FORM N-SAR Exhibits 77Q1(e) ECLIPSE FUNDS INC. For Period Ended 4/30/09 ECLIPSE FUNDS INC. SUBADVISORY AGREEMENT
FORM
N-SAR
Exhibits
77Q1(e)
811-06175
For
Period Ended 4/30/09
This
Subadvisory Agreement, made as of the 1st
day of
January, 2009 (the “Agreement”), between New York Life Investment Management
LLC, a Delaware limited liability company (the “Manager”) and Madison Square
Investors LLC, a Delaware limited liability company (the “Subadvisor”).
WHEREAS,
Eclipse Funds Inc. (the “Company”) is registered under the Investment Company
Act of 1940, as amended (the “1940 Act”), as an open-end, management investment
company; and
WHEREAS,
the Company is authorized to issue separate series, each of which may offer
a
separate class of shares of beneficial interest, each series having its own
investment objective or objectives, policies and limitations; and
WHEREAS,
the Company currently offers shares in multiple series, may offer shares of
additional series in the future, and intends to offer shares of additional
series in the future; and
WHEREAS,
the Manager has entered into the Amended and Restated Management Agreement
with
the Company, on behalf of its series, as amended (the “Management Agreement”);
and
WHEREAS,
under the Management Agreement, the Manager has agreed to provide certain
investment advisory and related administrative services to the Company;
and
WHEREAS,
the Management Agreement permits the Manager to delegate certain of its
investment advisory duties under the Management Agreement to one or more
subadvisors; and
WHEREAS,
the Manager wishes to retain the Subadvisor to furnish certain investment
advisory services to one or more of the series of the Company and manage such
portion of the Company as the Manager shall from time to time direct, and the
Subadvisor is willing to furnish such services;
NOW,
THEREFORE, in consideration of the premises and the promises and mutual
covenants herein contained, it is agreed between the Manager and the Subadvisor
as follows:
1.
Appointment. The Manager hereby appoints Madison Square Investors LLC to act
as
Subadvisor to the series designated on Schedule A of this Agreement (the
“Series”) with respect to all or a portion of the assets of the Series
designated by the Manager as allocated to the Subadvisor (“Allocated Assets”)
subject to such written instructions, including any redesignation of Allocated
Assets and supervision as the Manager may from time to time furnish for the
periods and on the terms set forth in this Agreement. The Subadvisor
accepts such appointment and agrees to furnish the services herein set forth
for
the compensation herein provided.
In
the event the Company designates one
or more series other than the Series with respect to which the Manager wishes
to
retain the Subadvisor to render investment advisory services hereunder, it
shall
notify the Subadvisor in writing. If the Subadvisor is willing to
render such services, it shall notify the Manager in writing, whereupon such
series shall become a Series hereunder, and be subject to this Agreement, and
Schedule A shall be revised accordingly.
2.
Portfolio Management Duties. Subject to the supervision of the Company’s Board
of Directors (“Board”) and the Manager, the Subadvisor will provide a continuous
investment program for the Series’ Allocated Assets and determine the
composition of the assets of the Series’ Allocated Assets, including
determination of the purchase, retention or sale of the securities, cash and
other investments contained in the portfolio. The Subadvisor will
conduct investment research and conduct a continuous program of evaluation,
investment, sales and reinvestment of the Series’ Allocated Assets by
determining the securities and other investments that shall be purchased,
entered into, sold, closed or exchanged for the Series, when these transactions
should be executed, and what portion of the Allocated Assets of the Series
should be held in the various securities and other investments in which it
may
invest, and the Subadvisor is hereby authorized to execute and perform such
services on behalf of the Series. The Subadvisor will provide the
services under this Agreement in accordance with the Series’ investment
objective or objectives, policies and restrictions as stated in the Company’s
Registration Statement filed with the Securities and Exchange Commission (the
“SEC”), as amended, copies of which shall be delivered to the Subadvisor by the
Manager. The Subadvisor further agrees as follows:
(a)
The Subadvisor understands that the Allocated Assets of the Series need to
be
managed so as to permit the Series to qualify or continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code,
and will coordinate efforts with the Manager with that objective.
(b)
The Subadvisor will conform with the 1940 Act and all rules and regulations
thereunder, all other applicable federal and state laws and regulations, any
applicable procedures adopted by the Company’s Board of which a copy has been
delivered to the Subadvisor, and the provisions of the Registration Statement
of
the Company under the Securities Act of 1933, as amended (the “1933 Act”), and
the 1940 Act, as supplemented or amended, copies of which shall be delivered
to
the Subadvisor by the Manager.
