PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this ____ day of _________, 2002, among The GCG Trust (the
"Trust"), a Massachusetts business trust, Directed Services, Inc. (the
"Manager"), a New York corporation, and X.X. Xxxxxx Xxxxxxx Asset Management
(U.S.A.) Inc. ("Portfolio Manager"), a corporation organized under the laws of
the State of Delaware.
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company;
WHEREAS, the Trust is authorized to issue separate series, each of which
will offer a separate class of shares of beneficial interest, each series having
its own investment objective or objectives, policies, and limitations;
WHEREAS, the Trust currently offers shares in multiple series, may offer
shares of additional series in the future, and intends to offer shares of
additional series in the future;
WHEREAS, pursuant to a Management Agreement, effective as of October 24,
1997, a copy of which has been provided to the Portfolio Manager, the Trust has
retained the Manager to render advisory, management, and administrative services
with respect to the Trust's series;
WHEREAS, the Trust and the Manager wish to retain the Portfolio Manager to
furnish investment advisory services to one or more of the series of the Trust,
and the Portfolio Manager is willing to furnish such services to the Trust and
the Manager;
NOW THEREFORE, in consideration of the premises and the promises and mutual
covenants herein contained, it is agreed between the Trust, the Manager, and the
Portfolio Manager as follows:
1. APPOINTMENT. The Trust and the Manager hereby appoint Portfolio
Manager to act as portfolio manager to the series of the Trust designated on
Schedule A of this Agreement (each a "Series") for the periods and on the terms
set forth in this Agreement. The Portfolio Manager accepts such appointment and
agrees to furnish the services herein set forth for the compensation herein
provided.
In the event the Trust designates one or more series other than the Series
with respect to which the Trust and the Manager wish to retain the Portfolio
Manager to render investment advisory services hereunder, 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 AUTHORITY. Subject to the supervision
of the Trust's Board of Trustees and the Manager, the Portfolio Manager will
provide a continuous investment program for each Series' portfolio and determine
the composition of the assets of each Series' portfolio, including determination
of the purchase, retention, or sale of the securities, cash, and other
investments contained in the portfolio. The Portfolio Manager will provide
investment research and conduct a continuous program of evaluation, investment,
sales, and reinvestment of each Series' assets by determining the securities and
other investments that shall be purchased, entered into, sold, closed, or
exchanged for the Series, when these transactions should be executed, and what
portion of the assets of each Series should be held in the various securities
and other investments in which it may invest, and the Portfolio Manager is
hereby authorized to execute and perform such services and transactions on
behalf of each Series. In accordance with the forgoing duties, the Portfolio
Manager is hereby authorized to act as agent for the Series (?) to order
deposits and the investment of cash and purchases and sales of securities for
the Series' account and in the name of the Trust. This authorization shall be a
continuing one and shall remain in full force and effect until this Agreement is
terminated in accordance with the provisions of Section 15 hereof. To the extent
permitted by the investment policies of each Series, the Portfolio Manager shall
make decisions for the Series as to foreign currency matters and make
determinations as to and execute and perform foreign currency exchange contracts
on behalf of the Series and shall have the authority to act in such capacity as
the Portfolio Manager deems necessary or desirable in order to carry out its
duties hereunder for the Series so long as not expressly prohibited by the terms
of this Agreement, the 1940 Act or other securities laws or regulations. The
Portfolio Manager will provide the services under this Agreement in accordance
with each Series' investment objective or objectives, policies, and restrictions
as stated in the Trust's Registration Statement filed with the Securities and
Exchange Commission ("SEC"), as from time to time amended (the "Registration
Statement"), copies of which shall be sent to the Portfolio Manager by the
Manager prior to the commencement of this Agreement and promptly upon filing any
such amendment with the SEC. The Portfolio Manager further agrees as follows:
(a) The Portfolio Manager will (1) manage each Series so that no action or
omission on the part of the Portfolio Manager will cause a Series to fail to
meet the requirements to qualify as a regulated investment company specified in
Section 851 of the Internal Revenue Code of 1986, as amended (the "Code") (other
than the requirements for the Trust to register under the 1940 Act and to file
with its tax return an election to be a regulated investment company, both of
which shall not be the responsibility of the Portfolio Manager), (2) manage each
Series so that no action or omission on the part of the Portfolio Manager shall
cause a Series to fail to comply with the diversification requirements of
Section 817(h) of the Code, and the regulations issued thereunder, and (3) use
reasonable efforts to manage the Series so that no action or omission on the
part of the Portfolio Manager shall cause a Series to fail to comply with any
other rules and regulations pertaining to investment vehicles underlying
variable annuity or variable life insurance policies that the Manger has
identified for 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
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Manager of any pertinent changes, modifications to, or interpretations of
Section 817(h) of the Code and regulations issued thereunder and of the other
rules or regulations pertaining to investment vehicles underlying variable
annuity or variable life insurance policies that the Manager has identified for
the Portfolio Manager.
