AMENDED
INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated and effective as of the 1st day of January, 2005, by
and between THE INCOME FUND OF AMERICA, INC., a Maryland corporation
(hereinafter called the "Fund"), and CAPITAL RESEARCH AND MANAGEMENT COMPANY, a
Delaware corporation (hereinafter called the "Investment Adviser"). The parties
agree as follows:
1. The Fund hereby employs the Investment Adviser to determine what
securities shall be purchased or sold by the Fund with respect to the investment
and reinvestment of the assets of the Fund. The Investment Adviser hereby
accepts such employment and agrees to render the services and to assume the
obligation to the extent herein set forth, for the compensation herein provided.
The Investment Adviser shall, for all purposes herein, be deemed an independent
contractor and not an agent of the Fund.
2. The Investment Adviser agrees to provide supervision of the portfolio of
the Fund and to determine what securities or other property shall be purchased
or sold by the Fund, giving due consideration to the policies of the Fund as
expressed in the Fund's Articles of Incorporation, By-Laws, Registration
Statement under the Investment Company Act of 1940 (the "1940 Act"),
Registration Statement under the Securities Act of 1933 (the "1933 Act"), and
prospectus as in use from time to time, as well as to the factors affecting the
Fund's status as a regulated investment company under the Internal Revenue Code.
The Investment Adviser shall provide adequate facilities and qualified
personnel for the placement of orders for the purchase, or other acquisition,
and sale, or other disposition, of portfolio securities for the Fund. With
respect to such transactions, the Investment Adviser, subject to such directions
as may be furnished from time to time by the Board of Directors of the Fund,
shall endeavor as the primary objective to obtain the most favorable prices and
executions of orders. Subject to such primary objective, the Investment Adviser
may place orders with brokerage firms which have sold shares of the Fund or
which furnish statistical and other information to the Investment Adviser,
taking into account the value and quality of the brokerage services of such
broker-dealers, including the availability and quality of such statistical and
other information. Receipt by the Investment Adviser of any such statistical and
other information and services shall not be deemed to give rise to any
requirement for abatement of the advisory fee payable pursuant to Section 5
hereof.
3. The Investment Adviser shall furnish the services of persons to perform
the executive, administrative, clerical, and bookkeeping functions of the Fund,
including the daily determination of net asset value and offering price per
share. The Investment Adviser shall pay the compensation and travel expenses of
all such persons, and they shall serve without additional compensation from the
Fund. The Investment Adviser shall also, at its expense, provide the Fund with
suitable office space (which may be in the offices of the Investment Adviser);
all necessary small office equipment and utilities; and general purpose
accounting forms, supplies, and postage used at the offices of the Fund.
4. The Fund shall pay all its expenses not assumed by the Investment
Adviser as provided herein. Such expenses shall include, but shall not be
limited to, custodian, stock transfer and dividend disbursing fees and expenses;
costs of the designing, printing and mailing of reports, prospectuses, proxy
statements, and notices to its shareholders; taxes; expenses of the issuance and
redemption of shares of the Fund (including stock certificates, registration and
qualification fees and expenses); legal and auditing expenses; compensation,
fees, and expenses paid to directors; association dues; costs of stationery and
forms prepared exclusively for the Fund; and costs of assembling and storing
shareholder account data.
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5. The Fund shall pay to the Investment Adviser on or before the tenth
(10th) day of each month, as compensation for the services rendered by the
Investment Adviser during the preceding month, the sum of the following amounts:
(a) 0.25% per annum on the first $500 million of the Fund's net assets;
0.23% per annum on the portion of such net assets from $500 million to
$1 billion, 0.21% per annum on the portion of such net assets from $1
billion to $1.5 billion, 0.19% per annum on the portion of such net
assets from $1.5 billion to $2.5 billion, 0.17% per annum on the
portion of such net assets from $2.5 billion to $4 billion, 0.16% per
annum on the portion of such net assets from $4 billion to $6.5
billion, 0.15% per annum on the portion of such net assets from $6.5
billion to $10.5 billion, 0.144% per annum on the portion of such net
assets from $10.5 billion to $13 billion, 0.141% per annum on the
portion of such net assets from $13 billion to $17 billion, 0.138% per
annum on the portion of such net assets from $17 billion to $21
billion, 0.135% per annum on the portion of such net assets from $21
billion to $27 billion, 0.133% per annum on the portion of such net
assets from $27 billion to $34 billion, 0.131% per annum on the
portion of such net assets from $34 billion to $44 billion, 0.129% per
annum on the portion of such net assets from $44 billion to $55
billion, and 0.127% per annum thereafter ("Net Asset Portion"); plus
(b) 2.25% of the Fund's monthly gross income for the preceding month
("Income Portion").
