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Exhibit 1(3a)
UNDERWRITING AGREEMENT
AGREEMENT made this ____ day of ________, 1993, by and among Provident
Mutual Life Insurance Company of Philadelphia, a Pennsylvania corporation
("Provident Mutual"), PML Securities Company, a Pennsylvania corporation
("PML"), and the Provident Mutual Variable Annuity Separate Account, ("Variable
Account"), a separate investment account of Provident Mutual.
WITNESSETH:
WHEREAS, Provident Mutual has established and maintains the Variable
Account pursuant to the laws of the Commonwealth of Pennsylvania, for the
purpose of selling variable annuity contracts ("Contracts"), the sale of which
is to commence after the effective date of the Registration Statement filed with
the Securities and Exchange Commission ("Commission") on Form N-4 pursuant to
the Securities Act of 1933 ("1933 Act"); and
WHEREAS, the Variable Account is registered as a unit investment trust
under the Investment Company Act of 1940 ("1940 Act"); and
WHEREAS, PML is registered as a broker-dealer under the Securities
Exchange Act of 1934 ("1934 Act") and is a member of the National Association
of Securities Dealers, Inc. ("NASD"); and
WHEREAS, Provident Mutual, the Variable Account and PML wish to enter into
an agreement to have PML act as Provident Mutual's principal underwriter for the
sale of the Contracts through the Variable Account;
NOW, THEREFORE, the parties agree as follows:
A. DISTRIBUTION SERVICES
1. PML represents that it is duly registered as a broker-dealer under
the 1934 Act and is a member in good standing of the NASD and, to the extent
necessary to offer the Contracts, shall be duly registered or otherwise
qualified under the securities laws of any state or other jurisdiction.
2. PML shall act as the principal underwriter for the sale of Contracts
to the public, during the term of this Agreement, in each state and other
jurisdictions in which such Contracts may lawfully be sold. PML shall offer the
Contracts for sale and distribution under guidelines established by Provident
Mutual. PML agrees to use its best efforts to solicit applications for the
Contracts at its own expense, and otherwise perform all duties and functions
which are necessary and proper for the distribution of the Contracts; provided,
however, PML shall not be obligated to sell any specific number of Contracts.
Completed applications for Contracts shall be transmitted directly to Provident
Mutual for acceptance or rejection in accordance with underwriting rules
established by Provident Mutual. All premium payments under the Contracts shall
be made by check payable to Provident Mutual and shall be transmitted promptly
in full by PML or its representatives to Provident Mutual.
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3. PML shall be fully responsible for training, supervising, and
controlling its representatives soliciting applications for Contracts, for
taking all necessary and appropriate steps to ensure compliance by PML and its
representatives on a continuous basis with the NASD Rules of Fair Practice,
federal and state securities law requirements and all other applicable laws and
regulations concerning the offer and sale of Contracts (and the riders and other
contracts offered in connection therewith), and for ensuring that its
representatives are duly and appropriately licensed or otherwise qualified for
the offer and sale of the Contracts under the federal securities laws and any
applicable securities, insurance or other laws of each state or other
jurisdiction in which the Contracts may be lawfully sold.
4. Provident Mutual agrees that during the term of this Agreement it
will take any action which is required to cause the Contracts to comply as an
insurance product and a registered security with all applicable federal and
state laws and regulations.
5. PML agrees that it will execute such papers and do such acts as
shall from time to time be reasonably requested by Provident Mutual for the
purpose of (a) maintaining the registration of the Contracts under the 1933 Act
and the Variable Account under the 1940 Act, and (b) qualifying and maintaining
qualification of the Contracts for sale under the applicable laws of any state.
