOR THE ALLOCATION OF OVER-
SUBSCRIPTION SHARES.
The positions below pertain to those persons on whose behalf the
Over-Subscription is being exercised.
____________ Total number of record date shares
____________ Total number of primary rights exercised
3
00250205.AT3
<PAGE>
SUBSCRIPTION AGENCY AGREEMENT
June [__], 1999
The Bank of New York
101 Barclay Street - 22W
New York, New York 10286
Attention of Mrs. Kelly Gallagher
Ladies and Gentleman:
Subscription Agency Agreement, dated as of June [______],
1999, between Alliance All-Market Advantage Fund, Inc. (the
"Fund") and The Bank of New York, a New York corporation (the
"Agent"). Capitalized terms used and not otherwise defined herein
shall have the respective meanings assigned to them in the Fund's
Prospectus dated June [______], 1999 (the "Prospectus"), a copy
of which is attached hereto as Exhibit A.
Section 1. The Rights Offering. The Fund is distributing to
the holders of record of Shares of its common stock, par value
$0.01 per share (the "Shares"), as of the close of business on
June 21, 1999 (the "Record Date") non-transferable rights (the
"Rights") to acquire up to a total of 1,048,230 Shares at a price
of $[____] per share (the "Subscription Price") on the basis of
one Right for each Share held of record on the Record Date. The
subscription period will run from June 21, 1999 through July 16,
1999 (the "Expiration Date"). The completed subscription form
evidencing the exercise of the basic purchase right and/or the
over-subscription privilege must be received by the Agent before
5:00 P.M., New York City time, on the Expiration Date. Payment
equal to the amount of the Subscription Price times the number of
Shares subscribed must be received by the Agent before the 10:00
A.M., New York City time on July 16, 1999.
The Fund filed the Registration Statement, including the
Prospectus, relating to the Rights and the Shares to be issued
upon exercise of Rights with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, on May
5, 1999. Said Registration Statement became effective on June
[___], 1999.
The Rights may be exercised by delivering to the Agent a
properly completed and executed subscription form, a form of
which is attached hereto as Exhibit B.
<PAGE>
Section 2. The Rights. Three Rights entitle the holder to
purchase one Share at the Subscription Price and to subscribe for
additional over-subscription Shares at the same price.
Basic purchase right. Three Rights entitle the holder to
receive, upon payment of the Subscription price, one Share.
Over-subscription privilege. Holders exercising their basic
purchase rights in full are entitled to subscribe for additional
over-subscription Shares up to a total of 1,048,230 Shares. If
the rights offering is oversubscribed, the Fund will allocate
those additional over-subscription Shares in accordance with the
terms of the offering.
Reference is made to the Prospectus for a complete
description of the Rights.
Section 3. Fractional Shares. No fractional share will be
issued. Any fractional share to which holders of Rights would
otherwise be entitled will be rounded down to the nearest whole
share.
Section 4. Appointment of Agent.
(a) The Fund hereby appoints you as Agent for the
Rights Offering. In connection with your appointment as Agent,
the Fund has also appointed you as Transfer Agent and as
Registrar of the Company for the Rights and the Shares to be
issued upon exercise of Rights, and to act as is customary in
such capacities.
(b) You hereby confirm that you mailed by first class
mail on June [___], 1999 to each record holder of Shares on the
Record Date (1) a copy of the Prospectus and Subscription
Certificate and (2) a return envelope addressed to the Agent.
Section 5. Duties of the Agent. As Agent you are authorized
and directed to:
(a) mail promptly by first class mail the Prospectus
and Subscription Certificate to each person who submits a request
to you before the Expiration Date;
(b) accept subscriptions upon the exercise of Rights in
accordance with the terms of the Prospectus and the Instructions
to the form of Subscription Certificate up to 5:00 P.M., New York
City time, on the Expiration Date;
(c) accept subscriptions, without further authorization
from the Fund, without procuring supporting legal papers or other
2
<PAGE>
proof of authority to sign (including proof of appointment of a
fiduciary or other person acting in a representative capacity):
(i) where the Shares are registered in the name
of a fiduciary, the subscription form is executed by such
fiduciary, and the Shares are to be issued in the name of the
registered owner of the Shares as of the Record Date;
(ii) where the Shares are in the name of a
corporation and the subscription form is executed by an officer
thereof, and the Ordinary Shares are to be issued in the name of
such corporation; or
(iii) where the Shares are registered in the name
of a decedent and the subscription is executed by a subscriber
purporting to act as the decedent's executor or administrator,
the Shares are to be registered in the name of the subscriber as
executor or administrator of the estate of the deceased
registered holder; and
(iv) in each of the cases under (i), (ii) and
(iii), there is no evidence indicating that the subscriber is not
the duly authorized representative that she purports to be;
(d) accept subscriptions executed, as agent for the
subscriber, by a firm having membership on a national securities
exchange or by a bank or trust company having an office or a
correspondent in the United States;
(e) accept full payment for the total number of shares
subscribed for prior to 10:00 A.M., New York City time, on July
16, 1999; and
(f) refer to the Fund for specific instructions as to
acceptance or rejection of subscriptions received after the
Expiration Date, subscriptions not authorized to be accepted
pursuant to paragraph (b), (c) or (d) above, and subscriptions
otherwise failing to comply with the requirements of the
Prospectus and the Instructions to the form of Subscription
Certificate.
(g) Upon acceptance of subscriptions, the Agent shall;
(i) hold in trust for the Fund, until 10:00 A.M.,
New York City time, July 16, 1999, in an interest bearing account
consisting of instruments which accrue interest at the prevailing
federal funds rate, all funds collected in payment of
subscriptions;
(ii) by no later than 12:00 P.M., New York City
time, July 16, 1999, transfer the funds to the Fund's current
3
<PAGE>
account with The Bank of New York, Account #000215 unless for any
reason the rights offering is terminated, in which case the Agent
shall refund to subscribers without interest all funds collected
and refund to the Fund all interest accrued on subscription
funds;
(iii) advise the Fund daily by telecopy and
confirmed by letter as to the total number of Shares subscribed
for and the amount of funds received (identified in accordance
with (i) above), deposited, available or transferred in
accordance with (i) above, with cumulative totals;
(iv) as promptly as possible following the
Expiration Date, advise the Fund in accordance with (ii) above of
the number of Shares subscribed and the number of Shares
unsubscribed; and
(v) On July 16, 1999 issue certificates as
Transfer Agent and Registrar for Shares subscribed for,
countersigned with the signature of the Agent, registered in the
names specified by the subscribers, and mail or deliver such
certificates as instructed by the subscribers as soon as
practicable in accordance with the rules of the NASD, after
collection of remittance for subscriptions.
Section 6. Agent Compensation. The Fund agrees that it will
pay to the Agent compensation for its services of $15,000 to act
as Agent. The Fund further agrees that it will reimburse the
Agent for its necessary and reasonable expenses incurred in the
performance of its duties as such, including without limitation
reasonable postage, stationery and supplies and counsel fees.
Section 7. Confidential Information. The Agent acknowledges
the confidential and proprietary nature of the Fund's shareholder
records and information related thereto which it may receive
pursuant to the exercise of its duties under this Agreement. The
Agent agrees that it shall maintain the confidentiality thereof
and, except as necessary to fulfill any duty under this
Agreement, shall not disclose the contents or nature thereof
without the express prior written authorization of any two of the
following persons: Edmund P. Bergan, Jr., Domenick Pugliese,
Vincent S. Noto and Phyllis Clark.
Section 8. Instructions. The Agent will be entitled to rely
upon any instructions or directions furnished to it in writing by
any officer of the Fund, and will be entitled to treat as
genuine, and as the document purports to be, any letter or other
document furnished to it by any officer of the Fund.
Section 9. Indemnification. The Fund further agrees that
the Fund will indemnify, protect and hold harmless the Agent from
4
<PAGE>
any and all liability, cost or expense resulting from any act,
omission, delay or refusal, made by it in reliance upon any
signature, endorsement, assignment, certificate, order, request,
notice, instructions or other instrument or document believed by
it in good faith to have been duly authorized, and in delaying or
refusing in good faith to accept any subscription. The Agent
shall, in issuing and registering Shares as Transfer Agent and
Registrar pursuant to duly exercised Rights, be liable for and
shall indemnify and hold the Fund harmless from any and all
liability, cost or expense as a result of or arising out of its
own negligence or bad faith or that of its agents, servants or
employee.
Section 10. Amendments. This Agreement may be amended,
supplemented or otherwise modified only by a written instrument
executed and delivered by each of the Fund and the Agent.
Section 11. Governing Law. This Agreement will be governed
by, and construed and interpreted in accordance with, the laws of
the State of New York.
Section 12. Counterparts. This Agreement may be executed by
the parties hereto on separate counterparts, which counterparts
taken together will be deemed to constitute one and the same
instrument.
5
<PAGE>
If the foregoing is acceptable to you, please indicate your
acceptance of your appointment as Agent upon the terms set forth
above by signing and return to us one copy of this Agreement.
Very truly yours,
Alliance All-Market Advantage Fund,
Inc.
By:________________________________
Name:______________________________
Title:_____________________________
Accepted and agreed to as of
the [__] day of June, 1999
THE BANK OF NEW YORK
By:_______________________
Name:_____________________
Title:____________________
6
00250205.AS7
<PAGE>
ALLIANCE CAPITAL [LOGO]
Dear Shareholder:
In order to provide you with answers to the questions that are
most frequently asked about the Dividend Reinvestment Plan (the
"Plan") established by Alliance All-Market Advantage Fund, Inc.
(the "Fund"), we have prepared this brochure to summarize the
details of the Plan. The Plan provides a convenient way to
acquire additional shares of the Fund's common stock
automatically through the reinvestment of net investment income
and capital gains.
If your shares are held in your own name, you will automatically
be a participant in the Plan unless you elect to receive cash.
If your shares are held in the name of a brokerage firm, bank or
other nominee, you should contact such brokerage firm, bank or
nominee to determine whether or how you may participate in the
Plan. If the automatic reinvestment service is provided by your
particular institution you will automatically be a participant in
the Plan. If such service is not provided by your particular
institution, you may have to request your brokerage firm, bank or
other nominee to register your shares in your own name to enable
you to participate in the Plan.
We hope that this brochure will prove helpful in addressing your
questions regarding the Plan. If you have any questions, please
contact The Bank of New York at the telephone number listed on
the cover of this brochure.
Sincerely,
/s/ David H. Dievler
____________________
David H. Dievler
Chairman of the Board
(R) This registered service mark used under license from the
owner, Alliance Capital Management L.P.
<PAGE>
How Often Are Dividends and Capital Gains Distributed?
The Fund will pay dividends of net investment income on its
shares of common stock (the "Shares") on an annual basis, and
will distribute net capital gains on the Shares, if any, at least
annually.
How Do I Enroll in The Plan
All shareholders whose Shares are registered in their own names
will have all distributions reinvested automatically in
additional Shares, unless a shareholder elects to receive cash.
Shareholders whose Shares are held in the name of a broker or
nominee will automatically have distributions reinvested by the
broker or nominee in additional Shares under the Plan, unless the
automatic reinvestment service is not provided by the particular
broker or nominee (the "Nonparticipating Institutions") or the
Shareholder elects to receive distributions in cash. You should
contact your brokerage firm, bank or other nominee to determine
whether or how you may participate in the Plan. If the service
is not available, such distributions will be paid in cash. To
the extent that you wish to participate in the Plan, and you hold
your Shares through a Non-participating Institution, you should
contact such institution to ensure that your account is properly
represented. It may also be necessary for you to have your
Shares taken out of "street" name and registered in your own name
to guarantee your participation in the Plan. You should contact
your broker or nominee for information as to its participation in
the automatic reinvestment service.
What Are The Benefits Of the Plan?
The Plan provides you with a convenient way to reinvest your
dividends and capital gains in additional Shares of the Fund,
thereby enabling you to compound your returns from the Fund.
As a participant, all distributions will be automatically
reinvested by The Bank of New York, as the plan agent (the "Plan
Agent"), in whole or fractional Shares of the Fund, as the case
may be.
Another benefit of the Plan is that, under circumstances in which
the dividends or distributions are reinvested in Shares that are
purchased by the Plan Agent on the open market, brokerage
commissions should be lower than you would pay to buy Shares on
your own because the Plan Agent would purchase Shares in large
blocks. In cases where dividends or distributions consist of
Shares issued directly by the Fund, no brokerage commissions to
acquire such Shares are paid.
2
<PAGE>
You will receive detailed account statements from the Plan Agent,
showing your dividends and capital gains distributions, dates of
reinvestment, number of Shares acquired and purchase price paid
per Share, and also showing the total number of Shares you
previously acquired and still hold through the Plan.
How Do I Receive Cash In Lieu of Reinvestment?
If Shares are registered in your name, you must notify the Plan
Agent that you wish to receive dividends and capital gains in
cash. All such distributions will be paid by check from the Plan
Agent. To notify the Plan Agent, the shareholder MUST:
- - Complete and sign the attached authorization form; and
- - Mail the form to the Plan Agent at the address stated on the
form.
In order to receive dividends and capital gains in cash, the
authorization form must be received by the Plan Agent at least 10
business days before the record date for such distributions.
How Does The Dividend Reinvestment Plan Work?
When a dividend or capital gain distribution is declared,
nonparticipants in the Plan will receive cash. Participants in
the Plan will receive the equivalent in Shares of the Fund valued
as described below:
(i) If the Shares are trading at net asset value or at a
premium above net asset value at the time of valuation, the Fund
will issue new Shares at the greater of net asset value or 95% of
the then current market price.
(ii) If the Shares are trading at a discount from net asset
value at the time of valuation, the Plan Agent will receive the
dividend or distribution in cash and apply it to the purchase of
the Fund's Shares in the open market, on the New York Stock
Exchange or elsewhere, for the participants' accounts. Such
purchases will be made on or shortly after the payment date for
such dividend or distribution and in no event more than 30 days
after such date except where temporary curtailment or suspension
of purchase is necessary to comply with the Federal securities
laws. If, before the Plan Agent has completed its purchases, the
market price exceeds the net asset value of a Share of common
stock, the average purchase price per share paid by the Plan
Agent may exceed the net asset value of the Fund's Shares,
resulting in the acquisition of fewer Shares than if the dividend
or distribution had been paid in Shares issued by the Fund.
3
<PAGE>
Will The Entire Amount Of My Distribution Be Reinvested?
As a registered shareholder in the Plan, the entire amount of
your distribution will be reinvested in Shares. For any balance
that is not sufficient to purchase a full Share, the Plan Agent
will credit your account with a fractional Share interest
computed to four decimal places. The fractional Share interest
is included in all subsequent distributions, and you have voting
rights on all full and fractional Shares acquired under the Plan.
Will I Be Issued Share Certificates For Transactions In The Plan?
No. All Shares will be credited to the shareholder's account.
However, if a stock certificate is desired, it must be requested
in writing for each transaction. Certificates will be issued
only for full Shares after request.
Are Distributions That Are Reinvested Subject To Income Taxes?
The automatic reinvestment of dividends and distributions will
not relieve participants of any income tax which may be payable
on such dividends or distributions. If you participate in the
Plan, you will receive a Form 1099 concerning the Federal tax
status of distributions paid during the year.
Is There Any Charge To Participate In The Plan?
You will not pay any charge as a participant in the Plan to have
your dividends and distributions reinvested in additional Shares.
The Plan Agent's fees for handling the reinvestment of dividends
and distributions will be paid by the Fund. There will be no
brokerage charges for Shares issued directly by the Fund as a
result of dividends or distributions payable either in Shares or
cash. However, each participant will pay a pro rata share of
brokerage commissions incurred with respect to the Plan Agent's
open market purchases in connection with the reinvestment of
dividends or distributions paid in cash.
How Do I Withdraw From the Plan or Sell My Shares?
Participants wishing to withdraw from the Plan or sell part or
all of their Shares must notify the Agent in writing not less
than 10 days prior to any dividend record date, as specified in
Paragraph 10 of the Terms and Conditions.
Should you choose to withdraw any Shares from the Plan or
discontinue your participation in the Plan, you will receive a
certificate for the appropriate number of full Shares, along with
a check in payment for any fractional Share interest you may
have. The payment for the fractional Share interest will be
valued at the market price of the Fund Shares on the date your
4
<PAGE>
termination is effective. In lieu of receiving a certificate,
you may request the Plan Agent to sell part or all of your Shares
at the market price and remit the proceeds to you, net of any
brokerage commissions. A $3.00 fee is charged by the Plan Agent
upon any cash withdrawal or termination.
WHOM SHOULD I CONTACT FOR ADDITIONAL INFORMATION?
If you hold Shares in your own name, please address all notices,
correspondence, questions or other communications regarding the
Plan to:
The Bank of New York
c/o Alliance All-Market Advantage Fund, Inc
Investor Relations Dept.
P.O. Box 19555
Newark, N.J. 07195-0555
(800) 432-8224
If your shares are not held in your name, you should contact your
brokerage firm, bank or other nominee for more information.
Experience under the Plan may indicate that changes are
desirable. Accordingly, the Fund reserves the right to amend or
terminate the Plan as applied to any dividend or distribution
paid subsequent to written notice of the change to the Plan
participant at least 90 days before the date of such dividend or
distribution. The Plan may also be amended or terminated by the
Plan Agent with the Fund's prior consent on at least 90 days'
written notice to participants.
ALLIANCE ALL-MARKET
ADVANTAGE FUND, INC.
TERMS AND CONDITIONS OF
DIVIDEND REINVESTMENT PLAN
1. Each holder of shares (a "Shareholder") of common stock
in Alliance All-Market Advantage Fund, Inc. (the "Fund"), whose
Fund shares are registered in his or her own name will
automatically be a participant ("Participant") in the Dividend
Reinvestment Plan (the "Plan"), unless any such Shareholder
specifically elects to receive all dividends and capital gains
distributions in cash paid by check mailed directly to the
Shareholder. A Shareholder whose shares are registered in the
name of a broker-dealer or other nominee (the "Nominee") will be
a Participant if such a service is provided by the Nominee. The
Bank of New York (the "Agent") will act as agent for Participants
and will open an account under the Plan for each Participant in
the same name as such Participant's common stock is registered on
the books and records of the transfer agent for the common stock.
5
<PAGE>
2. Whenever the Fund declares a capital gains distribution
or an income dividend payable in shares of common stock or cash,
Participants will receive the equivalent in shares of the Fund
valued as described in paragraph 3 below.
3. (i) If the shares are trading at net asset value or at
a premium above net asset value at the time of valuation, the
Fund will issue new Fund shares at the greater of net asset value
or 95% of the then current market price.
(ii) If the shares are trading at a discount from net
asset value at the time of valuation, the Agent will receive the
dividend or distribution in cash and apply it to the purchase of
the Fund's Shares in the open market, on the New York Stock
Exchange (the "Exchange") or elsewhere, for the Participants'
accounts. Such purchases will be made on or shortly after the
payment date for such dividend or distribution and in no event
more than 30 days after such date except where temporary
curtailment or suspension of purchase is necessary to comply with
Federal securities laws. If, before the Agent has completed its
purchases, the market price exceeds the net asset value of a
share of common stock, the average purchase price per share paid
by the Agent may exceed the net asset value of the Fund's shares,
resulting in the acquisition of fewer shares than if the dividend
or distribution had been in shares issued by the Fund.
4. For purposes of the Plan: (i) the market price of the
Fund's common stock on a particular date shall be the last sale
price on the Exchange at the close of the previous trading day
or, if there is no sale on the Exchange on that date, then the
mean between the closing bid and asked quotations for such stock
on the Exchange on such date, and (ii) net asset value per share
of common stock on a particular date shall be as determined by or
on behalf of the Fund.
5. The open market purchases provided for above may be made
on any securities exchange where the shares of common stock of
the Fund are traded, in the over-the-counter market or in
negotiated transactions, and may be on such terms as to price,
delivery and otherwise as the Agent shall determine. Monies held
by the Agent uninvested will not bear interest, and it is
understood that, in any event, the Agent shall have no liability
in connection with any inability to purchase shares of common
stock within 30 days after the initial date of such purchase as
herein provided, or with the timing of any purchases effected.
The Agent shall have no responsibility as to the value of the
shares of common stock of the Fund acquired for any Participant's
account.
6. The Agent will hold shares of common stock acquired
pursuant to the Plan in the Agent's name or that of its Nominee.
6
<PAGE>
The Agent will forward to each Participant any proxy solicitation
material and will vote any shares of common stock so held for
each Participant only in accordance with the proxy returned by
any such Participant to the Fund. Upon any Participant's written
request, the Agent will cause the Fund to deliver to her or him,
without charge, a certificate or certificates for the full shares
of common stock. Shares represented by certificates acquired in
this manner will continue to be included in the Participant's
account under the Plan.
7. The Agent will confirm to each Participant acquisitions
made for its account as soon as practicable but not later than
60 days after the date thereof. Although a Participant may from
time to time have an undivided fractional interest (computed to
four decimal places) in a share of common stock of the Fund, no
certificates for a fractional share will be issued. However,
dividends and distributions on fractional shares of common stock
will be credited to Participants' accounts.
8. Any stock dividends or split shares distributed by the
Fund on shares of common stock held by the Agent for any
Participant will be credited to such Participant's account. In
the event that the Fund makes available to Participants rights to
purchase additional shares of common stock or other securities,
the Agent will sell such rights and apply the proceeds of the
sale to the purchase of additional shares of common stock of the
Fund for the account of Participants.
9. The Agent's service fee for handling capital gains
distributions or income dividends will be paid by the Fund.
Participants will be charged a pro rata share of brokerage
commissions on all open market purchases.
10. Any Participant may withdrawal shares from such
Participant's account or terminate such Participant's account
under the Plan by notifying the Agent in writing. Such
withdrawal or termination will be effective immediately if notice
is received by the Agent not less than 10 days prior to any
dividend or distribution record date; otherwise such withdrawal
or termination will be effective, with respect to any subsequent
dividend or distribution, on the first trading day after the
dividends paid for such record date have been credited to the
Participant's account. The Plan may be terminated by the Fund or
the Agent with the Fund's prior consent upon notice in writing
mailed to each Participant at least 90 days prior tot nay record
date of the payment of any dividend or distribution by the Fund.
Upon any withdrawal or termination, the Agent will cause to be
delivered to each Participant a certificate or certificates for
the appropriate number of full shares and a cash adjustment for
any fractional share (valued at the market value of the shares at
the time of withdrawal or termination); provided, however that
7
<PAGE>
any participant may elect by notice to the Agent in writing in
advance of such termination to have the Agent sell part or all of
the shares in question and remit the proceeds to such
Participant, net of any brokerage commissions. A $3.00 fee will
be charged by the Agent upon any cash withdrawal or termination,
and the Agent is authorized to sell a sufficient number of the
Participant's shares to cover such fee and any brokerage
commission on such sale.
11. These terms and conditions amy be amended or
supplemented by the Fund or the Agent with the Fund's prior
consent only by mailing to each Participant appropriate written
notice at least 90 days prior to the effective date thereof. The
amendment or supplement shall be deemed to be accepted by each
Participant unless, with respect to any such Participant, prior
to the effective date thereof, the Agent receives written notice
of the termination of that Participant's account under the Plan.
Any such amendment may include an appointment by the Agent in its
place and stead of a successor Agent under these terms and
conditions, with full power and authority to perform all or any
of the acts to be performed by the Agent under these terms and
conditions. Upon any such appointment of an Agent for the
purpose of receiving dividends any distributions, the Fund will
be authorized to pay to such successor Agent, for Participants'
accounts, all dividends and distributions payable on the shares
of common stock held in each Participant's name or under the Plan
for retention or application by such successor Agent as provided
in these terms and conditions.
12. The Agent shall at all times act in good faith and agree
to use its best efforts within reasonable limits to ensure the
accuracy of all services performed under this agreement and to
comply with applicable law, but assumes no responsibility and
shall not be liable for loss or damage due to errors unless such
error is caused by its or its employees' negligence, bad faith or
willful misconduct.
13. The Participant shall have no right to draw checks or
drafts against such Participant's Account or to give instructions
to the Agent in respect of any shares or cash held therein except
as expressly provided herein.
14. The Participant agrees to notify the Agent promptly in
writing of any change of address. Notices to the Participant may
be given by the Agent by letter addressed to the Participant as
shown on the records of the Agent.
15. This Agreement and the account established hereunder for
the Participant shall be governed by and construed in accordance
with the laws of the State of New York and the Rules and
8
<PAGE>
Regulations of the Securities and Exchange Commission, as they
may be changed or amended from time to time.
9
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
10
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
11
<PAGE>
*AUTHORIZATION FOR CASH
PLEASE TERMINATE MY REINVESTMENT PLAN AND... (CHECK ONE)
-- Issue a certificate for all full shares, sell any
/ / fractional shares remaining in my reinvestment account
- -- and remit a check for the proceeds on the sale of the
fractional shares.
-- Sell all shares currently held in my reinvestment
/ / account, and remit a check for the proceeds.
- --
[DO NOT MAIL, IF YOU WISH TO RECEIVE BOTH YOUR DIVIDEND
AND CAPITAL GAINS DISTRIBUTIONS IN ADDITIONAL SHARES.]
PRINT
NAME(S)____________________
___________________________
DATE_______________________
TAX
IDENTIFICATION
NUMBER_____________________
SIGNATURE(S)_______________
___________________________
* NOTIFICATION MUST BE RECEIVED BY THE PLAN AGENT AT LEAST
90 BUSINESS DAYS PRIOR TO THE RECORD DATE FOR A DISTRIBUTION.
12
00250205.AS3
<PAGE>
ADVISORY AGREEMENT
Alliance All-Market Advantage Fund, Inc.
1345 Avenue Of The Americas
New York, New York 10105
October 28, 1994
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
Dear Sirs:
We, the undersigned Alliance All-Market Advantage
Fund, Inc., herewith confirm our agreement with you as
follows:
1. We are a closed-end, non-diversified
management investment company registered under the
Investment Company Act of 1940 (the "Act"). We propose to
engage in the business of investing and reinvesting our
assets in securities ("the portfolio assets") of the type
and in accordance with the limitations specified in our
Articles of Incorporation, Bylaws, Registration Statement
filed with the Securities and Exchange Commission under the
Securities Act of 1933 and the Act, and any representations
made in our prospectus, all in such manner and to such
extent as may from time to time be authorized by our Board
of Directors. We enclose copies of the documents listed
above and will from time to time furnish you with any
amendments thereof.
<PAGE>
2. (a) We hereby employ you to manage the
investment and reinvestment of the portfolio assets as above
specified and, without limiting the generality of the
foregoing, to provide management and other services
specified below.
(b) You will make decisions with respect to
all purchases and sales of the portfolio assets. To carry
out such decisions, you are hereby authorized, as our agent
and attorney-in-fact, for our account and at our risk and in
our name, to place orders for the investment and
reinvestment of the portfolio assets. In all purchases,
sales and other transactions in the portfolio assets you are
authorized to exercise full discretion and act for us in the
same manner and with the same force and effect as we might
or could do with respect to such purchases, sales or other
transactions, as well as with respect to all other things
necessary or incidental to the furtherance or conduct of
such purchases, sales or other transactions.
(c) You will report to our Board of Directors
at each meeting thereof all changes in the portfolio assets
since the prior report, and will also keep us in touch with
important developments affecting the portfolio assets and on
your own initiative will furnish us from time to time with
such information as you may believe appropriate for this
purpose, whether concerning the individual issuers whose
2
<PAGE>
securities are included in our portfolio, the industries in
which they engage, or the conditions prevailing in the
economy generally. You will also furnish us with such
statistical and analytical information with respect to the
portfolio assets as you may believe appropriate or as we
reasonably may request. In making such purchases and sales
of the portfolio assets, you will bear in mind the policies
set from time to time by our Board of Directors as well as
the limitations imposed by our Articles of Incorporation and
in our Registration Statement under the Act and the
Securities Act of 1933, and the limitations in the Act and
of the Internal Revenue Code of 1986, as amended, in respect
of regulated investment companies.
(d) It is understood that you will from time
to time employ or associate with yourselves such persons as
you believe to be particularly fitted to assist you in the
execution of your duties hereunder, the cost of performance
of such duties to be borne and paid by you. No obligation
may be incurred on our behalf in any such respect. During
the continuance of this agreement at our request you will
provide us persons satisfactory to our Board of Directors to
serve as our officers. Such personnel may be employees of
you or your affiliates. Nothing contained herein shall be
construed to restrict our right to hire our own employees or
to contract for services to be performed by third parties.
3
<PAGE>
Furthermore, you or your affiliates (other than us) shall
furnish us without charge with such management supervision
and assistance and such office facilities as you may believe
appropriate or as we may reasonably request subject to the
requirements of any regulatory authority to which you may be
subject.
3. We hereby confirm that, subject to the
foregoing, we shall be responsible and hereby assume the
obligation for payment of all our other expenses, including:
(a) payment of the fee payable to you under paragraph 5
hereof; (b) brokerage and commission expenses; (c) federal,
state, local and foreign taxes, including issue and transfer
taxes, incurred by or levied on us; (d) interest charges on
borrowings; (e) our organizational and offering expenses,
whether or not advanced by you; (f) fees and expenses of
registering our shares under the appropriate federal
securities laws and of qualifying our shares under
applicable state securities laws; (g) fees and expenses of
listing and maintaining the listing of our shares on any
securities exchange; (h) expenses of printing and
distributing reports to shareholders; (i) costs of proxy
solicitation; (j) fees, charges and expenses of our
administrator, custodian, our registrar, transfer and
dividend paying agent and our shareholder servicing agent;
(k) compensation of our Directors, officers and employees
4
<PAGE>
who do not devote any part of their time to your affairs or
the affairs of your affiliates other than us; (l) legal and
auditing expenses; (m) the cost of stock certificates
representing shares of our common stock; and (n) costs of
stationery and supplies.
4. We shall expect of you, and you will give us
the benefit of, your best judgment and efforts in rendering
these services to us, and we agree as an inducement to your
undertaking these services that you shall not be liable
hereunder for any mistake of judgment or in any event
whatsoever, except for lack of good faith, provided that
nothing herein shall be deemed to protect, or purport to
protect, you against any liability to us or to our security
holders to which you would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the
performance of your duties hereunder, or by reason of your
reckless disregard of your obligations and duties hereunder.
5. In consideration of the foregoing we will pay
you a fee comprised of a basic fee (the "Basic Fee") and an
adjustment to the Basic Fee based on the investment
performance of the Fund in relation to the investment record
of the Russell 1000 TM Growth Index (the "Index"). Such fee
shall be calculated and payable as described below.
(a) Beginning with the month of November 1995
and for each succeeding month, the Basic Fee shall be a
5
<PAGE>
monthly fee equal to 1/12th of 1.5% (1.5% on an annualized
basis) of the average of the net assets of the Fund at the
end of each month included in the applicable performance
period. The performance period for each such month shall be
from November 1994 to the most recent month-end, until this
agreement has been in effect for 36 full calendar months,
when it shall become a rolling 36 month period ending with
the most recent calendar month. The Basic Fee for each such
month shall be increased at the rate of 1/12th of .05% for
each percentage point in excess of two, rounded to the
nearer point (the higher point if exactly one-half a point),
that the investment performance of the Fund for the
performance period then ended exceeds the percentage change
in the investment record of the Index for such performance
period (up to a maximum of eight percentage points). If,
however, the investment performance of the Fund for such
performance period shall be exceeded by the percentage
change in the investment record of the Index for such
performance period, then such Basic Fee shall be decreased
at the rate of 1/12th of .05% for each percentage point in
excess of two, rounded to the nearer point (the higher point
if exactly one-half), that the percentage change in the
investment record of the Index exceeds the investment
performance of the Fund for such performance period (up to a
maximum of eight percentage points). The maximum increase
6
<PAGE>
or decrease in the Basic Fee for any month may not exceed
1/12th of .30%; the maximum monthly fee, as adjusted, may
not exceed 1/12th of 1.80%; and the minimum monthly fee, as
adjusted, may not be less than 1/12th of 1.20%.
(b) For the period from November 1, 1994
through October 31, 1995, you will receive a minimum fee
(the "Minimum Fee"), payable monthly, equal to 1.20%,
annualized, of the average of the net assets of the Fund at
the end of each month in such annual period. The
performance period relating to such annual period will be
from November 1, 1994 through October 31, 1995. The fee
receivable by you for such annual period may be increased to
1.80% from the Minimum Fee. The increase, if any, will be
equal to the difference between (i) the Basic fee as
adjusted for such annual period in accordance with the
preceding paragraph and (ii) the Minimum Fee. The maximum
increase in the Minimum Fee for such annual period may not
exceed .60%, with the rate of any increase being applied on
an annualized basis. You will not receive any fee for any
period prior to November 1, 1994.
