1
Exhibit d(2)(c)
SUB-ADVISORY AGREEMENT
AGREEMENT made this 31 day of May, 1998 between MainStay Management
Inc., a Delaware corporation (the "Manager"), on behalf of The MainStay Funds
(the "Trust"), and Gabelli Asset Management Company, a New York corporation (the
"Sub-Adviser").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end, management investment company;
WHEREAS, the Trust is authorized to issue separate series, each of which
will offer a separate class of shares of beneficial interest, each series having
its own investment objective or objectives, policies, and limitations;
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;
WHEREAS, the Manager has entered into a Management Agreement, dated
October 27, 1997 (the "Management Agreement") with the Trust, on behalf of its
series;
WHEREAS, the Management Agreement permits the Manager to delegate certain
of its investment advisory duties under the Management Agreement to a
sub-adviser; and
WHEREAS, the Manager wishes to retain the Sub-Adviser to furnish certain
investment advisory services to one or more of the series of the Trust, and the
Sub-Adviser 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 Sub-Adviser as follows:
1. Appointment. The Manager hereby appoints Gabelli Asset Management
Company to act as sub-adviser 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 Sub-Adviser 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
Sub-Adviser to render investment advisory services hereunder, they shall notify
the Sub-Adviser in writing. If the Sub-Adviser 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 Sub-Adviser 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 Sub-Adviser 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
2
securities and other investments in which it may invest, and the Sub-Adviser is
hereby authorized to execute and perform such services on behalf of the Series.
The Sub-Adviser 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 ("SEC"), as amended, copies of which shall be sent to the
Sub-Adviser by the Manager. The Sub-Adviser further agrees as follows:
(a) The Sub-Adviser will not cause the Series to fail to comply with
the diversification and qualifying income requirements of Subchapter M of the
Internal Revenue Code.
(b) The Sub-Adviser will conform with the 1940 Act and all rules and
regulations thereunder, all other applicable federal and state laws and
regulations, with any applicable procedures adopted by the Trust's Board of
Trustees of which the Sub-Adviser has been sent a copy, and the provisions of
the Registration Statement of the Trust under the Securities Act of 1933 (the
"1933 Act") and the 1940 Act, as supplemented or amended, of which the
Sub-Adviser has received a copy.
(c) On occasions when the Sub-Adviser 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 Sub-Adviser or any of its affiliates, the
Sub-Adviser 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 Sub-Adviser in a manner that is fair and
equitable in the judgment of the Sub-Adviser 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 Sub-Adviser 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 its administrative and
recordkeeping responsibilities with respect to the Series. With respect to
portfolio securities to be purchased or sold through the Depository Trust
Company, the Sub-Adviser will arrange for the automatic transmission of the
confirmation of such trades to the Trust's custodian and portfolio accounting
agent.
(e) The Sub-Adviser 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 Sub-Adviser 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 seeks assistance from, or identifies for review by, the Sub-Adviser.
(f) The Sub-Adviser will make available to the Trust and the
Manager, promptly upon request, all of the Series' investment records and
ledgers maintained by the Sub-Adviser (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 (the "Advisers Act"), as
well as other applicable laws. The Sub-Adviser will furnish to regulatory
authorities having the requisite authority any information or
-2-
3
reports in connection with such services which 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 Sub-Adviser 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
Sub-Adviser 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. However, the Sub-Adviser may not retain as sub-adviser 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 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 Sub-Adviser, or any such company that is retained as sub-adviser, and 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
Sub-Adviser shall be responsible for making reasonable inquiries and for
reasonably ensuring that any employee of the Sub-Adviser, any sub-adviser that
the Sub-Adviser has employed or with which it has associated with respect to the
Series, or any employee thereof has not, to the best of the Sub-Adviser's
knowledge, in any material connection with the handling of Trust 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. Broker-Dealer Selection. The Sub-Adviser is responsible for
decisions to buy and sell securities and other investments for the Series'
portfolio, broker-dealer selection, and negotiation of brokerage commission
rates. The Sub-Adviser'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 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, the
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 Sub-Adviser 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, the Sub-Adviser 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
-3-
4
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
Sub-Adviser 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 Sub-Adviser'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 Sub-Adviser is further authorized
to allocate the orders placed by it on behalf of the Series to the Sub-Adviser
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 or
statistical material, or other services to the Series, the Sub-Adviser, or an
affiliate of the Sub-Adviser. Such allocation shall be in such amounts and
proportions as the Sub-Adviser shall determine consistent with the above
standards, and the Sub-Adviser 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.
