AMENDED INVESTMENT ADVISORY AND SERVICE AGREEMENT
AMENDED
THIS
AGREEMENT,
dated and effective as of the 1st day of January, 2006, by and between THE
INCOME FUND OF AMERICA, INC., a Maryland corporation (hereinafter called
the
"Fund"), and CAPITAL RESEARCH AND MANAGEMENT COMPANY, a Delaware corporation
(hereinafter called the "Investment Adviser"). The parties agree as
follows:
1. The
Fund hereby
employs the Investment Adviser to determine what securities shall be purchased
or sold by the Fund with respect to the investment and reinvestment of the
assets of the Fund. The Investment 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 Investment Adviser shall,
for all purposes herein, be deemed an independent contractor and not an agent
of
the Fund.
2. The
Investment
Adviser agrees to provide supervision of the portfolio of the Fund and 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 1940 (the "1940 Act"), Registration Statement under
the Securities Act of 1933 (the "1933 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.
The
Investment
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 Investment 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
executions of orders. Subject to such primary objective, the Investment Adviser
may place orders with brokerage firms which have sold shares of the Fund
or
which furnish statistical and other information to the Investment Adviser,
taking into account the value and quality of the brokerage services of such
broker-dealers, including the availability and quality of such statistical
and
other information. Receipt by the Investment 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
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 additional compensation from the Fund.
The
Investment Adviser shall also, at its expense, provide the Fund with suitable
office space (which may be in the offices of the Investment Adviser); all
necessary small office equipment and utilities; and general purpose accounting
forms, supplies, and postage used at the offices of the Fund.
4. 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, stock transfer
and dividend disbursing fees and expenses; costs of the designing, printing
and
mailing of reports, prospectuses, proxy statements, and notices to its
shareholders; taxes; expenses of the issuance and redemption of shares of
the
Fund (including stock certificates, registration and qualification fees and
expenses); legal and auditing expenses; compensation, fees, and expenses
paid to
directors; association dues; costs of stationery and forms prepared exclusively
for the Fund; and costs of assembling and storing shareholder account
data.
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, the sum of the following amounts:
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(a)
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0.25%
per
annum on the first $500 million of the Fund's net assets; 0.23%
per annum
on the portion of such net assets from $500 million to $1 billion,
0.21%
per annum on the portion of such net assets from $1 billion to
$1.5
billion, 0.19% per annum on the portion of such net assets from
$1.5
billion to $2.5 billion, 0.17% per annum on the portion of such
net assets
from $2.5 billion to $4 billion, 0.16% per annum on the portion
of such
net assets from $4 billion to $6.5 billion, 0.15% per annum on
the portion
of such net assets from $6.5 billion to $10.5 billion, 0.144% per
annum on
the portion of such net assets from $10.5 billion to $13 billion,
0.141%
per annum on the portion of such net assets from $13 billion to
$17
billion, 0.138% per annum on the portion of such net assets from
$17
billion to $21 billion, 0.135% per annum on the portion of such
net assets
from $21 billion to $27 billion, 0.133% per annum on the portion
of such
net assets from $27 billion to $34 billion, 0.131% per annum on
the
portion of such net assets from $34 billion to $44 billion, 0.129%
per
annum on the portion of such net assets from $44 billion to $55
billion,
0.127% per annum on the portion of such net assets from $55 billion
to $71
billion, and 0.125% per annum thereafter ("Net Asset Portion");
plus
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(b)
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2.25%
of the
Fund's monthly gross income for the preceding month (AIncome
Portion@).
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The
Net Asset
Portion shall be accrued daily based on the number of days per year. The
net
assets of the Fund shall be determined in the manner and on the dates set
forth
in the prospectus of the Fund, 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. In the event of termination other than at the end of
a
calendar month, the monthly fee shall be prorated for the portion of the
month
prior to termination and paid on or before the tenth (10th) day subsequent
to
termination.
The
Income Portion
shall be accrued daily and Agross
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
sales of securities.
6. The
Investment
Adviser agrees to reduce the fee payable to it under this Agreement by the
amount by which the ordinary operating expenses of the Fund for any fiscal
year
of the Fund, excluding interest, taxes and extraordinary expenses, shall
exceed
one and one-half percent (1-1/2%) of the first $30 million of average net
assets
of the Fund determined pursuant to Section 5, plus one percent (1%) of such
average net assets in excess thereof. Costs incurred in connection with the
purchase or sale of portfolio securities, including brokerage fees and
commissions, which are capitalized in accordance with generally accepted
accounting principles applicable to investment companies, shall be accounted
for
as capital items and not as expenses. Proper accruals shall be made by the
Fund
for any projected reduction hereunder and corresponding amounts shall be
withheld from the fees paid by the Fund to the Investment Adviser. Any
additional reduction computed at the end of the fiscal year shall be deducted
from the fee for the last month of such fiscal year, and any excess shall
be
paid to the Fund immediately after the fiscal year end, and in any event
prior
to publication of the Fund's annual report, as a reduction of the fees
previously paid during the fiscal year.
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 Investment Adviser from
performing investment advisory, management, or distribution services for
other
investment companies and other persons or companies, or to prohibit affiliates
of the Investment Adviser from engaging in such businesses or in other related
or unrelated businesses.
9. The
Investment
Adviser shall have no liability to the Fund, or its shareholders, 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 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 December 31, 2006.
It
may thereafter be renewed from year to year by mutual consent, provided that
such renewal shall be specifically approved at least annually by either (i)
the
Board of Directors of the Fund, or by the vote of a majority (as defined
in the
0000 Xxx) 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 0000 Xxx) 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 0000
Xxx)
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. 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.
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THE
INCOME
FUND OF AMERICA, INC.
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CAPITAL
RESEARCH AND MANAGEMENT COMPANY
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By:
/s/ Xxxxx
X. Xxxxxxxx
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By:
/s/ Xxxxx
X. Xxxxxxxxxx
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Xxxxx
X.
Xxxxxxxx, Vice Chairman and
Principal
Executive Officer
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Xxxxx
X.
Xxxxxxxxxx, President
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By:
/s/
Xxxxxxx X. Xxxx
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By:
/s/
Xxxxxxx X. Xxxxxx
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Xxxxxxx
X.
Xxxx, Secretary
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Xxxxxxx
X.
Xxxxxx, Vice
President and Secretary
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