EXHIBIT d(2)(V)
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 31st day of July, 2002, among The GCG Trust (the
"Trust"), a Massachusetts business trust, Directed Services, Inc. (the
"Manager"), a New York corporation, and Xxxxxxxx Associates LLC ("Portfolio
Manager"), a limited liability company 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 the 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 protection of 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 and to file
with its tax return an election to be a regulated investment company and satisfy
the distribution requirements under Section 852 (a) of the Internal Revenue
Code, all 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;
provided that the Portfolio Manager has been provided with written notice of
such other rules and regulations pertaining to investment vehicles underlying
variable annuity or variable life insurance policies. 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) 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.
2
(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 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 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 (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, had 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
3
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
(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
Manager's and Trust's custodian in conformity with its
mandate.
(v) That in the event of the termination of this Agreement,
the Portfolio Manager, if legally and operationally possible,
may 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, 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
4
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.
The Portfolio Manager will consult with the Manager to the end that
portfolio transactions on behalf of a Series are directed to broker-dealers on
the basis of 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,
to any of its affiliated broker-dealers as agents, 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 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 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 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;
5
(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 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
6
(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 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
7
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 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-1 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 "Xxxxxxxx," or "Xxxxxxxx Associates" or any derivative thereof or
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;
8
(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. 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,
arising out of the Manager's responsibilities to the Trust which (1) may be
based upon any violations of willful misconduct, malfeasance, bad faith or gross
negligence by 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 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 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.
9
(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 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 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 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
10
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 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.
(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
11
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 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 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:
Xxxxxxxx Associates LLC
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Legal Department
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
12
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 prior approval of the
Manager (such approval shall not be unreasonably withheld) 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 "Xxxxxxxx," or "Xxxxxxxx
Associates" 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 only with the prior approval of the
Portfolio Manager (such approval shall not be unreasonably withheld) 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 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
13
of this Agreement shall be deemed to be severable.
(e) Nothing herein shall be construed as constituting the Portfolio
Manager as an agent of the Manager, or constituting the Manager as an agent of
the Portfolio Manager.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
THE GCG TRUST
Attest____________________________ By: [ILLEGIBLE]
---------------------------------
Title:____________________________ Title: Secretary
DIRECTED SERVICES, INC.
Attest____________________________ By: [ILLEGIBLE]
---------------------------------
Title:____________________________ Title: SVP
XXXXXXXX ASSOCIATES LLC
Attest /s/ Xxxxx Xxxxx By: /s/ Xxxxx X. Xxxxxx
--------------------------- --------------------------------
Xxxxx Xxxxx Xxxxx X. Xxxxxx
Title: Vice President - Legal Title: Executive Vice President
14
SCHEDULE A
The Series of The GCG Trust, as described in Section 1 of the attached
Portfolio Management Agreement, to which Xxxxxxxx Investments LLC shall act as
Portfolio Manager is as follows:
Equity Opportunity Series (formerly, Capital Appreciation Series)
15
SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by Xxxxxxxx Investments LLC ("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
Equity Opportunity Series
(formerly Capital Appreciation Series) 0.50% on first $50 million;
0.475% on next $150 million;
0.45% on next $300 million; and
0.40% in excess of $500
million
16
