PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this ____ day of April, 2002, among The GCG Trust (the
"Trust"), a Massachusetts business trust, Directed Services, Inc. (the
"Manager"), a New York corporation, and Janus Capital Management LLC ("Portfolio
Manager"), a Delaware limited liability company.
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 many of the Trust's series;
WHEREAS, the Trust and the Manager wish to retain the Portfolio Manager to
furnish investment advisory services to one or more of the series of the Trust,
and the Portfolio Manager is willing to furnish such services to the Trust and
the Manager;
NOW THEREFORE, in consideration of the premises and the promises and mutual
covenants herein contained, it is agreed between the Trust, the Manager, and the
Portfolio Manager as follows:
1. APPOINTMENT. The Trust and the Manager hereby appoint Janus Capital
Management LLC to act as Portfolio Manager to the Series designated on Schedule
A of this Agreement (each a "Series") for the periods and on the terms set forth
in this Agreement. The Portfolio Manager accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
In the event the Trust designates one or more series other than the Series
with respect to which the Trust and the Manager wish to retain the Portfolio
Manager to render investment advisory services hereunder, they shall promptly
notify the Portfolio Manager in writing. If the Portfolio Manager is willing to
render such services, it shall so notify the Trust and Manager in writing,
whereupon such series shall become a Series hereunder, and be subject to this
Agreement.
2. PORTFOLIO MANAGEMENT DUTIES. Subject to the supervision of the Trust's
Board of Trustees and the Manager, the Portfolio Manager will provide a
continuous investment program for each Series' portfolio and determine the
composition of the assets of each Series' portfolio, including determination of
the purchase, retention, or sale of the securities, cash, and other investments
contained in the portfolio. The Portfolio Manager will provide investment
research and conduct a continuous program of evaluation, investment, sales, and
reinvestment of each Series' assets by determining the securities and other
investments that shall be purchased, entered into, sold, closed, or exchanged
for the Series, when these transactions should be executed, and what portion of
the assets of each Series should
be held in the various securities and other investments in which it may invest,
and the Portfolio Manager is hereby authorized to execute and perform such
services on behalf of each Series. To the extent permitted by the investment
policies of the Series, the Portfolio Manager shall make decisions for the
Series as to foreign currency matters and make determinations as to and execute
and perform foreign currency exchange contracts on behalf of the Series. 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, copies of which
shall be sent to the Portfolio Manager by the Manager upon filing with the SEC.
Prior to filing the Manager will provide an opportunity for the Portfolio
Manager to review the Trust's prospectus and statement of additional
information. 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, both of which shall not be the
responsibility of the Portfolio Manager), (2) manage each Series so that no
action or omission on the part of the Portfolio Manager shall cause a Series to
fail to comply with the diversification requirements of Section 817(h) of the
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. Portfolio Manager shall have no responsibility to monitor those
limitations or restrictions, including the 90%-source test, for which the
Portfolio Manager has not been provided sufficient information in accordance
with Section 2(j) of this Agreement or otherwise, provided Portfolio Manager has
notified Manager of its need for such information. All such monitoring shall be
the responsibility of the Manager.
(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 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, of which the Portfolio Manager has received a copy ("Registration
Statement"). The Manager or the Trust will notify the Portfolio Manager of
pertinent provisions of applicable state insurance law with which the Portfolio
Manager must comply under this Paragraph 2(b).
(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
2
incurred in the transaction, will be made by the Portfolio Manager in a manner
that is fair and equitable in the judgment of the Portfolio Manager in the
exercise of its fiduciary obligations to the Trust and to such other clients,
subject to review by the Manager and the Board of Trustees.
(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 its administrative and
recordkeeping responsibilities with respect to the Series. With respect to
portfolio securities to be purchased or sold through the Depository Trust
Company, the Portfolio Manager will arrange for the automatic transmission of
the confirmation of such trades to the Trust's custodian and portfolio
accounting agent.
(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 for the Trust, 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. The Portfolio Manager shall not otherwise be responsible for
portfolio accounting nor shall it be required to generate information derived
from portfolio accounting data.
(f) The Portfolio Manager will make available to the Trust and the Manager,
promptly upon request, all of the Series' investment records and ledgers
maintained by the Portfolio Manager (which shall not include the records and
ledgers maintained by the custodian and portfolio accounting agent for the
Trust) as are necessary to assist the Trust and the Manager to comply with
requirements of the 1940 Act and the Investment Advisers Act of 1940 (the
"Advisers Act"), as well as other applicable laws. 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 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.
