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EXHIBIT 10.91
EXECUTION COPY
NASE - MEGA
VENDOR AGREEMENT
This
agreement ("Agreement") is made and entered into effective as
of
January 1, 2005 by and between The MEGA
Life and Health Insurance Company, an
Oklahoma domiciled life and health
insurance company ("CARRIER"), and the
National Association for the Self-Employed,
Inc., a Texas non-profit corporation
(the "NASE").
WHEREAS,
the NASE is a member organization that provides or makes
available to its members a variety of
services and benefits, including health
insurance products and other insurance
related products;
WHEREAS,
CARRIER is in the business of selling life and health insurance
and other insurance related products;
WHEREAS,
CARRIER currently has association group insurance policies
("Association Group Policies") in force
with NASE Group Insurance Trust Fund, an
Alabama trust, and with The NASE 2003 Group
Insurance Trust, an Illinois trust
(collectively, the "Trust"), pursuant to
which certificates of insurance have
been and will be issued to members of the
NASE. CARRIER has also issued
individual insurance policies ("Individual
Policies") to members of the NASE in
states that do not authorize the marketing
and sale of "association group"
policies;
WHEREAS,
the Parties entered into that certain Agreement dated April 1,
1996 (the "1996 Agreement") setting forth
the terms under which the NASE made
available to its members insurance products
and other health related products of
CARRIER; and
WHEREAS,
the Parties desire to amend, revise and restate in its entirety
the 1996 Agreement defining the
relationship between the NASE and CARRIER;
NOW,
THEREFORE, for and in consideration of the mutual covenants and
agreements hereinafter set forth, the
receipt and sufficiency of which is
acknowledged by the Parties hereto, the
NASE and CARRIER hereby agree as
follows:
1. VENDOR RELATIONSHIP. The NASE agrees
that, during the Term hereof and upon
the terms and conditions contained herein,
it will make available to members of
the NASE such Association Group Policies,
Individual Polices and other insurance
related products (collectively, the
"Products") offered by CARRIER as the
Parties may agree from time to time.
CARRIER shall be solely responsible for
designing the Products and for establishing
the prices to be charged for such
Products. The NASE shall be solely
responsible for determining which Products of
CARRIER will be made available through the
NASE to its members. The NASE will
make such Products available to its members
through its communications to
members and prospective members, through
its catalog of benefits, through
newspaper, television and other
advertisements and/or through other means
selected by the NASE in its sole
discretion. Nothing contained herein and no
performance by the NASE of its obligations
hereunder shall be deemed to
constitute an endorsement by the NASE of
CARRIER or of the Products, and the
NASE assumes no financial responsibility
for the profitability of any Products
sold by CARRIER to members of the NASE.
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2. DEFINITIONS. For purposes of this
Agreement, the following terms shall have
the following meanings:
(a) Administrative Expense means, with respect to any period,
costs
incurred
in such period by CARRIER for policy issuance and policy
maintenance, but excluding the cost of investigating and paying
claims.
(b) Collected Premium means, with respect to any period, the
insurance
premiums actually received in cash by CARRIER in such period.
(c) Governmental Authority means any nation or government, any
state
or
political subdivision thereof and any entity exercising
executive,
legislative, judicial, regulatory or administrative functions of
or
pertaining
to government.
(d) Health Policies means Individual Policies and Association
Group
Policies
(but excluding ancillary products) issued by CARRIER, which are
the
principal Products that CARRIER will sell to members of the
NASE.
(e) Marketing Expense means, with respect to any period, the
insurance
commissions paid to outside insurance agents during such
periods,
plus any out-of-pocket marketing costs incurred in such period
by
CARRIER
for selling and servicing the Health Policies to members.
(f) Person means any individual, corporation, limited liability
company,
business trust, association, company, partnership, joint
venture,
Governmental Authority, or other entity.
(g) Term shall have the meaning set forth in Section 24 hereof.
