SUB-ADVISORY AGREEMENT
Pacific Capital Mid-Cap Fund
THIS AGREEMENT is made as of December 22, 2006 among Pacific
Capital Funds (the Trust), The Asset Management Group of Bank of Hawaii
Capital Funds (the Trust), The Asset Management Group of Bank of Hawaii
(the Adviser), and Chicago Equity Partners (the Sub-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 Adviser has been appointed investment adviser
to the Trusts Mid-Cap Fund (the Fund);
WHEREAS, the Adviser desires to retain the Sub-Adviser to
assist it in the provision of a continuous investment program for the
Fund and the Sub-Adviser is willing to do so; and
WHEREAS, the 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 the Sub-Adviser to act
as the sub-adviser to the Fund as permitted by the Advisers Advisory
Agreement with the Trust pertaining to the Fund. Intending to be legally
bound, the 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
Trusts Board of Trustees and the Adviser, the Sub-Adviser will assist
the Adviser in providing a continuous investment program with respect to
the Funds portfolio, including investment research and management with
respect to all securities and investments and cash equivalents in the Fund.
The Sub-Adviser will provide services under this Agreement in accordance
with the Funds investment objectives, policies and restrictions as stated
in the Funds prospectus and resolutions of the Trusts Board of Trustees
applicable to the Fund.
Without limiting the generality of the foregoing, the
Sub-Adviser further agrees that it will, with respect to the Fund:
(a) determine from time to time what securities and other investments will
be purchased, retained or sold for the Fund;
(b) place orders pursuant to its investment determinations for the Fund
either directly with the issuer or with any broker or dealer;
(c) 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 Trusts Board of Trustees or by
federal, state and local law;
(d) manage the Funds overall cash position;
(e) attend regular business and investment-related meetings with the
Trusts Board of Trustees and the Adviser if requested to do so by the
Trust and/or the Adviser; and
(f) maintain books and records with respect to the securities transactions
for the Fund, furnish to the Adviser and the Trusts 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
Trusts Board meetings.
3. Covenants by the Sub-Adviser. The Sub-Adviser agrees with respect to
the services provided to the Fund 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 the Sub-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).
4. Services Not Exclusive. Except as provided herein, the services
furnished by the Sub-Adviser hereunder are deemed not to be exclusive,
and nothing in this Agreement shall (i) prevent the 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 the
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 the
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 Fund under this Agreement.
5. Portfolio Transactions. Investment decisions for the Fund shall be made
by the Sub-Adviser independently from those for any other investment
companies and accounts advised or managed by the Sub-Adviser. The Fund 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 the Fund 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 the
Sub-Adviser believes to be equitable to the Fund and such other investment
company or account. The Fund acknowledges that in some instances, this
investment procedure may adversely affect the price paid or received by the
Fund or the size of the position obtained or sold by the Fund. To the extent
permitted by law, the Sub-Adviser may aggregate the securities to be sold or
purchased for the Fund with those to be sold or purchased for other investment
companies or accounts in order to obtain best execution.The Sub-Adviser shall
place orders for the purchase and sale of portfolio securities and shall
solicit broker-dealers to execute transactions in accordance with the Funds
policies and restrictions regarding brokerage allocations. The Sub-Adviser
shall place orders pursuant to its investment determination for the Fund either
directly with the issuer or with any broker or dealer selected by the
Sub-Adviser. In executing portfolio transactions and selecting brokers or
dealers, the Sub-Adviser shall use its reasonable best efforts to seek the most
favorable execution of orders, after taking into account all factors the
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, the 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 Fund
and/or other accounts over which the Sub-Adviser or any of its affiliates
exercises investment discretion. The Sub-Adviser is authorized to pay to
a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Fund which is in
excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the 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 the Sub-Advisers overall
responsibilities to the Fund. In no instance will portfolio securities be
purchased from or sold to the 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, the
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 Trusts request. The 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, the Sub-Adviser shall 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 Fund.
8. Compensation. For the services provided and the expenses assumed with
respect to the Fund pursuant to this Agreement, the Sub-Adviser shall be
entitled to a fee, computed daily and payable quarterly directly from the
Fund, calculated at the annual rate of 0.20% on the Funds average daily net
assets.
9. Standard of Care; Limitation of Liability. The 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 and accounts, but shall not be liable for any action taken or
omitted by it in the performance of services rendered hereunder in the
absence of its bad faith, willful misconduct, gross negligence or reckless
disregard of its duties.
10. Reference to the Sub-Adviser. Neither the Adviser nor any affiliate or
agent of it shall make reference to or use the name of the Sub-Adviser or any
of its affiliates, or any of their clients, except references concerning the
identity of and services provided by the Sub-Adviser to the Fund, which
references shall not differ in substance from those included in the current
registration statement pertaining to the Fund, this Agreement and the Advisory
Agreement between the Adviser and the Trust with respect to the Fund, in any
advertising or promotional materials without the prior approval of the
Sub-Adviser, which approval shall not be unreasonably withheld or delayed.
11. Duration and Termination. Unless sooner terminated, this Agreement shall
continue for a period of two years from the date first set forth above, and
thereafter shall continue automatically for successive annual periods, provided
such continuance is specifically approved at least annually by the Trusts 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 Trusts 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 the Fund, on 60 days notice, by the Adviser,
the Sub-Adviser or the Trusts 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 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 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 The Sub-Adviser at:
Chicago Equity Partners
000 X. XxXxxxx Xx, Xxxxx 0000
Xxxxxxx, XX 00000
To the Adviser at:
The Asset Management Group of
Bank of Hawaii
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
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. 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 (without regard to conflict of
law principles). 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.
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, as amended, 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.
[Signature Page Follows]
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: /s/ Jordan T. Ige
Name: Jordan T. Ige
Title: Senior Vice President
CHICAGO EQUITY PARTNERS
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: President
PACIFIC CAPITAL FUNDS
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: President
1
Draft 5.29.06
