ICAP FUNDS, INC. MANAGEMENT AGREEMENT
ICAP
FUNDS, INC.
Agreement,
made as of the 31st
day of
August, 2006 (the “Agreement”) between ICAP Funds, Inc. (the “Company”), further
amended from time to time, on behalf of its series as set forth on Schedule
A
(each, a “Fund,” and collectively, the “Funds”) and New York Life Investment
Management LLC, a Delaware limited liability company (the
“Manager”).
W
I T N E
S S E T H:
WHEREAS,
the Company is an open-end management investment company registered under
the
Investment Company Act of 1940, as amended (the “1940 Act”); and
WHEREAS,
the shares of common stock of the Company (the “Shares”) are divided into
separate series, each of which is established by resolution of the Board
of
Directors of the Company and the Directors may from time to time terminate
such
series or establish and terminate additional series; and
WHEREAS,
the Manager is engaged in rendering investment management services and is
registered as an investment adviser under the Investment Advisers Act of
1940,
as amended (the “Advisers Act”); and
WHEREAS,
the Company desires to retain the Manager to render investment advisory and
related administrative services to each of the Funds, and the Manager is
willing
to render such services on the terms and conditions hereinafter set forth;
and
NOW,
THEREFORE, the parties agree as follows:
I. Appointment.
The Company hereby appoints New York Life Investment Management LLC to act
as
Manager to the Funds for the period and on the terms set forth in this
Agreement. The Manager accepts such appointment and agrees to render the
services herein described, for the compensation herein provided.
II. Duties
as
Manager. Subject to the supervision of the Directors of the Company, the
Manager
shall administer each Fund’s business affairs and manage the investment
operations of the Fund and the composition of the portfolio of the Fund,
including the purchase, retention and disposition of securities therein,
in
accordance with the investment objectives, policies and restrictions of the
Fund, as stated in the currently effective Prospectus (as hereinafter defined);
in conformity with the Articles of Incorporation and By-Laws (each as
hereinafter defined) of the Company; under the instructions and directions
of
the Directors of the Company; and in accordance with the applicable provisions
of the 1940 Act and the rules and regulations thereunder, the provisions
of the
Internal Revenue Code of 1986, as amended (the “Code”), relating to regulated
investment companies and all rules and regulations thereunder, and all other
applicable federal and state laws and regulations. In connection with the
services provided under this Agreement, the Manager will use best efforts
to
manage each Fund so that it will qualify as a regulated investment company
under
Subchapter M of the Code and regulations issued under the Code. The Manager
will
also monitor, to the extent not monitored by another agent, each Fund’s
compliance with its investment and tax guidelines and other compliance policies.
In managing each Fund in accordance with the requirements set out in this
Section, the Manager will be entitled to receive and act upon advice of counsel
for the Company or a Fund.
A. Administration:
The Manager shall (i) furnish the Funds with office facilities; (ii) be
responsible for the financial and accounting records required to be maintained
by the Funds (excluding those being maintained by the Funds’ Custodian and
Transfer Agent except as to which the Manager has supervisory functions)
and
other than those being maintained by the Funds’ subadvisor, if any; and (iii)
furnish the Funds with board materials, legal, ordinary clerical, bookkeeping
and recordkeeping services at such office facilities, and such other services
as
the parties may agree.
B. Advisory:
The Manager will determine the securities and other instruments to be purchased,
sold or entered into by each Fund and place orders with broker-dealers, foreign
currency dealers, futures commission merchants or others pursuant to the
Manager’s determinations and all in accordance with each Fund’s policies as set
out in the Prospectus of the Fund or as adopted by the Board of Directors
and
disclosed to the Manager. The Manager will determine what portion of each
Fund's
portfolio will be invested in securities and other assets and what portion,
if
any, should be held uninvested in cash or cash equivalents. Each Fund will
have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to the Manager’s investment advisory clients.
C. Valuation:
The Manager will provide assistance to the Board of Directors in valuing
the
securities and other instruments held by each Fund, to the extent reasonably
required by such valuation policies and procedures as may be adopted by each
Fund.
D. Selection
of Brokers: Subject to the policies established by, and any direction from,
the
Company’s Board of Directors, the Manager will be responsible for selecting the
brokers or dealers that will execute the purchases and sales for a Fund.
