Global Strategic Income Portfolio
Portfolio Manager Agreement
Exhibit 5(d)
GLOBAL STRATEGIC INCOME PORTFOLIO
PORTFOLIO MANAGER AGREEMENT
Agreement, made this ___ day of April, 1998, among The Palladian
Trust (the "Trust"), a Massachusetts business trust; Allmerica Investment
Management Company, Inc. (the "Manager"), a Massachusetts corporation; and
Allmerica Asset Management, Inc. (the "Portfolio Manager"), a Massachusetts
corporation.
WHEREAS, the Trust is a diversified, open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Manager and the Portfolio Manager are both registered
as investment advisers under the Investment Advisers Act of 1940; and
WHEREAS, the Trust is authorized to issue shares of beneficial
interest in separate portfolios with each such portfolio representing
interests in a separate portfolio of securities and other assets; and
WHEREAS, the Manager has entered into a management agreement with
the Trust, pursuant to which the Manager will provide, among other services,
advice with respect to the selection and monitoring of portfolio managers to
handle the day-to-day investment management of certain portfolios; and
WHEREAS, the Trust and the Manager desire to retain the Portfolio
Manager to provide investment advisory services to the Global Strategic
Income Portfolio of the Trust (the "Portfolio"), and the Portfolio Manager is
willing to render such services.
Therefore, the parties agree as follows:
1. APPOINTMENT. The Trust hereby appoints the Portfolio Manager to
provide investment advisory services with respect to the Portfolio for the
period and on the terms set forth in this Agreement, subject to the direction
of the Board of Trustees of the Trust (the "Board of Trustees"). The
Portfolio Manager accepts such appointment and agrees to render the services
described herein for the compensation provided in paragraph 13.
2. SERVICES OF THE PORTFOLIO MANAGER.
(a) Subject to the supervision of the Board of Trustees, the
Portfolio Manager will provide day-to-day investment management of the
Portfolio. The Portfolio Manager will provide investment research and
conduct a continuous program of evaluation, investment, sales, and
reinvestment of the Portfolio's assets by determining the securities and
other investments that shall be purchased, entered into, sold, closed, or
exchanged for the Portfolio, when these transactions should be executed, and
what portion of the assets of the Portfolio should be held in the various
securities and other investments in which it may invest. The Portfolio
Manager is hereby authorized to execute and perform such services on behalf
of the Portfolio. To the extent permitted by the investment policies of the
Portfolio, the Portfolio Manager shall make decisions for the Portfolio as to
foreign currency matters and make determinations as to, and execute and
perform, foreign currency exchange contracts on behalf of the Portfolio. The
Portfolio Manager will provide the services under this Agreement in
accordance with the Portfolio's investment objective or objectives, policies,
and restrictions as stated in the Trust's registration statement under the
Securities Act of 1933 and the 1940 Act as filed with the Securities and
Exchange Commission ("SEC") and amended from time to time (the "Registration
Statement").
(b) The Portfolio Manager will use reasonable efforts to manage
the Portfolio so that it will (1) qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code, (2) comply with the
diversification requirements of Section 817(h) of the Internal Revenue Code
and regulations issued thereunder, and (3) comply with any other rules and
regulations pertaining to investment vehicles underlying variable annuity or
variable life insurance policies. In managing the Portfolio in accordance
with these requirements, the Portfolio Manager shall be entitled to receive
and act upon advice of counsel to the Trust or counsel to the Manager.
(c) On occasions when the Portfolio Manager deems the purchase or
sale of a security to be in the best interest of the Portfolio as well as any
other investment advisory clients, the Portfolio Manager may, to the extent
permitted by applicable laws and regulations, including, but not limited to
Section 17(d) of the 1940 Act, 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.
(d) In connection with the purchase and sale of securities for the
Portfolio, the Portfolio Manager will arrange for the transmission to the
custodian for the Trust on a daily basis, such confirmation, trade tickets,
and other documents and information as may be reasonably necessary to enable
the custodian to perform its administrative and recordkeeping
responsibilities with respect to the Portfolio. 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. The Portfolio Manager
will provide to the Manager copies of the documents and information sent to
the custodian and the Depository Trust Company as requested by the Manager.
(e) The Portfolio Manager will assist the custodian or
recordkeeping 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 Portfolio for which the
custodian or recordkeeping agent seeks assistance or review from the
Portfolio Manager. The Portfolio Manager will monitor on a daily basis the
determination by the custodian or recordkeeping agent for the Trust the value
of portfolio securities and other assets of the Portfolio and the
determination of net asset value of the Portfolio.
