FUND PARTICIPATION AGREEMENT
THIS AGREEMENT is made this ____ day of August, 2000, between Xxxxxxxx
Portfolios, Inc., an open-end management investment company organized as a
Maryland Corporation (the "Fund"), Xxxxxxxx Advisors, Inc., a Delaware
corporation (the "Distributor") and Kansas City Life Insurance Company, a life
insurance company organized under the laws of the State of Missouri (the
"Company"), on its own behalf and on behalf of each segregated asset account of
the Company set forth on Schedule A, as may be amended from time to time (the
"Account").
W I T N E S S E T H :
WHEREAS, the Fund is a registered open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), and has
filed a currently effective registration statement to offer and sell its shares
under the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Fund desires to act as an investment vehicle for separate
accounts established for variable life insurance policies and variable annuity
contracts to be offered by insurance companies that have entered into
participation agreements with the Fund (the "Participating Insurance
Companies"); and
WHEREAS, the shares of the Fund are divided into several series of shares,
each series representing an interest in a particular managed portfolio of
securities and other assets (the "Portfolios"); and
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission ("SEC") granting Participating Insurance Companies (as defined in the
Fund's application for such order) and their separate accounts exemptions from
the provisions of sections 9(a), 13(a), 15(a) and 15(b) of the 1940 Act, and
Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to
permit shares of the Fund to be sold to and held by variable annuity and
variable life insurance separate accounts of both affiliated and unaffiliated
life insurance companies and certain qualified pension and retirement plans (the
"Exemptive Order"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC and
is a member in good standing of The National Association of Securities Dealers,
Inc. (the "NASD"); and
WHEREAS, the Distributor currently serves as the distributor of the Fund's
shares; and
WHEREAS, the Company has registered or will register certain variable life
insurance policies and/or variable annuity contracts under the 1933 Act (the
"Contracts"); and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act; and
WHEREAS, the Company desires to utilize shares of one or more Portfolios as
an investment vehicle of the Accounts;
NOW THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereto agree as follows:
ARTICLE I.
Sale of Fund Shares
1.1. The Fund shall make Class 2 shares of the Portfolios identified on
Schedule B (as such Schedule may be amended from time to time) available to the
Accounts at the net asset value next computed after receipt of such purchase
order by the Fund (or its designee), as established in accordance with the
provisions of the then current prospectus of the Portfolio or Portfolios. Shares
of a particular Portfolio of the Fund shall be ordered in such quantities and at
such times as determined by the Company to be necessary to meet the requirements
of the Contracts. The Directors of the Fund (the "Directors") may refuse to sell
shares of any Portfolio to any person, or suspend or terminate the offering of
shares of any Portfolio if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Directors
acting in good faith and in light of their fiduciary duties under federal and
any applicable state laws, necessary in the best interests of the shareholders
of such Portfolio.
1.2. The Fund will redeem any full or fractional shares of any Portfolio
when requested by the Company on behalf of an Account at the net asset value
next computed after receipt by the Fund (or its designee) of the request for
redemption, as established in accordance with the provisions of the then current
prospectus of the Fund.
1.3. For the purposes of Sections 1.1 and 1.2, the Fund hereby appoints the
Company as its designee for the limited purpose of receiving and accepting
purchase and redemption orders resulting from investment in and payments under
the Contracts. Receipt by the Company shall constitute receipt by the Fund
provided that (i) such orders are received by the Company in good order prior to
the time the net asset value of each Portfolio is priced in accordance with its
prospectus and (ii) the Fund receives notice of such orders by 10:00 a.m. New
York time on the next following Business Day. "Business Day" shall mean any day
on which the New York Stock Exchange is open for trading and on which the Fund
calculates its net asset value pursuant to the rules of the SEC.
1.4. For purposes of determining payment for purchase orders and redemption
orders, all such orders will be netted. Net purchase orders that are transmitted
to the Fund in accordance with Section 1.3 shall be paid for by the Company by
2:00 p.m. EST on the same Business Day that the Fund receives notice of the
order. Net redemption orders that are transmitted to the Fund in accordance with
Section 1.3 shall be paid for by the Fund by 2:00 p.m. EST on the same Business
Day that the Fund receives notice of the order, to the extent practicable, and
in any event the Fund shall make such payment within five calendar days after
the date the order is transmitted to the Fund in accordance with Section 1.3 or
such shorter period of time as may be required by law. Payments shall be made in
federal funds transmitted by wire.
