PORTFOLIO MANAGEMENT AGREEMENT
Exhibit (d)(aa)
AGREEMENT made effective this 2nd day of February, 2009 among Pacific Life Fund Advisors LLC,
a Delaware Limited Liability Company (“Investment Adviser”), and Western Asset Management Company,
a California corporation (“Portfolio Manager”), and Pacific Select Fund, a Massachusetts Business
Trust (the “Fund”).
WHEREAS, the Fund 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 Portfolio Manager is registered with the SEC as an investment adviser under the
Advisers Act;
WHEREAS, the Fund has retained the Investment Adviser to render investment advisory services
to the various portfolios of the Fund pursuant to an Advisory Agreement, as amended, and such
Agreement authorizes the Investment Adviser to engage a portfolio manager to discharge the
Investment Adviser’s responsibilities with respect to the investment management of such portfolios,
a copy of which has been provided to the Portfolio Manager and is incorporated herein by reference;
WHEREAS, the Fund and the Investment Adviser desire to retain the Portfolio Manager to
furnish investment advisory services to one or more portfolios of the Fund, and the Portfolio
Manager is willing to furnish such services to such portfolios and the Investment Adviser in the
manner and on the terms hereinafter set forth; and
WHEREAS, the Portfolio Manager desires to engage, pursuant to a written agreement
(“Sub-Advisory Agreement”), one or more affiliates that are registered with the SEC as investment
advisers under the Advisers Act (“Sub-Advisory Affiliates”) to assist the Portfolio Manager in
discharging the Portfolio Manager’s obligations under this Agreement on the terms hereinafter set
forth;
NOW THEREFORE, in consideration of the promises and mutual covenants herein contained, it is
agreed among the Fund, the Investment Adviser, and the Portfolio Manager as follows:
1. Appointment. The Fund and the Investment Adviser hereby appoint Western Asset Management
Company to act as Portfolio Manager to provide investment advisory services to the portfolios of
the Fund listed on Exhibit A attached hereto (each, a “Portfolio”) for the periods and on the terms
set forth in this Agreement. The Portfolio Manager accepts such appointment and agrees to furnish
the services herein set forth for the compensation herein provided.
In the event the Investment Adviser wishes to retain the Portfolio Manager to render
investment advisory services to one or more portfolios of the Fund other than the Portfolio, the
Investment Adviser shall notify the Portfolio Manager in writing and shall revise Exhibit A to
reflect such additional portfolio(s). If the Portfolio Manager is willing to render such services,
it shall notify the Fund and the Investment Adviser in writing, whereupon such portfolio shall
become a Portfolio hereunder, and be subject to this Agreement.
2. Portfolio Manager Duties. Subject to the supervision of the Fund’s Board of Trustees (the
“Board”) and the Investment Adviser, the Portfolio Manager will provide a continuous investment
program for the Portfolio and determine the composition of the assets of the Portfolio. The
Portfolio Manager will provide investment research and analysis, which may include computerized
investment methodology, and will conduct a continuous program of evaluation, investment, sales, and
reinvestment of the Portfolio’s assets by determining the securities, cash and other investments,
including futures and options contracts, if any, 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 Portfolio Manager 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 Portfolio Manager 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 Portfolio Manager is authorized to and shall exercise tender offers, exchange offers
and vote proxies on behalf of each Portfolio, each as the Portfolio Manager determines is in the
best interest of the Portfolio. The Portfolio Manager is authorized to open brokerage accounts on
behalf of the Portfolio in accordance with Fund procedures. The Portfolio Manager is authorized 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 Fund
procedures.
