VENDOR AGREEMENT

 

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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