EXHIBIT 5(D)
Skyline Sub-Advisory Agreement
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(Select Value Portfolio)
SKYLINE ASSET MANAGEMENT SUB-ADVISORY AGREEMENT
ASSIGNMENT AND CONSENT
THIS ASSIGNMENT AND CONSENT ("Assignment") is made as of this 31st day of
January, 1996, by and among PRINCIPAL PRESERVATION PORTFOLIOS, INC. ("Principal
Preservation"), a Maryland corporation which is a series, open-end, management
investment company registered under the Investment Company Act of 1940, X.X.
XXXXXXX AND COMPANY ("X.X. Xxxxxxx"), a registered investment adviser which
presently serves as the investment adviser to Principal Preservation's Select
Value Portfolio, XXXXXXX ASSET MANAGEMENT, INC. ("ZAMI"), a registered
investment adviser which is an affiliate of X.X. Xxxxxxx, and SKYLINE ASSET
MANAGEMENT, L.P. ("Skyline"), a registered investment adviser which presently
serves as sub-adviser to Principal Preservation's Select Value Portfolio.
RECITALS
WHEREAS, X.X. Xxxxxxx and ZAMI are each wholly-owned subsidiaries of The
Xxxxxxx Companies, Inc.;
WHEREAS, X.X. Xxxxxxx presently serves as investment adviser to Principal
Preservation's Select Value Portfolio pursuant to the terms of a May 1, 1989
Investment Advisory Agreement by and between Principal Preservation and X.X.
Xxxxxxx (the "Investment Advisory Agreement"), and Skyline presently serves as
sub-adviser to Principal Preservation's Select Value Portfolio pursuant to the
terms of an August 30, 1995 Sub-Advisory Agreement by and among Principal
Preservation (on behalf of the Select Value Portfolio), X.X. Xxxxxxx (as
investment adviser to the Select Value Portfolio), and Skyline (the "Sub-
Advisory Agreement");
WHEREAS, in connection with a restructuring and realignment, The Xxxxxxx
Companies, Inc. is consolidating all of its investment advisory operations
within ZAMI, and therefore, by the mutual consent of X.X. Xxxxxxx, ZAMI and
Principal Preservation, the Investment Advisory Agreement this day is being
assigned from X.X. Xxxxxxx to, and is being assumed by, ZAMI;
WHEREAS, in a consistent fashion, the parties to this Assignment wish to
express their intention and consent to the Assignment by X.X. Xxxxxxx of all of
its duties and obligations under the Sub-Advisory Agreement to ZAMI, and for
ZAMI to assume and agree to perform all of X.X. Xxxxxxx'x duties and obligations
under the Sub-Advisory Agreement;
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual promises set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is acknowledged by all parties hereto, the parties hereto
agree as follows:
1. ASSIGNMENT AND ASSUMPTION OF SUB-ADVISORY AGREEMENT. Effective at the
close of business on January 31, 1996, X.X. Xxxxxxx hereby assigns, conveys, and
transfers all of its rights, duties and obligations under the Sub-Advisory
Agreement to ZAMI, and ZAMI agrees to become bound by the terms and conditions
of the Sub-Advisory Agreement and to assume, discharge, perform and become
liable for the performance of all of X.X. Xxxxxxx'x duties and obligations under
the Sub-Advisory Agreement. Principal Preservation and Skyline each hereby
consent to such assignment and assumption. Accordingly, from and after the
close of business on January 31, 1996, the Sub-Advisory Agreement shall continue
in full force and effect with all duties and obligations of X.X. Xxxxxxx
thereunder being deemed duties and obligations of ZAMI as though Principal
Preservation and Skyline had executed such Sub-Advisory Agreement with ZAMI, and
all rights of X.X. Xxxxxxx under such Sub-Advisory Agreement shall be deemed
rights of ZAMI enforceable by ZAMI. In short, each and every reference to X.X.
Xxxxxxx in the Sub-Advisory Agreement shall be deemed instead a reference to
ZAMI.
