EXHIBIT d(2)(X)
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 30th day of April, 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, upon review and approval by the
Board, is authorized on behalf of the Series to enter into the agreements listed
below and execute any documents required to make investments pursuant to the
Registration Statement, as such Registration Statement may be amended from time
to time.
- Master ISDA Agreement
- Master Forward Agreement
- Master Repurchase Agreement
- Master Securities Loan Agreement
- Master Dealer Agreement for OTC Option Transactions -
U.S. Treasury Securities
(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
2
(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.
(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.
3
(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, 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 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
4
brokerage and research services provided by such broker-dealer, viewed in terms
of either that particular transaction or the Portfolio Manager's or its
affiliate's overall responsibilities with respect to the Series and to their
other clients as to which they exercise investment discretion. To the extent
consistent with these standards, the Portfolio Manager is further authorized to
allocate the orders placed by it on behalf of the Series to the Portfolio
Manager if it is registered as a broker-dealer with the SEC, to 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 under
the Advisers Act, or alternatively that it is not required to be a registered
investment adviser under the Advisers Act to perform the duties described in
this Agreement, and that it is a duly registered investment adviser in all
states in which the Portfolio Manager is required to be registered.
5. EXPENSES. During the term of this Agreement, the Portfolio
Manager will pay all expenses incurred by it and its staff and for their
activities in connection with its portfolio management duties under this
Agreement. The Manager or the Trust shall be responsible for all the expenses of
the Trust's operations including, but not limited to:
(a) Expenses of all audits by the Trust's independent
public accountants;
(b) Expenses of the Series' transfer agent, registrar,
dividend disbursing agent, and shareholder recordkeeping services;
(c) Expenses of the Series' custodial services including
recordkeeping services provided by the custodian;
(d) Expenses of obtaining quotations for calculating the
value of each Series' net assets;
(e) Expenses of obtaining Portfolio Activity Reports and
Analyses of International Management Reports (as appropriate) for each Series;
(f) Expenses of maintaining the Trust's tax records;
(g) Salaries and other compensation of any of the Trust's
executive officers and employees, if any, who are not officers, directors,
stockholders, or employees of the Portfolio Manager or an affiliate of the
Portfolio Manager;
(h) Taxes levied against the Trust;
5
(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;
(1) 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 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 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
6
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 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
7
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.
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.
8
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 or alleged untrue statement of a material fact
supplied by, or which is the responsibility of, the Manager and contained in the
Registration Statement or prospectus covering shares of the Trust or a Series,
or any amendment thereof or any supplement thereto, or the omission or alleged
omission to state therein a material fact known or which should have been known
to the Manager and was required to be stated therein or necessary to make the
statements therein not misleading, unless such statement or omission was made in
reliance upon information furnished to the Manager or the Trust or to any
affiliated person of the Manager by a Portfolio Manager Indemnified Person;
provided however, that in no case shall the indemnity in favor of the Portfolio
Manager Indemnified Person be deemed to protect such person against any
liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of its
duties, or by reason of its reckless disregard of obligations and duties under
this Agreement.
(b) Notwithstanding Section 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 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.
9
(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 the 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 Person independently in connection with the defense thereof
other than reasonable costs of investigation. The Manager shall not have the
right to compromise on or settle the litigation without the prior written
consent of the Portfolio Manager Indemnified Person if the compromise or
settlement 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 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
10
Person shall bear the fees and expenses of any additional counsel retained by
it, and the Portfolio Manager shall not be liable to the Manager Indemnified
Person under this Agreement for any legal or other expenses subsequently
incurred by the Manager Indemnified Person independently in connection with the
defense thereof other than reasonable costs of investigation. The Portfolio
Manager shall not have the right to compromise on or settle the litigation
without the prior written consent of the Manager Indemnified Person if the
compromise or settlement results, or may result in a finding of wrongdoing on
the part of the Manager Indemnified Person.
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 Agreement shall automatically terminate
in the event of its assignment (as such term is described in the 1940 Act). In
the event this Agreement is terminated or is not approved in the manner
described above, the Sections or Paragraphs numbered 2(f), 9, 10, 11, 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
11
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 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
12
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 March 15, 2001, 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: The GCG Trust
0000 Xxxxxxxx Xxxxx
Xxxx Xxxxxxx, XX 00000
Fax: 000-000-0000
Attention: Xxxxxxxxxxx Xxxxxx, Assistant
Treasurer
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: Xxx Xxxxxxxx, Vice President
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.
(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.
13
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: [ILLEGIBLE]
-----------------------------
Title:___________________________ Title:__________________________
DIRECTED SERVICES, INC.
Attest___________________________ By: [ILLEGIBLE]
-----------------------------
Title:___________________________ Title: Senior Vice President
PACIFIC INVESTMENT MANAGEMENT
COMPANY LLC
Attest [ILLEGIBLE] By: /s/ Xxxxxxx X. Benz
----------------------------
Xxxxxxx X. Benz, II
Title: [ILLEGIBLE] Title: Managing Director
14
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:
Global Fixed Income Series
15
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:
Global Fixed Income Series
0.25% on all assets
16
