INDIVIDUAL MEDICAL PRODUCTS
CARRIER PARTNER AGREEMENT
Agreement made and entered into as of the 29th day of December, 1998
between XxxxxxXxxx.xxx, Inc., a Pennsylvania corporation ("HealthAxis"),
Provident American Life & Health Insurance Company, an insurance company
domiciled in the State of Pennsylvania ("PALHIC"), and Central Reserve Life
Insurance Corporation, an insurance company domiciled in the State of Ohio
("CRLC").
BACKGROUND
A. PALHIC is desirous of becoming a carrier partner ("CP") with
HealthAxis in order to cause HealthAxis to distribute certain insurance products
of PALHIC through the HealthAxis website and other electronic distribution
methods within the HealthAxis distribution network.
B. CRLC is desirous of joining in this agreement to provide assurances
to HealthAxis on behalf of PALHIC during the first three (3) years of the term
of this Agreement.
C. The parties may enter into other or additional carrier partner
agreements with respect to the sale of products other than those which are the
subject of this Agreement.
D. The parties are entering into this Agreement to set forth the
rights, duties, and obligations of each of them.
NOW, THEREFORE, in consideration of the agreements, covenants and
conditions contained herein and intending to be legally bound hereby, the
parties hereto agree as follows:
1. PERFORMANCE OBLIGATIONS OF HEALTHAXIS.
a. HealthAxis agrees to promote PALHIC through the
HealthAxis electronic distribution network as a supplier of the internet version
of the insurance products described on Exhibit "A" attached hereto (the
"Individual Medical Products") on all of the HealthAxis websites and with the
HealthAxis internet marketing partners, ISP's and other content providers with
whom HealthAxis has entered into marketing agreements.
b. HealthAxis agrees to use its best efforts to
maintain a position as a leading distribution system in electronic commerce
dedicated to the sale of healthcare insurance products over the Internet, to
continue to expand its electronic distribution network of HealthAxis, and to
manage that network in order to make available to PALHIC the most favorable
online demographics as economically possible.
c. HealthAxis agrees to work directly with PALHIC in
the development of advertising/marketing materials, both for online and off-line
purposes.
d. During the term of this Agreement, the obligation
of HealthAxis to offer the health products issued by PALHIC or CRLC shall be
non-exclusive, and HealthAxis shall have the right to offer the Individual
Medical Products issued by other insurance companies, and other products.
2. REPRESENTATIONS, WARRANTIES, AND PERFORMANCE OBLIGATIONS OF
PALHIC AND CRLC:
a. PALHIC agrees to issue the Individual Medical
Products only to those persons who become insureds as a result of the activities
of HealthAxis and agrees to make available to HealthAxis for sale on the
Internet the Individual Medical Products which are specifically designed to meet
the needs of the HealthAxis customer base to be identified from data generated
by HealthAxis's Standard Promotional Efforts. However, HealthAxis reserves the
right to approve the design and pricing of all Individual Medical Products,
which approval shall not unreasonably be withheld.
b. PALHIC agrees to cooperate with HealthAxis and
use its best efforts (i) to offer the Individual Medical Products at the most
competitive premiums reasonably possible, (ii) that the premium for the sale of
the Individual Medical Products over the HealthAxis website shall be not less
than twelve (12%) percent less than the premiums for the sale of the same or
substantially similar policies sold by agents, and lowering of commissions shall
be based on to the consumer; and (iii) will not offer the Individual Medical
Products through any other distribution, at premiums lower than premiums made
available to customers generated by HealthAxis.
c. PALHIC and CRLC agree to use their best efforts
to develop and design additional health insurance products for sale over the
Internet that will be both competitive and responsive to the needs of the
HealthAxis customer demographics; when developed, the products shall be added to
Exhibit "A" by the mutual agreement between the parties.
d. PALHIC represents and warrants that (i) it has
full power and authority to issue the Product in the States in which PALHIC is
licensed to sell health insurance, and that the sale of the Individual Medical
Products shall be in compliance with all applicable state and federal laws and
regulations relating to the sale of health insurance; and (ii) it will maintain
at least a BEST Rating of B or better during the first three (3) year term of
this Agreement.