(b) On occasions when the Portfolio Manager deems the purchase or sale of
a security to be in the best interest of a Series as well as of other investment
advisory clients of the Portfolio Manager or any of its affiliates, the
Portfolio Manager may, to the extent permitted by applicable laws and
regulations, but shall not be obligated to, aggregate the securities to be so
sold or purchased with those of its other clients where such aggregation is not
inconsistent with the policies set forth in the Registration Statement. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Portfolio Manager in a
manner that is fair and equitable in the judgment of the Portfolio Manager in
the exercise of its fiduciary obligations to the Trust and to such other
clients. The Manager and the Board shall have the right to review the Portfolio
Manager's manner of allocation and to direct that the Portfolio Manager no
longer aggregate securities to be sold or purchased for the Series with
securities to be sold or purchased for the Portfolio Manager's other clients,
provided, however, that any such direction to the Portfolio Manager shall be
implemented on a prospective basis only. The Trust and the Manager recognize
that, in some cases, the Portfolio Manger's allocation procedure may limit the
size of the position that may be acquired or sold for the Series and that not
aggregating trades for the Series with trades for other clients of the Portfolio
Manager could adversely affect the price paid or received by the Series.
(c) In connection with the purchase and sale of securities for each
Series, the Portfolio Manager will arrange for the transmission to the custodian
and portfolio accounting agent for the Series on a daily basis, such
confirmation, trade tickets, and other documents and information, including, but
not limited to, Cusip, Sedol, or other numbers that identify securities to be
purchased or sold on behalf of the Series, as may be reasonably necessary to
enable the custodian and portfolio accounting agent to perform their
administrative and recordkeeping responsibilities with respect to the Series.
With respect to portfolio securities to be purchased or sold through the
Depository Trust Company, the Portfolio Manager will arrange for the automatic
transmission of the confirmation of such trades to the Trust's custodian and
portfolio accounting agent.
(d) The Portfolio Manager will assist the portfolio accounting agent for
the Trust in determining, consistent with the procedures and policies stated in
the Registration Statement, the value of any portfolio securities or other
assets of the Series for which the portfolio accounting agent seeks assistance
from or identifies for review by the Portfolio Manager.
(e) The Portfolio Manager will make available to the Trust and the
Manager, promptly upon reasonable request, all of the Series' investment records
and ledgers maintained by the Portfolio Manager
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(which shall not include the records and ledgers maintained by the custodian and
portfolio accounting agent for the Trust) as are necessary to assist the Trust
and the Manager to comply with requirements of the 1940 Act and the Investment
Advisers Act of 1940 (the "Advisers Act"), as well as other applicable laws. The
Portfolio Manager will furnish to regulatory authorities having the requisite
authority any information or reports in connection with such services which may
be requested in order to ascertain whether the operations of the Trust are being
conducted in a manner consistent with applicable laws and regulations.
(f) The Portfolio Manager will provide reports to the Trust's Board of
Trustees for consideration at meetings of the Board on the investment program
for the Series and the issuers and securities represented in the Series'
portfolio, and will furnish the Trust's Board of Trustees with respect to the
Series such periodic and special reports as the Trustees and the Manager may
reasonably request.