1.5. Issuance and transfer of the Fund's shares will be by book entry only.
Stock certificates will not be issued to the Company or the Account. Shares
ordered from the Fund will be recorded in the appropriate title for each Account
or the appropriate subaccount of each Account.
1.6. The Fund shall furnish prompt notice to the Company of any income
dividends or capital gain distributions payable on the Fund's shares. The
Company hereby elects to receive all such income dividends and capital gain
distributions as are payable on a Portfolio's shares in additional shares of
that Portfolio. The Company reserves the right to revoke this election and to
receive all such dividends and capital gains distributions in cash. The Fund
shall notify the Company of the number of shares so issued as payment of such
dividends and distributions.
1.7. The Fund shall make the net asset value per share for each Portfolio
available to the Company on a daily basis as soon as reasonably practical after
the net asset value per share is calculated and shall us its best efforts to
make such net asset value per share available by 6 p.m. New York time in a
manner suitable to both the Company and the Fund.
1.8. The Fund agrees that its shares will be sold only to Participating
Insurance Companies and their separate accounts and to certain qualified pension
and retirement plans to the extent permitted by the Exemptive Order. No shares
of any Portfolio will be sold directly to the general public. The Company agrees
that Fund shares will be used only for the purposes of funding the Contracts and
Accounts listed in Schedule A, as amended from time to time.
1.9. Each party shall have the right to rely on information or
confirmations provided by the other party, including an affiliate of the any
other party, and shall not be liable in the event that an error results from
incorrect information or confirmations supplied by any other party. If an error
is made in reliance upon incorrect information or confirmations, any amount
required to make a contract owner's account whole shall be borne by the party
who provided the incorrect information or confirmation.
ARTICLE II.
Obligations of the Parties
2.1. The Fund shall prepare and be responsible for filing with the SEC and
any state regulators requiring such filing all shareholder reports, notices,
proxy materials (or similar materials such as voting instruction solicitation
materials), prospectuses and statements of additional information of the Fund.
The Fund shall bear the cost of registration and qualification of its shares,
preparation and filing of the documents listed in this section 2.1 and all taxes
to which an issuer is subject on the issuance and transfer of its shares.
2.2. At the option of the Company, the Fund shall either (i) provide the
Company (at the Company's expense) with as many copies of the Fund's or the
relevant Portfolio's current prospectus, annual reports, semi-annual report and
other shareholder communications, including any amendments or supplements to any
of the foregoing (pertaining specifically to the Portfolios offered by the
Company), as the Company shall reasonably request; or (ii) provide the Company
with a camera ready copy (or, at the Company's request, on computer disk) of
such documents in a form suitable for printing, from which information relating
to portfolios of the Fund other than such Portfolios has been deleted. The Fund
shall provide the Company with a copy of its statement of additional information
in a form suitable for duplication by the Company. The Fund (at its expense)
shall provide the Company with copies of any Fund-sponsored proxy materials in
such quantity as the Company shall reasonably require for distribution to
Contract owners.
2.3. The Company shall bear the costs of printing and distributing the
Fund's or the relevant Portfolio's prospectus, statement of additional
information, shareholder reports and other shareholder communications to owners
of and applicants for policies for which the Fund is serving or is to serve as
an investment vehicle. The Company shall bear the costs of distributing proxy
materials (or similar materials such as voting solicitation instructions) to
Contract owners. The Company assumes sole responsibility for ensuring that such
materials are delivered to Contract owners in accordance with applicable federal
and state securities laws.
2.4. The Company agrees and acknowledges that the Fund's manager, J. & X.
Xxxxxxxx & Co. Incorporated ("Xxxxxxxx"), is the sole owner of the name and xxxx
"Xxxxxxxx" and that all use of any designation comprised in whole or part of
Xxxxxxxx (a "Xxxxxxxx Xxxx") under this Agreement shall inure to the benefit of
Xxxxxxxx. Except as provided in section 2.5, the Company shall not use any
Xxxxxxxx Xxxx on its own behalf or on behalf of the Accounts or Contracts in any
registration statement, advertisement, sales literature or other materials
relating to the Accounts or Contracts without the prior written consent of
Xxxxxxxx. Upon termination of this Agreement for any reason, the Company shall
cease all use of any Xxxxxxxx Xxxx(s) as soon as reasonably practicable, except
to the extent necessary to service existing Contracts.
