AMENDMENT NO. 4 TO FUND PARTICIPATION AGREEMENT
THIS AMENDMENT NO. 4 TO FUND PARTICIPATION AGREEMENT is effective as of the
1st day of June, 2002, by and among AMERICAN UNITED LIFE INSURANCE COMPANY (the
"Company"), the investment adviser of the Issuers, AMERICAN CENTURY INVESTMENT
MANAGEMENT, INC. ("ACIM") and AMERICAN CENTURY INVESTMENT SERVICES, INC. (the
"Distributor"). Capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in the Agreement (defined below).
RECITALS
WHEREAS, the Company, the Issuers and ACIM are parties to a certain Fund
Participation Agreement dated March 1, 1994, as amended September 16, 1997,
March 1, 1999 and May 1, 2001 (the "Agreement") in connection with the
participation by the Funds (as defined in the Agreement) in individual and group
annuity contracts to be issued through one or more separate accounts established
by the Company under state law; and
WHEREAS, the Company desires to revise the Agreement to make available as
investment options under the contracts, one or more of the Investor Class and
Advisor Class shares of the Funds made available by Distributor from time to
time;
WHEREAS, in connection with expanding the number of Funds available under
the Agreement, the parties agree to add American Century Investment Services,
Inc. (the "Distributor") as a party to the Agreement; and
WHEREAS, in connection with expanding the number of Funds available under
the Agreement, the parties have agreed to revise the reimbursement terms as set
forth herein; and
WHEREAS, the parties now desire to modify the Agreement as provided herein.
NOW, THEREFORE, in consideration of the mutual promises set forth herein
the parties hereto agree as follows:
1. Addition of Funds. The first paragraph of the Fund Participation
Agreement is hereby deleted in its entirety and the following paragraph is
hereby substituted in lieu thereof:
"American United Life Insurance Company (the "Company") and the
investment advisor to the Issuers, American Century Investment
Management, Inc. ("ACIM") hereby agree to an arrangement whereby
shares of one or more of the Investor Class and Advisor Class shares
of the Funds as set forth on EXHIBIT A, attached hereto, made
available by Distributor from time to time (the
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"Funds") each of which is a series of mutual fund shares registered
under the Investment Company Act of 1940, as amended, and issued by a
registered investment company (collectively the "Issuers") shall be
made available to serve as underlying investment media for Group
Annuity Contracts ("Contracts") to be offered to the public by the
Company, subject to the following provisions:"
2. Pricing Errors. The following language is hereby added to the Agreement
as Section 3(e):
"3(e). In the event adjustments are required to correct any error in
the computation of the net asset value of any Fund's shares at the
shareholder level as a result of a pricing error that is deemed to be
material under the pricing policy of the Fund's Board of Directors or
which Distributor otherwise deems necessary to correct at the
shareholder level, Distributor shall notify the Company as soon as
practicable after discovering the need for those adjustments which
result in a reimbursement to the Company's clients. Notification shall
be made by facsimile or by direct or indirect systems access
acceptable to the Company.
"If one or more of the Company's client accounts received amounts from
any Fund in excess of the amounts to which it otherwise would have
been entitled prior to an adjustment for an error, the Company will
use its best efforts to collect such excess amounts from the
applicable clients.
"If an adjustment is to be made in accordance with this paragraph to
correct an error which has caused a client account to receive an
amount less than that to which it is entitled, the Fund shall use its
best efforts to make all necessary adjustments to the number of shares
owned in the account and/or distribute to the Company the amount of
such underpayment for credit to the clients' subaccounts.
"For purposes of making adjustments as provided above, the Funds will
apply the same standards to all shareholders."
3. Administration of Accounts. The text of Section 7(a) of the Agreement is
hereby deleted in its entirety and the following text is substituted in lieu
thereof.
"(a) In consideration of the Administrative Services (the
"Administrative Services'') as set forth on EXHIBIT B attached hereto,
and the performance of all other obligations under this Agreement by
the Company, Distributor will pay the Company a fee
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per annum of the total average aggregate amount invested in Investor
Class and Advisor Class shares of the Funds set forth on EXHIBIT A by
the Company in accordance with the schedules set forth on EXHIBIT C."
The text of Section 7(b) is hereby deleted in its entirety and the following
text is substituted in lieu thereof:
"(b) In consideration of the performance of the distribution services
specified on EXHIBIT D, attached hereto (the "Distribution Services")
by the Company, Distributor will pay the Company a fee (the
"Distribution Fee") of 25 basis points (0.25%) of the average
aggregate amount invested by the Company in the Advisor Class shares
of the Funds under this Agreement."
