SUBADVISORY AGREEMENT
Exhibit (d)(gg)
AGREEMENT made effective the 1st day of May, 2010 among Franklin Advisory Services, LLC, a
Delaware Limited Liability Company (“Subadviser”), Pacific Life Fund Advisors LLC, a Delaware
Limited Liability Company (“Investment Adviser”), and Pacific Select Fund, a Massachusetts Business
Trust (the “Trust”).
WHEREAS, the Trust is registered with the Securities and Exchange Commission (“SEC”) as an
open-end, management investment company under the Investment Company Act of 1940, as amended (the
“1940 Act”);
WHEREAS, the Investment Adviser is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended (“Advisers Act”);
WHEREAS, the Subadviser is registered with the SEC as an investment adviser under the Advisers
Act;
WHEREAS, the Trust has retained the Investment Adviser to render investment advisory services
to the various portfolios of the Trust pursuant to an Advisory Agreement, as amended, and such
Agreement authorizes the Investment Adviser to engage a subadviser to discharge the Investment
Adviser’s responsibilities with respect to the investment management of such portfolios;
WHEREAS, the Trust and the Investment Adviser desire to retain the Subadviser to furnish
investment advisory services to one or more portfolios of the Trust, and the Subadviser is willing
to furnish such services to such portfolios and the Investment Adviser in the manner and on the
terms hereinafter set forth; and
NOW THEREFORE, in consideration of the promises and mutual covenants herein contained, it is
agreed among the Trust, the Investment Adviser, and the Subadviser as follows:
1. Appointment. The Trust and the Investment Adviser hereby appoint Subadviser to act as
subadviser to provide investment advisory services to the portfolios of the Trust or a designated
portion of a portfolio (“Segment”) listed on Exhibit A attached hereto (individually, a “Portfolio”
and together, the “Portfolios”) for the periods and on the terms set forth in this Agreement.
Unless otherwise specified herein, reference to a “Portfolio” shall include the Segment. The
Subadviser accepts such appointment and agrees to furnish the services set forth herein for the
compensation herein provided.
In the event the Investment Adviser wishes to retain the Subadviser to render investment
advisory services to one or more portfolios of the Trust other than the Portfolio or to make
changes to the allocation of a Segment, the Investment Adviser shall notify the Subadviser in
writing and shall revise Exhibit A to reflect such additional portfolio(s) or change to a Segment.
If the Subadviser is willing to render such services, it shall notify the Trust and the Investment
Adviser in writing, whereupon such portfolio shall become a Portfolio hereunder, and be subject to
this Agreement.
2. Subadviser Duties. Subject to the supervision of the Trust’s Board of Trustees (the
“Board”) and the Investment Adviser, the Subadviser will provide a continuous investment program
for the Portfolio and determine the composition of the assets of the Portfolio. The Subadviser
will provide investment research and analysis, which may include computerized investment
methodology, and will conduct a continuous program of evaluation, investment, purchases and/or
sales, and reinvestment of the Portfolio’s assets by determining the securities, cash and other
investments, including, but not limited to, futures, options contracts, swaps and other derivative
instruments, if any and at the most to the extent permitted in the Portfolio’s registration
statement, that shall be purchased, entered into, retained, sold, closed, or exchanged for the
Portfolio, when these transactions should be executed, and what portion of the assets of the
Portfolio should be held in the various securities and other investments in which it may invest,
and the Subadviser is hereby authorized to execute and perform such services on behalf of the
Portfolio. To the extent permitted by the written investment policies of the Portfolio, the
Subadviser shall make decisions for the Portfolio as to foreign currency matters and make
determinations as to the retention or disposition of foreign currencies or securities or other
instruments denominated in foreign currencies, or derivative instruments based upon foreign
currencies, including forward foreign currency contracts and options and futures on foreign
currencies and shall execute and perform the same on behalf of the Portfolio; the Subadviser shall
not be required to make use of any such derivative instruments. The Subadviser shall make
commercially reasonable efforts to vote proxies, provided that the Subadviser receives proxies from
the Fund custodian in a timely manner, on behalf of the Portfolio, as the Subadviser determines is
in the best interest of the Portfolio in accordance with the Subadviser’s proxy voting policy. The
Subadviser is authorized, on behalf of the Portfolio, to open brokerage accounts in accordance with
Trust procedures. The Subadviser is authorized, on behalf of the Portfolio, to enter into futures
account agreements, ISDA master agreements and related documents, and to open accounts and take
other necessary or appropriate actions related thereto, in accordance with Trust procedures.
In performing these duties, the Subadviser:
(a) will conform with (1) the 1940 Act and all rules and regulations thereunder, and
releases and interpretations related thereto (including any no-action letters and exemptive
orders which have been granted by the SEC applicable to the Trust (if, and as provided to the
Subadviser by the Investment Adviser), to the Investment Adviser (if, and as provided to the
Subadviser by the Investment Adviser), or to the Subadviser); (2) applicable rules and
regulations under the Securities Exchange Act of 1934, as amended (the “1934 Act”); (3) any
applicable written procedures, policies and guidelines adopted by the Board and furnished to the
Subadviser; provided, however, that Subadviser shall not be required to comply with any
requirements of such procedures, policies and guidelines to the extent that such compliance would
require disclosure of confidential or non-public information of clients (including Franklin
Xxxxxxxxx mutual funds) of Subadviser or its affiliates; (4) the Trust’s objectives, investment
policies and investment restrictions as stated in the Trust’s Prospectus and Statement of
Additional Information as supplemented or amended from time to time, as furnished to the
Subadviser; and (5) the provisions of the Trust’s Registration Statement filed on Form N-1A under
the Securities Act of 1933 (the “1933 Act”) and the 1940 Act, as supplemented or amended from
time to time (the “Registration Statement”), as furnished to the Subadviser; (6) Section
851(b)(3) of Subchapter M of the Internal Revenue Code of 1986,
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as amended (the “Code”) in regard to the managed portion of the Segment and will notify the
Investment Adviser and the Trust quarterly of any instruments in the managed portion of the
Segment that may be treated as non-qualifying for purposes of Section 851(b)(2) of the Code; (7)
any other applicable laws and regulations, including without limitation, proxy voting
regulations; and (8) the provisions of Section 817(h) of the Code, applicable to the Portfolio.
