INVESTMENT SERVICE AGREEMENT
THIS INVESTMENT SERVICE AGREEMENT, to be effective the 31st day of
October, 2002, by and between PRINCIPAL INVESTORS FUND, INC. (the "Fund"), an
open-end investment company formed under the laws of Maryland, PRINCIPAL
MANAGEMENT CORPORATION ("Manager"), an Iowa corporation, and PRINCIPAL LIFE
INSURANCE COMPANY, a specially chartered Iowa life insurance company;
W I T N E S S E T H:
WHEREAS, Principal 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 whereby the Manager undertakes to furnish the Fund with investment
advisory services for the Technology Fund, a series of the Fund; and
WHEREAS, Principal Financial Group has reached a definitive agreement
to sell significant portions of BT Financial Group businesses, including
Principal Capital Global Investors Limited, the sub-advisor for the Technology
Fund resulting in the termination of such sub-advisory services as of October
31, 2002; and
WHEREAS, the Board of Directors of the Fund have called for a meeting
of the shareholders of the Technology Fund to be held on November 20, 2002 to
vote on a proposal to permit the assets of the Technology Fund to be acquired by
the LargeCap Growth Fund, another series of the Fund and, if approved, the
assets of the Technology Fund will be acquired by the LargeCap Growth Fund as of
the close of business on December 4, 2002; and
WHEREAS, the Fund and the Manager want to assure investment advisory
services continue to be provided until such time as the Technology Fund's assets
are acquired by the LargeCap Growth Fund; 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 Life Insurance Company is willing to make available
to the Manager on a part-time basis certain employees and services of Principal
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 Life Insurance Company shall make available on such
basis, such employees of Principal Life Insurance Company and its
subsidiaries and for such periods as may be agreed upon by the
Manager and Principal Life Insurance Company and its
subsidiaries, as reasonably needed by the Manager in the
performance of its investment advisory services under the
Management Agreement. It is anticipated that such employees will
be persons employed in the Investment Department of Principal
Life Insurance Company or its subsidiaries. Principal 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 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 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 Life Insurance Company or its subsidiaries deem such
materials confidential.
3. Employees of Principal 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 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 Life Insurance Company employees or employees of
Principal Life Insurance Company subsidiaries.
4. Principal Life Insurance Company will, to the extent requested by
the Manager, supply to employees of the Manager (including
part-time employees of Principal 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 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 Life
Insurance Company or its subsidiaries and their employees
pursuant to this Investment Service Agreement, the Manager agrees
to pay Principal Life Insurance Company or its subsidiaries
within 10 days after the end of each calendar month, or as
otherwise agreed, an amount calculated in accordance with
Schedule A, attached hereto.
7. This Investment Service Agreement shall remain in force until the
assets of the Technology Fund are acquired by the LargeCap Growth
Fund, but shall terminate in any event on March 27, 2003 unless
it is approved by a vote of a majority of the outstanding voting
securities of the Technology Fund. If approved by the
shareholders, this Agreement 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 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 its
subsidiaries, 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 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 Life Insurance Company and its subsidiaries
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.
PRINCIPAL INVESTORS FUND, INC.
By /s/ A. S. Filean
----------------------------------------------------
A. S. Filean, Senior Vice President and Secretary
PRINCIPAL MANAGEMENT CORPORATION
By /s/ Xxxxx X. Xxxxxx
----------------------------------------------------
X. X. Xxxxxx, President
PRINCIPAL LIFE INSURANCE COMPANY
By /s/ Xxxx Xxxx
----------------------------------------------------
X. X. Beer, Vice President
SCHEDULE A
For the services provided and the expenses incurred by Principal Life or its
subsidiaries pursuant to the Investment Service Agreement, the Manager, not the
Fund, shall pay Principal Life or its subsidiaries a fee, computed daily and
paid monthly, at an annual rate of 0.0% of the Fund's average daily net assets.
