INVESTMENT SERVICE AGREEMENT
THIS INVESTMENT SERVICE AGREEMENT, to be effective the 12th day of
December, 1995, by and between PRINCOR LIMITED TERM BOND FUND, INC. (the
"Fund"), an open-end investment company formed under the laws of Maryland,
PRINCOR MANAGEMENT CORPORATION ("Manager"), an Iowa corporation, and PRINCIPAL
MUTUAL LIFE INSURANCE COMPANY, a specially chartered Iowa life insurance
company;
W I T N E S S E T H:
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 December 12, 1995 whereby the Manager undertakes to
furnish the Fund with investment advisory services and certain other services;
and
WHEREAS, the Manager has the right under the Management Agreement to
appoint one or more sub-advisors to furnish such services to the Fund; 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 and its subsidiaries 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 its subsidiaries and
for such periods as may be agreed upon by the Manager and Principal Mutual Life
Insurance Company and its subsidiaries, 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. It is anticipated
that such employees will be persons employed in the Investment Department of
Principal Mutual Life Insurance Company or its subsidiaries. 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 and its
subsidiaries 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 or its subsidiaries 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 or its subsidiaries deem such
materials confidential.
3. Employees of Principal Mutual Life Insurance Company or its
subsidiaries 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 or its
subsidiaries shall have no responsibility for investment recommendations and
decisions of the Manager based upon information or advice given or obtained by
or through such Principal Mutual Life Insurance Company employees or employees
of Principal Mutual Life Insurance Company subsidiaries.
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 or its subsidiaries 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 and its
subsidiaries undertake 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 or its subsidiaries and their employees pursuant to this
Investment Service Agreement, the Manager agrees to reimburse Principal Mutual
Life Insurance Company or its subsidiaries 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 and its subsidiaries 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 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 vote of a majority of the outstanding voting securities of the Fund
and in either event such continuance shall be approved by the vote of a majority
of the directors who are not interested persons of the Manager, Principal Mutual
Life Insurance Company or its subsidiaries or the Fund cast in person at a
meeting called for the purpose of voting on such approval. This Investment
Service 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 Principal Mutual Life Insurance Company. This Investment Service
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 persons", "assignment" and "voting securities") 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 and its
subsidiaries for this purpose shall be The Principal Financial Group, 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 LIMITED TERM BOND FUND, INC.
By _________________A. S. Filean____________________
A. S. Filean
PRINCOR MANAGEMENT CORPORATION
By __________________S. L. Jones____________________
X. X. Xxxxx
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By _________________R. E. Keller____________________
R. E. Xxxxxx