4. Disclosure about Sub-Adviser. The Sub-Adviser has reviewed the
post-effective amendment to the Registration Statement for the Trust filed with
the Securities and Exchange Commission that contains disclosure about the
Sub-Adviser, and represents and warrants that, with respect to the disclosure
about the Sub-Adviser or information relating, directly or indirectly, to the
Sub-Adviser, 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 Sub-Adviser further represents
and warrants that it is a duly registered investment adviser under the Advisers
Act and a duly registered investment adviser in all states in which the
Sub-Adviser is required to be registered.
5. Expenses. During the term of this Agreement, the Sub-Adviser 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;
(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 which 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, which 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 an internal legal 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;
-4-
5
(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.
6. Compensation. For the services provided, the Manager will pay the
Sub-Adviser a fee, payable monthly, as described on Schedule A.
7. Seed Money. The Manager agrees that the Sub-Adviser shall not be
responsible for providing money for the initial capitalization of the Series.
8. Compliance.
(a) The Sub-Adviser agrees that it shall immediately notify the
Manager and the Trust (1) in the event that the SEC has censured the
Sub-Adviser; placed limitations upon its activities, functions or operations;
suspended or revoked its registration as an investment adviser; or has commenced
proceedings or an investigation that may result in any of these actions, (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 Sub-Adviser further agrees to notify the
Manager and the Trust immediately of any material fact known to the Sub-Adviser
respecting or relating to the Sub-Adviser 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.
(b) The Manager agrees that it shall immediately notify the
Sub-Adviser (1) 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 has
commenced proceedings or an investigation that may result in any of these
actions, (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.
-5-
6
9. Books and Records. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records which
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, although the Sub-Adviser may, at its own expense, make and
retain a copy of such records. The Sub-Adviser 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 Sub-Adviser. The Manager and the
Trust agree that neither the Trust, the Manager, nor affiliated persons of the
Trust or the Manager shall give any information or make any representations or
statements in connection with the sale of shares of the Series concerning the
Sub-Adviser 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 Sub-Adviser,
except with the prior permission of the Sub-Adviser. 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 Sub-Adviser for its approval and
the Sub-Adviser has not commented within three (3) days, the Manager and its
affiliated persons may use and distribute such sales literature or other
promotional material, although, in such event, the Sub-Adviser shall not be
deemed to have approved of the contents of such sales literature or other
promotional material.
12. 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 reserve the right to direct, approve, or disapprove any
action hereunder taken on its behalf by the Sub-Adviser.
13. 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 Sub-Adviser, any affiliated person of the Sub-Adviser, and each person,
if any, who, within the meaning of Section 15 of the 1933 Act controls the
Sub-Adviser 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
Sub-Adviser's duties, or by reason of reckless disregard of the Sub-Adviser's
obligations and duties under this Agreement.
14. Indemnification.
(a) The Manager agrees to indemnify and hold harmless the
Sub-Adviser, any affiliated person of the Sub-Adviser, and each person, if any,
who, within the meaning of Section 15 of the 1933 Act controls ("controlling
person") the Sub-Adviser (all of such persons being referred to as "Sub-Adviser
Indemnified Persons") against any and all losses, claims, damages, liabilities,
or litigation (including legal and other expenses) to which a Sub-Adviser
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
-6-
7
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 Sub-Adviser Indemnified Person; provided however, that in no
case shall the indemnity in favor of the Sub-Adviser 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 Sub-Adviser
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 Sub-Adviser's responsibilities as
Sub-Adviser of the Series which (1) may be based upon any misfeasance,
malfeasance, or nonfeasance by the Sub-Adviser, any of its employees or
representatives, or any affiliate of or any person acting on behalf of the
Sub-Adviser, (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 Sub-Adviser 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 Sub-Adviser or any affiliated person of the Sub-Adviser;
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 Sub-Adviser Indemnified
Person unless such Sub-Adviser 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 Sub-Adviser Indemnified Person (or after such
Sub-Adviser 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 which it may have to the Sub-Adviser
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 Sub-Adviser
Indemnified Person, the Manager will be entitled to participate, at its own
expense, in the defense thereof or, after notice to the Sub-Adviser Indemnified
Person, to assume the defense thereof, with counsel satisfactory to the
Sub-Adviser 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 Sub-Adviser Indemnified Person would result in a conflict of interests
and therefore, would not, in the reasonable judgment of the Sub-Adviser
Indemnified Person,
-7-
8
adequately represent the interests of the Sub-Adviser 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 Sub-Adviser
Indemnified Person, which counsel shall be satisfactory to the Manager and to
the Sub-Adviser Indemnified Person. The Sub-Adviser Indemnified Person shall
bear the fees and expenses of any additional counsel retained by it, and the
Manager shall not be liable to the Sub-Adviser Indemnified Person under this
Agreement for any legal or other expenses subsequently incurred by the
Sub-Adviser 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 Sub-Adviser Indemnified Person if the compromise or settlement
results, or may result, in a finding of wrongdoing on the part of the
Sub-Adviser Indemnified Person.