(g) In rendering the services required under this Agreement, the Portfolio
Manager may, from time to time, employ or associate with itself such person or
persons as it believes necessary to assist it in carrying out its obligations
under this Agreement. The Portfolio Manager may not retain, employ or associate
itself with any company that would be an "investment adviser," as that term is
defined in the 1940 Act, to the Series unless the contract with such company is
approved by a majority of the Trust's Board of Trustees and a majority of
Trustees who are not parties to any agreement or contract with such company and
who are not "interested persons," as defined in the 1940 Act, of the Trust, the
Manager, or the Portfolio Manager, or any such company, and is approved by the
vote of a majority of the outstanding voting securities of the applicable Series
of the Trust to the extent required by the 1940 Act. The Portfolio Manager shall
be responsible for making reasonable inquiries and for reasonably ensuring that
no associated person of the Portfolio Manager, or of any company that the
Portfolio Manager has retained, employed, or with which it has associated, with
respect to the investment management of the Series, to the best of the Portfolio
Manager's knowledge, has, in any material connection with the handling of
assets:
(i) been convicted, in the last ten (10) years, of any felony or
misdemeanor arising out of conduct involving embezzlement, fraudulent
conversion, or misappropriation of funds or securities, involving
violations of Sections 1341, 1342, or 1343 of Xxxxx 00, Xxxxxx Xxxxxx
Code, or involving the purchase or sale of any security; or
(ii) been found by any state regulatory authority, within the last ten
(10) years, to have violated or to have acknowledged violation of any
provision of any state insurance law involving fraud, deceit, or
knowing misrepresentation; or
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(iii) been found by any federal or state regulatory authorities,
within the last ten (10) years, to have violated or to have
acknowledged violation of any provision of federal or state securities
laws involving fraud, deceit, or knowing misrepresentation.
(h) In using spot and forward foreign exchange contracts for the Series as
an investment the parties represent the following:
(i) That the Manager is properly and lawfully established with full
power and authority to enter into spot and forward foreign exchange
contracts, to perform its obligations under such foreign exchange
contracts and to procure the Portfolio Manager to enter into such
foreign exchange contracts on its behalf.
(ii) That the Manager may not, except for purposes of redemptions,
expenses, and other costs of doing business, encumber funds which the
Portfolio Manager has under the Portfolio Manager's management or
which benefit from the Portfolio Manager's investment advice. If the
Manager requires funds for any redemptions, expenses, and other costs
of doing business, the Portfolio Manager will make funds available in
a reasonably timely manner for the Manager to meet such obligations.
The Manager reserves the right to segregate assets upon notice to the
Portfolio Manager and provide different arrangements for investment
management with respect to those assets.
(iii) That the Portfolio Manager has been granted full power and
authority to enter into foreign exchange contracts as agent on the
Manager's behalf and to give instructions for settlement for the same.
(iv) That the Portfolio Manager has full authority to instruct Trust's
custodian in conformity with its mandate.
(v) That in the event of the termination of this Agreement, the
Portfolio Manager may, if legally and operationally possible, offer
the Series' counterparty the option 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,
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the difficulty of execution, and the execution capabilities and operational
facilities of the firms involved, and the firm's risk in positioning a block of
securities. Accordingly, the price to a Series in any transaction may be less
favorable than that available from another broker-dealer if the difference is
reasonably justified, in the judgment of the Portfolio Manager in the exercise
of its fiduciary obligations to the Trust, by other aspects of the portfolio
execution services offered.
Subject to such policies as the Board of Trustees may determine and
consistent with Section 28(e) of the Securities Exchange Act of 1934, the
Portfolio Manager may effect a transaction on behalf of the Series with a
broker-dealer who provides brokerage 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.
Subject to the overriding objective of obtaining best execution of
portfolio transactions on behalf of the Series, the Manager may consult with the
Portfolio Manager about directing portfolio transactions on behalf of the Series
to broker-dealers on the basis of additional criteria reasonably considered
appropriate by the Manager. To the extent consistent with this Agreement, the
Portfolio Manager is further authorized to allocate orders placed by it on
behalf of the Series to the Portfolio Manager as agent if it is registered as a
broker-dealer with the SEC or to any of its affiliated broker-dealers as agents.
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 indicating the
broker-dealers to which such allocations have been made and will provide such
other information on the allocations as the Board may reasonably request.