To the extent that the Subadviser engages in transactions that require segregation of assets or
other arrangements, including but not limited to, options, futures contracts, short sales or
borrowing transactions, the Subadviser shall designate to the Trust’s Custodian those assets to
be segregated in accordance with the 1940 Act, if necessary, based upon trading strategies and
positions the Subadviser employs on behalf of the Portfolio, as well as to segregate assets, if
necessary, in accordance with the 1934 Act and any other requirements of broker/dealers who may
execute transactions for the Portfolio in connection therewith. Until the Investment Adviser
delivers any supplements or amendments to the Subadviser, the Subadviser shall be fully protected
in relying on the procedures, policies and guidelines and the Trust’s Registration Statement that
were previously furnished by the Investment Adviser to the Subadviser. In managing the Portfolio
in accordance with the requirements of this Section 2, the Subadviser shall be entitled to
receive and act upon advice of counsel to the Trust, to the Investment Adviser or to the
Subadviser that is also acceptable to the Investment Adviser. Notwithstanding any other
provisions of this Agreement, the Subadviser shall act upon written instructions from the
Portfolio or the Investment Adviser.
(b) Intentionally omitted.
(c) is responsible, in connection with its responsibilities under this Section 2, for
decisions to buy and sell securities and other investments for the Portfolio, for broker-dealer
and futures commission merchant (“FCM”) selection, and for negotiation of commission rates. The
Subadviser’s primary consideration in effecting a security or other transaction will be to obtain
the best execution for the Portfolio, taking into account the factors specified in the Prospectus
and Statement of Additional Information for the Trust, as they may be amended or supplemented
from time to time and furnished to the Subadviser. Subject to such policies as the Board may
determine and consistent with Section 28(e) of the Securities Exchange Act of 1934, as amended
(the “1934 Act”), the Subadviser shall not be deemed to have acted unlawfully or to have breached
any duty created by this Agreement or otherwise solely by reason of its having caused the
Portfolio to pay a broker or dealer, acting as agent, for effecting a Portfolio transaction at a
price in excess of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Subadviser 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 or dealer, viewed in terms of either that particular transaction or the
Subadviser’s (or its affiliates’) overall responsibilities with respect to the Portfolio and to
its other clients as to which it exercises investment discretion. To the extent consistent with
these standards, and in accordance with Section 11(a) of the 1934 Act and Rule 11a2-2(T)
thereunder, and subject to any other applicable laws and regulations including Section 17(e) of
the 1940 Act, the Subadviser is further authorized to place orders on behalf of the Portfolio
through the Subadviser if the Subadviser is registered as a broker or dealer with the SEC or as a
FCM with the Commodities Futures Trading Commission (“CFTC”), through any of its affiliates that
are brokers or dealers or FCMs or such other entities which provide similar services in foreign
countries, or through
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such brokers and dealers that also provide research or statistical research and material, or
other services to the Portfolio or the Subadviser. Such allocation shall be in such amounts and
proportions as the Subadviser shall determine consistent with the above standards, and, upon
request, the Subadviser will report on said allocation to the Investment Adviser and Board,
indicating the brokers, dealers or FCMs to which such allocations have been made and the basis
therefor. The Subadviser is authorized to open brokerage accounts on behalf of the Portfolio in
accordance with Trust procedures. The Subadviser shall not direct brokerage to any broker-dealer
in recognition of, or otherwise take into account in making brokerage allocation decisions, sales
of shares of a Portfolio or of any other investment vehicle by that broker-dealer.
(d) may, on occasions when the purchase or sale of a security is deemed to be in the best
interest of a Portfolio as well as any other investment advisory clients, 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 as furnished to the Subadviser. 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 Subadviser in a manner that is fair and equitable and
consistent with the Subadviser’s fiduciary obligations to the Portfolio and to such other
clients.
(e) will, in connection with the purchase and sale of securities for the Portfolio, together
with the Investment Adviser, arrange for the transmission to the custodian and recordkeeping
agent for the Trust, on a daily basis, such confirmation(s), 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 Portfolio, as may be reasonably necessary to
enable the custodian and recordkeeping agent to perform its administrative and recordkeeping
responsibilities with respect to the Portfolio, and with respect to Portfolio securities to be
purchased or sold through the Depository Trust Company, will arrange for the automatic
transmission of the confirmation of such trades to the Trust’s custodian and recordkeeping agent,
and, if required, the Investment Adviser. The Subadviser agrees to comply with such rules,
procedures and time frames as the Trust’s custodian may reasonably set or provide with respect to
the clearance and settlement of transactions for a Portfolio, including but not limited to
submission of trade tickets. Any Portfolio assets shall be delivered directly to the Trust’s
custodian.
