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Exhibit (8)(f)
PARTICIPATION AGREEMENT
Provident Mutual Life Insurance Company and Providentmutual Life and Annuity
Company of America (individually and collectively, the "Insurance Company"), Xxx
Xxx Investment Trust (the "Trust") and the Trust's investment adviser, Xxx Xxx
Securities Corporation ("Underwriter") hereby agree that shares of the series of
the Trust as listed on Exhibit A, as it may, from time to time, be amended (the
"Portfolios"), shall be made available to serve as an underlying investment
medium for Individual Variable Life Insurance Policies (the "Contracts") to be
offered by Insurance Company subject to the following provisions:
1. Insurance Company represents that it has established the Provident
Mutual Variable Growth Separate Account, Provident Mutual Variable
Money Market Separate Account, Provident Mutual Variable Bond Separate
Account, Provident Mutual Variable Managed Separate Account, Provident
Mutual Variable Zero Coupon Bond Separate Account, Provident Mutual
Variable Aggressive Growth Separate Account, Provident Mutual Variable
International Separate Account, Provident Mutual Variable Separate
Account, and the Providentmutual Variable Life Separate Account,
separate accounts under Pennsylvania law, and has registered them as
unit investment trusts under the Investment Company Act of 1940 (the
"1940 Act"). The Provident Mutual Variable Separate Account and
Providentmutual Variable Life Separate Account (the "Variable
Accounts") will serve as investment vehicles for the Contracts. The
Contracts provide for the allocation of net amounts received by
Insurance Company to separate series of the Variable Accounts for
investment in the shares of specified investment companies selected
among those companies available through the Variable Accounts to act as
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underlying investment media. Selection of a particular investment
company is made by the Contract owner who may change such selection
from time to time in accordance with the terms of the applicable
Contract.
2. Insurance Company represents and warrants that the Contracts are or
will be registered under the 1933 Act; that the Contracts will be
issued and sold in compliance in all material respects with all
applicable federal and state laws. Insurance Company further represents
and warrants that it is an insurance company duly organized and in good
standing under applicable law.
3. The Trust represents and warrants that Portfolio shares sold pursuant
to this Agreement shall be registered under the 1933 Act, duly
authorized for issuance and sold in compliance with the laws of the
Commonwealth of Pennsylvania and all applicable federal and state
securities laws including without limitation the Securities Act of 1933
(the "1933 Act"), and the 1940 Act and that the Trust is and shall
remain registered under the 1940 Act. The Trust shall amend the
registration statement for its shares 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 Trust shall register and qualify the shares
for sale in accordance with the laws of the various states if and to
the extent required by applicable law. Insurance Company will notify
the Trust if its shares are required to be registered for sale in
Pennsylvania.
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4. The Trust represents and warrants that it is lawfully organized and
validly existing under the laws of the State of Massachusetts and that
it does and will comply in all material respects with the 1940 Act.
5. Underwriter represents and warrants that it is and shall remain duly
registered under all applicable federal and state securities laws and
that it shall perform its obligations for the Trust in compliance in
all material respects with the laws of the State of Massachusetts and
any applicable state and federal securities laws.
6. The Trust and Underwriter represent and warrant that all of their
directors, officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities of the
Trust are and shall continue to be at all times covered by a blanket
fidelity bond or similar coverage for the benefit of the Trust in an
amount not less than the minimal coverage as required currently by
Section 17g-(l) of the 1940 Act or related provisions as may be
promulgated from time to time. The aforesaid bond shall include
coverage for larceny and embezzlement and shall be issued by a
reputable bonding company.
7. The Parties hereto acknowledge that the arrangement contemplated by
this Agreement is not exclusive. The Trust and Underwriter agree that
shares of the Trust will be sold only to insurance companies (and their
separate accounts) which have entered into participation agreements
with the Trust and the Underwriter. No shares of any Designated
Portfolios will be sold to the general public. The Trust and the
Underwriter
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agree not to sell Fund shares to any insurance company or separate
account unless an agreement containing provisions substantially the
same as Sections 10, 20, and 26 of this Agreement is in effect to
govern such sales. The cash value of the Contracts may be invested in
other investment companies.
