INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, made as of October 29, 1993, between Pacific Capital
Funds, a Massachusetts business trust (herein called the "Trust"), and Hawaiian
Trust Company, Ltd., a state-chartered trust company having its principal place
of business in Honolulu, Hawaii (herein called the "Investment Adviser").
WHEREAS, 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 Trust desires to retain the Investment Adviser to furnish
investment advisory services to certain existing investment portfolios of the
Trust and may retain the Investment Adviser to serve in such capacity to certain
additional investment portfolios of the Trust, all as now or hereafter may be
identified on Schedule A hereto (such initial investment portfolios and any such
additional investment portfolios together called the "Funds") and the Investment
Adviser represents that it is willing and possesses legal authority to so
furnish such services without violation of applicable laws and regulations;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints the Investment Adviser to act
as investment adviser to the Funds for the period and on the terms
set forth in this Agreement. The Investment Adviser accepts such
appointment and agrees to furnish the services herein set forth for
the compensation herein provided. Additional investment portfolios
may from time to time be added to those covered by this Agreement by
the parties executing a new Schedule A which shall become effective
upon its execution and shall supersede any Schedule A having an
earlier date.
2. Delivery of Documents. The Trust has furnished the Investment
Adviser with copies properly certified or authenticated of each of
the following:
(a) The Trust's Declaration of Trust, dated October 30, 1992, and
filed with the Secretary of State of Massachusetts on the same
date, and all amendments thereto or restatements thereof (such
Declaration, as presently in effect and as it shall from time
to time be amended or restated, is herein called the
"Declaration of Trust");
(b) the Trust's By-Laws and any amendments thereto:
(c) resolutions of the Trust's Board of Trustees authorizing the
appointment of the Investment Adviser and approving this
Agreement;
1
(d) the Trust's Notification of Registration on Form N-8A under
the 1940 Act as filed with the Securities and Exchange
Commission ("SEC") on January 29, 1993, and all amendments
thereto;
(e) the Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act"), and under
the 1940 Act as filed with the SEC and all amendments thereto
(such Registration Statement, as in effect and as it shall
from time to time be amended or supplemented, is herein called
the "Registration Statement"); and
(f) the most recent Prospectus and Statement of Additional
Information of each of the Funds (such Prospectus and
Statement of Additional Information, as in effect, and all
amendments and supplements thereto, are herein collectively
called the "Prospectus").
The Trust will furnish the Investment Adviser from time to time with copies of
all amendments of or supplements to the foregoing.
3. Management. Subject to the supervision of the Trust's Board of
Trustees, the Investment Adviser will provide a continuous
investment program for the Funds, including investment research and
management with respect to all securities and other investments and
cash equivalents in the Funds. The Investment Adviser will determine
from time to time what securities and other investments will be
purchased, retained or sold by the Trust with respect to the Funds.
The Investment Adviser will provide the services under this
Agreement in accordance with each of the Fund's investment
objectives, policies and restrictions as stated in the Prospectus
and resolutions of the Trust's Board of Trustees. The Investment
Adviser further agrees that it:
(a) will use the same skill and care in providing such services as
it uses in providing services to fiduciary accounts for which
it has investment responsibilities;
(b) will conform with all applicable Rules and Regulations of the
SEC under the 1940 Act and in addition will conduct its
activities under this Agreement in accordance with any
applicable regulations of any governmental authority
pertaining to the investment advisory activities of the
Investment Adviser;
(c) will place or cause to be placed orders for the Funds either
directly with the issuer or with any broker or dealer. (In
placing orders with brokers and dealers, the Investment
Adviser will attempt to obtain prompt execution of orders in
an effective manner at the most favorable price. Consistent
with this obligation and to the extent permitted by the 1940
Act, when the execution and price offered by
2
two or more brokers or dealers are comparable, the Investment
Adviser may, in its discretion, purchase and sell portfolio
securities to and from brokers and dealers who provide the
Investment Adviser with research advice and other services. In
connection with its duties to arrange for the purchase and
sale of the Trust's portfolio securities, the Investment
Adviser will select such broker-dealers as will, in the
Investment Adviser's judgment, implement the policy of the
Trust to achieve "best execution," i.e., prompt, efficient and
reliable execution of orders at the most favorable net price.