(d) The Sub-Adviser 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 Sub-Adviser 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 Sub-Adviser of any such claim shall not relieve the
Sub-Adviser from any liability which 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 Sub-Adviser 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 Sub-Adviser assumes the defense of any such action and the
selection of counsel by the Sub-Adviser to represent both the Sub-Adviser 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 Sub-Adviser will, at its own expense, assume the defense with counsel to the
Sub-Adviser and, also at its own expense, with separate counsel to the Manager
Indemnified Person which counsel shall be satisfactory to the Sub-Adviser 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 Sub-Adviser
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 Sub-Adviser 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.
15. 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 two (2) years from the date
first indicated above and continue on an annual basis thereafter with respect to
the Series; provided that such annual 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. The Sub-Adviser shall
not provide any services for a Series or receive any fees on account of such
Series with respect to which this Agreement is not approved as described in the
preceding sentence. However, 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
-8-
9
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 Sub-Adviser 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 Sub-Adviser, or (c) by the Sub-Adviser 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
Sub-Adviser, although the Sub-Adviser 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). In the event this
Agreement is terminated or is not approved in the manner described above, the
sections numbered 2(f), 9, 10, 11, 14, 15, and 18 of this Agreement shall remain
in effect, as well as any applicable provision of this section 16.
16. 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 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.
17. 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 Sub-Adviser 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
Sub-Adviser shall forthwith cease to use such name (or derivative or logo).
(b) It is understood that the name Gabelli Asset Management Company
(GAMCO Investors, Inc.) or any derivative thereof or logo associated with that
name is the valuable property of the Sub-Adviser 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 with the approval of the Sub-Adviser and for
so long as the Sub-Adviser is a Sub-Adviser to the Trust and/or the Series. Upon
termination of this Agreement between the Trust, the Manager, and the
Sub-Adviser, the Trust shall forthwith cease to use such name (or derivative or
logo).
18. Amended and Restated Declaration of Trust. A copy of the Amended
and Restated Declaration of Trust for the Trust is on file with the Secretary of
The Commonwealth of Massachusetts. The Amended and Restated Declaration of Trust
has been executed on behalf of the Trust by the Trustees of the Trust in their
capacity as Trustees of the Trust and not individually. The obligations of this
Agreement shall be binding upon the assets and property of the Trust and shall
not be binding upon any Trustee, officer, or shareholder of the Trust
individually.
19. 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
-9-
10
the Manager at Xxxxxx Corporate Center I, Building A, 000 Xxxxxxxxx Xxxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000; or (2) to the Sub-Adviser at Xxx Xxxxxxxxx Xxxxxx,
Xxx, Xxx Xxxx 00000.
20. 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
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
Sub-Adviser as an agent of the Manager, or constituting the Manager as an agent
of the Sub-Adviser.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed as of the day and year first above written.
MAINSTAY MANAGEMENT, INC.
/s/ A. Xxxxxx Xxxxx III /s/ Xxxxxxx X. Xxxxxxx
___________________________________ By:___________________________________
Attest
Assistant Secretary President
___________________________________ ______________________________________
Title Title
GABELLI ASSET MANAGEMENT COMPANY
/s/ Xxxxx X. Xxxxxxxxx /s/ Xxxxxxx X. Xxxxxxxx
___________________________________ By:___________________________________
Attest
Deputy General Counsel Executive Vice President
___________________________________ ______________________________________
Title Title
-10-
11
SCHEDULE A
SERIES ANNUAL RATE*
Blue Chip Growth Fund .50% up to $500 million. For the period June 1, 1998 to
May 31, 2001 only, .40% on assets over $500 million, to
be reviewed prior to June 1, 2001.
* of Series' average daily net assets
-11-
