SERVICE AGREEMENT
This agreement is entered into this day of , 1998 between
First American Capital Corporation, incorporated under the laws of and domiciled
in the State of Kansas (hereinafter referred to as "the Company") and First Life
America Corporation, a life insurance company also incorporated and domiciled in
Kansas (hereinafter referred to as "FLAC").
The principal place of business of both the Company and FLAC is 0000 XX Xxxxxxxx
Xxxxxx, Xxxxxx, Xxxxxx 00000.
RECITALS
A. FLAC has need of numerous services, expertise and premises in the conduct
of its life insurance and annuity business including the following:
1) Executive, Marketing and Investment Management including related
compensation, taxes, and benefits;
2) Administrative Support management and staff including compensation, taxes
and benefits;
3) Data Processing;
4) Business Liability and Property Insurance;
5) Professional Services (including Accounting, Actuarial, Legal, Investment
Advisors, and miscellaneous Consulting);
6) Use of office space and equipment.
7) Regulatory Report Preparation a. Annual Statements b. Federal, State and
County tax returns (including premium tax returns, if any) c. Any reports
required by Insurance regulators
8) Underwriting, Policy Issue and Policyholder Service a. Ordering and
handling medical exams and attending physician statements b. Inspection reports
c. Medical Information Bureau (MIB) processing d. Issuance of contracts e.
Handling of all policyholder contract changes
9) Claims identification, investigation, processing & payment
10) General Office Expenses a. Postage, Telegraph and Telephone b. Printing
(other than sales material), including policy forms c. Administrative fees
charged by banks and service bureaus d. Bureau and Association dues,
publications, periodicals e. Office supplies and general expenses
11) Form Development
B. The Company desires to provide the above described services, expertise and
premises.
In consideration of the above recitals and the terms and covenants of this
agreement, the parties agree as follows:
SECTION ONE (EFFECTIVE DATE)
This agreement shall become effective on the date of its execution by the
parties hereto provided that same has been submitted to the Kansas Department of
Insurance and has not been disapproved.
SECTION TWO (COMPANY OBLIGATIONS)
The Company shall provide (and bear the expense of so providing) all of the
services, expertise and premises described in Recital A above EXCEPT that the
Company shall neither provide nor bear the expense of providing same in any
matter 1.) not related to the conduct of FLAC's life insurance and annuity
business; or 2.) arising out of the interpretation or enforcement of this
agreement. The Company shall not be responsible for any losses incurred by FLAC
resulting from the providing of the services and expertise enumerated in Recital
A absent a showing of gross negligence.
SECTION THREE (FLAC-RETAINED EXPENSES)
FLAC shall bear the expense of providing all direct selling costs including
agent recruiting, training and licensing; agent commissions; any benefits or
awards directly for or to agents or management, including any life or health
insurance to be provided; and any taxes (federal, state or county) directly
related to the business of FLAC. FLAC will also be responsible for any
expenditures related to reinsurance and to fulfilling obligations arising
directly from the contracts of life insurance, annuity, etc. entered into by its
agents, including legal costs related to claims. FLAC shall further be
responsible for any state examination fees arising from the conduct of its life
insurance and annuity business; independent auditors fees; any interest on FLAC
indebtedness; FLAC directors fees; Directors Liability Insurance; and any
expenses arising out of mergers or acquisitions involving FLAC.
SECTION FOUR (EXPENSES NOT ENUMERATED)
In the event that any expense is incurred by FLAC which is neither enumerated
nor described in this agreement, Company shall have no obligation to bear the
cost of same. However, the parties may enter into agreements separate and apart
from this agreement with respect to said expenses provided that those agreements
are not in violation of any applicable laws or regulations in any jurisdiction
in which FLAC conducts an insurance or annuity business.
SECTION FIVE (PAYMENTS FOR SERVICES)
In consideration for services enumerated in Recital A above, FLAC shall pay to
the Company a percentage of the life insurance and annuity premiums "delivered"
by FLAC agents. The percentages shall be twenty-five percent (25%) of first
year premiums; twenty percent (20%) of second year premiums; fifteen percent
(15%) of third year premiums; and ten percent (10%) of fourth year premiums and
five percent (5%) in years five and thereafter. Delivered premiums shall be
defined as premium received on new written business which has been underwritten
by FLAC and the policy accepted by the policy owner upon delivery by the agent.
SECTION SIX (TIME OF PAYMENTS)
The payments to the Company arising out of the calculations set forth in Section
Five above are to be remitted on a monthly basis and are due on or before the
fifth day of the month following the incurrence of the obligation to pay.
SECTION SEVEN (GOVERNING LAW)
It is agreed that this agreement shall be governed by, constructed and enforced
in accordance with the laws of the State of Kansas.
SECTION EIGHT (BINDING ARBITRATION)
It is agreed by the parties herein that any disputes arising under this
agreement shall be submitted to binding arbitration under the rules of
commercial arbitration of the American Arbitration Association.
SECTION NINE (ENTIRE AGREEMENT)
This agreement shall constitute the entire agreement between the parties. Any
prior understanding or representation of any kind preceding the date of this
agreement shall not be binding on either party except to the extent expressly
set out in this agreement.
SECTION TEN (MODIFICATION)
Any modification of this agreement or additional obligation assumed by either
party in connection with this agreement shall be binding only if evidenced in a
written document signed by both parties. Said written document shall first have
been submitted to the Departments of Insurance in all states in which FLAC is
authorized to conduct any insurance or annuity business without having been
disapproved.
SECTION ELEVEN (BINDING EFFECT)
This agreement shall inure to the benefit of and be binding upon the parties to
this agreement, their successors and assigns.
SECTION TWELVE (TERM OF AGREEMENT)
This agreement shall remain in effect until such time as either party provides
ninety (90) days written notice of termination.
SECTION THIRTEEN (PARTIAL INVALIDITY)
The invalidity of any part of this agreement will not and shall not be deemed to
affect the validity of any other part. In the event that any provision of this
agreement is held to be invalid, the parties agree that the remaining provisions
shall remain in full force and effect as if they had been executed by both
parties subsequent to the expungement of the invalid provision.
SECTION FOURTEEN (NOTIFICATION)
Any notices required under this agreement shall be made to the party to receive
notice at the party's principal place of business as described in the first
paragraph of this agreement unless said party has notified the other party in
writing of a change of address pursuant to this section.
SECTION FIFTEEN (PARAGRAPH HEADINGS)
The titles to the paragraphs of this agreement are solely for the convenience of
the parties and shall not be used to explain, modify or simplify the provisions
of this agreement.
SECTION SIXTEEN (FAILURE TO INSIST ON PERFORMANCE)
Failure at any time to insist on performance of any term or provision of this
agreement shall not be deemed a waiver of any right reserved or any other
provision of this agreement.
SIGNATURES
In witness whereof each party to this agreement has caused it to be executed in
Topeka, Shawnee County, Kansas on the date indicated below.
FIRST AMERICAN CAPITAL CORPORATION (the Company)
by: Date
Title
FIRST LIFE AMERICA CORPORATION (FLAC)
by: Date
Title
