Exhibit 99-(d)(2)(FF)
EXECUTION COPY
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made as of the 13th day of December, 2002, among The GCG Trust
(the "Trust"), a Massachusetts business trust, Directed Services, Inc. (the
"Manager"), a New York corporation, and Xxxxxxx Capital Management, LLC
("Portfolio Manager"), a limited liability company organized under the laws of
the State of Delaware.
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company;
WHEREAS, the Trust is authorized to issue separate series, each of which
will offer a separate class of shares of beneficial interest, each series
having its own investment objective or objectives, policies, and limitations;
WHEREAS, the Trust currently offers shares in multiple series, may offer
shares of additional series in the future, and intends to offer shares of
additional series in the future;
WHEREAS, pursuant to a Management Agreement, effective as of October 24,
1997 and subsequently amended, a copy of which has been provided to the
Portfolio Manager, the Trust has retained the Manager to render advisory,
management, and administrative services with respect to the Trust's series;
WHEREAS, the Trust and the Manager wish to retain the Portfolio Manager to
furnish investment advisory services to one or more of the series of the Trust,
and the Portfolio Manager is willing to furnish such services to the Trust and
the Manager;
NOW THEREFORE, in consideration of the premises and the promises and
mutual covenants herein contained, it is agreed between the Trust, the Manager,
and the Portfolio Manager as follows:
1. APPOINTMENT. The Trust and the Manager hereby appoint the Portfolio
Manager to act as an investment sub-adviser to the series of the Trust
designated on Schedule A of this Agreement (each a "Series") for the periods and
on the terms set forth in this Agreement. The Portfolio Manager accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
In the event the Trust designates one or more series other than the Series
with respect to which the Trust and the Manager wish to retain the Portfolio
Manager to render investment advisory services hereunder (each, an "Additional
Series"), the Manager shall promptly notify the
Portfolio Manager in writing of its desire to retain the Portfolio Manager to
provide investment advisory services to such Additional Series. If the
Portfolio Manager is willing to render such advisory services to the proposed
Additional Series, the Portfolio Manager shall so notify the Trust and Manager
in writing. Upon receipt of the written confirmation of acceptance of the
Portfolio Manager with respect to each Additional Series, Schedule A to this
Agreement shall be amended to reflect the addition of each such Additional
Series and the services provided to each such Additional Series shall be
governed by the terms of this Agreement.
2. PORTFOLIO MANAGEMENT DUTIES AND AUTHORITY. Subject to the supervision of
the Trust's Board of Trustees and the Manager, the Portfolio Manager will
provide a continuous investment program for each Series' portfolio and determine
the composition of the assets of each Series' portfolio, including determination
of the purchase, retention, or sale of the securities, cash, and other
investments contained in the portfolio. The Portfolio Manager will provide
investment research and conduct a continuous program of evaluation, investment,
sales, and reinvestment of each Series' assets by determining the securities and
other investments that shall be purchased, entered into, sold, closed, or
exchanged for the Series, when these transactions should be executed, and what
portion of the assets of each Series should be held in the various securities
and other investments in which it may invest, and the Portfolio Manager is
hereby authorized to execute and perform such services and transactions on
behalf of each Series. In accordance with the forgoing duties, the Portfolio
Manager is hereby authorized to act as agent for the portfolio to order deposits
and the investment of cash and purchases and sales of securities for the Series'
account and in the name of the Trust, with the understanding that the Portfolio
Manager will not act as custodian of any assets of any Series. This
authorization shall be a continuing one and shall remain in full force and
effect until this Agreement is terminated in accordance with the provisions of
Section 15 hereof. To the extent permitted by the investment policies of each
Series, the Portfolio Manager shall make decisions for the Series as to foreign
currency matters and make determinations as to and execute and perform foreign
currency exchange contracts on behalf of the Series and shall have the authority
to act in such capacity as the Portfolio Manager deems necessary or desirable in
order to carry out its duties hereunder for the protection of the Series so long
as not expressly prohibited by the terms of this Agreement, the 1940 Act or
other securities laws or regulations. The Portfolio Manager will provide the
services under this Agreement in accordance with each Series' investment
objective or objectives, policies, and restrictions as stated in the Trust's
Registration Statement filed with the Securities and Exchange Commission
("SEC"), as from time to time amended (the "Registration Statement"), copies
of which shall be sent to the Portfolio Manager by the Manager prior to the
commencement of this Agreement and promptly upon filing any such amendment
with the SEC. The Portfolio Manager further agrees as follows:
-2-
(a) The Portfolio Manager will (1) manage each Series so that no action or
omission on the part of the Portfolio Manager will cause a Series to fail to
meet the requirements to qualify as a regulated investment company specified in
Section 851 of the Internal Revenue Code of 1986, as amended (the "Code")(other
than the requirements for the Trust to register under the 1940 Act and to file
with its tax return an election to be a regulated investment company, both of
which shall not be the responsibility of the Portfolio Manager), (2) manage each
Series so that no action or omission on the part of the Portfolio Manager shall
cause a Series to fail to comply with the diversification requirements of
Section 817(h) of the Code, and the regulations issued thereunder, and (3) use
reasonable efforts to manage the Series so that no action or omission on the
part of the Portfolio Manager shall cause a Series to fail to comply with any
other rules and regulations pertaining to investment vehicles underlying
variable annuity or variable life insurance policies. The Manager will notify
the Portfolio Manager promptly if the Manager believes that a Series is in
violation of any requirement specified in the first sentence of this paragraph.
