FORM OF
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this ____ day of _________, 2001, among The GCG Trust (the
"Trust"), a Massachusetts business trust, Directed Services, Inc. (the
"Manager"), a New York corporation, and Pacific Investment Management Company
LLC ("Portfolio Manager"), a limited liability company organized under the laws
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 between The GCG Trust and
Directed Services, Inc., dated October 24, 1997 as last amended February 22,
2001, 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 among the Trust, the Manager, and the
Portfolio Manager as follows:
1. Appointment. The Trust and the Manager hereby appoint Pacific Investment
Management Company LLC 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. 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 on behalf of each Series. 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. Subject to Section 8(a) hereof,
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. Subject to Section 8(a) hereof,
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 within the scope of this Agreement
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 within the scope of this Agreement shall cause
a Series to fail to comply with the diversification requirements of Section
817(h) of the 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 within the scope of this Agreement 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;
provided however, that the Portfolio Manager shall not be so obligated unless
the Manager has provided copies of such rules and regulations to the Portfolio
Manager. 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) Portfolio Manager is authorized on behalf of the Series to enter into
agreements and execute any documents required to make investments pursuant to
the Registration Statement, as such Registration Statement may be amended from
time to time.
(c) 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 securities 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).
(d) 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.
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(e) 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.
(f) The Portfolio Manager will on a reasonable efforts basis 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 market quotations are not readily available, and the parties agree
that the Portfolio Manager shall not bear responsibility or liability for the
determination or accuracy of the valuation of such portfolio securities and
assets of the Series except to the extent that the Portfolio Manager exercises
judgment with respect to any such valuation, and then only in accordance with
its standard of care as set forth in this Agreement.
(g) 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.
(h) 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 as agreed to by the Portfolio Manager.
(i) 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:
(i) been convicted, in the last ten (10) years, of any felony or
misdemeanor arising out of conduct involving embezzlement, fraudulent
conversion,
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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 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.
3. Broker-Dealer Selection. The Portfolio Manager is hereby authorized to
place orders for the purchase and sale of securities 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 a security transaction will be to obtain the
best execution for the Series, taking into account the factors specified in the
prospectus and/or statement of additional information for the Trust, 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 to 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 would have charged for
effecting that transaction, if the Portfolio Manager or its affiliate determines
in good faith that such amount of commission was reasonable in relation to the
value of the brokerage and research services provided by suc h 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 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.
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
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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 Man ager 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;
(i) Brokerage fees, 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 14 of this
Agreement), and the legal
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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.
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 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 Manag er 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 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) 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 (the "Code"), or (2) 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
the description of the Portfolio Manager that is not contained in the
Registration Statement or prospectus for the Trust, or any amendment or
supplement thereto, 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.
(c) The Manager agrees that it shall immediately notify the Portfolio
Manager (1) 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 (2) 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
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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 (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; provided however that this agreement to
cooperate does not apply where the party does not reasonably believe the
government authority has authority to request the information or the information
is privileged or confidential.
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, Pacific
Investment Management Company LLC or any of its affiliates (other than the
Manager), or that use any derivative of the name , Pacific Investment Management
Company LLC 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. 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. Control. Notwithstanding any other provision of the Agreement, it is
understood and agreed that the Trust shall at all times retain the ultimate
responsibility for and control of all functions performed pursuant to this
Agreement and reserve the right to direct, approve, or disapprove any action
hereunder taken on its behalf by the Portfolio Manager.
13. 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.
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14. 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 shall not be liable for, 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's duties, or by reason of reckless disregard by Portfolio
Manager of its obligations and duties under this Agreement.
The Portfolio Manager is expressly authorized to rely upon any and all
instructions, approvals and notices given on behalf of the Trust by any one or
more of those persons designated as representatives of the Trust whose names,
titles and specimen signatures appear in Schedule C attached hereto. The Trust
may amend such Schedule C from time to time by written notice to the Portfolio
Manager. The Portfolio Manager shall continue to rely upon these instructions
until notified by the Trust to the contrary.
