EXHIBIT (b)(8)(g)
SERVICE AGREEMENT BETWEEN
TANDEM FINANCIAL GROUP, INC.
AND
ROYAL TANDEM LIFE INSURANCE COMPANY
Service Agreement made as of the 22nd day of June, 1987 between TANDEM
FINANCIAL GROUP, INC., a Delaware corporation ("TFG") and ROYAL TANDEM LIFE
INSURANCE COMPANY, a New York corporation ("Royal Tandem"),
W I T N E S S E T H:
WHEREAS, Royal Tandem is a wholly-owned subsidiary of TFG and desires to
utilize certain of TFG's services (including related property and personnel) in
carrying out some of its corporate functions and TFG is willing to furnish the
same on the terms and conditions hereinafter set forth:
NOW, THEREFORE, the parties do hereby mutually agree as follows, effective
so long as Royal Tandem is such a subsidiary of TFG:
1. TFG will furnish, or contract with any of its affiliates or
subsidiaries for the furnishing of, as available, services as listed in Exhibit
I hereto, if and to the extent requested by Royal Tandem. Royal Tandem will
utilize such services in accordance with the Commitment Agreement (copy
attached) to the New York Insurance Department (the "Department").
2. Royal Tandem agrees to pay TFG for such services.
(i) the amounts as may be specified in one or more Schedules,
pertaining to particular categories of services, as may be executed by the
parties and attached to and incorporated into this Agreement; or
(ii) if no so specified to pay those charges (direct or indirect) and
expenses incurred by TFG or any of its affiliates or subsidiaries which, as
reasonable determined by TFG and demonstrated to the reasonable satisfaction of
Royal Tandem, reflect actual cost to TFG or its affiliates or subsidiaries of
furnishing such services, provided that
(a) charges and expenses for personnel shall be based on a reasonable
allocation of the time spent on Royal Tandem matters relative to
time spent on other matters,
(b) charges and expenses for property or other services shall be
based on reasonable allocation of the proportion of and period
of time such property or services is utilized for Royal Tandem
matters relative to that utilized for other matters, and
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(c) no charges or expenses shall exceed those charged by the service
provider in the relevant market for comparable personnel,
property or service as the case may be.
TFG will provide Royal Tandem with a xxxx for service charges and expenses
incurred within 45 days after the end of the quarter in which incurred or in
which TFG ascertains the amounts thereof, and royal Tandem will pay for such
charges and expenses upon receipt of the xxxx.
3. the books, accounts and records of TFG and Royal Tandem as to all
transactions hereunder shall be maintained so as clearly and accurately disclose
the nature and details of the transactions, including such accounting
information as is necessary to support the reasonableness of the charges,
expenses or fees hereunder. Royal Tandem shall have the right, at its own
expense, and at any reasonable time, to make an audit of the services rendered
and the amounts charged therefor.
4. The term of this Agreement shall commence as of the date hereinabove
indicated and continue until December 31, 1987, and thereafter shall be deemed
to be renewed automatically, upon the same terms and conditions, for successive
periods of one year each, until either party, as least 60 days prior to the
expiration of the original term or of any extended term, shall
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give written notice to the other party of its intention no to renew the
Agreement, provided that, notwithstanding the foregoing, electronic data
processing services will be made available to Royal Tandem for up to six months
following any such termination, if Royal Tandem shall so request.
5. All differences between TFG and Royal Tandem on which agreement cannot
be reached will be decided by arbitration. The arbitrators will interpret this
Agreement in accordance with the usual business practices,rather than strict
technicalities or rules of law. Three arbitrators will decide any differences.
They must be officers of life insurance companies other than the two parties to
this agreement, their parents,subsidiaries and affiliates. One of the
arbitrators is to be appointed by Royal Tandem and one by TFG, and these two
will select a third. If the two are unable to agree on a third, the choice will
be left to the President of the American Council of Life Insurance of its
successor organization. The arbitrators' decision will e by majority vote and
no appeal will be taken from it. The cots of the arbitration will be borne by
the losing party unless the arbitrators decide otherwise.