The Manager or the Trust will notify the Portfolio Manager of any pertinent
changes, modifications to, or interpretations of Section 817(h) of the Code and
regulations issued thereunder and of rules or regulations pertaining to
investment vehicles underlying variable annuity or variable life insurance
policies.
(b) On occasions when the Portfolio Manager deems the purchase or sale of a
security to be in the best interest of a Series as well as of other investment
advisory clients of the Portfolio Manager or any of its affiliates, the
Portfolio Manager may, to the extent permitted by applicable laws and
regulations, but shall not be obligated to, aggregate the securities to be so
sold or purchased with those of its other clients where such aggregation is not
inconsistent with the policies set forth in the Registration Statement. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Portfolio Manager in a
manner that is fair and equitable in the judgment of the Portfolio Manager in
the exercise of its fiduciary obligations to the Trust and to such other
clients, provided, however that the Manager and the Board shall have the right
to review and request changes to the Portfolio Manager's manner of allocation,
provided further that any requested changes to such manner of allocation that
are agreed to by the Portfolio Manager shall be implemented on a prospective
basis only.
(c) In connection with the purchase and sale of securities for each Series,
the Portfolio Manager will arrange for the transmission to the custodian and
portfolio accounting agent for the Series on a daily basis, such confirmation,
trade tickets, and other documents and information, including, but not limited
to, Cusip, Sedol, or other numbers that identify securities to be purchased or
sold on behalf of the Series, as may be reasonably necessary to enable the
custodian and portfolio accounting agent to perform their administrative and
recordkeeping responsibilities with respect to the Series. With respect to
portfolio securities to be purchased or sold through the
-3-
Depository Trust Company, the Portfolio Manager will arrange for the automatic
transmission of the confirmation of such trades to the Trust's custodian and
portfolio accounting agent.
(d) The Portfolio Manager will assist the portfolio accounting agent for
the Trust in determining or confirming, consistent with the procedures and
policies stated in the Registration Statement, the value of any portfolio
securities or other assets of the Series for which the portfolio accounting
agent seeks assistance from or identifies for review by the Portfolio Manager,
and the parties agree that the Portfolio Manager shall not bear responsibility
or liability for the determination or accuracy of the valuation of any portfolio
securities and other assets of the Series except to the extent that the
Portfolio Manager exercises judgment with respect to any such valuation.
(e) The Portfolio Manager will make available to the Trust and the Manager,
promptly upon reasonable request, all of the Series' investment records and
ledgers maintained by the Portfolio Manager (which shall not include the records
and ledgers maintained by the custodian and portfolio accounting agent for the
Trust) as are necessary to assist the Trust and the Manager to comply with
requirements of the 1940 Act and the Investment Advisers Act of 1940 (the
"Advisers Act"), as well as other applicable laws. The Portfolio Manager will
furnish to regulatory authorities having the requisite authority any information
or reports in connection with such services which may be requested in order to
ascertain whether the operations of the Trust are being conducted in a manner
consistent with applicable laws and regulations.
(f) The Portfolio Manager will provide reports to the Trust's Board of
Trustees for consideration at meetings of the Board on the investment program
for the Series and the issuers and securities represented in the Series'
portfolio, and will furnish the Trust's Board of Trustees with respect to the
Series such periodic and special reports as the Trustees and the Manager may
reasonably request.
(g) In rendering the services required under this Agreement, the Portfolio
Manager may, from time to time, employ or associate with itself such person or
persons as it believes necessary to assist it in carrying out its obligations
under this Agreement. The Portfolio Manager may not retain, employ or associate
itself with any company that would be an "investment adviser," as that term is
defined in the 1940 Act, to the Series unless the contract with such company is
approved by a majority of the Trust's Board of Trustees and a majority of
Trustees who are not parties to any agreement or contract with such company and
who are not "interested persons," as defined in the 1940 Act, of the Trust, the
Manager, or the Portfolio Manager, or any such company, and is approved by the
vote of a majority of the outstanding voting securities of the applicable Series
of the Trust to the extent required by the 1940 Act. The Portfolio Manager shall
be responsible for making reasonable inquiries and for reasonably ensuring that
any
-4-
associated person of the Portfolio Manager, or of any company that the Portfolio
Manager has retained, employed, or with which it has associated with respect to
the Series, to the best of the Portfolio Manager's knowledge, in any material
connection with the handling of assets, has not:
(i) been convicted, in the last ten (10) years, of any felony or
misdemeanor arising out of conduct involving embezzlement, fraudulent
conversion, or misappropriation of funds or securities, involving
violations of Sections 1341, 1342, or 1343 of Xxxxx 00, Xxxxxx Xxxxxx
Code, or involving the purchase or sale of any security; or
(ii) been found by any state regulatory authority, within the last ten
(10) years, to have violated or to have acknowledged violation of any
provision of any state insurance law involving fraud, deceit, or
knowing misrepresentation; or
(iii) been found by any federal or state regulatory authorities,
within the last ten (10) years, to have violated or to have
acknowledged violation of any provision of federal or state securities
laws involving fraud, deceit, or knowing misrepresentation.
(h) In using spot and forward foreign exchange contracts for the Series as
an investment the parties represent the following:
(i) That the Manager is properly and lawfully established with full
power and authority to enter into spot and forward foreign exchange
contracts, to perform its obligations under such foreign exchange
contracts and to procure the Portfolio Manager to enter into such
foreign exchange contracts on its behalf.
(ii) That the Manager may not, except for purposes of redemptions,
expenses, and other costs of doing business, encumber funds which the
Portfolio Manager has under the Portfolio Manager's management or
which benefit from the Portfolio Manager's investment advice. If the
Manager requires funds for any redemptions, expenses, and other costs
of doing business, the Portfolio Manager will make funds available in
a reasonably timely manner for the Manager to meet such obligations.
