Exhibit 99(d)(7)
SUB-ADVISORY AGREEMENT
Pacific Capital International Stock Fund and Pacific Capital Small Cap Fund
AGREEMENT made as of March 8, 2001 between The Asset Management Group
of Bank of Hawaii (the "Adviser"), and Xxxxxxxx Xxxxxxxxx Capital Management, a
California limited partnership ("Sub-Adviser").
WHEREAS, Pacific Capital Funds (the "Trust") is registered as an
open-end, diversified management investment company under the Investment Company
Act of 1940, as amended (the "1940 Act");
WHEREAS, the Adviser has been appointed investment adviser to the
Trust's Pacific Capital International Stock Fund and Pacific Capital Small Cap
Fund (each a "Fund" and collectively the "Funds");
WHEREAS, the Adviser desires to retain Sub-Adviser to assist it in the
provision of a continuous investment program for the Funds and Sub-Adviser is
willing to do so; and
WHEREAS, the Board of Trustees of the Trust and each Fund's sole
shareholder has approved this Agreement, and Sub-Adviser is willing to furnish
such services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Adviser hereby appoints Sub-Adviser to act as
sub-adviser to each of the Funds as permitted by the Adviser's Advisory
Agreement with the Trust pertaining to the Funds. Intending to be legally bound,
Sub-Adviser accepts such appointment and agrees to render the services herein
set forth for the compensation herein provided.
2. SUB-ADVISORY SERVICES. Subject to the supervision of the Trust's
Board of Trustees, Sub-Adviser will assist the Adviser in providing a continuous
investment program with respect to each Fund's portfolio, including investment
research and management with respect to all securities and investments and cash
equivalents in the Fund. Sub-Adviser will provide services under this Agreement
in accordance with each Fund's investment objectives, policies and restrictions
as stated in the Fund's prospectus and resolutions of the Trust's Board of
Trustees applicable to the Fund.
Without limiting the generality of the foregoing, Sub-Adviser further
agrees that it will, with respect to each of the Funds:
(a) determine from time to time what securities and other investments
will be purchased, retained or sold for the Fund;
(b) manage in consultation with the Adviser the Fund's temporary
investments in securities;
(c) place orders pursuant to its investment determinations for the Fund
either directly with the issuer or with any broker or dealer;
(d) not purchase shares of the Fund for itself or for accounts with
respect to which it exercises sole investment discretion in connection with such
transactions except as permitted by the Trust's Board of Trustees or by federal,
state and local law;
(e) manage the Fund's overall cash position, and determine from time to
time what portion of the Fund's assets will be held in different currencies;
(f) provide the Adviser with foreign broker research, a quarterly
review of international economic and investment developments, and occasional
"Spot Lights" on international investment issues;
(g) attend regular business and investment-related meetings with the
Trust's Board of Trustees and the Adviser if requested to do so by the Trust
and/or the Adviser; and
(h) maintain books and records with respect to the securities
transactions for the Fund, furnish to the Adviser and the Trust's Board of
Trustees such periodic and special reports as they may request with respect to
the Fund, and provide in advance to the Adviser all reports to the Board of
Trustees for examination and review within a reasonable time prior to the
Trust's Board meetings.
3. COVENANTS BY SUB-ADVISER. Sub-Adviser agrees with respect to the
services provided to each of the Funds that it will:
(a) conform with all Rules and Regulations of the Securities and
Exchange Commission;
(b) telecopy trade information to the Adviser on the first business day
following the day of the trade and cause broker confirmations to be sent
directly to the Adviser; and
(c) treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust and prior, present or
potential shareholders, and not use such records and information for any purpose
other than performance of its responsibilities and duties hereunder (except
after prior notification to and approval in writing by the Trust, which approval
shall not be unreasonably withheld and may not be withheld and will be deemed
granted where Sub-Adviser may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to
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divulge such information by duly constituted authorities, or when so requested
by the Trust).
