INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, dated and effective as of the 1st day of
December, 1988, is made and entered into by and between THE AMERICAN FUNDS
TAX-EXEMPT SERIES I, a Massachusetts business trust, (hereinafter called the
"Trust"), and CAPITAL RESEARCH AND MANAGEMENT COMPANY, a Delaware corporation
(hereinafter called the "Adviser"). The parties agree as follows:
1.
The Trust is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets, and intends initially to offer shares of two series designated
The Tax-Exempt Fund of Maryland and The Tax- Exempt Fund of Virginia (the
"Fund(s)").
2.
The Trust hereby employs the Adviser to furnish advice to the Trust with
respect to the investment and reinvestment of the assets of the Fund(s). The
Adviser hereby accepts such employment and agrees to render the services and to
assume the obligations to the extent herein set forth, for the compensation
herein provided. The Adviser shall, for all purposes herein, be deemed an
independent contractor and not an agent of the Trust or the Fund(s).
3.
The Adviser agrees to provide supervision of the portfolio of the
Fund(s) and to determine what securities or other property shall be purchased
or sold by the Fund(s), giving due consideration to the policies of the Fund(s)
as expressed in the Trust's Declaration of Trust, Registration Statement under
the Investment Company Act of 1940, as amended (the "1940 Act"), Registration
Statement under the Securities Act of 1933, as amended (the "1933 Act"), and
prospectus as in use from time to time, as well as to the factors affecting the
Trust's status as a regulated investment company under the Internal Revenue
Code of 1954, as amended.
The Adviser shall provide adequate facilities and qualified personnel
for the placement of orders for the purchase, or other acquisition, and sale,
or other disposition, of portfolio securities for the Fund(s). With respect to
such transactions, the Adviser may place orders with broker-dealer firms which
have sold shares of the Fund(s) or of other mutual funds or insurance contracts
for which American Funds Distributors, Inc. serves as underwriter or which
furnish statistical and other information to the Adviser. Neither receipt by
the Adviser of any such statistical and other information or services, nor any
consideration given to sales of shares of the Fund(s) or such other mutual
funds or insurance contracts in selecting broker-dealer firms, shall be deemed
to give rise to any requirement for abatement of the advisory fee payable
pursuant to section 6 hereof.
4.
Except to the extent expressly assumed by the Adviser herein, and
subject to section 6 hereof, the Trust shall pay all costs and expenses in
connection with its operations. Without limiting the generality of the
foregoing, such costs and expenses shall include the following: registration
and filing fees with federal and state agencies, blue sky expenses, expenses of
shareholders' meetings, the expense of reports to existing shareholders,
expenses of printing proxies and prospectuses, insurance premiums, legal and
auditing fees; dividend disbursement expenses; the expense of issuance,
transfer and redemption of its shares; custodian fees; printing and preparation
of registration statements; taxes; the Fund's distribution expenses pursuant to
the Plan of Distribution; compensation of Trustees who are not interested
persons of the Trust; association dues; and costs of stationery, forms and
certificates prepared exclusively for the Trust. The Adviser and Washington
Management Corporation, which manages the business affairs of the Trust (the
Business Manager") will pay the foregoing expenses in proportion to the fees
both receive from the Trust (with the exclusion of interest, taxes, brokerage
costs and extraordinary expenses such as litigation and acquisitions) for a
period ending not later than August 1, 1996, all subject to reimbursement by
the Trust. To accomplish such reimbursement, the Adviser and the Business
Manager receive expense reimbursement fees which together on an annual basis,
are equivalent to the difference between the fees of the Adviser and the
Business Manager and 1% of the average daily net assets of each Fund. The
expense reimbursement fees are for reimbursement of actual expenses incurred by
or on behalf of each Fund and have the effect of assuring that the total normal
operating expenses of each Fund during the expense reimbursement period will
not exceed 1%. Such expense reimbursement fee agreement will terminate either
(1) when all such reimbursable expenses of the Trust which have been paid by
the Adviser and the Business Manager pursuant thereto have been reimbursed by
the Trust or (2) on August 1, 1996, whichever is earlier.
