AMENDED INVESTMENT ADVISORY AND SERVICE AGREEMENT
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 THE BOND FUND OF AMERICA, INC., a Maryland corporation,
(hereinafter called the “Fund”), and CAPITAL RESEARCH AND MANAGEMENT COMPANY, a
Delaware corporation, (hereinafter called the “Investment
Adviser”). The parties agree as follows:
WITNESSETH
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, custodian, 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:
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(a)
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0.30%
per
annum of the first $60 million of the Fund's average daily net assets
during the month, plus
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0.21%
per annum on
the portion of such net assets between $60 million and $1 billion,
plus
0.18%
per annum on
the portion of such net assets between $1 billion and $3 billion,
plus
0.16%
per annum on
the portion of such net assets between $3 billion and $6 billion,
plus
0.15%
per annum on
the portion of such net assets between $6 billion and $10 billion,
plus
0.14%
per annum on
the portion of such net assets between $10 billion and $16 billion,
plus
0.13%
on the
portion of such net assets between $16 billion and $20 billion;
plus
0.12%
on the
portion of such net assets between $20 billion and $28 billion;
plus
0.115%
on the
portion of such net assets between $28 billion and $36 billion;
plus
0.11%
on the
portion of such net assets in excess of $36 billion ("Net Asset Portion"),
plus
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(b)
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2.25%
of the
Fund’s first $8,333,333 of monthly gross income,
plus
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2%
of such income
between $8,333,333 and $41,666,667, plus
1.75%
of such
income in excess of $41,666,667 ("Income Portion").
The
Net Asset
Portion shall be accrued daily based on the number of days per year. 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
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.
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 to reduce the fee payable to it under this Agreement
(a) by the amount by which ordinary operating expenses of the Fund for any
fiscal year of the Fund, excluding interest, taxes and extraordinary expenses
such as litigation, shall exceed the greater of (i) one percent (1%) of the
average month-end net assets of the Fund for such fiscal year or (ii) ten
percent (10%) of the Fund's gross investment income, and (b) by any additional
amount necessary to assure that such ordinary operating expenses of the Fund
in
any year after such reduction, do not exceed the lesser of (i) one and one-half
percent (1-1/2%) of the first $30 million of average month-end assets of the
Fund, plus one percent (1%) of the average month-end net assets in excess
thereof or (ii) twenty-five percent (25%) of the Fund's gross investment
income. Costs incurred in connection with the purchase or sale of
portfolio securities, including brokerage fees and commissions, which are
capitalized in accordance with generally accepted accounting principles
applicable to investment companies, shall be accounted for as capital items
and
not as expenses. Proper accruals shall be made by the Fund for any
projected reduction hereunder, and corresponding amounts shall be withheld
from
the fees paid by the Fund to the Investment Adviser. Any additional
reduction computed at the end of the fiscal year shall be deducted from the
fee
for the last month of such fiscal year, and any excess shall be paid to the
Fund
immediately after the fiscal year end, and in any event prior to publication
of
the Fund's Annual Report as a reduction of the fees previously paid during
the
fiscal year.
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
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 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.
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. It
is understood that the name “American Funds” or any derivative thereof or logo
associated with that name is the valuable property of the Investment 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).
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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THE
BOND FUND OF AMERICA, INC.
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CAPITAL
RESEARCH AND
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MANAGEMENT
COMPANY
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By
/s/
Xxxxx X. Xxxxxxxxx
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By
/s/
Xxxxxxx X. Xxxxxx
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Xxxxx
X. Xxxxxxxxx
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Xxxxxxx
X. Xxxxxx
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President
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President
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By
/s/
Xxxxxxxx X. Xxxxxxx
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By
/s/
Xxxxxxx X. Xxxxxx
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Xxxxxxxx
X. Xxxxxxx
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Xxxxxxx
X. Xxxxxx
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Secretary
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Vice
President and Secretary
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