THIRD PARTY BROKERAGE AGREEMENT
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THIS AGREEMENT, made this 1st day of March, 2002, between The Citation
Group of Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated (herein referred to
as "Broker") and The GCG Trust (herein referred to as "Fund");
WITNESSETH
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Whereas, the Fund is willing to have its investment managers place
brokerage transactions for equity securities through the Broker and the Broker
is willing to execute such transactions in accordance with the provisions of
this Agreement, the parties agree as follows:
The Broker agrees to execute all transactions directed to the Broker at the
Fund's investment managers' normal negotiated rate schedule. In return, the
Broker will effect a recapture of a portion of the commissions (in the form of a
return of funds) and will pay to the Fund an amount to be determined by the
parties.
REPRESENTATIONS OF FUND
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The Fund represents and warrants that:
1. in reaching its decision to direct its investment advisers to effect
transactions through the Broker, it has carefully considered its obligation
to ensure best execution for such transactions, and has determined that the
activity contemplated by this Agreement is consistent with that objective;
2. this type of arrangement (i.e., commission recapture arrangements) has been
presented to, and approved by, the Trustees of the Fund, and funds covered
hereby shall be used for the exclusive benefit of the Fund;
3. the amount paid the Fund from the recapture of commissions will be used to
offset the expenses of the Fund, including but not limited to, the payment
of investment advisory fees (but not sub-advisory fees) and expenses
associated with the maintenance and administration of the directed
brokerage program, but will not be used to pay for expenses incurred in
connection with the distribution of the shares of the Fund, including
distribution expenses arising from the offer or sale of variable insurance
products that invest in Fund shares;
4. the Fund and the person acting on behalf of the Fund with respect to the
execution of this Agreement have the power and authority to enter into this
Agreement and any related agreement with an investment adviser of the Fund
and to instruct such adviser to direct transactions through the Broker on
behalf of the Fund;
5. this type of arrangement (i.e., commission recapture arrangements) and any
related agreement with an investment adviser of the Fund and all
transactions hereunder and thereunder do and shall comply with all
applicable provisions of Federal, state and municipal laws and regulations
as may from time to time be in effect, including such laws governing
fiduciary responsibility and self dealing and transactions in which the
Fund may or may not engage;
6. the Fund is not subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA"); and
7. the Fund is a major U.S. institutional investor as defined in Rule
15a-6(b)(4)under the Securities Exchange Act of 1934 ("'34 Act").
RESPONSIBILITY OF BROKER
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Attached hereto is a supplement that addresses the manner in which payments
are to be made for the benefit of the Fund.
For all recaptured commissions returned to, or for the benefit of, the Fund
by check or wire transfer, the Broker shall remit directly to the Fund the
applicable portion of commissions or commission equivalents earned on
transactions executed by the Broker when executing trades on the listed block
trading desk, on the program or portfolio trading desk or on a regional block
trading desk on behalf of the Fund. All such payments shall be made subject to
permissibility under the U.S. federal securities law, rules and regulations.
Broker will maintain all required records of every transaction effected on
behalf of the Fund, and provide to the Fund duplicate confirmations of every
transaction effected and duplicate monthly account statements reflecting, by
investment manager, the totality of each manager's activity for the credit of
the Fund's account. Periodically, after investment money managers have
reconciled accounts with the Fund, the investment money managers shall be
directed to reconcile accounts with the Broker.
Broker agrees to make available upon request of the Fund any and all
records maintained pursuant to Rule 17a-3 under the `34 Act relative to
transactions effected for the account of the Fund. In addition, the Fund agrees
to adhere to recordkeeping and other controls regarding its representations
contained herein.
The Broker's representative will be available to meet with the Chief
Investment Officer of the Fund or any other person authorized by the Fund's
Board of Trustees and to review items necessary for the execution of this
Agreement. The Broker shall not under any circumstances act as custodian for, or
take or have possession of, the assets held in the Fund's portfolio. The grant
of investment authority to money managers shall be accomplished independently
from this Agreement. The Broker shall be entitled to rely on the authority of
any such money manager designated in writing by the Fund until the Broker
receives written notice from the Fund that such authority has been terminated.
The Broker's representative will be available to render such assistance to
the investment adviser and any sub-adviser for the Fund as such investment
adviser or sub-adviser may reasonably request relative to trades executed for
the account of the Fund and corresponding records thereof in providing the
Trustees of the Fund with such information as the Trustees deem necessary to
monitor and evaluate the directed brokerage arrangement described in this
Agreement. Such assistance may include, but not be limited to, providing the
investment adviser with copies of records maintained by the Broker regarding
commission payments and recaptures as well as brokerage transactions.
REPRESENTATIONS OF THE BROKER
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The Broker represents to the Fund that it is registered with the Securities
and Exchange Commission as a Broker, and that such registration is currently
effective. The Broker further represents that it has never been convicted of any
crime or violations
enumerated in Section 411(a) of ERISA. The Broker agrees to give prompt written
notice to the Fund of any changes in any of the foregoing.
MUTUAL REPRESENTATIONS
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Fund and Broker rely on the representations and warranties herein contained
and, further, mutually agree to promptly advise each other in writing of any
material change in the circumstances underlying any representation or warranty
expressed in this Agreement.
DURATION OF AGREEMENT
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This Agreement shall continue from the date hereof until terminated. Either
party to this Agreement may terminate this Agreement by notice in writing to the
other party not less than 30 days prior to such termination. The Fund may, at
any time, order the Broker to cease activity with respect to the trading of
securities and other assets in the Fund's portfolio, provided that the Fund
contemporaneously issues such order to its investment managers.
ASSIGNMENT
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This Agreement shall not be assigned without prior written consent of the
other party, and this Agreement shall, until terminated, inure to the benefit of
the Broker and any successor thereto.
APPLICABLE LAW
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THE CONSTRUCTION AND EFFECT OF EVERY PROVISION OF THIS AGREEMENT, THE RIGHTS OF
THE PARTIES HEREUNDER AND ANY QUESTIONS ARISING OUT OF THE AGREEMENT, SHALL BE
SUBJECT TO THE STATUTORY AND COMMON LAW OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICT OF LAW PRINCIPLES.
ENTIRE AGREEMENT
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This Agreement constitutes the entire agreement between the parties
relating to the subject matter herein and supersedes all prior agreements, oral
or written, between the parties relating thereto.
OTHER
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Nothing in this Agreement shall require the Fund to direct the execution of
any specific transaction through the Broker or for the Broker to accept any
transaction for execution.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the 1ST day of March, 2002.
XXXXXXX LYNCH, PIERCE, XXXXXX &
THE GCG TRUST XXXXX INCORPORATED
THE CITATION GROUP
By: By:
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Name: Xxxx XxXxxxx
Title:
