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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
HIGHMARK FUNDS
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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<PAGE> 2
HIGHMARK FUNDS
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 31, 1998
A special meeting of the shareholders of the HighMark International Equity
Fund (the "Fund"), a series of the HighMark Funds, will be held at 9:00 a.m. at
the offices of SEI Investments Fund Resources, 1 Freedom Valley Drive, Oaks,
Pennsylvania, on March 31, 1998, for the following purposes:
1. AGREEMENT WITH THE INVESTMENT SUB-ADVISOR. TO CONSIDER A NEW SUB-ADVISORY
AGREEMENT. THIS NEW SUB-ADVISORY AGREEMENT IS REQUIRED IN ORDER TO ALLOW AXA
ASSET MANAGEMENT PARTENAIRES ("AXA" OR THE "SUB-ADVISOR") TO OPERATE AS THE
FUND'S INVESTMENT SUB-ADVISOR. THERE WILL BE NO CHANGE IN THE FUND'S
INVESTMENT OBJECTIVES OR INVESTMENT POLICIES OR IN THE DUTIES OF THE FUND'S
INVESTMENT ADVISOR, PACIFIC ALLIANCE, A DIVISION OF UNION BANK OF
CALIFORNIA, N.A. ("UBOC"), AS A RESULT OF THE APPROVAL OF THE NEW
SUB-ADVISORY AGREEMENT. AXA'S DUTIES UNDER THIS NEW SUB-ADVISORY AGREEMENT
WILL BE THE SAME AS THE FUND'S PREVIOUS SUB-ADVISOR. THERE WILL BE NO CHANGE
IN THE FEES PAYABLE BY THE FUND TO UBOC AS A RESULT OF APPROVAL OF THE NEW
SUB-ADVISORY AGREEMENT, ALTHOUGH THERE MAY BE A CHANGE IN THE FEES PAYABLE
BY UBOC TO AXA; AND
2. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENT THEREOF.
The Board of Trustees has fixed February 5, 1998 as the record date for
determination of shareholders entitled to vote at this meeting.
BY ORDER OF THE TRUSTEES
KEVIN P. ROBINS
March 13, 1998 SECRETARY
YOU CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP LETTERS TO
ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU ARE UNABLE TO
ATTEND THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY SO
THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE SPECIAL MEETING. THE
ENCLOSED ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 3
HIGHMARK FUNDS
HIGHMARK INTERNATIONAL EQUITY FUND
OAKS, PENNSYLVANIA 19456
------------------------
PROXY STATEMENT
The enclosed proxy is solicited on behalf of the Board of Trustees (the
"Trustees") of the HighMark International Equity Fund (the "Fund"), a series of
HighMark Funds (the "Trust"). The proxy is revocable at any time before it is
voted by sending written notice of the revocation to the Trust or by appearing
personally at the March 31, 1998 special meeting of shareholders of the Fund
(the "Special Meeting"). The cost of preparing and mailing the notice of
meeting, the proxy card, this proxy statement and any additional proxy material
has been or is to be borne by the Fund. Proxy solicitations will be made
primarily by mail, but may also be made by telephone, telegraph, fax or personal
interview conducted by certain officers or employees of the Fund, the Fund's
investment advisor, or the Fund's administrator or, if necessary, a commercial
firm retained for this purpose. In the event that the shareholder signs and
returns the proxy ballot, but does not indicate a choice as to any of the items
on the proxy ballot, the proxy attorneys will vote those shares in favor of such
proposal(s).
Only shareholders of record at the close of business on February 5, 1998
will be entitled to vote at the Special Meeting. On February 5, 1998, the Fund
had outstanding 1,764,343.343 shares of beneficial interest ("Shares"), each
Share being entitled to one vote, and each fractional Share being entitled to a
proportionate fractional vote.
For purposes of determining the presence of a quorum and counting votes on
the matters presented, Shares represented by abstentions and "broker non-votes"
may be counted as present, but not as votes cast, at the Special Meeting. Under
the Investment Company Act of 1940, as amended (the "1940 Act"), the affirmative
vote necessary to approve the matter under consideration may be determined with
reference to a percentage of votes present at the Special Meeting, which would
have the effect of treating abstentions and non-votes as if they were votes
against the proposal.
The Trust's executive offices are located in Oaks, Pennsylvania 19456. This
proxy statement and the enclosed notice of meeting and proxy card are first
being mailed on or about March 13, 1998.
A copy of the Trust's Annual Report dated July 31, 1997 is available upon
request and may be obtained by calling 1-800-433-6884.
This Special Meeting is being called (1) to approve or disapprove a new
Sub-Advisory Agreement (the "New Sub-Advisory Agreement") between Pacific
Alliance, a division of Union Bank of California, N.A. ("UBOC"), and AXA Asset
Management Partenaires ("AXA" or the "Sub-Advisor"). The New Sub-Advisory
Agreement will be dated as of the date shareholders approve the New Sub-Advisory
Agreement; and (2) to transact such other business as may properly come before
the Special Meeting or any adjournment thereof.
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Approval of Proposal (1) requires the affirmative vote of: (a) 67% or more
of the Shares of the Fund present at the Special Meeting, if the holders of more
than 50% of the outstanding Shares are present or represented by proxy, or (b)
more than 50% of the outstanding Shares of the Fund, whichever is less.
PROPOSAL (1)
APPROVAL OR DISAPPROVAL OF THE
NEW SUB-ADVISORY AGREEMENT
THE NEW SUB-ADVISORY AGREEMENT
Consideration of the New Sub-Advisory Agreement is being requested because
the Board of Trustees believe that it would be in the shareholders' best
interests to have experienced and talented investment personnel, who specialize
in the international management of fund assets, managing the Fund's assets.
Here are some of the factors you should consider in determining whether to
approve the New Sub-Advisory Agreement:
The Board of Trustees has unanimously approved the New Sub-Advisory
Agreement;
There will be no change in the Fund's investment objective or policies
or in the duties of UBOC as a result of approval of the New Sub-Advisory
Agreement; and
There will be no change in the fees payable by the Fund to UBOC for
advisory services as a result of approval of the New Sub-Advisory
Agreement, although the fees payable by UBOC to AXA may change.
UBOC, 475 Sansome Street, Post Office Box 45000, San Francisco, CA 94104,
serves as investment adviser to the Fund. Investment sub-advisory duties were
handled by Tokyo-Mitsubishi Asset Management (U.K.) Ltd. ("TMAM") until December
31, 1997 pursuant to a Sub-Advisory Agreement, between UBOC and TMAM (the "TMAM
Sub-Advisory Agreement"). Pursuant to the TMAM Sub-Advisory Agreement, TMAM was
responsible for making the day-to-day investment decisions for the assets of the
Fund, subject to the supervision of, and policies established by, UBOC and the
Trustees.
