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EXHIBIT 10.92
EXECUTION COPY
AFS - 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
Americans for Financial Security, Inc., a
non-profit corporation organized under
the laws of the District of Columbia
("AFS").
WHEREAS,
AFS 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 the Multiple Association Insurance
Trust, an Alabama trust (the "Trust"),
pursuant to which certificates of
insurance have been and will be issued to
members of AFS. CARRIER has also
issued individual insurance policies
("Individual Policies") to members of AFS
in states that do not authorize the
marketing and sale of "association group"
policies;
WHEREAS,
the Parties entered into that certain Agreement dated February
26, 1999 (the "1999 Agreement") setting
forth the terms under which AFS 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 1999 Agreement defining the
relationship between AFS 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 all of the Parties hereto,
AFS and CARRIER hereby agree as
follows:
1. VENDOR RELATIONSHIP. AFS agrees that,
during the Term hereof and upon the
terms and conditions contained herein, it
will make available to members of AFS
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,
subject to consultation with AFS. AFS shall
be solely responsible for
determining which Products of CARRIER will
be made available through AFS to its
members. AFS 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 AFS. Nothing
contained herein and no performance by AFS
of its obligations hereunder shall be
deemed to constitute an endorsement by AFS
of CARRIER or of the Products, and AFS
assumes no financial responsibility for
the profitability of any Products sold by
CARRIER to members of AFS.
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
by CARRIER for policy issuance and policy maintenance during
such
period,
but excluding the cost of investigating and paying claims.
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(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 and association group
health
insurance policies
(but excluding ancillary products) issued by CARRIER,
which are
the principal Products that CARRIER will sell to members of
AFS.
(e) Marketing Expense means, with respect to any period, the
insurance
commissions paid to outside insurance agents during such
period,
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 AFS'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 AFS 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 AFS on or before June 15 of
each year
for the most recent calendar year.
(ii) Health Insurance in Force Report, including, with respect
to
members of
AFS, the number of policies in force and the amount of Earned
Premiums
thereon for the most recent calendar year.
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(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 AFS 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 AFS, 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. If requested by AFS, 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 AFS 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 AFS during the
Term hereof.
5. NOTICE OF RATE INCREASES. CARRIER shall
provide to AFS 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. AFS 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 AFS to permit AFS to
provide such input. CARRIER agrees to
consider recommendations by AFS and to
provide its rationale to AFS for
decisions regarding rate increases that are
contrary to AFS'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
AFS 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 of the Parties
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 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
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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 AFS 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) AFS
hereby represents and warrants to CARRIER as follows:
(i) AFS 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
