State Farm O & A January 99

State Farm has responded to the NAGS Benchmark Pricing Calculators by amending it's Offer & Acceptance Agreement. Effective January 1, 1999, they have changed discounts on windshields and tempered, along with instituting a flat charge for both labor and materials.

The following is the text of the letter sent out to thousands of glass shops who participate in the State Farm Offer & Acceptance Program.

November 13, 1998

Dear Glass Facility:

In September, NAGS introduced their new "benchmark" glass pricing structure. This structure, which goes into effect January 1, 1999, amounts to a large - scale reduction in the previous NAGS automobile glass list prices. Sate Farm has responded to this change by revising its pricing structure as set out below. As you can see, the discount rates, labor rate and kit charge have changed from our previous offer. Our discount off NAGS has decreased due to the reduction in NAGS benchmark list prices and our labor and kit charges have increased. These changes result in keeping our new pricing in line with our prior pricing structure.

Under your State Farm Offer & Acceptance Agreement, you previously agreed to future pricing structures upon notification from State Farm. Effective January 1, 1999, the pricing for glass service set forth in Sections 1.A, 1.B and 1.C of the Agreement will be as follows:

A. Glass for Autos, Vans and Light Trucks: Domestic and Foreign

Windshield:
A market > 41% off NAGS List Price
B market > 26% off NAGS List Price
C market > 13% off NAGS List Price
D market > 3% off NAGS List Price
E market > 10% over NAGS List Price

Tempered:
A market > 39% off NAGS List Price
B market > 30% off NAGS List Price
C market > 22% off NAGS List Price
D market > 17% off NAGS List Price
E market > 10% off NAGS List Price

Your Invoice will determine the agreed upon price for that job if consistent with the above pricing.

B. Labor:
All Markets > $40.00 Flat Rate per Piece of Glass

C. Installation Materials:
All markets > $19.00

The amount stated for installation materials will be paid for each glass replacement regardless of installation technique, unless installation materials are not required. This amount includes the appropriate type of adhesive, primer, clips, etc.

The above pricing structures do not apply to Recreational Vehicles (RV) or Customized Vans (CV). On any dispatch for RV or CV glass, you will have the following options:

1. Install RV or CV glass to be delivered by Duncan Systems and submit the deductible and a bill for labor to Duncan systems for direct payment by Duncan Systems in an amount agreeable to State Farm; OR

2. Give Duncan Systems a competitive bid for the work to be performed with State Farm paying the policyholder the lower of the competitive bids; OR

3. Choose not to perform the replacement of the RV or CV glass.

All other terms and conditions of the Agreement remain in effect. As provided by the Agreement, either party can terminate the Agreement in writing at any time.

We look forward to continuing our mutually beneficial business relationship. However, if it is you decision to discontinue your participation in the Offer & Acceptance program, you must send WRITTEN notification to State Farm an the following address

Glass Central Unit A-4
State Farm Mutual Automobile Insurance Company
One State Farm Plaza
Bloomington, IL 61710

The above information describes changes to the Offer & Acceptance Agreement previously completed by your facility. All other terms and conditions of the Agreement remain in effect. As provided in the Agreement, either party can terminate the Agreement in writing at any time.

Please do not call Glass Central to be removed from the Offer & Acceptance program since any request to terminate the Agreement must be in writing. Until we receive a WRITTEN removal request, any jobs dispatched to your facility on or after January 1, 1999 will be processed under the new pricing structure and your facility will continue to remain on the Offer & Acceptance program.

We appreciate your continued participation in our glass claim program. Thank you for helping provide our common customers with the best glass claim service in the industry.

Sincerely,

Eric L. Thomas
National Glass Manager