PRINCIPAL VARIABLE CONTRACTS FUNDS, INC.
AMENDED AND RESTATED SUB-ADVISORY AGREEMENT
X. XXXX PRICE ASSOCIATES, INC. SUB-ADVISED FUND
AMENDED AND RESTATED SUB-ADVISORY
AGREEMENT (the "Agreement") executed as of the 15th day of
December, 2017 by and between PRINCIPAL GLOBAL
INVESTORS, LLC, a Delaware limited liability company
(hereinafter called "the Manager"), and X. XXXX PRICE
ASSOCIATES, INC., a corporation organized and existing under
the laws of the State of Maryland, (hereinafter called "the
Sub-Advisor").
W I T N E S S E T H:
WHEREAS, the Manager is the manager and investment
adviser to each Series of Principal Variable Contracts Funds, Inc.
(the "Fund"), an open-end management investment company
registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Manager desires to retain the Sub-Advisor
to render discretionary investment advisory services for all or a
portion of the assets of each Series of the Fund identified in
Appendix A hereto, as may be amended from time to time
(hereinafter called "Series"), which the Manager has agreed to
provide to the Fund, and the Sub-Advisor desires to furnish such
services; and
WHEREAS, the Manager and the Sub-Advisor agree to
amend and restate the Sub-Advisory Agreement between the
Manager (having assumed the rights and obligation of Principal
Management Corporation) and the Sub-Advisor dated April 1,
2012, as amended with this Agreement; and
WHEREAS, The Manager has furnished the Sub-Advisor
with copies properly certified or authenticated of each of the
following and will promptly provide the Sub-Advisor with copies
properly certified or authenticated of any amendment or
supplement thereto:
(a) Management Agreement (the "Management Agreement")
with the Fund;
(b) The Fund's registration statement and financial statements
as filed with the Securities and Exchange Commission (the
"SEC");
(c) The Fund's Articles of Incorporation and By-laws;
(d) Policies, procedures or instructions adopted or approved
by the Board of Directors of the Fund relating to obligations
and services to be provided by the Sub-Advisor.
NOW, THEREFORE, in consideration of the premises and
the terms and conditions hereinafter set forth, the parties agree as
follows:
1. Appointment of Sub-Advisor
In accordance with and subject to the Management
Agreement, the Manager hereby appoints the Sub-Advisor
to perform the services described in Section 2 below for
investment and reinvestment of such portion of the assets
of each Series as may be allocated to the Sub-Advisor by
the Manager, from time to time (the "Allocated Assets"),
subject to the control and direction of the Manager and the
Fund's Board of Directors, for the period and on the terms
hereinafter set forth. The Sub-Advisor accepts such
appointment and agrees to furnish the services hereinafter
set forth for the compensation herein provided. The
Sub-Advisor shall for all purposes herein be deemed to be
an independent contractor and shall, except as expressly
provided or authorized, have no authority to act for or
represent the Fund or the Manager in any way or
otherwise be deemed an agent of the Fund or the
Manager.
2. Obligations of and Services to be Provided by the
Sub-Advisor
The Sub-Advisor will:
(a) Provide investment advisory services, including but
not limited to research, advice and supervision for the
Allocated Assets of each Series.
(b) Furnish to the Board of Directors of the Fund for
approval (or any appropriate committee of such
Board), and revise from time to time as conditions
require, a recommended investment program for each
Series consistent with the Allocated Assets of each
Series' respective investment objective(s) and policies
and any specific investment guidelines provided by the
Manager applicable to the Allocated Assets.
(c) Implement the approved investment program for the
Allocated Assets by placing orders for the purchase
and sale of securities without prior consultation with
the Manager and without regard to the length of time
the securities have been held, the resulting rate of
portfolio turnover or any tax considerations, subject
always to the provisions of the Fund's registration
statement, Articles of Incorporation and Bylaws and
the requirements of the 1940 Act, as each of the same
shall be from time to time in effect.
(d) Not act as a custodian for the Allocated Assets or have
such assets registered in its own name or the name of
its nominee.
