AMENDED INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS
AGREEMENT,
dated and effective as of the 1st day of November 2005, is made and entered
into
by and between CAPITAL INCOME BUILDER, INC., a Maryland corporation,
(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
A.
The Fund is an
open-end non-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.
B.
The Investment
Adviser has provided investment advisory services to the Fund since its
inception, and is currently providing such services under an amended Investment
Advisory and Services Agreement dated November 1, 2004.
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 and offering price 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, registrar,
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 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 rates of:
|
(a)
|
0.240%
of the
first $1 billion of the Fund's net assets,
|
|
plus
0.200%
of net assets from $1 billion to $2 billion,
|
|
|
plus
0.180%
of net assets from $2 billion to $3 billion,
|
|
|
plus
0.165%
of net assets from $3 billion to $5 billion,
|
|
|
plus
0.155%
of net assets from $5 billion to $8 billion,
|
|
|
plus
0.150%
of net assets from $8 billion to $13 billion,
|
|
|
plus
0.145%
of net assets from $13 billion to $17 billion,
|
|
|
plus
0.140%
of net assets from $17 billion to $21 billion,
|
|
|
plus
0.135%
of net assets from $21 billion to $27 billion,
|
|
|
plus
0.130%
of net assets from $27 billion to $34 billion,
|
|
|
plus
0.125%
of net assets from $34 billion to $44 billion,
|
|
|
plus
0.120%
of net assets from $44 billion to $55 billion,
|
|
|
plus
0.117%
of net assets in excess of $55 billion, plus
|
|
|
(b)
|
3%
of the
Fund's first $100 million monthly gross income and 2.5% of the
monthly
gross income above $100 million.
|
The
net asset
portion shall be accrued daily based on the actual number of days per year.
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 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 the sale of securities.
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, distribution expenses pursuant to a plan
under
Rule 12b-1 and extraordinary expenses such as litigation and acquisitions)
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
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 Board of
Directors of the Fund or by vote of a majority (within the meaning of the
Investment Company Act of l940) 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,
2006. 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. Such mutual consent to
renewal shall not be deemed to have been given unless evidenced by writing
signed by both parties.
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.
IN
WITNESS WHEREOF,
the parties hereto have caused this instrument to be executed in duplicate
original by their duly authorized officers.
CAPITAL
INCOME
BUILDER, INC.
By
/s/ Xxxxx X.
Xxxxxxxx
Xxxxx
X. Xxxxxxxx,
Vice Chairman
By
/s/ Xxxxxxx X.
Xxxxx
Xxxxxxx
X. Xxxxx,
Secretary
CAPITAL
RESEARCH
AND MANAGEMENT COMPANY
By
/s/ Xxxxx X.
Xxxxxxxxxx
Xxxxx
X.
Xxxxxxxxxx, President
By
/s/ Xxxxxxx X.
Xxxxxx
Xxxxxxx
X. Xxxxxx,
Vice President and
Secretary
