Exhibit 99.d.6
HIGHMARK SMALL CAP GROWTH FUND
SUB-ADVISORY AGREEMENT
This AGREEMENT is executed as of , 200__ and made effective as of
________________________, 2001 and made effective as of _________________, 2001,
by and between HIGHMARK CAPITAL MANAGEMENT, INC. (the "Adviser") and
XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT, a California limited partnership, 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 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, Adviser's affiliate, Union Bank of California N.A., serves as
Custodian for the HighMark Funds and provides certain other services for the
Funds;
WHEREAS, SEI Investments Mutual Fund Services is Administrator and SEI
Investment Distribution Co. is Distributor of the HighMark Funds
(collectively, the "SEI Companies"); and
WHEREAS, Adviser desires to retain Sub-Adviser as its agent to furnish
investment sub-advisory services for certain assets of the Trusts Small Cap
Growth 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 Mutual Fund
Services and SEI Investments Distribution Co, respectively.
1.4 "Adviser" shall mean HighMark Capital Management, Inc.
1.5 "Adviser's Act" shall mean the Investment Adviser's Act of 1940 and the
rules and regulations promulgated thereunder, as they may be amended from
time to time
1.6 "Bank" shall mean Union Bank of California, NA., a national banking
association organized under the laws of the United States.
1.7 "Sub-Adviser" shall mean Xxxxxxxx-Xxxxxxxxx Capital Management, a limited
partnership
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formed under the laws of the State of California 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. 33376887) and the x00 Xxx 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 Small Cap Growth 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 the 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.
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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 it self
reasonably available to the Trust's 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 United States Securities and Exchange
Commission ("SEC") Rules and Regulations of the SEC pertaining to its
investment advisory activities as amended from time to time 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 Fund 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-Advisers 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, the
SEI Companies, or any affiliated person of any of the Trust, Adviser, the
Sub-Adviser, or the SEI Companies that
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Adviser has identified to the Sub-Adviser in writing, except as may be
permitted under the `40 Act.
(d) will report regularly to Adviser and will make appropriate persons
available for the purpose of reviewing at reasonable times the management of
the Fund with representatives of Adviser and the Board of Trustees,
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 that are not inconsistent
with the fiduciary duties undertaken 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, and, unless otherwise
notified in writing, to vote all proxies and take any other actions relating
to the securities of the Fund including exercise of rights and acceptance of
tender offers in accordance with any investment guidelines provided to
Sub-Adviser by Adviser.
4.4 Sub-Adviser will diligently perform services as defined under this
Agreement. However, Sub-Adviser makes no representations or guarantees
whatsoever that the objective(s) 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 31 a-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
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Sub-Adviser of its responsibilities under this paragraph 5.
6. INSURANCE. Adviser agrees to obtain and maintain on behalf of the Fund
all necessary and appropriate insurance, including errors and omissions
coverage.
7. 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
8. 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.
9. 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 of the Trust. Adviser recognizes, and has advised the Trusts 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.
10. 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 or for
having executed Adviser's instructions , 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.
11. 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.
12. DURATION AND TERMINATION. This Agreement will become effective as of the
date hereof, provided that it has been approved by a vote of a majority of
the outstanding voting
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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
Fund for successive periods of 12 months, each ending on the day preceding
the annual anniversary of the Agreement's effective date, 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 approval, and (b) by the
vote of a majority of the Trust's Board of Trustees or by the vote of a
majority of all votes attributable to the outstanding Shares of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated as to the
Fund at any time, without the payment of any penalty, on sixty (60) day's
written notice by the Adviser to Sub-Adviser. 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)
13. 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
14. MUTUAL RECOGNITION. Each party hereby consents to the reasonable use of
their name in marketing/client materials developed and distributed by or on
behalf of the other party.
In addition, it is understood that each party's respective names or the name
of any of their respective affiliates, or any derivative associated with
those names, are the valuable property of such party and its affiliates and
that each party to this Agreement has the right to use the other party's
name(s) or derivative(s) in offering materials and sales literature so long
as this Agreement is in effect. Upon termination of the Agreement, each party
shall forthwith cease to r use such name(s) or derivative(s).
15. SUB-ADVISER INFORMATION. During the terms of this Agreement, Adviser
agrees to furnish the Sub-Adviser at Sub-Advisers 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
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paragraph. Sales literature may be furnished to the Sub-Adviser by
first-class or overnight mail, facsimile transmission equipment or hand
delivery.
16. 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 inure
to the benefit of the parties hereto and their respective successors.
17. NOTICES. Sub-Adviser undertakes to promptly notify Adviser of any
changes in its general partner(s). Further, any notice, advice or report to
be given pursuant to this Agreement shall be delivered or mailed as set forth
below.
TO ADVISER AT:
-------------
HighMark Capital Management, Inc.
000 Xxxxxxx Xxxxxx
Post Office Xxx 00000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, President
TO THE SUB-ADVISER AT:
---------------------
Xxxxxxxx-Xxxxxxxxx Capital Management
000 Xxxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxxx, XX 000000
Attention: Director, Client Service/Marketing
Copy to: Xxxxx X. Xxxxxxxx
Vice President - Business Development
Xxxxx Xxxxx
General Counsel
TO THE TRUST OR THE FUND AT:
----------------------------
HighMark Funds
c/o SEI Investments Fund Resources
and SEI Investments Distribution Co.
Xxx Xxxxxxx Xxxxxx Xx.
Xxxx, Xxxxxxxxxxxx 00000
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.
18. BROCHURE REVIEW. Adviser has received from Sub-Adviser and reviewed the
disclosure statement or brochure required to be delivered pursuant to Rule
204-3 of the 40 Act (the Brochure, which Brochure was received and reviewed
by Adviser more than 48 hours prior to entering this Agreement
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19. 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
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
20. 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.
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.
HIGHMARK CAPITAL MANAGEMENT, INC. XXXXXXXX-XXXXXXXXX CAPITAL
MANAGEMENT
By: By:
------------------------------ ------------------------------
Name: Xxxxx Xxxxx Name:
----------------------------
Title: President Title:
---------------------------
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SCHEDULE A
HIGHMARK SMALL CAP GROWTH FUND
Advisory Fee: 95 b.p.
Sub-Advisory Fee: 65 b.p. on the first $900 million
60 b.p. on the next $100 million
55 b.p. on the next $100 million
50 b.p. on assets over $300 million
The Sub-Advisory fee shall be payable out of the Advisory fee
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SCHEDULE B
SUB-ADVISER PERFORMANCE STANDARDS
Outperform the Xxxxxxx 2000 Growth Index and perform in the top 30% of the
Morningstar small cap growth fund universe.
Sub-Adviser will diligently perform services as defined under this Agreement.
However, sub-Adviser 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.
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