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Exhibit 99.b.5.a.i
AMERICAN AADVANTAGE MILEAGE FUNDS
MANAGEMENT AGREEMENT
Agreement made as of this 1st day of October, 1995 between the
American AAdvantage Mileage Funds, a Massachusetts business trust (the "Mileage
Trust"), and AMR Investment Services, Inc. (the "Manager"), a Delaware
corporation.
WHEREAS, the Mileage Trust is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as an open-end management investment
company consisting of one or more series (portfolios) of shares, each having
its own investment policies; and
WHEREAS, the Manager is an investment adviser under the Investment
Advisers Act of 1940, as amended; and
WHEREAS, the Mileage Trust desires to retain the Manager as investment
adviser and administrator to furnish administrative, investment advisory and
portfolio management services to the Mileage Trust with respect to such
portfolios as the Mileage Trust and the Manager shall agree upon from time to
time (collectively, the "Portfolios"), and the Manager is willing to furnish
such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Mileage Trust hereby appoints the Manager as
investment adviser and administrator of the Mileage Trust and each Portfolio
listed on Schedule A of this Agreement (as such schedule may be amended from
time to time) for the period and on the terms set forth in this Agreement. The
Manager accepts such appointment and agrees to render the services herein set
forth. In the performance of its duties, the Manager will act in the best
interests of the Mileage Trust and each Portfolio and will comply with (a)
applicable laws and regulations, including, but not limited to, the 1940 Act,
(b) the terms of this Agreement, (c) the Mileage Trust's Declaration of Trust,
By-Laws and currently effective registration statement under the Securities Act
of 1933, as amended, and the 1940 Act, and any amendments thereto, (d) relevant
undertakings to state securities regulators which have been provided to the
Manager, (e) the stated investment objective, policies and restrictions of each
applicable Portfolio, and (f) such other guidelines as the Board
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of Trustees of the Mileage Trust ("Board of Trustees") reasonably may
establish.
2. DUTIES AS INVESTMENT ADVISER.
(a) Subject to the supervision of the Board of Trustees, the
Manager will provide a continuous investment program for each Portfolio,
including investment research and management with respect to all securities,
investments and cash equivalents in each Portfolio. The Manager will determine
from time to time what securities and other investments will be purchased,
retained or sold by each Portfolio. The Manager will exercise full discretion
and act for each Portfolio in the same manner and with the same force and
effect as such Portfolio itself might or could do with respect to purchases,
sales, or other transactions, as well as with respect to all other things
necessary or incidental to the furtherance or conduct of such purchases, sales
or other transactions.
(b) The Manager will place orders pursuant to its investment
determinations for each Portfolio either directly with the issuer or through
other broker-dealers ("brokers"). In the selection of brokers and the
placement of orders for the purchase and sale of portfolio investments for the
Portfolios, the Manager shall use its best efforts to obtain for the Portfolios
the most favorable price and execution available, except to the extent it may
be permitted to pay higher brokerage commissions for brokerage and research
services as described below. In using its best efforts to obtain the most
favorable price and execution available, the Manager, bearing in mind the
Mileage Trust's best interests at all times, shall consider all factors it
deems relevant, including by way of illustration, price, the size of the
transaction, the nature of the market for the security, the amount of the
commission, the timing of the transaction taking into account market prices and
trends, the reputation, experience and financial stability of the broker
involved and the quality of service rendered by the broker in other
transactions. Subject to such policies as the Board of Trustees may determine,
the Manager shall not be deemed to have acted unlawfully or to have breached
any duty created by this Agreement or otherwise solely by reason of its having
caused a Portfolio to pay a broker that provides brokerage and research
services to the Manager an amount of commission for effecting a portfolio
investment transaction in excess of the amount of commission another broker
would have charged for effecting that transaction if the Manager determines in
good faith that such amount of commission was reasonable in relation to the
value of the brokerage and research services provided by such broker, viewed in
terms of either that particular transaction or the Manager's overall
responsibilities with respect to the Mileage Trust and to other clients of the
Manager as to which the Manager exercises investment discretion.
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The Mileage Trust agrees that any entity or person associated with the Manager
which is a member of a national securities exchange is authorized to effect any
transaction on such exchange for the account of the Mileage Trust which is
permitted by Section 11(a) of the Securities Exchange Act of 1934, as amended,
and the Mileage Trust hereby consents to the retention of compensation for such
transactions.