The
Manager will place orders pursuant to its determination with or through such
persons, brokers or dealers (including NYLIFE Securities Inc.) in conformity
with the policy with respect to brokerage as set forth in the Company’s
Registration Statement and Prospectus (each as hereinafter defined) or as
the
Directors may direct from time to time. It is recognized that, in providing
the
Funds with investment supervision or the placing of orders for portfolio
transactions, the Manager will give primary consideration to securing the
most
favorable price and efficient execution. Consistent with this policy, the
Manager may consider the financial responsibility, research and investment
information and other services provided by brokers or dealers who may effect
or
be a party to any such transaction or other transactions to which other clients
of the Manager may be a party. It is understood that neither the Funds, the
Company nor the Manager has adopted a formula for allocation of the Funds’
investment transaction business. It is also understood that it is desirable
for
the Funds that the Manager have access to supplemental investment and market
research and security and economic analyses provided by certain brokers who
may
execute brokerage transactions at a higher cost to the Funds than may result
when allocating brokerage to other brokers on the basis of seeking the most
favorable price and efficient execution. Therefore, the Manager or any
subadvisor is authorized to place orders for the purchase and sale of securities
for the Funds with such certain brokers, subject to review by the Company’s
Directors from time to time with respect to the extent and continuation of
this
practice. It is understood that the services provided by such brokers may
be
useful to the Manager or any subadvisor in connection with its services to
other
clients. Subject to the foregoing, it is understood that the Manager will
not be
deemed to have acted unlawfully, or to have breached a fiduciary duty to
the
Company or be in breach of any obligation owing to the Company under this
Agreement, or otherwise, solely by reason of its having directed a securities
transaction on behalf of a Fund to a broker-dealer in compliance with the
provisions of Section 28(e) of the Securities Exchange Act of 1934 or as
otherwise permitted from time to time by a Fund’s Prospectus.
On
occasions when the Manager deems the purchase or sale of a security to be
in the
best interest of the Funds as well as other clients, the Manager, to the
extent
permitted by applicable laws and regulations, may, but shall be under no
obligation to, aggregate the securities to be so sold or purchased in order
to
obtain the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold,
as
well as expenses incurred in the transaction, will be made by the Manager
in the
manner it considers to be the most equitable and consistent with its fiduciary
obligations to the Funds and to such other clients.
E. Delegation
of Investment Advisory Services. Subject to the prior approval of a majority
of
the members of the Board of Directors, including a majority of the Directors
who
are not “interested persons”, and, to the extent required by applicable law, by
the shareholders of a Fund, the Manager may, through a subadvisory agreement
or
other arrangement, delegate to a subadvisor any of the duties enumerated
in this
Agreement, including the management of all or a portion of the assets being
managed. Subject to the prior approval of a majority of the members of the
Board
of Directors, including a majority of the Directors who are not “interested
persons”, and, to the extent required by applicable law, by the shareholders of
a Fund, the Manager may adjust such duties, the portion of assets being managed,
and the fees to be paid by the Manager; provided, that in each case the Manager
will continue to oversee the services provided by such company or employees
and
any such delegation will not relieve the Manager of any of its obligations
under
this Agreement.
The
Company and Manager understand and agree that the Manager may manage a Fund
in a
“manager-of-managers” style with either a single or multiple subadvisors, which
contemplates that the Manager will, among other things and pursuant to an
Order
issued by the Securities and Exchange Commission (SEC): (i) continually evaluate
the performance of each Subadvisor to a Fund, if applicable, through
quantitative and qualitative analysis and consultations with such Subadvisor;
(ii) periodically make recommendations to the Board as to whether the contract
with one or more Subadvisors should be renewed, modified, or terminated;
and
(iii) periodically report to the Board regarding the results of its evaluation
and monitoring functions. The Company recognizes that a Subadvisor’s services
may be terminated or modified pursuant to the “manager-of-managers” process, and
that the Manager may appoint a new Subadvisor for a Subadvisor that is so
removed.
F. Instructions
to Custodian: The Manager or any subadvisor shall provide the Company’s
Custodian on each business day with information relating to the execution
of all
portfolio transactions pursuant to standing instructions.
G. Delegation
of Administration Services: With respect to any or all series of the Company,
including the Funds, the Manager may enter into one or more contracts
“Sub-Administration Contract”) with a sub-administrator in which the Manager
delegates to such sub-administrator any or all its duties specified in this
Agreement, provided that the Sub-Administration Contract meets all applicable
requirements of the 1940 Act and rules thereunder, as applicable.
