MAINSTAY FUNDS INTERIM SUBADVISORY AGREEMENT
This
Interim Subadvisory Agreement is made as of the 29th day of
June, 2009 (the “Agreement”), between New York Life Investment Management LLC, a
Delaware limited liability company (the “Manager”) and Institutional Capital
LLC, a Delaware limited liability company (the “Subadvisor”).
WHEREAS,
The MainStay Funds (the “Trust”) is registered under the Investment Company Act
of 1940, as amended (the “1940 Act”), as an open-end, management investment
company; and
WHEREAS,
the Trust 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 Trust 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 entered into an Amended and Restated Management Agreement dated
August 1, 2008 with the Trust, 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 Trust;
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 Trust and manage such
portion of the Trust as the Manager shall from time to time direct, and the
Subadvisor is willing to furnish such services; and
WHEREAS,
Rule 15a-4 under the 1940 Act provides for a temporary exemption from the
shareholder approval requirement of Section 15(a) of the 1940 Act upon board
approval of an interim contract containing specified conditions;
and
WHEREAS,
the Board of Trustees of the Trust, including a majority of the Trustees who are
not “interested persons,” as defined in the 1940 Act, of the Trust, voted at a
meeting held on June 23, 2009, to approve this Interim Sub-Advisory Agreement
(“Interim Agreement”) so that the Subadvisor may provide investment advisory
services to the Series as of the date first stated above for a period of no more
than 150 days from such date or, if earlier, until a new Subadvisory Agreement
with the Subadvisor is approved by the vote of a “majority of the Series’
outstanding voting securities” (as defined in the 1940 Act);
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 Institutional Capital 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.
2. Portfolio Management
Duties. Subject to the supervision of the Trust’s Board of
Trustees (“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 Trust’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 Trust’s Board of which a copy has been
delivered to the Subadvisor, and the provisions of the Registration Statement of
the Trust 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, 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
Trust 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 Trust.
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(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 Trust and
Clearing Corporation, the Subadvisor will arrange for the automatic transmission
of the confirmation of such trades to the Trust’s custodian and portfolio
accounting agent.
(e) The
Subadvisor will assist the custodian and portfolio accounting agent for the
Trust in determining or confirming, consistent with the procedures and policies
stated in the Registration Statement for the Trust, 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 Trust 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 Trust) as are necessary to
assist the Trust 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 Trust are being conducted in a manner consistent with
applicable laws and regulations.
(g) The
Subadvisor will provide reports to the Trust’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
Trust’s Board with respect to the Series such periodic and special reports as
the Trustees 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 Trust’s Board and by a majority of Trustees 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 Trust, 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 Trust 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 way material to the services provided under this
Agreement:
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(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.
(i) The
Subadvisor is authorized to retain legal counsel and financial advisors and to
negotiate and execute documentation relating to investments in the Allocated
Assets or Series, at the expense of the Allocated Assets or
Series. Such documentation may relate to investments to be made or
sold, currently held or previously held. The authority shall include,
without limitation: (i) documentation relating to private
placements and bank debt; (ii) waivers, consents, amendments or other
modifications relating to investments; and (iii) purchase agreements, sales
agreements, commitment letters, pricing letters, registration rights agreements,
indemnities and contributions, escrow agreements and other investment related
agreements. Manager represents that the Allocated Assets or Series
can settle such private placements.
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 Trust for management services described under the Management
Agreement between the Trust and the Manager. Expense caps 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.
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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 Trust, 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 Trust, 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 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 overall responsibilities with respect to the
Series and to its other clients as to which it exercises investment
discretion. To the extent consistent with these standards and the
Trust’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, 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 Trust 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 for their activities in connection with its portfolio management
duties under this Agreement. The Manager or the Trust shall be
responsible for all the expenses of the Trust’s operations, including, but not
limited to:
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(a) the
fees and expenses of Trustees who are not interested persons of the Manager or
of the Trust;
(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 Trustees of the Trust; 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 Trust’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
Trust;
(e) brokers’
commissions and any issue or transfer taxes chargeable to the Trust in
connection with its securities transactions on behalf of the
Series;
(f) all
taxes and business fees payable by the Trust or the Series to federal, state or
other governmental agencies;
(g) the
fees of any trade association of which the Trust 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
Trust and of its Series with the SEC, registering the Trust as a broker or
dealer and qualifying its shares under state securities laws, including the
preparation and printing of the Trust’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 Trustees’ 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 Trust’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.
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7. Compliance.
(a) The
Subadvisor agrees to assist the Manager and the Trust in complying with the
Trust’s obligations under Rule 38a-1 under the 1940 Act, including but not
limited to: (i) periodically providing the Trust’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 Trust’s Chief Compliance Officer within a reasonable
time; and (iii) reporting any material changes to the Subadvisor’s
Compliance Program to the Trust’s Chief Compliance Officer within a reasonable
time. The Subadvisor understands that the Board is required to
approve the Subadvisor’s Compliance Program and receive annual reports in
compliance with Rule 38a-1, 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 Trust’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 Trust, 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 Trust, 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) Declaration
of Trust of the Trust, as amended from time to time, as filed with the Secretary
of the Commonwealth of the Commonwealth of Massachusetts (such Declaration of
Trust, as in effect on the date hereof and as amended from time to time, are
herein called the “Declaration of Trust”);
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(b) By-Laws
of the Trust, 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 Trustees of the Trust 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 Trust 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 Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust’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 Trust.