8. Insurance Company agrees to make every reasonable effort to market its
Contracts. It will use its best efforts to give equal emphasis and
promotion to shares of the Trust as is given to other underlying
investments of the Variable Accounts. In marketing its Contracts,
Insurance Company will comply with all applicable state or Federal
laws.
9. The Trust or Underwriter will provide closing net asset value, dividend
and capital gain information at the close of trading each business day,
and, in any event, by 6:30 p.m. Eastern Time, to Insurance Company.
Insurance Company will use this data to calculate unit values, which
will in turn be used to process that same business day's Variable
Accounts unit value. The Variable Accounts processing will be done the
same evening, and orders will be placed the morning of the following
business day. Orders will be sent directly to the Trust or its
specified agent, and payment for purchase will be wired to a custodial
account designated by the Trust or Underwriter, so as to coincide with
the order for Trust shares. The Trust agrees to sell to Insurance
Company those shares of the Portfolios which the Variable Accounts
order and agrees to make shares of the Portfolios available for
purchase at the applicable net asset value pursuant to the rules of the
Securities and Exchange Commission (the "SEC"). For the purpose of this
section, Insurance Company shall be the designee of the Trust for
receipt of such orders and
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receipt by such designee shall constitute receipt by the Trust provided
that the Trust receives notice of such orders by 10 a.m. and receipt by
such designee shall constitute receipt by the Trust. In the event that
the Fund is unable to meet the 6:30 p.m. time stated herein, it shall
provide additional time for the Company to place orders for the
purchase and redemption of shares of each Designated Portfolio for the
Account. Such additional time shall be equal to the additional time
which the Fund takes to make the net asset value available to the
Company. If the Fund provides incorrect share net asset value
information, the Company shall be entitled to an adjustment to the
number of shares purchased or redeemed to reflect the correct net asset
value per share. Any error in the calculation or reporting of net asset
value per share, dividend or capital gains information greater than or
equal to $.01 per share shall be reported immediately upon discovery to
the Company. Any error of a lesser amount shall be corrected in the
next Business Day's net asset value per share. "Business Day" shall
mean any day on which the New York Stock Exchange is open for trading
and on which the Trust calculates the net asset value pursuant to the
rules of the SEC. The Trust will execute the orders at the net asset
value as determined as of the close of trading on the prior day.
Dividends and capital gains distributions shall be reinvested in
additional shares at the ex-date net asset value.
10. The Trust agrees to redeem for cash (subject to its rights under Rules
18f-1 and 22c-1, provided that each Contract owner shall be considered
a shareholder for purposes of Rule 18f-1), on Insurance Company's
request, any full or fractional shares of the Portfolios, executing
such requests on a daily basis at the net asset value next computed
after receipt by the Trust or its designee of the request for
redemption. For purposes of
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this section, insurance Company shall be the designee of the Trust for
receipt of requests for redemption and receipt by such designee shall
constitute receipt by the Trust.
11. Insurance Company shall pay for Portfolio shares by 11 a.m. Eastern
time on the next Business Day after an order to purchase Trust shares
is made in accordance with the provisions of Section 9 hereof. Payment
shall be in federal funds transmitted by wire and/or by a credit for
any shares redeemed the same day as the purchase.
12. The Trust shall pay and transmit the proceeds of redemptions of
Portfolio shares by 11 a.m. Eastern time on the next Business Day after
a redemption order is received in accordance with Section 10 hereof.
Payment shall be in federal funds transmitted by wire and/or a credit
for any shares purchased the same day as the redemption.