(f) The Portfolio Manager shall regularly report to the Board of
Trustees on the investment program for the Portfolio, and will furnish the
Board of Trustees such periodic and special reports as the Board may
reasonably request.
(g) The Portfolio Manager shall make its officers and employees
available to the Board of Trustees, officers of the Trust, and officers of
the Manager for consultation and discussions regarding the investment program
for the Portfolio.
3. BROKER-DEALER SELECTION. The Portfolio Manager is responsible for
decisions to buy and sell securities and other investments for the Portfolio,
broker-dealer selection, and negotiation of brokerage commission rates. The
Portfolio Manager's primary consideration in effecting a security transaction
will be to obtain the best execution for the Portfolio, taking into account
the factors specified in the Registration Statement. Subject to the
Registration Statement and 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 shall not be deemed to have acted unlawfully or
to have breached any duty created by this Agreement or otherwise solely by
reason of its having caused the Portfolio to pay a broker-dealer for
effecting a portfolio investment transaction in excess of the amount of
commission another broker-dealer would 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 overall
responsibilities with respect to the Portfolio and to its other clients as to
which it exercises investment discretion.
4. EMPLOYEES. In rendering the services required under this
Agreement, the Portfolio Manager may, from time to time, employ such person
or persons as it believes necessary to assist it in carrying out its
obligations under this Agreement. The Portfolio Manager shall be responsible
for making reasonable inquiries and for reasonably ensuring that no employee
of the Portfolio Manager:
(a) has 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, or involving
violations of Sections 1341, 1342, or 1343 of Xxxxx 00, Xxxxxx Xxxxxx
Code; or
(b) has 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
(c) has 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 provisions of federal or state
securities laws involving fraud, deceit, or knowing misrepresentation;
or
(d) is ineligible by reason of Section 9 of the 1940 Act to serve as
an employee of an investment adviser to an investment company.
5. CONFORMITY WITH APPLICABLE LAW. The Portfolio Manager, in the
performance of its duties and obligations under this Agreement, shall act in
conformity with the Registration Statement and with the instructions and
directions of the Board of Trustees and will conform to, and comply with, the
requirements of the 1940 Act and all other applicable federal and state laws
and regulations.
6. EXCLUSIVITY. The services of the Portfolio Manager under this
Agreement are not deemed exclusive, and the Portfolio Manager, or any
affiliate thereof, shall be free to render similar services to other
investment companies and other clients and to engage in other activities, so
long as its services hereunder are not impaired thereby.
7. DOCUMENTS. The Trust has delivered copies of each of the following
documents to the Portfolio Manager and will deliver to it all future
amendments and supplements thereto, if any:
(a) the Trust's Declaration of Trust and its by-laws;
(b) the Registration Statement; and
(c) the prospectus and statement of additional information of the
Trust as currently in effect and as amended and supplemented from time to
time.
8. RECORDS. The Portfolio Manager agrees to maintain and to preserve
records relating to the Trust as required by the 1940 Act. The Portfolio
Manager further agrees that all records which it maintains for the Trust are
the property of the Trust and it will promptly surrender any of such records
upon request.
9. DISCLOSURE BY PORTFOLIO MANAGER. The Portfolio Manager will not
disclose or use any records or information obtained pursuant to this
Agreement (excluding investment research and investment advice) in any manner
whatsoever except as required to carry out its duties as investment adviser
or in the ordinary course of business in connection with placing orders for
the purchase and sale of securities, and will keep confidential any
information obtained pursuant to this Agreement, and disclose such
information only if the Board of Trustees has authorized such disclosure, or
if such disclosure is expressly required by applicable federal or state law
or regulations or regulatory authorities having the requisite authority.
10. DISCLOSURE ABOUT PORTFOLIO MANAGER. The Portfolio Manager will
cooperate with the Trust and the Manager by providing and reviewing
information relating to the Portfolio Manager and the Portfolio for use in
the Registration Statement, shareholder reports and other documents. The
Portfolio Manager represents and warrants that it is a duly registered
investment adviser under the Investment Advisers Act of 1940 and a duly
registered investment adviser in all states in which the Portfolio Manager is
required to be registered.