(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
3
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) Portfolio Manager shall be responsible for the preparation and filing
of Schedule 13G and 13F on behalf of the Series. Portfolio Manager shall not be
responsible for preparing or filing of any other reports required of the Series
by any governmental or regulatory agency, except as may be expressly agreed to
in writing. This section shall not be interpreted to relieve Portfolio Manager
of its duty to file reports of it as an investment adviser. Portfolio Manager
shall vote proxies received in connection with securities held by the Series.
(j) Manager shall timely furnish Portfolio Manager with such information as
may be reasonably necessary for or requested by Portfolio Manager to perform its
responsibilities.
(k) The Series assets shall be maintained in the custody of the Trust's
designated custodian. Any assets added to the Series shall be delivered directly
to such custodian. Portfolio Manager shall have no liability for the acts or
omissions of any custodian of the Series' assets, except for Portfolio Manager's
instructions given to any custodian. Portfolio Manager shall have no
responsibility, except for Portfolio Manager's instructions to custodian, for
custodian's compliance with the segregation requirement of the 1940 Act or other
applicable law. Portfolio Manager shall be subject to a written code of ethics
adopted by it pursuant to Rule 17j-1(b) 0f the 1940 Act, which was adopted by
the Board of Trustees of the Trust as the code of ethics for the Series, and
shall not be subject to any other code of ethics, including Manager's code of
ethics, unless specifically adopted by Portfolio Manager.
3. BROKER-DEALER SELECTION. The Portfolio Manager is responsible for
decisions to buy and sell securities and other investments for each Series'
portfolio, broker-dealer selection, and negotiation of brokerage commission
rates. The Portfolio Manager's primary consideration in effecting a security
transaction will be to obtain the best execution for the Series, taking into
account the factors specified in the prospectus and/or statement of additional
information for the Trust, which include price (including the applicable
brokerage commission or dollar spread), the size of the order, the nature of the
market for the security, the timing of the transaction, the reputation, the
experience and financial stability of the broker-dealer involved, the quality of
the service, the difficulty of execution, and the execution capabilities and
operational facilities of the firms involved, and the firm's risk in positioning
a block of securities. Accordingly, the price to the Series in any transaction
may be less favorable than that
4
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 shall not be deemed to have acted unlawfully or to have
breached any duty created by this Agreement or otherwise solely by reason of its
having caused the Series to pay a broker-dealer for effecting a portfolio
investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction, if the
Portfolio Manager or its affiliate 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 its affiliated broker-dealer, or
to such brokers and dealers who also provide research or statistical material,
or other services to the Series, the Portfolio Manager, or an affiliate of the
Portfolio Manager. Such allocation shall be in such amounts and proportions as
the Portfolio Manager shall determine consistent with the above standards, and
the Portfolio Manager will report on said allocation regularly to the Board of
Trustees of the Trust indicating the broker-dealers to which such allocations
have been made and the basis therefor. Pursuant to the Procedures for Opening
Brokerage and Other Accounts, the Portfolio Manager is authorized to open
brokerage and other trading accounts on behalf of the Series in compliance with
these procedures.
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.
Manager represents and warrants that: (a) it has complied, in all material
respects, with all registrations required by, and will comply, in all material
respects, with all applicable rules and regulations of, the SEC, and (b) it has
authority under the Management Agreement and applicable law to execute, deliver
and perform this Agreement.
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;
5
(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 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) Costs of printing stock certificates representing shares of the Trust;
(n) Trustees' fees and expenses to trustees who are not officers,
employees, or stockholders of the Portfolio Manager or any affiliate thereof;
(o) The Trust's pro rata portion of the fidelity bond required by Section
17(g) of the 1940 Act, or other insurance premiums;
(p) Association membership dues;
(q) Extraordinary expenses of the Trust as may arise including expenses
incurred in connection with litigation, proceedings, and other claims (unless
the Portfolio Manager is responsible for such expenses under Section 14 of this
Agreement), and the legal obligations of the Trust to indemnify its Trustees,
officers, employees, shareholders, distributors, and agents with respect
thereto; and
(r) Organizational and offering expenses.
6
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, 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 Internal Revenue
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 or prospectus for the Trust, or any
amendment or supplement thereto, and is required to be stated therein or
necessary to make the statements therein not misleading, or of any statement
contained therein that becomes untrue in any material respect.