4. DISCLOSURE ABOUT PORTFOLIO MANAGER. The Portfolio Manager has reviewed
the post-effective amendment to the Registration Statement for the Trust filed
with the SEC that contains disclosure about the Portfolio Manager, and
represents and warrants that, with respect to the disclosure about or
information relating, directly or indirectly, to the Portfolio Manager, to the
Portfolio Manager's knowledge, such Registration Statement contains, as of the
date hereof, no untrue statement of any material fact and does not omit any
statement of a material fact which was required to be stated therein or
necessary to make the statements contained therein not misleading. The Portfolio
Manager further represents and warrants that it is a duly registered investment
adviser under the Advisers Act, or alternatively that it is not required to be a
registered investment adviser under the Advisers Act to perform the duties
described in this Agreement, and that it is a duly registered investment adviser
in all states in which the Portfolio Manager is required to be registered and
will maintain such registration so long as this
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Agreement remains in effect. The Portfolio Manager will provide the Manager with
a copy of the Portfolio Manager's Form ADV, Part II at the time the Form ADV and
any amendment is filed with the SEC, and a copy of its written code of ethics
complying with the requirements of Rule 17j-1 under the 1940 Act, together with
evidence of its adoption
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 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
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bodies, the maintenance of the Trust's existence, and the regulation of shares
with federal and state securities or insurance authorities;
(l) The Trust's legal fees, including the legal fees related to the
registration and continued qualification of the Trust's shares for sale;
(m) Trustees' fees and expenses to trustees who are not officers,
employees, or stockholders of the Portfolio Manager or any affiliate thereof;
(n) The Trust's pro rata portion of the fidelity bond required by Section
17(g) of the 1940 Act, or other insurance premiums;
(o) Association membership dues;
(p) Extraordinary expenses of the Trust as may arise including expenses
incurred in connection with litigation, proceedings, and other claims (unless
the Portfolio Manager is responsible for such expenses under Section 13 of this
Agreement), and the legal obligations of the Trust to indemnify its Trustees,
officers, employees, shareholders, distributors, and agents with respect
thereto; and
(q) Organizational and offering expenses.
6. COMPENSATION. For the services provided to each Series, the Manager
will pay the Portfolio Manager a fee, payable as described in Schedule B.
The fee will be prorated to reflect any portion of a calendar month that
this Agreement is not in effect among the parties. In accordance with the
provisions of the Management Agreement, the Manager is solely responsible for
the payment of fees to the Portfolio Manager, and the Portfolio Manager agrees
to seek payment of its fees solely from the Manager.
7. SEED MONEY. The Manager agrees that the Portfolio Manager shall not be
responsible for providing money for the initial capitalization of the Series.
8. COMPLIANCE.
(a) The Trust and the Manager acknowledge that the Portfolio Manager is
not the compliance agent for any Series or for the Trust or the Manager, and
does not have access to all of each Series' books and records necessary to
perform certain compliance testing. To the extent that the Portfolio Manager has
agreed to perform the services specified in Section 2 in accordance with the
Trust's registration statement, the Trust's Amended and Restated Agreement and
Declaration of Trust and By-Laws, the Trust's
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Prospectus and any policies adopted by the Trust's Board of Trustees applicable
to the Series (collectively, the "Charter Requirements"), and in accordance with
applicable law (including Subchapters M and L of the Code, the 1940 Act and the
Advisers Act ("Applicable Law")), the Portfolio Manager shall perform such
services based upon its books and records with respect to each Series, which
comprise a portion of each Series' books and records, and upon information and
written instructions received from the Trust, the Manager or the Trust's
administrator, and shall not be held responsible under this Agreement so long as
it performs such services in accordance with this Agreement, the Charter
Requirements and Applicable Law based upon such books and records and such
information and instructions provided by the Trust, the Manager, or the Trust's
administrator. The Manager shall promptly provide the Portfolio Manager with
copies of the Trust's registration statement, the Trust's Amended and Restated
Agreement and Declaration of Trust and By-Laws, the Trust's currently effective
Prospectus and any written policies and procedures adopted by the Trust's Board
of Trustees applicable to the Portfolio and any amendments or revisions thereto.
The Portfolio Manager agrees that it shall promptly notify the Manager and the
Trust (1) in the event that the SEC or other governmental authority has censured
the Portfolio Manager; placed limitations upon its activities, functions or
operations; suspended or revoked its registration, if any, as an investment
adviser; or has commenced proceedings or an investigation that may result in any
of these actions, (2) upon having a reasonable basis for believing that the
Series has ceased to qualify or might not qualify as a regulated investment
company under Subchapter M of the Code , or (3) upon having a reasonable basis
for believing that the Series has ceased to comply with the diversification
provisions of Section 817(h) of the Code or the regulations thereunder. The
Portfolio Manager further agrees to notify the Manager and the Trust promptly of
any material fact known to the Portfolio Manager respecting or relating to the
Portfolio Manager that is not contained in the Registration Statement as then in
effect, and is required to be stated therein or necessary to make the statements
therein not misleading, or of any statement contained therein that becomes
untrue in any material respect.
