PRINCIPAL VARIABLE CONTRACTS FUNDS, INC.
AMENDED AND RESTATED
MANAGEMENT AGREEMENT
AGREEMENT to be effective the July 1, 2009, by and between PRINCIPAL
VARIABLE CONTRACTS FUNDS, INC., a Maryland corporation (hereinafter called
the "Fund") and PRINCIPAL 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 therefore 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 portfolio of each Account of the Fund consistent
with the Account'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 (the "1940 Act"), 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; and
(g) 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 Life Insurance Company, or an affiliate thereof; provided,
however that entry into any such agreements shall not relieve the Manager
of its duty to review and monitor the performance of such persons to the
extent provided in the agreements with such persons or as determined from
time to time by the Board of Directors.
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 Accounts 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 attached hereto,
less any fees the Accounts pay to Principal Shareholder Services, Inc.
("PSS"), or any affiliated person of PSS pursuant to the Transfer Agency
Agreement. If at any time this Agreement or the Fund's Transfer Agency
Agreement is amended to provide for increased compensation that, in the
aggregate, exceeds the compensation provided for under this Agreement, the
Fund will obtain approval of this Agreement, prior to the effective
date(s) of the amendment(s), by a vote of a majority of the outstanding
voting securities of the Fund.
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 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 Life Insurance Company and the Manager may be reimbursed
therefore, or such expenses may be paid directly by Principal 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, if required by the 1940 Act, 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 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 material amendment of this Agreement shall
be effective until approved, if required by the 1940 Act or the rules,
regulations, interpretations or orders issued thereunder, 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 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 FUNDS, INC.
By /s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx, Vice President &
Secretary
PRINCIPAL MANAGEMENT CORPORATION
By /s/ Xxxxxxx X. Beer
Xxxxxxx X. Beer, Executive Vice
President and
Chief Operating Officer
SCHEDULE 1
MANAGEMENT FEES
LargeCap Growth Account I and
Asset Allocation Account
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $100,000,000 0.80%
Next $100,000,000 0.75%
Next $100,000,000 0.70%
Next $100,000,000 0.65%
Thereafter 0.60% SCHEDULE 6
MANAGEMENT FEES
MidCap Growth Account I
and Real Estate Securities Account
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $100,000,000 0.90%
Next $100,000,000 0.85%
Next $100,000,000 0.80%
Next $100,000,000 0.75%
Thereafter 0.70%
SCHEDULE 2
MANAGEMENT FEES
Diversified International Account and
LargeCap Value Account II
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $250,000,000 0.85%
Next $250,000,000 0.80%
Next $250,000,000 0.75%
Next $250,000,000 0.70%
Thereafter 0.65% SCHEDULE 7
MANAGEMENT FEES
SmallCap Growth Account II
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $100,000,000 1.00%
Next $100,000,000 0.95%
Next $100,000,000 0.90%
Next $100,000,000 0.85%
Thereafter 0.80%
SCHEDULE 3
MANAGEMENT FEES
MidCap Blend Account
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $100,000,000 0.65%
Next $100,000,000 0.60%
Next $100,000,000 0.55%
Next $100,000,000 0.50%
Thereafter 0.45% SCHEDULE 8
MANAGEMENT FEES
SmallCap Blend Account
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $100,000,000 0.85%
Next $100,000,000 0.80%
Next $100,000,000 0.75%
Next $100,000,000 0.70%
Thereafter 0.65%
SCHEDULE 4
MANAGEMENT FEES
Balanced Account
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $100,000,000 0.60%
Next $100,000,000 0.55%
Next $100,000,000 0.50%
Next $100,000,000 0.45%
Thereafter 0.40% SCHEDULE 9
MANAGEMENT FEES
SmallCap Value Account I
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $100,000,000 1.10%
Next $100,000,000 1.05%
Next $100,000,000 1.00%
Next $100,000,000 0.95%
Thereafter 0.90%
SCHEDULE 5
MANAGEMENT FEES
Bond & Mortgage Securities Account, Government & High Quality Bond Account,
Short-Term Bond Account
and Money Market Account
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $100,000,000 0.50%
Next $100,000,000 0.45%
Next $100,000,000 0.40%
Next $100,000,000 0.35%
Thereafter 0.30% SCHEDULE 10
MANAGEMENT FEES
International SmallCap Account
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $100,000,000 1.20%
Next $100,000,000 1.15%
Next $100,000,000 1.10%
Next $100,000,000 1.05%
Thereafter 1.00%
SCHEDULE 11
MANAGEMENT FEES
LargeCap Value Account
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $250 Million 0.60%
Next $250 Million 0.55%
Next $250 Million 0.50%
Next $250 Million 0.45%
Thereafter 0.40% SCHEDULE 16
MANAGEMENT FEES
Principal LifeTime 2010, Principal
LifeTime 2020, Principal LifeTime 2030, Principal LifeTime 2040, Principal
LifeTime 2050 and Principal LifeTime Strategic Income Accounts
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
All Assets 0.03%
SCHEDULE 12
MANAGEMENT FEES
MidCap Value Account II
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $250 Million 1.05%
Next $250 Million 1.00%
Next $250 Million 0.95%
Next $250 Million 0.90%
Thereafter 0.85% SCHEDULE 17
MANAGEMENT FEES
Equity Income Account
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $100 million......................0.60%
Next $100 million.....................0.55%
Next $100 million.....................0.50%
Next $100 million.....................0.45%
Over $400 million.....................0.40%
SCHEDULE 13
MANAGEMENT FEES
LargeCap S&P 500 Index Account
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
Overall Fee 0.25% SCHEDULE 18
MANAGEMENT FEES
West Coast Equity Account
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $500 million......................0.625%
Over $500 million .....................0.50%
SCHEDULE 14
MANAGEMENT FEES
International Emerging Markets Account
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $250 Million 1.25%
Next $250 Million 1.20%
Next $250 Million 1.15%
Next $250 Million 1.10%
Thereafter 1.05% SCHEDULE 19
MANAGEMENT FEES
MidCap Stock Account
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $1 billion..........................0.75%
Next $1 billion..........................0.70%
Next $1 billion..........................0.65%
Over $3 billion..........................0.60%
SCHEDULE 15
MANAGEMENT FEES
LargeCap Value Account III
and LargeCap Blend Account II
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $250 Million 0.75%
Next $250 Million 0.70%
Next $250 Million 0.65%
Next $250 Million 0.60%
Thereafter 0.55% SCHEDULE 20
MANAGEMENT FEES
Mortgage Securities Account and Income Account
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $2 billion 0.50%
Over $2 billion 0.45%
SCHEDULE 21
MANAGEMENT FEES
Short-Term Income Account
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $200 Million 0.50%
Next $300 Million 0.45%
Over $500 Million 0.40%
SCHEDULE 23
MANAGEMENT FEE
LargeCap Growth Account
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $500 Million 0.68%
Next $500 Million 0.65%
Next $1 billion 0.62%
Next $1 billion 0.58%
Over $3 billion 0.55%
SCHEDULE 22
MANAGEMENT FEES
XXX Balanced Portfolio; XXX Conservative Balanced Portfolio, XXX Conservative
Growth Portfolio, XXX Flexible Income Portfolio, and XXX Strategic Growth
Portfolio*
Average Daily Net Fee as a Percentage of
Assets of the Account Average Daily Net Assets
First $1 Billion 0.25%
Over $1 Billion.........................0.20%
*Breakpoints based on aggregate XXX Portfolio net assets
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