6. No assignment of this Agreement shall be made by TFG without the
consent of Royal Tandem.
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7. Subject to the foregoing Section 6, this Agreement shall inure to the
benefit of and be finding upon the successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
TANDEM FINANCIAL GROUP, INC.
By: /s/
--------------------------
[TYPE NAME HERE]
ROYAL TANDEM LIFE INSURANCE
COMPANY
By: /s/
-------------------------
[TYPE NAME HERE]
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EXHIBIT I
To Service Agreement
Between TFG and Royal Tandem
Personnel, Property and Services (except as provided under separate agreement or
Schedules):
1. Electronic data processing
2. Legal
3. Corporate Secretary
4. Actuarial
5. Product design and development
6. General corporate management.
7. Storage
8. Office and general supplies
9. Financial and cash advice or management
10. Advertising and public relations
11. Printing
12. Development of software programs
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Xxxxxxxxxxxxxx, Xxxxx xx Xxx Xxxx
Department of Insurance
Re: Acquisition of Control of
Royal Tandem Life Insurance Company
-----------------------------------
Dear Superintendent:
COMMITMENT AGREEMENT TO THE
NEW YORK INSURANCE DEPARTMENT
Pursuant to your request, the undersigned, the Equitable Life Assurance Society
of the United States ("Equitable", Tandem financial Group, Inc. ("TFG") and
Xxxxxxx Xxxxx & co., Inc. ("Xxxxxxx Xxxxx") (collectively known as the "parents"
and individually as a "Parent") represent and commit, effective as to each
Parent so long as it shall be deemed by the Department, under applicable law, to
control Royal Tandem Life Insurance Company ("Royal Tandem"), that it will not
on behalf of Royal Tandem do, indirectly or through the medium of another
entity, that which is prohibited to Royal Tandem by statute, or regulation or
administrative ruling of the New York Insurance Department, including but not
limited to the following:
1. No Parent nor any of its affiliates or subsidiaries will offer,
sell, give or in any way transfer or assign any securities issued by any of such
companies, or offer any options or warrants on such securities, to persons who
are officers, directors, agents or employees of Royal Tandem, except in
connection with services rendered directly to such Parent or the company
selling, offering or giving such securities, options or warrants, and after full
and appropriate disclosure to, and prior approval by the Superintendent of the
plan pursuant to which such offer, sale or gift is made and except as permitted
by the provisions of Regulation No. 54. This paragraph, however, shall not be
deemed to apply to any offer or sale made to an such person as a part of, and
the same terms as, a general offering to stockholders or to the public.
2. No Parent nor any of its affiliates or subsidiaries, nor
controlling interests thereof, other than Royal Tandem, will grant any
compensation or special advantage to officers, directors, agents or employees of
Royal Tandem except in connection with services rendered directly to such Parent
or the company making such grant as provided by but not limited to the
provisions of Section 1509 of the New York Insurance Law.
3. Royal Tandem's operations will be directed by its own management
and no agreement or arrangement will be made pursuant to which another company
will provide such management directly or indirectly. Royal Tandem shall
maintain a home office in New York which shall have at least one full-time
administrative officer who is unaffiliated with any other company in the holding
company system and who shall have fully responsibility and authority for making
management and administrative decisions and carrying out established policy.
The management of Royal Tandem will be fully responsible to the Department for
the actions of, or failure to act by, Royal Tandem, pursuant to the provisions
of Section 1507 of the New York Insurance Law.
4. Royal Tandem will maintain in this state, at its home office,
officers and qualified personnel knowledgeable of and responsible for directing
and performing the daily operations of Royal Tandem, included by not limited to
the following primary insurance company functions:
(a) Policyholder services - such services shall comprise any and all
activities involving personal contact or communication with a
policy holder or beneficiary, including but not limited to policy
loan applications and payments, surrender requests including
computation and payment of benefits, determination and payment of
policy benefits, policy conversions,beneficiary changes, policy
changes, request for general information, dividend computations,
premium payments, policy lapses and reinstatements, and consumer
complaints.