4. SERVICES NOT EXCLUSIVE. Except as provided herein, the services
furnished by Sub-Adviser hereunder are deemed not to be exclusive, and nothing
in this Agreement shall (i) prevent Sub-Adviser from acting as investment
adviser or manager for any other person or persons, including other management
investment companies, or (ii) limit or restrict Sub-Adviser from buying, selling
or trading any securities or other investments (including any securities or
other investments which the Funds are eligible to buy) for its or their own
accounts or for the accounts of others for whom it or they may be acting;
PROVIDED, HOWEVER, that Sub-Adviser agrees that it will not undertake any
activities which, in its reasonable judgment, will adversely affect the
performance of its obligations to the Funds under this Agreement.
5. PORTFOLIO TRANSACTIONS. Investment decisions for each of the Funds
shall be made by Sub-Adviser independently from those for any other investment
companies and accounts advised or managed by Sub-Adviser. The Funds and such
investment companies and accounts may, however, invest in the same securities.
When a purchase or sale of the same security is made at substantially the same
time on behalf of either of the Funds and/or another investment company or
account, the transaction will be averaged as to price, and available investments
allocated as to amount, in a manner which Sub-Adviser believes to be equitable
to the Fund and such other investment company or account. In some instances,
this investment procedure may adversely affect the price paid or received by a
Fund or the size of the position obtained or sold by a Fund. To the extent
permitted by law, Sub-Adviser may aggregate the securities to be sold or
purchased for a Fund with those to be sold or purchased for the other Fund or
other investment companies or accounts in order to obtain best execution.
Sub-Adviser shall place orders for the purchase and sale of portfolio
securities and will solicit broker-dealers to execute transactions in accordance
with the Funds' policies and restrictions regarding brokerage allocations.
Sub-Adviser shall place orders pursuant to its investment determination for the
Funds either directly with the issuer or with any broker or dealer selected by
Sub-Adviser. In executing portfolio transactions and selecting brokers or
dealers, Sub-Adviser shall use its reasonable best efforts to seek the most
favorable execution of orders, after taking into account all factors Sub-Adviser
deems relevant, including the breadth of the market in the security, the price
of the security, the financial condition and execution capability of the broker
or dealer, and the reasonableness of the commission, if any, both for the
specific transaction and oil a continuing basis.
Consistent with this obligation, Sub-Adviser may, to the extent
permitted by law, purchase and sell portfolio securities to and from brokers and
dealers who provide brokerage and research services (within the meaning of
Section 28(e) of the Securities Exchange Act of 1934) to or for the benefit of
the Funds and/or other accounts over which Sub-Adviser or any of its affiliates
exercises investment discretion. Sub-Adviser
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is authorized to pay to a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction for a Fund
which is in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction if Sub-Adviser determines in good
faith that such commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or Sub-Adviser's overall
responsibilities to the Fund and to the Company. In no instance will portfolio
securities be purchased from or sold to Sub-Adviser, or the Funds' principal
underwriter, or any affiliated person thereof except as permitted by the
Securities and Exchange Commission.
6. BOOKS AND RECORDS. In compliance with the requirements of Rule 3la-3
under the 1940 Act, Sub-Adviser hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.
7. EXPENSES. During the term of this Agreement, Sub-Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased for the Funds.
8. COMPENSATION. For the services provided and the expenses assumed
with respect to each of the Funds pursuant to this Agreement, the Sub-Adviser
will be entitled to a fee, computed daily and payable quarterly, from Adviser,
calculated at the annual rate of 0.65% on the first $50 million of the Fund's
average daily net assets and 0.60% on average daily net assets in excess of $50
million for Pacific Capital International Stock Fund and 0.60% on the first $50
million of the Fund's average daily net assets and 0.55% on average daily net
assets in excess of $50 million for Pacific Capital Small Stock Fund.
9. STANDARD OF CARE; LIMITATION OF LIABILITY. Sub-Adviser shall
exercise due care and diligence and use the same skill and care in providing its
services hereunder as it uses in providing services to other investment
companies, but shall not be liable for any action taken or omitted by
Sub-Adviser in performance of services rendered hereunder in the absence of bad
faith, willful misconduct, gross negligence or reckless disregard of its duties.
