SUBADVISORY AGREEMENT
SUBADVISORY
AGREEMENT, made as of the 10th day of September, 2007 (the “Agreement”), between
New York Life Investment Management LLC, a Delaware limited liability company
(the “Manager”), on behalf of The MainStay Funds (the “Trust”), and McMorgan
& Company LLC (the “Subadvisor”).
WHEREAS,
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
September 10, 2007, with the Trust, on behalf of its series (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 each series of the Trust set forth on Schedule A hereto,
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 Trust, the Manager, and
the
Subadvisor as follows:
1. Appointment.
The Manager hereby appoints McMorgan & Company LLC to act as Subadvisor to
the series designated on Schedule A of this Agreement (the “Series”) 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 Trust and the
Manager wish to retain the Subadvisor to render investment advisory services
hereunder, they shall notify the Subadvisor in writing. If the Subadvisor is
willing to render such services, it shall notify the Trust and Manager in
writing, whereupon such series shall become a Series hereunder, and be subject
to this Agreement.
2. Portfolio
Management Duties. Subject to the supervision of the Trust’s Board of Trustees
and the Manager, the Subadvisor will provide a continuous investment program
for
the Series’ portfolio and determine the composition of the assets of the Series’
portfolio, including determination of the purchase, retention, or sale of the
securities, cash, and other investments contained in the portfolio. The
Subadvisor will provide investment research and conduct a continuous program
of
evaluation, investment, sales, and reinvestment of the Series’ 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 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 “Commission”), as amended, copies of
which shall be sent to the Subadvisor by the Manager. The Subadvisor further
agrees as follows:
(a) The
Subadvisor will take all steps necessary to manage the Series so that it will
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code.
(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 Trustees of which the
Subadvisor has been sent a copy, 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, of which the Subadvisor has
received a copy.
(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 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 of
Trustees.
(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 Trust’s custodian and portfolio accounting
agent.
(e) The
Subadvisor will monitor on a daily basis the determination by the portfolio
accounting agent for the Trust of the valuation of portfolio securities and
other investments of the Series. 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 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 of Trustees, for
consideration at meetings of the Board, on the investment program for the Series
and the issuers and securities represented in the Series’ portfolio, and will
furnish the Trust’s Board of Trustees 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 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 of Trustees 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, or 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 material connection with the handling of Company
assets:
(i) been
convicted, in the last ten (10) years, of any felony or misdemeanor arising
out
of conduct involving embezzlement, fraudulent conversion, or misappropriation
of
funds or securities, involving violations of Sections 1341, 1342, or 1343 of
Xxxxx 00, Xxxxxx Xxxxxx Code, or involving the purchase or sale of any security;
or
(ii) been
found by any state regulatory authority, within the last ten (10) years, to
have
violated or to have acknowledged violation of any provision of any state
insurance law involving fraud, deceit, or knowing misrepresentation;
or
(iii) been
found by any federal or state regulatory authorities, within the last ten (10)
years, to have violated or to have acknowledged violation of any provision
of
federal or state securities laws involving fraud, deceit, or knowing
misrepresentation.
3. Compensation. For
the services provided and the expenses assumed pursuant to this Agreement,
the
Manager shall pay the Subadvisor as full compensation therefore, a fee equal
to
the percentage of the respective Fund’s average daily net assets of the portion
of the respective Fund managed by the Subadvisor 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 Fund for management services described under the Management
Agreement between the Fund and the Manager. Expense caps or fee
waivers for the Fund that may be agreed to by the Manager, but not agreed to
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’ portfolio, 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 of Trustees may
determine, and consistent with Section 28(e) of the Securities Exchange Act
of
1934, as amended, 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 with 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 Commission, to its affiliated
broker-dealer, or to such brokers and dealers who also provide research or
statistical material, or other services, to the Series, the Subadvisor, or
an
affiliate of the Subadvisor. Such allocation shall be in such amounts and
proportions as the Subadvisor shall determine consistent with the above
standards, and the Subadvisor will report on said allocation regularly to the
Board of Trustees of the Trust, 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 Commission 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 fees and 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 fees and 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;
(b) the
fees and expenses of each Series which relate to (A) the custodial function
and
the recordkeeping connected therewith, (B) the maintenance of the required
accounting records of the Series not being maintained by the Manager, (C) 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 (D) 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 and compliance departments) 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 Series Shares;
(i) the
fees and expenses involved in registering and maintaining registrations of
the
Trust and of its Shares with the Commission, 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.
