ADMINISTRATIVE SERVICES AGREEMENT
THIS ADMINISTRATIVE SERVICES AGREEMENT is made and executed by and between Farm
Bureau Life Insurance Company ("Farm Bureau Life"), an Iowa corporation having
its principal offices at 0000 Xxxxxxxxxx Xxxxxx, Xxxx Xxx Xxxxxx, Xxxx; and
Southern Farm Bureau Life Insurance Company (the "Company"), a life insurance
company having its principal offices at Jackson, Mississippi 39205..
RECITALS
Company desires to have Farm Bureau Life provide services to Company with
respect to certain annuity contracts and/or insurance policies and Farm Bureau
Life is willing to provide such services, subject to the terms and conditions of
this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and obligations
hereinafter expressed and for the consideration recited herein, Company and Farm
Bureau Life hereby covenant, stipulate and agree as follows:
PART 1 - SERVICES
1.1 SCOPE OF SERVICES. From and after the date of this Agreement, Farm Bureau
Life agrees to provide to the Company financial reporting and service functions
with respect to the annuity contract and/or insurance policy forms underwritten
and issued by the Company, as identified and listed in the schedule of contract
and policy forms and riders annexed hereto as Schedule A. Such financial
reporting and service functions shall consist of the activities set forth and
described in the Description of Services annexed hereto and incorporated herein
as Schedule B. Schedules A and B may be amended from time to time by mutual
written agreement of the Company and Farm Bureau Life.
1.2 ADDITIONAL SERVICES. Farm Bureau Life shall review any additional servicing
requirements at the request of the Company and Farm Bureau Life will provide the
Company with a written proposal to include specific services to be provided, an
implementation schedule and any associated fees and expenses.
1.3 COMPENSATION. In consideration of its administration services under this
Agreement for and on behalf of the Company and its contract or policy holders,
annuitants and beneficiaries, the Company will pay Farm Bureau Life such
compensation and reimburse Farm Bureau Life for such expenses as are provided
for in the schedule of administrative fees annexed hereto as Schedule C. Farm
Bureau Life agrees that the compensation payable pursuant to Schedule C shall be
accepted by Farm Bureau Life as full compensation from the Company for the
services described in Schedule B.
1.4 COMPANY DIRECTIVES. Farm Bureau Life shall, in all cases and at all times,
to the extent there is reasonable notice thereof, observe and obey the rules,
regulations, instructions and directives of the Company as the Company may, from
time to time, promulgate for its operations, and shall not bind the Company in
contravention of any such rules, regulations, instructions or directives. Farm
Bureau Life shall not, however, upon reasonable prior notice to the Company, be
responsible for observing or obeying any rule, regulation, instruction or
directive of the Company, if in so doing, Farm Bureau Life, in the opinion of
its counsel, would
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be in violation of any statute, rule or regulation promulgated by any
governmental authority with jurisdiction thereover.
1.5 REFERRAL OF COMMUNICATIONS. Farm Bureau Life shall handle all correspondence
of a routine nature and other general functions necessary for satisfactory
administration of the Company's annuity contracts or insurance policies and
shall maintain files relative thereto. Farm Bureau Life shall immediately
forward to the Company copies of all attorney letters or other communications
notifying Farm Bureau Life of threatened or actual litigation against Farm
Bureau Life or the Company. The Company shall forward to Farm Bureau Life,
immediately upon receipt, all complaints and inquiries, and all attorney letters
containing complaints received by the Company but appropriate for Farm Bureau
Life response. Farm Bureau Life will dispatch responses within a reasonable
period or as required by appropriate law, whichever is sooner, and will copy the
Company on such responses to all complaints. The Company shall have an
opportunity to review Farm Bureau Life's response to all attorney letters and
Farm Bureau Life will not mail or otherwise transmit any such written responses
to such attorney letters without the prior written approval of the Company.
PART 2 - STANDARDS OF PERFORMANCE
2.1 LICENSURE. Farm Bureau Life will be properly licensed with each state or
other jurisdiction as required.
2.2 GENERAL STANDARD. All services to be provided by Farm Bureau Life under this
Agreement shall be performed in a professional manner consistent with industry
standards and in accordance with all applicable laws and regulations.