III. Manager
Personnel. The Manager shall authorize and permit any of its directors, officers
and employees who may be elected or appointed as Directors or officers of
the
Company to serve in the capacities in which they are elected or appointed.
Services to be furnished by the Manager under this Agreement may be furnished
through the medium of any of such Directors, officers, or
employees.
IV. Books
and
Records. The Manager shall keep the Funds’ books and records required to be
maintained by it, pursuant to Section II hereof. The Manager agrees that
all
records which it maintains for the Funds are the property of the Funds, and
it
will surrender promptly to the Funds any of such records upon the Funds’
request. Moreover, The Manager shall maintain all books and records with
respect
to the Funds’ securities transactions required by sub-paragraphs (b)(5), (6),
(9) and (10) and paragraph (f) of Rule 31a-1 under the 1940 Act and any other
books and records required to be maintained by it under the 1940 Act and
the
Rules thereunder. The Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 as promulgated by the Securities and Exchange
Commission (the “Commission”) under the 1940 Act any such records as are
required to be maintained by the Manager pursuant to Section II hereof. The
Manager shall render to the Company’s Directors such periodic and special
reports as the Directors may reasonably request.
V. Services
Not Exclusive. The Manager’s services to the Company and each Fund pursuant to
this Agreement are not exclusive and it is understood that the Manager may
render investment advice, management and services to other persons (including
other investment companies) and to engage in other activities, so long as
its
services under this Agreement are not impaired by such other activities.
It is
understood and agreed that officers or directors of the Manager may serve
as
officers or Directors of the Company, and that officers or Directors of the
Company may serve as officers or directors of the Manager to the extent
permitted by law; and that the officers and directors of the Manager are
not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, trustees
or
directors of any other firm, trust or corporation, including other investment
companies. Whenever a Fund and one or more other accounts or investment
companies advised by the Manager have available funds for investment,
investments suitable and appropriate for each will be allocated in accordance
with procedures believed by the Manager to be equitable to each entity over
time. Similarly, opportunities to sell securities will be allocated in a
manner
believed by the Manager to be equitable to each entity over time. The Company
and each Fund recognize that in some cases this procedure may adversely affect
the size of the position that may be acquired or disposed of for a
Fund.
VI. Documents.
The Company has delivered to the Manager copies of each of the following
documents and will deliver to it all future amendments and supplements, if
any:
A. Articles
of Incorporation of the Company, as amended from time to time, as filed with
the
Department of Assessments and Taxation of the State of Maryland (such Articles
of Incorporation, as in effect on the date hereof and as amended from time
to
time, is 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
Manager 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-1A (the “Registration Statement”), as filed with the Commission, relating to
the Funds and the Funds’ Shares and all amendments thereto;
E. Notification
of Registration of the Company under the 1940 Act on Form N-8A as filed with
the
Commission and all amendments thereto; and
F. The
form
of Prospectus and Statement of Additional Information of the Company pursuant
to
which the Funds’ shares are offered for sale to the public (such Prospectus and
Statement of Additional Information, as currently in effect and as amended
or
supplemented from time to time, being herein called collectively the
“Prospectus”).
VII. Expenses.
A. In connection with the services rendered by the Manager under this Agreement,
the Manager will bear all of the following expenses:
1. the
salaries and expenses of all personnel of the Company and the Manager, except
the fees and expenses of Directors who are not interested persons of the
Manager
or of the Company; and
2. all
expenses incurred by the Manager in connection with managing the investment
operations of the Funds and administering the ordinary course of the Funds’
business, other than those assumed by the Funds herein.