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: (a) periodically providing the Trust with information about, and
independent third-party reports (if available) on, the Subadvisor’s compliance
program adopted pursuant to Rule 206(4)-7 under the Advisers Act (“Subadvisor’s
Compliance Program”); (b) reporting any material deficiencies in the
Subadvisor’s Compliance Program to the Trust within a reasonable time; and (c)
reporting any material changes to the Subadvisor’s Compliance Program to the
Trust within a reasonable time. The Subadvisor understands that the Board of
Trustees of the Trust 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 of Trustees approval of the Subadvisor’s Compliance
Program.
(b) The
Subadvisor agrees that it shall immediately notify the Manager and the Trust:
(1) in the event that the Commission 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 (2) 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 and the Trust
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: (1) in the
event
that the Commission 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 (2) 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 in effect on the date hereof and as amended from
time
to time;
(b) By-Laws
of the Trust;
(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 Commission 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
Commission, 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 Commission) 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.
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 Trust 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.
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 (1) may be based upon any
misfeasance, malfeasance, or nonfeasance by the Manager, any of its employees
or
representatives or any affiliate of or any person acting on behalf of the
Manager, or (2) 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 or 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 (1) may be based upon any misfeasance, malfeasance, or
nonfeasance by the Subadvisor, any of its employees or representatives, or
any
affiliate of or any person acting on behalf of the Subadvisor, (2) may be based
upon a failure to comply with Section 2, Paragraph(a) of this Agreement, or
(3)
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 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, 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 interests 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 interests 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. 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, and continue on an annual basis thereafter with
respect to the Series, provided that such continuance is specifically approved
each year by (a) the vote of a majority of the entire Board of Trustees of
the
Trust, 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 of Trustees 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 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.
::ODMA\PCDOCS\OGCDOCS\219521\2
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 names
McMorgan or any derivative thereof or logo associated with those names, are
the
valuable property of the Subadvisor and its affiliates and that the Trust and/or
the Series have the right to use such names (or derivative or logo) in offering
materials of 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 names (or
derivative or logo).
19. Proxies.
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.
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 00 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000,
Attention: President; or (2) to the Subadvisor at Xxx Xxxx Xxxxxx, Xxxxx 000
Xxx
Xxxxxxxxx, XX 00000.
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 Commission 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 0000 Xxx. (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.
::ODMA\PCDOCS\OGCDOCS\219521\2
IN
WITNESS WHEREOF, the parties hereto
have caused this instrument to be executed as of the day and year first above
written.
NEW
YORK
LIFE INVESTMENT MANAGEMENT LLC
Attest: ____________________ By:
____________________
Name:
Xxxxxxxxxx X.X.
Xxxxxxxx Name:
Xxxxx X. Xxxxxxx
Title: Managing
Director Title: President
and Chief Executive Officer
MCMORGAN
& COMPANY LLC
Attest: ____________________ By: ____________________
Name: Name:
Title: Title:
::ODMA\PCDOCS\OGCDOCS\219521\2
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
|
Institutional
Bond Fund
|
0.175%
|
Principal
Preservation Fund
|
0.125%
|
The
portion of the fee based upon the average daily net assets of the respective
Fund shall be accrued daily at the rate of 1/365th of the
annual rate
applied to the daily net assets of the Fund.
The
subadvisory fee so accrued shall be paid monthly to the
Subadvisor.
::ODMA\PCDOCS\OGCDOCS\219521\2