2.3 RESERVATION OF MANAGEMENT AUTHORITY. Services as are rendered by Farm Bureau
Life are subject to the express limitation that they shall in no way constitute
a relinquishment of the management responsibility of the Company, which shall
not be relieved of any obligation or liability to which it would otherwise be
subject by law as a result of these services being rendered. The Company retains
ultimate and final authority to underwrite, issue policies, arrange reinsurance
or otherwise service the policies as set forth in Schedule B. The authority
granted and delegated in Schedule B can be amended or removed pursuant to
section 3.2 in the sole discretion of the Company.
PART 3 - EFFECTIVE DATE, TERM; TERMINATION
3.1 EFFECTIVE DATE; TERM. This Agreement shall become and be effective on and
as of January 1, 2000, and, unless sooner terminated pursuant to Section 3.2
hereof, shall thereafter continue in full force and effect until December 31,
2009; provided, however, after the initial ten-year term, this Agreement, and
all of its terms and provisions, as the same may have previously been amended
by the parties, shall be automatically renewed and reconducted for successive
six month renewal terms unless one party shall, not less than 180 days prior
to the conclusion of the initial or any renewed term, advise the other party
in writing of its intent that this Agreement terminate as of the conclusion
of any such term.
3.2 TERMINATION: After the conclusion of the initial or any renewed or extended
term, this Agreement may be terminated:
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a. by either party with respect to new business, upon six months prior written
notice to the other party;
b. by the Company with respect to business in force, upon six months prior
written notice to Farm Bureau Life;
c. by the Company, with respect to new business and/or business in force, upon
written notice to Farm Bureau Life in the event of the bankruptcy or
insolvency of Farm Bureau Life, or
d. by either party upon prior written notice to the other party specifying the
other party's breach or default in the performance of any material covenant
or obligation of this Agreement and failure to cure or remedy such breach
or non-performance within 30 days of the date on which notice of such
breach or default is received, or such longer period as may be permitted by
the party giving notice.
Prior to the completion of the initial term of this Agreement, this Agreement
may be terminated only for the reasons stated in subparagraphs "c" and "d"
above, or by the express written agreement of the parties.
3.4 RIGHTS AND OBLIGATIONS UPON TERMINATION. Upon the termination of this
Agreement, Farm Bureau Life shall supply the Company with copies of claims and
policy administration documents and all information necessary to administer the
business covered by this Agreement, including data on magnetic media.
PART 4 - INDEMNIFICATION
4.1 MUTUAL INDEMNIFICATION. Farm Bureau Life agrees to indemnify and hold the
Company harmless from any liability, damages or losses which the Company may
incur as a result of any claims, actions or judgments, negligent or intentional,
in connection with Farm Bureau Life's provision of services to the Company;
provided, however, Farm Bureau Life shall not be responsible for decisions made
by the Company or for actions as directed by Company in writing. The Company
similarly agrees to indemnify and hold Farm Bureau Life harmless for decisions
made by the Company or actions as directed by the Company in writing. Each party
warrants to the other that its services and obligations as performed under this
Agreement, including, but not limited to the materials used therein, will not
infringe upon the proprietary interests or rights of third parties and each
party will further indemnify, hold harmless and defend the other party, its
directors, officers, agents and employees, against any infringement liability,
claim or action as a result of the actions of the indemnifying party.
4.2 NOTICE OF CLAIM. If any claim is made by a party which would give rise to
a right of indemnification under Section 4.1, the party entitled to
indemnification (the "Indemnified Party") promptly will give notice of the
claim to the party required to provide indemnification (the "Indemnifying
Party"). The Indemnified Party will permit the Indemnifying Party to
participate in such defense at the Indemnifying Party's expense. The
Indemnifying Party will not, in the defense of any such claim or litigation,
consent to entry or any judgment or enter into any settlement without the
written consent of the Indemnified Party which will not be withheld
unreasonably. The Indemnified Party shall cooperate fully with the
Indemnifying Party and make available to the Indemnifying Party all pertinent
information under its control relating thereto.