(c) The investment performance of the Fund for
any period, expressed as a percentage of the Fund's net
asset value per share at the beginning of such period, shall
mean and be the sum of: (i) the change in the Fund's net
asset value per share during such period; (ii) the value of
7
<PAGE>
the Fund's cash distributions per share accumulated to the
end of such period; and (iii) the value of capital gains
taxes per share paid or payable on undistributed realized
long-term capital gains accumulated to the end of such
period. For this purpose, the value of distributions per
share of realized capital gains, of dividends per share paid
from investment income and of capital gains taxes per share
paid or payable on undistributed realized long-term capital
gains shall be treated as reinvested in shares of the Fund
at the net asset value per share in effect at the close of
business on the record date for the payment of such
distributions and dividends and the date on which provision
is made for such taxes, after giving effect to such
distribution, dividends and taxes. Notwithstanding any
provisions of this subparagraph (c) or of the other
subparagraphs of Paragraph 5 hereof to the contrary, the
investment performance of the Fund for any period shall not
include, and there shall be excluded from the change in the
Fund's net asset value per share during such period and the
value of the Fund's cash distributions per share accumulated
to the end of such period shall be adjusted for, any
increase or decrease in the investment performance of the
Fund for such period computed as set forth in the preceding
two sentences and resulting from the Fund's issuance, sale
or repurchase of any shares of Common Stock of the Fund.
8
<PAGE>
(d) The investment record of the Index for any
period, expressed as a percentage of the Index level at the
beginning of such period, shall mean and be the sum of
(i) the change in the level of the Index during such period;
and (ii) the value, computed consistently with the Index, of
cash distributions made by companies whose securities
comprise the Index accumulated to the end of such period.
For this purpose, cash distributions on the securities which
comprise the Index shall be treated as reinvested in the
Index at the end of each calendar month following the
payment of the dividend.
(e) Any calculation of the investment performance
of the Fund and the investment record of the Index shall be
in accordance with any then applicable rules of the
Securities and Exchange Commission.
(f) In the event of any termination of this
agreement, the fee provided for in this Paragraph 5 shall be
calculated on the basis of a period ending on the last day
on which this agreement is in effect, subject to a pro rata
adjustment based on the number of days elapsed in the
current period as a percentage of the total number of days
in such period.
6. This agreement shall become effective on the
date on which our pending Registration Statement on Form N-2
relating to our shares becomes effective and shall continue
9
<PAGE>
in effect until September 30, 1996 and may be continued for
successive twelve-month periods (computed from each
October 1) provided that such continuance is specifically
approved at least annually by our Board of Directors or by
majority vote of the holders of our outstanding voting
securities (as defined in the Act), and in either case, by a
majority of our Board of Directors who are not interested
persons, as defined in the Act, of any party to this
agreement (other than as Directors of our corporation),
provided further, however, that if the continuation of this
agreement is not approved, you may continue to render the
services described herein in the manner and to the extent
permitted by the Act and the rules and regulations
thereunder. Upon the effectiveness of this agreement, it
shall supersede all previous agreements between us covering
the subject matter hereof. This agreement may be terminated
at any time, without the payment of any penalty, by vote of
a majority of our outstanding voting securities (as so
defined), or by a vote of our Board of Directors on 60 days
written notice to you, or by you on 60 days written notice
to us.
7. This agreement may not be transferred,
assigned, sold or in any manner hypothecated or pledged by
you and this agreement shall terminate automatically in the
event of any such transfer, assignment, sale, hypothecation
10
<PAGE>
or pledge by you. The term "transfer", "assignment" and
"sale" as used in this paragraph shall have the meanings
ascribed hereto by governing law and any interpretation
thereof contained in rules or regulations promulgated by the
Securities and Exchange Commission thereunder.
8. (a) Except to the extent necessary to perform
your obligations hereunder, nothing herein shall be deemed
to limit or restrict your right, or the right of any of your
employees, or any of the officers or directors of Alliance
Capital Management Corporation, your general partner, who
may also be a Director, officer or employee of ours, or
persons otherwise affiliated with us (within the meaning of
the Act) to engage in any other business or to devote time
and attention to the management or other aspects of any
other business, whether of a similar or dissimilar nature,
or to render service of any kind to any other trust,
corporation, firm, individual or association.
(b) You will notify us of any change in the
general partner of your partnership within a reasonable time
after such change.
9. This agreement shall be construed in
accordance with the laws of the State of New York, provided,
however, that nothing herein shall be construed as being
inconsistent with the Act.
11
<PAGE>
If the foregoing is in accordance with your
understanding, will you kindly so indicate by signing and
returning to us the enclosed copy hereof.
Very truly yours,
ALLIANCE ALL-MARKET ADVANTAGE
FUND, INC.
By /s/ David H. Dievler
__________________________
Name:
Title:
Agreed to and accepted
as of the date first set forth above.
ALLIANCE CAPITAL MANAGEMENT L.P.
By ALLIANCE CAPITAL MANAGEMENT
CORPORATION,
its General Partner
By /s/ John D. Carifa
_______________________________
Name:
Title:
12
00250205.AD3
<PAGE>
R&W DRAFT - 6/17/99
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
845,600 Shares of Common Stock Issuable Upon Exercise
of Non-Transferable Rights to Subscribe for
Such Shares of Common Stock
DEALER MANAGER AGREEMENT
New York, New York
June 21, 1999
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Ladies and Gentlemen:
Alliance All-Market Advantage Fund, Inc., a Maryland
corporation (the "Company"), and Alliance Capital Management L.P.
("Alliance") each confirms its agreement with and appointment of
PaineWebber Incorporated to act as dealer manager (the "Dealer
Manager") in connection with the issuance by the Company to the
holders of record at the close of business on June 21, 1999 or
such other date as is established as the record date for such
purpose (the "Holders"), of the shares of common stock, par value
$.01 per share, of the Company (the "Common Stock"), of non-
transferable rights entitling such Holders to subscribe for an
aggregate of 845,600 shares (each a "Share" and, collectively,
the "Shares") of Common Stock (the "Offer"). Pursuant to the
over-subscription privilege in connection with the Offer (the
"Over-Subscription Privilege"), the Company may, at the
discretion of the Board of Directors, increase the number of
Shares subject to subscription by up to 25%. Pursuant to the
terms of the Offer, the Company is issuing each Holder one
nontransferable right (each a "Right" and, collectively, the
"Rights") for each whole share of Common Stock held by such
Holder on the record date set forth in the Prospectus (as defined
herein) (the "Record Date"). The Rights entitle Holders to
acquire during the subscription period set forth in the
Prospectus (as defined herein) (the "Subscription Period"), at
the price set forth in the Prospectus (the "Subscription Price"),
one Share for each three Rights exercised on the terms and
conditions set forth in such Prospectus. No fractional Shares
will be issued.
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement, on Form
<PAGE>
N-2 (Nos. 333-77839 and 811-8702) and a related preliminary
prospectus for the registration of the Shares under the
Securities Act of 1933, as amended (the "Securities Act"), and
the rules and regulations of the Commission thereunder (the
"Securities Act Rules and Regulations"), and has filed such
amendments to such registration statement on Form N-2, if any,
and such amended preliminary prospectuses as may have been
required to the date hereof. The Company will prepare and file
such additional amendments thereto and such amended prospectuses
as may hereafter be required. The registration statement (as
amended, if applicable) and the prospectus constituting a part
thereof, as from time to time amended or supplemented pursuant to
the Securities Act, are herein referred to as the "Registration
Statement" and such prospectus is referred to herein as the
"Prospectus", except that if any revised prospectus shall be
provided to the Dealer Manager by the Company for use in
connection with the Offer which differs from the Prospectus on
file at the Commission at the time the Registration Statement
becomes effective (whether such revised prospectus is required to
be filed by the Company pursuant to Rule 497(b) or Rule 497(h) of
the Securities Act Rules and Regulations), the term "Prospectus"
shall refer to each such revised prospectus from and after the
time it is first provided to the Dealer Manager for such use.
Any letters to beneficial owners of the shares of Common Stock of
the Company, forms used to exercise rights, any letters from the
Company to securities dealers, commercial banks and other
nominees and any newspaper announcements, press releases and
other offering materials and information that the Company may
use, approve, prepare or authorize in writing for use in
connection with the Offer, are collectively referred to
hereinafter as the "Offering Materials."
1. Representations and Warranties.
(a) The Company represents and warrants to, and agrees
with, the Dealer Manager as of the date hereof and as of the date
of the commencement of the Offer (such later date being
hereinafter referred to as the "Representation Date") and as of
the Expiration Date (as defined below) that:
(i) The Company meets the requirements for use of
Form N-2 under the Securities Act, the Securities Act
Rules and Regulations, the Investment Company Act of
1940, as amended (the "Investment Company Act"), and the
rules and regulations of the Commission under the
Investment Company Act, (the "Investment Company Act
Rules and Regulations"). At the time the Registration
Statement becomes effective, the Registration Statement
will contain all statements required to be stated
therein in accordance with and will comply in all
material respects with the requirements of the
2
<PAGE>
Securities Act, the Investment Company Act, the
Securities Act Rules and Regulations and the Investment
Company Act Rules and Regulations (the Securities Act
Rules and Regulations and the Investment Company Act
Rules and Regulations will together hereinafter be
referred to as the "Rules and Regulations") and will not
include any 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. From the time the Registration Statement
becomes effective through the expiration date of the
Offer set forth in the Prospectus (the "Expiration
Date"), the Prospectus (unless the term "Prospectus"
refers to a prospectus which has been provided to the
Dealer Manager by the Company for use in connection with
the Offer which differs from the Prospectus on file with
the Commission at the time the Registration Statement
becomes effective, in which case at the time such
prospectus is first provided to the Dealer Manager for
such use) and the Offering Materials then authorized by
the Company for use will not include an untrue statement
of a material fact or omit to state a material fact
necessary in order 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 shall
not apply to statements in or omissions from the
Registration Statement or Prospectus made in reliance
upon and in conformity with information relating to the
Dealer Manager furnished to the Company in writing by
the Dealer Manager expressly for use in the Registration
Statement or Prospectus.
(ii) The Company is registered with the Commission
under the Investment Company Act as a closed-end, non-
diversified, management investment company, and no order
of suspension or revocation of such registration has
been issued or proceedings therefor initiated or
threatened by the Commission, all required action has
been taken under the Securities Act, the Investment
Company Act and any state securities laws to make the
public offering and consummate the issuance of the
Rights and the issuance and sale of the Shares by the
Company upon exercise of the Rights, and the provisions
of the Company's articles of incorporation and bylaws
comply as to form in all material respects with the
requirements of the Investment Company Act and the
Investment Company Act Rules and Regulations.
(iii) PricewaterhouseCoopers LLP, the accountants
who certified the financial statements of the Company
3
<PAGE>
set forth or incorporated by reference in the
Registration Statement and the Prospectus, are
independent public accountants as required by the
Securities Act and the Securities Act Rules and
Regulations.
(iv) The financial statements of the Company set
forth or incorporated by reference in the Registration
Statement and the Prospectus fairly present in all
material respects the financial condition of the Company
as of the dates indicated in conformity with generally
accepted accounting principles; and the information set
forth in the Prospectus under the headings "Fee Table"
and "Financial Highlights" each presents fairly in all
material respects the information stated therein.
(v) The Company has been duly incorporated and is
validly existing as a corporation in good standing under
the laws of the State of Maryland, has full power and
authority (corporate and other) to conduct its business
as described in the Registration Statement and the
Prospectus and is duly qualified to do business in each
jurisdiction in which it owns or leases real property or
in which the conduct of its business requires such
qualification, except where the failure to be so
qualified would not result in a material adverse effect
upon the business, properties, financial position or
results of operations of the Company. The Company has
no subsidiaries.
(vi) The Company's authorized capitalization is as
set forth in the Prospectus; the outstanding shares of
Common Stock have been duly authorized and validly
issued and are fully paid and non-assessable and conform
in all material respects to the description thereof in
the Prospectus under the heading "Description of Capital
Stock"; the Rights have been duly authorized by all
requisite action on the part of the Company for issuance
pursuant to the Offer; the Shares have been or, with
respect to the Shares to be issued pursuant to the Over-
Subscription Privilege, will be duly authorized by all
requisite action on the part of the Company for issuance
and sale pursuant to the terms of the Offer and, when
issued and delivered by the Company pursuant to the
terms of the Offer against payment of the consideration
set forth in the Prospectus will be validly issued and
fully paid and non-assessable; the Shares and the Rights
conform in all material respects to all statements
relating thereto contained in the Registration Statement
and the Prospectus; and the issuance of each of the
4
<PAGE>
Rights and the Shares is not subject to any preemptive
rights.
(vii) Except as set forth in the Prospectus,
subsequent to the respective dates as of which
information is given in the Registration Statement and
the Prospectus, (A) the Company has not incurred any
liabilities or obligations, direct or contingent, or
entered into any transactions, other than in the
ordinary course of business, that are material to the
Company, (B) there has not been any material change in
the capital stock of the Company, or any material
adverse change, or to the Company's knowledge any
development involving a prospective material adverse
change, in the condition (financial or otherwise),
business, prospects, net worth or results of operations
of the Company, (C) there has been no dividend or
distribution paid or declared in respect of the
Company's capital stock (other than the distribution
with respect to the fiscal quarter ending June 30,
1999)and (D) the Company has no outstanding long-term
debt.
(viii) Except as set forth in the Prospectus, there
is not pending or, to the knowledge of the Company,
threatened, any action, suit or proceeding affecting the
Company or to which the Company is a party before or by
any court or governmental agency or body, which might
result in any material adverse change in the condition
(financial or otherwise), business, prospects, net worth
or results of operations of the Company, or which might
materially and adversely affect the properties or assets
thereof.
(ix) There are no franchises, contracts or other
documents of the Company that are required to be filed
as exhibits to the Registration Statement by the
Securities Act or the Investment Company Act or by the
Rules and Regulations that have not been so filed or
incorporated by reference therein as permitted by the
Rules and Regulations.
(x) This Agreement, the Subscription Rights Agency
Agreement (the "Subscription Agency Agreement") between
the Company and The Bank of New York (the "Subscription
Agent"), the Investment Advisory Agreement between the
Company and Alliance (the "Investment Advisory
Agreement"), the Administration Agreement between the
Company and Alliance (the "Administration Agreement"),
the Custodian Agreement between the Company and The Bank
of New York (the "Custodian Agreement"), the Transfer
5
<PAGE>
Agency Agreement between the Company and The Bank of New
York (the "Transfer Agency Agreement"), the Shareholder
Inquiry Agency Agreement between the Company and
Alliance Fund Services, Inc. (the "Shareholder Inquiry
Agency Agreement"), the Shareholder Servicing Agreement
between the Company and PaineWebber Incorporated (the
"Shareholder Servicing Agreement") (collectively, all
the foregoing are the "Company Agreements") have been
duly authorized, executed and delivered by the Company;
the Company Agreements are, assuming due authorization,
execution and delivery by the other parties thereto,
legal, valid, binding and enforceable obligations of the
Company subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws of
general applicability relating to or affecting
creditors' rights and to general principles of equity
(regardless of whether enforceability is considered in a
proceeding in equity or at law) and except as
enforcement of rights to indemnity and contribution
hereunder may be limited by Federal or state securities
laws or principles of public policy, and the performance
of the Company's obligations under the Company
Agreements and the consummation of the transactions
contemplated therein or in the Registration Statement
will not result in a material breach or violation of any
of the terms and provisions of, constitute a default
under, or result in the creation or imposition of any
lien, charge or encumbrance upon any properties or
assets of the Company pursuant to any material
agreement, indenture, mortgage, lease or other
instrument to which the Company is a party or by which
it may be bound or to which any of the property or
assets of the Company is subject, nor will such action
result in any violation of the Company's charter or
bylaws, or any order, law, rule or regulation of any
court or governmental agency or body having jurisdiction
over the Company or any of its properties; no consent,
approval, authorization, notification or order of, or
filing with, any court or governmental agency or body is
required for the consummation by the Company of the
transactions contemplated by the Company Agreements or
the Registration Statement, except such as have been
obtained, or if the registration statement filed with
respect to the Shares is not effective under the
Securities Act as of the time of execution hereof, such
as may be required (and shall be obtained as provided in
this Agreement) under the Investment Company Act, the
Securities Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and state securities laws.
6
<PAGE>
(xi) Each of the Company Agreements complies in all
material respects with all applicable provisions of the
Investment Company Act.
(xii) The Common Stock has been duly listed on the
New York Stock Exchange and prior to their issuance the
Shares will have been approved for listing, subject to
official notice of issuance.
(xiii) The Company owns or possesses or has obtained
all material governmental licenses, permits, consents,
orders or approvals and other authorizations necessary
to lease or own, as the case may be, and to operate its
properties and to carry on its business as contemplated
in the Prospectus.
(xiv) The Company (A) has not taken, directly or
indirectly, any action designed to cause or to result
in, or that has constituted or which might reasonably be
expected to constitute, the stabilization or
manipulation of the price of any security of the Company
to facilitate the issuance of the Rights or the sale or
resale of the Shares, (B) has not since the filing of
the Registration Statement sold, bid for or purchased,
or paid anyone any compensation for soliciting purchases
of, shares of Common Stock of the Company and (C) will
not, until the later of the expiration of the Rights or
the completion of the distribution (within the meaning
of Rule 10b-6 under the Exchange Act) of the Shares,
sell, bid for or purchase, pay or agree to pay to any
person any compensation for soliciting another to
purchase any other securities of the Company (except for
the solicitation of the exercises of Rights pursuant to
this Agreement); provided that any action in connection
with the Company's dividend reinvestment plan will not
be deemed to be within the terms of this Section
1(a)(xiv).
(xv) The Company has complied in all previous tax
years, and intends to direct the investment of the
proceeds of the Offer described in the Registration
Statement and the Prospectus in such a manner as to
continue to comply with the requirements of Subchapter M
of the Internal Revenue Code of 1986, as amended
("Subchapter M of the Code"), and is qualified and
intends to continue to qualify as a regulated investment
company under Subchapter M of the Code.
(xvi) The Prospectus and the Offering Materials
complied and comply with the requirements of the
7
<PAGE>
Securities Act, the Investment Company Act and the Rules
and Regulations.
(xvii) There are no material restrictions,
limitations or regulations with respect to the ability
of the Company to invest its assets as described in the
Prospectus other than as described therein.
(b) Alliance represents and warrants to, and agrees
with, the Dealer Manager as of the date hereof, as of the
Representation Date and as of the Expiration Date that:
(i) It has been duly organized and is validly
existing as a limited partnership under the laws of the
State of Delaware, with partnership power and authority
to own its properties and conduct its business as
described in the Prospectus, and is duly licensed or
qualified as a foreign entity and in good standing to do
business in each other jurisdiction in which its
ownership of property or the conduct of its business
requires such qualification or license, except where the
failure to be so qualified would not have a material
adverse effect on Alliance.
(ii) It is duly registered as an investment adviser
under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), and is not prohibited by the
Advisers Act or the Investment Company Act, or the rules
and regulations under such Acts, from acting under the
Investment Advisory Agreement for the Company as
contemplated by the Prospectus.
(iii) Each of this Agreement and the Investment
Advisory Agreement has been duly authorized, executed
and delivered by Alliance; the Investment Advisory
Agreement is, assuming due authorization, execution and
delivery by the other parties thereto, a legal, valid,
binding and enforceable obligation of Alliance, subject
as to enforcement to bankruptcy, insolvency,
reorganization, moratorium and other laws of general
applicability relating to or affecting creditors'
rights, and to general principles of equity (regardless
of whether enforceability is considered in a proceeding
in equity or at law), and the performance by Alliance of
its obligations under such agreements and the
consummation of the transactions therein contemplated to
be consummated by Alliance will not result in a breach
or violation of any of the terms and provisions of, or
constitute a default under, any statute, any material
agreement or instrument to which Alliance is a party or
and by which it is bound or to which any of the property
8
<PAGE>
of Alliance is subject, the Agreement of Limited
Partnership of Alliance, or any order, rule or
regulation of any court or governmental agency or body,
stock exchange or securities association having
jurisdiction over Alliance or any of its properties or
operations.
(iv) Except as set forth in the Prospectus, there
is not pending or, to the knowledge of Alliance,
threatened, any action, suit or proceeding to which
Alliance is a party before or by any court or
governmental agency or body, which is likely to have a
material adverse effect upon the Company or upon the
ability of Alliance to perform its obligations under the
Investment Advisory Agreement.
(v) Alliance (i) has not taken, directly or
indirectly, any action designed to cause or to result
in, or that has constituted or which might reasonably be
expected to constitute, the stabilization or
manipulation of the price of any security of the Company
to facilitate the issuance of the Rights or the sale or
resale of the Shares, (ii) has not since the filing of
the Registration Statement sold, bid for or purchased,
or paid anyone any compensation for soliciting purchases
of, shares of Common Stock of the Company and (iii) will
not, until the later of the expiration of the Rights or
the completion of the distribution (within the meaning
of Rule 10b-6 under the Exchange Act) of the Shares,
sell, bid for or purchase, pay or agree to pay any
person any compensation for soliciting another to
purchase any other securities of the Company (except for
the solicitation of exercises of Rights pursuant to this
Agreement); provided that any action in connection with
the Company's dividend reinvestment plan will not be
deemed to be within the terms of this Section 1(b)(v).
(vi) Alliance owns, possesses or has obtained and
currently maintains all material governmental licenses,
permits, consents, orders, approvals and other
authorizations ("Authorizations") as are necessary for
Alliance to carry on its business as set forth in and
contemplated by the Prospectus except where the failure
to obtain such Authorizations would not have a material
adverse effect on the ability of Alliance to perform its
obligations under the Investment Advisory Agreement.
(vii) The description of Alliance and its businesses
in the Registration Statement and the Prospectus
complies with the requirements of the Registration
Statement on Form N-2, the Securities Act, the
9
<PAGE>
Investment Company Act and the Rules and Regulations as
they relate to the Offer and does not contain any untrue
statement of a material fact or omit to state any
material fact required by the foregoing to be stated
therein or necessary in order to make the statements
therein not misleading in light of the circumstances
under which they were made.
(viii) There are no material restrictions,
limitations or regulations with respect to the ability
of the Company to invest its assets as described in the
Prospectus other than as may be described therein.
(c) Any certificate required by this Agreement that is
signed by any officer of the Company, Alliance Capital Management
Corporation, the General Partner of Alliance (the "General
Partner"), and delivered to the Dealer Manager or counsel for the
Dealer Manager shall be deemed a representation and warranty by
the Company or to the Dealer Manager, as to the matters covered
thereby.
2. Agreement to Act as Dealer Manager.
(a) On the basis of the representations and warranties
contained herein, and subject to the terms and conditions of the
Offer:
(i) The Company hereby appoints the Dealer Manager
and other soliciting dealers entering into a Soliciting
Dealer Agreement, in the form attached hereto as Exhibit
A, with the Dealer Manager (the "Soliciting Dealers"),
to solicit, in accordance with the Securities Act, the
Investment Company Act and the Exchange Act, and their
customary practice, the exercise of the Rights, subject
to the terms and conditions of this Agreement, the
procedures described in the Registration Statement and,
where applicable, the terms and conditions of such
Soliciting Dealer Agreement; and
(ii) The Company agrees to furnish, or cause to be
furnished, to the Dealer Manager lists, or copies of
those lists, showing the names and addresses of, and
number of shares of Common Stock held by, Holders as of
the Record Date, and the Dealer Manager agrees to use
such information only in connection with the Offer, and
not to furnish the information to any other person
except for securities brokers and dealers that have been
requested by the Dealer Manager to solicit exercises of
Rights.
10
<PAGE>
(b) The Dealer Manager agrees to provide to the
Company, in addition to the services described in paragraph (a)
of this Section 2, financial advisory and marketing services in
connection with the Offer. No advisory fee, other than the fees
provided for in Section 3 of this Agreement and the reimbursement
of the Dealer Manager's out-of-pocket expenses as described in
Section 5 of this Agreement, will be payable by the Company to
the Dealer Manager in connection with the financial advisory and
marketing services provided by the Dealer Manager pursuant to
this Section 2(b).
(c) The Company and the Dealer Manager agree that the
Dealer Manager is an independent contractor with respect to the
solicitation of the exercise of Rights and the performance of
financial advisory and marketing services to the Company
contemplated by this Agreement.
(d) The Dealer Manager agrees to perform those services
with respect to the Offer as are customarily performed by the
Dealer Manager in connection with offers of a like nature,
including (but not limited to) using its reasonable best efforts
to solicit the exercise of Rights pursuant to the Offer and in
communicating with the Soliciting Dealers. In soliciting the
exercise of Rights, (i) the Dealer Manager shall not be deemed to
be acting as the agent of the Company other than pursuant to this
Agreement or as the agent of any Soliciting Dealer and (ii) no
Soliciting Dealer shall be deemed to be acting as the agent of
the Dealer Manager. It is understood that the Dealer Manager is
being engaged hereunder solely to provide the services described
above on behalf of the Company and that the Dealer Manager is not
acting as an agent or fiduciary of, and shall have no duties or
liability to, the equity holders of the Company or any other
third party in connection with its engagement hereunder, all of
which are hereby expressly waived.
(e) In rendering the services contemplated by this
Agreement, neither the Dealer Manager nor any affiliate thereof
will be subject to any liability to the Company or Alliance or
any of their affiliates, for any losses, claims, damages,
liabilities or expenses arising from any act or omission on the
part of any securities broker or dealer (except with respect to
the Dealer Manager acting in such capacity) or any other person
and the Dealer Manager will not be liable for acts or omissions
in performing its obligations under this Agreement or otherwise
in connection with the Offer, except for any losses, claims,
damages, liabilities and expenses that are finally judicially
determined to have resulted primarily from the willful
misfeasance, bad faith or gross negligence of the Dealer Manager
or by reason of the reckless disregard of the obligations and
duties of the Dealer Manager under this Agreement.
11
<PAGE>
3. Dealer Manager and Solicitation Fees. In full payment
for the financial advisory, marketing, and soliciting services
rendered and to be rendered hereunder by the Dealer Manager, the
Company agrees to pay the Dealer Manager a fee (the "Dealer
Manager Fee") equal to 3.75% of the aggregate Subscription Price
per Share for each Share issued pursuant to the exercise of
Rights and the Over-Subscription Privilege. In full payment for
the soliciting efforts to be rendered, the Dealer Manager agrees
to reallow soliciting fees (the "Soliciting Fees") to Soliciting
Dealers equal to 2.50% of the Subscription Price per Share for
each Share issued pursuant to the exercise of Rights and the
Over-Subscription Privilege. The Dealer Manager agrees to pay
the Soliciting Fees to the broker dealers designated on the
applicable portion of the form used by the Holder to exercise
Rights and the Over-Subscription Privilege, and if no broker-
dealer is so designated pursuant to the terms of the Soliciting
Dealer Agreement, then the Dealer Manager shall retain such
Soliciting Fees for Shares issued pursuant to the exercise of
Rights and Over-Subscription Privilege. Payment to the Dealer
Manager by the Company will be in the form of a wire transfer of
same day funds to an account or accounts identified by the Dealer
Manager. Such payment will be made on each date on which the
Company issues Shares after the Expiration Date. Payment to a
Soliciting Dealer will be made by check to an address identified
by such broker-dealer. Such payments shall be made on or before
the tenth business day following each date on which the Company
issues Shares after the Expiration Date.
4. Covenants of the Company and Alliance.
(a) The Company covenants with the Dealer Manager as
follows:
(i) The Company will use its best efforts to cause
the Registration Statement to become effective under the
Securities Act, and will advise the Dealer Manager
promptly as to the time at which the Registration
Statement and any amendments thereto (including any
post-effective amendment) becomes so effective.
(ii) The Company will notify the Dealer Manager
immediately, and confirm the notice in writing, (A) of
the effectiveness of the Registration Statement and any
amendment thereto (including any post-effective
amendment), (B) of the receipt of any comments from the
Commission, (C) of any request by the Commission for any
amendment to the Registration Statement or any amendment
or supplement to the Prospectus or for additional
information, (D) of the issuance by the Commission of
any stop order suspending the effectiveness of the
Registration Statement or the initiation of any
12
<PAGE>
proceedings for that purpose, (E) of the suspension of
the qualification of the Shares or the Rights for
offering or sale in any jurisdiction. The Company will
make every reasonable effort to prevent the issuance of
any stop order described in subsection (D) hereunder
and, if any such stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(iii) The Company will give the Dealer Manager
notice of its intention to file any amendment to the
Registration Statement (including any post-effective
amendment) or any amendment or supplement to the
Prospectus (including any revised prospectus which the
Company proposes for use by the Dealer Manager in
connection with the Offer, which differs from the
prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether such
revised prospectus is required to be filed pursuant to
Rule 497(b) or Rule 497(h) of the Securities Act Rules
and Regulations), whether pursuant to the Investment
Company Act, the Securities Act, or otherwise, and will
furnish the Dealer Manager with copies of any such
amendment or supplement a reasonable amount of time
prior to such proposed filing or use, as the case may
be, and will not file any such amendment or supplement
to which the Dealer Manager or counsel for the Dealer
Manager shall reasonably object.
(iv) The Company will, without charge, deliver to
the Dealer Manager, as soon as practicable, the number
of copies (one of which is manually executed) of the
Registration Statement as originally filed and of each
amendment thereto as it may reasonably request, in each
case with the exhibits filed therewith.
(v) The Company will, without charge, furnish to
the Dealer Manager, from time to time during the period
when the Prospectus is required to be delivered under
the Securities Act, such number of copies of the
Prospectus (as amended or supplemented) as the Dealer
Manager may reasonably request for the purposes
contemplated by the Securities Act or the Securities Act
Rules and Regulations.
(vi) If any event shall occur as a result of which
it is necessary, in the reasonable opinion of counsel
for the Dealer Manager, to amend or supplement the
Registration Statement or the Prospectus in order to
make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a
Holder, the Company will forthwith amend or supplement
13
<PAGE>
the Prospectus by preparing and filing with the
Commission (and furnishing to the Dealer Manager a
reasonable number of copies of) an amendment or
amendments of the Registration Statement or an amendment
or amendments of or a supplement or supplements to, the
Prospectus (in form and substance satisfactory to
counsel for the Dealer Manager), at the Company's
expense, which will amend or supplement the Registration
Statement or the Prospectus so that the Prospectus will
not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make
the statements therein, in the light of the
circumstances existing at the time the Prospectus is
delivered to a Holder, not misleading.
(vii) The Company will endeavor, in cooperation with
the Dealer Manager and its counsel, to assist such
counsel to qualify the Rights and the Shares for
offering and sale under the applicable securities laws
of such states and other jurisdictions of the United
States as the Dealer Manager may designate and maintain
such qualifications in effect for the duration of the
Offer; provided, however, that the Company will not be
obligated to file any general consent to service of
process, or to qualify as a foreign corporation or as a
dealer in securities in any jurisdiction in which it is
not now so qualified. The Company will file such
statements and reports as may be required by the laws of
each jurisdiction in which the Rights and the Shares
have been qualified as above provided.
(viii) The Company will make generally available to
its security holders as soon as practicable, but no
later than 60 days after the close of the period covered
thereby, an earnings statement (in form complying with
the provisions of Rule 158 of the Securities Act Rules
and Regulations) covering a twelve-month period
beginning not later than the first day of the Company's
second fiscal quarter following the "effective" date (as
defined in said Rule 158) of the Registration Statement.
(ix) For a period of 180 days from the date of this
Agreement, the Company will not, without the prior
consent of the Dealer Manager, directly or indirectly
sell, offer to sell, enter into any agreement to sell,
or otherwise dispose of, any equity or equity related
securities of the Company or securities convertible into
such securities, other than the Shares and the Common
Stock issued in reinvestment of dividends or
distributions.
14
<PAGE>
(x) The Company will apply the net proceeds from
the Offer as set forth under "Use of Proceeds" in the
Prospectus.
(xi) The Company will use its best efforts to cause
the Shares to be duly authorized for listing by the New
York Stock Exchange prior to the time the Shares are
issued.
(xii) The Company will use its best efforts to
maintain its qualification as a regulated investment
company under Subchapter M of the Code.
(xiii) The Company will advise or cause the
Subscription Agent to advise the Dealer Manager and each
Soliciting Dealer from day to day during the period of,
and promptly after the termination of, the Offer, as to
the names and addresses of all Holders exercising
Rights, the total number of Rights exercised by each
Holder during the immediately preceding day, indicating
the total number of Rights verified to be in proper form
for exercise, rejected for exercise and being processed
and, for the Dealer Manager and each Soliciting Dealer,
the number of Rights exercised on exercise forms
indicating the Dealer Manager or such Soliciting Dealer,
as the case may be, as the broker-dealer with respect to
such exercise, and as to such other information as the
Dealer Manager may reasonably request; and will notify
the Dealer Manager and each Soliciting Dealer, not later
than 5:00 P.M., New York City time, on the first
business day following the Expiration Date, of the total
number of Rights exercised and Shares related thereto,
the total number of Rights verified to be in proper form
for exercise, rejected for exercise and being processed
and, for the Dealer Manager and each Soliciting Dealer,
the number of Rights exercised on exercise forms
indicating the Dealer Manager or such Soliciting Dealer,
as the case may be, as the broker-dealer with respect to
such exercise, and as to such other information as the
Dealer Manager may reasonably request.
(b) The Company and Alliance will not take, directly or
indirectly, any action designed to cause or to result in, or that
has constituted or which might reasonably be expected to
constitute the stabilization or manipulation of the price of any
security of the Company to facilitate the issuance of the Rights
or the sale or resale of the Shares; provided that any action in
connection with the Company's dividend reinvestment plan will not
be deemed to be within the meaning of this Section 4(b).
