PRINCIPAL VARIABLE CONTRACTS FUND, INC.
                             SUB-ADVISORY AGREEMENT
                EDGE ASSET MANAGEMENT, INC. SUB-ADVISED ACCOUNTS


AGREEMENT executed as of January 5, 2007, by and between PRINCIPAL MANAGEMENT
CORPORATION (hereinafter called "the Manager"), and EDGE ASSET MANAGEMENT, INC.
(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 Account of
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 the Sub-Advisor to furnish it with
portfolio selection and related research and statistical services in connection
with the investment advisory services for each Account of the Fund identified in
Appendix A hereto (hereinafter called "Account"), which the Manager has agreed
to provide to the Fund, and the Sub-Advisor desires to furnish such services;
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; and

     (c) 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 the securities and
         other assets of each Account, 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 each Account.

         (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 Account consistent with each Account's investment objective
               and policies.

         (c)   Implement the approved investment program 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)   Advise and assist the officers of the Fund, as 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 each Account.

         (e)   Maintain, in connection with the Sub-Advisor's investment
               advisory services obligations, compliance with the 1940 Act and
               the regulations adopted by the Securities and Exchange Commission
               thereunder and the Account's investment strategies and
               restrictions as stated in the Fund's prospectus and statement of
               additional information.

         (f)   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 each Account are being observed.

         (g)   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.

         (h)   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 each Account.

          (i)  Open  accounts  with   broker-dealers   and  futures   commission
               merchants ("broker-dealers"), select broker-dealers to effect all
               transactions  for each Account,  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 each
               Account 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 each  Account 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 each Account at prices which are advantageous to
               the  Account  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 Account 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  Account.  In addition,  joint  repurchase  or other
               accounts may not be utilized by the Account  except to the extent
               permitted  under any exemptive  order obtained by the Sub-Advisor
               provided that all conditions of such order are complied with.

          (j)  Maintain  all  accounts,  books and records  with respect to each
               Account as are required of an investment  advisor of a registered
               investment  company  pursuant  to the  1940  Act  and  Investment
               Advisers Act of 1940 (the  "Investment  Advisers  Act"),  and the
               rules thereunder,  and furnish the Fund and the Manager with such
               periodic  and  special   reports  as  the  Fund  or  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 Account 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
               Account  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 an  Account  upon
               request  by the  Fund  or the  Manager.  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 an Account.

         (k)   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 Sub-Advisor's current Code of Ethics.
               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.

         (l)   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 an Account, all in such detail as
               the Manager or the Fund may reasonably request. 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 due notice to review the investments of an Account.

         (m)   Provide such information as is customarily provided by a
               sub-advisor and may be required 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 Investment Advisers
               Act, the Securities Act of 1933, as amended (the "Securities
               Act"), and any state securities laws, and any rule or regulation
               thereunder.

          (n)  Vote proxies received on behalf of the Account in a manner
               consistent with 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 Account to file Form N-PX as required by SEC
               rule.

         (o)   Respond to tender offers, rights offerings and other voluntary
               corporate action requests affecting securities held by the Fund
               and complete and file notices of claims in connection with class
               action lawsuits concerning securities owned by the Fund.

     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 each Account, 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 an Account 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.  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.

     7.  Regulation

         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.

     8.  Duration and Termination of This Agreement

         This Agreement shall become effective on the latest of (i) the date of
         its execution, (ii) the date of its approval by a majority of the Board
         of Directors of the Fund, including approval by the vote of a majority
         of the Board of Directors of the Fund who are not interested persons 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 or (iii) if required by the 1940 Act, 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 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 an Account 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 Account 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
         Account during such period is in compliance with Rule 15a-4 under the
         1940 Act.

         This Agreement may be terminated 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 Account on sixty days written notice. This Agreement
         shall automatically terminate in the event of its assignment. In
         interpreting the provisions of this Section 8, the definitions
         contained in Section 2(a) of the 1940 Act (particularly the definitions
         of "interested person," "assignment" and "voting security") shall be
         applied.

     9.  Amendment of this Agreement

         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 Account and by
         vote of a majority of the Board of Directors of the Fund who are not
         interested persons 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.

     10. 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, Des Moines, Iowa 50392-0200. The
              address of the Sub-Advisor for this purpose shall be 1201 3rd
              Avenue, 8th Floor, Seattle, Washington, 98101

         (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 Investment 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 an Account.

