SKYLINE FUND
SKYLINE CONTRARIAN EQUITIES
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, dated the ___ day of _______, 1997, made and entered into
by and between SKYLINE FUNDS, a Massachusetts business trust (the "Fund") on
behalf of the Skyline Contrarian Equities ("Contrarian Equities"), and SKYLINE
ASSET MANAGEMENT, L.P., a Delaware limited partnership (the "Adviser").
In consideration of the mutual convenants hereinafter contained, the
parties hereto hereby agree as follows:
1. ENGAGEMENT OF THE ADVISER. The Adviser shall manage the investment
and reinvestment of the assets of Contrarian Equities. The Adviser
shall determine which investments shall be made or disposed of by
Contrarian Equities and shall effect such acquisitions and
dispositions, all in furtherance of Contrarian Equities' investment
objective and policies, subject to the overall control and supervision
of the Fund's board of trustees, for the period and on the terms set
forth in this Agreement.
The Adviser is authorized to place Contrarian Equities' portfolio
transactions with securities broker-dealers and futures commission
merchants and to negotiate the terms of such transactions, including
brokerage commissions, on behalf of Contrarian Equities. The Adviser
is authorized to exercise discretion within the Fund's policy
concerning allocation of its brokerage business, as permitted by law,
including but not limited to Section 28(e) of the Securities Exchange
Act of 1934. The Adviser shall report on such activities to the
Fund's board of trustees and shall submit such reports and other
information thereon as the Fund's board of trustees shall from time to
time request. The Adviser shall provide certain other services to the
Fund in connection with the Fund's ongoing administration and
operation.
2. COMPLIANCE WITH APPLICABLE REQUIREMENTS. This Agreement will be
performed in accordance with the requirements of the Investment
Company Act of 1940 (the "Act") and the Investment Advisers Act of
1940 and the rules and regulations under such acts, to the extent that
the subject matter of this Agreement is within the purview of such
acts and such rules and regulations. The Adviser will assist the Fund
in complying with the requirements of the Act and the Securities Act
of 1933, as amended (the "1933 Act") and the rules and regulations
under such acts, and in qualifying as a regulated investment company
under the Internal Revenue Code and applicable regulations of the
Internal Revenue Service thereunder. In carrying out its obligations
under this Agreement the Adviser shall at all times conform to the
provisions of the Agreement and Declaration of Trust and By-Laws of
the Fund, the provisions of the currently effective Registration
Statement
of the Fund under the Act and the 1933 Act, and any other applicable
provisions of state or federal law.
3. EXPENSES TO BE PAID BY THE ADVISOR. The Advisor shall furnish, at its
own expense, office space to the Fund and all necessary office
facilities, equipment, and personnel for managing the assets of
Contrarian Equities, providing shareholder servicing and providing
general administrative services to Contrarian Equities and to the
Fund. The Adviser shall also assume and pay all other ordinary costs
and expenses incurred by it in connection with managing the assets of
the Fund; all ordinary accounting, auditing and legal services,
clerical and statistical services, administrative costs and advisory
fees (except to the extent payable by the Fund pursuant to Section 4);
any compensation of officers and employees of the Fund; all costs
attributable to shareholder and investor services relating to
Contrarian Equities (including, without limitation, telephone and
personnel expenses and the charges, if any, of third parties
performing such services); all expenses of marketing shares of
Contrarian Equities; all expenses of maintaining the registration of
shares of Contrarian Equities under the 1933 Act and of qualifying and
maintaining qualification of shares of Contrarian Equities under the
securities laws of such United States jurisdictions as the Fund may
from time to time reasonably designate (except to the extent payable
by the Fund pursuant to Section 4); and all expenses of determining
daily price computations, placing of portfolio transaction orders, and
performing related bookkeeping services. The Adviser shall pay all
charges of depositories, custodians, and other agencies for the
safekeeping and servicing of the Fund's cash, securities, and other
property and of the Fund's transfer, dividend disbursing, and
redemption agents and registrars, if any; insurance expenses; all
compensation of trustees who are "interested persons" of the Fund as
defined in the Act and all expenses incurred in connection with their
services to the Fund; all expenses of publication of notices and
reports to the Fund's shareholders; all expenses of proxy
solicitations of the Fund or its board of trustees; and all expenses
of maintaining the Fund's existence and maintaining the registration
of the Fund under the Act.