15
<PAGE>
(c) The Company and Alliance agree that, except as
required by applicable law, any reference to the Dealer Manager
in any Offering Materials or any other document or communication
prepared, approved or authorized by the Company or Alliance in
connection with the Offer is subject to the prior approval of the
Dealer Manager, provided that if such reference to the Dealer
Manager is required by applicable law, the Company or Alliance
agrees to notify the Dealer Manager within a reasonable time
prior to such use.
5. Payment of Expenses.
(a) The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including,
but not limited to, expenses relating to (i) the printing and
filing of the Registration Statement as originally filed and of
each amendment thereto, (ii) the preparation, issuance and
delivery of the certificates for the Shares and exercise forms
relating to the Rights, (iii) the fees and disbursements of the
Company's counsel (including the fees and disbursements of local
counsel) and accountants, (iv) the qualification of the Rights
and the Shares under securities laws in accordance with the
provisions of Section 4(a)(vii) of this Agreement, including
filing fees and the preparation of the Blue Sky Letter by counsel
to the Dealer Manager, (v) the printing or other production and
delivery to the Dealer Manager of copies of the Registration
Statement as originally filed and of each amendment thereto and
of the Prospectus and any amendments or supplements thereto, (vi)
the printing and other production and delivery of copies of the
Blue Sky Letter, (vii) the fees and expenses incurred with
respect to filing with the National Association of Securities
Dealers, Inc., (viii) the fees and expenses incurred in
connection with the listing of the Shares on the New York Stock
Exchange, (ix) the printing or other production, mailing and
delivery expenses incurred in connection with the Prospectus and
the Offering Materials, (x) the fees and expenses incurred with
respect to the Subscription Agent and the Information Agent, (xi)
all fees, if any, payable to the Dealer Manager and Soliciting
Dealers as reimbursement for their customary mailing and handling
expenses in forwarding materials related to the Offer to their
customers, (xii) all advertising charges, including the
announcement, if any, of the Offer in The Wall Street Journal, in
connection with the Offer.
(b) In addition to any fees that may be payable to the
Dealer Manager under this Agreement, the Company agrees to
reimburse the Dealer Manager upon request made from time to time
for its reasonable expenses incurred in connection with its
activities under this Agreement, including the reasonable fees
and disbursements of its legal counsel (excluding Blue Sky fees
16
<PAGE>
and expenses which are paid directly by the Company), in an
amount up to $100,000.
(c) If this Agreement is terminated by the Dealer
Manager in accordance with the provisions of Section 6 or Section
9(a)(i), 9(a)(ii) or 9(a)(iii), the Company agrees to reimburse
the Dealer Manager for all of its reasonable out-of-pocket
expenses incurred in connection with its performance hereunder,
including the reasonable fees and disbursements of counsel for
the Dealer Manager. In the event the transactions contemplated
hereunder are not consummated, the Company agrees to pay all of
the costs and expenses set forth in paragraphs (a) and (b) of
this Section 5 which the Company would have paid if such
transactions had been consummated.
6. Conditions of Dealer Manager's Obligations. The
obligations of the Dealer Manager hereunder are subject to the
accuracy of the representations and warranties of the Company and
Alliance contained herein, to the performance by the Company and
Alliance of their respective obligations hereunder, and to the
following further conditions:
(a) The Registration Statement shall have become
effective not later than 5:30 P.M., on the Representation Date,
or at such later time and date as may be approved by the Dealer
Manager; the Prospectus and any amendment or supplement thereto
shall have been filed with the Commission in the manner and
within the time period required by Rule 497(b), (d) or (h), as
the case may be, under the Securities Act; no stop order
suspending the effectiveness of the Registration Statement or any
amendment thereto shall have been issued, and no proceedings for
that purpose shall have been instituted or threatened or, to the
knowledge of the Company and Alliance or the Dealer Manager,
shall be contemplated by the Commission; and the Company shall
have complied with any request of the Commission for additional
information (to be included in the Registration Statement or the
Prospectus or otherwise).
(b) On the Representation Date and the Expiration Date,
the Dealer Manager shall have received:
(1) The favorable opinion, dated the Representation
Date and the Expiration Date, of Seward & Kissel LLP, counsel
for the Company and special counsel for Alliance, in form and
substance satisfactory to counsel for the Dealer Manager, to
the effect that:
(i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under
the laws of the State of Maryland, has full corporate
power and authority to conduct its business as described
17
<PAGE>
in the Registration Statement and the Prospectus, and is
duly qualified to do business as a foreign corporation
in each jurisdiction wherein it owns or leases material
properties or conducts material business, except where
the failure to be so qualified, considering all such
cases in the aggregate, does not involve a material
adverse risk to the business, properties, financial
position or results of operations of the Company;
(ii) the Company's authorized capitalization is as
set forth in the Prospectus; the outstanding shares of
Common Stock have been duly authorized and validly
issued and are fully paid and non-assessable and conform
in all material respects to the description thereof in
the Prospectus under the heading "Description of Capital
Stock"; the Rights have been duly authorized by all
requisite action on the part of the Company for issuance
pursuant to the Offer; the Shares have been or, with
respect to the Shares to be issued pursuant to the Over-
Subscription Privilege, will be, duly authorized by all
requisite action on the part of the Company for issuance
and sale pursuant to the terms of the Offer and, when
issued and delivered by the Company pursuant to the
terms of the Offer against payment of the consideration
set forth in the Prospectus, will be validly issued and
fully paid and non-assessable; the Shares and the Rights
conform in all material respects to all statements
relating thereto contained in the Registration Statement
and the Prospectus; and the issuance of each of the
Rights and the Shares is not subject to any preemptive
rights under the charter or bylaws of the Company or, to
such counsel's knowledge, otherwise. The outstanding
Common Stock has been duly listed on the New York Stock
Exchange and the Shares have been duly authorized for
listing subject to official notice of issuance, on the
New York Stock Exchange;
(iii) to the best knowledge of such counsel, there
is no pending or threatened action, suit or proceeding
before any court or governmental agency, authority or
body or any arbitrator involving the Company of a
character required to be disclosed in the Registration
Statement or the Prospectus which is not adequately
disclosed therein, and there is no franchise, contract
or other document of a character required to be
described in the Registration Statement or the
Prospectus, or to be filed or incorporated by reference
as an exhibit which is not described or filed or
incorporated by reference as required;
18
<PAGE>
(iv) the statements in the Prospectus under the
heading "Taxation", insofar as such statements describe
or summarize United States tax laws, treaties, doctrines
or practices, provide an accurate description thereof as
of the date of the Prospectus;
(v) the Registration Statement has become
effective under the Securities Act; any required filing
of the Prospectus or any supplement thereto pursuant to
Rule 497(b), (d) or (h) required to be made to the date
hereof has been made in the manner and within the time
period required by Rule 497(b), (d) or (h), as the case
may be; to the best knowledge of such counsel, no stop
order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for that
purpose have been instituted or threatened; and the
Registration Statement, the Prospectus and each
amendment thereof or supplement thereto (other than the
financial statements and other financial and statistical
information contained therein, as to which such counsel
need express no opinion) comply as to form in all
material respects with the applicable requirements of
the Securities Act and the Investment Company Act and
the Rules and Regulations;
(vi) this Agreement has been duly authorized,
executed and delivered by the Company and, assuming due
authorization, execution and delivery by the other
parties hereto, is a legal, valid, binding and
enforceable obligation of the Company, subject to the
qualification that the enforceability of the Company's
obligations hereunder may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws
of general applicability relating to or affecting
creditors' rights, and to general principles of equity
(regardless of whether enforceability is considered in a
proceeding in equity or at law) subject to the
qualification that the right to indemnity and
contribution thereunder may be limited by Federal or
state laws; the Subscription Agency Agreement, the
Investment Advisory Agreement, the Administration
Agreement, the Custodian Agreement, the Transfer Agency
Agreement, the Shareholder Inquiry Agency Agreement and
the Shareholder Servicing Agreement have been duly
authorized, executed and delivered by the Company,
comply in all material respects with all applicable
provisions of the Investment Company Act and, assuming
due authorization, execution and delivery by the other
parties thereto, are legal, valid, binding and
enforceable obligations of the Company, subject to the
qualification that the enforceability of the Company's
19
<PAGE>
obligations thereunder may be limited by bankruptcy,
insolvency, reorganization, moratorium and similar laws
of general applicability relating to or affecting
creditors' rights, and to general principles of equity
(regardless of whether enforceability is considered in a
proceeding in equity or at law);
(vii) no consent, approval, authorization or order
of any court or governmental agency or body is required
under Maryland corporate law, the laws of New York or
Federal law or, to the best of such counsel's knowledge,
the laws of any other jurisdiction in the United States,
for the consummation by the Company of the transactions
contemplated in the Company Agreements, except (A) such
as have been obtained under the Securities Act, the
Exchange Act, the Investment Company Act, or from the
New York Stock Exchange, (B) such as may be required
under the blue sky laws of any jurisdiction in
connection with the transactions contemplated hereby and
(C) such other approvals as have been obtained or the
failure to have obtained will not have a material
adverse effect on the Company or its ability to perform
its obligations under the Company Agreements;
(viii) neither the issuance of the Rights, nor the
issuance and sale of the Shares by the Company, nor the
consummation by the Company of any other of the
transactions contemplated in the Company Agreements or
the Prospectus nor the fulfillment by the Company of the
terms of the Company Agreements will conflict with,
result in a breach of, or constitute a default under, or
result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the
Company pursuant to the charter or bylaws of the Company
or, to the knowledge of such counsel, the terms of any
material agreement, indenture, mortgage, lease or other
instrument to which the Company is a party or bound or
to which any of the property or assets of the Company is
subject, or any order of which such counsel has
knowledge, law, rule or regulation applicable to the
Company of any United States court, regulatory body,
administrative agency, governmental body or arbitrator
having jurisdiction over the Company or any of its
properties; and
(ix) the Company is registered with the Commission
under the Investment Company Act as a closed-end, non-
diversified management investment company, all required
action has been taken under the Securities Act and the
Investment Company Act to make the Offer and consummate
the issuance of the Rights and the issuance and sale of
20
<PAGE>
the Shares by the Company upon exercise of the Rights,
and the provisions of the Company's charter and bylaws
comply as to form in all material respects with the
requirements of the Investment Company Act and the
Investment Company Act Rules and Regulations.
(x) the Investment Advisory Agreement complies
with all applicable provisions of the Advisers Act and
the Investment Company Act.
(xi) to the knowledge of such counsel, except as
set forth in the Prospectus, there is not pending or
threatened, any action, suit or proceeding to which
Alliance is a party before or by any court or
governmental agency or body or any arbitrator, which is
likely to have a material adverse effect upon the
Company or upon the ability of Alliance to perform its
obligations under the Investment Advisory Agreement;
(xii) the description of Alliance and its business
in the Registration Statement and the Prospectus
complies with the requirements of the Registration
Statement on Form N-2, the Securities Act, the
Investment Company Act, and the Rules and Regulations as
they relate to the Offer and, to the knowledge of such
counsel, does not contain any untrue statement of a
material fact or omit to state any material fact
required by the foregoing to be stated therein or
necessary in order to make the statements therein not
misleading in light of the circumstances under which
they were made.
In rendering such opinion, Seward & Kissel LLP may rely (A) as to
matters involving the application of the laws of the State of
Maryland, on the opinion of Venable, Baetjer and Howard LLP,
Maryland counsel for the Company, (B) as to matters involving the
application of laws of any jurisdiction other than the States of
New York or Maryland or the United States, to the extent they
deem proper and specified in such opinion, upon the opinion of
other counsel of good standing whom they believe to be reliable
and who are satisfactory to counsel for the Dealer Manager, (C)
as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and public
officials and (D) as to certain matters relating to Alliance, to
the extent they deem proper, on an opinion or certificate of
David R. Brewer, Jr., Senior Vice President and General Counsel
of Alliance Capital Management Corporation.
Such counsel shall also have stated that, while they
have not themselves checked the accuracy and completeness of or
otherwise verified, and are not passing upon and assume no
21
<PAGE>
responsibility for the accuracy or completeness of, the
statements contained in the Registration Statement or the
Prospectus, except to the limited extent stated in paragraphs
(ii) and (iv) above, in the course of their review and discussion
of the contents of the Registration Statement and Prospectus with
certain officers and employees of the Company and its independent
accountants and others, no facts have come to their attention
which cause them to believe that the Registration Statement as of
the effective date thereof or the Prospectus, as of the effective
date thereof and as of the Representation Date and Expiration
Date, contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or
necessary to make the statements contained therein not
misleading, or, if there has been any supplement to the
Prospectus made by the Company, that any such supplement, at the
date of such supplement and on the Representation Date and
Expiration Date, contained an untrue statement of a material fact
or omitted to state a material fact necessary to make the
statements contained therein, in the light of the circumstances
under which they were made, not misleading (except that such
counsel need express no opinion or belief as to financial
statements, schedules or other financial data included therein or
excluded therefrom).
(2) The favorable opinion, dated the Representation
Date and the Expiration Date, of David R. Brewer, Jr., Senior
Vice President and General Counsel of Alliance Capital
Management Corporation, in form and substance satisfactory to
counsel for the Dealer Manager, to the effect that:
(i) Alliance has been duly organized and is
validly existing as a limited partnership under the laws
of the State of Delaware, with partnership power and
authority to own its properties and conduct its business
as described in the Prospectus, and is duly licensed or
qualified as a foreign entity and in good standing to do
business in each other jurisdiction in which its
ownership of property or the conduct of its business
requires such qualification or license, except where the
failure to be so qualified, considering all such cases
in the aggregate, would not have a material adverse
effect on Alliance;
(ii) Alliance is duly registered as an investment
adviser under the Advisers Act and is not prohibited by
the Advisers Act or the Investment Company Act, or the
rules and regulations under such Acts, from acting as an
investment manager for the Company as contemplated in
the Prospectus and the Investment Advisory Agreement;
22
<PAGE>
(iii) this Agreement and the Investment Advisory
Agreement have each been duly authorized, executed and
delivered by Alliance and is, assuming due
authorization, execution and delivery by the other
parties thereto, a legal, valid, binding and enforceable
obligation of Alliance, subject to the qualification
that the enforceability of Alliance's obligations
thereunder may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws of general
applicability relating to or affecting creditors'
rights, and to general principles of equity (regardless
of whether enforceability is considered in a proceeding
in equity or at law);
(iv) neither the performance by Alliance of its
obligations under this Agreement or the Investment
Advisory Agreement nor the consummation of the
transactions contemplated herein or therein nor the
fulfillment of the terms hereof or thereof will conflict
with, or result in a breach of, or constitute a default
under the Agreement of Limited Partnership of Alliance
or, to the knowledge of such counsel, the terms of any
material agreement or instrument to which Alliance is a
party or is bound or to which any of its property is
subject, which conflict, breach or default would have a
material adverse effect on the ability of Alliance to
carry out its obligations under such Agreements, or any
law, order of which such counsel has knowledge, rule or
regulation applicable to Alliance of any United States
court, regulatory body, administrative agency,
governmental body, stock exchange or securities
association having jurisdiction over Alliance or its
properties or operations;
(v) to the knowledge of such counsel, Alliance
owns, possesses or has obtained and currently maintains
all material Authorizations under New York, Delaware or
United States law as are necessary for Alliance to
perform its obligations under the Investment Advisory
Agreement as set forth in and contemplated by the
Prospectus except where the failure to obtain such
Authorizations would not have a material adverse effect
on Alliance; and
In rendering such opinion, Mr. Brewer may rely (A) as to matters
involving the application of laws of any jurisdiction other than
the State of New York or the United States to the extent such
counsel deems proper and specified in such opinion, upon the
opinion of other counsel of good standing whom such counsel
believes to be reliable and who are satisfactory to counsel for
the Dealer Manager and (B) as to matters of fact, to the extent
23
<PAGE>
such counsel deems proper, on certificates of responsible
officers of Alliance and public officials.
(3) The favorable opinion, dated the Representation
Date and the Expiration Date, of Edmund P. Bergan, Jr.,
Assistant General Counsel of Alliance Capital Management
Corporation, in form and substance satisfactory to counsel
for the Dealer Manager, to the effect that:
the Offering Materials comply as to form in all material
respects with the requirements of the Securities Act,
the Investment Company Act and the Rules and
Regulations.
(c) The Dealer Manager shall have received from Rogers
& Wells LLP, counsel for the Dealer Manager, such opinion or
opinions, dated the Representation Date and the Expiration Date,
with respect to the offer, the Registration Statement, the
Prospectus and other related matters as the Dealer Manager may
reasonably require, and the Company shall have furnished to such
counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(d) The Company shall have furnished to the Dealer
Manager a certificate of the Company, signed by the Chairman of
the Board, the President or a Vice President of the Company,
dated the Representation Date and the Expiration Date, to the
effect that the signer of such certificate has carefully examined
the Registration Statement, the Prospectus, any supplement to the
Prospectus and this Agreement and that, to the best of his
knowledge:
(i) the representations and warranties of the
Company in this Agreement are true and correct in all
material respects on and as of the Representation Date
or the Expiration Date, as the case may be, with the
same effect as if made on the Representation Date or the
Expiration Date and the Company has complied with all
the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the
Representation Date or the Expiration Date, as the case
may be; and
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no
proceedings for that purpose have been instituted or, to
the Company's knowledge, threatened.
(iii) since the date of the most recent balance
sheet included or incorporated by reference in the
Prospectus, there has been no material adverse change in
24
<PAGE>
the condition (financial or other), earnings, business,
prospects, net worth or results of operations of the
Company (excluding fluctuations in the Company's net
asset value due to investment activities in the ordinary
course of business), except as set forth in or
contemplated in the Prospectus.
(e) Alliance shall have furnished to the Dealer Manager
a certificate, signed by the Chairman or other senior officer of
its general partner, dated the Representation Date and the
Expiration Date, to the effect that the signer of such
certificate has read the Registration Statement, the Prospectus,
any supplement to the Prospectus and this Agreement and, to the
best knowledge of such signer, (i) the representations and
warranties of Alliance in this Agreement are true and correct in
all material respects on and as of the Representation Date or the
Expiration Date, as the case may be, with the same effect as if
made on the Representation Date or the Expiration Date, (ii)
Alliance has complied with all the agreements and satisfied all
the conditions on its part to be performed or satisfied at or
prior to the Representation Date or the Expiration Date and (iii)
as of the Representation Date or the Expiration Date, as the case
may be, the Registration Statement did not include any untrue
statement of a material fact and did not omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading and on such Representation Date
or the Expiration Date, the Prospectus and any Offering Materials
did not include any untrue statement of a material fact and did
not omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and,
since the date of the Prospectus, no event has occurred which
should have been set forth in a supplement to, or amendment of,
the Prospectus which has not been set forth in such a supplement
or amendment.
(f) PricewaterhouseCoopers LLP shall have furnished to
the Dealer Manager a letter, dated the Representation Date and
the Expiration Date, in form and substance satisfactory to the
Dealer Manager, and stating in effect that:
(i) they are independent accountants with respect
to the Company within the meaning of the Securities Act
and the applicable Rules and Regulations;
(ii) in their opinion, the audited financial
statements examined by them and included or incorporated
by reference in the Registration Statement comply as to
form in all material respects with the applicable
accounting requirements of the Securities Act and the
Investment Company Act and the respective Rules and
Regulations;
25
<PAGE>
(iii) they have performed specified procedures, not
constituting an audit, including a reading of the latest
available interim financial statements of the Company, a
reading of the minute books of the Company, inquiries of
officials of the Company responsible for financial or
accounting matters and such other inquiries and
procedures as may be specified in such letter, and on
the basis of such inquiries and procedures nothing came
to their attention that caused them to believe that at
the date of the latest available financial statements
read by such accountants, or at a subsequent specified
date not more than five days prior to the Representation
Date or the Expiration Date, as the case may be, there
was any change in the capital stock, net assets or
absence of long-term debt of the Company as compared
with amounts shown on the audited financial statements
included or incorporated by reference in the Prospectus,
except as the Prospectus discloses has occurred or may
occur or as disclosed in their letter;
(iv) in addition to the procedures referred to in
clause (iii) above, they have performed other specified
procedures, not constituting an audit, with respect to
certain amounts, percentages, numerical data, financial
information and financial statements appearing in the
Registration Statement, which have previously been
specified by the Dealer Manager and which shall be
specified in such letter, and have compared such items
with, and have found such items to be in agreement with,
the accounting and financial records of the Company.
(g) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, there shall not have been (i) any change or decrease
specified in the letter or letters referred to in paragraph (f)
of this Section 6, or (ii) any change, or any development
involving a prospective change, in or affecting the business or
properties of the Company, the effect of which, in any case
referred to in clause (i) or (ii) above, is, in the judgment of
the Dealer Manager, so material and adverse as to make it
impractical or inadvisable to proceed with the Offer as
contemplated by the Registration Statement and the Prospectus.
(h) Prior to the Representation Date and the Expiration
Date, the Company shall have furnished to the Dealer Manager such
further information, certificates and documents as the Dealer
Manager may reasonably request.
If any of the conditions specified in this Section 6
shall not have been fulfilled in all material respects when and
as provided in this Agreement, or if any of the opinions and
26
<PAGE>
certificates mentioned above or elsewhere in this Agreement shall
not be in all material respects reasonably satisfactory in form
and substance to the Dealer Manager and its counsel, this
Agreement and all obligations of the Dealer Manager hereunder may
be canceled at, or at any time prior to, the Representation Date
by the Dealer Manager. Notice of such cancellation shall be
given to the Company in writing or by telephone or telegraph
confirmed in writing.
7. Indemnification and Contribution.
(a) Each of the Company and Alliance, jointly and
severally, will indemnify and hold harmless the Dealer Manager,
the directors, officers, employees and agents of the Dealer
Manager and each person, if any, who controls the Dealer Manager
within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act from and against any and all
losses, claims, liabilities, expenses and damages (including, but
not limited to, any and all investigative, legal and other
expenses reasonably incurred in connection with, and any and all
amounts paid in settlement of, any action, suit or proceeding
between any of the indemnified parties and any indemnifying
parties or between any indemnified party and any third party, or
otherwise, or any claim asserted), as and when incurred to which
the Dealer Manager, or any such person, may become subject under
the Securities Act, the Exchange Act, the Investment Company Act,
the Advisers Act or other federal or state statutory law or
regulation, at common law or otherwise insofar as such losses,
claims, liabilities, expenses or damages arise out of or are
based on (i) any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, the
Prospectus or Offering Materials, or any amendment or supplement
to the Registration Statement, the Prospectus or Offering
Materials, or in any documents filed under the Exchange Act and
deemed to be incorporated by reference into the Registration
Statement, the Prospectus, or in any application or other
document executed by or on behalf of the Company or based on
written information furnished by or on behalf of the Company
filed with the Commission, (ii) the omission or alleged omission
to state in such document a material fact required to be stated
in it or necessary to make the statements in it not misleading or
(iii) any act or failure to act or any alleged act or failure to
act by the Dealer Manager in connection with, or relating in any
manner to, the Rights or the Shares or the offering contemplated
hereby, and which is included as part of or referred to in any
loss, claim, liability, expense or damage arising out of or based
upon matters covered by clause (i) or (ii) above (provided that
neither the Company nor Alliance shall be liable under this
clause (iii) to the extent it is finally judicially determined by
a court of competent jurisdiction that such loss, claim,
liability, expense or damage resulted directly from any such acts
27
<PAGE>
or failures to act undertaken or omitted to be taken by such
Dealer Manager through its bad faith, willful misconduct, gross
negligence, or violation of any applicable rules and regulations
or intentional failure to perform substantially the obligations
and duties of the Dealer Manager under this Agreement); provided
that neither the Company or Alliance will be liable to the extent
that such loss, claim, liability, expense or damage arises from
the sale of the Shares in the public offering to any person by
the Dealer Manager and is based on an untrue statement or
omission or alleged untrue statement or omission made in reliance
on and in conformity with information relating to the Dealer
Manager furnished in writing to the Company by the Dealer Manager
expressly for inclusion in the Registration Statement or the
Prospectus. This indemnity agreement will be in addition to any
liability that the Company or Alliance might otherwise have.
(b) The Dealer Manager will indemnify and hold harmless
the Company and Alliance, each person, if any, who controls the
Company or Alliance within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each director
of the Company and each officer of the Company who signs the
Registration Statement to the same extent as the foregoing
indemnity from the Company or Alliance to the Dealer Manager, but
only insofar as losses, claims, liabilities, expenses or damages
arise out of or are based on any untrue statement or omission or
alleged untrue statement or omission made in reliance on and in
conformity with information relating to the Dealer Manager
furnished in writing to the Company by the Dealer Manager
expressly for use in the Registration Statement or Prospectus,
such information being as set forth in Section 7(h) hereof. This
indemnity will be in addition to any liability that the Dealer
Manager might otherwise have; provided, however, that in no case
shall the Dealer Manager be liable or responsible for any amount
in excess of the fees and commissions received by the Dealer
Manager.
(c) Any party that proposes to assert the right to be
indemnified under this Section 7 will, promptly after receipt of
notice of commencement of any action against such party in
respect of which a claim is to be made against an indemnifying
party or parties under this Section 7, notify each such
indemnifying party of the commencement of such action, enclosing
a copy of all papers served, but the omission to so notify such
indemnifying party will not relieve it from any liability that it
may have to any indemnified party under the foregoing provision
of this Section 7 unless, and only to the extent that, such
omission results in the forfeiture of substantive rights or
defenses by the indemnifying party. If any such action is
brought against any indemnified party and it notifies the
indemnifying party of its commencement, the indemnifying party
will be entitled to participate in and, to the extent that it
28
<PAGE>
elects by delivering written notice to the indemnified party
promptly after receiving notice of the commencement of the action
from the indemnified party, jointly with any other indemnifying
party similarly notified, to assume the defense of the action,
with counsel satisfactory to the indemnified party, and after
notice from the indemnifying party to the indemnified party of
its election to assume the defense, the indemnifying party will
not be liable to the indemnified party for any legal or other
expenses except as provided below and except for the reasonable
costs of investigation subsequently incurred by the indemnified
party in connection with the defense. The indemnified party will
have the right to employ its own counsel in any such action, but
the fees, disbursements and other charges of such counsel will be
at the expense of such indemnified party unless (1) the
employment of counsel by the indemnified party has been
authorized in writing by the indemnifying party, (2) the
indemnified party has reasonably concluded (based on the advice
of counsel) that there may be legal defenses available to it or
other indemnified parties that are different from or in addition
to those available to the indemnifying party, (3) a conflict or
potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the
indemnifying party (in which case the indemnifying party will not
have the right to direct the defense of such action on behalf of
the indemnified party) or (4) the indemnifying party has not in
fact employed counsel to assume the defense of such action within
a reasonable time after receiving notice of the commencement of
the action, in each of which cases the reasonable fees,
disbursements and other charges of counsel will be at the expense
of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be
liable for the reasonable fees, disbursements and other charges
of more than one separate firm admitted to practice in such
jurisdiction (in addition to local counsel) at any one time for
all such indemnified party or parties. All such fees,
disbursements and other charges will be reimbursed by the
indemnifying party promptly as they are incurred. An
indemnifying party will not be liable for any settlement of any
action or claim effected without its written consent (which
consent will not be unreasonably withheld). No indemnifying
party shall, without the prior written consent of each
indemnified party, settle or compromise or consent to the entry
of any judgment in any pending or threatened claim, action or
proceeding relating to the matters contemplated by this Section 7
(whether or not any indemnified party is a party thereto), unless
such settlement, compromise or consent includes an unconditional
release of each indemnified party from all liability arising or
that may arise out of such claim, action or proceeding.
Notwithstanding any other provision of this Section 7(c), if at
any time an indemnified party shall have requested an
29
<PAGE>
indemnifying party to reimburse the indemnified party for fees,
disbursements and other charges of counsel, such indemnifying
party agrees that it shall be liable for any settlement effected
without its written consent if (i) such settlement is entered
into more than 45 days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall have
received notice of terms of such settlement at least 30 days
prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified
party in accordance with such request prior to the date of such
settlement.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnification
provided for in the foregoing paragraph of this Section 7 is
applicable in accordance with its terms but for any reason is
held to be unavailable from the Company, Alliance or the Dealer
Manager, the Company, Alliance and the Dealer Manager will
contribute to the total losses, claims, liabilities, expenses and
damages (including any investigative, legal and other expenses
reasonably incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim
asserted, but after deducting any contribution received by the
Company and the Investment Manger from persons other than the
Dealer Manager, such as persons who control the Company or
Alliance within the meaning of the Securities Act or the Exchange
Act, officers of the Company who signed the Registration
Statement and directors of the Company, who may also be liable
for contribution) to which the Company, Alliance and the Dealer
Manager may be subject in such proportion as shall be appropriate
to reflect the relative benefits received by the Company and
Alliance on the one hand and the Dealer Manager on the other.
The relative benefits received by the Company and Alliance
(treated jointly for this purpose as one person) on the one hand
and the Dealer Manager on the other hand shall be deemed to be in
the same proportion as the total net proceeds from the Offering
(before deducting expenses) received by the Company bear to the
total fees received by the Dealer Manager, in each case as set
forth on the cover page of the Prospectus. If, but only if, the
allocation provided by the foregoing sentence is not permitted by
applicable law, the allocation of contribution shall be made in
such proportion as is appropriate to reflect not only such
relative benefits referred to in the foregoing sentence but also
the relative fault of the Company and Alliance (treated jointly
for this purpose as one person) on the one hand and the Dealer
Manager on the other hand with respect to the statements or
omissions which resulted in such loss, claim, liability, expense
or damage in respect thereof, as well as any other relevant
equitable considerations with respect to the Offering. Such
relative fault of the parties shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact
30
<PAGE>
or the omission or alleged omission to state a material fact
relates to information supplied by the Company, Alliance or the
Dealer Manager, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, Alliance and
the Dealer Manager agree that it would not be just and equitable
if contributions pursuant to this Section 7(d) were to be
determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, liability,
expense or damage, or action in respect thereof, referred to in
this Section 7(d) shall be deemed to include, for purposes of
this Section 7(d) any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the
provisions of this Section 7(d), the Dealer Manager shall not be
required to contribute any amount in excess of the fees received
by it and no person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will
be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section
7(d), any person who controls a party to this Agreement within
the meaning of the Securities Act will have the same rights to
contribution as that party, and each director of the Company and
each officer of the Company who signed the Registration Statement
will have the same rights to contribution as the Company, subject
in each case to the provisions hereof. Any party entitled to
contribution, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim for
contribution may be made under this Section 7(d), will notify
such party or parties from whom contribution may be sought, but
the omission so to notify will not relieve the party or parties
from whom contribution may be sought from any other obligation it
or they may have under this Section 7(d). Except for a
settlement entered into pursuant to the last sentence of Section
7(c) hereof, no party will be liable for contribution with
respect to any action or claim settled without its written
consent (which consent shall not be unreasonably withheld).
(e) The indemnity and contribution agreements contained
in this Section 7 and the representations and warranties of the
Company and Alliance contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any
investigation made by or on behalf of the Dealer Manager, (ii)
acceptance of Shares and payment therefor or (iii) any
termination of this Agreement.
(f) Notwithstanding any other provisions in this
Section 7, no party shall be entitled to indemnification or
contribution under this Agreement against any loss, claim,
31
<PAGE>
liability, expense or damage arising by reason of such person's
willful misfeasance, bad faith or gross negligence in the
performance of its duties hereunder, or by reason of such
person's intentional failure to perform such person's obligations
and duties hereunder.
(g) The Company and Alliance agree to indemnify each
Soliciting Dealer and controlling persons to the same extent and
subject to the same conditions and to the same agreements,
including with respect to contribution, provided for in
subsections 7(a), 7(b), 7(c), 7(d), 7(e) and 7(f).
(h) The Company and Alliance acknowledge that the
statements under the caption "THE OFFER--Distribution
Arrangements" in the Prospectus constitute the only information
furnished in writing to the Company by the Dealer Manager
expressly for use in such document, and the Dealer Manager
confirms that such statements are correct in all material
respects.
8. Representations, Warranties and Agreements to Survive
Delivery. The respective agreements, representations,
warranties, indemnities and other statements of the Company or
its officers, of Alliance and of the Dealer Manager set forth in
or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of
Dealer Manager, Alliance or the Company or any of the officers,
directors or controlling persons referred to in Section 7 hereof,
and will survive delivery of and payment for the Shares pursuant
to the Offer; provided, however, that following delivery and
payment for the Shares, the remedies against Alliance for breach
of its representations and warranties shall, in the absence of
fraudulent misrepresentation by Alliance not include fraudulent
misrepresentation attributed to Alliance solely by virtue of and
in the event of its being a controlling person of the Company, be
limited to those available pursuant to Section 7 hereof. The
provisions of Sections 5 and 7 hereof shall survive the
termination or cancellation of this Agreement.