Portfolio Manager may delegate to any other one or more companies that Portfolio
Manager controls, is controlled by, or is under common control with, or to specified employees
of any such companies, including Sub-Advisory Affiliates, certain of Portfolio Manager’s duties
under this Agreement, provided that any such arrangements are entered into in accordance with
all applicable requirements of the 1940 Act. Portfolio Manager acknowledges and agrees that
any delegation by Portfolio Manager to one or more persons shall in no way relieve Portfolio
Manager of its duties and obligations pursuant to this Agreement, all such duties and
obligations under this Agreement shall remain the sole responsibility of Portfolio Manager as
if no such delegation had occurred, Portfolio Manager shall at all times provide appropriate
supervision and oversight of any such persons, and Portfolio Manager shall be fully
responsible and liable for all actions or omissions to act by such persons. Portfolio Manager
shall notify the Fund and the Investment Adviser promptly in writing at least ninety (90) days
in advance in the event that a Sub-Advisory Agreement is to be amended in any material
fashion. Portfolio Manager acknowledges and agrees that the Sub-Advisory Affiliates are not
parties to this Agreement and are not intended beneficiaries of this Agreement and that they
have no rights under this Agreement.
In performing these duties, the Portfolio Manager:
(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 to the Fund, to the Investment Adviser (as provided to the Portfolio
Manager by the Investment Adviser), or to the Portfolio Manager), (2) applicable rules and
regulations under the Securities Exchange Act of 1934, as amended (the “1934 Act”) (3) all other
applicable federal and state laws and regulations pertaining to investment vehicles underlying
variable annuity and/or variable life insurance contracts, (4) any applicable written procedures,
policies and guidelines adopted by the Board
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and furnished to the Portfolio Manager, (5) the Fund’s objectives, investment policies and
investment restrictions as stated in the Fund’s Prospectus and Statement of Additional Information
as supplemented or amended from time to time, as furnished to the Portfolio Manager, (6) the
provisions of the Fund’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”), (7) Section 851(b)(2) and (3) of Subchapter M of the Internal Revenue Code of 1986, as
amended (the “Code”), (8) the provisions of Section 817(h) of the Code, applicable to the
Portfolio; and (9) any other applicable laws and regulations, including without limitation, proxy
voting regulations. To the extent that the Portfolio Manager 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 Portfolio Manager shall segregate assets in
accordance with the 1940 Act, if necessary, based upon trading strategies and positions the
Portfolio Manager 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 Portfolio Manager, the Portfolio Manager shall be fully protected
in relying on the Fund’s Registration Statement previously furnished by the Investment Adviser to
the Portfolio Manager. In managing the Portfolio in accordance with the requirements of this
Section 2, the Portfolio Manager shall be entitled to receive and act upon advice of counsel to the
Fund, to the Investment Adviser or to the Portfolio Manager that is also acceptable to the
Investment Adviser.
(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
Portfolio Manager’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 Fund, as they may be amended or
supplemented from time to time and furnished to the Portfolio Manager. 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 Portfolio Manager shall not be deemed to have acted unlawfully or
to have breached any duty created by this Agreement or otherwise solely by reason of its having
caused the 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 Portfolio Manager determines in good faith that such
amount of commission was reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that particular transaction or the
Portfolio Manager’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 lla2-2(T)
thereunder, and subject to any other applicable laws and regulations including Section 17(e) of the
1940 Act, the Portfolio Manager is further authorized to place orders on behalf of the Portfolio
through the Portfolio Manager if the Portfolio Manager is registered as a broker or dealer with the
SEC or
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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 Portfolio Manager.
Such allocation shall be in such amounts and proportions as the Portfolio Manager shall determine
consistent with the above standards, and, upon request, the Portfolio Manager 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 Portfolio Manager 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 Portfolio Manager. In
such event, allocation of the securities so purchased or sold, as well as the expenses incurred in
the transaction, will be made by the Portfolio Manager in a manner that is fair and equitable and
consistent with the Portfolio Manager’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 Fund, 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 Fund’s custodian and recordkeeping agent, and, if required, the
Investment Adviser. The Portfolio Manager agrees to comply with such rules, procedures and time
frames as the Fund’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 Fund’s custodian.
