PRINCIPAL VARIABLE CONTRACTS FUNDS, INC.
AMENDED AND RESTATED
MANAGEMENT AGREEMENT
AGREEMENT to be effective the May 1, 2013, 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
Xxxx X. Xxxxxx, Vice President & Secretary
PRINCIPAL MANAGEMENT CORPORATION
By
Xxxxxxx X. Beer, Executive Vice President and Chief Operating Officer
Management Fee as a Percentage
of Average Daily Net Assets
Account
First $250
Million
Next $250
Million
Next $250
Million
Next $250
Million
Thereafter
Diversified International Account
0.85%
0.80%
0.75%
0.70%
0.65%
International Emerging Markets Account
1.25
1.20
1.15
1.10
1.05
LargeCap Blend Account II
0.75
0.70
0.65
0.60
0.55
LargeCap Value Account
0.60
0.55
0.50
0.45
0.40
LargeCap Value Account III
0.75
0.70
0.65
0.60
0.55
MidCap Value Account II
1.05
1.00
0.95
0.90
0.85
Management Fee as a Percentage
of Average Daily Net Assets
Account
First $500
Million
Next $500
Million
Next $1
Billion
Next $1
Billion
Over $3
Billion
LargeCap Growth Account
0.68%
0.63%
0.61%
0.56%
0.51%
Management Fee as a Percentage
of Average Daily Net Assets
Account
First $100
Million
Next $100
Million
Next $100
Million
Next $100
Million
Thereafter
Asset Allocation Account
0.80%
0.75%
0.70%
0.65%
0.60%
Balanced Account
0.60
0.55
0.50
0.45
0.40
Bond & Mortgage Securities Account
0.50
0.45
0.40
0.35
0.30
Equity Income Account
0.60
0.55
0.50
0.45
0.40
Government & High Quality Bond Account
0.50
0.45
0.40
0.35
0.30
International SmallCap Account
1.20
1.15
1.10
1.05
1.00
LargeCap Growth Account I
0.80
0.75
0.70
0.65
0.60
MidCap Blend Account
0.65
0.60
0.55
0.50
0.45
MidCap Growth Account I
0.90
0.85
0.80
0.75
0.70
Money Market Account
0.50
0.45
0.40
0.35
0.30
Real Estate Securities Account
0.90
0.85
0.80
0.75
0.70
Short-Term Bond Account
0.50
0.45
0.40
0.35
0.30
SmallCap Blend Account
0.85
0.80
0.75
0.70
0.65
SmallCap Growth Account II
1.00
0.95
0.90
0.85
0.80
SmallCap Value Account I
1.10
1.05
1.00
0.95
0.90
Management Fee as a Percentage of Average Daily Net
Assets
Account
First $200 Million
Next $300 Million
Over $500 Million
Short-Term Income Account
0.50%
0.45%
0.40%
Management Fee as a Percentage of Average Daily Net Assets
Account
First $2 Billion
Over $2 Billion
Income Account
0.50%
0.45%
Mortgage Securities Account
0.50
0.45
Management Fee as a Percentage of Average Daily Net Assets
Account
First $500 Million
Over $500 Million
Principal Capital Appreciation Account
0.625%
0.500%
Management Fee as a Percentage of Average Daily Net Assets
Account
First $1 Billion
Over $1 Billion
XXX Balanced Portfolio*
0.25%
0.20%
XXX Conservative Balanced Portfolio*
0.25
0.20
XXX Conservative Growth Portfolio*
0.25
0.20
XXX Flexible Income Portfolio*
0.25
0.20
XXX Strategic Growth Portfolio*
0.25
0.20
*Breakpoints based on aggregate XXX Portfolio net assets
Management Fee as a Percentage of Average Daily Net
Assets
Account
Overall Fee
Bond Market Index Account
0.25%
Diversified Balanced Account
0.05
Diversified Growth Account
0.05
Diversified Income Account
0.05
LargeCap S&P 500 Index Account
0.25
Principal LifeTime 2010 Account
0.03
Principal LifeTime 2020 Account
0.03
Principal LifeTime 2030 Account
0.03
Principal LifeTime 2040 Account
0.03
Principal LifeTime 2050 Account
0.03
Principal LifeTime 2060 Account
0.03
Principal LifeTime Strategic Income Account
0.03
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