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 THE BOND 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:
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, custodian,
stock transfer and dividend disbursing fees and
expenses; distribution expenses pursuant to a plan
under rule 12b-1 of the 1940 Act; costs of the
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 directors;
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, the sum
of the following amounts:
(a) 0.30% per annum of the first $60 million of the Fund's
average daily net assets during the month, plus 0.21%
per annum of such assets in excess of $60 million but
not exceeding $1 billion, plus
0.18% per annum of such assets in excess of $1 billion
but not exceeding $3 billion, plus 0.16% per annum of
such assets in excess of $3 billion but not exceeding
$6 billion, plus 0.15% per annum of such assets in
excess of $6 billion but not exceeding $10 billion,
plus 0.14% per annum of such assets in excess of $10
billion but not exceeding $16 billion, plus 0.13% of
such assets in excess of $16 billion ("Net Asset
Portion"), plus
(b) 2.25% of the first $8,333,333 of the Fund's monthly
gross investment income for such period, plus 2% of
such income in excess of $8,333,333 but not exceeding
$41,666,667 of the Fund's monthly gross investment
income for such period, plus 1.75% of such monthly
gross income in excess of $41,666,667 ("Investment
Income Portion").
The Net Asset Portion shall be accrued daily at 1/365th of the
applicable annual rate set forth above. 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.
The Investment Income Portion shall be accrued daily and
"gross investment income" for this purpose shall be determined in accordance
with Generally Accepted Accounting Principles and shall not include net gains
from the sale of securities.
For the purposes hereof, the net assets of the Fund shall be
determined in the manner set forth in the Articles of Incorporation 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 to reduce the fee payable to
it under this Agreement (a) by the amount by which ordinary operating expenses
of the Fund for any fiscal year of the Fund, excluding interest, taxes and
extraordinary expenses such as litigation, shall exceed the greater of (i) one
percent (1%) of the average month-end net assets of the Fund for such fiscal
year or (ii) ten percent (10%) of the Fund's gross investment income, and (b) by
any additional amount necessary to assure that such ordinary operating expenses
of the Fund in any year after such reduction, do not exceed the lesser of (i)
one and one-half percent (1-1/2%) of the first $30 million of average month-end
assets of the Fund, plus one percent (1%) of the average month-end net assets in
excess thereof or (ii) twenty-five percent (25%) of the Fund's gross investment
income. 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.
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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.
6. The expense limitation described in section 5 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 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 5 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.
7. This agreement may be terminated at any time, without
payment of any penalty, by the Directors 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 October 31,
2004. 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 Directors 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 Directors 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.
8. 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.
9. 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.
10. 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.
11. It is understood that the name "American Funds" or any
derivative thereof or logo associated with that name is the valuable property of
the Investment 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
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Agreement shall continue in effect. Upon termination of this Agreement the Fund
shall forthwith cease to use such name (or derivative or logo).
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed in duplicate original by their duly authorized
officers.
THE BOND FUND OF AMERICA, INC. CAPITAL RESEARCH AND
MANAGEMENT COMPANY
By /s/ Xxxx X. Xxxxx, Xx. By /s/ Xxxxx X. Xxxxxxxxxx
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Xxxx X. Xxxxx, Xx., Chairman Xxxxx X. Xxxxxxxxxx, President
By /s/ Xxxxx X. Xxxxxxxx By /s/ Xxxxxxx X. Xxxxxx
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Xxxxx X. Xxxxxxxx, Secretary Xxxxxxx X. Xxxxxx, Vice President
and Secretary