The Manager reserves the right to segregate assets upon notice to the
Portfolio Manager and provide different arrangements for investment
management with respect to those assets.
(iii) That the Portfolio Manager has been granted full power and
authority to enter into foreign exchange contracts as agent on the
Manager's behalf and to give instructions for settlement for the same.
-5-
(iv) That the Portfolio Manager has full authority to instruct
Manager's and Trust's custodian in conformity with its mandate.
(v) That in the event of the termination of this Agreement, the
Portfolio Manager may offer its counterparty the ability to leave open
any existing foreign exchange contracts or to close them out at
prevailing market rates.
3. BROKER-DEALER SELECTION. The Portfolio Manager is hereby authorized to
place orders for the purchase and sale of securities and other investments for
each Series' portfolio, with or through such persons, brokers or dealers and to
negotiate commissions to be paid on such transactions and to supervise the
execution thereof. The Portfolio Manager's primary consideration in effecting
any such transaction will be to seek best execution of orders for the Series,
taking into account the factors specified in the Registration Statement, which
include price (including the applicable brokerage commission or dollar spread),
the size of the order, the nature of the market for the security, the timing of
the transaction, the reputation, the experience and financial stability of the
broker-dealer involved, the quality of the service, the difficulty of execution,
and the execution capabilities and operational facilities of the firms involved,
and the firm's risk in positioning a block of securities. Accordingly, the price
to a Series in any transaction may be less favorable than that available from
another broker-dealer if the difference is reasonably justified, in the judgment
of the Portfolio Manager in the exercise of its fiduciary obligations to the
Trust, by other aspects of the portfolio execution services offered.
Subject to such policies as the Board of Trustees may determine and
consistent with Section 28(e) of the Securities Exchange Act of 1934, the
Portfolio Manager may effect a transaction on behalf of the Series with a
broker-dealer who provides brokerage research services to the Portfolio Manager
notwithstanding the fact that the commissions payable with respect to any such
transaction may be greater than the amount of any commission another
broker-dealer might have charged for effecting that transaction, if the
Portfolio Manager determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker-dealer, viewed in terms of either that particular
transaction or the Portfolio Manager's or its affiliate's overall
responsibilities with respect to the Series and to their other clients as
to which they exercise investment discretion.
The Portfolio Manager will consult with the Manager to the end that portfolio
transactions on behalf of a Series are directed to broker-dealers on the basis
of criteria reasonably considered appropriate by the Manager. Manager may
instruct the Portfolio Manager to use its best efforts to execute a portion of
securities transactions on behalf of a Series, not to exceed 25% of the
securities transactions for such Series on an annual basis, with or through one
or more brokers
-6-
designated by Manager. Manager represents and warrants that it has negotiated
and is satisfied with its selection of such brokers, their commission rates,
execution quality, and all other terms and conditions relating to the services
to be provided by such brokers in connection with all such transactions. To the
extent consistent with this Agreement and any applicable laws, the Portfolio
Manager is further authorized to allocate orders placed by it on behalf of the
Series to any of the Portfolio Manager's affiliated broker-dealers as agents,
such as Banc of America Securities, LLC ("BAS"), or to such brokers and dealers
who also provide research or statistical material, or other services to the
Series, the Portfolio Manager, or an affiliate of the Portfolio Manager. An
affiliated broker may execute transactions for a Series on an exchange floor,
and receive and retain all commissions, fees, and benefits without complying
further with Section 11(a) of the Securities Exchange Act. An affiliated broker
also may execute agency cross trades, in which the affiliated broker acts as
broker both for a Series and for the counterparty to the transaction. Agency
cross trades may enable the Portfolio Manager to purchase or sell a block of
securities for its clients at a set price, and possibly avoid an unfavorable
price movement that may be created through entrance into the market with such
purchase or sale order. Portfolio Manager will comply with any legal
requirements that may apply, including, but not limited to, Rule 17e-1 under the
1940 Act and Rule 206(3)-2 under the Advisers Act, as well any procedures
adopted by the Board of Trustees of the Trust. Manager is aware that the
affiliation between the Portfolio Manager and an affiliated broker could give
the Portfolio Manager an indirect interest in brokerage commissions received by
the affiliated broker, and that agency cross trades could create potentially
conflicting divisions of loyalties and responsibilities, because the affiliated
broker acts for and receives commissions from both sides of the trade. Such
allocation shall be in such amounts and proportions as the Portfolio Manager
shall determine consistent with the above standards (BAS typically handles
approximately 4% to 8% of the Portfolio Manager's total trades on a commission
basis, and generally receives a commission of $0.05 per share that is comparable
to other full service brokers used by Portfolio Manager), and the Portfolio
Manager will report on said allocation regularly to the Board indicating the
broker-dealers to which such allocations have been made and the basis therefor.
Manager may at any time revoke its consent to the execution of future trades
with an affiliated broker for a Series by giving written notice to Portfolio
Manager or the affiliated broker.
