ADVISORY AGREEMENT
ALLIANCE MORTGAGE SECURITIES INCOME FUND, INC.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
July 22, 1992
Alliance Capital Management L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
We herewith confirm our agreement with you as follows:
1. We are an open-end, diversified management
investment company registered under the Investment Company Act of
1940 (the "Act"). We are currently authorized to issue one class
of Common Stock and our Board of Directors is authorized to
reclassify and issue any unissued shares to any number of
additional classes or series (Portfolios) each having its own
investment objective, policies and restrictions, all as more
fully described in the Prospectus and Statement of Additional
Information constituting parts of the Registration Statement
filed on our behalf under the Securities Act of 1933 and the Act.
We propose to engage in the business of investing and reinvesting
the assets in each of our Portfolios in securities of the type
and in accordance with the limitations specified in our Articles
of Incorporation, By-Laws, Registration Statement filed on our
behalf under the Securities Act of 1933 and the Act, and any
representations made in our Prospectus and Statement of
Additional Information, all in such manner and to such extent as
may from time to time be authorized by our Board of Directors.
We enclose copies of the documents listed above and will from
time to time furnish you with any amendments thereof.
2. (a) We hereby employ you to manage the investment
and reinvestment of the assets in each of our Portfolios as above
specified, and, without limiting the generality of the foregoing,
to provide management and other services specified below.
(b) You will make decisions with respect to all
purchases and sales of securities in each of our Portfolios. To
carry out such decisions, you are hereby authorized, as our agent
and attorney in fact, for our account and at our risk and in our
name, to place orders for the investment and reinvestment of our
assets. In all purchases, sales and other transactions in
securities in each of our Portfolios you are authorized to
exercise full discretion and act for us in the same manner and
with the same force and effect as our corporation itself 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 each Portfolio since the prior
report, and will also keep us in touch with important
developments affecting any Portfolio and on your own initiative
will furnish us from time to time with such information as you
may believe appropriate for this purpose, whether concerning the
individual issuers of securities included in our Portfolio, the
activities in which they engage, the conditions prevailing in the
markets for mortgage-related securities, or the economy
generally. You will also furnish us with such statistical and
analytical information with respect to securities in each of our
Portfolios as you may believe appropriate or as we reasonably may
request. In making such purchases and sales of securities in
each of our Portfolios, you will bear in mind the policies set
from time to time by our Board of Directors as well as the
limitations imposed by our Articles of Incorporation and in our
Registration Statement under the Securities Act of 1933 and the
Act, the limitations in the Act and of the Internal Revenue Code
in respect of regulated investment companies and the investment
objective, policies and restrictions for each of our Portfolios.
(d) It is understood that you will from time to time
employ or associate with yourselves with 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 and at our request you will provide to our corporation
persons satisfactory to our Board of Directors to serve as our
officers. You and your affiliates (other than us) will also
provide persons, who may be our officers, to render such
clerical, accounting and other services to us as we may from time
to time request of you. Such personnel may be employees of you
or your affiliates. We will pay to you or your affiliates the
cost of such personnel for rendering such services to us at such
rates as shall from time to time be agreed upon between us,
provided that all time devoted to the investment or reinvestment
of our portfolio securities shall be for your account. Nothing
contained herein shall be construed to restrict our right to hire
our own employees or to contract for services to be performed by
third parties. Furthermore, you or your affiliates (other than
us) shall furnish us without charge with such management
supervision and assistance and such office facilities as you may
believe appropriate or as we may reasonably request subject to
2
the requirements of any regulatory authority to which you may be
subject. You or your affiliates (other than us) shall also be
responsible for the payment of any expenses incurred in promoting
the sale of our shares (other than the portion of the promotional
expenses to be borne by us in pursuant to an effective plan
pursuant to Rule 12b-1 under the Act, the costs of printing our
prospectuses and other reports to stockholders and fees related
to registration with the Securities and Exchange Commission and
with state regulatory authorities).
