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EXHIBIT 5(a)
Investment Advisory Agreement between the
Registrant and Union Bank of California, N.A.,
dated as of April 1, 1996
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INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of April 1, 1996 between THE HIGHMARK GROUP, a
Massachusetts business trust (herein called the "Group:), and UNION BANK OF
CALIFORNIA, N.A., a national banking association with its principal offices in
San Francisco, California (herein called the "Investment Adviser").
WHEREAS, the Group is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended ("1940 Act"); and
WHEREAS, the Group desires to retain the Investment Adviser to furnish
investment advisory and administrative services to certain investment
portfolios of the Group (the "Funds") and the Investment Adviser represents
that it is willing and possesses legal authority to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Group hereby appoints the Investment Adviser to
act as investment adviser to the Funds identified on Schedule A hereto for the
period and on the terms set forth in this Agreement. The Investment Adviser
accepts such appointment and agrees to furnish the services herein set forth
for the compensation herein provided.
2. DELIVERY OF DOCUMENTS. The Group has furnished the Investment Adviser
with copies properly certified or authenticated of each of the following:
(a) the Group's 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 Group's Code of Regulations and amendments thereto;
(c) resolutions of the Group's Board of Trustees authorizing
the appointment of the Investment Adviser and approving this Agreement;
(d) the Group's Notification of Registration on Form N-8A
under the 1940 Act as filed with the Securities and Exchange
Commission on March 12, 1987 and all amendments thereto;
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(e) the Group'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 Securities and Exchange
Commission and all amendments thereto; and
(f) the Fund's most recent prospectuses and Statement of
Additional Information (such prospectuses and Statement of Additional
Information, as presently in effect, and all amendments and
supplements thereto are herein collectively called the "Prospectus").
The Group will furnish the Investment Adviser from time to time with
copies of all amendments of or supplements to the foregoing.
3. MANAGEMENT. Subject to the supervision of the Group's Board of
Trustees, the Investment Adviser will provide a continuous investment program
for each Fund, including investment research and management with respect to all
securities and investments and cash equivalents in said Funds. The Investment
Adviser will determine from time to time what securities and other investments
will be purchased, retained or sold by the Group with respect to the Funds. The
Investment Adviser will provide the services under this Agreement in accordance
with each Fund's investment objective, policies, and restrictions as stated in
the Prospectus and resolutions of the Group's Board of Trustees. The Investment
Adviser further agrees that it:
(a) will use the same skill and care in providing such
services as it uses in providing services to fiduciary accounts for
which it has investment responsibilities;
(b) will conform with all applicable Rules and Regulations of
the Securities and Exchange Commission and in addition will conduct
its activities under this Agreement in accordance with any applicable
regulations of any governmental authority pertaining to the investment
advisory activities of the Investment Adviser;
(c) will not make loans to any person to purchase or carry
units of beneficial interest in the Group or make loans to the Group;
(d) will place orders pursuant to its investment
determinations for the Group either directly with the issuer or with
any broker or dealer. In placing orders with brokers and dealers, the
Investment Adviser will attempt to obtain prompt execution of orders
in an effective manner at the most favorable price. Consistent with
this obligation, when the execution and price offered by two or more
brokers or dealers are comparable, the Investment Adviser may, in its
discretion, purchase and sell portfolio securities to and from brokers
and dealers who provide the Investment Adviser with research advice
and other services. Unless and until appropriate procedures are
adopted by the Trustees of the Group under Rule 17e-1 of the 1940 Act
and unless the provisions of such Rule are complied with, portfolio
securities will not be purchased from or sold to BISYS Fund Services,
Union Bank of California, N.A., or any affiliated person of either the
Group, BISYS Fund Services, or Union Bank of California, N.A.;
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(e) will maintain all books and records with respect to the
Group's securities transactions and will furnish the Group's Board of
Trustees such periodic and special reports as the Board may request;
(f) will treat confidentially and as proprietary information
of the Group all records and other information relative to the Group
and prior, present or potential interestholders; 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 Group, which approval shall not be
unreasonably withheld and may not be withheld where the Investment
Adviser may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Group; and
(g) will maintain its policy and practice of conducting its
fiduciary functions independently. In making investment
recommendations for the Group, the Investment Adviser's personnel will
not inquire or take into consideration whether the issuers of
securities proposed for purchase or sale for the Group's account are
customers of the Investment Adviser or of its parent or its
subsidiaries or affiliates. In dealing with such customers, the
Investment Adviser and its parent, subsidiaries, and affiliates will
not inquire or take into consideration whether securities of those
customers are held by the Group.
