Exhibit (h)(3)
ADMINISTRATIVE SERVICES AGREEMENT
THIS ADMINISTRATIVE SERVICES AGREEMENT dated as of December 10, 2007 is
made and entered into by and between HighMark Capital Management, Inc., a
California corporation ("HighMark"), and HighMark Funds, a Massachusetts
business trust (the "Trust").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust desires to retain HighMark to render certain
administrative services with respect to each investment portfolio listed on
Schedule A "Investment Portfolio List" attached hereto and all terms of which
are incorporated by this reference, and as the same may be amended from time to
time by the parties hereto; and HighMark is willing to render such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. SERVICES. The Trust hereby appoints HighMark to act as its
administrator. HighMark, will (either directly or pursuant to delegation to
other parties) perform all administrative services necessary or appropriate for
the operation of the Trust, including but not limited to recordkeeping,
regulatory reporting, regulatory compliance, blue sky, tax reporting,
transmission of regular shareholder communications, supervision of third party
service providers, and fund accounting services. This Agreement shall not
obligate HighMark to perform custodial, securities lending, transfer agency or
investment advisory services or to pay any portion of the fees or expenses of
the Trust's outside legal counsel or independent auditors, except as otherwise
provided herein. In its performance of such administrative services, HighMark,
among other things, will provide: (i) suitable office space for the Trust, (ii)
all necessary administrative facilities and equipment, and (iii) all personnel
necessary for the efficient conduct of the affairs of the Trust, including
persons to serve as the Trust's officers. In addition, HighMark shall bear the
additional expenses of the Trust set forth on Schedule B "List of Additional
Expenses" attached hereto and all terms of which are incorporated herein by this
reference, and as the same may be amended from time to time by the mutual
consent of the parties hereto, provided, however, that the parties shall
allocate between themselves as agreed from time to time the compensation and
expenses of the person who serves as the chief compliance officer of HighMark
and of the Trust and such allocation may be revised from time to time by the
parties. HighMark may delegate any or all of its responsibilities hereunder to
one or more other parties, and any compensation paid to any such party will be
the sole responsibility of HighMark. Except to the extent otherwise specifically
provided, HighMark shall not be obligated to pay the compensation of any
employee of the Trust retained by the trustees of the Trust to perform services
on behalf of the Trust.
2. COMPENSATION. The Trust will pay to HighMark as compensation for the
services rendered and for the facilities furnished by HighMark, a fee computed
daily and paid monthly in
arrears at the annual rate of 0.15% of the first $8 billion of the Trust's
average daily net assets and 0.14% of such average daily net assets in excess of
$8 billion. HighMark's compensation shall be prorated for partial months. As
mentioned in Paragraph 1 above, pursuant to the "AGREEMENT Concerning CCO
Compensation Allocation" dated December 15, 2004 but made effective as of July
1, 2004, the Trust pays to HighMark a portion of the overall compensation and
expenses for the compliance work of the HighMark CCO functioning as the Trust's
CCO. The Trust assumes and shall pay or cause to be paid all other expenses of
the Trust not otherwise allocated to HighMark herein, including, without
limitation: organizational costs; taxes; expenses for legal and auditing
services; blue sky filing fees; the expenses of preparing (including
typesetting), printing and mailing reports, prospectuses, statements of
additional information, proxy solicitation material, shareholder statements,
confirmations and notices to existing shareholders (including any fees charged
by Automated Data Processing, Inc. with respect to mailing any such materials to
beneficial shareholders); all expenses incurred in connection with issuing and
redeeming shares; the costs of pricing services; the costs of custodial
services; the cost of initial and ongoing registration of the shares under
Federal and state securities laws; bank service charges; rating agency fees;
NSCC trading charges; fees and out-of-pocket expenses of Trustees who are not
affiliated persons of HighMark or any affiliated person of HighMark; the costs
of Trustees' meetings; insurance; interest; brokerage costs; litigation and
other extraordinary or nonrecurring expenses; and all fees and charges of
service providers to the Trust other than service providers with whom HighMark
has entered into a sub-contracting arrangement for the provision of services
HighMark is obligated to provide hereunder. The Trust shall reimburse HighMark,
and any sub-administrator hired by HighMark, for their reasonable out-of-pocket
copying, postage, telephone, and fax expenses and similar types of expenses
incurred by them in the performance of their duties.