On December 10, 1997, the Trustees unanimously determined that based on all
pertinent factors it was in the shareholders' best interests to terminate the
TMAM Sub-Advisory Agreement effective December 31, 1997.
Also on December 10, 1997, the Trustees, including a majority of the
Trustees who are not interested persons of the Fund, UBOC, or AXA, as defined in
the 1940 Act, approved the New Sub-Advisory Agreement between UBOC and AXA,
pursuant to which AXA will act as the Fund's investment sub-advisor. The
Trustees approved AXA acting as sub-advisor to the Fund until the earlier of
April 30, 1998 or the Special Meeting. If shareholders approve the New
Sub-Advisory Agreement,
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then the Trustees have approved AXA to continue to operate as Sub-Advisor to the
Fund. If shareholders do not approve the New Sub-Advisory Agreement then UBOC
will become responsible for making the day-to-day investment decisions for the
assets of the Fund.
THE TERMS OF THE NEW SUB-ADVISORY AGREEMENT ARE IDENTICAL TO THOSE OF THE
TMAM SUB-ADVISORY AGREEMENT WITH RESPECT TO DUTIES, FEES AND THE STANDARD OF
CARE. The effective date of the New Sub-Advisory Agreement will be the date of
approval by shareholders of the New Sub-Advisory Agreement.
Copies of the TMAM Sub-Advisory Agreement and the New Sub-Advisory
Agreement appear as Exhibits A and B, respectively, to this proxy statement. As
required by the 1940 Act, the TMAM Sub-Advisory Agreement was last submitted to
a vote of shareholders on April 25, 1997.
The terms of the New Sub-Advisory Agreement (which are materially unchanged
from the TMAM Sub-Advisory Agreement) provide that AXA, subject to the
supervision and policies of UBOC and the Trustees, will make day-to-day
investment decisions for the Fund, including investment research and management
with respect to all securities and investments and cash equivalents in the Fund.
AXA will determine from time to time what securities and other investments will
be purchased, retained or sold by the Fund.
If approved by shareholders at this Special Meeting, the New Sub-Advisory
Agreement will continue until July 31, 1999, unless terminated, and may be
renewed from year to year thereafter by the Board of Trustees. The continuation
of the New Sub-Advisory Agreement must be approved (a) by a majority vote of the
Trustees, including a majority of the Trustees who are not parties to the New
Sub-Advisory Agreement or interested persons of the Trust, UBOC, or AXA, as
defined in the 1940 Act, cast in person at a meeting called for that purpose and
(b) by a vote of a majority of the outstanding voting securities of the Fund.
The New Sub-Advisory Agreement may be terminated at any time on sixty days'
written notice, without the payment of any penalty, by the Fund (by vote of the
Board of Trustees or by vote of a majority of the outstanding voting securities
of the Fund), by UBOC, or by AXA. The New Sub-Advisory Agreement may not be
assigned and shall terminate automatically in the event of its assignment, as
defined in the 1940 Act. The New Sub-Advisory Agreement provides that it may be
amended only by an instrument in writing signed by the party against which
enforcement of the change is sought.
As did the TMAM Sub-Advisory Agreement, the New Sub-Advisory Agreement
provides that UBOC shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the performance of
the New Sub-Advisory 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 UBOC in the performance of its duties or from reckless disregard by UBOC
of its obligations and duties under the New Sub-Advisory Agreement.
The Trustees, including the Trustees who are not interested persons of the
Fund, UBOC, or AXA, as defined in the 1940 Act, reviewed and unanimously
approved the New Sub-Advisory Agreement in person at a meeting on December 10,
1997 and have directed that it be submitted to the shareholders of the Fund for
their approval.
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Fees
For its services under the TMAM Sub-Advisory Agreement, TMAM was entitled
to receive an annual fee from UBOC of the lesser of: (a) a fee computed daily
and paid monthly at the annual rate of fifty one-hundredths of one percent
(0.50%) of the Fund's average daily net assets, or (b) such fee as may from time
to time be agreed upon in writing by UBOC and TMAM. For the fiscal period ended
July 31, 1997, TMAM received $72,131 from UBOC for its services to the Fund. As
disclosed in the Fund's prospectus, for the fiscal year ended July 31, 1997,
TMAM was paid for its sub-advisory services a fee at the annual rate of thirty
one-hundredths of one percent (0.30%) of the Fund's average daily net assets
from UBOC. Under the New Sub-Advisory Agreement, AXA will be entitled to receive
the identical annual fee from UBOC, that is, the lesser of: (a) a fee computed
daily and paid monthly at the annual rate of fifty one-hundredths of one percent
(0.50%) of the Fund's average daily net assets, or (b) such fee as may from time
to time be agreed upon in writing by UBOC and AXA. As explained further below,
for the period prior to shareholder approval of the New Sub-Advisory Agreement,
AXA will receive from UBOC a fee calculated at the rate of fifty one-hundredths
of one percent (0.50%) of the Fund's average daily net assets.
INTERIM PERIOD
For the period from December 31, 1997 until shareholder approval of the New
Sub-Advisory Agreement occurs (the "Interim Period"), the Board of Trustees
determined that it would be in the shareholders' best interests if AXA were to
serve as the Fund's Sub-Advisor. Thus, pursuant to the Board of Trustees'
determination and consistent with the rules under the 1940 Act, AXA began
serving as the Fund's Sub-Advisor beginning January 1, 1998. During the Interim
Period, AXA will serve as the Fund's Sub-Advisor on terms identical to those
under which TMAM served as the Fund's Sub-Advisor. AXA will have the same
responsibilities and duties as TMAM and receive the same contractual
compensation.
Consistent with the rules under the 1940 Act and the Board of Trustees'
determinations, AXA's position as the Fund's Sub-Advisor will automatically
terminate on April 30, 1998, the end of the Interim Period, unless shareholders
approve or disapprove the New Sub-Advisory Agreement prior to April 30, 1998. If
shareholders approve the New Sub-Advisory Agreement then AXA will continue to
serve as the Fund's Sub-Advisor operating under the New Sub-Advisory Agreement.
If shareholders disapprove the New Sub-Advisory Agreement then AXA will cease
serving as the Fund's Sub-Advisor as soon as practical thereafter and in no
event later than April 30, 1998. In the latter case, UBOC, the Fund's Investment
Advisor, would then make day-to-day investment decisions for the Fund, until,
and if, the Board of Trustees determines to pursue alternative arrangements.
TRUSTEES' RECOMMENDATIONS AND OTHER INFORMATION
The New Sub-Advisory Agreement was approved by the Board of Trustees,
including a majority of the Trustees who are not interested persons of the
Trust, UBOC, or AXA as defined in the 1940 Act, at a meeting held on December
10, 1997. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF THE FUND VOTE FOR THE
PROPOSED NEW SUB-ADVISORY AGREEMENT.
