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CORE BOND PLUS FUND
TAX FREE BOND FUND
SUB-ADVISORY AGREEMENT
Agreement made as of _____________, 2000 (the "Agreement") between New
York Life Investment Management LLC, a Delaware limited liability company (the
"Manager"), and MacKay Xxxxxxx LLC, a Delaware limited liability company (the
"Sub-Adviser") (the "Agreement").
WHEREAS, the Manager has entered into a Management Agreement, dated
_______________, 2000 (the "Management Agreement") with MainStay Institutional
Funds Inc. (the "Company"), an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), on behalf
of the Core Bond Plus Fund, and Tax Free Bond Fund (each a "Fund" and together,
the "Funds"), each a series of the Company;
WHEREAS, under the Management Agreement, the Manager has agreed to provide
certain investment advisory and related administrative services to the Funds;
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 desires to retain the Sub-Adviser to furnish certain
investment advisory services with respect to the Funds and the Sub-Adviser is
willing to furnish such services;
NOW, THEREFORE, the parties agree as follows:
I. Appointment. The Manager hereby appoints the Sub-Adviser as an
investment sub-adviser with respect to each Fund for the period and on
the terms set forth in this Agreement. The Sub-Adviser accepts that
appointment and agrees to render the services herein set forth, for the
compensation herein provided.
II. Duties as Sub-Adviser. Subject to the supervision of the Board of
Directors of the Company and the Manager, the Sub-Adviser shall manage
the investment operations of each Fund and the composition of the
portfolio of each Fund, including the purchase, retention and
disposition thereof, in accordance with the investment objectives,
policies and restrictions of each Fund, as specified in the currently
effective Prospectus (as hereinafter defined) and subject to the
following understandings:
A. The Sub-Adviser shall provide supervision of each Fund's investments
and determine from time to time what investments or securities will
be purchased, retained, sold or lent by each Fund, and what portion
of each Fund's assets will be invested or held uninvested as cash.
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B. The Sub-Adviser shall use its best judgment in the performance of
its duties under this Agreement.
C. The Sub-Adviser, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Articles of
Incorporation, By-Laws and Prospectus (each as hereinafter defined)
of the Company and with the instructions and directions of the Board
of Directors and the Manager and will conform to and comply with the
requirements of the 1940 Act and all other applicable federal and
state laws and regulations.
D. The Sub-Adviser shall determine the securities to be purchased or
sold by each 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 Company's Registration
Statement and Prospectus (each as hereinafter defined) or as the
Board of Directors may direct from time to time. It is recognized
that, in providing a Fund with investment supervision or the placing
of orders for portfolio transactions, the Sub-Adviser will give
primary consideration to securing the most favorable price and
efficient execution. Consistent with this policy, the 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 Sub-Adviser may be a
party. It is understood that none of the Funds, the Company, the
Manager nor the Sub-Adviser has adopted a formula for allocation of
the Funds' investment transaction business. It is also understood
that it is desirable for each Fund that the 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 a Fund than may result
when allocating brokerage to other brokers on the basis of seeking
the most favorable price and efficient execution. Therefore, the
Sub-Adviser is authorized to place orders for the purchase and sale
of securities for each Fund with such certain brokers, subject to
review by the Company's Board of 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 Sub-Adviser in connection with its services to other clients.
On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of a Fund as well as other
clients, the 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 by the Sub-Adviser in the
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manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Fund and to such other clients.
E. The Sub-Adviser shall maintain all books and records with respect to
each Fund's securities transactions required by sub-paragraphs
(b)(5), (6), (9) and (10) and paragraph (f) of Rule 31 a-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 Manager and to the Company's Directors such periodic and
special reports as the Manager or the Directors may reasonably
request.
F. The Sub-Adviser shall provide each Fund's Custodian on each business
day with information relating to the execution of all portfolio
transactions pursuant to standing instructions.
III. Sub-Adviser Personnel. The Sub-Adviser 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 Sub-Adviser
under this Agreement may be furnished through the medium of any of such
directors, officers, or employees.
IV. Books and Records. The Sub-Adviser shall keep each Fund's books and
records required to be maintained by it, pursuant to paragraph II
hereof The Sub-Adviser agrees that all records which it maintains for a
Fund are the property of that Fund, and it will surrender promptly to
that Fund any of such records upon the Fund's request. The Sub-Adviser
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 Sub-Adviser pursuant to paragraph II hereof.