(f) will provide reasonable assistance to the Investment Adviser, custodian or recordkeeping
agent for the Fund in determining or confirming, consistent with the procedures and policies stated
in the Fund’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 Portfolio Manager or identifies for review by the
Portfolio Manager. 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 Portfolio Manager 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 any Portfolio
security’s value does not appear to reflect corporate actions, news, significant events or such
security otherwise requires review to determine if fair valuation is necessary under the Fund’s
procedures; (iii) applying to the Portfolio’s assets the procedures of the Portfolio Manager used
for valuing the assets held by
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other accounts under management of the Portfolio Manager 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 fair
valuations or recommendations for fair valuations in accordance with the Fund’s valuation
procedures, as they may be amended from time to time; 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 Fund upon request. Such records
shall be deemed to be Fund records.
(g) will maintain and preserve such records related to each Portfolio’s transactions as
required under the 1940 Act and the Advisers Act. The Portfolio Manager will make available to the
Fund and the Investment Adviser promptly upon request, any of the Portfolio’s investment records
and ledgers maintained by the Portfolio Manager (which shall not include the records and ledgers
maintained by the custodian and recordkeeping agent for the Fund), as are necessary to assist the
Fund 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 Fund 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 each Portfolio, a quarterly compliance checklist, reports regarding compliance with the Fund’s
procedures pursuant to Rules 17e-l, 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 Funds, and compliance with
the Portfolio Manager’s and each Sub-Advisory Affiliate’s Code of Ethics, and such other reports or
certifications that the Investment Adviser may reasonably request from time to time.
(i) has adopted, and each of its Sub-Advisory Affiliates has adopted, a written Code of Ethics
complying with the requirements of Rule 17j-l under the 1940 Act and Rule 204A-l under the Advisers
Act and will provide the Investment Adviser and the Fund with a copies of the Codes of Ethics for
Portfolio Manager and for each Sub-Advisory Affiliate, together with evidence of its adoption.
Within 30 days of the end of each calendar quarter during which this Agreement remains in effect,
the Chief Compliance Officer or authorized corporate officer shall certify to the Investment
Adviser that the Portfolio Manager and each Sub-Advisory Affiliate has complied with the
requirements of Rule 17j-l during the previous calendar quarter and that there have been no
violations of the Codes of Ethics or, if a violation has occurred, that appropriate action has been
taken in response to such violation. Upon reasonable written request of the Investment Adviser or
the Fund, the Portfolio Manager and each Sub-Advisory Affiliate 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 Codes of Ethics and other records evidencing enforcement of the Codes of
Ethics, subject to
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procedures that are reasonably designed to protect the confidentiality of any non public
personal information.
(j) will provide to the Investment Adviser a copy of the Portfolio Manager’s Form ADV, and a
copy of the Form ADV for each Sub-Advisory Affiliate, 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
Portfolio Manager 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 Portfolio Manager represents and
warrants that each of its Sub-Advisory Affiliates is a duly registered investment adviser under the
Advisers Act and that Portfolio Manager will notify the Investment Adviser immediately if any
action is brought by any regulatory body which would affect the registration of any of its
Sub-Advisory Affiliates. The Portfolio Manager will provide a list of persons whom the Portfolio
Manager wishes to have authorized to give written and/or oral instructions to Custodians of assets
for the Portfolio.
(k) will be responsible for the preparation and filing of such reports with respect to the
assets of the Portfolio reflecting holdings over which the Portfolio Manager 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 Portfolio Manager or any employee of a Sub-Advisory
Affiliate 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
orders for the purchase and sale of securities or obtaining
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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 Fund and the Investment Adviser will not
disclose or use any records or information with respect to the Portfolio Manager 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 Fund, 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
Portfolio Manager hereunder. Specifically, and without limitation to the foregoing, the Portfolio
Manager agrees to provide certifications to the principal executive and financial officers of the
Fund (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 Fund’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 Fund shall reasonably request or
in accordance with procedures adopted by the Fund.
(o) is, along with its affiliated persons, permitted to enter into transactions with the other
portfolios of the Fund and affiliated persons of those other portfolios of the Fund (collectively,
the “Other Portfolios”). In doing so, the Portfolio Manager and each of its Sub-Advisory Affiliates
is prohibited from consulting with the Investment Adviser or the portfolio managers 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 Portfolio Manager, 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 Portfolio Manager shall
vote proxies on behalf of each Portfolio in a manner deemed by the Portfolio Manager to be in the
best interests of each Portfolio pursuant to the Portfolio Manager’s written Proxy Voting Policies
and Procedures. The Portfolio Manager 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 Portfolio Manager 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 Portfolio Manager 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 statues and
regulations.
