MANAGEMENT AGREEMENT
AGREEMENT to be effective the 1st day of November 1994, by and between
PRINCOR BALANCED 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, 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 ADMINISTRATIVE SERVICES
In addition to the investment advisory services set forth in Section 1,
the Manager will perform the following corporate administrative services:
(a) Furnish the services of such of the Manager's officers and
employees as may be elected officers or directors of the Fund,
subject to their individual consent to serve and to any
limitations imposed by law;
(b) Furnish office space, and all necessary office facilities and
equipment, for the general corporate functions of the Fund (i.e.,
functions other than (i) underwriting and distribution of Fund
shares; (ii) custody of Fund assets, and (iii) transfer and
paying agency services); and
(c) Furnish the services of the supervisory and clerical personnel
necessary to perform the general corporate functions of the Fund.
(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.
3. RESERVED RIGHT TO DELEGATE DUTIES AND SERVICES TO OTHERS
The Manager in assuming responsibility for the various services as set
forth in this Agreement 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 THE MANAGER
The Manager will pay:
(a) The compensation and expenses of all officers and executive
employees of the Fund;
(b) The compensation and expenses of all directors of the Fund who
are persons affiliated with the Manager; and
(c) The expenses of the organization of the Fund, including its
registration under the Investment Company Act of 1940, and the
initial registration and qualification of its Capital Stock for
sale under the Securities Act of 1933 and the Blue Sky laws of
the states in which it initially qualifies.
5. COMPENSATION OF THE MANAGER BY FUND
For all services to be rendered and payments made as provided in
Sections 1, 2 and 3 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 following schedule.
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%
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 4 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. SERVICES FURNISHED AT COST BY THE MANAGER
The Manager (in addition to the services to be performed by it pursuant
to Sections 1 and 2 hereof) will:
(a) Act as, and provide all services customarily performed by, the
transfer and paying agent of the Fund including, without
limitation, the following:
(i) preparation and distribution to shareholders of reports,
tax information, notices, proxy statements and proxies;
(ii) preparation and distribution of dividend and capital gain
payments to shareholders;
(iii) issuance, transfer and registry of shares, and maintenance
of open account system;
(iv) delivery, redemption and repurchase of shares, and
remittances to shareholders; and
(v) communication with shareholders concerning items (i), (ii),
(iii) and (iv) above.
In the carrying out of this function the Manager may contract
with others for data systems, processing services and other
administrative services.
(b) Use its best efforts to qualify the Capital Stock of the Fund for
sale in states and jurisdictions other than those in which
initially qualified, as directed by the Fund; and
(c) Prepare stock certificates, and distribute the same as requested
by shareholders of the Fund.
The Manager will maintain records in reasonable detail of the costs
(including a reasonable charge for administrative overhead) incurred by it in
the performance of the services set forth in this Section 5, and at the end of
each calendar month the Fund will reimburse the Manager for such costs.
7. EXPENSES BORNE BY FUND
(a) The Fund will pay, without reimbursement by the Manager, the
following expenses:
(i) Taxes, including in case of redeemed shares any initial
transfer taxes, and governmental fees (except with respect
to the Fund's organization and the initial qualification
and registration of its Capital Stock);
(ii) Portfolio brokerage fees and incidental brokerage
expenses; and
(iii) Interest.
(b) The Fund will pay, without reimbursement by the Manager except
under the circumstances set forth in Section 7, the following
expenses:
(i) The fees of its independent auditor and its legal counsel,
incurred subsequent to the Fund's organization and the
initial qualification and registration of its Capital
Stock;
(ii) The fees and expenses of the Custodian of its assets;
(iii) The fees and expenses of all directors of the Fund who
are not persons affiliated with the Manager; and
(iv) The cost of meetings of shareholders.
8. REIMBURSEMENT OF CERTAIN FUND EXPENSES
If in any fiscal year of the Fund the normal operating expenses of the
Fund chargeable to its income account shall exceed the lowest applicable
percentage of average net assets or income limitations prescribed by any state
in which Fund shares are qualified for sale, the Manager will pay the Fund, as
promptly as practical after the end of such year, an amount equal to such
excess. For purposes of this Section 7, "normal operating expenses" shall
include the Section 4 investment advisory fee, the Section 5 monthly
reimbursement, and the expenses enumerated in subsection 6(b), but shall not
include the expenses enumerated in subsection 6(a).
9. 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.
10. 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.
11. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall remain in force until the conclusion of the next
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.
12. 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.
13. 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.
14. 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.
PRINCOR BALANCED FUND, INC.
XXXXXX X. XXXXXX
By _____________________________________
Xxxxxx X. Xxxxxx, Vice President
PRINCOR MANAGEMENT CORPORATION
XXXXXXX X. XXXXX
By _____________________________________
Xxxxxxx X. Xxxxx, President