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PART 5 - GENERAL PROVISIONS
5.1 AUTHORIZED OFFICERS. The Company authorizes each of its officers identified
in Schedule D, attached hereto and incorporated herein by reference (hereinafter
referred to as "Authorized Officers"), within the scope of the officers'
authority as described in Schedule D, to: (i) coordinate communications with
Farm Bureau Life with respect to this Agreement; (ii) provide to Farm Bureau
Life written requests and instructions with respect to the services provided for
herein; and (iii) clarify with Farm Bureau Life the specific scope and timing of
records maintained, reports prepared and other services performed by Farm Bureau
Life. The Company authorizes its Chairman, Vice Chairman, President, Chief
Executive Officer, Executive Vice President, Chief Financial Officer, Chief
Operating Officer and Chief Marketing Officer to agree in writing with Farm
Bureau Life on changes in the compensation payable by the Company to Farm Bureau
Life to reflect changes in the scope and timing of the services. If Farm Bureau
Life receives any letter or other writing from an executive officer of the
Company authorizing an officer of the Company to sign documents on behalf of the
Company, then such officer shall be considered an Authorized Officer for
purposes of this Agreement and Schedule D shall be considered amended
accordingly. The Company may amend Schedule D from time to time by giving notice
to Farm Bureau Life of the amendment.
5.2 CONFIDENTIAL INFORMATION. In performing the obligations arising under this
Agreement, each party may have access to and receive disclosure of certain
confidential or proprietary information of the other party (hereinafter
"Confidential Information"). Each party shall take all reasonable steps
necessary to protect the confidential and proprietary nature of all Confidential
Information of the other party by affording thereto the same types of protection
which the party in possession of Confidential Information of the other party
affords its own confidential and proprietary information. Except as provided in
this Agreement or as reasonably required to perform the services referenced
herein, neither party shall, directly or indirectly, disclose or make available
to any third party, or use for any purpose, any Confidential Information
belonging to the other party. Notwithstanding the foregoing, Confidential
Information shall not include: (i) any information which is or becomes generally
available to the public or the insurance industry, other than as a result of a
breach of this Agreement by the party obtaining the Confidential Information;
(ii) any information which is lawfully obtained by the party from a third party,
provided that the third party is not, to the knowledge of the party obtaining
the information, bound by a nondisclosure agreement with respect thereto; or
(iii) any information which subsequently develops from independent sources.
5.3 COMPANY PROPERTY. All contract and policy forms, records and supplies
furnished by the Company to Farm Bureau Life, shall remain the property of the
Company and shall be turned over to the Company promptly on demand. All other
contract and policy forms or other supplies, and all underwriting files or other
files pertaining to an annuitant's or insured's coverage, whether retained by
the Company or Farm Bureau Life, shall be copied upon request and said copies
provided to the other party at the expense of the requesting party. All licenses
and other materials relating to government licensing or authorizations of the
Company with respect to this Agreement shall be and remain the property of the
Company and shall be turned over to the Company by Farm Bureau Life promptly
upon demand.
5.4 INSPECTION OF BOOKS AND RECORDS. The Company, or others on its behalf, shall
have the right at any reasonable time to inspect all books and documents
relating to the business administered under this Agreement. Farm Bureau Life
shall provide any and all information
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concerning the business administered hereunder required in order to administer
this Agreement and to permit the Company to comply with governmental
regulations, examinations, audits and inspections.
5.5 FARM BUREAU LIFE AUTHORITY. Farm Bureau Life expressly represents and
warrants that it has the authority to enter into this Agreement and that it is
not or will not be, by virtue of entering into this Agreement or otherwise, in
breach of any other agreement with any other insurance company, association,
firm, person or corporation.
5.6 COMPANY AUTHORITY. The officer signing this Agreement on behalf of the
Company and Farm Bureau Life represent and warrant that they are authorized to
execute this document on behalf of such corporations pursuant to their bylaws or
a resolution of their boards of directors.
5.7 INDEPENDENT CONTRACTOR. Farm Bureau Life is an independent contractor.
Nothing contained in this Agreement shall be construed to create the
relationship of employer and employee between the Company and Farm Bureau Life,
nor shall Farm Bureau Life's employees be considered employees of the Company
for any purposes.
