AMENDED INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated and effective as of the 1st day of November 2004, 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 an
amended Investment Advisory and Services Agreement dated September 22, 2003, 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 0.150% of the Fund's net assets from $8 billion to $13 billion,
plus 0.145% of the Fund's net assets from $13 billion to $17 billion,
plus 0.140% of the Fund's net assets from $17 billion to $21 billion,
plus 0.135% of the Fund's net assets from $21 billion to $27 billion,
plus 0.130% of the Fund's net assets from $27 billion to $34 billion,
plus 0.125% of the Fund's net assets from $34 billion to $44 billion,
plus 0.120% of the Fund's net assets in excess of $44 billion, plus
(b) 3% of the Fund's first $100 million monthly gross income and 2.5% of
the monthly gross income above $100 million.
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 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, 2005. 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 /s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx, Chairman
By /s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx, Secretary
CAPITAL RESEARCH AND MANAGEMENT COMPANY
By /s/ Xxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxxxxxx, President
By /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx, Vice President and Secretary
