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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.
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(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
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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.
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(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 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.
(iii) This Agreement constitutes the legal, valid and binding
obligation
of the ALLIANCE, 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
ALLIANCE or for the validity or enforceability thereof, except
for
such
approvals or consents which have been obtaine