13. All expenses incident to the performance by the Trust under this
Agreement shall be paid by the Trust. The Trust shall pay the cost of
registration of Trust shares with the SEC. The Trust shall distribute,
to the Variable Accounts, proxy material, periodic Trust reports to
shareholders and other material the Trust may require to be sent to
Contract owners. The Trust shall pay the cost of qualifying Trust
shares in states where required. The Trust, at its or the Underwriter's
expense, will provide Insurance Company with as many copies of the
Trust's current prospectus as Insurance Company may reasonably request,
and other material the Trust may require to be sent to Contract owners.
The Trust will provide Insurance Company with a copy of the Statement
of Additional Information suitable for duplication.
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Insurance Company shall bear the expenses of routine annual
distribution of the Trust's prospectus to Contract owners and of
distributing the Trust's proxy materials and reports to such Contract
owners.
14. Insurance Company and its agents shall make no representations
concerning the Trust or Trust shares except those contained in the
then-current registration statement, prospectus, or statements of
additional information of the Trust, as such registration, statement,
prospectus or statement of additional information may be amended or
supplemented from time to time, or in current printed sales literature
or promotional material approved by the Trust or its designee, except
with the permission of the Trust.
15. The Trust and Underwriter shall not give any information or make any
representations on behalf of Insurance Company or concerning Insurance
Company, the Variable Accounts, or the Contracts other than the
information or representations contained in a registration statement or
prospectus or statement of additional information for the Contracts, as
such registration statement and prospectus and statement of additional
information may be amended or supplemented from time to time, or in
reports for the Variable Accounts, or in current printed sales
literature or other promotional material approved by Insurance Company
or its designee, except with the permission of Insurance Company.
16. Administrative services to Contract owners shall be the responsibility
of Insurance Company, and shall not be the responsibility of the Trust
or Underwriter. The Trust and
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Underwriter recognize that Insurance Company will be sole shareholder
of Trust shares issued pursuant to the Contracts. Such arrangement will
result in multiple share orders.
17. The Trust represents and warrants that the Trust shall comply at all
times with Sections 817(h) and 851 of the Internal Revenue Code of
1986, as amended, if applicable, and the regulations thereunder, and
the applicable provisions of the 1940 Act relating to the
diversification requirements for variable annuity, endowment, and life
insurance contracts. Upon request, the Trust shall provide Insurance
Company with a letter from the appropriate Trust officer certifying the
Trust's compliance with the diversification requirements and
qualification as a regulated investment company.
18. The Trust represents and warrants that the Trust and each Portfolio is
currently qualified as a Regulated Investment Company under Subchapter
M of the Code, and that it will maintain such qualification (under
Subchapter M or any successor or similar provisions) as long as this
Agreement is in effect.
19. The Trust or Underwriter will notify Insurance Company promptly upon
having a reasonable basis for believing that the Trust or any Portfolio
has ceased to comply with the aforesaid Section 817(h) diversification
or Subchapter M qualification requirements or might not so comply in
the future.
20. Insurance Company agrees to inform the Board of Trustees of the Trust
of the existence of or any potential for, any material irreconcilable
conflict of interest between the
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interests of the Contract owners of the Variable Accounts investing in
the Trust and/or any other separate account of any other insurance
company investing in the Trust.
A material irreconcilable conflict may arise for a variety of reasons,
including:
(a) an action by any state insurance or other regulatory authority;
(b) a change in applicable federal or state insurance, tax or securities
laws or regulations, or a public ruling, private letter ruling, 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 Contract owners and
variable annuity insurance contract owners or by variable annuity or
life insurance contract owners of different life insurance companies
utilizing the Trust; or
(f) a decision by Insurance Company to disregard the voting instructions of
Contract owners.
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Insurance Company will be responsible for assisting the Board of
Trustees of the Trust in carrying out its responsibilities by providing
the Board with all information which to Insurance Company's knowledge
is reasonably necessary for the Board to consider any issue raised,
including information as to a decision by Insurance Company to
disregard voting instruction of Contract owners.
The Board of Trustees of the Trust will monitor the Trust for existence
of any material irreconcilable conflict between the interests of the
Contract owners of all separate accounts investing in the Trust.
