Exhibit D
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 THE BOND 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:
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, custodian, 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 any share certificates, stationery and forms prepared exclusively
for the Fund.
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, the sum of the following
amounts:
(a) 0.30% per annum of the first $60 million of the Fund's average
daily net assets during the month, 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
4
0.16% per annum on the portion of such net assets between $3
billion and $6 billion, plus 0.15% per annum on the portion of
such net assets between $6 billion and $10 billion, plus 0.14%
per annum on the portion of such net assets between $10 billion
and $16 billion, plus 0.13% on the portion of such net assets
between $16 billion and $20 billion; plus 0.12% on the portion of
such net assets in excess of $20 billion ("Net Asset Portion"),
plus
(b) 2.25% of the Fund's first $8,333,333 of monthly gross income,
plus 2% of such income between $8,333,333 and $41,666,667, plus
1.75% of such income in excess of $41,666,667 ("Income Portion").
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.
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 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 to reduce the fee payable to
it under this Agreement (a) by the amount by which ordinary operating expenses
of the Fund for any fiscal year of the Fund, excluding interest, taxes and
extraordinary expenses such as litigation, shall exceed the greater of (i) one
percent (1%) of the average month-end net assets of the Fund for such fiscal
year or (ii) ten percent (10%) of the Fund's gross investment income, and (b) by
any additional amount necessary to assure that such ordinary operating expenses
of the Fund in any year after such reduction, do not exceed the lesser of (i)
one and one-half percent (1-1/2%) of the first $30 million of average month-end
assets of the Fund, plus one percent (1%) of the average month-end net assets in
excess thereof or (ii) twenty-five percent (25%) of the Fund's gross investment
income. 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.
6. The expense limitation described in section 5 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 5 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.
7. 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 October 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.
8. 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.
9. 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.
10. 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.
11. 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).
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed in duplicate original by their duly authorized
officers.
THE BOND FUND OF AMERICA, INC. CAPITAL RESEARCH AND
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, Vice President and
Secretary
