AMENDED AND RESTATED AMERICAN BEACON FUNDS INVESTMENT ADVISORY AGREEMENT
Exhibit
(d)(2)(I)
AGREEMENT dated May 25, 2010, and amended and restated this 14th day of January 2011,
by and between American Beacon Advisors, Inc., a Delaware Corporation (the “Manager”), and Xxxxx
Circle Partners, L.P. (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, the Trust has retained the Manager to provide the Trust with business and asset
management services, subject to the control of the 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 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 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 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 that, except with respect to an Excepted Account, as defined below:
(1) that the blended fee in basis points contracted with the Manager will not exceed the blended
fee in basis points contracted with a High Yield mandates of the same or smaller size (including
other accounts managed for the same client); and (2) that the actual annual dollar fee paid by any
other client of the same or larger size for whom the Adviser provides investment advisory services
for High Yield mandates under an asset based fee arrangement (i.e., not a performance fee
arrangement) 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. “Excepted
Account” shall mean the Xxxxxxx Investment Management Company and its affiliates (collectively
“Xxxxxxx”). Xxxxxxx is a multiple mandate client of Adviser and the lower fee charged for the
Excepted Account is based on cumulative assets managed for Xxxxxxx by Advisor. In the event the
multiple mandate status is eliminated and the Excepted Account becomes similar in size to the
American Beacon High Yield Bond Fund, the Adviser agrees to either reduce the fee charged to
Manager to match the fee charged to the Excepted Account or raise the fee charged to the Excepted
Account to match the fee charged to Manager.
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.
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 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 shall become effective on the date first
indicated above, subject to the condition of the Board of Trustees, including a majority of those
Trustees who are not interested persons (as such term is defined in the 0000 Xxx) of the Manager or
the Adviser, shall have approved this Agreement. Unless sooner terminated as provided herein, this
Agreement shall continue in full force and effect 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 the Portfolios’ shareholders to the extent required by the 1940 Act.
14. Governing Law. This Agreement shall be governed by the laws of Texas.
15. Trust and Shareholder Liability. The Adviser is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the Declaration of Trust and
agrees that obligations assumed by the Trust pursuant to this Agreement shall be limited in all
cases to the Trust and its assets, and if the liability relates to one or more Portfolio, the
obligations hereunder shall be limited to the respective assets of that Portfolio. The Adviser
further agrees that they shall not seek satisfaction of any such obligation from the shareholders
or any individual shareholder of the Portfolio, nor from the Trustees or any individual Trustee of
the Trust.
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.
| Xxxxx Circle Partners, L.P. | American Beacon Advisors, Inc. | |||||||||
By |
/s/ Xxxx Xxxxxxxx | By | /s/ Xxxx X. Needles, Jr. | |||||||
| Xxxx Xxxxxxxx | Xxxx X. Needles, Jr. | |||||||||
| President and CEO | ||||||||||
Its
|
Chief Executive Officer | |||||||||
Schedule A
to the
American Beacon Funds
Investment Advisory Agreement
between
American Beacon Advisors, Inc.
and
Xxxxx Circle Partners, L.P.
to the
American Beacon Funds
Investment Advisory Agreement
between
American Beacon Advisors, Inc.
and
Xxxxx Circle Partners, L.P.
American Beacon Advisors, Inc. (“Manager”) shall pay compensation to Xxxxx Circle Partners,
L.P. (“Adviser”) pursuant to Section 4 of the Investment Advisory Agreement between said parties
for rendering investment management services with respect to the High Yield Bond Fund in accordance
with the following annual percentage rates for all Trust assets under Adviser’s management:
First $50 million |
0.33 of 1% | |||
Next $50 million |
0.30 of 1% | |||
Over $100 million |
0.25 of 1% | |||
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 May 25, 2010 and restated on January 14, 2011