3. LIMITATION ON HEALTH POLICIES MARKETING
EXPENSE AND ADMINISTRATIVE EXPENSE.
As partial consideration for the NASE's
agreement to make the Products available
to its members, CARRIER agrees as
follows:
(a) unless otherwise agreed to by the Parties, Marketing
Expense
with
respect to Health Policies shall not exceed in any calendar year
the
following
amounts (expressed as a percentage of Collected Premiums in
such
calendar
year): (i) 44.5% of first year Collected Premiums, (ii) 30% of
second
year Collected Premiums and (iii) 15% of all Collected Premiums
after the
second policy year; and
(b) unless otherwise agreed to by the Parties, Administrative
Expense in
any calendar year with respect to Health Policies shall not
exceed 10%
of Collected Premiums in such calendar year.
4. CARRIER'S REPORTS.
(a).
Annual Reports. Except for the reports provided pursuant to
Section
4(a)(i), within ninety (90) days after the
end of each calendar year during the
Term hereof, CARRIER shall submit written
reports to the NASE setting forth the
following information:
(i) Financial Status of CARRIER Report, including CARRIER's
most
recent
annual audited statutory financial statements filed with the
state
insurance
departments and CARRIER's current ratings with any rating
agencies,
which reports shall be submitted to the NASE on or before June
15 of each
year for the most recent calendar year.
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(ii) Health Insurance in Force Report, including, with respect
to
members of
the NASE, the number of policies in force and the amount of
Earned
Premiums thereon for the most recent calendar year.
(iii) Claims Report, which shall be substantially in the form,
and
contain
substantially the information, as set forth in SCHEDULE
4(a)(III)
hereto.
(iv) Complaints Report, including the number of complaints
received
regarding
claims handling and regarding agent conduct, the source of such
complaints
(department of insurance, members of the NASE or other) and the
number of
claims disposed of during the most recent calendar year on
Health
Policies issued by CARRIER.
(v) Litigation Report. The number of legal actions brought
against
CARRIER
with respect to any Products sold to members of the NASE, the
number of
such actions disposed of during the most recent calendar year
and a
brief description of any material litigation pending at
year-end.
(vi) Certificate of Compliance, containing the calculation of
CARRIER's
compliance with the limitation on Marketing Expense and the
limitation
on Administrative Expense for the most recent calendar year
and, if
CARRIER did not comply with any of such limitations, CARRIER's
plan for
curing such non-compliance.
(b)
Quarterly Reports. Within sixty (60) days following the end of
each
calendar quarter during the Term hereof
(other than the fourth quarter of each
year), CARRIER shall provide to the NASE
unaudited statutory financial
statements of CARRIER as filed with the
Oklahoma state insurance department, and
a Health Insurance in Force Report, as
described in Section 4 (ii) above, in
each case as of the end of and for such
calendar quarter.
(c) Other
Reports. CARRIER shall also provide such other reports as may
reasonably be requested by the NASE during
the Term hereof.
5. NOTICE OF RATE INCREASES. CARRIER shall
provide to the NASE not less than
forty five (45) days' advance written
notice of any proposed rate increases for
the Health Policies, such notice to include
a statement that such premium rate
increase is deemed necessary based upon the
analysis of the actuarial department
of CARRIER. NASE shall have the right to
provide to CARRIER input with respect
to proposed rate decisions, and CARRIER
agrees to share claim information and
experience with the NASE to permit the NASE
to provide such input. CARRIER
agrees to consider recommendations by the
NASE and to provide its rationale to
the NASE for decisions regarding rate
increases that are contrary to the NASE's
recommendations. Notwithstanding the
foregoing, CARRIER shall at all times
retain the right to determine in its sole
and absolute discretion the amount and
timing of any rate increase on Health
Policies.
6. MUTUAL DISCLOSURES. Each of CARRIER and
the NASE agrees that it will promptly
notify the other Party of any lawsuits,
complaints or notices of investigations
that it receives which will or may involve
the other Party.