2.5. The Company shall fully disclose in each Contract prospectus any fees
paid or to be paid by the relevant Portfolio under a plan adopted pursuant to
Rule 12b-1 of the 1940 Act. The Company shall furnish, or cause to be furnished,
to the Fund or the Distributor a copy of each Contract prospectus or statement
of additional information in which the Fund or Xxxxxxxx is named prior to ten
business days prior to first use. The Company shall furnish, or shall cause to
be furnished, to the Fund or its designee, each piece of advertising, sales
literature or other promotional material in which the Fund, the Portfolios or
Xxxxxxxx is named, at least ten Business Days prior to its use. No such material
shall be used if the Fund or the Distributor reasonably objects to such use
within five business days after receipt of such material.
2.6. The Company shall not give any information or make any representations
or statements on behalf of the Fund or concerning the Fund or Xxxxxxxx in
connection with the sale of the Contracts other than information or
representations contained in and accurately derived from the registration
statement or prospectus for the Fund shares (as such registration statement and
prospectus may be amended or supplemented from time to time), reports of the
Fund, Fund-sponsored proxy statements, or in any advertisements, sales
literature or other promotional material approved by the Fund or the
Distributor, except as required by legal process or regulatory authorities or
with the written permission of the Fund or the Distributor. The Fund or its
designee will promptly respond to requests for permission.
2.7. Neither the Fund nor the Distributor shall give any information or
make any representations or statements on behalf of the Company, or concerning
the Company, the Accounts or the Contracts other than information or
representations contained in and accurately derived from the registration
statement or prospectus for the Contracts (as such registration statement and
prospectus may be amended or supplemented from time to time), or in materials
approved by the Company for distribution including advertisements, sales
literature or other promotional materials, except as required by legal process
or regulatory authorities or with the written permission of the Company. The
Company will promptly respond to requests for permission.
2.8. The Fund will provide to the Company at least one complete copy of all
registration statements, profiles, prospectuses, SAIs, reports, proxy
statements, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Fund or its shares, promptly after the filing of such
document(s) with the SEC or other regulatory authorities.
2.9. The Company will provide to the Fund at least one complete copy of all
registration statements, prospectuses (which shall include an offering
memorandum, if any, if the Contracts issued by the Company or interests therein
are not registered under the 1933 Act), SAIs, reports, solicitations for voting
instructions, sales literature and other promotional materials, applications for
exemptions, requests for no-action letters, and all amendments to any of the
above, that relate to the Contracts or the Account, promptly after the filing of
such document(s) with the SEC or other regulatory authorities. The Company shall
provide to the Fund and the Distributor any complaints received from the
Contract owners pertaining to the Fund or the Portfolios.
2.10. The Fund hereby notifies the Company that it may be appropriate to
include in the prospectus pursuant to which Contracts are offered disclosure
regarding the potential risks of mixed- and shared-funding.
2.11. So long as, and to the extent that the SEC interprets the 1940 Act to
require pass-through voting privileges for variable policyowners, the Company
will provide pass-through voting privileges to owners of policies whose cash
values are invested, through the Accounts, in shares of the Fund. The Fund shall
require all Participating Insurance Companies to calculate voting privileges in
the same manner and the Company shall be responsible for assuring that the
Accounts calculate voting privileges in the manner established by the Fund. With
respect to each Account, the Company will vote shares of the Fund held by the
Account and for which no timely voting instructions for policyowners are
received as well as shares it owns that are held by that Account, in the same
proportion as those shares for which voting instructions are received. Subject
to applicable law, the Company and its agents will in no way recommend or oppose
or interfere with the solicitation of proxies for Fund shares held by Contract
owners without the prior written consent of the Fund, which consent may be
withheld in the Fund's sole discretion.
2.12. The Company shall establish and disclose to Contract owners a
reasonable policy designed to discourage frequent and disruptive purchases and
redemptions of Fund shares by Contract owners and shall cooperate with the Fund
to minimize the impact on the Fund of such transactions.
2.13. The Fund will use reasonable efforts to provide the Company on a
timely basis such information as the Company may reasonably require in
connection with the preparation of disclosure documents and annual and
semi-annual reports pertaining to the contracts.
ARTICLE III.
Representations and Warranties
3.1. The Company represents and warrants that it is an insurance company
duly organized and in good standing under the laws of the State of Missouri and
that it has legally and validly established each Account as a segregated asset
account under such law on the date set forth in Schedule A.
3.2. The Company represents and warrants that it has registered or, prior
to any issuance or sale of the Contracts, will register each Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for the Contracts.