4. EXPENSES TO BE PAID BY THE FUND. Expenses borne by the Fund, as
described below, attributable to Contrarian Equities are charged
against Contrarian Equities Other expenses of the Fund are allocated
among its portfolios on a reasonable basis as determined by the Fund's
board of trustees. The Fund shall pay all fees and expenses incurred
in connection with the services to the Fund of trustees who are not
"interested persons" of the Fund as defined in the Act; all initial
offering and organizational expenses of the Fund, including
typesetting of the Fund's initial prospectus, legal and accounting
expenses, initial registration under the Act, and initial 1933 Act
registration; all taxes and fees payable to federal, state, or other
governmental agencies, domestic or foreign; all stamp or other
transfer taxes; all interest charges; and any extraordinary costs or
expenses such as legal accounting, or other cost or expenses not
incurred in the course of the Fund's
2
ongoing operation. In addition to the payment of the foregoing
expenses the Fund shall also pay all brokers' commissions and other
portfolio transaction costs.
5. LIMITATION OF EXPENSES. During the term of this Agreement, the total
expenses of Contrarian Equities, exclusive of extraordinary costs or
expenses such as legal, accounting, or other costs or expenses not
incurred in the course of the Fund's ongoing operation, but including
fees paid to the Adviser pursuant to paragraph 6 below, shall not in
any fiscal year exceed the annual rate of 1.75% of the average daily
net asset value of Contrarian Equities, and the Adviser agrees to pay
any excess expenses or to reimburse Contrarian Equities for any sums
expended for such expenses in excess of that amount. Such payment, if
any, will be paid on a monthly basis. Brokers' commissions and other
charges relating to the purchase and sale of securities shall not be
regarded as expenses for this purpose.
6. COMPENSATION OF THE ADVISER. For the services to be rendered and as
full reimbursement for all expenses of the Fund to be paid by the
Adviser pursuant to this Agreement, Contrarian Equities shall pay to
the Adviser a monthly fee computed on the basis of the average daily
net asset value of Contrarian Equities at the following annual rates:
(i) 1.50% of the first $200 million of average daily net assets;
(ii) 1.45% of the next $200 million of average daily net assets;
(iii) 1.40% of the next $200 million average daily net assets; and
(iv) 1.35% of average daily net assets in excess of $600 million. The
fee for each calendar month or portion thereof shall be payable on the
first business day of the next month.
7. SERVICES OF THE ADVISER NOT EXCLUSIVE. The services of the Adviser to
the Fund hereunder are not to be deemed exclusive. The Adviser shall
be free to render similar services to others and engage in other
activities. The Adviser shall be deemed for all purposes to be an
independent contractor and not an agent of the Fund, and unless
otherwise expressly provided or authorized, shall have no authority to
act for or represent the Fund in any way.
8. SERVICES OTHER THAN AS THE ADVISER. The Adviser or its affiliates may
act as broker for the Fund in connection with the purchase of sale of
securities by or for the Fund if and to the extent permitted by
procedures adopted from time to time by the Fund's board of trustees.
Such brokerage services are not within the scope of the duties of the
Adviser under this Agreement and, within the limits permitted by law
and the Fund's board of trustees, the Adviser may receive brokerage
commissions, fees, or other remuneration from the Fund for such
service in addition to its fee for services as the Adviser. Within
the limits permitted by law, the Adviser may receive compensation from
the Fund for other services performed by it for the Fund which are not
within the scope of the duties of the Adviser under this Agreement.
