EX-99.23d1
INVESTMENT ADVISORY
AND
MANAGEMENT AGREEMENT
This INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT is dated as of May
14, 1999 between JNL Variable Fund III LLC, a Delaware limited liability
company, (the "Fund") and Xxxxxxx National Financial Services, LLC, a Michigan
limited liability company (the "Adviser").
WHEREAS, the Fund is authorized to issue separate series, each series
having its own investment objective or objectives, policies and limitations; and
WHEREAS, the Fund on behalf of its investment series listed on Schedule
A hereto ("Series") desires to retain Adviser to perform investment advisory
services, on the terms and conditions set forth herein; and
WHEREAS, the Adviser agrees to serve as the investment adviser and
business manager for the Series on the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the Fund and the Adviser
agree as follows:
1. Apppointment
The Fund hereby appoints the Adviser to provide certain investment
advisory services to the Series for the period and on the terms set forth in
this Agreement. The Adviser accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided.
In the event the Fund designates one or more series other than the
Series with respect to which the Fund wishes to retain the Adviser to render
investment advisory services hereunder, it shall notify the Adviser in writing.
If the Adviser is willing to render such services, it shall notify the Fund in
writing, whereupon such series shall become a Series hereunder, and be subject
to this Agreement.
2. Duties
The Adviser shall manage the affairs of the Fund including, but not
limited to, continuously providing the Fund with investment advice and business
management, including investment research, advice and supervision, determining
which securities shall be purchased or sold by each Series, effecting purchases
and sales of securities on behalf of each Series (and determining how voting and
other rights with respect to securities owned by each Series shall be
exercised). The management of the Series by the Adviser shall be subject to the
control of the Board of Managers of the Fund (the "Board of Managers") and in
accordance with the objectives, policies and principles for each Series set
forth in the Fund's Registration Statement and its current Prospectus and
Statement of Additional Information, as amended from time to time, the
requirements of the Investment Company Act of 1940, as amended (the "Act") and
other applicable law, as well as to the factors affecting the status of variable
contracts under the diversification requirements set forth in Section 817(h) of
the Internal Revenue Code of 1986, as amended, (the "Code") and the regulations
thereunder. In performing such duties, the Adviser shall (i) provide such office
space, bookkeeping, accounting, clerical, secretarial, and administrative
services (exclusive of, and in addition to, any such service provided by any
others retained by the Fund or any of its Series) and such executive and other
personnel as shall be necessary for the operations of each Series, (ii) be
responsible for the financial and accounting records required to be maintained
by each Series (including those maintained by the Fund's custodian), and (iii)
oversee the performance of Services provided to each Series by others, including
the custodian, transfer agent, shareholder servicing agent and sub-adviser, if
any. The Fund acknowledges that the Adviser also acts as the investment adviser
of other investment companies.
The Adviser may delegate certain of its duties under this Agreement
with respect to a Series to a sub-adviser or sub-advisers, subject to the
approval of the Board of Managers and a Series' interest holders, as required by
the Act. The Adviser is solely responsible for payment of any fees or other
charges arising from such delegation and the Fund shall have no liability
therefore.
To the extent required by the laws of any state in which the Fund is
subject to an expense guarantee limitation, if the aggregate expenses of any
Series in any fiscal year exceed the specified expense limitation ratios for
that year (calculated on a daily basis), Adviser agrees to waive such portion of
its advisory fee in excess of the limitation, but such waiver shall not exceed
the full amount of the advisory fee for such year except as may be elected by
Adviser and all other normal expenses and charges, but shall exclude interest,
taxes, brokerage fees on Series transactions, fees and expenses incurred in
connection with the distribution of Fund shares, and extraordinary expenses
including litigation expenses. In the event any amounts are so contributed by
Adviser to the Fund, the Fund agrees to reimburse Adviser, provided that such
reimbursement does not result in increasing the Fund's aggregate expenses above
the aforementioned expense limitation ratios.
3. Expenses
The Adviser shall pay all if its expenses arising from the performance
of its obligations under this Agreement and shall pay any salaries, fees and
expenses of the Board of Managers and any officers of the Fund who are employees
of the Adviser. The Adviser shall not be required to pay any other expenses of
the Fund, including, but not limited to direct charges relating to the purchase
and sale of Series securities, interest charges, fees and expenses of
independent attorneys and auditors, taxes and governmental fees, cost of stock
certificates and any other expenses (including clerical expenses) of issue, sale
repurchase or redemption of shares, expenses of registering and qualifying
shares for sale, expenses of printing and distributing reports and notices to
interest holders, expenses of data processing and related services, interest
holder recordkeeping and interest holder account service, expenses of printing
and filing reports and other documents filed with governmental agencies,
expenses of printing and distributing Prospectuses, fees and disbursements of
transfer agents and custodians, expenses of disbursing dividends and
distributions, fees and expenses of members of the Board of Managers who are not
employees of the Adviser or its affiliates, membership dues in the investment
company trade association, insurance premium and extraordinary expenses such as
litigation expenses.