(q) will provide reasonable assistance to the Fund and the Fund’s Chief Compliance Officer
(“CCO”) in complying with Rule 38a-l under the 1940 Act. Specifically,
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the Portfolio Manager represents and warrants that it shall maintain, and its Sub-Advisory
Affiliates 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 Portfolio Manager’s compliance program, and the Sub-Advisory Affiliates’ compliance
programs, which access shall include on-site visits with the Portfolio Manager and the Sub-Advisory
Affiliates 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-l, the Portfolio Manager
agrees to provide certifications as may be reasonably requested by the CCO related to the design
and implementation of the Portfolio Manager’s compliance program and the Sub-Advisory Affiliates’
compliance programs.
(r) will comply with the Fund’s policy on selective disclosure of portfolio holdings of the
Fund (the “Selective Disclosure Policy”), as provided in writing to the Portfolio Manager and as
may be amended from time to time. The Portfolio Manager agrees to provide a certification with
respect to compliance by the Portfolio Manager and each of its Sub-Advisory Affiliates with the
Fund’s Selective Disclosure Policy as may be reasonably requested by the Fund from time to time.
(s) will use its best efforts to notify the Investment Adviser promptly in the event that, in
the judgment of the Portfolio Manager, Portfolio share transaction activity becomes disruptive to
the ability of the Portfolio Manager or any of its Sub-Advisory Affiliates 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 Portfolio Manager hereunder.
(u) will provide such certifications to the Fund as the Fund or the Investment Adviser may
reasonably request related to the services provided by the Portfolio Manager hereunder, including
(but not limited to) certifications of compliance with Trust procedures, the Registration
Statement, and applicable securities regulations.
(v) will monitor and promptly inform the Investment Adviser of developments relating to class
action litigation involving securities held by the Portfolio, and upon request by the Investment
Adviser, 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 Portfolio Manager will provide relevant
trade information (for example, a schedule of purchases and sales and/or holdings) for such
security.
(w) will provide reasonable assistance to the Investment Adviser with respect to the annual
audit of the Fund’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 Fund or the Fund’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
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assignments) and derivatives) that are not readily ascertainable in the event the Fund or the
Fund’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 Portfolio Manager or
any of its Sub-Advisory Affiliates 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 Portfolio
Manager’s fee rate or any of its Sub-Advisory Affiliates’ fee rates is less than the rate charged
the Investment Adviser for management of the Portfolio.
(y) will, for the duration of this Agreement, not directly solicit or induce any personnel of
Investment Adviser or its affiliated companies to leave the employ of Investment Adviser or
affiliated company. After personnel of Investment Adviser or an affiliate cease to be in the
employ of Investment Adviser or affiliate, Portfolio Manager shall be free to directly or
indirectly employ or retain such personnel in any capacity, so long as Portfolio Manager did not
directly solicit or induce such personnel to leave the employ of Investment Adviser or its
affiliate.
(z) place orders for the execution of securities transactions with or through such brokers,
dealers or trading platforms as portfolio Manger may select.
(aa) to the extent the Fund, through the Custodian or other third party agent, participates in
a securities lending program, the Portfolio Manager shall not be responsible for losses or
liabilities, including, without limitation, overdraft fees, loss of opportunity to participate in
corporate actions or exchanges or other trade failure, resulting from the Fund’s participation in
such securities lending program, except to the extent such losses are due to the to the gross
negligence, willful misconduct or bad faith of the Portfolio Manager.