(b) Recordkeeping - Royal Tandem will maintain at its home office in
New York, all records, files and other sources of information
relating to the operations of the company. Such recordkeeping
shall include but not be limited to ledgers, journals, trial
balances and adjusting journal entries, vouchers, annual
statement workpapers, and all related back-up records including
EDP printouts. If it is necessary to transfer records in
connection with the performance of specific services, copies of
such records shall be transferred and the originals maintained at
the home office of Royal Tandem. Persons providing services
shall forward to the home office of Royal Tandem the originals or
copies of all work papers, related records and documents prepared
and utilized in connection with such services. While records
which are maintained solely on EDP tapes, disks, etc., need not
be forwarded to Royal Tandem, the servicer, when requested, shall
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provide printouts of such tapes, disks, etc. which shall be
available for inspection by the Superintendent at the home office
in New York.
(c) Accounting - Royal Tandem will perform all accounting functions
at its home office in New York. Such accounting functions shall
include but not be limited to the initiation and preparation of
all vouchers and accounting records and/or transactions relating
to the financial condition of the subsidiary, verification that
original financial data and accounting transactions have been
accurately prepared and reflected in the subsidiary's books of
account, bank reconciliations and reconciliations of EDP
printouts. This shall not preclude Royal Tandem from the use of
an outside service for the preparation of accounting records or
processing of accounting transactions, provided that (i) the
initiation of such records and/or transactions are prepared and
the final product verified by Royal Tandem at its home office in
New York and (ii) that there is within Royal Tandem's home office
in New York qualified personnel knowledgeable of and familiar
with all the details of the services provided including but not
limited to, accounting and adjusting entries.
(d) Underwriting - Royal Tandem will establish and reduce to writing
all underwriting standards for the acceptance of new business,
make all final underwriting decisions and maintain at its home
office in New York all original papers which are basic to the
insurance contract. Within a period of five years from the date
of this Commitment Agreement, Royal Tandem will perform at its
home office in New York all underwriting functions. Such
underwriting shall include but not be limited to the review of
policy applications, assignment of policy numbers, MIB review,
medical review, and actual policy issue. It is understood that
no service agreements will be entered into by Royal Tandem which
will provide for underwriting services beyond the above-mentioned
period.
(e) Claims - Royal Tandem will establish and reduce to writing claims
settlement procedures, and will exercise final approval authority
for all claims settlements and maintain at its home office in new
York all original claims investigation papers and worksheets.
Within a period of five years from the date of this Commitment
Agreement, Royal
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Tandem will perform at its home office in New York all claims
processing and settlement. Such claims processing and settlement
shall include but not be limited to verification that the policy
was in force and review and investigation of claims. It is
understood that no service agreements will be entered into which
will provide for claims processing services beyond the above-
mentioned period.
(f) Marketing - Within a period of five years from the date of this
Commitment Agreement, Royal Tandem will perform at its home
office in New York the following marketing functions:
recruitment and direction of the agency field force, validation
of agents training allowances and development allowances, and the
administration of all agency matters. It is understood that no
service agreements will be entered into by Royal Tandem which
will be entered into by Royal Tandem which will provide for
marketing services beyond the above-mentioned period.
5. All agreements providing for the rendering of statistical,
mechanical or ministerial services on a regular or systematic basis between
Royal Tandem and either Equitable or its subsidiaries or affiliates, or any
modification thereof, will be submitted to the Department for prior review,
pursuant to the provisions of Section 1505 and 1507 of the New York Insurance
Law.
6. All reinsurance treaties between Royal Tandem and any Parent or
affiliates thereof, or any modification thereto, will be submitted to the New
York Insurance Department for prior review in accordance with the provisions of
Section 1505 of the New York Insurance Law. Any experience rating formula or
dividend formula to be used in conjunction with the agreements will be submitted
to the New York Insurance Department for prior review. Expenses and settlement
data under this formula will be retained and will be furnished to the New York
Insurance Department upon request.
