SKYLINE FUNDS
SKYLINE SMALL CAP VALUE PLUS
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 Value Plus (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 the Portfolio. The Adviser shall
determine which investments shall be made or disposed of by the
Portfolio and shall effect such acquisitions and dispositions, all in
furtherance of the Portfolio'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 the Portfolio'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 the Portfolio. 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 the
Portfolio, providing shareholder servicing and providing general
administrative services to the Portfolio 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 the
Portfolio (including, without limitation, telephone and personnel
expenses and the charges, if any, of third parties performing such
services); all expenses of marketing shares of the Portfolio; all
expenses of maintaining the registration of shares of the Portfolio
under the 1933 Act and of qualifying and maintaining qualification of
shares of the Portfolio 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 the Portfolio are charged against the
Portfolio. 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 operation. In addition
to the payment of the foregoing expenses the Fund shall also pay all
brokers' commissions and other portfolio transaction costs.
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5. LIMITATION OF EXPENSES. During the term of this Agreement, the total
expenses of the Portfolio, 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 2.00% of the average daily
net asset value of the Portfolio, and the Adviser agrees to pay any
excess expenses or to reimburse the Portfolio 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, the Portfolio shall pay to the
Adviser a monthly fee computed on the basis of the average daily net
asset value of the Portfolio 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 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
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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
the Portfolio 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 the Portfolio, 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 the
Portfolio 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 the 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.
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
Operating Officer Chief Investment Officer
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