(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 reasonable request, although the Portfolio Manager may, at its own
expense, make and retain a
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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; CONFIDENTIALITY. Each party to this Agreement agrees to
cooperate with each other party and with all appropriate governmental
authorities having the requisite jurisdiction (including, but not limited to,
the SEC and state insurance regulators) in connection with any investigation or
inquiry relating to this Agreement or the Trust.
Subject to the foregoing, the Portfolio Manager shall treat as confidential
all information pertaining to the Trust and actions of the Trust, the Manager
and the Portfolio Manager, and the Manager shall treat as confidential and use
only in connection with the Series all information furnished to the Trust or the
Manager by the Portfolio Manager, in connection with its duties under the
Agreement except that the aforesaid information need not be treated as
confidential if required to be disclosed under applicable law, if generally
available to the public through means other than by disclosure by the Portfolio
Manager or the Manager, or if available from a source other than the Manager,
Portfolio Manager of 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 or any of its
affiliates (other than the Manager), or that use any derivative of the names
"X.X. Xxxxxx Xxxxxxx Asset Management" "X.X. Xxxxxx Chase & Co.," or "Xxxxxx
Xxxxxxx Inc." or any logos associated therewith. The Trust and the Manager agree
that they will not use any such material without the prior consent of the
Portfolio Manager, which consent shall not be unreasonably withheld. In the
event of the termination of this Agreement, the Trust and the Manager will
furnish to the Portfolio Manager copies of any of the above-mentioned materials
that refer or relate in any way to the Portfolio Manager;
(b) The Trust and the Manager will furnish to the Portfolio Manager such
information relating to either of them or the business affairs of the Trust as
the Portfolio Manager shall from time to time reasonably request in order to
discharge its obligations hereunder;
(c) The Manager and the Trust agree that neither the Trust, the Manager,
nor affiliated persons of the Trust or the Manager shall give any information or
make any representations or statements in connection with the sale of shares of
the Series concerning the Portfolio Manager or the Series other than the
information or representations contained in the Registration Statement,
prospectus, or statement of
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Additional information for the Trust, as they may be amended or supplemented
from time to time, or in reports or proxy statements for the Trust, or in sales
literature or other promotional material approved in advance by the Portfolio
Manager, except with the prior permission of the Portfolio Manager.
12. SERVICES NOT EXCLUSIVE. It is understood that the services of the
Portfolio Manager are not exclusive, and nothing in this Agreement shall prevent
the Portfolio Manager (or its affiliates) from providing similar services to
other clients, including investment companies (whether or not their investment
objectives and policies are similar to those of the Series) or from engaging in
other activities.
13. LIABILITY. Except as may otherwise be required by the 1940 Act or the
rules thereunder or other applicable law, the Trust and the Manager agree that
the Portfolio Manager, any affiliated person of the Portfolio Manager, and each
person, if any, who, within the meaning of Section 15 of the 1933 Act, controls
the Portfolio Manager (1) shall bear no responsibility and shall not be subject
to any liability for any act or omission respecting any series of the Trust that
is not a Series hereunder; and (2) shall not be liable for any error of
judgment, mistake of law, any diminution in value of the investment portfolio of
the Series, or subject to any damages, expenses, or losses in connection with,
any act or omission connected with or arising out of any services rendered under
this Agreement, except by reason of willful misfeasance, bad faith, or gross
negligence in the performance by the Portfolio Manager of its duties, or by
reason of reckless disregard by the Portfolio Manager of its obligations and
duties under this Agreement.