9. Termination of Agreement.
(a) This Agreement shall be subject to termination in
the absolute discretion of the Dealer Manager, by notice given to
the Company prior to the expiration of the Offer, if prior to
such time (i) financial, political, economic, currency or banking
conditions in the United States shall have undergone any material
change the effect of which on the financial markets makes it, in
the Dealer Manager's judgment, impracticable to proceed with the
Offer, (ii) there has occurred any outbreak or material
escalation of hostilities or other calamity or crisis the effect
of which on the financial markets of the United States is such as
32
<PAGE>
to make it, in the Dealer Manager's judgment, impracticable to
proceed with the Offer, (iii) trading in the shares of Common
Stock shall have been suspended by the Commission or the New York
Stock Exchange, (iv) trading in securities generally on the New
York Stock Exchange shall have been suspended or limited or (v) a
banking moratorium shall have been declared either by Federal, or
New York State authorities.
(b) If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party
to any other party except as provided in Section 5.
10. Notices. All communications hereunder will be in
writing and effective only on receipt, and, if sent to the Dealer
Manager, will be mailed, delivered or telegraphed and confirmed
to PaineWebber Incorporated, 1285 Avenue of the Americas, New
York, New York 10019; or if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at 1345 Avenue of
the Americas, New York, New York 10105; or if sent to Alliance,
will be mailed, delivered or telegraphed and confirmed to it at
1345 Avenue of the Americas, New York, New York 10105.
11. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective
successors and will inure to the benefit of the officers and
directors and controlling persons referred to in Section 7
hereof, and no other person will have any right or obligation
hereunder.
12. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York
without reference to choice of law principles thereof.
13. Consent to Jurisdiction; Waiver of Jury Trial. The
Company and Alliance hereby irrevocably submit to the
jurisdiction of any state or federal court sitting in the borough
of Manhattan, State of New York in respect of any such action,
proceeding or counterclaim and irrevocably agree that all claims
and defenses in respect of any such suit, action or proceeding
may be heard and determined in any such court. The Company and
Alliance, and the Dealer Manager each hereby irrevocably waive
any right they may have to a trial by jury in respect of any
claim based upon or arising out of this Agreement.
14. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the
same instrument.
33
<PAGE>
If the foregoing is in accordance with your
understanding of our agreement, please so indicate in the space
provided below for that purpose, whereupon this letter shall
constitute a binding agreement among the Company, Alliance and
the Dealer Manager.
Very truly yours,
Alliance All-Market Advantage Fund, Inc.
By:_______________________________
Name:
Title:
Alliance Capital Management L.P.
By Alliance Capital Management
Corporation, its general partner
By:______________________________
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
PaineWebber Incorporated
as Dealer Manager
By:_____________________________
Name:
Title:
34
00250205.AT6
<PAGE>
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
Rights Offering for Shares of Common Stock
SOLICITING DEALER AGREEMENT
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
JULY 16, 1999, UNLESS EXTENDED
To Securities Dealers and Brokers:
Alliance All-Market Advantage Fund, Inc., a Maryland
corporation (the "Fund"), is issuing to its stockholders of
record ("Holders") as of the close of business on June 21, 1999
(the "Record Date") non-transferable rights ("Rights") to
subscribe for an aggregate of up to 845,600 shares (the "Shares")
of common stock, par value $0.01 per share (the "Common Stock"),
of the Fund upon the terms and subject to the conditions set
forth in the Fund's Prospectus (the "Prospectus"), dated June 21,
1999 (the "Offer"). Each such Holder is being issued one Right
for each full share of Common Stock owned on the Record Date.
Such Rights entitle holders to acquire during the Subscription
Period (as hereinafter defined) at the Subscription Price (as
hereinafter defined), one Share for each three Rights (except
that any Holder who is issued fewer than three Rights will be
able to subscribe for one full Share pursuant to the primary
subscription), on the terms and conditions set forth in such
Prospectus. No fractional shares will be issued. Any Holder who
fully exercises all Rights initially issued to such Holder (other
than those Rights that cannot be exercised because they represent
the right to acquire less than one Share) will be entitled to
subscribe for, subject to allocation, additional Shares (the
"Over-Subscription Privilege") on the terms and conditions set
forth in such Prospectus. Pursuant to the Over-Subscription
Privilege, the Fund may, at its discretion, increase the number
of Shares subject to subscription by up to 25%. The Subscription
Price will be 95% of the lower of (1) the average of the last
reported sales price per share on the New York Stock Exchange
(the "NYSE") for the five trading days ending with the day the
offer expires and (2) the NAV as of the close of trading on the
NYSE on that day. The Subscription Period will commence on June
21, 1999 and end at 5:00 p.m., New York City time on the
Expiration Date (the term "Expiration Date" means July 16, 1999
unless the Fund shall, in its sole discretion, have extended the
period for which the Offer is open, in which event the term
"Expiration Date" with respect to the Offer will mean the latest
time and date on which the Offer, as so extended by the Fund,
will expire).
<PAGE>
For the duration of the Offer, the Fund has authorized
and the Dealer Manager has agreed to reallow a Solicitation Fee
to any qualified broker or dealer executing a Soliciting Dealer
Agreement who solicits the exercise of Rights and the Over-
Subscription Privilege in connection with the Offer and who
complies with the procedures described below (a "Soliciting
Dealer"). Upon timely delivery to The Bank of New York, the
Fund's Subscription Agent for the Offer, of payment for Shares
purchased pursuant to the exercise of Rights and the Over-
Subscription Privilege and of properly completed and executed
documentation as set forth in this Soliciting Dealer Agreement, a
Soliciting Dealer will be entitled to receive the Solicitation
Fee equal to 2.50% of the Subscription Price per Share so
purchased; provided, however, that no payment shall be due with
respect to the issuance of any Shares until payment therefor is
actually received. A qualified broker or dealer is a broker or
dealer which is a member of a registered national securities
exchange in the United States or the National Association of
Securities Dealers, Inc. ("NASD") or any foreign broker or dealer
not eligible for membership who agrees to conform to the Rules of
Fair Practice of the NASD, including Sections 2730, 2740, 2420
and 2750 thereof, in making solicitations in the United States to
the same extent as if it were a member thereof.
The Fund has authorized the payment of, and the Dealer
Manager has agreed to pay, the Solicitation Fees payable to the
undersigned Soliciting Dealer, and the Fund has agreed to
indemnify such Soliciting Dealer on the terms set forth in the
Dealer Manager Agreement, dated June 21, 1999, among PaineWebber
Incorporated ("PaineWebber") as the dealer manager (the "Dealer
Manager"), the Fund and Alliance Capital Management L.P. (the
"Dealer Manager Agreement"). Solicitation and other activities
by Soliciting Dealers may be undertaken only in accordance with
the applicable rules and regulations of the Securities and
Exchange Commission and only in those states and other
jurisdictions where such solicitations and other activities may
lawfully be undertaken and in accordance with the applicable
rules and regulations of the Securities and Exchange Commission
and only in those states and other jurisdictions where such
solicitations and other activities may lawfully be undertaken and
in accordance with the laws thereof. Compensation will not be
paid for solicitations in any state or other jurisdiction in
which the opinion of counsel to the Fund or counsel to the Dealer
Manager, such compensation may not lawfully be paid. No
Soliciting Dealer shall be paid Solicitation Fees with respect to
Shares purchased pursuant to an exercise of Rights and the Over-
Subscription Privilege for its own account or for the account of
any affiliate of the Soliciting Dealer. No Soliciting Dealer or
any other person is authorized by the Fund or the Dealer Manager
to give any information or make any representations in connection
with the Offer other than those contained in the Prospectus and
2
<PAGE>
other authorized solicitation material furnished by the Fund
through the Dealer Manager. No Soliciting Dealer is authorized
to act as agent of the Fund or the Dealer Manager in any
connection or transaction. In addition, nothing herein contained
shall constitute the Soliciting Dealers partners with the Dealer
Manager or with one another, or agents of the Dealer Manager or
of the Fund, or create any association between such parties, or
shall render the Dealer Manager or the Fund liable for the
obligations of any Soliciting Dealer. Except as provided above
with respect to Solicitation Fees, the Dealer Manager shall be
under no liability to make any payment to any Soliciting Dealer,
and shall be subject to no other liabilities to any Soliciting
Dealer, and no obligations of any sort shall be implied.
In order for a Soliciting Dealer to receive Solicitation
Fees, the Subscription Agent must have received from such
Soliciting Dealer no later than 5:00 p.m., New York City time, on
the Expiration Date, either (i) a properly completed and duly
executed Subscription Certificate with respect to Shares
purchased pursuant to the exercise of Rights and the Over-
Subscription Privilege designating the Soliciting Dealer in the
applicable portion thereof and full payment for such Shares; or
(ii) a Notice of Guaranteed Delivery guaranteeing delivery to
the Subscription Agent of a properly completed and duly executed
Soliciting Dealer Agreement and a Subscription Certificate
designating the Soliciting Dealer in the applicable portion
hereof. In the case of a Notice of Guaranteed Delivery,
Solicitation Fees will only be paid after delivery in accordance
with such Notice of Guaranteed Delivery has been effected.
Solicitation Fees will be paid by the Dealer Manager to the
Soliciting Dealer by check to an address designated by the
Soliciting Dealer below by the tenth] business day following each
date on which the Fund issues Shares after the Expiration Date
with respect to which such Subscription Certificates were
received.
All questions as to the form, validity and eligibility
(including time of receipt) of this Soliciting Dealer Agreement
will be determined by the Dealer Manager, in its sole discretion,
which determination shall be final and binding. Unless waived,
any irregularities in connection with a Soliciting Dealer
Agreement or delivery thereof must be cured within such time as
the Fund shall determine. None of the Fund, the Dealer Manager,
the Subscription Agent, the Information Agent for the Offer,
Shareholder Communications Corporation, or any other person will
be under any duty to give notification of any defects or
irregularities in any Soliciting Dealer Agreement or incur any
liability for failure to give such notification.
The acceptance of Solicitation Fees from the Dealer
Manager by the undersigned Soliciting Dealer shall constitute a
3
<PAGE>
representation by such Soliciting Dealer to the Dealer Manager
that: (i) it has received and reviewed the Prospectus; (ii) in
soliciting purchases of Shares pursuant to the exercise of the
Rights and the Over-Subscription Privilege, it has complied with
the applicable requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), the applicable rules and
regulations thereunder, any applicable securities laws of any
state or jurisdiction where such solicitations were made, and the
applicable rules and regulation of any self-regulatory
organization or registered national securities exchange; (iii) in
soliciting purchases of Shares pursuant to the exercise of the
Rights and the Over-Subscription Privilege, it has not published,
circulated or used any soliciting materials other than the
Prospectus and any other authorized solicitation material
furnished by the Fund through the Dealer Manager; (iv) it has not
purported to act as agent of the Fund or the Dealer Manager in
any connection or transaction relating to the Offer; (v) the
information contained in this Soliciting Dealer Agreement is, to
its best knowledge, true and complete; (vi) it is not affiliated
with the Fund; (vii) it will not accept Solicitation Fees paid by
the Dealer Manager pursuant to the terms hereof with respect to
Shares purchased by the Soliciting Dealer pursuant to an exercise
of Rights and the Over-Subscription Privilege for its own
account; (viii) it will not remit, directly or indirectly, any
part of Solicitation Fees paid by the Fund pursuant to the terms
hereof to any beneficial owner of Shares purchased pursuant to
the Offer; and (ix) it has agreed to the amount of the
Solicitation Fees and the terms and conditions set forth herein
with respect to receiving such Solicitation Fees. By returning a
Soliciting Dealer Agreement and accepting Solicitation Fees, a
Soliciting Dealer will be deemed to have agreed to indemnify and
hold harmless, to the fullest extent permitted by law, the Fund,
the Dealer Manager, the directors, officers, employees and agents
of the Dealer Manager and each person, if any, who controls the
Dealer Manager within the meaning of Section 15 of the Act and
Section 20 of the Exchange Act (the "Indemnified Persons")
against losses, claims, damages and liabilities, joint or several
(including, but not limited to, any and all investigation, legal
and other expenses reasonably incurred in connection with, and
any amount paid in settlement of, any action, suit or preceding
or any claim asserted) to which the Indemnified Persons may
become subject to as a result of the breach of such Soliciting
Dealer's representations made herein and described above. In
making the foregoing representations, the Soliciting Dealer is
reminded of the possible applicability of the anti-manipulation
rules under the Exchange Act if it has bought, sold, dealt in or
traded in any Shares for its own account since the commencement
of the Offer.
4
<PAGE>
Upon expiration of the Offer, no Solicitation Fees will
be payable to Soliciting Dealers with respect to Shares purchased
thereafter.
Capitalized terms not otherwise defined herein shall
have the meanings ascribed to them in the Dealer Manager
Agreement or, if not defined therein, in the Prospectus.
This Soliciting Dealer Agreement will be governed by the
laws of the State of New York.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY PROCEEDINGS.
Please execute this Soliciting Dealer Agreement below
accepting the terms and conditions hereof and confirming that you
are a member firm of the NASD or a foreign broker or dealer not
eligible for membership who has conformed to the Rules of Fair
Practice of the NASD, including Sections 2730, 2740, 2420 and
2750 thereof, in making solicitations of the type being
undertaken pursuant to the Offer in the United States to the same
extent as if you were a member thereof, and certifying that you
have solicited the purchase of the Shares pursuant to exercise of
the Rights, all as described above, in accordance with the terms
and conditions set forth in this Soliciting Dealer Agreement.
Please forward two executed copies of this Soliciting Dealer
Agreement to PaineWebber Incorporated, Attn: Joseph Zabik, 1285
Avenue of the Americas, New York, New York 10019; Telephone No.:
(212) 713-2711 and Facsimile No.: (212) 713-4205.
A signed copy of this Soliciting Dealer Agreement will
be promptly returned to the Soliciting Dealer at the address set
forth below.
Very truly yours,
PaineWebber Incorporated
By:_________________________________
Name:_______________________________
Title:______________________________
PLEASE COMPLETE THE INFORMATION BELOW
___________________________ ____________________________________
Printed Firm Name Address
_________________________________________________________________
Contact at Soliciting Dealer
5
<PAGE>
___________________________ ____________________________________
Authorized Signature Area Code and Telephone Number
___________________________ ____________________________________
Name and Title Facsimile Number
Dated:______________________________
Payment of the Solicitation Fee shall be
mailed by check to the following address:
___________________________________
___________________________________
___________________________________
6
00250205.AT5
<PAGE>
CUSTODY AGREEMENT
Agreement made as of this 28th day of October, 1994, between
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC., a corporation organized
and existing under the laws of the State of Maryland having its
principal office and place of business at 1345 Avenue of the
Americas, New York, New York 10105 (hereinafter called the
"Fund"), and THE BANK OF NEW YORK, a New York corporation
authorized to do a banking business, having its principal office
and place of business at 48 Wall Street, New York, New York 10286
(hereinafter called the "Custodian").
W I T N E S S E T H :
that for and in consideration of the mutual promises hereinafter
set forth, the Fund and the Custodian agree as follows:
ARTICLE I.
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the
following meanings:
1. "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and federal
agency securities, its successor or successors and its nominee or
nominees.
2. "Call Option" shall mean an exchange traded option with
respect to Securities other than Stock Index Options, Futures
Contracts, and Futures Contract Options entitling the holder,
upon timely exercise and payment of the exercise price, as
specified therein, to purchase from the writer thereof the
specified underlying Securities.
3. "Certificate" shall mean any notice, instruction, or
other instrument in writing, authorized or required by this
Agreement to be given to the Custodian which is actually received
by the Custodian and signed on behalf of the Fund by any two
Officers, and the term Certificate shall also include
instructions by the Fund to the Custodian communicated by a
Terminal Link.
4. "Clearing Member" shall mean a registered broker-dealer
which is a clearing member under the rules of O.C.C. and a member
of a national securities exchange qualified to act as a custodian
<PAGE>
for an investment company, or any broker-dealer reasonably
believed by the Custodian to be such a clearing member.
5. "Collateral Account" shall mean a segregated account so
denominated which is specifically allocated to a Series and
pledged to the Custodian as security for, and in consideration
of, the Custodian's issuance of (a) any Put Option guarantee
letter or similar document described in paragraph 8 of Article V
herein, or (b) any receipt described in Article V or VIII herein.
6. "Covered Call Option" shall mean an exchange traded
option entitling the holder, upon timely exercise and payment of
the exercise price, as specified therein, to purchase from the
writer thereof the specified underlying Securities (excluding
Futures Contracts) which are owned by the writer thereof and
subject to appropriate restrictions.
7. "Depository" shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and
Exchange Commission, its successor or successors and its nominee
or nominees. The term "Depository" shall further mean and
include any other person authorized to act as a depository under
the Investment Company Act of 1940, its successor or successors
and its nominee or nominees, specifically identified in a
certified copy of a resolution of the Fund's Board of Directors
specifically approving deposits therein by the Custodian.
8. "Financial Futures Contract" shall mean the firm
commitment to buy or sell fixed income securities including,
without limitation, U.S. Treasury Bills, U.S. Treasury Notes,
U.S. Treasury Bonds, domestic bank certificates of deposit, and
Eurodollar certificates of deposit, during a specified month at
an agreed upon price.
9. "Futures Contract" shall mean a Financial Futures
Contract and/or Stock Index Futures Contracts.
10. "Futures Contract Option" shall mean an option with
respect to a Futures Contract.
11. "Margin Account" shall mean a segregated account in the
name of a broker, dealer, futures commission merchant, or a
Clearing Member, or in the name of the Fund for the benefit of a
broker-dealer, futures commission merchant, or Clearing Member,
or otherwise, in accordance with an agreement between the Fund,
the Custodian and a broker, dealer, futures commission merchant
or a Clearing Member (a "Margin Account Agreement"), separate and
distinct from the custody account, in which certain Securities
and/or money of the Fund shall be deposited and withdrawn from
time to time in connection with such transactions as the Fund may
from time to time determine. Securities held in the Book-Entry
2
<PAGE>
System or the Depository shall be deemed to have been deposited
in, or withdrawn from, a Margin Account upon the Custodian's
effecting an appropriate entry in its books and records.
12. "Money Market Security" shall be deemed to include,
without limitation, certain Reverse Repurchase Agreements, debt
obligations issued or guaranteed as to interest and principal by
the government of the United States or agencies or
instrumentalities thereof, any tax, bond or revenue anticipation
note issued by any state or municipal government or public
authority, commercial paper, certificates of deposit and bankers,
acceptances, repurchase agreements with respect to the same and
bank time deposits, where the purchase and sale of such
securities normally requires settlement in federal funds on the
same day as such purchase or sale.
13. "O.C.C." shall mean the Options Clearing Corporation, a
clearing agency registered under Section 17A of the Securities
Exchange Act of 1934, its successor or successors, and its
nominee or nominees.
14. "Officers" shall be deemed to include the President, any
Vice President, the Secretary, the Treasurer, the Controller, any
Assistant Secretary, any Assistant Treasurer, and any other
person or persons, whether or not any such other person is an
officer of the Fund, duly authorized by the Board of Directors of
the Fund to execute any Certificate, instruction, notice or other
instrument on behalf of the Fund and listed in the Certificate
annexed hereto as Appendix A or such other Certificate as may be
received by the Custodian from time to time.
15. "Option" shall mean a Call Option, Covered Call Option,
Stock Index Option and/or a Put Option.
16. "Oral Instructions" shall mean verbal instructions
actually received by the Custodian from an Officer or from a
person reasonably believed by the Custodian to be an Officer.
17. "Put Option" shall mean an exchange traded option with
respect to Securities other than Stock Index Options, Futures
Contracts, and Futures Contract Options entitling the holder,
upon timely exercise and tender of the specified underlying
Securities, to sell such Securities to the writer thereof for the
exercise price.
18. "Reverse Repurchase Agreement" shall mean an agreement
pursuant to which the Fund sells Securities and agrees to
repurchase such Securities at a described or specified date and
price.
3
<PAGE>
19. "Security" shall be deemed to include, without
limitation, Money Market Securities, Call Options, Put Options,
Stock Index Options, Stock Index Futures Contracts, Stock Index
Futures Contract Options, Financial Futures Contracts, Financial
Futures Contract Options, Reverse Repurchase Agreements, common
stocks and other securities having characteristics similar to
common stocks, preferred stocks, debt obligations issued by state
or municipal governments and by public authorities, (including,
without limitation, general obligation bonds, revenue bonds,
industrial bonds and industrial development bonds), bonds,
debentures, notes, mortgages or other obligations, and any
certificates, receipts, warrants or other instruments
representing rights to receive, purchase, sell or subscribe for
the same, or evidencing or representing any other rights or
interest therein, or any property or assets.
20. "Senior Security Account" shall mean an account
maintained and specifically allocated to a Series under the terms
of this Agreement as a segregated account, by recordation or
otherwise, within the custody account in which certain Securities
and/or other assets of the Fund specifically allocated to such
Series shall be deposited and withdrawn from time to time in
accordance with Certificates received by the Custodian in
connection with such transactions as the Fund may from time to
time determine.
21. "Series" shall mean the various portfolios, if any, of
the Fund as described from time to time in the current and
effective prospectus for the Fund.
22. "Shares" shall mean the shares of capital stock of the
Fund, each of which is, in the case of a Fund having Series,
allocated to a particular Series.
23. "Stock Index Futures Contract" shall mean a bilateral
agreement pursuant to which the parties agree to take or make
delivery of an amount of cash equal to a specified dollar amount
times the difference between the value of a particular stock
index at the close of the last business day of the contract and
the price at which the futures contract is originally struck.
24. "Stock Index Option" shall mean an exchange traded
option entitling the holder, upon timely exercise, to receive an
amount of cash determined by reference to the difference between
the exercise price and the value of the index on the date of
exercise.
25. "Terminal Link" shall mean an electronic data
transmission link between the Fund and the Custodian requiring in
connection with each use of the Terminal Link by or on behalf of
4
<PAGE>
the Fund use of an authorization code provided by the Custodian
and at least two access codes established by the Fund.
ARTICLE II.
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custodian
as custodian of the Securities and moneys at any time owned by
the Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as hereinafter
set forth.
ARTICLE III.
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, the Fund will deliver or cause to be
delivered to the Custodian all Securities and all moneys owned by
it, at any time during the period of this Agreement, and shall
specify with respect to such Securities and money the Series to
which the same are specifically allocated. The Custodian shall
segregate, keep and maintain the assets of the Series separate
and apart. The Custodian will not be responsible for any
Securities and moneys not actually received by it. The Custodian
will be entitled to reverse any credits made on the Fund's behalf
where such credits have been previously made and moneys are not
finally collected. The Fund shall deliver to the Custodian a
certified resolution of the Board of Directors of the Fund,
substantially in the form of Exhibit A hereto, approving,
authorizing and instructing the Custodian on a continuous and
ongoing basis to deposit in the Book-Entry System all Securities
eligible for deposit therein, regardless of the Series to which
the same are specifically allocated and to utilize the Book-Entry
System to the extent possible in connection with its performance
hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of
Securities and deliveries and returns of Securities collateral.
Prior to a deposit of Securities specifically allocated to a
Series in the Depository, the Fund shall deliver to the Custodian
a certified resolution of the Board of Directors of the Fund,
substantially in the form of Exhibit B hereto, approving,
authorizing and instructing the Custodian on a continuous and
ongoing basis until instructed to the contrary by a Certificate
actually received by the Custodian to deposit in the Depository
all Securities specifically allocated to such Series eligible for
deposit therein, and to utilize the Depository to the extent
possible with respect to such Securities in connection with its
5
<PAGE>
performance hereunder, including, without limitation, in
connection with settlements of purchases and sales of Securities,
loans of Securities, and deliveries and returns of Securities
collateral. Securities and moneys deposited in either the Book-
Entry System or the Depository will be represented in accounts
which include only assets held by the Custodian for customers,
including, but not limited to, accounts in which the Custodian
acts in a fiduciary or representative capacity and will be
specifically allocated on the Custodian's books to the separate
account:for the applicable Series. Prior to the Custodian's
accepting, utilizing and acting with respect to Clearing Member
confirmations for options and transactions in Options for a
Series as provided in this Agreement, the Custodian shall have
received a certified resolution of the Fund's Board of Directors,
substantially in the form of Exhibit C hereto, approving,
authorizing and instructing the Custodian on a continuous and
ongoing basis, until instructed to the contrary by a Certificate
actually received by the Custodian, to accept, utilize and act in
accordance with such confirmations as provided in this Agreement
with respect to such Series.
2. The Custodian shall establish and maintain separate
accounts, in the name of each Series, and shall credit to the
separate account for each Series all moneys received by it for
the account of the Fund with respect to such Series. Money
credited to a separate account for a Series shall be reimbursed
by the Custodian only:
(a) As hereinafter provided;
(b) Pursuant to Certificates setting forth the name and
address of the person to whom the payment is to be made, the
Series account from which payment is to be made and the purpose
for which payment is to be made; or
(c) In payment of the fees and in reimbursement of the
expenses and liabilities of the Custodian attributable to such
Series.
3. Promptly after the close of business on each day, the
Custodian shall furnish the Fund with confirmations and a
summary, on a per Series basis, of all transfers to or from the
account of the Fund for a Series, either hereunder or with any
co-custodian or sub-custodian appointed in accordance with this
Agreement during said day. Where Securities are transferred to
the account of the Fund for a Series, the Custodian shall also by
book-entry or otherwise identify as belonging to such Series a
quantity of Securities in a fungible bulk of Securities
registered in the name of the Custodian (or its nominee) or shown
on the Custodian's account on the books of the Book-Entry System
or the Depository. At least monthly and from time to time, the
6
<PAGE>
custodian shall furnish the Fund with a detailed statement, on a
per Series basis, of the Securities and moneys held by the
Custodian for the Fund.
4. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, all Securities held by the Custodian
hereunder, which are issued or issuable only in bearer form,
except such Securities as are held in the Book-Entry System,
shall be held by the Custodian in that form; all other Securities
held hereunder may be registered in the name of the Fund, in the
name of any duly appointed registered nominee of the Custodian as
the Custodian may from time to time determine, or in the name of
the Book-Entry System or the Depository or their successor or
successors, or their nominee or nominees. The Fund agrees to
furnish to the Custodian appropriate instruments to enable the
Custodian to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee or in the name of
the Book-Entry System or the Depository any Securities which it
may hold hereunder and which may from time to time be registered
in the name of the Fund. The Custodian shall hold all such
Securities specifically allocated to a Series which are not held
in the Book-Entry System or in the Depository in a separate
account in the name of such Series physically segregated at all
times from those of any other person or persons.
5. Except as otherwise provided in this Agreement and
unless otherwise instructed to the contrary by a Certificate, the
Custodian by itself, or through the use of the Book-Entry System
or the Depository with respect to Securities held hereunder and
therein deposited, shall with respect to all Securities held for
the Fund hereunder in accordance with preceding paragraph 4:
(a) Collect all income due or payable;
(b) Present for payment and collect the amount payable
upon such Securities which are called, but only if either (i) the
Custodian receives a written notice of such call, or (ii) notice
of such call appears in one or more of their publications listed
in Appendix B annexed hereto, which may be amended at any time by
the Custodian without the prior notification or consent of the
Fund;
(c) Present for payment and collect the amount payable
upon all Securities which mature;
(d) Surrender Securities in temporary form for
definitive Securities;
(e) Execute, as custodian, any necessary declarations or
certificates of ownership under the Federal Income Tax Laws or
7
<PAGE>
the laws or regulations of any other taxing authority now or
hereafter in effect; and
(f) Hold directly, or through the Book-Entry System or
the Depository with respect to Securities therein deposited, for
the account of a Series, all rights and similar securities issued
with respect to any Securities held by the Custodian for such
Series hereunder.
6. Upon receipt of a Certificate and not otherwise, the
Custodian, directly or through the use of the Book-Entry System
or the Depository, shall:
(a) Execute and deliver to such persons as may be
designated in such Certificate proxies, consents, authorizations,
and any other instruments whereby the authority of the Fund as
owner of any Securities held by the Custodian hereunder for the
Series specified in such Certificate may be exercised;
(b) Deliver any Securities held by the Custodian
hereunder for the Series specified in such Certificate in
exchange for other Securities or cash issued or paid in
connection with the liquidation, reorganization, refinancing,
merger, consolidation or recapitalization of any corporation, or
the exercise of any conversion privilege and receive and hold
hereunder specifically allocated to such Series any cash or other
Securities received in exchange;
(c) Deliver any Securities held by the Custodian
hereunder for the Series specified in such Certificate to any
protective committee, reorganization committee or other person in
connection with the reorganization, refinancing, merger,
consolidation, recapitalization or sale of assets of any
corporation, and receive and hold hereunder specifically
allocated to such Series such certificates of deposit, interim
receipts or other instruments or documents as may be issued to it
to evidence such delivery;
(d) Make such transfers or exchanges of the assets of
the Series specified in such Certificate, and take such other
steps as shall be stated in such Certificate to be for the
purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the
Fund; and
(e) Present for payment and collect the amount payable
upon Securities not described in preceding paragraph 5(b) of this
Article which may be called as specified in the Certificate.
7. Notwithstanding any provision elsewhere contained
herein, the Custodian shall not be required to obtain possession
8
<PAGE>
of any instrument or certificate representing any Futures
Contract, any Option, or any Futures Contract Option until after
it shall have determined, or shall have received a Certificate
from the Fund stating, that any such instruments or certificates
are available. The Fund shall deliver to the Custodian such a
Certificate no later than the business day preceding the
availability of any such instrument or certificate. Prior to
such availability, the Custodian shall comply with Section 17(f)
of the Investment Company Act of 1940, as amended, in connection
with the purchase, sale, settlement, closing out or writing of
Futures Contracts, Options, or Futures Contract options by making
payments or deliveries specified in Certificates received by the
Custodian in connection with any such purchase, sale, writing,
settlement or closing out upon its receipt from a broker, dealer,
or futures commission merchant of a statement or confirmation
reasonably believed by the Custodian to be in the form
customarily used by brokers, dealers, or future commission
merchants with respect to such Futures Contracts, Options, or
Futures Contract Options, as the case may be, confirming that
such Security is held by such broker, dealer or futures
commission merchant, in book-entry form or otherwise, in the name
of the Custodian (or any nominee of the Custodian) as custodian
for the Fund, provided, however, that notwithstanding the
foregoing, payments to or deliveries from the Margin Account, and
payments with respect to Securities to which a Margin Account
relates, shall be made in accordance with the terms and
conditions of the Margin Account Agreement. Whenever any such
instruments or certificates are available, the Custodian shall,
notwithstanding any provision in this Agreement to the contrary,
make payment for any Futures Contract, option, or Futures
Contract Option for which such instruments or such certificates
are available only against the delivery to the Custodian of such
instrument or such certificate, and deliver any Futures Contract,
Option or Futures Contract Option for which such instruments or
such certificates are available only against receipt by the
Custodian of payment therefor. Any such instrument or
certificate delivered to the Custodian shall be held by the
Custodian hereunder in accordance with, and subject to, the
provisions of this Agreement.
ARTICLE IV.
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS
1. Promptly after each purchase of Securities by the Fund,
other than a purchase of an Option, a Futures Contract or a
Futures Contract Option, the Fund shall deliver to the Custodian
(i) with respect to each purchase of Securities which are not
Money Market Securities, a Certificate, and (ii) with respect to
9
<PAGE>
each purchase of Money Market Securities, a Certificate or Oral
Instructions, specifying with respect to each such purchase: (a)
the Series to which such Securities are to be specifically
allocated; (b) the name of the issuer and the title of the
Securities; (c) the number of shares or the principal amount
purchased and accrued interest, if any; (d) the date of purchase
and settlement; (e) the purchase price per unit; (f) the total
amount payable upon such purchase; (g) the name of the person
from whom or the broker through whom the purchase was made, and
the name of the clearing broker, if any; and (h) the name of the
broker to whom payment is to be made. The Custodian shall, upon
receipt of Securities purchased by or for the Fund, pay to the
broker specified in the Certificate out of the moneys held for
the account of such Series the total amount payable upon such
purchase,,provided that the same conforms to the total amount
payable as set forth in such Certificate or Oral Instructions.
2. Promptly after each sale of Securities by the Fund,
other than a sale of any Option, Futures Contract, Futures
Contract Option, or any Reverse Repurchase Agreement, the Fund
shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, a Certificate,
and (ii) with respect to each sale of Money Market Securities, a
Certificate or Oral Instructions, specifying with respect to each
such sale: (a) the Series to which such Securities were
specifically allocated; (b) the name of the issuer and the title
of the Security; (c) the number of shares or principal amount
sold, and accrued interest, if any; (d) the date of sale; (e) the
sale price per unit; (f) the total amount payable to the Fund
upon such sale; (g) the name of the broker through whom or the
person to whom the sale was made, and the name of the clearing-
broker, if any; and (h) the name of the broker to whom the
Securities are to be delivered. The Custodian shall deliver the
Securities specifically allocated to such Series to the broker
specified in the Certificate against payment of the total amount
payable to the Fund upon such sale, provided that the same
conforms to the total amount payable as set forth in such
Certificate or Oral Instructions.
ARTICLE V.
