SKYLINE FUND
SKYLINE SMALL CAP CONTRARIAN
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, dated the 15th day of December, 1997, made and entered into
by and between SKYLINE FUNDS, a Massachusetts business trust (the "Fund") on
behalf of the Skyline Small Cap Contrarian ("Contrarian"), and SKYLINE ASSET
MANAGEMENT, L.P., a Delaware limited partnership (the "Adviser").
In consideration of the mutual covenants 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. The
Adviser shall determine which investments shall be made or
disposed of by Contrarian and shall effect such acquisitions and
dispositions, all in furtherance of Contrarian's 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's 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. 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, providing shareholder servicing and
providing general administrative services to Contrarian 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
(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; all
expenses of maintaining the registration of shares of Contrarian
under the 1933 Act and of qualifying and maintaining
qualification of shares of Contrarian 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 are charged against
Contrarian. 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 ongoing
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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, 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, and the Adviser
agrees to pay any excess expenses or to reimburse Contrarian 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 shall pay to
the Adviser a monthly fee computed on the basis of the average
daily net asset value of Contrarian 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.
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
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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 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, 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.
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
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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]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
ATTEST: SKYLINE FUNDS
/s/ Xxxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------- ---------------------------
Name: Xxxxx X. Xxxx Name: Xxxxxxx X. Xxxxxx
Title: Secretary Title: President
ATTEST: SKYLINE ASSET MANAGEMENT, L.P.
/s/ Xxxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------- ---------------------------
Name: Xxxxx X. Xxxx Name: Xxxxxxx X. Xxxxxx
Title: Chief Operating Officer Title: President and Chief
Executive Officer
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