(c)
On occasions when the Subadvisor deems the purchase or sale of a security to
be
in the best interest of the Series as well as of other investment advisory
clients of the Subadvisor or any of its affiliates, the Subadvisor may, to
the
extent permitted by applicable laws and regulations, but shall not be obligated
to, aggregate the securities to be so sold or purchased with those of its other
clients where such aggregation is not inconsistent with the policies set forth
in the Registration Statement. 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 a manner that, over time, is fair and equitable in
the
judgment of the Subadvisor in the exercise of its fiduciary obligations to
the
Company and to such other clients, subject to review by the Manager and the
Board. The Manager recognizes that in some cases this procedure may adversely
affect the results obtained for the Series or Company.
(d)
In connection with the purchase and sale of securities for the Series, the
Subadvisor will arrange for the transmission to the custodian and portfolio
accounting agent for the Series, on a daily basis, such confirmation, trade
tickets and other documents and information, including, but not limited to,
CUSIP, Sedol or other numbers that identify securities to be purchased or sold
on behalf of the Series, as may be reasonably necessary to enable the custodian
and portfolio accounting agent to perform their administrative and recordkeeping
responsibilities with respect to the Series. With respect to portfolio
securities to be purchased or sold through the Depository Company and Clearing
Corporation, the Subadvisor will arrange for the automatic transmission of
the
confirmation of such trades to the Company’s custodian and portfolio accounting
agent.
(e)
The Subadvisor will assist the custodian and portfolio accounting agent for
the
Company in determining or confirming, consistent with the procedures and
policies stated in the Registration Statement for the Company, the value of
any
portfolio securities or other Allocated Assets of the Series for which the
custodian and portfolio accounting agent seek assistance from, or which they
identify for review by, the Subadvisor.
(f)
The Subadvisor will make available to the Company and the Manager, promptly
upon
request, all of the Series’ investment records and ledgers maintained by the
Subadvisor (which shall not include the records and ledgers maintained by the
custodian or portfolio accounting agent for the Company) as are necessary to
assist the Company and the Manager to comply with requirements of the 1940
Act
and the Investment Advisers Act of 1940, as amended (the “Advisers Act”), as
well as other applicable laws. The Subadvisor will furnish to
regulatory agencies having the requisite authority any information or reports
in
connection with such services that may be requested in order to ascertain
whether the operations of the Company are being conducted in a manner consistent
with applicable laws and regulations.
(g)
The Subadvisor will provide reports to the Company’s Board, for consideration at
meetings of the Board, on the investment program for the Series and the issuers
and securities represented in the Series’ Allocated Assets, and will furnish the
Company’s Board with respect to the Series such periodic and special reports as
the Directors and the Manager may reasonably request.
(h)
In rendering the services required under this Agreement, the Subadvisor may,
from time to time, employ or associate with itself such entity, entities, person
or persons as it believes necessary to assist it in carrying out its obligations
under this Agreement. The Subadvisor may not, however, retain as subadvisor
any
company that would be an “investment adviser” as that term is defined in the
1940 Act, to the Series unless the contract with such company is approved by
a
majority of the Company’s Board and by a majority of Directors who are not
parties to any agreement or contract with such company and who are not
“interested persons” as defined in the 1940 Act, of the Company, the Manager,
the Subadvisor or any such company that is retained as subadvisor, and also
is
approved by the vote of a majority of the outstanding voting securities of
the
applicable Series of the Company to the extent required by the 1940
Act. The Subadvisor shall be responsible for making reasonable
inquiries and for reasonably ensuring that any employee of the Subadvisor,
any
subadvisor that the Subadvisor has employed or with which it has associated
with
respect to the Series, or any employee thereof has not, to the best of the
Subadvisor’s knowledge, in any material connection with the handling of Company
assets:
(i)
been convicted, within the last ten (10) years, of any felony or misdemeanor
arising out of conduct involving embezzlement, fraudulent conversion or
misappropriation of funds or securities, involving violations of Sections 1341,
1342, or 1343 of Xxxxx 00, Xxxxxx Xxxxxx Code, or involving the purchase or
sale
of any security; or
(ii)
been found by any state regulatory authority, within the last ten (10) years,
to
have violated or to have acknowledged violation of any provision of any state
insurance law involving fraud, deceit or knowing misrepresentation; or
(iii)
been found by any federal or state regulatory authorities, within the last
ten
(10) years, to have violated or to have acknowledged violation of any provision
of federal or state securities laws involving fraud, deceit or knowing
misrepresentation.
3.
Compensation. For the services provided and the expenses assumed pursuant to
this Agreement, the Manager shall pay the Subadvisor as full compensation
therefor, a fee equal to the percentage of the Allocated Assets constituting
the
respective Series’ average daily net assets as described in the attached
Schedule A. Liability for payment of compensation by the Manager to
the Subadvisor under this Agreement is contingent upon the Manager’s receipt of
payment from the Company for management services described under the Management
Agreement between the Company and the Manager. Expense limitations or
fee waivers for the Series that may be agreed to by the Manager, but not agreed
to in writing by the Subadvisor, shall not cause a reduction in the amount
of
the payment to the Subadvisor by the Manager.