OPTIONS
1. Promptly after the purchase of any Option by the Fund,
the Fund shall deliver to the Custodian a Certificate specifying
with respect to each Option purchased: (a) the Series to which
such Option is specifically allocated; (b) the type of Option
(put or call); (c) the name of the issuer and the title and
number of shares subject to such Option or, in the case of A
Stock Index Option, the stock index to which such Option relates
and the number of Stock Index Options purchased; (d) the
10
<PAGE>
expiration date; (e) the exercise price; (f) the dates of
purchase and settlement; (g) the total amount payable by the Fund
in connection with such purchase; (h) the name of the Clearing
Member through whom such option was purchased; and (i) the name
of the broker to whom payment is to be made. The Custodian shall
pay, upon receipt of a Clearing member's statement confirming the
purchase of such Option held by such Clearing Member for the
account of the Custodian (or any duly appointed and registered
nominee of the Custodian) as custodian for the Fund, out of
moneys held for the account of the Series to which such Option is
to be specifically allocated, the total amount payable upon such
purchase to the Clearing Member through whom the purchase was
made, provided that the same conforms to the total amount payable
as set forth in such Certificate.
2. Promptly after the sale of any Option purchased by the
Fund pursuant to paragraph 1 hereof, the fund shall deliver to
the Custodian a Certificate specifying with respect to each such
sale: (a) the Series to which such Option was specifically
allocated; (b) the type of Option (put or call); (c) the name of
the issuer and the title and number of shares subject to such
Option or, in the case of a Stock Index Option, the stock index
to which such Option relates and the number of Stock Index
Options sold; (d) the date of sale; (e) the sale price; (f) the
date of settlement; (g) the total amount payable to the Fund upon
such sale; and (h) the name of the Clearing Member through whom
the sale was made. The Custodian shall consent to the delivery
of the option sold by the Clearing Member which previously
supplied the confirmation described in preceding paragraph 1 of
this Article with respect to such Option against payment to the
Custodian of the total amount payable to the Fund, provided that
the same conforms to the total amount payable as set forth in
such Certificate.
3. Promptly after the exercise by the Fund of any Call
Option purchased by the Fund pursuant to paragraph I hereof, the
Fund shall deliver to the Custodian a Certificate specifying with
respect to such Call Option: (a) the Series to which such Call
Option was specifically allocated; (b) the name of the issuer and
the title and number of shares subject to the Call Option; (c)
the expiration date; (d) the date of exercise and settlement; (e)
the exercise price per share; (f) the total amount to be paid by
the Fund upon such exercise; and (g) the name of the Clearing
Member through whom such Call option was exercised. The
Custodian shall, upon receipt of the Securities underlying the
Call Option which was exercised, pay out of the moneys held for
the account of the Series to which such Call Option was
specifically allocated the total amount payable to the Clearing
Member through whom the Call Option was exercised, provided that
the same conforms to the total amount payable as set forth in
such Certificate.
11
<PAGE>
4. Promptly after the exercise by the Fund of any Put
Option purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall deliver to the Custodian a Certificate specifying with
respect to such Put Option: (a) the Series to which such Put
Option was specifically allocated; (b) the name of the issuer and
the title and number of shares subject to the Put Option; (c) the
expiration date; (d) the date of exercise and settlement; (e) the
exercise price per share; (f) the total amount to be paid to the
Fund upon such exercise; and (g) the name of the Clearing Member
through whom such Put Option was exercised. The Custodian shall,
upon receipt of the amount payable upon the exercise of the Put
Option, deliver or direct the Depository to deliver the
Securities specifically allocated to such Series, provided the
same conforms to the amount payable to the Fund as set forth in
such Certificate.
5. Promptly after the exercise by the Fund of any Stock
Index Option purchased by the Fund pursuant to paragraph 1
hereof, the Fund shall deliver to the Custodian a Certificate
specifying with respect to such Stock Index Option: (a) the
Series to which such Stock Index Option was specifically
allocated; (b) the type of Stock Index Option (put or call); (c)
the number of Options being exercised; (d) the stock index to
which such Option relates; (e) the expiration date; (f) the
exercise price; (g) the total amount to be received by the Fund
in connection with such exercise; and (h) the Clearing Member
from whom such payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying
with respect to such Covered Call Option: (a) the Series for
which such Covered Call Option was written; (b) the name of the
issuer and the title and number of shares for which the Covered
Call Option was written and which underlie the same; (c) the
expiration date; (d) the exercise price; (e) the premium to be
received by the Fund; (f) the date such Covered Call Option was
written; and (g) the name of the Clearing Member through whom the
premium is to be received. The Custodian shall deliver or cause
to be delivered, in exchange for receipt of the premium specified
in the Certificate with respect to such Covered Call Option, such
receipts as are required in accordance with the customs
prevailing among Clearing Members dealing in Covered Call Options
and shall impose, or direct the Depository to impose, upon the
underlying Securities specified in the Certificate specifically
allocated to such Series such restrictions as may be required by
such receipts. Notwithstanding the foregoing, the Custodian has
the right, upon prior written notification to the Fund, at any
time to refuse to issue any receipts for Securities in the
possession of the Custodian and not deposited with the Depository
underlying a Covered Call Option.
12
<PAGE>
7. Whenever a Covered Call Option written by the Fund and
described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate instructing the Custodian to deliver, or to direct
the Depository to deliver, the Securities subject to such Covered
Call Option and specifying: (a) the Series for which such Covered
Call Option was written; (b) the name of the issuer and the title
and number of shares subject to the Covered Call Option; (c) the
Clearing Member to whom the underlying Securities are to be
delivered; and (d) the total amount payable to the Fund upon such
delivery. Upon the return and/or cancellation of any receipts
delivered pursuant to paragraph 6 of this Article, the Custodian
shall deliver, or direct the Depository to deliver, the
underlying Securities as specified in the Certificate against
payment of the amount to be received as set forth in such
Certificate.
8. Whenever the Fund writes a Put Option, the Fund shall
promptly deliver to the Custodian a Certificate specifying with
respect to such Put Option: (a) the Series for which such Put
Option was written; (b) the name of the issuer and the title and
number of shares for which the Put Option is written and which
underlie the same; (c) the expiration date; (d) the exercise
price; (e) the premium to be received by the Fund; (f) the date
such Put Option is written; (g) the name of the Clearing Member
through whom the premium is to be received and to whom a Put
Option guarantee letter is to be delivered; (h) the amount of
cash, and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the
Senior Security Account for such Series; and (i) the amount of
cash and/or the amount and kind of Securities specifically
allocated to such Series to be deposited into the Collateral
Account for such Series. The Custodian shall, after making the
deposits into the collateral Account specified in the
Certificate, issue a Put Option guarantee letter substantially in
the form utilized by the Custodian on the date hereof, and
deliver the same to the Clearing Member specified in the
Certificate against receipt of the premium specified in said
Certificate. Notwithstanding the foregoing, the Custodian shall
be under no obligation to issue any Put Option guarantee letter
or similar document if it is unable to make any of the
representations contained therein.
9. Whenever a Put Option written by the Fund and described
in the preceding paragraph is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the Series
to which such Put Option was written; (b) the name of the issuer
and title and number of shares subject to the Put Option; (c) the
Clearing Member from whom the underlying Securities are to be
received; (d) the total amount payable by the Fund upon such
delivery; (e) the amount of cash and/or the amount and kind of
13
<PAGE>
Securities specifically allocated to such Series to be withdrawn
from the Collateral Account for such Series and (f) the amount of
cash and/or the amount and kind of Securities, specifically
allocated to such Series, if any, to be withdrawn from the Senior
Security Account. Upon the return and/or cancellation of any Put
Option guarantee letter or similar document issued by the
Custodian in connection with such Put Option, the Custodian shall
pay out of the moneys held for the account of the Series to which
such Put option was specifically allocated the total amount
payable to the Clearing Member specified in the Certificate as
set forth in such Certificate against delivery of such
Securities, and shall make the withdrawals specified in such
Certificate.
10. Whenever the Fund writes a Stock Index Option, the Fund
shall promptly deliver to the Custodian a Certificate specifying
with respect to such Stock Index Option: (a) the Series for which
such Stock Index Option was written; (b) whether such Stock Index
Option is a put or a call; (c) the number of options written; (d)
the stock index to which such Option relates; (e) the expiration
date.; (f) the exercise price; (g) the Clearing Member through
whom such Option was written; (h) the premium to be received by
the Fund; (i) the amount of cash and/or the amount and kind of
Securities, if any specifically allocated to such Series to be
deposited in the Senior Security Account for such Series; (j) the
amount of cash and/or the amount and kind of Securities, if any,
specifically allocated to such Series to be deposited in the
Collateral Account for such Series; and (k) the amount of cash
and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in a Margin Account, and
the name in which such account is to be or has been established.
The Custodian shall, upon receipt of the premium specified in the
Certificate, make the deposits, if any, into the Senior Security
Account specified in the Certificate, and either (1) deliver such
receipts, if any, which the Custodian has specifically agreed to
issue, which are in accordance with the customs prevailing among
Clearing Members in Stock Index Options and make the deposits
into the Collateral Account specified in the Certificate, or (2)
make the deposits into the Margin Account specified in the
Certificate.
11. Whenever a Stock Index Option written by the Fund and
described in the preceding paragraph of this Article is
exercised, the Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to such Stock Index Option:
(a) the Series for which such Stock Index Option was written; (b)
such information as may be necessary to identify the Stock Index
Option being exercised; (c) the Clearing Member through whom such
Stock Index Option is being exercised; (d) the total amount
payable upon such exercise, and whether such amount is to be paid
by or to the Fund; (e) the amount of cash and/or amount and kind
14
<PAGE>
of Securities, if any, to be withdrawn from the Margin Account;
and (f) the amount of cash and/or amount and kind of Securities,
if any, to be withdrawn from the Senior Security Account for such
Series; and the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Collateral Account
for such Series. Upon the return and/or cancellation of the
receipt, if any, delivered pursuant to the preceding paragraph of
this Article, the Custodian shall pay out of the moneys held for
the account of the Series to which such Stock Index Option was
specifically allocated to the Clearing Member specified in the
Certificate the total amount payable, if any, as specified
therein.
12. Whenever the Fund purchases any option identical to a
previously written Option described in paragraphs, 6, 8 or 10 of
this Article in a transaction expressly designated as a "Closing
Purchase Transaction" in order to liquidate its position as a
writer of an Option, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to the Option
being purchased: (a) that the transaction is a Closing Purchase
Transaction; (b) the Series for which the Option was written; (c)
the name of the issuer and the title and number of shares subject
to the Option, or, in the case of a Stock Index Option, the stock
index to which such Option relates and the number of Options
held; (d) the exercise price; (e) the premium to be paid by the
Fund; (f) the expiration date; (g) the type of Option (put or
call); (h) the date of such purchase; (i) the name of the
Clearing Member to whom the premium is to be paid; and (j) the
amount of cash and/or the amount and kind of Securities, if any,
to be withdrawn from the Collateral Account, a specified Margin
Account, or the Senior Security Account for such Series. Upon
the Custodian's payment of the premium and the return and/or
cancellation of any receipt issued pursuant to paragraphs 6, 8 or
10 of this Article with respect to the option being liquidated
through the Closing Purchase Transaction, the Custodian shall
remove, or direct the Depository to remove, the previously
imposed restrictions on the Securities underlying the Call
Option.
13. Upon the expiration, exercise or consummation of a
Closing Purchase Transaction with respect to any Option purchased
or written by the Fund and described in this Article, the
Custodian shall delete such Option from the statements delivered
to the Fund pursuant to paragraph 3 Article III herein, and upon
the return and/or cancellation of any receipts issued by the
Custodian, shall make such withdrawals from the Collateral
Account, and the Margin Account and/or the Senior Security
Account as may be specified in a Certificate received in
connection with such expiration, exercise, or consummation.
15
<PAGE>
ARTICLE VI.
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Contract,
the Fund shall deliver to the Custodian a Certificate specifying
with respect to such Futures Contract, (or with respect to any
number of identical Futures Contract(s)): (a) the Series for
which the Futures Contract is being entered; (b) the category of
Futures Contract (the name of the underlying stock index or
financial instrument); (c) the number of identical Futures
Contracts entered into; (d) the delivery or settlement date of
the Futures Contract(s); (e) the date the Futures Contract(s) was
(were) entered into and the maturity date; (f) whether the Fund
is buying (going long) or selling (going short) on such Futures
Contract(s); (g) the amount of cash and/or the amount and kind of
Securities, if any, to be deposited in the Senior Security
Account for such Series; (h) the name of the broker, dealer, or
futures commission merchant through whom the Futures Contract was
entered into; and W the amount of fee or commission, if any, to
be paid and the name of the broker-dealer, or futures commission
merchant to whom such amount is to be paid. The Custodian shall
make the deposits, if any, to the Margin Account in accordance
with the terms and conditions of the Margin Account Agreement.
The Custodian shall make payment out of the moneys specifically
allocated to such Series of the fee or commission, if any,
specified in the Certificate and deposit in the Senior Security
Account for such Series the amount of cash and/or the amount and
kind of Securities specified in said Certificate.
2. (a) Any variation margin payment or similar payment
required to be made by the Fund to a broker, dealer, or futures
commission merchant with respect to an outstanding Futures
Contract, shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar payment from
a broker, dealer, or futures commission merchant to the Fund with
respect to an outstanding Futures Contract, shall be received and
dealt with by the Custodian in accordance with the terms and
conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian
hereunder is retained by the Fund until delivery or settlement is
made on such Futures Contract, the Fund shall deliver to the
Custodian a Certificate specifying: (a) the Futures Contract and
the Series to which the same relates; (b) with respect to a Stock
Index Futures Contract, the total cash settlement amount to be
paid or received, and with respect to a Financial Futures
Contract, the Securities and/or amount of cash to be delivered or
received; (c) the broker, dealer, or futures commission merchant
16
<PAGE>
to or from whom payment or delivery is to be made or received;
and (d) the amount of cash and/or Securities to be withdrawn from
the Senior Security Account for such Series. The Custodian shall
make the payment or delivery specified in the Certificate, and
delete such Futures Contract from the statements delivered to the
Fund pursuant to paragraph 3 of Article III herein.
4. Whenever the Fund shall enter into a Futures Contract to
offset a Futures Contract held by the Custodian hereunder, the
Fund shall deliver to the Custodian a Certificate specifying: (a)
the items of information required in a Certificate described in
paragraph 1 of this Article, and (b) the Futures Contract being
offset. The Custodian shall make payment out of the money
specifically allocated to such Series of the fee or commission,
if any, specified in the Certificate and delete the Futures
Contract being offset from the statements delivered to the Fund
pursuant to paragraph 3 of Article III herein, and make such
withdrawals from the Senior Security Account for such Series as
may be specified in such Certificate. The withdrawals, if any,
to be made from the Margin Account shall be made by the Custodian
in accordance with the terms and conditions of the margin Account
Agreement.
ARTICLE VII.
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract
Option by the Fund, the Fund shall promptly deliver to the
Custodian a Certificate specifying with respect to such Futures
Contract Option: (a) the Series to which such Option is
specifically allocated; (b) the type of Futures Contract Option
(put or call); (c) the type of Futures Contract and such other
information as may be necessary to identify the Futures Contract
underlying the Futures Contract Option purchased; (d) the
expiration date; (e) the exercise price; (f) the dates of
purchase and settlement; (g) the amount of premium to be paid by
the Fund upon such purchase; (h) the name of the broker or
futures commission merchant through whom such Option was
purchased; and (i) the name of the broker, or futures commission
merchant, to whom payment is to be made. The Custodian shall pay
out of the moneys specifically allocated to such Series, the
total amount to be paid upon such purchase to the broker or
futures commissions merchant through whom the purchase was made,
provided that the same conforms to the amount set forth in such
Certificate.
2. Promptly after the sale of any Futures Contract Option
purchased by the Fund pursuant to paragraph I hereof, the Fund
shall promptly deliver to the Custodian a Certificate specifying
with respect to each such sale: (a) Series to which such Futures
17
<PAGE>
Contract Option was specifically allocated; (b) the type of
Future Contract Option (put or call); (c) the type of Futures
Contract and such other information as may be necessary to
identify the Futures Contract underlying the Futures Contract
Option; (d) the date of sale; (e) the sale price; (f) the date of
settlement; (g) the total amount payable to the Fund upon such
sale; and (h) the name of the broker of futures commission
merchant through whom the sale was made. The Custodian shall
consent to the cancellation of the Futures Contract Option being
closed against payment to the Custodian of the total amount
payable to the Fund, provided the same conforms to the total
amount payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the Fund
pursuant to paragraph 1 is exercised by the Fund, the Fund shall
promptly deliver to the Custodian a Certificate specifying: (a)
the Series to which such Futures Contract Option was specifically
allocated; (b) the particular Futures Contract Option (put or
call) being exercised; (c) the type of Futures Contract
underlying the Futures Contract Option; (d) the date of exercise;
(e) the name of the broker or futures commission merchant through
whom the Futures Contract Option is exercised; (f) the net total
amount, if any, payable by the Fund; (g) the amount, if any, to
be received by the Fund; and (h) the amount of cash and/or the
amount and kind of Securities to be deposited in the Senior
Security Account for such Series. The Custodian shall make, out
of the moneys and Securities specifically allocated to such
Series, the payments, if any, and the deposits, if any, into the
Senior Security Account as specified in the Certificate. The
deposits, if any, to be made to the Margin Account shall be made
by the Custodian in accordance with the terms and conditions of
the Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract Option, the
Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to such Futures Contract Option: (a) the
Series for which such Futures Contract Option was written; (b)
the type of Futures Contract Option (put or call); (c) the type
of Futures Contract and such other information as may be
necessary to identify the Futures Contract underlying the Futures
Contract Option; (d) the expiration date; (e) the exercise price;
(f) the premium to be received by the Fund; (g) the name of the
broker or futures commission merchant through whom the premium is
to be received; and (h) the amount of cash and/or the amount and
kind of Securities, if any, to be deposited in the Senior
Security Account for such Series. The Custodian shall, upon
receipt of the premium specified in the Certificate, make out of
the moneys and Securities specifically allocated to such Series
the deposits into the Senior Security Account, if any, as
specified in the Certificate. The deposits, if any, to be made
to the Margin Account shall be made by the Custodian in
18
<PAGE>
accordance with the terms and conditions of the Margin Account
Agreement.
5. Whenever a Futures Contract Option written by the Fund
which is a call is exercised,the Fund shall promptly deliver to
the Custodian a Certificate specifying: (a) the Series to which
such Futures Contract Option was specifically allocated; (b) the
particular Futures Contract Option exercised; (c) the type of
Futures Contract underlying the Futures Contract Option; (d) the
name of the broker or futures commission merchant through whom
such Futures Contract Option was exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f) the
net total amount, if any, payable by the Fund upon such exercise;
and (g) the amount of cash and/or the amount and kind of
Securities to be deposited in the Senior Security Account for
such Series. The Custodian shall, upon its receipt of the net
total amount payable to the Fund, if any, specified in such
Certificate make the payments, if any, and the deposits, if any,
into the Senior Security Account as specified in the Certificate.
The deposits, if any, to be made to the Margin Account shall be
made by the Custodian in accordance with the terms and conditions
of the Margin Account Agreement.
6. Whenever a Futures Contract Option which is written by
the Fund and which is a put is exercised, the Fund shall promptly
deliver to the Custodian a Certificate specifying: (a) the Series
to which such Option was specifically allocated; (b) the
particular Futures Contract Option exercised; (c) the type of
Futures Contract underlying such Futures Contract Option; (d) the
name of the broker or futures commission merchant through whom
such Futures Contract Option is exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f) the
net total amount, if any, payable by the Fund upon such exercise;
and (g) the amount and kind of Securities and/or cash to be
withdrawn from or deposited in, the Senior Security Account for
such Series, if any. The Custodian shall, upon its receipt of
the net total amount payable to the Fund, if any, specified in
the Certificate, make out of the moneys and Securities
specifically allocated to such Series, the payments, if any, and
the deposits, if any, into the Senior Security Account as
specified in the Certificate. The deposits to and/or withdrawals
from the Margin Account, if any, shall be made by the Custodian
in accordance with the terms and conditions of the Margin Account
Agreement.
7. Whenever the Fund purchases any Futures Contract Option
identical to a previously written Futures Contract Option
described in this Article in order to liquidate its position as a
writer of such Futures Contract Option, the Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to
the Futures Contract Option being purchased: (a) the Series to
19
<PAGE>
which such option is specifically allocated; (b) that the
transaction is a closing transaction; (c) the type of Future
Contract and such other information as may be necessary to
identify the Futures Contract underlying the Futures Option
Contract; (d) the exercise price; (e) the premium to be paid by
the Fund; (f) the expiration date; (g) the name of the broker or
futures commission merchant to whom the premium is to be paid;
and (h) the amount of cash and/or the amount and kind of
Securities, if any, to be withdrawn from the Senior Security
Account for such Series. The Custodian shall effect the
withdrawals from the Senior Security Account specified in the
Certificate. The withdrawals, if any, to be made from the Margin
Account shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.
8. Upon the expiration, exercise, or consummation of a
closing transaction with respect to, any Futures Contract Option
written or purchased by the Fund and described in this Article,
the Custodian shall (a) delete such Futures Contract Option from
the statements delivered to the Fund pursuant to paragraph 3 of
Article III herein and, (b) make such withdrawals from and/or in
the case of an exercise such deposits into the Senior Security
Account as may be specified in a Certificate. The deposits to
and/or withdrawals from the Margin Account, if any, shall be made
by the Custodian in accordance with the terms and conditions of
the Margin Account Agreement.
9. Futures Contracts acquired by the Fund, through the
exercise of a Futures Contract option described in this Article
shall be subject to Article VI hereof.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sales by any Series of the
Fund, the Fund shall promptly deliver to the Custodian a
Certificate specifying: (a) the Series for which such short sale
was made; (b) the name of the issuer and the title of the
security; (c) the number of shares or principal amount sold, and
accrued interest or dividends, if any; (d) the dates of the sale
and settlement; (e) the sale price per unit; (f) the total amount
credited to the Fund upon such sale, if any, (g) the amount of
cash and/or the amount and kind of Securities, if any, which are
to be deposited in a Margin Account and the name in which such
Margin Account has been or is to be established; (h) the amount
of cash and/or the amount and kind of Securities, if any, to be
deposited in a Senior Security Account, and (i) the name of the
broker through whom such short sale was made. The Custodian
shall upon its receipt of a statement from such broker confirming
such sale and that the total amount credited to the Fund upon
20
<PAGE>
such sale, if any, as specified in the Certificate is held by
such broker for the account of the Custodian (or any nominee of
the Custodian) as Custodian of the Fund, issue a receipt or make
the deposits into the Margin Account and the Senior Security
Account specified in the Certificate.
2. In connection with the closing out of any short sale,
the Fund shall promptly deliver to the Custodian a Certificate
specifying with respect to each such closing out: (a) the Series
for which such transaction is being made; (b) the name of the
issuer and the title of the Security; (c) the number of shares or
the principal amount, and accrued interest or dividends, if any,
required to effect such closing out to be delivered to the
broker; (d) the dates of closing out and settlement; (e) the
purchase price per unit; (f) the net total amount payable to the
Fund upon such closing-out; (g) the net total amount payable to
the broker upon such closing-out; (h) the amount of cash and the
amount and kind of Securities to be withdrawn, if any, from the
Margin Account; (i) the amount of cash and/or the amount and kind
of Securities, if any, to be withdrawn from the Senior Security
Account; and (j) the name of the broker through whom the Fund is
effecting such closing-out. The Custodian shall, upon receipt of
the net total amount payable to the Fund upon such closing-out,
and the return and/ or cancellation of the receipts, if any,
issued by the Custodian with respect to the short Sale being
closed-out, pay out of the moneys held for the account of the
Fund to the broker the net total amount payable to the broker,
and make the withdrawals from the Margin Account and the Senior
Security Account, as the same are specified in the Certificate.
ARTICLE IX.
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Reverse Repurchase
Agreement with respect to Securities and money held by the
Custodian hereunder, the Fund shall deliver to the Custodian a
Certificate, or in the event such Reverse Repurchase Agreement is
a Money Market Security, a Certificate or Oral Instructions
specifying: (a) the Series for which the Reverse Repurchase
Agreement is entered; (b) the total amount payable to the Fund in
connection with such Reverse Repurchase Agreement and
specifically allocated to such Series; (c) the broker or dealer
through or with whom the Reverse Repurchase Agreement is entered;
(d) the amount and kind of Securities to be delivered by the Fund
to such broker or dealer; (e) the date of such Reverse Repurchase
Agreement; and (f) the amount of cash and/or the amount and kind
of Securities, if any, specifically allocated to such Series to
be deposited in a Senior Security Account for such Series in
connection with such Reverse Repurchase Agreement. The Custodian
shall, upon receipt of the total amount payable to the Fund
21
<PAGE>
specified in the Certificate, Oral Instructions, or Written
Instructions make the delivery to the broker or dealer, and the
deposits, if any, to the Senior Security Account, specified in
such Certificate or Oral Instructions.
2. Upon the termination of a Reverse Repurchase Agreement
described in preceding paragraph I of this Article, the Fund
shall promptly deliver a Certificate or, in the event such
Reverse Repurchase Agreement is a Money Market Security, a
Certificate or Oral Instructions to the custodian specifying: (a)
the Reverse Repurchase Agreement being terminated and the Series
for which same was entered; (b) the total amount payable by the
Fund in connection with such termination; (c) the amount and kind
of Securities to be received by the Fund and specifically
allocated to such Series in connection with such termination; (d)
the date of termination; (e) the name of the broker or dealer
with or through whom the Reverse Repurchase Agreement is to be
terminated; and (f) the amount of cash and/or the amount and kind
of Securities to be withdrawn from the Senior Securities Account
for such Series. The Custodian shall, upon receipt of the amount
and kind of Securities to be received by the Fund specified in
the Certificate or Oral Instructions, make the payment to the
broker or dealer, and the withdrawals, if any, from the Senior
Security Account, specified in such Certificate or Oral
Instructions.
ARTICLE X.
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities
specifically allocated to a Series held by the Custodian
hereunder, the, Fund shall deliver or cause to be delivered to
the Custodian a Certificate specifying with respect to each such
loan: (a) the Series to which the loaned Securities are
specifically allocated; (b) the name of the issuer and the title
of the Securities, (c) the number of shares or the principal
amount loaned, (d) the date of loan and delivery, (e) the total
amount to be delivered to the Custodian against the loan of the
Securities, including the amount of cash collateral and the
premium, if any, separately identified, and (f) the name of the
broker, dealer, or financial institution to which the loan was
made. The Custodian shall deliver the Securities thus designated
to the broker, dealer or financial institution to which the loan
was made upon receipt of the total amount designated as to be
delivered against the loan of Securities. The Custodian may
accept payment in connection with a delivery otherwise than
through the Book-Entry System or Depository only in the form of a
certified or bank cashier's check payable to the order of the
Fund or the Custodian drawn on New York Clearing House funds and
22
<PAGE>
may deliver Securities in accordance with the customs prevailing
among dealers in securities.
2. Promptly after each termination of the loan of
Securities by the Fund, the Fund shall deliver or cause to be
delivered to the Custodian a Certificate specifying with respect
to each such loan termination and return of Securities: (a) the
Series to which the loaned Securities are specifically allocated;
(b) the name of the issuer and the title of the Securities to be
returned, (c) the number of shares or the principal amount to be
returned, (d) the date of termination, (e) the total amount to be
delivered by the Custodian (including the cash collateral for
such Securities minus any offsetting credits as described in said
Certificate), and (f) the name of the broker, dealer, or
financial institution from which the Securities will be returned.
The Custodian shall receive all Securities returned from the
broker, dealer, or financial institution to which such Securities
were loaned and upon receipt thereof shall pay, out of the moneys
held for the account of the Fund, the total amount payable upon
such return of Securities as set forth in the Certificate.
ARTICLE XI.
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY ACCOUNTS, AND
COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such
deposits to, or withdrawals from, a Senior Security Account as
specified in a Certificate received by the Custodian. Such
Certificate shall specify the Series for which such deposit or
withdrawal is to be made and the amount of cash and/or the amount
and kind of Securities specifically allocated to such Series to
be deposited in, or withdrawn from, such Senior Security Account
for such Series. In the event that the Fund fails to specify in
a Certificate the Series, the name of the issuer, the title and
the number of shares or the principal amount of any particular
Securities to be deposited by the Custodian into, or withdrawn
from, a Senior Securities Account, the Custodian shall be under
no obligation to make any such deposit or withdrawal and shall so
notify the Fund.
2. The Custodian shall make deliveries or payments from a
Margin Account to the broker, dealer, futures commission merchant
or Clearing Member in whose name, or for whose benefit, the
account was established as specified in the Margin Account
Agreement.
3. Amounts received by the Custodian as payments or
distributions with respect to Securities deposited in any Margin
Account shall be dealt with in accordance with the terms and
conditions of the Margin Account Agreement.
23
<PAGE>
4. The Custodian shall have a continuing lien and security
interest in and to any property at any time held by the Custodian
in any Collateral Account described herein. In accordance with
applicable law the Custodian may enforce its lien and realize on
any such property whenever the custodian has made payment or
delivery pursuant to any Put option guarantee letter or similar
document or any receipt issued hereunder by the Custodian. In
the event the Custodian should realize on any such property net
proceeds which are less than the Custodian's obligations under
any Put option guarantee letter or similar document or any
receipt, such deficiency shall be a debt owed the Custodian by
the Fund within the scope of Article XIV herein.
5. On each business day the Custodian shall furnish the
Fund with a statement with respect to each Margin Account in
which money or Securities are held specifying as of the close of
business on the previous business day: (a) the name of the Margin
Account; (b) the amount and kind of Securities held therein; and
(c) the amount of money held therein. The Custodian shall make
available upon request to any broker, dealer, or futures
commission merchant specified in the name of a Margin Account a
copy of the statement furnished the Fund with respect to such
Margin Account.
6. Promptly after the close of business on each business
day in which cash and/or Securities are maintained in a
Collateral Account for any Series, the Custodian shall furnish
the Fund with a statement with respect to such Collateral Account
specifying the amount of cash and/or the amount and kind of
Securities held therein. No later than the close of business
next succeeding the delivery to the Fund of such statement, the
Fund shall furnish to the Custodian a Certificate or Written
Instructions specifying the then market value of the Securities
described in such statement. In the event such then market value
is indicated to be less than the Custodian's obligation with
respect to any outstanding Put Option guarantee letter or similar
document, the Fund shall promptly specify in a Certificate the
additional cash and/or Securities to be deposited in such
Collateral Account to eliminate such deficiency.
ARTICLE XII.
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall furnish to the Custodian a copy of the
resolution of the Board of Directors of the Fund, certified by
the Secretary or any Assistant Secretary, either (i) setting
forth with respect to the Series specified therein the date of
the declaration of a dividend or distribution, the date of
payment thereof, the record date as of which shareholders
entitled to payment shall be determined, the amount payable per
24
<PAGE>
Share of such Series to the shareholders of record as of that
date and the total amount payable to the Dividend Agent and any
sub-dividend agent or co-dividend agent of the Fund on the
payment date, or (ii) authorizing with respect to the Series
specified therein the declaration of dividends and distributions
on a daily basis and authorizing the Custodian to rely on Oral
Instructions or a Certificate setting forth the date of the
declaration of such dividend or distribution, the date of payment
thereof, the record date as of which shareholders entitled to
payment shall be determined, the amount payable per Share of such
Series to the shareholders of record as of that date and the.
total amount payable to the Dividend Agent on the payment date.
2. Upon the payment date specified in such resolution, Oral
Instructions or Certificate, as the case may be, the Custodian
shall pay out of the moneys held for the account of each Series
the total amount payable to the Dividend Agent and any sub-
dividend agent or co-dividend agent of the Fund with respect to
such Series.
ARTICLE XIII.
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall
deliver to the Custodian a Certificate duly specifying:
(a) The Series, the number of Shares sold, trade date,
and price; and
(b) The amount of money to be received by the Custodian
for the sale of such Shares and specifically allocated to the
separate account in the name of such Series.
2. Upon receipt of such money from the Transfer Agent, the
Custodian shall credit such money to the separate account in the
name of the Series for which such money was received.
3. Upon issuance of any Shares of any Series described in
the foregoing provisions of this Article, the Custodian shall
pay, out of the money held for the account of such Series, all
original issue or other taxes required to be paid by the Fund in
connection with such issuance upon the receipt of a Certificate
specifying the amount to be paid.
4. Whenever the Fund desires the Custodian to make payment
out of the money held by the Custodian hereunder in connection
with a redemption of any Shares, it shall furnish to the
Custodian:
25
<PAGE>
(a) A resolution by the Board of Directors of the
Fund directing the Transfer Agent to redeem
the Shares; and
(b) A Certificate specifying the number and a
Series of Shares redeemed; and
(c) The amount to be paid for such Shares.
5. Upon receipt from the Transfer Agent of an advice
setting forth the Series and number of Shares received by the
Transfer Agent for redemption and that such Shares are in good
form for redemption, the Custodian shall make payment to the
Transfer Agent out of the moneys held in the separate account in
the name of the Series the total amount specified in the
Certificate issued pursuant to the foregoing paragraph 4 of this
Article.
ARTICLE XIV.