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,
howsoever arising from or in connection with this Agreement or the performance
by the Portfolio Manager of its duties under this Agreement, provided, however,
the Portfolio Indemnified Persons shall not be indemnified against losses,
damages, liabilities or litigation (including legal and other expenses) arising
out of (1) Portfolio Manager's, including without limitation any of its
employees or representatives or any affiliate of or any person acting on behalf
of the Portfolio Manager, willful misfeasance, bad faith, or gross negligence in
the performance of the Portfolio Manager's duties, or by reason of reckless
disregard of the Portfolio Manager's obligations and duties under this
Agreement, or (2) which are based upon any untrue statement or alleged untrue
statement of a material fact supplied by, or which is the responsibility of, the
Portfolio Manager and contained in the Registration Statement or prospectus
covering shares of the
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Trust or any Series, or any amendment thereof or any supplement thereto, or the
omission or alleged omission to state therein a material fact known or which
should have been known to the Portfolio 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
Portfolio Manager or the Trust or to any affiliated person of the Portfolio
Manager by the Manager. I
(b) Notwithstanding Section 13 of this Agreement, the Portfolio Manager
agrees to indemnify and hold harmless the Manager, any affiliated person of the
Manager (other than the Portfolio Manager), and each person, if any, who, is a
controlling person of the Manager (all of such persons being referred to as
"Manager Indemnified Persons") against any and all losses, claims, damages,
liabilities, or litigation (including legal and other expenses) to which a
Manager Indemnified Person may become subject under the 1933 Act, 1940 Act, the
Advisers Act, the Code, under any other statute, at common law or otherwise,
arising out of the Portfolio Manager's responsibilities as Portfolio Manager of
the Series which (1) may be based upon any violations of willful misconduct,
malfeasance, bad faith or gross negligence by the Portfolio Manager, any of its
employees or representatives, or any affiliate of or any person acting on behalf
of the Portfolio Manager, including but not limited to its responsibilities
under Section 2, Paragraph (a) of this Agreement, or (2) any breach of any
representations or warranties contained in Section 4; provided, however, that in
no case shall the indemnity in favor of a Manager Indemnified Person be deemed
to protect such person against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
(c) The Manager shall not be liable under Paragraph (a) of this Section 14
with respect to any claim made against a Portfolio Manager Indemnified Person
unless such Portfolio Manager Indemnified Person shall have notified the Manager
in writing within a reasonable time after the summons, notice, or other first
legal process or notice giving information of the nature of the claim shall have
been served upon such Portfolio Manager Indemnified Person (or after such
Portfolio Manager Indemnified Person shall have received notice of such service
on any designated agent), but failure to notify the Manager of any such claim
shall not relieve the Manager from any liability which it may have to the
Portfolio Manager Indemnified Person against whom such action is brought except
to the extent the Manager is prejudiced by the failure or delay in giving such
notice. In case any such action is brought against the Portfolio Manager
Indemnified Person, the Manager will be entitled to participate, at its own
expense, in the defense thereof or, after notice to the Portfolio Manager
Indemnified Person, to assume the defense thereof, with counsel satisfactory to
the Portfolio Manager Indemnified Person. If the Manager assumes the defense of
any such action and the selection of counsel by the Manager to represent both
the Manager and the Portfolio Manager Indemnified Person would result in a
conflict of interests and therefore, would not, in the reasonable 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
-12-
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, without the
prior written consent of each Portfolio Manager Indemnified Person, settle or
compromise the liability of any Portfolio Manager Indemnified Person in any such
action, or permit a default or consent to the entry of any judgment in respect
thereof, unless in connection with such settlement, compromise or consent each
Portfolio Manager Indemnified Person receives from such claimant an
unconditional release from all liability in respect of such claim.
(d) The Portfolio Manager shall not be liable under Paragraph (b) of this
Section 14 with respect to any claim made against a Manager Indemnified Person
unless such Manager Indemnified Person shall have notified the Portfolio Manager
in writing within a reasonable time after the summons, notice, or other first
legal process or notice giving information of the nature of the claim shall have
been served upon such Manager Indemnified Person (or after such Manager
Indemnified Person shall have received notice of such service on any designated
agent), but failure to notify the Portfolio Manager of any such claim shall not
relieve the Portfolio Manager from any liability which it may have to the
Manager Indemnified Person against whom such action is brought except to the
extent the Portfolio Manager is prejudiced by the failure or delay in giving
such notice. In case any such action is brought against the Manager Indemnified
Person, the Portfolio Manager will be entitled to participate, at its own
expense, in the defense thereof or, after notice to the Manager Indemnified
Person, to assume the defense thereof, with counsel satisfactory to the Manager
Indemnified Person. If the Portfolio Manager assumes the defense of any such
action and the selection of counsel by the Portfolio Manager to represent both
the Portfolio Manager and the Manager Indemnified Person would result in a
conflict of interests and therefore, would not, in the reasonable judgment of
the Manager Indemnified Person, adequately represent the interests of the
Manager Indemnified Person, the Portfolio Manager will, at its own expense,
assume the defense with counsel to the Portfolio Manager and, also at its own
expense, with separate counsel to the Manager Indemnified Person, which counsel
shall be satisfactory to the Portfolio Manager and to the Manager Indemnified
Person. The Manager Indemnified Person shall bear the fees and expenses of any
additional counsel retained by it, and the Portfolio Manager shall not be liable
to the Manager Indemnified Person under this Agreement for any legal or other
expenses subsequently incurred by the Manager Indemnified Person independently
in connection with the defense thereof other than reasonable costs of
investigation. The Portfolio Manager shall not, without the prior written
consent of each Manager Indemnified Person, settle or compromise the liability
of any Manager Indemnified Person in any such action, or permit a default or
consent to the entry of any judgment in respect thereof, unless in connection
with such settlement, compromise or consent each Manager Indemnified Person
receives from such claimant an unconditional release from all liability in
respect of such claim.
