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Exhibit 3(a)
UNDERWRITING AGREEMENT
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AGREEMENT made this ____ day of _____________, 1992, by and among
Providentmutual Life and Annuity Company of America, a Pennsylvania corporation
("Providentmutual"), PML Securities Company, a Pennsylvania corporation ("PML"),
and the Providentmutual Variable Annuity Separate Account, ("Variable Account"),
a separate investment account of Providentmutual.
WITNESSETH:
WHEREAS, Providentmutual has established and maintains the Variable
Account pursuant to the laws 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, Providentmutual, the Variable Account and PML wish to enter
into an agreement to have PML act as Providentmutual's principal underwriter for
the sale of the Contracts through the Variable Account;
NOW, THEREFORE, the parties agree as follows:
A. DISTRIBUTION SERVICES
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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
Providentmutual. 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.
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applications for Contracts shall be transmitted directly to Providentmutual for
acceptance or rejection in accordance with underwriting rules established by
Providentmutual. All premium payments under the Contracts shall be made by check
payable to Providentmutual and shall be transmitted promptly in full by PML or
its representatives to Providentmutual.
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. Providentmutual 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 Providentmutual 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
Providentmutual 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
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or employees as employees of Providentmutual 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 Providentmutual 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 of agents, representatives or brokers selling the Contracts. Each
Broker shall assume any legal responsibilities of Providentmutual 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
Providentmutual, and if received by PML, shall be forwarded to Providentmutual.
All premium payments under the Contracts shall be made by check payable to
Providentmutual and remitted promptly to Providentmutual as agent for PML.
9. Providentmutual shall undertake to appoint the qualified
representatives of PML or any Broker appointed by PML as life insurance agents
of Providentmutual and shall apply for proper licenses in the appropriate states
or jurisdictions for these proposed agents. Providentmutual reserves the right
to refuse to appoint any proposed agent, or once appointed to terminate the
same.
B. COMPLIANCE AND RECORDKEEPING
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1. PML is authorized to appoint the organizations described in paragraph
6 of Article A above as independent general agents of Providentmutual 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. Providentmutual and PML wish to ensure that Contracts sold by PML
will be issued to purchasers for whom the Contracts
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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 Providentmutual.
3. Providentmutual, 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.
Providentmutual 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 Providentmutual; 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, Providentmutual shall cause to be maintained and
preserved, for the periods prescribed, such accounts, books and other documents
as are required of Providentmutual 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 Providentmutual, 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.
Providentmutual 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
Providentmutual 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
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odic, special or other inspection or examination by the Commission and all other
regulatory bodies having jurisdiction. Providentmutual, 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 Providentmutual, 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 Providentmutual, 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 Providentmutual.
5. Providentmutual 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
Providentmutual and the Variable Account shall be the property of
Providentmutual and the Variable Account and that it will surrender promptly to
the designated officers of Providentmutual any or all such accounts and records
upon request. Providentmutual, 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 Providentmutual to be furnished with such reports as
Providentmutual 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 Providentmutual agree to cooperate fully in any insurance
regulatory investigation or proceeding or judicial proceeding arising in
connection with Contracts distributed under this Agreement. PML and
Providentmutual further agree to cooperate fully in any securities regulatory
inspection, inquiry, investigation or proceeding or judicial proceeding with
respect to Providentmutual, PML, their affiliates and their agents or
representatives to the extent that such inspection, inquiry, investigation or
proceeding is in connection with Contract 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 proceeding received by Providentmutual with
respect to PML or any agent or representative or which may affect
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Providentmutual's issuance of any Contract marketed under this
Agreement.
(b) PML will promptly notify Providentmutual 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
Providentmutual 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
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1. On behalf of PML, Providentmutual 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 Providentmutual and PML shall determine. Providentmutual
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. Providentmutual 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
Providentmutual and specified in such written agreements.
3. Providentmutual 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.
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D. MISCELLANEOUS
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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 Providentmutual to such
assignment is obtained;
(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; and
(d) may be terminated at any time upon the mutual written
consent of the parties hereto;
(e) may be terminated for "cause" at any time by
Providentmutual. "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
Providentmutual prior to termination, and all commissions attributable thereto.
2. In the event of termination for any reason, all records shall
promptly be returned to Providentmutual 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 Providentmutual has authorized such disclosure or such
disclosure is expressly required by applicable federal or state regulatory
authorities.
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4. PML shall submit to all regulatory and administrative bodies having
jurisdiction over the operations of Providentmutual 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 constitute PML or its agents or employees as employees of
Providentmutual 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.
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.
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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:
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PROVIDENTMUTUAL LIFE AND
ANNUITY COMPANY OF AMERICA
ATTEST: BY:
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THE PROVIDENTMUTUAL VARIABLE
ANNUITY SEPARATE ACCOUNT
ATTEST: BY:
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SCHEDULE "A"
As compensation for the sale of Contracts by registered representatives of PML,
Providentmutual will pay a commission to PML equal to 6% of the initial premium
payment for each Contract sold and 2% of each subsequent premium payment for
such Contract.
PML shall pay each of its registered representatives selling a Contract, either
directly or through Providentmutual acting on behalf of PML, 4% of the initial
premium payment for such Contract and 2% of each subsequent premium payment for
such Contract.
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