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian, should in its sole discretion
advance funds on behalf of any Series which results in an
overdraft because the moneys held by the Custodian in the
separate account for such Series shall be insufficient to pay the
total amount payable upon a purchase of Securities specifically
allocated to such Series, as set forth in a Certificate or Oral
Instructions, or which results in an overdraft in the separate
account of such Series for some other reason, or if the Fund is
for any other reason indebted to the "Custodian with respect to a
Series, including any indebtedness to The Bank of New York under
the Fund's Cash Management and Related Services Agreement,
(except a borrowing for investment or for temporary or emergency
purposes using Securities as collateral pursuant to a separate
agreement and subject to the provisions of paragraph 2 of this
Article), such overdraft or indebtedness shall be deemed to be a
loan made by the Custodian to the Fund for such Series payable on
demand and shall bear interest from the date incurred at a rate
per annum based on a 360-day year, for the actual number of days
involved) equal to 1/2% over Custodian's prime commercial lending
rate in effect from time to time, such rate to be adjusted on the
effective date of any change in such prime commercial lending
rate but in no event to be less than 6 per annum. In addition,
the Fund hereby agrees that the Custodian shall have a continuing
lien and security interest in and to any property specifically
allocated to such Series at any time held by it for the benefit
of such Series or in which the Fund may have an interest which is
then in the Custodian's possession or control or in possession or
control of any third party acting in the Custodian's behalf. The
Fund authorizes the Custodian, in its sole discretion, at any
26
<PAGE>
time to charge any such overdraft or indebtedness together with
interest due thereon against any balance of account standing to
such Series' credit on the Custodian's books. In addition, the
Fund hereby covenants that on each Business Day on which either
it intends to enter a Reverse Repurchase Agreement and/or
otherwise borrow from a third party, or which next succeeds a
Business Day on which at the close of business the Fund had
outstanding a Reverse Repurchase Agreement or such a borrowing,
it shall prior to 9 a.m., New York City time, advise the
Custodian, in writing, of each such borrowing, shall specify the
Series to which the same relates, and shall not incur any
indebtedness not so specified other than from the Custodian.
2. The Fund will cause to be delivered to the
Custodian by any bank (including, if the borrowing is pursuant to
a separate agreement, the Custodian) from which it borrows money
for investment or for temporary or emergency purposes using
Securities held by the Custodian hereunder as collateral for such
borrowings, a notice or undertaking in the form currently
employed by any such bank setting forth the amount which such
bank will loan to the Fund against delivery of a stated amount of
collateral. The Fund shall promptly deliver to the Custodian a
Certificate specifying with respect to each such borrowing: (a)
the Series to which such borrowing relates; (b) the name of the
bank, (c) the amount and terms of the borrowing, which may be set
forth by incorporating by reference an attached promissory note,
duly endorsed by the Fund, or other loan agreement, (d) the time
and date, if known, on which the loan is to be entered into, (e)
the date on which the loan becomes due and payable, (f) the total
amount payable to the Fund on the borrowing date, (g) the market
value of Securities to be delivered as collateral for such loan,
including the name of the issuer, the title and the number of
shares or the principal amount of any particular Securities, and
(h) a statement specifying whether such loan is for investment
purposes or for temporary or emergency purposes and that such
loan is in conformance with the Investment Company Act of 1940
and the Fund's prospectus. The Custodian shall deliver on the
borrowing date specified in a Certificate the specified
collateral and the executed promissory note, if any, against
delivery by the lending bank of the total amount of the loan
payable, provided that the same conforms to the total amount
payable as set forth in the Certificate. The Custodian may, at
the option of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory note
or loan agreement. The Custodian shall deliver such Securities
as additional collateral as may be specified in a Certificate to
collateralize further any transaction described in this
paragraph. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian, and
the Custodian shall receive from time to time such return of
27
<PAGE>
collateral as may be tendered to it. In the event that the Fund
fails to specify in a Certificate the Series, the name of the
issuer, the title and number of shares or the principal amount of
any particular Securities to be delivered as collateral by the
Custodian, the Custodian shall not be under any obligation to
deliver any Securities.
ARTICLE XV.
TERMINAL LINK
1. At no time and under no circumstances shall the
Fund be obligated to have or utilize the Terminal Link, and the
provisions of this Article shall apply if, but only if, the Fund
in its sole and absolute discretion elects to utilize the
Terminal Link to transmit Certificates to the Custodian.
2. The Terminal Link shall be utilized by this Fund
only for the purpose of the Fund providing Certificates to the
Custodian with respect to transactions involving Securities or
for the transfer of money to be applied to the payment of
dividends, distributions or redemptions of Fund Shares, and shall
be utilized by the Custodian only for the purpose of providing
notices to the Fund. Such use shall commence only after the Fund
shall have delivered to the Custodian a Certificate substantially
in the form of Exhibit D and shall have established access codes.
Each use of the Terminal Link by the Fund shall constitute a
representation and warranty that the Terminal Link is being used
only for the purposes permitted hereby, that at least two
officers have each utilized an access code, that such safekeeping
procedures have been established by the Fund, and that such use
does not contravene the Investment Company Act of 1940, as
amended, or the rules or regulations thereunder.
3. The Fund shall obtain and maintain at its own cost
and expense all equipment and services, including, but not
limited to communications services, necessary for it to utilize
the Terminal Link, and the Custodian shall not be responsible for
the reliability or availability of any such equipment or
services.
4. The Fund acknowledges that any data bases made
available as part of, or through the Terminal Link and any
proprietary data, software, processes, information and
documentation (other than any such which are or become part of
the public domain or are legally required to be made available to
the public) (collectively, the "Information"), are the exclusive
and confidential property of the Custodian. The Fund shall, and
shall cause others to which it discloses the Information, to keep
the Information confidential by using the same care and
discretion it uses with respect to its own confidential property
28
<PAGE>
and trade secrets, and shall neither make nor permit any
disclosure without the express prior written consent of the
Custodian.
5. Upon termination of this Agreement for any reason,
the Fund shall return to the Custodian any and all copies of the
Information which are in the Fund's possession or under its
control, or which the Fund distributed to third parties. The
provisions of this Article shall not affect the copyright status
of any of the Information which may be copyrighted and shall
apply to all Information whether or not copyrighted.
6. The Custodian reserves the right to modify the
Terminal Link from time to time without notice to the Fund except
that the Custodian shall give the Fund notice not less than 75
days in advance of any modification which would materially
adversely affect the Fund's operation, and the Fund agrees that
the Fund shall not modify or attempt to modify the Terminal Link
without the Custodian's prior written consent. The Fund
acknowledges that any software or procedures provided the Fund as
part of the Terminal Link are the property of the Custodian and,
accordingly, the Fund agrees that any modifications to the
Terminal Link, whether by the Fund, or by the Custodian and
whether with or without the Custodian's consent, shall become the
property of the Custodian.
7. Neither the Custodian nor any manufacturers and
suppliers it utilizes or the Fund utilizes in connection with the
Terminal Link makes any warranties or representations, express or
implied, in f act or in law, including but not limited to
warranties of merchantability and fitness for a particular
purpose.
8. The Fund will cause its Officers and employees to
treat the authorization codes and the access codes applicable to
Terminal Link with extreme care, and irrevocably authorizes the
Custodian to act in accordance with and rely on Certificates
received by it through the Terminal Link. The Fund acknowledges
that it is its responsibility to assure that only its Officers
use the Terminal Link on its behalf, and that a Custodian shall
not be responsible nor liable for use of the Terminal Link on the
Fund's behalf by persons other than such persons or Officers, or
by only a single Officer, nor for any alteration, omission, or
failure to promptly forward.
9 (a). Except as otherwise specifically provided in
Section 9(b) of this Article, the Custodian shall have no
liability for any losses, damages, injuries, claims, costs or
expenses arising out of or in connection with any failure,
malfunction or other problem relating to the Terminal Link except
for money damages suffered as the direct result of the negligence
29
<PAGE>
of the Custodian in an amount not exceeding for any incident
$25,000 provided, however, that the Custodian shall have no
liability under this Section 9 if the Fund fails to comply with
the provisions of Section 11.
9 (b). The Custodian's liability for its negligence
in executing or failing to execute in accordance with a
Certificate received through Terminal Link shall be only with
respect to a transfer of funds which is not made in accordance
with such Certificate after such Certificate shall have been duly
acknowledged by the Custodian, and shall be contingent upon the
Fund complying with the provisions of Section 12 of this Article,
and shall be limited to (i) restoration of the principal amount
mistransferred, if and to the extent that the Custodian would be
required to make such restoration under applicable law, and (ii)
the lesser of (A) a Fund's actual pecuniary loss incurred by
reason of its loss of use of the mistransferred funds or the
funds which were not transferred, as the case may be, or (B)
compensation for the loss of the use of the mistransferred funds
or the funds which were not transferred, as the case may be, at a
rate per annum equal to the average federal funds rate as
computed from the Federal Reserve Bank of New York's daily
determination of the effective rate for federal funds, for the
period during which a Fund has lost use of such funds. In no
event shall the Custodian have any liability for failing to
execute in accordance with a Certificate a transfer of funds
where the Certificate is received by the Custodian through
Terminal Link other than through the applicable transfer module
for the particular instructions contained in such Certificate.
10. Without limiting the generality of the foregoing,
in no event shall the Custodian or any manufacturer or supplier
of its computer equipment, software or services relating to the
Terminal Link be responsible for any special, indirect,
incidental or consequential damages which the Fund may incur or
experience by reason of its use of the Terminal Link even if the
Custodian or any manufacturer or supplier has been advised of the
possibility of such damages, nor with respect to the "use of the
Terminal Link shall the Custodian or any such manufacturer or
supplier be liable for acts of God, or with respect to the
following to the extent beyond such person's reasonable control
machine or computer breakdown or malfunction, interruption or
malfunction of communication facilities, labor difficulties or
any other similar or dissimilar cause.
11. The Fund shall notify the Custodian of any errors,
omissions or interruptions in, or delay or unavailability of, the
Terminal Link as promptly as practicable, and in any event within
24 hours after the earliest of (i) discovery thereof, (ii) the
Business Day on which discovery should have occurred through the
exercise of reasonable care and (iii) in the case of any error,
30
<PAGE>
the date of actual receipt of the earliest notice which reflects
such error, it being agreed that discovery and receipt of notice
may only occur on a business day. The Custodian shall promptly
advise the Fund whenever the Custodian learns of any errors,
omissions or interruption in, or delay or unavailability of, the
Terminal Link.
12. The Custodian shall verify to the Fund, by use of
the Terminal Link, receipt of each Certificate the Custodian
receives through the Terminal Link, and in the absence of such
verification the Custodian shall not be liable for any failure to
act in accordance with such Certificate and the Fund may not
claim that such Certificate was received by the Custodian. Such
verification, which may occur after the Custodian has acted upon
such Certificate, shall be accomplished on the same day on which
such Certificate is received.
ARTICLE XVI.
DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY
OF ANY SERIES HELD OUTSIDE OF THE UNITED STATES
1. The Custodian is authorized and instructed to
employ, as sub-custodian for each Series' Foreign Securities (as
such term is defined in paragraph (c)(1) of Rule 17f-5 under the
Investment Company Act of 1940, as amended) and other assets, the
foreign banking institutions and foreign securities depositories
and clearing agencies designated on Schedule I hereto ("Foreign
Sub-Custodians") to carry out their respective responsibilities
in accordance with the terms of the sub-custodian agreement
between each such Foreign Sub-Custodian and the custodian, copies
of which have been previously delivered to the Fund and receipt
of which is hereby acknowledged (each such agreement, a "Foreign
Sub-Custodian Agreement"). The Custodian shall be liable for the
acts and omissions of each Foreign Sub-Custodian constituting
negligence or willful misconduct in the conduct of its
responsibilities under the terms of the Foreign Sub-Custodian
Agreement. Upon receipt of a Certificate, together with a
certified resolution substantially in the form attached as
Exhibit E of the Fund's Board of Directors, the Fund may
designate any additional foreign sub-custodian with which the
Custodian has an agreement for such entity to act as the
Custodian's agent, as its sub-custodian and any such additional
foreign sub-custodian shall be deemed added to Schedule I. Upon
receipt of a Certificate from the Fund, the Custodian shall cease
the employment of any one or more Foreign Sub-Custodians for
maintaining custody of the Fund's assets and such Foreign Sub-
Custodian shall be deemed deleted from Schedule I.
2. Each Foreign Sub-Custodian Agreement shall be
substantially in the form previously delivered to the Fund and
31
<PAGE>
will not be amended in a way that materially adversely affects
the Fund without the Fund's prior written consent.
3. The Custodian shall identify on its books as
belonging to each Series of the Fund the Foreign Securities of
such Series held by each Foreign Sub-Custodian. At the election
of the Fund, it shall be entitled to be subrogated to the rights
of the Custodian with respect to any claims by the Fund or any
Series against a Foreign Sub-Custodian as a consequence of any
loss, damage, cost, expense, liability or claim sustained or
incurred by the Fund or any Series if and to the extent that the
Fund or such Series has not been made whole for any such loss,
damage, cost, expense, liability or claim.
4. Upon request of the Fund, the Custodian will,
consistent with the terms of the applicable Foreign Sub-Custodian
Agreement, use reasonable efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and
records of any Foreign Sub-Custodian insofar as such books and
records relate to the performance of such Foreign Sub-Custodian
under its agreement with the Custodian on behalf of the Fund.
5. The Custodian will supply to the Fund from time to
time, as mutually agreed upon, statements in respect of the
securities and other assets of each Series held by Foreign Sub-
Custodians, including but not limited to, an identification of
entities having possession of each Series, Foreign Securities and
other assets, and advices or notifications of any transfers of
Foreign Securities to or from each custodial account maintained
by a Foreign Sub-Custodian for the Custodian on behalf of the
Series.
6. The Custodian shall furnish annually to the Fund,
as mutually agreed upon, information concerning the Foreign Sub-
Custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in
connection with the Fund's initial approval of such Foreign Sub-
Custodians and, in any event, shall include information
pertaining to (i) the Foreign Custodians, financial strength,
general reputation and standing in the countries in which they
are located and their ability to provide the custodial services
required, and (ii) whether the Foreign Sub-Custodians would
provide a level of safeguards for safekeeping and custody of
securities not materially different form those prevailing in the
United States. The Custodian shall monitor the general operating
performance of each Foreign Sub-Custodian, and at least annually
obtain and review the annual financial report published by such
Foreign Sub-Custodian to determine that it meets the financial
criteria of an "Eligible Foreign Custodian" under Rule 17f 5 (c)
(2) (i) or (ii). The Custodian will promptly inform the Fund in
the event that the Custodian learns that a Foreign Sub-Custodian
32
<PAGE>
no longer satisfies the financial criteria of an "Eligible
Foreign Custodian" under such Rule. The Custodian agrees that it
will use reasonable care in monitoring compliance by each Foreign
Sub-Custodian with the terms of the relevant Foreign Sub-
Custodian Agreement and that if it learns of any breach of such
Foreign Sub-Custodian Agreement believed by the Custodian to have
a material adverse effect on the Fund or any Series it will
promptly notify the Fund of such breach. The Custodian also
agrees to use reasonable and diligent efforts to enforce its
rights under the relevant Foreign Sub-Custodian Agreement.
7. The Custodian shall transmit promptly to the Fund
all notices, reports or other written information received
pertaining to the Fund's Foreign Securities, including without
limitation, notices of corporate action, proxies and proxy
solicitation materials.
8. Notwithstanding any provision of this Agreement to
the contrary, settlement and payment for securities received for
the account of any Series and delivery of securities maintained
for the account of such Series may be effected in accordance with
the customary or established securities trading or securities
processing practices and procedures in the jurisdiction or market
in which the transaction occurs, including, without limitation,
delivery of securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a
receipt with the expectation of receiving later payment for such
securities from such purchaser or dealer.
ARTICLE XVII.
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, or as provided in
Article XVI neither the Custodian nor its nominee shall be liable
for any loss or damage, including counsel fees, resulting from
its action or omission to act or otherwise, either hereunder or
under any Margin Account Agreement, except for any such loss or
damage arising out of its own negligence or willful misconduct.
In no event shall the Custodian be liable to the Fund or any
third party for special, indirect or consequential damages or
lost profits or loss of business, arising under or in connection
with this Agreement, even if previously informed of the
possibility of such damages and regardless of the form of action.
The Custodian may, with respect to questions of law arising
hereunder or under any Margin Account Agreement, apply for and
obtain the advice and opinion of counsel to the Fund or of its
own counsel, at the expense of the Fund, and shall be fully
protected with respect to anything done or omitted by it in good
faith in conformity with such advice or opinion. The Custodian
shall be liable to the Fund for any loss or damage resulting from
33
<PAGE>
the use of the Book-Entry System or any Depository arising by
reason of any negligence or willful misconduct on the part of the
Custodian or any of its employees or agents.
2. Without limiting the generality of the foregoing,
the Custodian shall be under no obligation to inquire into, and
shall not be liable for:
(a) The validity of the issue of any Securities
purchased, sold, or written by or for the Fund, the legality of
the purchase, sale or writing thereof, or the propriety of the
amount paid or received therefor;
(b) The legality of the sale or redemption of any
Shares, or the propriety of the amount to be received or paid
therefor;
(c) The legality of the declaration or payment of
any dividend by the Fund;
(d) The legality of any borrowing by the Fund
using Securities as collateral;
(e) The legality of any loan of portfolio
Securities, nor shall the Custodian be under any duty or
obligation to see to it that any cash collateral delivered to it
by a broker, dealer, or financial institution or held by it at
any time as a result of such loan of portfolio Securities of the
Fund is adequate collateral for the Fund against any loss it
might sustain as a result of such loan. The Custodian
specifically, but not by way of limitation, shall not be under
any duty or obligation periodically to check or notify the Fund
that the amount of such cash collateral held by it for the Fund
is sufficient collateral for the Fund, but such duty or
obligation shall be the sole responsibility of the Fund. In
addition, the Custodian shall be under no duty or obligation to
see that any broker, dealer or financial institution to which
portfolio Securities of the Fund are lent pursuant to Article XIV
of this Agreement makes payment to it of any dividends or
interest which are payable to or for the account of the Fund
during the period of such loan or at the termination of such
loan, provided, however, that the Custodian shall promptly notify
the Fund in the event that such dividends or interest are not
paid and received when due; or
(f) The sufficiency or value of any amounts of
money and/or Securities held in any Margin Account, Senior
Security Account or Collateral Account in connection with
transactions by the Fund. In addition, the Custodian shall be
under no duty or obligation to see that any broker-dealer,
futures commission merchant or Clearing Member makes payment to
34
<PAGE>
the Fund of any variation margin payment or similar payment which
the Fund may be entitled to receive from such broker-dealer,
futures commission merchant or Clearing Member, to see that any
payment received by the Custodian from any broker-dealer, futures
commission merchant or Clearing Member is the amount the Fund is
entitled to receive, or to notify the Fund of the Custodian's
receipt or non-receipt of any such payment.
3. The Custodian shall not be liable for, or
considered to be the Custodian of, any money, whether or not
represented by any check, draft, or other instrument for the
payment of money, received by it on behalf of the Fund until the
Custodian actually receives and collects such money directly or
by the final crediting of the account representing the Fund's
interest at the Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and
shall not be liable for ascertaining or acting upon any calls,
conversions, exchange offers, tenders, interest rate changes or
similar matters relating to Securities held in the Depository,
unless the Custodian shall have actually received timely notice
from the Depository. In no event shall the Custodian have any
responsibility or liability for the failure of the Depository to
collect, or for the late collection or late crediting by the
Depository of any amount payable upon Securities deposited in the
Depository which may mature or be redeemed, retired, called or
otherwise become payable. However, upon receipt of a Certificate
from the Fund of an overdue amount on Securities held in the
Depository the Custodian shall make a claim against the
Depository on behalf of the Fund, except that the Custodian shall
not be under any obligation to appear in, prosecute or defend any
action suit or proceeding in respect to any Securities held by
the Depository which in its opinion may involve it in expense or
liability, unless indemnity satisfactory to it against all
expense and liability be furnished as often as may be required.
5. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount due
to the Fund from the Transfer Agent of the Fund nor to take any
action to effect payment or distribution by the Transfer Agent of
the Fund of any amount paid by the Custodian to the Transfer
Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or
obligation to take action to effect collection of any amount, if
the Securities upon which such amount is payable are in default,
or if payment is refused after due demand or presentation, unless
and until (i) it shall be directed to take such action by a
Certificate and (ii) it shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection with any
such action.
35
<PAGE>
7. The Custodian may in addition to the employment of
Foreign Sub-Custodians pursuant to Article XVI appoint one or
more banking institutions as Depository or Depositories, as Sub-
Custodian or Sub-Custodians, or as Co-Custodian or Co-Custodians
including, but not limited to, banking institutions located in
foreign countries, of Securities and moneys at any time owned by
the Fund, upon such terms and conditions as may be approved in a
Certificate or contained in an agreement executed by the
Custodian, the Fund and the appointed institution.
8. The Custodian shall not be under any duty or
obligation (a) to ascertain whether any Securities at any time
delivered to, or held by it or by any Foreign Sub-Custodian, for
the account of the Fund and specifically allocated to a Series
are such as properly may be held by the Fund or such Series under
the provisions of its then current prospectus, or (b) to
ascertain whether any transactions by the Fund, whether or not
involving the Custodian, are such transactions as may properly be
engaged in by the Fund.
9. The Custodian shall be entitled to receive and the
Fund agrees to pay to the custodian all out-of-pocket expenses
and such compensation as may be agreed upon from time to time
between the Custodian and the Fund. The Custodian may charge
such compensation and any expenses with respect to a Series
incurred by the Custodian in the performance of its duties
pursuant to such agreement against any money specifically
allocated to such Series. Unless and until the Fund instructs
the Custodian by a Certificate to apportion any loss, damage,
liability or expense among the Series in a specified manner, the
Custodian shall also be entitled to charge against any money held
by it for the account of a Series such Series, pro rata share
(based on such Series net asset value at the time of the charge
to the aggregate net asset value of all Series at that time) of
the amount of any loss, damage, liability or expense, including
counsel fees, for which it shall be entitled to reimbursement
under the provisions of this Agreement. The expenses for which
the Custodian shall be entitled to reimbursement hereunder shall
include, but are not limited to, the expenses of sub-custodians
and foreign branches of the Custodian incurred in settling
outside of New York City transactions involving the purchase and
sale of Securities of the Fund.
10. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received by
the Custodian and reasonably believed by the Custodian to be a
Certificate. The Custodian shall be entitled to rely upon any
Oral Instructions actually received by the Custodian hereinabove
provided for. The Fund agrees to forward to the Custodian a
Certificate or facsimile thereof confirming such Oral
Instructions in such manner so that such Certificate or facsimile
36
<PAGE>
thereof is received by the Custodian, whether by hand delivery,
telecopier or other similar device, or otherwise, by the close of
business of the same day that such Oral Instructions are given to
the Custodian. The Fund agrees that the fact that such
confirming instructions are not received by the Custodian shall
in no way affect the validity of the transactions or
enforceability of the transactions hereby authorized by the Fund.
The Fund agrees that the Custodian shall incur no liability to
the Fund in acting upon Oral Instructions given to the Custodian
hereunder concerning such transactions provided such instructions
reasonably appear to have been received from an Officer.
11. The Custodian shall be entitled to rely upon any
instrument, instruction or notice received by the Custodian and
reasonably believed by the Custodian to be given in accordance
with the terms and conditions of any Margin Account Agreement.
Without limiting the generality of the foregoing, the Custodian
shall be under no duty to inquire into, and shall not be liable
for, the accuracy of any statements or representations contained
in any such instrument or other notice including, without
limitation, any specification of any amount to be paid to a
broker, dealer, futures commission merchant or Clearing Member.
12. The books and records pertaining to the Fund which
are in the possession of the Custodian shall be the property of
the Fund. Such books and records shall be prepared and
maintained as required by the Investment Company Act of 1940, as
amended, and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized representatives,
shall have access to such books and records during the
Custodian's normal business hours. Upon the reasonable request
of the Fund, copies of any such books and records shall be
provided by the Custodian to the Fund or the Fund's authorized
representative, and the Fund shall reimburse the Custodian its
expenses of providing such copies. Upon reasonable request of
the Fund, the Custodian shall provide in hard copy or on
microfilm, whichever the Custodian elects, any records included
in any such delivery which are maintained by the Custodian on a
computer disc, or are similarly maintained, and the Fund shall
reimburse the Custodian for its expenses of providing such hard
copy or micro-film.
13. The Custodian shall provide the Fund with any
report obtained by the Custodian on the system of internal
accounting control of the Book-Entry System, the Depository or
O.C.C., and with such reports on its own systems of internal
accounting control as the Fund may reasonably request from time
to time.
14. Subject to the foregoing provisions of this
Agreement, including, without limitation, those contained in
37
<PAGE>
Article XVI the Custodian may deliver and receive Securities, and
receipts with respect to such Securities, and arrange for
payments to be made and received by the Custodian in accordance
with the customs prevailing from time to time among brokers or
dealers in such Securities. When the Custodian is instructed to
deliver Securities against payment, delivery of such Securities
and receipt of payment therefor may not be completed
simultaneously. The Fund assumes all responsibility and
liability for all credit risks involved in connection with the
Custodian's delivery of Securities pursuant to instructions of
the Fund, which responsibility and liability shall continue until
final payment in full has been received by the Custodian.
15. The Custodian shall have no duties or
responsibilities whatsoever except such duties and
responsibilities as are specifically set forth in this Agreement,
and no covenant or obligation shall be implied in this Agreement
against the Custodian.
ARTICLE XVIII.
TERMINATION
1. Either of the parties hereto may terminate this
Agreement by giving to the other party a notice in writing
specifying the date of such termination, which shall be not less
than ninety (90) days after the date of giving of such notice.
In the event such notice is given by the Fund, it shall be
accompanied by a copy of a resolution of the Board of Directors
of the Fund, certified by the Secretary or any Assistant
Secretary, electing to terminate this Agreement and designating a
successor custodian or custodians, each of which shall be a bank
or trust company having not less than $2,000,000 aggregate
capital, surplus and undivided profits. In the event such notice
is given by the Custodian, the Fund shall, on or before the
termination date, deliver to the Custodian a copy of a resolution
of the Board of Directors of the Fund, certified by the Secretary
or any Assistant Secretary, designating a successor custodian or
custodians. In the absence of such designation by the Fund, the
Custodian may designate a successor custodian which shall be a
bank or trust company having not less than $2,000,000 aggregate
capital, surplus and undivided profits. Upon the date set forth.
in such notice this Agreement shall terminate, and the Custodian
shall upon receipt of a notice of acceptance by the successor
custodian on that date deliver directly to the successor
custodian all Securities and moneys then owned by the Fund and
held by it as Custodian, after deducting all fees, expenses and
other amounts for the payment or reimbursement of which it shall
then be entitled.
38
<PAGE>
2. If a successor custodian is not designated by the
Fund or the Custodian in accordance with the preceding paragraph,
the Fund shall upon the date specified in the notice of
termination of this Agreement and upon the delivery by the
Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and
moneys then owned by the Fund be deemed to be its own custodian
and the Custodian shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement, other than the duty
with respect to Securities held in the Book Entry System which
cannot be delivered to the Fund to hold such securities hereunder
in accordance with this Agreement.
ARTICLE XIX.
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate
signed by two of the present Officers of the Fund under its
corporate seal, setting forth the names and the signatures of the
present officers of the Fund. The Fund agrees to furnish to the
Custodian a new Certificate in similar form in the event any such
present Officer ceases to be an officer of the Fund, or in the
event that other or additional Officers are elected or appointed.
Until such new Certificate shall be received, the Custodian shall
be fully protected in acting under the provisions of this
Agreement upon the signatures of the Officers as set forth in the
last delivered Certificate.
2. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the
Custodian, shall be sufficiently given if addressed to the
Custodian and mailed or delivered to it at its offices at 90
Washington Street, New York, New York 10286, or at such other
place as the Custodian may from time to time designate in
writing.
3. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Fund
shall be sufficiently given if addressed to the Fund and mailed
or delivered to it at its office at the address for the Fund
first above written, or at such other place as the Fund may from
time to time designate in writing.
4. This Agreement may not be amended or modified in
any manner except by a written agreement executed by both parties
with the same formality as this Agreement and approved by a
resolution of the Board of Directors of the Fund.
5. This Agreement shall extend to and shall be binding
upon the parties hereto, and their respective successors and
39
<PAGE>
assigns; provided, however, that this Agreement shall not be
assignable by the Fund without the written consent of the
Custodian, or by the Custodian without the written consent of the
Fund, authorized or approved by a resolution of the Fund's Board
of Directors.
6. This Agreement shall be construed in accordance
with the laws of the State of New York without giving effect to
conflict of laws principles thereof. Each party hereby consents
to the jurisdiction of a state or federal court situated in New
York City, New York in connection with any dispute arising
hereunder and hereby waives its right to trial by jury.
7. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but such counterparts shall, together, constitute only one
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective corporate Officers,
thereunto duly authorized and their respective corporate seals to
be hereunto affixed, as of the day and year first above written.
ALLIANCE ALL-MARKET
ADVANTAGE FUND, INC.
[SEAL] BY:/s/ Mark D. Gersten
_______________________
Attest:
/s/ George O. Martinez
______________________________
[SEAL]
THE BANK OF NEW YORK
By:/s/
______________________
Attest:
/s/ Majorie McLaughlin
______________________________
40
<PAGE>
APPENDIX A
I, Mark A. Gersten and I, Patrick J. Farrell, of Alliance
All-Market Advantage Fund, Inc., a Maryland corporation (the
"Fund"), do hereby certify that:
The following individuals serve in the following
positions with the Fund and each has been duly elected or
appointed by the Board of Directors of the Fund to each such
position and qualified therefor in conformity with the Fund's
Articles of Incorporation and By-Laws, and the signatures set
forth opposite their respective names are their true and correct
signatures:
Name Position Signature
Mark A. Gersten Treasurer /s/ Mark A. Gersten
______________________
Patrick J. Farrell Controller /s/ Patrick J. Farrell
______________________
Joseph J. Manfineo Assistant Controller /s/ Joseph J. Manfineo
______________________
Karen Machlis Assistant Controller /s/ Karen Machlis
______________________
<PAGE>
APPENDIX B
I, Jorge Ramos, a Vice President with THE BANK OF NEW YORK do
hereby designate the following publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal
<PAGE>
EXHIBIT A
CERTIFICATION
The undersigned, , hereby certifies that he or she
is the duly elected and acting of Alliance All-Market Advantage
Fund, Inc., a Maryland corporation (the "Fund"), and further
certifies that the following resolution was adopted by the Board
of Directors of the Fund at a meeting duly held on ,
1994, at which a quorum was at all times present and that such
resolution has not been modified or rescinded and is in full
force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to
a Custody Agreement between The Bank of New York and the Fund
dated as of 1994, (the "Custody Agreement") is authorized and
instructed on a continuous and ongoing basis to deposit in the
Book-Entry System, as defined in the Custody Agreement, all
securities eligible for deposit therein, regardless of the Series
to which the same are specifically allocated, and to utilize the
Book-Entry System to the extent possible in connection with its
performance thereunder, including, without limitation, in
connection with settlements of purchases and sales of securities,
loans of securities, and deliveries and returns of securities
collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of Alliance All-Market Advantage Fund, Inc. as of the
_________ day of 1994.
/s/
______________________
[SEAL)
<PAGE>
EXHIBIT B
CERTIFICATION
The undersigned, , hereby certifies that he or
she is the duly elected and acting of Alliance All-Market
Advantage Fund, Inc., a Maryland corporation (the "Fund"), and
further certifies that the following resolution was adopted by
the. Board of Directors of the Fund at a meeting duly held on 11
1994, at which a quorum was at all times present and that such
resolution has not been modified or rescinded and is in full
force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian, pursuant
to a Custody Agreement between The Bank of New York and the Fund
dated as of , 1994, (the "Custody Agreement") is
authorized and instructed on a continuous and ongoing basis until
such time as it receives a Certificate, as defined in the Custody
Agreement, to the contrary to deposit in the Depository, as
defined in the Custody Agreement, all securities eligible for
deposit therein, regardless of the Series to which the same are
specifically allocated, and to utilize the Depository to the
extent possible in connection with its performance thereunder,
including, without limitation, in connection with settlements of
purchases and sales of securities, loans of securities, and
deliveries and returns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of Alliance All-Market Advantage Fund, Inc. as of the
day of 1994.
