SKYLINE FUNDS
SKYLINE SMALL CAP CONTRARIAN
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, dated as of the 28th day of May, 1998, made and entered
into by and between SKYLINE FUNDS, a Massachusetts business trust (the "Fund")
on behalf of Skyline Small Cap Contrarian ("Contrarian" or the "Portfolio"), 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 ADVISER. The Adviser 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 of 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 or 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 May 31, 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 (i) in the event of its assignment (as defined
in the Act); and (ii) on September 25, 1998 unless it has been
approved by the holders of a "majority of the outstanding voting
securities" as defined in Section 2(a)(42) of the Act) of Contrarian
on or before that date.
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 Contrarian.
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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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
ATTEST: SKYLINE FUNDS
/s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------- -----------------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President Title: President
ATTEST: SKYLINE ASSET MANAGEMENT, L.P.
/s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------- -----------------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxxx X. Xxxxxx
Title: Partner and Chief Title: Managing Partner and Chief
Operating Officer Investment Officer
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