(e) Advise and assist the officers of the Fund, as
reasonably requested by the officers, 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
Allocated Assets of each Series.
(f) Maintain, in connection with the Sub-Advisor's
investment advisory services provided to the Allocated
Assets, compliance with the 1940 Act and the
regulations adopted by the SEC thereunder and the
Series investment strategies and restrictions as stated
in the Fund's prospectus and statement of additional
information and any specific investment guidelines
provided by the Manager applicable to the Allocated
Assets. The Manager acknowledges that the
Subadvisor is not the compliance agent for the Series,
and does not have access to all of the Series' books
and records necessary to perform certain compliance
testing. The Sub-Advisor shall perform such services
based upon its books and records with respect to the
Allocated Assets of the Series.
(g) Report to the Board of Directors of the Fund at such
times and in such detail as the Board of Directors may
reasonably deem appropriate in order to enable it to
determine that the investment policies, procedures
and approved investment program of the Allocated
Assets of each Series (and any specific investment
guidelines provided by the Manager applicable to the
Allocated Assets) are being observed.
(h) Upon request, provide assistance and
recommendations for the determination of the fair
value of certain securities when reliable market
quotations are not readily available for purposes of
calculating net asset value in accordance with
procedures and methods established by the Fund's
Board of Directors.
(i) Furnish, at its own expense, (i) all necessary
investment and management facilities, including
salaries of clerical and other personnel required for it
to execute its duties faithfully, and (ii) administrative
facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of
the investment advisory affairs of the Allocated Assets
of each Series.
(i) Open accounts with Foreign Account Tax Compliance
Act compliant broker-dealers and futures commission
merchants ("broker-dealers"), select broker-dealers to
effect all transactions for the Allocated Assets of each
Series, place all necessary orders with broker-dealers
or issuers (including affiliated broker-dealers), and
negotiate commissions, if applicable. To the extent
consistent with applicable law, purchase or sell orders
for the Allocated Assets of each Series may be
aggregated with contemporaneous purchase or sell
orders of other clients of the Sub-Advisor. In such
event allocation of securities so sold or purchased, as
well as the expenses incurred in the transaction, will
be made by the Sub-Advisor in the manner the Sub-
Advisor considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and
to other clients. The Sub-Advisor will, report on such
allocations at the request of the Manager, the Fund or
the Fund's Board of Directors, providing such
information as the number of aggregated trades to
which the Allocated Assets of each Series was a party,
the broker-dealers to whom such trades were directed
and the basis for the allocation for the aggregated
trades. The Sub-Advisor shall use its best efforts to
obtain execution of transactions for the Allocated
Assets of each Series at prices which are
advantageous to the Series and at commission rates
that are reasonable in relation to the benefits received.
However, the Sub-Advisor may select brokers or
dealers on the basis that they provide brokerage,
research or other services or products to the Sub-
Advisor. To the extent consistent with applicable law,
the Sub-Advisor may pay a broker or dealer an
amount of commission for effecting a securities
transaction in excess of the amount of commission or
dealer spread another broker or dealer would have
charged for effecting that transaction if the Sub-
Advisor determines in good faith that such amount of
commission is reasonable in relation to the value of
the brokerage and research products and/or services
provided by such broker or dealer. This determination,
with respect to brokerage and research products
and/or services, may be viewed in terms of either that
particular transaction or the overall responsibilities
which the Sub-Advisor and its affiliates have with
respect to each Series as well as to accounts over
which they exercise investment discretion. Not all such
services or products need be used by the Sub-Advisor
in managing the Allocated Assets. In addition, joint
repurchase or other accounts may not be utilized by
the Series except to the extent permitted under any
exemptive order obtained by the Sub-Advisor provided
that all conditions of such order are complied with.