3. EFFECTIVE DATE AND TERM. This Agreement shall become effective as of
the date first written above, and it shall continue in effect, unless earlier
terminated by either party hereto as provided hereunder, until December 31,
2008, and thereafter shall be renewed automatically for successive one-year
terms unless written notice not to renew is given by the non-renewing party to
the other party at least 120 days prior to the expiration of the then-current
term. Each party to this Agreement may terminate this Agreement prior to the
expiration of the initial term set forth above, by providing written notice to
the other party hereto with a specified date of termination, in the event of a
material breach of this Agreement by the other party, provided that the
terminating party has notified the other party of such breach at least 45 days
prior to the specified date of termination and the breaching party has not
remedied such breach by the specified date. This Agreement shall terminate as to
any portfolio or as to the Trust upon the liquidation, respectively, of the
portfolio or the Trust. Compensation due HighMark and unpaid by the Trust upon
such termination shall be immediately due and payable upon and notwithstanding
such termination. If the Trust terminates this Agreement, or if this Agreement
terminates as a result of the liquidation of the Trust, HighMark, and any
sub-administrator hired by HighMark, shall be entitled to reimbursement from the
Trust for their reasonable expenses in connection with their activities in
effecting termination, including without limitation, the delivery to the Trust
or its designee(s) of the Trust's property, records, instruments and documents.
4. STANDARD OF CARE AND LIMITATION OF LIABILITY. HighMark shall use its
reasonable best efforts to ensure the accuracy of all services performed under
this Agreement, but in the absence of willful misfeasance, bad faith or gross
negligence on the part of HighMark, or the
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reckless disregard by HighMark, of its obligations and duties hereunder,
HighMark shall not be subject to any liability to the Trust, for any act or
omission in the course of, or connected with, the rendering of services
hereunder. As used in this Section 4, the term "HighMark" shall include the
directors, officers, employees and other agents of HighMark.
So long as HighMark, or its agents, acts with good faith and with due diligence
hereunder, the Trust assumes full responsibility and shall indemnify HighMark
and hold it harmless from and against any and all actions, suits and claims,
whether groundless or otherwise, and from and against any and all losses,
damages, costs, charges, reasonable counsel fees and disbursements, payments,
expenses and liabilities (including reasonable investigation expenses) arising
directly or indirectly out of said administration relationship to the Trust or
any other service rendered to the Trust hereunder; provided however, that in no
event shall the Trust be obligated to indemnify HighMark against any liability
to which HighMark would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of duty. The indemnity
provisions set forth herein shall indefinitely survive the termination of this
Agreement.
HighMark may apply to the Trust at any time for instructions and may consult
with auditors or counsel for the Trust or, at its own expense, HighMark's own
counsel, accountants or other experts, with respect to any matter arising in
connection with HighMark's duties, and HighMark shall not be liable or
accountable for any action taken or omitted by it in good faith and with due
diligence in accordance with such instruction or with the opinion of such
counsel, accountants or other experts. To the extent HighMark consults with the
Trust's counsel or the Trust's auditors pursuant to this provision, any such
expense shall be borne by the Trust.
Nothing herein shall make HighMark liable for the performance or omissions of
unaffiliated third parties such as, by way of example and not limitation,
transfer agents, custodians, postal or delivery services, telecommunications
providers and processing and settlement services unless in each case such third
party is engaged by HighMark. HighMark may rely upon information provided by the
Trust's transfer agent and custodian, and has no duty to investigate or confirm
the accuracy or adequacy of any such information.
In the event of equipment failures beyond HighMark's control, HighMark shall
take reasonable and prompt steps to minimize service interruptions but shall
have no liability with respect thereto. HighMark shall develop and maintain a
plan for recovery from equipment failures which may include contractual
arrangements with appropriate parties making reasonable provision for emergency
use of electronic data processing equipment to the extent appropriate equipment
is available. The foregoing limitation of liability provision shall not apply
where HighMark could have reasonably invoked its business continuity plan to
avoid the failure to comply caused by the equipment failure.
5. ASSIGNMENT. This Agreement shall not be assignable by HighMark without
the prior written consent of the Trust.
6. AMENDMENTS. This Agreement may be amended by the parties only if such
amendment is specifically approved by the vote of a majority of the Trustees of
the Trust.
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7. NOTICE. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by certified or registered
mail, postage prepaid, return receipt requested, or delivered by hand, facsimile
(with a hard copy via regular mail), messenger or overnight courier, and shall
be deemed given when received at the addresses set forth below, or at such other
address as a party may specify by written notice to the other party.
If to the Trust: HighMark Funds - Attention: Xxxx Xxxxx
000 Xx. Xxxxxxxx Xx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
000-000-0000 (fax)
with a copy to :
Ropes & Xxxx.
Attention: Xxxx Xxxxx, Esq
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
000-000-0000 (fax)
If to HighMark: HighMark Capital Management, Inc.
Attention: VP of Fund Administration
000 Xxxxxxxxxx Xx. , 00xx xxxxx
Xxx Xxxxxxxxx, XX 00000
000-000-0000 (fax)
8. HEADINGS. The headings of Sections hereof are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions hereof.
9. GENERAL. This Agreement, together with the Schedule A and Schedule B,
contain the entire understanding between the parties hereto with respect to the
subject matter hereof, and supersede all prior and contemporaneous agreements
and understandings, inducements or conditions, express or implied, oral or
written. If any term or provision of this Agreement or the application thereof
to any person or circumstances is held to be invalid, illegal or otherwise
unenforceable to any extent, then, to the fullest extent permitted by law: (i)
such invalidity, illegality or unenforceability shall not affect any other term
or provision of this Agreement; (ii) all other terms and provisions of this
Agreement shall remain in full force and effect and shall be liberally construed
in order to carry out the intent of the parties as nearly as may be possible;
and (iii) the parties shall use all reasonable efforts to substitute a valid,
legal and enforceable provision which, insofar as practicable, implements the
purpose and intents of this Agreement. HighMark shall be deemed to be an
independent contractor for all purposes under this Agreement. The services of
HighMark rendered to the Trust hereunder are not to be deemed to be exclusive.