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In making these recommendations, the Trustees have considered information
relating to AXA's capabilities and expertise, which are described below, in
serving as investment adviser to the Fund. They have reviewed the terms of the
New Sub-Advisory Agreement, including the fact that no effective net change to
the Fund's investment advisory fee is being proposed.
Pursuant to the TMAM Sub-Advisory Agreement, TMAM determined and, during
the Interim Period, AXA will determine, subject to the general supervision of
the Board of Trustees and in accordance with the Fund's investment objective and
restrictions, which securities are to be purchased and sold by the Fund, and
which brokers are to be eligible to execute its portfolio transactions. While
the Sub-Advisor generally seeks competitive spreads or commissions on behalf of
the Fund, the Fund may not necessarily pay the lowest spread or commission
available on each transaction. Allocation of transactions to various dealers is
determined by the Sub-Advisor in its best judgment and in a manner deemed fair
and reasonable to shareholders. The primary consideration is prompt execution of
orders in an effective manner at the most favorable price. Subject to this
consideration, dealers who provide supplemental investment research to the
Sub-Advisor may receive orders for transactions by the Fund. Information so
received is in addition to and not in lieu of services required to be performed
by the Sub-Advisor and does not reduce the advisory fees payable to UBOC by the
Fund or payable to the Sub-Advisor by UBOC. Such information may be useful to
the Sub-Advisor in serving both the Fund and other clients and, conversely,
supplemental information obtained by the placement of business of other clients
may be useful to the Sub-Advisor in carrying out its obligations to the Fund.
THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS APPROVE THE NEW
SUB-ADVISORY AGREEMENT.
INFORMATION ABOUT AXA
AXA-UAP is one of the leading investment managers worldwide and specializes
in the international management of client assets. With approximately $500
billion in assets under management, as of December 31, 1997, it is the world's
third largest investment adviser, managing assets for institutional clients,
insurance companies, and individuals and advises many mutual fund and other
collective investment vehicles in various countries.
AXA-UAP is an international group of affiliated companies, including:
Alliance Capital, which manages assets primarily in the United States; National
Mutual Fund Management, which manages assets primarily in Asia and the Pacific
Basin; and AXA Investment Managers, which manages assets primarily in Europe.
AXA is a subsidiary of AXA Investment Managers. AXA, a societe anonyme
organized under the laws of France, and AXA Investment Managers are indirect
subsidiaries of AXA-UAP, which is indirectly controlled by a group of five
French mutual insurance companies. Based on information provided by AXA-UAP, on
July 1, 1997, 23.5% of the issued ordinary shares (representing 31.2% of the
voting power) of AXA-UAP were directly or indirectly owned by Finaxa, a French
holding company ("Finaxa"). Such percentage of interest includes the interest of
Colisee Vendome, a wholly-owned subsidiary of Finaxa, which owned 3.1% of the
issued ordinary shares (representing 2.7% of the voting
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power) of AXA-UAP and the interest of les Ateliers de construction du Nord de la
France-ANF, a 95.4% owned subsidiary of Finaxa, which owned 0.2% of the issued
ordinary shares (representing 0.3% of the voting power) of AXA-UAP. As of July
1, 1997, 61.5% of the issued ordinary shares (representing 72.3% of the voting
power) of Finaxa were owned by five French mutual insurance companies (the
"Mutuelles AXA") one of which, AXA Assurances I.A.R.D. Mutuelle, owned 34.9% of
the issued ordinary shares, and 23.7% of the issued ordinary shares
(representing 14.7% of the voting power) of Finaxa were owned by Banque Paribas,
a French bank. Acting as a group, the Mutuelles AXA will continue to control
AXA-UAP and Finaxa.
AXA has a highly experienced and knowledgeable investment management staff.
AXA employs approximately 90 investment professionals directly involved in asset
management and portfolio management supported by approximately 40 highly
specialized research and analysis staff. AXA has been registered with the
Securities and Exchange Commission as an investment adviser since 1995.
AXA currently serves as the investment sub-adviser to the Winthrop
International Equity Fund, which has a similar investment objective to the Fund
and had net assets of approximately $44.5 million as of April 30, 1997.
According to that fund's most recent prospectus, for services to that fund, AXA
is paid by that fund's investment adviser, out of the adviser's own resources,
at the following annual percentage rates of the average daily net assets of that
fund: .625% of the fund's first $100,000,000, .575% of the next $100,000,000,
and .50% of the balance.
OFFICERS
The principal executive officers of AXA are:
<TABLE>
<CAPTION>
NAME POSITION WITH AXA
---- -----------------
<S> <C>
Kevin C. Dolan.............................................. Chief Executive Officer
Thierry Dehevels............................................ Chief Investment Officer
Jean-Pierre Hellebuyck...................................... Chief Strategist Officer
Robert de Guigne............................................ Senior Fund Manager
Jean-Baptiste de Gorostarzu................................. Senior Fund Manager
</TABLE>
AFFILIATED BROKER TRANSACTIONS
In the fiscal year ended July 31, 1997, no brokerage commissions were paid
to affiliated brokers of the Fund or of AXA or TMAM on account of trading for
the Fund.
OTHER MATTERS AND DISCRETION
OF PERSONS NAMED IN THE PROXY
While the Special Meeting is called to act upon any other business that may
properly come before it, at the date of this proxy statement the only business
which the management intends to present or knows that others will present is the
business stated in the Notice of Meeting. If any other matters
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lawfully come before the Special Meeting, and in all procedural matters at said
Special Meeting, it is the intention that the enclosed proxy shall be voted in
accordance with the best judgment of the persons named as proxies therein, or
their substitutes, present and acting at the Special Meeting.
If at the time any session of the Special Meeting is called to order, a
quorum is not present, in person or by proxy, the persons named as proxies may
vote those proxies that have been received to adjourn the Special Meeting to a
later date. In the event that a quorum is present but sufficient votes in favor
of one or more of the proposals have not been received, the persons named as
proxies may propose one or more adjournments of the Special Meeting to permit
further solicitation of proxies with respect to any such proposal. All such
adjournments will require the affirmative vote of a majority of the Shares
present in person or by proxy at the session of the Special Meeting to be
adjourned. The persons named as proxies will vote those proxies that they are
entitled to vote in favor of the proposal, in favor of such an adjournment, and
will vote those proxies required to be voted against the proposal, against any
such adjournment. A vote may be taken on one or more of the proposals in this
proxy statement prior to any such adjournment if sufficient votes for its or
their approval have been received and it is otherwise appropriate.
As of February 5, 1998, the Fund believes that UBOC was the shareholder of
record of 84.09% of the Fund.
