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EXHIBIT 99.B5(b)
AMERICAN AADVANTAGE MILEAGE FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 12th day of November, 1996 by and between AMR
Investment Services, Inc., a Delaware Corporation (the "Manager"), and
Hotchkis and Wiley, a division of the Capital Management Group of Xxxxxxx Xxxxx
Asset Management, L.P. (the "Adviser");
WHEREAS, American AAdvantage Mileage Funds (the "Mileage 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 Mileage Trust has retained the Manager to provide the
Mileage Trust with business and asset management services, subject to the
control of the Mileage Trust's Board of Trustees;
WHEREAS, the Mileage 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 Mileage Trust with respect to certain of
its investment portfolios and such other investment portfolios as the Mileage
Trust and the Adviser may agree upon and so specify in the Schedule(s) attached
hereto (collectively, the "Portfolios") and as described in the Mileage 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 Mileage
Trust with records concerning the Adviser's activities which the Mileage Trust
is required to maintain, and to render regular reports to the Manager and to
the Mileage 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 Mileage Trust and in compliance with such
policies as the Trustees may
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from time to time establish, and in compliance with the objectives, policies,
and limitations for each such Portfolio set forth in the Mileage 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 Mileage 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 Mileage Trust and its custodian(s).) The Adviser will
not be responsible for the cost of securities or brokerage commissions or any
other Mileage 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
Mileage 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 Mileage 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 Mileage 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 Mileage Trust such information relating to portfolio transactions as
they may reasonably request.
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 month-end 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).
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The Adviser agrees that the fee charged to the Manager will be no more
than that charged for any other client of similar type. Furthermore, the
Adviser agrees to notify the Manager on a timely basis of any fee schedule it
enters into with any other client of similar type which is lower than the fee
paid by the Manager.
4. OTHER SERVICES. At the request of the Mileage Trust or the
Manager, the Adviser in its discretion may make available to the Mileage 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 Mileage Trust or the Manager at a price to be
agreed upon by the Adviser and the Mileage Trust or the Manager.
5. REPORTS. The Manager (on behalf of the Mileage 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.
6. STATUS OF ADVISER. The services of the Adviser to the Mileage
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 Mileage 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 Mileage Trust in any way or otherwise be deemed an
agent to the Manager or the Mileage 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 Mileage Trust are the property of the Manager or the Mileage
Trust and will be surrendered promptly to the Manager or Mileage Trust on
request.
8. LIABILITY OF ADVISER. No provision of this Agreement shall be
deemed to protect the Adviser against any liability to the Mileage 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 Mileage 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
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Adviser are or may be interested in the Mileage Trust as Trustees, shareholders
or otherwise; and the Adviser (or any successor thereof) is or may be
interested in the Mileage 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 Mileage 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 Mileage 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 Mileage 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 Mileage 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 Mileage
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 Mileage Trust is on file
with the Secretary of the Commonwealth of Massachusetts, and notice is hereby
given that this instrument is not binding
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upon any of the Trustees, officers, or shareholders of the Mileage Trust
individually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first written above.
Hotchkis and Wiley AMR Investment Services, Inc.
By /s/Xxxxx X. Xxxxx By /s/Xxxxxxx X. Xxxxx
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Title Chief Financial Officer Title President
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Schedule A
to the
American AAdvantage Mileage Funds
Investment Advisory Agreement
between
AMR Investment Services, Inc.
and
Hotchkis and Wiley
AMR Investment Services, Inc. shall pay compensation to Boatmen's
Trust Company pursuant to section 3 of the Investment Advisory Agreement
between said parties in accordance with the following annual percentage rates:
0.60% per annum of the first $10 million
0.50% per annum of the next $140 million
0.30% per annum of the next $50 million
0.20% per annum of the next $800 million
0.15% per annum of 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 Adviser.
To the extent that a Fund invests all of its investable assets (i.e.,
securities and cash) in another investment company, however, no portion of the
advisory fee attributable to that Fund as specified above shall be paid for the
period that such Fund's assets are so invested.
Funds:
American AAdvantage Balanced Fund
American AAdvantage Growth and Income Fund
American AAdvantage International Equity Fund
DATED: November 12, 1996