/s/
______________________
[SEAL)
<PAGE>
EXHIBIT B-1
CERTIFICATION
The undersigned, , hereby certifies that he or she is
the duly elected and acting of Alliance All-Market
Advantage Fund, Inc., a Maryland corporation (the "Fund"), and
further certifies that the following resolution was adopted by
the Board of Trustees of the Fund at a meeting duly held on
, 1994, at which a quorum was at all times present and
that such resolution has not been modified or rescinded and is in
full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant
toa Custody Agreement between The Bank of New York and the Fund
dated as of , 1994, (the "Custody Agreement") is
authorized and instructed on a continuous and ongoing basis until
such time as it receives a Certificate, as defined in the Custody
Agreement, to the contrary to deposit in the Participants Trust
Company as Depository, as defined in the Custody Agreement, all
securities eligible for deposit therein, regardless of the Series
to which the same are specifically allocated, and to utilize the
Participants Trust Company to the extent possible in connection
with its performance thereunder, including, without limitation,in
connection with settlements of purchases and sales of securities,
loans of securities, and deliveries and returns of securities
collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of Alliance All-Market Advantage Fund, Inc., as of the day of
_____________, 1994.
/s/
______________________
[SEAL)
<PAGE>
EXHIBIT C
CERTIFICATION
The undersigned, hereby certifies that he or she is the duly
elected and acting of Alliance All-Market Advantage Fund, Inc.,
aMaryland corporation (the "Fund") , and further certifies that
the following resolution was adopted by the Board of Directors of
the Fund at a meeting duly held on 11 1994, at which a quorum was
at all times present and that such resolution has not been
modified or rescinded and is in full force and effect as of the
date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to
a Custody Agreement between The Bank of New York and the Fund
dated as of _________, 1994, (the "Custody Agreement") is
authorized and instructed on a continuous and ongoing basis until
such time as it receives a Certificate, as defined in the Custody
Agreement, to the contrary, to accept, utilize and act with
respect to Clearing Member confirmations for Options and
transaction in options, regardless of the Series to which the
same are specifically allocated, as such terms are defined in the
Custody Agreement, as provided in the Custody Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the seal
of Alliance All-Market Advantage Fund, Inc. as of the day of
, 1994.
/s/
______________________
[SEAL]
<PAGE>
EXHIBIT D
The undersigned, hereby certifies that he or
sheis the duly elected and acting of Alliance All-
Market Advantage Fund, Inc., a Maryland corporation (the "Fund"),
further certifies that the following resolutions were adopted by
the Board of Directors of the Fund at a meeting duly held on
, 1994, at which a quorum was at all times present and
that such resolutions have not been modified or rescinded and are
in full force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian pursuant to
the Custody Agreement between The Bank of New York and the Fund
dated as of , 1994 (the "Custody Agreement") is
authorized and instructed on a continuous and ongoing basis to
act in accordance with, and to rely on Certificates (as defined
in the Custody Agreement) given by the Fund to the Custodian by a
Terminal Link as defined in the Custody Agreement).
RESOLVED, that the Fund shall establish access codes and
grant use of such access codes only to Officers of the Fund as
defined in the Custody Agreement, shall establish internal
safekeeping procedures to safeguard and protect the
confidentiality and availability of such access codes, shall
limit its use of the Terminal Link to those purposes permitted by
the Custody Agreement, shall require at least two such Officers
to utilize their respective access codes in connection with each
such Certificate, and shall use the Terminal Link only in a
manner that does not contravene the Investment Company Act of
1940, as amended, or the rules and regulations thereunder.
RESOLVED, that Officers of the Fund shall, following the
establishment of such access codes and such internal safe-
keeping procedures, advise the Custodian that the same have been
established by delivering a Certificate, as defined in the
Custody Agreement, and the Custodian shall be entitled to rely
upon such advice.
IN WITNESS WHEREOF, I hereunto set my hand and the seal of
Alliance All-Market Advantage Fund, Inc., as of the day of
, 1994.
/s/
______________________
(SEAL]
<PAGE>
EXHIBIT E
The undersigned , hereby certifies that he or
she is the duly elected and acting of Alliance All-Market
Advantage Fund, Inc., a Maryland corporation (the "Fund"),
further certifies that the following resolutions were adopted by
the Board of Directors of the Fund at a meeting duly held on 11
1994, at which a quorum was at all times present and that such
resolutions have not been modified or rescinded and are in full
force and effect as of the date hereof.
RESOLVED, that the maintenance of the Fund's assets in each
country listed in Schedule I hereto be, and hereby is, approved
by the Board of Directors as consistent with the best interests
of the Fund and its shareholders; and further.
RESOLVED, that the maintenance of the Fund's assets with the
foreign branches of The Bank of New York, (the "Bank") listed in
Schedule I located in the countries specified therein, and with
the foreign subcustodians and despositories listed in Schedule I
located in the countries specified therein be, and hereby is,
approved by the Board of Directors as consistent with the best
interest of the Fund and its shareholders; and further
RESOLVED, that the Subcustodian Agreements presented to this
meeting between the Bank and each of the foreign subcustodians
and depositories listed in Schedule I providing for the
maintenance of the Fund's assets with the applicable entity, be
and hereby are, approved by the Board of Directors as consistent
with the best interests of the Fund and its shareholders; and
further
RESOLVED, that the appropriate officers of the Fund are
hereby authorized to place assets of the Fund with the
aforementioned foreign branches and foreign subcustodians and
depositories as hereinabove provided; and further
RESOLVED, that the appropriate officers of the Fund, or any
of them, are authorized to do any and all other acts, in the name
of the Fund and on its behalf, as they, or any of them, may
determine to be necessary or desirable and proper in connection
with or in furtherance of the foregoing resolutions.
IN WITNESS WHEREOF, I hereunto set my hand and the seal of
Alliance All-Market Advantage Fund, Inc., as of the day of
, 1994.
/s/
___________________
[SEAL]
00250205.AS1
<PAGE>
AGREEMENT, made as of October 28, 1994 between Alliance All-
Market Advantage Fund, Inc., a corporation organized and existing
under the laws of the state of Maryland (hereinafter referred to
as the "Customer"), and The Bank of New York, a New York trust
company (hereinafter referred to as the "Bank").
WITNESSETH:
That for and in consideration of the mutual promises hereinafter
set forth, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases
shall have the following meanings:
1. "Business Day" shall be deemed to be each day on which the
Bank is open for business.
2. "Certificate" shall mean any notice, instruction, or other
instrument in writing, authorized or required by this Agreement
to be given to the Bank by the Customer which is signed by any
Officer, as hereinafter defined, and actually received by the
Bank.
3. "Officer" shall be deemed to be the Customer's Chief
Executive Officer, President, any Vice President, the Secretary,
the Treasurer, the Controller, any Assistant Treasurer and any
Assistant Secretary duly authorized by the Board of Directors of
the Customer to execute any Certificate, instruction, notice or
other instrument on behalf of the Customer and named in a
Certificate, as such Certificate may be amended from time to
time.
4. "Prospectus" shall mean the last Customer prospectus actually
received by the Bank from the Customer with respect to which the
Customer has indicated a registration statement under the
Securities Act of 1933, as amended, has become effective,
including the statement of Additional Information incorporated by
reference therein.
5. "Shares" shall mean all or any part of each class of the
shares of capital stock of the Customer which from time to time
are authorized and/or issued by the Customer and identified in a
Certificate of the Secretary of the Customer under corporate
seal, as such Certificate may be amended from time to time.
<PAGE>
ARTICLE II
APPOINTMENT OF BANK
1. The Customer hereby constitutes and appoints the Bank as its
agent to perform the services described herein and as more
particularly described in Schedule I attached hereto (the
"Services"), and the Bank hereby accepts appointment as such
agent and agrees to perform the Services in accordance with the
terms hereinafter set forth.
2. In connection with such appointment, the Customer shall
deliver the following documents to the Bank on or about the
closing date of the initial public offering:
(a) A certified copy of the Certificate of Incorporation
or other document evidencing the Customer's form of organization
(the "Charter") and all amendments thereto; (b) A certified copy
of the By-Laws of the Customer;
(b) A certified copy of the By-Laws of the Customer;
(c) A certified copy of a resolution of the Board of
Directors of the Customer appointing the Bank to perform the
Services and authorizing the execution and delivery of this
Agreement;
(d) A Certificate signed by the Secretary of the
Customer specifying: the number of authorized Shares, the number
of such authorized Shares issued and currently outstanding, and
the names and specimen signatures of all persons duly authorized
by the Board of Directors of the Customer to execute any
Certificate on behalf of the Customer, which Certificate may be
amended from time to time;
(e) A Specimen Share certificate for each class of
Shares in the form approved by the Board of Directors of the
Customer, together with a Certificate signed by the Secretary of
the Customer as to such approval;
(f) A copy of the Customer's Registration Statement,
filed by the Customer with the Securities and Exchange Commission
under the Securities Act of 1933, as amended.
(g) An opinion of counsel for the Customer with respect
to the validity of the authorized and outstanding Shares, whether
such Shares are fully paid and non-assessable and the status of
such Shares under the Securities Act of 1933, as amended, and any
other applicable law or regulation (i.e., if subject to
registration, that they have been registered and that the
Registration Statement has become effective or, if exempt, the
specific grounds therefor).
2
<PAGE>
3. The Customer shall furnish the Bank with a sufficient supply
of blank Share certificates and from time to time will renew such
supply upon request of the Bank. Such blank Share certificates
shall be properly signed, by facsimile or otherwise, by officers
of the Customer authorized by law or by the By-Laws to sign Share
certificates, and, if required, shall bear the corporate seal or
a facsimile thereof.
ARTICLE III
AUTHORIZATION AND ISSUANCE OF SHARES
1. The Customer shall deliver to the Bank a certified copy of
the amendment to the Charter giving effect to such increase,
decrease or change, on or before the effective date of any
increase, decrease or other change in the-total number of Shares
authorized to be issued.
(a) A certified copy of the amendment to the Charter
giving effect to such increase, decrease or change;
(b) An opinion of counsel for the Customer with respect
to the validity of the Shares and the status of such Shares under
the Securities Act of 1933, as amended and any other applicable
federal law or regulations (i.e., if subject to registration,
that they have been registered and that the Registration
Statement has become effective or, if exempt, the specific
grounds therefor); and
(c) In the case of an increase, if the appointment of
the Bank was theretofore expressly limited, a certified copy of a
resolution of the Board of Directors of the Customer increasing
the authority of the Bank.
2. Prior to the issuance of any additional Shares pursuant to
stock dividends, stock splits or otherwise, and prior to any
reduction in the number of Shares outstanding, the Customer shall
deliver the following documents to the Bank:
(a) A certified copy of the resolutions adopted by the
Board of Directors and/or the shareholders of the Customer
authorizing such issuance of additional Shares of the Customer or
such reduction, as the case may be;
(b) A certified copy of the order or consent, if
applicable, of each governmental or regulatory authority required
by law as a prerequisite to the issuance or reduction of such
Shares; and
(c) An opinion of counsel for the Customer with respect
to the validity of the Shares and the status of such the Shares
under the Securities Act of 1933, as amended, and any other
3
<PAGE>
applicable law or regulation (i.e., if subject to registration,
that they have been registered and that the registration
Statement has become effective, or, if exempt, the specific
grounds therefor).
ARTICLE IV
RECAPITALIZATION OR CAPITAL ADJUSTMENT
1. In the case of any negative stock split, recapitalization or
other capital adjustment requiring a change in the form of Share
certificates, the Bank will issue Share certificates in the new
form in exchange for, or upon transfer of, outstanding Share
certificates in the old form, upon.receiving:
(a) A Certificate authorizing the issuance of Share
certificates in the new form;
(b) A certified copy of any amendment to the Charter
with respect to the change;
(c) Specimen Share certificates for each class of Shares
in the new form approved by the Board of Directors of the
Customer with a Certificate signed by the Secretary of the
Customer as to such approval;
(d) A certified copy of the order or consent of each
governmental or regulatory authority required by law as a
prerequisite to the issuance of the Shares in the new form, and
an opinion of counsel for the Customer that the order or consent
of no other governmental or regulatory authority is required; and
(e) An opinion of counsel for the Customer with respect
to the validity of the Shares in the new form and the status of
such Shares under the Securities Act of 1933, as amended, and any
other applicable law or regulation (i.e., if subject to
registration that the Shares have been registered and that the
Registration Statement has become effective or, if exempt, the
specific grounds therefor).
2. The Customer shall furnish the Bank with a sufficient supply
of blank Share certificates in the new form, and from time to
time will replenish such supply upon the request of the Bank.
Such blank Share certificates shall be properly signed, by
facsimile or otherwise, by Officers of the Customer authorized by
law or by the By-Laws to sign Share Certificates and, if
required, shall bear the corporate seal or a facsimile thereof.
4
<PAGE>
ARTICLE V
ISSUANCE AND TRANSFER OF SHARES
1. (a) The Bank will issue Share certificates upon receipt
of a Certificate from an Officer, but shall not be required to
issue Share certificates after it has received from an
appropriate federal or state authority written notification that
the sale of Shares has been suspended or discontinued, and the
Bank shall be entitled to rely upon such written notification.
The Bank shall not be responsible for the payment of any original
issue or other taxes required to be paid by the Customer in
connection with the issuance of any shares.
(b) Shares will be transferred upon presentation to the
Bank of Share certificates in form deemed by the Bank properly
endorsed for transfer, accompanied by such documents as the Bank
deems necessary to evidence the authority of the person making
such transfer, and bearing satisfactory evidence of the payment
of applicable stock transfer taxes. In the case of small estates
where no administration is contemplated, the Bank may, when
furnished with an appropriate surety bond, and without further
approval of the Customer, transfer Shares registered in the name
of the decedent where the current market value of the Shares
being transferred does not exceed such amount as may from time to
time be prescribed by the various states. The Bank reserves the
right to refuse to transfer Shares until it is satisfied that the
endorsements on Share certificates are valid and genuine, and for
that purpose it may require, unless otherwise instructed by an
Officer of the Customer, a guaranty of signature by a member firm
of the New York Stock Exchange or by a bank or trust company
acceptable to the Bank. The Bank also reserves the right to
refuse to transfer Shares until it is satisfied that the
requested transfer is legally authorized, and it shall incur no
liability for the refusal in good faith to make transfers which
the Bank, in its judgment, deems improper or unauthorized, or
until it is satisfied that there is no basis to any claims
adverse to such transfer. The Bank may, in effecting transfers
of Shares, rely upon those provisions of the Uniform Act for the
Simplification of Fiduciary Security Transfers or the Uniform
Commercial Code, as the same may be amended from time to time,
applicable to the transfer of securities, and the Customer shall
indemnify the Bank for any act done or omitted by it in good
faith in reliance upon such laws.
(c) All certificates representing Shares that are
subject to restrictions on transfer (e.g., securities acquired
pursuant to an investment representation, securities held by
controlling persons, securities subject to stockholders'
agreements, etc.), other than the general restrictions on the
transferability of the Shares described in the Prospectus, shall
be stamped with a legend describing the extent and conditions of
5
<PAGE>
the restrictions or referring to the source of such restrictions.
The Bank assumes no responsibility with respect to the transfer
of restricted securities where counsel for the Customer advises
that such transfer may be properly effected.
(d) Notwithstanding the foregoing or any other provision
contained in this Agreement to the contrary, the Bank shall be
fully protected by the Customer in not requiring any instruments,
documents, assurances, endorsements or guarantees, including,
without limitation, any signature guarantees, in connection with
a transfer of Shares whenever the Bank reasonably believes that
requiring the same would be inconsistent with the transfer
procedures as described in the Prospectus.
ARTICLE VI
DIVIDENDS AND DISTRIBUTIONS
1. The Customer shall furnish to the Bank a copy of a resolution
of its Board of Directors, certified by the Secretary or any
Assistant Secretary, either (i) setting forth the date of the
declaration of a dividend or distribution, the date of accrual or
payment, as the case may be, the record date as of which
shareholders entitled to payment, or accrual, as the case may be,
shall be determined, the amount per Share of such dividend or
distribution, the payment date on which all previously accrued
and unpaid dividends are to be paid, and the total amount, if
any, payable to the Bank on such payment date, or (ii)
authorizing the declaration of dividends and distributions on a
periodic basis and authorizing the Bank to rely on a Certificate
setting forth the information described in subsection (i) of this
paragraph.
2. Prior to the payment date specified in such Certificate or
resolution, as the case may be, the Customer shall, in the case
of a cash dividend or distribution, pay to the Bank an amount of
cash, sufficient for the Bank to make the payment, specified in
such Certificate or resolution, to the shareholders of record as
of such payment date. The Bank will, upon receipt of any such
cash, (i) in the case of shareholders who are participants in a
dividend reinvestment and/or cash purchase plan of the Customer,
reinvest such cash dividends or distributions in accordance with
the terms of such plan, and (ii) in the case of shareholders who
are not participants in any such plan, make payment of such cash
dividends or distributions to the shareholders of record as of
the record date by mailing a check, payable to the registered
shareholder, to the address of record or dividend mailing
address. The Bank shall not be liable for any improper payment
made in accordance with a Certificate or resolution described in
the preceding paragraph. If the Bank shall not receive
sufficient cash prior to the payment date to make payments of any
cash dividend or distribution pursuant to subsections (i) and
6
<PAGE>
(ii) above to all shareholders of the Customer as of the record
date, the Bank shall, upon notifying the Customer, withhold
payment to all shareholders of the Customer as of the record date
until sufficient cash is provided to the Bank.
3. It is understood that the Bank shall in no way be responsible
for the determination of the rate or form of dividends or
distributions due to the shareholders.
4. It is,understood that the Bank shall file such appropriate
information returns concerning the payment of dividends and
distributions with the proper federal, state and local
authorities as are required by law to be filed by the Customer
but shall in no way be responsible for the collection or
withholding of taxes due on such dividends or distributions due
to shareholders, except and only to the extent required of it by
applicable law.
ARTICLE VII
CONCERNING THE CUSTOMER
1. The Customer shall promptly deliver to the Bank written
notice of any change in the Officers authorized to sign Share
certificates, Certificates, notifications or requests, together
with a specimen signature of each new Officer. In the event any
Officer who shall have signed manually or whose facsimile
signature shall have been affixed to blank Share certificates
shall die, resign or be removed prior to issuance of such Share
certificates, the Bank may issue such Share certificates as the
Share certificates of the Customer notwithstanding such death,
resignation or removal, and the Customer shall promptly deliver
to the Bank such approvals, adoptions or ratifications as may be
required by law.
2. Each copy of the Charter of the Customer and copies of all
amendments thereto shall be certified by the Secretary of State
(or other appropriate official) of the state of incorporation,
and if such Charter and/or amendments are required by law also to
be filed with a county or other officer or official body, a
certificate of such filing shall be filed with a certified copy
submitted to the Bank. Each copy of the By-Laws and copies of
all amendments thereto, and copies of resolutions of the Board of
Directors of the Customer, shall be certified by the Secretary or
an Assistant Secretary of the Customer under the corporate seal.
3. It shall be the sole responsibility of the Customer to
deliver to the Bank the Customer's currently effective Prospectus
and, for purposes of this Agreement, the Bank shall not be deemed
to have notice of any information contained in such Prospectus
until it is actually received by the Bank.
7
<PAGE>
ARTICLE VII
CONCERNING THE BANK
1. The Bank shall not be liable and shall be fully protected in
acting upon any oral instruction, writing or document reasonably
believed by it to be genuine and to have been given, signed or
made by the proper person or persons and shall not be held to
have any notice of any change of authority of any person until
receipt of written notice thereof from an Officer of the
Customer. It shall also be protected in processing Share
certificates which it reasonably believes to bear the proper
manual or facsimile signatures of the duly authorized officers of
the Customer and the proper countersignature of the Bank:
2. The Bank may establish such additional procedures, rules and
regulations governing the transfer or registration of Share
certificates as it may deem advisable and consistent with such
rules and regulations generally adopted by bank transfer agents.
3. The Bank may keep such records as it deems advisable but not
inconsistent with resolutions adopted by the Board of Directors
of the Customer. The Bank may deliver to the Customer from time
to time at its discretion, for safekeeping or disposition by the
Customer in accordance with law, such records, papers, Share
certificates which have been cancelled in transfer or exchange
and other documents accumulated in the execution of its duties
hereunder as the Bank may deem expedient, other than those which
the Bank is itself required to maintain pursuant to applicable
laws and regulations, and the Customer shall assume all
responsibility for any failure thereafter to produce any record,
paper, cancelled Share certificate or other document so returned,
if and when required. The records maintained by the Bank
pursuant to this paragraph which have not been previously
delivered to the Customer pursuant to the foregoing provisions of
this paragraph shall be considered to be the property of the
Customer, shall be made available upon request for inspection by
the Officers, employees and auditors of the Customer, and shall
be delivered to the Customer upon request and in any event upon-
the date of termination of this Agreement, as specified in
Article IX of this Agreement, in the form and manner kept by the
Bank on such date of termination or such earlier date as may be
requested by the Customer.
4. The Bank may employ agents or attorneys-in-fact at the
reasonable expense of the Customer, and shall not be liable for
any loss or expense arising out of, or in connection with, the
actions or omissions to act of its agents or attorneys-in-fact,
so long as the Bank acts in good faith and without negligence or
willful misconduct in connection with the selection of such
agents or attorneys-in-fact.
8
<PAGE>
5. The Bank shall not be liable for any loss or damage,
including reasonable attorney's fees, damage arising out
resulting from its actions or omissions to act or otherwise,
except for any loss or damage arising out of its own negligence
or willful misconduct.
6. The Customer shall indemnify and hold harmless the Bank from
and against any and all claims (whether with or without basis in
fact or law), costs, demands, expenses and liabilities, including
reasonable attorney's fees, which the Bank may sustain or incur
or which may be asserted against the Bank by reason of or as a
result of any action taken or omitted to be taken by the Bank
without its own negligence or willful misconduct in reliance upon
(i) any provision of this agreement, (ii) the Prospectus, (iii)
any instrument, order or Share certificate reasonably believed by
it to be genuine and to be signed, countersigned or executed by
any duly authorized Officer of the Customer, (iv) any Certificate
or other instructions of an Officer, (v) any opinion of legal
counsel for the Customer or the Bank, or (vi) any law, act,
regulation or any interpretation of the same even though such
law, act or regulation may thereafter have been altered, changed,
amended or repealed.
7. Specifically, but not by way of limitation, the Customer
shall indemnify and hold harmless the Bank from and against any
and all claims (whether with or without basis in fact or law),
costs, demands, expenses and liabilities, including reasonable
attorney's fees, of any and every nature which the Bank may
sustain or incur or which may be asserted against the Bank in
connection with the genuineness of a Share certificate, the
Bank's capacity and authorization to issue Shares and the form
and amount of authorized Shares.
8. At any time the Bank may apply to an Officer of the Customer
for written instructions with respect to any matter arising in
connection with the Bank's duties and obligations under this
Agreement, and the Bank shall not be liable for any action taken
or omitted to be taken by the Bank in good faith in accordance
with such instructions. Such application by the Bank for
instructions from an Officer of the Customer may, at the option
of the Bank, set forth in writing any action proposed to be taken
or omitted to be taken by the Bank with respect to its duties or
obligations under this Agreement and the date on and/or after
which such action shall be taken, and the Bank shall not be
liable for any action taken or omitted to be taken in accordance
with a proposal included in any such application on or after the
date specified therein unless, prior to taking or omitting to
take any such action, the Bank has received written instructions
in response to such application specifying the action to be taken
or omitted. The Bank may consult counsel to the Customer or its
own counsel, at the expense of the Customer, and shall be fully
9
<PAGE>
protected with respect to anything done or omitted by it in good
faith in accordance with the advice or opinion of such counsel.
9. When mail is used for delivery of non-negotiable Share
certificates, the value of which does not exceed the limits of
the Bank's Blanket Bond, the Bank shall send such non-negotiable
Share certificates by first class mail, and such deliveries will
be covered while in transit by the Bank's Blanket Bond. Non-
negotiable Share certificates, the value of which exceed the
limits of the Bank's Blanket Bond, will be sent by insured
registered mail. Negotiable Share certificates will be sent by
insured registered mail. The Bank shall advise the Customer of
any Share certificates returned as undeliverable after being
mailed as herein provided for.
10. The Bank may issue new Share certificates in place of Share
certificates represented to have been lost, stolen or destroyed
upon receiving instructions in writing from an Officer and
indemnity satisfactory to the Bank. Such instructions from the
Customer shall be in such form as approved by the Board of
Directors of the Customer in accordance with applicable law or
the By-Laws of the Customer governing such matters. If the Bank
receives written notification from the owner of the lost, stolen
or destroyed Share certificate within a reasonable time after he
has notice of it, the Bank shall promptly notify the Customer and
shall act pursuant to written instructions signed by an Officer.
If the Customer receives such written notification from the owner
of the lost, stolen or destroyed Share certificate within a
reasonable time after he has notice of it, the Customer shall
promptly notify the Bank and the Bank shall act pursuant to
written instructions signed by an Officer. The Bank shall not be
liable for any act done or omitted by it pursuant to the written
instructions described herein. The Bank may issue new Share
certificates in exchange for, and upon surrender of, mutilated
Share certificates.
11. The Bank will issue and mail subscription warrants for
Shares, Shares representing stock dividends, exchanges or splits,
or act as conversion agent upon receiving written instructions
from an Officer and such other documents as the Bank may deem
necessary.
12. The Bank will supply shareholder lists to the Customer from
time to time upon receiving a request therefor from an Officer of
the Customer.
13. In case of any requests or demands for the inspection of the
shareholder records of the Customer, the Bank will notify the
Customer and endeavor to secure instructions from an officer as
to such inspection. The Bank reserves the right, however, to
exhibit the shareholder records to any person whenever it is
10
<PAGE>
advised by its counsel that there is a reasonable likelihood that
the Bank will be held Hable for the failure to exhibit the
shareholder records to such person.
14. At the request of an Officer, the Bank will address and mail
such appropriate notices to shareholders as the Customer may
direct.
15. Notwithstanding any provisions of this Agreement to the
contrary, the Bank shall be under no duty or obligation to
inquire into, and shall not be liable for:
(a) The legality of the issue, sale or transfer of any
Shares, the sufficiency of the amount to be received in
connection therewith, or the authority of the Customer to request
such issuance, sale or transfer;
(b) The legality of the purchase of any Shares, the
sufficiency of the amount to be paid in connection therewith, or
the authority of the Customer to request such purchase;
(c) The legality of the declaration of any dividend by
the Customer, or the legality of the issue of any Shares in
payment of any stock dividend; or
(d) The legality of any recapitalization or readjustment
of the Shares.
16. The Bank shall be entitled to receive and the Customer
hereby agrees to pay to the Bank for its performance hereunder
(i) out-of-pocket expenses (including reasonable attorney's fees
and expenses) incurred in connection with this Agreement and its
performance hereunder, and (ii) the compensation for services as
set forth in Schedule I
17. The Bank shall not be responsible for any money, whether or
not represented by any check, draft or other instrument for the
payment of money, received by it on behalf of the Customer, until
the Bank actually receives and collects such funds.
18. The Bank shall have no duties or responsibilities whatsoever
except such duties and responsibilities as are specifically set
forth in this Agreement, and no covenant or obligation shall be
implied against the Bank in connection with this Agreement.
ARTICLE IX
TERMINATION
Either of the parties hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date
of such termination, which shall be not less than 60 days after
11
<PAGE>
the date of receipt of such notice. In the event such notice is
given by the Customer, it shall be accompanied by a copy of a
resolution of the Board of Directors of the Customer, certified
by the Secretary electing to terminate this Agreement and
designating a successor transfer agent or transfer agents. In
the event such notice is given by the Bank, the Customer shall,
on or before the termination date, deliver to the Bank a copy of
a resolution of its Board of Directors certified by the Secretary
designating a successor transfer agent or transfer agents. In
the absence of such designation by the Customer, the Bank may
designate a successor transfer agent. If the Customer fails to
designate a successor transfer agent and if the Bank is unable to
find a successor transfer agent, the Customer shall, upon the
date specified in the notice of termination of this Agreement and
delivery of the records maintained hereunder, be deemed to be its
own transfer agent and the Bank shall thereafter be relieved of
all duties and responsibilities hereunder. Upon termination
hereof, the Customer shall pay to the Bank such compensation as
may be due to the Bank as of the date of such termination, and
shall reimburse the Bank for any disbursements and expenses made
or incurred by the Bank and payable or reimbursable hereunder.
ARTICLE X
MISCELLANEOUS
1. The Customer agrees that prior to effecting any change in the
Prospectus which would increase or alter the duties and
obligations of the Bank hereunder, it shall advise the Bank of
such proposed change at least ten business days prior to the
intended date of the same, and shall proceed with such change
only.if it shall have received the written consent of the Bank
thereto.
2. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Customer shall be
sufficiently given if addressed to the Customer and mailed or
delivered to c/o Alliance Fund Distributors, Inc., 1345 Avenue of
the Americas, New York, New York 10 105 or at such other place as
the Customer may from time to time designate in writing.
3. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Customer shall be
sufficiently given if addressed to the Customer and mailed or
delivered to it at or at such place as the Customer may from time
to time designate in writing.
4. Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Bank shall be
sufficiently given if addressed to the Bank and mailed or
delivered to it at its office at 101 Barclay Street (22W), New
12
<PAGE>
York, New York 10286 or at such other place as the Bank may from
time to time designate in writing.
5. This Agreement may not be amended or modified in any manner
except by a written agreement duly authorized and executed by
both parties. Any duly authorized Officer may amend any
Certificate naming Officers authorized to execute and deliver
Certificates, instructions, notices or other instruments, and the
Secretary or any Assistant Secretary may amend any Certificate
listing the shares of capital stock of the Customer for which the
Bank performs Services hereunder.
6. This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns;
provided however, that this Agreement shall not be assignable by
either party without the prior written consent of the other
party.
7. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
8. This Agreement may be executed in any number of counterparts
each of which shall be deemed to be an original; but such
counterparts, together, shall constitute only one instrument.
9. The provisions of this Agreement are intended to benefit only
the Bank and the Customer, and no rights shall be granted to any
other person, by virtue of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective corporate officer, thereunto
duly authorized in their respective corporate seals to be
hereunto affixed, as of the day and year first above written.
Attest: ALLIANCE ALL-MARKET ADVANTAGE
FUND, INC.
/s/ George O. Martinez By:/s/ David H. Dievler
_________________________ ___________________________
Title:________________________
Attest: THE BANK OF NEW YORK
/s/ By:/s/ Ralph Chianese
_________________________ ___________________________
Title: Vice President
_______________________
13
00250205.AS2
<PAGE>
ADMINISTRATION AGREEMENT
Agreement made as of October 28, 1994, between ALLIANCE
ALL-MARKET ADVANTAGE FUND, INC., a Maryland corporation (the
"Fund"), and ALLIANCE CAPITAL MANAGEMENT L.P., a Delaware limited
partnership (the "Administrator").
WHEREAS, the Fund intends to operate as a closed-end
management investment company, and is so registered under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Fund has authorized the issuance of its
shares of common stock, par value $.01 per share (the "Common
Stock") (holders of the Common Stock are referred to collectively
herein as the "Shareholders");
WHEREAS, the Fund wishes to retain the Administrator to
provide certain administrative services to the Fund, under the
terms and conditions stated below, and the Administrator is
willing to provide such services for the compensation set forth
below;
NOW, THEREFORE, in consideration of the premises and
mutual covenants contained herein, the parties agree as follows:
1. Appointment. The Fund hereby appoints the
Administrator to administer the Fund, and the Administrator
accepts such appointment and agrees that it will furnish the
services set forth in paragraph 2 below.
2. Services and Duties of the Administrator. Subject
to the supervision of the Fund's Board of Directors (the
"Board"), the Administrator will provide the following services:
(a) Prepare and assemble all reports required to
be sent to the Fund Shareholders, and arrange
for the printing and dissemination of such
reports to Shareholders;
(b) Assemble all reports required to be filed with
the Securities and Exchange Commission (the
"SEC") on Form N-SAR, or such other form as
the SEC may substitute for Form N-SAR, and
file such completed form with the SEC;
(c) Arrange for the dissemination to Shareholders
of the Fund's proxy materials and oversee the
tabulation of proxies by the Fund's transfer
agent;
<PAGE>
(d) Negotiate the terms and conditions under which
custodian services will be provided to the
Fund and the fees to be paid by the Fund to
its custodian in connection therewith;
(e) Negotiate the terms and conditions under which
dividend disbursing services will be provided
to the Fund, and the fees to be paid by the
Fund in connection therewith; review the
provision of dividend disbursing services to
the Fund;
(f) Calculate, or arrange for the calculation of,
the net asset value of the Fund's shares;
(g) Calculate the basic fee payable to Alliance
Capital Management L.P. and the adjustment to
the basic fee based on the investment
performance of the Fund in relation to the
investment record of the Russell 1000 TM Growth
Index;
(h) Determine the amounts available for
distribution as dividends and distributions to
be paid by the Fund to its Shareholders;
prepare and arrange for the printing of
dividend notices to Shareholders; and provide
the Fund's dividend disbursing agent and
custodian with such information as is required
for such parties to effect the payment of
dividends and distributions and to implement
the Fund's dividend reinvestment plan;
(i) Assist in providing to the Fund's independent
accountants such information as is necessary
for such accountants to prepare and file the
Fund's federal income and excise tax returns
and the Fund's state and local tax returns;
(j) Monitor compliance of the Fund's operations
with the 1940 Act and with its investment
policies and limitations as currently in
effect;
(k) Monitor compliance of the Fund's operations
with respect to engaging in short sales with
the 1940 Act and the Internal Revenue Code of
1986, as amended;
(l) Provide accounting and bookkeeping services
(including the maintenance of such accounts,
2
<PAGE>
books and records of the Fund as may be
required by Section 31(a) of the 1940 Act and
the rules and regulations thereunder); and
(m) Make such reports and recommendations to the
Board as the Board reasonably requests or
deems appropriate.
All services to be furnished by the Administrator
may be furnished through the medium of any directors,
officers or employees of the Administrator or its
affiliates. Each party shall bear all its own expenses
incurred in connection with this agreement.
