AMENDED INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS
AGREEMENT,
dated and effective as of the 1st day of November 2007, is made and entered
into
by and between CAPITAL INCOME BUILDER, INC., a Maryland corporation,
(hereinafter, the “Fund”), and CAPITAL RESEARCH AND MANAGEMENT COMPANY, a
Delaware corporation, (hereinafter, 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, 2006.
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 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:
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(a)
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0.240%
on the
first $1 billion of the Fund’s net assets,
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plus
0.200%
of net assets from $1 billion to $2 billion,
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plus
0.180%
of net assets from $2 billion to $3 billion,
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plus
0.165%
of net assets from $3 billion to $5 billion,
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plus
0.155%
of net assets from $5 billion to $8 billion,
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plus
0.150%
of net assets from $8 billion to $13 billion,
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plus
0.145%
of net assets from $13 billion to $17 billion,
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plus
0.140%
of net assets from $17 billion to $21 billion,
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plus
0.135%
of net assets from $21 billion to $27 billion,
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plus
0.130%
of net assets from $27 billion to $34 billion,
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plus
0.125%
of net assets from $34 billion to $44 billion,
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plus
0.120%
of net assets from $44 billion to $55 billion,
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plus
0.117%
of net assets from $55 billion to $71 billion,
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plus
0.114%
of net assets from $71 billion to $89 billion,
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plus
0.112%
of net assets from $89 billion to $115 billion,
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plus
0.110%
of net assets in excess of $115 billion, plus
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(b)
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3%
of the
Fund’s first $100 million monthly gross income and 2.5% of
the
monthly
gross
income above $100 million.
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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 Amended and Restated 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, 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 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 shareholders 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.
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CAPITAL
RESEARCH AND
MANAGEMENT
COMPANY
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CAPITAL
INCOME BUILDER, INC.
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By /s/
Xxxxxxxxx X. Xxxx
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By /s/
Xxxxxxx X. Xxxxxx
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Xxxxxxxxx
X. Xxxx, Principal
ExecutiveOfficer
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Xxxxxxx
X. Xxxxxx,
President
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By
/s/
Xxxxxxx X. Xxxxx
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By
/s/
Xxxxxxx X. Xxxxxx
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Xxxxxxx
X. Xxxxx,
Secretary
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Xxxxxxx
X. Xxxxxx, Vice Presidentand
Secretary
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