To the best knowledge of the Fund, only the following persons are the
record owners of more than 5% of the Fund's outstanding Shares as of January 30,
1998, other than UBOC or the persons listed above:
<TABLE>
<CAPTION>
PERCENTAGE
OF RECORD
NAME AND ADDRESS OWNERSHIP
---------------- -------------
<S> <C>
Lane & Company.............................................. 62.09%
c/o Union Bank of California, N.A.
P.O. Box 109
San Diego, California 92112-4103
Lane & Company.............................................. 22.00%
c/o Union Bank of California, N.A.
P.O. Box 109
San Diego, California 92112-4103
The Equitable Life Assurance Society of the United States... 8.68%
1290 Avenue of the Americas
12th Floor
Attn: Rosemarie Shonstein
New York, New York 10104-0102
AXA Pacific Inc............................................. 6.99%
AXA Canada
200 University Street
Montreal, Canada H3A 2A5
</TABLE>
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As of February 5, 1998, the Officers and Trustees of the Fund owned less
than 1% of the Fund's outstanding Shares.
If you do not expect to attend the Special Meeting, please sign your proxy
card promptly and return it in the enclosed envelope to avoid unnecessary
expense and delay. No postage is necessary.
March 13, 1998
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EXHIBIT A
INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT executed as of April 25, 1997 by and between UNION BANK OF
CALIFORNIA, N.A. (the "Advisor"), and TOKYO-MITSUBISHI ASSET MANAGEMENT (UK),
LTD. (the "SubAdvisor"), a subsidiary of Bank of Tokyo, Ltd.
WHEREAS, Advisor is the investment manager for HighMark Funds (the
"Trust"), an open-end management investment company registered under the
Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, Advisor desires to retain SubAdvisor as its agent to furnish
investment advisory services for the Trust's International Equity investment
portfolio (the "Fund").
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. Appointment. Advisor hereby appoints SubAdvisor to provide certain
sub-investment advisory services to the Fund for the period and on the terms set
forth in this Agreement. SubAdvisor accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
2. Delivery of Documents. Advisor has furnished or will furnish SubAdvisor
with copies properly certified or authenticated of each of the following:
(a) the Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the Commonwealth of Massachusetts on March 10, 1987,
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 amendments thereto;
(c) resolutions of the Trust's Board of Trustees authorizing the
appointment of SubAdvisor and approving this Agreement;
(d) the Trust's Notification of Registration of Form N-8A under the
Investment Company Act of 1940 (the "1940 Act") as filed with the
Securities and Exchange Commission (the "SEC") on March 12, 1987 and all
amendments thereto;
(e) the Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended ("1933 Act") (File No. 33-12608) and
under the 1940 Act as filed with the SEC and all amendments thereto insofar
as such Registration Statement and such amendments relate to the Funds;
(f) the Trust's most recent prospectuses and Statement of Additional
Information for the Funds (such prospectuses and Statement of Additional
Information, as presently in effect, and all amendments and supplements
thereto are herein collectively called the "Prospectus"); and
(g) such other materials and documents as SubAdvisor shall reasonably
request.
<PAGE> 12
Advisor will furnish SubAdvisor from time to time with copies of all
amendments of or supplements to the foregoing.
3. Management. Subject always to the supervision of the Trust's Board of
Trustees and Advisor, SubAdvisor will furnish an investment program in respect
of, and make investment decisions for the assets of the Fund entrusted to it
hereunder and place all orders for the purchase and sale of securities, all on
behalf of the Fund. In the performance of its duties, SubAdvisor will satisfy
its fiduciary duties to the Fund (as set forth in Section 8 below), and will
monitor the Fund investments, and will comply with the provisions of the Trust's
Declaration of Trust and By-Laws, as amended from time to time, and the stated
investment objectives, policies and restrictions of the Fund. SubAdvisor and
Advisor will each make its officers and employees available to the other from
time to time at reasonable times to review investment policies of the Fund and
to consult with each other regarding the investment affairs of the Fund.
SubAdvisor shall also make itself reasonably available to the Board of
Trustees at such times as the Board of Trustees shall request.
SubAdvisor represents and warrants that it is in compliance with all
applicable Rules and Regulations of the SEC pertaining to its investment
advisory activities and 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 maintain registration with the SEC as an investment adviser
under the Investment Advisers Act of 1940 and will conform with all
applicable Rules and Regulations of the SEC pertaining to its investment
advisory activities;
(c) will place orders pursuant to its investment determinations for
the Fund either directly with the issuer or with any broker or dealer.
In providing the Funds with investment supervision, the SubAdvisor
will give primary consideration to securing the most favorable price and
efficient execution. Within the framework of this policy, the SubAdvisor
may consider the financial responsibility, research and investment
information and other services provided by brokers or dealers who may
effect or be a party to any such transaction or other transactions to which
the SubAdvisor's other clients may be a party. It is understood that it is
desirable for the Fund that the SubAdvisor have access to supplemental
investment and market research and security and economic analysis provided
by brokers who may execute brokerage transactions at a higher cost to the
Fund than may result when allocating brokerage to other brokers on the
basis of seeking the most favorable price and efficient execution.
Therefore, the SubAdvisor is authorized to place orders for the purchase
and sale of securities for the Fund with such brokers, subject to such
guidelines as shall be established by the Advisor and reviewed by the
Trust's Board of Trustees from time to time with respect to the extent and
continuation of this practice. It is understood that the services provided
by such brokers may be useful to the SubAdvisor in connection with the
SubAdvisor's services to other clients.
<PAGE> 13
On occasions when the SubAdvisor deems the purchase or sale of a
security to be in the best interest of the Fund as well as other clients of
the SubAdvisor, the SubAdvisor, to the extent permitted by applicable laws
and regulations, may, but shall be under no obligation to, aggregate the
securities to be so purchased or sold in order to obtain the most favorable
price or lower brokerage commissions and efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the SubAdvisor in the
manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Fund and to such other clients. In no instance
will portfolio securities be purchased from or sold to Advisor, SubAdvisor,
SEI Financial Services Company or any affiliated person of either the
Trust, Advisor, SEI Financial Services Company or SubAdvisor that Advisor
has identified to the SubAdvisor in writing, except as may be permitted
under the 1940 Act;
(d) will report regularly to Advisor and will make appropriate persons
available for the purpose of reviewing at reasonable times with
representatives of Advisor and the Board of Trustees the management of the
Fund, including, without limitation, review of the general investment
strategy of the Fund, the performance of the Fund in relation to standard
industry indices and general conditions affecting the marketplace and will
provide various other reports from time to time as reasonably requested by
Advisor;
(e) will maintain books and records with respect to the Trust's
securities transactions required by subparagraphs (b)(5), (6), (7), (9),
(10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act and will
furnish Advisor and the Trust's Board of Trustees such periodic and special
reports as the Board of Trustees may request;
(f) will act upon instructions form Advisor not inconsistent with the
fiduciary duties hereunder; and
(g) will treat confidentially and as proprietary information of the
Trust all such records and other information relative to the Trust
maintained by the SubAdvisor, 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 SubAdvisor 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.
