PRINCIPAL VARIABLE CONTRACTS FUNDS, INC.
AMENDED AND RESTATED SUB-ADVISORY AGREEMENT
PRINCIPAL GLOBAL INVESTORS SUB-ADVISED ACCOUNTS
AGREEMENT executed as of the March 11, 2003, by and between PRINCIPAL
MANAGEMENT CORPORATION, an Iowa Corporation (hereinafter called "the Manager")
and PRINCIPAL GLOBAL INVESTORS, LLC (hereinafter called "PGI").
W I T N E S S E T H:
WHEREAS, the Manager is the manager and investment adviser to Principal
Variable Contracts Fund, 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 PGI to furnish portfolio selection
and related research and statistical services in connection with the investment
advisory services which the Manager has agreed to provide to the Fund, and PGI
desires to furnish such services; and
WHEREAS, The Manager has furnished PGI with copies properly certified or
authenticated of each of the following:
(a) Management Agreement (the "Management Agreement") with the Fund;
(b) Copies of the registration statement of the Fund as filed pursuant to
the federal securities laws of the United States, including all
exhibits and amendments;
NOW, THEREFORE, in consideration of the premises and the terms and
conditions hereinafter set forth, it is agreed as follows:
1. Appointment of PGI
In accordance with and subject to the Management Agreement, the Manager
hereby appoints PGI to perform portfolio selection services described in Section
2 below for investment and reinvestment of the securities and other assets of
certain series of the Fund described in Schedule A hereto (the "Accounts"),
subject to the control and direction of the Fund's Board of Directors, as well
as to assume other obligations as specified in Section 2 below, for the period
and on the terms hereinafter set forth. PGI accepts such appointment and agrees
to furnish the services hereinafter set forth for the compensation herein
provided. PGI 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 PGI
(a) PGI shall provide with respect to those Accounts of the Fund described
in Schedule A hereto all services and obligations of the Manager described in
Section 1, Investment Advisory Services, of the Management Agreement.
(b) PGI shall use the same skill and care in providing services to the
Accounts as it uses in providing services to fiduciary accounts for which it has
investment responsibility. PGI will conform with all applicable rules and
regulations of the Securities and Exchange Commission.
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
PGI hereunder with respect to the Accounts, the Manager shall pay PGI within 10
days after the end of each calendar month, or as otherwise agreed, an amount
representing PGI's actual cost of providing such services and assuming such
obligations.
5. Duration and Termination of This Agreement
This Agreement shall become effective as to an Account on the latest of (i)
the date of its execution, (ii) the date of its approval by a majority of the
directors of the Fund, including approval by the vote of a majority of the
directors of the Fund who are not interested persons of the Manager, Principal
Mutual Life Insurance Company, PGI or the Fund cast in person at a meeting
called for the purpose of voting on such approval and (iii) the date of its
approval by a majority of the outstanding voting securities of the Account. It
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 Account 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, PGI 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 Account, PGI or by the Manager. This
Agreement shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Section 5, 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.
6. Amendment of this Agreement
No amendment of this Agreement as to an Account shall be effective until
approved by vote of the holders of a majority of the outstanding voting
securities and by vote of a majority of the directors of the Fund who are not
interested persons of the Manager, PGI, Principal Mutual Life Insurance Company
or the Fund cast in person at a meeting called for the purpose of voting on such
approval.
7. 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 PGI and of the Manager for
this purpose shall be The Principal Financial Group, Xxx Xxxxxx, Xxxx
00000-0000.
(c) PGI agrees to notify the Manager of any change in PGI's officers and
directors within a reasonable time after such change.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
date first above written.
PRINCIPAL MANAGEMENT CORPORATION
By /s/A. S. Filean
-----------------------------------------------------
A. S. Filean, Vice President
PRINCIPAL GLOBAL INVESTORS, LLC
By /s/Xxxxxx X. Xxxxxxx
------------------------------------------------------
Xxxxxx X. Xxxxxxx, Executive Director-Equities
SCHEDULE A
TO THE PRINCIPAL GLOBAL INVESTORS
SUB-ADVISORY AGREEMENT
Balanced Account...............................................0.086%
Blue Chip Account..............................................0.070%
Capital Value Account..........................................0.100%
Government Securities Account..................................0.060%
Growth Account.................................................0.070%
International Account..........................................0.110%
International Emerging Markets Account.........................0.500%
International SmallCap Account.................................0.500%
LargeCap Stock Index Account...................................0.015%
Limited Term Bond Account......................................0.100%
MidCap Account.................................................0.100%
SmallCap Account...............................................0.250%
Utilities Account..............................................0.070%