(k) Section 871(m) Transactions: Sub-Advisor shall not on
behalf of the Fund enter into certain U.S. dividend
equivalent payment transactions described in Section
871(m) of the U.S. Internal Revenue Code and the
regulations thereunder ("871(m) Transaction") with a
foreign counterparty unless: (i), Sub-Advisor adheres
to the ISDA 2015 Section 871(m) Protocol on behalf of
the Fund, and (ii), The foreign counterparty to the
871(m) Transaction provides Sub-Advisor with a
properly completed Form W-8IMY certifying to its
status as a qualified derivatives dealer ("QDD").
(l) Maintain all accounts, books and records with respect
to the Allocated Assets as are required of an
investment advisor of a registered investment
company pursuant to the 1940 Act and Investment
Advisers Act of 1940, as amended (the "Advisers
Act"), and the rules thereunder, and furnish the Fund
and the Manager with such periodic and special
reports as the Fund or the Manager may reasonably
request. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Sub-Advisor hereby
agrees that all records that it maintains for each Series
are the property of the Fund, agrees to preserve for
the periods described by Rule 31a-2 under the 1940
Act any records that it maintains for the Series and
that are required to be maintained by Rule 31a-1
under the 1940 Act, and further agrees to surrender
promptly to the Fund any records that it maintains for
a Series upon request by the Fund or the Manager,
provided, however, the Sub-Advisor may retain copies
of such records to the extent required for it to comply
with applicable laws, rules and regulations. The Sub-
Advisor has no responsibility for the maintenance of
Fund records except insofar as is directly related to
the services the Sub-Advisor provides to the Allocated
Assets of each Series.
(m) Observe and comply with Rule 17j-1 under the 1940
Act and the Sub-Advisor's Code of Ethics adopted
pursuant to that Rule as the same may be amended
from time to time. The Manager acknowledges receipt
of a copy of the Sub-Advisor's current Code of Ethics.
The Sub-Advisor shall promptly forward to the
Manager a copy of any material amendment to the
Sub-Advisor's Code of Ethics along with certification
that the Sub-Advisor has implemented procedures for
administering the Sub-Advisor's Code of Ethics.
(n) From time to time as the Manager or the Fund may
request, furnish the requesting party reports on
portfolio transactions and reports on investments held
by a Series, all in such detail as the Manager or the
Fund may reasonably request. Upon due notice, the
Sub-Advisor will make available its officers and
employees to meet with the Fund's Board of Directors
at the Fund's principal place of business on such
times as mutually agreeable to the parties to review
the investments of the Allocated Assets of each
Series.
(o) Provide such information as is customarily provided by
a sub-advisor, or as may be required or reasonably
requested by the Manager, for the Fund or the
Manager to comply with their respective obligations
under applicable laws, including, without limitation, the
Internal Revenue Code of 1986, as amended (the
"Code"), the 1940 Act, the Advisers Act, the Securities
Act of 1933, as amended (the "Securities Act"), and
any state securities laws, and any rule or regulation
thereunder. Such information includes, but is not
limited to: the Sub-Advisor's compliance policies and
procedures thereof adopted to comply with Rule
206(4)-7 of the Advisers Act; the Sub-Advisor's most
recent annual compliance report or a detailed
summary of such report; timely and complete
responses to all Quarterly Compliance Questionnaires
(including the identification of any material compliance
matters and a copy (marked to show changes) and/or
summary of any material changes to the Sub-
Advisor's Rule 206(4)-7 compliance policies and
procedures; Annual Proxy Voting Questionnaires;
Annual Best Execution and Soft Dollar
Questionnaires, and responses to all other reasonable
requests from the Manager. The Sub-Advisor agrees
to make available on-site at its offices for the
Manager's review all deficiency letters issued by the
SEC, together with all responses given by Sub-
Advisor to such letters, related to the subadvisory
services it provides.
(o) Vote proxies received on behalf of the Allocated
Assets of each Series in a manner consistent with the
Sub-Advisor's proxy voting policies and procedures
and provide a record of votes cast containing all of the
voting information required by Form N-PX in an
electronic format to enable the Series to file Form N-
PX as required by SEC rule.