The Net Asset Portion shall be accrued daily based on the number of days
per year. The net assets of the Fund shall be determined in the manner and on
the dates set forth in the prospectus of the Fund, and on days on which the net
assets are not determined, shall be as of the last preceding day on which the
net assets shall have been determined. In the event of termination other than at
the end of a calendar month, the monthly fee shall be prorated for the portion
of the month prior to termination and paid on or before the tenth (10th) day
subsequent to termination.
The Income Portion shall be accrued daily and "gross income" for this
purpose shall be determined in the same manner as gross income is determined for
and reported in financial statements and shall not include gains or losses from
sales of securities.
6. The Investment Adviser agrees to reduce the fee payable to it under this
Agreement by the amount by which the ordinary operating expenses of the Fund for
any fiscal year of the Fund, excluding interest, taxes and extraordinary
expenses, shall exceed one and one-half percent (1-1/2%) of the first $30
million of average net assets of the Fund determined pursuant to Section 5, plus
one percent (1%) of such average net assets in excess thereof. Costs incurred in
connection with the purchase or sale of portfolio securities, including
brokerage fees and commissions, which are capitalized in accordance with
generally accepted accounting principles applicable to investment companies,
shall be accounted for as capital items and not as expenses. Proper accruals
shall be made by the Fund for any projected reduction hereunder and
corresponding amounts shall be withheld from the fees paid by the Fund to the
Investment Adviser. Any additional reduction computed at the end of the fiscal
year shall be deducted from the fee for the last month of such fiscal year, and
any excess shall be paid to the Fund immediately after the fiscal year end, and
in any event prior to publication of the Fund's annual report, as a reduction of
the fees previously paid during the fiscal year.
7. The expense limitation described in Section 6 shall apply only to Class
A shares issued by the Fund and shall not apply to any other class(es) of shares
the Fund may issue in the future. Any new
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class(es) of shares issued by the Fund will not be subject to an expense
limitation. However, notwithstanding the foregoing, to the extent the Investment
Adviser is required to reduce its management fee pursuant to provisions
contained in Section 6 due to the expenses of the Class A shares exceeding the
stated limit, the Investment Adviser will either (i) reduce its management fee
similarly for other classes of shares, or (ii) reimburse the Fund for other
expenses to the extent necessary to result in an expense reduction only for
Class A shares of the Fund.
8. Nothing contained in this Agreement shall be construed to prohibit the
Investment Adviser from performing investment advisory, management, or
distribution services for other investment companies and other persons or
companies, or to prohibit affiliates of the Investment Adviser from engaging in
such businesses or in other related or unrelated businesses.
9. The Investment Adviser shall have no liability to the Fund, or its
shareholders, for any error of judgment, mistake of law, or for any loss arising
out of any investment, or for any other act or omission in the performance of
its obligations to the Fund not involving willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties hereunder.
10. This Agreement shall continue in effect until the close of business on
December 31, 2005. It may thereafter be renewed from year to year by mutual
consent, provided that such renewal shall be specifically approved at least
annually by either (i) the Board of Directors of the Fund, or by the vote of a
majority (as defined in the 0000 Xxx) of the outstanding voting securities of
the Fund, and (ii) a majority of those directors who are not parties to this
Agreement or interested persons (as defined in the 0000 Xxx) of any such party
cast in person at a meeting called for the purpose of voting on such approval.
Such mutual consent to renewal shall not be deemed to have been given unless
evidenced by a writing signed by both parties hereto.
11. This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Directors of the Fund or by the vote of a majority (as
defined in the 0000 Xxx) of the outstanding voting securities of the Fund, on
sixty (60) days' written notice to the Investment Adviser, or by the Investment
Adviser on like notice to the Fund. This Agreement shall automatically terminate
in the event of its assignment (as defined in the 1940 Act).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate originals by their officers thereunto duly authorized as
of the day and year first above written.
CAPITAL RESEARCH AND MANAGEMENT
THE INCOME FUND OF AMERICA, INC. COMPANY
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxxxx, President Xxxxx X. Xxxxxxxxxx, President
By: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxx, Secretary Xxxxxxx X. Xxxxxx,
Vice President and Secretary
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