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EXHIBIT 1(A8)
AGREEMENT REGARDING OPERATION OF THE STRIPPED ("ZERO")
U.S. TREASURY SECURITIES FUND PROVIDENT MUTUAL SERIES A
AGREEMENT effective May 12, 1986, between Provident Mutual
Life Insurance Company of Philadelphia ("Provident Mutual"), an insurance
company chartered in Pennsylvania, and ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated ("▇▇▇▇▇▇▇ ▇▇▇▇▇"), a Delaware corporation.
WHEREAS, Provident Mutual is a life insurance company which
currently issues variable life insurance policies and it and other affiliated
insurance companies may issue various versions of variable life insurance
policies in the future ("Policies"), and
WHEREAS, the Provident Mutual Variable Zero Coupon Bond
Separate Account ("Account") is a separate investment account of Provident
Mutual registered under the Investment Company Act of 1940 ("Act") as a part of
a unit investment trust, which serves as the investment vehicle for the Policies
issued by Provident Mutual and its separate accounts, and
WHEREAS, the Provident Mutual Series of Stripped ("Zero") U.S.
Treasury Securities Fund and any subsequent series ("Zero Trust"), is a unit
investment trust sponsored by ▇▇▇▇▇▇▇ ▇▇▇▇▇ that will have several portfolios
("Trusts"), and the Zero Trust is registered as a unit investment trust under
the Act, and
WHEREAS, Provident Mutual seeks a unit investment trust as the
underlying investment medium for the Account and any similar accounts
established by affiliated companies ("Accounts"), the units of which will be
sold to the Accounts and the investment
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in which will enable the Accounts to provide policyowners with a stabilized rate
of return, and
WHEREAS, ▇▇▇▇▇▇▇ ▇▇▇▇▇ desires to make the Zero Trust available
to Provident Mutual for the investment of amounts allocated under the Policies
to the Account and to Accounts designated by Provident Mutual of affiliated
companies, and
WHEREAS, ▇▇▇▇▇▇▇ ▇▇▇▇▇ intends to maintain a secondary market in
units representing interests in the Trusts ("Units") in order to enable the
Accounts to provide policyowners with a stabilized rate of return.
NOW, THEREFORE, in consideration of the mutual promises
contained herein, the parties agree as follows:
1. Provident Mutual shall invest assets of the Account in the
Zero Trust and ▇▇▇▇▇▇▇ ▇▇▇▇▇ will serve as sponsor and depositor of the Zero
Trust, provided that ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Provident Mutual fulfill their respective
obligations set forth in paragraphs 2 through 10.
2. Unless otherwise determined by mutual agreement, Units of the
Zero Trust will be sold exclusively to the Account or Accounts designated by
Provident Mutual.
3. Initially, ▇▇▇▇▇▇▇ ▇▇▇▇▇ will create three Trusts, containing
securities with specified maturities in years 1991, 1996 and 2005, respectively,
or any other maturities mutually agreed upon by ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Provident
Mutual. Thereafter, as may be mutually agreed upon by the parties from time to
time,
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▇▇▇▇▇▇▇ ▇▇▇▇▇ will create additional Trusts containing securities with different
maturities.
4. Until the securities of any particular Trust of the Zero
Trust mature, ▇▇▇▇▇▇▇ ▇▇▇▇▇ will make Units available continuously for purchase
by Provident Mutual for investment of assets of the Account, either by selling
Units currently held in inventory or by creating new Units, except that ▇▇▇▇▇▇▇
▇▇▇▇▇ shall not be obligated to create new Units if the underlying portfolio
securities are unavailable. When creating additional Units, regardless of the
size of the purchase order from Provident Mutual, ▇▇▇▇▇▇▇ ▇▇▇▇▇ will acquire
portfolio securities to fund such Units only in round-lots.
5. Units of fractional undivided interest in the Trusts will be
issued to ▇▇▇▇▇▇▇ ▇▇▇▇▇ on its deposit of securities in a Trust of the Zero
Trust, based upon the offering side evaluation of the securities so deposited.