3. Disclosure about Portfolio Manager and Portfolio. The Portfolio Manager 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 Portfolio Manager, any of its
Sub-Advisory Affiliates 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 Portfolio Manager, including any performance information the Portfolio Manager
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 Portfolio Manager further
agrees to notify the Investment Adviser and the Fund immediately of any material fact about the
Portfolio Manager or any of its Sub-Advisory Affiliates, known to the Portfolio Manager respecting
or relating to the Portfolio Manager or any of its Sub-Advisory Affiliates, that is not contained
in the Registration Statement or prospectus for the Fund, or any amendment or supplement thereto,
or of any statement respecting or relating to the Portfolio Manager or any of its Sub-Advisory
Affiliates contained therein that becomes untrue in any material respect. With respect to the
disclosure respecting each Portfolio, the Portfolio Manager represents and agrees that the
descriptions in the Fund’s Prospectus, as of the date of this Agreement and as of the date of any
Registration Statement or supplement thereto, as furnished to the Portfolio Manager, (a) about the
Portfolio’s investment goal and main investments (“Portfolio Description”) is consistent with the
manner in which the Portfolio Manager intends to manage each Portfolio, and (b) about the
Portfolio’s risks (“Risk Description”) is consistent with risks known to the
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Portfolio Manager that arise in connection with the manner in which the Portfolio Manager
intends to manage the Portfolio. The Portfolio Manager further agrees to notify the Investment
Adviser and the Fund promptly in the event that the Portfolio Manager becomes aware that the
Portfolio Description for a Portfolio is inconsistent in any material respect with the manner in
which the Portfolio Manager is managing the Portfolio, and in the event that the Risk Description
is inconsistent in any material respect with the risks known to the Portfolio Manager that arise in
connection with the manner in which the Portfolio Manager and any of its Sub-Advisory Affiliates is
managing the Portfolio. In addition, the Portfolio Manager agrees to comply with the Investment
Adviser’s reasonable request for information regarding the personnel of the Portfolio Manager who
are responsible for the day-to-day management of a Portfolio’s assets.
4. Expenses. The Portfolio Manager shall bear all expenses incurred by it and its staff with
respect to all activities in connection with the performance of the Portfolio Manager’s services
under this Agreement, including but not limited to salaries, overhead, travel, expenses incurred by
Portfolio Manager in connection with preparation of Board materials it provides, marketing
materials relating to Portfolio Manager or other information provided by Portfolio Manager to the
Investment Adviser and/or the Funds Distributor, and expenses incurred by Portfolio Manager in
connection with marketing support provided to the Investment Adviser and/or the Funds Distributor.
Portfolio Manager 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 Portfolio Manager 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 Fund by the Portfolio Manager of such Changes, the Fund is
not generating a supplement for other purposes or the Fund does not wish to add such Changes to a
pending supplement. In the event two or more portfolio managers each require a supplement
simultaneously, the expense of each supplement will be shared pro rata with such other portfolio
manager(s) based upon the number of pages required by each such portfolio manager. All other
expenses not specifically assumed by the Portfolio Manager hereunder or by the Investment Adviser
under the Advisory Agreement are borne by the applicable Portfolio of the Fund. The Fund, the
Portfolio Manager and the Investment Adviser shall not be considered as partners or participants in
a joint venture.
5. Compensation. For the services provided and the expenses borne by the Portfolio Manager
pursuant to this Agreement, the Investment Adviser will pay to the Portfolio Manager 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 Portfolio Manager shall not be
responsible for providing money for the initial capitalization of any Portfolio.
7. Compliance.
(a) The Portfolio Manager agrees that it shall immediately notify the Investment Adviser and
the Fund (i) in the event that the SEC, CFTC, or any banking or other regulatory body has censured
the Portfolio Manager or any of its Sub-Advisory Affiliates, placed limitations upon its or any of
its Sub-Advisory Affiliates’ activities, functions or operations; suspended or revoked its or any
of its Sub-Advisory Affiliates’ registration, if any,
10
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; (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 Portfolio Manager further agrees to notify
the Investment Adviser and Fund immediately of any material fact known to the Portfolio Manager
respecting or relating to the Portfolio Manager or any of its Sub-Advisory Affiliates 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 Portfolio Manager (i)
in the event that the SEC has censured the Investment Adviser or the Fund; 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 Portfolio Manager 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 Portfolio Manager understands that unless
provided herein or authorized from time to time by the Fund, the Portfolio Manager shall have no
authority to act for or represent the Fund in any way or otherwise be deemed the Fund’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 Portfolio Manager hereby agrees that
all records which it maintains for the Portfolio are the property of the Fund and further agrees to
surrender promptly to the Fund any of such records upon the Fund’s or the Investment Adviser’s
request, although the Portfolio Manager 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 Fund.