         (d)  The Manager shall provide (or cause the Account custodian to
              provide) timely information to the Sub-Advisor regarding such
              matters as the composition of the assets of an Account, cash
              requirements and cash available for investment in an Account, and
              all other reasonable information as may be necessary for the
              Sub-Advisor to perform its duties and responsibilities hereunder.

         (e) 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 MANAGEMENT CORPORATION


          By   _/s/ Michael J. Beer______________________
                 Michael   J.   Beer,
               Executive Vice President



          EDGE ASSET MANAGEMENT, INC.


          By   /s/ William G. Papesh______________________
               Wlliam  G. Papesh,
               President







                                   APPENDIX A

Sub-Advisor shall serve as investment sub-advisor for each Account identified
below. The Manager will pay Sub-Advisor, as full compensation for all services
provided under this Agreement, a fee, computed and paid monthly, at an annual
rate as shown below of the Account's net assets as of the first day of each
month allocated to Sub-Advisor's management.

In calculating the fee for an Account included in Table A, assets of all other
Accounts included in Table A as well as assets of any unregistered separate
account of Principal Life Insurance Company and any investment company sponsored
by Principal Life Insurance Company to which Sub-Advisor or PGI provides
investment advisory services and which invests primarily in fixed-income
securities (except money market separate accounts or investment companies) ,
will be combined with the assets of the Account to arrive at net assets.

In calculating the fee for an Account included in Table B, assets of any
unregistered separate account of Principal Life Insurance Company and any
investment company sponsored by Principal Life Insurance Company to which
Sub-Advisor or PGI provides investment advisory services and which have the same
investment mandate (e.g. MidCap Stock) as the Account for which the fee is
calculated, will be combined with the assets of the Account to arrive at net
assets.

If this Agreement becomes effective or terminates before the end of any month,
the fee (if any) for the period from the effective date to the end of such month
or from the beginning of such month to the date of termination, as the case may
be, shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs.


         ------------------------------------------------------------------------------------------------
                                                     Table A
         ------------------------------------------------------------------------------------------------
         ------------------------------------------------------------------------------------------------

                                                                Net Asset Value of Account

                                                      First        Next          Next          Over
         Account                                   $5 billion   $1 billion    $4 billion    $10 billion
         -------                                   ----------   ----------    ----------    -----------

         Income Account, Mortgage Securities
         Account
         and Short Term Income Account               0.1126%      0.0979%      0.0930%        0.0881%
         ----------------------------------------- ------------ ------------ ------------- --------------








------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Table B
------------------------------------------------------------------------------------------------------------------------------------------
----------------------------- ------------------------------------------------------------------------------------------------------------

                                                       Net Asset Value of Account

                                First          Next            Next             Next            Next             Next           Over
Account                      $50 million    $50 million    $100 million     $200 million    $350 million     $750 million   $1.5 billion
-------                      -----------    -----------    ------------     ------------    ------------     ------------   ------------

Equity Income
Account I                      0.2643%        0.2448%         0.2154%         0.1762%          0.1273%         0.0881%         0.0587%


                                                       Net Asset Value of Account

                              First          Next           Next            Next            Next             Next              Over
Account                    $25 million    $75 million   $100 million    $300 million    $500 million     $500 million      $1.5 billion
-------                    -----------    -----------   ------------    ------------    ------------     ------------      ------------

MidCap Stock Account and     0.3916%        0.3133%        0.2643%        0.2252%          0.1762%          0.1273%          0.0783%
West Coast Equity
Account
------------------------- -------------- -------------- -------------- --------------- ---------------- ---------------- -----------------


              -----------------------------------------------------------------------------------
                                                   Table C
              -----------------------------------------------------------------------------------
              --------------------------------------------------- --- ---------------------------

                                                                             Sub-Advisor
              Account                                                       Percentage Fee

              SAM Balanced Portfolio                                           0.0416%
              SAM Conservative Balanced Portfolio                              0.0416%
              SAM Conservative Growth Portfolio                                0.0416%
              SAM Flexible Income Portfolio                                    0.0416%
              SAM Strategic Growth Portfolio                                   0.0416%
              --------------------------------------------------- --- ---------------------------