(f) will provide reasonable assistance to the Investment Adviser, custodian or recordkeeping
agent for the Trust in determining or confirming, consistent with the procedures and policies
stated in the Trust’s valuation procedures and/or the Registration Statement, the value of any
portfolio securities or other assets of the Portfolio for which the Investment Adviser, custodian
or recordkeeping agent seeks assistance from the Subadviser or identifies for review by the
Subadviser. Such reasonable assistance shall include (but is not limited to): (i) designating
and providing timely access, on an as-needed basis and upon the reasonable request of the
Investment Adviser or custodian, to one or more employees of the Subadviser who are knowledgeable
about the security/issuer, its financial condition, trading and/or other relevant factors for
valuation, which employees shall be available for consultation when the Board’s Valuation
Committee convenes; (ii) notifying the Investment Adviser in the
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event any Portfolio security’s value does not appear to reflect corporate actions, news,
significant events and as a result the Subadviser recommends a change in the valuation of such
Portfolio security; or such security otherwise requires review to determine if fair valuation is
necessary under the Trust’s procedures; (iii) applying to the Portfolio’s assets the procedures
of the Subadviser used for valuing the assets held by other accounts under management of the
Subadviser and notifying the Investment Adviser of the valuation of such assets determined under
such procedures, including in the event that the application of such procedures would result in a
determination of fair value with respect to any asset held by the Portfolio where a market
quotation is not readily available or is deemed to be unreliable with respect to such asset; (iv)
upon the request of the Investment Adviser or custodian, assisting in obtaining bids and offers
or quotes from broker/dealers or market-makers with respect to securities held by the Portfolio;
(v) verifying pricing and providing recommendations for fair valuations in accordance with the
Subadviser’s valuation procedures; and (vi) maintaining adequate records and written backup
information with respect to the securities valuation services provided hereunder, and providing
such information to the Investment Adviser or the Trust upon request. Such records shall be
deemed to be Trust records, however, the Subadviser is permitted to maintain copies of those
records necessary to comply with federal regulatory requirements. The parties to this Agreement
acknowledge that, though Subadviser may, at the request of the Investment Adviser, provide
assistance with valuation of assets of the Portfolio, the Subadviser shall not be responsible for
the Trust’s valuation decisions.
(g) will maintain and preserve such records related to the Portfolio’s transactions as
required under the 1940 Act and the Advisers Act. The Subadviser will make available to the
Trust and the Investment Adviser promptly upon request, any of the Portfolio’s investment records
and ledgers maintained by the Subadviser (which shall not include the records and ledgers
maintained by the custodian and recordkeeping agent for the Trust), as are necessary to assist
the Trust and the Investment Adviser in complying with requirements of the 1940 Act and the
Advisers Act, as well as other applicable laws, and 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.
(h) will regularly report to the Board on the investment program for the Portfolio and the
issuers and securities represented in the Portfolio, and will furnish the Board, with respect to
the Portfolio, such periodic and special reports as the Board and the Investment Adviser may
reasonably request, including, but not limited to, reports concerning transactions and
performance of the Portfolio, a quarterly compliance checklist, reports regarding compliance with
the Trust’s procedures pursuant to Rules 17e-1, 17a-7, 10f-3 and 12d3-1 under the 1940 Act ,
fundamental investment restrictions, procedures for opening brokerage accounts and commodity
trading accounts, liquidity determination of securities purchased pursuant to Rule 144A and 4(2)
commercial paper, IOs/POs, confirmation of the liquidity of all other securities in the Trusts,
and compliance with the Subadviser’s Code of Ethics, and such other reports or certifications
concerning the Subadviser’s duties under this Agreement that the Investment Adviser may
reasonably request from time to time. Notwithstanding any other provision of this paragraph (h)
or of this Agreement, Subadviser shall not be required to
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make or furnish any reports containing confidential or non-public information of clients
(including Franklin Xxxxxxxxx mutual funds) of Subadviser or its affiliates.
(i) will adopt a written Code of Ethics complying with the requirements of Rule 17j-1 under
the 1940 Act and Rule 204A-1 under the Advisers Act and will provide the Investment Adviser and
the Trust with a copy of the Code of Ethics, together with evidence of its adoption. Within 30
days of the end of each calendar quarter during which this Agreement remains in effect, the
president or a vice president the chief compliance officer and/or president and/or managing
director (as the Investment Adviser determines appropriate) of the Subadviser shall certify to
the Investment Adviser that the Subadviser has complied with the requirements of Rule 17j-1
during the previous calendar quarter and that there have been no violations of the Code of Ethics
or, if a violation has occurred, that appropriate action has been taken in response to such
violation. Upon written request of the Investment Adviser or the Trust, the Subadviser shall
permit representatives of the Investment Adviser and the Trust to examine the reports (or
summaries of the reports) required to be made under the Code of Ethics and other records
evidencing enforcement of the Code of Ethics.
(j) will provide to the Investment Adviser a copy of the Subadviser’s Form ADV, and any
supplements or amendments thereto, as filed with the SEC, on an annual basis (or more frequently
if requested by the Investment Adviser or the Board) including any portion which contains
disclosure of legal or regulatory actions. The Subadviser represents and warrants that it is a
duly registered investment adviser under the Advisers Act and will notify the Investment Adviser
immediately if any action is brought by any regulatory body which would affect that registration.
The Subadviser will provide a list of persons whom the Subadviser wishes to have authorized to
give written and/or oral instructions to Custodians of assets for the Portfolio.
(k) will be responsible for meeting the Subadviser’s regulatory obligations, including the
preparation and filing of such reports with respect to the assets of the Portfolio reflecting
holdings over which the Subadviser or its affiliates have investment discretion as may be
required from time to time, including but not limited to Schedule 13G, Form 13F and Form SH.
