EXHIBIT 99.3
SUB-ADVISORY AGREEMENT
Agreement made as of ______________, 1997 (the "Agreement") between
MainStay Management, Inc., a Delaware corporation (the "Manager"), and XxxXxx-
Xxxxxxx Financial Corporation, a Delaware corporation (the "Sub-Adviser") (the
"Agreement").
WHEREAS, the Manager has entered into a Management Agreement, dated
_____________, 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 Strategic Value 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
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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 Trustees of the
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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 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 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.
(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 Trustees of the Trust 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
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 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 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 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.
(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.
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3. Sub-Adviser Personnel. The Sub-Adviser shall authorize and permit any
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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
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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 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
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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
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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 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
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").
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7. Expenses. During the term of this Agreement, the Sub-Adviser will bear
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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, the Fund or the Manager.
8. Compensation. For the services provided and the expenses assumed by the
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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 0.375% of the Fund's average daily net assets.
9. Standard of Care. The Sub-Adviser 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.
10. Duration and Termination. This Agreement shall continue in effect for a
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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) at any
time without penalty by the Fund 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
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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,
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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 amendment of this Agreement shall be effective until
approved (i) by a vote of a majority of those Trustees 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 an SEC order or no-action letter permitting it to
modify the Agreement without such vote).
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13. 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.
14. 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 Sub-Adviser at 0 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000.
15. 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, 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: ____________________________________
Name:
Title:
XXXXXX-XXXXXXX FINANCIAL CORPORATION
By: ____________________________________
Name:
Title:
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