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SUB-ADVISORY AGREEMENT
MAINSTAY MAP EQUITY FUND
Agreement made as of ______, 1999 (the "Agreement") between MainStay
Management, Inc., a Delaware corporation (the "Manager"), and Markston
International, LLC, a [ ] limited liability company (the "Sub-Adviser").
WHEREAS, the Manager has entered into a Management Agreement, dated
October 27, 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 the
MainStay MAP Growth Equity Fund (the "Fund"), a series of the Trust;
WHEREAS, under the Management Agreement, the Manager has agreed to
provide certain investment advisory and related administrative services to the
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 the 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 the 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 the Fund and the composition of the portfolio of the
Fund, including the purchase, retention and disposition of securities therein
in accordance with the investment objectives, policies and restrictions of the
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 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.
(b) The Sub-Adviser shall use its best judgment in the
performance of its duties under this Agreement.
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(c) The Sub-Adviser, 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 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 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 Board of 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 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 Fund, the Trust, the Manager nor the 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
Sub-Adviser have access to supplemental investment and market research and
related services and security and economic analyses that will consitute
research services with the meaning of Section 28(e) of the Securities and
Exchange Act of 1934 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 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 Board of Trustees from time to time with
respect to the extent and continuation of this practice. It is understood that
the products 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 the 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 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 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.
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(f) The Sub-Adviser shall provide the Fund's Custodian on
each business day with information relating to the execution of all portfolio
transactions pursuant to standing 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 Fund's 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 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 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 and Shareholder o the Fund authorizing the appointment of the Sub-Adviser
and approving the form of this Agreement;
(d) Written Instrument to Establish and Designate the Fund
as a 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 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 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 the
"Prospectus").
7. Expenses. During the term of this Agreement, the Sub-Adviser
will bear all expenses, including but limited to all interest, taxes, fees and
commissions of every kind, and all custodian charges 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, the 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
the Fund, will pay to the Sub-Adviser a fee, computed daily and payable
monthly, at an annual rate of 0.45% of the first $250 million of the Fund's
average daily net assets; 0.40% of the next $250 million to $500 million of
average daily net assets; and 0.35% on average daily net assets in excess of
$500 million.
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 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.
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 the
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 the Fund at any time without penalty upon the vote of a
majority of the 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 the 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.
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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
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 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 Xxxxx Xxxxxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxx Xxxx 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.
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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.
MAINSTAY MANAGEMENT, INC.
By:
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Name:
Title:
MARKSTON INTERNATIONAL, LLC.
By:
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Name:
Title:
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