5.
The Adviser and the Business Manager will pay the expenses, in proportion to
the fees both receive from the Trust, incurred in connection with the
organization of the Trust, and its registration as an investment company under
the 1940 Act, and all fees and expenses including fees of legal counsel to the
Trust which would otherwise be required to be paid by the Trust pursuant to
section 4 and which are incurred by the Trust prior to the initial effective
date of its Registration Statements under the 1933 Act and 1940 Act except for
the costs of any share certificates and transfer agent fees and costs. The
provisions contained in Section 4 and 5 with respect to the Business Manager
are contained in the Business Management Agreement between the Trust and the
Business Manager.
6.
The Trust shall pay to the Adviser on or before the tenth (10th) day of
each month, as compensation for the services rendered by the Adviser during the
preceding month, the sum of the following amounts:
(a) 0.165% per annum of each Fund's average daily net assets
during the month ("Net Asset Portion"), plus
(b) 1.65% of each 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 rate set forth above. The net assets of the Fund(s) shall be
determined in the manner and on the dates set forth in the prospectus of the
Trust, 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 of discount as
defined for Federal income tax purposes but shall not include net gains from
the sale of securities.
Upon any termination of this Agreement on a day other than the last day
of the month, the fee for the period from the beginning of the month in which
termination occurs to the date of termination shall be prorated according to
the proportion which such period bears to the full month.
7.
Nothing contained in this Agreement shall be construed to prohibit the
Adviser from performing investment advisory, management, or distribution
services for other investment companies and other persons or companies nor to
prohibit affiliates of the Adviser from engaging in such businesses or in other
related or unrelated businesses.
8.
The Adviser shall have no liability to the Trust, or its shareholders or
creditors, for any error of judgment, mistake of law, or for any loss arising
out of any investment, or for any other act or omission in the performance of
its obligations to the Trust not involving willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations and duties hereunder.
9.
The Trust has heretofore, or will promptly, and from time to time will furnish
to the Adviser the following: (a) Declaration of Trust; (b) By-Laws; (c)
Minutes of all shareholder meetings; (d) Minutes of all Board of Trustees
meetings; (e) Registration Statements filed under the 1933 Act and 1940 Act;
(f) all periodic reports filed with the Securities and Exchange Commission; (g)
all amendments, subsidiary documents, interpretations, additions or deletions
relating to any of the documents described in this paragraph.
Until notification and delivery of any of the foregoing by the Trust to the
Adviser, the Adviser may rely upon the documents theretofore furnished to it.
10.
This Agreement shall continue in effect until the close of business on
July 31, 1989. It may thereafter be renewed from year to year with respect to
each Fund by mutual consent, provided that such renewal shall be specifically
approved at least annually (i) by the Trustees of the Trust, or by the vote of
a majority of the outstanding voting securities (as defined in the 0000 Xxx) of
each Fund with respect to which renewal is to be effected, and (ii) by a
majority of the non-interested Trustees by vote cast in person at a meeting
called for the purpose of voting on such renewal. Any approval of this
Agreement or the renewal thereof with respect to a Fund by the vote of a
majority of the outstanding voting securities of that Fund, by the Trustees of
the Trust or by a majority of the non- interested Trustees, shall be effective
to continue this Agreement with respect to that Fund notwithstanding (A) that
this Agreement or the renewal thereof has not been so approved as to any other
Fund or (B) that this Agreement or the renewal thereof has not been approved by
the vote of a majority of the outstanding voting securities of the Trust as a
whole.
11.
The obligations of the Trust under this Agreement are not binding upon
any of the Trustees, officers, agents or shareholders of the Trust
individually, but bind only the Trust estate. The Adviser agrees to look
solely to the assets of the Trust or each Fund for the satisfaction of any
liability in respect of the Trust or such 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.