10. REFERENCE TO SUB-ADVISER. Neither the Adviser nor any affiliate or
agent of it shall make reference to or use the name of Sub-Adviser or any of its
affiliates, or any of their clients, except references concerning the identity
of and services provided by Sub-Adviser to the Funds, which references shall not
differ in substance from those included in the current registration statement
pertaining to the Funds, this Agreement and the Advisory Agreement between the
Adviser and the Trust with respect to the Funds, in any advertising or
promotional materials without the prior approval of Sub-Adviser,
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which approval shall not be unreasonably withheld or delayed. The Adviser hereby
agrees to make all reasonable efforts to cause the Funds and any affiliate
thereof to satisfy the foregoing obligation.
11. DURATION AND TERMINATION. Unless sooner terminated, with respect to
each Fund, this Agreement shall continue with respect to each Fund until March
8, 2002 and thereafter shall continue automatically for successive annual
periods, provided such continuance is specifically approved at least annually by
the Trust's Board of Trustees or vote of the lesser of (a) 67 % of the shares of
the Fund represented at a meeting if holders of more than 50% of the outstanding
shares of the Fund are present in person or by proxy, or (b) more than 50% of
the outstanding shares of the Fund, provided that in either event its
continuance also is approved by a majority of the Trust's Trustees who are not
"interested persons " (as defined in the 0000 Xxx) of any party to this
Agreement (the "Disinterested Trustees"), by vote cast in person at a meeting
called for the purpose of voting on such approval. This Agreement is terminable
at any time without penalty, with respect to either Fund, on 60 days' notice, by
Adviser, Sub-Adviser or by the Trust's Board of Trustees or by vote of the
lesser of (a) 67% of the shares of the Fund represented at a meeting if holders
of more than 50% of the outstanding shares of the Fund are present in person or
by proxy, or (b) more than 50% of the outstanding shares of the Fund. This
Agreement will terminate automatically in the event of its assignment (as
defined in the 1940 Act).
12. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated with respect to either Fund orally,
but only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought. No
amendment of this Agreement shall be effective with respect to either Fund until
approved by the vote of both (i) a majority of the outstanding voting securities
of the Fund, and (ii) a majority of the Disinterested Trustees cast in person at
a meeting called for the purpose of voting on such approval.
13. NOTICE. Any notice, advice or report to be given pursuant to this
Agreement shall be delivered or mailed:
TO SUB-ADVISER AT:
Xxxxxxxx Xxxxxxxxx Capital Management
000 Xxxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: General Counsel
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TO THE ADVISER AT:
The Asset Management Group of
Bank of Hawaii
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Xx. Xxxxx Xxxxxx
TO THE TRUST AT:
c/o BISYS Fund Services
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000-0000
14. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and shall be governed by the
laws of the Commonwealth of Massachusetts.
15. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16. PERSONAL LIABILITY . The names "Pacific Capital Funds" and
"Trustees" refer respectively to the Trust created and to the Trustees, as
trustees but not individually or personally, acting from time to time under an
Agreement and Declaration of Trust dated as of October 30, 1992 to which
reference is hereby made and a copy of which is on file at the office of the
Secretary of State of The Commonwealth of Massachusetts and elsewhere as
required by law, and to any and all amendments thereto so filed or hereafter
filed. The obligations of "Pacific Capital Funds" entered into in the name or on
behalf hereof by any of the Trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
Trustees, shareholders or representatives of the Trust personally, but bind only
the assets of the Trust and all persons dealing with any series of shares of the
Trust must look solely to the assets of the Trust belonging to such series for
the enforcement of any claims against the Trust.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
THE ASSET MANAGEMENT GROUP OF
BANK OF HAWAII
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
XXXXXXXX XXXXXXXXX CAPITAL MANAGEMENT
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
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