(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 Internal Revenue 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 Internal Revenue Code or the Regulations
thereunder.
9. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Portfolio Manager hereby agrees that all records which
it maintains for the Series are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's or the
Manager's request, although the Portfolio Manager may, at its own expense, make
and retain a copy of such records. The Portfolio Manager further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records
required to be maintained by Rule 31a-l under the 1940 Act and to preserve the
records required by Rule 204-2 under the Advisers Act for the period specified
in the Rule.
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.
7
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, Janus Capital
Management LLC or any of its affiliates (other than the Manager), or that use
any derivative of the name Janus Capital Management LLC or any logo associated
therewith. The Trust and the Manager agree that they will not use any such
material without the prior written consent of the Portfolio Manager, which
consent shall not be unreasonably withheld or delayed. The Series' name shall
not include the name Janus without prior written consent of the Portfolio
Manager. In the event of the termination of this Agreement, the Trust and the
Manager will furnish to the Portfolio Manager copies of any of the
above-mentioned materials that refer or relate in any way to the Portfolio
Manager;
(b) the Trust and the Manager will furnish to the Portfolio Manager such
information relating to either of them or the business affairs of the Trust as
the Portfolio Manager shall from time to time reasonably request in order to
discharge its obligations hereunder;
(c) the Manager and the Trust agree that neither the Trust, the Manager,
nor affiliated persons of the Trust or the Manager shall give any information or
make any representations or statements in connection with the sale of shares of
the Series concerning the Portfolio Manager or the Series other than the
information or representations contained in the Registration Statement,
prospectus, or statement of additional information for the Trust, as they may be
amended or supplemented from time to time, or in reports or proxy statements for
the Trust, or in sales literature or other promotional material approved in
advance by the Portfolio Manager, except with the prior permission of the
Portfolio Manager.
12. CONTROL. It is understood and agreed that the Trust shall at all times
retain the ultimate responsibility for and control of all functions performed
pursuant to this Agreement and reserve the right to direct, approve, or
disapprove any action hereunder taken on its behalf by the Portfolio Manager.
13. SERVICES NOT EXCLUSIVE. It is understood that the services of the
Portfolio Manager are not exclusive, and nothing in this Agreement shall prevent
the Portfolio Manager (or its affiliates) from providing similar services to
other clients, including investment companies (whether or not their investment
objectives and policies are similar to those of the Series) or from engaging in
other activities.
14. LIABILITY. Except as may otherwise be required by the 1940 Act or the
rules thereunder or other applicable law, the Trust and the Manager agree that
the Portfolio Manager, any affiliated person of the Portfolio Manager, and each
person, if any, who, within the meaning of Section 15 of the 1933 Act, controls
the Portfolio Manager shall not be liable for, or subject to any damages,
expenses, or losses in connection with, any act or omission connected with or
arising out of any services rendered under this Agreement, except by reason of
willful misfeasance, bad faith, or gross negligence in the performance of the
Portfolio Manager's duties, or by reason of reckless disregard of the Portfolio
Manager's obligations and duties under this Agreement.
