EXHIBIT (d)(20)
PORTFOLIO MANAGEMENT AGREEMENT
AGREEMENT made this 15th day of December, 1999 between Pacific Life
Insurance Company, ("Adviser"), a California corporation, and Fund Asset
Management, L.P., doing business as Mercury Asset Management US ("Mercury or
Portfolio Manager"), a Delaware Limited Partnership, and Pacific Select Fund
(the "Fund"), a Massachusetts Business Trust.
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"); and
WHEREAS, the Fund is authorized to issue shares of beneficial interest
("Shares") in separate portfolios, with each such portfolio representing
interests in a separate portfolio; and
WHEREAS, the Fund currently offers multiple Portfolios, two of which are
designated as the Equity Index and Small-Cap Index Portfolios, such Portfolios
together with any other Portfolios subsequently established by the Fund, with
respect to which the Fund and Adviser desire to retain the Portfolio Manager to
render investment advisory services hereunder, and with respect to which the
Portfolio Manager is willing to do so, being herein collectively referred to
also as the "Portfolios"; and
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 ("Advisers Act"); and
WHEREAS, the Portfolio Manager is registered with the SEC as an investment
adviser under the Advisers Act; and
WHEREAS, the Fund has retained the Adviser to render investment advisory
services to the Portfolios pursuant to an Advisory Agreement, as amended, and
such Agreement authorizes the Adviser to engage Portfolio Manager to discharge
the Adviser's responsibilities with respect to the investment management of the
Portfolio, a copy of which has been provided to the Portfolio Manager and is
incorporated by reference herein; and
WHEREAS, the Fund and the 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 Adviser in the manner and on the terms hereinafter set forth; and
NOW THEREFORE, in consideration of the premises and the promises and mutual
covenants herein contained, it is agreed between the Fund, the Adviser, and the
Portfolio Manager as follows:
1
1. Appointment. The Fund and the Adviser hereby appoint Mercury to act as
------------
Portfolio Manager to the Equity Index and Small-Cap Index Portfolios ("the
Portfolios") 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 Adviser wishes to retain the Portfolio Manager to render
investment advisory services to one or more portfolios other than the
Portfolios, the Adviser shall notify the Portfolio Manager in writing. If the
Portfolio Manager is willing to render such services, it shall notify the Fund
and 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 and the Adviser, the Portfolio Manager will provide a
continuous investment program for the Portfolios and determine the composition
of the assets of the Portfolios, including determination of the purchase,
retention, or sale of the securities, cash, and other investments, including
futures contracts and options thereon, for the Portfolios. The Portfolio
Manager will provide investment research and analysis, which may consist of
computerized investment methodology, and will conduct a continuous program of
evaluation, investment, sales, and reinvestment of the Portfolio's assets by
determining the securities and other investments that shall be purchased,
entered into, sold, closed, or exchanged for the Portfolios, when these
transactions should be executed, and what portion of the assets of the
Portfolios 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 Portfolios. To the extent permitted
by the investment policies of the Portfolios, the Portfolio Manager shall make
decisions for the Portfolios 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 Portfolios. The Portfolio Manager is
authorized to exercise tender offers, exchange offers and to vote proxies on
behalf of the Fund, each as the Portfolio Manager determines is in the best
interest of the Fund. In performing these duties, the Portfolio Manager:
(a) Will (1) manage the Portfolios in a manner that complies with
requirements imposed upon regulated investment companies under Subchapter M of
the Internal Revenue Code and (2) manage the Portfolios so as to ensure
compliance by the Portfolios with the diversification requirements of Section
817(h) of the Internal Revenue Code and Regulations issued thereunder. The
Adviser will notify the Portfolio Manager of any amendments to the Section
817(h) of the Internal Revenue Code and Regulations issued thereunder. In
managing the Portfolios in accordance with these requirements, the Portfolio
Manager shall be entitled to receive and act upon advice of counsel to the Fund,
counsel to the Adviser, or counsel to the Portfolio Manager that is also
acceptable to the Adviser.