2. EFFECT OF ASSIGNMENT. The parties acknowledge and intend that,
because (among other factors) X.X. Xxxxxxx and ZAMI are under the common control
of The Xxxxxxx Companies, Inc., this Assignment and Consent does not result in
an "assignment" (as that term is defined in the Investment Company Act of 1940)
of the Sub-Advisory Agreement which would bring about its automatic termination.
IN WITNESS WHEREOF, each of the parties hereto has caused this Assignment
to be executed on its behalf by its duly authorized officer as of the date and
year written above.
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
By: /s/ X.X. Xxxxxxx
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X. X. Xxxxxxx, President
X.X. XXXXXXX AND COMPANY
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx, President
XXXXXXX ASSET MANAGEMENT, INC.
By: /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx, President and CEO
SKYLINE ASSET MANAGEMENT, L.P.
By: /s/ Xxxxxxxx X. Xxxx
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Xxxxxxxx X. Xxxx, Principal, Marketing
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 30th day of August, 1995, by and among PRINCIPAL
PRESERVATION PORTFOLIOS, INC. (the "Fund"), a Maryland corporation, X.X.
XXXXXXX AND COMPANY (the "Adviser"), and SKYLINE ASSET MANAGEMENT, L.P. (the
"Sub-Adviser"), a Delaware limited partnership.
R E C I T A L S
WHEREAS, Mesirow Asset Management, Inc. ("Mesirow") has provided
investment advisory services to the Fund's Select Value Portfolio since the
commencement of its operations on August 23, 1994 pursuant to the terms of a
Sub-Advisory Agreement (the "Present Sub-Advisory Agreement"), dated as of
August 23, 1994, by and among the Fund (on behalf of the Select Value
Portfolio), the Adviser and Mesirow;
WHEREAS, there presently is pending a transaction (the "Transaction") in
which Mesirow would transfer substantially all of the assets of its
institutional business (including its rights and obligations under the Present
Sub-Advisory Agreement) to the Sub-Adviser;
WHEREAS, under the provisions of the Investment Company Act of 1940 (the
"Act"), consummation of the Transaction will cause the Present Sub-Advisory
Agreement to terminate automatically concurrent with such consummation; and
WHEREAS, the parties to the Present Sub-Advisory Agreement desire and
intend for the Sub-Adviser, as the successor to Mesirow's business, to continue
providing investment advisory services to the Select Value Portfolio following
the consummation of the Transaction under the same terms and conditions as
Mesirow presently provides such services, and accordingly desire to enter into
a new sub-advisory agreement on terms and conditions substantively identical
with those of the Present Sub-Advisory Agreement, as set forth herein.
W I T N E S S E T H
In consideration of the mutual promises and agreements herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed by and among the parties hereto as follows:
1. IN GENERAL
The Sub-Adviser agrees, as more fully set forth herein, to act
as Sub-Adviser to the Fund with respect to the investment and
reinvestment of the assets of the Select Value Portfolio and of any
other series of common stock of the Fund as the parties may mutually
agree and specify from time to time on Exhibit A hereto. The Select
Value Portfolio and each other such series is referred to herein as a
"Portfolio." The Sub-Adviser agrees to supervise and arrange the
purchase of securities and the sale of securities held in the
investment portfolios of each Portfolio specified on Exhibit A. It
is understood that the Fund may create one or more additional series
of shares and that, if it does so, this Agreement may be amended by
the mutual written consent of the parties to include such additional
series under the terms of this Agreement.
2. DUTIES AND OBLIGATIONS OF THE SUB-ADVISER WITH RESPECT TO INVESTMENTS
OF ASSETS OF THE PORTFOLIOS
(a) Subject to the succeeding provisions of this section and
subject to the oversight and review of the Adviser and the direction
and control of the Board of Directors of the Fund, the Sub-Adviser
shall:
(i) Determine what securities shall be purchased or sold by
each Portfolio specified on Exhibit A;
(ii) Arrange for the purchase and the sale of securities
held in each Portfolio specified on Exhibit A; and
(iii) Provide the Adviser and the Directors with such
reports as may reasonably be requested in connection with the
discharge of the foregoing responsibilities and the discharge of
the Adviser's responsibilities under its Investment Advisory
Agreement with the Fund and those of X.X. Xxxxxxx and Company
(the "Distributor") under its Distribution Agreement with the
Fund.