6. PML is hereby authorized to enter into separate written
agreements, on such terms and conditions as PML may determine which are not
inconsistent with this Agreement, with one or more organizations which agree to
participate in the distribution of the Contracts. Such organization (hereafter
"Broker") shall be registered both as a broker-dealer under the 1934 Act and as
a member of the NASD. All such sales agreements shall provide that each Broker
will assume full responsibility for continued compliance by itself and its
representatives with applicable federal and state securities laws, including but
not limited to training, supervision and control of its representatives engaged
in the distribution of the Contracts. PML shall obtain the approval of Provident
Mutual prior to entering into an agreement with any such organization. All
Brokers shall act as independent contractors and nothing herein shall constitute
such Brokers or their agents or employees as employees of Provident Mutual in
connection with the sale of the Contracts.
7. PML shall take reasonable steps to ensure that any Broker and its
representatives soliciting applications for Contracts shall be duly and
appropriately licensed, registered or otherwise qualified for the sale of such
Contracts (and the riders and other contracts offered in connection therewith)
under the state insurance laws, the federal securities laws, and any applicable
blue-sky laws of each state or other jurisdiction in which Provident Mutual is
licensed to sell the Contracts.
8. PML shall take reasonable steps to ensure that each Broker trains,
supervises and controls its representatives in compliance with applicable laws
and regulations including, but not limited to (a) conducting such training
(including the preparation and utilization of training materials as in the
opinion of PML is necessary to accomplish the purposes of this Agreement and (b)
establish and implement reasonable written procedures for supervision of sales
practices
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of agents, representatives or brokers selling the Contracts. Each Broker shall
assume any legal responsibilities of Provident Mutual for the acts, commissions,
omissions, or defalcations of such representatives insofar as they relate to the
sale of the Contracts. Applications for Contracts solicited by a Broker through
its agents or representatives shall be transmitted directly to Provident
Mutual, and if received by PML, shall be forwarded to Provident Mutual. All
premium payments under the Contracts shall be made by check payable to Provident
Mutual and remitted promptly to Provident Mutual as agent for PML
9. Provident Mutual shall undertake to appoint the qualified
representatives of PML or any Broker appointed by PML as life insurance agents
of Provident Mutual and shall apply for proper licenses in the appropriate
states or jurisdictions for these proposed agents. Provident Mutual reserves the
right to refuse to appoint any proposed agent, or once appointed to terminated
the same.
B. COMPLIANCE AND RECORDKEEPING
1. PML is authorized to appoint the organizations described in
paragraph 6 of Article A above as independent general agents of Provident Mutual
for the sale of the Contracts. PML is responsible for ensuring that Brokers are
duly qualified, under the insurance laws of the applicable jurisdictions, to
sell the Contracts.
2. Provident Mutual and PML wish to ensure that Contracts sold by
PML will be issued to purchasers for whom the Contracts will be suitable. PML
shall take reasonable steps to ensure that the various representatives appointed
by it shall not make recommendations to an applicant to purchase a Contract in
the absence of reasonable grounds to believe that the purchase of the Contracts
is suitable for such applicant. While not limited to the following, a
determination of suitability shall be based on information furnished to a
representative after reasonable inquiry of such applicant concerning the
applicant's retirement and financial needs, objectives and situation. PML is not
authorized to give any information or to make any representations concerning the
Contracts other than those contained in the current prospectus filed with the
Commission or in such sales literature as may be authorized by Provident Mutual.
3. Provident Mutual, at its sole expense, shall have the
responsibility for furnishing PML and its representatives with prospectuses,
financial statements, sales promotion materials as well as individual sales
proposals related to the sale of the Contracts, and other documents which PML
reasonably requests for use in connection with the distribution of the
Contracts. Provident Mutual shall have responsibility for preparing, filing with
the appropriate federal and state regulatory authorities and printing all
required prospectuses and/or registration statements in connection with the
Contracts and the payments of all related expenses. PML shall not use any sales
materials that have not been approved by Provident Mutual; provided, however,
that PML shall have responsibility for approving and filing all sales literature
and advertisements with the NASD and the Commission as required by law or rule.