B. Each
Fund
assumes and will pay its expenses, including but not limited to those described
below (where any such category applies to more than one series of the Company,
the Fund shall be liable only for its allocable portion of the
expenses):
1. the
fees
and expenses of Directors who are not interested persons of the Manager or
of
the Company;
2. the
fees
and expenses of the Funds’ custodian which relate to (A) the custodial function
and the recordkeeping connected therewith, (B) the preparation and maintenance
of the general required accounting records of the Funds not being maintained
by
the Manager, (C) the pricing of the Fund’s Shares, including the cost of any
pricing service or services which may be retained pursuant to the authorization
of the Directors of the Company, and (D) for both mail and wire orders, the
cashiering function in connection with the issuance and redemption of the
Funds’
Shares;
3. the
fees
and expenses of the Company’s transfer and dividend disbursing agent, which may
be the custodian, which relate to the maintenance of the shareholder
account;
4. 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 Company;
5. brokers’
commissions and any issue or transfer taxes chargeable to the Company in
connection with its securities transactions on behalf of the Funds;
6. all
taxes
and business fees payable by the Company or the Funds to federal, state or
other
governmental agencies;
7. the
fees
of any trade association of which the Company may be a member;
8. the
cost
of share certificates representing Fund Shares;
9. the
cost
of fidelity, directors and officers and errors and omissions
insurance;
10. the
fees
and expenses involved in registering and maintaining registrations of the
Company and of its Shares with the Commission, 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;
11. 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; and
12. litigation
and indemnification expenses and other extraordinary expenses not incurred
in
the ordinary course of the Company’s business.
C. The
Manager will not be required to pay expenses of any activity which is primarily
intended to result in sales of Shares if and to the extent that (i) such
expenses are required to be borne by a principal underwriter that acts as
the
distributor of the Fund's Shares pursuant to an underwriting agreement that
provides that the underwriter will assume some or all of such expenses, or
(ii)
the Company on behalf of the Fund will have adopted a plan in conformity
with
Rule 12b-1 under the 1940 Act providing that the Fund (or some other party)
will
assume some or all of such expenses. The Manager will pay such sales expenses
only to the extent they are not required to be paid by the principal underwriter
pursuant to the underwriting agreement or are not permitted to be paid by
a Fund
(or some other party) pursuant to such a plan.
VIII. Organization
Expenses. The Company hereby agrees to reimburse the Manager for the
organization expenses of, and the expenses incurred in connection with, the
initial offering of any new share classes of a Fund or the initial offering
of a
new series of the Company.
IX. Compensation.
For the services provided and the facilities furnished pursuant to this
Agreement, the Company will pay to the Manager as full compensation therefor
a
fee at the annual rate for each Fund as set forth on Schedule A. This fee
will
be computed daily and will be paid to the Manager monthly. This fee will
be
chargeable only to the applicable Fund, and no other series of the Company
shall
be liable for the fee due and payable hereunder. The Funds shall not be liable
for any expense of any other series of the Company.
The
Manager may from time to time agree not to impose all or a portion of its
fee
otherwise payable under this Agreement and/or undertake to pay or reimburse
a
Fund for all or a portion of its expenses not otherwise required to be paid
by
or reimbursed by the Manager. Unless otherwise agreed, any fee reduction
or
undertaking may be discontinued or modified by the Manager at any time. For
the
month and year in which this Agreement becomes effective or terminates, there
will be an appropriate pro ration of any fee based on the number of days
that
the Agreement is in effect during such month and year,
respectively.
X. Limitation
of Liability of Manager:
(a) As
an
inducement to the Manager undertaking to provide services to the Company
and
each Fund pursuant to this Agreement, the Company and each Fund agrees that
the
Manager will not be liable under this Agreement for any error of judgment
or
mistake of law or for any loss suffered by the Company or a Fund in connection
with the matters to which this Agreement relates, provided that nothing in
this
Agreement will be deemed to protect or purport to protect the Manager against
any liability to the Company, a Fund or its shareholders to which the Manager
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.
(b) The
rights of exculpation provided under this Section are not to be construed
so as
to provide for exculpation of any person described in this Section for any
liability (including liability under U.S. federal securities laws that, under
certain circumstances, impose liability even on persons that act in good
faith)
to the extent (but only to the extent) that exculpation would be in violation
of
applicable law, but will be construed so as to effectuate the applicable
provisions of this Section to the maximum extent permitted by applicable
law.
XI. Duration
and Termination. This Agreement shall continue in effect with respect to
the
Funds for a period of more than two years from the date hereof only so long
as
such continuance is specifically approved at least annually with respect
to the
Funds in conformity with the requirements of the 1940 Act and the Rules
thereunder and any applicable SEC or SEC staff guidance or interpretation;
provided, however, that this Agreement may be terminated with respect to
the
Funds at any time, without the payment of any penalty, by the Directors of
the
Company or by vote of a majority of the outstanding voting securities (as
defined in the ▇▇▇▇ ▇▇▇) of the Funds, or by the Manager at any time, without
the payment of any penalty, on not more than 60 days’ nor less than 30 days’
written notice to the other party. This Agreement shall terminate automatically
in the event of its assignment (as defined in the 1940 Act).
