SUBADVISORY AGREEMENT
Exhibit (d)(22)
AGREEMENT made effective the 1st day of January, 2011 among X.X. Xxxxxx Investment
Management Inc., a Delaware corporation (“Subadviser”), Pacific Life Fund Advisors LLC, a Delaware
Limited Liability Company (“Investment Adviser”), and Pacific Life Funds, a Delaware Statutory
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 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. 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, the Investment
Adviser shall notify the Subadviser in writing and shall revise Exhibit A to reflect such
additional portfolio(s). 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 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 is
authorized to and shall exercise tender offers, exchange offers and vote proxies on behalf of the
Portfolio, each as the Subadviser determines is in the best interest of the Portfolio in accordance
with the Subadviser’s proxy voting policy.
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, to the Investment Adviser (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; (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; (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”); (6) Section 851(b)(2) and (3) of Subchapter M of
the Internal Revenue Code of 1986, as amended (the “Code”); and (7) any other applicable federal
laws and regulations, including without limitation, proxy voting regulations. 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
applicable law and regulation 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 Trust’s Registration Statement 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.
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(b) will (i) identify each position in the Portfolio that constitutes stock in a Passive
Foreign Investment Company (“PFIC”), as that term is defined in Section 1296 of the Code, and (ii)
make such determinations and inform the Investment Adviser at least annually (or more often and by
such date(s) as the Investment Adviser shall request) of any stock in a PFIC.
(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 such factors as price (including the
applicable commission or dollar spread), size of the order, the nature of the market for the
security, the timing of the transaction, the reputation, experience and financial stability of the
broker—dealer involved, the quality of the service, the difficulty of execution and the
operational facilities of the firms involved, and the firm’s risk in positioning a block of
securities and other such factors that are consistent with the objective of obtaining best
execution as may be 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 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, on behalf of the Portfolio, to open brokerage and futures
accounts and enter into any necessary agreement to open such accounts in accordance with Trust
procedures. The Subadviser is authorized, on behalf of the Portfolio, to enter into
over-the-counter options agreements, International Swaps and Derivative Association, Inc. master
agreements and related documents, and to open accounts and take other necessary or appropriate
actions related thereto, 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.
The Investment Adviser and the Trust hereby acknowledge receipt of the current best execution
policy of Subadviser’s London branch. Subadviser shall provide the Investment Adviser and
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the Trust with updated versions of such policy as it may be amended, supplemented, or modified
from time to time. Upon adoption of Subadviser’s best execution policy by the Board, and subject
to the requirements of U.S. laws rules, and regulations, including, without limitation, the 1940
Act and the Investment Advisers Act of 1940, as amended (the Advisers Act), and the rules
thereunder, the Investment Adviser and the Trust agree that the Subadviser’s London branch may
follow the then-current version of such best execution policy in managing the Portfolio. In
addition, the Investment Adviser and the Trust agree that in managing the Portfolio, the
Subadviser’s London branch may execute trades in markets that are not “regulated markets” as that
term is defined in the “Markets in Financial Instruments Directive” and may utilize a multilateral
trading facility.
(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. The
Investment Adviser and the Fund recognize that, in some cases, this procedure may limit the size of
the position that may be acquired or sold for the Portfolio. It shall be understood that the
Subadviser is not required to consider the activities of any other subadviser of the Fund with
respect to its duties under this provision.
(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 event the Subadviser has reason to believe that any
Portfolio security’s value
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does not reflect corporate actions, news, significant events or such security otherwise
requires review to determine if fair valuation is necessary under the Trust’s procedures; (iii)
notifying the Investment Adviser in the event the Subadviser determines, with respect to a security
held by the Portfolio, of the fair value of such security pursuant to the Subadviser’s procedures
for determining the fair value of a security, using the same valuation procedures for the
Portfolio’s assets that the Subadviser uses for valuing the assets held by other accounts under
management of the Subadviser that might be fair valued under the Subadviser’s’s procedures,
including those assets for which a market quotation is not readily available or is deemed to be
unreliable with respect to such asset; (iv) notifying the Investment Adviser of the fair valuation
of any such security determined by Subadviser under such procedures; (v) upon the request of the
Investment Adviser or custodian, assisting in obtaining bids and offers or quotes from
broker/dealers or market-makers and verifying pricing with respect to securities held by the
Portfolio; (vi) upon the request of the Investment Adviser or custodian, confirming pricing and
providing recommendations for fair valuations in accordance with the Trust’s valuation procedures,
as they may be amended from time to time; and (vii) maintaining adequate records and written backup
information with respect to the securities valuation assistance provided hereunder, and providing
such information to the Investment Adviser or the Trust upon request. Such records as relate to the
Portfolio’s assets shall be deemed to be Trust records.
