INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated and effective as of the 26th day of September, 1994
is made and entered into by and between AMERICAN HIGH-INCOME MUNICIPAL BOND
FUND, 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
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.
EXHIBIT 5
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 at the annual rate of:
(a) 0.30% per annum on the first $60 million of the Fund's net
assets; plus 0.21% per annum on the portion of such net assets in excess of $60
million ("Net Asset Portion"), plus
(b) 3% of the Fund's gross investment income for the preceding
month ("Investment Income Portion").
The Net Asset Portion shall be accrued daily at 1/365th of the applicable
annual rates set forth above. The net asset value of the Fund shall be
determined in the manner set forth in the Articles of Incorporation and
prospectus of the Fund as of the close of the New York Stock Exchange on each
day of which said Exchange is open, and in the case of Saturdays, Sundays, and
other days on which said Exchange shall not be open, as at the close of the
last preceding day on which said Exchange shall have been open.
The Investment Income Portion shall be accrued daily. For the purposes
hereof, the Fund's gross investment income shall not reflect any net realized
gains or losses on the sale of portfolio securities but shall include
original-issue discount as defined for Federal income tax purposes.
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 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. 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 October 1, 2004, 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 0.60% of the fund's average daily
net assets until December 30, 1994 and 0.90% of the fund's average net assets
per annum for a period thereafter. 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
0.60% of the fund's average daily net assets until December 30, 1994 and 0.90%
of the fund's average net assets per annum for a period thereafter. Such
expense reimbursement fee arrangement will 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 October 1, 2004, whichever is earlier.
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 September 25, 1996.
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. The obligations of the Fund under this Agreement are not binding
upon any of the Directors, 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 Directors, officers, employees, agents or shareholders,
or any of them, or any of their personal assets for such satisfaction.
12. It is understood that the name "American Funds" or any derivative
thereof or logo associated with that name is the valuable property of the
Invstment 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 Articles of Incorporation 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.
AMERICAN HIGH-INCOME MUNICIPAL CAPITAL RESEARCH AND
BOND FUND, INC. MANAGEMENT COMPANY
By /s/ Xxxx X. Xxxxx, Xx. By /s/ Xxxxx X. Xxxxxxxx
Xxxx X. Xxxxx, Xx. Xxxxx X. Xxxxxxxx
Chairman Vice Chairman of the Board
By /s/ Xxxxx X. Xxxxxxxx By /s/ Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx Xxxxxxx X. Xxxxxx
Secretary Secretary
