EXHIBIT 99.2
THE MAINSTAY FUNDS
MAINSTAY STRATEGIC VALUE FUND
MANAGEMENT AGREEMENT
Agreement, made as of the ___ day of ____________, 1997 between THE
MAINSTAY FUNDS, a Massachusetts business trust (the "Trust"), on behalf of the
MAINSTAY STRATEGIC VALUE FUND (the "Fund"), a separate series of the Trust, and
MainStay Management, Inc., a Delaware corporation (the "Manager").
W I T N E S S E T H :
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WHEREAS, the Trust is an open-end management investment company registered
under the investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the shares of beneficial interest of the Trust (the "Shares") are
divided into separate series, each of which is established pursuant to a written
instrument executed by the Trustees of the Trust, and the Trustees may from time
to time terminate such series or establish and terminate additional series; and
WHEREAS, the Fund desires to retain the Manager to render investment
advisory and related administrative services to the Fund, and the Manager is
willing to render such services on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, the parties agree as follows:
1. Appointment. The Fund hereby appoints MainStay Management, Inc. to act as
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manager to the Fund 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.
2. Duties as Manager. Subject to the supervision of the Trustees of the
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Trust, the Manager shall administer the 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 thereof, in accordance
with the investment objectives, policies and restrictions of the Fund, as stated
in the Prospectus (as hereinafter defined) and subject to the following
understandings:
(a) The Manager shall (i) furnish the Fund with office facilities; (ii)
be responsible for the financial and accounting records required to be
maintained by the Fund (excluding those being maintained by the Fund's Custodian
and Transfer Agent except as to which the Manager has supervisory functions) and
[other than those being maintained by the Fund's sub-
adviser, if any]; and (iii) furnish the Fund with ordinary clerical, bookkeeping
and recordkeeping services at such office facilities.
(b) The Manager shall provide supervision of the Fund's investments and
determine from time to time what investments or securities will be purchased,
retained, sold or lent by the Fund, and what portion of the Fund's assets will
be invested or held uninvested as cash.
(c) The Manager shall use its best judgment in the performance of its
duties under this Agreement.
(d) The Manager, in the performance of its duties and obligations under
this Agreement, shall act in conformity with the Declaration of Trust, By-Laws
and Prospectus (each as hereinafter defined) of the Trust and with the
instructions and directions of the Trustees of the Trust and will conform
to and comply with the requirements of the 1940 Act and all other
applicable federal and state laws and regulations.
(e) The Manager, and any sub-adviser to whom such authority has been
delegated, shall determine the securities to be purchased or sold by the Fund
and 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 Trust's
Registration Statement and Prospectus (each as hereinafter defined) or as the
Trustees may direct from time to time. It is recognized that, in providing the
Fund with investment supervision or the placing of orders for portfolio
transactions, the Manager or any sub-adviser will give primary consideration to
securing the most favorable price and efficient execution. Consistent with this
policy, the Manager or any sub-adviser 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 or any sub-adviser may
be a party. It is understood that neither the Fund, the Trust nor the Manager or
sub-adviser has adopted a formula for allocation of the Fund's investment
transaction business. It is also understood that it is desirable for the Fund
that the Manager or any sub-adviser 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 Fund 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 sub-
adviser is authorized to place orders for the purchase and sale of securities
for the Fund with such certain brokers, subject to review by the Trust's
Trustees 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 sub-adviser in connection with its services to
other clients.
On occasions when the Manager or any sub-adviser deems the purchase or sale
of a security to be in the best interest of the Fund as well as other clients,
the Manager or any sub-adviser, 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
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by the Manager or any sub-adviser in the manner it considers to be the most
equitable and consistent with its fiduciary obligations to the Fund and to such
other clients.
(f) The Manager shall maintain all books and records with respect to the
Fund's 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] and shall render to the Trust's Trustees such periodic and special
reports as the Trustees may reasonably request.
(g) The Manager shall provide the Trust's Custodian on each business day
with information relating to the execution of all portfolio transactions
pursuant to standing instructions.