4. Compensation
As compensation for services performed and the facilities and personnel
provided by the Adviser under this Agreement, the Fund will pay to the Adviser,
a fee, accrued daily and payable monthly on the average daily net assets in the
Series, in accordance with Schedule B.
Upon any termination of this Agreement on a day other than the last day
of the month, the fee for the period from the beginning of the month in which
termination occurs to the date of termination shall be prorated according to the
proportion which such period bears to the full month.
5. Purchase and Sale of Securities
The Adviser shall purchase securities from or through and sell
securities to or through such persons, brokers or dealers as the Adviser shall
deem appropriate to carry out the policies with respect to Series transactions
as set forth in the Fund's Registration Statement and its current Prospectus or
Statement of Additional Information, as amended from time to time, or as the
Board of Managers may direct from time to time.
Nothing herein shall prohibit the Board of Managers from approving the
payment by the Fund of additional compensation to others for consulting
services, supplemental research and security, and economic analysis.
6. Term of Agreement
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.
If approved by the affirmative vote of a majority of the outstanding voting
securities (as defined by the Act) of a Series with respect to such Series,
voting separately from any other Series of the Fund, this Agreement shall
continue in full force and effect with respect to such Series for two years from
the date thereof and thereafter from year to year, provided such continuance is
approved at least annually (i) by the Board of Managers by vote cast in person
at a meeting called for the purpose of voting on such renewal, or by the vote of
a majority of the outstanding voting securities (as defined by the Act) of such
Series with respect to which renewal is effected, and (ii) by a majority of the
non-interested members of the Board of Managers by a vote cast in person at a
meeting called for the purpose of voting on such renewal. Any approval of this
Agreement or the renewal thereof with respect to a Series by the vote of a
majority of the outstanding voting securities of that Series, or by the Board of
Managers which shall include a majority of the non-interested members of the
Board of Managers, shall be effective to continue this Agreement with respect to
that Series notwithstanding (a) that this Agreement or the renewal thereof has
not been so approved as to any other Series, or (b) that this Agreement or the
renewal thereof has not been so approved by the vote of a majority of the
outstanding voting securities of the Fund as a whole.
7. Termination
This Agreement may be terminated at any time as to a Series, without
payment of any penalty, by the Board of Managers or by the vote of a majority of
the outstanding voting securities (as defined in the Act) of such Series on
sixty (60) days' written notice to the Adviser. Similarly, the Adviser may
terminate this Agreement without penalty on like notice to the Fund provided,
however, that this Agreement may not be terminated by the Adviser unless another
investment advisory agreement has been approved by the Fund in accordance with
the Act, or after six months' written notice, whichever is earlier. This
Agreement shall automatically terminate in the event of its assignment (as
defined in the Act).
8. Reports
The Adviser shall report to the Board of Managers, or to any committee
or officers of the Fund acting pursuant to the authority of the Board of
Managers, at such times and in such detail as shall be reasonable and as the
Board of Managers may deem appropriate in order to enable the Board of Managers
to determine that the investment policies of each Series are being observed and
implemented and that the obligations of the Adviser under this Agreement are
being fulfilled. Any investment program undertaken by the Adviser pursuant to
this Agreement and any other activities undertaken by the Adviser on behalf of
the Fund shall at all times be subject to any directives of the Board of
Managers or any duly constituted committee or officer of the Fund acting
pursuant to the authority of the Board of Managers.
The Adviser shall furnish all such information as may reasonably be
necessary for the Board of Managers to evaluate the terms of this Agreement.
9. Records
The Fund is responsible for maintaining and preserving for such period
or periods as the Securities and Exchange Commission may prescribe by rules and
regulations, such accounts, books and other documents that constitute the
records forming the basis for all reports, including financial statements
required to be filed pursuant to the Act and for the Fund's auditor's
certification relating thereto. The Fund and the Adviser agree that in
furtherance of the recordkeeping responsibilities of the Fund under Section 31
of the Act and the rules thereunder, the Adviser will maintain records and
ledgers and will preserve such records in the form and for the period prescribed
in Rule 31a-2 of the Act for each Series.