(l) will not permit any employee of the Subadviser to have any material involvement with the
management of the Portfolio if such employee has:
(i) been, within the last ten (10) years, convicted of or acknowledged commission of any
felony or misdemeanor (a) involving the purchase or sale of any security, (b) involving
embezzlement, fraudulent conversion, or misappropriation of funds or securities, (c) involving
sections 1341, 1342 or 1343 of Title 18 of the U.S. Code, or (d) arising out of such person’s
conduct as an underwriter, broker, dealer, investment adviser, municipal securities dealer,
government securities broker, government securities dealer, transfer agent, or entity or person
required to be registered under the Commodity Exchange Act, or as an affiliated person, salesman,
or employee or officer or director of any investment company, bank, insurance company, or entity or
person required to be registered under the Commodity Exchange Act;
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(ii) been permanently or temporarily enjoined by reason of any misconduct, by order, judgment,
or decree of any court of competent jurisdiction, from acting as an underwriter, broker, dealer,
investment adviser, municipal securities dealer, government securities broker, government
securities dealer, transfer agent, or entity or person required to be registered under the
Commodity Exchange Act, or as an affiliated person, salesman or employee of any investment company,
bank, insurance company, or entity or person required to be registered under the Commodity Exchange
Act, or from engaging in or continuing any conduct or practice in connection with any such activity
or in connection with the purchase or sale of any security.
(m) will not disclose or use any records or information obtained pursuant to this Agreement
(excluding investment research and investment advice) in any manner whatsoever except as
expressly authorized in this Agreement or in the ordinary course of business in connection with
placing orders for the purchase and sale of securities or obtaining investment licenses in
various countries or the opening of custody accounts and dealing with settlement agents in
various countries, and will keep confidential any information obtained pursuant to the Agreement,
and disclose such information only if the Board has authorized such disclosure, or if such
disclosure is required by applicable federal or state law or regulations or regulatory
authorities having the requisite authority. The Trust and the Investment Adviser will not
disclose or use any records or information with respect to the Subadviser obtained pursuant to
this Agreement, in any manner whatsoever except as expressly authorized in this Agreement, and
will keep confidential any information obtained pursuant to this Agreement, and disclose such
information only as expressly authorized in this Agreement, if the Board has authorized such
disclosure, or if such disclosure is required by applicable federal or state law or regulations
or regulatory authorities having the requisite authority. Notwithstanding any other provision of
this Agreement, the Subadviser may include the performance of the Portfolio attributable to the
time period Subadviser provided services under this Agreement as part of any composite
performance information of the Subadviser.
(n) will upon their request provide reasonable assistance to the Investment Adviser, the
Trust, and any of its or their trustees, directors, officers, and/or employees in complying with
the provisions of the Xxxxxxxx-Xxxxx Act of 2002 to the extent such provisions relate to the
services to be provided by, and the obligations of, the Subadviser hereunder. Specifically, and
without limitation to the foregoing, the Subadviser agrees to provide certifications to the
principal executive and financial officers of the Trust (the “certifying officers”) that
correspond to and/or support the certifications required to be made by the certifying officers in
connection with the preparation and/or filing of the Trust’s Form N-CSRs, N-Qs, N-SARs,
shareholder reports, financial statements, and other disclosure documents or regulatory filings,
in such form and content as the Trust shall reasonably request or in accordance with procedures
adopted by the Trust as provided to Subadviser.
(o) is, along with its affiliated persons, permitted to enter into transactions with the
other portfolios of the Trust and affiliated persons of those other portfolios of the Trust
(collectively, the “Other Portfolios”). In doing so, the Subadviser is prohibited from
consulting with the Investment Adviser or the subadvisers of these Other Portfolios
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concerning securities transactions of the Portfolio except for the purpose of complying with
the conditions of Rule 12d3-1(a) and (b) under the 1940 Act.
(p) will exercise voting rights with respect to portfolio securities held by a Portfolio in
accordance with written policies and procedures adopted by the Subadviser, which may be amended
from time to time, and which at all times shall comply with the requirements of applicable
federal statutes and regulations and any related SEC guidance relating to such statutes and
regulations (collectively, “Proxy Voting Policies and Procedures”). The Subadviser shall vote
proxies on behalf of the Portfolio in a manner deemed by the Subadviser to be in the best
interests of the Portfolio pursuant to the Subadviser’s written Proxy Voting Policies and
Procedures. The Subadviser shall provide disclosure regarding the Proxy Voting Policies and
Procedures in accordance with the requirements of Form N-1A for inclusion in the Registration
Statement. The Subadviser shall report to the Investment Adviser in a timely manner a record of
all proxies voted, in such form and format that complies with acceptable federal statutes and
regulations (e.g., requirements of Form N-PX). The Subadviser shall certify at least annually or
more often as may reasonably be requested by the Investment Adviser, as to its compliance with
its own Proxy Voting Policies and Procedures and applicable federal statutes and regulations.
(q) will provide reasonable assistance to the Trust and the Trust’s Chief Compliance Officer
(“CCO”) in complying with Rule 38a-1 under the 1940 Act. Specifically, the Subadviser represents
and warrants that it shall maintain a compliance program in accordance with the requirements of
Rule 206(4)-7 under the Advisers Act, and shall provide the CCO with reasonable access to
information regarding the Subadviser’s compliance program, which access shall include on-site
visits with the Subadviser as may be reasonably requested from time to time. In connection with
the periodic review and annual report required to be prepared by the CCO pursuant to Rule 38a-1,
the Subadviser agrees to provide certifications as may be reasonably requested by the CCO related
to the design and implementation of the Subadviser’s compliance program.
