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
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.
(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.
(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.
(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.
(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.
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.
(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.
(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).
(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.
(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.
* * *
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.