PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this ____ day of _________, 1998, among The GCG Trust
(the "Trust"), a Massachusetts business trust, Directed Services, Inc. (the
"Manager"), a New York corporation, and Baring International Investment
Limited ("Portfolio Manager"), a limited liability company organized under
the laws of the United Kingdom.
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, a copy of which has been provided to the Portfolio Manager, the Trust has
retained the Manager to render advisory, management, and administrative services
to many of 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 Baring
International Investment Limited to act as Portfolio Manager to the Series
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, they shall
promptly notify the Portfolio Manager in writing. If the Portfolio Manager is
willing to render such services, it shall so notify the Trust and Manager in
writing, whereupon such series shall become a Series hereunder, and be subject
to this Agreement.
2. Portfolio Management Duties and 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 Serie
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 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 risk and on the name of the Trust.
This authorization shall be 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 the
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 the Series' investment
objective or objectives, policies, and restrictions as stated in the Trust's
Registration Statement filed with the Securities and Exchange Commission (the
"SEC"), as from time to time amended (the "Registration Statement"), copies
of which shall be sent to the Portfolio Manager by the Manager upon filing
with the SEC. The Portfolio Manager further agrees as follows:
(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 (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 Internal Revenue Code and 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.
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The Manager ill 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 Internal Revenue Code and regulations issued thereunder and of rules or
regulations pertaining to investment vehicles underlying variable annuity or
variable life insurance policies.
(b) The Portfolio Manager will perform its duties hereunder pursuant
to the 1940 Act and all rules and regulations thereunder, all other applicable
federal and state laws and regulations, with any applicable procedures adopted
by the Trust's Board of Trustees (the "Board") of which the Portfolio Manager
has been notified in writing, and the provisions of the Registration Statement
of the Trust under the Securities Act of 1933 (the "1933 Act") and the 1940
Act, as supplemented or amended, (provided that the Manager on behalf of the
Board has delivered copies of any such supplement or amendments to the
Portfolio Manager).
(c) 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, subject to review by the Manager and the Board of Trustees.
(d) In connection with the purchase and sale of securities for a
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 its administrative and recordkeeping responsibilities with
respect to the Series. With respect to portfolio securities to be purchased
or sold through the 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.
(e) 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
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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.
(f) The Portfolio Manager will make available to the Trust and the
Manager, promptly upon 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.
(g) 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.
(h) 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. However, the Portfolio Manager may not
retain as subadviser 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 that
is retained as subadviser, 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 employee
of the Portfolio Manager, any subadviser that the Portfolio Manager has employed
or with which it has associated with respect to the Series, or any employee
thereof has not, to the best of the Portfolio Manager's knowledge, in any
material connection with the handling of Trust assets:
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(i) been convicted, in the last ten (10) years, of any felony or
misdemeanor arising out of conduct involving embezzlement, fraudulent
conversion, or misappro-priation 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.
(i) 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 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 Portfolio Manager's management or which
benefit from 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 timely
manner for Manager to meet its 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.
(iv) That the Portfolio Manager has full authority to instruct Manager's
custodian in conformity with its mandate.
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(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 obtain the best execution 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 the 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 and 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. To the extent consistent with these
standards, the Portfolio Manager is further authorized to allocate the orders
placed by it on behalf of the Series to the Portfolio Manager if it is
registered as a broker-dealer with the SEC, to any of its affiliated broker-
dealer, 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. Such allocation shall be in such amounts
and proportions as the Portfolio Manager shall determine consistent with the
above standards, and the Portfolio Manager will report on said allocation
regularly to the Board of Trustees of the Trust indicating the broker-dealers
to which such allocations have been made and the basis therefor.
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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 concerning 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 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.
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;
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(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) Costs of printing stock certificates representing shares of the
Trust;
(n) Trustees' fees and expenses to trustees who are not officers,
employees, or stockholders of the Portfolio Manager or any affiliate thereof;
(o) The Trust's pro rata portion of the fidelity bond required by
Section 17(g) of the 1940 Act, or other insurance premiums;
(p) Association membership dues;
(q) 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
(r) Organizational and offering expenses.
6. Compensation. For the services provided, the Manager will pay the
Portfolio Manager a fee, payable as described in Schedule B.
7. Seed Money. The Manager agrees that the Portfolio Manager shall
not be responsible for providing money for the initial capitalization of the
Series.