(r) will comply with the Trust’s policy on selective disclosure of portfolio holdings of the
Trust (the “Selective Disclosure Policy”), as provided in writing to the Subadviser and as may be
amended from time to time. The Subadviser agrees to provide a certification with respect to
compliance with the Trust’s Selective Disclosure Policy as may be reasonably requested by the
Trust from time to time.
(s) will notify the Investment Adviser promptly in the event that, in the judgment of the
Subadviser, Portfolio share transaction activity becomes disruptive to the ability of the
Subadviser to effectively manage the assets of a Portfolio consistent with the Portfolio’s
investment objectives and policies.
(t) will provide assistance as may be reasonably requested by the Investment Adviser in
connection with compliance by the Portfolio with any current or future legal and regulatory
requirements related to the services provided by the Subadviser hereunder.
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(u) will provide such certifications to the Trust as the Trust or the Investment Adviser may
reasonably request related to the services provided by the Subadviser hereunder, including (but
not limited to) certifications of compliance with Trust procedures, the Registration Statement,
and applicable securities regulations.
(v) The Investment Adviser agrees that the Subadviser shall not be expected or required to
take any action with respect to legal proceedings (including, without limitation, class action
lawsuits, governmental or regulatory victim funds, and bankruptcy proceedings) involving
securities presently or formerly held in the Portfolio, or the issuers thereof, provided,
however, upon request by the Investment Adviser, Subadviser will research and confirm to the
Investment Adviser whether the Portfolio held or traded in a particular security, on any
particular day or during any particular timeframe within the term of this Agreement, as the
Investment Adviser may specify; and Subadviser will provide relevant trade information and
documentation (for example, a schedule of purchases and sales and/or holdings or trade tickets)
for such security.
(w) will provide reasonable assistance to the Investment Adviser with respect to the annual
audit of the Trust’s financial statements, including, but not limited to: (i) providing broker
contacts as needed for obtaining trade confirmations (in particular with respect to investments
in loans (including participations and assignments) and all derivatives, including swaps); (ii)
providing copies of all documentation relating to investments in loans (including participations
and assignments) and derivative contracts, within a reasonable time after the execution of such
documentation; (iii) providing assistance in obtaining trade confirmations in the event the Trust
or the Trust’s independent registered public accounting firm is unable to obtain such
confirmations directly from the brokers; and (iv) obtaining market quotations for investments
(including investments in loans (including participations and assignments) and derivatives) that
are not readily ascertainable in the event the Trust or the Trust’s independent registered public
accounting firm is unable to obtain such market quotations through independent means.
(x) will, on an annual basis, advise the Investment Adviser (i) if the Subadviser acts as
sub-adviser to another U.S. registered mutual fund that follows the same investment strategy as
the Portfolio and (ii) if so, whether the Subadviser’s fee rate is less than the rate charged the
Investment Adviser for management of the Portfolio.
(y) will, for the duration of this Agreement, not directly or indirectly solicit or induce
any investment personnel of Investment Adviser or its affiliated companies to leave the employ of
Investment Adviser or affiliated company. After investment personnel of Investment Adviser or an
affiliate cease to be in the employ of Investment Adviser or affiliate, Subadviser shall be free
to directly or indirectly employ or retain such personnel in any capacity, so long as Subadviser
did not solicit or induce such personnel to leave the employ of Investment Adviser or its
affiliate.
3. Disclosure about Subadviser and Portfolio. The Subadviser represents that it has reviewed
the current Registration Statement and agrees to promptly review future
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amendments to the Registration Statement, including any supplements thereto, which relate to
the Subadviser, filed with the SEC (or which will be filed with the SEC in the future) and
represents that, solely with respect to the disclosure respecting or relating to the Subadviser,
excluding any performance information related to Subadviser, such Registration Statement that the
Subadviser has reviewed contains no untrue statement of any material fact and does not omit any
statement of material fact which was required to be stated therein or necessary to make the
statements contained therein not misleading. The Subadviser further agrees to notify the
Investment Adviser and the Trust immediately of any material fact about the Subadviser, known to
the Subadviser respecting or relating to the Subadviser, that is not contained in the Registration
Statement or prospectus for the Trust, or any amendment or supplement thereto, or of any statement
respecting or relating to the Subadviser contained therein that becomes untrue in any material
respect. The Subadviser agrees to provide to the Investment Adviser and the Trust a written
summary that complies with the corresponding sections related to principal investment strategies
and principal risks of Form N-1A for a statutory prospectus and summary prospectus with respect to
the Portfolio (the “Portfolio Description”) as of the date of this Agreement. The Subadviser agrees
to annually, or more frequently, as necessary, review the Portfolio Description for accuracy and
completeness and provide to the Investment Adviser a revised Portfolio Description promptly if the
Portfolio Description is not accurate or complete. In addition, the Subadviser agrees to comply
with the Investment Adviser’s reasonable request for information regarding the personnel of the
Subadviser who are responsible for the day-to-day management of a Portfolio’s assets.