It is agreed that if it is determined by a majority of the members of
the Board of Trustees of the Trust or a majority of its disinterested
Trustees that a material irreconcilable conflict exists affecting
Insurance Company, Insurance Company shall, at its own expense, take
whatever steps are necessary to remedy or eliminate the irreconcilable
material conflict, which steps may include, but are not limited to:
(a) withdrawing the assets allocable to some or all of the
separate accounts from the Trust or any Portfolio and
reinvesting such assets in a different investment medium,
including another Portfolio of the Trust or submitting the
questions of whether such segregation should be implemented to
a vote of all affected Contract owners and, as appropriate,
segregating the assets of any particular group (i.e., annuity
Contract owners, life insurance Contract owners or qualified
Contract
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owners) that votes in favor of such segregation, or offering
to the affected Contract owners the option of making such a
change; or
(b) establishing a new registered management investment company or
managed separate account.
For purposes hereof, a majority of the disinterested members of the
Board of Trustees of the Trust shall determine whether any proposed
action adequately remedies any material irreconcilable conflict. In no
event will the Trust be required to establish a new funding medium for
any Contracts. Insurance Company shall not be required by the terms
hereof to establish a new funding medium for any Contracts if an offer
to do so has been declined by vote of a majority of affected Contract
owners. In the event that the Board determines that any proposed action
does not adequately remedy any irreconcilable material conflict, then
Insurance Company will withdraw the Variable Accounts' investment in
the Trust and terminate this Agreement within six (6) months, or such
lesser period of time as the SEC may require, after the Board informs
Insurance 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 members of the Board.
The Trust will undertake to promptly make known to Insurance Company
the Board of Trustees' determination of the existence of a material
irreconcilable conflict and its implications.
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If a material irreconcilable conflict arises because of insurance
Company's decision to disregard Contract owner voting instructions and
that decision represents a minority position or would preclude a
majority vote, Insurance Company may be required, at the Trust's
election, to withdraw the Variable Accounts' investment in the Trust;
provided, however, that such withdrawal shall be limited to the extent
required by the foregoing material irreconcilable conflict as
determined by a majority of the disinterested members of the Board. Any
such withdrawal and termination must take place within six (6) months
after the Trust gives written notice that this provision is being
implemented, and until the end of that six month period the Trust shall
continue to accept and implement orders by Insurance Company for the
purchase (and redemption) of shares of the Trust. If investment in all
Portfolios is withdrawn, then this Agreement will terminate. No charge
or penalty will be imposed against the Variable Accounts as a result of
such withdrawal Insurance Company agrees that any remedial action taken
by it in resolving any material conflicts of interest will be carried
out with a view only to the interests of Contract owners.
If a material irreconcilable conflict arises because a particular state
insurance regulator's decision applicable to Insurance Company
conflicts with the majority of other state regulators, then Insurance
Company will withdraw the Variable Accounts' investment in the Trust
and terminate this Agreement within six months after the Board informs
Insurance Company in writing that it has determined that such decision
has created an irreconcilable material conflict; provided, however,
that such withdrawal and termination
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shall be limited to the extent required by the foregoing material
irreconcilable conflict as determined by a majority of the
disinterested members of the Board. Until the end of the foregoing six
month period, the Trust shall continue to accept and implement orders
by Insurance Company for the purchase (and redemption) of shares of the
Trust.
21. This Agreement shall terminate as to the sale and issuance of new Contracts:
(a) at the option of Insurance Company, Underwriter or the Trust upon six
months' advance written notice to the other parties;
(b) at the option of Insurance Company, if Trust shares are not available
for any reason to meet the requirements of Contracts as determined by
Insurance Company. Reasonable advance notice of election to terminate
shall be furnished by Insurance Company;
(c) at the option of Insurance Company, Underwriter or the Trust, upon
institution of formal proceedings against the Broker-Dealer or
Broker-Dealers marketing the Contracts, the Variable Accounts,
Insurance Company or the Trust by the National Association of
Securities Dealers ("NASD"), the SEC or any other regulatory body;
(d) upon a decision by Insurance Company, in accordance with regulations of
the SEC, to substitute such Trust shares with the shares of another
investment
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company for Contracts for which the Trust shares have been selected to
serve as the underlying investment medium. Insurance Company will give
60 days' written notice to the Trust and Underwriter of any proposed
vote to replace Trust shares;
(e) upon assignment of this Agreement unless made with the written consent
of each other party;
(f) in the event Trust shares are not registered, issued or sold in
conformance with Federal law or such law precludes the use of Trust
shares as an underlying investment medium of Contracts issued or to be
issued by Insurance Company. Prompt notice shall be given by either
party to the other in the event the conditions of this provision occur.
(g) at the option of Insurance Company by written notice to the Trust and
Underwriter with respect to any Portfolio in the event that such
Portfolio fails to meet the Section 817(h) diversification requirements
or Subchapter M qualifications specified in Article VI hereof or if
Insurance Company reasonably believes that the Portfolio may fail to
meet either of those requirements;
(h) at the option of Insurance Company by written notice to the Trust and
Underwriter, if Insurance Company shall determine, in its sole judgment
exercised in good faith, that the Trust or Underwriter has suffered a
material adverse change
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in its business, operations, financial condition or prospects since the
date of this Agreement or is the subject of material adverse publicity;
or
(i) at the option of the Trust or Underwriter by written notice to
Insurance Company, if the Trust or Underwriter shall determine, in its
sole judgment exercised in good faith, that the Trust or Underwriter
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.
22. Termination as the result of any cause listed in the preceding paragraph
shall not affect the Trust's obligation to furnish Trust shares for
Contracts then in force for which the shares of the Trust serve or may
serve as an underlying medium, unless such further sale of Trust shares is
proscribed by law or the SEC or other regulatory body, or deemed by the
Trust's Board of Trustees, acting in good faith, not to be in the best
interests of the Trust or any Portfolio thereof, upon 90 days written
notice to Insurance Company. Specifically, without limitation, the owners
of Contracts then in force shall be permitted to reallocate investments in
the Trust, redeem investments in the Trust and/or invest in the Trust upon
the making of additional purchase payments under the Contracts then in
force. In addition, with respect to the Contracts in force upon
termination pursuant to the preceding paragraph, the provisions of
Sections 9, 10, 11, 12, 13, 17, 18, and 19 shall survive and not be
affected by termination of this Agreement. The parties agree that this
section shall not apply to any terminations under Section 20 and the
effect of such Section 20 terminations shall be governed by Section 20 of
this Agreement.
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Notwithstanding any termination of this Agreement, each party's obligation
under Section 27 to indemnify other parties shall survive and not be
affected by any termination of this Agreement. A successor by law of the
parties of this Agreement shall be entitled to the benefits of the
indemnification contained in Section 27.
23. Each notice required by this Agreement shall be given by wire and
confirmed in writing to:
Provident Mutual Life Insurance Company
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Chief Executive Officer
Providentmutual Life and Annuity Company of America
000 Xxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: President
Van Eck Investment Trust
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: President
Xxx Xxx Associates Corporation
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: President, with copy to General Counsel
24. Advertising and sales literature with respect to the Trust prepared by
Insurance Company or its agents for use in marketing its Contracts will be
submitted to the Trust for review before such material is submitted to the
SEC or NASD for review.
25. The Trust or Underwriter shall furnish, or shall cause to be furnished, to
Insurance Company, each piece of advertising and sales literature in which
Insurance Company
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and/or its separate account(s) is named, for review before such material
is submitted to the SEC or NASD for review.
