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Exhibit 99.b.5.a.i
AMERICAN AADVANTAGE FUNDS
MANAGEMENT AGREEMENT
AGREEMENT made this 3rd day of April, 1987, by and between AMERICAN
AADVANTAGE FUNDS (the "Trust"), and AMR INVESTMENT SERVICES, INC. (the
"Manager");
WHEREAS the Trust, a Massachusetts Business Trust, is an open-end,
diversified management investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), consisting of several series
(portfolios) of shares, each having its own investment policies; and
WHEREAS, the Trust desires to avail itself of the services,
information, advice, assistance and facilities of a fund manager and to have a
fund manager provide or: perform for it various administrative, management,
advisory, statistical, research, asset allocation, portfolio manager selection
and other services;and
WHEREAS, the Manager, an investment adviser registered under the
Investment Advisers Act of 1940, as amended, is willing to furnish such
services to the Trust with respect to its existing portfolios and such other
portfolios as the Trust and the Manager shall agree upon (collectively, the
"Portfolios") on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the Trust and Manager agree as follows:
1. Appointment of the Manager. The Trust hereby appoints the
Manager to provide management services to the Trust in the manner set forth in
Section 2 of this Agreement, subject to the direction of the Trust's Board of
Trustees and officers, for the period in the manner and in the terms
hereinafter set forth. The Manager hereby accepts such appointment and agrees
during such period to render the services and assume the obligations herein set
forth. The Manager shall for all purposes herein be deemed to be an independent
contractor and shall, except as expressly provided or authorized (whether
herein or otherwise), have no authority to act for or represent the Trust in
any way or otherwise be deemed an agent of the Trust.
2. Duties of and Services to be Provided by the Manager. The
Manager undertakes to provide the services hereinafter set forth and to assume
the following obligations:
A. Corporate Management and Administrative Services.
(a) The Manager shall furnish to the Trust
adequate (i) office space, which may be space within the offices of the Manager
or in such other place as may be agreed upon from time-to-time, and (ii) office
furnishings, facilities and
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equipment as may be reasonably required for managing and administering the
operations and conducting the business of the Trust.
(b) The Manager shall take all necessary steps to
assist the Trust in complying with the securities, tax and other laws and
regulations of the United States and the various states and other jurisdictions
in which the Trust does business, conducting correspondence and other
communications with the shareholders of the Trust, and maintaining or
supervising the maintenance of all internal bookkeeping, accounting and
auditing services and records in connection with the Trust's investment and
business activities. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Manager hereby agrees that all records which it maintains for
the Trust are the property of the Trust and further agrees to surrender
promptly to the Trust any such records upon the Trust's request. The Manager
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act the records required to be maintained by Rule 31a-1 under the 1940
Act.
(c) The Manager shall employ or provide and
compensate the executive, administrative, secretarial and clerical personnel
necessary to supervise the provision of the services set forth in Subparagraph
2(A)(b), and shall bear the expense of providing such services, except as may
otherwise be provided in Paragraph 4 of this Agreement. The Manager shall also
compensate all Trustees, officers or employees of the Trust who are directors,
officers or employees of the Manager or any of its affiliates.
B. Investment Management Services.
(a) The Manager shall have responsibility for the
management and investment of the assets and portfolio securities of each
Portfolio, subject to and in accordance with the Declaration of Trust and
By-Laws of the Trust as currently in effect, the current investment objectives
and policies of each Portfolio, and any directions which the Trust's Board of
Trustees may issue to the Manager from time-to-time.
(b) The Manager shall provide a continuous
investment program for each Portfolio, shall revise each such program as
necessary, and shall monitor implementation of the program.
(c) The Manager shall oversee the maintenance of
all books and records with respect to the securities transactions of each
Portfolio and the keeping of each Portfolio's books of account, and shall
provide to the Trust's Board of Trustees such periodic and special reports as
the Board may request.
(d) The Manager may delegate any or all of its
duties under this Paragraph 2(B) and Paragraph 3 with respect to any Portfolio
to one or more persons or companies ("Advisers"),
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pursuant to an agreement between the Manager and each such Adviser providing
such services to a Portfolio ("Investment Advisory Agreement"). Each Investment
Advisory Agreement may provide that the Adviser which is a party thereto,
subject to the control and supervision of the Trust's Board of Trustees and the
Manager, shall have full investment discretion for the affected Portfolio and
shall make all determinations with respect to the investment of that
Portfolio's assets or any portion thereof specified by the Manager and the
purchase and sale of portfolio securities for that Portfolio. Any delegation of
duties pursuant to this Paragraph shall comply with any applicable provisions
of Section 15 of the 1940 Act, except to the extent permitted by any exemptive
order of the Securities and Exchange Commission or similar relief.
(e) The Manager shall evaluate Advisers and shall
advise the Trustees of the Trust of the Advisers which the Manager believes are
best suited to invest the assets of each Portfolio; shall monitor and evaluate
the investment performance of each Adviser employed by the Manager which
manages any portion of a Portfolio's assets; shall allocate the portion of each
Portfolio's assets to be managed by each Adviser; shall recommend changes of or
additional Advisers when appropriate; shall coordinate the investment
activities of the Advisers; and shall compensate the Advisers in the manner
specified in each Investment Advisory Agreement.