4. DISCLOSURE ABOUT PORTFOLIO MANAGER. The Portfolio Manager has reviewed
the post-effective amendment to the Registration Statement for the Trust filed
with the SEC that contains disclosure about the Portfolio Manager, and
represents and warrants that, with respect to the disclosure about or
information relating, directly or indirectly, to the Portfolio Manager, to the
Portfolio Manager's knowledge, such Registration Statement contains, as of the
date hereof, no untrue statement of any material fact and does not omit any
statement of a material fact which was required to be stated therein or
necessary to make the statements contained therein not
-7-
misleading. The Portfolio Manager further represents and warrants that it is a
duly registered investment adviser under the Advisers Act, or alternatively that
it is not required to be a registered investment adviser under the Advisers Act
to perform the duties described in this Agreement, and that it is a duly
registered investment adviser in all states in which the Portfolio Manager is
required to be registered and will maintain such registration so long as this
Agreement remains in effect. The Portfolio Manager will provide the Manager with
a copy of the Portfolio Manager's Form ADV, Part II at least once each year
during the term of this Agreement and at such other times as reasonably may be
requested in writing by the Manager, and a copy of its written code of ethics
complying with the requirements of Rule 17j-1 under the 1940 Act, together with
evidence of its adoption. Manager represents that it has received Portfolio
Manager's current Form ADV Part II at least 48 hours prior to entering into this
Agreement.
5. EXPENSES. During the term of this Agreement, the Portfolio Manager will
pay all expenses incurred by it and its staff and for their activities in
connection with its portfolio management duties under this Agreement. The
Manager or the Trust shall be responsible for all the expenses of the Trust's
operations including, but not limited to:
(a) Expenses of all audits by the Trust's independent public accountants;
(b) Expenses of the Series' transfer agent, registrar, dividend disbursing
agent, and shareholder recordkeeping services;
(c) Expenses of the Series' custodial services including recordkeeping
services provided by the custodian;
(d) Expenses of obtaining quotations for calculating the value of each
Series' net assets;
(e) Expenses of obtaining Portfolio Activity Reports and Analyses of
International Management Reports (as appropriate) for each Series;
(f) Expenses of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the Trust's executive
officers and employees, if any, who are not officers, directors, stockholders,
or employees of the Portfolio Manager or an affiliate of the Portfolio Manager;
(h) Taxes levied against the Trust;
-8-
(i) Brokerage fees and commissions, transfer fees, registration fees, taxes
and similar liabilities and costs properly payable or incurred in connection
with the purchase and sale of portfolio securities for the Series;
(j) Costs, including the interest expense, of borrowing money;
(k) Costs and/or fees incident to meetings of the Trust's shareholders, the
preparation and mailings of prospectuses and reports of the Trust to its
shareholders, the filing of reports with regulatory bodies, the maintenance of
the trust's existence, and the regulation of shares with federal and state
securities or insurance authorities;
(l) The Trust's legal fees, including the legal fees related to the
registration and continued qualification of the Trust's shares for sale;
(m) Trustees' fees and expenses to trustees who are not officers,
employees, or stockholders of the Portfolio Manager or any affiliate thereof;
(n) The Trust's pro rata portion of the fidelity bond required by Section
17(g) of the 1940 Act, or other insurance premiums;
(o) Association membership dues;
(p) Extraordinary expenses of the Trust as may arise including expenses
incurred in connection with litigation, proceedings, and other claims (unless
the Portfolio Manager is responsible for such expenses under Section 13 of this
Agreement), and the legal obligations of the Trust to indemnify its Trustees,
officers, employees, shareholders, distributors, and agents with respect
thereto; and
(q) Organizational and offering expenses.
6. COMPENSATION. For the services provided to each Series, the Manager will
pay the Portfolio Manager a fee, payable as described in Schedule B.
The fee will be prorated to reflect any portion of a calendar month that
this Agreement is not in effect among the parties. In accordance with the
provisions of the Management Agreement, the Manager is solely responsible for
the payment of fees to the Portfolio Manager, and the Portfolio Manager agrees
to seek payment of its fees solely from the Manager.
-9-
7. SEED MONEY. The Manager agrees that the Portfolio Manager shall not be
responsible for providing money for the initial capitalization of the Series.
8. COMPLIANCE.
(a) The Trust and the Manager acknowledge that the Portfolio Manager is not
the compliance agent for any Series or for the Trust or the Manager, and does
not have access to all of each Series' books and records necessary to perform
certain compliance testing. To the extent that the Portfolio Manager has agreed
to perform the services specified in Section 2 in accordance with the Trust's
registration statement, the Trust's Amended and Restated Agreement and
Declaration of Trust and By-Laws, the Trust's Prospectus and any policies
adopted by the Trust's Board of Trustees applicable to the Series (collectively,
the "Charter Requirements"), and in accordance with applicable law (including
Subchapters M and L of the Code, the 1940 Act and the Advisers Act ("Applicable
Law")), the Portfolio Manager shall perform such services based upon its books
and records with respect to each Series, which comprise a portion of each
Series' books and records, and upon information and written instructions
received from the Trust, the Manager or the Trust's administrator, and shall not
be held responsible under this Agreement so long as it performs such services in
accordance with this Agreement, the Charter Requirements and Applicable Law
based upon such books and records and such information and instructions provided
by the Trust, the Manager, or the Trust's administrator. The Manager shall
promptly provide the Portfolio Manager with copies of the Trust's registration
statement, the Trust's Amended and Restated Agreement and Declaration of Trust
and By-Laws, the Trust's currently effective Prospectus and any written policies
and procedures adopted by the Trust's Board of Trustees applicable to the
Portfolio and any amendments or revisions thereto.
