FORM OF AMERICAN BEACON FUNDS INVESTMENT ADVISORY AGREEMENT
Exhibit (d)(ii)(I)
AGREEMENT made this 12th day of September, 2008 by and between American Beacon,
Inc., a Delaware Corporation (the “Manager”), and Lazard Asset Management LLC (the “Adviser”);
WHEREAS, American Beacon Funds (the “Trust”), a Massachusetts Business Trust, is an open-end,
diversified management investment company registered under the Investment Company Act of 1940, as
amended (“1940 Act”), consisting of several portfolios of shares, each having its own investment
policies; and
WHEREAS, the Trust has retained the Manager to provide the Trust with business and asset
management services, subject to the control of the Trust’s Board of Trustees;
WHEREAS, the Trust’s agreement with the Manager permits the Manager to delegate to other
parties certain of its asset management responsibilities; and
WHEREAS, the Manager desires to retain the Adviser to render investment management services to
the Trust with respect to certain of its investment portfolios and such other investment portfolios
as the Trust and the Adviser may agree upon and so specify in the Schedule(s) attached hereto
(collectively, the “Portfolios”) and as described in the Trust’s registration statement on Form
N-1A as amended from time to time, and the Adviser is willing to render such services;
NOW THEREFORE, in consideration of mutual covenants herein contained, the parties hereto agree
as follows:
1. Duties of Adviser. The Manager employs the Adviser to manage the investment and
reinvestment of such portion, if any, of the Portfolios’ assets as is designated by the Manager
from time to time, and, with respect to such assets, to continuously review, supervise, and
administer the investment program of the Portfolios, to determine in the Adviser’s discretion the
securities to be purchased or sold, to provide the Manager and the Trust with records concerning
the Adviser’s activities which the Trust is required to maintain, and to render regular reports to
the Manager and to the Trust’s officers and Trustees concerning the Adviser’s discharge of the
foregoing responsibilities. The Adviser shall discharge the foregoing responsibilities subject to
the Manager’s oversight and the control of the officers and the Trustees of the Trust and in
compliance with such policies as the Trustees may from time to time establish, and in compliance
with the objectives, policies, and limitations for each such Portfolio set forth in the Trust’s
current registration statement as amended from time to time, and applicable laws and regulations.
The Adviser accepts such employment and agrees to render the services for the compensation
specified herein and to provide at its own expense the office space, furnishings and equipment and
the personnel required by it to perform the services on the terms and for the compensation provided
herein. (With respect to any of the Portfolio assets allocated for management by the Adviser, the
Adviser can request that the Manager make the investment
decisions with respect to that portion of assets which the Adviser deems should be invested in
short-term money market instruments. The Manager agrees to provide this service.) The Manager
will instruct the Trust’s Custodian(s) to hold and/or transfer the Portfolios’ assets in accordance
with Proper Instructions received from the Adviser. (For this purpose, the term “Proper
Instructions” shall have the meaning(s) specified in the applicable agreement(s) between the Trust
and its custodian(s).) The Adviser will not be responsible for the cost of securities or brokerage
commissions or any other Trust expenses except as specified in this Agreement.
2. Portfolio Transactions. The Adviser is authorized to select the brokers or
dealers (including, to the extent permitted by law and applicable Trust guidelines, the Adviser or
any of its affiliates) that will execute the purchases and sales of portfolio securities for the
Portfolios and is directed to use its best efforts to obtain the best net results with respect to
brokers’ commissions and discounts as described in the Trust’s current registration statement as
amended from time to time. In selecting brokers or dealers, the Adviser may give consideration to
factors other than price, including, but not limited to, research services and market information.
Any such services or information which the Adviser receives in connection with activities for the
Trust may also be used for the benefit of other clients and customers of the Adviser or any of its
affiliates. The Adviser will promptly communicate to the Manager and to the officers and the
Trustees of the Trust such information relating to portfolio transactions as they may reasonably
request. The Adviser shall not, without the prior approval of the Manager, effect any transactions
which would cause the portion of the Portfolio’s assets designated to the Adviser to be out of
compliance with any restrictions or policies of the Portfolio established by the Manager or set
forth in the Portfolio’s registration statement. The Adviser shall not consult with any other
investment sub-adviser of the Portfolio concerning transactions for the Portfolio in securities or
other assets..
3. Compensation of the Adviser. For the services to be rendered by the Adviser as
provided in Sections 1 and 2 of this Agreement, the Manager shall pay to the Adviser compensation
at the rate specified in Schedule A attached hereto and made a part of this Agreement. Such
compensation shall be paid to the Adviser quarterly in arrears, and shall be calculated by applying
the annual percentage rate(s) as specified in the attached Schedule A to the average daily assets
of the specified portfolios during the relevant quarter. Solely for the purpose of calculating the
applicable annual percentage rates specified in the attached Schedule(s), there shall be included
such other assets as are specified in said Schedule(s).
The Adviser agrees that, in the event it subsequently enters into an agreement with a client
(1) pursuant to which it manages an amount of assets for the entire client relationship equal to or
less than the assets of the account, (2) the client relationship is for a sub-advised relationship
with respect to a substantially similar investment management mandate and (3) the client
relationship is not pursuant to a wrap fee or similar arrangement or an individual or entity with a
relationship to the Adviser or one of its members or employees, and, pursuant to which it charges a
fee rate that produces a lower fee at the same level of assets held in the account, Lazard will
reduce the fee payable with respect to that account to the lower fee rate. In the event that the
lower fee rate charged to the other client is subsequently increased, the fee payable with
respect
to the account shall be similarly increased, but not above the amount set forth in Schedule A.
