MANAGEMENT AGREEMENT
AGREEMENT to be effective the day of , 1997, by and between PRINCIPAL
VARIABLE CONTRACTS FUND, INC., a Maryland corporation (hereinafter called the
"Fund") and PRINCOR MANAGEMENT CORPORATION, an Iowa corporation (hereinafter
called "the Manager").
W I T N E S S E T H:
WHEREAS, The Fund has furnished the Manager with copies properly certified
or authenticated of each of the following:
(a) Certificate of Incorporation of the Fund;
(b) Bylaws of the Fund as adopted by the Board of Directors;
(c) Resolutions of the Board of Directors of the Fund selecting the Manager
as investment adviser and approving the form of this Agreement.
NOW THEREFORE, in consideration of the premises and mutual agreements
herein contained, the Fund hereby appoints the Manager to act as investment
adviser and manager of the Fund and the Manager agrees to act, perform or assume
the responsibility therefor in the manner and subject to the conditions
hereinafter set forth. The Fund will furnish the Manager from time to time with
copies, properly certified or authenticated, of all amendments of or supplements
to the foregoing, if any.
1. INVESTMENT ADVISORY SERVICES
The Manager will regularly perform the following services for the Fund:
(a) Provide investment research, advice and supervision;
(b) Provide investment advisory, research and statistical facilities and
all clerical services relating to research, statistical and investment
work;
(c) Furnish to the Board of Directors of the Fund (or any appropriate
committee of such Board), and revise from time to time as economic
conditions require, a recommended investment program for the Fund's
portfolio consistent with the Fund's investment objective and
policies;
(d) Implement such of its recommended investment program as the Fund shall
approve, by placing orders for the purchase and sale of securities,
subject always to the provisions of the Fund's Certificate of
Incorporation and Bylaws and the requirements of the Investment
Company Act of 1940, and the Fund's Registration Statement, current
Prospectus and Statement of Additional Information, as each of the
same shall be from time to time in effect;
(e) Advise and assist the officers of the Fund in taking such steps as are
necessary or appropriate to carry out the decisions of its Board of
Directors and any appropriate committees of such Board regarding the
general conduct of the investment business of the Fund; and
(f) Report to the Board of Directors of the Fund at such times and in such
detail as the Board may deem appropriate in order to enable it to
determine that the investment policies of the Fund are being observed.
2. CORPORATE AND OTHER ADMINISTRATIVE SERVICES AND EXPENSES
The Manager will regularly perform or assume responsibility for general
corporate and all other administrative services and expenses, except as set out
in Section 4 hereof, as follows:
(a) Furnish office space, all necessary office facilities and assume costs
of keeping books of the Fund;
(b) Furnish the services of executive and clerical personnel necessary to
perform the general corporate functions of the Fund;
(c) Compensate and pay the expenses of all officers, and employees of the
Fund, and of all directors of the Fund who are persons affiliated with
the Manager;
(d) Determine the net asset value of the shares of the Fund's Capital
Stock as frequently as the Fund shall request or as shall be required
by applicable law or regulations;
(e) Provide for the organizational expense of the Fund and expenses
incurred with the registration of the Fund and Fund shares with the
federal and state regulatory agencies, including the costs of printing
prospectuses in such number as the Fund shall need for purposes of
registration and for the sale of its shares;
(f) Be responsible for legal and auditing fees and expenses incurred with
respect to registration and continued operation of the Fund;
(g) Act as, and provide all services customarily performed by, the
transfer and paying agent of the Fund including, without limitation,
the following:
(i) issuance, registry of shares, and maintenance of open account
system;
(ii) preparation and distribution of dividend and capital gain
payments to shareholders;
(iii)preparation and distribution to shareholders of reports, tax
information, notices, proxy statements and proxies;
(iv) delivery, redemption and repurchase of shares, and remittances to
shareholders; and
(v) correspondence with shareholders concerning items (i), (ii),
(iii) and (iv) above.
(h) Prepare stock certificates, and distribute the same requested by
shareholders of the Fund; and
(i) Provide such other services as required by law or considered
reasonable or necessary in the conduct of the affairs of the Fund in
order for it to meet its business purposes.
3. RESERVED RIGHT TO DELEGATE DUTIES AND SERVICES TO OTHERS
The Manager in assuming responsibility for the various services as set
forth in 1 and 2 above, reserves the right to enter into agreements with others
for the performance of certain duties and services or to delegate the
performance of some or all of such duties and services to Principal Mutual Life
Insurance Company, or an affiliate thereof.
4. EXPENSES BORNE BY FUND
The Fund will pay, without reimbursement by the Manager, the following
expenses:
(a) Taxes, including in the case of redeemed shares any initial transfer
taxes, and other local, state and federal taxes, governmental fees and
other charges attributable to investment transactions;
(b) Portfolio brokerage fees and incidental brokerage expenses;
(c) Interest;
(d) The fees and expenses of the Custodian of its assets;
(e) The fees and expenses of all directors of the Fund who are not persons
affiliated with the Manager; and
(f) The cost of meetings of shareholders.
5. COMPENSATION OF THE MANAGER BY FUND
For all services to be rendered and payments made as provided in Sections 1
and 2 hereof, the Fund will accrue daily and pay the Manager within five days
after the end of each calendar month a fee based on the average of the values
placed on the net assets of the Fund as of the time of determination of the net
asset value on each trading day throughout the month in accordance with the
Schedules of Management Fees attached hereto.
