Exhibit 10.16
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United Investors Life Insurance Company
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
VARIABLE ACCOUNTS
Distribution Contract
TMK/United Funds, Inc. (hereinafter TMK) is a Maryland corporation registered
with the Securities and Exchange Commission under the Investment Company Act of
1940 (the "Act") as a management class, open-end, diversified investment
company. It offers its shares exclusively to insurance companies as the
investment vehicles for variable life and variable annuity policies. TMK has
authorized eleven classes of shares each of which is a separate fund (Portfolio)
being: Money Market Portfolio, Bond Portfolio, High Income Portfolio, Growth
Portfolio, Income Portfolio, International Portfolio, Small Cap Portfolio,
Balanced Portfolio, Limited-Term Bond Portfolio, Asset Strategy Portfolio and
Science and Technology Portfolio.
You have advised TMK that you are sponsoring two variable accounts, United
Investors Life Variable Account and United Investors Annuity Variable Account,
each of which is an investment company organized and registered with the
Securities and Exchange Commission as a unit investment trust under the Act
(hereinafter collectively, the Trust). You advised that you wish to arrange for
the acquisition of TMK's shares as the exclusive funding medium for each of the
Trusts. TMK agrees to make the shares of its eleven Portfolios available to you
for said purposes subject to the following terms and conditions:
1. TMK will sell its shares directly to you and on request redeem its shares at
the time and prices specified in its then current prospectus and statement of
additional information (SAI) for the purposes of funding the investment
divisions of the two Trusts as is more particularly set forth in the Trusts'
then current prospectuses.
2. (a) Payment for shares in investable funds shall be due on issuance of
shares.
(b) TMK will make payment on redemption of its shares as stated in its
prospectus and SAI.
(c) Purchases and redemptions of shares of the same Portfolio on the same
day may be netted so as to result in a single purchase or single redemption
for the day.
(d) Shares of one Portfolio may be exchanged for shares of another
Portfolio by redemption of shares of a particular Portfolio and the immediate
purchase of shares of the other Portfolio. On your request, TMK will effect
such exchanges by transfer of monies from one Portfolio to the other as
appropriate.
(e) All dividends and capital gains distributions shall be reinvested in
additional shares.
3. TMK will furnish you with adequate number of copies of its annual and
semiannual reports to shareholders and TMK's proxy material for shareholder
meetings as you may request for furnishing to the policyowners and will
reimburse you for your expenses in mailing the reports and proxy materials to
the policyowners including return postage with respect to the voting of proxy
cards. With TMK's prior consent, you may include additional items in the
mailing of TMK's reports to shareholders provided any extra costs are paid by
you.
4. You shall vote the shares held by the policyholders as set forth in the
Trust's prospectuses and any SAI's.
5. TMK will furnish you with a copy of its current prospectus and XXX and all
amendments thereto. You shall print and reproduce at your expense such
copies thereof as you may desire with respect to the distribution of
interests in the Trusts. You may use TMK's shareholder reports in the
distribution process. Copies of the reports will be furnished for such
purpose as you request at your expense.
6. The foregoing, notwithstanding, TMK shall not engage directly or indirectly
in financing any activity which is primarily intended to result in the sale
of its shares issued by it.
7. Indemnification
A. TMK agrees with you for your benefit and each person, if any, who
controls you within the meaning of Section 15 of the Securities Act of 1933
(the "Securities Act") and each and all and any of them, to indemnify and
hold you harmless and any such controlling person from and against any and
all losses, claims, damages or liabilities, joint or several, to which you,
they or any of them may become subject under the Securities Act, under any
other statute, at common law or otherwise, and to reimburse you and such
controlling persons, if any, for any legal or other expenses (including the
cost of any investigation and preparation) reasonably incurred by you, them
or any of them in connection with any litigation whether or not resulting
in any liability, insofar as such losses, claims, damages, liabilities or
litigation arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any registration statement
or any prospectus or any amendment thereof or supplement thereto or arise
out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated
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therein or necessary to make the statements therein not misleading;
provided, however, that this indemnity agreement shall not apply to amounts
paid in settlement of any such litigation if such settlement is effected
without the consent of TMK or to any such losses, claims, damages,
liabilities or litigation arising out of or based upon any untrue statement
or alleged untrue statement of a material fact contained in any
registration statement or prospectus or any amendment thereof or supplement
thereto, or arising out of or based upon 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, which statement or omission
was made in reliance upon information furnished in writing to TMK by you
for inclusion in any registration statement or any prospectus or any
amendment thereof or supplement thereto. You and each such controlling
person shall promptly, after the complaint shall have been served upon you
or such controlling person in any litigation against you or such
controlling person in respect of which indemnity may be sought from TMK on
account of its agreement contained in this paragraph, notify TMK in writing
of the commencement thereof. Your omission or such controlling person so to
notify TMK of any such litigation shall relieve TMK from any liability
which it may have to you or such controlling person on account of the
indemnity agreement contained in this paragraph but shall not relieve TMK
from any liability which it may have to you or controlling person otherwise
than on account of the indemnity agreement contained in this paragraph. In
case any such litigation shall be brought against you or any such
controlling person and you or such controlling person shall notify TMK of
the commencement thereof, TMK shall be entitled to participate in (and, to
the extent that it shall wish, to direct) the defense thereof at its own
expense but such defense shall be conducted by counsel of good standing and
satisfactory to you or such controlling person or persons, defendant or
defendants in the litigation. The indemnity agreement of TMK contained in
this paragraph shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of you or any such
controlling person and shall survive any delivery of shares of TMK. TMK
agrees to notify you promptly of the commencement of any litigation or
proceeding against it or any of its officers or directors of which it may
be advised in connection with the issue and sale of its shares.