2
(b) Shall 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, the Adviser or the Portfolio Manager), (2) with all other applicable
federal and state laws and regulations pertaining to investment vehicles
underlying variable annuity and/or variable life insurance contracts, (3) with
any applicable procedures, policies and guidelines adopted by the Fund's Board
of Trustees, (4) with the Portfolio's objectives, investment policies and
investment restrictions as stated in the Fund's Prospectus and Statement of
Additional Information, and (5) with 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. Until the
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 to the Portfolio Manager by the Adviser.
(c) Will: (i) use its best efforts to identify each position in the
Portfolios that constitutes stock in a Passive Foreign Investment Company
("PFIC"), as that term is defined in Section 1296 of the Internal Revenue Code,
and (ii) make such determinations and inform the Adviser at least annually, (or
more often and by such date(s) as the Adviser shall request), of any stock in a
PFIC.
(d) Is responsible, in connection with its responsibilities under this
Section 2, for decisions to buy and sell securities and other investments for
the Portfolios, 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 Portfolios, 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. Subject to such
policies as the Board of Trustees may determine and consistent with Section
28(e) of the Securities Exchange Act of 1934, the Portfolio Manager shall not be
deemed to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of its having caused the 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 Portfolios 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 Securities Exchange Act of 1934 and Rule 11a2-2(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 Portfolios through the Portfolio Manager if the Portfolio Manager is
registered as a broker or dealer with the SEC or as a FCM with the Commodities
Futures Trading Commission ("CFTC"), to any of its affiliates that are brokers
or dealers or FCMs or such other entities which provide similar services in
foreign countries, or to such brokers and dealers that also provide research or
statistical research and material, or other services to the Portfolios or the
Portfolio Manager. Such allocation shall be in such amounts and proportions as
the Portfolio Manager shall
3
determine consistent with the above standards, and, upon request, the Portfolio
Manager will report on said allocation to the Adviser and Board of Trustees of
the Fund, indicating the brokers, dealers or FCMs to which such allocations have
been made and the basis therefor.
(e) 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 Fund's Registration Statement. In such event,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Portfolio Manager in a manner
that is fair and equitable in the judgment of the Portfolio Manager in the
exercise of its fiduciary obligations to the Fund and to such other clients.
(f) Will, in connection with the purchase and sale of securities for the
Portfolios, together with the 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 Portfolios, 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 Adviser.
(g) Will assist the custodian and recordkeeping agent for the Fund in
determining or confirming, consistent with the procedures and policies stated in
the Registration Statement for the Fund, the value of any portfolio securities
or other assets of the Portfolios for which the custodian and recordkeeping
agent seeks assistance from the Portfolio Manager or identifies for review by
the Portfolio Manager.
(h) Will make available to the Fund and the 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 Adviser to comply 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.
(i) Will regularly report to the Fund's Board of Trustees on the investment
program for the Portfolios and the issuers and securities represented in the
Portfolios' portfolios, and will furnish the Fund's Board of Trustees with
respect to the Portfolios such periodic and special reports as the Trustees and
the Adviser may reasonably request, including, but not limited to, the monthly
compliance checklist, monthly tax compliance worksheet, reports regarding
4
compliance with the Fund's procedures pursuant to Rules 17e-1, 17a-7, 10f-3 and
12d3-1 under the Investment Company Act of 1940, 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, and compliance with the Portfolio Manager's Code of
Ethics, and such other procedures or requirements that the Adviser may request
from time to time.
(j) Will not disclose or use any records or information obtained pursuant
to this Agreement (excluding investment research and investment advice) in any
manner whatsoever except as expressly authorized in this Agreement or in the
ordinary course of business in connection with placing orders for the purchase
and sale of securities or obtaining investment licenses in various countries or
the opening of custody accounts and dealing with settlement agents in various
countries, and will keep confidential any information obtained pursuant to the
Agreement, and disclose such information only if the Board of Trustees of the
Fund 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 Adviser will not disclose or use any
records or information respecting 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 of Trustees of the Fund 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.