Units will be sold to the Account at an offering price, next computed after
receipt by ▇▇▇▇▇▇▇ ▇▇▇▇▇ of an order to purchase, that is the sum of: (a) the
net asset value of the Units uniformly computed on any given day based upon
either a daily or weekly computation calculated in accordance with Rule 22c-1
under the Act, using an offering side evaluation of the portfolio securities,
and (b) a transaction charge. The amount of the transaction charge applicable to
a Unit of a particular Trust will vary based upon the period of time remaining
until maturity of the Trust at the time the Unit is purchased, as follows:
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Transaction Charge As
A Percentage of the
Remaining Years Until Maturity Offering Price of the
Of the Trust Trust Unit
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less than 2 years 0.25%
at least 2 years but less than 3 years 0.50%
at least 3 years but less than 5 years 0.75%
at least 5 years but less than 8 years 1.00%
at least 8 years but less than 13 years 1.50%
at least 13 years but less than 18 years 1.75%
18 years or more 2.00%
These rates are subject to change hereafter, by mutual agreement, provided that
any new rate established does not exceed the rate ordinarily paid by a dealer to
acquire similar securities, and provided that the transaction charge shall not
be increased if the staff of the Securities and Exchange Commission expresses
and objection to such change or, if Provident Mutual believes necessary, unless
an order of the Securities and Exchange Commission, providing appropriate
exemptive relief, is obtained. In addition, in the event ▇▇▇▇▇▇▇ ▇▇▇▇▇ should
cease to maintain a secondary market, the transaction charge will be adjusted to
an amount determined by mutual agreement, after considering factors including
the absence of a secondary market, aggregate expenses and charges to ▇▇▇▇▇▇▇
▇▇▇▇▇ and any standards set by the Securities and Exchange Commission as
necessary to continue the exemptive relief granted in connection with the
investment by the Account in the Zero Trust.
6. ▇▇▇▇▇▇▇ ▇▇▇▇▇ will use its best efforts to continuously
maintain a secondary market in Units of each Trust and will repurchase Units
held by the Account, absent an extreme and
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unforeseen occurrence which makes it financially impracticable for ▇▇▇▇▇▇▇ ▇▇▇▇▇
to repurchase the Units, at a price equal to the net asset value of the Units,
based upon the offering side evaluation of the underlying securities of the
applicable Trust.
7. ▇▇▇▇▇▇▇ ▇▇▇▇▇ may, at its discretion, redeem in cash or in
kind Units of the Zero Trust that it has purchased in the secondary market, or
acquired upon deposit of securities in the Zero Trust, provided that it redeems
Units only in an amount substantially equal to the value of one or more
securities held in the affected Trust, so that the uninvested cash generated by
such redemption is de minimus.
8. The underlying securities of each Trust will be evaluated by
a qualified entity, selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, that is not affiliated with
▇▇▇▇▇▇▇ ▇▇▇▇▇.
9. On each day that Provident Mutual is required by Rule 22c-1
under the Act to value the Policies, but on which no Units are purchased from,
or sold to, ▇▇▇▇▇▇▇ ▇▇▇▇▇ by Provident Mutual, ▇▇▇▇▇▇▇ ▇▇▇▇▇ will cause the Zero
Trust to provide to Provident Mutual a net asset value for the Units, using an
offering side evaluation of the portfolio securities, computed on a daily or
weekly basis in accordance with Rule 22c-1 under the Act.
10. An entity which meets the qualifications set forth in
Section 26 of the Act will serve as trustee for each Trust, who shall agree to
furnish Provident Mutual, within 30 days after the
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end of each calendar year, year-end financial statements for each Trust which
have been audited by independent public accountants.
The terms used in this Agreement shall be construed in
accordance with the Act, and this Agreement shall be governed by and construed
in accordance with the laws of the State of New York. This agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, and such counterparts together shall constitute but one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and their respective corporate seals to be affixed
hereto as of the date set forth above by their respective officers who have been
duly authorized.
PROVIDENT MUTUAL LIFE INSURANCE
COMPANY OF PHILADELPHIA
By /s/ Illegible
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▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ &
▇▇▇▇▇ INCORPORATED
By /s/ Illegible
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