AMENDED AND RESTATED
DISTRIBUTION AGREEMENT
AGREEMENT to be effective June 14, 2004, by and between PRINCIPAL
VARIABLE CONTRACTS FUND, INC., a Maryland corporation (hereinafter sometimes
called the "Fund") and PRINCOR FINANCIAL SERVICES CORPORATION, an Iowa
corporation (Hereinafter sometimes called the "Distributor").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, The Fund and the Distributor wish to enter into an agreement
setting forth the terms upon which the Distributor will act as underwriter and
distributor of the Fund; and
WHEREAS, The Fund and the Distributor have adopted procedures to
implement an Anti-Money Laundering Program reasonably designed to prevent the
funds from being used to launder money or to support terrorist activities; and
WHEREAS, The Fund wants to appoint the Distributor as its agent to assure
the Fund's Anti-Money Laundering Program procedures are implemented and the
program is operated in accordance with those procedures, and the Distributor is
willing to accept this responsibility.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Fund hereby appoints the Distributor to act as
principal underwriter (as such term is defined in Section 2(a)(29) of the
Investment Company Act of 1940 (as amended) of the shares of Capital Stock of
the Fund (hereinafter sometimes call "shares"), and the distributor agrees to
act and perform the duties and functions of underwriter in the manner and
subject to the conditions hereinafter set forth.
1. SALE OF SHARES
The Distributor is authorized to sell as agent on behalf of the Fund
authorized shares of the Fund by accepting unconditional orders placed
with the Distributor by Eligible Purchasers, as defined in the Fund's
prospectus, in states where sales may lawfully be made.
2. PUBLIC OFFERING PRICE
Except as limited by paragraph 4 hereof, all shares of the Fund sold to
Eligible Purchasers by the Distributor as agent for the Fund will be sold
at net asset value.
3. DELIVERY OF PAYMENTS AND ISSUANCE OF SHARES
The Distributor will deliver to the Fund all payments made pursuant to
orders accepted by the Distributor upon receipt thereof by the
Distributor in its principal place of business.
After payment the Fund will issue shares of Capital Stock by crediting to
a stockholder account in such names and such manner as specified in the
application or order relating to such shares. Certificates will be issued
only upon request by the shareholder.
4. SALE OF SHARES TO INVESTORS BY THE FUND
Any right granted to the Distributor to accept orders for shares or make
sales on behalf of the Fund will not apply to shares issued in connection
with the merger or consolidation of any other investment company with the
Fund or the Fund's acquisition, purchase or otherwise, of all or
substantially all the assets of any investment company or substantially
all the outstanding shares of any such company. Also, any such right
shall not apply to shares issued, sold or transferred, whether Treasury
or newly issued shares, that may be offered by the Fund to its
shareholders as stock dividends or splits for not less than "net asset
value" (which term, "net asset value," as used herein, means said value
as determined either as of the close of trading of the New York Stock
Exchange on the day an order for purchase of shares is accepted or as of
such other time as may be in accordance with any provision of the 1940
Investment Company Act, any rule or regulation thereunder, or any rule or
regulation made or adopted by any securities association registered
under the 1934 Securities Exchange Act (all as the Distributor may
determine) or as of such time as the Board of Directors or duly
authorized officers or agents of the Fund may determine in the manner
provided in the Fund's Certificate of Incorporation or Bylaws as from
time to time amended.
5. AGREEMENTS WITH DEALERS OR OTHERS
In making agreements with any dealers or others, the Distributor shall
act only in its own behalf and in no sense as agent for the Fund and
shall be agent for the Fund only in respect of sales and repurchases of
Fund shares.
6. COPIES OF CORPORATE DOCUMENTS
The Fund will furnish the Distributor promptly with properly certified or
authenticated copies of any registration statements filed by it with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, or the Investment Company Act of 1940, as amended, together with
any financial statements and exhibits included therein and all amendments
or supplements thereto hereafter filed. Also, the Fund shall furnish the
Distributor with a reasonable number of printed copies of each report to
shareholders of the Fund as the Distributor may request, and shall
cooperate fully in the efforts of the Distributor to sell and arrange for
the sale of the Fund's shares of Capital Stock and in the performance by
the Distributor of all of its duties under this Agreement.
7. RESPONSIBILITY FOR CONTINUED REGISTRATION INCLUDING INCREASE IN SHARES
The Fund will arrange for or assume the continued responsibility for
meeting the requirements of registration under the Securities Act of
1933, as amended, under the Investment Company Act of 1940, as amended,
and as necessary under the securities laws of the various states where
the Distributor is registered as a broker-dealer. The Fund will increase
the number of authorized shares from time to time as may be necessary to
provide the Distributor with such number of shares as the Distributor may
reasonably be expected to sell.