4. Termination. The text of Section 8(g)entirety of the Agreement is hereby
deleted in itsand the following text is substituted in lieu thereof
"(g) Upon assignment of this Agreement by either Party."
The following text is hereby added to the Agreement as Section 8(i) and the
remaining section shall be relettered accordingly.
"(i) by a vote of a majority of the independent directors of the
Funds; and"
5. Miscellaneous. The text of Section 14(c) is hereby deleted in its
entirety and the following text is substituted in lieu thereof.
"(c) Successors and Assigns. This Agreement may not be assigned
and will be terminated automatically upon any attempted assignment.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto."
The text of Section 14(f) is hereby deleted in its entirety and the following
text is substituted in lieu thereof
"(f) This Agreement constitutes the entire Agreement and
understanding between the parties and supersedes all prior agreements
and understanding relating to the subject matter hereof and
specifically the agreement dated March 1, 1994 as amended September 3,
1997, March 1, 1999 and May 1, 2001 between American United Life
Insurance Company,
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American Century Investment Management, Inc. and American Century
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Mutual Funds, Inc., with respect to offering the International Growth
Fund, the Small Cap Value Fund and the Equity Income Fund."
6. Ratification. In the event of a conflict between the terms of this
Amendment No. 4 and the Agreement, it is the intention of the parties that the
terms of this Amendment No.4 shall control and the Agreement shall be
interpreted on that basis. To the extent the provisions of the Agreement have
not been amended by this Amendment No. 4, the parties hereby confirm and ratify
the Agreement.
7. Countemarts. This Amendment No. 4 may be executed in two or more
counterparts, each of which shall be an original and all of which together shall
constitute one instrument.
8. Full Force and Effect. Except as expressly supplemented, amended or
consented to hereby, all of the representations, warranties, terms, covenants
and conditions of the Agreement shall remain unamended and shall continue to be
in full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 4 as
of the date first above written.
AMERICAN UNITED LIFE AMERICAN CENTURY INVESTMENT
INSURANCE COMPANY MANAGEMENT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: VP Marketing Title: President
AMERICAN CENTURY INVESTMENT
SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
EXHIBIT A
FUNDS AVAILABLE -INVESTOR CLASS
Funds Eligible for Funds With a 25 bps Funds With a Funds With NO
TIERED Reimb. Reimb.Cap 5 bps Reimb. Cap Service Reimbursement
Total Expense Total Expense Ratio Total Expense Ratio Total Expense
Ratio > 75 bps* between 56 bps -74 bps between 46 bps -55 bps Ratio < 45bps
====================================================================================================================================
Balanced Fund Diversified Bond Fund AZ Municipal Bond Fund Premium Money Market Fund
Emerging Markets Fund Equity Growth Fund CA High Yield Municipal Fund
Equity Income Fund Global Natural Resources Fund CA Intermediate Term Tax Free Fund
Global Growth Fund High-Yield Municipal Fund CA Limited Term Tax Free Fund
Growth Fund Income & Growth Fund CA Long-Term Tax Free Fund
Heritage Fund Prime Money Market Fund CA Tax Free Money Market Fund
High Yield Fund Short-Term Govemment Fund Capital Preservation Fund
Intemational Bond Fund Target 2005 Fund FL Municipal Bond Fund
International Growth Fund Target 2010 Fund Govemment Agency Money Market Fund
Large Company Value Fund Target 2015 Fund Govemment Bond Fund
Life Sciences Fund Target 2020 Fund Inflation Adjusted Bond Fund
Real Estate Fund Target 2025 Fund Tax-Free Money Market Fund
Select Fund Target 2030 Fund Tax - Free Bond Fund
Small Cap Quantitative Fund Utilities Fund
Small Cap Value Fund
Strategic Allocation: Aggressive
Strategic Allocation Conservative
Strategic Allocation: Moderate
Tax -Managed Value Fund
Technology Fund
Ultra Fund
Value Fund
Vista Fund
* bps = basis points
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EXHIBIT A (Continued)
FUNDS AVAILABLE -ADVISOR CLASS
Funds Eligible for Funds With a 25 bps Funds With a 5 bps Funds With
35 bps* Reimb. Reimb. Cap Total Reimb. Cap Total NO Service
Total Expense Expense Ratio Expense Ratio Reimbursement Total
Ratio > 100 bps between 81 bps-99 bps between 71 bps - 80 bps Expense Ratio < 70 bps
===================================================================================================================================
Balanced Fund Diversified Bond Fund Government Agency
Emerging Market Fund Equity Growth Fund Money Market Fund
Equity Income Fund Global Natural Resources Fund Government Bond Fund
Global Growth Fund High-Yield Municipal Fund Inflation Adjusted Bond Fund
Growth Fund Income & Growth Fund
Heritage Fund Short Term Govemment Fund
I-Iigh Yield Fund Target 2005 Fund
International Bond Fund Target 2010 Fund
International Growth Fund Target 2015 Fund
Large Company Value Fund Target 2020 Fund
Life Sciences Fund Target 2025 Fund
Real Estate Fund Target 2030 Fund
Select Fund Utilities Fund
Small Cap Quantitative Fund
Small Cap Value Fund
Strategic Allocation
Aggressive Fund
Strategic Allocation
Conservative Fund
Strategic Allocation
Moterate Fund
Tax-Managed Value Fund
Technolo Fund
Ultra Fund
Value Fund
Vista Fund
* bps = basis points
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EXHIBIT B
ADMINISTRATIVE SERVICES
Pursuant to the Agreement to which this is attached, the Company shall
perform all administrative and shareholder services required or requested under
the Contracts with respect to the Contract owners, including, but not limited
to, the following:
1. Maintain separate records for each Contract owner, which records shall
reflect the shares purchased and redeemed and share balances of such Contract
owners. The Company will maintain a single master account with each Fund on
behalf of the Contract owners and such account shall be in the name of the
Company (or its nominee) as the record owner of shares owned by the Contract
owners.