SubAdvisor shall have the right to execute and deliver, or cause its
nominee to execute and deliver, all proxies and notices of meetings and
other notices affecting or relating to the securities of the Fund.
4. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, SubAdvisor 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. SubAdvisor
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act the records required to be maintained by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.
SubAdvisor may delegate its responsibilities under this
<PAGE> 14
Section to affiliates that perform custody and/or fund accounting services for
the Fund, which delegation shall not, however, relieve the SubAdvisor of its
responsibilities under this paragraph 4.
5. Expenses. During the terms of this Agreement, SubAdvisor will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities (including brokerage commissions, if any)
purchased for the Trust.
6. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, Advisor will pay the SubAdvisor, and the SubAdvisor
agrees to accept as full compensation therefor, a sub-advisory fee, accrued
daily and payable monthly, in accordance with Schedule A hereto. The fee will be
calculated based on the average monthly market value of the assets under the
Sub-Advisor's management and will be paid to the Sub-Advisor monthly. From time
to time, SubAdvisor may agree to waive or reduce some or all of the compensation
to which it is entitled under this Agreement.
7. Services to Others. Advisor understands, and has advised the Trust's
Board of Trustees, that SubAdvisor now acts, and may in the future act, as an
investment adviser to fiduciary and other managed accounts, and as investment
advisor, sub-investment adviser, and/or administrator to other investment
companies. Advisor has no objection to SubAdvisor's acts in such capacities, as
long as such services do not impair the services rendered to Advisor or the
Trust. Advisor recognizes, and has advised the Trust's Board of Trustees, that
in some cases this procedure may adversely affect the size of the position that
the Fund may obtain in a particular security. In addition, Advisor understands,
and has advised the Trust's Board of Trustees, that the persons employed by
SubAdvisor to assist in SubAdvisor's duties under this Agreement will not devote
their full time to such service and nothing contained in this Agreement will be
deemed to limit or restrict the right of SubAdvisor or any of its affiliates to
engage in and devote time and attention to other businesses or to render
services of whatever kind or nature.
8. Limitation of Liability. The SubAdvisor shall not be liable for any
error or judgment or for any loss suffered by the Fund or Advisor in connection
with performance of its obligations under this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services (in which case any award of damages shall be limited
to the period and the amount set forth in Section 36(b) (3) of the 1940 Act), or
a loss resulting from willful misfeasance, bad faith or gross negligence on the
SubAdvisor's part in the performance of its duties or from reckless disregard of
its obligations and duties under this Agreement, except as may otherwise be
provided under provisions or applicable state law which cannot be waived or
modified hereby.
9. Indemnification. Advisor and SubAdvisor each agree to indemnify the
other against any claim against, loss or liability to such other party
(including reasonable attorneys' fees) arising out of any action on the part of
the indemnifying party which constitutes willful misfeasance, bad faith or gross
negligence.
10. Duration of Termination. This Agreement will become effective as of
the date hereof, provided that it has been approved by vote of a majority of the
outstanding voting securities of the Fund
<PAGE> 15
in accordance with the requirements under the 1940 Act, and, unless sooner
terminated as provided herein, will continue in effect for one year.
Thereafter, if not terminated, this Agreement will continue in effect for
the Funds through July 31, 1997 and thereafter from year to year, provided that
such continuation 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
interested persons of the Trust, SubAdvisor, or Advisor, 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 majority of all
votes attributable to the outstanding Shares of the Fund. Notwithstanding the
foregoing, this Agreement may be terminated as to the Funds at any time, without
the payment of any penalty, on sixty (60) day's written notice by Advisor or by
SubAdvisor. 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" have the same meaning
of such terms in the 1940 Act.)
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. SubAdvisor Information. During the terms of this Agreement, Advisor
agrees to furnish the SubAdvisor at SubAdvisor's principal office all
prospectuses, proxy statements, reports to stockholders, sales literature or
other materials prepared for distribution to stockholders of the Fund, the Trust
or the public that refer to the SubAdvisor or its clients in any way prior to
use thereof and not to use material if the SubAdvisor reasonably objects in
writing within five business days (or such other period as may be mutually
agreed) after receipt thereof. The SubAdvisor's right to object to such
materials is limited to the portions of such materials that expressly relate to
the SubAdvisor, its services and its clients. The Advisor agrees to use its
reasonable best efforts to ensure that materials prepared by its employees or
agents or its affiliates that refer to the SubAdvisor or its clients in any way
are consistent with those materials previously approved by the SubAdvisor as
referenced in the first sentence of this paragraph. Sales literature may be
furnished to the SubAdvisor by first-class or overnight mail, facsimile
transmission equipment or hand delivery.
13. Severability. Should any part of this Agreement be held 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.
<PAGE> 16
14. Notices. Any notice, advice or report to be given pursuant to this
Agreement shall be delivered or mailed:
To Advisor at:
Pacific Alliance Capital Management
Union Bank of California, N.A.
530 "B" Street
San Diego, CA 92101
Attention: Clark Gates, President
To the SubAdvisor at:
Tokyo-Mitsubishi Asset Management (UK), Ltd.
12-15 Finsbury Circus
London, EC2M 7BT
England
Attention: James Wignall, Company Secretary
To the Trust or the Fund at:
HighMark Funds
1 Freedom Valley Road
Oaks, Pennsylvania 19456
Attention: Legal Department
15. Change of Law. Where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is altered by a rule, regulation or
order of the Commission, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
16. 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 is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be affected
thereby. This Agreement will be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and will be governed by the
laws of the Commonwealth of Massachusetts.
The name "HighMark Funds" and "Trustees of the HighMark Funds" refer
respectively to the Trust created by, and the Trustees, as trustees but not
individually or personally, acting from time to time under, the Declaration of
the Trust, to which reference is hereby made and 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 "HighMark Funds" entered in the name or on
behalf thereof by any of the Trustees, representatives or agents are made not
individually but only 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 persons
<PAGE> 17
dealing with the Funds must look solely to the assets of the Trust belonging to
such Funds for the enforcement of any claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officer designated below as of the day and year first above
written.
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Clark R. Gates
------------------------------------------
Name: Clark R. Gates
----------------------------------------
Title: Senior Vice President
-----------------------------------------
TOKYO-MITSUBISHI ASSET MANAGEMENT (UK), LTD.