11. COMPLIANCE. The Portfolio Manager agrees that it shall immediately
notify the Manager and the Trust in the event that:
(a) the SEC has censured the Portfolio Manager; placed limitations
upon its activities, functions or operations; suspended or revoked its
registration as an investment adviser; or commenced proceedings or an
investigation that may result in any of these actions; or
(b) the Portfolio Manager has a reasonable basis for believing
that the Portfolio has ceased to qualify or might not qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code; or
(c) the Portfolio Manager has a reasonable basis for believing
that the Portfolio has ceased to comply or might not comply with the
diversification provisions of Section 817(h) of the Internal Revenue Code or
the regulations thereunder; or
(d) the Portfolio Manager has become aware of a material fact that
is not contained in the Registration Statement or prospectus for the Trust,
or any amendment or supplement thereto, or that any statement contained
therein that has become untrue or misleading in any material respect.
12. EXPENSES. During the term of this Agreement, the Portfolio Manager
will pay all expenses incurred by it in connection with its activities under
this Agreement, including all rent and other expenses involved in providing
office space and equipment required by the Portfolio Manager and the salaries
and expenses of all personnel of the Portfolio Manager. The Portfolio
Manager further agrees to pay all salaries, fees and expenses of any officer
or trustee of the Trust who is an officer, director or employee of the
Portfolio Manager or any of its affiliates. Nothing in this Agreement shall
require the Portfolio Manager to bear the following expenses:
(a) Fees of the Manager and the Portfolio Advisor;
(b) Charges for audits by the Trust's independent public accountants;
(c) Charges of the Trust's transfer agent, registrar, and/or dividend
disbursing agent;
(d) Charges of the Trust's custodian and/or accountant;
(e) Costs of obtaining quotations for calculating the value of each
Portfolio's net assets;
(f) Costs 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, or
employees of the Portfolio Manager or any of its affiliates;
(h) Taxes levied against the Trust;
(i) Brokerage fees and commissions in connection with the purchase
and sale of portfolio securities for the Trust;
(j) Costs, including the interest expense, of borrowing by the Trust;
(k) Costs and/or fees incident to meetings of the Trust's
shareholders, the preparation and mailings of prospectuses, reports, proxy
statements and other communications by the Trust to its shareholders, the
filing of reports with regulatory bodies, the maintenance of the Trust's
existence, and the registration of shares with federal and state securities
or insurance authorities;
(l) The Trust's legal fees, including the legal fees related to
the registration and continued qualification of the Trust's shares for sale;
(m) Costs of printing stock certificates representing shares of
the Trust;
(n) Trustees' fees and expenses of Trustees who are not officers,
directors, or employees of the Portfolio Manager or any affiliates;
(o) Trust's pro rata portion of the fidelity bond required by
Section 17(g) of the 1940 Act, or other insurance premiums;
(p) Membership dues for any association of which the Trust is a
member;
(q) Extraordinary expenses of the Trust as may arise, including
expenses incurred in connection with litigation, proceedings, other claims
against the Trust (unless the Portfolio Manager is responsible for such
expenses under paragraph 14 of this Agreement), and the legal obligations of
the Trust to indemnify its trustees, officers, employees, shareholders,
distributors, and agents with respect to such claims; and
(r) Organizational and offering expenses of the Trust and, if
applicable, reimbursement (with interest) of underwriting discounts and
commissions.
13. COMPENSATION.
(a) For the services provided and the expenses borne by the
Portfolio Manager pursuant to this Agreement, the Trust will pay the
Portfolio Manager 80% of the Initial Monthly Advisory Fee or the Monthly
Advisory Fee, as those terms are defined in this paragraph, whichever is
applicable.
(b) For the period beginning with the effective date of this
Agreement and ending with the last day of the twelfth full calendar month
thereafter, the Portfolio will pay at the end of each month, an advisory fee
calculated at an annual rate of 0.80% of the Portfolio's average daily net
assets (the "Initial Monthly Advisory Fee").
(c) For the period beginning with the first day of the thirteenth
full calendar month after the effective date of this Agreement and continuing
through the remainder of the term of this Agreement, the Portfolio will pay
at the end of each month, an advisory fee (the "Monthly Advisory Fee"). The
Monthly Advisory Fee equals the Basic Fee (as defined in paragraph 13(d)
below) plus the Incentive Fee (as defined in paragraph 13(e) below) and
adjusted, if so required, by paragraph 13(h) below.
(d) The Basic Fee equals one-twelfth of 2% multiplied by the
Portfolio's average daily net assets for the previous 12 months (including
the month for which the fee is being calculated).
(e) The Incentive Fee equals: (i) one-twelfth of the Annual
Incentive Fee set forth in the chart below based on the difference between
the Performance of the Portfolio and the Performance of the Benchmark, as
those terms are defined in paragraphs 13(f) and 13(g) below; (ii) multiplied
by the Portfolio's average daily net assets for the previous 12 months
(including the month for which the fee is being calculated).