(p) Respond to tender offers, rights offerings and other
voluntary corporate action requests affecting securities
held by the Allocated Assets of each Series.
(q) Cooperate with the Manager in its performance of
quarterly and annual tax compliance tests to monitor
the Series' compliance with Subchapter M of the Code
and Section 817(h) of the Code. If it is determined by
the Manager or its tax advisors that the Series is not in
compliance with the requirements imposed by the
Code, the Sub-Advisor, in consultation with the
Manager and its tax advisors, will take prompt action
to bring the Allocated Assets of each Series back into
compliance with the time permitted under the Code.
3. Prohibited Conduct
In providing the services described in this agreement, the
Sub-Advisor will not consult with any other investment
advisory firm that provides investment advisory services to
any investment company sponsored by Principal Life
Insurance Company regarding transactions for the Fund in
securities or other assets.
4. Compensation
As full compensation for all services rendered and
obligations assumed by the Sub-Advisor hereunder with
respect to the Allocated Assets, the Manager shall pay the
compensation specified in Appendix A to this Agreement.
5. Liability of Sub-Advisor
Neither the Sub-Advisor nor any of its directors, officers,
employees, agents or affiliates shall be liable to the
Manager, the Fund or its shareholders for any loss suffered
by the Manager or the Fund resulting from any error of
judgment made in the good faith exercise of the
Sub-Advisor's investment discretion in connection with
selecting investments for the Allocated Assets of each
Series or as a result of the failure by the Manager or any of
its affiliates to comply with the terms of this Agreement,
except for losses resulting from willful misfeasance, bad
faith or gross negligence of, or from reckless disregard of,
the duties of the Sub-Advisor or any of its directors,
officers, employees, agents, or affiliates.
6. Trade Errors
The Sub-Advisor will notify the Manager of any Trade
Error(s), regardless of materiality, promptly upon the
discovery such Trade Error(s) by the Sub-Advisor.
Notwithstanding Section 5, the Sub-Advisor shall be liable
to the Manager, the Fund or its shareholders for any loss
suffered by the Manager or the Fund resulting from Trade
Errors due to negligence, misfeasance, or disregard of
duties of the Sub Advisor or any of its directors, officers,
employees, agents (excluding any broker-dealer selected
by the Sub-Advisor), or affiliates. For purposes under this
Section 6, "Trade Errors" are defined as errors due to (i)
erroneous orders by the Sub-Advisor for the Series that
result in the purchase or sale of securities that were not
intended to be purchased or sold; (ii) erroneous orders by
the Sub-Advisor that result in the purchase or sale of
securities for the Series in an unintended amount or price;
or (iii) purchases or sales of financial instruments which
violate the investment limitations or restrictions disclosed in
the Fund's registration statement and/or imposed by
applicable law or regulation (calculated at the Sub-
Advisor's portfolio level), unless otherwise agreed to in
writing.
7. Supplemental Arrangements
The Sub-Advisor may enter into arrangements with other
persons affiliated with the Sub-Advisor or with unaffiliated
third parties to better enable the Sub-Advisor to fulfill its
obligations under this Agreement for the provision of
certain personnel and facilities to the Sub-Advisor, subject
to written notification to and approval of the Manager and,
where required by applicable law, the Board of Directors of
the Fund, provided, however, that entry into any such
arrangements shall not relieve the Sub-Advisor of any of its
obligations under this Agreement.
8. Regulation
All information and advice furnished by one party to the
other party (including their respective agents, employees
and representatives) (the "Discloser") hereunder shall be
treated as confidential and shall not be disclosed to third
parties without prior notification to the Discloser, except as
may be necessary to comply with applicable laws, rules
and regulations, subpoenas or court orders. The
Sub-Advisor shall submit to all regulatory and
administrative bodies having jurisdiction over the services
provided pursuant to this Agreement any information,
reports or other material which any such body may request
or require pursuant to applicable laws and regulations.