8. SUSPENSION OF SALES
If and whenever the determination of asset value is suspended pursuant to
applicable law, and such suspension has become effective, until such
suspension is terminated no further applications for shares shall be
accepted by the Distributor except unconditional orders placed with the
Distributor before the Distributor had knowledge of the suspension. In
addition, the Fund reserves the right to suspend sales and the
Distributor's authority to accept orders for shares on behalf of the
Fund, if in the judgment of the majority of the Fund's Board of
Directors, or a majority of the Executive Committee, if such Committee
exists, it is in the best interest of the Fund to do so, suspension to
continue for such period as may be determined by such majority; and in
that event no shares will be sold by the Fund or by the Distributor on
behalf of the Fund while such suspension remains in effect except for
shares necessary to cover unconditional orders accepted by the
Distributor before the Distributor had knowledge of the suspension.
9. RESPONSIBILITY FOR IMPLEMENTING THE FUND'S ANTI-MONEY LAUNDERING PROGRAM
The Fund hereby appoints the Distributor to act as its agent to assure
the Fund's Anti-Money Laundering Program procedures are implemented and
the Distributor accepts this appointment. The Distributor will assure
such procedures are implemented and that the program operates in
accordance with those procedures and will provide such reports and
information as the Fund may request from time to time to facilitate the
Fund's oversight of such program. The Distributor will also make
information and records relating to the Fund's Anti-Money Laundering
Program available to federal regulators as required by law and will
permit such regulators to examine and inspect the Distributor for
purposes of the program. The distributor will perform the specific
requirements of the Fund's Customer Identification Program and will
annually certify it has implemented the Fund's anti-money laundering
program.
10. EXPENSES
The Fund will pay (or will enter into arrangements providing for the
payment of) all fees and expenses (1) in connection with the preparation
and filing of any registration statement or amendments thereto as
required under the Investment Company Act of 1940, as amended; (2) in
connection with the preparation and filing of any registration statement
and prospectus or amendments thereto under the Securities Act of 1933, as
amended, covering the issue and sale of the Fund's shares; and (3) in
connection with the registration of the Fund and qualification of shares
for sale in the various states and other jurisdictions. The Fund will
also pay (or enter into arrangements providing for the payment of) the
cost of (i) preparation and distribution to shareholders of prospectuses,
reports, tax information, notices, proxy statements and proxies; (ii)
preparation and distribution of dividend and capital gain payments to
shareholders; (iii) issuance, transfer, registry and maintenance of open
account charges; (iv) delivery, remittance, redemption and repurchase
charges; (v) communication with shareholders concerning these items; and
(vi) stock certificates. The Fund will pay taxes including, in the case
of redeemed shares, any initial transfer taxes unpaid.
The Distributor will pay all fees and expenses in connection with the
Distributor's qualification as a dealer under the Securities Exchange Act
of 1934, as amended, and in the various states, and all other expenses in
connection with the sale and offering for sale of shares of the Fund
which have not been herein specifically allocated to or assumed by the
Fund.
11. CONFORMITY WITH LAW
The Distributor agrees that in selling the shares of the Fund it will
duly conform in all respects with the laws of the United States and any
state or other jurisdiction in which such shares may be offered for sale
pursuant to this Agreement.
12. MEMBERSHIP IN NATIONAL ASSOCIATION OF SECURITIES DEALERS
The Fund recognizes that the Distributor is now a member of the National
Association of Securities Dealers, and in the conduct of its duties under
this Agreement the Distributor is subject to the various rules, orders
and regulations of such organization. The right to determine whether such
membership should or should not continue, or to join other organizations,
is reserved by the Distributor.
13. OTHER INTERESTS
It is understood that directors, officers, agents and stockholders of the
Fund are or may be interested in the Distributor as directors, officers,
stockholders, or otherwise; that directors, officers, agents, and
stockholders of the Distributor are or may be interested in the Fund as
directors, officers, stockholders or otherwise; that the Distributor may
be interested in the Fund as a stockholder or otherwise; and that the
existence of any dual interest shall not affect the validity hereof or of
any transaction hereunder except as otherwise provided in the Certificate
of Incorporation of the Fund and the Distributor, respectively, or by
specific provision of applicable law.