Annual
Percentage Point Difference Between Performance of the Portfolio Incentive
and Performance of the Benchmark Fee (%)
------------------------------------------------------------------------------------
+7.5 or greater 2.0%
+6.0 or greater, but less than +7.5 1.5
+4.5 or greater, but less than +6.0 1.0
+3.0 or greater, but less than +4.5 0.5
+1.5 or greater, but less than +3.0 0.0
0.0 or greater, but less than +1.5 -0.5
-1.5 or greater, but less than 0.0 -1.0
-3.0 or greater, but less than -1.5 -1.5
Less than -3.0 -2.0
(f) The Performance of the Portfolio will be calculated by first
determining the change in the Portfolio's net asset value per share during
the previous twelve months (including the month for which the fee is being
computed) assuming the reinvestment of distributions during that period, and
then expressing this amount as a percentage of the net asset value per share
at the beginning of the period. Net asset value per share is calculated by
dividing the value of the securities held by the Portfolio plus any cash or
other assets minus all liabilities including accrued advisory fees and the
other expenses, by the total number of shares outstanding at the time. The
Performance of the Portfolios shall be calculated in accordance with SEC
rules.
(g) The Performance of the Benchmark will be calculated by first
determining the change in the level of the Benchmark during the previous
twelve months (including the month for which the fee is being computed) plus
the value of any cash dividends or distributions made by the companies whose
securities comprise the Benchmark accumulated to the end of the period, and
then expressing this amount as a percentage of the Benchmark at the beginning
of the period. The Performance of the Benchmark shall be calculated in
accordance with SEC rules. The Benchmark is _____________________________.
If the Benchmark ceases to be published, changes in any material respect or
otherwise becomes impracticable to use for purposes of the Incentive Fee, the
Monthly Advisory Fee will equal the Basic Fee (with no incentive adjustment)
until such time as the Board of Trustees approves a substitute Benchmark.
(h) Notwithstanding paragraphs 13(a)-13(g) above, if the
Performance of a Portfolio (minus payment of all expenses, including the
Basic Fee and any Incentive Fee) is negative and does not exceed the
Performance of the Benchmark by six percentage points, then the Monthly
Advisory Fee will equal zero. Notwithstanding paragraphs 13(a)-13(g) above,
if the Performance of a Portfolio (minus payment of all expenses, including
the Basic Fee and any Incentive Fee) is negative, exceeds the Performance of
the Benchmark by six percentage points, but does not exceed the Performance
of the Benchmark by twelve percentage points, then the Monthly Advisory Fee
will not be greater than one-twelfth of 1% of the Portfolio's average daily
net assets for the previous 12 months (including the month for which the fee
is being calculated). Notwithstanding paragraphs 13(a)-13(g) above, if the
Performance of a Portfolio (minus payment of all expenses, including the
Basic Fee and any Incentive Fee) is negative and exceeds the Performance of
the Benchmark by twelve percentage points, then the Monthly Advisory Fee will
not be greater than one-twelfth of 2% of the Portfolio's average daily net
assets for the previous 12 months (including the month for which the fee is
being calculated).
14. LIABILITY AND INDEMNIFICATION. The Portfolio Manager, the Manager
and the Trust each may rely on information reasonably believed by it to be
accurate and reliable. The Portfolio Manager shall not be liable to the
Trust or its shareholders for any loss suffered by the Trust as the result of
any negligent act or error of judgment of the Portfolio Manager in connection
with the matters to which this Agreement relates, except a loss resulting
from a breach by the Portfolio Manager of its fiduciary duty with respect to
the receipt of compensation for services (in which case any award of damages
shall be limited to the period and the amount set forth in Section 36(b)(3)
of the 0000 Xxx) or loss resulting from willful misfeasance, bad faith or
gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement.
The Trust shall indemnify the Portfolio Manager and hold it harmless from all
cost, damage and expense, including reasonable expenses for legal counsel,
incurred by the Portfolio Manager resulting from actions for which it is
relieved of responsibility by this paragraph. The Portfolio Manager shall
indemnify the Trust and hold it harmless from all cost, damage and expense,
including reasonable expenses for legal counsel, incurred by the Trust
resulting from (i) a breach by the Portfolio Manager of its fiduciary duty
with respect to compensation for services paid by the Trust (in which case
any award of damages shall be limited to the period and the amount set forth
in Section 36(b)(3) of the 1940 Act); (ii) willful misfeasance, bad faith or
gross negligence by the Portfolio Manager in the performance of its duties
under this Agreement; or (iii) reckless disregard by the Portfolio Manager of
its obligations and duties under this Agreement.