-13-
(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.
15. DURATION AND TERMINATION. This Agreement shall become effective with
respect to each Series on the later of the date first indicated above or the
date of the commencement of operations of each Series. Unless terminated as
provided herein, the Agreement shall remain in full force and effect for two (2)
years from the date indicated above and continue on an annual basis thereafter
with respect to each Series; provided that such annual continuance is
specifically approved each year by (a) the vote of a majority of the entire
Board of Trustees of the Trust, or by the vote of a majority of the outstanding
voting securities (as defined in the 0000 Xxx) of each Series, and (b) the vote
of a majority of those Trustees who are not parties to this Agreement or
interested persons (as such term is defined in the 0000 Xxx) of any such party
to this Agreement cast in person at a meeting called for the purpose of voting
on such approval. The Portfolio Manager shall not provide any services for such
Series or receive any fees on account of such Series with respect to which this
Agreement is not approved as described in the preceding sentence. However, any
approval of this Agreement by the holders of a majority of the outstanding
shares (as defined in the 0000 Xxx) of a Series shall be effective to continue
this Agreement with respect to such Series notwithstanding (i) that this
Agreement has not been approved by the holders of a majority of the outstanding
shares of any other Series or (ii) that this agreement has not been approved by
the vote of a majority of the outstanding shares of the Trust, unless such
approval shall be required by any other applicable law or otherwise.
Notwithstanding the foregoing, this Agreement may be terminated for each or any
Series hereunder: (a) by the Manager at any time without penalty, upon sixty
(60) days' written notice to the Portfolio Manager and the Trust, (b) at any
time without payment of any penalty by the Trust, upon the vote of a majority of
the Trust's Board of Trustees or a majority of the outstanding voting securities
of each Series, upon sixty (60) days' written notice to the Manager and the
Portfolio Manager, or (c) by the Portfolio Manager at any time without penalty,
upon three (3) months' written notice to the Manager and the Trust, unless the
Manager or the Trust requests additional time to find a replacement for the
Portfolio Manager, in which case the Portfolio Manager shall allow the
additional time requested by the Trust or the Manager not to exceed three (3)
months beyond the initial three-month notice period; provided however, that the
Portfolio Manager may terminate this Agreement at any time without penalty
effective upon written notice to the Manager and the Trust, in the event either
the Portfolio Manager (acting in good faith) or the Manager ceases to be
registered as an investment adviser under the Advisers Act or otherwise becomes
legally incapable of providing investment management services pursuant to its
respective contract with the Trust, or in the event the Manager becomes bankrupt
or otherwise incapable of carrying out its obligations under this Agreement, or
in the event that the Portfolio Manager does not receive compensation for its
services from the Manager or the Trust as required by the terms of this
Agreement. In addition, this Agreement shall terminate with respect to a Series
in the event that it is not
-14-
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(e), 9, 10, 11, 13, 14, and 18 of this
Agreement shall remain in effect, as well as any applicable provision of this
Paragraph numbered 15.
16 NOTICES. Any notice must be in writing and shall be sufficiently given
(1) when delivered in person, (2) when dispatched by telegram or electric
facsimile transfer (confirmed in writing by postage prepaid first class mail
simultaneously dispatched), (3) when sent by internationally recognized
overnight courier service (with receipt confirmed by such overnight courier
service), or (4) when sent by registered or certified mail, to the other party
at the address of such party set forth below or at such other address as such
party may from time to time specify in writing to the other party.