14. INDEMNIFICATION
The Fund agrees to indemnify, defend and hold the Distributor, its
officers and directors, and any person who controls the Distributor
within the meaning of Section 15 of the Securities Act of 1933, free and
harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims,
demands or liabilities and any counsel fees incurred in connection
therewith) which the Distributor, its officers, directors or any such
controlling person may incur under the Securities Act of 1933, or under
common law or otherwise, arising out of or based upon any untrue
statement of a material fact contained in the Fund's registration
statement or prospectus or arising out of or based upon any alleged
omission to state a material fact required to be stated in either thereof
or necessary to make the statements in either thereof not misleading,
except insofar as such claims, demands, liabilities or expenses arise out
of or are based upon any such untrue statement or in conformity with
information furnished in writing by the Distributor to the Fund for use
in the Fund's registration statement or prospectus; provided, however,
that this indemnity agreement, to the extent that it might require
indemnity of any person who is also an officer or director of the Fund or
who controls the Fund within the meaning of Section 15 of the Securities
Act of 1933, shall not inure to the benefit of such officer, director or
controlling person unless a court of competent jurisdiction shall
determine, or it shall have been determined by controlling precedent that
such result would not be against public policy as expressed in the
Securities Act of 1933, and further provided, that in no event shall
anything contained herein be so construed as to protect the Distributor
against any liability to the Fund or to its security holders to which the
Distributor would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence, in the performance of its duties, or by
reason of its reckless disregard of its obligations under this Agreement.
The Fund's agreement to indemnify the Distributor, its officers and
directors and any such controlling person as aforesaid is expressly
conditioned upon the Fund being promptly notified of any action brought
against the Distributor, its officers or directors, or any such
controlling person, such notification to be given by letter or telegram
addressed to the Fund. The Fund agrees promptly to notify the Distributor
of the commencement of any litigation or proceedings against it or any of
its directors in connection with the issue and sale of any shares of it
Capital Stock.
The Distributor agrees to indemnify, defend and hold the Fund, its
officers and directors and any person who controls the Fund, if any,
within the meaning of Section 15 of the Securities Act of 1933, free and
harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims,
demands liabilities and any counsel fees incurred in connection
therewith) which the Fund, its directors or officers or any such
controlling person may incur under the Securities Act of 1933 or under
common law or otherwise; but only to the extent that such liability or
expense incurred by the Fund, its directors or officers or such
controlling person resulting from such claims or demands shall arise out
of or be based upon any alleged untrue statement of a material fact
contained in information furnished in writing by the Distributor to the
Fund for use in the Fund's registration statement or prospectus or shall
arise out of or be based upon any alleged omission to state a material
fact in connection with such information required to be stated in the
registration statement or prospectus or necessary to make such
information not misleading. The Distributor's agreement to indemnify the
Fund, its directors and officers, and any such controlling person as
aforesaid is expressly conditioned upon the Distributor being promptly
notified of any action brought against the Fund, its officers or
directors or any such controlling person.
15. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective upon the effective date of the
Fund's initial registration statement under the Securities Act of 1933
and will remain in effect from year to year thereafter, but only so long
as such 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, provided that in either event
such continuation shall be approved by the vote of a majority of the
directors who are not interested persons of the Distributor, 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
60 days written notice be terminated at any time, without the payment of
any penalty, by the Fund, or by the Distributor. This Agreement shall
terminate automatically in the event of its assignment by the Distributor
and shall not be assignable by the Fund without the consent of the
Distributor.
In interpreting the provisions of this paragraph 15, 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.
16. 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. If the Fund should at any time deem it necessary
or advisable in the best interests of the Fund that any amendment of this
Agreement be made in order to comply with the recommendations or
requirements of the Securities and Exchange Commission or other
governmental authority or to obtain any advantage under state or federal
tax laws and should notify the Distributor of the form of such amendment,
and the reasons therefore, and if the Distributor should decline to
assent to such amendment, the Fund may terminate this Agreement
forthwith. If the Distributor should at any time request that a change be
made in the Fund's Certificate of Incorporation or By-laws, or in its
method of doing business, in order to comply with any requirements of
federal law or regulations of the Securities and Exchange Commission or
of a national securities association of which the Distributor is or may
be a member, relating to the sale of shares of the Fund, and the Fund
should not make such necessary change within a reasonable time, the
Distributor may terminate this Agreement forthwith.
17. ADDRESS FOR PURPOSES 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 Distributor for this purpose shall be The Principal
Financial Group, Xxx Xxxxxx, Xxxx 00000.
IN WITNESS WHEREOF, the parties hereof have caused this Agreement to be
executed in duplicate on the day and year first above written.
PRINCIPAL VARIABLE CONTRACTS FUND, INC.
/s/ A. S. Filean
By ________________________________
A. S. Filean, Senior Vice President
PRINCOR FINANCIAL SERVICES CORPORATION
/s/ X. X. Xxxxxx
By ___________________________________________
X. X. Xxxxxx, President