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
Adviser and its affiliates, and that the Trust and/or the Fund(s) have the
right to use such name (or derivative or logo) only so long as this Agreement
shall continue with respect to the Trust and/or each such Fund. Upon
termination of this Agreement with respect to the Trust or any Fund, the Trust
and each such Fund shall forthwith cease to use such name (or derivative or
logo) and, in the case of the Trust, shall promptly amend its Declaration of
Trust to change its name.
13.
This Agreement may be terminated at any time as to a Fund (or the
Trust), without payment of any penalty, by the Trustees or by the vote of a
majority of the outstanding voting securities (as defined in the 0000 Xxx) of
such Fund (or the Trust), on 60 days' written notice to the Adviser, or by the
Adviser on like notice to the Trust. This Agreement shall automatically
terminate in the event of its assignment (as defined in the 1940 Act).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate originals by their officers thereunto duly authorized as
of the day and year first above written
THE AMERICAN FUNDS TAX-EXEMPT SERIES I
By Xxxxxxx Xxxxxxxx
Chairman of the Board
By Xxxxxx X. Xxxxxxxxxx
Vice President, Secretary and Treasurer
CAPITAL RESEARCH AND MANAGEMENT COMPANY
By Xxxxx X. Xxxxxxxx
Vice Chairman of the Board
By Xxxxxxx X. X'Xxxxx
Assistant Vice President
RENEWAL OF INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, made this 18th day of July, 1996, between The American Funds
Tax-Exempt Series I, a Massachusetts business trust (the "Trust"), and Capital
Research and Management Company, a Delaware corporation (the "Investment
Adviser").
W I T N E S S E T H:
WHEREAS, there is now in effect an Investment Advisory Agreement dated
December 1, 1988, between the Trust and the Investment Adviser, providing for
research and portfolio management services to be furnished to the Trust by the
Investment Adviser on certain terms and conditions and subject to certain
provisions set forth therein; and
WHEREAS, said Agreement was last approved by the vote of the holders of a
majority of the outstanding shares of beneficial interest of the Trust at a
Special Meeting of Shareholders held November 22, 1988, and said Agreement
provides for year to year renewals by mutual consent, upon certain specified
conditions, and the last renewal of said Agreement was approved by the Board of
Trustees of the Trust on July 18, 1996; and
WHEREAS, the Trust and the Business Manager wish to renew said Agreement for a
one-year period and such renewal has been approved as required by the terms of
the Agreement;
NOW, THEREFORE, the parties agree as follows:
1. The Investment Advisory Agreement dated December 1, 1988 is hereby renewed
for the one-year period beginning August 1, 1996 and ending at the close of
business on July 31, 1997.
2. The first sentence of Paragraph 6 of the Investment Advisory Agreement, as
amended July 21, 1994, shall read as follows:
"(a) 0.165% per annum of the first $60 million of the Fund's average daily
net assets during the month and 0.12% per annum of the Fund's average daily net
assets during the month in excess of $60 million ("Net Asset Portion"), plus
(b) 1.65% of the Fund's gross investment income for the preceding
month ("Investment Income Portion")."
3. In all other respects said Investment Advisory Agreement, as now in effect,
is reaffirmed and shall continue in effect for the period provided by such
Agreement as renewed by this Agreement.
4. This Agreement shall be executed in several counterparts, each of which
shall be original.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their corporate names by their duly authorized officers as of the
day and year first above written.
THE AMERICAN FUNDS TAX-EXEMPT SERIES I CAPITAL RESEARCH AND MANAGEMENT
COMPANY
By Xxxxx X. Xxxxx, Xx. By Xxxxx X. Xxxxxxxxxxx
Chairman of the Board President
By Xxxxxx X. Xxxxxxxxxx By Xxxxx Xxxxxxxxxx
Senior Vice President and Secretary Senior Vice President