3.3. The Company represents that it has full power and authority under
applicable law and has taken all actions necessary, to enter into this
Agreement. The Company represents and warrants that the Contracts will be
registered under the 1933 Act prior to any issuance or sale of the Contracts;
the Contracts will be issued and sold in compliance in all material respects
with all applicable federal and state laws; and the sale of the Contracts shall
comply in all material respects with state insurance suitability laws and
regulations.
3.4. The Fund represents and warrants that it is duly organized and validly
existing under the laws of the State of Maryland and that it does and will
comply in all material respects with the 1940 Act and rules and regulations
thereunder.
3.5. The Fund represents and warrants that the Fund shares offered and sold
pursuant to this Agreement will be registered under the 1933 Act and the Fund
shall be registered under the 1940 Act prior to any issuance or sale of such
shares. The Fund shall amend its registration statement under the 1933 Act and
the 1940 Act from time to time as required in order to effect the continuous
offering of its shares. The Fund shall make notice or other filings in
accordance with the laws of the various states only if and to the extent deemed
necessary by the Fund.
3.6. The Fund represents that it has full power and authority under
applicable law and has taken all actions necessary, to enter into this
Agreement.
3.7. The Distributor represents and warrants that it is duly organized and
validly existing under the laws of the State of Delaware.
3.8. The Distributor represents that it has full power and authority under
applicable law and has taken all actions necessary, to enter into this
Agreement.
3.9. The Fund will invest its assets in such a manner as to ensure that the
Contracts will be treated as annuity or life insurance contracts, whichever is
appropriate, under the Code and the regulations issued thereunder (or any
successor provisions). Without limiting the scope of the foregoing, each
Portfolio has complied and will continue to comply with Section 817(h) of the
Code and Treasury Regulation 1.817-5, and any Treasury interpretations thereof,
relating to the diversification requirements for variable annuity, endowment, or
life insurance contracts, and any amendments or other modifications or successor
provisions to such Section or Regulations. In the event of a breach of this
Section 3.9 by the Fund, it will (a) take all reasonable steps to notify the
Company of such breach and (b) take all necessary steps to adequately diversify
the Fund so as to achieve compliance within the grace period afforded by
Regulation 1.817-5.
3.10. The Fund represents that it is or will be qualified as a Regulated
Investment Company under Subchapter M of the Code, and that it will use its best
efforts to maintain such qualification (under Subchapter M or any successor or
similar provisions) and that it will notify the Company immediately upon having
a reasonable basis for believing that it has ceased to so qualify or that it
might not so qualify in the future.
3.11. The Fund represents and warrants that all of its officers, employees,
investment advisers and other individuals and entities having access to the
funds of the Portfolios and/or securities of the Portfolios are and at all times
will be covered by a blanket fidelity bond or similar coverage for the benefit
of the Fund in an amount not less than the minimum coverage currently required
by Rule 17g-1 under the 1940 Act.
ARTICLE IV.
Potential Conflicts
4.1. The parties acknowledge that the Fund's shares may be made available
for investment to other Participating Insurance Companies and qualified pension
and retirement plans ("Qualified Plans"). In such event, the Directors will
monitor the Fund for the existence of any material irreconcilable conflict
between the interests of the contract owners of all Participating Insurance
Companies and of Qualified Plans. An irreconcilable material conflict may arise
for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by variable annuity contract and variable life insurance contract owners; or (f)
a decision by an insurer to disregard the voting instructions of contract
owners. The Directors shall promptly inform the Company if they determine that
an irreconcilable material conflict exists and the implications thereof.
4.2. The Company agrees to promptly report any potential or existing
conflicts of which it is aware to the Directors. The Company will assist the
Directors in carrying out their responsibilities under the Exemptive Order by
providing the Directors with all information reasonably necessary for the
Directors to consider any issues raised including, but not limited to,
information as to a decision by the Company to disregard Contact owner voting
instructions.
4.3. If it is determined by a majority of the Directors, or a majority of
its disinterested Directors, that a material irreconcilable conflict exists that
affects the interests of Contract owners, the Company shall, in cooperation with
other Participating Insurance Companies whose contract owners are also affected,
at its expense and to the extent reasonably practicable (as determined by the
Directors) take whatever steps are necessary to remedy or eliminate the
irreconcilable material conflict, which steps could include: (i) withdrawing the
assets allocable to some or all of the Accounts from the Fund or any Portfolio
and reinvesting such assets in a different investment medium, including (but not
limited to) another Portfolio of the Fund, or submitting the question of whether
or not such segregation should be implemented to a vote of all affected Contract
owners and, as appropriate, segregating the assets of any appropriate group
(i.e., variable annuity contract owners or variable life insurance contract
owners that votes in favor of such segregation, or offering to the affected
Contract owners the option of making such a change; and (ii) establishing a new
registered management investment company or managed separate account.