If to the Trust:
The GCG Trust
0000 Xxxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Chief Counsel
If to the Manager:
Directed Services, Inc.
0000 Xxxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Chief Counsel
If to the Portfolio Manager:
X.X. Xxxxxx Xxxxxxx Asset Management (U.S.A.) Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Mutual Funds - Legal
-15-
17. AMENDMENTS. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) the Trustees of the Trust,
including a majority of the Trustees of the Trust who are not interested persons
of any party to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval, if such approval is required by applicable
law; and (ii) the holders of a majority of the outstanding voting securities of
the Series.
18. USE OF NAME.
(a) It is understood that the name "Directed Services, Inc." or any
derivative thereof or logo associated with that name is the valuable property of
the Manager and/or its affiliates, and that the Portfolio Manager has the right
to use such name (or derivative or logo) only with the approval of the Manager
and only so long as the Manager is Manager to the Trust and/or the Series. Upon
termination of the Management Agreement between the Trust and the Manager, the
Portfolio Manager shall as soon as is reasonably possible cease to use such name
(or derivative or logo).
(b) It is understood that the names "X.X. Xxxxxx Xxxxxxx Asset
Management", "X.X. Xxxxxx Chase & Co.," or "Xxxxxx Xxxxxxx Inc." or any
derivative thereof or logos associated with those names are the valuable
property of the Portfolio Manager and its affiliates and that the Trust and/or
the Series have the right to use such names (or derivatives or logos) in
offering materials of the Trust with the approval of the Portfolio Manager and
for so long as the Portfolio Manager is a portfolio manager to the Trust and/or
the Series. Upon termination of this Agreement between the Trust, the Manager,
and the Portfolio Manager, the Trust shall as soon as is reasonably possible
cease to use such names (or derivatives or logos).
19. AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST. A copy of the
Amended and Restated Agreement and Declaration of Trust for the Trust is on file
with the Secretary of the Commonwealth of Massachusetts. The Amended and
Restated Agreement and Declaration of Trust has been executed on behalf of the
Trust by Trustees of the Trust in their capacity as Trustees of the Trust and
not individually. The obligations of this Agreement shall be binding upon the
assets and property of the Trust and shall not be binding upon any Trustee,
officer, or shareholder of the Trust individually.
20. MISCELLANEOUS.
(a) This Agreement shall be governed by the laws of the Commonwealth of
Pennsylvania, without giving effect to the provisions, policies or principals
thereof relating to choice or conflict of laws, provided that nothing herein
shall be construed in a manner inconsistent with the 1940 Act, the Advisers
-16-
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.
-17-
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:
------------------------------ ----------------------------------
X.X. XXXXXX XXXXXXX ASSET MANAGEMENT
(U.S.A.) INC.
Attest By:
------------------------------ -------------------------------------
Title: Title:
------------------------------ ----------------------------------
-18-
SCHEDULE A
The Series of The GCG Trust, as described in Section 1 of the attached
Portfolio Management Agreement, to which X.X. Xxxxxx Xxxxxxx Asset Management
(U.S.A.) Inc. shall act as Portfolio Manager is as follows:
X.X. Xxxxxx Xxxxxxx Small Cap Equity Series
-19-
SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by X.X. Xxxxxx Xxxxxxx Asset Management (U.S.A.)
Inc. ("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
X.X. XXXXXX XXXXXXX
SMALL CAP EQUITY SERIES 0.60% on the first $200 million;
0.55% on the next 300 million; and
0.50% thereafter
If the Manager or any of its affiliates appoints the Portfolio Manager or any of
its affiliates to manage another portfolio(s) following the Portfolio Manager's
"Small Cap Equity" investment strategy ("New Portfolio"), the assets of the New
Portfolio will be aggregated with the assets of the Series in calculating the
Portfolio Manager's fee at the above stated rate.
The Portfolio Manager has agreed to the above fee schedule and to aggregate the
assets of any New Portfolio in calculating its fees based upon the Portfolio
Manager and its affiliates receiving a total of at least $100 million in the
portfolios it and its affiliates manage for the Manager and its affiliates;
provided, in addition, that at least $50 million of such assets will be in
portfolios following the Portfolio Manager's affiliate's "EAFE Plus" strategy.
-20-