4. Other Services. At the request of the Trust or the Manager, the Adviser in its
discretion may make available to the Trust office facilities, equipment, personnel, and other
services. Such office facilities, equipment, personnel and services shall be provided for or
rendered by the Adviser and billed to the Trust or the Manager at a price to be agreed upon by the
Adviser and the Trust or the Manager.
5. Reports. The Manager (on behalf of the Trust) and the Adviser agree to furnish to
each other, if applicable, current prospectuses, proxy statements, reports to shareholders,
certified statements of financial condition, and such other information with regard to their
affairs as each may reasonably request.
6. Status of Adviser. The services of the Adviser to the Trust are not to be deemed
exclusive, and the Adviser and its directors, officers, employees and affiliates shall be free to
render similar services to others so long as its services to the Trust are not impaired thereby.
The Adviser shall be deemed to be an independent contractor and shall, unless otherwise expressly
provided or authorized, have no authority to act for or represent the Manager or the Trust in any
way or otherwise be deemed an agent to the Manager or the Trust.
7. Certain Records. Any records required to be maintained and preserved pursuant to
the provisions of Rule 31a-1 and Rule 31a-2 promulgated under the 1940 Act which are prepared or
maintained by the Adviser on behalf of the Manager or the Trust are the property of the Manager or
the Trust and will be surrendered promptly to the Manager or Trust on request.
8. Liability of Adviser. No provision of this Agreement shall be deemed to protect
the Adviser against any liability to the Trust or its shareholders to which it might otherwise be
subject by reason of any willful misfeasance, bad faith, or gross negligence in the performance of
its duties or the reckless disregard of its obligations under this Agreement.
9. Permissible Interests. To the extent permitted by law, Trustees, agents, and
shareholders of the Trust are or may be interested in the Adviser (or any successor thereof) as
directors, partners, officers, or shareholders, or otherwise; directors, partners, officers,
agents, and shareholders of the Adviser are or may be interested in the Trust as Trustees,
shareholders or otherwise; and the Adviser (or any successor thereof) is or may be interested in
the Trust as a shareholder or otherwise; provided that all such interests shall be fully disclosed
between the parties on an ongoing basis and in the Trust’s registration statement as required by
law.
10. Duration and Termination. This Agreement, unless sooner terminated as provided
herein, shall continue for two years after its initial approval as to each Portfolio and thereafter
for periods of one year for so long as such continuance thereafter is specifically approved at
least annually (a) by the vote of a majority of those Trustees of the Trust who are not parties to
this
Agreement or interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval, and (b) by the Trustees of the Trust or by vote of a majority
of the outstanding voting securities of each Portfolio; provided, however, that if the shareholders
of any Portfolio fail to approve the Agreement as provided herein, the Adviser may continue to
serve hereunder in the manner and to the extent permitted by the 1940 Act and rules thereunder.
The foregoing requirement that continuance of this Agreement be “specifically approved at least
annually” shall be construed in a manner consistent with the 1940 Act and the rules and regulations
thereunder. This Agreement may be terminated as to any Portfolio at any time, without the payment
of any penalty, by the Manager, by vote of a majority of the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Portfolio on not less than 30 days’ nor more
than 60 days’ written notice to the Adviser, or by the Adviser at any time without the payment of
any penalty, on 60 days’ written notice to the Trust. This Agreement will automatically and
immediately terminate in the event of its assignment. Any notice under this Agreement shall be
given in writing, addressed and delivered, or mailed postpaid, to the other party at the primary
office of such party, unless such party has previously designated another address.
As used in this Section 10, the terms “assignment,” “interested persons,” and a “vote of a
majority of the outstanding voting securities” shall have the respective meanings set forth in the
1940 Act and the rules and regulations thereunder, subject to such exemptions as may be granted by
the Securities and Exchange Commission under said Act.
11. Severability. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
A copy of the Declaration of Trust of the Trust is on file with the Secretary of the
Commonwealth of Massachusetts, and notice is hereby given that this instrument is not binding upon
any of the Trustees, officers, or shareholders of the Trust individually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day
and year first written above.
| Lazard Asset Management LLC | American Beacon, Inc. | |||||||||||
By:
|
By: | |||||||||||
| Name: | Xxxxxxx X. Xxxxx | |||||||||||
| Title: | Chairman | |||||||||||
FORM OF
Schedule A
to the
American Beacon Funds
Investment Advisory Agreement
between
American Beacon, Inc.
and
Lazard Asset Management
to the
American Beacon Funds
Investment Advisory Agreement
between
American Beacon, Inc.
and
Lazard Asset Management
American Beacon, Inc. shall pay compensation to Lazard Asset Management LLC pursuant to
section 3 of the Investment Advisory Agreement between said parties in accordance with the
following annual percentage rates:
X.XX% per annum for the first $100 million
X.XX% per annum for the next $400 million
X.XX% per annum on all excess assets
X.XX% per annum for the next $400 million
X.XX% per annum on all excess assets
In calculating the amount of assets under management solely for the purpose of determining the
applicable percentage rate, there shall be included all other assets or trust assets of American
Airlines, Inc. also under management by the Investment Manager.
If the management of the accounts commences or terminates at any time other than the beginning
or end of a calendar quarter, the fee shall be prorated based on the portion of such calendar
quarter during which the Agreement was in force.
Dated: as of September 12, 2008