11. Representations Respecting
Subadvisor. The Manager and the Trust agree that neither the
Trust, the Manager, nor affiliated persons of the Trust 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 Trust shares, as they may be amended or
supplemented from time to time, or in reports or proxy statements for the Trust,
or in sales literature or other promotional material approved in advance by the
Subadvisor.
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.
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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 Trust 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 Trust, 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 Trust 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 Trust 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.
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(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 Trust 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 Trust or any affiliated
person of the Manager or Trust 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.
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(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 Trust, 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.
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17. Duration and
Termination. This Agreement shall become effective on the date
first indicated above. This Agreement will continue in effect, unless
sooner terminated as provided herein, for a period of no more than 150 days from
such date or, if earlier, until a new Sub-Advisory Agreement with the Subadvisor
is approved by the vote of a “majority of the Series’ outstanding voting
securities” (as defined in the 1940 Act). This Agreement is
terminable, without payment of any penalty, by vote of the Board of Trustees of
the Trust or by vote of a majority of Series’ outstanding voting securities on
ten (10) calendar days’ written notice to the Subadvisor. This
Agreement will automatically terminate, without the payment of any penalty, in
the event of its assignment (as defined in the 0000 Xxx) or in the event the
Management Agreement between the Manager and the Trust is assigned or terminates
for any other reason. This Agreement will also terminate upon written
notice to the other party that the other party is in material breach of this
Agreement, unless the other party in material breach of this Agreement cures
such breach to the reasonable satisfaction of the party alleging the breach
within ten (10) days after written notice. In the event of
termination for any reason, all records of the Series shall promptly be returned
to the Manager or the Trust, 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. 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 the Trustees of the Trust, including a majority of the
Trustees of the Trust 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 name MainStay, or any derivative thereof or logo
associated with that name is the valuable property of the Manager and/or its
affiliates, and that the Subadvisor has the right to use such name (or
derivative or logo) only with the approval of the Manager and only so long as
the Manager is Manager, and the Subadviser is Subadviser, to the Trust and/or
the Series. Upon termination of this Agreement or the Management
Agreement between the Trust and the Manager, the Subadvisor shall forthwith
cease to use such name (or derivative or logo).
(b) It
is understood that the name Institutional Capital LLC or any derivative thereof
or logo associated with that name is the valuable property of the Subadvisor and
its affiliates and that the Trust and/or the Series have the right to use such
name (or derivative or logo) in offering materials of the Trust or sales
materials with respect to the Trust with the approval of the Subadvisor and for
so long as the Subadvisor is a Subadvisor to the Trust and/or the
Series. Upon termination of this Agreement, the Trust shall forthwith
cease to use such name (or derivative or logo).
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20. Proxies; Class
Actions.
(a) The Manager delegates proxy voting
authority to the Subadvisor. The Subadvisor has adopted proxy voting
policies and procedures designed to ensure that all proxies solicited by or with
respect to the issuers of securities held by the Series are reviewed on a
case-by-case basis and voted in the best interests of the Series without regard
to the interests of the Subadvisor. The Subadvisor shall maintain
records concerning how it has voted proxies on behalf of the Series, and these
records shall be available to the Trust 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
Institutional Capital LLC, 000 Xxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx,
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;
13
(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.
* * *
14
IN
WITNESS WHEREOF, the parties hereto have caused this instrument to be executed
by their officers designated below as of the 29th day of
June, 2009. This Agreement may be signed in
counterparts.
NEW
YORK LIFE INVESTMENT MANAGEMENT LLC
|
Attest:
/s/ Xxxxxx
Xxxxx
|
By:
/s/ Xxxxxxx X.
Xxxxxx
|
|
Name: Xxxxxx
Xxxxx
|
Name:
Xxxxxxx
X. Xxxxxx
|
|
Title: Vice
President
|
Title:
President
|
INSTITUIONAL
CAPITAL LLC
|
Attest:
/s/ Xxxxx
Franc
|
By:
/s/ Xxxxx
Xxxxxx
|
|
Name:
Xxxxx
Franc
|
Name:
Xxxxx
Xxxxxx
|
|
Title:
CCO
|
Title:
CEO
and CIO
|
15
SCHEDULE
A
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
|
|
MainStay Value
Fund*
|
0.36%
on assets up to $200 million;
0.325%
on assets between $200 million and $500 million;
0.25%
on assets over $500 million
|
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 the
Fund listed above, to the extent that the Manager has agreed to waive a portion
of the 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, Subadvisor has voluntarily agreed to waive or reimburse its fee
proportionately.
