AMERICAN BEACON FUNDS INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ___ day of March,
2010 by and between American Beacon Advisors, Inc., a Delaware Corporation (the
"Manager"), and CB Xxxxxxx Xxxxx Investors, Inc. (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
1
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.
(b) Valuation. In
accordance with procedures and methods established by the Board, which may be
amended from time to time, the Adviser will provide assistance to the Manager in
determining the fair value of all securities and other investments owned by the
Portfolios, and use reasonable efforts to arrange for the provision of valuation
information or prices from parties independent of the Adviser with respect to
the securities or other investments owned by the Portfolios for which market
prices are not readily available. The Adviser will monitor the securities
and other investments owned by the Portfolios for potential significant events
that could affect their values and notify the Manager when, in its opinion, a
significant event has occurred that may not be reflected in the market values of
such securities.
(c)
Compliance
Matters. The Adviser, at its expense, will provide the Manager with
such compliance reports and certifications relating to its duties under this
Agreement and the federal securities laws as may be agreed upon by such parties
from time to time. The Adviser also shall: (i) cooperate with and provide
reasonable assistance to the Manager, the Trust’s administrator, custodian,
transfer agent and pricing agents and all other agents and representatives of
the Portfolios, the Trust and the Manager; (ii) keep all such persons fully
informed as to such matters as they may reasonably deem necessary to the
performance of their obligations to the Portfolios, the Trust and the Manager;
(iii) provide prompt responses to reasonable requests made by such persons; and
(iv) maintain any appropriate interfaces with each so as to promote the
efficient exchange of information.
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.
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
2
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 blended fee in basis points contracted with the Manager will not exceed
the blended fee in basis points contracted with an account 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 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.
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.
3
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, 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 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
4
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.
|
CB
Xxxxxxx Xxxxx Investors, Inc.
|
American
Beacon Advisors, Inc.
|
|||
|
By
|
|
By
|
||
|
Its
|
Xxxxxxx
X. Xxxxx
|
|||
|
Executive
Charirman
|
||||
5
Schedule
A
to
the
between
American
Beacon Advisors, Inc.
and
___________________________
American Beacon Advisors, Inc.
(“Manager”) shall pay compensation to ________________________ (“Adviser”)
pursuant to Section 4 of the Investment Advisory Agreement between said parties
for rendering investment management services with respect to the Fund in accordance with the following annual
percentage rates for all Trust assets under Adviser’s
management:
|
First
$100 million
|
0.XX
of 1%
|
|
|
Next
$100 million
|
0.XX
of 1%
|
|
|
Over
$200 million
|
0.XX
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 ,
2009
|
[ADVISER]
|
American
Beacon Advisors, Inc.
|
|||
|
By:
|
By:
|
|||
|
Name:
|
Xxxxxxx
X. Xxxxx
|
|||
|
Title:
|
President
|
|||
6