5.8 ARBITRATION. In the event of any dispute arising between Farm Bureau Life
and the Company with reference to the rights or liabilities of either party
under this Agreement, the dispute shall be referred to three arbitrators (other
than present or former officers or employees of Farm Bureau Life, the Company,
any affiliated company or any company with a monetary interest in the dispute)
familiar with the business of insurance. One of the arbitrators shall be chosen
by Farm Bureau Life, another by the Company and a third by the first two. The
decision of the arbitrators shall be binding and final. The standards to be used
in the proceedings will be the Commercial Arbitration Rules of the American
Arbitration Association. Each party shall initially pay the costs and fees of
the arbitrator it selects, and the costs and fees of the third arbitrator shall
be divided equally by the parties; PROVIDED, HOWEVER, that the prevailing party
in any arbitration proceeding conducted pursuant to this Section shall be
entitled to recover from the other party any costs or expenses incurred by the
prevailing party in connection with the arbitration, including the fees of
arbitrators and the reasonable fees of attorneys, actuaries, accountants and
other experts.
5.9 ASSIGNMENT. Neither party may assign or delegate all or any part of its
rights and duties under this Agreement without the prior written consent by an
executive officer of the granting party.
5.10 NON-WAIVER. The waiver of any breach of any term, covenant or condition of
this Agreement shall not be deemed a waiver of any subsequent breach of the same
or any other term, covenant or condition. No term, covenant or condition of this
Agreement shall be deemed to have been waived unless such waiver is in writing
and signed by the party charged therewith.
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5.11 NOTICES. Any notice required or permitted under this Agreement shall be
deemed sufficiently given and effective five (5) business days after deposit
with the United States Postal Service, postage-prepaid, registered or certified,
return-receipt-requested, by facsimile or other electronic transmission, or upon
receipt if delivered personally. Such notice shall be directed as follows:
FARM BUREAU LIFE INSURANCE SOUTHERN FARM BUREAU LIFE
COMPANY INSURANCE COMPANY
Attn.: Xxxxxxx X. Xxxx Attn.:
Executive Vice President
and General Manager
0000 Xxxxxxxxxx Xxxxxx
Xxxx Xxx Xxxxxx, Xxxx 00000 Xxxxxxx, Xxxxxxxxxxx 00000
5.12 TITLES AND HEADINGS. The titles and headings appearing in this Agreement
are included for convenience only and shall not be taken into account in the
interpretation, construction or application of this Agreement.
5.13 AMENDMENT. Any amendment to this Agreement shall be in writing and signed
by authorized representatives of both parties.
5.14 ENTIRE AGREEMENT. This Agreement, together with the several Schedules
appended hereto and incorporated herein, constitutes the entire agreement
between the parties relative to the subject matter hereof, superseding any and
all prior understandings or agreements between the parties and any subsidiary,
parent or affiliated company and may not be amended except by written instrument
executed by the parties.
IN WITNESS WHEREOF, Farm Bureau Life and the Company have caused this Agreement
to be subscribed and executed, in triplicate original, by their undersigned
officers, duly authorized hereunto, on the dates hereinafter indicated.
FARM BUREAU LIFE INSURANCE COMPANY SOUTHERN FARM BUREAU LIFE
INSURANCE COMPANY
By:________________________________ By:________________________________
Xxxxxxx X. Xxxx
Executive Vice President and
General Manager
Date:_______________________ Date:_______________________
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SCHEDULE A
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SCHEDULE OF CONTRACTS, POLICY FORMS AND RIDERS
------
Description Policy Number
-------------------------------------------------------------------------------
-Variable Products folder 43X-001
-Variable Products brochure 43X-002
-Variable Annuity guide 43X-003
-Variable Annuity Prospectus 43X-007
-Annuity Buyers Guide (if required) 43X-018
-Non-Participating Flexible Premium 43X-062
Deferred Variable Annuity
-Beneficiary Designation form 43X-064
-XXX Disclosure Statement 43X-085
-Xxxx XXX Disclosure Statement 43X-085R
-Simple XXX Disclosure Statement 43X-085S
-Variable Annuity Application form 43X-121
-Systematic Withdrawal/DCA Service form 43X-129
-Settlement Election form 43X-130
-Texas - special complaint notice 43X-174
-Replacement Notice (if required by state) 43X-176XX
-Guaranty Association Notice (if required by state) 43X-177XX
-EFT Notice 43X-279
-Policy Service Request Form 43X-279
-Variable Policyowner Service Request 43X-289
-Beneficiary Statement 43X-341
-Amendment of Application 43X-358
-403(b) Annuity Endorsement 43X-531
-XXX Endorsement 43X-550
-Qualified Plan Endorsement 43X-551
-Xxxx XXX Endorsement plus Texas variation 43X-553
-SIMPLE XXX Endorsement 43X-554
-Lost Policy Certificate 43X-566
-Settlement Options 43X-585
-Statement of Values 43X-821
-Statement of Values 43X-822
-Absolute Assignment 43X-830
-Request for transfer 43X-832
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SCHEDULE B
------
DESCRIPTION OF SERVICES
------
Subject to guidelines and directions of the Company within applicable laws
and regulations and reasonable industry standards consistent with the
maintenance of an "A" or "A-" rating as determined by A.M. Best Company and
including all expenses and fees related thereto.