The Trust understands that purchases from underwriters include
a commission or concession paid by the issuer to the
underwriter and that principal transactions placed through
broker-dealers include a spread between the bid and asked
prices. In allocating transactions to broker-dealers, the
Investment Adviser is authorized to consider, in determining
whether a particular broker-dealer will provide best
execution, the dealer's reliability, integrity, financial
condition and risk in positioning the securities involved, as
well as the difficulty of the transaction in question and the
value of research services provided by the broker-dealer, and
thus need not pay the lowest spread or commission available if
the Investment Adviser determines in good faith that the
amount of commission is reasonable in relation to the value of
the brokerage and research services provided by the
broker-dealer, viewed either in terms of the particular
transaction or the Investment Adviser's overall
responsibilities as to the accounts over which it exercises
investment discretion. If, on the foregoing basis, the
transaction in question could be allocated to two or more
broker-dealers, the Investment Adviser is authorized, in
making such allocation, to consider (i) whether a
broker-dealer has provided research services, as further
discussed below and (ii) whether a broker-dealer has sold
shares of the Trust or any other investment company or
companies having the Investment Adviser as its investment
adviser or having the same sub-adviser, administrator or
principal underwriter as the Trust. Such research may be in
written form or through direct contact with individuals and
may include quotations on portfolio securities and information
on particular issuers and industries, as well as on market,
economic or institutional activities. The Trust recognizes
that no dollar value can be placed on such research services
or on execution services, that such research services may or
may not be useful to the Trust and/or other accounts of the
Investment Adviser, and that research received by such other
accounts may or may not be useful to the Trust. In no instance
will portfolio securities be purchased from or sold to any
affiliate of the Trust, including the Trust's distributor or
investment adviser, or any affiliated person of any such
person, except in accordance with Section 17 of the 1940 Act
and the Rules and Regulations thereunder;
3
(d) will maintain records with respect to the securities
transactions of the Funds and will furnish the Trust's Board
of Trustees with such periodic and special reports as the
Board may request;
(e) will treat confidentially and as proprietary information of
the Trust all records and other information relative to the
Trust and the Funds and prior, present, or potential
shareholders, except to the extent that such information is
generally available to the public other than as a result of
disclosure by the Investment Adviser, and will 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 where the Investment Adviser may be exposed to
civil or criminal contempt proceedings for failure to comply,
when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust; and
(f) will maintain its policy and practice of conducting its
fiduciary functions independently. In making investment
recommendations for the Funds, the Investment Adviser's
personnel will not inquire or take into consideration whether
the issuers of securities proposed for purchase or sale for
the Trust's account are customers of the Investment Adviser or
of its parent or its subsidiaries or affiliates. In dealing
with such customers, the Investment Adviser and its parent,
subsidiaries, and affiliates will not inquire or take into
consideration whether securities of those customers are held
by the Trust.
4. Services Not Exclusive. The investment management services furnished
by the Investment Adviser hereunder are not to be deemed exclusive,
and the Investment Adviser shall be free to furnish similar services
to others so long as its services under this Agreement are not
impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Investment Adviser hereby agrees that all
records which it maintains for the Funds are the property of the
Trust and further agrees to surrender promptly to the Trust any of
such records upon the Trust's request. The Investment 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.
6. Expenses . During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its
activities under this Agreement other than the cost of portfolio
securities and the transaction costs of purchasing such portfolio
securities (including brokerage commissions, if any) purchased for
the Funds.
4
7. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, each of the Funds will pay the
Investment Adviser and the Investment Adviser will accept as full
compensation therefor a fee equal to the fee set forth on Schedule A
hereto as it may be amended from time to time as agreed upon by the
Trust and the Investment Adviser. The obligations of the Funds to
pay the above-described fee to the Investment Adviser will begin as
of the respective dates of the initial public sale of shares in the
Funds.
If in any fiscal year the aggregate expenses of any of the Funds (as
defined under the securities regulations of any state having
jurisdiction over the Trust) exceed the expense limitations of any
such state, the Investment Adviser will reimburse the Fund for a
portion of such excess expenses equal to such excess times the ratio
of the fees otherwise payable by the Fund to the Investment Adviser
hereunder to the aggregate fees otherwise payable by the Fund to the
Investment Adviser hereunder and to the Fund's administrator under
its Administration Agreement. The obligation of the Investment
Adviser to reimburse the Funds hereunder is limited in any fiscal
year to the amount of its fee hereunder for such fiscal year,
provided, however, that notwithstanding the foregoing, the
Investment Adviser shall reimburse the Funds for such proportion of
such excess expenses regardless of the amount of fees paid to it
during such fiscal year to the extent that the securities
regulations of any state having jurisdiction over the Trust so
require. Such expense reimbursement, if any, will be estimated daily
and reconciled and paid on a monthly basis.
8. Limitation of Liability. The Investment Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered
by the Funds in connection with the performance of this Agreement,
except a loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services or a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of
the Investment Adviser in the performance of its duties or from
reckless disregard by it of its obligations and duties under this
Agreement.
It is further agreed that the Investment Adviser shall have no
responsibility or liability for the accuracy or completeness of the
Trust's Registration Statement under the 1940 Act and the 1933 Act,
except for information supplied by the Investment Adviser for
inclusion therein. The Investment Adviser shall promptly inform the
Trust as to any information concerning the Investment Adviser
appropriate for inclusion in such Registration Statement, or as to
any transaction or proposed transaction which might result in an
assignment of this Agreement. Finally, the Trust agrees to indemnify
the Investment Adviser to the full extent permitted by the
Declaration of Trust and the 1940 Act.