V. Services Not Exclusive. The services furnished by the Sub-Adviser
hereunder are not to be deemed exclusive and the Sub-Adviser shall be
free to furnish similar or different services to others so long as its
services under this Agreement are not impaired thereby.
VI. Documents. The Manager has delivered to the Sub-Adviser 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, filed with the Maryland
Department of Assessments and Taxation (such Articles of
Incorporation, as in effect on the date hereof and as amended from
time to time are herein called the "Articles of Incorporation");
B. By-Laws of the Company (such By-Laws, as in effect on the date
hereof and as amended from time to time, are herein called the
"By-Laws");
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C. Certified Resolutions of the Board of Directors of the Company
authorizing the appointment of the Sub-Adviser 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 (the "Registration Statement"), as
filed -with the Commission relating to each Fund and each Fund's
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. Each form of Prospectus and Statement of Additional Information of
the Company Fund (such Prospectuses 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. During the term of this Agreement, the Sub-Adviser will bear
all expenses incurred by it in connection with its services under this
Agreement. The Sub-Adviser shall not be responsible for any expenses
incurred by the Company, any Fund or the Manager.
VIII. Compensation. For the services provided and the expenses assumed by
the Sub-Adviser pursuant to this Agreement, the Manager, not the
Company or any Fund, will pay to the Sub-Adviser a fee, computed daily
and payable monthly, at an annual rate of the following percentage of
each Fund's average daily net assets:
Core Bond Plus Fund 0.30%
Institutional Tax Free Bond Fund 0.25%
IX. Standard of Care. Subject to applicable law, the Sub-Adviser shall not be
liable for any error of judgment or for any loss suffered by a 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.
X. Duration and Termination. This Agreement shall continue in effect 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 each Fund in conformity with the requirements of the 1940
Act and the Rules thereunder. Notwithstanding the foregoing, this
Agreement may be terminated: (a) with respect to any Fund at any time
without penalty upon the vote of a majority of the Company's Directors
or by vote of the majority of the Fund's outstanding voting securities,
upon sixty (60) days' written notice to the Sub-adviser, (b) by the
Manager at any time without penalty upon sixty (60) days' written
notice to the Sub-Adviser or immediately upon material breach by the
Sub-Adviser or
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immediately if, in the reasonable judgment of the Manager, the Sub-Adviser
becomes unable to discharge its duties and obligations under this
Agreement, or (c) by the Sub-Adviser at any time without penalty, upon
sixty (60) days' written notice to each applicable Fund. This Subadvisory
Agreement will also terminate automatically in the event of its assignment
(as defined in the 0000 Xxx) or the assignment or termination of the
Management Agreement.
XI. Other Business. Nothing in this Agreement shall limit or restrict the
right of any of the Sub-Adviser's directors, officers, or employees who
may also be a Director, officer, or employee of the Company to engage
in any other business or to devote his or her time and attention in
part to the management or other aspects of any business, whether of a
similar or dissimilar nature, nor limit or restrict the Sub-Adviser's
right to engage in any other business or to render services of any kind
to any other corporation, trust, firm, individual or association.
XII. Amendment. 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. No material amendment of this
Agreement shall be effective until approved (i) by a vote of a majority of
those Directors of the Company who are not parties to this Agreement or
interested persons of any such party, and (ii) by a vote of a majority of
the relevant Fund's outstanding voting securities (unless in the case of
(ii), the Company receives an SEC order or no-action letter permitting it
to modify the Agreement without such vote).
XIII. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
XIV. 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
Xxxxxx Corporate Center I, Building A, 000 Xxxxxxxxx Xxxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000; or (2) to the Sub-Adviser at 0 Xxxx 00xx
Xxxxxx, Xxx Xxxx, XX 00000.
XV. 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, the terms "majority of the outstanding voting securities,"
"affiliated person," "interested person," "assignment," "broker,"
"investment adviser," "net assets," "sale," "sell" and "security" 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.
NEW YORK LIFE INVESTMENT MANAGEMENT LLC
By:
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Name:
Title:
MACKAY XXXXXXX LLC
By:
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Name:
Title:
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