e. CRLC represents and warrants that (i) it will
cause PALHIC to possess sufficient capital and surplus to perform the
obligations of PALHIC as set forth in this Agreement, (ii) it shall be in
compliance with all applicable state and federal laws and regulations relating
to the sale of health insurance, and (iii) in the event that it is determined
that the Individual Medical Products must be issued by an insurance company
having a higher BEST than either CRLC or PALHIC, CRLC will use its best efforts
in cooperation with HealthAxis to engage such an insurance company, and
thereafter will assist such insurance company in the issuance of the Individual
Medical Products.
f. PALHIC and CRLC agree that during the first three
(3) years of the term of this Agreement, that neither shall offer the Product in
any form of E-commerce marketing except through the electronic distribution
network established by HealthAxis.
g. Within sixty (60) days from the date of this
Agreement, the parties shall enter into an agreement setting forth performance
standards with respect to the issuance of Individual Medical Products by PALHIC
or CRLC as the case may be, including, but not limited to, processing and
administration of claims, customer service, and regulatory matters.
3. PRODUCT ADMINISTRATION
a. HealthAxis shall provide or cause to be provided
the following services related to front end sales and administration:
[ ] sale completion activity (including sales
call center)
[ ] sales activity;
[ ] electronic application processing; and
[ ] electronic policy issuance and renewal.
b. Except as set forth in subparagraph 3.(a) above,
PALHIC shall be responsible for the underwriting and administration of the
Individual Medical Products, including, but not limited to, the mailing of
premium notices, the receipt and processing of premium payments, claims, and
policyholder service and information.
c. PALHIC will provide HealthAxis with monthly
statements showing premiums collected, claims made, claims paid reserves, and
all financial and other information relating to the sale of the Individual
Medical Products.
4. TECHNICAL SUPPORT
a. HealthAxis agrees to build and maintain a
state-of-the-art technological infrastructure capable of supporting the sale of
the Individual Medical Products by CP.
b. PALHIC agrees to commit the resources to create a
seamless interface with the HealthAxis website and electronic administration
system.
5. COMMISSIONS AND FEES
a. PALHIC shall pay to HealthAxis a first-year
commission of thirteen (13%) percent of collected premium from the sale of the
Individual Medical Products, and a second and subsequent commission of five (5%)
percent of collected premium from the sale of Individual Medical Products. For
the purposes of computing the premium with respect to which commissions shall be
payable hereunder, the parties agree that the sale of Individual Medical
Products or substantially similar products by persons who at any time are
licensed to sell insurance by PALHIC prior to the date hereof, persons who
become licensed to sell insurance by PALHIC or CRLC after the date of this
Agreement, and premiums received from policies initially issued by PALHIC and
subsequently rewritten by any other affiliated insurance company shall be
included.
b. The first $10,000,000.00 of administrative fees
shall be paid to HealthAxis to assist HealthAxis in recovering the costs
incurred to initiate the HealthAxis E-Commerce website and internet health
insurance sales program. After HealthAxis has received $10,000,000.00 in fees,
the additional fees received in the calendar years 1999 and 2000 shall be paid
fifty (50%) percent to HealthAxis and fifty (50%) percent to PALHIC; beginning
January 1, 2001, notwithstanding the amount of administrative fees collected
prior to that date, the administrative fees shall be paid eighty (80%) percent
to PALHIC and twenty (20%) percent to HealthAxis. PALHIC agrees to pay to
HealthAxis all association fees.
c. In the event of any termination of this
Agreement, PALHIC agrees to continue to pay to HealthAxis all renewal
commissions on the in force policies of the Individual Medical Products existing
on the date of termination, through and including the termination of each
policy.
6. OTHER AGREEMENTS
a. (1) HealthAxis is or agrees to become licensed to
sell insurance in all the states wherein products are to be sold, and agrees to
comply with all applicable insurance and other laws, rules, and regulations
applicable to the sale of health insurance in the states in which PALHIC is
licensed to sell health insurance.
(2) PALHIC agrees to and does hereby appoint
HealthAxis as its exclusive agent for the sale of the Individual Medical
Products in the states in which PALHIC is licensed to sell health insurance.
b. PALHIC and HealthAxis agree that neither shall
disclose to any other person the terms and conditions of this Agreement, and
each agree that the transactions contemplated herein and all documents,
materials, and other information relative to the business of each of HealthAxis
and PALHIC shall be held in confidence and not disclosed to others without the
prior written consent or except as may be required by law.
c. HealthAxis agrees to use its best efforts to void
incorrect or invalid results or abnormal software or hardware operation related
to calendar "Year 2000" compliant.
d. CRLC hereby agrees to and does indemnify
HealthAxis from all damages, liabilities, claims, or demands, including
reasonable attorneys' fees, arising as a result of the breach by PALHIC or CRLC
of any material term or condition of this Agreement, negligence, misconduct or,
noncompliance with any law or regulation applicable to the sale of individual
medical products, and by insureds and policyholders.
e. The parties agree and acknowledge that, as a
result of negotiating, entering into and performing this Agreement, each party
has and will have access to certain of the other party's Confidential
Information (as defined below). Each party also understands and agrees that
misuse and/or disclosure of that information could adversely affect the other
party's business. Accordingly, the parties agree that, during the term of this
Agreement and thereafter, each party shall use and reproduce the other party's
Confidential Information only for purposes of this Agreement and only to the
extent necessary for such purpose and shall restrict disclosure of the other
party's Confidential Information to its employees, consultants or independent
contractors with a need to know and who are under a legal or contractual duty to
maintain confidentiality and shall not disclose the other party's Confidential
Information to any third party without the prior written approval of the other
party. Notwithstanding the foregoing, it shall not be a breach of this Agreement
for either party to disclose Confidential Information of the other party if
required to do so under law or in a judicial or other governmental investigation
or proceeding, provided the other party has been given prior notice and the
disclosing party has sought all available safeguards against widespread
dissemination prior to such disclosure.
f. As used in this Agreement, the term "Confidential
Information" refers to: (i) the terms and conditions of this Agreement; (ii)
each party's trade secrets, business plans, strategies, methods and/or
practices; and (iii) other information relating to either party that is not
generally known to the public, including information about either party's
personnel, products, customers, marketing strategies, services or future
business plans. Notwithstanding the foregoing, the term "Confidential
Information" specifically excludes (A) information that is now in the public
domain or subsequently enters the public domain by publication or otherwise
through no action or fault of the other party; (B) information that is known to
either party without restriction, prior to receipt from the other party under
this Agreement, from its own independent sources as evidenced by such party's
written records, and which was not acquired, directly or indirectly, from the
other party; (C) information that either party receives from any third party
reasonably known by such receiving party to have a legal right to transmit such
information, and not under any obligation to keep such information confidential;
and (D) information independently developed by either party's employees or
agents provided that either party can show that those same employees or agents
had no access to the Confidential Information received hereunder.
g. CRLC has reviewed all material computer software
used by it and the areas within its business and operations that could be
adversely affected by the "year 2000 computer issue" (that is, the risk that
such software may be unable to recognize and perform properly date-sensitive
functions involving certain dates prior to and any date after December 31,
1999), and has developed or is developing a program to address this issue on a
timely basis. Based on such review and program, the year 2000 computer issue is
not reasonably likely to impair the ability of CRLC to use such software after
December 31, 1999.
7. TERMINATION.
a. This Agreement shall commence effective as of
January 1, 1999, and shall continue in effect for an initial term of three (3)
years ending on December 31, 2001. Notwithstanding the foregoing, this
Agreement, unless terminated by either party upon ninety (90) days notice prior
to the end of any current term, shall automatically renew for an additional one
(1) year term.
b. Notwithstanding the provisions of subparagraph
7(a) above, in the event that any party hereto breaches a material term or
condition hereof and such breach continues uncured for a period of ninety (90)
days following written notice to such effect, the non-breaching party shall have
the right to terminate this Agreement upon providing thirty (30) days notice
thereof.