(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 Trust, and compliance with
the Subadviser’s Code of Ethics, and such other reports or certifications that the Investment
Adviser may reasonably request from time to time.
(i) has adopted 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, a vice president 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
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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, with respect to
violations of the Code of Ethics potentially affecting a Portfolio, 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 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 cause it to cease to be so
registered. The Subadviser will provide a list of persons whom the Subadviser wishes to have
authorized to give instructions to Custodians of assets for the Portfolio.
(k) will be responsible for the preparation and filing of Schedule 13G and Form 13F or any
other regulatory filing the Subadviser may be obligated to file from time to time with respect to
the assets of the Portfolio reflecting holdings over which the Subadviser or its affiliates have
investment discretion.
(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;
(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
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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.
(n) will assist 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 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.
(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 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
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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. The Investment Adviser and the Fund acknowledge that the Subadviser manages
other accounts, including other mutual funds following the same investment strategy as the
Portfolio and that these accounts may have different portfolio holdings disclosure policies.
(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.
(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) will process class action paperwork for any security held in the Portfolio within the term
of this Agreement
(w) as requested by the Investment Adviser, 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
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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.
3. Confidential Treatment. It is understood that any information or recommendation supplied
by, or produced by, the Subadviser in connection with the performance of its obligations hereunder
is to be regarded by the Fund and the Investment Adviser as confidential and for use only by the
Investment Adviser and the Fund. Furthermore, except as required by law (including, but not
limited to semi-annual, annual or other filings made under the 0000 Xxx) or as agreed to by the
Investment Adviser and the Subadviser, the Investment Adviser and the Fund will not disclose, in
any manner whatsoever except as expressly authorized in this Agreement, any list of securities held
by the Portfolio for a period of at least 30 days after month end, except that the Portfolio’s top
10 holdings may be disclosed 10 days after month end. In addition, the Investment Adviser or the
Fund may disclose, earlier than 30 days after month end, a list of the securities held by the
Portfolio to certain third parties who have entered into a confidentiality agreement with the Fund.
4. Disclosure about Subadviser and Portfolio. The Subadviser represents that it has reviewed
the current Registration Statement and agrees to promptly review future amendments to the
Registration Statement, including any supplements thereto, which relate to the Subadviser or the
Portfolio, filed with the SEC (or which will be filed with the SEC in the future) and represents
and warrants that, solely with respect to the disclosure respecting or relating to the Subadviser,
including any performance information the Subadviser provides that is included in or serves as the
basis for information included in the Registration Statement, such Registration Statement contains
as of the date hereof, and will contain as of the date of any Registration Statement or supplement
thereto, 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. With respect to the
disclosure respecting the Portfolio, the Subadviser represents and agrees that the description in
the Trust’s prospectus, of the Portfolio’s goal, investment strategies and risks (the “Portfolio
Description”), as of the date of this Agreement and as of the date of any Registration Statement or
supplement thereto, is consistent with the manner in which the Subadviser intends to manage the
Portfolio, and the identification of risks is inclusive of the material risks known to the
Subadviser that are expected to arise in connection with the manner in which the Subadviser intends
to manage the Portfolio. The Subadviser further agrees to notify the Investment Adviser and the
Trust promptly in the event that the Subadviser becomes aware that the Portfolio Description for a
Portfolio is inconsistent in any material respect with the manner in which the Subadviser is
managing the Portfolio, and in the event that the identified risks are inconsistent in any material
respect with the risks known to the Subadviser that arise in connection with the manner in which
the Subadviser is managing the Portfolio. 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.
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5. 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. 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 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.
6. 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.
7. Seed Money. The Investment Adviser agrees that the Subadviser shall not be responsible for
providing money for the initial capitalization of any Portfolio.