(b) Any investment purchases or sales made by the Sub-Adviser
under this section shall at all times conform to, and be in
accordance with, any requirements imposed by: (1) the provisions of
the Act and of any rules or regulations in force thereunder; and (2)
the provisions of the Articles of Incorporation and By-Laws of the
Fund as amended from time to time; (3) any policies and
determinations of the Board of Directors of the Fund; and (4) the
fundamental policies of the Fund, as reflected in its registration
statement under the Act, or as amended by the shareholders of the
Fund; provided that copies of the items referred to in clauses (2),
(3) and (4) shall have been furnished to the Sub-Adviser.
(c) The Sub-Adviser shall give the Fund the benefit of its best
judgment and effort in rendering services hereunder. In the absence
of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations or duties ("disabling conduct")
hereunder on the part of the Sub-Adviser (and its officers,
directors, agents, employees, controlling persons, shareholders and
any other person or entity affiliated with the Sub-Adviser) the Sub-
Adviser shall not be subject to liability to the Fund or to any
shareholder of the Fund for any act or omission in the course of, or
connected with, rendering services hereunder, including without
limitation any error of judgment or mistake of law or for any loss
suffered by any of them in connection with the matters to which this
Agreement relates, except to the extent specified in Section 36(b) of
the Act concerning loss resulting from a breach of fiduciary duty
with respect to the receipt of compensation for services. Except for
such disabling conduct, the Fund shall indemnify the Sub-Adviser (and
its officers, directors, agents, employees, controlling persons,
shareholders and any other person or entity affiliated with the Sub-
Adviser) against any liability arising from the Sub-Adviser's conduct
under this Agreement to the extent permitted by the Fund's Articles
of Incorporation, By-Laws and applicable law.
(d) Nothing in this Agreement shall prevent the Sub-Adviser or
any affiliated person (as defined in the Act) of the Sub-Adviser from
acting as investment advisor or manager for any other person, firm or
corporation and shall not in any way limit or restrict the Sub-
Adviser or any such affiliated person from buying, selling or trading
any securities for its or their own accounts or for the accounts of
others for whom it or they may be acting, provided, however, that the
Sub-Adviser expressly represents that it will undertake no activities
which, in its judgment, will adversely affect the performance of its
obligations to the Fund under this Agreement or under the Act. It is
agreed that the Sub-Adviser shall have no responsibility or liability
for the accuracy or completeness of the Fund's Registration Statement
under the Act and the Securities Act of 1933, except for information
supplied by the Sub-Adviser for inclusion therein. The Sub-Adviser
shall be deemed to be an independent contractor and, unless otherwise
expressly provided or authorized, have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the
Fund.
(e) In connection with its duties to arrange for the purchase
and sale of each Portfolio's portfolio securities, the Sub-Adviser
shall follow the principles set forth in any investment advisory
agreement in effect from time to time between the Fund and the
Adviser, provided that a copy of any such agreement shall have been
provided to the Sub-Adviser. The Sub-Adviser will promptly
communicate to the Adviser and to the officers and the Directors of
the Fund such information relating to portfolio transactions as they
may reasonably request.
3. ALLOCATION OF EXPENSES
The Sub-Adviser agrees that it will furnish the Fund, at the
Sub-Adviser's expense, with all office space and facilities,
equipment and clerical personnel necessary for carrying out the Sub-
Adviser's duties under this Agreement. The Sub-Adviser will also pay
all compensation of those of the Fund's officers and employees, if
any, and of those Directors, if any, who in each case are affiliated
persons of the Sub-Adviser.
4. CERTAIN RECORDS
Any records required to be maintained and preserved pursuant to
the provisions of Rule 31a-1 and Rule 31a-2 under the Act which are
prepared or maintained by the Sub-Adviser on behalf of the Fund are
the property of the Fund and will be surrendered promptly to the Fund
or the Adviser on request.
