AMENDED INVESTMENT ADVISORY AND SERVICE AGREEMENT
AMENDED
THIS AGREEMENT,
dated and effective as of the 1st day of January, 2008, 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.
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:
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(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,
0.127% per annum on the portion of such net assets from $55 billion to $71
billion, 0.125% per annum on the portion of such net assets from $71
billion to $89 billion, and 0.123% per annum thereafter ("Net Asset
Portion"); plus
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(b)2.25% of
the Fund's monthly gross income for the preceding month (“Income
Portion”).
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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 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,
2008. 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.
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CAPITAL
RESEARCH AND MANAGEMENT
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THE INCOME
FUND OF AMERICA, INC.
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COMPANY
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By:
/s/ Xxxxx X. Xxxxxxxx
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By:
/s/ Xxxxx X.
Xxxxxxxxxx
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Xxxxx X.
Xxxxxxxx, Vice Chairman
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Xxxxx X.
Xxxxxxxxxx, Chairman and
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and Principal
Executive Officer
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Principal
Executive Officer
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By:
/s/ Xxxxxxx X. Xxxx
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By:
/s/ Xxxxxxx X.
Xxxxxx
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Xxxxxxx X.
Xxxx, Secretary
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Xxxxxxx X.
Xxxxxx,
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Vice
President and Secretary
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