B. Anything herein to the contrary notwithstanding TMK's agreement in the
foregoing, insofar as it constitutes a basis for reimbursement by TMK for
liabilities (other than payment by TMK of expenses incurred or paid in the
successful defense of any action, suit or proceeding) arising under the
Securities Act, shall not extend to the extent of any interest therein of
any person who is deemed to be an underwriter or a partner or controlling
person of an underwriter within the meaning of Section 15 of the Securities
Act or who, at the date of this Agreement, is a director of TMK, except to
the extent that an interest of such character shall have been determined by
a court of appropriate jurisdiction the question of whether or not such
interest is against public policy as expressed in the Securities Act.
C. You agree to indemnify and hold harmless TMK and its directors and such
officers as shall have signed any registration statement from and against
any and all losses, claims, damages or liabilities, joint or several, to
which TMK or such directors or officers may become subject under the
Securities Act, under any other statute, at common law or otherwise, and
will reimburse TMK or such directors or officers for any legal or other
expenses (including the cost of any investigation and preparation)
reasonably incurred by it or them or any of them in connection with any
litigation, damages, liabilities or litigation arise out of, or are based
upon, any untrue statement or alleged omission to state therein a material
fact required to be stated therein or necessary to
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make the statements therein not misleading, which statement or omission was
made in reliance upon information furnished in writing to TMK by you for
inclusion in any registration statement or any prospectus, or any amendment
thereof or supplement thereto, or which statement was made in, or the
alleged omission was from, any advertising or sales literature (including
any reports to shareholders used as such) which relate to TMK.
You shall not be liable for amounts paid in settlement of any such
litigation if such settlement was effected without its consent. TMK and its
directors and such officers, defendant or defendants, in any such
litigation shall, promptly after the complaint shall have been served upon
TMK or any such director or officer in any litigation against TMK or any
such director or officer in respect of which indemnity may be sought from
TMK on account of its agreement contained in this paragraph, notify you in
writing of the commencement thereof. The omission of TMK or such director
or officer so to notify you of any such litigation shall relieve you from
any liability which it may have to TMK or such director or officer on
account of the indemnity agreement contained in this paragraph, but shall
not relieve you from any liability which it may have to TMK or such
director or officer otherwise than on account of the indemnity agreement
contained in this paragraph. In case any such litigation shall be brought
against TMK or any such officer or director and notice of the commencement
thereof shall have been given to you, you shall be entitled to participate
in (and, to the extent that it shall wish, to direct) the defense thereof
at its own expense, but such defense shall be conducted by counsel of good
standing and satisfactory to TMK. The indemnity agreement of TMK contained
in this paragraph shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of TMK and shall
survive any delivery of shares of TMK. You agree to notify TMK promptly of
the commencement of any litigation or proceeding against you or any of your
officers or directors or against any such controlling person of which you
may be advised, in connection with the issue and sale of TMK.
D. Notwithstanding any provision contained in this Agreement, no party
hereto and no person or persons in control of any party hereto shall be
protected against any liability to TMK or its security holders, including
beneficial owners or its security to which they would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of their duties or by reason of their reckless disregard of
their obligations and duties under this Agreement.
8. TMK will make shares available and otherwise carry out the terms of this
Agreement until the Trusts are terminated; provided, however, it will have
no obligation to issuance of shares other than for purposes of exchange
among Portfolios and reinvestment of dividends and distribution, should the
registration of the Trust securities under the Securities Act of 1933
terminate. TMK agrees to use its best efforts to keep an adequate number of
shares at all times authorized, but it will not be required to issue its
shares if all TMK shares be issued and outstanding. TMK will be relieved of
responsibility hereunder for issuing shares by reason of any governmental
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rule, regulation or order or order of court of any competent jurisdiction
or when for reasons beyond its control, it is unable to issue such shares.
If the foregoing is in accordance with your understanding of our Agreement,
please execute your acceptance hereof on the duplicates hereto enclosed for
that purpose and return one copy to TMK/United Funds, Inc., whereupon this
shall become a binding Agreement between you and TMK/United Funds, Inc.
TMK/United Funds, Inc.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Vice President
Accepted this 4th day of April, 1997.
United Investors Life Insurance Company
By: /s/ Xxxxx X/ Sedgwick
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Xxxxx X. Xxxxxxxx, President
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