5. REFERENCE TO THE SUB-ADVISER
Neither the Fund nor the Adviser or any affiliate or agent
thereof shall make reference to or use the name of the Sub-Adviser or
any of its affiliates in any advertising or promotional materials
without the prior approval of the Sub-Adviser, which approval shall
not be unreasonably withheld.
6. COMPENSATION OF THE SUB-ADVISER
The Adviser agrees to pay the Sub-Adviser, and the Sub-Adviser
agrees to accept as full compensation for all services rendered by
the Sub-Adviser as such, a management fee as specified on Exhibit A.
7. DURATION AND TERMINATION
(a) This Agreement shall go into effect with respect to the
Select Value Portfolio and replace the Present Sub-Advisory Agreement
upon the later of: (i) consummation of the Transaction; or (ii) on
the first business day following approval hereof by a vote of a
"majority" (as defined in the Act) of the outstanding voting
securities of the Select Value Portfolio. In the event the
Transaction is not consummated for any reason, then this Agreement
shall terminate automatically without ever having become effective
and shall be considered void and of no further force or effect, and
the Present Sub-Advisory Agreement shall continue in full force and
effect unaffected by this Agreement unless and until terminated in
accordance with its terms. In the event the parties hereto mutually
agree that one or more series of the Fund should be included as
additional "Portfolio(s)" hereunder, this Agreement shall become
effective with respect to each such additional Portfolio on the date
specified on Exhibit A hereto. Once effective with respect to any
Portfolio(s), this Agreement shall, unless terminated as hereinafter
provided, continue in effect for a period of two years with respect
to such Portfolio, and thereafter from year to year, but only so long
as such continuance is specifically approved at least annually by a
majority of the Fund's Board of Directors, or by the vote of the
holders of a "majority" (as defined in the Act) of the outstanding
voting securities of the relevant Portfolio(s), and, in either case,
a majority of the Directors who are not parties to this Agreement or
"interested persons" (as defined in the Act) of any such party cast
in person at a meeting called for the purpose of voting on such
approval.
(b) This Agreement may be terminated by the Sub-Adviser in its
entirety or with respect to any one or more specifically identified
Portfolios at any time without penalty upon giving the Fund and the
Adviser sixty (60) days' written notice (which notice may be waived
by the Fund and the Adviser) and may be terminated by the Fund or the
Adviser in its entirety or with respect to any one or more
specifically identified Portfolios at any time without penalty upon
giving the Sub-Adviser sixty (60) days' written notice (which notice
may be waived by the Sub-Adviser), provided that such termination by
the Fund shall be directed or approved by the vote of a majority of
all of its Directors in office at the time or by the vote of the
holders of a "majority" (as defined in the Act) of the voting
securities of each Portfolio with respect which the Agreement is to
be terminated. This Agreement shall automatically terminate in the
event of its "assignment" (as defined in the Act). This Agreement
will also automatically terminate in the event that the Investment
Advisory Agreement by and between the Fund and X.X. Xxxxxxx and
Company is terminated for any reason.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers and their seals to
be hereto affixed, all as of the day and year first above written.
PRINCIPAL PRESERVATION PORTFOLIOS, INC. X.X. XXXXXXX AND COMPANY
By: /s/ X.X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxx
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X. X. Xxxxxxx, President Xxxxx X. Xxxxxxx, President
SKYLINE ASSET MANAGEMENT, L.P.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, President and
Chief Executive Officer
EXHIBIT A TO THE
PRINCIPAL PRESERVATION PORTFOLIOS, INC.
SKYLINE ASSET MANAGEMENT, L.P.
SUB-ADVISORY AGREEMENT
1. Select Value Portfolio.
a. Determined pursuant to Section 7(a) of this Agreement.
b. Management Fee: computed daily and paid monthly at the annual rate
of 0.375 of one percent on the Select Value Portfolio's first $250
million of average daily net assets, reducing 0.025 of one percent on
each $250 million thereafter, down to an annual rate of 0.325 of one
percent on average daily net assets over $500 million.
