INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated and effective as of the 1st day of June, 1996, is
made and entered into by and between THE CASH MANAGEMENT TRUST OF AMERICA, a
Massachusetts Business Trust, (hereinafter called the "Trust"), and CAPITAL
RESEARCH AND MANAGEMENT COMPANY, a Delaware corporation, (hereinafter called
the "Adviser"). This Agreement shall supersede the previous agreement between
the Trust and the Adviser, which previous agreement shall terminate by mutual
consent of the parties when this Agreement becomes effective. The parties
agree as follows:
1. The Trust hereby employs the Adviser to furnish advice to the Trust
with respect to the investment and reinvestment of the assets of the Trust.
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 Trust.
2. The Adviser agrees to provide supervision of the portfolio of the
Trust and, to the extent authorized by the Trustees, to determine what
securities or other property shall be purchased or sold by the Trust, giving
due consideration to the policies of the Trust as expressed in the Trust's
Declaration of Trust, By-Laws, Registration Statement under the Investment
Company Act of 1940, as amended (the "1940 Act"), Registration Statement under
the Securities Act of 1933, as amended (the "1933 Act"), and Prospectus as in
use from time to time, as well as to the factors affecting the Trust's status
as a regulated investment company under the Internal Revenue Code of 1954, 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 Trust. With respect to such
transactions, the Adviser, subject to such directions as may be furnished from
time to time by the Trustees, shall endeavor as the primary objective to obtain
the most favorable prices and execution of orders. Subject to the primary
objective, the Adviser may place orders with broker-dealer firms which have
sold shares of the Trust or which furnished statistical and other information
to the 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 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 shall (a) furnish to the Trust the services of qualified
personnel to (i) manage the investments of the Trust, (ii) perform the
executive and related administrative functions of the Trust, and (iii) if
desired by the Trust, serve as Trustees of the Trust, in all cases without
additional compensation of such persons by the Trust; (b) pay the expenses of
all persons whose services are to be furnished by the Adviser under this
Section; (c) provide office space, furniture, small office equipment, and
telephone facilities and utilities, all of which may be the same as occupied or
used by the Adviser; and (d) provide general purpose forms, supplies,
stationery, and postage used at the offices of the Trust relating to the
services to be furnished by the Adviser hereunder.
4. Except to the extent expressly assumed by the Adviser herein, the
Trust 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 Trustees who are not
affiliated persons of the Adviser and reimbursement of travel expenses incurred
by such Trustees in connection with attendance at meetings of the Trustees or
committees thereof; fees and expenses of the transfer agent, dividend
disbursing agent, legal counsel, independent public accountants, and custodian;
costs of designing, printing, and mailing reports, prospectuses, proxy
statements and notices to shareholders; fees and expenses of sale (including
registration and qualification), issuance (including costs of any share
certificates) and redemption of shares; association dues; interest; and taxes.
5. The Trust shall pay to the Adviser on or before the tenth (10th) day
of each month, as compensation for the services rendered by the Adviser
hereunder during the previous month, a fee computed at the annual rate of 0.32%
on the first $1 billion of the total daily net assets of the Trust during the
preceding month plus .29% on the portion of such total daily net assets in
excess of $1 billion but not exceeding $2 billion plus .27% of such total daily
net assets in excess of $2 billion.
For the purposes hereof, the total net assets of the Trust shall be
determined in the manner set forth in the Declaration of Trust, By-Laws, and
Prospectus of the Trust. The advisory fee shall be payable for the period
commencing on the effective date of this Agreement and ending on the date of
termination of this Agreement.
6. Within thirty days following the close of any fiscal year of the
Trust, the Adviser will pay to the Trust a sum equal to the amount by which the
aggregate expenses of the Trust 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 Trust
for preceding year or the sum of (a) 1-1/5% 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.
7. 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, nor to
prohibit affiliates of the Adviser from engaging in such business or in other
related or unrelated businesses.
8. The Adviser shall have no liability to the Trust, 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 Trust not involving willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations and duties
hereunder.
9. This Agreement shall continue in effect until the close of business on
May 31, 1997. It may thereafter be renewed from year to year by mutual
consent, provided that such renewal shall be specifically approved at least
annually by (i) the Trustees or by the vote of a majority (as defined in the
0000 Xxx) of the outstanding voting securities of the Trust, and (ii) a
majority of those Trustees 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.
10. The obligations of the Trust under this Agreement are not binding
upon any of the Trustees, officers, employees, agents or shareholders of the
Trust individually, but bind only the Trust Estate. The Adviser agrees to look
solely to the assets of the Trust for the satisfaction of any liability of the
Trust in respect of this Agreement and will not seek recourse against such
Trustees, officers, employees, agents or shareholders, or any of them, or any
of their personal assets for such satisfaction.
11. This Agreement may be terminated at any time, without payment of any
penalty, by the Trustees or by the vote of a majority (as defined in the 0000
Xxx) of the outstanding voting securities of the Trust, on sixty (60) days'
written notice to the Adviser, or by the Adviser on like notice to the Trust.
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.
THE CASH MANAGEMENT TRUST CAPITAL RESEARCH AND MANAGEMENT
OF AMERICA 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/ Xxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx, Secretary Xxxxxx X. Xxxxxxxx, Vice President
and Treasurer