By: /s/ Akio Nakai
------------------------------------------
Name: Akio Nakai
----------------------------------------
Title: MD & CEO
-----------------------------------------
<PAGE> 18
SCHEDULE A
HIGHMARK INTERNATIONAL EQUITY FUND
Advisory Fee: 95 b.p.
Subadvisory Fee: 30 b.p. (will waive 20 b.p.)
<PAGE> 19
SCHEDULE B
SUBADVISOR PERFORMANCE STANDARDS
1. Outperform the Morgan Stanley EAFE Index.
<PAGE> 20
EXHIBIT B
FORM OF
HIGHMARK INTERNATIONAL EQUITY FUND
SUB-ADVISORY AGREEMENT
AGREEMENT executed as of by and between UNION BANK OF
CALIFORNIA, N.A. (the "Bank") and AXA ASSET MANAGEMENT PARTENAIRES, a French
corporation with registration number Paris B392 846 747, with its registered
office at Paris, 75017, France, 46 Avenue de la Grande Armee which is an
investment adviser registered under the laws of the United States as an
investment adviser under the Investment Advisers Act of 1940 ("Sub-Adviser").
WHEREAS, the Pacific Alliance, a Division of the Bank ("Adviser"), is the
investment adviser for the HighMark Funds (the "Trust"), an open-end diversified
management investment company registered under the Investment Company Act of
1940, as amended (" '40 Act");
WHEREAS, Bank also serves as Custodian for the HighMark Funds and provides
certain other services for the Funds;
WHEREAS, SEI Investments Fund Resources is Administrator and SEI
Investments Distribution Co. is Distributor of the HighMark Funds; and
WHEREAS, Adviser desires to retain Sub-Adviser as its agent to furnish
investment sub-advisory services for certain assets of the Trust's International
Equity Fund (the "Fund").
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. DEFINITIONS. As used herein the following terms shall have the meanings
set forth:
1.1 "33 Act" shall mean the Securities Act of 1933, the rules and
regulations issued thereunder, as they may be amended from time to time.
1.2 "40 Act" shall mean the Investment Company Act of 1940, the rules and
regulations issued thereunder, as they may be amended from time to time.
1.3 "Administrator" and "Distributor" shall mean SEI Investments Fund
Resources and SEI Investments Distribution Co., respectively.
1.4 "Adviser" shall mean the Pacific Alliance, a Division of Union Bank of
California, N.A. The parties hereto acknowledge that Bank is currently
contemplating organizing Pacific Alliance as a subsidiary. Parties agree that in
the event Pacific Alliance is spun-off as a subsidiary of Bank or its holding
company, the term "Adviser" shall refer to such subsidiary, and this contract
shall be deemed to have been executed between Sub-Adviser and such subsidiary
with no action other than notice of such spin-off being necessary.
1
<PAGE> 21
1.5 "Adviser's Act" shall mean the Investment Adviser's Act of 1940 and the
rules and regulations thereunder, as they may be amended from time to time.
1.6 "Bank" shall mean Union Bank of California, N.A., a national banking
association organized under the laws of the United States.
1.7 "Sub-Adviser" shall mean AXA Asset Management Partenaires, a company
incorporated in France and registered as an investment adviser under the
Investment Advisers Act of 1940.
2. APPOINTMENT. Adviser hereby appoints Sub-Adviser to provide certain
sub-advisory services to the Fund for the period and on the terms set forth in
this Agreement. Sub-Adviser accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided.
3. DELIVERY OF DOCUMENTS. Adviser has furnished or will furnish
Sub-Adviser with copies properly certified or authenticated of each of the
following:
(a) Copies of the Declarations of Trust establishing the HighMark
Funds and the By-Laws of the Trust;
(b) Resolutions of the Trust's Board of Trustees authorizing the
appointment of Sub-Adviser and approving this Agreement;
(c) The Trust's Registration Statement on Form N-1A under the '33 Act
(File No. 33-37687) and the '40 Act as filed with the SEC and all
amendments thereto insofar as such Registration Statement and such
amendments relate to the Funds;
(d) The Trust's most recent prospectus and Statement of Additional
Information for the International Fund (such prospectus and Statement of
Additional Information, as presently in effect, and all amendments and
supplements thereto are herein collectively called the "Prospectus"); and
(e) Such other materials and documents as Sub-Adviser shall reasonably
request.
Adviser will furnish Sub-Adviser with copies of all amendments of or
supplements to the foregoing promptly following adoption of such amendments or
supplements.
4. MANAGEMENT:
4.1 Subject always to the supervision of the Trust's Board of Trustees and
of Adviser, Sub-Adviser will furnish an investment program in respect of, and
make investment decisions for the assets of the Fund entrusted to it hereunder.
Sub-Adviser may place all orders for the purchase and sale of securities, on
behalf of the Fund. Sub-Adviser is also authorized, subject to periodic
approvals of authorized persons by the Board of Trustees, to instruct Custodian
to settle trades executed on behalf of Fund. In the performance of its duties,
Sub-Adviser will satisfy its fiduciary duties to the Fund, will monitor the Fund
investments, and will comply with the provisions of the Trust's Declaration of
Trust and By-Laws, as amended from time to time, and with the investment
objectives, policies and restrictions of the Fund stated in the Fund Prospectus
and compliance policies and procedures furnished to the Sub-Adviser by Adviser
from time to time.
2
<PAGE> 22
4.2 Sub-Adviser and Adviser will each make its officers and employees
available to the other from time to time at reasonable times to review
investment policies of the Fund and to consult with each other regarding the
investment affairs of the Fund. Sub-Adviser shall also make itself reasonably
available to the Board of Trustees at such times as the Board of Trustees shall
request.
4.3 Sub-Adviser represents and warrants that it is and shall remain in
compliance with all applicable Rules and Regulations of the SEC pertaining to
its investment advisory activities and agrees that it:
(a) will use at least the same skill and care in providing such
services as it uses in providing services to fiduciary accounts in the
United States for which it has investment responsibilities;
(b) will maintain registration with the SEC as an investment adviser
under the Advisers Act and will conform with all applicable laws, rules and
regulations pertaining to its investment advisory activities;
(c) will place orders pursuant to its investment determinations for
the Fund either directly with the issuer or with any broker or dealer. In
providing the Funds with investment supervision, the Sub-Adviser will give
primary consideration to securing the most favorable price and efficient
execution. Within the framework of this policy, the Sub-Adviser may
consider the financial responsibility, research and investment information
and other services provided by brokers or dealers who may effect or be a
party to any such transaction or other transactions to which the Sub-
Adviser's other clients may be a party. It is understood that it is
desirable for the Fund that the Sub-Adviser have access to supplemental
investment and market research and security and economic analysis provided
by brokers who may execute brokerage transactions at a higher cost to the
Fund than may result when allocating brokerage to other brokers on the
basis of seeking the most favorable price and efficient execution.
