PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 30th day of January, 2002, among The GCG Trust (the
"Trust"), a Massachusetts business trust, Directed Services, Inc. (the
"Manager"), a New York corporation, and Xxxxxx Xxxxxxx Investment Management
Inc. d/b/a Xxx Xxxxxx (the "Portfolio Manager"), a corporation organized under
the laws of the State of Maryland.
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 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 under the terms and conditions described below for a period of one hundred
and fifty (150) days, and the Portfolio Manager is willing to furnish such
services to the Trust and the Manager on an interim basis pending shareholder
approval of a new portfolio management agreement among the Trust on behalf of
the series, DSI and the Portfolio Manager (the "New Agreement");
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 Xxxxxx Xxxxxxx
Investment Management Inc. d/b/a Xxx Xxxxxx 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 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 the 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
the Series. In accordance with the forgoing duties, the Portfolio Manager is
hereby authorized to act as agent for the portfolio 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 the 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 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. 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 (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 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 Internal Revenue 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 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. 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
Internal Revenue Code and regulations issued thereunder and of rules or
regulations pertaining to investment vehicles underlying variable annuity or
variable life insurance policies.
(b) 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 laws and regulations, with any applicable procedures adopted
by the Trust's Board of Trustees (the "Board") of which the Portfolio Manager
has been notified in writing, and the provisions of the Registration Statement
of the Trust under the Securities Act of 1933 (the "1933 Act") and the 1940 Act,
as supplemented or amended, (provided that the Manager on behalf of the Board
has delivered copies of any such supplement or amendments to the Portfolio
Manager).
(c) 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, provided, however that the Manager and the Board shall have the right
to review and request changes to the Portfolio Manager's manner of allocation,
provided further that any requested changes to such manner of allocation shall
be implemented on a prospective basis only.
(d) 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 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.
(e) 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,
and the parties agree that the Portfolio Manager shall not bear responsibility
or liability for the determination or accuracy of the valuation of any portfolio
securities and other assets of the Series except to the extent that the
Portfolio Manager exercises judgment with respect to any such valuation.
(f) 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.
(g) 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 each 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.
(h) 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 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.
(i) 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 may offer its counterparty the ability
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 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 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. 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 any of its affiliated
broker-dealers, 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 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;
(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
(q) 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 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 Internal Revenue Code of
1986, as amended (the "Code"), or (3) upon having a reasonable basis for
believing that the Series has ceased to comply with the diversification
provisions of Section 817(h) of the Code or the regulations thereunder. The
Portfolio Manager further agrees to notify the Manager and the Trust promptly of
any material fact known to the Portfolio Manager respecting or relating to the
Portfolio Manager that is not contained in the Registration Statement as then in
effect, and is required to be stated therein or necessary to make the statements
therein not misleading, or of any statement contained therein that becomes
untrue in any material respect.
(b) The Manager agrees that it shall immediately notify the Portfolio
Manager (1) in the event that the SEC has censured the Manager or the Trust;
placed limitations upon either of their activities, functions, or operations;
suspended or revoked the Manager's registration as an investment adviser; or has
commenced proceedings or an investigation that may result in any of these
actions, (2) upon having a reasonable basis for believing that the Series has
ceased to qualify or might not qualify as a regulated investment company under
Subchapter M of the Code, or (3) upon having a reasonable basis for believing
that the Series has ceased to comply with the diversification provisions of
Section 817(h) of the Code or the regulations thereunder.
9. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Portfolio Manager hereby agrees that all records which
it maintains for the Series are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's or the
Manager's reasonable request, although the Portfolio Manager may, at its own
expense, make and retain a 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.
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 "Xxxxxx Xxxxxxx," "Xxx Xxxxxx," "Xxxxxx Xxxxxxxx" or "MAS" or any
logos associated therewith. The Trust and the Manager agree that they will not
use any such material without the prior consent of the Portfolio Manager, which
consent shall not be unreasonably withheld. In the event of the termination of
this Agreement, the Trust and the Manager will furnish to the Portfolio Manager
copies of any of the above-mentioned materials that refer or relate in any way
to the Portfolio Manager;
(b) The Trust and the Manager will furnish to the Portfolio Manager
such information relating to either of them or the business affairs of the Trust
as the Portfolio Manager shall from time to time reasonably request in order to
discharge its obligations hereunder;
(c) The Manager and the Trust agree that neither the Trust, the
Manager, nor affiliated persons of the Trust or the Manager shall give any
information or make any representations or statements in connection with the
sale of shares of the Series concerning the Portfolio Manager or the Series
other than the information or representations contained in the Registration
Statement, prospectus, or statement of 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 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 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, 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 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
otherwise than on account of this Section 14. 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 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 14. 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.