15. INDEMNIFICATION.
(a) Notwithstanding Section 14 of this Agreement, the Manager agrees to
indemnify and hold harmless the Portfolio Manager, any affiliated person of the
Portfolio Manager (other than the Manager), and each person, if any, who, within
the meaning of Section 15 of the 1933 Act controls ("controlling
8
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 Internal Revenue 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 misfeasance,
malfeasance, or nonfeasance 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 14 of this Agreement, the Portfolio Manager
agrees to indemnify and hold harmless the Manager, any affiliated person of the
Manager (other than the Portfolio Manager), and each person, if any, who, within
the meaning of Section 15 of the 1933 Act, controls ("controlling person") the
Manager (all of such persons being referred to as "Manager Indemnified Persons")
against any and all losses, claims, damages, liabilities, or litigation
(including legal and other expenses) to which a Manager Indemnified Person may
become subject under the 1933 Act, 1940 Act, the Advisers Act, the Internal
Revenue 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 misfeasance, malfeasance, or nonfeasance by the
Portfolio Manager, any of its employees or representatives, or any affiliate of
or any person acting on behalf of the Portfolio Manager, (2) may be based upon a
failure to comply with Section 2, Paragraph (a) of this Agreement, or (3) may be
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or prospectus covering the shares of the
Trust or a Series, or any amendment or supplement thereto, or the omission or
alleged omission to state therein a material fact known or which should have
been known to the Portfolio Manager and was required to be stated therein or
necessary to make the statements therein not misleading, if such a statement or
omission was made in reliance upon information furnished to the Manager, the
Trust, or any affiliated person of the Manager or Trust by the Portfolio Manager
or any affiliated person of the Portfolio Manager; provided, however, that in no
case shall the indemnity in favor of a Manager Indemnified Person be deemed to
protect such person against any liability to which any such person would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
(c) The Manager shall not be liable under Paragraph (a) of this Section 15
with respect to any claim made against a Portfolio Manager Indemnified Person
unless such Portfolio Manager Indemnified Person shall have notified the Manager
in writing within a reasonable time after the summons, notice, or other first
legal process or notice giving information of the nature of the claim shall have
been served upon such Portfolio Manager Indemnified Person (or after such
Portfolio Manager Indemnified Person shall have received notice of such service
on any designated agent), but failure to notify the Manager of
9
any such claim shall not relieve the Manager from any liability which it may
have to the Portfolio Manager Indemnified Person against whom such action is
brought otherwise than on account of this Section 15. In case any such action is
brought against the Portfolio Manager Indemnified Person, the Manager will be
entitled to participate, at its own expense, in the defense thereof or, after
notice to the Portfolio Manager Indemnified Person, to assume the defense
thereof, with counsel 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 15 with respect to any claim made against a Manager Indemnified Person
unless such Manager Indemnified Person shall have notified the Portfolio Manager
in writing within a reasonable time after the summons, notice, or other first
legal process or notice giving information of the nature of the claim shall have
been served upon such Manager Indemnified Person (or after such Manager
Indemnified Person shall have received notice of such service on any designated
agent), but failure to notify the Portfolio Manager of any such claim shall not
relieve the Portfolio Manager from any liability which it may have to the
Manager Indemnified Person against whom such action is brought otherwise than on
account of this Section 15. In case any such action is brought against the
Manager Indemnified Person, the Portfolio Manager will be entitled to
participate, at its own expense, in the defense thereof or, after notice to the
Manager Indemnified Person, to assume the defense thereof, with counsel
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 15 to indemnify and
hold harmless the Portfolio Manager and the Portfolio Manager shall not be
liable under this Section 15 to indemnify
10
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.
16. DURATION AND TERMINATION. This Agreement shall become effective on the
date first indicated above. Unless terminated as provided herein, the Agreement
shall remain in full force and effect for two (2) years from such date and
continue on an annual basis thereafter with respect to each Series; provided
that such annual continuance is specifically approved each year by (a) the vote
of a majority of the entire Board of Trustees of the Trust, or by the vote of a
majority of the outstanding voting securities (as defined in the 0000 Xxx) of
each Series, and (b) the vote of a majority of those Trustees who are not
parties to this Agreement or interested persons (as such term is defined in the
0000 Xxx) of any such party to this Agreement cast in person at a meeting called
for the purpose of voting on such approval. The Portfolio Manager shall not
provide any services for such Series or receive any fees on account of such
Series with respect to which this Agreement is not approved as described in the
preceding sentence. However, any approval of this Agreement by the holders of a
majority of the outstanding shares (as defined in the 0000 Xxx) of a Series
shall be effective to continue this Agreement with respect to such Series
notwithstanding (i) that this Agreement has not been approved by the holders of
a majority of the outstanding shares of any other Series or (ii) that this
agreement has not been approved by the vote of a majority of the outstanding
shares of the Trust, unless such approval shall be required by any other
applicable law or otherwise. Notwithstanding the foregoing, this Agreement may
be terminated for each or any Series hereunder: (a) by the Manager at any time
without penalty, upon sixty (60) days' written notice to the Portfolio Manager
and the Trust, (b) at any time without payment of any penalty by the Trust, upon
the vote of a majority of the Trust's Board of Trustees or a majority of the
outstanding voting securities of each Series, upon sixty (60) day's written
notice to the Manager and the Portfolio Manager, or (c) by the Portfolio Manager
at any time without penalty, upon sixty (60) days written notice to the Manager
and the Trust. In addition, this Agreement shall terminate with respect to a
Series in the event that it is not initially approved by the vote of a majority
of the outstanding voting securities of that Series at a meeting of shareholders
at which approval of the Agreement shall be considered by shareholders of the
Series. In the event of termination for any reason, all records of each Series
for which the Agreement is terminated shall promptly be returned to the Manager
or the Trust, free from any claim or retention of rights in such records by the
Portfolio Manager, although the Portfolio Manager may, at its own expense, make
and retain a copy of such records. The Agreement shall automatically terminate
in the event of its assignment (as such term is described in the 1940 Act). In
the event this Agreement is terminated or is not approved in the manner
described above, the Sections or Paragraphs numbered 2(f), 9, 10, 11, 14, 15,
and 18 of this Agreement shall remain in effect, as well as any applicable
provision of this Paragraph numbered 16.