(f) The Trust shall provide the Manager with a
statement of the investment objectives and policies of each Portfolio and any
specific investment restrictions applicable thereto as established by the
Trust. The Trust will promptly notify the Manager of any modifications to such
objectives, policies or restrictions or of any specific instructions which the
Trust's Board of Trustees may adopt.
C. Provision of Information Necessary for Preparation of
Securities Registration, Statements, Amendments and Other Materials. The
Manager will make available and provide to the Trust: (i) financial, accounting
and statistical information required by the Trust in the preparation of
registration statements, reports and other documents required by federal
securities laws and the securities laws of the states and other jurisdictions
in which the Trust's shares are sold; (ii) such information as the Trust may
reasonably request for use in the preparation of registration statements,
reports and other documents required by federal securities laws and the
securities laws of the states and other jurisdictions in which the Trust's
shares are sold; and (iii) such information as the Trust may reasonably request
for use in the preparation of such documents or of other materials necessary or
helpful for the distribution of the Trust's shares.
D. Other Obligations and Services. The Manager shall
make available its officers and employees to the Trustees and officers of the
Trust for consultation and discussions regarding the administration and
management of the Trust and its investment activities.
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3. Execution and Allocation of Portfolio Transactions.
A. The Manager, subject to the control and direction of
the Trust's Board of Trustees, shall have authority and discretion to select
brokers and dealers to execute portfolio transactions for each Portfolio, and
for the selection of the markets on or in which the transactions will be
executed.
B. In acting pursuant to Subparagraph 3(A) of this
Agreement, the primary objective of the Manager shall be to obtain the best net
price and most favorable execution of its orders for the Trust. However, this
responsibility shall not be deemed to obligate the Manager to solicit
competitive bids for each transaction, and the Manager shall have no obligation
to seek the lowest available commission cost to the Trust, so long as the
Manager determines that the broker or dealer is able to obtain the best price
on a particular transaction and that the commission cost is reasonable in
relation to the total quality and reliability of the brokerage and research
services made available by the broker to the Manager viewed in terms of either
that particular transaction or of the Manager's overall responsibility to the
Trust or its other clients. Accordingly, the Trust and the Manager agree that
the Manager and the Advisers may select brokers and dealers for the execution
of the Trust's portfolio transactions from among:
(a) Those brokers and dealers who provide
brokerage and research services or statistical quotations and other information
to the Trust, including the quotations necessary to determine the value of each
Portfolio's net assets, in such amount as may reasonably be required in light
of such services; and
(b) Those brokers and dealers who supply
brokerage and research services to the Manager or the Advisers of any Portfolio
which relate directly to the portfolio securities, actual or potential, of the
Portfolio, or which place the Manager or Advisers in a better position to make
decisions in connection with the management of the Portfolio's assets, whether
or not such data may also be useful to the Manager and its affiliates, or the
Advisers and their affiliates, in managing other Portfolios or advising other
clients, in such amount as may reasonably be required.
C. The Manager shall provide such reports to the Trust
as may reasonably be requested by the Trust's Board of Trustees of the total
brokerage business placed and the manner in which the allocation of brokerage
transactions has been accomplished.
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D. The Manager agrees that no investment decision will
be made or influenced by a desire to provide brokerage for allocation in
accordance with the foregoing, and that the right to make such allocation of
brokerage shall not interfere with the Manager's primary duty to obtain the
best net price and execution for the Trust.
E. The Manager agrees that no securities of any
Portfolio will be purchased from or sold to the Manager or any of its
affiliates except in accordance with the 1940 Act and rules thereunder.
4. Expenses of the Trust. It is understood that the Trust will
pay all of its expenses other than those expressly assumed by the Manager
herein, which expenses payable by the Trust shall include: expenses of all
audits by independent public accountants; expenses of each transfer agent,
registrar, dividend disbursing agent, shareholder recordkeeping agent and
custodian (including recordkeeping services provided by each custodian);
expenses of obtaining quotations for calculating the value of each Portfolio's
net assets; salaries and other compensation of any of the Trust's officers and
employees, who are not officers, directors or employees of the Manager or its
affiliates; taxes and the preparation of the Fund's tax returns; brokerage fees
and commissions in connection with the purchase and sale of portfolio
securities for each Portfolio; costs, including the interest expense, of
borrowing money; costs and/or fees incident to meetings of the Trust's
shareholders, Board of Trustees and any committees thereof, the preparation and
mailing of prospectuses and reports of the Trust to its shareholders, the
filing of reports with regulatory bodies, the maintenance of the Trust's
existence as a Massachusetts business trust, and the registration of Trust
shares with federal and other securities authorities as required; legal fees,
including the legal fees related to the registration and continued
qualification of the Trust's shares for sale and fees of separate counsel; for
the Trust's independent Trustees, costs of printing any stock certificates
representing shares of the Trust, trustees' fees and expenses of Trustees who
are not directors, officers or employees of the Manager or any of its
affiliates; costs of the fidelity bond required by Section 17(g) of the 1940
Act and any other insurance premiums; and any extraordinary expenses of a
non-recurring nature.
