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THE MAINSTAY FUNDS
MANAGEMENT AGREEMENT
Agreement, made as of the 21st day of October, 1997
between THE MAINSTAY FUNDS, a Massachusetts business trust (the "Trust"), on
behalf of its series (each, a "Fund," and collectively, the "Funds") as set
forth on Schedule A, as amended from time to time, and MainStay Management,
Inc., a Delaware corporation (the "Manager").
W I T N E S S E T H:
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, each 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. Each Fund hereby appoints MainStay
Management, Inc. to act as 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 Trust, the Manager shall administer each Fund's business
affairs and manage the investment operations of each Fund and the composition
of the portfolio of each Fund, including the purchase, retention and
disposition of securities therein, in accordance with the investment
objectives, policies and restrictions of each Fund, as stated in the currently
effective Prospectus (as hereinafter defined) and subject to the following
understandings:
(a) The Manager shall (i) furnish each Fund with
office facilities; (ii) be responsible for the financial and accounting records
required to be maintained by each Fund (excluding those being maintained by the
Fund's Custodian, Transfer Agent and Accounting Services 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 each Fund with
ordinary clerical, bookkeeping and recordkeeping services at such office
facilities.
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(b) The Manager 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 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 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
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 a 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 none of the Funds, the
Trust nor the Manager or any sub-adviser has adopted a formula for allocation
of a Fund's investment transaction business. It is also understood that it is
desirable for each 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 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 Manager or any sub-adviser is authorized to place orders for the
purchase and sale of securities for a 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 a 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,
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will be made by the Manager or any sub-adviser in the manner it considers to be
the most equitable and consistent with its fiduciary obligations to that Fund
and to such other clients.
(f) The Manager 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 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 Funds, 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 applicable
requirements of the 1940 Act and rules thereunder.
3. Manager Personnel. The Manager shall authorize and
permit any of its 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 Funds'
books and records required to be maintained by it, pursuant to paragraph 2
hereof. The Manager agrees that all records which it maintains for a Fund are
the property of such 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 Securities and
Exchange Commission (the "Commission's 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 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 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-1A (the "Registration
Statement"), as filed with the Commission, relating to each Fund and each
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) Each form of Prospectus and Statement of
Additional Information of the Trust (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").
7. Expenses. (a) In connection with the services
rendered by the Manager 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 each Fund and
administering the ordinary course of each Fund's 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 Trust, each 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 each 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 Funds not being maintained by the Manager, (C) the pricing of the Funds'
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 Funds' 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 (including an allocable portion of the cost of maintaining an internal
legal and compliance department) 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 Funds;
(vi) all taxes and business fees payable
by the Trust or the Funds 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 Fund Shares;
(ix) 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;
(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;
(xi) litigation and indemnification
expenses and other extraordinary expenses not incurred in the ordinary course
of the Trust's business; and
(xii) any expenses assumed by the Funds
pursuant to a Plan of Distribution adopted in conformity with Rule 12b-1 under
the 1940 Act.
8. Organization Expenses. Each Fund hereby agrees to
reimburse the Manager for the organization expenses of, and the expenses
incurred in connection with, the initial offering of Shares of that Fund.
9. Compensation. For the services provided and the
facilities furnished pursuant to this Agreement, the Trust will pay to the
Manager as full compensation therefor a fee at an annual rate, as set forth
opposite each Fund's name on Schedule A, of the average daily net assets of
each Fund.
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This fee will be computed daily and will be paid to
the Manager monthly. This fee will be chargeable only to the respective Fund,
and no other series of the Trust shall be liable for the fee due and payable
hereunder. No Fund shall be liable for any expense of any other series of the
Trust.
10. Standard of Care. Subject to the applicable law, the
Manager 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.
11. Duration and Termination. This Agreement shall
continue in effect with respect to each 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 that 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 a 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
that 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 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 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 any Fund or the Trust in
any way or otherwise be deemed an agent of any Fund or the Trust.
14. Trust Materials. During the term of this Agreement,
the Trust 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 a 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 each Fund as the Manager at any time, or from time to time,
reasonably requests in order to discharge its obligations hereunder.
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15. Amendment. This Agreement may be amended in writing
by mutual consent, but the consent of each of the Funds, if required, must be
obtained in conformity with the requirements of the 1940 Act and the Rules
thereunder.
16. 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 Trust at 00 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000.
17. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
18. Limitation of Liability of the Trust and the
Shareholders. It is understood and 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. Each Fund 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 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 respective Fund 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.
20. 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 day
and year first above written.
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THE MAINSTAY FUNDS, on behalf of
each series listed on Schedule A
By:
----------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
MAINSTAY MANAGEMENT, INC.
By:
----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President and Chief
Financial Officer
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SCHEDULE A
(as revised, April 27, 1998 and March 15, 1999)
FUND ANNUAL RATE*
California Tax Free Fund 0.50%
Capital Appreciation Fund 0.72%
Convertible Fund 0.72%
Equity Index Fund 0.50%
Government Fund 0.60%
High Yield Corporate Bond Fund 0.60%
International Bond Fund 0.70%
International Equity Fund 1.00%
Money Market Fund 0.50%**
New York Tax Free Fund 0.50%
Strategic Income Fund 0.60%
Strategic Value Fund 0.75%
Tax Free Bond Fund 0.60%
Total Return Fund 0.64%
Value Fund 0.72%***
Blue Chip Growth Fund 1.00%
Research Value Fund 0.85%
Small Cap Value Fund 1.00%
Growth Opportunities Fund 0.70%
Small Cap Growth Fund 1.00%
Equity Income Fund 0.70%
Global High Yield Fund 0.70%
MAP Equity Fund 0.75%
* of each Fund's average daily net assets
** up to $300 million; .450% from $300 to $700 million; .40% from $700
million to $1 billion; and .35% in excess of $1 million.
*** up to $200 million; .65% from $200 million to $500 million; and .50%
in excess of $500 million.
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