XII. Additional
Series. In the event the Company establishes one or more Funds after the
effective date of this Agreement, such Funds will become Funds under this
Agreement upon approval of this Agreement by the Board of Directors with
respect
to the Funds and the execution of an amended Schedule A reflecting the
Funds.
XIII. Independent
Contractor. Except as otherwise provided herein or authorized by the Directors
of the Company from time to time, the Manager shall for all purposes herein
be
deemed to be an independent contractor and shall have no authority to act
for or
represent the Funds or the Company in any way or otherwise be deemed an agent
of
the Funds or the Company.
XIV. Company
Materials. During the term of this Agreement, the Company agrees to furnish
the
Manager at its principal office all prospectuses, proxy statements, reports
to
shareholders, sales literature or other material prepared for distribution
to
shareholders of the Funds or to the public, which refer to the Manager in
any
way, prior to use thereof and, not to use such material if the Manager
reasonably objects in writing within five business days (or such other time
as
may be mutually agreed) after receipt thereof. In the event of termination
of
this Agreement, the Company will continue to furnish to the Manager copies
of
any of the above-mentioned materials which refer in any way to the Manager.
The
Company shall furnish or otherwise make available to the Manager such other
information relating to the business affairs of the Funds as the Manager
at any
time, or from time to time, reasonably requests in order to discharge its
obligations hereunder.
XV. Amendment.
This Agreement may be amended in writing by mutual consent, but the consent
of
the Funds, if required, must be obtained in conformity with the requirements
of
the 1940 Act and the Rules thereunder.
XVI. 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, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Secretary; or (2) to the Company
at ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: President.
XVII. Governing
Law. This Agreement shall be governed by and construed in accordance with
the
laws of the State of New York.
XVIII. Limitation
of Liability of the Company and the Shareholders. It is understood and expressly
stipulated that none of the Directors, officers, agents or shareholders of
the
Company shall be personally liable hereunder. The name “ICAP Funds, Inc.” is the
designation of the Company for the time being under the Articles of
Incorporation and all persons dealing with the Company must look solely to
the
property of the Company for the enforcement of any claims against the Company,
as neither the Directors, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Company. No series
of
the Company shall be liable for any claims against any other series of the
Company.
XIX. Use
of
Name. The Funds may use any name including the word MainStay only for so
long as
this Agreement or any other agreement between the Manager or any other affiliate
of New York Life Insurance Company and the Company or any extension, renewal
or
amendment thereof remains in effect, including any similar agreement with
any
organization which shall have succeeded to the Manager’s business as investment
adviser. At such time as such an agreement shall no longer be in effect,
the
Funds will (to the extent that it lawfully can) cease to use such name or
any
other name indicting that it is advised by or otherwise connected with the
Manager or any organization which shall have so succeeded to its
business.
XX. Miscellaneous.
The captions in this Agreement are included for convenience of reference
only
and in no way define or delimit any of the provisions hereof or otherwise
affect
their construction or effect. 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. As used in this Agreement,
terms shall have the same meaning as such terms have in the 1940 Act. Where
the
effect of a requirement of the federal securities laws reflected in any
provision of this Agreement is made less restrictive by a rule, regulation
or
order of the Commission, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule, regulation
or
order. This Agreement may be signed in counterpart.
IN
WITNESS WHEREOF, the parties hereto have caused this instrument to be executed
by their officers designated below as of the 31st
day of
August, 2006.
ICAP
Funds, Inc., on behalf of
each
series listed on Schedule A
By: /s/▇▇▇▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
Name:
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title:
President
NEW
YORK
LIFE INVESTMENT MANAGEMENT LLC
By: /s/
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
President and Chief Executive Officer
SCHEDULE
A
For
all
services rendered by the Manager hereunder, the below named Fund of the Company
shall pay the Manager and the Manager agrees to accept as full compensation
for
all services rendered hereunder, at annual advisory fee equal to the
following:
Fund Annual
Rate
MainStay
ICAP Equity Fund .80%
of
the average daily net assets of the Fund
MainStay
ICAP Select Equity Fund .80%
of
the average daily net assets of the Fund
MainStay
ICAP International Equity Fund .80%
of
the average daily net assets of the Fund
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
advisory fee so accrued shall be paid monthly to the Manager.