SUB-ADVISORY AGREEMENT
[Pacific Capital New Asia Growth Fund]
AGREEMENT made as of October 29, 1994 between Hawaiian Trust
Company, Ltd. (the "Adviser"), and Credit Lyonnais International Asset
Management (HK) Limited ("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 New Asia Growth Fund] Fund (the "Fund"); and
WHEREAS, the Adviser desires to retain Sub-Adviser to assist it in
the provision of a continuous investment program for the Fund and Sub-Adviser is
willing to do so;
WHEREAS, the Board of Trustees and the Fund's sole shareholder have
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 the Fund as permitted by the Adviser's Advisory Agreement with
the Trust pertaining to the Fund. 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 the foreign component of the Fund's
portfolio, including investment research and management with respect to all
foreign securities and investments and cash equivalents in the Fund. Sub-Adviser
will provide services under the Agreement in accordance with the Fund's
investment objective, 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:
(a) will prepare, subject to the Adviser's approval, lists of
foreign countries for investment by the Fund and determine from time to
time what securities and other investments will be purchased, retained or
sold for the Fund, including, with the assistance of the Adviser, the
Funds investments in futures and forward currency contracts;
(b) will manage in consultation with the Adviser the Fund's
temporary investments in securities;
(c) will place orders pursuant to its investment determinations for
the Fund either directly with the issuer or with any broker or dealer;
(d) will 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) will 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) will 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) will 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) will 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
period to the Trust's Board meetings.
3. Covenants by Sub-Adviser. Sub-Adviser agrees with respect to the
services provided to the Fund that it:
(a) will conform with all Rules and Regulations of the Securities
and Exchange Commission;
(b) will telecopy trade information to the Adviser on the first
business day following the date of the trade and cause broker
confirmations to be sent directly to the Adviser; and
(c) will 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 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 and will not be deemed granted where Sub-Adviser
may be
2
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 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, except that the Sub-Adviser will not enter into an
agreement to provide principal adviser or sub-advisory services to any
registered investment company that distributes any class of shares in Hawaii,
Guam or Arizona, 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 Fund is 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 Fund under this Agreement.
5. Portfolio Transactions. Investment decisions for the Fund shall
be made by Sub-Adviser independently from those for any other investment
companies and accounts advised or managed by 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 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 the Fund or the
size of the position obtained or sold by the Fund. To the extent permitted by
law, 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.
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 Fund's policies and restrictions regarding brokerage
allocations. 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 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 on 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 Fund and/or other
accounts over
3
which Sub-Adviser or any of its affiliates exercises investment discretion.
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
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 Fund's 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
31a-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 by the Fund.
8. Compensation.
(a) For the services provided and the expenses assumed with
respect to the Fund pursuant to this Agreement, the Sub-Adviser will be entitled
to a fee, computed daily and payable monthly, from Adviser, calculated at the
annual rate of 0.50% of the Fund's average daily net assets;
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 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 Sub-Adviser, which
approval shall not be unreasonably withheld or
4
delayed. The Adviser hereby agrees to make all reasonable efforts to cause the
Fund and any affiliate thereof to satisfy the foregoing obligation.
11. Duration and Termination. Unless sooner terminated, this
Agreement shall continue until October 29, 1996 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 of (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, on 60 days' notice, by
Adviser, Sub-Adviser or by the Trust's Board of Trustees or by vote of 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 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 with respect to the Fund until approved by the vote of (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:
Credit Lyonnais International Asset Management (HK) Limited
Room 000-0, Xxxxx Xxxxxxxx Xxxxxx,
0 Xxxxxxxxx Xxxxx, Xxxxxxx,
Xxxx Xxxx
To the Adviser at:
Hawaiian Trust Company
000 X. Xxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
5
To the Trust at:
c/o The Winsbury Company
0000 X. Xxxxxx - Xxxxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000
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.
6
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.
ATTEST: HAWAIIAN TRUST COMPANY, LTD.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
-------------------------------
Title: Senior Vice President
------------------------------
CREDIT LYONNAIS INTERNATIONAL ASSET
MANAGEMENT (HK) LIMITED
By: /s/ Xxxxxx X. Brenks
--------------------------------
Name: Xxxxxx X. Brenks
-------------------------------
Title: Associate Director
------------------------------
PACIFIC CAPITAL FUNDS
By: /s/ Xxxxxx Xxxxxx
--------------------------------
Name: Xxxxxx Xxxxxx
-------------------------------
Title: Chairman
------------------------------
7