Therefore, the Sub-Adviser is authorized to place orders for the purchase
and sale of securities for the Fund with such brokers, subject to such
guidelines as shall be established by the Adviser and reviewed by the
Trust's Board of Trustees from time to time with respect to the extent and
continuation of this practice. It is understood that the services provided
by such brokers may be useful to the Sub-Adviser in connection with the
Sub-Adviser's services to other clients.
On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Fund as well as other clients of
the Sub-Adviser, the Sub-Adviser, to the extent permitted by applicable
laws and regulations, may, but shall be under no obligation to, aggregate
the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and efficient execution. In
such event, allocation of the securities so purchased or sold, as well as
the expenses incurred in the transaction, will be made by the Sub-Adviser
in the manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Fund and to such other clients. In no instance
will portfolio securities be purchased from or sold to Adviser,
Sub-Adviser, SEI Financial Services Company or any affiliated person of
either the Trust, Adviser, SEI Financial Services Company or Sub-Adviser
that Adviser has identified to the Sub-Adviser in writing, except as may be
permitted under the '40 Act.
3
<PAGE> 23
(d) will report regularly to Adviser and will make appropriate persons
available for the purpose of reviewing at reasonable times with
representatives of Adviser and the Board of Trustees the management of the
Fund, including, without limitation, review of the general investment
strategy of the Fund, the performance of the Fund in relation to standard
industry indices which have been agreed upon between Adviser and
Sub-Adviser and general conditions affecting the marketplace and will
provide various other reports from time to time as reasonably requested by
Adviser;
(e) will maintain books and records with respect to the Trust's
securities transactions required by subparagraphs (b)(5), (6), (7), (9),
(10) and (11) and paragraph (f) of Rule 31a-1 under the '40 Act and will
furnish Adviser and the Trust's Board of Trustees such periodic and special
reports as the Adviser or Board of Trustees may request;
(f) will act upon instructions from Adviser not inconsistent with the
fiduciary duties hereunder; and
(g) will treat confidentially and as proprietary information of the
Trust all such records and other information relative to the Trust
maintained by the Sub-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 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.
Sub-Adviser shall have the right to execute and deliver, or cause its
nominee to execute and deliver, all proxies and notices of meetings and
other notices affecting or relating to the securities of the Fund.
4.4 Sub-Advisor will diligently perform services as defined under this
Agreement. However, Sub-Advisor makes no representations or guarantees
whatsoever that the objective of the Fund will be achieved or that the Fund will
outperform its benchmark as set forth in Schedule B.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the '40 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
'40 Act the records required to be maintained by subparagraphs (b)(5), (6), (7),
(9), (10) and (11) and paragraph (f) of Rule 31a-1 under the '40 Act for the
Fund. Sub-Adviser may delegate its responsibilities under this Section to
affiliates that perform custody and/or fund accounting services for the Fund,
which delegation shall not, however, relieve the Sub-Adviser of its
responsibilities under this paragraph 4.
6. EXPENSES. During the terms 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 (including brokerage commissions, if any)
purchased for the Trust, unless otherwise stated in this Agreement.
4
<PAGE> 24
7. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, Adviser will pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation therefor, a sub-advisory fee,
accrued daily and payable monthly, in accordance with Schedule A hereto. From
time to time, Sub-Adviser may, in its sole discretion, agree to waive or reduce
some or all of the compensation to which it is entitled under this Agreement.
8. SERVICES TO OTHERS. Adviser understands, and has advised the Trust's
Board of Trustees, that Sub-Adviser now acts and may in the future act, as an
investment adviser to fiduciary and other managed accounts, and as investment
adviser, sub-investment adviser, and/or administrator to other investment
companies. Adviser has no objection to Sub-Adviser's acting in such capacities,
as long as such services do not impair the services rendered to Adviser or the
Trust. Adviser recognizes, and has advised the Trust's Board of Trustees, that
in some cases this procedure may adversely affect the size of the position that
the Fund may obtain in a particular security. In addition, Adviser understands,
and has advised the Trust's Board of Trustees, that the persons employed by
Sub-Adviser to assist in Sub-Adviser's duties under this Agreement will not
devote their full time to such service and nothing contained in this Agreement
will be deemed to limit or restrict the right of Sub-Adviser or any of its
affiliates to engage in and devote time and attention to other businesses or to
render services of whatever kind or nature.
9. LIMITATION OF LIABILITY. The Sub-Adviser shall not be liable for any
error or judgment or for any loss suffered by the Fund or Adviser in connection
with performance of its obligations under this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services (in which case any award of damages shall be limited
to the period and the amount set forth in Section 36(b)(3) of the '40 Act), or a
loss resulting from willful misfeasance, bad faith or gross negligence on the
Sub-Adviser's part in the performance of its obligations or in failing to
perform its obligations under this Agreement, except as may otherwise be
provided under provisions of applicable state or federal law which cannot be
waived or modified hereby.
10. INDEMNIFICATION. Adviser and Sub-Adviser each agree to indemnify the
other against any claim against, loss or liability to such other party
(including reasonable attorneys' fees) arising out of any action on the part of
the indemnifying party which constitutes willful misfeasance, bad faith or gross
negligence.
11. DURATION AND TERMINATION. This Agreement will become effective as of
the date hereof, provided that it has been approved by vote of a majority of the
outstanding voting securities of the Fund in accordance with the requirements
under the '40 Act, and, unless sooner terminated as provided therein, will
continue in effect for two (2) years.
Thereafter, if not terminated, this Agreement will continue in effect for
the Funds for successive periods of 12 months, each ending on the day preceding
the anniversary of the Agreement's effective date of each year, provided that
such continuation 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
interested persons of the Trust, Sub-Adviser, or Adviser, cast in person at a
meeting called for the purpose of voting on such
5
<PAGE> 25
approval, and (b) by the vote of a majority of the Trust's Board of Trustees or
by the vote of majority of all votes attributable to the outstanding Shares of
the Fund.
Notwithstanding the foregoing, this Agreement may be terminated as to the
Funds at any time, without the payment of any penalty, on sixty (60) day's
written notice by the Adviser to Sub-Adviser to the other party. This Agreement
may be terminated at any time, without the payment of any penalty, on 120 day's
written notice by the Sub-Adviser to 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" have the same meaning of such terms in the '40 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.