8. 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 its activities, functions or operations; suspended or revoked
its registration, if any, or ability to serve as an investment adviser; or has commenced
proceedings or an investigation that can reasonably be expected to result in any of these actions;
and (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. 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 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
10
Adviser’s registration as an investment adviser; or has commenced proceedings or an
investigation that may result in any of these actions; and (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.
9. 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.
10. 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 that all
records which it maintains for the Portfolio 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 Investment Adviser’s
request, although the Subadviser may, at its own expense, make and retain a copy of such records.
11. 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) in connection with any investigation or inquiry relating to this Agreement or
the Trust.
12. 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.
13. 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.
14. Liability. (a) 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.
11
(b) The Subadviser does not guarantee the future performance of the Portfolio or any specific
level of performance, the success of any investment decision or strategy that Subadviser may use,
or the success of the Subadviser’s overall management of the Portfolio. The Investment Adviser and
the Fund understand that investment decisions made for the Portfolio by the Subadviser are subject
to various market, currency, economic, political and business risks, and that those investment
decisions will not always be profitable.
15. 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
12
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 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.
16. 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 0000 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.
17. Use of Name.
(a) It is understood that the name “Pacific Life Insurance Company,” “Pacific Life Fund
Advisors LLC,” “Pacific Asset Management,” and “Pacific Life Funds” and any abbreviated forms and
any derivatives thereof and any logos associated with those names (including, without limitation,
the whale logo) 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) without the prior
13
written approval of the Investment Adviser and only 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).
(b) It is understood that the name “X.X. Xxxxxx Investment Management Inc.”, JPMorgan Chase &
Co., and JPMorgan Asset Management and any derivative thereof or any logo associated with those
names are the valuable property of the Subadviser and that the Trust and the Investment Adviser
have the right to use such name (or derivative or logo), in the Trust’s prospectus, SAI and
Registration Statement or other filings, forms or reports required under applicable state or
federal securities, insurance, or other law, for so long as the Subadviser is a Subadviser to the
Trust and/or one of the Portfolio, provided, however, that the Trust may continue to use the name
of the Subadviser in its Registrations Statement and other documents to the extent deemed necessary
by the Trust to comply with disclosure obligations under applicable law and regulation. Neither
the Trust nor the Investment Adviser shall use the Subadviser’s name or logo in promotional or
sales related materials prepared by or on behalf of the Investment Adviser or the Trust, without
prior review and approval by the Subadviser, which may not be unreasonably withheld. Upon
termination of this Agreement, the Trust and the Investment Adviser shall forthwith cease to use
such names (and logo), except as provided for herein.
18. 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.
19. 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):
A. | if to the Subadviser, to: | ||
X.X. Xxxxxx Investment Management Inc. 000 Xxxx Xxxxxx Xxx Xxxx, X.X. 00000 Facsimile transmission number: (000) 000-0000 Attention: Mutual Funds- Legal |
|||
B. | if to the Investment Adviser, to: | ||
Pacific Life Fund Advisors LLC 000 Xxxxxxx Xxxxxx Xxxxx Xxxxxxx Xxxxx, XX 00000 |
14
Facsimile transmission number: (000) 000-0000 Attention: Xxxxx X. Xxxxx |
|||
C. | if to the Trust, to: | ||
Pacific Select Fund c/o Pacific Life Insurance Company 000 Xxxxxxx Xxxxxx Xxxxx Xxxxxxx Xxxxx, XX 00000 Facsimile transmission number: (000) 000-0000 Attention: Xxxxx X. Xxxxx |
20. Force Majeure. The Subadviser shall not be liable for damages resulting from delayed or
defective performance when such delays arise out of causes beyond the control and without the fault
or negligence of the Subadviser and could not have been reasonably prevented by the Subadviser
through back-up systems and other business continuation and disaster recovery procedures commonly
employed by other SEC-registered investment advisers that meet reasonable commercial standards in
the investment company industry. Such causes may include, but are not restricted to, Acts of God
or of the public enemy, terrorism, acts of the State in its sovereign capacity, fires, floods,
earthquakes, power failure, disabling strikes, epidemics, quarantine restrictions, and freight
embargos.
