INVESTMENT SERVICE AGREEMENT
THIS INVESTMENT SERVICE AGREEMENT, effective March 10, 1987, by and between
PRINCOR HIGH YIELD FUND, INC. (the "Fund"), an open-end investment company
formed under the laws of Maryland, PRINCOR INVESTMENT MANAGEMENT COMPANY ("the
Manager"), an Iowa corporation and PRINCIPAL MUTUAL LIFE INSURANCE COMPANY, a
specially chartered Iowa life insurance company;
WITNESSETH:
WHEREAS, Principal Mutual Life Insurance Company has organized the Manager
to serve as investment adviser and is the owner (through its subsidiaries) of
all of the outstanding stock of the Manager; and
WHEREAS, the Manager and the Fund have entered into a Management Agreement
effective as of March 10, 1987, whereby the Manager undertakes to furnish the
Fund with investment advisory services and certain other services; and
WHEREAS, Principal Mutual Life Insurance Company is willing to make
available to the Manager on a part-time basis certain employees and services of
Principal Mutual Life Insurance Company for the purpose of better enabling the
Manager to fulfill its investment advisory obligations under the Management
Agreement, provided that the Manager bears all costs allocable to the time spent
by them on the affairs of the Manager, and the Manager and the Fund believe that
such an arrangement will be for their mutual benefit:
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. The Manager shall have the right to use, on a part-time basis, and
Principal Mutual Life Insurance Company shall make available on such basis, such
employees of Principal Mutual Life Insurance Company and for such periods as may
be agreed upon by the Manager and Principal Mutual Life Insurance Company, as
reasonably needed by the Manager in the performance of its investment advisory
services (but not its administrative, transfer and paying services) under the
Management Agreement. Principal Mutual Life Insurance Company will also make
available to the Manager or the Fund such clerical, stenographic and
administrative services as the Manager may reasonably request to facilitate its
performance of such investment advisory services.
2. The employees of Principal Mutual Life Insurance Company in performing
services for the Manager hereunder may, to the full extent that they deem
appropriate, have access to and utilize statistical and economic data,
investment research reports and other material prepared for or contained in the
files of the Investment Department of Principal Mutual Life Insurance Company
which is relevant to making investments for the Fund, and may make such
materials available to the Manager; provided, that any such materials prepared
or obtained in connection with a private placement or other non-public
transaction need not be made available to the Manager if Principal Mutual Life
Insurance Company deems such materials confidential.
3. Employees of Principal Mutual Life Insurance Company performing services
for the Manager pursuant hereto shall report and be responsible solely to the
officers and directors of the Manager or persons designated by them. Principal
Mutual Life Insurance Company shall have no responsibility for investment
recommendations and decisions of the Manager based upon information or advice
given or obtained by or through such employees.
4. Principal Mutual Life Insurance Company will, to the extent requested by
the Manager, supply to employees of the Manager (including part-time employees
of Principal Mutual Life Insurance Company serving the Manager) such clerical,
stenographic and administrative services and such office supplies and equipment
as may be reasonably required in order that they may properly perform their
respective functions on behalf of the Manager in connection with its performance
of its investment advisory services under the Management Agreement.
5. The obligation of performance under the Management Agreement is solely
that of the Manager, and Principal Mutual Life Insurance Company undertakes no
obligation in respect thereto, except as otherwise expressly provided herein.
6. In consideration of the services to be rendered by Principal Mutual Life
Insurance Company and its employees pursuant to this Investment Service
Agreement, the Manager agrees to reimburse Principal Mutual Life Insurance
Company for such costs, direct and indirect, as may be fairly attributable to
the services performed for the Manager. Such costs shall include, but not be
limited to, an appropriate portion of:
(a) salaries;
(b) employee benefits;
(c) general overhead expense;
(d) supplies and equipment; and
(e) a charge in the nature of rent for the cost of space in Principal
Mutual Life Insurance Company offices fairly allocable to
activities of the Manager under the Management Agreement.
In the event of disagreement between the Manager and Principal Mutual Life
Insurance Company as to a fair basis for allocating or apportioning costs, such
basis shall be fixed by the public accountants for the Fund.
7. This Investment Service 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 until the next annual meeting of the Fund.
Thereafter, this Agreement shall continue in effect 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, by the Manager, or by Principal Mutual Life
Insurance Company. This Agreement shall automatically terminate in the event of
its assignment. In interpreting the provisions of this Section 7, 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.
8. Any notice under this Investment Service Agreement shall be in writing,
addressed and delivered or mailed postage prepaid to the other parties at such
addresses as such other parties may designate for the receipt of such notices.
Until further notice it is agreed that the address of the Fund, that of the
Manager and that of Principal Mutual Life Insurance Company for this purpose
shall be 000 Xxxx Xxxxxx, Xxx Xxxxxx, Xxxx 00000.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in three counterparts by their duly authorized officers the day and
year first above written.
PRINCOR HIGH YIELD FUND, INC.
R. E. Xxxxxx
By __________________________________________
R. E. Xxxxxx
PRINCOR INVESTMENT MANAGEMENT COMPANY
X. X. Xxxxx
By __________________________________________
X. X. Xxxxx
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
X. X. Xxxx
By __________________________________________
X. X. Xxxx