4. On behalf of PML, Provident Mutual shall cause to be maintained
and preserved, for the periods prescribed, such accounts, books and other
documents as are required of
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Provident Mutual and PML by the 1934 Act, any applicable releases issued by the
Commission under the federal securities laws, and any other applicable laws and
regulations in connection with the offer and sale of the Contracts. The books,
accounts and records of Provident Mutual, the Variable Account and PML as to all
transactions hereunder shall be maintained so as to disclose clearly and
accurately the nature and details of the transactions. Provident Mutual shall
maintain, on behalf of and as agent for PML, such books and records of PML
pertaining to the offer and sale of the Contracts and required by the 1934 Act
as may be mutually agreed upon from time to time by Provident Mutual and PML,
including but not limited to maintaining a record of representatives licensed,
registered and otherwise qualified under the federal securities laws to sell the
Contracts and of the payments of commissions and service fees made to such
representatives; provided that such books and records shall be the property of
PML and shall at all times be subject to such reasonable periodic, special or
other inspection or examination by the Commission and all other regulatory
bodies having jurisdiction. Provident Mutual, on behalf of and as agent for PML,
shall be responsible for sending all required confirmations on customer
transactions upon or before completion thereof in compliance with applicable
laws and regulations, as modified by an exemption or other relief obtained by
Provident Mutual, and any applicable releases issued by the Commission under the
federal securities laws. Such confirmation, unless modified by an exemption or
other relief obtained by Provident Mutual, shall reflect the facts of the
transaction, and the form thereof will show that it is being sent on behalf of
PML acting in the capacity of agent for Provident Mutual.
5. Provident Mutual and the Variable Account shall own and control
all pertinent records relating to the variable annuity operations required to be
prepared and maintained under the 1940 Act and applicable rules and regulations
thereunder. PML agrees that all accounts and records which it maintains for
Provident Mutual and the Variable Account shall be the property of Provident
Mutual and the Variable Account and that it will surrender promptly to the
designated officers of Provident Mutual, any or all such accounts and records
upon request. Provident Mutual, the Variable Account or the authorized
representative of said parties shall have the right to copy any such records in
the possession of PML. Such accounts and records shall be available to properly
constituted governmental authorities as required by federal and state law and/or
regulation. PML shall cause Provident Mutual to be furnished with such reports
as Provident Mutual may reasonably request for the purpose of meeting its
reporting and recordkeeping requirements under the insurance laws of the
Commonwealth of Pennsylvania and any other applicable states or jurisdictions.
6. PML and Provident Mutual agree to cooperate fully in any insurance
regulatory investigation or proceeding or judicial proceeding arising in
connection with Contracts contributed under this Agreement. PML and Provident
Mutual further agree to cooperate fully in any securities regulatory inspection,
inquiry, investigation or proceeding or judicial proceeding with respect to
Provident Mutual, PML, their affiliates and their agents or representatives to
the extent that such inspection, inquiry, investigation or proceeding is in
connection with Contracts distributed under this Agreement. Without limitation:
(a) PML will be notified promptly of any customer complaint or
notice of any regulatory inspection, inquiry, investigation or
proceeding or judicial
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proceeding received by Provident Mutual with respect to PML or any
agent or representative or which may affect Provident Mutual's issuance
of any Contract marketed under this Agreement.
(b) PML will promptly notify Provident Mutual of any customer
complaint or notice of any regulatory inspection, inquiry,
investigation or proceeding received by PML or its affiliates with
respect to PML or any agent or representative in connection with any
Contract distributed under this Agreement or any activity in connection
with any such Contract.
(c) In the case of a substantive customer complaint, PML and
Provident Mutual will cooperate in investigating such complaint and any
response to such complaint will be sent to the other party to this
Agreement for approval not less than five business days prior to its
being sent to the customer or regulatory authority, except that, if a
more prompt response is required, the proposed response shall be
communicated by telephone or telecopy.
C. COMPENSATION
1. On behalf of PML, Provident Mutual shall arrange for the payment
of commissions directly to those registered representatives of PML who are
entitled thereto in connection with the sale of the Contracts in the amounts and
on such terms and conditions as Provident Mutual and PML shall determine.