(h) With respect to any or all Series of the Trust, including the Fund,
the Manager may enter into one or more contracts ("Sub-Advisory or Sub-
Administration Contract") with a sub-adviser or sub-administrator in which
the Manager delegates to such sub-adviser or sub-administrator any or all
its duties specified in this Agreement, provided that each Sub-Advisory or
Sub-Administration Contract meets all requirements of the 1940 Act and
rules thereunder.
3. Manager Personnel. The Manager shall authorize and permit any of its
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directors, officers and employees who may be elected or appointed as Trustees or
officers of the Trust 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.
4. Books and Records. The Manager shall keep the Fund's books and records
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required to be maintained by it, pursuant to paragraph 2 hereof. The Manager
agrees that all records which it maintains for the Fund are the property of the
Fund, and it will surrender promptly to the Fund any of such records upon the
Fund's request. The Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 as promulgated by the Commission under the 1940 Act any
such records as are required to be maintained by the Manager pursuant to
paragraph 2 hereof.
5. Services Not Exclusive. The services furnished by the Manager hereunder
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are not to be deemed exclusive and the Manager shall be free to furnish similar
services to others so long as its services under this Agreement are not impaired
thereby.
6. Documents. The Trust has delivered to the Manager copies of each of the
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following documents and will deliver to it all future amendments and
supplements, if any:
(a) Declaration of Trust of the Trust, filed with the Secretary of the
Commonwealth of Massachusetts (such Declaration of Trust, as in effect on
the date hereof and as amended from time to time, is herein called the
"Declaration of Trust");
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(b) By-Laws of the Trust (such By-Laws, as in effect on the date hereof
and as amended from time to time, are herein called the "By-Laws");
(c) Certified Resolutions of the Trustees of the Trust authorizing the
appointment of the Manager and approving the form of this Agreement;
(d) Written Instrument to Establish and Designate Separate Series of
Shares;
(e) Registration Statement under the 1940 Act and the Securities Act of
1933, as amended, on Form N-lA (the "Registration Statement"), as filed with the
Securities and Exchange Commission (the "Commission") relating to the Fund and
the Fund's Shares and all amendments thereto;
(f) Notification of Registration of the Trust under the 1940 Act on Form
N-8A as filed with the Commission and all amendments thereto; and
(g) Prospectus and Statement of Additional Information of the Fund (such
Prospectus and Statement of Additional Information, as currently in effect
and as amended or supplemented from time to time, being herein called the
"Prospectus").
7. Expenses. (a) In connection with the services rendered by the Manager
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under this Agreement, the Manager will bear all of the following expenses:
(i) the salaries and expenses of all personnel of the Trust and the
Manager, except the fees and expenses of Trustees who are not interested
persons of the Manager or of the Trust; and
(ii) all expenses incurred by the Manager in connection with managing
the investment operations of the Fund and administering the ordinary course of
the Fund's business, other than those assumed by the Fund herein;
(b) The 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 Trust, the Fund shall be liable only for its allocable
portion of the expenses):
(i) the fees and expenses of Trustees who are not interested persons
of the Manager or of the Trust;
(ii) the fees and expenses of the Fund's custodian which relate to
(A) the custodial function and the recordkeeping connected therewith, (B) the
maintenance of the required accounting records of the Fund 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 Trustees of the Trust, and (D) for both mail
and wire orders, the cashiering function in connection with the issuance
and redemption of the Fund's Shares;
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(iii) 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;
(iv) the charges and expenses of legal counsel and independent
accountants for the Trust;
(v) brokers' commissions and any issue or transfer taxes chargeable
to the Trust in connection with its securities transactions on behalf of the
Fund;
(vi) all taxes and business fees payable by the Fund to federal,
state or other governmental agencies;
(vii) the fees of any trade association of which the Trust may be a
member;
(viii) the cost of share certificates representing the Fund's Shares;
(ix) the fees and expenses involved in registering and maintaining
registrations of the Trust and of its Shares with the Securities and Exchange
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;
(x) 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; and
(xi) litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of the Fund's business.