15. Indemnification.
(a) Notwithstanding Section 14 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 the willful misfeasance, bad faith or gross negligence of 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 o r 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 disrega rd of obligations and duties under
this Agreement.
(b) Notwithstanding Section 14 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 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
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Portfolio Manager of the Series which (1) may be based upon the willful
misfeasance, bad faith or gross negligence of the Portfolio Manager, any of its
employees or representatives, or any affiliate of or any person acting on behalf
of the Portfolio Manager, (2) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
prospectus covering the shares of the Trust or a Series, or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact known or which should have been known to the Portfolio Manager and
was required to be stated therein or necessary to make the statements therein
not misleading, if such a statement or omission relate to the description of the
Portfolio Manager; 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 15
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 15. 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
th e Portfolio Manager Indemnified Person, to assume the defense thereof, with
counsel of Manager's choice. 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, with counsel of Manager's
choice. 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 P erson 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 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 15 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
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such action is brought otherwise than on account of this Section 15. 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 of Portfolio Manager's choice. 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 with counsel of Portfolio Manager's choice. 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 indep endently 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.
16. 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
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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 descri
bed above, the Sections or Paragraphs numbered 2(f), 9, 10, 11, 14, 15, and 18
of this Agreement shall remain in effect, as well as any applicable provision of
this Paragraph numbered 16.
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, 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.
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 name Pacific Investment Management Company
LLC 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).
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. Delivery of Part II of Form ADV
Concurrently with the execution of this Agreement, the Portfolio Manager is
delivering to the Trust a copy of Part II of its Form ADV, as revised, on file
with the Securities and Exchange Commission. The Trust acknowledges receipt of
such copy.
21. Futures and Options
The Portfolio Manager's investment authority shall include the authority to
purchase, sell, cover open positions, and generally to deal in financial futures
contracts and
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options thereon, in accordance with the Series' investment
objective or objectives, policies and restrictions as stated in the Trust's
Registration Statement.
The Trust will: (i) open and maintain brokerage accounts for financial
futures and options (such accounts hereinafter referred to as "brokerage
accounts") on behalf of and in the name of the Series and (ii) execute for and
on behalf of the Series, standard customer agreements with a broker or brokers.
The Portfolio Manager may, using such of the securities and other property in
the Series as the Portfolio Manager deems necessary or desirable, direct the
custodian to deposit on behalf of the Series, original and maintenance brokerage
deposits and otherwise direct payments of cash, cash equivalents and securities
and other property into such brokerage accounts and to such brokers as the
Portfolio Manager deems desirable or appropriate.
The Portfolio Manager has delivered to the Trust a copy of its Disclosure
Document, as amended, dated June 15, 2000, on file with the Commodity Futures
Trading Commission. The Trust hereby acknowledges receipt of such copy.
22. Notices
Any written notice required by or pertaining to this Agreement shall be
personally delivered to the party for whom it is intended, at the address stated
below, or shall be sent to such party by prepaid first class mail or facsimile.
If to the Trust:
Directed Services, Inc.
0000 Xxxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Chief Legal Officer
If to the Portfolio Manager:
Pacific Investment Management Company LLC
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Fax: 000-000-0000
Attention: Chief Legal Officer
cc: [Account Manager Name, Title]
23. Miscellaneous.
(a) This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts, 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.
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(c) To the extent permitted under Section 16 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:___________________________
PACIFIC INVESTMENT MANAGEMENT
COMPANY LLC
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 Pacific Investment Management Company
LLC shall act as Portfolio Manager are as follows:
Core Bond Series
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SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided Pacific Investment Management Company LLC to the
following Series of The GCG Trust, pursuant to the attached Portfolio Management
Agreement, the Manager will pay the Portfolio Manager a fee for each Series,
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:
Core Bond Series: 0.25% on all assets
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SCHEDULE C
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