VENDOR AGREEMENT

 

<PAGE>

 

                                                                   EXHIBIT 10.94

 

                                                                  EXECUTION COPY

 

                              ALLIANCE - CHESAPEAKE

 

                                VENDOR AGREEMENT

 

      This agreement ("Agreement") is made and entered into effective as of

January 1, 2005 by and between The Chesapeake Life Insurance Company, an

Oklahoma domiciled life and health insurance company ("CARRIER"), and the

Alliance for Affordable Services, a membership organization that is organized

under the laws of the District of Columbia (the "ALLIANCE").

 

      WHEREAS, the ALLIANCE is a membership organization that provides or/and

makes available to its members a variety of services and benefits, including

business and professional benefits, family and lifestyle benefits and health and

wellness 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 intends to issue group insurance policies ("Group

Policies") to The ALLIANCE Group Insurance Trust, an Illinois trust (the

"Trust"), pursuant to which certificates of insurance will be issued to members

of the ALLIANCE. CARRIER also intends to issue individual insurance policies

("Individual Policies") to members of the ALLIANCE in states that do not

authorize the marketing and sale of "association group" policies; and

 

      WHEREAS, the parties desire to enter into this Agreement to set forth the

relationship between the ALLIANCE and CARRIER;

 

      NOW, THEREFORE, for and in consideration of the mutual covenants and

agreements hereinafter set forth, the ALLIANCE and CARRIER hereby agree as

follows:

 

1. VENDOR RELATIONSHIP. The ALLIANCE agrees that during the Term hereof and upon

the terms and conditions contained herein it will make available to members of

the ALLIANCE such 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 involved and for establishing the prices to be charged for such

Products, subject to consultation with the ALLIANCE. The ALLIANCE shall be

solely responsible for determining which Products of CARRIER will be made

available through the ALLIANCE to its members. The ALLIANCE may make such

Products available to its members through its communications to members and

prospective members, through its catalog of benefits or through newspaper,

television or other advertisements and other means selected by the ALLIANCE.

Nothing contained herein and no performance by the ALLIANCE of its obligations

hereunder shall be deemed to constitute an endorsement by the ALLIANCE of

CARRIER or of the Products, and the ALLIANCE assumes no financial responsibility

for the operating results of any Products sold by CARRIER to members of the

ALLIANCE.

 

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.

 

                                       1

<PAGE>

 

      (b) Collected Premium means, with respect to any period, 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 ALLIANCE.

 

      (e) Marketing Expense means, with respect to any period, the insurance

commissions as a percentage of Collected Premiums paid to outside insurance

agents in 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.

 

3. LIMITATION ON CARRIER'S MARKETING AND ADMINISTRATIVE EXPENSES. As partial

consideration for the ALLIANCE's agreement to make the Products available to its

members, CARRIER agrees as follows:

 

      (a) unless otherwise agreed to by the Parties, the Marketing Expense with

respect to Health Policies shall not exceed in any calendar year the following

amounts (expressed as a percentage of Collected Premiums): (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 with

respect to Health Policies shall not exceed 10% of Collected Premiums.

 

4. CARRIER'S REPORTS.

 

      (a) Annual Reports. Except for the reports provided pursuant to Section

4(a)(i), within 90 days after the end of each calendar year during the Term

hereof, CARRIER shall submit written reports to the ALLIANCE 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 shall be submitted to the ALLIANCE 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 the ALLIANCE, the number of policies issued, the number of

      policies dropped, the number of policies in force and the amount of Earned

      Premiums thereon for the most recent calendar year.

 

            (iii) Claims Report in substantially 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, a

 

                                       2

<PAGE>

 

      member of the ALLIANCE or other) and the number of claims disposed of

      during the most recent calendar year on Health Policies issued to members

      of the ALLIANCE.

 

            (v) Litigation Report. The number of legal actions brought against

      CARRIER with respect to any Products sold to members of the ALLIANCE, 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 either of such limitations, CARRIER's

      plan for curing such non-compliance.

 

            (b) Quarterly Reports. Within 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 ALLIANCE unaudited statutory

      financial statements of CARRIER filed with the state insurance

      departments, and a Health Insurance in Force Report, as described in

      Section 4(a)(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 ALLIANCE during the term hereof.

 

5. NOTICE OF RATE INCREASES. CARRIER shall provide to the ALLIANCE not less than

30 days advance written notice of any premium rate increases. Such notice shall

include a statement that such premium rate increase is deemed necessary based

upon the analysis of the actuarial department of CARRIER.

 

6. MUTUAL DISCLOSURES. CARRIER and the ALLIANCE each agree that they will

promptly notify the other Party of any complaints or notices of investigations

that they receive which will or may involve the other Party.

 

7. CONFIDENTIALITY: Each of the Parties recognize 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 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 ALLIANCE 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.

 

                                       3

<PAGE>

 

            (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 Health

      Policies and certificates 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 ALLIANCE hereby represents and warrants to CARRIER as follows:

 

            (i) The ALLIANCE is a membership organization that is duly

      organized, validly existing and in good standing under the District of

      Columbia Nonprofit 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 ALLIANCE to authorize a