Net asset value shall be determined pursuant to applicable provisions of
the Certificate of Incorporation of the Fund. If pursuant to such provisions the
determination of net asset value is suspended, then for the purposes of this
Section 5 the value of the net assets of the Fund as last determined shall be
deemed to be the value of the net assets for each day the suspension continues.
The Manager may, at its option, waive all or part of its compensation for
such period of time as it deems necessary or appropriate.
6. ASSUMPTION OF EXPENSES BY PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
Although in no way relieving the Manager of its responsibility for the
performance of the duties and services set out in Section 2 hereof, and
regardless of any delegation thereof as permitted under Section 3 hereof, some
or all of the expenses therefore may be voluntarily assumed by Principal Mutual
Life Insurance Company and the Manager may be reimbursed therefor, or such
expenses may be paid directly by Principal Mutual Life Insurance Company.
7. AVOIDANCE OF INCONSISTENT POSITION
In connection with purchases or sales of portfolio securities for the
account of the Fund, neither the Manager nor any of the Manager's directors,
officers or employees will act as a principal or agent or receive any
commission.
8. LIMITATION OF LIABILITY OF THE MANAGER
The Manager shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on the Manager's part in the performance of its duties
or from reckless disregard by it of its obligations and duties under this
Agreement.
9. COPIES OF CORPORATE DOCUMENTS
The Fund will furnish the Manager promptly with properly certified or
authenticated copies of amendments or supplements to its articles or bylaws.
Also, the Fund will furnish the Manager financial and other corporate
information as needed, and otherwise cooperate fully with the Manager in its
efforts to carry out its duties and responsibilities under this Agreement.
10. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall remain in force until the conclusion of the first
meeting of the shareholders of the Fund and if it is approved by a vote of a
majority of the outstanding voting securities of the Fund it shall continue in
effect thereafter from year to year provided that the continuance is
specifically approved at least annually either by the Board of Directors of the
Fund or by a vote of a majority of the outstanding voting securities of the Fund
and in either event by vote of a majority of the directors of the Fund who are
not interested persons of the Manager, Principal Mutual Life Insurance Company,
or the Fund cast in person at a meeting called for the purpose of voting on such
approval. This Agreement may, on sixty days written notice, be terminated at any
time without the payment of any penalty, by the Board of Directors of the Fund,
by vote of a majority of the outstanding voting securities of the Fund, or by
the Manager.
This Agreement shall automatically terminate in the event of its
assignment. In interpreting the provisions of this Section 10, the definitions
contained in Section 2(a) of the Investment Company Act of 1940 (particularly
the definitions of "interested person," "assignment" and "voting security")
shall be applied.
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, and no amendment of this Agreement shall be effective until approved by
vote of the holders of a majority of the Fund's outstanding voting securities
and by vote of a majority of the directors who are not interested persons of the
Manager, Principal Mutual Life Insurance Company or the Fund cast in person at a
meeting called for the purpose of voting on such approval.
12. ADDRESS FOR PURPOSE OF 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 notices. Until further notice
to the other party, it is agreed that the address of the Fund and that of the
Manager for this purpose shall be The Principal Financial Group, Xxx Xxxxxx,
Xxxx 00000.
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. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized.
PRINCIPAL VARIABLE CONTRACTS FUND, INC.
By ____________________________________________
Xxxxxx X. Xxxxxx, Vice President
PRINCOR MANAGEMENT CORPORATION
By ____________________________________________
Xxxxxxx X. Xxxxx, President
SCHEDULE 1
MANAGEMENT FEES
Aggressive Growth and
Asset Allocation Accounts
Average Daily Net Fee as a Percentage of
Assets of the Fund Average Daily Net Assets
---------------------------------------------------------------------
First $100,000,000 .80%
Next 100,000,000 .75%
Next 100,000,000 .70%
Next 100,000,000 .65%
Amount Over 400,000,000 .60%
SCHEDULE 2
MANAGEMENT FEES
International Account
Average Daily Net Fee as a Percentage of
Assets of the Fund Average Daily Net Assets
---------------------------------------------------------------------
First $100,000,000 .75%
Next 100,000,000 .70%
Next 100,000,000 .65%
Next 100,000,000 .60%
Amount Over 400,000,000 .55%
SCHEDULE 3
MANAGEMENT FEES
MidCap Account
Average Daily Net Fee as a Percentage of
Assets of the Fund Average Daily Net Assets
---------------------------------------------------------------------
First $100,000,000 .65%
Next 100,000,000 .60%
Next 100,000,000 .55%
Next 100,000,000 .50%
Amount Over 400,000,000 .45%
SCHEDULE 4
MANAGEMENT FEES
High Yield and
Balanced Accounts
Average Daily Net Fee as a Percentage of
Assets of the Fund Average Daily Net Assets
------------------------------------------------------------------
First $100,000,000 .60%
Next 100,000,000 .55%
Next 100,000,000 .50%
Next 100,000,000 .45%
Amount Over 400,000,000 .40%
SCHEDULE 5
MANAGEMENT FEES
Bond, Capital Value, Government Securities,
Growth and Money Market Accounts
Average Daily Net Fee as a Percentage of
Assets of the Fund Average Daily Net Assets
------------------------------------------------------------------
First $100,000,000 .50%
Next 100,000,000 .45%
Next 100,000,000 .40%
Next 100,000,000 .35%
Amount Over 400,000,000 .30%
