EX-99.23d2
INVESTMENT SUB-ADVISORY AGREEMENT
This AGREEMENT is dated as of May 26, 1999, by and between XXXXXXX
NATIONAL FINANCIAL SERVICES, LLC., a Michigan limited liability company and
registered investment adviser ("Adviser"), and FIRST TRUST ADVISORS L.P., an
Illinois limited partnership and registered investment adviser ("Sub-Adviser").
WHEREAS, Adviser is the investment manager for the JNL Variable Fund
III LLC (the "Fund"), an open-end management investment company registered under
the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Fund is authorized to issue separate series, each series
having its own investment objective or objectives, policies and limitations;
WHEREAS, Adviser desires to retain Sub-Adviser as Adviser's agent to
furnish investment advisory services to the series of the Fund listed on
Schedule A hereto ("Series").
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Appointment. Adviser hereby appoints Sub-Adviser to provide certain
sub-investment advisory services to the Series for the period and on
the terms set forth in this Agreement. Sub-Adviser accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
In the event the Adviser designates one or more series other than the
Series with respect to which the Adviser wishes to retain the
Sub-Adviser to render investment advisory services hereunder, it shall
notify the Sub-Adviser in writing. If the Sub-Adviser is willing to
render such services, it shall notify the Adviser in writing, whereupon
such series shall become a Series hereunder, and be subject to this
Agreement.
2. Delivery of Documents. Adviser has or will furnish Sub-Adviser with
copies properly certified or authenticated of each of the following:
a) the Fund's Certificate of Formation, as filed with the
Secretary of the State of Delaware on October 13, 1998, and
all amendments thereto or restatements thereof (such
Certificate of Formation, as presently in effect and as it
shall from time to time be amended or restated, is herein
called the "Certificate of Formation");
b) the Fund's Operating Agreement and amendments thereto;
c) resolutions of the Fund's Board of Managers authorizing the
appointment of Sub-Adviser and approving this Agreement;
d) the Fund's Notification of Registration on Form N-8A under the
1940 Act as filed with the Securities and Exchange Commission
(the "SEC") and all amendments thereto;
e) the Fund's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended ("1933 Act") and under the
1940 Act as filed with the SEC and all amendments thereto
insofar as such Registration Statement and such amendments
relate to the Series; and
f) the Fund's most recent prospectus and Statement of Additional
Information (collectively called the "Prospectus").
Adviser will furnish the Sub-Adviser from time to time with copies of
all amendments of or supplements to the foregoing.
3. Management. Subject always to the supervision of Fund's Board of
Managers and the Adviser, Sub-Adviser will furnish an investment
program in respect of, and make investment decisions for, all assets of
the Series and place all orders for the purchase and sale of
securities, all on behalf of the Series. In the performance of its
duties, Sub-Adviser will satisfy its fiduciary duties to the Series (as
set forth below), and will monitor the Series' investments, and will
comply with the provisions of Fund's Certificate of Formation and
Operating Agreement, as amended from time to time, and the stated
investment objectives, policies and restrictions of the Series.
Sub-Adviser and Adviser will each make its officers and employees
available to the other from time to time at reasonable times to review
investment policies of the Series and to consult with each other
regarding the investment affairs of the Series. Sub-Adviser will report
to Board of Managers and to Adviser with respect to the implementation
of such program. Sub-Adviser is responsible for compliance with the
provisions of Section 817(h) of the Internal Revenue Code of 1986, as
amended, applicable to the Series.