(k) Shall not permit any employee of the Portfolio Manager to have any
material connection with the handling of the Portfolios if such employee has:
(i) been convicted, in the last ten (10) years, of any felony or
misdemeanor involving the purchase or sale of any security or 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 of any
investment company, bank, insurance company, or entity or person required to be
registered under the Commodity Exchange Act; or
(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.
5
(l) Shall provide to Adviser a copy of Portfolio Manager's Form ADV as
filed with the Securities and Exchange Commission and a list of persons who
Portfolio Manager wishes to have authorized to give written and/or oral
instructions to Custodians of Fund assets for the Portfolios.
3. Disclosure about Portfolio Manager. The Portfolio Manager has reviewed
----------------------------------
the current Registration Statement for the Fund filed with the SEC and
represents and warrants that, with respect to the disclosure about the Portfolio
Manager or information relating, directly or indirectly, to the Portfolio
Manager, such Registration Statement contains, as of the date hereof, no untrue
statement of any material fact and does not omit any statement of a material
fact which was required to be stated therein or necessary to make the statements
contained therein not misleading. The Portfolio Manager further represents and
warrants that it is a duly registered investment adviser under the Advisers Act
and a duly registered investment adviser in all states in which the Portfolio
Manager is required to be registered. The Adviser has received a current copy
of the Portfolio Manager's Uniform Application for Investment Adviser
Registration on Form ADV, as filed with the SEC. On an annual basis, (or more
frequently if requested by the Adviser or the Fund's Board of Trustees) the
Portfolio Manager agrees to provide the Adviser with current copies of the
Portfolio Manager's Form ADV, and any supplements or amendments thereto, as
filed with the SEC.
4. Expenses. During the term of this Agreement, the Portfolio Manager
--------
will pay all expenses incurred by it and its staff and for their activities in
connection with its services under this Agreement. The Portfolio Manager shall
not be responsible for any of the following:
(a) Expenses of all audits by the Fund's independent public
accountants;
(b) Expenses of the Fund's transfer agent, registrar, dividend
disbursing agent, and shareholder recordkeeping services;
(c) Expenses of the Fund's custodial services including recordkeeping
services provided by the custodian;
(d) Expenses of the Fund's recordkeeping services provided by the
recordkeeping agent;
(e) Expenses of obtaining quotations for calculating the value of the
Portfolio's net assets;
(f) Expenses of obtaining portfolio activity reports for each
Portfolio;
(g) Expenses of maintaining the Fund's tax records;
(h) Salaries and other compensation of any of the Fund's executive
officers and employees, if any, who are not officers, directors, stockholders,
or employees of the Portfolio Manager or its subsidiaries or affiliates (except
that the Adviser, or any of its subsidiaries or affiliates, shall bear the
expense with respect to executive officers and employees,
6
if any, who are officers, directors, stockholders or employees of the Adviser
or of its subsidiaries or affiliates);
(i) Taxes, if any, levied against the Fund or any of its Portfolios;
(j) Brokerage fees and commissions in connection with the purchase and
sale of portfolio securities for the Portfolios;
(k) Costs, including the interest expenses, of borrowing money;
(l) Costs and/or fees incident to meetings of the Fund's shareholders,
the preparation and mailings of proxy statements, prospectuses, statements of
additional information and reports of the Fund to its shareholders, the filing
of reports with regulatory bodies, the maintenance of the Fund's existence, and
the registration of shares with federal and state securities or insurance
authorities;
(m) The Fund's legal fees, including the legal fees related to the
registration and continued qualification of the Fund's shares for sale;
(n) Costs of printing "share" stock certificates, if any, representing
shares of the Fund;
(o) Trustees' fees and expenses of Trustees of the Fund who are not
officers, employees, or stockholders of the Portfolio Manager or any affiliate
thereof (except that the Adviser shall bear the expense of any trustee who is an
officer, employee, or stockholder of the Adviser or any affiliate thereof);
(p) The Fund's fidelity bond required by Section 17(g) of the 1940 Act,
or other insurance premiums;
(q) Association membership dues;
(r) Extraordinary expenses of the Fund as may arise including expenses
incurred in connection with litigation, proceedings and other claims and the
legal obligations of the Fund to indemnify its trustees, officers, employees,
shareholders, distributors, and agents with respect thereto (unless Portfolio
Manager is responsible for such expenses under Section 14 of this Agreement);
and
(s) Organizational and offering expenses and, if applicable,
reimbursement (with interest) of underwriting discounts and commissions.