4.4. If a material irreconcilable conflict arises because of a decision by
the Company to disregard Contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the affected Account if
requested by the Fund's Directors, terminate this Agreement with respect to such
Account within six months after the Directors inform the Company in writing that
it has determined that such decision has created a material irreconcilable
conflict; provided, however that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the disinterested Directors. Until the end of
such six month period, the Fund shall continue to accept and implement orders by
the Company for the purchase and redemption of shares of the Fund.
4.5. If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to the Company conflicts with
the majority of other state regulators, then the Company will withdraw the
affected Account's investment in the Fund and, if requested by the Fund's
Directors, terminate this Agreement with respect to such Account within six
months after the Directors inform the Company in writing that it has determined
that such decision has created an irreconcilable material conflict; provided,
however, that such withdrawal and termination shall be limited to the extent
required by the foregoing material irreconcilable conflict as determined by a
majority of the disinterested Directors. Until the end of such six month period,
the Fund shall continue to accept and implement orders by the Company for the
purchase and redemption of shares of the Fund.
4.6. For purposes of Sections 4.3 through 4.6 of this Agreement, a majority
of the disinterested Directors shall determine whether any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Company be required to establish a new funding medium for the Contracts if
an offer to do so has been declined by vote of a majority of Contract owners
materially adversely affected by the irreconcilable material conflict. In the
event that the Directors determine that any proposed action does not adequately
remedy any irreconcilable material conflict, then the Company will withdraw the
Account's investment in the Fund and terminate this Agreement within six (6)
months after the Directors inform the Company in writing of the foregoing
determination; provided, however, that such withdrawal and termination shall be
limited to the extent required by any such material irreconcilable conflict as
determined by a majority of the disinterested Directors.
4.7. The Company and Xxxxxxxx shall at least annually submit to the
Directors such reports, materials or data as the Directors may reasonable
request so that the Directors may fully carry out the duties imposed upon them
by the Exemptive Order, and said reports, materials and data shall be submitted
more frequently if deemed appropriate by the Directors.
4.8. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or
Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940
Act or the rules promulgated thereunder with respect to mixed or shared funding
(as defined in the Exemptive Order) on terms and conditions materially different
from those contained in the Exemptive Order, then the Fund and/or the
Participating Insurance Companies, as appropriate, shall take such steps as may
be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3,
as adopted, to the extent such rules are applicable.
ARTICLE V.
Indemnification
5.1. Indemnification By the Company. The Company agrees to indemnify and
hold harmless the Fund, the Distributor, and each of their Directors, officers,
employees and agents and each person, if any, who controls the Fund or the
Distributor within the meaning of Section 15 of the 1933 Act (collectively, the
"Xxxxxxxx Indemnified Parties" for purposes of this Article V) against any and
all losses, claims, damages, liabilities (including amounts paid in settlement
with the written consent of the Company which consent shall not be unreasonably
withheld) or expenses (including the reasonable costs of investigating or
defending any alleged loss, claim, damage, liability or expense and reasonable
legal counsel fees incurred in connection therewith) (collectively, "Losses"),
to which the Xxxxxxxx Indemnified Parties may become subject under any statute
or regulation, or at common law or otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in a registration
statement or prospectus for the Contracts or in the Contracts themselves or
in any advertising, sales literature or other promotional literature
generated or approved by the Company on behalf of the Contracts or Accounts
(or any amendment or supplement to any of the foregoing) (collectively,
"Company Documents" for the purposes of this Article V), or arise out of or
are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that this indemnity shall not
apply as to any Xxxxxxxx Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon and was
accurately derived from written information furnished to the Company by or
on behalf of the Fund or the Distributor for use in Company Documents or
otherwise for use in connection with the sale of the Contracts or Fund
shares; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in and accurately derived from
Fund Documents as defined in Section 5.2(a)) or wrongful conduct of the
Company or persons under its control, or subject to its authorization or
supervisions with respect to the sale or acquisition of the Contracts or
Fund shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Fund Documents as defined in
Section 5.2(a) or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission was made in
reliance upon and accurately derived from written information furnished to
the Fund or the Distributor by or on behalf of the Company; or
(d) arise out of or result from any failure by the Company to provide
the services or furnish the materials required under the terms of this
Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this Agreement or
arise out of or result from any other material breach of this Agreement by
the Company.