7. Royal Tandem will neither subsidize nor be subsidized by any
Parent or by any Parent's subsidiaries or affiliates. Subject to the foregoing,
all expenses incurred by or on its behalf, all joint expenses and the cost of
servicing functions provided Royal Tandem by such Parent or subsidiaries,
affiliates or other corporate entities thereof, will be allocated equitably.
Adequate and properly documented workpapers serving as a basis for allocations
and charges shall be maintained by Royal Tandem. The books, accounts and
records of each party will be kept in a manner which clearly and accurately
discloses, inter
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alia, the nature and details of all transactions and arrangements between Royal
Tandem and such Parent or any subsidiary or affiliate thereof. All of the above
shall be in conformance with the provisions of Section 1505 of the New York
Insurance Law.
This section shall not be deemed to prohibit the rendering of
incidental services to and for the benefit of Royal Tandem by Equitable without
being compensated therefor.
8. Royal Tandem will operate at arm's length in relation to each
Parent, its subsidiaries and affiliates. Allocations and classifications of
expenses incurred jointly, or for services rendered or received shall be in
accordance with New York Insurance Department Regulation 33. In the event that,
in the judgment of the Insurance Department, the books, accounts, and records of
each Parent, its subsidiaries and/or affiliates, will be made available to the
Department to the extent they relate to Royal Tandem, its officers, directors,
employees or agents pursuant to the provisions of Section 1504 of the New York
Insurance Law.
9. In line with the customary practice of non-affiliated domestic
life companies, Royal Tandem's income is to be received directly at its home
office and an itemized record is to be made thereof at the time of receipt.
Within the meaning of the preceding sentence, Royal Tandem may arrange for the
collection of premiums or other income at a lock box located within or without
this state, provided that:
(a) A contract providing for the establishment and operation of the
lock box is entered into by all of the parties affected by such
arrangement and the contract is submitted to the Superintendent
for prior approval.
(b) All bank accounts maintained in connection with the operation of
the lock box shall be in the name of the subsidiary insurer, and
withdrawal therefrom shall be limited to checks signed by
authorized officials of the subsidiary insurer only.
(c) Where a bank account is maintained outside the state for
collection purposes, the account shall be in the name of the
subsidiary insurer and withdrawals from such account shall be
solely for the purpose of transferring funds to a New York bank
account. Withdrawals shall be made at periodic intervals not to
exceed ten days, so that the maximum balance in such out of state
account at the day of withdrawal will not exceed $1,000.00 unless
the Superintendent has indicated his prior
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approval for the maintenance of a larger balance. Royal Tandem
is to maintain in New York (i) all bank accounts customarily
maintained in New York by non-affiliated domestic life companies
and (ii) all evidence of ownership of its assets. Royal Tandem's
obligations (including benefits and salaries) are to be paid
directly to its primary obligees by drafts or check on its bank
accounts.
10. Agreements with agencies engaged in common by Royal Tandem and
any Parent of affiliates thereof shall not, directly or indirectly, provide for
compensation or other financial advantages which would be prohibited by Section
4228 or 4229 of the New York Insurance Law, as amended, or regulations, circular
letters and rulings relative thereto and as provided in Section 1509 of the New
York Insurance Law and this agreement.
11. Royal Tandem shall required such agents engaged in common, as
described above, to make available, on request by the Superintendent of
Insurance of the State of New York, all books and records in respect to their
insurance activities with Royal Tandem and any Parent and/or affiliates thereof.
12. No transfer, depletion, divestment or reassignment of a
significant number of its chief management officers or personnel performing
important and/or key functions in vital departments of Royal Tandem shall be
made by or to any Parent, its affiliates, subsidiaries or controlling interests
thereof it if would result in impairing the operations of Royal Tandem. No
transactions of this type shall be entered into prior to being submitted to the
Department for review.