(c) The Manager will provide the Board of Trustees on a regular
basis with economic and investment analyses and reports and make available to
the Board upon request any economic, statistical and investment services
normally available to institutional or other customers of the Manager.
(d) Any of the foregoing functions with respect to any or all
Portfolios may be delegated by the Manager, at the Manager's expense, to one or
more appropriate parties, including an affiliated party ("Advisers"), subject
to such approval by the Board of Trustees and shareholders of each affected
Portfolio as may be required by the 1940 Act. In connection with any such
delegation, the Manager shall:
(i) oversee the performance of delegated functions by any
Adviser and furnish the Mileage Trust with quarterly evaluations and
analyses concerning the performance of delegated responsibilities by
those parties;
(ii) allocate the portion of each Portfolio's assets to be
managed by an Adviser and coordinate the investment activities of the
Advisers;
(iii) if appropriate, recommend changes in Advisers or the
addition of Advisers, subject to the necessary approvals under the
1940 Act; and
(iv) be responsible for compensating the Advisers in the
manner specified in its advisory agreements with the Advisers.
3. DUTIES AS ADMINISTRATOR. The Manager will assist in administering
the affairs of the Mileage Trust subject to the supervision of the Board of
Trustees and the following understandings:
(a) The Manager will supervise all aspects of the operations of the
Mileage Trust except as hereinafter set forth; provided, however, that nothing
herein contained shall be deemed to relieve or deprive the Board of Trustees of
its responsibility for and control of the conduct of the Mileage Trust's
affairs.
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(b) The Manager will investigate and, with appropriate approval of
the Board of Trustees, select necessary service companies to conduct certain
operations of the Mileage Trust, including the Mileage Trust's custodian,
transfer agent, dividend disbursing agent, distributor, independent public
accountant and attorney.
(c) The Manager will provide the Mileage Trust with such
administrative and clerical services as are deemed necessary or advisable by
the Board of Trustees, including the maintenance of certain books and records
of the Mileage Trust and each Portfolio which are not maintained by the Mileage
Trust's custodian or any Adviser.
(d) The Manager will arrange, but not pay, for the periodic updating
of prospectuses and statements of additional information and supplements
thereto, proxy material, tax returns and reports to shareholders and the
Securities and Exchange Commission.
(e) The Manager will provide the Mileage Trust with, or obtain for
it, adequate office space and all necessary office equipment and services,
including telephone service, heat, utilities, stationery supplies and similar
items.
(f) The Manager will hold itself available to respond to shareholder
inquiries.
(g) Any of the foregoing functions with respect to any or all
Portfolios may be delegated by the Manager, at the Manager's expense, to
another appropriate party (including an affiliated party), subject to such
approval by the Board of Trustees. The Manager shall oversee the performance
of delegated functions by any such party and shall furnish to the Mileage Trust
with quarterly evaluations and analyses concerning the performance of delegated
responsibilities by those parties.
4. SERVICES NOT EXCLUSIVE. The services furnished by the Manager
hereunder are not to be deemed exclusive and the Manager shall be free to
furnish similar services to others so long as its services under this Agreement
are not impaired thereby.
5. BOOKS AND RECORDS. In compliance with the requirements of
Rule 3la-3 under the 1940 Act, the Manager hereby agrees that all records which
it maintains for the Mileage Trust are the property of the Mileage Trust and
further agrees to surrender promptly to the Mileage Trust any of such records
upon the Mileage Trust's request. The Manager further agrees to preserve for
the periods prescribed by Rule 3la-2 under the 1940 Act the
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records required to be maintained by Rule 3la-1 under the 1940 Act.
6. EXPENSES. During the term of this Agreement, the Mileage
Trust will bear all expenses not specifically assumed by the Manager incurred
in its operations and the offering of its shares. Expenses borne by the
Mileage Trust will include, but not be limited to, the following (or each
Portfolio's proportionate share of the following): (a) brokerage commissions
relating to securities purchased or sold by the Mileage Trust or any losses
incurred in connection therewith; (b) fees payable to and expenses incurred on
behalf of the Mileage Trust by the Manager; (c) expenses of organizing the
Mileage Trust and the Portfolios; (d) filing fees and expenses relating to the
registration and qualification of the Mileage Trust's shares and the Mileage
Trust under federal or state securities laws and maintaining such registrations
and qualifications; (e) distribution fees, if any; (f) fees and salaries
payable to the members of the Board of Trustees and officers who are not
officers or employees of the Manager or interested persons (as defined in the
0000 Xxx) of any investment adviser or distributor of the Mileage Trust; (g)
taxes (including any income or franchise taxes) and governmental fees; (h)
costs of any liability, uncollectible items of deposit and other insurance or
fidelity bonds; (i) any costs, expenses or losses arising out of any liability
of or claim for damage or other relief asserted against the Mileage Trust for
violation of any law; (j) legal, accounting and auditing expenses, including
legal fees of special counsel for the independent trustees; (k) charges of
custodians, transfer agents and other agents; (l) costs of preparing share
certificates; (m) expenses of setting in type and printing Prospectuses and
supplements thereto for existing shareholders, reports and statements to
shareholders and proxy material; (n) any extraordinary expenses (including fees
and disbursements of counsel) incurred by the Mileage Trust; and (o) fees and
other expenses incurred in connection with membership in investment company
organizations.
