FORM OF
AMENDED INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated and effective as of the 1st day of November, 2003 is
made and entered into by and between LIMITED TERM TAX-EXEMPT BOND FUND OF
AMERICA, a Massachusetts business trust, (hereinafter called the "Fund"), and
CAPITAL RESEARCH AND MANAGEMENT COMPANY, a Delaware corporation, (hereinafter
called the "Investment Adviser").
W I T N E S S E T H
The Fund is an open-end diversified investment company of the management
type, registered under the Investment Company Act of 1940 (the "1940 Act"). The
Investment Adviser is registered under the Investment Advisers Act of 1940 and
is engaged in the business of providing investment advisory and related services
to the Fund and to other investment companies.
NOW, THEREFORE, in consideration of the premises and the mutual undertaking
of the parties, it is covenanted and agreed as follows:
1. The Investment Adviser shall determine what securities and other
assets shall be purchased or sold by the Fund.
2. 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 per
share. The Investment Adviser shall pay the compensation and travel
expenses of all such persons, and they shall serve without any additional
compensation from the Fund. The Investment Adviser shall also, at its
expense, provide the Fund with necessary office space (which may be in the
offices of the Investment Adviser); all necessary office equipment and
utilities; and general purpose forms, supplies, and postage used at the
offices of the Fund.
3. 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, expenses incurred in connection with the organization of the
Fund, its qualification to do business as a foreign corporation in the
State of California, and its registration as an investment company under
the 1940 Act; custodian, stock transfer and dividend disbursing fees and
expenses; distribution expenses pursuant to a plan under rule 12b-1 under
the 1940 Act; costs of designing and of printing and mailing to its
shareholders reports, prospectuses, proxy statements, and notices to its
shareholders; taxes; expenses of the issuance, sale, redemption, or
repurchase of shares of the Fund (including registration and qualification
expenses); legal and auditing fees and expenses; compensation, fees, and
expenses paid to trustees not affiliated with the Investment Adviser;
association dues; and costs of any share certificates, stationery and forms
prepared exclusively for the Fund.
4. 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, a fee at the annual rate of:
(a) 0.30% per annum on the first $60 million of the Fund's net
assets; plus 0.18% per annum on the portion of such net assets
between $60 million and $1 billion; pus 0.16% per annum of such
net assets in excess of $1 billion ("Net Asset Portion"), plus
(b) 3% of the Fund's gross investment income for such period
("Investment Income Portion").
The Net Asset Portion shall be accrued daily at 1/365th of the
applicable annual rates set forth above. The net asset value of the Fund
shall be determined in the manner set forth in the Articles of
Incorporation and prospectus of the Fund as of the close of the New York
Stock Exchange on each day of which said Exchange is open, and in the case
of Saturdays, Sundays, and other days on which said Exchange shall not be
open, as at the close of the last preceding day on which said Exchange
shall have been open.
The Investment Income Portion shall be accrued daily. For the purposes
hereof, the Fund's gross investment income shall be determined in
accordance with Generally Accepted Accounting Principles and shall not
include any net realized gains or losses on the sale of portfolio
securities.
For the purposes hereof, the net assets of the Fund shall be
determined in the manner set forth in the Declaration of Trust and
Prospectus of the Fund. The advisory fee shall be payable for the period
commencing on the date on which operations of the Fund begin and ending on
the date of termination hereof and shall be prorated for any fraction of a
month at the termination of such period.
5. The Investment Adviser agrees that in the event the expenses of the
Fund (with the exclusion of interest, taxes, brokerage costs, extraordinary
expenses such as litigation and acquisitions or other expenses excludable
under applicable state securities laws or regulations) for any fiscal year
ending on a date on which this Investment Advisory and Service Agreement is
in effect, exceed the expense limitations, if any, applicable to the Fund
pursuant to state securities laws or any regulations thereunder, it will
reduce its fee by the extent of such excess and, if required pursuant to
any such laws or regulations, will reimburse the Fund in the amount of such
excess.