(b) The Portfolio Manager agrees that it shall promptly notify the Manager
and the Trust (1) in the event that the SEC or other governmental authority has
censured the Portfolio Manager; placed limitations upon its activities,
functions or operations; suspended or revoked its registration, if any, as an
investment adviser; or has commenced proceedings or an investigation that may
result in any of these actions, (2) upon having a reasonable basis for believing
that the Series has ceased to qualify or might not qualify as a regulated
investment company under Subchapter M of the Code, or (3) upon having a
reasonable basis for believing that the Series has ceased to comply with the
diversification provisions of Section 817(h) of the Code or the regulations
thereunder. The Portfolio Manager further agrees to notify the Manager and the
Trust promptly of any material fact known to the Portfolio Manager respecting or
relating to the Portfolio Manager that is not contained in the Registration
Statement as then in effect, and is required to be stated therein or necessary
to make the statements therein not misleading, or of any statement contained
therein that becomes untrue in any material respect.
-10-
(c) The Manager agrees that it shall immediately notify the Portfolio
Manager (1) in the event that the SEC has censured the Manager or the Trust;
placed limitations upon either of their activities, functions, or operations;
suspended or revoked the Manager's registration as an investment adviser; or has
commenced proceedings or an investigation that may result in any of these
actions, (2) upon having a reasonable basis for believing that the Series has
ceased to qualify or might not qualify as a regulated investment company under
Subchapter M of the Code, or (3) upon having a reasonable basis for believing
that the Series has ceased to comply with the diversification provisions of
Section 817(h) of the Code or the regulations thereunder.
9. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Portfolio Manager hereby agrees that all records which
it maintains for the Series are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's or the
Manager's reasonable request, although the Portfolio Manager may, at its own
expense, make and retain a copy of such records. The Portfolio Manager further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by Rule 31a-1 under the 1940 Act and to
preserve the records required by Rule 204-2 under the Advisers Act for the
period specified in such rules.
10. COOPERATION; CONFIDENTIALITY. Each party to this Agreement agrees to
cooperate with each other party and with all appropriate governmental
authorities having the requisite jurisdiction (including, but not limited to,
the SEC and state insurance regulators) in connection with any investigation or
inquiry relating to this Agreement or the Trust.
Subject to the foregoing, the Portfolio Manager shall treat as confidential
all information pertaining to the Trust and actions of the Trust, the Manager
and the Portfolio Manager; and the Manager shall treat as confidential and use
only in connection with the Series all information furnished to the Trust or the
Manager by the Portfolio Manager, in connection with its duties under the
Agreement; except that the aforesaid information need not be treated as
confidential if required to be disclosed under applicable law, if generally
available to the public through means other than by disclosure by the Portfolio
Manager or the Manager, or if available from a source other than the Manager,
Portfolio Manager, or the Trust.
-11-
11. REPRESENTATIONS RESPECTING PORTFOLIO MANAGER.
(a) During the term of this Agreement, the Trust and the Manager agree to
furnish to the Portfolio Manager at its principal offices prior to use thereof
copies of all Registration Statements and amendments thereto, prospectuses,
proxy statements, reports to shareholders, sales literature or other material
prepared for distribution to shareholders of the Trust or any Series or to the
public that refer or relate in any way to the Portfolio Manager or any of its
affiliates (other than the Manager), or that use any derivative of the names
"Marsico" or "Xxxxxxx Capital Management, LLC," or any logos associated
therewith. The Trust and the Manager agree that they will not use any such
material without the prior consent of the Portfolio Manager, which consent shall
not be unreasonably withheld. In the event of the termination of this Agreement,
the Trust and the Manager will furnish to the Portfolio Manager copies of any of
the above-mentioned materials that refer or relate in any way to the Portfolio
Manager;
(b) The Trust and the Manager will furnish to the Portfolio Manager such
information relating to either of them or the business affairs of the Trust as
the Portfolio Manager shall from time to time reasonably request in order to
discharge its obligations hereunder;
(c) The Manager and the Trust agree that neither the Trust, the Manager,
nor affiliated persons of the Trust or the Manager shall give any information or
make any representations or statements in connection with the sale of shares of
the Series concerning the Portfolio Manager or the Series other than the
information or representations contained in the Registration Statement,
prospectus, or statement of additional information for the Trust, as they may be
amended or supplemented from time to time, or in reports or proxy statements for
the Trust, or in sales literature or other promotional material approved in
advance by the Portfolio Manager, except with the prior permission of the
Portfolio Manager.
12. SERVICES NOT EXCLUSIVE. It is understood that the services of the
Portfolio Manager are not exclusive, and nothing in this Agreement shall prevent
the Portfolio Manager (or its affiliates) from providing similar services to
other clients, including investment companies (whether or not their investment
objectives and policies are similar to those of the Series) or from engaging in
other activities.
13. LIABILITY. Except as may otherwise be required by the 1940 Act or the
rules thereunder or other applicable law, the Trust and the Manager agree that
the Portfolio Manager, any affiliated person of the Portfolio Manager, and each
person, if any, who, within the meaning of Section 15 of the 1933 Act, controls
the Portfolio Manager (1) shall bear no responsibility and shall not be subject
to any liability for any act or omission respecting any series of the Trust that
is not a Series hereunder; and (2) shall not be liable for any error of
judgment, mistake of law,
-12-
any diminution in value of the investment portfolio of the Series, or subject to
any damages, expenses, or losses in connection with, any act or omission
connected with or arising out of any services rendered under this Agreement,
except by reason of willful misfeasance, bad faith, or gross negligence in the
performance by the Portfolio Manager of its duties, or by reason of reckless
disregard by the Portfolio Manager of its obligations and duties under this
Agreement. Portfolio Manager makes no representation or warranty, express or
implied, that any level of performance or investment results will be achieved by
any Series, or that the Series will perform comparably with any standard or
index, including other clients of Portfolio Manager.