The Mileage Trust may pay directly any expense incurred by it in its
normal operations and, if any such payment is consented to by the Manager and
acknowledged as otherwise payable by the Manager pursuant to this Agreement,
the Mileage Trust may reduce the fee payable to the Manager pursuant to
paragraph 7 hereof by such amount. To the extent that such deductions exceed
the fee payable to the Manager on any monthly payment date, such excess shall
be carried forward and deducted in the same manner from the fee payable on
succeeding monthly payment dates.
In addition, if the expenses borne by the Mileage Trust or any
Portfolio in any fiscal year exceed the applicable expense
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limitations imposed by the securities regulations of any state in which shares
are registered or qualified for sale to the public, the Manager will reimburse
the Mileage Trust or Portfolio for any excess up to the amount of the fee
payable to it during that fiscal year pursuant to paragraph 7 hereof.
7. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement with respect to each Portfolio, the Mileage Trust
will pay the Manager, effective from the date of this Agreement, a fee which is
computed daily and paid monthly from each Portfolio's assets at the annual
rates as percentages of that Portfolio's average daily net assets under
Manager's management as set forth in the attached Schedule A, which schedule
can be modified from time to time to reflect changes in annual rates or the
addition or deletion of a Portfolio from the terms of this Agreement, subject
to appropriate approvals required by the 0000 Xxx. To the extent that a
Portfolio invests all of its investable assets (i.e., securities and cash) in
another registered investment company, however, only that portion of the fee
attributable to that Fund as specified in Schedule A attached hereto shall be
paid for the period that such Fund's assets are so invested. If this Agreement
becomes effective or terminates with respect to any Portfolio before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion that such period
bears to the full month in which such effectiveness or termination occurs.
8. LIMITATION OF LIABILITY OF THE MANAGER. The Manager shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Mileage Trust or any Portfolio in connection with the matters to which this
Agreement relate except a loss resulting from the willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement.
Any person, even though also an officer, partner, employee, or agent of the
Manager, who may be or become an officer, trustee, employee or agent of the
Mileage Trust shall be deemed, when rendering services to the Mileage Trust or
acting in any business of the Mileage Trust, to be rendering such services to
or acting solely for the Mileage Trust and not as an officer, partner,
employee, or agent or one under the control or direction of the Manager even
though paid by it.
9. DURATION AND TERMINATION. This Agreement shall become effective
upon its execution; provided that, with respect to any Portfolio now existing
or hereafter created, this agreement shall not take effect unless it first has
been approved by a vote of
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the majority of those trustees of the Mileage Trust who are not parties to this
Agreement or interested persons of such party, cast in person at a meeting
called for the purpose of voting on such approval, and by vote of a majority of
that Portfolio's outstanding voting securities. This Agreement shall remain in
full force and effect continuously thereafter until terminated without the
payment of any penalty by any one of the following:
(a) By vote of a majority of its trustees, or by the affirmative vote
of a majority of the outstanding Shares of such Portfolio, the Mileage Trust
may at any time terminate this Agreement with respect to any or all Portfolios
by providing not more than 60 days' written notice delivered or mailed by
registered mail, postage prepaid, to the Manager at its principal offices.
(b) With respect to any Portfolio, if (i) the trustees or the
shareholders of that Portfolio by the affirmative vote of a majority of the
outstanding shares of such Portfolio, and (ii) a majority of the trustees who
are not interested persons of the Mileage Trust or of the Manager or of any
Adviser, by vote cast in person at a meeting called for the purpose of voting
on such approval, do not specifically approve at least annually the continuance
of this Agreement, then this Agreement shall automatically terminate at the
close of business on the second anniversary of its execution, or upon the
expiration of one year from the effective date of the last such continuance,
whichever is later; provided, however, that if the continuance of this
Agreement is submitted to the shareholders of a Portfolio for their approval
and such shareholders fail to approve such continuance of this Agreement as
provided herein, the Manager may continue to serve hereunder in a manner
consistent with the 1940 Act and the rules and regulations thereunder with
respect to that Portfolio.