6. The Investment Adviser agrees to pay the expenses of the Fund
referred to in paragraph 3 above (with the exclusion of interest, taxes,
brokerage costs and extraordinary expenses such as litigation and
acquisitions) attributable to the Class A shares of the Fund for a period
ending not later than October 1, 2003, all subject to reimbursement by the
Fund. To accomplish such reimbursement, the Fund shall pay the Investment
Adviser an expense reimbursement fee which on
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an annual basis is equivalent to the difference between the fees of the
Investment Adviser described in paragraph 4 above attributable to the Class
A shares of the Fund and .75% of the average net assets of the Fund
attributable to Class A shares of the Fund. The expense reimbursement fees
are for reimbursement of actual expenses incurred by or on behalf of the
Fund and are intended to have the effect of assuring that the total normal
operating expenses borne by the Class A shares of the Fund during the
expense reimbursement period will not exceed .75% of the Fund's average net
assets attributable to Class A shares per annum. Such expense reimbursement
fee arrangement will terminate either when all of such reimbursable
expenses of the Fund which have been paid by the Investment Adviser
pursuant thereto have been reimbursed by the Fund for a period of twelve
consecutive months or on October 1, 2003, whichever is earlier.
7. The expense limitations described in paragraph 5 and 6 above shall
apply only to Class A shares of the Fund and shall not apply to any other
class(es) of shares the Fund may issue in the future. Any new 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 fees pursuant to provisions contained in
paragraph 5 or 6 due to the expenses of the Class A shares of the Fund
exceeding the stated limits, the Investment Adviser will either (i) reduce
its fee similarly for other classes of shares of the Fund, 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. This Agreement may be terminated at any time, without payment of
any penalty, by the Trustees of the Fund or by vote of a majority (within
the meaning of 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. Unless sooner terminated
in accordance with this provision, this Agreement shall continue until May
31, 2000. It may thereafter be renewed from year to year by mutual consent;
provided that such renewal shall be specifically approved at least annually
by the Board of Trustees of the Fund, or by vote of a majority (within the
meaning of the 0000 Xxx) of the outstanding voting securities of the Fund.
In either event, it must be approved by a majority of those Trustees who
are not parties to such Agreement nor interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such
approval.
9. This agreement shall not be assignable by either party hereto, and
in the event of assignment (within the meaning of the 0000 Xxx) by the
Investment Adviser shall automatically be terminated forthwith. The term
"assignment" shall have the meaning defined in the 1940 Act.
10. 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, nor to prohibit affiliates of the Investment Adviser from
engaging in such business or in other related or unrelated businesses.
11. The Investment Adviser shall not be liable to the Fund or its
stockholders for any error of judgment, act, or omission not involving
willful misfeasance, bad faith, gross negligence, or reckless disregard of
its obligations and duties hereunder.
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12. The obligations of the Fund under this Agreement are not binding
upon any of the Trustees, officers, employees, agents or shareholders of
the Fund individually, but bind only the Fund's estate. The Investment
Adviser agrees to look solely to the assets of the Fund for the
satisfaction of any liability in respect of the Fund under this Agreement
and will not seek recourse against such Trustees, officers, employees,
agents or shareholders, or any of them, or any of their personal assets for
such satisfaction.
13. It is understood that the name "American Funds" or any derivative
thereof or logo associated with that name is the valuable property of the
Invstment Adviser and its affiliates, and that the Fund shall have the
right to use such name (or derivative or logo) only so long as this
Agreement shall continue in effect. Upon termination of this Agreement the
Fund shall forthwith cease to use such name (or derivative or logo) and
shall promptly amend its Declaration of Trust to change its name.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed in duplicate original by their duly authorized officers.
LIMITED TERM TAX-EXEMPT BOND CAPITAL RESEARCH AND
FUND OF AMERICA MANAGEMENT COMPANY
By /s/ Xxxx X. Xxxxx, Xx. By /s/ Xxxxx X. Xxxxxxxxxx
Xxxx X. Xxxxx, Xx., Chairman Xxxxx X. Xxxxxxxxxx, President
By /s/ Xxxxx X. Xxxxxxxx By /s/ Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxx, Vice
Secretary President and Secretary
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