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8. Compliance.
(a) 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 Internal
Revenue Code of 1986, as amended (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.
(b) 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 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-l 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. Each party to this Agreement agrees to cooperate
with each other party and with all appropriate governmental authorities having
the requisite jurisdiction
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(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.
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, Baring Asset Management, Inc. or any of its affiliates (other than the
Manager), or that use any derivative of the name Baring Asset Management or any
logo 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
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of Section 15 of the 1933 Act, controls the Portfolio Manager shall not be
liable for any error of judgment, mistake of law 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 Portfolio
Manager of its duties, or by reason of reckless disregard by Portfolio Manager
of its obligations and duties under this Agreement.
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 Portfolio Manager, any of its employees or
representatives, or any affiliate of or any person acting on behalf of the
Portfolio 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 a 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,
within the meaning of Section 15 of the 1933 Act, controls ("controlling
person") the Manager (all of such persons being referred to as "Manager
Indemnified Persons") against any and all losses, claims, damages, liabilities,
or
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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 responsibili-ties 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 Manager, any of its employees or
representatives, or any affiliate of or any person acting on behalf of the
Manager, (2) may be based upon a failure to comply with Section 2, Paragraph
(a) of this Agreement, or (3) any breach of any representations or warranties
contained in Section 3; 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 otherwise than on account of this Section 14. 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 judgment 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 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
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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 otherwise
than on account of this Section 14. 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.
(e) The Manager shall not be liable under this Section 14 to indemnify and
hold harmless the Portfolio Manager and the Portfolio Manager shall not be
liable under this Section 14 to indemnify and hold harmless the Manager with
respect to any losses, claims, damages, liabilities, or litigation that first
become known to the party seeking indemnification during any period that the
Portfolio Manager is, within the meaning of Section 15 of the 1933 Act, a
controlling person of the Manager.
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15. Duration and Termination. This Agreement shall become effective
on the date first indicated above. Unless terminated as provided herein, the
Agreement shall remain in full force and effect for two (2) years from such date
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 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) day's written
notice to the Manager and the Portfolio Manager, or (c) by the Portfolio
Manager at any time without penalty, upon sixty (60) days written notice to the
Manager and the Trust. In addition, this Agreement shall terminate with respect
to a Series in the event that it is not initially 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 numbered
2(f), 9, 10, 11, 13, 14, and 17 of this Agreement shall remain in effect, as
well as any applicable provision of this Paragraph numbered 15.
16. 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
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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, and (ii) the
holders of a majority of the outstanding voting securities of the Series, cast
in person at a meeting called for the purpose of voting on such approval, if
such approval is required by applicable law.
17. 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 name "Baring International Investment
Limited" or any derivative thereof or logo associated with that name is the
valuable property of the Portfolio Manager and its affiliates and that the Trust
and/or the Series have the right to use such name (or derivative or logo) 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 name (or derivative or logo).
18. 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.
19. Investment Management Regulatory Organization.
(a) Under the rules of the Investment Management Regulatory
Organization ("IMRO"), clients must be placed in specific categories which are
dictated by different considerations including the nature and financial
description of the client, the experience of the client in certain investments
and other factors. On the basis of the information given by the
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Manager, it is
categorized as a [Non-Private Customer] in relation to the services to be
provided in accordance with the Agreement.
(b) The Portfolio Manager has written procedures in operation in
accordance with IMRO rules for the effective consideration and proper handling
of client complaints. Any complaint by the Manager should be sent in writing to
the Compliance Officer of the Portfolio Manager. The Manager and the Trust may
make any complaint about the Portfolio Manager to IMRO.
20. Miscellaneous.
(a) This Agreement shall be governed by the laws of the State of
Delaware, without giving effect to the provisions, policies or principals
thereof relating to choice or contract 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.
(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.
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:
BARING INTERNATIONAL INVESTMENT
LIMITED
Attest By:
-------------------------------
Title: Title:
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SCHEDULE A
The Series of The GCG Trust, as described in Section 1 of the attached
Portfolio Management Agreement, to which Baring International Investment Limited
shall act as Portfolio Manager are as follows:
Global Fixed Income Series
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SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by Baring International Investment Limited
("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:
SERIES RATE
Global Fixed Income Series 0.45% of first $200 million,
0.30% of next $500 million,
0.25% of next $1 billion,
0.10% in excess of $2 billion
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