9. Duration and Termination of This Agreement
This Agreement shall become effective with respect to a
Series as of the corresponding date set forth on Appendix
B to this Agreement, as may be amended from time to
time, and, unless otherwise terminated with respect to
such Series, shall continue in effect thereafter for the initial
term set forth on Appendix B to this Agreement, and
thereafter from year to year, provided that in each case the
continuance is specifically approved within the period
required by the 1940 Act either by the Board of Directors of
the Fund or by a vote of a majority of the outstanding
voting securities of the Series and in either event by a vote
of a majority of the Board of Directors of the Fund who are
not interested persons of the Manager, Principal Life
Insurance Company, the Sub-Advisor or the Fund cast in
person at a meeting called for the purpose of voting on
such approval.
If the shareholders of a Series fail to approve the
Agreement or any continuance of the Agreement in
accordance with the requirements of the 1940 Act, the
Sub-Advisor will continue to act as Sub-Advisor with
respect to the Allocated Assets of such Series pending the
required approval of the Agreement or its continuance or of
any contract with the Sub-Advisor or a different manager or
sub-advisor or other definitive action; provided, that the
compensation received by the Sub-Advisor in respect to
the Allocated Assets of such Series during such period is in
compliance with Rule 15a-4 under the 1940 Act.
This Agreement may be terminated with respect to a
Series at any time, without the payment of any penalty, by
the Board of Directors of the Fund or by the Sub-Advisor,
the Manager or by vote of a majority of the outstanding
voting securities of the Series on sixty days written notice.
This Agreement shall automatically terminate in the event
of its assignment. In interpreting the provisions of this
Section 9, the definitions contained in Section 2(a) of the
1940 Act (particularly the definitions of "interested person,"
"assignment," "voting security" and "majority of the
outstanding voting securities") shall be applied.
10. Amendment of this Agreement
No amendment of this Agreement shall be effective unless
in writing and signed by both parties. 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 outstanding voting
securities of the Series (as defined in the 0000 Xxx) and by
vote of a majority of the Board of Directors of the Fund who
are not interested persons (as defined in the 0000 Xxx) of
the Manager, the Sub-Advisor, Principal Life Insurance
Company or the Fund cast in person at a meeting called
for the purpose of voting on such approval.
11. Additional Series
In the event the Manager wishes to appoint the Sub-
Advisor to perform the services described in this
Agreement with respect to one or more additional Series of
the Fund after the effective date of this Agreement, such
Series will become a Series under this Agreement upon
approval of this Agreement in the manner required by the
1940 Act and the amendment of Appendices A and B
hereto.
12. General Provisions
(a) Each party agrees to perform such further acts and
execute such further documents as are necessary to
effectuate the purposes hereof. This Agreement shall
be construed and enforced in accordance with and
governed by the laws of the State of Iowa. The
captions in this Agreement are included for
convenience only and in no way define or delimit any of
the provisions hereof or otherwise affect their
construction or effect.
(b) Any notice under this Agreement shall be in writing,
addressed and delivered or mailed postage pre-paid 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 Manager for this purpose shall be
Principal Financial Group, Xxx Xxxxxx, Xxxx
00000-0000, and the address of the Sub-Advisor shall
be X. Xxxx Price Associates, Inc., 0000 Xxxxxxxx Xxxx
Xxxx, Xxxxxx Xxxxx, Xxxxxxxx 00000, Attention: Senior
Legal Counsel - Subadvised.
(c) The Sub-Advisor will promptly notify the Manager in
writing of the occurrence of any of the following events:
(1) the Sub-Advisor fails to be registered as an
investment adviser under the Advisers Act or under
the laws of any jurisdiction in which the
Sub-Advisor is required to be registered as an
investment advisor in order to perform its
obligations under this Agreement.
(2) the Sub-Advisor is served or otherwise receives
notice of any action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any
court, public board or body, involving the affairs of a
Series.
(3) the Sub-Advisor becomes aware of any pending or
threatened action, suit, proceeding, inquiry or
investigation that is reasonably likely to result in a
conviction, order, judgment or decree issued with
respect to it or any affiliate that could reasonably be
expected to result in the Sub-Advisor becoming
ineligible to serve as an investment adviser of a
registered investment company under the 0000 Xxx.