15. CONTINUATION AND TERMINATION. This Agreement shall take effect on
the date first written above, and shall continue in effect, unless sooner
terminated as provided herein, for 119 days thereafter, and provided that the
Agreement is approved by a majority of the outstanding voting shares of the
Portfolio by the end of such 119th day, shall continue for two years from the
date of this Agreement and shall continue from year to year thereafter so
long as such continuance is specifically approved at least annually (i) by
the vote of a majority of the Board of Trustees; or (ii) by vote of a
majority of the outstanding voting shares of the Portfolio; provided,
further, in either event that continuance is also approved by the vote of a
majority of the Board of Trustees who are not parties to this Agreement or
"interested persons" (as defined in the 0000 Xxx) of the Trust, the Manager
or the Portfolio Manager cast in person at a meeting called for the purpose
of voting on such approval. This Agreement may be terminated (i) by the
Trust at any time, without the payment of any penalty, by vote of a majority
of the entire Board of Trustees or by a vote of a majority of the outstanding
voting shares of the Portfolio, on sixty (60) days' written notice to the
Manager and the Portfolio Manager, (ii) by the Manager at any time, without
the payment of any penalty, on ninety (90) days' written notice to the Trust
and the Portfolio Manager, or (iii) by the Portfolio Manager at any time,
without the payment of any penalty, on ninety (90) days' written notice to
the Trust and the Manager. This Agreement will automatically and immediately
terminate in the event of its "assignment" (as defined in the 1940 Act).
16. INDEPENDENT CONTRACTOR. The Portfolio Manager shall for all
purposes herein be deemed to be an independent contractor and shall, unless
otherwise expressly provided herein or authorized by the Board of Trustees
from time to time, have no authority to act for or represent the Trust in any
way or otherwise be deemed its agent.
17. USE OF NAME. It is understood that the words "Palladian" and
"Fulcrum Fund," any derivative thereof and any design associated with those
words (collectively, the "Words and Designs") are the valuable property of
the Trust, and that the Portfolio Manager shall have the right to use the
Words and Designs only with the approval of the Trust. Upon termination of
this Agreement, the Portfolio Manager shall promptly discontinue all use of
the Words and Designs.
18. SALES LITERATURE. The Manager agrees to furnish to the Portfolio
Manager all sales literature which refers to the Portfolio Manager prior to
use thereof and not to use such sales literature if the Portfolio Manager
reasonably objects in writing five business days (or such other time as may
be mutually agreed) after receipt thereof. Sales literature may be furnished
to the Portfolio Manager by first class mail, overnight delivery service,
facsimile transmission equipment, or hand delivery.
19. NOTICE. Notices of any kind to be given to the Trust shall be in
writing and shall be duly given if sent by first class mail or delivered to
the Trust at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000, or at such other
address or to such individual as shall be specified by the Trust (with proper
notice to the Manager and the Portfolio Manager). Notices of any kind to be
given to the Manager shall be in writing and shall be duly given if sent by
first class mail or delivered to the Manager at 000 Xxxxxxx Xxxxxx,
Xxxxxxxxx, XX 00000, or at such other address or to such individual as shall
be specified by the Manager (with proper notice to the Trust and the
Portfolio Manager). Notices of any kind to be given to the Portfolio Manager
shall be in writing and shall be duly given if sent by first class mail or
delivered to the Portfolio Manager at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, XX
00000, or at such other address or to such individual as shall be specified
by the Portfolio Manager (with proper notice to the Trust and the Manager).
20. OBLIGATION. A copy of the Trust's Agreement and Declaration of
Trust is on file with the Secretary of the Commonwealth of Massachusetts.
Notice is hereby given that this Agreement has been executed on behalf of the
Trust by a trustee of the Trust in his or her capacity as trustee and not
individually. The obligations of this Agreement shall only 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.
21. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original.
22. APPLICABLE LAW. This Agreement shall be governed by the laws of
Massachusetts, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Investment Advisers Act of 1940, or any
rules or order of the SEC thereunder.
23. SEVERABILITY. 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.
24. CAPTIONS. 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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed by their officers designated below on the day and year first
above written.
The Palladian Trust
By: Witness
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Xxxxxx X. Xxxx Assistant Secretary
Allmerica Investment Management
Company, Inc.
By:
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Witness Name:
Title:
Allmerica Asset Management, Inc.
By:
---------------------- ----------------------
Witness Name:
Title:
