Exhibit 10.9
STRATEGIC AGREEMENT
BY AND AMONG
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
and
UNITED STATES PHARMACEUTICAL GROUP, LLC and
NATIONSHEALTH, INC.
as of
May 4, 2005

 

CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSION.

 

--------------------------------------------------------------------------------

 

     This STRATEGIC AGREEMENT (this “Agreement”), dated as of May 4, 2005 (the
“Effective Date”), is made and entered into by and between Connecticut General
Life Insurance Company, a Connecticut corporation, (“CIGNA”), and UNITED STATES
PHARMACEUTICAL GROUP, LLC, a Delaware limited liability company, (“USPG”) and
NATIONSHEALTH, INC., a Delaware corporation and the indirect owner of all of the
membership interest of USPG (“NationsHealth”).
     WHEREAS, the Medicare Prescription Drug Benefit program was established by
Section 101 of the Medicare Prescription Drug, Improvement, and Modernization
Act of 2003 (the “MMA”) and is codified in Sections 1860D-1 through 1860D-41 of
the Social Security Act (the “Act”) and created a new Part D, known as the
Voluntary Prescription Drug Benefit Program (hereinafter referred to as
“Part D”);
     WHEREAS, CIGNA has submitted an application to the Centers for Medicare and
Medicaid Services (“CMS”) under Part D to become a Prescription Drug Plan
(“PDP”) sponsor in each of the thirty-four Part D regions designated by CMS;
     WHEREAS, subject to such approvals by CMS as may be necessary, CIGNA, USPG
and NationsHealth desire to enter into an agreement in the nature of a strategic
alliance, pursuant to which USPG would provide certain marketing, distribution,
and enrollee service activities and expertise in connection with CIGNA’s
activities as a PDP sponsor and Medicare contractor;
     WHEREAS, in entering into the relationship contemplated herein, CIGNA is
desirous of becoming a shareholder and warrantholder of NationsHealth as
contemplated in sections 3.02 and 3.03 of this Agreement.
     NOW, THEREFORE, in consideration of the covenants set forth in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I
SERVICES AND OBLIGATIONS OF USPG
     SECTION 1.01 General Responsibilities. USPG shall provide to CIGNA the
services (collectively, the “Services”) set forth in this Article I. The
Services shall consist of the activities enumerated in Sections 1.02 through
1.06, below. The Services shall be performed, at a minimum, consistent with the
timeliness, accuracy and quality standards set forth in CMS instructions and
guidelines, provided, however, that the Parties may agree to standards in
addition, or in excess of, those established by CMS.
     SECTION 1.02 Part D Capabilities. USPG will develop the systems and
infrastructure required to perform the Services in conformance with CMS
regulations and guidance, as described in Exhibit 1.02.
     SECTION 1.03 Marketing and Beneficiary Communication. USPG will provide
marketing and beneficiary communication services in conformance with CMS
regulations and guidance, as described in Exhibit 1.03 and consistent with the
standards of performance described therein.

 

--------------------------------------------------------------------------------

 

     SECTION 1.04 Enrollment Billing and Premium Collection. USPG will provide
Enrollee billing and collection services, including, but not limited to,
Enrollee-specific premium billing, and collection information in support of
financial reporting and reconciliation processes, all in conformance with CMS
regulations and guidance, as described in Exhibit 1.04 and consistent with the
standards of performance described therein.
     SECTION 1.05 Enrollment and Eligibility. USPG will provide Enrollee
management entry point and servicing in conformance with CMS regulations and
guidance, as described in Exhibit 1.05 and consistent with the standards of
performance described therein. USPG will also provide disenrollment management
in conformance with CMS regulations and guidance, as described in Exhibit 1.05
and consistent with the standards of performance described therein.
     SECTION 1.06 Enrollee Inquiries and Grievance Processing. USPG will be
responsible for Enrollee inquiries and grievance processing in conformance with
CMS regulations and guidance, as described in Exhibit 1.06 and consistent with
the standards of performance described therein.
     SECTION 1.07. NationsHealth ***. NationsHealth and/or USPG will fund the
NationsHealth *** described in Exhibit 1.07.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CIGNA;
*** OF CIGNA
     SECTION 2.01 CIGNA hereby represents and warrants to USPG and NationsHealth
as follows:
          (a) Corporate Status; Authorizations. CIGNA is a corporation duly
incorporated, validly existing and in good standing under the Laws of the State
of Connecticut. CIGNA has the corporate power and authority, and all licenses,
permits or other authorizations required for CIGNA to carry on its business as
now conducted and as contemplated by this Agreement, except where the failure to
possess any such authority, authorization, licenses, permits or other
authorizations would not have a Material Adverse Effect. The execution, delivery
and performance of this Agreement by CIGNA have been duly authorized by all
necessary corporate action of CIGNA and this Agreement constitutes the valid and
binding obligations of CIGNA enforceable against it in accordance with their
terms, except as may be limited by bankruptcy, insolvency, moratorium or other
similar Laws affecting creditors’ rights generally, and subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
          (b) Part D Qualification. CIGNA is a risk bearing entity licensed to
provide health insurance benefits in each of the fifty states and the District
of Columbia; has, or will develop, a pharmacy network that meets, or will meet,
CMS access standards for a PDP sponsor; and otherwise qualifies for one or more
Part D contracts.

2

--------------------------------------------------------------------------------

 

          (c) Part D Contract Requirements. CIGNA will comply with all of the
requirements imposed by any Part D Contract it executes with CMS, provided,
however, that CIGNA’s failure to comply with any Part D Contract requirements
will not be grounds for termination of this Agreement unless CMS terminates the
Part D Contract based on CIGNA’s failure to comply.
          (d) State Licensure. CIGNA will continuously maintain all appropriate
state insurance licenses, permits, or qualifications for the provision of its
services to Enrollees under the PDP.
     SECTION 2.02 ***. CIGNA will develop the systems and infrastructure
described in Exhibit 2.02.
ARTICLE III
COMPENSATION AND INVESTMENT
     SECTION 3.01 Determination of Compensation. The compensation to USPG for
its Services as described in this Agreement shall be determined as described in
Exhibit 3. 01.
     SECTION 3.02 Common Stock Purchase. Fourteen (14) days after the
NationsHealth Funding Date, CIGNA shall purchase from NationsHealth, and
NationsHealth shall issue to CIGNA, 303,030 shares of the common stock of
NationsHealth (the “NHRX Common Shares”) at a purchase price of Six Dollars and
Sixty Cents ($6.60) per share, for a total aggregate purchase price of One
Million Nine Hundred Ninety-nine Thousand Nine Hundred Ninety-eight Dollars
($1,999,998.00). The purchase of the Common Shares and the Warrant (as defined
below) shall be governed by a Securities Purchase Agreement by and between
NationsHealth and CIGNA, substantially in the form attached hereto as
Exhibit 3.02, and which is being executed contemporaneously herewith.
     SECTION 3.03 Issuance of Warrants to CIGNA. Fourteen (14) days after the
NationsHealth Funding Date, NationsHealth shall issue to CIGNA a Warrant (the
“Warrant”) to purchase 2,936,450 shares of the common stock of NationsHealth
(the “Warrant Shares”) at an exercise price of Six Dollars and Sixty Cents
($6.60) per share, in accordance with the terms and conditions of a Warrant
Agreement, substantially in the form attached hereto as Exhibit 3.03 (the
“Warrant Agreement”), and which is being executed contemporaneously herewith.
     SECTION 3.04 Registration Rights. The NHRX Common Shares and the Warrant
Shares (when issued) shall become subject to a Registration Rights Agreement
between NationsHealth and CIGNA, substantially in the form attached hereto as
Exhibit 3.04, which NationsHealth and CIGNA shall execute upon the purchase and
issuance of the NHRX Common Shares.