1. NEW BUSINESS
(a) Farm Bureau Life shall receive all premiums, applications, date stamp
and process those applications promptly.
(b) Verify that agency and agent licenses are in place according to data
provided by the Company.
(c) Maintain all written communication pertinent to the application.
2. UNDERWRITING AND POLICY ISSUE
(a) Prepare a systems master file.
(b) Farm Bureau Life's underwriting authority shall extend automatically
to all underwriting decisions.
(c) Create policy and data pages.
(d) Verify that policies are issued as applied for or amended.
(e) Mail, via Regular United States Postal Service, policies to owner
and/or broker in accordance with the Company's placement.
(f) Create a policyholder file.
3. POLICYHOLDER SERVICE
(a) Maintain policyholder records (computer, hard copy, microfilm or image
system as applicable).
(b) Record all policy services changes on master file.
(c) Receive and respond to requests, complaints and inquiries from
policyholder, and other authorized people in accordance with the
Company's complaint procedures as set forth in part 1 Section 1.5.
(d) Maintain all written material reflecting system changes.
(e) Receive and process all disbursement requests with confirmations to
policyholder and broker in accordance with agreed upon procedures.
(f) Calculate and collect fees and taxes as applicable.
(g) Receive and process policyholder service requests.
(h) Receive and process policyholder requests for settlement/annuity
options.
(i) Prepare periodic and non-periodic disbursement payments by check to
policyholders or designated payees and deliver in accordance with
agreed upon procedures.
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(j) Withhold and report federal and state income tax as required.
(k) Record and acknowledge assignments of ownership and collateral.
(l) Produce and mail periodic statements of account to policyholders.
(m) Prepare and mail tax forms to policyholders and other payees as
required by law.
4. CLAIMS PROCESSING
(a) The Company shall advise and instruct Farm Bureau Life in writing
concerning disputed claims and policy interpretations brought to the
attention of the Company's Claim Department by Farm Bureau Life.
(b) In the event a Claimant's file is to be sent to the Company for
review, the original copy of that file shall be retained by Farm
Bureau Life unless requested by the Company because of pending
litigation. (c) Withhold and report federal and state income tax as
required.
(d) Fulfill state requirements for Tax Notices and Consents in the payment
of claims.
(e) Include statutory interest on the payment of claims when applicable.
(f) Abide by the applicable state Unfair Claim Settlement Practices
regulations.
(g) Receive and respond to complaints in accordance with the Company's
complaint procedures as set forth in part 1 Section 1.5.
5. AGENCY/AGENT SERVICES
(a) Prepare and mail monthly commission statements and checks to the
broker reflecting both positive and negative earnings for the period.
(b) Prepare and transmit to the Company tax information for broker or
other payees as required by law.
(c) Carry sufficient information on registered representatives of the
broker so that proper identification of business issued can be
appropriately credited.
(d) Provide Company with monthly production reports showing the production
generated by each Broker.
6. COLLECTION AND DISPOSITION OF FUNDS
(a) Farm Bureau Life shall act on behalf of the Company in collecting and
receiving funds from insureds, reinsurers, agents and brokers. All
funds so received and collected shall be deposited promptly in a bank
account for the Company and established by the Company, separate and
apart from any funds belonging to Farm Bureau Life or third parties.