9. Duration and Termination. This Agreement will become effective as of
the date first written above (or, if a particular Fund is not in
existence on that
5
date, on the date the particular Fund commences operations after a
registration statement relating to that Fund becomes effective with
the SEC), provided that it shall have been approved by vote of a
majority of the outstanding voting securities of such Fund, in
accordance with the requirements under the 1940 Act, and, unless
sooner terminated as provided herein, shall continue in effect until
its second anniversary.
Thereafter, if not terminated, this Agreement shall continue in
effect as to a particular Fund for successive annual periods,
provided such continuance is specifically approved at least annually
(a) by the vote of a majority of those members of the Trust's Board
of Trustees who are not parties to this Agreement or interested
persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the
vote of a majority of the Trust's Board of Trustees or by the vote
of a majority of all votes attributable to the outstanding shares of
such Fund. Notwithstanding the foregoing, this Agreement may be
terminated as to a particular Fund at any time on sixty days'
written notice, without the payment of any penalty, by the Trust (by
vote of the Trust's Board of Trustees or by vote of a majority of
the outstanding voting securities of such Fund) or by the Investment
Adviser. This Agreement will immediately terminate in the event of
its assignment. (As used in this Agreement, the terms "majority of
the outstanding voting securities," interested persons" and
"assignment" shall have the same meanings as ascribed to such terms
in the 1940 Act.)
10. Investment Adviser's Representations. The Investment Adviser hereby
represents and warrants that it is willing and possesses all
requisite legal authority to provide the services contemplated by
this Agreement without violation of applicable law and regulations,
including but not limited to the Xxxxx-Xxxxxxxx Act and the
regulations promulgated thereunder.
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement
of the change, waiver, discharge or termination is sought.
12. Use of Name. The Investment Adviser and the Trust each agree that
the term "Pacific Capital Funds" (including, for all purposes of
this paragraph, any combination, variation or abbreviation thereof
and any logo or graphic used in association therewith) is a property
right of an affiliate of the Investment Adviser which has been
licensed to the Investment Adviser. The Investment Adviser hereby
sublicenses the right to use such term to the Trust, subject such
license and subject to the following agreements and comments. The
Trust agrees and consents that: (i) it will use the term "Pacific
Capital Funds" as a component of its corporate name, the name of any
series or class, or both and for no other purpose; (ii) it will not
grant to any third party the right to use the term "Pacific Capital
Funds" for any purpose; (iii) the Investment Adviser or any
corporate affiliate of the
6
Investment Adviser may use or grant to others the right to use the
term "Pacific Capital Funds" as all or a portion of a corporate or
business name or for any commercial purpose, other than a grant of
such right to another registered investment company not advised by
the Investment Adviser or one of its affiliates; and (iv) in the
event that the Investment Adviser or an affiliate thereof is no
longer acting as investment adviser to any Fund, the Trust shall,
upon request by the Investment Adviser, promptly take such action as
may be necessary to change its corporate name to one not containing
the term "Pacific Capital Funds" and following such change, shall
not use the term "Pacific Capital Funds" as a part of its corporate
name or for any other commercial purpose, and shall use its best
efforts to cause its trustees, officers and shareholders to take any
and all actions that the Investment Adviser may request to effect
the foregoing and to reconvey to the Investment Adviser any and all
rights to such term.
13. Miscellaneous. The names "Pacific Capital Funds" and "Trustees of
Pacific Capital Funds" 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 thereof 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 person 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.
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.
PACIFIC CAPITAL FUNDS
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
HAWAIIAN TRUST COMPANY, LTD.
By: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President
7
Schedule A
to the
Investment Advisory Agreement
between Pacific Capital Funds and
Hawaiian Trust Company, Ltd.
Name of Fund Compensation(1)
------------ ---------------
Short Intermediate U.S. Treasury Annual rate of fifty one-hundredths of
Securities Fund and Tax-Free Short one percent (o.50%) of the average daily
Intermediate Securities Fund net assets of each such Fund.
Diversified Fixed Income Fund, U.S. Annual rate of sixty one-hundredths of
Treasury Securities Fund and Tax-Free one percent (0.60%) of the average daily
Securities Fund net assets of each such Fund
Growth Stock Fund, Balanced Fund and Annual rate of eighty one-hundredths of
Income Stock Fund one percent (0.80%) of the average daily
net assets of each such Fund.
PACIFIC CAPITAL FUNDS
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
HAWAIIAN TRUST COMPANY, LTD.
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President
----------
(1) All fees are computed daily and paid monthly.
A-1
