EXHIBIT 99.(d)(ii)(EE)
AMERICAN AADVANTAGE FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 30th day of June, 2004 by and between AMR Investment
Services, Inc., a Delaware Corporation (the "Manager"), and Pzena Investment
Management, LLC (the "Adviser");
WHEREAS, American AAdvantage 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 sole 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
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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.
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(s) 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(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 charged to
the Trust will not exceed the blended fee in basis points charged hereafter to a
mid cap value account of the same or smaller size; and (2) that the actual
annual dollar fee paid by any other client of the same or larger size for whom
the Adviser provides mid cap value investment advisory services will not
hereafter be less than the actual annual dollar fee paid by the Trust. In the
event that the fee charged to the Trust exceeds the fee charged to an account
described in (1) or (2) above, the fee charged to the Trust shall automatically
be reduced to match the fee charged to such other account from the time such fee
is charged to such other account.
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.
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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 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 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.
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
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.
8. Liability of Adviser. The Adviser shall not be liable for any action
taken or omitted to be taken by it in its reasonable judgment, in good faith and
believed by it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement, or in accordance with (or in the absence
of) specific directions or instructions from the Manager. 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 Investment Company
Act of 1940 and rules thereunder. The foregoing requirement that continuance of
this Agreement be
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"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 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 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.
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.
PZENA INVESTMENT MANAGEMENT, LLC AMR INVESTMENT SERVICES, INC.
By _________________________ By ___________________________
Its ________________________ Its __________________________
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Schedule A
to the
American AAdvantage Funds
Investment Advisory Agreement
between
AMR Investment Services, Inc.
and
Pzena Investment Management, LLC
AMR Investment Services, Inc. ("AMRIS") shall pay compensation to Pzena
Investment Management, LLC. ("Pzena") pursuant to section 3 of the Investment
Advisory Agreement between said parties in accordance with the following annual
percentage rates for all Mid Cap Value assets under Pzena's management:
1.00% per annum on the first $10 million
0.75% per annum on the next $40 million
0.60% per annum on the next $50 million
0.50% per annum on the excess over $100 million
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 June 30, 2004
PZENA INVESTMENT MANAGEMENT, LLC. AMR INVESTMENT SERVICES, INC.
By: ________________________ By: ____________________________
Name: Xxxxxxx X. Xxxxx
Title: President