(b) The Company shall grant Farm Bureau Life authority for said account
pursuant to an agreement. Farm Bureau Life shall have the authority to
disburse funds from such bank account for the following purposes:
1. Payment of commissions to broker.
2. Payment of return premiums.
3. Payment to the Company of net due to the Company.
4. Payment of fees to Farm Bureau Life pursuant to the Settlement
Information section below and Schedule C.
5. Payment of policy proceeds including, but not limited to,
surrenders and claims.
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6. Remit Federal and State policyholder benefit withholding to the
Company for distribution to the proper authorities.
Farm Bureau Life shall not disburse funds from the account for any other reason
without written authorization from the Company.
Farm Bureau Life shall monitor the account balance on an as needed basis,
determine daily funding needs and communicate deposit requests to the Company.
When requested by Farm Bureau Life, the Company shall deposit funds in amounts
sufficient to maintain a minimum balance in the account. It shall be the
responsibility of the Company to make deposits on a timely basis.
7. SETTLEMENT INFORMATION
(a) Within 10 business days after the end of each quarter, Farm Bureau Life
shall report to the Company the net due to or from the Company; the prior
month's activity shall be reconciled by Farm Bureau Life.
(b) Farm Bureau Life shall provide service reports to the Company, including
but not limited to the following reports:
1. Check Register.
2. Premiums and commissions on a year-to-date basis, broken down by first
year and renewals.
3. Benefits including but not limited to: Surrender, Annuitization or
Death.
4. Statutory Tax Information.
5. Standard production or Marketing Reports as agreed upon.
MONTHLY
(1) Commissions Payable.
(2) Reconciliation Report (Reinsurance).
(3) A reconciliation between what flowed through bank account
vs. what was reported.
(4) Pending Premium Report.
QUARTERLY
(1) Premiums by State.
(2) Agents Debit Balances.
(3) Interest Credited.
(4) Reserve Report.
ANNUALLY
(1) Surrenders by State.
(2) Death Claims by State.
(3) Any other Policyholder Benefits Paid by State.
(4) Policy Exhibit by State Information.
(5) Death Claim counts by State.
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7. OTHER SERVICES
(a) Reconcile bank statements and cash accounts on a monthly basis.
(b) Furnish to the Company all applicable data necessary for preparation of the
Company's NAIC Convention Blank, corporate tax return.
(c) Responsibility for compliance with all statutory and regulatory
requirements with respect to services provided herein.
(d) System Changes.
1. The Company will notify Farm Bureau Life in writing and likewise, Farm
Bureau Life will notify the Company, if there are any changes in
federal, state or local law, rules or regulations which affect the
services provided to the Company under this Agreement. Farm Bureau
Life will use its best efforts to develop and implement the necessary
changes and take other actions reasonably required so that the
services continue to satisfy applicable laws, rules and regulations.
2. The Company may request in writing system changes not required by law,
rule or regulation. Farm Bureau Life will use its best effort to
develop and implement these changes where the changes are practical
and feasible at a pre-agreed upon cost.
(e) Provide historical record retention in hard copy, microfilm or image as
applicable and in conformance with the Company's retention policy.
(f) Maintain off-site computer disaster recovery backup and recovery tapes on a
daily, weekly and monthly basis. Recovery time will be specified to mirror
the Company rules.
(g) Provide minimum death benefits, contingency reserves, ETC. as required by
the Company.
(h) Support financial, administrative, claim, regulatory and data processing
audit reviews in accordance with guidelines agreed to with the Company.
(i) Process special mailings and/or mailing inserts as reasonably required.
(j) To the extent not specifically provided for herein, Farm Bureau Life will
provide such services as are necessary to allow the Company to comply with
its obligations under the VA and VUL Reinsurance Agreements with Farm
Bureau Life.
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SCHEDULE C
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EXPENSES
----------
1. INITIAL CHARGES: There shall be a one time charge of $75,000 for the
development and implementation of the variable annuity product. This amount
shall be paid no later than the execution date on page 6 of this Agreement.
