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 INTERMEDIATE 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 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 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, 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 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 on the first $60 million of the Fund's average daily
net assets during the month; plus 0.21% per annum on net assets in
excess of $60 million but not exceeding $1 billion; plus 0.18% per
annum on net assets in excess of $1 billion but not exceeding $3
billion; plus 0.16% per annum on net assets in excess of $3 billion
but not exceeding $6 billion; plus 0.15% on net assets in excess of $6
billion ("Net Asset Portion"), plus
(b) 3% of the first $3,333,333 of the Fund's gross investment income for
such period, plus 2.5% of the Fund's gross investment income in excess
of $3,333,333 but not exceeding $8,333,333 for the preceding month,
plus 2% of the Fund's gross investment income in excess of $8,333,333
for the period ("Investment Income Portion").
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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 include accrual or discount as defined for
Federal income tax purposes but shall not include 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 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, 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 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) for a period
ending not later than December 14, 1997, all subject to reimbursement by the
Fund. To accomplish such reimbursement, the Fund shall pay the Investment
Adviser an expense reimbursement fee which on an annual basis is equivalent to
the difference between the fees of the Investment Adviser described in paragraph
4 above and 1.25% of the average daily net assets 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 of the Fund during the expense reimbursement
period will not exceed 1.25%. Such expense reimbursement fee arrangement will
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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 December 14, 1997,
whichever is earlier.
7. This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Trustees 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, 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.
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. 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 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.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in duplicate original by their duly authorized officers.
INTERMEDIATE BOND FUND OF CAPITAL RESEARCH AND
AMERICA 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
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