The Sub-Adviser further agrees that it:
a) will use the same skill and care in providing such services as
it uses in providing services to fiduciary accounts for which
it has investment responsibilities;
b) will conform with all applicable Rules and Regulations of the
SEC in all material respects and in addition will conduct its
activities under this Agreement in accordance with any
applicable regulations of any governmental authority
pertaining to its investment advisory activities;
c) will place orders pursuant to its investment determinations
for the Series either directly with the issuer or with any
broker or dealer, including an affiliated broker-dealer which
is a member of a national securities exchange as permitted in
accordance with guidelines established by the Board of
Managers. In placing orders with brokers and dealers, the
Sub-Adviser will attempt to obtain the best combination of
prompt execution of orders in an effective manner and at the
most favorable price. Consistent with this obligation, when
the execution and price offered by two or more brokers or
dealers are comparable Sub-Adviser may, in its discretion,
purchase and sell portfolio securities to and from brokers and
dealers who provide the Sub-Adviser with research advice and
other services. In no instance will portfolio securities be
purchased from or sold to the Adviser, Sub-Adviser or any
affiliated person of either the Fund, Adviser, or Sub-Adviser,
except as may be permitted under the 1940 Act;
d) will report regularly to Adviser and to the Board of Managers
and will make appropriate persons available for the purpose of
reviewing with representatives of Adviser and the Board of
Managers on a regular basis at reasonable times the management
of the Series, including, without limitation, review of the
general investment strategies of the Series, the performance
of the Series in relation to standard industry indices,
interest rate considerations and general conditions affecting
the marketplace and will provide various other reports from
time to time as reasonably requested by Adviser;
e) will prepare and maintain such books and records with respect
to the Series' securities transactions and will furnish
Adviser and Fund's Board of Managers such periodic and special
reports as the Board of Managers or Adviser may request;
f) will act upon instructions from Adviser not inconsistent with
the fiduciary duties hereunder;
g) will treat confidentially and as proprietary information of
Fund all such records and other information relative to Fund
maintained by the Sub-Adviser, and will not use such records
and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior
notification to and approval in writing by Fund, which
approval shall not be unreasonably withheld and may not be
withheld where the Sub-Adviser may be exposed to civil or
criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted
authorities, or when so requested by Fund; and
h) will vote proxies received in connection with securities held
by the Series consistent with its fiduciary duties hereunder.
4. Expenses. During the term of this Agreement, Sub-Adviser will pay all
expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage
commission, if any) purchased for the Series.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records
which it maintains for the Fund are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records
upon the Fund's request. Sub-Adviser 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.
6. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, Adviser will pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation therefor, a
sub-advisory fee, accrued daily and payable monthly on the average
daily net assets in the Series, excluding the net assets representing
capital contributed by Xxxxxxx National Separate Account III, in
accordance with Schedule B hereto. From time to time, the Sub-Adviser
may agree to waive or reduce some or all of the compensation to which
it is entitled under this Agreement.
The Sub-Adviser represents and warrants that in no event shall the
Sub-Adviser provide similar investment advisory services to any client
comparable to the Series being managed under this Agreement at a
composite rate of compensation less than that provided for herein.
7. Services to Others. Adviser understands, and has advised the Fund's
Board of Managers, that Sub-Adviser now acts, or may in the future act,
as an investment adviser to fiduciary and other managed accounts, and
as investment adviser or sub-investment adviser to other investment
companies. Adviser has no objection to Sub-Adviser acting in such
capacities, provided that whenever the Series and one or more other
investment advisory clients of Sub-Adviser have available funds for
investment, investments selected for each will be allocated in a manner
believed by Sub-Adviser to be equitable to each. Adviser recognizes,
and has advised Fund's Board of Managers, that in some cases this
procedure may adversely affect the size of the position that the
participating Series may obtain in a particular security. In addition,
Adviser understands, and has advised Fund's Board of Managers, that the
persons employed by Sub-Adviser to assist in Sub-Adviser's duties under
this Agreement will not devote their full time to such service and
nothing contained in this Agreement will be deemed to limit or restrict
the right of Sub-Adviser or any of its affiliates to engage in and
devote time and attention to other businesses or to render services of
whatever kind or nature.
8. Standard of Care and Limitation of Liability. The Sub-Adviser shall
exercise its best judgment and shall act in good faith in rendering the
services pursuant to this Agreement.
9. Indemnification. The Sub-Adviser agrees to indemnify and hold harmless
the Adviser, any 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 (all of such persons being referred
to as "Adviser Indemnified Persons") against any and all losses,
claims, damages, liabilities, or litigation (including reasonable legal
and other expenses) to which an Adviser Indemnified Person may become
subject under the 1933 Act, 1940 Act, the Investment Advisers Act of
1940, the Internal Revenue Code, under any other statute, at common law
or otherwise, arising out of the Sub-Adviser's responsibilities as
Sub-Adviser to the Series and to the Fund which (1) may be based upon
any misfeasance, malfeasance, or nonfeasance by the Sub-Adviser, any of
its employees or representatives, or any affiliate of or any person
acting on behalf of the Sub-Adviser, (2) may be based upon a failure to
comply with Section 3 of this Agreement, or (3) may be based upon any
untrue statement or alleged untrue statement of a material fact
contained in the Prospectus, or any amendment or supplement thereto, or
the omission or alleged omission to state therein a material fact known
or which should have been known to the Sub-Adviser and was required to
be stated therein or necessary to make the statements therein not
misleading, if such a statement or omission was made in reliance upon
information furnished to the Adviser, the Fund, or any affiliated
person of the Adviser or Fund by the Sub-Adviser or any affiliated
person of the Sub-Adviser; provided, however, that in no case shall the
indemnity in favor of an Adviser Indemnified Person be deemed to
protect such person against any liability to which any such person
would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations and duties under this Agreement.