5. Compensation. For the services provided and the expenses borne by the
------------
Portfolio Manager pursuant to this Agreement, the Adviser will pay to the
Portfolio Manager a fee in accordance with the Fee Schedule attached to this
Agreement. This fee will be computed and accrued daily and payable monthly.
These fees for services shall be prorated for any portion of a year in which the
Agreement is not effective.
7
6. Seed Money. The 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
Adviser and the Fund in the event (i) that the SEC has censured the Portfolio
Manager; placed limitations upon its activities, functions or operations;
suspended or revoked its registration as an investment adviser; or has commenced
proceedings or an investigation that can reasonably be expected to result in any
of these actions, (ii) upon having a reasonable basis for believing that a
Portfolio has ceased to qualify or might not qualify as a regulated investment
company under Subchapter M of the Internal Revenue 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 Internal Revenue Code or the
Regulations thereunder. The Portfolio Manager further agrees to notify the
Adviser and the Fund immediately of any material fact known to the Portfolio
Manager respecting or relating to the Portfolio Manager that is not contained in
the Registration Statement or prospectus for the Fund, or any amendment or
supplement thereto, or of any statement contained therein that becomes untrue in
any material respect.
(b) The Adviser agrees that it shall immediately notify the Portfolio
Manager in the event (i) that the SEC has censured the Adviser or the Fund;
placed limitations upon either of their activities, functions, or operations;
suspended or revoked the 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 Internal Revenue 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 Internal Revenue 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 Adviser from time to time, have
no authority to act for or represent the 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 Rule 31a-3
-----------------
under the 1940 Act, the Portfolio Manager hereby agrees that all records which
it maintains for the Portfolios 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
Adviser's request, although the Portfolio Manager may, at its own expense, make
and retain a copy of such records. The Portfolio Manager further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records
required to be maintained by Rule 31a-1 under the 1940 Act and to preserve the
records required by Rule 204-2 under the Advisers Act for the period specified
in the Rule.
8
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 shall at all times
retain the ultimate responsibility for and control of all functions performed
pursuant to this Agreement and reserves the right to direct, approve or
disapprove any action hereunder taken on its behalf by the Portfolio Manager.
12. Services Not Exclusive. It is understood that the services of the
----------------------
Portfolio Manager are not exclusive, and nothing in this Agreement shall prevent
the Portfolio Manager (or its affiliates) from providing similar services to
other clients, including investment companies (whether or not their investment
objectives and policies are similar to those of the Portfolios) or from engaging
in other activities.
13. Liability. Except as provided in Section 14 and as may otherwise be
---------
required by the 1940 Act or the rules thereunder or other applicable law, the
Fund and the 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, the Portfolio Manager may be liable
to the Fund for acts of good faith and nothing contained in this Agreement shall
constitute a waiver or limitation of rights that the Fund may have under federal
or state securities laws.
