INVESTMENT ADVISORY AND SERVICE AGREEMENT
THIS AGREEMENT, dated and effective as of the 1st day of March, 1995
is made and entered into by and between CAPITAL INCOME BUILDER, 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 non-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 and offering
price 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, registrar, 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 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, a fee calculated at the
annual rates of:
(a) 0.24% of the first $1 billion of the Fund's net assets, plus 0.20% of
the Fund's net assets from $1 billion to $2 billion, plus 0.18% of the Fund's
net assets from $2 billion to $3 billion, plus 0.165% of the Fund's net assets
from $3 billion to $5 billion, plus 0.155% of the Fund's net assets from $5
billion to $8 billion, plus 0.15% of the Fund's net assets in excess of $8
billion, plus
(b) 3% of the Fund's annual gross investment income
Such fee shall be computed and accrued daily at one three-hundreth-sixty-fifth
(1/365th) of the applicable rates set forth above.
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 Fund's gross investment income shall be calculated
in accordance with generally accepted accounting principals and the Fund shall
not be required to amortize the premiums on bonds. 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,
distribution expenses pursuant to a plan under Rule 12b-1 and extraordinary
expenses such as litigation and acquisitions) 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. This agreement may be terminated at any time, without payment
of any penalty, by the Board of Directors of the Fund or by vote of a majority
(within the meaning of the Investment Company Act of l940) 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, 1995. 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. Such mutual consent to renewal shall not be deemed to have been
given unless evidenced by writing signed by both parties.
7. 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.
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, nor to prohibit affiliates of the Investment Adviser from
engaging in such business or in other related or unrelated businesses.
9. 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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed in duplicate original by their duly authorized officers.
CAPITAL INCOME BUILDER, INC. CAPITAL RESEARCH AND MANAGEMENT COMPANY
By /s/ Xxx X. Xxxxxxxx By /s/ Xxxxx X. Xxxxxxxx
Xxx X. Xxxxxxxx, Xxxxx X. Xxxxxxxx,
Chairman of the Board Vice Chairman of the Board
By /s/ Xxxxxxx X. Xxxxx By /s/ Xxxx X. Xxxxx, Xx.
Xxxxxxx X. Xxxxx, Xxxx X. Xxxxx, Xx.
Secretary Senior Vice President