The Adviser and the Fund agree that all accounts, book and other
records maintained and reserved by each as required hereby shall be subject at
any time, and from time to time, to such reasonable periodic, special and other
examinations by the Securities and Exchange Commission, the Fund's auditors, the
Fund or any representative of the Fund, or any governmental agency or other
instrumentality having regulatory authority over the Fund. It is expressly
understood and agreed that the books and records maintained by the Adviser on
behalf of each Series shall, at all times, remain the property of the Fund.
10. Liability and Indemnification
In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties ("disabling conduct") hereunder on
the part of the Adviser (and its officers, directors, agents, employees,
controlling persons, interest holders and any other person or entity affiliated
with Adviser), Adviser shall not be subject to liability to the Fund or to any
interest holder of the Fund for any act or omission in the course of, or
connected with, rendering services hereunder including, without limitation, any
error of judgment or mistake of law or for any loss suffered by any of them in
connection with the matters to which this Agreement relates, except to the
extent specified in Section 36(b) of the Act concerning loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services. Except for such disabling conduct or liability incurred under Section
36(b) of the Act, the Fund shall indemnify Adviser (and its officer, directors,
agents, employees, controlling person, interest holders and any other person or
entity affiliated with Adviser) from any liability arising from Adviser's
conduct under this Agreement.
Indemnification to Adviser or any of its personnel or affiliates shall
be made when (i) a final decision on the merits is rendered by a court or other
body before whom the proceeding was brought, that the person to be indemnified
was not liable by reason of disabling conduct or Section 36(b) or, (ii) in the
absence of such a decision, a reasonable determination, based upon a review of
the facts, that the person to be indemnified was not liable by reason of
disabling conduct, by (a) the vote of a majority of a quorum of Board of
Managers who are neither "interested persons" of the Fund as defined in Section
2(a)(19) of the Act nor parties to the proceeding ("disinterested, non-party
members of the Board of Managers"), or (b) an independent legal counsel in a
written opinion. The Fund may, by vote of a majority of the disinterested,
non-party members of the Board of Managers, advance attorneys' fees or other
expenses incurred by officers, members of the Board of Managers, investment
advisers or principal underwriters, in defending a proceeding upon the
undertaking by or on behalf of the person to be indemnified to repay the advance
unless it is ultimately determined that such person is entitled to
indemnification. Such advance shall be subject to at least one of the following:
(1) the person to be indemnified shall provide a security for the undertaking,
(2) the Fund shall be insured against losses arising by reason of any lawful
advances, or (3) a majority of a quorum of the disinterested, non-party members
of the Board of Managers, or an independent legal counsel in a written opinion
shall determine, based on a review of readily available facts, that there is
reason to believe that the person to be indemnified ultimately will be found
entitled to indemnification.
11. Miscellaneous
Anything herein to the contrary notwithstanding, this Agreement shall
not be construed to require, or to impose any duty upon either of the parties,
to do anything in violation of any applicable laws or regulations.
A copy of the Certificate of Formation of the Fund is on file with the
Secretary of the State of Delaware, and notice is hereby given that this
instrument is executed on behalf of the members of the Board of Managers as
members of the Board of Managers, and is not binding upon any of the members of
the Board of Managers, officers, or interest holders of the Fund individually
but binding only upon the assets and property of the Fund. With respect to any
claim by the Adviser for recovery of that portion of the investment management
fee (or any other liability of the Fund arising hereunder) allocated to a
particular Series, whether in accordance with the express terms hereof or
otherwise, the Adviser shall have recourse solely against the assets of that
Series to satisfy such claim and shall have no recourse against the asset of any
other Series for such purpose.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement
to be executed by their duly authorized officers as of the date first above
written.
JNL VARIABLE FUND III LLC
Attest: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxx
--------------------------- --------------------------
Xxxxxx X. Xxxxx Xxxxxx X. Xxxxxxx
Secretary President
XXXXXXX NATIONAL FINANCIAL
SERVICES, LLC
Attest: /s/ Xxx X. Xxxxxxxxx By: /s/ Xxxx X. Xxxxx
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Xxx X. Xxxxxxxxx Xxxx X. Xxxxx
Secretary Chief Financial Officer
SCHEDULE A
DATED MAY 14, 1999
(Series)
JNL/First Trust The DowSM Target 10 Series
SCHEDULE B
DATED MAY 14, 1999
(Compensation)
JNL/First Trust The DowSM Target 10 Series
Average Daily Net Assets Annual Rate
$0 to $500 million .75%
$500 million to $1 billion .70%
Over $1 billion .65%