3

--------------------------------------------------------------------------------

 

ARTICLE IV
ADDITIONAL AGREEMENTS
     SECTION 4.01 Legal and Regulatory Compliance.
     (a) Each Party shall carry out its duties and obligations under this
Agreement in material compliance with all applicable Laws. USPG shall provide
Services under this Agreement to Enrollees in accordance with the terms and
conditions of this Agreement and in a manner consistent with the requirements of
the Medicare statutes, regulations, CMS guidance and CIGNA policies, including
but not limited to CIGNA’s CMS-required compliance programs with respect to
Medicare Part D, as amended from time to time, and training thereon, provided,
however, that such policies and compliance programs, as amended, shall have been
furnished in writing to USPG which shall have a reasonable period of time for
their implementation. With respect to CIGNA policies other than CIGNA’s
CMS-required compliance program, CIGNA shall not require compliance by
NationsHealth in excess of that required from CIGNA’s other Part D
subcontractors. USPG shall maintain all applicable licenses required to carry
out its business activities and shall further comply with CIGNA policies and
procedures and all applicable laws and regulations to ensure that its Services
are provided in a culturally competent manner to Enrollees, including those with
limited English proficiency or reading skills, diverse cultural and ethnic
backgrounds, and physical or mental disabilities.
     (b) In the event that USPG is required by regulatory authorities to obtain
additional licenses necessary to permit it to perform the Services, or USPG
determines that it is required to obtain such licenses, or in the event that
CIGNA concludes in good faith after reasonable investigation that USPG is
required to obtain such licenses, and USPG does not possess such licenses, then
USPG shall have a period of ninety (90) days within which to file applications
for such licenses. If, after one hundred twenty (120) days from the last day of
such ninety (90) day period USPG does not possess at least seventy-five (75%)
percent of such licenses, then CIGNA shall be entitled to terminate this
Agreement For Cause pursuant to Section 6.05(a), provided, however, that in such
instance the notice requirement and cure period contained in Section 6.05(a)
shall not apply.
     (c) In the event that USPG is ordered or otherwise formally requested by
regulatory authorities to cease performing any of the Services, then USPG shall
cease performing such Services in accordance with such order or formal request.
     (d) If either of the events described in subsections (b) or (c), above,
occurs, CIGNA may, pursuant to Section 7.04(a)(iv), directly or through a third
party, solicit and/or service Part D Enrollees in the state(s) or
jurisdictions(s) with respect to which USPG is unable to so solicit and/or
service because of its lack of licensure or the application of a governmental
order or formal request that it cease such activities in such state(s) or
jurisdiction(s).
     (e) To the extent that USPG seeks to obtain applicable licenses, even if it
is uncertain whether Governmental Authorities require, or will require such
licenses, then USPG’s *** in obtaining such licenses shall be *** under this
Agreement.

4

--------------------------------------------------------------------------------

 

     SECTION 4.02 Inspection, Audit and Acceptance.
          (a) CIGNA, its Affiliates, and CMS shall have the right, directly or
through their designated auditors, at all reasonable times to inspect, audit, or
otherwise evaluate the work performed or being performed by USPG, its supporting
policies and procedures, including those related to data security, disaster
recovery and back-up, as well as all data supplied, in the performance of this
Agreement. If any inspection or evaluation is made by CIGNA or CMS on the
premises of USPG or any of USPG’s suppliers, USPG or its suppliers shall provide
at no additional charge all reasonable facilities and assistance for the safety
and convenience of the personnel conducting the inspection or evaluation. The
Secretary of Health and Human Services, the Comptroller General of the U.S.
Government Accountability Office, or their designees shall have the right during
the term of this Agreement and for a period of ten (10) years after termination
of this Agreement or the date of the audit completion, whichever is later, to
audit, evaluate, or inspect any books, contracts, medical records, documents,
papers, enrollee documentation, and other records of USPG, related entity,
subcontractor, or transferee that pertain to any aspect of the Services provided
under this Agreement, or as the Secretary may deem necessary to enforce the
applicable Medicare Contract between CMS and CIGNA. Any audit, evaluation, or
inspection covered by this Section 4.02(a) shall be at no additional charge to
CIGNA, but each Party will be responsible for its own labor and out of pocket
expenses. USPG and NationsHealth further represent, warrant, and covenant to
CIGNA that, in connection with the performance of the Services hereunder, USPG
and/or NationsHealth will not hold Enrollees liable for fees that are the
responsibility of CIGNA.
          (b) All Services provided by USPG for CIGNA, its Affiliates, and the
Enrollees shall be in accordance with the requirements of this Agreement,
including all schedules, annexes, exhibits and attachments, and shall be subject
to rejection if such Services are nonconforming. No inspection or evaluation
performed by CIGNA, its Affiliates, or CMS shall in any way relieve USPG of its
obligation to furnish all required Services in strict accordance with the
requirements of this Agreement. If any of the Services do not conform to the
requirements of this Agreement, CIGNA shall have the right to require USPG to
take such steps as are reasonably necessary to bring its performance into
compliance including, but not limited to, requiring USPG to perform the work or
services again in conformity with the applicable requirements at no cost to
CIGNA or CMS.
     SECTION 4.03 Representations and Covenants of USPG and NationsHealth.
          (a) Contracting Capacity. USPG and NationsHealth represent, warrant
and covenant that (1) as to themselves and their principals within the last five
years, and (2) their employees and subcontractors that will be assigned to
perform Services hereunder within the five-year period preceding their initial
performance hereunder, to USPG and NationsHealth’s Knowledge: (i) are not
debarred, suspended, proposed for debarment or suspension, or otherwise excluded
or declared ineligible for the award of contracts by or participation in any
Federal program, department or agency; (ii) have not been charged with,
convicted of or had a civil judgment rendered against them for: commission of a
fraud or a criminal offense in connection with obtaining, attempting to obtain,
or performing a public (Federal, state, or local) contract or subcontract;
dishonesty or breach of trust including but not limited to violation of Federal
or state antitrust statutes, commission of a fraud including but not limited to
mail fraud or false repre

5

--------------------------------------------------------------------------------

 

sentations, violation of fiduciary relationship, securities offenses,
embezzlement, theft, forgery, bribery, falsification or destruction of records,
making false statements, tax evasion, or receiving stolen property; (iii) have
not been indicted for, or otherwise criminally or civilly charged by a
government entity (Federal, state, or local) with, commission of any of the
offenses enumerated in this Section; (iv) have not had one or more public
agreements or transactions (Federal, state, or local) terminated for cause or
default; and (v) have not been excluded from participation for a federal
program, including but not limited to, Medicare, Medicaid, federal health care
programs or federal behavioral health care programs pursuant to Title XI of the
Social Security Act, 42 U.S.C. § 1320a-7 and other applicable federal statutes.
USPG and NationsHealth also represent, warrant, and covenant to CIGNA that USPG
and/or NationsHealth have or will duly obtain all intellectual property rights
necessary to perform its obligations under this Agreement. USPG and
NationsHealth’s certification in this Section is a material representation of
fact upon which CIGNA relied when this Agreement was entered into by the
Parties. USPG and/or NationsHealth shall provide immediate written notice to
CIGNA if, at any time during the term of this Agreement, USPG and/or
NationsHealth learns that its certification in this Section was erroneous on the
Effective Date of this Agreement or has become erroneous by reason of new or
changed circumstances. If the circumstances causing such certification to be
erroneous are curable, then USPG and NationsHealth shall have forty-five
(45) days to cure such circumstances. Furthermore, if the circumstances causing
such certification to be erroneous relate to a non-compliant employee or
subcontractor in connection with Section 4.03(a)(2), above, then USPG and
NationsHealth shall be deemed to have timely cured such circumstances, so long
as USPG and/or NationsHealth completely removes such employee or subcontractor
from performing any Services hereunder immediately upon learning that such
employee or subcontractor is non-compliant with this Section. Subject to the
foregoing cure provisions, if it is later determined that USPG’s and/or
NationsHealth’s certification in this Section was erroneous on the Effective
Date of this Agreement or has become erroneous by reason of new or changed
circumstances, in addition to other remedies available to CIGNA, CIGNA may
terminate this Agreement for convenience, at its sole discretion.
          (b) Corporate Status; Authorizations. NationsHealth and USPG,
respectively, are a corporation and a limited liability company duly
incorporated or organized, validly existing and in good standing under the Laws
of the state of Delaware. NationsHealth and USPG have the corporate power and
authority, and all licenses, permits or other authorizations required to carry
on their businesses as now conducted and as contemplated by this Agreement,
except where the failure to possess any such authority, authorization, licenses,
permits or other authorizations would not have a Material Adverse Effect and
except as set forth on Exhibit 4.03(b). The execution, delivery and performance
of this Agreement by NationsHealth and USPG have been duly authorized by all
necessary corporate action and this Agreement constitutes the valid and binding
obligations of NationsHealth and USPG enforceable against them in accordance
with their terms, except as may be limited by bankruptcy, insolvency, moratorium
or other similar Laws affecting creditors’ rights generally, and subject to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law).
     SECTION 4.04 Warranting and Certification of Data. Certain of the data (the
“CMS data”) furnished by USPG or NationsHealth in connection with its
performance of its obligations under this Agreement will be used by CIGNA to
obtain payments from CMS, to support

6

--------------------------------------------------------------------------------

 

CIGNA’s bids for Medicare Program renewals and contracts with CMS in future
years, or both. CIGNA and CMS will be acting in reliance on the accuracy,
completeness, and truthfulness of any CMS data USPG or NationsHealth provides.
USPG and NationsHealth agree to warrant the accuracy, completeness, and
truthfulness of the CMS data it furnishes pursuant to this Agreement to CMS and
to indemnify and hold CIGNA harmless for any payments made by CIGNA and any
damages or liabilities caused by the negligence or willful misconduct of USPG or
NationsHealth or that of their employees or agents in connection with providing
inaccurate, incomplete, or untruthful CMS data. Any CMS data that are provided
pursuant to this Agreement on a monthly, quarterly, or annual basis shall be
certified by the duly authorized Chief Executive Officer, the Chief Financial
Officer or other officer of USPG who reports directly to NationsHealth’s Chief
Executive Officer or Chief Financial Officer. With respect to any data furnished
by USPG and/or NationsHealth that CIGNA or its Affiliates will incorporate into
data certified to CMS such certification shall state:
“I hereby certify that the data, information and statements set forth herein are
accurate, complete, truthful and current to the best of my knowledge,
information, and belief after reasonable investigation with respect thereto, and
are made in good faith.

            Signed:

Certifying Officer”
                       

     SECTION 4.05 Compliance with Grievance Requirements. If and to the extent
that USPG processes Enrollee grievances, then USPG shall cooperate and comply
with all requirements of Medicare and CIGNA regarding the processing of Enrollee
grievances as defined under Part D and accompanying CMS regulations, including
the obligation to provide information (including medical records and other
pertinent information) to CIGNA within the time frame reasonably requested for
such purpose, and shall process such grievances in accordance with Exhibit 1.06.
     SECTION 4.06 Privacy and Security of Certain Data.
     (a) The Parties expect to be responsible for obtaining, analyzing, storing,
transmitting, and reporting Protected Health Information, as defined in
regulations, 45 CFR Parts 160 and 164, implementing the Health Insurance
Portability and Accountability Act of 1996, Pub. L. 104-191 (“HIPAA”). The
Parties agree to comply with all applicable Federal and State privacy and
security laws including but not limited to the requirements of HIPAA and its
implementing regulations and 42 CFR § 423.136 as more fully described in the
Business Associate Agreement in the form attached as Exhibit 4.06 to be executed
by the Parties with respect to Enrollee data and other protected information.
     (b) The parties recognize that USPG and NationsHealth are able to provide
important health-related products and services that may add value for Enrollees,
but which may not be part of CIGNA’s plan of benefits, that may be part of an
Enrollee’s treatment, or provide a kind of alternative treatment or therapy that
may be helpful to Enrollees. Accordingly, and in a manner consistent with
applicable state and federal law, including HIPAA, CIGNA agrees that it will
work with USPG and NationsHealth over the next one hundred twenty (120) days to
develop a plan that: (i) directly provides Enrollees with information concerning
USPG and NationsHealth

7

--------------------------------------------------------------------------------

 

Part B Supplies in a form approved by USPG and NationsHealth, and (ii) seeks to
obtain appropriate authorizations from Enrollees authorizing CIGNA to share
Protected Health Information with USPG and NationsHealth such that USPG and
NationsHealth may provide appropriate information to Enrollees regarding USPG
and NationsHealth Part B Supplies. Any plan to directly provide Enrollees with
information concerning USPG and NationsHealth products shall be subject to any
applicable regulatory and marketing requirements, including but not limited to
those set forth in 42 C.F.R. § 423.50 that may require the approval of CMS, as
determined in the reasonable discretion of CIGNA. In the event that CMS
disapproves any plan to directly provide Enrollees with information concerning
USPG and NationsHealth products, such disapproval shall not affect or change any
of the Parties’ respective rights and obligations under the Agreement, and such
disapproval shall not constitute a breach of the Agreement by CIGNA, or give
rise to any right of termination or rescission or amendment of the Agreement in
any manner by any Party.
     SECTION 4.07 Assignment and Subcontracting. Except as described on Exhibit
4.07, USPG and NationsHealth are solely responsible for the provision of the
Services and their other obligations under this Agreement. Neither USPG nor
NationsHealth may assign or transfer, in whole or in part, these obligations,
any interest in this Agreement or any claim under this Agreement. Neither the
entirety nor any part of this Agreement or any task order may be further
subcontracted by USPG or NationsHealth without the prior written consent of
CIGNA.
     SECTION 4.08 Advance Consent to Assignment Among Affiliates of CIGNA. USPG
and NationsHealth consent in advance to CIGNA’s assignment or transfer of all or
part of its rights and obligations of under this Agreement to any CIGNA
subsidiary or Affiliate (including any successor company of CIGNA pursuant to a
reorganization by CIGNA and one or more of its Affiliates). Any such assignment
and transfer shall be effective upon delivery of a written notice of assignment
by CIGNA to USPG or NationsHealth and shall be subject to Section 11.05 of this
Agreement.
     SECTION 4.09 Delegation of Duties. The parties acknowledge that CIGNA
oversees and is accountable to CMS for any functions or responsibilities
described in CMS’ Medicare Program regulations and, upon becoming a sponsor of
the PDP, will monitor the performance of USPG on an ongoing basis. USPG and
NationsHealth shall perform their obligations under this Agreement in a manner
consistent with and in compliance with CIGNA’s contractual obligations under
CIGNA’s Medicare contract with CMS. In the event that CIGNA delegates to USPG or
NationsHealth any function or responsibility imposed pursuant to CIGNA’s
contract with CMS, such delegation shall be subject to the requirements set
forth in 42 C.F.R.§ 423.505(i)(4), as they may be amended over time. In
addition, any delegation by USPG or NationsHealth of functions or
responsibilities imposed pursuant to this Agreement shall be subject to the
prior written approval of CIGNA and shall also be subject to the requirements
set forth in 42 C.F.R. § 423.505(i)(4), as they may be amended over time. USPG
and NationsHealth shall promptly supplement and amend their permitted
subcontracts to include CMS’ requirements applicable to subcontractors. USPG and
NationsHealth agree that CIGNA or its Affiliates may, at their option, outsource
various functions of its Medicare contract with CMS.
     SECTION 4.10 Document Retention, Audit Rights. Each Party shall retain, in
accordance with standard and accepted practices, such financial, accounting, and
administrative re

8

--------------------------------------------------------------------------------

 

cords related to the services it is obligated to provide under this Agreement
for such period as is necessary to comply with applicable Law, but in no event
less than ten (10) years after the date such documents and information are
created or obtained, or longer under the conditions enumerated in 42 CFR§
423.505(e)(4). Subject to applicable Law, during the term of this Agreement
CIGNA, on one hand, and USPG and NationsHealth, on the other hand, may
reasonably conduct (or have conducted on its behalf), at its own expense, one
audit each year of the other Party with respect to relevant documents and data
in the possession of such other Party and with reasonable access to relevant
personnel of such other Party upon reasonable notice solely for the purposes of
confirming compliance with obligations undertaken pursuant to this Agreement
including those that are required to be reported to an applicable government
agency; provided, however, that such audits may be performed more frequently to
the extent necessary to respond to a request by CMS or another government
agency. The terms of the confidentiality provisions set forth in Article VII
hereof shall apply to any such audits. Such audit rights will be available
following termination of this Agreement to the extent necessary to respond to a
request by a customer, Governmental Authority, provider or other relevant party
and for a Party’s need to manage litigation and to determine compliance with
this Agreement or applicable Laws.
     SECTION 4.11 Ownership of Assets. Notwithstanding any other provision of
this Agreement, each Party shall maintain ownership of its own assets.
     SECTION 4.12 Organization of Committee. The parties shall organize the
Committee to facilitate the implementation and operating efficiency of the
activities described in this Agreement, which Committee shall meet monthly or at
such intervals as the Parties may agree.
ARTICLE V
SEPARATE PRODUCT OFFERINGS: FUTURE ENDEAVORS
     SECTION 5.01 Sale of Other Products and Services by USPG or NationsHealth.
CIGNA acknowledges that NationsHealth and USPG are in the business of selling
other services and supplies including, but not limited to, Part B Supplies
reimbursable by the Medicare Program. Nothing in this Agreement is intended to
foreclose USPG or NationsHealth from conducting such other businesses or
offering such products and services, including, but not limited to, Part B
Supplies. Notwithstanding the foregoing in no event shall NationsHealth or USPG
market any service or supply on a targeted basis directly to Enrollees of CIGNA
Employer Groups. Notwithstanding anything in this Agreement to the contrary,
except as provided for in Section 5.03, in no event shall NationsHealth or USPG,
in the course of providing services under this Agreement or in connection with
an Enrollee interaction initiated with or by NationsHealth or USPG concerning
coverage or services under the PDP, solicit, refer, recommend or direct
Enrollees to utilize NationsHealth or USPG for any Medicare Part B goods or
services or other goods or services. Nothing contained in this Agreement shall
apply to current or prospective enrollees in the CIGNA Healthcare of Arizona
Medicare Advantage Prescription Drug Plan or to any other Medicare Advantage
Prescription Drug Plan that CIGNA or its Affiliates, or NationsHealth and USPG,
may acquire, offer, administer, insure or otherwise provide, or to non-Part D
products or services offered by CIGNA or NationsHealth and/or USPG, provided,
however, that CIGNA agrees that it will not directly, or through a contract on
CIGNA’s behalf, market the Part B Supplies of a Part B supplier other than
NationsHealth to Persons who are enrolled in Medicare Part B, except as such
activities are conducted by CIGNA as of the Effective Date.

9

--------------------------------------------------------------------------------

 

     SECTION 5.02 Prohibition on Discount Card Marketing to Part D-Eligible
Enrollees. From *** through *** NationsHealth and USPG shall not market any drug
discount card directly to Part D-eligible individuals.
     SECTION 5.03 Future Endeavors. The Parties agree that there may be
additional opportunities to jointly offer products and services *** such
products and services, in a manner that capitalizes on the strengths and
efficiencies of each Party. In connection with potential future endeavors, the
Parties agree to the undertakings described in Exhibit 5.03.
ARTICLE VI
AGREEMENT CONTINGENT;
TERM AND TERMINATION
     SECTION 6.01 Agreement Contingent on CMS Acceptance of CIGNA Applications.
This Agreement is expressly contingent upon CMS’ acceptance of the applications
submitted by CIGNA and the award of Part D contracts to CIGNA.
     SECTION 6.02 Agreement Contingent on NationsHealth Funding of *** and
NationsHealth ***.
     (a) Required NationsHealth Funding. By the later of (i) the date that is
*** after the Effective Date or (ii) the date that is *** after CMS approves the
PDP (the “NationsHealth Funding Date”) NationsHealth and/or USPG will have
received *** in funds available to support the Services, or NationsHealth and/or
USPG will have entered into a binding credit agreement or loan agreement with a
term of at least twelve (12) months with a lender or other financial institution
providing NationsHealth and/or USPG with total proceeds or borrowing
availability, together with any funds realized from the sale of equity or from
other sources, of at least *** (exclusive of financing expenses) to fund the ***
and the NationsHealth *** as necessary to make the PDP fully operational. The
proceeds of such loan agreement or credit agreement shall be available to be
drawn down by USPG and/or NationsHealth on the NationsHealth Funding Date. The
*** to be provided by NationsHealth and/or USPG on the NationsHealth Funding
Date shall be evidenced by either of the following:
     (i) the deposit by NationsHealth or USPG of the sum of at least *** in an
escrow account subject to an escrow agreement, control agreement, or similar
arrangement limiting withdrawals to the funding of *** and/or NationsHealth ***;
or
     (ii) the execution by NationsHealth and/or USPG of a binding credit
agreement or loan agreement with MHR Capital Partners LP, or any of its
Affiliates, or a financial institution rated “A” or better by Standard and
Poor’s, or by another financing source reasonably acceptable to CIGNA, which
credit agreement or loan agreement shall expressly permit the draw down of
proceeds of at least *** (less any proceeds realized by NationsHealth or USPG
from the sale of equity or from other sources) to pay for the *** and the
NationsHealth ***.
     (b) Elections Available to CIGNA in the Absence of Funding by
NationsHealth. If, on the NationsHealth Funding Date, NationsHealth and/or USPG,
for any reason, have not obtained

10

--------------------------------------------------------------------------------

 

cash proceeds or borrowing availability, together with any funds realized from
the sale of equity or from other sources, of at least *** (exclusive of
financing expenses) or are not able to commence actual payment of the *** and
the NationsHealth *** as necessary to make the PDP fully operational, then CIGNA
shall be entitled to, in its sole discretion, elect one or more of the following
items (i), (ii), (iii) or (iv):
     (i) terminate this Agreement pursuant to Section 6.05(a), below, provided,
however, that the notice requirement and cure period contained therein shall not
apply;
     (ii) remove all exclusivity obligations by CIGNA to NationsHealth and/or
USPG, including, without limitation, the commitment described in
Section 7.04(a), below;
     (iii) terminate, without any liability to CIGNA, that certain Securities
Purchase Agreement dated May 4, 2005, by and between NationsHealth and CIGNA,
which termination shall not affect the Warrant Agreement dated May 4, 2005
executed by NationsHealth for the benefit of CIGNA or the Warrants issued by
NationsHealth to CIGNA pursuant thereto; or,
     (iv) modify the terms of this Agreement to provide all of the following:

  (A)   CIGNA shall be responsible for *** of the first *** of the *** for 2005.
    (B)   CIGNA may reduce the monthly settlement payment due to NationsHealth
as described in Exhibit 3.01 by a fee reduction equal to *** until such time as
NationsHealth and/or USPG’s portion of the 2005 *** is recovered, and for an
additional *** thereafter. Such fee reduction shall be applied until the earlier
of the date described in the preceding sentence or the termination of this
Agreement.     (C)   The Advanced Expense Payment to NationsHealth shall
increase from *** of the estimated *** for the month in question to *** of the
estimated *** for such month.

     SECTION 6.03 Term of this Agreement. The initial term of this Agreement
shall be from the Effective Date until December 31, 2009.
     SECTION 6.04 Termination. Each Party may terminate this Agreement For Cause
by providing written notice to the other Party, provided, however, that neither
of USPG or NationsHealth may cause a termination of this Agreement by providing
a notice of termination to the other. If For Cause notice is given regarding any
of the events set forth in Section 6.05(a), (b), (c), (d), and (h) the effective
date of termination shall be either (i) the expiration of the applicable cure
period, or (ii) if there is no applicable cure period, forty-five (45) days
after the date written notice of termination is received by the other Party. In
the event a For Cause notice is given regarding any of the events set forth in
Section 6.05(e), (f) or (g), the effective date of termination will be the date
that such notice is received by the other Party.

11

--------------------------------------------------------------------------------

 

          SECTION 6.05 For Cause. “For Cause” termination shall mean the
following:
          (a) As to a nonbreaching Party, the other Party’s breach of any of the
terms
          and conditions of this Agreement that causes a Material Adverse Effect
on the non-breaching Party, and remains uncured following written notice and a
reasonable opportunity to cure, which shall not be less than ninety (90) days
from the date of written notice of such breach.
          (b) As to any Party, if the PDP, at the end of then most recent CMS
contract year, has fewer than *** Enrollees (excluding CIGNA Employer Group
members and Dual Eligibles).
          (c) As to any Party, if the then-most recently completed two CMS
contract years cumulative experience results in a Net Loss.
          (d) As to a nonbreaching Party, if a default occurs on a payment
required to
          be made by the breaching Party relating to the PDP.
          (e) As to a nonbreaching Party, if a Party is adjudicated to have
committed fraud in a civil proceeding or otherwise settles a civil fraud action
involving the United States for a material amount, or a criminal action is filed
by a governmental agency against a Party arising out of, or relating to, the
PDP, or a Party is excluded or debarred from participation in any federal or
state health care program pursuant to 42 U.S.C. § 1320a-7.
          (f) As to a nonbreaching Party, if a Party: (i) is unable to pay its
debts generally as they become due; (ii) makes a voluntary assignment for the
benefit of creditors; (iii) is declared insolvent in any proceeding;
(iv) commences a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself, any of its property,
assets or debts under any bankruptcy, insolvency or other similar laws now or
hereafter in effect or petitions or applies to any tribunal for the appointment
of a receiver, liquidator, custodian or trustee for such Party under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
liquidation, or dissolution law of any jurisdiction now or hereafter in effect;
or (v) is named as a debtor party in such petition, application, case or
proceeding and it indicates its approval thereof, consents thereto, acquiesces
therein or acts in furtherance thereof, or if such petition, application, case
or proceeding is not dismissed or stayed for a period of sixty (60) days after
it is commenced, or is the subject of any order appointing any such receiver,
liquidator, custodian or trustee or approving the petition in any such case or
proceeding.
          (g) If a Party undergoes a change in control which shall be defined as
a transfer of all, or substantially all, of the Party’s assets, or a transfer of
more than (i) *** as to CIGNA, or (ii) *** as to NationsHealth or USPG, of the
voting control of their respective securities, in a single transaction or a
series of transactions intended to effect a change in control of such Party then
the Party not undergoing such change in control may deem a For Cause termination
to have occurred, provided, however that a reorganization by a Party and one or
more of its Affiliates for administrative or similar purposes shall not be
deemed a change in control and provided further that as to USPG and/or
NationsHealth this provision shall be limited to a change in control such

12

--------------------------------------------------------------------------------

 

that USPG and/or NationsHealth would be substantially controlled by a health
plan or pharmacy benefit provider or another entity that substantially competes
with, or operates a business that substantially conflicts with, CIGNA.
          (h) As to any Party, as to which any existing Law governing the Part D
program is changed, or if a new Law relating to Part D is enacted or
promulgated, and the effect of such changed or new Law would cause a Material
Adverse Effect on such Party.
     SECTION 6.06 Optional Extension of Counter-Party Performance in Connection
With Early Termination.
          (a) Early Termination for Failure to Meet Enrollee Threshold, Net
Loss. Following the termination of this Agreement prior to the initial term
described in Section 6.03 pursuant to Section 6.05 (b) or (c) above, either
party shall, at the election of the other party, agree to honor the terms and
conditions of this Agreement through December 31 of the year following the year
in which the termination is effective, or such shorter time as the party
requesting performance may specify, provided however, that if such a
continuation of performance creates a substantial financial hardship to USPG,
then the parties shall meet and confer in good faith concerning potential
compensation to ***.
          (b) Early Termination for Other Reasons. Following the termination of
this Agreement prior to the initial term described in Section 6.03 pursuant to
Section 6.05 (a), (d),(e), (f),(g) and (h), above, the party subject to a
termination For Cause shall, at the election of the other party, agree to honor
the terms and conditions of this Agreement through December 31 of the year
following the year in which the termination is effective, or such shorter time
as the party requesting performance may specify, provided however, that if such
a continuation of performance creates a substantial financial hardship to USPG,
then the parties shall meet and confer in good faith concerning potential
compensation to ***.
     SECTION 6.07 Effect of Termination or Expiration of Agreement Upon
Enrollees; Contingent Financial Settlement; Option to Acquire Servicing Assets;
No Loss of Rights in Cardholder Data; No Preclusion on Marketing by USPG and
NationsHealth.
          (a) Post-Termination Re-Enrollment. Upon termination or expiration of
this Agreement other than with respect to a termination by CIGNA of
NationsHealth and/or USPG pursuant to Sections 6.05(a),(d), (e) (except that for
purposes of this Subsection 6.07(a) the criminal action referred to in (e) must
result in a conviction of NationsHealth) and (f), if NationsHealth or USPG (or
NationsHealth or USPG and a third party or parties) is the sponsor or is a
contractor, in a material capacity, for a CMS-approved PDP (the “NationsHealth
PDP”) and *** within thirty (30) days of termination of this Agreement (or such
longer period as the Parties may agree) *** that otherwise would be
automatically *** for the then-next open ***, then the Parties will effect such
*** and any other activities necessary to support such *** in accordance with
terms of such approval and applicable Law, including, without limitation, HIPAA,
pursuant to which, CIGNA shall provide NationsHealth and/or USPG with *** to the
extent necessary to enable NationsHealth and/or USPG to *** the NationsHealth
PDP *** as of the date of termination of this Agreement. ***:

13

--------------------------------------------------------------------------------

 

     (i) *** a prescription card program offered or operated by NationsHealth
and/or USPG prior to October 1, 2005, or *** Part B Supplies from NationsHealth
prior to October 1, 2005, *** of the Parties no later than June 30, 2006.
     (ii) *** (*** through a procedure agreed upon by the Parties, except where
*** is impracticable or inappropriate, such as where it would result in ***
Part D plans) *** of CIGNA Employer Groups.
          (b) Contingent Financial Settlement. If the NationsHealth PDP is
precluded by CMS or by applicable Law from ***, above, or CMS does not grant its
express authorization or approval as described in (a), above, then, at the end
of each calendar quarter *** following the termination of ***:
     (i) NationsHealth shall pay CIGNA *** of CIGNA’s Employer Groups *** in any
NationsHealth PDP.
     (ii) CIGNA shall pay NationsHealth or USPG ***:
     (1) *** otherwise would have been *** the NationsHealth PDP under
subsection ***, above;
     (2) *** where USPG and/or NationsHealth *** pursuant to Section 4.01(b),
above; and,
     (3) *** in the CIGNA PDP for ***.
     (iii) For (A) *** not identified in subsections *** and ***, above,(for
example, *** as a consequence of ***) and (B) excluding CIGNA Employer Group ***
NationsHealth shall consist of *** for those *** (as to which CIGNA shall
exercise reasonable diligence, but no less effort than it would with respect to
***) in CIGNA’s PDP for such plan year, less *** (as to which NationsHealth
and/or USPG shall exercise reasonable diligence, but no less effort than it
would with respect to ***) in the NationsHealth PDP. In the event that *** in
the NationsHealth PDP *** in CIGNA’s PDP, then NationsHealth shall ***.
          (c) Option to Acquire Servicing Assets. In the event of a termination
of this Agreement by CIGNA For Cause pursuant to subsections (a), (d), (e),
(f) and (g) of Section 6.05, above, or in the event that USPG and NationsHealth
change their business operations such that they no longer offer the Services,
then CIGNA shall have the option to acquire, which option must be exercised
within thirty (30) days of the final date on which USPG renders Services
pursuant to this Agreement, the assets required to deliver all or part of the
Services described in Exhibits 1.02, 1.03, 1.04, 1.05, and 1.06 . CIGNA shall
have the option to acquire such physical assets from USPG and/or NationsHealth
at their fair market value. NationsHealth may decline to sell such physical
assets to CIGNA, in which instance CIGNA may acquire similar assets from third
party vendors. NationsHealth and/or USPG will provide know how, expertise, and
personnel resources to assist CIGNA, without cost to CIGNA, in replicating the
functionality of such assets. Prior to the effective date of such termination,
CIGNA may notify USPG or NationsHealth of CIGNA’s intent to exercise such option
so that the transfer of such assets will occur

14

--------------------------------------------------------------------------------

 

simultaneously with the termination. Further, in the event of such termination,
CIGNA shall have the option to acquire from USPG and/or NationsHealth, without
cost to CIGNA, the intangible assets required to deliver all or part of the
Services, including system specifications and configurations, software code,
training and policy manuals, marketing plans and other information used by USPG
or NationsHealth in the performance of the Services described in the foregoing
exhibits through a grant by USPG and/or NationsHealth to CIGNA of a royalty-free
perpetual license for such intangible assets to the extent of the authority of
USPG and/or NationsHealth to grant such a license.
          (d) No Loss of Rights in Cardholder Data; No Preclusion on Marketing
by USPG and NationsHealth. No termination of this Agreement shall be deemed by
CIGNA to constitute a transfer or assignment by USPG or NationsHealth to CIGNA
of data developed by USPG or NationsHealth concerning participants in
NationsHealth’s prescription card program or to constitute a prohibition on
marketing activities by NationsHealth or USPG with respect to such participants.
          (e) Inapplicability of Post-Termination *** Arrangements and
Contingent Financial Settlement to CIGNA as a Result of a Termination For Cause
by NationsHealth. Upon the termination of this Agreement by NationsHealth
pursuant to Sections 6.05(a), (d), (e) (except that for purposes of this
Subsection 6.07(e) the criminal action referred to in (e) must result in a
conviction of CIGNA) and (f), then those provisions of subsections 6.07 (a) and
(b), above, entitling CIGNA to post-termination *** and a contingent financial
settlement, shall not apply to CIGNA.
ARTICLE VII
CONFIDENTIALITY; USE OF INTELLECTUAL PROPERTY;
ENROLLEE DATA; EXCLUSIVITY
     SECTION 7.01 Confidentiality. Prior to entering into this Agreement the
Parties have each committed substantial resources to developing the arrangements
described in this Agreement. The Parties specifically acknowledge that to induce
each other to enter into this Agreement each Party specifically confirms that
all Confidential Information received from the other party at any time shall
remain confidential during the term of this Agreement and shall be used only in
furtherance of the business relationships contemplated by the provisions of this
Agreement. In this regard, each Party agrees that any Confidential Information
provided to it will only be provided to its employees on a “need to know” basis,
and will be treated with at least as much care as the receiving party provides
for its own Confidential Information (and in no event treated with any less than
a high degree of confidentiality.)
     SECTION 7.02 Use of Proprietary Information.
          (a) Notwithstanding anything to the contrary in this Agreement,
NationsHealth and USPG reserves all right, title and interest in and to, and all
control of the use of NationsHealth or USPG’s copyrights, patents, service
marks, trademarks, designs, logos, brand names, Internet “URL” addresses, World
Wide Web sites and all right, title and interest in and to any trade names,
fictitious business names, and all other intellectual property rights
(collectively, “NationsHealth/USPG Intellectual Property”), including all right,
title and interest, including any

15

--------------------------------------------------------------------------------

 

license rights it has, in and to the name of NationsHealth or USPG, and any
derivation thereof and including NationsHealth/USPG New Intellectual Property
(as defined below). CIGNA shall not, and shall ensure that CIGNA’s Affiliates do
not, use any of NationsHealth/USPG Intellectual Property in materials supplied
to Employer Groups, prospective Employer Groups, Enrollees or otherwise without
NationsHealth’s and USPG’s express and specific prior written consent. To the
extent applicable, CIGNA hereby assigns, transfers and conveys irrevocably and
perpetually to NationsHealth or USPG all of its worldwide right, title and
interest in and to any and all NationsHealth/USPG Intellectual Property.
“NationsHealth/USPG New Intellectual Property” means all developed materials and
other intellectual property that (a) are conceived, created or developed in
connection with or in the course of providing the Services and are
modifications, enhancements, adaptations or derivative works of or derived from
or based on the NationsHealth Data or any NationsHealth/USPG Intellectual
Property in all cases, regardless of who makes such modifications, enhancements,
adaptations and derivative works but specifically excluding modifications,
enhancements, adaptations or derivative works of or derived from or based on the
CIGNA Data or any CIGNA Intellectual Property, or (b) are conceived, created or
developed to address, execute or embody a NationsHealth/USPG-specific product,
service, business process, including any modifications, enhancements,
adaptations and/or derivative works of or based on any of the foregoing, in all
cases, regardless of who conceives, creates, develops or makes any of the
foregoing. For the avoidance of doubt, “NationsHealth/USPG New Intellectual
Property” does not include CIGNA Intellectual Property generally applicable to
CIGNA’s business.
          (b) Notwithstanding anything to the contrary in this Agreement, CIGNA
and its Affiliates reserve all right, title and interest in and to, and all
control of the use of, CIGNA’s copyrights, patents, service marks, trademarks,
designs, logos, brand names, Internet “URL” addresses, World Wide Web sites and
all right, title and interest in and to any trade names, fictious business names
and all other intellectual property rights (collectively “CIGNA Intellectual
Property”) including all right, title and interest, including any license rights
it has, in and to the names “CIGNA,” “CIGNA HealthCare,” “CIGNA Companies,”
“Connecticut General Life Insurance Company,” and any derivation thereof and
including CIGNA New Intellectual Property. USPG and NationsHealth shall not, and
shall ensure that USPG’s and NationsHealth’s Affiliates do not, use any CIGNA
Proprietary Information in materials supplied to Employer Groups, prospective
Employer Groups, Enrollees or otherwise without CIGNA’s prior express and
specific prior written consent. To the extent applicable, USPG and NationsHealth
hereby assign, transfer and convey irrevocably and perpetually to CIGNA all of
their worldwide right, title and interest in and to any and all CIGNA
Intellectual Property. “CIGNA New Intellectual Property” means all developed
materials and other intellectual property that (a) are conceived, created or
developed in connection with or in the course of providing the Services and are
modifications, enhancements, adaptations or derivative works or derived from or
based on the CIGNA Data or CIGNA Confidential Information or any CIGNA
Intellectual Property in all cases, regardless of who makes such modifications,
enhancements, adaptations and derivative works of or derived from or based on
the CIGNA Data or any CIGNA Intellectual Property but specifically excluding
modifications, enhancements, adaptations and derivative works derived from or
based on the NationsHealth Data or any NationsHealth /USPG Intellectual
Property, or (b) are conceived, created or developed to address, execute or
embody a CIGNA-specific product, service, business process, including any
modifications, enhancements, adaptations and/or derivative works of or based on
any of the foregoing, in all cases, regardless of who conceives, creates,
develops or makes any of

16

--------------------------------------------------------------------------------

 

the foregoing. For the avoidance of doubt, “CIGNA New Intellectual Property”
does not include NationsHealth/USPG Intellectual Property generally applicable
to USPG’s or NationsHealth’s business.
     SECTION 7.03 Data. The use and management of CIGNA Data by USPG and/or
NationsHealth shall be as described in Exhibit 7.03. The use and management of
NationsHealth Data by CIGNA shall be as described in Exhibit 7.03.
     SECTION 7.04 Exclusivity.
          (a) Exclusive Rights of USPG. USPG shall be CIGNA’s exclusive provider
of the Services described in Article I of this Agreement that pertain to Part D
Enrollees, provided, however, that this shall not prevent CIGNA from engaging
in, or acquiring capabilities, to engage in the following:
               (i) CIGNA shall have the option to service its Part D Enrollees
in CIGNA’s Employer Groups through its own servicing operations or through
servicing operations provided by a third party;
               (ii) CIGNA may provide its pharmacy benefit management capability
to third parties on a “leased” or fee basis;
               (iii) CIGNA may provide its pharmacy benefit management
capability and risk taking capacity to third parties who market and service
products within discrete local markets and which may include a
direct-to-consumer Part D program as described under Section 101 the MMA; and
               (iv) CIGNA may, directly or through a third party, solicit and/or
service Part D Enrollees if USPG is legally prohibited from marketing the PDP to
enrollees of its non-endorsed prescription card and Medicare Part B programs, or
is unable to perform the Services described in Article I of this Agreement, or
experiences (or NationsHealth experiences) a change in control as described in
Section 6.05(g), or in connection with circumstances described in
Section 4.01(d) (relating to USPG’s failure to possess certain licenses or the
issuance to USPG of a cease and desist order or similar formal regulatory
request.)
               (v) CIGNA may use a third party to market the CIGNA PDP to
prospective Enrollees provided that CIGNA offers to USPG the opportunity to
perform, and USPG agrees to perform, all Services under this Agreement with
respect to such prospective Enrollees except for the marketing services that are
provided by such third party. If USPG agrees to perform the Services, then such
prospective Enrollees, to the extent that they become Enrollees, will be counted
in the Parties’ calculations as described in Exhibit 3.01. If USPG rejects
CIGNA’s offer as described above, then USPG shall not perform Services for CIGNA
with respect to such Enrollees and such Enrollees shall not be counted in the
Parties’ calculations as described in Exhibit 3.01.
          (b) Exclusive Rights of CIGNA CIGNA shall be the exclusive PDP sponsor
for which USPG or NationsHealth provides any Services as described in Article I
of this Agreement.

17

--------------------------------------------------------------------------------

 

ARTICLE VIII
SURVIVAL; INDEMNIFICATION
     SECTION 8.01 Survival of Representations and Warranties. Notwithstanding
any investigation made by or on behalf of the Parties hereto, the results of any
such investigation, or the Knowledge of USPG or NationsHealth or Knowledge of
CIGNA (regardless of how obtained), the representations and warranties contained
in Articles II and IV hereof and the indemnification obligations of the Parties
with respect thereto, and the provisions of Article IX, shall survive the
expiration or termination of this Agreement for a period of one (1) year
following such expiration or termination, subject to the terms and conditions of
this Article VIII.
     SECTION 8.02 Mutual Indemnification.
          (a) Subject to the terms and conditions of this Article VIII, USPG and
NationsHealth shall hold harmless and indemnify CIGNA and its Affiliates from
any claims, losses, damages, liabilities, costs, expenses or obligations,
including reasonable attorney’s fees and expenses related to the performance of
this Agreement (collectively, “Losses”) that arise out of or result from (i) the
breach of any representation or warranty of USPG under this Agreement, or
(ii) the negligence or willful misconduct of USPG, its officers, employees and
agents in the performance of USPG’s obligations under this Agreement.
          (b) Subject to the terms and conditions of this Article VIII, CIGNA
shall hold harmless and indemnify USPG and NationsHealth from any Losses that
arise out of or result from (i) the breach of any representation or warranty of
CIGNA under this Agreement, or (ii) the negligence or willful misconduct of
CIGNA, its officers, employees and agents in the performance of CIGNA’s
obligations under this Agreement.
     SECTION 8.03 Method of Asserting Third-Party Claims.
          (a) As used in this Agreement, “Notifying Party” refers to any Party
who claims entitlement to indemnification under Section 8.02 for losses
resulting from a third-party claim. The “Indemnifying Party” refers to the Party
obligated to indemnify the Notifying Party under Section 8.02.
          (b) In the event any Notifying Party is made a defendant in or party
to any claim instituted by any third party for which the Notifying Party may be
entitled to indemnification under Section 8.02, the Notifying Party shall give
the Indemnifying Party prompt notice thereof. The failure to give such notice
shall not affect any Notifying Party’s ability to seek reimbursement unless, and
only to the extent that, such failure has a detrimental effect on the
Indemnifying Party’s ability to defend successfully the claim. The Indemnifying
Party shall be entitled to contest and defend such claim, provided that the
Indemnifying Party: (i) has a reasonable basis for concluding that such defense
may be successful; and (ii) diligently contests and defends such claim.
          (c) Notice of the intention so to contest and defend shall be given by
the Indemnifying Party to the Notifying Party within fifteen (15) business days
after the Notifying Party’s notice of such claim. The Indemnifying Party shall
use reputable attorneys of its choosing