10. Duration and Termination. This Agreement will become effective as to a
Series upon execution or, if later, the date that initial capital for
such Series is first provided to it and, unless sooner terminated as
provided herein, will continue in effect for two years from such date.
Thereafter, if not terminated as to a Series, this Agreement will
continue in effect as to a Series for successive periods of 12 months,
provided that such continuation is specifically approved at least
annually by the Fund's Board of Managers or by vote of a majority of
the outstanding voting securities of such Series, and in either event
approved also by a majority of the Members of the Fund's Board of
Managers who are not interested persons of the Fund, or of the Adviser,
or of the Sub-Adviser. Notwithstanding the foregoing, this Agreement
may be terminated as to a Series at any time, without the payment of
any penalty, on sixty days' written notice by the Fund or Adviser, or
on ninety days' written notice by the Sub-Adviser. This Agreement will
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities",
"interested persons" and "assignment" have the same meanings of such
terms in the 1940 Act.)
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally; but only by an
instrument in writing signed by the party against which enforcement of
the change, waiver, discharge or termination is sought.
12. Notice. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such
notice.
13. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or effect.
If any provision of this Agreement is held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement
will be binding upon and shall inure to the benefit of the parties
hereto.
The name "JNL Variable Fund III LLC" and "Members of the JNL Variable
Fund III LLC's Board of Managers" refer respectively to the Fund
created by, and the Members of the Board of Managers, as members but
not individually or personally, acting from time to time under, the
Operating Agreement, to which reference is hereby made, and to any and
all amendments thereto. The obligations of the JNL Variable Fund III
LLC entered in the name or on behalf thereof by any of the Members of
the JNL Variable Fund III LLC Board of Managers, representatives or
agents are made not individually but only in such capacities and are
not binding upon any of the Members, interest holders or
representatives of the Fund personally, but bind only the assets of the
Fund, and persons dealing with the Series must look solely to the
assets of the Fund belonging to such Series for the enforcement of any
claims against Fund.
14. Representations and Warranties of the Sub-Adviser.
The Sub-Adviser hereby represents that this Agreement does not violate
any existing agreements between the Sub-Adviser and any other party.
The Sub-Adviser further represents and warrants that it is a duly
registered investment adviser under the Investment Advisers Act of
1940, as amended and has provided to the Adviser a copy of its most
recent Form ADV as filed with the Securities and Exchange Commission.
The Sub-Adviser further represents that is has reviewed the
post-effective amendment to the Registration Statement for the Fund
filed with the Securities and Exchange Commission that contains
disclosure about the Sub-Adviser, and represents and warrants that,
with respect to the disclosure about the Sub-Adviser or information
relating, directly or indirectly, to the Sub-Adviser, 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.
15. Applicable Law. This Agreement shall be construed in accordance with
applicable federal law and the laws of the State of Michigan.
IN WITNESS WHEREOF, the Adviser and the Sub-Adviser have caused this
Agreement to be executed as of this 26th day of May, 1999
XXXXXXX NATIONAL FINANCIAL
SERVICES, LLC
By:
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Name: Xxxxxx X. Xxxxxxx
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Title: President
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FIRST TRUST ADVISORS L.P.
By:
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Name:
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Title:
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SCHEDULE A
Dated May 26, 1999
(Series)
JNL/First Trust The DowSM Target 10 Series
SCHEDULE B
Dated May 26, 1999
(Compensation)
JNL/First Trust The DowSM Target 10 Series
Average Daily Net Assets Annual Rate
$0 to $500 million .35%
$500 million to $1 billion .30%
Over $1 billion .25%
