AMERICAN FUNDS SHORT-TERM TAX-EXEMPT BOND FUND INVESTMENT ADVISORY AND SERVICE AGREEMENT
INVESTMENT
ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT,
dated and effective as of the [DATE] 2009 is made and entered into by
and between AMERICAN FUNDS SHORT-TERM TAX-EXEMPT BOND FUND, a Delaware statutory
trust (the “Fund”), and CAPITAL RESEARCH AND MANAGEMENT COMPANY, a Delaware
corporation (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 calculated at the annual rate of:
0.39% on the first $200 million of
average daily net assets; plus
0.37% on such assets in excess of $200
million to $600 million; plus
0.33% on such assets in excess of $600
million to $1.2 billion; plus
0.29% on such assets in excess of $1.2
billion.
For the purposes hereof, the net assets of the
Fund shall be determined in the manner set forth in the agreement and
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. 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 [DATE], 2009. 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.
7. 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.
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, nor to
prohibit affiliates of the Investment Adviser from engaging in such business or
in other related or unrelated businesses.
9. The
Investment Adviser shall not be liable to the Fund or its holders of beneficial
interest 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.
10. 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.
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 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
Agreement and 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.
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AMERICAN
FUNDS SHORT-TERM
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CAPITAL
RESEARCH AND
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TAX-EXEMPT
BOND FUND
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MANAGEMENT
COMPANY
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By
_______________________________
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By
________________________________
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President
and
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President
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Principal
Executive Officer
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By
_________________________________
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By
_______________________________
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Senior Vice
President and Secretary
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Secretary
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