14. INDEMNIFICATION.
(a) Notwithstanding Section 13 of this Agreement, the Manager agrees to
indemnify and hold harmless the Portfolio Manager, any affiliated person of the
Portfolio Manager (other than the Manager), and each person, if any, who, within
the meaning of Section 15 of the 1933 Act controls ("controlling person") the
Portfolio Manager (all of such persons being referred to as "Portfolio Manager
Indemnified Persons") against any and all losses, claims, damages, liabilities,
or litigation (including legal and other expenses) to which a Portfolio Manager
Indemnified Person may become subject under the 1933 Act, the 1940 Act, the
Advisers Act, the Code, under any other statute, at common law or otherwise,
arising out of the Manager's responsibilities to the Trust which (1) may be
based upon any violations of willful misconduct, malfeasance, bad faith or gross
negligence by the Manager, any of its employees or representatives, or any
affiliate of or any person acting on behalf of the Manager, or (2) may be based
upon any untrue statement or alleged untrue statement of a material fact
supplied by, or which is the responsibility of, the Manager and contained in the
Registration Statement or prospectus covering shares of the Trust or any Series,
or any amendment thereof or any supplement thereto, or the omission or alleged
omission to state therein a material fact known or which should have been known
to the Manager and was required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or omission was made in
reliance upon information furnished to the Manager or the Trust or to any
affiliated person of the Manager by a Portfolio Manager Indemnified Person;
provided however, that in no case shall the indemnity in favor of the Portfolio
Manager Indemnified Person be deemed to protect such person against any
liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of its
duties, or by reason of its reckless disregard of obligations and duties under
this Agreement.
(b) Notwithstanding Section 13 of this Agreement, the Portfolio Manager
agrees to indemnify and hold harmless the Manager, any affiliated person of the
Manager (other than the Portfolio Manager), and each person, if any, who, is a
controlling person of the Manager (all of such persons being referred to as
"Manager Indemnified Persons") against any and all losses,
-13-
claims, damages, liabilities, or litigation (including legal and other expenses)
to which a Manager Indemnified Person may become subject under the 1933 Act,
1940 Act, the Advisers Act, the Code, under any other statute, at common law or
otherwise, arising out of the Portfolio Manager's responsibilities as Portfolio
Manager of the Series which (1) may be based upon any violations of willful
misconduct, malfeasance, bad faith or gross negligence by the Portfolio Manager,
any of its employees or representatives, or any affiliate of or any person
acting on behalf of the Portfolio Manager, including but not limited to its
responsibilities under Section 2, Paragraph (a) of this Agreement, or (2) any
material breach of any representations or warranties contained in Section 4;
provided, however, that in no case shall the indemnity in favor of a Manager
Indemnified Person be deemed to protect such person against any liability to
which any such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence in the performance of its duties, or by
reason of its reckless disregard of its obligations and duties under this
Agreement.
(c) The Manager shall not be liable under Paragraph (a) of this Section 14
with respect to any claim made against a Portfolio Manager Indemnified Person
unless such Portfolio Manager Indemnified Person shall have notified the Manager
in writing within a reasonable time after the summons, notice, or other first
legal process or notice giving information of the nature of the claim shall have
been served upon such Portfolio Manager Indemnified Person (or after such
Portfolio Manager Indemnified Person shall have received notice of such service
on any designated agent), but failure to notify the Manager of any such claim
shall not relieve the Manager from any liability which it may have to the
Portfolio Manager Indemnified Person against whom such action is brought except
to the extent the Manager is prejudiced by the failure or delay in giving such
notice. In case any such action is brought against the Portfolio Manager
Indemnified Person, the Manager will be entitled to participate, at its own
expense, in the defense thereof or, after notice to the Portfolio Manager
Indemnified Person, to assume the defense thereof, with counsel satisfactory to
the Portfolio Manager Indemnified Person. If the Manager assumes the defense of
any such action and the selection of counsel by the Manager to represent both
the Manager and the Portfolio Manager Indemnified Person would result in a
conflict of interests and therefore, would not, in the reasonable judgement of
the Portfolio Manager Indemnified Person, adequately represent the interests of
the Portfolio Manager Indemnified Person, the Manager will, at its own expense,
assume the defense with counsel to the Manager and, also at its own expense,
with separate counsel to the Portfolio Manager Indemnified Person, which counsel
shall be satisfactory to the Manager and to the Portfolio Manager Indemnified
Person. The Portfolio Manager Indemnified Person shall bear the fees and
expenses of any additional counsel retained by it, and the Manager shall not be
liable to the Portfolio Manager Indemnified Person under this Agreement for any
legal or other expenses subsequently incurred by the Portfolio Manager
Indemnified Person independently in connection with the defense thereof other
than reasonable costs of investigation. The Manager shall not have
-14-
the right to compromise on or settle the litigation without the prior written
consent of the Portfolio Manager Indemnified Person if the compromise or
settlement results, or may result in a finding of wrongdoing on the part of the
Portfolio Manager Indemnified Person.
