AMENDED
INVESTMENT ADVISORY AND SERVICE AGREEMENT
Bond Portfolio
THIS AGREEMENT, dated and effective as of the 28th day of July, 1999,
is made and entered into by and between ENDOWMENTS, a Delaware business trust
(hereinafter called the "Trust"), on behalf of the Bond Portfolio, a series of
the Trust (the "Fund"), and CAPITAL RESEARCH AND MANAGEMENT COMPANY, a Delaware
corporation, (hereinafter called the "Adviser"). 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 Fund. The
Adviser hereby accepts such employment and agrees to render the services and to
assume the obligations 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 Fund's portfolio and
to determine what securities or other property shall be purchased or sold on
behalf of the Fund, giving due consideration to the policies of the Fund as
expressed in the currently effective Prospectus (the "Prospectus") and Statement
of Additional Information ("SAI") relating to the Fund included in the Trust's
Registration Statement, as amended from time to time (the "Registration
Statement) filed by the Trust under the Investment Company Act of 1940, as
amended (the "1940 Act") and the Securities Act of 1933, as amended, as well as
to the factors affecting the Fund's status as a series of a regulated investment
company under the Internal Revenue Code of 1986, as amended, and subject always
to policies and instructions adopted by the Trust's Board of Trustees.
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 Fund. With respect to such
transactions, the Adviser, subject to such directions as may be furnished from
time to time on behalf of the Fund by the Board of Trustees of the Trust, shall
endeavor as the primary objective to obtain the most favorable prices and
executions of orders. Subject to such primary objective, the Adviser may place
orders with broker-dealer firms which have sold shares of the Fund or which
furnish 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 6 hereof.
3.
The Adviser shall furnish the services of persons to perform the
executive, administrative, clerical, and bookkeeping functions of the Fund,
including the daily determination of the Fund's net asset value and offering
price per share. The Adviser shall pay the compensation and travel expenses of
all such persons, and they shall serve without additional compensation from the
Fund. The Adviser shall also, at its expense, provide the Fund with suitable
office space (which may be in the offices of the Adviser); all necessary small
office equipment and utilities; and general purpose accounting forms, supplies,
and postage used at the offices of the Trust.
1
4.
The Fund shall pay all its expenses not assumed by the Adviser as
provided herein. Such expenses shall include, but shall not be limited to,
custodian, registrar, stock transfer and dividend disbursing fees and expenses;
costs of the designing, printing and mailing of reports, Prospectuses, SAI's,
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 trustees; association dues; and costs
of stationery and forms prepared exclusively for the Trust.
5.
The Trust on behalf of the Fund shall pay to the Adviser on or before
the tenth (10th) day of each month, as compensation for the services rendered by
the Adviser during the preceding month, a fee at the annual rate of 0.50% on the
first $150,000,000 of the Fund's average daily net assets, plus 0.40% on the
portion of such average daily net assets in excess of $150,000,000.
The advisory fee shall be accrued daily at 1/365th of the applicable
annual rate set forth above. The net asset value of the Fund shall be determined
in the manner set forth in the Trust's Declaration of Trust and the Registration
Statement and always in accordance with applicable law.
Upon any termination of this Agreement on a day other than the last day
of the month the fee for the period from the beginning of the month in which
termination occurs to the date of termination shall be prorated according to the
proportion which such period bears to the full month of the Trust.
6.
The 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, excluding interest, taxes and extraordinary expenses, shall exceed
0.75% of the average net assets of the Fund determined pursuant to Section 5.
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 Trust on behalf of the Fund for any projected
reduction hereunder, and corresponding amounts shall be withheld from the fees
paid by the Trust on behalf of the Fund to the 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.
Nothing contained in this Agreement shall be construed to prohibit the
Adviser from performing investment advisory, management, or distribution
services for other investment companies (or series thereof) and other persons or
companies, or to prohibit affiliates of the Adviser from engaging in such
businesses or in other related or unrelated businesses.
2
8.
The 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.
9.
This Agreement shall continue in effect until the close of business on
July 27, 2000. 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 Board of Trustees of the Trust, or by the vote of a majority (as defined
in the ▇▇▇▇ ▇▇▇) of the outstanding voting securities of the Fund, and (ii) a
majority of those trustees who are not parties to this Agreement or interested
persons (as defined in the ▇▇▇▇ ▇▇▇) 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 Fund 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 Board of Trustees of the Trust or by the vote of a majority (as
defined in the ▇▇▇▇ ▇▇▇) of the outstanding voting securities of the Fund, 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.
ENDOWMENTS
on behalf of the Bond Portfolio
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chairman of the Board
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Secretary
CAPITAL RESEARCH AND
MANAGEMENT COMPANY
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Secretary
3