(c) The Manager may at any time terminate this Agreement with respect
to any or all Portfolios by not less than 60 days' written notice delivered or
mailed by registered mail, postage prepaid to the Mileage Trust.
(d) This Agreement automatically and immediately will terminate in
the event of its assignment.
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, and no material amendment
of this Agreement with respect to any Portfolio shall be effective until
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approved by vote of the holders of a majority of that Portfolio's outstanding
voting securities.
11. NAME OF MILEAGE TRUST. The Mileage Trust may use the name
"American AAdvantage" or "American AAdvantage Mileage Funds" only for so long
as this Agreement or any extension, renewal or amendment hereof remains in
effect, including any similar agreement with any organization which shall have
succeeded to the business of the Manager. At such time as such an agreement
shall no longer be in effect, the Mileage Trust will (to the extent that it
lawfully can) cease to use any name derived from American AAdvantage Mileage
Funds, or AMR Investment Services, Inc., or any successor organization.
12. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Texas, without giving effect to the
conflicts of laws principles thereof, and in accordance with the 1940 Act. To
the extent that the applicable laws of the State of Texas conflict with the
applicable provisions of the 1940 Act, the latter shall control.
13. DEFINITIONS. As used in this Agreement, the terms "majority
of the outstanding voting securities," "interested person," and "assignment"
shall have the same meanings as such terms have in the 1940 Act.
14. 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. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors.
15. NOTICE. Notice hereby is given that the Mileage Trust's
Declaration of Trust is on file with the Secretary of State of the Commonwealth
of Massachusetts and the Declaration of Trust and this Agreement are executed
by the Mileage 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 Mileage Trust.
16. MISCELLANEOUS. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
Attest: AMERICAN AADVANTAGE MILEAGE FUNDS
By: /s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxxx X. Xxxxxxxxx
------------------------- ----------------------
Attest: AMR INVESTMENT SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx By: /s/ Xxxxxxx X. Xxxxx
------------------------- -----------------------------
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SCHEDULE A
TO THE MANAGEMENT AGREEMENT BETWEEN
AMR INVESTMENT SERVICES, INC.
AND THE
AMERICAN AADVANTAGE MILEAGE FUNDS
As compensation pursuant to section 7 of the Management Agreement
between AMR Investment Services, Inc. (the "Manager") and American AAdvantage
Mileage Funds (the "Mileage Trust"), the Mileage Trust shall pay to the Manager
a fee, computed daily and paid monthly, at the following annual rates as
percentages of each Portfolio's average daily net assets:
(1) 0.20% of the net assets of the American AAdvantage Money
Market Mileage Fund, the American AAdvantage Municipal Money Market
Mileage Fund, and the American AAdvantage U.S. Treasury Money Market
Mileage Fund;
(2) 0.50% of the net assets of the American AAdvantage
Limited-Term Income Mileage Fund;
(3) 0.35% of the net assets of the American AAdvantage
Balanced Mileage Fund, the American AAdvantage Growth and Income
Mileage Fund, and the American AAdvantage International Equity Mileage
Fund;
(4) plus all fees payable by the Manager with respect to such
Funds pursuant to any Investment Advisory Agreement entered into
pursuant to Paragraph 2(d) of said Management Agreement.
To the extent that a Portfolio invests all of its investable assets
(i.e., securities and cash) in another registered investment company, however,
the Mileage Trust shall pay to the Manager as compensation pursuant to section
7 of the Management Agreement the following fee, computed daily and paid
monthly, at the following annual rates as percentages of each Portfolio's
average daily net assets:
(1) 0.25% of the net assets of the American AAdvantage
Balanced Mileage Fund, the American AAdvantage Growth and Income
Mileage Fund, the American AAdvantage International Equity Mileage
Fund and the American AAdvantage Limited-Term Income Fund; and
(2) 0.05% of the net assets of the American AAdvantage Money
Market Mileage Fund, the American AAdvantage Municipal Money Market
Mileage Fund, and the American AAdvantage U.S. Treasury Money Market
Mileage Fund.
DATED: October 1, 1995
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