4.
Broker-Dealer Selection. The Subadvisor is responsible for decisions to buy
and
sell securities and other investments for the Series’ Allocated Assets, for
broker-dealer selection and for negotiation of brokerage commission
rates. The Subadvisor’s primary consideration in effecting a security
transaction will be to obtain the best execution for the Series, taking into
account the factors specified in the Prospectus and/or Statement of Additional
Information for the Company, which include the following: price
(including the applicable brokerage commission or dollar spread); the size
of
the order; the nature of the market for the security; the timing of the
transaction; the reputation, experience and financial stability of the
broker-dealer involved; the quality of the service; the difficulty of execution,
and the execution capabilities and operational facilities of the firm involved;
and the firm’s risk in positioning a block of
securities. Accordingly, the price to the Series in any transaction
may be less favorable than that available from another broker-dealer if the
difference is reasonably justified, in the judgment of the Subadvisor in the
exercise of its fiduciary obligations to the Company, by other aspects of the
portfolio execution services offered. Subject to such policies as the
Board may determine, and consistent with Section 28(e) of the Securities
Exchange Act of 1934, as amended, and the rules and interpretations of the
SEC
thereunder, the Subadvisor shall not be deemed to have acted unlawfully or
to
have breached any duty created by this Agreement or otherwise solely by reason
of its having caused the Series to pay a broker-dealer for effecting a portfolio
investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction, if the
Subadvisor or its affiliate determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker-dealer, viewed in terms of either that
particular transaction or the Subadvisor’s or its affiliate’s overall
responsibilities with respect to the Series and to their other clients as to
which they exercise investment discretion. To the extent consistent
with these standards and the Company’s Procedures for Securities Transactions
with Affiliated Brokers pursuant to Rule 17e-1, the Subadvisor is further
authorized to allocate the orders placed by it on behalf of the Series to the
Subadvisor if it is registered as a broker-dealer with the SEC, to its
affiliated broker-dealer, or to such brokers and dealers who also provide
research, statistical material or other services to the Series, the Subadvisor
or an affiliate of the Subadvisor. Such allocation shall be in such
amounts and proportions as the Subadvisor shall determine consistent with the
above standards and the Subadvisor will report on said allocation regularly
to
the Board of the Company, indicating the broker-dealers to which such
allocations have been made and the basis therefor.
5.
Disclosure about Subadvisor. The Subadvisor has reviewed the post-effective
amendment to the Registration Statement for the Company filed with the SEC
that
contains disclosure about the Subadvisor and represents and warrants that,
with
respect to the disclosure about the Subadvisor or information relating directly
or indirectly to the Subadvisor, such Registration Statement contains, as of
the
date hereof, no untrue statement of any material fact and does not omit any
statement of a material fact which was required to be stated therein or
necessary to make the statements contained therein not misleading. The
Subadvisor further represents and warrants that it is a duly registered
investment adviser under the Advisers Act and has notice filed in all states
in
which the Subadvisor is required to make such filings.
6.
Expenses. During the term of this Agreement, the Subadvisor will pay all
expenses incurred by it and its staff and for their activities in connection
with its portfolio management duties under this Agreement. The Manager or the
Company shall be responsible for all the expenses of the Company’s operations,
including, but not limited to:
(a)
the fees and expenses of Directors who are not interested persons of the Manager
or of the Company;
(b)
the fees and expenses of each Series which relate to: (i) the custodial
function and recordkeeping connected therewith; (ii) the maintenance of the
required accounting records of the Series not being maintained by the Manager;
(iii) the pricing of the Series’ shares, including the cost of any pricing
service or services that may be retained pursuant to the authorization of the
Directors of the Company; and (iv) for both mail and wire orders, the
cashiering function in connection with the issuance and redemption of the
Series’ shares;
(c)
the fees and expenses of the Company’s transfer and dividend disbursing agent,
that may be the custodian, which relate to the maintenance of each shareholder
account;
(d)
the charges and expenses of legal counsel and independent accountants for the
Company;
(e)
brokers’ commissions and any issue or transfer taxes chargeable to the Company
in connection with its securities transactions on behalf of the Series;
(f)
all taxes and business fees payable by the Company or the Series to federal,
state or other governmental agencies;
(g)
the fees of any trade association of which the Company may be a member;
(h)
the cost of share certificates representing the Series’ shares;
(i)
the fees and expenses involved in registering and maintaining registrations
of
the Company and of its Series with the SEC, registering the Company as a broker
or dealer and qualifying its shares under state securities laws, including
the
preparation and printing of the Company’s registration statements and
prospectuses for filing under federal and state securities laws for such
purposes;
(j)
allocable communications expenses with respect to investor services and all
expenses of shareholders’ and Directors’ meetings and of preparing, printing and
mailing reports to shareholders in the amount necessary for distribution to
the
shareholders;
(k)
litigation and indemnification expenses and other extraordinary expenses not
incurred in the ordinary course of the Company’s business; and
(l)
any expenses assumed by the Series pursuant to a Plan of Distribution adopted
in
conformity with Rule 12b-1 under the 1940 Act.