11. Responsibility and Control. Notwithstanding any other provision of this Agreement, it is
understood and agreed that the Fund reserves the right to direct, approve or disapprove any action
hereunder taken on its behalf by the Portfolio Manager, provided, however, that the Portfolio
Manager shall not be liable for any losses to the Fund resulting from the Fund’s direction, or from
the Fund’s disapproval of any action proposed to be taken by the Portfolio Manager.
12. Services Not Exclusive. It is understood that the services of the Portfolio Manager and
its employees are not exclusive, and nothing in this Agreement shall prevent the Portfolio Manager
(or its employees or affiliates) from providing similar services to other
11
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 Fund and the Investment Adviser agree that the Portfolio Manager, any
affiliated person of the Portfolio Manager, and each person, if any, who, within the meaning of
Section 15 of the 1933 Act, controls the Portfolio Manager, shall not be liable for, or subject to
any damages, expenses, or losses in connection with, any act or omission connected with or arising
out of any services rendered under this Agreement, except by reason of willful misfeasance, bad
faith, or gross negligence in the performance of the Portfolio Manager’s duties, or by reason of
reckless disregard of the Portfolio Manager’s obligations and duties under this Agreement.
Notwithstanding the foregoing, nothing contained in this Agreement shall constitute a waiver or
limitation of rights that the Fund may have under federal or state securities laws. Notwithstanding
anything to the contrary in this Agreement, neither the Fund, the Investment Adviser nor their
affiliated persons shall be liable to any Sub-Advisory Affiliate for any damages, expenses or
losses in connection with this Agreement.
14. Indemnification.
(a) The Portfolio Manager 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 Portfolio Manager’s responsibilities
to the Fund which (i) are based upon any willful misfeasance, bad faith, negligence, or reckless
disregard of, the Portfolio Manager’s obligations and/or duties under this Agreement by the
Portfolio Manager or by any of its directors, officers or employees, or any affiliate acting on
behalf of the Portfolio Manager (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 Fund 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 Fund, or any affiliated person of the Fund by the Portfolio Manager or any affiliated
person of the Portfolio Manager (other than a PL Indemnified Person) provided, however, that in no
case is the Portfolio Manager’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 Portfolio Manager, any
affiliated person within the meaning of Section 2(a)(3) of the 1940 Act of the Portfolio Manager
and each person, if any, who, within the meaning of Section 15 of the 1933 Act controls
(“controlling person”) the Portfolio Manager (collectively, “Portfolio Manager Indemnified
Persons”) against any and all losses, claims, damages, liabilities or litigation (including
reasonable legal and other expenses) to which a Portfolio Manager Indemnified Person may become
subject under the 1933 Act, the 1940 Act, the Advisers Act,
12
under any other statute, at common law or otherwise, arising out of the Adviser’s
responsibilities as Investment Adviser of the Fund which (i) are based upon any willful
misfeasance, bad faith or 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 Portfolio
Manager 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 Fund 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 Fund, or any
affiliated person of the Fund by the Portfolio Manager or any affiliated person of the Portfolio
Manager (other than a PL Indemnified Person) provided however, that in no case is the Investment
Adviser’s indemnity in favor of the Portfolio Manager 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 each 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 each 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 Fund, the
Investment Adviser, or the Portfolio Manager, 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 Fund at any time with respect to the services provided by the Portfolio Manager,
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 Fund 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 Portfolio Manager and the Investment Adviser;
(b) by the Portfolio Manager at any time, without the payment of any penalty, upon sixty (60)
days’ prior written notice to the Investment Adviser and the Fund.
