AMENDED INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated and effective as of the 3rd day of December, 1999 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 a
written agreement dated March 1, 1995, as renewed.
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) 0.24% of the first $1 billion of the Fund's net assets, plus 0.20% of the
Fund's net assets from $1 billion to $2 billion, plus 0.18% of the Fund's net
assets from $2 billion to $3 billion, plus 0.165% of the Fund's net assets from
$3 billion to $5 billion, plus 0.155% of the Fund's net assets from $5 billion
to $8 billion, plus 0.15% of the Fund's net assets in excess of $8 billion,
plus
(b) 3% of the Fund's annual gross investment income
Such fee shall be computed and accrued daily at one three-hundreth-sixty-fifth
(1/365th) of the applicable rates set forth above.
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 Fund's gross investment income shall be calculated
in accordance with generally accepted accounting principals and the Fund shall
not be required to amortize the premiums on bonds. 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, 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 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
Xxxx X. Xxxxx, Xx., Chairman
By
Xxxxxxx X. Xxxxx, Secretary
CAPITAL RESEARCH AND MANAGEMENT COMPANY
By
Xxxxx X. Xxxxxxxxxx, President
By
Xxxxxxx X. Xxxxxx
