Ex D 2 a
THE MAINSTAY FUNDS
AMENDED AND RESTATED SUBADVISORY AGREEMENT
This Amended and Restated Subadvisory Agreement, made as of the 1st day of
August, 2008 (the "Agreement"), between New York Life Investment Management LLC,
a Delaware limited liability company (the "Manager") and MacKay Xxxxxxx 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 the 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;
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 MacKay Xxxxxxx 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 Trust 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 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 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 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
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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 Trust 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.
(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 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
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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 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 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 and 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:
(a) the fees and expenses of Trustees who are not interested persons
of the Manager or of the Trust;
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(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 (including an allocable
portion of the cost of maintaining internal legal (provided pursuant to a
separate legal services agreement) and compliance department) 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 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 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. 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.
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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 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
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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.
(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
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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.
11
15. 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.
16. 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 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 Trustees 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 Trust, 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 Trust; (B) at any time without payment of any penalty by the Trust, upon the
vote of a majority of the Trust'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 Trust. 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 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. 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 Trust 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, 15, and 18 of this Agreement shall remain in effect, as well as any
applicable provision of this Section 16.
17. 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
12
holders of a majority of the outstanding voting securities of the Series; and
(ii) 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.
18. 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 to the Trust and/or the Series. Upon
termination of 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 MacKay Xxxxxxx 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).
19. 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 Trust. Absent contrary
instructions received in writing from the Trust, 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 Trust, 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.
20. 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 MacKay Xxxxxxx LLC, 0 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: President.
13
21. 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 16 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.
***
14
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the 1st day of August, 2008.
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 & Associate Title: Executive Vice President
General Counsel
MACKAY XXXXXXX LLC
Attest: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxxxx Xxxxxx
----------------------------- ------------------------------------
Name: Xxxxx Xxxxxxx Name: Xxxxxxx Xxxxxx
Title: General Counsel & Title: Chief Operating Officer
Senior Managing Director
15
SCHEDULE A
(As of August 1, 2008)
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
------------------------------ ---------------------------------------------
Capital Appreciation Fund 0.360% up to $200 million;
0.325% from $200 million to $500 million; and
0.250% in excess of $500 million
Convertible Fund* 0.300% up to $500 million;
0.275% from $500 million to $1 billion; and
0.250% in excess of $1 billion
Diversified Income Fund* 0.300%
Global High Income Fund* 0.350%
Government Fund * 0.300% up to $1 billion; and
0.275% in excess of $1 billion
High Yield Corporate Bond Fund 0.300% up to $500 million;
0.275% from $500 million to $5 billion; and
0.2625% in excess of $5 billion
International Equity Fund* 0.600%
Mid Cap Growth Fund* 0.375%
Mid Cap Value Fund* 0.350%
Money Market Fund* 0.250% up to $300 million;
0.225% from $300 million to $700 million;
0.200% from $700 million to $1 billion; and
0.175% in excess of $1 billion
Small Cap Growth Fund * 0.500%
Small Cap Value Fund * 0.425% up to $1 billion; and
0.400% in excess of $1 billion
Tax Free Bond Fund * 0.300% up to $1 billion; and
0.275% in excess of $1 billion
A-1
FUND ANNUAL RATE
---- -----------
Total Return Fund* 0.320% up to $500 million; and
0.300% in excess of $500 million
Value Fund* 0.360% up to $200 million;
0.325% from $200 million to $500 million; and
0.250% in excess of $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 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, MacKay Xxxxxxx, as Subadvisor for these Funds, has
voluntarily agreed to waive or reimburse its fee proportionately.
A-2