2. ONGOING CHARGES: Acquisition and maintenance charges related to the variable
annuity contract will be charged as follows:
VARIABLE SETTLEMENT
CHARGES AND FEES ANNUITY OPTIONS
-------- ----------
Acquisition charge per application $108 $93
Annual maintenance fee per policy $53 $38
Annual Acquisition charge
on first-year premium 0% 0%
ACQUISITION CHARGES
Acquisition charges apply to new applications. The maintenance fee is charged
quarterly on the number of policies in force each quarter. The number of
policies in force each quarter will be equal to half of the sum of the number of
policies in force at the end of the prior quarter and the number in force on the
last day of the current quarter.
MAXIMUM ANNUAL PER POLICY MAINTENANCE FEE
If the Company issues at least the cumulative number of policies, as shown in
the following table, by the end of each of the first five calendar years of this
agreement, then the annual per policy maintenance fee charged effective January
1 of the following year will not be greater than the fee shown in the table
below.. The policy count would apply on a cumulative basis.
YEAR CUMULATIVE
NO. OF POLICIES MAXIMUM ANNUAL
ISSUED MAINTENANCE FEE
2000 457 $50
2001 1,656 $46
2002 3,670 $43
2003 6,314 $40
2004 9,090 $37
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Charges and fees in this section are based on 1998 experience. Subject to
Company qualifying for a cap on the maximum annual maintenance fee based on the
number of policies issued each year, as shown above, charges and fees will be
adjusted annually, on April 1. If the Company does not meet the requirements
regarding the number of policies issued, as shown above, the maintenance fee
will be based on actual results for the year ended the previous December 31. If
new charges and fees are not mutually agreed to in writing within ninety (90)
days after the announcement of the new charges and fees, the parties agree to
resolve any dispute about the new charges and fees by Arbitration pursuant to
section 5.8 of this Agreement. After the initial five-year term of this
Agreement, if new charges and fees are not mutually agreed to in writing within
ninety (90) days after the date of announcement of the new charges and fees,
this Agreement will terminate.
SERVICES PROVIDED
These initial charges and fees are based on the cost of providing the following
categories of services:
Policy Issue
Underwriting
Policy Service
Routine claim payment administration
Premium billing and collection
Processing the products as originally priced and designed
Accounting
Financial/actuarial services
3. OTHER EXPENSES
Except for the following listed services which are specifically excluded from
this agreement and which will be provided by Farm Bureau Life and paid for
separately by the Company only upon the written request for these additional
services by the Company, it is the intent of the parties that Farm Bureau Life
will provide such the services necessary to allow the Company to comply with its
obligations under the VA Reinsurance Agreement with Farm Bureau Life. Those
types of services which are excluded from this agreement are as follows:
1. Additional product development and pricing. Product development,
filing with the appropriate regulatory authorities and pricing for the
initial products are covered by the fees paid under section 1 of this
schedule.
2. Agency matters (including fees and costs associated with the
appointment of agents).
3. Commissions.
4. Designing and printing brochures, applications or any other printed
material utilized by the Company.
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5. Filing fees. Any fee incurred by Farm Bureau Life related to the
services provided to the Company. The Company will also pay its
proportionate share of any fees incurred by Farm Bureau Life that also
relate to services provided to other companies.
6. Certain claims settlement expenses such as outside legal fees and
expenses.
7. Advertising costs.
8. Video/CD/ other media development.
9. Providing training for Companies' agent/managers/employees.
10. Illustration modification, systems modification, diskette
distribution.
11. Any system modification requested by the Company.
12. Market research conducted for or on behalf of the Company.
13. Advanced underwriting/marketing.
14. Investment accounting
15. Broker/Dealer expenses incurred by Farm Bureau Life's Broker/Dealer.
16. Outside legal expenses.
17. Taxes.
18. Software expenses.
19. Preparation of prospectuses.
20. Other direct expenses applicable to the business serviced by Farm
Bureau Life.
Direct expenses for services provided pursuant Company's written request will be
billed as incurred and will be payable within 15 days of billing.
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SCHEDULE D
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AUTHORIZED EMPLOYEES
----------
Chairman
Vice Chairman
President
Chief Executive Officer
Executive Vice President
Chief Financial Officer
Chief Operating officer
Chief Marketing Officer
Vice President
Assistant Vice President
Treasurer
Assistant Treasurer
Secretary
Assistant Secretary
Actuary
Director of Agency Administration
Director of Annuity Issue
Director of Underwriting
Director of Claims
Director of Information Services
Market Conduct Officer
2-8-99
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