26. Insurance Company (a) will distribute all proxy material furnished by the
Trust, (b) will. solicit voting instructions from Contract owners, and (c)
will vote Trust shares in accordance with instructions received from the
Contract owners of such Trust shares, and (d) will vote the Trust shares
for which no instructions have been received in the same proportion as
Trust shares for which said instruction have been received from Contract
owners, so long as and to the extent that the SEC continues to interpret
the 1940 Act to require pass-through voting privileges for variable
contract owners. Insurance Company reserves the right to vote Trust shares
held in any segregated asset account in its own right, to the extent
permitted by law. Insurance Company and its agents will in no way
recommend action in connection with or oppose or interfere with the
solicitation of proxies for the Trust shares held for such Contract
owners.
27. (a) Insurance Company agrees to indemnify and hold harmless the Trust,
Underwriter, and each of their trustees, directors, officers,
employees, agents and each person, if any, who controls the Trust
within the meaning of the 1933 Act (the Trust and such persons
collectively, "Trust Indemnified Person") against any losses,
claims, damages or liabilities to which a Trust Indemnified Person
may become subject, under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in
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the registration statement or prospectus or statement of additional
information for the Variable Accounts or in information furnished in
writing by Insurance Company for use in the registration statement
or prospectus or statement of additional information of the Trust 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, or arise
out of or as a result of conduct, statements or representations
(other than statements or representations contained in the
prospectus, statement of additional information, and Trust-prepared
sales literature of the Trust) of Insurance Company or its agents
with respect to the sale and distribution of Contracts for which
Trust shares are an underlying investment or arise out of a breach
of this Agreement; and Insurance Company will reimburse any legal or
other expenses reasonably incurred by a Trust Indemnified Person in
connection with investigating or defending any such loss, claim,
damage, liability or action. This indemnity agreement will be in
addition to any liability which Insurance Company may otherwise
have.
(b) The Trust agrees to indemnify and hold harmless Insurance Company
and each of its directors, officers, employees, agents and each
person, if any, who controls Insurance Company within the meaning of
the 1933 Act (Insurance Company and such persons collectively,
"Insurance Company Indemnified Person") against any losses, claims,
damages or liabilities to which an Insurance Company Indemnified
Person may become subject, under the 1933 Act or otherwise, insofar
as such
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losses, claims, damages or liabilities to which an Insurance
Company Indemnified Person may become subject, under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in the registration statement or prospectus or statement
of additional information or Trust-prepared sales literature of the
Trust, or in information furnished in writing by the Trust for use
in the registration statement or prospectus or statement of
additional information of the Variable Accounts, 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, or arise out of or are based
upon the Trust's failure to keep each of the Trust options fully
diversified and qualified as a regulated investment company as
required by the applicable provisions of the Internal Revenue Code,
the 1940 Act, and any other law or regulation, or arise out of a
breach of this Agreement and the Trust will reimburse any legal or
other expenses reasonably incurred by an Insurance Company
Indemnified Person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however,
that the Trust will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or omission or alleged omission made
in such registration statement or prospectus or statement of
additional information in conformity with written information
furnished to the Trust by Insurance Company specifically for
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use therein or in Insurance Company-prepared sales literature. This
indemnity agreement will be in addition to any liability which the
Trust may otherwise have.
(c) Underwriter agrees to indemnify and hold harmless each Insurance
Company Indemnified Person against any losses, claims, damages or
liabilities to which an Insurance Company Indemnified Person may
become subject, under the 1933 Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the
registration statement or prospectus or statement of additional
information or Underwriter-prepared sales literature of the Trust,
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,
or arise out of or are based upon Underwriter's failure to keep each
of the Trust and its Portfolios fully diversified and qualified as a
regulated investment company as required by the applicable
provisions of the Internal Revenue Code, the 1940 Act, and any other
law or regulation, or arise out of a breach of this Agreement and
Underwriter will reimburse any legal or other expenses reasonably
incurred by each Insurance Company Indemnified Person in connection
with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that Underwriter will not be
liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue
statement or omission or alleged omission made in such registration
statement or prospectus or statement of
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additional information in conformity with written information
furnished to Underwriter by Insurance Company specifically for use
therein or Insurance Company-prepared sales literature. This
indemnity agreement will be in addition to any liability which
Underwriter may otherwise have.