5.2. Indemnification By the Fund. The Fund agrees to indemnify and hold
harmless the Company and each of its directors, officers, employees and agents
and each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act (collectively, the "Company Indemnified Parties" for purposes
of this Article V) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Fund,
which consent shall not be unreasonably withheld) or expenses (including the
reasonable costs of investigating or defending any alleged loss, claim, damage,
liability or expense and reasonable legal counsel fees incurred in connection
therewith) (collectively, "Losses"), to which the Company Indemnified Parties
may become subject under any statute or regulation, or at common law or
otherwise, insofar as such Losses:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in the registration
statement or prospectus for the Fund (or any amendment or supplement
thereto), (collectively, "Fund Documents" for the purposes of this Article
V), or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, provided that this indemnity
shall not apply as to any Company Indemnified Party if such statement or
omission or such alleged statement or omission was made in reliance upon
and was accurately derived from written information furnished to the Fund
or the Distributor by or on behalf of the Company for use in Fund Documents
or otherwise for use in connection with the sale of the Contracts or Fund
shares; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in and accurately derived from
Company Documents) or wrongful conduct of the Fund or persons under its
control, or subject to its authorization or supervision with respect to the
sale or acquisition of the Contracts or Fund shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Company Documents or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statement therein not misleading if such
statement or omission was made in reliance upon and accurately derived from
written information furnished to the Company by or on behalf of the Fund;
or
(d) arise out of or result from any failure by the Fund to provide the
services or furnish the materials required under the terms of this
Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or arise
out of or result from any other material breach of this Agreement by the
Fund.
5.3. Indemnification By the Distributor. The Distributor agrees to
indemnify and hold harmless each of the Company Indemnified Parties against any
and all losses, claims, damages, liabilities (including amounts paid in
settlement with the written consent of the Distributor, which consent shall not
be unreasonably withheld) or expenses (including the reasonable costs of
investigating or defending any alleged loss, claim, damage, liability or expense
and reasonable legal counsel fees incurred in connection therewith)
(collectively, "Losses"), to which the Company Indemnified Parties may become
subject under any statute or regulation, or at common law or otherwise, insofar
as such Losses:
(a) arise out of or are based upon any untrue statements or alleged
untrue statements of any material fact contained in any Fund Documents, or
in any advertising, sales literature or other promotional literature
generated or approved by the Fund or the Distributor on behalf of the Fund
or any of the Portfolios (collectively, "Fund Sales Documents" for the
purposes of this Article V), or arise out of or are based upon the omission
or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
provided that this indemnity shall not apply as to any Company Indemnified
Party if such statement or omission or such alleged statement or omission
was made in reliance upon and was accurately derived from written
information furnished to the Fund or the Distributor by or on behalf of the
Company for use in Fund Sales Documents or otherwise for use in connection
with the sale of the Contracts or Fund shares; or
(b) arise out of or result from statements or representations (other
than statements or representations contained in and accurately derived from
Company Documents) or wrongful conduct of the Distributor or persons under
its control, or subject to its authorization or supervision with respect to
the sale or acquisition of the Contracts or Fund shares; or
(c) arise out of or result from any untrue statement or alleged untrue
statement of a material fact contained in Company Documents or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statement therein not misleading if such
statement or omission was made in reliance upon and accurately derived from
written information furnished to the Company by or on behalf of the
Distributor; or
(d) arise out of or result from any failure by the Distributor to
provide the services or furnish the materials required under the terms of
this Agreement; or
(e) arise out of or result from any material breach of any
representation and/or warranty made by the Distributor in this Agreement or
arise out of or result from any other material breach of this Agreement by
the Distributor.
5.4. Neither the Company, the Fund nor the Distributor shall be liable
under the indemnification provisions of sections 5.1, 5.2 or 5.3, as applicable,
with respect to any Losses incurred or assessed against a Xxxxxxxx Indemnified
Party or a Company Indemnified Party (collectively, the "Indemnified Parties")
that arise from such Indemnified Party's willful misfeasance, bad faith or gross
negligence in the performance of such Indemnified Party's duties or by reason of
such Indemnified Party's reckless disregard of obligations or duties under this
Agreement.