14. Indemnification.
---------------
(a) The Portfolio Manager agrees to indemnify and hold harmless, the
Adviser, any affiliated person within the meaning of Section 2(a)(3) of the 1940
Act ("affiliated person") of the Adviser, and each person, if any, who, within
the meaning of Section 15 of the 1933 Act, controls ("controlling person") the
Adviser (collectively, "PL Indemnified Persons") against any and all losses,
claims, damages, liabilities or litigation (including legal and other expenses),
to which the Adviser or such affiliated person or controlling person may become
subject under the 1933 Act, 1940 Act, the Advisers Act, under any other statute,
at common law or otherwise, arising out of the Portfolio Manager's
responsibilities to the Trust which (i) may be based upon any willful
misfeasance, bad faith, or gross negligence of, or by reckless disregard of, the
Portfolio Manager's obligations and/or duties under this Agreement by the
Portfolio Managers 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) may be 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 Fund, or any amendment thereof or any
9
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 Adviser, the Trust, or any
affiliated person of the Trust 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
Adviser or any affiliated person or controlling person of the 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 obligation and duties under this Agreement.
(b) The 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 legal and other
expenses) to which a Portfolio Manager 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 Adviser's responsibilities as
adviser of the Fund which (i) may be based upon any willful misfeasance, bad
faith or gross negligence by the Adviser, any of its employees or any affiliate
acting on behalf of the Adviser (other than a Portfolio Manager Indemnified
Person) or (ii) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or
prospectus covering 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
statement therein not misleading, unless such statement or omission was made in
reliance upon written information furnished to the Fund or the Adviser or any
affiliated person of the Adviser by a Portfolio Manager Indemnified Person
(other than an Adviser Indemnified Person); provided however, that in no case is
the indemnity of the Adviser 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 from such date and continue thereafter on an annual basis with respect to
the Portfolios; provided that such annual continuance is specifically approved
at least annually (a) by the vote of a majority of the Board of Trustees of the
Fund, 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 of Trustees of the Fund who are not parties to this
Agreement or "interested persons" (as such term is defined in the 0000 Xxx) of
the Fund, the Adviser, or the Portfolio Manager, cast in person at a meeting
called for the purpose of voting on such approval. This Agreement may not be
materially amended without a majority vote of the outstanding shares (as defined
in the 0000 Xxx) of the Portfolios. This Agreement may be terminated:
10
(a) by the Fund at any time with respect to the services provided by
the Portfolio Manager, without the payment of any penalty, forfeiture,
compulsory buyout amount, or performance of any other obligation which could
deter termination, by vote of a majority of the entire Board of Trustees of the
Fund 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, on 60 days' written notice to the Portfolio
Manager and the Adviser;
(b) by the Portfolio Manager at any time, without the payment of any
penalty, forfeiture, compulsory buyout amount or performance of any other
obligation which could deter termination, upon 60 days' written notice to the
Adviser and the Fund.
(c) by the Adviser at any time, without the payment of any penalty,
forfeiture, compulsory buyout amount or performance of any other obligation
which could deter termination, upon 60 days' written notice to the Portfolio
Manager and the Fund.
However, any approval of this Agreement by the holders of a majority of the
outstanding shares (as defined in the 0000 Xxx) of a particular Portfolio shall
be effective to continue this Agreement with respect to such Portfolio
notwithstanding (a) that this Agreement has not been approved by the holders of
a majority of the outstanding shares of any other Portfolio or (b) that this
Agreement has not been approved by the vote of a majority of the outstanding
shares of the Fund, unless such approval shall be required by any other
applicable law or otherwise. In the event of termination for any reason, all
records of the Portfolios shall promptly be returned to the Adviser or the Fund,
free from any claim or retention of rights in such record by the Portfolio
Manager, although the Portfolio Manager may, at its own expense, make and retain
a copy of such records. This Agreement will terminate automatically in event
of its assignment (as that term is defined in the 1940 Act), but shall not
terminate in connection with any transaction not deemed an assignment within the
meaning of Rules 2a-6 under the 1940 Act, or any other rule adopted by the SEC
regarding transactions not deemed to be assignments. In the event this
Agreement is terminated or is not approved in the manner described above, the
Sections or Paragraphs numbered 2(h), 2(j), 9, 10, 11, 13, 14 and 16 of this
Agreement as well as any applicable provision of this Paragraph numbered 15
shall remain in effect.
