1
EXHIBIT 1.A.(9)(a)
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:
SPECIMEN - 1 -
2
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 not so specified, to pay those charges (direct
and indirect) and expenses incurred by TFG or any of its affiliates or
subsidiaries which, as reasonably 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
SPECIMEN - 2 -
3
(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 a 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
(c) no charges or expenses shall exceed those
charged by the service provider in the relevant
market for comparable personnel, property or
services 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.
SPECIMEN - 3 -
4
3. The books, accounts and records of TFG and Royal Tandem as to all
transactions hereunder shall be maintained so as to 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, at
least 60 days prior to the expiration of the original term or of any extended
term, shall give written notice to the other party of its intention not 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.
SPECIMEN - 4 -
5
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 or its successor organization. The arbitrators' decision will be by
majority vote and no appeal will be taken from it. The costs 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.
7. Subject to the foregoing Section 6, this Agreement shall inure to
the benefit of and be binding upon the successors and assigns of the parties
hereto.
SPECIMEN - 5 -
6
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
TANDEM FINANCIAL GROUP, INC.
By: /S/ XXXXXXXX XXXXXX
----------------------
Xxxxxxxx Xxxxxx
ROYAL TANDEM LIFE
INSURANCE COMPANY
By: /S/ XXXXXXXX XXXXXX
-----------------------
Xxxxxxxx Xxxxxx
SPECIMEN - 6 -
7
EXHIBIT I
To Service Agreement
Between TFG and Royal Tandem
Personnel, Property and Services (except as provided under separate agreements
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
SPECIMEN - 0 -
0
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
any such person as a part of, and on the same terms as, a general offering to
stockholders or to the public.
SPECIMEN - 8 -
9
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 full 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 but
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
policyholder 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.
SPECIMEN - 9 -
10
(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
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,
SPECIMEN - 10 -
11
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 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
SPECIMEN - 11 -
12
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 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 X.xxxx or
subsidiaries, affiliateS or other corporate entities thereof, will be allocated
SPECIMEN - 12 -
13
equitably. Adequate and properly documented workpapers serving as a basis for
allocations and charges shall be maintained by Royal Tandem. The books,
accounts an! records of each party will be kept in a manner which clearly and
accurately discloses, inter 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 Royal Tandem do not adequately reveal all transactions
relevant to its operations, 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 mar
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
SPECIMEN - 13 -
14
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
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 checks on
its bank accounts.
10. Agreements with agencies engaged in common by
Royal Tandem and any Parent or 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 require 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
SPECIMEN - 14 -
15
departments of Royal Tandem shall be made by or to any Parent, its affiliates,
subsidiaries or controlling interests thereof if it 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.
(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 Tandems 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
SPECIMEN - 15 -
16
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 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
SPECIMEN - 16 -
17
TANDEM FINANCIAL GROUP, INC.
By /S/ XXXXXXX X. XXXXXXXXX
-------------------------------
Xxxxxxx X. Xxxxxxxxx
Title: 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 X. XXXXXXXXX
-------------------------------
Xxxxxxx X. Xxxxxxxxx
Title: President
SPECIMEN - 17 -
18
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 ("EVEICO"), 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, Rational
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
SPECIMEN - 18 -
19
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.
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
Title: Executive Vice President
EQUITABLE VARIABLE LIFE INSURANCE
COMPANY
By /S/ XXXXXX XXXXXX
-------------------------------
Xxxxxx Xxxxxx
Title: President
ROYAL TANDEM LIFE INSURANCE COMPANY
By /S/ XXXXXXX X. XXXXXXXXX
-------------------------------
Xxxxxxx X. Xxxxxxxxx
Title: President
SPECIMEN - 19 -
20
NATIONAL INTEGRITY LIFE INSURANCE
COMPANY
By /S/ FRANKLIN MAISAND
-------------------------------
Franklin Maisand
Title: President
XXXXXXX XXXXX & CO., INC.
By /S/ XXXX X. XXXXXXXX
-------------------------------
Xxxx X. Xxxxxxxx
Title: Executive Vice President
SPECIMEN - 20 -
21
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
SPECIMEN - 21 -
22
ROYAL TANDEM LIFE INSURANCE
COMPANY
By /S/ XXXXXXX X. XXXXXXXXX
-------------------------------
Xxxxxxx X. Xxxxxxxxx
Title: President
SPECIMEN - 22 -