21. Professional Client. The Investment Adviser and the Trust acknowledge that all services
provided by the Subadviser through its London Branch under this Agreement are provided on the basis
that the Investment Adviser and the Trust are considered to be “Professional Clients” by Subadviser
within the meaning of the U.K. Financial Services Authority’s rules.
22. Delegation of Duties. Subadviser may employ, pursuant to the Trust’s Policies and
Procedurs on Disclosure of Portfolio Holdings (“Disclosure Policy”), an affiliate or a third party
to perform certain non-advisory services including any accounting, administrative, reporting or
other ancillary services required to enable Subadviser to perform its functions under this
Agreement. Subadviser will act in good faith in the selection, use and monitoring of affiliates and
other third parties, and any delegation or appointment hereunder shall not relieve Subadviser of
any of its obligations under this Agreement. Notweithstanding any other provision of this
Agreement, the Subadviser may disclose information, including confidential information, about the
Portfolio to any such affiliate or third party for the purpose of this provision as long as such
disclosure is in compliance with the Trust Disclosure Policy. Subadviser shall be liable to the
Trust for any violation of the Trust’s Disclosure Policy by any affiliate or third party it
employs.
23. Customer Identification Program. To help the government fight the funding of terrorism and
money laundering activities, Subadviser has adopted a Customer Identification Program, (“CIP”)
pursuant to which Subadviser is required to obtain, verify and maintain records
15
of certain information relating to its clients. In order to facilitate Subadviser’s compliance
with its CIP, the Investment Adviser hereby represents and warrants that (i) it has provided the
Subadviser with the Trust’s taxpayer identification number or other government issued
identification number, (ii) all documents provided to Subadviser are true and accurate as of the
date hereof, and (iii) the Investment Adviser agrees to provide to Subadviser such other
information and documents that Subadviser requests in order to comply with Subadviser’s CIP.
24. 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 0000 Xxx.
(b) The captions of this Agreement are included for convenience only and in no way define or
limit any of the provisions hereof or otherwise affect their construction or effect.
(c) To the extent permitted under Section 15 of this Agreement and under the 1940 Act, this
Agreement may only be assigned by any party with 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. 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.
16
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/ Xxxxxx X. Xxxxxxxx | By: | /s/ Xxxxxxx X. XxxXxxxx | |||||
Name: Xxxxxx X. Xxxxxxxx | Name: Xxxxxxx X. XxxXxxxx | |||||||
Title: VP, Fund Advisor Operations | Title: AVP & Assistant Secretary | |||||||
X.X. XXXXXX INVESTMENT MANAGEMENT INC. | ||||||||
By:
|
/s/ Xxxxx Xxxxxx | |||||||
Name: Xxxxx Xxxxxx | ||||||||
Title: Vice President | ||||||||
PACIFIC LIFE FUNDS | ||||||||
By:
|
/s/ Xxxxxx X. Xxxxxxxx | By: | /s/ Xxxxxxx X. XxxXxxxx | |||||
Name: Xxxxxx X. Xxxxxxxx | Name: Xxxxxxx X. XxxXxxxx | |||||||
Title: VP, Fund Advisor Operations | Title: AVP & Assistant Secretary |
17
Exhibit A
PACIFIC LIFE FUNDS
FEE SCHEDULE
FEE SCHEDULE
Effective: January 1, 2011
Portfolio: PL International Value
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 PL International
Value Fund and the International Value Portfolio of Pacific Select Fund according to the
following schedule:
Rate% | Break Point (assets) | |||
0.35 | % | Up to $1 billion |
||
0.30 | % | From $1 billion to $2 billion; AND |
||
0.25 | % | On the excess |
(b) The ratio of the PL International Value’s average daily net assets over the combined
assets of the PL International Value Fund and the International Value Portfolio.
In recognition of the fact that the Subadviser may have an inherent constraint with respect to
the amount of money that Subadviser is able to manage in a particular strategy, Subadviser agrees
to hold back or reserve total capacity (that is, agrees to accept a certain level of dollars) for
the PL International Value Fund and the International Value Portfolio of Pacific Select Fund in
total (collectively the “Fund”) and the strategies employed for the Fund and investments as
follows:
Total reserved capacity for the Fund: $3.5 billion dollars (to be determined on a net cash
flow basis into the account).
Fees for services shall be prorated for any portion of a year in which the Agreement is not
effective.