3
9. LIMITATION OF LIABILITY OF THE ADVISER. The Adviser shall not be
liable to the Fund or its shareholders for any loss suffered by the
Fund or its shareholders from or as a consequence of any act or
omission of the Adviser, or of any of the directors, officers,
employees, or agents of the Adviser, in connection with, pursuant to
or arising out of investment advisory or portfolio investment services
under this Agreement, except by reason of willful misfeasance, bad
faith, or gross negligence on the part of the Adviser in the
performance of such investment advisory or portfolio investment duties
or by reason of reckless disregard by the Adviser of such investment
advisory or portfolio investment obligations and duties under this
Agreement.
With respect to all other services rendered under this Agreement, the
Adviser shall not be liable to the Fund or its shareholders for any
loss suffered by the Fund or its shareholders from or as a consequence
of any act or omission of the Adviser, or of any of the directors,
officers, employees or agents of the Adviser, except by reason of
willful misfeasance, bad faith, gross negligence or negligence on the
part of the Adviser in the performance of such other duties or by
reason of reckless disregard by the Adviser of such other obligations
or duties.
10. DURATION AND RENEWAL. This Agreement has been approved on behalf of
Contrarian Equities by a majority of those trustees of the Fund who
are not "interested persons" (as defined in the Act) of the Fund or of
the Adviser, voting in person at a meeting called for the purpose of
voting on such approval. Unless terminated as provided in Section 11,
this Agreement shall continue in effect until April 30, 1999, and
thereafter from year to year only so long as such continuance is
specifically approved at least annually by the board of trustees of
the Fund, including a majority of those trustees of the Fund who are
not "interested persons" (as defined in the Act) of the Fund or of the
Adviser, voting in person at a meeting called for the purpose of
voting on such approval.
11. TERMINATION. This Agreement may be terminated at any time, without
payment of any penalty, by the Fund's board of trustees or by a vote
of the holders of a majority (as defined in the Act) of the
outstanding shares of Contrarian Equities, upon 60 days' written
notice to the Adviser. This Agreement may be terminated by the
Adviser at any time upon 90 days' written notice to the Fund. This
Agreement shall terminate automatically in the event of its assignment
(as defined in the Act).
12. AMENDMENT. This Agreement may not be amended without the affirmative
vote of (a) a majority of those trustees who are not "interested
persons" as defined in the Act of the Fund or of the Adviser, voting
in person at a meeting called for the purpose of voting on such
approval, and (b) the holders of a majority of the outstanding shares
of Portfolio.
4
13. GOVERNING LAW. The terms and provisions of this Agreement shall be
interpreted under and governed by the law of the State of Illinois.
14. LIMITED LIABILITY. Any obligation of the Fund hereunder shall be
binding only on the assets of the Fund (or the applicable Portfolio
thereof) and shall not be binding upon any trustee, officer, employee,
agent or shareholder of the Fund. Neither the authorization of any
action by the trustees or shareholders of the Fund nor the execution
of this Agreement on behalf of the Fund shall impose any liability
upon any trustee or any shareholder.
15. NOTICES. Any notices and communications required hereunder shall be
in writing and shall be deemed given when delivered in person or when
sent by first-class, registered or certified mail to the Adviser at
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000 and to the
Fund at 000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000,
or at such address as either party may from time to time specify by
notice to the other.
[Remainder of Page Intentionally Blank]
5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
ATTEST: SKYLINE FUNDS
By:
------------------------------ -------------------------------
Name: Xxxxx X. Xxxx Name: Xxxxxxx X. Xxxxxx
Title: Secretary Title: President
ATTEST: SKYLINE ASSET MANAGEMENT, L.P.
By:
------------------------------ -------------------------------
Name: Xxxxx X. Xxxx Name: Xxxxxxx X. Xxxxxx
Title: Chief Operating Officer Title: President and Chief
Executive Officer
6