3. Compliance with the Fund's Governing Documents
and Applicable Law. In all matters relating to the
performance of this Agreement, the Administrator will act in
conformity with the Articles of Incorporation, By-Laws and
Registration Statements of the Fund and with the directions
of the Board and Fund executive officers and will conform to
and comply with the requirements of the 1940 Act and all
other applicable federal or state laws and regulations.
4. Service Not Exclusive. The Administrator's
services hereunder are not deemed to be exclusive, and the
Administrator is free to render administrative or other
services to other funds or clients so long as the
Administrator's services under this Agreement are not
impaired thereby.
5. Compensation. For the services provided and
expenses assumed by the Administrator under this Agreement,
the Fund will pay the Administrator a monthly fee at an
annualized rate of .25 of 1% of the Fund's average weekly
net assets. For purposes of the calculation of such fee,
average weekly net assets shall be determined on the basis
of the average net assets of the Fund for each weekly period
(ending on Friday) ending during the month. The net assets
for each weekly period are determined by averaging the net
assets on the Friday of such weekly period with the net
assets on the Friday of the immediately preceding weekly
period. When a Friday is not a business day for the Fund,
then the calculation will be based on the net assets on the
business day immediately preceding such Friday. Such fee
shall be payable in arrears on the last day of each calendar
month for services performed hereunder during such month.
If this Agreement becomes effective after the beginning of a
month or terminates prior to the end of a month, such fee
shall be prorated according to the proportion which such
portion of the month bears to the full month.
3
<PAGE>
6. Limitation of Liability of the Administrator.
The Administrator will not be liable for any error of
judgement or mistake of law or for any loss suffered by the
Fund or its Shareholders in connection with the performance
of its duties under this Agreement, except a loss resulting
from wilful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or from reckless
disregard by it of its duties under this Agreement.
7. Duration and Termination. This Agreement will
become effective upon the date hereabove written and shall
continue in effect until September 30, 1996 and may be
continued for successive twelve-month periods (computed from
each October 1) provided that such continuance is
specifically approved at least annually by a vote of the
Fund's Board of Directors or by majority vote of the holders
of the Fund's outstanding voting securities (as defined in
the 1940 Act), and in either case, by the vote of a majority
of the Fund's Board of Directors who are not interested
persons, as defined in the 1940 Act, of any party to this
Agreement (other than as Directors of the Fund) cast in
person at a meeting called for the purpose of voting on such
approval; provided further, however, that if the
continuation of this Agreement is not approved, the
Administrator may continue to render the services described
herein in the manner and to the extent permitted by the 1940
Act and the rules and regulations thereunder. Upon the
effectiveness of this Agreement, it shall supersede all
previous agreements between the Fund and the Administrator
covering the subject matter hereof. This Agreement may be
terminated at any time, without the payment of any penalty,
by a vote of a majority of the Fund's outstanding voting
securities (as so defined), or by a vote of the Fund's Board
of Directors on 60 days written notice to the Administrator,
or by the Administrator on 60 days written notice to the
Fund.
8. Assignment. Neither this Agreement nor any
rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
9. Amendment of this Agreement. No provision of
this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change,
waiver or discharge or termination is sought.
10. Governing Law. This Agreement shall be
construed in accordance with the laws of the State of New
York, without giving effect to the principles of conflicts
of law thereof. To the extent that the applicable laws of
4
<PAGE>
the State of New York conflict with the applicable
provisions of the 1940 Act, the latter shall control.
11. Miscellaneous. The captions of this Agreement
are included for convenience of reference only and in no way
define or delimit any of the provisions hereof or otherwise
affect their construction or effect. If any provision of
this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused
this instrument to be executed by their officers designated
below as of the day and year first above written.
ALLIANCE ALL-MARKET ADVANTAGE
FUND, INC.
By /s/ David H. Dievler
_____________________________
Name:
Title:
ALLIANCE CAPITAL MANAGEMENT L.P.
By ALLIANCE CAPITAL MANAGEMENT
CORPORATION,
its General Partner
By /s/ John D. Carifa
_____________________________
Name:
Title:
5
00250205.AD2
<PAGE>
SHAREHOLDER SERVICING AGREEMENT
SHAREHOLDER SERVICING AGREEMENT dated October 28,
1994 between Alliance All-Market Advantage Fund, Inc., a
Maryland corporation (the "Fund"), and Kidder, Peabody & Co.
Incorporated, a Delaware corporation (the "Shareholder
Servicing Agent").
WHEREAS, the Fund is a closed-end, non-diversified
management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"),
the shares of the common stock of which are registered under
the Securities Act of 1933, as amended; and
WHEREAS, the Fund desires to retain the Shareholder
Servicing Agent to render services with respect to the
Fund's shareholders, and the Shareholder Servicing Agent is
willing to render such services.
NOW, THEREFORE, in consideration of the mutual
terms and conditions set forth below, the parties hereto
agree as follows:
1. The Fund hereby employs the Shareholder
Servicing Agent for the period and on the terms and
conditions set forth herein, subject at all times to the
supervision of the Board of Directors of the Fund, to:
(i) Provide services and make efforts to
publicize the Fund on an ongoing basis to
investors, including both clients of the
<PAGE>
Shareholder Servicing Agent and other investors,
and to remind investors and prospective investors
of the Fund's features and benefits, including
communications with clients and their
representatives, periodic seminars or conference
calls, internal and external publications,
presentations at retail system meetings, responses
to questions from potential or current shareholders
and specific shareholder contact where appropriate;
(ii) Make available to brokers and investors
market price, net asset value and yield information
regarding the Fund for the purpose of helping to
maintain the visibility of the Fund to brokers and
clients (including investors and prospective
investors in the Fund); and
(iii) Provide financial advice and consultation
at the request of the Fund with respect to
consideration by the Board of Directors of the Fund
of share repurchases or tender offers.
2. The Fund will pay the Shareholder Servicing
Agent a fee at an annualized rate of .10 of 1% of the Fund's
average weekly net assets for the services provided
hereunder. For purposes of the calculation of such fee,
average weekly net assets shall be determined on the basis
of the average net assets of the Fund for each weekly period
2
<PAGE>
(ending on Friday) ending during the month involved. The
net assets for each weekly period are to be determined by
averaging the net assets on the Friday of such weekly period
with the net assets on the Friday of the immediately
preceding weekly period. When a Friday is not a business
day for the Fund, then the calculation will be based on the
Fund's net assets on the business day immediately preceding
such Friday. Such fee shall be payable in arrears on the
last day of each calendar month for services provided
hereunder during such month. For the month and year in
which this Agreement becomes effective or terminates, there
shall be an appropriate proration of such fee on the basis
of the number of days that this Agreement is in effect
during such month and year, respectively.
3. The Fund acknowledges that the consulting
services of the Shareholder Servicing Agent provided for
hereunder do not include any advice as to the value of
securities or regarding the advisability of purchasing or
selling any securities for the Fund's portfolio. No
provision of this Agreement shall be considered as creating,
nor shall any provision create, any obligation on the part
of the Shareholder Servicing Agent, and the Shareholder
Servicing Agent is not hereby agreeing, to furnish any
advice or make any recommendations regarding the purchase or
sale of portfolio securities.
3
<PAGE>
4. Nothing herein shall be construed as
prohibiting the Shareholder Servicing Agent or its
affiliates from providing similar or other services to any
other person (including other registered investment
companies), so long as the Shareholder Servicing Agent's
services to the Fund are not impaired thereby.
5. The term of this Agreement shall commence upon
the date above, and shall continue in effect until September
30, 1996 and may thereafter be continued for successive
twelve-month periods (computed from each October 1) unless
one party to this Agreement gives to the other party, at
least 60 days prior to the next anniversary hereof, written
notice of intention to terminate, in which case this
Agreement shall terminate on the date specified in such
notice or such anniversary, whichever is later.
6. This Agreement shall be construed in
accordance with the laws of the State of New York for
contracts to be performed entirely therein and without
regard to the choice of law principles thereof.
7. All notices required or permitted to be sent
under this Agreement shall be sent, if to the Shareholder
Servicing Agent:
Kidder, Peabody & Co. Incorporated
60 Broad Street
New York, New York 10004
Attention: William Short
or if to the Fund:
4
<PAGE>
Alliance All-Market Advantage Fund, Inc.
c/o Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
Attention: Mark D. Gersten
or such other name or address as may be given in writing to
the other party. Any notice shall be deemed to be given or
received on the third day after deposit in the U.S. mails
with certified postage prepaid or when actually received,
whether by hand, express delivery service or facsimile
transmission, whichever is earlier.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Shareholder Servicing Agreement as of the date
first above written.
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
By:/s/ David H. Dievler
________________________________
Name:
Title:
KIDDER, PEABODY & CO. INCORPORATED
By:________________________________
Name:
Title:
5
00250205.AD4
<PAGE>
EXHIBIT A
ALLIANCE FUND SERVICES, INC.
SHAREHOLDER INQUIRY AGENCY AGREEMENT
AGREEMENT, dated as of January 1, 1995, between Alliance
All-Market Advantage Fund, Inc., a Maryland Corporation and a
closed-end investment company registered with the Securities and
Exchange Commission (the "SEC") under the Investment Company Act
of 1940 (the "Investment Company Act"), having its principal
place of business at 1345 Avenue of Americas, New York, New York
10105 (the "Fund"), and ALLIANCE FUND SERVICES, INC., a Delaware
corporation, having its principal place of business at 500 Plaza
Drive, Secaucus, New Jersey 07094 ("Fund Services").
WHEREAS, Fund Services has agreed to act as shareholder
inquiry agent to the Fund for the purpose of responding to
telephone inquiries concerning the Fund and matters relating
thereto from Shareholders and others;
NOW THEREFORE, for and in consideration of the mutual
covenants and agreements contained herein, the parties do hereby
agree as follows:
SECTION 1. Upon the terms set forth in this Agreement,
the Fund hereby appoints Fund Services as its shareholder inquiry
agent, and Fund Services agrees to act in that capacity.
Capitalized terms used in this Agreement and not otherwise
defined shall have the meanings assigned to them in SECTION 10.
SECTION 2.
(a) As shareholder inquiry agent hereunder, Fund
Services shall respond to telephone inquiries concerning the Fund
and matters relating thereto from Shareholders and others.
(b) In responding to the inquiries referred to in
SECTION 2(a), Fund Services shall be limited to providing
information that is otherwise publicly available.
(c) With respect to any inquiries that Fund Services is
unable to respond to or which are beyond the scope of its
services under this Agreement, to the extent reasonable under the
circumstances, Fund Services shall direct such inquiries to the
appropriate person.
SECTION 3. The Fund shall provide Fund Services with
copies of any materials relating to the Fund that are reasonably
<PAGE>
requested by Fund Services for the purposes of performing its
services under this Agreement.
SECTION 4. Upon the declaration of each dividend and
each capital gains distribution by the Fund's Directors, the Fund
shall notify Fund Services of the date of such declaration, the
amount payable per Share, the record date for determining the
Shareholders entitled to payment, the payment and the
reinvestment date price.
SECTION 5. Nothing contained in this Agreement is
intended to or shall require Fund Services to perform any
functions or duties on any day other than a Business Day.
Functions or duties normally scheduled to be performed on any day
which is not a Business Day shall be performed on, and as of, the
next Business Day, unless otherwise required by law.
SECTION 6. For the services rendered by Fund Services
as described above, the Fund shall pay to Fund Services a fee at
a rate to be mutually agreed upon from time to time, provided
that in no event shall the fee be more than the cost to Fund
Services of providing such services.
SECTION 7. Fund Services shall not be liable for any
taxes, assessments or governmental charges that may be levied or
assessed on any basis whatsoever in connection with the Fund or
any Shareholder, excluding taxes assessed against Fund Services
for compensation received by it hereunder.
SECTION 8.
(a) Fund Services shall at all times act in good faith
and with reasonable care in performing the services to be
provided by it under this Agreement, but shall not be liable for
any loss or damage unless such loss or damage is caused by the
negligence, bad faith or willful misconduct of Fund Services or
its employees or agents.
(b) Without limiting the foregoing:
(i) Fund Services may rely upon the statements and
instructions of Fund officers and advice of the Fund or counsel
to the Fund or Fund Services. Fund Services shall not be liable
for any action taken in good faith reliance upon such
instructions or advice;
(ii) Fund Services shall not be liable for any
action reasonably taken in good faith reliance upon any such
instructions or advice or upon a certified copy of any resolution
of the Fund's Directors. Fund Services may rely upon the
2
<PAGE>
genuineness of any document, or copy thereof, reasonably believed
by Fund Services in good faith to have been validly executed;
(iii) Fund Services may rely, and shall be
protected by the Fund in acting, upon any signature, instruction,
request, opinion of counsel, statement, report, notice or other
document reasonably believed by it in good faith to be genuine
and to have been duly signed or presented on behalf of the Fund.
(c) The Fund shall indemnify Fund Services and hold it
harmless from any and all losses, costs, damages, liabilities and
expenses, including reasonable expenses of counsel, incurred by
it resulting from any claim, demand, action or suit in connection
with the performance of its duties hereunder, including any
error, omission, inaccuracy or other deficiency contained in
materials provided to Fund Services by the Fund, or as a result
of acting upon any instruction reasonably believed by it to have
been properly given by a duly authorized officer of the Fund, or
out of the failure of the Fund to provide any information in the
Fund's possession needed by Fund Services to knowledgeably
perform its functions; provided the Fund shall have no obligation
to indemnify Fund Services or hold it harmless with respect to
any expenses, damages, claims, suits, liabilities, actions,
demands or losses caused directly or indirectly by acts or
omissions of Fund Services, and provided that this
indemnification shall not apply to actions or omissions of Fund
Services in cases of its own bad faith, willful misconduct or
negligence, and provided further that if in any case the Fund may
be asked to indemnify or hold Fund Services harmless pursuant to
this Section, the Fund shall have been fully and promptly advised
by Fund Services of all material facts concerning the situation
in question. The Fund shall have the option to defend Fund
Services against any claim which may be the subject of this
indemnification, and in the event that the Fund so elects, it
will so notify Fund Services, and thereupon the Fund shall retain
competent counsel to undertake defense of the claim, and Fund
Services shall in such situations incur no further legal or other
expenses for which it may seek indemnification under this
Section.
SECTION 9. This Agreement may be amended from time to
time by a written supplemental agreement executed by the Fund and
Fund Services and without notice to or approval of the
Shareholders; provided this Agreement may not be amended in any
manner which would substantially increase the Fund's obligations
hereunder unless the amendment is first approved by the Fund's
Directors, including a majority of the Directors who are not a
party to this Agreement or interested persons of any such party,
at a meeting called for such purpose, and thereafter is approved
by the Shareholders if such approval is required under the
Investment Company Act or the rules and regulations thereunder.
3
<PAGE>
The parties hereto may adopt procedures as may be appropriate or
practical under the circumstances, and Fund Services may
conclusively rely on the determination of the Fund that any
procedure that has been approved by the Fund does not conflict
with or violate any requirement of its Articles of Incorporation
or By-Laws, or any rule, regulation or requirement of any
regulatory body.
SECTION 10. The terms, as defined in this Section,
whenever used in this Agreement or in any amendment or supplement
hereto, shall have the meanings specified below, insofar as the
context will allow.
(a) Business Day: The term Business Day shall mean any
day on which the Fund is open for business as described in its
Prospectus.
(b) Shareholders: The term Shareholders shall mean the
registered owners from time to time of the Shares, as reflected
on the stock registry records of the Fund.
(c) Shares: The term Shares shall mean all or any part
of each class of the shares of capital stock of the Fund which
from time to time are authorized and/or issued by the Fund.
SECTION 11. Fund Services shall not be liable for any
delays or errors occurring by reason of circumstances beyond its
control, including but not limited to acts of civil or military
authorities, national emergencies, fire, flood or catastrophe,
acts of God, insurrection, war, riot, or failure of
transportation, communication or power supply, except to the
extent that Fund Services shall have failed to use its best
efforts to minimize the likelihood of occurrence of such
circumstances or to mitigate any loss or damage to the Fund
caused by such circumstances.
SECTION 12. The Fund may give Fund Services sixty (60)
days and Fund Services may give the Fund ninety (90) days written
notice of the termination of this Agreement, such termination to
take effect at the time specified in the notice. Upon notice of
termination, the Fund may, but is not required to, appoint a
successor shareholder inquiry agent. Upon receipt from the Fund
of written notice of the appointment of the successor shareholder
inquiry agent and related instructions, Fund Services shall, upon
request of the Fund and the successor shareholder inquiry agent
and upon payment of Fund Services' reasonable charges and
disbursements, promptly transfer to the successor shareholder
inquiry agent all materials held by Fund Services hereunder and
cooperate with, and provide reasonable assistance to, the
successor shareholder inquiry agent in the transition to carry
out its responsibilities hereunder.
4
<PAGE>
SECTION 13. Any notice or other communication required
by or permitted to be given in connection with this Agreement
shall be in writing, and shall be delivered in person or sent by
first-class mail, postage prepaid, to the respective parties.
Notice to the Fund shall be given as follows until
further notice:
Alliance All-Market Advantage Fund, Inc.
1345 Avenue of the Americas
New York, New York 10105
Attention: Secretary
Notice to Fund Services shall be given as follows until
further notice:
Alliance Fund Services, Inc.
500 Plaza Drive
Secaucus, New Jersey 07094
SECTION 14. The Fund represents and warrants to Fund
Services that the execution and delivery of this Agreement by the
undersigned officer of the Fund has been duly and validly
authorized by resolution of the Fund's Directors. Fund Services
represents and warrants to the Fund that the execution and
delivery of this Agreement by the undersigned officer of Fund
Services has also been duly and validly authorized.
SECTION 15. This Agreement may be executed in more than
one counterpart, each of which shall be deemed to be an original,
and shall become effective as of [January 1, 1995], unless
otherwise agreed by the parties. Unless sooner terminated
pursuant to SECTION 12, this Agreement will continue until
[ ] and will continue in effect thereafter for
successive 12 month periods only if such continuance is
specifically approved at least annually by the Directors or by a
vote of the Shareholders and in either case by a majority of the
Directors who are not parties to this Agreement or interested
persons of any such party, at a meeting called for the purpose of
voting on this Agreement.
SECTION 16. This Agreement shall extend to and shall
bind the parties hereto and their respective successors and
assigns; provided, however, that this Agreement shall not be
assignable by the Fund without the written consent of Fund
Services or by Fund Services without the written consent of the
Fund, authorized or approved by a resolution of the Fund's
Directors. Notwithstanding the foregoing, either party may
assign this Agreement without the consent of the other party so
long as the assignee is an affiliate, parent or subsidiary of the
5
<PAGE>
assigning party and is qualified to act under the Investment
Company Act, as amended from time to time.
SECTION 17. This Agreement shall be governed by the
laws of the state of New York.
WITNESS the following signatures:
THE ALLIANCE ALL-MARKET ADVANTAGE
FUND, INC.
By: /s/
Title:__________________________
ALLIANCE FUND SERVICES, INC.
By: /s/
Title:__________________________
6
00250209.AB1
<PAGE>
INFORMATION AGENT AGREEMENT
This document will constitute the agreement between ALLIANCE
ALL-MARKET ADVANTAGE FUND, INC. ("AMO"), with its principal
executive offices at 1345 Avenue of the Americas, New York, NY
10105 and SHAREHOLDER COMMUNICATIONS CORPORATION ("SCC"), with
its principal executive offices at 17 State Street, New York, NY
10005, relating to a Rights Offering (the "OFFER") of Alliance
All-Market Advantage Fund, Inc. (the "FUND").
The services to be provided by SCC will be as follows:
(1) INDIVIDUAL HOLDERS OF RECORD AND BENEFICIAL OWNERS
Target Group. SCC estimates that it may call between
840 to 1,320 of the approximately 6,000 outstanding
beneficial and registered shareholders of the FUND. The
estimate number is subject to adjustment and SCC may
actually call more or less shareholders depending on the
response to the OFFER or at AMO's direction.
Telephone Number Lookups. SCC will obtain the needed
telephone numbers from various types of telephone
directories.
Initial Telephone Calls to Provide Information. SCC
will begin telephone calls to the target group as soon
as practicable after being instructed by AMO. Most
calls will be made during 10:00 A.M. to 9:00 P.M. on
business days and only during 10:00 A.M. to 5:00 P.M. on
Saturdays. No calls will be received by any shareholder
after 9:00 p.m. on any day, in any time zone, unless
specifically requested by the shareholder. SCC will
maintain "800" lines for shareholders to call with
questions about the OFFER. The "800" lines will be
staffed Monday through Friday between 9:00 a.m. and
9:00 p.m. SCC will provide AMO with a weekly report
reflecting the number of calls received by SCC
reflecting the names and phone number, if available.
Re-mails. SCC will coordinate re-mails of offering
materials to the shareholders who advise us that they
have discarded or misplaced the originally mailed
materials. Use of overnight courier services must
receive prior approval by AMO.
Reminder/Extension Mailing. SCC will help to coordinate
any targeted or broad-based reminder mailing at the
request of AMO. SCC will mail only materials supplied
by AMO or approved by AMO in writing.
<PAGE>
Subscription Reports. SCC will provide AMO and/or the
dealer manager with subscription indications beginning
not less than 7 business days prior to expiration of the
OFFER. These reports are based solely on verbal
indications received from the reorganization departments
of each participating broker dealer.
(2) BANK/BROKER SERVICING
SCC will contact all banks, dealers and other nominee
shareholders ("sponsors") holding stock as shown on
appropriate portions of the shareholder lists to
ascertain quantities of offering materials needed for
forwarding to beneficial owners.
SCC will deliver offering materials by messenger to New
York City based intermediaries and by Federal Express or
other means to non-New York City based intermediaries.
SCC will also follow-up by telephone with each
intermediary to insure receipt of the offering materials
and to confirm timely re-mailing of materials to the
beneficial owners.
SCC will maintain frequent contact with intermediaries
to monitor shareholder response and to insure that all
liaison procedures are proceeding satisfactorily. In
addition, SCC will contact beneficial holders directly,
if possible, and do whatever may be appropriate or
necessary to provide information regarding the OFFER to
this group.
SCC will, as frequently as practicable, report to AMO
with responses from intermediaries.
(3) PROJECT FEE
In consideration for acting as Information Agent SCC
will receive a project fee of $7,500.
(4) ESTIMATED EXPENSES
SCC will be reimbursed by AMO for its reasonable
out-of-pocket expenses incurred provided that SCC
submits to AMO an expense report, itemizing such
expenses and providing copies of all supporting bills in
respect of such expenses. If the actual expenses
incurred are less than the portion of the estimated high
range expenses paid in advance by AMO, AMO will receive
from SCC a check payable in the amount of the difference
at the time that SCC sends its final invoice for the
second half of the project fee.
2
<PAGE>
SCC's expenses are estimated as set forth below and the
estimates are based largely on data provided to SCC by
AMO. In the course of the OFFER the expenses and
expense categories may change due to changes in the
OFFER schedule or due to events beyond SCC's control,
such as delays in receiving offering material and
related items. In the event of a change of 10% or more
from the total expenses estimated or new expenses not
originally contemplated, SCC will notify AMO by phone
and/or by letter for prior approval of such expenses.
ESTIMATED EXPENSES Low Range High Range
Data Handling and Preparation
Telephone # Lookup - Account Consolidation
Computer Match and Information Operators
(blended rate)
2,400 @ $.65.................................$ 1,565 $ 1,565
Inbound/Outbound Information Campaign
Outbound Telephone Calls
840 to 1,320 @ $3.75
(registered & NOBO holders)...................3,150 4,950
850 to 1,100 @ $3l75
(Reorganization Calls)........................3,187 4,125
Inbound "800" Telephone Calls
(Shareholders, Banks, Brokers
and Financial Advisors)
480 to 950 @ $4.00...............................480 3,800
Mailing & Distribution
Bank/Broker Distribution
(freight, messenger and FedEx)................1,250 1,900
Miscellaneous expenses - Fax, FedEx,
postage, search and related items................500 750
--- ---
TOTAL ESTIMATED EXPENSES...................$10,132 $17,090
(5) PERFORMANCE
SCC will use its best efforts to achieve the goals of
AMO but SCC is not guaranteeing a minimum success rate.
SCC's Project Fee as outlined in Section 3 or Expenses
as outlined in Section 4 are not contingent on success
or failure of the OFFER.
SCC's strategies revolve around a telephone information
campaign. The purpose of the telephone information
3
<PAGE>
campaign is to raise the overall awareness amongst
shareholders of the OFFER and help shareholders better
understand the transaction. This in turn may result in
a higher overall response.
(6) COMPLIANCE
SCC agrees that all activities by SCC and by others on
behalf of SCC pursuant to this Agreement shall be
conducted in compliance with all applicable (i) federal
and state laws and regulations, including, but not
limited to all federal and state securities laws and
regulations, and (ii) requirements of the National
Association of Securities Dealers, Inc. and the New York
Stock Exchange.
AMO agrees that all activities by AMO and by others
(other than by, or on behalf of SCC) on behalf of AMO
pursuant to this Agreement shall be conducted in
compliance with all applicable (i) federal and state
laws and regulations, including, but not limited to all
federal and state securities laws and regulations, and
(ii) requirements of the National Association of
Securities Dealers, Inc.
In rendering the services contemplated by this
Agreement, SCC agrees not to make any representations,
oral or written that are not contained in the FUND's
current Prospectus for the OFFER, unless previously
authorized to do so in writing by AMO.
(7) PAYMENT
Payment for one half the project fee ($3,750) and one
half the estimated high range expenses ($8,545.00) for a
total of $12,295.00 will be made at the signing of this
contract. The balance, if any, will be paid by AMO due
thirty days after SCC sends its final invoice.
(8) DISSEMINATION OF INFORMATION
In rendering the services contemplated by this
Agreement, SCC agrees that neither SCC, nor any person
or entity acting on behalf of SCC shall (i) mail or
otherwise distribute any written materials unless such
materials have been provided by AMO to SCC for
distribution, or such distribution has been approved by
AMO in advance in writing, (ii) make any oral
representations or other statements to any person or
entity relating in anyway to the FUND or the OFFER other
4
<PAGE>
than as set forth in (A) written materials provided by
AMO to SCC for use by SCC in oral communications
pursuant to this Agreement or (B) the then current
prospectus for the OFFER. In connection with
representations or other statements based on information
set forth in such prospectus, SCC shall take appropriate
steps to ensure that information is presented in a
manner that is fair, balanced and not misleading.
(9) TRAINING
SCC shall at its own expense provide training to all
persons who are to be involved in communications with
shareholders or intermediaries so as to ensure that all
such persons review carefully and understand the OFFER
and the prospectus for the FUND so as to be in a
position to effectively communicate with shareholders
and the intermediaries. Training materials will be
based solely on the information provided in the
prospectus or supplemented by AMO.
(10) MISCELLANEOUS
SCC will hold in confidence and will not use nor
disclose to third parties information we receive from
AMO, or information developed by SCC based upon such
information we receive, except for information which was
public at the time of disclosure or becomes part of the
public domain without disclosure by SCC or information
which we learn from a third party which does not have an
obligation of confidentiality to AMO or the FUND.
5
<PAGE>
In the event the project is cancelled for an indefinite
period of time after the signing of this Agreement and
before the expiration of the OFFER, SCC will be
reimbursed by AMO for any expenses incurred and a pro
rata portion of the project fee as calculated based upon
the number of days lapsed from the signing of this
Agreement through the original expiration date.
AMO agrees to indemnify, hold harmless, reimburse and
defend SCC, and its officers, agents and employees,
against all claims or threatened claims, costs,
expenses, liabilities, obligations, losses or damages
(including reasonable legal fees and expenses) of any
nature, incurred by or imposed upon SCC, or any of its
officers, agents or employees, which results, arises out
of or is based upon services rendered to AMO in
accordance with the provisions of this AGREEMENT,
provided that such services are rendered to AMO without
any negligence, willful misconduct, bad faith or
reckless disregard on the part of SCC, or its officers,
agents and employees. SCC agrees to advise the FUND of
any claim or liability promptly after receipt of any
notice thereof. The FUND shall not be liable for any
settlement without its written consent.
This agreement will be governed by and construed in
accordance with the laws of the State of New York. This
AGREEMENT sets forth the entire AGREEMENT between SCC and AMO
with respect to the agreement herein and cannot be modified
except in writing by both parties.
IN WITNESS WHEREOF, the parties have signed this AGREEMENT
this _______ day of June 1999.
ALLIANCE ALL-MARKET SHAREHOLDER COMMUNICATIONS
ADVANTAGE FUND, INC. CORPORATION
By_______________________ By________________________
Robert S. Brennan
Vice President
6
<PAGE>
In the event the project is cancelled for an indefinite
period of time after the signing of this Agreement and
before the expiration of the OFFER, SCC will be
reimbursed by AMO for any expenses incurred and a pro
rata portion of the project fee as calculated based upon
the number of days lapsed from the signing of this
Agreement through the original expiration date.
AMO agrees to indemnify, hold harmless, reimburse and
defend SCC, and its officers, agents and employees,
against all claims or threatened claims, costs,
expenses, liabilities, obligations, losses or damages
(including reasonable legal fees and expenses) of any
nature, incurred by or imposed upon SCC, or any of its
officers, agents or employees, which results, arises out
of or is based upon services rendered to AMO in
accordance with the provisions of this AGREEMENT,
provided that such services are rendered to AMO without
any negligence, willful misconduct, bad faith or
reckless disregard on the part of SCC, or its officers,
agents and employees. SCC agrees to advise the FUND of
any claim or liability promptly after receipt of any
notice thereof. The FUND shall not be liable for any
settlement without its written consent.
This agreement will be governed by and construed in
accordance with the laws of the State of New York. This
AGREEMENT sets forth the entire AGREEMENT between SCC and AMO
with respect to the agreement herein and cannot be modified
except in writing by both parties.
IN WITNESS WHEREOF, the parties have signed this AGREEMENT
this _______ day of June 1999.
ALLIANCE ALL-MARKET SHAREHOLDER COMMUNICATIONS
ADVANTAGE FUND, INC. CORPORATION
By_______________________ By________________________
Robert S. Brennan
Vice President
7
00250205.AS6
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus constituting part of Pre-Effective Amendment No. 1 to
this Registration Statement on Form N-2 (the "Registration
Statement") of our report dated November 18, 1998, relating to
the financial statements and financial highlights appearing in
the September 30, 1998 Annual Report to Shareholders of Alliance
All-Market Advantage Fund, Inc., which is also incorporated by
reference into the Registration Statement. We also consent to
the references to us under the headings "Financial Highlights"
and "Experts" in the Prospectus.
/s/ PricewaterhouseCoopers LLP
__________________________
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
June 16, 1999
<PAGE>
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
October 27, 1994
Alliance All-Market Advantage
Fund, Inc.
1345 Avenue of the Americas
New York, New York 10105
Gentlemen:
In connection with our purchase of 5,000 shares of
Common Stock of Alliance All-Market Advantage Fund, Inc. (the
"Corporation") for an aggregate cash consideration of One Hundred
Thousand Dollars ($100,000), this will confirm that we are buying
such shares for investment for our account only, and not with a
view to reselling or otherwise distributing them.
Very truly yours,
ALLIANCE CAPITAL MANAGEMENT L.P.
By: Alliance Capital Management
Corporation,
its General Partner
By:/s/
______________________________
00250205.AG3
<PAGE>
[ARTICLE] 6
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] SEP-30-1998
[PERIOD-END] MAR-31-1999
[INVESTMENTS-AT-COST] 66,764,036
[INVESTMENTS-AT-VALUE] 122,370,152
[RECEIVABLES] 543,742
[ASSETS-OTHER] 12,397
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 122,926,291
[PAYABLE-FOR-SECURITIES] 489,244
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 3,965,875
[TOTAL-LIABILITIES] 4,455,119
[SENIOR-EQUITY] 25,157
[PAID-IN-CAPITAL-COMMON] 49,741,734
[SHARES-COMMON-STOCK] 2,515,686
[SHARES-COMMON-PRIOR] 2,508,017
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 18,984,393
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 55,460,805
[NET-ASSETS] 118,471,172
[DIVIDEND-INCOME] 214,044
[INTEREST-INCOME] 17,641
[OTHER-INCOME] 0
[EXPENSES-NET] 1,263,587
[NET-INVESTMENT-INCOME] (1,031,902)
[REALIZED-GAINS-CURRENT] 20,897,764
[APPREC-INCREASE-CURRENT] 21,491,287
[NET-CHANGE-FROM-OPS] 41,357,149
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] (4,709,015)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 0
[NUMBER-OF-SHARES-REDEEMED] 0
[SHARES-REINVESTED] 7,669
[NET-CHANGE-IN-ASSETS] 36,919,153
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (1,913,371)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 884,555
[INTEREST-EXPENSE] 2,223
[GROSS-EXPENSE] 1,263,587
[AVERAGE-NET-ASSETS] 102,415,256
[PER-SHARE-NAV-BEGIN] 32.52
<PAGE>
[PER-SHARE-NII] (0.41)
[PER-SHARE-GAIN-APPREC] 16.86
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] (1.88)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 47.09
[EXPENSE-RATIO] 2.47
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
00250205.AS8