15. DURATION AND TERMINATION. This Agreement shall become effective on
the date first indicated above. Unless terminated as provided herein, this
Agreement shall remain in full force and effect until the earlier of: (i) one
hundred and fifty (150) days from the date hereof; (ii) the date a superseding
agreement which has been approved by the vote of a majority of the outstanding
voting securities (as defined in the 0000 Xxx) of the applicable Series becomes
effective; or (iii) such other time as may be mutually agreed to by the parties
hereto.
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 the applicable 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 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. This 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, 13, 14, and 17 of this Agreement shall remain in effect, as
well as any applicable provision of this Paragraph numbered 15.
16. 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 material amendment of this Agreement shall be
effective until approved by an affirmative vote of (i) the Trustees of the
Trust, including a majority of the Trustees of the Trust who are not interested
persons of any party to this Agreement, and (ii) the holders of a majority of
the outstanding voting securities of the Series, cast in person at a meeting
called for the purpose of voting on such approval, if such approval is required
by applicable law.
17. USE OF NAME.
(a) It is understood that the name "Directed Services, Inc." or any
derivative thereof or logo associated with that name is the valuable property of
the Manager and/or its affiliates, and that the Portfolio Manager has the right
to use such name (or derivative or logo) only with the approval of the Manager
and only so long as the Manager is Manager to the Trust and/or the Series. Upon
termination of the Management Agreement between the Trust and the Manager, the
Portfolio Manager shall as soon as is reasonably possible cease to use such name
(or derivative or logo).
(b) It is understood that the names "Xxxxxx Xxxxxxx," "Xxx Xxxxxx,"
"Xxxxxx Xxxxxxxx" or "MAS" or any derivative thereof or logos associated with
those names are the valuable property of the Portfolio Manager and its
affiliates and that the Trust and/or the Series have the right to use such names
(or derivatives or logos) in offering materials of the Trust with the approval
of the Portfolio Manager and for so long as the Portfolio Manager is a portfolio
manager to the Trust and/or the Series. Upon termination of this Agreement
between the Trust, the Manager, and the Portfolio Manager, the Trust shall as
soon as is reasonably possible cease to use such names (or derivatives or
logos).
18. 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.
19. 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 of this
Agreement shall be deemed to be severable.
(e) Nothing herein shall be construed as constituting the Portfolio
Manager as an agent of the Manager, or constituting the Manager as an agent of
the Portfolio Manager.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
THE GCG TRUST
Attest By:
---------------------------- --------------------------------------
Title: Title:
---------------------------- -----------------------------------
DIRECTED SERVICES, INC.
Attest By:
---------------------------- --------------------------------------
Title: Title:
---------------------------- -----------------------------------
XXXXXX XXXXXXX INVESTMENT MANAGEMENT INC.
Attest By:
---------------------------- --------------------------------------
Title: Title:
---------------------------- ----------------------------------
SCHEDULE A
The Series of The GCG Trust, as described in Section 1 of the attached
Portfolio Management Agreement, to which Xxxxxx Xxxxxxx Investment
Management Inc. d/b/a Xxx Xxxxxx shall act as Portfolio Manager is as
follows:
Xxx Xxxxxx Growth and Income Series
SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by Xxxxxx Xxxxxxx Investment Management Inc.
("Portfolio Manager") to the following Series of The GCG Trust, pursuant to the
attached Portfolio Management Agreement, the Manager will pay the Portfolio
Manager a fee, computed daily and payable monthly, based on the average daily
net assets of the Series at the following annual rates of the average daily net
assets of the Series:
SERIES RATE
Xxx Xxxxxx Growth and Income Series
(formerly, Rising Dividends Series) 0.50% on the first $100 million
0.40% on the next $100 million;
0.30% on the next $100 million;
0.25% on the next $700 million; and
0.20% on assets in excess of $1 billion
