INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated and effective as of the 20th day of November, 1993,
is made and entered into by and between CAPITAL WORLD BOND FUND, 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
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.
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 Investment Adviser agrees to pay the expenses incurred in
connection with the organization of the Fund, its qualification to do business
as a foreign corporation in the
State of California, and its registration as an investment company under the
1940 Act, and all fees and expenses including fees of legal counsel to the
Fund, which would otherwise be required to be paid by the Fund pursuant to
Section 3 and which are incurred by the Fund prior to the effective date of its
Registration Statement, except for the costs of any share certificates and
transfer agent fees and costs.
5. 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 at the annual rate of
0.70% of the first $500 million of the Fund's net assets, plus 0.60% on net
assets in excess of $500 million but not exceeding $1 billion, plus 0.50% on
net assets in excess of $1 billion. Such fee shall be computed and accrued
daily at one three-hundreth-sixty-fifth (1/365th) of the applicable rate 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 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.
6. 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.
7. The Investment Adviser agrees to pay the expenses of the Fund referred
to in paragraph 3 above (with the exclusion of interest, taxes, brokerage costs
and extraordinary expenses such as litigation and acquisitions) for a period
ending not later than June 9, 1997, all subject to reimbursement by the Fund.
To accomplish such reimbursement, the Fund shall pay the Investment Adviser an
expense reimbursement fee which on an annual basis is equivalent to the
difference between the fees of the Investment Adviser described in Section 5
above and 1.50% of the average daily net assets of the Fund. The expense
reimbursement fees are for reimbursement of actual expenses incurred by or on
behalf of the Fund and are intended to have the effect of assuring that the
total normal operating expenses of the Fund during the expense reimbursement
period will not exceed 1.50%. Such expense reimbursement fee arrangement will
terminate either when all of such reimbursable expenses of the Fund which have
been paid by the Investment Adviser pursuant thereto have been reimbursed by
the Fund for a period of twelve consecutive months or on June 9, 1997,
whichever is earlier.
8. 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, 1994. 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.
9. 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.
10. 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.
11. 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 WORLD BOND FUND, INC. CAPITAL RESEARCH AND MANAGEMENT
COMPANY
By/s/ Xxxx X. Xxxxx, Xx. By /s/ Xxxxx X. Xxxxxxxx
Xxxx X. Xxxxx, Xx., Chairman Xxxxx X. Xxxxxxxx, Vice Chairman
of the Board of the Board
By/s/ Xxxxx X. Xxxxxxxx By /s/ Xxxxxx X. Xxxxx
Xxxxx X. Xxxxxxxx, Secretary Xxxxxx X. Xxxxx, Vice President
and Secretary
