AMENDED AND RESTATED AMERICAN BEACON FUNDS INVESTMENT ADVISORY AGREEMENT
Exhibit (d)(2)(S)
AGREEMENT
dated the 3rd day of December, 2009 and amended and restated this 20th day
of January 2011, by and between American Beacon Advisors, Inc., a Delaware Corporation (the
“Manager”), and Xxxxxxxx Xxxxxx Asset Management Company 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, consisting of several series (portfolios) of shares, each having its own investment
policies; and
WHEREAS, Manager represents and warrants that it is an investment advisor under the Investment
Advisors Act of 1940, as amended; and
WHEREAS, the Trust has retained the Manager as the Administrator of the Trust to provide the
Trust with business and asset management services, subject to the control of the Board of Trustees;
and
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 as a sub-advisor to a series of the Trust
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 the 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
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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 Manager shall make the 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 best execution 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 consult
with any other investment sub-adviser of the Portfolio concerning transactions for the Portfolio in
securities or other assets.
3. Voting Rights. The Trust will exercise voting rights on any assets held in the
Portfolios.
4. 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(s) attached hereto and made a part of this Agreement. Such
compensation shall be paid to the Adviser quarterly in arrears, and the Manager shall calculate the
fee by applying the annual percentage rate(s) as specified in the attached Schedule(s) 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: (1) that the fee schedule in basis points for managing Treasury Inflation
Protected Securities (“TIPS”) assets of the Trust or any of its affiliates or subsidiaries will not
exceed the fee schedule in basis points charged by the Adviser to any subsequent TIPS client with
an account of the same or smaller size ; and (2) that the actual annual dollar fee paid by any
other TIPS client of the same or larger size for whom the Adviser provides investment advisory
services under an asset based fee arrangement (i.e., not a performance fee arrangement)
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will not be less than the actual annual dollar fee paid by the Manager. In the event that the fee
charged to the Manager exceeds the fee charged to an account described in (1) or (2) above, the fee
charged to the Manager shall automatically be reduced to match the fee charged to such other
account from the time such fee is charged to such other account.
5. 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.
6. 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 copies of their financial statements, and such other information with regard to their
affairs as each may reasonably request.
7. 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 of the Trust.
8. 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 Investment Company Act of 1940
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.
9. Liability of Adviser. The Adviser shall have no liability to the Trust, its
shareholders or any third party arising out of or related to this Agreement except with respect to
claims which occur due to any willful misfeasance, bad faith, or gross negligence in the
performance of its duties or the reckless disregard of its obligations under this Agreement.
Manager shall indemnify, defend and hold harmless the Adviser for (a) any action taken,
omitted or suffered by Adviser in connection with this Agreement or the services provided
hereunder, unless such act or omission shall have resulted from Adviser’s willful misfeasance, bad
faith or gross negligence; or (b) any loss arising from Adviser’s adherence to Manager’s
instructions.. Adviser shall in no event be liable for any indirect, incidental, special,
punitive, exemplary or consequential damages in connection with or arising out of this Agreement.
10. 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
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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.
11. 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 Investment Company Act of 1940 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 Investment Company
Act of 1940 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 11, 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
Investment Company Act of 1940 and the rules and regulations thereunder, subject to such exemptions
as may be granted by the Securities and Exchange Commission under said Act.
12. 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.
13. Amendments. This Agreement may be amended by mutual consent, subject to approval
by the Board and to the extent required by the Investment Company Act of 1940.
14. Governing Law. This Agreement shall be governed by the laws of the state of
Delaware.
15. Upon execution of this Agreement, Adviser shall deliver to Manager a current copy of
Adviser’s Part II of its Form ADV, the receipt of which shall occur at least 48 hours prior to
entering into this Agreement, as required by Rule 204-3 under the Investment Advisers Act of 1940,
as amended. Adviser shall deliver a complete copy of Part II of its Form ADV to Manager annually.
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16. The Manager authorizes and consents to the disclosure of the Manager and/or Trust’s
identity as a client of Adviser in any representative client list prepared by Adviser for use in
its marketing materials. Further, the Manager and Adviser agree that disclosure of any performance
information regarding the Trust’s account will be limited to inclusion in a composite of
performance information in which the Trust’s and/or Portfolio’s name is disclosed.
17. Adviser acknowledges the confidential nature of the portfolio data, documents and overall
investment strategies that may be disclosed by or on behalf of the Trust, its agents and employees
pursuant to this Agreement (the “Manager Confidential Information”). Manager acknowledges the
confidential nature of Adviser’s investment management services, including, among other things,
market research, strategic plans, proprietary models, portfolio analysis, the terms of this
Agreement, and investment returns (the “Adviser Confidential Information”). All Manager
Confidential Information and Adviser Confidential Information furnished by either Manager or
Adviser to the other party hereunder shall be treated as confidential by the receiving party and
shall not be disclosed by the receiving party to any third parties unless approved by the party
that provided the confidential information, except that such information may be disclosed without
consent if required to fulfill such party’s obligations under this Agreement or by law, regulation,
judicial process or government order.
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.
| Xxxxxxxx Xxxxxx Asset Management Company LLC | American Beacon Advisors, Inc. | |||||||||
By
|
/s/ Xxxxxxx St. A. Xxx | By | /s/ Xxxx X. Needles, Jr. | |||||||
| Xxxxxxx St. A. Xxx | Xxxx X. Needles, Jr. | |||||||||
| President and CEO | ||||||||||
Its
|
Managing Director | |||||||||
| Client Service & Marketing | ||||||||||
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Schedule A
to the
American Beacon Funds
Investment Advisory Agreement
between
American Beacon Advisors, Inc.
and
Xxxxxxxx Mellon Asset Management Company LLC
to the
American Beacon Funds
Investment Advisory Agreement
between
American Beacon Advisors, Inc.
and
Xxxxxxxx Mellon Asset Management Company LLC
American Beacon Advisors, Inc. (“Manager”) shall pay compensation of 0.05% per annum to
Xxxxxxxx Xxxxxx Asset Management Company LLC (“Adviser”) pursuant to Section 4 of the Investment
Advisory Agreement between said parties for rendering investment management services with respect
to the American Beacon Treasury Inflation Protected Securities Fund for all Trust assets under
Adviser’s management.
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 December 3, 2009 and restated on January 20, 2011
| Xxxxxxxx Mellon Asset Management Company LLC | American Beacon Advisors, Inc. | |||||||||
By:
|
/s/ Xxxxxxx St. A. Xxx | By: | /s/ Xxxx X. Needles, Jr. | |||||||
Name:
|
Xxxxxxx St. A. Xxx | Xxxx X. Needles, Jr. | ||||||||
Title:
|
Managing Director | President and CEO | ||||||||
| Client Service & Marketing | ||||||||||
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