13. No transactions will be entered into by Royal Tandem, any Parent
or any affiliate which involves or could involve the actual or proposed
transfer, directly or indirectly, of control of Royal Tandem without prior
notice to and no objection being raised by the Department to the terms of the
transaction.
Such transactions shall include but not be limited to:
(a) Pledging of shares as collateral for loans.
(b) Hypothecation of securities.
(c) Sale of new shares of such parent or affiliate.
(d) Encumbering of shares of such parent or affiliate.
(e) Exchange of shares.
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(f) Any other disposition of shares.
14. Any director or principal officer of any Parent, who holds office
in subsidiaries or affiliates of Royal Tandem which will have dealings with
Royal Tandem, and who is found to be untrustworthy, will be removed from these
offices at the direction of the Department.
15. In keeping with the Department's requirement that the name of a
Parent or any of its affiliates not be used in Royal Tandem's name unless a
modifier is placed in front of the Parent or affiliate's name, no Parent will
change its name nor permit any of its affiliates to change their names in such a
way as to circumvent the intention of this requirement. Each Parent and Royal
Tandem further agree that they will not use any advertising or printed material
which circumvents the intention of this requirement by stressing or emphasizing
the name of the Parent or affiliate.
16. In the future, if Royal Tandem should plan to make any
significant deviation from the Plan of Operations and actuarial projections
originally submitted to the New York State Insurance Department, the Department
will be informed of such planned deviation and Royal Tandem will submit new
actuarial projections to the Department and will obtain the Department's
approval prior to entering into any new product lines or lines of business which
would cause such deviation.
It is further understood that the signing of this commitment agreement
by present management of the Parents, and of Royal Tandem, is binding not only
on present management but on any successor management which may be the result of
internal or external changes, and must be made a part of, but not limited to,
any merger, takeover, tender officer, assumption or pooling of interest
agreement voluntarily entered into.
It is further agreed that if any changes are incorporated in the New
York Insurance Law, Department Regulations, or Administrative Procedures which
alter to any material extent these commitments, these changes will be
automatically incorporated in this document, which is signed by executive
officers of the Parents and Royal Tandem. This
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document has or will receive the consent and approval of the Board of Directors
of each Parent.
Respectfully submitted,
Dated: June , 1987
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By: /s/ XXXXX XXXXX
------------------------------
Xxxxx Xxxxx
Title: Executive Vice President
TANDEM FINANCIAL GROUP, INC.
By: /s/ XXXXXXX XXXXXXXXX
------------------------------
Xxxxxxx Xxxxxxxxx
Title: Executive Vice President
XXXXXXX XXXXX & CO., INC.
By: /s/ XXXX X. XXXXXXXX
------------------------------
Xxxx X. Xxxxxxxx
Title: Executive Vice President
ROYAL TANDEM LIFE INSURANCE COMPANY
By: /s/ XXXXXXX XXXXXXXXX
------------------------------
Xxxxxxx Xxxxxxxxx
Title: President
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SPECIAL COMMITMENT AGREEMENT TO
THE NEW YORK INSURANCE DEPARTMENT
The undersigned each agree with the New York State Insurance
Department as follows, effective for the period described below:
1. With respect to transactions between Royal Tandem Life Insurance
Company ("Royal Tandem") and the Equitable Life Assurance Society of the United
States ("Equitable Life"), Royal Tandem and Equitable Life commit that,
notwithstanding Section 1502 of the New York Insurance Law, they will comply
with all the provisions of Section 1505 thereof.
2. Royal Tandem will utilize only those marketing distribution
systems which cannot be effectively served by Equitable Life, by Equitable
Variable Life Insurance Company ("EVLICO"), by National Integrity Life Insurance
Company ("National Integrity") or any other New York licensed life insurance
company subsidiary of Equitable Life. Equitable Life and EVLICO will utilize
only traditional affiliated agency sales forces consisting of career agents to
distribute their products and services, and National Integrity will distribute
its products and services in accordance with its Special Commitment Agreement to
the New York Insurance Department, dated November 4, 1985, as amended or
supplemented, whereas Royal Tandem will distribute its products and services
only through licensed subsidiaries and affiliates of Xxxxxxx Xxxxx & Co., Inc.