4. Expenses. The Subadviser shall bear all expenses incurred by it and its staff with respect
to all activities in connection with the performance of the Subadviser’s services under this
Agreement, including but not limited to salaries, overhead, travel, preparation of Board materials,
review of marketing materials relating to Subadviser or other information provided by Subadviser to
the Investment Adviser and/or the Trust’s Distributor, and marketing support; provided, however,
that the Portfolio shall bear costs including, without limitation, external legal costs, of
entering into all agreements, documents, authorizations, forms and other instruments needed to
trade or enter into instruments and investments for the Portfolio, including exchange traded and
over-the-counter derivative contracts, securities and instruments so long as the investment or
instrument is permitted by the Portfolio’s prospectus and the costs have been pre-approved in
writing by the Investment Adviser. Subadviser agrees to pay to the Investment Adviser the cost
of generating a prospectus supplement, which includes preparation, filing, printing, and
distribution (including mailing) of the supplement, if the Subadviser makes any changes that the
Subadviser believes require immediate disclosure in the prospectus or any required regulatory
documents by supplement, including changes to its structure or ownership, to investment personnel,
to investment style or management, or otherwise (“Changes”), and at the time of notification to the
Trust by the Subadviser of such Changes, the Trust is not generating a supplement for other
purposes or the Trust does not wish to add such Changes to a pending supplement. In the event two
or more subadvisers each require a supplement simultaneously, the expense of each supplement will
be shared pro rata with such other subadviser(s) based upon the number of pages required by each
such subadviser. All other expenses not specifically assumed by the Subadviser hereunder or by the
Investment Adviser under the Advisory Agreement are borne by the applicable Portfolio of the Trust.
The Trust, the Subadviser and the Investment Adviser shall not be considered as partners or
participants in a joint venture.
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5. Compensation. For the services provided and the expenses borne by the Subadviser pursuant
to this Agreement, the Investment Adviser will pay to the Subadviser a fee in accordance with
Exhibit A attached to this Agreement. This fee will be computed and accrued daily and payable
monthly. The fees for any month during which this Agreement is in effect for less than the entire
month shall be pro-rated based on the number of days during such month that the Agreement was in
effect.
6. Seed Money. The Investment Adviser agrees that the Subadviser shall not be responsible for
providing money for the initial capitalization of any Portfolio.
7. Compliance.
(a) The Subadviser agrees that it shall immediately notify the Investment Adviser and the
Trust (i) in the event that the SEC, CFTC, or any banking or other regulatory body has censured
the Subadviser; placed limitations upon the activities, functions or operations of the Subadviser, or has suspended or revoked its registration as an investment adviser; or has commenced
proceedings or an investigation that can reasonably be expected to result in any of these
actions; (ii) upon having a reasonable basis for believing that a Portfolio has ceased to qualify
or might not qualify as a regulated investment company under Subchapter M of the Code; and (iii)
upon having a reasonable basis for believing that the Portfolio has ceased to comply with the
diversification provisions of Section 817(h) of the Code or the Regulations thereunder. The
Subadviser further agrees to notify the Investment Adviser and Trust immediately of any material
fact known to the Subadviser respecting or relating to the Subadviser that is not contained in
the Registration Statement, or any amendment or supplement thereto, or of any statement
concerning the Subadviser or the Portfolio contained therein that becomes untrue in any material
respect.
(b) The Investment Adviser agrees that it shall immediately notify the Subadviser (i) in the
event that the SEC has censured the Investment Adviser or the Trust; placed limitations upon
either of their activities, functions, or operations; suspended or revoked the Investment
Adviser’s registration as an investment adviser; or has commenced proceedings or an investigation
that may result in any of these actions; (ii) upon having a reasonable basis for believing that a
Portfolio has ceased to qualify or might not qualify as a regulated investment company under
Subchapter M of the Code; or (iii) upon having a reasonable basis for believing that the
Portfolio has ceased to comply with the diversification provisions of Section 817(h) of the Code
or the Regulations thereunder.
8. Independent Contractor. The Subadviser shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided herein or authorized by the
Investment Adviser from time to time, have no authority to act for or represent the Investment
Adviser in any way or otherwise be deemed its agent. The Subadviser understands that unless
provided herein or authorized from time to time by the Trust, the Subadviser shall have no
authority to act for or represent the Trust in any way or otherwise be deemed the Trust’s agent.
9. Books and Records. In compliance with the requirements of and to the extent required by
Section 31(a) of the 1940 Act and the rules thereunder, the Subadviser hereby agrees
11
that all records which it maintains for the Portfolio are the property of the Trust, however,
the Subadviser is permitted to maintain copies of those records necessary to comply with federal
regulatory requirements and further agrees to surrender promptly to the Trust any of such records
upon the Trust’s or the Investment Adviser’s request, although the Subadviser may, at its own
expense, make and retain a copy of such records.
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 authorities) in connection with any investigation or
inquiry relating to this Agreement or the Trust.
11. Responsibility and Control. Notwithstanding any other provision of this Agreement, it is
understood and agreed that the Trust reserves the right to direct, approve or disapprove any action
hereunder taken on its behalf by the Subadviser, provided, however, that the Subadviser shall not
be liable for any losses to the Trust resulting from the Trust’s direction, or from the Trust’s
disapproval of any action proposed to be taken by the Subadviser.
12. Services Not Exclusive. It is understood that the services of the Subadviser and its
employees are not exclusive, and nothing in this Agreement shall prevent the Subadviser (or its
employees or 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
Portfolio) 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 Investment Adviser agree that the Subadviser, any
affiliated person of the Subadviser, and each person, if any, who, within the meaning of Section 15
of the 1933 Act, controls the Subadviser, 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 Subadviser’s duties, or by reason of reckless disregard
of the Subadviser’s obligations and duties under this Agreement. Notwithstanding the foregoing,
nothing contained in this Agreement shall constitute a waiver or limitation of rights that the
Trust may have under federal or state securities laws.
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14. Indemnification.