5.5. Neither the Company, the Fund nor the Distributor shall be liable
under the indemnification provisions of sections 5.1, 5.2 or 5.3, as applicable,
with respect to any claim made against any Indemnified Party unless such
Indemnified Party shall have notified the other party in writing within a
reasonable time after the summons, or other first written notification, giving
information of the nature of the claim shall have been served upon or otherwise
received by such Indemnified Party (or after such Indemnified Party shall have
received notice of service upon or other notification to any designated agent),
but failure to notify the party against whom indemnification is sought of any
such claim shall not relieve that party from any liability which it may have to
the Indemnified Party in the absence of sections 5.1, 5.2 and 5.3.
5.6. In case any such action is brought against the Indemnified Parties,
the indemnifying party shall be entitled to participate, at its own expense, in
the defense of such action. The indemnifying party also shall be entitled to
assume the defense thereof, with counsel reasonably satisfactory to the party
named in the action. After notice from the indemnifying party to the Indemnified
Party of an election to assume such defense, the Indemnified Party shall bear
the fees and expenses of any additional counsel retained by it, and the
indemnifying party will not be liable to the Indemnified Party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
ARTICLE VI.
Termination
6.1 This Agreement may be terminated by either party:
(a) for any reason by six months' advance written notice delivered to the
other party; or
(b) by the Company by written notice to the Fund based upon the Company's
determination that shares of the Fund are not reasonably available to meet the
requirements of the Contracts; or
(c) by the Company by written notice to the Fund in the event shares of any
of the Portfolios are not registered, issued or sold in accordance with
applicable state and/or federal law or such law precludes the use of such shares
as the underlying investment media of the Contracts issued or to be issued by
the Company; or
(d) by the Fund in the event that formal administrative proceedings are
instituted against the Company by the NASD, the SEC, the Insurance Commissioner
or like official of any state or any other regulatory body regarding the
Company's duties under this Agreement or related to the sale of the Contracts,
the operation of any Account, or the purchase of the Fund's shares; provided,
however, that the Fund determines in its sole judgment exercised in good faith,
that any such administrative proceedings will have a material adverse effect
upon the ability of the Company to perform its obligations under this Agreement;
or
(e) by the Company in the event that formal administrative proceedings are
instituted against the Fund by the NASD, the SEC, or any state securities or
insurance department or any other regulatory body; provided, however, that the
Company determines in its sole judgment exercised in good faith, that any such
administrative proceedings will have a material adverse effect upon the ability
of the Fund to perform its obligations under this Agreement; or
(f) by the Company by written notice to the Fund with respect to any
Portfolio in the event that such Portfolio ceases to qualify as a Regulated
Investment Company under Subchapter M or fails to comply with the Section 817(h)
diversification requirements specified in Sections 3.9 and 3.10 hereof, or if
the Company reasonably believes that such Portfolio may fail to so qualify or
comply; or
(g) by the Fund by written notice to the Company, if the Fund shall
determine, in its sole judgment exercised in good faith, that the Company has
suffered a material adverse change in its business, operations, financial
condition, or prospects since the date of this Agreement or is the subject of
material adverse publicity; or
(h) by the Company by written notice to the Fund, if the Company shall
determine, in its sole judgment exercised in good faith, that the Fund has
suffered a material adverse change in its business, operations, financial
condition or prospects since the date of this Agreement or is the subject of
material adverse publicity; or
(i) by the Company upon any substitution of the shares of another
investment company or series thereof for shares of a Portfolio of the Fund in
accordance with the terms of the Contracts, provided that the Company has given
at least 45 days prior written notice to the Fund of the date of substitution;
or
(j) by either party in the event that the Fund's Board of Directors
determines that a material irreconcilable conflict exists as provided in Article
IV; or
(k) at the option of either party upon another party's failure to cure a
material breach of any provision of this Agreement within 30 days after written
notice thereof.
6.2. Notwithstanding any termination of this Agreement pursuant to Section
6.1 (other than a termination pursuant to Section 6.1(j)), the Company, at its
option, may require the Fund to continue to make available additional shares of
the Fund (or any Portfolio) pursuant to the terms and conditions of this
Agreement for all Contracts in effect on the effective date of termination of
this Agreement (the "Initial Termination Date"), provided that the Company
continues to pay the costs it has agreed to pay in Section 2.3. Specifically,
without limitation, if the Company so elects to require the Fund to make
additional shares available, the owners of such Contracts or the Company,
whichever shall have legal authority to do so, shall be permitted to reallocate
investments in the Fund or the relevant Portfolio, redeem investments, and/or
invest upon the making of additional purchase payments under the Existing
Contracts.