7.
Compliance.
(a)
The Subadvisor agrees to assist the Manager and the Company in complying with
the Company’s obligations under Rule 38a-1 under the 1940 Act, including but not
limited to: (i) periodically providing the Company’s Chief
Compliance Officer with information about and independent third-party reports
(if available) in connection with the Subadvisor’s compliance program adopted
pursuant to Rule 206(4)-7 under the Advisers Act (“Subadvisor’s Compliance
Program”); (ii) reporting any material deficiencies in the Subadvisor’s
Compliance Program to the Company’s Chief Compliance Officer within a reasonable
time; and (iii) reporting any material changes to the Subadvisor’s
Compliance Program to the Company’s Chief Compliance Officer within a reasonable
time. The Subadvisor understands that the Board of the Company is
required to approve the Subadvisor’s Compliance Program on at least an annual
basis, and acknowledges that this Agreement is conditioned upon the Board’
approval of the Subadvisor’s Compliance Program.
(b)
The Subadvisor agrees that it shall immediately notify the Manager and the
Company’s Chief Compliance Officer: (i) in the event that the
SEC has censured the Subadvisor, placed limitations upon its activities,
functions or operations, suspended or revoked its registration as an investment
adviser or commenced proceedings or an investigation that may result in any
of
these actions; or (ii) upon having a reasonable basis for believing that
the Series has ceased to qualify or might not qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code. The
Subadvisor further agrees to notify the Manager immediately of any material
fact
known to the Subadvisor respecting or relating to the Subadvisor that is not
contained in the Registration Statement or prospectus for the Company, or any
amendment or supplement thereto, or of any statement contained therein that
becomes untrue in any material respect.
(c)
The Manager agrees that it shall immediately notify the Subadvisor: (i) in
the event that the SEC has censured the Manager or the Company, placed
limitations upon either of their activities, functions or operations, suspended
or revoked the Manager’s registration as an investment adviser or commenced
proceedings or an investigation that may result in any of these actions; or
(ii) upon having a reasonable basis for believing that the Series has
ceased to qualify or might not qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code.
8.
Documents. The Manager has delivered to the Subadvisor copies of each of the
following documents and will deliver to it all future amendments and
supplements, if any:
(a)
Articles of Incorporation of the Company, as amended from time to time, as
filed
with the Department of Assessments and Taxation of the State of Maryland (such
Articles of Incorporation, as in effect on the date hereof and as amended from
time to time, are herein called the “Articles of Incorporation”);
(b)
By-Laws of the Company, as amended from time to time (such By-Laws, as in effect
on the date hereof and as amended from time to time, are herein called the
“By-Laws”);
(c)
Certified Resolutions of the Directors of the Company authorizing the
appointment of the Subadvisor and approving the form of this Agreement;
(d)
Registration Statement under the 1940 Act and the Securities Act of 1933, as
amended, on Form N-lA, as filed with the SEC relating to the Series and the
Series’ shares, and all amendments thereto;
(e)
Notification of Registration of the Company under the 1940 Act on Form N-8A,
as
filed with the SEC, and all amendments thereto; and
(f)
Prospectus and Statement of Additional Information of the Series.
9.
Books and Records. In compliance with the requirements of Rule 31a-3 under
the
1940 Act, the Subadvisor hereby agrees that all records that it maintains for
the Series are the property of the Company and further agrees to surrender
promptly to the Company any of such records upon the Company’s or the Manager’s
request; provided, however, that the Subadvisor may, at its own expense, make
and retain a copy of such records. The Subadvisor further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records
required to be maintained by Rule 31a-l under the 1940 Act and to preserve
the
records required by Rule 204-2 under the Advisers Act for the period specified
in the Rule.
10.
Cooperation. Each party to this Agreement agrees to cooperate with each other
party and with all appropriate governmental authorities having the requisite
jurisdiction (including, but not limited to, the SEC) in connection with any
investigation or inquiry relating to this Agreement or the Company.
11.