(a) The Subadviser agrees to indemnify and hold harmless, the Investment Adviser, any
affiliated person within the meaning of Section 2(a)(3) of the 1940 Act (“affiliated person”) of
the Investment Adviser, and each person, if any, who, within the meaning of Section 15 of the
1933 Act, controls (“controlling person”) the Investment Adviser (collectively, “PL Indemnified
Persons”) against any and all losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses), to which the Investment Adviser or such affiliated person
or controlling person may become subject under the 1933 Act, the 1940 Act, the Advisers Act,
under any other statute, at common law or otherwise, arising out of the Subadviser’s
responsibilities to the Trust which (i) are based upon any willful misfeasance, bad faith, gross
negligence, or reckless disregard of, the Subadviser’s obligations and/or duties under this
Agreement by the Subadviser or by any of its directors, officers or employees, or any affiliate
acting on behalf of the Subadviser (other than a PL Indemnified Person), or (ii) are based upon
any untrue statement or alleged untrue statement of a material fact contained in a Registration
Statement or prospectus covering the Shares of the Trust or any Portfolio, or any amendment
thereof or any supplement thereto, or the omission or alleged omission to state therein a
material fact 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 in
writing to the Investment Adviser, the Trust, or any affiliated person of the Trust by the
Subadviser or any affiliated person of the Subadviser (other than a PL Indemnified Person)
provided, however, that in no case is the Subadviser’s indemnity in favor of the Investment
Adviser or any affiliated person or controlling person of the Investment Adviser 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 his duties,
or by reason of his reckless disregard of obligations and duties under this Agreement.
(b) The Investment Adviser agrees to indemnify and hold harmless the Subadviser, any
affiliated person within the meaning of Section 2(a)(3) of the 1940 Act of the Subadviser and
each person, if any, who, within the meaning of Section 15 of the 1933 Act controls (“controlling
person”) the Subadviser (collectively, “Subadviser Indemnified Persons”) against any and all
losses, claims, damages, liabilities or litigation (including reasonable legal and other
expenses) to which a Subadviser Indemnified Person may become subject under the 1933 Act, the
1940 Act, the Advisers Act, under any other statute, at common law or otherwise, arising out of
the Investment Adviser’s responsibilities as Investment Adviser of the Trust which (i) are based
upon any willful misfeasance, bad faith or gross negligence by the Investment Adviser, any of its
directors, officers, or employees or any affiliate acting on behalf of the Investment Adviser
(other than a Subadviser Indemnified Person), or (ii) are based upon any untrue statement or
alleged untrue statement of a material fact contained in a Registration Statement or prospectus
covering the Shares of the Trust or any Portfolio, or any amendment thereof or any supplement
thereto, or the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, unless such a
statement or omission was made in reliance upon information furnished in writing to the
Investment Adviser, the Trust, or any affiliated person of the Trust by the Subadviser or any
affiliated person of the Subadviser (other than a PL Indemnified Person) provided however, that
in no case is the Investment Adviser’s
13
indemnity in favor of the Subadviser Indemnified Persons 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 his duties, or by reason of his
reckless disregard of obligations and duties under this Agreement.
15. Duration and Termination. This Agreement shall become effective as of the date of
execution first written above, and shall continue in effect for two years and continue thereafter
on an annual basis with respect to the Portfolio; provided that such annual continuance is
specifically approved at least annually (a) by the vote of a majority of the Board, or (b) by the
vote of a majority of the outstanding voting shares of the Portfolio, and provided that continuance
is also approved by the vote of a majority of the Board who are not parties to this Agreement or
“interested persons” (as such term is defined in the 1900 Xxx) of the Trust, the Investment
Adviser, or the Subadviser, cast in person at a meeting called for the purpose of voting on such
approval.
This Agreement may be terminated with respect to any Portfolio:
(a) by the Trust at any time with respect to the services provided by the Subadviser,
without the payment of any penalty, by vote of a majority of the Board or by a vote of a majority
of the outstanding voting shares of the Trust or, with respect to a particular Portfolio, by vote
of a majority of the outstanding voting shares of such Portfolio, upon sixty (60) days’ prior
written notice to the Subadviser and the Investment Adviser;
(b) by the Subadviser at any time, without the payment of any penalty, upon sixty (60) days’
prior written notice to the Investment Adviser and the Trust.
(c) by the Investment Adviser at any time, without the payment of any penalty, upon sixty
(60) days’ prior written notice to the Subadviser and the Trust.
This Agreement will terminate automatically in event of its assignment under the 1940 Act and
any rules adopted by the SEC thereunder, but shall not terminate in connection with any transaction
not deemed an assignment. In the event this Agreement is terminated or is not approved in the
manner described above (i) Subadviser agrees to provide all reports, certification and assistance
called for pursuant to paragraphs 2(b), 2(h), 2(i), 2(k), 2(n), 2(p), and 2(q) within 30 business
days of termination; and (ii) the Sections or Paragraphs numbered 2(g) for a period of six years,
and 2(m), 2(t), 2(v), 9, 10, 13, 14, 16, 17, 18 and 19 of this Agreement as well as any applicable
provision of this Paragraph numbered 15 shall remain in effect.
16. Use of Name.
(a) It is understood that the name “Pacific Life Insurance Company,” “Pacific Life Fund
Advisors LLC,” “Pacific Asset Management,” “Pacific Life Funds,” and “Pacific Select Fund” and any
abbreviated forms and any derivatives thereof and any logos associated with those names (including,
without limitation, the whale logo) (collectively, “Pacific Life Names”) are the valuable property
of the Investment Adviser and its affiliates, and that the Subadviser shall not use such names (or
abbreviations, derivatives or logos) except solely to identify the Subadviser as the subadviser to
the Portfolio as required by law or governmental regulations without the prior written approval of
the Investment Adviser and only
14
so long as the Investment Adviser is an investment adviser to the Trust and/or the Portfolio.
