AMENDED INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated and effective as of the 1st of March, 2000, is made and
entered into by and between THE TAX-EXEMPT BOND FUND OF AMERICA, INC., a
Maryland corporation, (hereinafter called the "Fund"), and CAPITAL RESEARCH AND
MANAGEMENT COMPANY, a Delaware corporation, (hereinafter called the "Adviser").
The parties agree as follows:
1. The Fund hereby employs the Adviser to furnish advice to the Fund with
respect to the investment and reinvestment of the assets of the Fund. The
Adviser hereby accepts such employment and agrees to render the services and to
assume the obligation 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 Fund.
2. The Adviser agrees to provide from its own resources and those of its
subsidiary companies supervision of the portfolio of the Fund and, to the
extent authorized by the Board of Directors of the Fund, to determine what
securities or other property shall be purchased or sold by the Fund, giving due
consideration to the policies of the Fund as expressed in the Fund's Articles
of Incorporation, By-Laws, Registration Statement under the Investment Company
Act of l940, as amended (the "l940 Act"), and Prospectus as in use from time to
time, as well as to the factors affecting the Fund's status as a regulated
investment company under the Internal Revenue Code of l954, 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. With respect to such
transactions, the Adviser, subject to such directions as may be furnished from
time to time by the Board of Directors of the Fund, shall endeavor as the
primary objective to obtain the most favorable prices and execution of orders.
Subject to such primary objective, the Adviser may place orders with brokerage
firms which have sold shares of the Fund or which furnish statistical and other
information to the Adviser, taking into account the value and quality of the
brokerage services of such dealers, including the availability and quality of
such statistical and other information. Receipt by the Adviser of any such
statistical and other information and services shall not be deemed to give rise
to any requirement for abatement of the advisory fee payable pursuant to
Section 5 hereof.
3. The Adviser, at its own expense, shall furnish to the Fund: office space,
furniture, equipment, supplies, telephone and utilities, which may be the same
as occupied or used by the Adviser; the services of qualified personnel for
administering the affairs, managing the investments, and preparing and
maintaining the books of account and records of the Fund; members of the
Adviser's organization to serve without compensation for the Fund as officers
and/or directors of the Fund, if desired by the Fund; daily determination of
net asset value and offering price per share; general purpose forms, supplies,
stationery and postage relating to the obligations of the Adviser hereunder;
and compensation and expenses of all persons whose services are to be furnished
to the Fund pursuant to this Section 3.
4. Except to the extent expressly assumed by the Adviser herein, the subject
to an expense reimbursement fee agreement described in Section 6 below, the
Fund 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: compensation paid to the directors of the Fund who are
not affiliated persons of the Adviser and reimbursement of travel expenses
incurred by such Directors of the Fund in connection with attendance at
meetings of the Directors or committees thereof; fees and expenses of the
Fund's custodian, transfer agent, dividend disbursing agent, legal counsel and
independent public accountants; costs of designing, printing, and mailing
reports, prospectuses, proxy statements and notices to Fund shareholders;
special purpose forms and stationery, and postage relating directly to the
business of the Fund; fees and expenses of sale (including registration and
qualification), issuance (including costs of stock certificates) and redemption
of shares; association dues; interest; and taxes.
5. The Fund 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) 0.30% per annum on the first $60 million of the Fund's average daily net
assets; plus 0.21% per annum on such net assets between $60 million and $1
billion; plus 0.18% per annum on such net assets between $1 billion and $3
billion; plus 0.16% on such net assets in excess of $3 billion ("Net Asset
Portion"), plus
(b) 3% of the first $40 million of annual gross income for such period; plus
2.5% of such income for such period between $40 million and $100 million; plus
2.25% of such income for such period in excess of $100 million ("Investment
Income Portion").
The Net Asset Portion shall be accrued daily at 1/365th of the applicable
annual rates set forth above. The net asset value of the Fund shall be
determined in the manner set forth in the Articles of Incorporation and
prospectus of the Fund as of the close of the New York Stock Exchange on each
day of which said Exchange is open, and in the case of Saturdays, Sundays, and
other days on which said Exchange shall not be open, as at the close of the
last preceding day on which said Exchange shall have been open.
The Investment Income Portion shall be accrued daily. For the purposes
hereof, the Fund's gross investment income shall be determined in accordance
with Generally Accepted Accounting Principles and shall not include net
realized gains or losses on the sale of portfolio 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 of the Fund.
6. The Adviser agrees to pay the expenses of the Fund referred to in Section 4
above (with the exclusion of interest, taxes, brokerage costs and extraordinary
expenses such as litigation and acquisitions) for a period not to exceed the
ten year period ending September 30, l989, all subject to reimbursement by the
Fund. To accomplish such reimbursement, the Fund shall pay the Adviser an
expense reimbursement fee which on an annual basis is equivalent to the
difference between the compensation referred to in Section 6 above, and 1% of
the average daily net assets of the Fund. Such expense reimbursement fee
agreement shall terminate when either (1) all of such reimbursable expenses of
the Fund which have been paid by the Adviser pursuant thereto have been
reimbursed by the Fund or (2) the ten year period has expired. Payment of the
foregoing fee is subject to the provision that within thirty days following the
close of any fiscal year of the Fund, the Adviser will pay to the Fund a sum
equal to the amount by which the aggregate expenses of the Fund incurred during
such fiscal year, but excluding interest, taxes, brokerage costs, and
extraordinary expenses such as litigation and acquisitions, exceed the lesser
of either 25% of gross income of the Fund for the preceding year or the sum of
(a) 1-1/2% of the average daily net assets of the preceding year up to and
including $30,000,000 and (b) 1% of any excess of average daily net assets of
the preceding year over $30,000,000. The obligation of the Adviser to
reimburse the Fund for expenses incurred for any year may be terminated or
revised at any time by the Adviser to the Fund by notice in writing from the
Adviser to the Fund, provided, however, that termination or revision of the
Adviser's obligation to reimburse for expenses is not to be effective with
respect to the fiscal year within which such notice is given.
7. The expense limitation described in Section 6 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 6 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.
8. 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, or to
prohibit affiliates of the Adviser from engaging in such businesses or in other
related or unrelated businesses.
9. The Adviser shall have no liability to the Fund, or its shareholders or
creditors, for any error of judgement, 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 Fund not involving willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties hereunder.
10. This Agreement shall continue in effect until the close of business on May
31, 2000. It may be renewed from year to year thereafter by mutual consent,
provided that such renewal shall be specifically approved at least annually by
(i) the Board of Directors of the Fund, or by the vote of a majority (as
defined in the l940 Act) of the outstanding voting securities of the Fund, and
(ii) a majority of those directors who are not parties to this Agreement or
interested persons (as defined in the l940 Act) 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 a writing signed by both parties hereto.
11. This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Directors of the Fund or by the vote of a majority (as
defined in the l940 Act) of the outstanding voting securities of the Fund, on
sixty (60) days' written notice to the Adviser, or by the Adviser on like
notice to the Fund. This Agreement shall automatically terminate in the event
of its assignment (as defined in the l940 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 TAX-EXEMPT BOND FUND CAPITAL RESEARCH AND
OF AMERICA, INC. MANAGEMENT COMPANY
By /s/Xxxx X. Xxxxx, Xx. By /s/Xxxxx X. Xxxxxxxxxx
Xxxx X. Xxxxx, Xx., Chairman Xxxxx X. Xxxxxxxxxx, President
By /s Xxxxx X. Xxxxxxxx By /s/Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx, Secretary Xxxxxxx X. Xxxxxx, Secretary
