1
Exhibit 99.d.ii.I
AMERICAN AADVANTAGE 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 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 ("1940 Act"),
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 Trust's
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 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
2
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. 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 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 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).
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
3
billed to the Trust or the Manager at a price to be agreed upon by the Adviser
and the Trust or the Manager.
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 or 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
1940 Act 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. 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
4
(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
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 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 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 Trust is on file with the
Secretary of the State of New York, 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.
Hotchkis and Wiley AMR Investment Services,Inc.
By By /S/ XXXXXXX X. XXXXX
--------------------------- ---------------------------------
Title Title President
------------------------ -----------------------------
5
Amendment dated October 15, 1998 to
Schedule A of the
American AAdvantage Funds
Investment Advisory Agreement
between
AMR Investment Services, Inc.
and
Hotchkis and Wiley
AMR Investment Services, Inc. shall pay compensation to Hotchkis and
Wiley pursuant to section 3 of the Investment Advisory Agreement between said
parties in accordance with the following annual percentage rates:
Balanced, Growth and Income and International Equity Funds
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 on 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.
Small Cap Value Fund
0.5625% per annum of Fund assets under management.
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.