4. SERVICES NOT EXCLUSIVE. The investment management services
furnished by the Investment Adviser hereunder are not to be deemed exclusive,
and the Investment Adviser shall be free to furnish similar services to others
so long as its services under this Agreement are not impaired thereby.
5. BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Investment Adviser hereby agrees that all records
which it maintains for the Group are the property of the Group and further
agrees to surrender promptly to the Group any of such records upon the Group's
request. The Investment Adviser further agrees to preserve for the periods
prescribed by Rule 31a-3 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. EXPENSES. During the term of this Agreement, the Investment
Adviser will pay all expenses incurred by it in connection with its activities
under this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Group.
7. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, each of the Funds will pay the Investment Adviser
and the Investment Adviser will accept as full compensation therefor a fee
computed daily and paid monthly at the applicable annual rate set forth on
Schedule A hereto. Each Fund's obligation to pay the above-described fee to the
Investment Adviser will begin as of the date of the initial public sale of
shares in that Fund.
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If in any fiscal year the aggregate expenses of any of the Funds (as
defined under the securities regulations of any state having jurisdiction over
the Group) exceed the expense limitations of any such state, the Investment
Adviser will reimburse the Fund for a portion of such excess expenses equal to
such excess times the ratios of the fees otherwise payable by the Fund to the
Investment Adviser hereunder to the aggregate fees otherwise payable by the
Fund to the Investment Adviser hereunder and to BISYS Fund Services under the
Administration Agreement between BISYS Fund Services and the Group. The
obligation of the Investment Adviser to reimburse the Funds hereunder is
limited in any fiscal year to the amount of its fee hereunder for such fiscal
year, provided, however, that notwithstanding the foregoing, the Investment
Adviser shall reimburse the Funds for such proportion of such excess expenses
regardless of the amount of fees paid to it during such fiscal year to the
extent that the securities regulations of any state having jurisdiction over
the Group so require. Such expense reimbursement, if any, will be estimated
daily and reconciled and paid on a monthly basis.
8. LIMITATION OF LIABILITY. The Investment Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Funds in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Investment Adviser in the
performance of its duties or from reckless disregard by the Investment Adviser
of its obligations and duties under this Agreement.
9. DURATION AND TERMINATION. This Agreement will become effective as
to a particular Fund as of the date first written above, provided that it shall
have been approved by vote of a majority of the outstanding voting securities
of such Fund, in accordance with the requirements under the 1940 Act, and,
unless sooner terminated as provided herein, shall continue in effect until
___________________.
Thereafter, if not terminated, this Agreement shall continue in effect
as to a particular Fund for successive periods of twelve months each ending on
October 31st of each year, provided such continuance is specifically approved
at least annually (a) by the vote of a majority of those members of the Group's
Board of Trustees who are not parties to this Agreement or interested persons
of any party to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval, and (b) by the vote of a majority of the
Group's Board of Trustees or by the vote of a majority of the outstanding
voting securities of such Fund. Notwithstanding the foregoing, this Agreement
may be terminated as to a particular Fund at any time on sixty days' written
notice, without the payment of any penalty, by the Group (by vote of the
Group's Board of Trustees or by vote of a majority of the outstanding voting
securities of such Fund) or by the Investment Adviser. This Agreement will
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested persons" and "assignment" shall have the same meaning of such terms
in the 1940 Act.)
10. 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.
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11. 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 law of the Commonwealth of Massachusetts.
The names "The HighMark Group" and "Trustees of The HighMark Group"
refer respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under a Declaration of
Trust dated as of March 10, 1987 to which reference is hereby made and a copy
of which is on file at the office of the Secretary 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 "The HighMark Group"
entered into in the name or on behalf thereof by any of the Trustees,
representatives or agents are made not individually, but in such capacities,
and are not binding upon any of the Trustees, interestholders or
representatives of the Trust personally, but bind only the assets of the Trust,
and all persons dealing with any Fund of the Trust must look solely to the
assets of the Trust belonging to such Fund for the enforcement of any claims
against the Trust.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
THE HIGHMARK GROUP
Seal By: /s/
--------------------------
Title: President
UNION BANK OF CALIFORNIA, N.A.
Seal By: /s/
--------------------------
Title: Executive Vice President
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Dated as of April 1, 1996
Amended and Restated
Schedule A
to the
Investment Advisory Agreement
between The HighMark Group and
Union Bank of California, N.A.