Representations Respecting Subadvisor. The Manager and the Company agree that
neither the Company, the Manager, nor affiliated persons of the Company or
the
Manager shall, except with the prior permission of the Subadvisor, give any
information or make any representations or statements in connection with the
sale of shares of the Series concerning the Subadvisor or the Series other
than
the information or representations contained in the Registration Statement,
Prospectus or Statement of Additional Information for the Company shares, as
they may be amended or supplemented from time to time, or in reports or proxy
statements for the Company, or in sales literature or other promotional material
approved in advance by the Subadvisor. The parties agree that, in the event
that
the Manager or an affiliated person of the Manager sends sales literature or
other promotional material to the Subadvisor for its approval and the Subadvisor
has not commented within five (5) business days, the Manager and its affiliated
persons may use and distribute such sales literature or other promotional
material, although, in such event, the Subadvisor shall not be deemed to have
approved of the contents of such sales literature or other promotional
material.
12.
Confidentiality. The Subadvisor will treat as proprietary and confidential
any
information obtained in connection with its duties hereunder, including all
records and information pertaining to the Series and its prior, present or
potential shareholders. The Subadvisor will not use such information for any
purpose other than the performance of its responsibilities and duties hereunder.
Such information may not be disclosed except after prior notification to and
approval in writing by the Series or if such disclosure is expressly required
or
requested by applicable federal or state regulatory authorities.
13.
Control. Notwithstanding any other provision of the Agreement, it is understood
and agreed that the Manager shall at all times retain the ultimate
responsibility for and control of all functions performed pursuant to this
Agreement, and reserves the right to direct, approve or disapprove any action
hereunder taken on its behalf by the Subadvisor.
14.
Liability. Except as may otherwise be required by the 1940 Act or the rules
thereunder or other applicable law, the Company and the Manager agree that
the
Subadvisor, any affiliated person of the Subadvisor, and each person, if any,
who, within the meaning of Section 15 of the 1933 Act controls the Subadvisor,
shall not be liable for, or subject to any damages, expenses or losses in
connection with, any act or omission connected with or arising out of any
services rendered under this Agreement, except by reason of willful misfeasance,
bad faith or gross negligence in the performance of the Subadvisor’s duties, or
by reason of reckless disregard of the Subadvisor’s obligations and duties under
this Agreement.
Nothing
in this section shall be deemed a limitation or waiver of any obligation or
duty
that may not by law be limited or waived.
15.
Indemnification.
(a)
The Manager agrees to indemnify and hold harmless the Subadvisor, any affiliated
person of the Subadvisor, and each person, if any, who, within the meaning
of
Section 15 of the 1933 Act controls (“controlling person”) the Subadvisor (all
of such persons being referred to as “Subadvisor Indemnified Persons”) against
any and all losses, claims, damages, liabilities or litigation (including legal
and other expenses) to which a Subadvisor Indemnified Person may become subject
under the 1933 Act, the 1940 Act, the Advisers Act, the Internal Revenue Code,
under any other statute, at common law or otherwise, arising out of the
Manager’s responsibilities to the Company, which: (i) may be
based upon any willful misfeasance, bad faith or gross negligence in the
performance of the Manager’s duties or reckless disregard of the Manager’s
obligations and duties under this Agreement, or by any of its employees or
representatives or any affiliate of or any person acting on behalf of the
Manager, or (ii) may be based upon any untrue statement or alleged untrue
statement of a material fact supplied by, or which is the responsibility of,
the
Manager and contained in the Registration Statement or Prospectus covering
shares of the Company or a Series, or any amendment thereof or any supplement
thereto, or the omission or alleged omission to state therein a material fact
known or which should have been known to the Manager and was required to be
stated therein or necessary to make the statements therein not misleading,
unless such statement or omission was made in reliance upon information
furnished to the Manager, the Company or to any affiliated person of the Manager
by a Subadvisor Indemnified Person; provided, however, that in no case shall
the
indemnity in favor of the Subadvisor Indemnified Person be deemed to protect
such person against any liability to which any such person would otherwise
be
subject by reason of willful misfeasance, bad faith or gross negligence in
the
performance of its duties, or by reason of its reckless disregard of obligations
and duties under this Agreement.
(b)
Notwithstanding Section 14 of this Agreement, the Subadvisor agrees to indemnify
and hold harmless the Manager, any affiliated person of the Manager, and each
person, if any, who, within the meaning of Section 15 of the 1933 Act, controls
(“controlling person”) the Manager (all of such persons being referred to as
“Manager Indemnified Persons”) against any and all losses, claims, damages,
liabilities or litigation (including legal and other expenses) to which a
Manager Indemnified Person may become subject under the 1933 Act, 1940 Act,
the
Advisers Act, the Internal Revenue Code, under any other statute, at common
law
or otherwise, arising out of the Subadvisor’s responsibilities as Subadvisor of
the Series, which: (i) may be based upon any willful
misfeasance, bad faith or gross negligence in the performance of the
Subadvisor’s duties, or by reason of reckless disregard of the Subadvisor’s
obligations and duties under this Agreement, or by any of its employees or
representatives, or any affiliate of or any person acting on behalf of the
Subadvisor; (ii) may be based upon a failure to comply with Section 2, Paragraph
(a) of this Agreement; or (iii) may be based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or Prospectus covering the shares of the Company or a Series, or
any
amendment or supplement thereto, or the omission or alleged omission to state
therein a material fact known or which should have been known to the Subadvisor
and was required to be stated therein or necessary to make the statements
therein not misleading, if such a statement or omission was made in reliance
upon information furnished to the Manager, the Company or any affiliated person
of the Manager or Company by the Subadvisor or any affiliated person of the
Subadvisor; provided, however, that in no case shall the indemnity in favor
of a
Manager Indemnified Person be deemed to protect such person against any
liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of its reckless disregard of its obligations and duties
under this Agreement.