18

--------------------------------------------------------------------------------

 

to conduct such contest and defense. The Notifying Party shall be entitled at
any time, at its own cost and expense (which expense shall not constitute a Loss
for which the Notifying Party can be indemnified under Section 8.02), to
participate in such contest and defense and to be represented by attorneys of
its own choosing. The Notifying Party shall give the Indemnifying Party notice
that it intends to participate in such contest and defense.
          (d) If the Notifying Party elects to participate in such defense, the
Notifying Party shall cooperate with the Indemnifying Party in the conduct of
the defense. Whether or not the Notifying Party elects to participate in such
defense, neither the Notifying Party nor the Indemnifying Party may concede,
settle or compromise any claim without notifying the other Party and without the
Indemnifying Party’s consent if the settling party is the Notifying Party, which
consent shall not be unreasonably withheld.
          (e) Notwithstanding any provision in this Agreement to the contrary,
if: (i) a claim from a third party seeks relief in the form of a material
obligation of the Notifying Party other than an obligation to pay monetary
damages; (ii) the subject matter of a claim relates to the ongoing business of
the Notifying Party, which claim, if decided against the Notifying Party, would
adversely effect the ongoing business (including, without limitation, requiring
any material change in the business practices of the Notifying Party) of the
Notifying Party; or (iii) the Notifying Party would not be fully indemnified
under Section 8.02 or released with respect to such claim, then, in each such
case, the Notifying Party shall be entitled to contest and defend such claim,
the expense of which shall constitute a Loss for which the Notifying Party can
be indemnified under Section 8.02 (and the Indemnifying Party may participate);
provided, however, that any settlement or compromise shall require the consent
of the Indemnifying Party, which consent shall not be unreasonably withheld,
and, if the Notifying Party does not contest and defend such claim, the
Indemnifying Party shall then have the right to contest and defend (but not
settle) such third party claim.
          (f) Any dispute between the Parties about the applicability of any
Party’s indemnification rights or obligations under Section 8.02 or the method
of asserting claims under this Section 8.03 shall be resolved in accordance with
the dispute resolution provisions set forth in Article IX.
     SECTION 8.04 Limitations on Indemnification. Except as set forth in
Article IX, the rights set forth in Section 8.02 shall be each Party’s sole and
exclusive remedies against the other Party hereto for any Losses. No Party shall
be entitled to any recovery under this Agreement for its own special,
consequential, incidental or punitive damages. The limitations set forth in this
Section 8.04 shall not apply to any Losses that have resulted proximately from
any fraudulent act of the Indemnifying Party or its directors, officers,
employees, agents or representatives.
     SECTION 8.05 Insurance. During the term of this Agreement, the Parties
shall each maintain adequate insurance related to the operation of their
respective businesses and their respective obligations under this Agreement.

19

--------------------------------------------------------------------------------

 

ARTICLE IX
DISPUTE RESOLUTION
     SECTION 9.01 Disputes. This Article IX sets forth the sole source of
remedies available to the Parties with regard to any and all disputes between
them arising in connection with this Agreement (hereinafter referred to as
“Disputes”) including all questions of arbitrability, the existence, validity,
scope or termination of this Agreement or any term thereof; provided, however,
that the Parties agree that money damages may not be an adequate remedy for any
breach of the provisions of this Agreement and that a Party may, in its
discretion, apply to a court of law or equity of competent jurisdiction located
in a venue set forth in Section 11.09 for specific performance and injunctive
relief in order to enforce or prevent any violations of this Agreement and any
Party against whom such proceeding is brought hereby waives the claim or defense
that such Party has an adequate remedy at law and agrees not to raise the
defense that the other Party has an adequate remedy at law. The Parties shall
work together in good faith to resolve any and all Disputes. Any Disputes that
the Parties are unable to satisfactorily resolve by discussion and negotiation
between themselves in good faith and within a thirty (30) day period from the
time notice of the Dispute is provided to the other Party shall be referred to
the Committee. The Committee shall use reasonable business efforts to resolve
the Dispute within thirty (30) days of receiving written notice of the Dispute,
or such other period of time as mutually agreed between the Parties. The
Committee acting by unanimous consent shall have the authority to waive the
Dispute; designate specific corrective or alternative action; set a time period
for certain performance; take other mutually agreeable action or submit the
matter to arbitration, provided, however, that the Committee shall have no
authority to amend the terms of this Agreement, which may only be accomplished
in accordance with the provisions of this Agreement.
     SECTION 9.02 Commencing Arbitration. If the Committee is unable to resolve
any such Dispute or agree upon appropriate action within thirty (30) days
following the date one Party sent written notice of the Dispute to the
Committee, or such other period of time as mutually agreed between the Parties,
and if a Party wishes to pursue the Dispute, such Party may thereafter submit
the Dispute to binding arbitration in accordance with the American Arbitration
Association’s Procedures for Large, Complex Commercial Disputes, as they may be
amended from time to time (see http://www.adr.org). Unless otherwise agreed to
in writing by the Parties, the Party wishing to pursue the Dispute must initiate
the arbitration within one year after the date on which the Dispute was
submitted to the Committee or shall be deemed to have waived its right to pursue
the Dispute in any forum. Any arbitration proceeding under this Agreement shall
be conducted in Hartford, Connecticut. The arbitrator(s) may construe or
interpret but shall not vary or ignore the terms of this Agreement and shall be
bound by controlling Law. The arbitrator(s) shall have no authority to award
special, consequential, incidental or punitive damages.
     SECTION 9.03 Decision Binding; Federal Arbitration Act. The decision of the
arbitrator(s) regarding the Dispute will be binding, and judgment on the award
may be entered in any court having jurisdiction thereof. The Parties acknowledge
that because this Agreement affects interstate commerce, the Federal Arbitration
Act applies.
     SECTION 9.04 Waiver; Survival. In the event any court determines that this
arbitration procedure is not binding or otherwise allows litigation involving a
Dispute to proceed, the Parties hereby waive any and all right to trial by jury
in, or with respect to, such litigation. This Article IX shall survive any
termination of this Agreement.

20

--------------------------------------------------------------------------------

 

ARTICLE X
DEFINITIONS
     SECTION 10.01 Defined Terms.
     When each of the following terms is used in this Agreement it shall have
the meaning stated below:
     “Affiliate” with respect to any Person means a Person that directly or
indirectly, through one or more intermediaries, Controls, is controlled by, or
is under common control with, the first mentioned Person.
     “CIGNA Data” means, collectively, all data and information (a) relating to
providers, enrollees, and customers of CIGNA, or (b) CIGNA’s Confidential
Information, or (c) CIGNA’s Intellectual Property, or (d) to which USPG or
NationsHealth have access by or through CIGNA in connection with the provision
of the Services, or (e) any and all knowledge, experience or know-how gained by
CIGNA during the course of this Agreement.
     “Committee” means a committee composed of up to three (3) representatives
from each of USPG and CIGNA that is charged with coordinating activities under
this Agreement, adopting an operating budget, approving business strategies and
marketing plans, developing pricing strategies (subject to CIGNA’s final
approval), dispute resolution, the use of branded materials pertaining to any
Party, and such other matters as the Parties may agree are appropriate for
oversight or implementation by the Committee.
     “Confidential Information” means information about a Party’s customers,
business practices and procedures, and the proprietary business information of a
Party.
     “Contract” means any written or oral contract, agreement, commitment,
insurance policy, arrangement or understanding.
     “Control” (including the terms “controlled by” and “under common control
with”) means the possession, directly or indirectly or as member or trustee, of
the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of stock or as member or trustee, by
Contract or credit arrangement or otherwise.
     “Domiciled” means the locality in which an Employer Group’s principal
executive offices are located.
     “Dual Eligibles” means persons who are eligible for both Medicare and
Medicaid.
     “Employer Group” means any employer, labor union, Governmental Authority or
other legally organized group of individuals, and the covered dependents of the
persons associated therewith, or an entity which directly or indirectly
contracts to provide a prescription drug benefit, including an
employer-sponsored nonstatutory customized Medicare “wrap” or PDP program.

