AMENDED INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated and effective as of the 1st day of
April, 2004 is made and entered into by and between AMERICAN HIGH-INCOME
MUNICIPAL 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 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 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, 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;
custodian, stock transfer and dividend disbursing fees and expenses;
distribution expenses pursuant to a plan under rule 12b-1 under the 1940 Act;
costs of 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 trustees not affiliated with
the Investment Adviser; association dues; and costs of any share certificates,
stationery and forms prepared exclusively for the Fund.
4
4. 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:
(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% 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 in excess of $3 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 over $3,333,333 ("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 includes gains
or losses from the sale of securities.
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.
5. The Investment Adviser agrees that in the event the
expenses of the Fund (with the exclusion of interest, taxes, brokerage costs,
extraordinary expenses such as litigation and acquisitions or other expenses
excludable under applicable state securities laws or regulations) 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.
6. 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)
attributable to the Class A shares of the Fund for a period ending not later
than October 1, 2004, 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 paragraph 4 above
attributable to the Class A shares of the Fund and 0.60% of the Fund's average
daily net assets attributable to Class A shares of the Fund until December 30,
1994 and 0.90% of the Fund's average net assets per annum attributable to Class
A shares of the Fund for a period thereafter. 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
0.60% of the fund's average daily net assets attributable to Class A shares
until December 30, 1994 and 0.90% of the Fund's average net assets per annum
attributable to Class A shares of the Fund for a period thereafter. 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 October 1, 2004, whichever is earlier.
7. The expense limitations described in paragraph 5 and 6
above shall apply only to Class A shares of 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 fees pursuant to provisions contained in paragraph 5 or 6 due to
the expenses of the Class A shares of the Fund exceeding the stated limits, the
Investment Adviser will either (i) reduce its fee similarly for other classes of
shares of the Fund, 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. This Agreement may be terminated at any time, without
payment of any penalty, by the 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, 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 May 31,
2004. 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.
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.
12. The obligations of the Fund under this Agreement are not
binding upon any of the Directors, officers, employees, agents or shareholders
of the Fund individually, but bind only the Fund's estate. The Investment
Adviser agrees to look solely to the assets of the Fund for the satisfaction of
any liability in respect of the Fund under this Agreement and will not seek
recourse against such Directors, officers, employees, agents or shareholders, or
any of them, or any of their personal assets for such satisfaction.
13. It is understood that the name "American Funds" or any
derivative thereof or logo associated with that name is the valuable property of
the Investment Adviser and its affiliates, and that the Fund shall have the
right to use such name (or derivative or logo) only so long as this Agreement
shall continue in effect. Upon termination of this Agreement the Fund shall
forthwith cease to use such name (or derivative or logo) and shall promptly
amend its Articles of Incorporation to change its name.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed in duplicate original by their duly authorized
officers.
AMERICAN HIGH-INCOME CAPITAL RESEARCH AND
MUNICIPAL BOND FUND, INC. MANAGEMENT COMPANY
By /s/Xxxx X. Xxxxx, Xx. By /s/Xxxxx X. Xxxxxxxxxx
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Xxxx X. Xxxxx, Xx. Xxxxx X. Xxxxxxxxxx
Chairman of the Board President
By /s/Xxxxx X. Xxxxxxxx By /s/Xxxxxxx X. Xxxxxx
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Xxxxx X. Xxxxxxxx Xxxxxxx X. Xxxxxx
Secretary Vice President and Secretary