(c) by the Investment Adviser at any time, without the payment of any penalty, upon sixty (60)
days’ prior written notice to the Portfolio Manager and the Fund.
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) Portfolio Manager 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.
13
16. Use of Name.
(a) It is understood that the name “Pacific Life Insurance Company”, “Pacific Life Fund
Advisors LLC”, “Pacific Asset Management”, 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) are the valuable property of the Investment Adviser and its affiliates, and that
the Portfolio Manager shall not use such names (or abbreviations, derivatives or logos) without the
prior written approval of the Investment Adviser and only so long as the Investment Adviser is an
investment adviser to the Fund and/or the Portfolio. Upon termination of this Agreement, the
Portfolio Manager shall forthwith cease to use such names (or abbreviations, derivatives or logos).
(b) It is understood that the name “Western Asset Management Company” and any derivative
thereof or any logo associated with that name is the valuable property of the Portfolio Manager and
that the Fund and the Investment Adviser have the right to use such name (or derivative or logo),
in the Fund’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
Portfolio Manager is a Portfolio Manager to the Fund and/or one of the Portfolio, provided,
however, that the Fund may continue to use the name of the Portfolio Manager in its Registrations
Statement and other documents to the extent deemed necessary by the Fund to comply with disclosure
obligations under applicable law and regulation. Neither the Fund nor the Investment Adviser shall
use the Portfolio Manager’s name or logo in promotional or sales related materials prepared by or
on behalf of the Investment Adviser or the Fund, without prior review and approval by the Portfolio
Manager, which may not be unreasonably withheld. Upon termination of this Agreement, the Fund and
the Investment Adviser shall forthwith cease to use such names (and logo), except as provided for
herein.
17. Limitation of Liability. A copy of the Declaration of Trust for the Fund is on file with
the Secretary of the State of Massachusetts. The Declaration of Trust has been executed on behalf
of the Fund by a Trustee of the Fund in his capacity as Trustee of the Fund and not individually.
The obligations of this Agreement with respect to each 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 Fund
individually, or upon the Fund generally or upon any other portfolio of the Fund.
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):
14
| A. | if to the Portfolio Manager, to: Western Asset Management Company 000 X. Xxxxxxxx Xxxx. Xxxxxxxx, XX 00000 Facsimile transmission number: 000-000-0000 Attention: General Counsel |
||
| B. | if to the Investment Adviser, to: Pacific Life Fund Advisors LLC 000 Xxxxxxx Xxxxxx Xxxxx Xxxxxxx Xxxxx, XX 00000 Facsimile transmission number: (000) 000-0000 Attention: Xxxxx X. Xxxxx |
||
| C. | if to the Fund, 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 |
| 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 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.
15
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/ Xxxxxx X. Milfs
|
|||||||
| Title: VP, Fund Advisor Operations | Title: Vice President & Secretary |
WESTERN ASSET MANAGEMENT COMPANY
By:
|
/s/ Xxxxxxx X. Xxxxxxx
|
By: | /s/ Xxxxx X. Xxxxx
|
|||||||
| Title: Head of Client Service And Marketing Support | Title: Director of Global Client Service and Marketing |
By:
|
/s/ Xxxxxx X. Xxxxxxxx
|
By: | /s/ Xxxxxx X. Milfs
|
|||||||
| Title: Vice President | Title: Secretary |
16
Exhibit A
PACIFIC SELECT FUND
FEE SCHEDULE
FEE SCHEDULE
Effective: February 2, 2009
Portfolios: Diversified Bond Portfolio
The Investment Adviser will pay to the Portfolio Manager a monthly fee based on an annual
percentage of the average daily net assets of the Diversified Bond Portfolio according to the
following schedule:
| Rate% | Break Point (assets) | |||
| 0.225% | First $300 million |
|||
| 0.15% | Excess over $300 million up to $2 billion |
|||
| 0.10% | Excess over $2 billion |
|||
Fees for services shall be prorated for any portion of a year in which the Agreement is not
effective.
17