(d) The Trust and Underwriter shall indemnify and hold Insurance Company
harmless against any and all liability, loss, damages, costs or
expenses which Insurance Company may incur, suffer or be required to
pay directly due to the Trust's or Underwriter's (or their
designated agent's) (1) incorrect calculation of the daily net asset
value, dividend rate or capital gain distribution rate; (2)
incorrect reporting of the daily net asset value, dividend rate or
capital gain distribution rate; or (3) untimely reporting of the net
asset value, dividend rate or capital gain distribution rate. Any
gain to Insurance Company attributable to the Trust's, or
Underwriter's (or their designated agent's) incorrect calculation or
reporting of the daily net asset value shall be immediately returned
to the Trust.
(e) Promptly after receipt by an indemnified party under this paragraph
of notice of the commencement of action, such indemnified party
will, if a claim in respect thereof is to be made against the
indemnifying party under this paragraph, notify the indemnifying
party of the commencement thereof, but the omission so to notify the
indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than under this
paragraph. In case any such action is brought against any
indemnified party, and it notified the
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indemnifying party of the commencement thereof, the indemnifying
party, at its expense, will be entitled to participate therein and,
to the extent that it may wish, assume the defense thereof, with
counsel satisfactory to such indemnified party. After notice from
the indemnifying party to such indemnified party of indemnifying
party's election to assume the defense thereof, 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
such party under this paragraph for any legal or other expenses
subsequently incurred by such indemnified party in connection with
the defense thereof other than reasonable costs of investigation.
(f) The indemnifying party shall not be liable under this
indemnification provision with respect to any losses, claims,
damages, liabilities or litigation to which an indemnified party
would otherwise be subject by reason of such indemnified party's
willful misfeasance, bad faith, or 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 or to the indemnifying party, whichever is applicable.
(g) Each indemnified party will promptly notify the indemnifying party
of the commencement of any litigation or proceedings against it in
connection with the issuance or sale of the Trust shares or the
Contracts or the operation or existence of the Trust or the Variable
Accounts.
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(h) Nothing herein shall entitle an indemnified party to special,
consequential or exemplary damages or damages of like kind or
nature, and with respect to Section 27(d) hereof, all liability,
loss and damages shall be limited to the amount required to correct
the value of the account as if there had been no incorrect
calculation or reporting or untimely reporting of net asset value,
dividend rate or capital gain distribution rate.
(i) The term "Trust" means the Master Trust Agreement of the Trust
(organized as a Massachusetts business trust), as the same may from
time to time, be amended. It is expressly agreed that the
obligations of the Trust or a Portfolio hereunder shall not be
binding on any trustees, shareholders, nominees, officers, agents or
employees of the Trust or a Portfolio personally, but bind only the
assets and property of the Trust or Portfolio. The execution and
delivery of this Agreement by the officers of the Trust has been
authorized by the trustees of the Trust, acting as such, and neither
such authorization by the trustees or execution and delivery by any
such officer shall be deemed to have been made by any of them
personally, but shall bind only the assets and property of a
Portfolio, as provided in the Master Trust Agreement.
-23-
24
28. If, in the course of future marketing of the Contracts, Insurance
Company or its agents shall request the continued assistance of the
Trust's sales personnel, compensation (which will be negotiated by
the Trust and Insurance Company) shall be paid by Insurance Company
to the Trust.
PROVIDENT MUTUAL LIFE INSURANCE COMPANY
May 1, 1995 By /s/ Illegible
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Date
PROVIDENTMUTUAL LIFE AND ANNUITY
COMPANY OF AMERICA
May 1, 1995 By /s/ Illegible
----------- ------------------------------
Date
XXX XXX INVESTMENT TRUST
May 1, 1995 By /s/ Illegible
----------- ------------------------------
Date
XXX XXX SECURITIES CORPORATION
May 1, 1995 By /s/ Illegible
----------- ------------------------------
Date
-24-