13. SUB-ADVISER INFORMATION:
13.1 During the terms of this Agreement, Adviser agrees to furnish the
Sub-Adviser at Sub-Adviser's principal office all prospectuses, proxy
statements, reports to stockholders, sales literature or other materials
prepared for distribution to stockholders of the Fund, the Trust or the public
that refer to the Sub-Adviser or its clients in any way prior to use thereof and
not to use material if the Sub-Adviser reasonably objects in writing within five
business days (or such other period as may be mutually agreed) after receipt
thereof. The Sub-Adviser's right to object to such materials is limited to the
portions of such materials that expressly relate to the Sub-Adviser, its
services and its clients. The Adviser agrees to use its reasonable best efforts
to ensure that materials prepared by its employees or agents or its affiliates
that refer to the Sub-Adviser or its clients in any way are consistent with
those materials previously approved by the Sub-Adviser as referenced in the
first sentence of this paragraph. Sales literature may be furnished to the
Sub-Adviser by first-class or overnight mail, facsimile transmission equipment
or hand delivery.
14. SEVERABILITY. Should any part of this Agreement be held 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.
15. NOTICES. Any notice, advice or report to be given pursuant to this
Agreement shall be delivered or mailed as set forth below:
To Adviser at:
Pacific Alliance Capital Management
Union Bank of California, N.A.
475 Sansome Street, 14th Fl.
San Francisco, CA 94111
Attention: Clark Gates, President
6
<PAGE> 26
To the Sub-Adviser at:
AXA Asset Management Partenaires
46, Avenue de la Grande Armee
Paris, 75017, France
Attention: Kevin C. Dolan
Chief Executive Officer
To the Trust or the Fund at:
HighMark Funds
c/o SEI Fund Resources
One Freedom Valley Drive
Oaks, Pennsylvania 19456
Attention: Legal Department
Parties agree that they shall not be bound by the terms of any changes in
policies, procedures, or contracts until notice has been received as set forth
in this Agreement.
16. CHANGE OF LAW. Where the effect of a requirement of the '40 Act
reflected in any provision of this Agreement is altered by a rule, regulation or
order of the Commission, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
17. 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 is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be affected
thereby. This Agreement will be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and will be governed by the
laws of the Commonwealth of Massachusetts.
The name "HighMark Funds" and "Trustees of the HighMark Funds" refer
respectively to the Trust created by, and the Trustees, as trustees but not
individually or personally, acting from time to time under, the Declaration of
the Trust, to which reference is hereby made and 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 "HighMark Funds" entered in the name or on
behalf thereof by any of the Trustees, representatives or agents are made not
individually but only 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 persons dealing with the Funds must look solely to
the assets of the Trust belonging to such Funds for the enforcement of any
claims against the Trust.
7
<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officer designated below as of the day and year first above
written.
<TABLE>
<CAPTION>
AXA ASSET MANAGEMENT
UNION BANK OF CALIFORNIA, N.A. PARTENAIRES
<S> <C>
By:
------------------------------------------------ By:
------------------------------------------------
Name: -------------------------------------------- Name: --------------------------------------------
Title:
---------------------------------------------- Title:
----------------------------------------------
</TABLE>
8
<PAGE> 28
SCHEDULE A
HIGHMARK INTERNATIONAL FUND
Advisory Fee: 95 b.p.
Sub-Advisory Fee: 50 b.p.
The Sub-Advisory fee shall be payable out of the Advisory fee
9
<PAGE> 29
SCHEDULE B
SUB-ADVISER PERFORMANCE STANDARDS
Outperform the MSCI Europe, Australia, Far East Index ("MSCI EAFE Index")*
and perform in the top 40% of non-U.S. equity mutual fund universe (MSCI EAFE
benchmark) as measured by Lipper Analytical Services.
Sub-Advisor will diligently perform services as defined under this
Agreement. However, Sub-Advisor makes no representations or guarantees
whatsoever that the objective of the Fund will be achieved or that the Fund will
outperform its benchmark as set forth above.
* The MSCI EAFE Index is an arithmetic, market value-weighted average of the
performance of over 900 securities listed on the stock exchanges of the
following countries in Europe, Australia, and the Far East: Australia,
Austria, Belgium, Denmark, Finland, France, Hong Kong, Ireland, Italy, Japan,
Malaysia, Netherlands, New Zealand. The index is calculated on a total return
basis in U.S. dollars, which includes reinvestment of gross dividends before
deduction of withholding taxes.
10
<PAGE> 30
HIGHMARK FUNDS
SEI FUND RESOURCES
630 EAST SWEDESFORD ROAD
WAYNE, PA 19087
- ------------------------------------------------------------------------
[ADDRESS] IMPORTANT PROXY
PLEASE FILL OUT AND SIGN
PROXY TODAY.
THIS IS YOUR PROXY
DETACH AND RETURN
BOTTOM PORTION IN
THE ENCLOSED
ENVELOPE.
THIS PROXY APPLIES TO THE ACCOUNTS LISTED BELOW
HIGHMARK INTERNATIONAL EQUITY FUND
PLEASE DO NOT HESITATE TO CONTACT
HIGHMARK FUNDS AT 1-800-433-6884
SHOULD YOU HAVE ANY QUESTIONS
- --------------------------------------------------------------------------
[Account Number] HIGHMARK FUNDS [ ]
INTERNATIONAL EQUITY FUND
Proxy for Special Meeting of Shareholders - March 31, 1998
The undersigned hereby appoints Kathryn Stanton and Kevin P. Robins proxies
to vote and act at the Special Meeting of Shareholders of the International
Equity Fund (the "Fund"), a portfolio of HighMark Funds, to be at the offices of
SEI Investments Distribution Co., 1 Freedom Valley Drive, Oaks, Pennsylvania
19456 at 9:00 a.m. on March 31, 1998 and at all adjournments thereof, in respect
of all Shares of the Fund as to which the undersigned may be entitled to vote or
act. Each proxy shall have power of substitution and a majority of said proxies
or their substitutes, or any one if only one be present and acting, shall have
all powers hereby granted.
<PAGE> 31
The proxies are hereby authorized and instructed to vote upon the matters
specified in the notice of meeting as set forth on this side of this proxy. If
no choice is indicated as to the proposal, the proxies shall vote FOR the
proposal. The proxies may vote in their discretion on any other matter which may
properly come before the meeting.
NOTE: Signature(s) should agree with name(s) as printed hereon. All joint owners
should sign. Fiduciaries please indicate their titles. This proxy is solicited
on behalf of the Board of Trustees of HighMark Funds. Please sign and return
promptly in the enclosed envelope.
<TABLE>
<S> <C> <C> <C>
VOTE ON PROPOSALS
(1) Proposal to approve the proposed New FOR AGAINST ABSTAIN
Investment Sub-Advisory Agreement. ___ ___ ___
(2) Transaction of such other business as FOR AGAINST ABSTAIN
may properly come before the meeting or ___ ___ ___
any adjournment thereof.
</TABLE>
Please sign and return.
The proxies are hereby instructed to vote as specified.
X_________________ X_________________ DATE:____________
Signature