(d) The Portfolio Manager shall not be liable under Paragraph (b) of this
Section 14 with respect to any claim made against a Manager Indemnified Person
unless such Manager Indemnified Person shall have notified the Portfolio Manager
in writing within a reasonable time after the summons, notice, or other first
legal process or notice giving information of the nature of the claim shall have
been served upon such Manager Indemnified Person (or after such Manager
Indemnified Person shall have received notice of such service on any designated
agent), but failure to notify the Portfolio Manager of any such claim shall not
relieve the Portfolio Manager from any liability which it may have to the
Manager Indemnified Person against whom such action is brought except to the
extent the Portfolio Manager is prejudiced by the failure or delay in giving
such notice. In case any such action is brought against the Manager Indemnified
Person, the Portfolio Manager will be entitled to participate, at its own
expense, in the defense thereof or, after notice to the Manager Indemnified
Person, to assume the defense thereof, with counsel satisfactory to the Manager
Indemnified Person. If the Portfolio Manager assumes the defense of any such
action and the selection of counsel by the Portfolio Manager to represent both
the Portfolio Manager and the Manager Indemnified Person would result in a
conflict of interests and therefore, would not, in the reasonable judgment of
the Manager Indemnified Person, adequately represent the interests of the
Manager Indemnified Person, the Portfolio Manager will, at its own expense,
assume the defense with counsel to the Portfolio Manager and, also at its own
expense, with separate counsel to the Manager Indemnified Person, which counsel
shall be satisfactory to the Portfolio Manager and to the Manager Indemnified
Person. The Manager Indemnified Person shall bear the fees and expenses of any
additional counsel retained by it, and the Portfolio Manager shall not be liable
to the Manager Indemnified Person under this Agreement for any legal or other
expenses subsequently incurred by the Manager Indemnified Person independently
in connection with the defense thereof other than reasonable costs of
investigation. The Portfolio Manager shall not have the right to compromise on
or settle the litigation without the prior written consent of the Manager
Indemnified Person if the compromise or settlement results, or may result in a
finding of wrongdoing on the part of the Manager Indemnified Person.
15. DURATION AND TERMINATION. This Agreement shall become effective with
respect to each Series on the later of the date first indicated above or the
date of the commencement of operations of each Series. Unless terminated as
provided herein, the Agreement shall remain in full force and effect for two (2)
years from the date indicated above and continue on an annual basis thereafter
with respect to each Series; provided that such annual continuance is
specifically approved each year by (a) the vote of a majority of the entire
Board of Trustees of the Trust, or
-15-
by the vote of a majority of the outstanding voting securities (as defined in
the 0000 Xxx) of each Series, and (b) the vote of a majority of those Trustees
who are not parties to this Agreement or interested persons (as such term is
defined in the 0000 Xxx) of any such party to this Agreement cast in person at a
meeting called for the purpose of voting on such approval. The Portfolio Manager
shall not provide any services for such Series or receive any fees on account of
such Series with respect to which this Agreement is not approved as described in
the preceding sentence. However, any approval of this Agreement by the holders
of a majority of the outstanding shares (as defined in the 0000 Xxx) of a Series
shall be effective to continue this Agreement with respect to such Series
notwithstanding (i) that this Agreement has not been approved by the holders of
a majority of the outstanding shares of any other Series or (ii) that this
agreement has not been approved by the vote of a majority of the outstanding
shares of the Trust, unless such approval shall be required by any other
applicable law or otherwise. Notwithstanding the foregoing, this Agreement may
be terminated for each or any Series hereunder: (a) by the Manager at any time
without penalty, upon sixty (60) days' written notice to the Portfolio Manager
and the Trust, (b) at any time without payment of any penalty by the Trust, upon
the vote of a majority of the Trust's Board of Trustees or a majority of the
outstanding voting securities of each Series, upon sixty (60) days' written
notice to the Manager and the Portfolio Manager, or (c) by the Portfolio Manager
at any time without penalty, upon three (3) months' written notice to the
Manager and the Trust, unless the Manager or the Trust requests additional time
to find a replacement for the Portfolio Manager, in which case the Portfolio
Manager shall allow the additional time requested by the Trust or the Manager
not to exceed three (3) months beyond the initial three-month notice period;
provided however, that the Portfolio Manager may terminate this Agreement at any
time without penalty effective upon written notice to the Manager and the Trust,
in the event either the Portfolio Manager (acting in good faith) or the Manager
ceases to be registered as an investment adviser under the Advisers Act or
otherwise becomes legally incapable of providing investment management services
pursuant to its respective contract with the Trust, or in the event the Manager
becomes bankrupt or otherwise incapable of carrying out its obligations under
this Agreement, or in the event that the Portfolio Manager does not receive
compensation for its services from the Manager or the Trust as required by the
terms of this Agreement. In addition, this Agreement shall terminate with
respect to a Series in the event that it is not approved by the vote of a
majority of the outstanding voting securities of that Series at a meeting of
shareholders at which approval of the Agreement shall be considered by
shareholders of the Series. In the event of termination for any reason, all
records of each Series for which the Agreement is terminated shall promptly be
returned to the Manager or the Trust, free from any claim or retention of rights
in such records by the Portfolio Manager, although the Portfolio Manager may, at
its own expense, make and retain a copy of such records. The Agreement shall
automatically terminate in the event of its assignment (as such term is
described in the 1940 Act). In the event this Agreement is terminated or is not
approved in the manner described above, the Sections or Paragraphs
-16-
numbered 2(f), 9, 10, 11, 13, 14, and 18 of this Agreement shall remain in
effect, as well as any applicable provision of this Paragraph numbered 15.
16. NOTICES. Any notice must be in writing and shall be sufficiently given
(1) when delivered in person, (2) when dispatched by telegram or e-mail or
electric facsimile transfer (confirmed in writing by postage prepaid first class
mail simultaneously dispatched), (3) when sent by internationally recognized
overnight courier service (with receipt confirmed by such overnight courier
service), or (4) when sent by registered or certified mail, to the other party
at the address of such party set forth below or at such other address as such
party may from time to time specify in writing to the other party.