5. Activities and Affiliates of the Manager. The services of the
Manager hereunder are not to be deemed exclusive, and the Manager and any of
its affiliates shall be free to render similar services to others so long as
its services under this Agreement are not impaired thereby. Subject to and in
accordance with the Declaration of Trust and By-Laws of the Trust as currently
in effect and the 1940 Act and the rules thereunder, it is understood that the
Trustees, officers, agents and shareholders of the Trust are or may be
interested in the Manager or its affiliates as directors, officers, agents or
stockholders of the Manager or its affiliates; directors, officers, agents and
stockholders of the Manager or its affiliates are or may be interested in the
Trust as Trustees, officers, agents,
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shareholders or otherwise; the Manager or its affiliates may be interested in
the Trust as shareholders or otherwise; and the effect of any such interests
shall be governed by said Declaration of Trust, By-Laws and the 1940 Act and
the rules thereunder.
6. Compensation of the Manager. In consideration of the Manager's
services as specified in this Agreement, the Manager shall receive a fee as
specified in the Schedule(s) attached hereto. Such fee constitutes the
Manager's compensation solely with respect to the investment advisory and
portfolio allocation services performed pursuant Paragraphs 2(B) and 3 of this
Agreement. In addition, the Trust acknowledges that the Manager will charge,
and expressly authorizes the Manager to charge, a Shareholder Fee to each
investor in Trust pursuant to Shareholder Service Agreements entered into
between the Manager and each Investor. The shareholder Fee represents the
Manager's compensation for all services performed under this Agreement other
than investment advisory and portfolio allocation services specified in
Paragraphs 2(B) and 3.
7. Liabilities of the Manager. In the absence of willful
misfeasance or bad faith, gross negligence or reckless disregard of its
obligations and duties hereunder, the Manager shall not be subject to liability
to the Trust or to any shareholder of the Trust for any act or omission in the
course of or connected with rendering services hereunder. Any person, even
though also an officer, director, employee or agent of Manager, who may be or
become a Trustee, officer, employee or agent of the Trust shall be deemed, when
rendering services to the Trust or acting with respect to any business of the
Trust, to be rendering such services to or acting solely for the Trust and not
as an officer, director, employee or agent or one under the control of the
Manager even though paid by it.
8. Renewal and Termination. This Agreement shall become effective
on the date written above and, unless sooner terminated as provided herein,
shall continue in effect for two years. This Agreement may be continued
annually thereafter for successive one year periods, provided that such
continuance is specifically approved at least annually with respect to any
Portfolio, (a) by a vote of a majority of the outstanding voting securities of
that Portfolio, or (b) by a vote of a majority of the Trustees of the Trust,
and, in either case by a majority of the Trustees who are not parties to this
Agreement or interested persons of any parties to this Agreement (other than as
Trustees of the Trust) cast in person at a meeting called for the purpose of
voting on this Agreement. Notwithstanding the foregoing, this Agreement may be
terminated at any time with respect to any Portfolio by either party hereto,
without payment of any penalty, on sixty (60) days' written notice, by vote of
the Trust's Board of Trustees or by vote of a majority of the outstanding
voting securities of that Portfolio and will terminate automatically 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
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party to this Agreement at its principal place of business. As used in this
Agreement the terms "assignment," "interested person," and "vote of a majority
of the outstanding voting securities" shall have the meanings set forth in the
1940 Act.
9. 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.
10. Governing Law. To the extent that state Law has not been
preempted by the provisions of any law of the United States heretofore or
hereafter enacted, as the same may be amended from time to time, this Agreement
shall be administered, construed and enforced according to the laws of The
State of Texas.
11. Notice. Notice hereby is given that the Trust's Declaration of
Trust is on file with the Secretary of State of the Commonwealth of
Massachusetts and that the Declaration of Trust and this Agreement are executed
by the Trust's Trustees and/or officers in their capacities as Trustees and/or
officers, and the obligations of the Declaration of Trust and this Agreement
are not binding upon any of them or the Shareholders individually; rather, they
are binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first written above.
AMERICAN AADVANTAGE FUNDS
By /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
Title President
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AMR INVESTMENT SERVICES, INC.
By /s/ M. E. Xxxxxx
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Xxxxxxx X. Xxxxxx
Title Vice President & Treasurer
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Schedule A
to the
Management Agreement
between
AMR Investment Services, Inc.
and
American AAdvantage Funds
As compensation pursuant to section 6 of the Management Agreement between AMR
Investment Services, Inc. and American AAdvantage Funds, American AAdvantage
Funds shall pay to AMR Investment Services, Inc. an annualized fee equal to the
sum of (i) .15% of the net assets of the American AAdvantage Money Market Fund;
and (ii) .05% of the net assets of the American AAdvantage Balanced, Equity and
Fixed Income Funds, plus all fees payable by the Manager with respect to such
Funds pursuant to any Investment Advisory Agreement entered into pursuant to
Paragraph 2(B)(d) of said Management Agreement. The above described
compensation shall be calculated and accrued daily and be payable monthly.
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