8. MISCELLANEOUS.
a. Governing Law/Consent to Jurisdiction. This
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania. The parties hereto agree to consent to the
jurisdiction and venue of the courts of the Commonwealth of Pennsylvania located
in Xxxxxxxxxx county, Pennsylvania, and of the United States District Court for
the Eastern District of Pennsylvania, and agree that all disputes between the
parties shall be litigated only therein. Neither PALHIC nor CRLC shall be
entitled to assign this Agreement without the prior written consent of
HealthAxis, except that PALHIC shall have the right to assign the Agreement to
CRLC or an affiliate of CRLC. HealthAxis shall be entitled to assign this
Agreement without the consent of PALHIC or CRLC.
b. Successors and Assigns. The Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, administrators, successors and assigns.
c. Notices. Any notices hereunder, if mailed, shall
be deemed given and received 72 hours after mailing, and if sent by professional
express service, notice shall be deemed given and received at the time of actual
delivery. Notices shall be sent to the parties at the addresses set forth
herein, or such other addresses as the parties shall designate in writing from
time to time.
d. Expenses. Each party hereto shall pay its own
expenses including, without limitation, legal and accounting fees and expenses,
incident to the negotiation and preparation of this Agreement and to its
performance and compliance with the provisions contained herein.
e. Entire Agreement; Amendments; and Waivers. This
Agreement constitutes the entire understanding and agreement among the parties
hereto relative to the subject matter hereof. Any amendments to the Agreement
must be in writing, signed by each party hereto. The failure of any party hereto
to enforce at any time any provision of this Agreement shall not be construed to
be a waiver of the provision, nor in any way to affect the validity of this
Agreement or any part hereof or the right of such party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to constitute a waiver of any other or subsequent breach.
f. Partial Invalidity. In case any one or more of
the provisions contained in this Agreement shall for any reason be held to be
invalid, illegal, or unenforceable in any respect, such invalidity, illegality,
or unenforceability shall not affect any other provision hereof, and this
Agreement shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein, unless the deletion of the provision
or provisions would result in such a material change as to cause completion of
the transactions contemplated herein to be unreasonable.
g. Execution in Counterparts. This Agreement may be
executed by the parties hereto signing the same instrument, or by each party
hereto signing a separate counterpart or counterparts, each of which shall be
deemed to be an original, but all of which together shall constitute one and the
same instrument. The parties agree that documents executed by facsimile shall be
acceptable in his transaction, and the signatures thereof shall have the same
force and effect as original signatures.
h. Waivers. Any one party may, by written
instrument, extend the time for the performance of any of the obligations or
other acts of the other party and with respect to this Agreement (a) waive any
inaccuracies in the representations and warranties of the other party in this
Agreement or in any document delivered pursuant to this Agreement, (b) waive
compliance with any of the covenants of the other party contained in this
Agreement, and (c) waive the other party's performance of any of its obligations
set out in this Agreement. Any agreement on the part of the parties hereto for
any such extension or waiver shall be validly and sufficiently authorized for
the purposes of this Agreement if it is approved by the persons authorized to
make such agreements on behalf of the parties hereto.
i. Titles and Headings. Titles and headings to
Paragraphs herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
j. Exhibits. The Exhibits to this Agreement shall be
construed with and as an integral part of this Agreement to the same extent as
if the same had been set forth verbatim herein.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
the day and year first above-written.
XXXXXXXXXX.XXX, INC. PROVIDENT AMERICAN LIFE & HEALTH
INSURANCE COMPANY
By: By:
-------------------------------- ----------------------------------
Xxxxxxx Xxxxxx Xxxxxxx X. Xxxxx
President Chief Operating Officer
CENTRAL RESERVE LIFE INSURANCE
COMPANY
By:
--------------------------------
EXHIBIT "A"
THE INDIVIDUAL MEDICAL PRODUCTS
1. HealthQuest (Internet Version)
2. Optimum (Internet Version)
3. Personal Privilege (Internet Version)
4. Solution Plus/HealthQuest Plus/AdvantEdge (Internet Version)
5. Policies Similar in Form, Content, and Coverage to Those
Listed in Paragraphs 1 through 4 above