8. Organization Expenses. The Fund hereby agrees to reimburse the Manager
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for the organization expenses of, and the expenses incurred in connection with,
the initial offering of Shares of the Fund.
9. Compensation. For the services provided and the facilities furnished
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pursuant to this Agreement, the Trust will pay to the Manager as full
compensation therefor a fee at an annual rate of 0.75% of the average daily net
assets of the Fund.
This fee will be computed daily and will be paid to the Manager monthly.
This fee will be chargeable only to the Fund, and no other series of the Trust
shall be liable for the fee due and payable hereunder. The Fund shall not be
liable for any expense of any other series of the Trust.
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10. Standard of Care. The Manager shall not be liable for any error of
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judgment or for any loss suffered by the Fund in connection with the matters
to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard by it of its obligations and duties under this
Agreement.
11. Duration and Termination. This Agreement shall continue in effect with
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respect to the Fund 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 Fund in conformity with the requirements of the 1940 Act and the
Rules thereunder; provided, however, that this Agreement may be terminated with
respect to the Fund at any time, without the payment of any penalty, by the
Trustees of the Trust or by vote of a majority of the outstanding voting
securities (as defined in the 0000 Xxx) of the Fund, 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).
12. Other Business. Nothing in this Agreement shall limit or restrict the
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right of any of the Manager's directors, officers, or employees who may also be
a Trustee, officer, or employee of the Trust to engage in any other business or
to devote his time and attention in part to the management or other aspects of
any business, whether of a similar or dissimilar nature, nor limit or restrict
the Manager's right to engage in any other business or to render services of any
kind to any other corporation, trust, firm, individual or association.
13. Independent Contractor. Except as otherwise provided herein or
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authorized by the Trustees of the Trust 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 Fund or the Trust in any way or otherwise
be deemed an agent of the Fund or the Trust.
14. Trust Materials. During the term of this Agreement, the Trust agrees to
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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 Fund 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 Trust will continue to furnish to the Manager
copies of any of the above-mentioned materials which refer in any way to the
Manager. The Trust shall furnish or otherwise make available to the Manager
such other information relating to the business affairs of the Fund as the
Manager at any time, or from time to time, reasonably requests in order to
discharge its obligations hereunder.
15. Amendment. This Agreement may be amended in writing by mutual consent,
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but consent of the Fund, if required, must be obtained in conformity with the
requirements of the 1940 Act and the Rules thereunder.
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16. Notice. Any notice or other communication required to be given pursuant
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to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, (1) to the Manager at Xxxxxx Corporate Center
I, Building A, 000 Xxxxxxxxx Xxxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000; or (2) to
the Trust at 00 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000.
17. Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of New York.
18. Limitation of Liability of the Trust and the Shareholders. It is
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understoodand expressly stipulated that none of the Trustees, officers, agents
or shareholders of the Trust shall be personally liable hereunder. The name "The
MainStay Funds" is the designation of the Trust for the time being under the
Declaration of Trust and all persons dealing with the Trust must look solely to
the property of the Trust for the enforcement of any claims against the Trust,
as neither the Trustees, officers, agents or shareholders assume any personal
liability for obligations entered into on behalf of the Trust. No series of the
Trust shall be liable for any claims against any other series of the Trust.
19. Use of Name. The Fund may use any name including the word "MainStay"
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only for so long as this Agreement or any other Investment Advisory Agreement
between the Manager or any other affiliate of New York Life Insurance Company
and the Trust 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 Fund will (to the extent that it
lawfully can) cease to use such name or any other name indicating that it is
advised by or otherwise connected with the Manager or any organization which
shall have so succeeded to its business.
20. Miscellaneous. The captions in this Agreement are included for
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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.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THE MAINSTAY FUNDS, on behalf of
MAINSTAY STRATEGIC VALUE FUND,
a series
By: ________________________________
Name:
Title:
MAINSTAY MANAGEMENT, INC.
By: ________________________________
Name:
Title:
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