AMENDED INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated and effective as of the 1st of April,
2004, 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 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 0.15% per
annum on the portion of such net assets between $3 billion
and $6 billion; plus 0.13% per annum on the portion of such
net assets in excess of $6 billion ("Net Asset Portion"),
plus
(b) 3% of the Fund's first $3,333,333 of monthly gross income;
plus 2.5% of such income between $3,333,333 and $8,333,333;
plus 2% of such income in excess of $8,333,333 ("Income
Portion").
The Net Asset Portion shall be accrued daily based on the
number of days per year. 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 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 on 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 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 that 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 that 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 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 Fund not
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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, 2004. 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
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Xxxx X. Xxxxx, Xx., Chairman Xxxxx X. Xxxxxxxxxx, President
By /s/ Xxxxx X. Xxxxxxxx By /s/ Xxxxxxx X. Xxxxxx
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Xxxxx X. Xxxxxxxx, Secretary Xxxxxxx X. Xxxxxx,
Secretary
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