("Xxxxxxx Xxxxx"), and their registered representatives or employees as licensed
for Royal Tandem, or through such other agents or groups of agents or other
means as may be approved in writing from time to time by the Insurance
Department. Equitable Life, EVLICO, National Integrity and Royal Tandem will
not license, directly or indirectly, agents in common. None of Equitable Life,
EVLICO or National Integrity will license any agent licensed with Royal Tandem.
Royal Tandem will not license any agent licensed with Equitable Life, EVLICO or
National Integrity. To avoid dual licensing, (a) every agent license
application received by Royal Tandem will be computer matched against Equitable
Life's Agent Data Base, which lists all Equitable Life/EVLICO Agents, and will
be matched against National Integrity's Agent Data Base and any such
applications which match against any such Agent Data Base will be denied by
Royal Tandem and (b) every agent license application received by Equitable Life,
EVLICO or National Integrity will be computer matched against Royal Tandem's
Agent Data Base, which lists all Royal Tandem Agents, and any such applications
which match against such Agent Data Base will be denied by Equitable Life,
EVLICO or National Integrity, as the case may be.
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3. This Special Commitment Agreement shall be effective as to
Equitable Life, EVLICO, Royal Tandem and National Integrity so long as Equitable
Life shall be deemed by the Department, under applicable law, to control Royal
Tandem, and shall be effective as to Xxxxxxx Xxxxx so long as Xxxxxxx Xxxxx
shall be deemed by the Department, under applicable law, to control Royal
Tandem.
Dated: June , 1987
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By: /s/ XXXXX XXXXX
------------------------------
Xxxxx Xxxxx
Executive Vice President
EQUITABLE VARIABLE LIFE
INSURANCE COMPANY
By: /s/ XXXXXX XXXXXX
------------------------------
Xxxxxx Xxxxxx
President
ROYAL TANDEM LIFE INSURANCE COMPANY
By: /s/ XXXXXXX XXXXXXXXX
------------------------------
Xxxxxxx Xxxxxxxxx
President
NATIONAL INTEGRITY LIFE
INSURANCE COMPANY
By: /s/ XXXXXXXX XXXXXXX
------------------------------
Xxxxxxxx Xxxxxxx
Title: President
XXXXXXX XXXXX & CO., INC.
By: /s/ XXXX X. XXXXXXXX
-----------------------------
Xxxx X. Xxxxxxxx
Title: Executive Vice President
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June , 1987
Xxxxxxxxx Xxxxx X. Xxxxxxxx
Superintendent
State of New York
Department of Insurance
000 Xxxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Acquisition of Control of
Royal Tandem Life Insurance Company
-----------------------------------
Dear Xx. Xxxxxxxx:
The undersigned each agree with the New York State Insurance
Department, effective for the period described below, that Royal Tandem Life
Insurance Company ("Royal Tandem") shall at all times maintain a minimum capital
of two million dollars and a minimum surplus of four million dollars. This
commitment letter shall be effective as to each of The Equitable Life Assurance
Society of the United States and Xxxxxxx Xxxxx & Co., Inc. so long as it shall
be deemed by the Department, under applicable law, to control Royal Tandem.
Respectfully submitted,
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By: /s/ XXXXX XXXXX
--------------------------------
Xxxxx Xxxxx
Title: Executive Vice President
XXXXXXX XXXXX & CO., INC.
By: /s/ XXXX X. XXXXXXXX
--------------------------------
Xxxx X. Xxxxxxxx
Title: Executive Vice President
ROYAL TANDEM LIFE INSURANCE COMPANY
By: /s/ XXXXXXX XXXXXXXXX
-------------------------------
Xxxxxxx Xxxxxxxxx
Title: President
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