(c)
The Manager shall not be liable under Paragraph (a) of this Section 15 with
respect to any claim made against a Subadvisor Indemnified Person unless such
Subadvisor Indemnified Person shall have notified the Manager in writing within
a reasonable time after the summons, notice or other first legal process or
notice giving information of the nature of the claim shall have been served
upon
such Subadvisor Indemnified Person (or after such Subadvisor Indemnified Person
shall have received notice of such service on any designated agent), but failure
to notify the Manager of any such claim shall not relieve the Manager from
any
liability that it may have to the Subadvisor Indemnified Person against whom
such action is brought otherwise than on account of this Section 15. In case
any
such action is brought against the Subadvisor Indemnified Person, the Manager
will be entitled to participate, at its own expense, in the defense thereof
or,
after notice to the Subadvisor Indemnified Person, to assume the defense
thereof, with counsel satisfactory to the Subadvisor Indemnified Person. If
the
Manager assumes the defense of any such action and the selection of counsel
by
the Manager to represent both the Manager and the Subadvisor Indemnified Person
would result in a conflict of interest and, therefore, would not, in the
reasonable judgment of the Subadvisor Indemnified Person, adequately represent
the interests of the Subadvisor Indemnified Person, the Manager will, at its
own
expense, assume the defense with counsel to the Manager and, also at its own
expense, with separate counsel to the Subadvisor Indemnified Person, which
counsel shall be satisfactory to the Manager and to the Subadvisor Indemnified
Person. The Subadvisor Indemnified Person shall bear the fees and expenses
of
any additional counsel retained by it, and the Manager shall not be liable
to
the Subadvisor Indemnified Person under this Agreement for any legal or other
expenses subsequently incurred by the Subadvisor Indemnified Person
independently in connection with the defense thereof other than reasonable
costs
of investigation. The Manager shall not have the right to compromise on or
settle the litigation without the prior written consent of the Subadvisor
Indemnified Person if the compromise or settlement results, or may result,
in a
finding of wrongdoing on the part of the Subadvisor Indemnified Person.
(d)
The Subadvisor shall not be liable under Paragraph (b) of this Section 15 with
respect to any claim made against a Manager Indemnified Person unless such
Manager Indemnified Person shall have notified the Subadvisor in writing within
a reasonable time after the summons, notice or other first legal process or
notice giving information of the nature of the claim shall have been served
upon
such Manager Indemnified Person (or after such Manager Indemnified Person shall
have received notice of such service on any designated agent), but failure
to
notify the Subadvisor of any such claim shall not relieve the Subadvisor from
any liability that it may have to the Manager Indemnified Person against whom
such action is brought otherwise than on account of this Section 15. In case
any
such action is brought against the Manager Indemnified Person, the Subadvisor
will be entitled to participate, at its own expense, in the defense thereof
or,
after notice to the Manager Indemnified Person, to assume the defense thereof,
with counsel satisfactory to the Manager Indemnified Person. If the Subadvisor
assumes the defense of any such action and the selection of counsel by the
Subadvisor to represent both the Subadvisor and the Manager Indemnified Person
would result in a conflict of interest and, therefore, would not, in the
reasonable judgment of the Manager Indemnified Person, adequately represent
the
interests of the Manager Indemnified Person, the Subadvisor will, at its own
expense, assume the defense with counsel to the Subadvisor and, also at its
own
expense, with separate counsel to the Manager Indemnified Person, which counsel
shall be satisfactory to the Subadvisor and to the Manager Indemnified Person.
The Manager Indemnified Person shall bear the fees and expenses of any
additional counsel retained by it, and the Subadvisor shall not be liable to
the
Manager Indemnified Person under this Agreement for any legal or other expenses
subsequently incurred by the Manager Indemnified Person independently in
connection with the defense thereof other than reasonable costs of
investigation. The Subadvisor shall not have the right to compromise on or
settle the litigation without the prior written consent of the Manager
Indemnified Person if the compromise or settlement results, or may result,
in a
finding of wrongdoing on the part of the Manager Indemnified Person.
16.
