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Exhibit d(2)(h)
SUB-ADVISORY AGREEMENT
Agreement made as of October 21, 1997 (the "Agreement") between MainStay
Management, Inc., a Delaware corporation (the "Manager"), and XxxXxx-Xxxxxxx
Financial Corporation, a Delaware corporation (the "Sub-Adviser").
WHEREAS, the Manager has entered into a Management Agreement, dated
October 21, 1997 (the "Management Agreement") with The MainStay Funds (the
"Trust"), an open-end management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), on behalf of its
series (each, a "Fund," and collectively, the "Funds") as set forth in Schedule
A, as amended from time to time;
WHEREAS, under the Management Agreement, the Manager has agreed to provide
certain investment advisory and related administrative services to each Fund;
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 each Fund and the Sub-Adviser is
willing to furnish such services;
NOW, THEREFORE, the parties agree as follows:
1. 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.
2. Duties as Sub-Adviser. Subject to the supervision of the Board of
Trustees of the Trust 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 of securities therein,
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.
(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
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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 Board of Trustees 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 Trust's
Registration Statement and Prospectus (each as hereinafter defined) or as the
Board of 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 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 Trust, the Manager nor the 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 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
Trust's Board of 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 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 one or more of the Funds 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 manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Funds and to such other
clients.
(e) The Sub-Adviser 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 Manager and to the Trust's Trustees
such periodic and special reports as the Manager or the Trustees 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
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instructions.
3. Sub-Adviser Personnel. The Sub-Adviser 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 Sub-Adviser under this
Agreement may be furnished through the medium of any of such directors,
officers, or employees.
4. Books and Records. The Sub-Adviser shall keep the Funds' books and
records required to be maintained by it, pursuant to paragraph 2 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 2 hereof.
5. 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.
6. 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) 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");
(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 Board of Trustees of the Trust
authorizing the appointment of the Sub-Adviser 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 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 Prospectus and Statement of Additional Information of the
Trust (such
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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. 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 Trust, any Fund or the Manager.
8. Compensation. For the services provided and the expenses assumed by the
Sub-Adviser pursuant to this Agreement, the Manager, not the Trust or any Fund,
will pay to the Sub-Adviser a fee, computed daily and payable monthly, at an
annual rate , as set forth opposite each Fund's name on Schedule A, of the
average daily net assets of the Fund.
9. Standard of Care. Subject to the 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.
10. 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 Trust's Trustees 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
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.
11. 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 Trustee, officer, or employee of the Trust 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.
12. 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 Trustees of the
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Trust 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 Trust receives a Commission
order or no-action letter permitting it to modify the Agreement without such
vote).
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
14. 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.
15. 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.
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.
MAINSTAY MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: SR. VP.
XXXXXX-XXXXXXX FINANCIAL CORPORATION
By: /s/ Xxxx Xxxxxxx
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Name: Xxxx Xxxxxxx
Title: Chairman and CEO
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SCHEDULE A
(AS AMENDED OCTOBER 27, 1997 AND APRIL 27, 1998)
FUND ANNUAL RATE*
California Tax Free Fund 0.25%
Capital Appreciation Fund 0.36%
Convertible Fund 0.36%
Government Fund 0.30%
High Yield Corporate Bond Fund 0.30%
International Bond Fund 0.45%
International Equity Fund 0.60%
Money Market Fund 0.25%**
New York Tax Free Fund 0.25%
Strategic Income Fund 0.30%
Strategic Value 0.375%
Tax Free Bond Fund 0.30%
Total Return Fund 0.32%
Value Fund 0.36%***
Small Cap Growth Fund 0.50%
Equity Income Fund 0.35%
Global High Yield Fund 0.35%
* of each Fund's average daily net assets
** up to $300 million; .225% from $300 to $700 million; .20% from $700
million to $1 billion; and .175% in excess of $1 billion.
*** up to $200 million ; .325% from $200 million to $500 million; and .25% in
excess of $500 million
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