Upon termination of this Agreement, the Subadviser shall forthwith cease to use such names (or
abbreviations, derivatives or logos). If the Subadviser makes any unauthorized use of a Pacific
Life Name, the parties acknowledge that the Investment Adviser, Trust or other related parties, as
applicable, shall suffer irreparable harm for which monetary damages may be inadequate and thus,
the applicable party shall be entitled to injunctive relief, as well as any other remedy available
under law.
(b) The parties agree that the name of the Subadviser, the names of any affiliates of the
Subadviser and any derivatives of such or logo or trademark or service xxxx or trade name of the
Subadviser and its affiliates (altogether, “Subadviser Names”) are the valuable property of the
Subadviser and its affiliates. The Investment Adviser and the Portfolio may use the name of the
Subadviser to identify it as the subadviser to the Portfolio in the Trust’s Registration Statement, annual and semi-annual reports, proxies, or as otherwise required by law or governmental
regulations. Any other use of a Subadviser Name must be expressly pre-approved in writing by the
Subadviser. Upon termination of this Agreement, the Investment Adviser and the Portfolio shall
forthwith cease to use Subadviser Names unless required by law. If the Investment Adviser or the
Portfolio makes any unauthorized use of a Subadviser Name, the parties acknowledge that the
Subadviser shall suffer irreparable harm for which monetary damages may be inadequate and thus, the
Subadviser shall be entitled to injunctive relief, as well as any other remedy available under law.
17. Limitation of Liability. A copy of the Declaration of Trust for the Trust is on file with
the Secretary of the State of Massachusetts. The Declaration of Trust has been executed on behalf
of the Trust by a Trustee of the Trust in his capacity as Trustee of the Trust and not
individually. The obligations of this Agreement with respect to the Portfolio shall be binding
upon the assets and property of each such Portfolio individually, and not jointly, and shall not be
binding upon any Trustee, officer, employee, agent or shareholder, whether past, present, or
future, of the Trust individually, or upon the Trust generally or upon any other portfolio of the
Trust.
18. Notices. All notices and other communications hereunder shall be in writing sent by
facsimile first, if practicable, but shall only be deemed given if delivered in person or by
messenger, cable, certified mail with return receipt, or by a reputable overnight delivery service
which provides evidence of receipt to the parties at the following addresses (or at such other
address or number for a party as shall be specified by like notice):
15
| A. | if to the Subadviser, to: |
||
| Franklin Advisory Services, LLC Onx Xxxxxx Xxxxx, Xxxxx Xxxxx Xxxx Xxx, Xxx Xxxxxx 00000 Xttention: Xxxxxxx X. Xxxxxxx |
|||
| With a copy to: | |||
| Franklin Xxxxxxxxx Investments Onx Xxxxxxxx Xxxxxxx Xxx Xxxxx, Xxxxxxxxxx 00000 Xttention: General Counsel |
|||
| B. | if to the Investment Adviser, to: | ||
| Pacific Life Fund Advisors LLC 700 Xxxxxxx Xxxxxx Xxxxx Xxxxxxx Xxxxx, XX 00000 Xacsimile transmission number: (000) 000-0000 Attention: Xxxxx X. Xxxxx |
|||
| C. | if to the Trust, to: | ||
| Pacific Select Fund c/o Pacific Life Insurance Company 700 Xxxxxxx Xxxxxx Xxxxx Xxxxxxx Xxxxx, XX 00000 Xacsimile transmission number: (000) 000-0000 Attention: Xxxxx X. Xxxxx |
19. Miscellaneous.
(a) This Agreement shall be governed by the laws of California, without regard to the
conflict of law principles thereof, 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 1900 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 and under the 1940 Act, this
Agreement may only be assigned by any party with prior written consent of the other parties.
16
(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. To the extent
that any provision of this Agreement shall be held or made invalid by a court decision, statute,
rule or otherwise with regard to any party hereunder, such provisions with respect to other
parties hereto shall not be affected thereby.
(e) This Agreement may be executed in several counterparts, each of which shall be deemed to
be an original, and all such counterparts shall together constitute one and the same Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed as of the
day and year first written above.
PACIFIC LIFE FUND ADVISORS, LLC
By:
|
/s/ Xxxx X. Xxxxxxxx
|
By: | /s/ Xxxxxx X. Milfs
|
|||||
| Title: EVP & Chief Investment Officer | Title: VP & Secretary | |||||||
FRANKLIN ADVISORY SERVICES, LLC
|
||||||||
By:
|
/s/ Xxxxxxx X. Xxxxxxx | By: | ||||||
| Title: President | Title: | |||||||
By:
|
/s/ Xxxx X. Xxxxxxxx
|
By: | /s/ Xxxxxx X. Milfs
|
|||||
| Title: President | Title: VP & Secretary | |||||||
18
Exhibit A
PACIFIC SELECT FUND
FEE SCHEDULE
FEE SCHEDULE
Effective: May 1, 2010
Portfolio: Small-Cap Equity Portfolio
The Investment Adviser will pay to the Subadviser a monthly fee for its services for the above
noted Portfolio based on:
| (a) The annual percentage of the combined average daily net assets of the Segment of the Small-Cap Equity Portfolio according to the following schedule: |
| Rate% | Break Point (assets) | |||
| 0.60 | % | First $200 million |
||
| 0.52 | % | Next $300 million |
||
| 0.50 | % | Excess over $500 million |
||
Fees for services shall be prorated for any portion of a year in which the Agreement is not
effective.