17. AMENDMENTS. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved by an affirmative vote of (i) the holders of a majority of the
outstanding voting securities of the Series, and (ii) 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.
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
11
Portfolio Manager has the right to use such name (or derivative or logo) only
with the approval of the Manager and only so long as the Manager is Manager to
the Trust and/or the Series. Upon termination of the Management Agreement
between the Trust and the Manager, the Portfolio Manager shall as soon as is
reasonably possible cease to use such name (or derivative or logo).
(b) It is understood that the name "Janus" or any derivative thereof or
logo associated with that name is the valuable property of the Portfolio Manager
and its affiliates and that the Trust and/or the Series have the right to use
such name (or derivative or logo) in offering materials of the Trust with the
approval of the Portfolio Manager, only as stated in Section 11, and only for so
long as the Portfolio Manager is a portfolio manager to the Trust and/or the
Series. Upon termination of this Agreement between the Trust, the Manager, and
the Portfolio Manager, the Trust shall as soon as is reasonably possible cease
to use such name (or derivative or logo).
19. AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST. A copy of the
Amended and Restated Agreement and Declaration of Trust for the Trust is on file
with the Secretary of the Commonwealth of Massachusetts. The Amended and
Restated Agreement and Declaration of Trust has been executed on behalf of the
Trust by Trustees of the Trust in their capacity as Trustees of the Trust and
not individually. The obligations of this Agreement shall be binding upon the
assets and property of the Trust and shall not be binding upon any Trustee,
officer, or shareholder of the Trust individually.
20. MISCELLANEOUS.
(a) This Agreement shall be governed by the laws of the State of Delaware,
provided that nothing herein shall be construed in a manner inconsistent with
the 1940 Act, the Advisers Act or rules or orders of the SEC thereunder. The
term "affiliate" or "affiliated person" as used in this Agreement shall mean
"affiliated person" as defined in Section 2(a)(3) of the 0000 Xxx.
(b) The captions of this Agreement are included for convenience only and in
no way define or limit any of the provisions hereof or otherwise affect their
construction or effect.
(c) To the extent permitted under Section 16 of this Agreement, this
Agreement may only be assigned by any party with the prior written consent of
the other parties.
(d) If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby, and to this extent, the provisions of this
Agreement shall be deemed to be severable.
(e) Nothing herein shall be construed as constituting the Portfolio Manager
as an agent of the Manager, or constituting the Manager as an agent of the
Portfolio Manager.
12
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:
----------------------------- ---------------------------------
JANUS CAPITAL MANAGEMENT LLC
Attest By:
----------------------------- ------------------------------------
Title: Title:
----------------------------- ---------------------------------
13
SCHEDULE A
The Series of The GCG Trust, as described in Section 1 of the attached
Portfolio Management Agreement, to which Janus Capital Management LLC shall act
as Portfolio Manager are as follows:
Growth Series
Janus Growth and Income Series
Special Situations Series
14
SCHEDULE B
COMPENSATION FOR SERVICES TO SERIES
For the services provided by Janus Capital Management LLC ("Portfolio
Manager") to the following Series of The GCG Trust, pursuant to the attached
Portfolio Management Agreement, dated April ___, 2002, the Manager will pay the
Portfolio Manager a fee, computed daily and payable monthly, based on the
average daily net assets of the applicable Series at the following annual rates:
SERIES FEE
Growth Series 0.55% on first $100 million;
0.50% on next $400 million;
0.45% on next $500 million;
0.425% on the next $2 billion; and
0.40% in excess of $3 billion
Special Situation Series and 0.55% on first $100 million;
Janus Growth and Income Series 0.50% on next $400 million; and
0.45% on amounts in excess of $500 million.
15