Services Not Exclusive. The services furnished by the Subadvisor hereunder
are
not to be deemed exclusive, and except as the Subadvisor may otherwise agree
in
writing, the Subadvisor shall be free to furnish similar services to others
so
long as its services under this Agreement are not impaired thereby. Nothing
in
this Agreement shall limit or restrict the right of any director, officer or
employee of the Subadvisor, who may also be a trustee, officer or employee
of
the Company, to engage in any other business or to devote his or her time and
attention in part to the management or other aspects of any other business,
whether of a similar nature or a dissimilar nature.
17.
Duration and Termination. This Agreement shall become effective on the date
first indicated above. Unless terminated as provided herein, the Agreement
shall
remain in full force and effect for an initial period of two (2) years from
the
date first indicated above when following a shareholder approval, and otherwise
a period of one (1) year, and continue on an annual basis thereafter with
respect to the Series, provided that such continuance is specifically approved
each year by: (a) the vote of a majority of the entire Board of the Company
or
by the vote of a majority of the outstanding voting securities (as defined
in
the 0000 Xxx) of the Series; and (b) the vote of a majority of those Directors
who are not parties to this Agreement or interested persons (as such term is
defined in the 0000 Xxx) of any such party to this Agreement cast in person
at a
meeting called for the purpose of voting on such approval. Any approval of
this
Agreement by the holders of a majority of the outstanding shares (as defined
in
the 0000 Xxx) of a Series shall be effective to continue this Agreement with
respect to the Series notwithstanding: (i) that this Agreement has not been
approved by the holders of a majority of the outstanding shares of any other
Series; or (ii) that this Agreement has not been approved by the vote of a
majority of the outstanding shares of the Company, unless such approval shall
be
required by any other applicable law or otherwise. Notwithstanding
the foregoing, this Agreement may be terminated for each or any Series
hereunder: (A) by the Manager at any time without penalty, upon
sixty (60) days’ written notice to the Subadvisor and the Company; (B) at
any time without payment of any penalty by the Company, upon the vote of a
majority of the Company’s Board or a majority of the outstanding voting
securities of each Series, upon sixty (60) days’ written notice to the Manager
and the Subadvisor; or (C) by the Subadvisor at any time without penalty,
upon sixty (60) days’ written notice to the Manager and the
Company. In the event of termination for any reason, all records of
each Series for which the Agreement is terminated shall promptly be returned
to
the Manager or the Company, free from any claim or retention of rights in such
record by the Subadvisor; provided, however, that the Subadvisor may, at its
own
expense, make and retain a copy of such records. The Agreement shall
automatically terminate in the event of its assignment (as such term is
described in the 1940 Act) or in the event the Management Agreement between
the
Manager and the Company is assigned or terminates for any other
reason. In the event this Agreement is terminated or is not approved
in the manner described above, the Sections numbered 2(f), 8, 9, 10, 12, 14,
15
and 19 of this Agreement shall remain in effect, as well as any applicable
provision of this Section 17.
18.
Amendments. 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, and no material amendment of this Agreement shall be effective until
approved by an affirmative vote of: (i) the holders of a majority of the
outstanding voting securities of the Series; and (ii) the Directors of the
Company, including a majority of the Directors of the Company who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, if such approval is required
by applicable law.
19.
Use of Name.
(a)
It is understood that the names MainStay, Eclipse or any derivatives thereof
or
logos associated with those names are the valuable property of the Manager
and/or its affiliates, and that the Subadvisor has the right to use such names
(or derivatives or logos) only with the approval of the Manager and only so
long
as the Manager is Manager to the Company and/or the Series. Upon termination
of
the Management Agreement between the Company and the Manager, the Subadvisor
shall forthwith cease to use such names (or derivatives or logos).
(b)
It is understood that the name Madison Square Investors LLC or any derivative
thereof or logo associated with that name is the valuable property of the
Subadvisor and its affiliates and that the Company and/or the Series have the
right to use such name (or derivative or logo) in offering materials of the
Company or sales materials with respect to the Company with the approval of
the
Subadvisor and for so long as the Subadvisor is a Subadvisor to the Company
and/or the Series. Upon termination of this Agreement, the Company shall
forthwith cease to use such name (or derivative or logo).
20.
Proxies; Class Actions.
(a)
The Manager has provided the Subadvisor a copy of the Manager’s Proxy Voting
Policy, setting forth the policy that proxies be voted for the exclusive benefit
and in the best interests of the Company. Absent contrary
instructions received in writing from the Company, the Subadvisor will vote
all
proxies solicited by or with respect to the issuers of securities held by the
Series in accordance with applicable fiduciary obligations. The
Subadvisor shall maintain records concerning how it has voted proxies on behalf
of the Company, and these records shall be available to the Company upon
request.