If to the Trust:
The GCG Trust
0000 Xxxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx
If to the Manager:
Directed Services, Inc.
0000 Xxxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx
If to the Portfolio Manager:
Xxxxxxx Capital Management
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxx
17. AMENDMENTS. 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, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) the Trustees of the Trust,
including a majority of the Trustees of the Trust who are not interested persons
of any party to this Agreement, cast in person at a meeting called for the
purpose of voting on such
-17-
approval, if such approval is required by applicable law; and (ii) the holders
of a majority of the outstanding voting securities of the Series.
18. USE OF NAME.
(a) It is understood that the name "Directed Services, Inc." or any
derivative thereof or logo associated with that name is the valuable property of
the Manager and/or its affiliates, and that the Portfolio Manager has the right
to use such name (or derivative or logo) only with the approval of the Manager
and only so long as the Manager is Manager to the Trust and/or the Series. Upon
termination of the Management Agreement between the Trust and the Manager, the
Portfolio Manager shall as soon as is reasonably possible cease to use such name
(or derivative or logo).
(b) It is understood that the names "Marsico" or "Xxxxxxx Capital
Management, LLC," or any derivative thereof or logos associated with those names
are the valuable property of the Portfolio Manager and its affiliates and that
the Trust and/or the Series have the right to use such names (or derivatives or
logos) in offering materials of the Trust with the approval of the Portfolio
Manager and for so long as the Portfolio Manager is a portfolio manager to the
Trust and/or the Series. Upon termination of this Agreement between the Trust,
the Manager, and the Portfolio Manager, the Trust shall as soon as is reasonably
possible cease to use such names (or derivatives or logos).
19. AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST. A copy of the
Amended and Restated Agreement and Declaration of Trust for the Trust is on file
with the Secretary of the Commonwealth of Massachusetts. The Amended and
Restated Agreement and Declaration of Trust has been executed on behalf of the
Trust by Trustees of the Trust in their capacity as Trustees of the Trust and
not individually. The obligations of this Agreement shall be binding upon the
assets and property of the Trust and shall not be binding upon any Trustee,
officer, or shareholder of the Trust individually.
20. MISCELLANEOUS.
(a) This Agreement shall be governed by the laws of the Commonwealth of
Pennsylvania, without giving effect to the provisions, policies or principals
thereof relating to choice or conflict of laws, provided that nothing herein
shall be construed in a manner inconsistent with the 1940 Act, the Advisers Act
or rules or orders of the SEC thereunder. The term "affiliate" or "affiliated
person" as used in this Agreement shall mean "affiliated person" as defined in
Section 2(a)(3) of the 0000 Xxx.
-18-
(b) The captions of this Agreement are included for convenience only and in
no way define or limit any of the provisions hereof or otherwise affect their
construction or effect.
(c) To the extent permitted under Section 15 of this Agreement, this
Agreement may only be assigned by any party with the prior written consent of
the other parties.
(d) 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, and to this extent, the provisions of this
Agreement shall be deemed to be severable.
(e) Nothing herein shall be construed as constituting the Portfolio Manager
as an agent of the Manager, or constituting the Manager as an agent of the
Portfolio Manager.
[SIGNATURES ON FOLLOWING PAGE]
-19-
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
THE GCG TRUST
Attest /s/ Xxxxxxxxxxx X. Xxxxx By: /s/ Xxxx Xxx Xxxxxxxxx
Title: Strategic Relationship Manager Title: President
DIRECTED SERVICES, INC.
Attest By:
------------------------ ------------------------
Title: Title:
------------------------ ------------------------
XXXXXXX CAPITAL MANAGEMENT, LLC
Attest By:
------------------------ ------------------------
Title: Title:
------------------------ ------------------------
-20-
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
THE GCG TRUST
Attest By:
------------------------------------ ------------------------------
Title: Title:
------------------------------------ ------------------------------
DIRECTED SERVICES, INC.
Attest /s/ Xxxxx Xxxxx By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------ ------------------------------
Title: Counsel Title: SVP
------------------------------------ ------------------------------
XXXXXXX CAPITAL MANAGEMENT, LLC
Attest By:
------------------------------------ ------------------------------
Title: Title:
------------------------------------ ------------------------------
-20-
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
THE GCG TRUST
Attest By:
------------------------------------ ------------------------------
Title: Title:
------------------------------------ ------------------------------
DIRECTED SERVICES, INC.
Attest By:
------------------------------------ ------------------------------
Title: Title:
------------------------------------ ------------------------------
XXXXXXX CAPITAL MANAGEMENT, LLC
Attest /s/ Xxx Xxxxxx By: /s/ Xxxxx Xxxxxxx
------------------------------------ ------------------------------
Title: VP & General Counsel Title: President
------------------------------------ ------------------------------
-20-
SCHEDULE A
The Series of The GCG Trust, as described in Section 1 of the attached
Portfolio Management Agreement, to which Xxxxxxx Capital Management, LLC shall
act as Portfolio Manager is as follows:
Growth Series.
-21-
SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by Xxxxxxx Capital Management, LLC ("Portfolio
Manager") to the following Series of The GCG Trust, pursuant to the attached
Portfolio Management Agreement, the Manager will pay the Portfolio Manager a
fee, computed daily and payable monthly, based on the average daily net assets
of the Series at the following annual rates of the average daily net assets of
the Series:
AVERAGE DAILY
SERIES RATE NET ASSETS
Growth Series 0.45% $0 to $500,000,000;
0.40% $500,000,001 to
$1,500,000,000; and
0.35% Amounts in excess of $1,500,000,001.
-22-