7. CONFIDENTIALITY. Each Party recognizes
that in the course of exercising its
rights and performing its obligations under
this Agreement it will come into
possession of confidential or proprietary
information of the other Party or of
customers of the other Party ("Confidential
Information"). Each Party agrees
that it will not disclose to anyone not a
Party to this Agreement any
Confidential Information of the other Party
or its customers and will not use
any such Confidential Information except to
the extent
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necessary to carry out its obligations
hereunder. Each Party agrees to comply
with the confidentiality requirements
imposed on it by state and Federal law,
including the Health Insurance Portability
and Accountability Act of 1996
("HIPPA"). Confidential Information does
not include information which (i) is or
becomes generally available to the public
other than pursuant to a violation of
this Agreement, (ii) was available to the
Parties on a non-confidential basis
prior to its disclosure by the other Party
or its customer to such Party or
(iii) became available to a Party on a
non-confidential basis from a third party
who was not bound by a confidentiality
agreement with respect to such
information.
8. REPRESENTATIONS AND WARRANTIES.
(a)
CARRIER hereby represents and warrants to the NASE as follows:
(i) CARRIER is a corporation duly organized, validly existing and
in
good
standing under the laws of the State of Oklahoma and has all
necessary
corporate power and authority to enter into this Agreement and
to
consummate the transactions contemplated hereby and to perform
its
obligations hereunder.
(ii) All corporate and other actions or proceedings required to
be
taken by
or on the part of CARRIER to authorize and permit the execution
and
delivery by it of this Agreement, the performance by it of its
obligations hereunder, and the consummation by it of the
transactions
contemplated herein and therein, have been duly and properly
taken.
(iii) This Agreement constitutes the legal, valid and binding
obligation
of CARRIER, enforceable against it in accordance with its
terms,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws
in
effect
which affect the enforcement of creditors' rights generally and
by
equitable
limitations on the availability of specific remedies.
(iv) CARRIER is duly licensed and has authority to issue
"association group" health insurance policies and certificates,
individual
policies
of health insurance and multiple employer trust policies of
health
insurance to insureds in each of the states in which CARRIER is
currently
issuing such policies, and CARRIER will obtain and retain all
licenses necessary to
conduct CARRIER's business during the Term hereof.
(v) No authorization, approval, or consent of, and no filing or
registration with, any Governmental Authority or third party is or
will be
necessary
for the execution, delivery of this Agreement, or performance
by
CARRIER or
for the validity or enforceability thereof, except for such
approvals
or consents which have been obtained or made.
(b) The
NASE hereby represents and warrants to CARRIER as follows:
(i) The NASE is a non-profit corporation duly organized,
validly
existing
and in good standing under the Texas Non-profit Corporation Act
and has
all necessary corporate power and authority to enter into this
Agreement
and to consummate the transactions contemplated hereby and to
perform
its obligations hereunder.
(ii) All corporate and other actions or proceedings required to
be
taken by
or on the part of the NASE to authorize and permit the
execution
and
delivery by it of this Agreement, the performance by it of its
respective
obligations hereunder, and the consummation by it of the
transactions contemplated herein and therein, have been duly and
properly
taken.
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(iii) This Agreement constitutes the legal, valid and binding
obligation
of the NASE, enforceable against it in accordance with its
terms,
except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws
in
effect
which affect the enforcement of creditors' rights generally and
by
equitable
limitations on the availability of specific remedies.
(iv) No authorization, approval, or consent of, and no filing
or
registration with, any Governmental Authority or third party is or
will be
necessary
for the execution, delivery of this Agreement, or performance
by
the NASE
or for the validity or enforceability thereof, except for such
approvals
or consents which have been obtained or made.
9. INDEMNIFICATION.
(a)
Indemnification by CARRIER. CARRIER agrees to indemnify and
hold
harmless the N