Name of Fund Compensation*
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The U.S. Government Obligations Fund Annual rate of forty
one-hundredths of one percent
(.40%) of the U.S. Government
Obligations Fund's first $500
million of average daily net assets,
thirty-five one-hundredths of one
percent (.35%) of the next $500
million of average daily net assets,
and thirty one-hundredths of one
percent (.30%) of the remaining
average daily net assets.
The Diversified Obligations Fund Annual rate of forty
one-hundredths of one percent
(.40%) of the Diversified
Obligations Fund's first $500
million of average daily net assets,
thirty-five one-hundredths of one
percent (.35%) of the next $500
million of average daily net assets,
and thirty one-hundredths of one
percent (.30%) of the remaining
average daily net assets.
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* All fees are computed daily and paid periodically.
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Amended and Restated
Schedule A
to the
Investment Advisory Agreement
between The HighMark Group and
Union Bank of California, N.A.
Name of Fund Compensation*
------------ -------------
The 100% U.S. Treasury Obligations Fund Annual rate of forty
one-hundredths of one percent
(.40%) of the U.S. Treasury
Obligations Fund's first $500
million of average daily net assets,
thirty-five one-hundredths of one
percent (.35%) of the next $500
million of average daily net assets,
and thirty one-hundredths of one
percent (.30%) of the remaining
average daily net assets.
The Income Equity Fund Annual rate of one percent
(1.00%) of the first $40 million of
the Income Equity Fund's average
daily net assets and sixty
one-hundredths of one percent
(.60%) of the remaining average
daily net assets.
The Bond Fund Annual rate of one percent
(1.00%) of the first $40 million of
the Bond Fund's average daily net
assets and sixty one-hundredths of
one percent (.60%) of the
remaining average daily net assets.
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* All fees are computed daily and paid periodically.
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Amended and Restated
Schedule A
to the
Investment Advisory Agreement
between The HighMark Group and
Union Bank of California, N.A.
Name of Fund Compensation*
------------ -------------
The Tax-Free Fund Annual rate of forty
one-hundredths of one percent
(.40%) of the Tax-Free Fund's
first $500 million of average daily
net assets, thirty-five one-
hundredths of one percent (.35%)
of the next $500 million of
average daily net assets, and thirty
one-hundredths of one percent
(.30%) of the remaining average
daily net assets.
The California Tax-Free Fund Annual rate of forty
one-hundredths of one percent
(.40%) of the California Tax-Free
Fund's first $500 million of
average daily net assets, thirty-five
one-hundredths of one percent
(.35%) of the next $500 million of
average daily net assets, and thirty
one-hundredths of one percent
(.30%) of the remaining average
daily net assets.
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* All fees are computed daily and paid periodically.
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Amended and Restated
Schedule A
to the
Investment Advisory Agreement
between The HighMark Group and
Union Bank of California, N.A.
Name of Fund Compensation*
------------ -------------
The Balanced Fund Annual rate of one percent
(1.00%) of the first $40 million of
the Fund's average daily net assets
and sixty one-hundredths of one
percent (.60%) of the remaining
average daily net assets.
The Growth Fund Annual rate of one percent
(1.00%) of the first $40 million of
the Fund's average daily net assets
and sixty one-hundredths of one
percent (.60%) of the remaining
average daily net assets.
The Government Annual rate of one percent
(1.00%) of the first $40 million of
the Fund's average daily net assets
and sixty one-hundredths of one
percent (.60%) of the remaining
average daily net assets.
The Income and Growth Fund Annual rate of one percent
(1.00%) of the first $40 million of
the Fund's average daily net assets
and sixty one-hundredths of one
percent (.60%) of the remaining
average daily net assets.
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* All fees are computed daily and paid periodically.
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Amended and Restated
Schedule A
to the
Investment Advisory Agreement
between The HighMark Group and
Union Bank of California, N.A.
Name of Fund Compensation*
------------ -------------
The Intermediate California Annual rate of one percent
(1.00%) of the first $40 million of
the Fund's average daily net assets
and sixty one-hundredths of one
percent (.60%) of the remaining
average daily net assets.
The Intermediate Municipal Annual rate of one percent
(1.00%) of the first $40 million of
the Fund's average daily net assets
and sixty one-hundredths of one
percent (.60%) of the remaining
average daily net assets.
THE HIGHMARK GROUP
By: /s/
--------------------------
Title: President
UNION BANK OF CALIFORNIA, N.A.
By: /s/
--------------------------
Title: Executive Vice President
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* All fees are computed daily and paid periodically.
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