16. Use of Name.
-----------
(a) It is understood that the name "Pacific Life Insurance Company" or
"Pacific Life", or "Pacific Select Fund" or any derivative thereof or logo
associated with that name is the valuable property of the Adviser and its
affiliates, and that the Portfolio Manager has the right to use such name (or
derivative or logo) only with the approval of the Adviser and only so long as
the Adviser is an investment adviser to the Fund and/or the Portfolios. Upon
termination of the Investment Advisory Agreement between the Fund and the
Adviser, the Portfolio Manager shall forthwith cease to use such name (or
derivative or logo).
(b) It is understood that the name "Mercury" or any derivative thereof
or logo associated with that name is the valuable property of the Portfolio
Manager and that the Adviser has the right to use such name (or derivative or
logo), in offering materials of the Fund and/or
11
Portfolios with the approval of the Portfolio Manager and for so long as the
Portfolio Manager is a Portfolio Manager to the Fund and/or the Portfolios. Upon
termination of this Agreement between the Fund, the Adviser and the Portfolio
Manager, the Fund and the Adviser shall forthwith cease to use such name (or
derivative or logo).
(c) Neither the Fund nor the Advisers shall use the Portfolio
Manager's name in promotional or sales related materials prepared by or on
behalf of the Adviser or the Fund, without prior review and approval by the
Portfolio Manager, which may not be unreasonably withheld.
17. Limitation of Liability. A copy of the Amended and Restated Agreement
-----------------------
and Declaration of Trust for the Fund is on file with the Secretary of the
Commonwealth of Massachusetts. The Agreement and 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
shall be binding upon the assets and property of the Fund and shall not be
binding upon any Trustee, officer, employee, agent or shareholder, whether past,
present, or future, of the Fund individually.
18. Miscellaneous.
-------------
(a) This Agreement shall be governed by the laws of California,
provided that nothing herein shall be construed in a manner inconsistent with
the 1940 Act, the Investment Advisers Act of 1940 or rules or orders of the SEC
thereunder. The term "affiliate" or "affiliated person" as used in this
Agreement shall mean "affiliated person" as defined in Section 2(a)(3) of the
0000 Xxx.
(b) The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
(c) To the extent permitted under Section 15 of this Agreement, this
Agreement may only be assigned by any party with 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.
12
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first written above.
PACIFIC LIFE INSURANCE COMPANY
Attest: /s/ Xxxxxx X. Milfs By: /s/ Xxxxxx X. Xxxxxx
--------------------------- ---------------------
Name: Xxxxxx X. Milfs Name: Xxxxxx X. Xxxxxx
Title: Secretary Title: Chairman of the Board & Chief
Executive Officer
FUND ASSET MANAGEMENT, L.P.
Attest: /s/ Xxxx X'xxxxxxx By: /s/ Xxxxxxx X. Xxxxx
--------------------------- ---------------------
Name: Xxxx X'xxxxxxx Name: Xxxxxxx X. Xxxxx
Title: Managing Director Title: Managing Director
PACIFIC SELECT FUND
Attest: /s/ Xxxxxx X. Milfs By: /s/ Xxxxxx X. Xxxxxx
--------------------------- ---------------------
Name: Xxxxxx X. Milfs Name: Xxxxxx X. Xxxxxx
Title: Secretary Title: Chairman of the Board & Trustee
13
PACIFIC SELECT FUND
FEE SCHEDULE
Portfolio: Equity Index and Small-Cap Index Portfolios
Fee:
The Adviser will pay to the Portfolio Manager a monthly fee based on the
combined average daily net assets of these Portfolios at an annual rate equal
to:
0.08% on the first $100 million
0.04% on the next $100 million
0.02% on the excess
14