(b)
Manager acknowledges and agrees that the Subadvisor shall not be responsible
for
taking any action or rendering advice with respect to any class action claim
relating to any assets held in the Allocated Assets or Series. Manager will
instruct the applicable service providers not to forward to the Subadvisor
any
information concerning such actions. The Subadvisor will, however, forward
to
Manager any information it receives regarding any legal matters involving any
asset held in the Allocated Assets or Series.
21.
Notice. Any notice or other communication required to be given pursuant to
this
Agreement shall be deemed duly given if delivered or mailed by registered mail,
postage prepaid, (1) to the Manager at NYLIM Center, 000 Xxxxxxxxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000, Attention: President; or (2) to the Subadvisor
at
Madison Square Investors LLC, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: President.
22.
Miscellaneous.
(a)
This Agreement shall be governed by the laws of the State of New York, provided
that nothing herein shall be construed in a manner inconsistent with the 1940
Act, the Advisers Act or rules or orders of the SEC thereunder. The term
“affiliate” or “affiliated person” as used in this Agreement shall mean
“affiliated person” as defined in Section 2(a)(3) of the 1940 Act;
(b)
The captions of this Agreement are included for convenience only and in no
way
define or limit any of the provisions hereof or otherwise affect their
construction or effect;
(c)
To the extent permitted under Section 17 of this Agreement, this Agreement
may
only be assigned by any party with the prior written consent of the other
parties;
(d)
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, and to this extent, the provisions of this Agreement shall
be deemed to be severable;
(e)
Nothing herein shall be construed as constituting the Subadvisor as an agent
of
the Manager, or constituting the Manager as an agent of the Subadvisor.
*
* *
IN
WITNESS WHEREOF, the parties hereto have caused this instrument to be executed
by their officers designated below as of the 1st
day of
January, 2009. This Agreement may be signed in counterparts.
NEW
YORK
LIFE INVESTMENT MANAGEMENT LLC
Attest:
/s/ Xxxxxxx X.
Xxxxxxxxx
By:_/s/ Xxxxx X. Xxxxx
Name:
Xxxxxxx X.
Xxxxxxxxx
Name:
Xxxxx X. Xxxxx
Title:
Director
Title:
Executive Vice President
MADISON
SQUARE INVESTORS LLC
Attest:
/s/ Xxxxxx
Xxxx
By: /s/ Xxxx
Xxxxxx
Name:
Xxxxxx
Xxxx
Name:
Xxxx Xxxxxx
Title:
2nd
Vice
President
Title:
Chief Executive Officer
SCHEDULE
A
(As
of
January 1, 2009)
As
compensation for services provided by Subadvisor the Manager will pay the
Subadvisor and Subadvisor agrees to accept as full compensation for all services
rendered hereunder, at an annual subadvisory fee equal to the following:
|
FUND
|
ANNUAL
RATE
|
|
Conservative
Allocation Fund
|
0.050%
|
|
Growth
Allocation Fund
|
0.050%
|
|
Growth
Equity Fund *
|
0.350%
up to $500 million; and
0.3375%
in excess of $500 million
|
|
Income
Manager Fund *
|
0.325%
up to $1 billion; and
0.3125%
in excess of $1 billion †
|
|
Moderate
Allocation Fund
|
0.050%
|
|
Moderate
Growth Allocation Fund
|
0.050%
|
|
S&P
500 Index Fund *
|
0.125%
up to $1 billion;
0.1125%
from $1 billion to $2 billion;
0.1075%
from $2 billion to $3 billion; and
0.100%
in excess of $3 billion
|
|
130/30
Core Fund *
|
0.500%
|
|
130/30
Growth Fund *
|
0.500%
|
|
130/30
International Fund *
|
0.550%
|
|
Retirement
2010 Fund
|
0.050%
|
|
Retirement
2020 Fund
|
0.050%
|
|
Retirement
2030 Fund
|
0.050%
|
|
Retirement
2040 Fund
|
0.050%
|
|
Retirement
2050 Fund
|
0.050%
|
The
portion of the fee based upon the average daily net assets of the respective
Fund shall be accrued daily at the rate of 1/(number of days in calendar year)
of the annual rate applied to the daily net assets of the Fund.
|
|
Payment
will be made to the Subadvisor on a monthly basis.
|
*
For
certain Funds listed above, NYLIM has agreed to waive a portion of each Fund’s
management fee or reimburse the expenses of the appropriate class of the Fund
so
that the class’ total ordinary operating expenses do not exceed certain
amounts. These waivers or expense limitations may be changed with
Board approval. To the extent NYLIM has agreed to waive its
management fee or reimburse expenses, Madison Square Investors LLC, as
Subadvisor for these Funds, has voluntarily agreed to waive or reimburse its
fee
proportionately.
† On
the portion of the Fund’s assets that are being subadvised by Madison Square
Investors LLC.