2. Disburse or credit to the Contract owners all proceeds of redemptions of
shares of the Funds and all dividends and other distributions not reinvested in
shares of the Funds.
3. Prepare and transmit to the Contract owners, as required by law or the
Contracts, periodic statements showing the total number of shares owned by the
Contract owners as of the statement closing date, purchases and redemptions of
Fund shares by the Contract owners during the period covered by the statement
and the dividends and other distributions paid during the statement period
(whether paid in cash or reinvested in Fund shares), and such other information
as may be required, from time to time, by the Contracts.
4. Transmit purchase and redemption orders to the Funds on behalf of the
Contract owners in accordance with the procedures set forth in Section 3 to the
Agreement.
5. Distribute to the Contract owners copies of the Funds' prospectus, proxy
materials, periodic fund reports to shareholders and other materials that the
Funds are required by law or otherwise to provide to their shareholders or
prospective shareholders.
6. Maintain and preserve all records as required by law to be maintained
and preserved in connection with providing the Administrative Services for the
Contracts.
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EXHIBIT C
APPLICABLE FEES
Investor Class
No Administrative Services Fee shall be paid on any Investor Class Funds with an
expense ratio at or below 45 basis points. An Administrative Services Fee of 5
basis points shall be paid on any Investor Class Funds with an expense ratio
between 46 basis points and 55 basis points. An Administrative Services Fee of
25 basis points shall be paid on any Investor Class Funds with an expense ratio
between 56 basis points and 74 basis points. An Administrative Services Fee in
accordance with the schedule below shall be paid on any Investor Class Funds
with an expense ratio greater than or equal to 75 basis points.
Assets(1) Fee
Assets between $0 - $500 million 25.0 basis points
Assets > $500 million 30.0 basis points
Advisor Class
No Administrative Services Fee shall be paid on any Advisor Class Funds with an
expense ratio less than or equal to 70 basis points. An Administrative Services
Fee of 5 basis points shall be paid on any Advisor Class Funds with an expense
ratio between 71 basis points and 80 basis points. An Administrative Services
Fee of 25 basis points shall be paid on any Advisor Class Funds with an expense
ratio between 81 basis points and 99 basis points. An Administrative Services
Fee of 35 basis points shall be paid on any Advisor Class Funds with an expense
ratio greater than or equal to 100 basis points.
The expense ratio of each Fund is set forth in each Fund's then-current
prospectus.
1. The total asset level shall include only those Funds that meet the
requirements for reimbursement in accordance with the applicable fees as
set forth above. The total asset level shall be determined by aggregating
the assets invested in the Investor Class shares of the Funds by the
Company with the assets invested in the Class I VP shares of the Funds by
the Company under the Agreement dated 3/1/94, as amended.
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EXHIBIT D
DISTRIBUTION SERVICES
Pursuant to the Agreement to which this is attached, the Company shall perform
distribution services for Advisor Class shares of the Funds, including, but not
limited to, the following:
1. Receive and answer correspondence from prospective shareholders, including
distributing prospectuses, statements of additional information, and
shareholder reports.
2. Provide facilities to answer questions from prospective investors about
Fund shares.
3. Assist investors in completing application forms and selecting dividend and
other account options.
4. Provide other reasonable assistance in connection with the distribution of
Fund shares.
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