(4) the Sub-Advisor becomes aware of a transaction or
series of transactions that is reasonably likely to
result in a change in the management or control of
the Sub-Advisor or a controlling person thereof or
otherwise in the assignment (as defined in the 0000
Xxx) of this Agreement by the Sub-Advisor.
(d) The Manager shall provide (or cause the Series
custodian to provide) timely information to the Sub-
Advisor regarding such matters as the composition of
the assets of a Series, cash requirements and cash
available for investment in a Series, and all other
reasonable information as may be necessary for the
Sub-Advisor to perform its duties and responsibilities
hereunder.
(e) The Sub-Advisor represents that it will not enter into
any agreement, oral or written, or other understanding
under which the Fund directs or is expected to direct
portfolio securities transactions, or any remuneration,
to a broker or dealer in consideration for the promotion
or sale of Fund shares or shares issued by any other
registered investment company. The Sub-Advisor
further represents that it is contrary to the Sub-
Advisor's policies to permit those who select brokers or
dealers for execution of Fund portfolio securities
transactions to take into account the broker's or
dealer's promotion or sale of Fund shares or shares
issued by any other registered investment company.
(f) The Sub-Advisor agrees that neither it nor any of its
affiliates will in any way refer to its relationship with the
Fund, the Series, or the Manager or any of their
respective affiliates in offering, marketing or other
promotional materials without the express written
consent of the Manager. The Sub-Adviser hereby
grants the Manager a royalty-free, non-exclusive, non-
transferable (with no right to sublicense) limited license
to display or otherwise use the name, trademark,
service xxxx, logo, insignia or other identifying xxxx of
the Sub-Advisor and/or its affiliate(s) ("Sub-Advisor
Marks") during the term of this Agreement solely as
incorporated within communications and materials
relating to or about the Fund. The Manager shall use
the Sub-Advisor Marks only in accordance with the
Sub-Advisor's guidelines and applicable law. The
Manager shall not use Sub-Advisor Marks or disclose
information related to the business of the Sub-Advisor
or any of its affiliates in any prospectus, sales literature
or other material relating to the Fund in any manner not
approved prior thereto by the Sub-Advisor; provided,
however, that the Sub-Advisor hereby approves of all
uses of its name which merely refer in accurate terms
to the appointment of the Sub-Advisor hereunder or
which are required by the SEC or a state securities
commission. Materials which have been previously
approved in writing by the Sub-Advisor or those that
only refer to the Sub-Advisor's name or the Sub-
Advisor Marks are not subject to such prior approval
provided the Manager shall ensure that such materials
are consistent with those which were previously
approved by the Sub-Advisor and no changes have
been made to the Sub-Advisor Marks previously
approved by the Sub-Advisor.
(g) Nothing in this Agreement shall limit or restrict the right
of Subadvisor or its affiliates to engage in any other
business or to devote his or her time and attention in
part to the management or other aspects of any
business, whether of a similar or a dissimilar nature, or
limit or restrict Subadvisor's right to engage in any
other business or to render services of any kind to any
other mutual fund, corporation, firm, individual, or
association.
(h) This Agreement contains the entire understanding and
agreement of the parties.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement on the date first above written.
PRINCIPAL GLOBAL INVESTORS, LLC
By
/s/ Xxxxxxx X. Beer
Name: Xxxxxxx X. Beer
Title: Executive Director - Principal Funds
By
/s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Counsel
X. XXXX PRICE ASSOCIATES, INC.
By
/s/ Xxxxxxx Xxxxxxxx
Name: Xxxxxxx Xxxxxxxx
Title: Vice President
APPENDIX A
[INTENTIONALLY OMITTED]
APPENDIX B
Effective Date and Initial Term of Sub-Advisory Agreement for each Series
Series
Effective Date
Initial Term
LargeCap Growth Account I
August 2004
2 Years
