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Exhibit 8(f)
PARTICIPATION AGREEMENT
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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 under-
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lying 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 remaln 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-(1) 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
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and 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
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by the Trust or its designee of the request for redemption. For purposes of
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
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Trust will provide Insurance Company with a copy of the Statement of
Additional Information suitable for duplication.
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.
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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 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.
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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 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
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(f) a decision by Insurance Company to disregard the voting instructions
of Contract owners.
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
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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
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.
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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.
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
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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 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;
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(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 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;
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(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 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
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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. 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
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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 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
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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
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.
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(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 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
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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
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
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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 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.
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(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 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
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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.
(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
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24
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.
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
------------------------------- -----------------------------------------
Date
PROVIDENTMUTUAL LIFE AND ANNUITY
COMPANY OF AMERICA
May 1, 1995 By
------------------------------- -----------------------------------------
Date
XXX XXX INVESTMENT TRUST
May 1, 1995 By
------------------------------- -----------------------------------------
Date
XXX XXX SECURITIES CORPORATION
May 1, 1995 By
------------------------------- -----------------------------------------
Date
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