6.3. In the event of a termination of this Agreement pursuant to this
Section 6, the Company shall promptly notify the Fund whether the Fund will be
required to continue to make shares available after such termination; if the
Fund will continue to make shares so available, the provisions of this Agreement
shall remain in effect except for Section 6.1 hereof, and thereafter either
party may terminate the Agreement (the "Final Termination"), as so continued
pursuant to Section 6.2 and this Section 6.3, upon prior written notice to the
other party, such notice to be for a period that is reasonable under the
circumstances but, if given by the Fund, need not be greater than six months.
6.4. The Company and the Fund agree to cooperate in respect of the measures
that are necessary or appropriate to effect the Final Termination of this
Agreement, and will give reasonable assistance to one another in that regard,
including steps necessary or appropriate to ensure that an Account owns no
shares of the Fund after the Final Termination of this Agreement.
6.5. The provisions of Article V shall survive the termination of this
Agreement, and the provisions of Article IV and Section 2.11 (relating to
pass-through voting privileges of contract owners) shall survive the termination
of this Agreement as long as shares of the Fund are held on behalf of the
Contract owners in accordance with section 6.2.
ARTICLE VII.
Notices
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel, Law & Regulation
If to the Company:
Kansas City Life Insurance Company
0000 Xxxxxxxx
Xxxxxx Xxxx, XX 00000
Attention: C. Xxxx Xxxxxxxxx
General Counsel
ARTICLE VIII.
Miscellaneous
8.1. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
8.2. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
8.3. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby.
8.4. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of State of New York. Each
party hereto unconditionally submits to the jurisdiction of any New York state
court or federal court of the United States sitting in New York City, and any
appellate court thereof, in any action or proceeding arising out of or relating
to this Agreement.
8.5. The parties to this Agreement acknowledge and agree that all
liabilities of the Fund arising, directly or indirectly, under this Agreement,
of any and every nature whatsoever, shall be satisfied solely out of the assets
of the Fund and that no Director, officer, agent or holder of shares of
beneficial interest of the Fund shall be personally liable for any such
liabilities.
8.6. Each party shall cooperate with each other party and all appropriate
governmental authorities (including without limitation the SEC, the National
Association of Securities Dealers and state insurance regulators) and shall
permit such authorities reasonable access to its books and records in connection
with any investigation or inquiry relating to this Agreement or the transactions
contemplated hereby.
8.7. The rights, remedies and obligations contained in this Agreement are
cumulative and are in addition to any and all rights, remedies and obligations,
at law or in equity, which the parties hereto are entitled to under state and
federal laws.
8.8. The parties to this Agreement acknowledge and agree that this
Agreement shall not be exclusive in any respect.
8.9. Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the prior written approval of the other party.
8.10. No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties.
8.11. This Agreement constitutes the entire contract between the parties
relating to the subject matter hereof and supersedes any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof.
8.12. The Fund shall treat as confidential (and shall require its
affiliates, contractors and designees to treat as confidential) the names and
addresses of the Contract Owners. The parties shall treat as confidential such
other information reasonably identified in writing as confidential or
proprietary by the other party, and except as permitted by this Agreement or
required by legal process or regulatory authorities, shall not disclose,
disseminate or utilize (nor allow anyone else to utilize) such names and
addresses and other confidential or proprietary information until such time as
they may come into the public domain, without the express written consent of the
affected party.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Participation Agreement as of the date and year first above
written.
Xxxxxxxx Portfolios, Inc.
By: ________________________
Name: ______________________
Title: _____________________
Xxxxxxxx Advisors, Inc.
By: ________________________
Name: ______________________
Title: _____________________
KANSAS CITY LIFE INSURANCE COMPANY
By: ________________________
Name: ______________________
Title: _____________________
Schedule A
Separate Accounts and Associated Contracts
Names of Separate Account and Contracts Funded
Date Established by Board of Directors By Separate Account
Kansas City Life Variable Life Separate Account Kansas City Life Variable Life
Est. April 24, 1995 Form Series J146
SEC Registration Number 033-95354
Kansas City Life
Survivorship VUL
Kansas City Life Variable Annuity Separate Account Form Series J150
Est. January 23, 1995
SEC Registration Number 033-89984 Century II Variable Annuity
Form Series J147
Schedule B
Portfolios and Class of Shares
Portfolio Class of Shares
Xxxxxxxx Capital Portfolio Class 2
Xxxxxxxx Communications Class 2
and Information Portfolio