HighMark is free to render such services to others and to have other businesses
and interests. This Agreement may be executed in two or more counterparts, each
of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
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10. GOVERNING LAW. This Agreement shall be governed by, construed,
interpreted and applied in accordance with the laws of the Commonwealth of
Massachusetts, without giving effect to any conflict of laws rules that would
make the substantive laws of another jurisdiction apply.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their officers hereunto duly authorized all as of the day and year first
above written.
HIGHMARK FUNDS
By: /s/ Xxxxxx X'Xxxxxxx
------------------------------
Name: Xxxxxx X'Xxxxxxx
Title: Treasurer
HIGHMARK CAPITAL MANAGEMENT, INC.
By: /s/ Xxxxx X. Xxxx XX
------------------------------
Name: Xxxxx X. Xxxx XX
Title: President & CEO
NOTICE
A copy of the Agreement and Declaration of Trust, as amended through the
date hereof, establishing HighMark Funds (the "Trust") is on file with the
Secretary of The Commonwealth of Massachusetts, and notice is hereby given that
this Agreement is executed on behalf of the Trust by officers of the Trust as
officers and not individually and that the obligations of or arising out of this
Agreement are not binding upon any of the trustees, officers or shareholders
individually but are binding only upon the assets and property belonging to the
Trust.
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SCHEDULE A
TO THE ADMINISTRATION AGREEMENT
INVESTMENT PORTFOLIO LIST
EFFECTIVE AS OF SEPTEMBER 27, 2007
HighMark 100% U. S. Treasury Money Market Fund
HighMark California Tax-Free Money Market Fund
HighMark Diversified Money Market Fund
HighMark U. S. Government Money Market Fund
HighMark Balanced Fund
HighMark Core Equity Fund
HighMark Large Cap Growth Fund
HighMark Large Cap Value Fund
HighMark Small Cap Value Fund
HighMark Value Momentum Fund
HighMark Bond Fund
HighMark California Intermediate Tax-Free Bond Fund
HighMark National Intermediate Tax-Free Bond Fund
HighMark Short Term Bond Fund
HighMark Income Plus Allocation Fund
HighMark Growth & Income Allocation Fund
HighMark Capital Growth Allocation Fund
HighMark Diversified Equity Allocation Fund
HighMark International Opportunities Fund
HighMark Cognitive Value Fund
HighMark Enhanced Growth Fund
HighMark Small Cap Advantage Fund
and any other portfolios hereafter created by the Trust after the date
of this Agreement
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ADMINISTRATION AGREEMENT
SCHEDULE B
LIST OF ADDITIONAL EXPENSES
* HighMark as Administrator shall be responsible for the per account and CUSIP
fees charged by the Trust's transfer agent related to the Trust's portfolios up
to but not to exceed $950,000 per year. HighMark shall not be responsible for
any other transfer agency expenses, including but not limited to any
out-of-pocket expenses.
For any new Trust portfolios or new share classes of either existing or new
Trust portfolios established and offered to the public during the term of this
Agreement (as those terms are defined above), the Trust will be charged a fee in
accordance with the effective fee schedule in place with the transfer agent at
that time. The undertaking by HighMark as Administrator to pay certain transfer
agency expenses as noted above shall not affect the allocation methodology of
transfer agency expenses applied by the Trust: that is, any transfer agency fee
incurred by a new Trust portfolio or new share class (whether of a portfolio
existing as of the date of this Schedule B, or a new portfolio), including but
not limited to any applicable minimum fee, shall be allocated pro rata among all
of the then existing Trust portfolios, based on their respective net assets.
* Annually, HighMark as Administrator shall be responsible for up to $100,000 of
routine legal expenses incurred by the Trust and the Trust's portfolios when
such routine expenses exceed $250,000; provided, however, that HighMark shall
not be responsible for (i) non-routine legal expenses. or (ii) routine legal
expenses in excess of $350,000. As used herein, the term "routine legal
expenses" includes annual updates to the Trust's registration statement and
supplements as necessary; review of annual and semi-annual reports; board
meeting attendance and preparation of minutes; annual trustee, officer, and
service provider questionnaires; annual review of investment advisory
agreements; anti-money laundering and Xxxxxxxx-Xxxxx related issues;
establishment of new portfolios (up to two separate filings annually); proxies
related to affiliated portfolio mergers and acquisitions; and investment policy
changes that do not involve special circumstances (up to one filing annually).
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