3. It is further agreed that you shall be responsible
for the portion of the net expenses of each of our Portfolios
(except taxes, brokerage, interest, distribution service fees
paid in accordance with an effective plan pursuant to Rule 12b-1
under the Act and extraordinary expenses) incurred by us during
each of our fiscal years or portion thereof that this agreement
is in effect between us which in any such year exceeds one
percent (1%) of such Portfolio's average daily net assets during
such year. We hereby confirm that, subject to the foregoing, we
shall be responsible and hereby assume the obligation for payment
of all our other expenses, including: (a) payment of the fee
payable to you under paragraph 5 hereof; (b) custody, transfer,
and dividend disbursing expenses; (c) fees of directors who are
not your affiliated persons; (d) legal and auditing expenses; (e)
clerical, accounting and other office costs; (f) costs of
personnel providing services to us, as provided in subparagraph
2(d) above; (g) costs of printing our prospectuses and
stockholder reports; (h) costs of maintenance of corporate
existence; (i) interest charges, taxes, brokerage fees and
commissions; (j) costs of stationery and supplies; (k) expenses
and fees related to registration and filing with the Securities
and Exchange Commission and with state regulatory authorities;
and (l) such promotional expenses as may be contemplated by an
effective plan pursuant to Rule 12b-1 under the Act; provided,
that our payment of such promotional expenses shall be in the
amounts, and in accordance with the procedures, set forth in such
plan.
4. We shall expect of you, and you will give us the
benefit of, your best judgment and efforts in rendering these
services to us, and we agree as an inducement to your undertaking
these services that you shall not be liable hereunder for any
mistake of judgment or in any event whatsoever, except for lack
of good faith, provided that nothing herein shall be deemed to
protect, or purport to protect, you against any liability to us
or to our security holders to which you would otherwise be
subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of your duties hereunder, or by
reason of your reckless disregard of your obligations and duties
hereunder.
3
5. In consideration of the foregoing we will pay you a
quarterly fee, payable for the preceding quarter on the first
business day of January, April, July and October, based upon the
value of our net assets at the close of business on the last
business day immediately preceding such payment date as follows:
.1375 of 1% of the value of our net assets up to $500,000,000 and
.125 of 1% of the value of our net assets in excess of
$500,000,000; provided, however, that for the portion of any
quarter, if this agreement becomes effective after the beginning
of such quarter or terminates prior to the end of such quarter,
such compensation shall be prorated according to the proportion
which such portion of a quarter bears to a full quarter. Your
reimbursement, if any, of our expenses as provided in paragraph 3
above will be annualized on a quarterly basis. Payment of the
advisory fee will be reduced or postponed, if necessary, with any
adjustments made after the end of the year.
6. This agreement shall become effective on the date
hereof and shall remain in effect until December 31, 1992 and
thereafter for successive twelve-month periods (computed from
each January 1), with respect to each Portfolio provided that
such continuance is specifically approved at least annually by
our Board of Directors or by majority vote of the holders of the
outstanding voting securities (as defined in the Act) of such
Portfolio, and, in either case, by a majority of our directors
who are not parties to this agreement or interested persons, as
defined in the Act of any such party (other than as directors of
our corporation) provided further, however, that if the
continuation of this agreement is not approved as to a Portfolio,
you may continue to render to such Portfolio the services
described herein in the manner and to the extent permitted by the
Act and the rules and regulations, thereunder. Upon the
effectiveness of this agreement, it shall supersede all previous
agreements between us covering the subject matter hereof. This
agreement may be terminated with respect to any Portfolio at any
time, without the payment of any penalty, by vote of a majority
of the outstanding voting securities (as so defined) of such
Portfolio, or by a vote of a majority of our Board of Directors
on sixty days' written notice to you, or by you with respect to
any Portfolio on sixty days' written notice to us.
7. This agreement may not be transferred, assigned,
sold or in any manner hypothecated or pledged by you and this
agreement shall terminate automatically in the event of any such
transfer, assignment, sale, hypothecation or pledge by you. The
terms "transfer", "assignment" and "sale" as used in this
paragraph shall have the meanings ascribed thereto by governing
law and any interpretation thereof contained in rules or
regulations promulgated by the Securities and Exchange Commission
thereunder.
4
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 Directors of Alliance Capital Management Corporation,
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 services of any kind to any other corporation, firm,
individual or association.
(b) You will notify us of any change in the
general partners of your partnership within a reasonable time
after such change.
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 Mortgage Securities
Income Fund, Inc.
By/s/Xxxxx X. Xxxxxxx
____________________
Xxxxx X. Xxxxxxx
Chairman
Accepted: As of July 22, 1992
Alliance Capital Management L.P.
By Alliance Capital Management Corporation,
general partner
By/s/ Xxxx X. Xxxxxx
____________________________
Xxxx X. Xxxxxx
Executive Vice President
5
00250125.AN3