Provident Mutual will pay the difference between the amount of the commissions
payable with respect to a Contract and the amount paid to the registered
representative for such Contract to PML for expenses associated with
distribution and marketing of Contracts and supervision of its registered
representatives. (See Schedule A.)
2. Provident Mutual shall arrange for the payment of commissions
directly to those Brokers who sell Contracts under Agreements entered into
pursuant to paragraph 6 of Article A above, in amounts as may be agreed to by
Provident Mutual and specified in such written agreements.
3. Provident Mutual shall reimburse PML for the costs and expenses
incurred by PML in furnishing or obtaining the services, materials and supplies
required by the terms of this Agreement in the initial sales efforts and the
continuing obligations hereunder.
4. Notwithstanding anything in this Agreement to the contrary, no
representative of PML or any Broker shall have an interest in any deductions or
other fees payable to PML.
D. MISCELLANEOUS
1. This Agreement shall be effective upon the execution hereof. This
Agreement:
(a) shall automatically be terminated in the event of its
assignment, unless prior written consent of Provident Mutual to such
assignment is obtained;
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(b) may be terminated by any party at any time upon 60 days'
written notice to the other parties hereto;
(c) may be terminated upon written notice of a party to another
party hereto in the event of bankruptcy or insolvency of such party to
which notice is given;
(d) may be terminated at any time upon the mutual written consent
of the parties hereto; and
(e) may be terminated for "cause" at any time by Provident
Mutual. "Cause" is defined and limited for this purpose to mean willful
misfeasance, bad faith, or gross negligence by PML in the performance
of its duties or reckless disregard by it of its obligations and duties
under this Agreement.
Upon termination of this Agreement, all authorizations, rights, and obligations
shall cease except the obligations to settle accounts hereunder, including
payments or premiums or contributions subsequently received for Contracts in
effect at the time of termination or issued pursuant to applications received by
Provident Mutual prior to termination, and all commissions attributable thereto.
2. In the event of termination for any reason, all records shall
promptly be returned to Provident Mutual free from any claim or retention of
rights by PML.
3. PML shall not disclose or use any records of information obtained
pursuant to this Agreement in any manner whatsoever except as expressly
authorized herein and, further, PML will keep confidential any information
obtained pursuant to the service relationship set forth herein and disclose such
information only if Provident Mutual has authorized such disclosure or such
disclosure is expressly required by applicable federal or state regulatory
authorities.
4. PML shall submit to all regulatory and administrative bodies
having jurisdiction over the operations of Provident Mutual and/or the Variable
Account, present or future, any materials reasonably related to the
administrative and marketing services provided hereunder and any other
information, reports or other material, as may be requested or required by any
governmental agency having jurisdiction.
5. PML shall act as an independent contractor and nothing herein
contained shall constituted PML or its agents or employees as employees of
Provident Mutual in connection with the sale of the Contracts.
6. PML shall be liable for its own misconduct and negligence.
7. The services of PML hereunder are not to be deemed exclusive and
PML shall be free to render similar services to others so long as its services
hereunder are not impaired or interfered with thereby.
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8. This Agreement shall be subject to the provisions of the 1940 Act
and the 1934 Act and the rules, regulations, and rulings thereunder and of the
applicable rules and regulations of the NASD, from time to time in effect
including such exemptions from the 1940 Act as the Commission may grant, and the
terms hereof shall be interpreted and construed in accordance therewith. Without
limiting the foregoing, the terms "assign" or "assignment" shall not include any
transaction exempted from section 15(b)(2) of the 1940 Act.
9. A copy of this Agreement shall be furnished to the Commission.
10. This Agreement shall be construed and enforced in accordance with
and governed by the laws of the Commonwealth of Pennsylvania.
11. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PML SECURITIES COMPANY
ATTEST: __________________________ BY: ________________________________
PROVIDENT MUTUAL LIFE INSURANCE
COMPANY OF PHILADELPHIA
ATTEST: __________________________ BY: ________________________________
THE PROVIDENT MUTUAL VARIABLE
ANNUITY SEPARATE ACCOUNT
ATTEST: __________________________ BY: ________________________________
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