21

--------------------------------------------------------------------------------

 

     “Enrollee” or “Part D Enrollee” means each eligible persons enrolled
directly, or indirectly, in a CIGNA-sponsored PDP.
     “Governmental Authority” means any government or political subdivision
thereof, whether federal, state or local (including counties and cities), or any
court, agency, commission, department, district, or other instrumentality of any
such government or political subdivision.
     “Knowledge of USPG and NationsHealth” means the actual knowledge of the
individuals set forth on Exhibit 10.01(a) as such knowledge has been obtained in
the normal conduct of the business.
     “Knowledge of CIGNA” means the actual knowledge of the individuals set
forth on Exhibit 10.01(b). as such knowledge has been obtained in the normal
conduct of the business.
     “Law” means the common law and any statute, ordinance, code or other law,
rule, regulation, order, standard, requirement or procedure enacted, adopted,
promulgated, applied or followed by any Governmental Authority with proper
jurisdiction over the Parties, or the activities of the Parties.
     “Material Adverse Effect” means any change, effect, fact, event or
circumstance that, individually or when taken together with all such other
changes, effects, facts, events or circumstances is or may reasonably be
expected to be materially adverse to the condition (financial or otherwise),
results of operations, business, properties, prospects, assets, liabilities, or
operations of a Party’s business, as the case may be, or to the ability of a
Party to consummate the transactions contemplated by this Agreement.
     “Medicare Program” means, collectively, the programs created by Congress in
the Act, including without limitation, the implementation of the Medicare Part D
Prescription Drug Benefit Program, including any regulations or CMS
pronouncements and any future amendments.
     “NationsHealth Data” means, collectively, (a) all data and information
concerning customers, participants, and prospects of USPG or NationsHealth,
excluding Part D-specific Data developed in connection with this Agreement, or
(b) NationsHealth’s or USPG’s Confidential Information, or (c)
NationsHealth/USPG Intellectual Property, or (d) any and all knowledge,
experience or know-how gained by NationsHealth or USPG during the course of this
Agreement.
     “Net Loss” means ***.
     “Part B Supplies” means medical supplies consisting of, but not limited to,
prescription drugs, durable medical equipment, diabetes supplies, oxygen or
other respiratory supplies, and ostomy supplies and any related services that
are furnished by the supplier to Medicare beneficiaries on an outpatient basis
and that are reimbursed under Part B of the Medicare program.
     “Parties” means USPG, NationsHealth, and CIGNA and its Affiliates.
     “Person” means an individual, corporation, partnership, association,
limited liability company, trust, unincorporated organization, Governmental
Authority or other entity or group (as defined in Section 13(d) of the
Securities Exchange Act of 1934, as amended).

22

--------------------------------------------------------------------------------

 

     “Tax” means any federal, state, county, local, foreign or other tax
(including, without limitation, income taxes, premium taxes, excise taxes, sales
taxes, use taxes, gross receipts taxes, franchise taxes, ad valorem taxes,
severance taxes, capital levy taxes, transfer taxes, withholding, employment and
payroll-related taxes, property taxes and import duties), and includes interest,
additions to tax assessments, fines and penalties with respect thereto.
ARTICLE XI
GENERAL PROVISIONS
     SECTION 11.01 Notices. All notices and other communications given or made
pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given or made as of the date delivered, mailed or transmitted to the other
party’s facsimile number, and shall be effective upon receipt, if delivered
personally, the next business day if sent by reputable overnight express
courier, charges prepaid, or, if mailed, three (3) days after deposit with the
United States Postal Service, certified mail, return receipt requested, postage
prepaid, to the Parties at the following addresses (or at such other address for
a Party as shall be specified by like changes of address) or upon receipt if
sent by electronic transmission to the facsimile number specified below
(provided a confirmation copy is sent by reputable overnight express courier,
charges prepaid):
If to USPG or NationsHealth:
Glenn Parker, M.D.
NationsHealth, Inc.
13650 NW 8th Street
Suite 109
Sunrise, Florida 33325
Facsimile: 954-903-5008
With a copy to:
Ira J. Coleman, P.A.
McDermott Will & Emery
201 South Biscayne Boulevard
Suite 2200
Miami, Florida 33131-4336
Facsimile: 305-347-6500
Tracy M. Schmidt
General Counsel/EVP Regulatory Operations
NationsHealth, Inc.
13650 NW 8th Street, #109
Sunrise, Florida 33325
Facsimile 954-903-5252

23

--------------------------------------------------------------------------------

 

If to CIGNA:
Mr. David Russell
CIGNA HealthCare, S-330
900 Cottage Grove Road
Hartford, Connecticut 06152—2202
Facsimile: 860-226-5683
With a copy to:
Rhonda M. Karlin, Esquire
Senior Counsel
CIGNA HealthCare, S-201
900 Cottage Grove Road
Hartford, Connecticut 06152—2202
Facsimile: 860-226-7222
     SECTION 11.02 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
     SECTION 11.03 Severability. If any term or other provision of this
Agreement is finally adjudicated by a court of competent jurisdiction to be
invalid, illegal or incapable of being enforced by any Law, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and
effect. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall negotiate in good
faith to modify this Agreement , as the case may be, so as to effect the
original intent of the Parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
     SECTION 11.04 Entire Agreement. This Agreement (together with any Exhibits
and Schedules hereto and thereto) constitute the entire agreement of the Parties
and supersede all prior agreements and undertakings, both written and oral,
between the Parties with respect to the subject matter hereof. Each Party
acknowledges that nothing in this Agreement or any other materials presented to
such Party in connection with the transaction contemplated by this Agreement
constitutes legal or tax advice to such Party. The Parties have consulted such
legal and tax advisors as they, in their sole discretion, have deemed necessary
or appropriate in connection with this Agreement.
     SECTION 11.05 Assignment. Any Party may assign its rights and duties
hereunder only to a wholly-owned or wholly-controlled subsidiary or Affiliate;
provided, however, that as a condition to any assignment, the assignor shall
remain liable to perform, or to cause its assignee to perform, all of the
assignor’s obligations under this Agreement.
     SECTION 11.06 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each Party and their respective successors and
permitted assigns, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.
     SECTION 11.07 Construction of Terms. Whenever used in this Agreement, a
singular number shall include the plural and a plural the singular. Pronouns of
one gender shall include

24

--------------------------------------------------------------------------------

 

all genders. References herein to articles, sections, paragraphs, subparagraphs
or the like shall refer to the corresponding articles, sections, paragraphs,
subparagraphs or the like of this Agreement, as the case may be. The words
“hereof,” “herein,” and terms of similar import shall refer to this entire
Agreement. Whenever used in this Agreement, the use of the terms “including,”
“included,” “such as,” or terms of similar meaning, shall not be construed to
imply the exclusion of any other particular elements.
     SECTION 11.08 No Strict Construction. The language used in this Agreement
shall be deemed to be the language chosen by the Parties to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
     SECTION 11.09 Governing Law; Jurisdiction; Waiver of Jury Trial.
          (a) Except to the extent that each of the Parties is governed by the
Laws of its domiciliary state, this Agreement shall be construed and enforced in
accordance with the internal Laws of the State of Connecticut.
          (b) The jurisdiction and venue for any request, motion or other action
for injunctive relief, specific performance and other equitable relief brought
by any Party hereto pursuant to this Agreement shall properly lie in any federal
court of competent jurisdiction located in Hartford, Connecticut. By execution
and delivery of this Agreement, each Party hereto irrevocably submits to the
exclusive jurisdiction of such courts for itself and in respect of its property
with respect to such action. The Parties irrevocably agree that venue would be
proper in such court, and hereby waive any objection that such court is an
improper or inconvenient forum for the resolution of such action. The Parties
further agree that the mailing by certified or registered mail, return receipt
requested, of any process required by any such court shall constitute valid and
lawful service of process against them, without necessity for service by any
other means provided by statute or rule of court.
     SECTION 11.10 Amendment. This Agreement may not be amended except by an
instrument in writing signed by the Parties, except that in the event that this
Agreement or any Exhibit does not contain a particular provision required by the
Laws governing the Part D program, or any provision of this Agreement or an
Exhibit conflicts with such Laws or regulations, then this Agreement and any
Exhibits, as applicable, shall be deemed amended to comply with the Laws
governing the Part D program and any conflicting provision shall be deemed
stricken and such amendment shall be effective immediately upon the date that
such Law becomes effective.
     SECTION 11.11 Waiver. At any time a Party may (a) extend the time for the
performance of any of the obligations or other acts of another Party, (b) waive
any inaccuracies in the representations and warranties of another Party
contained in this Agreement or in any document delivered pursuant to this
Agreement and (c) waive compliance by another Party with any of the agreements
or conditions contained in this Agreement. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the Party or
Parties to be bound thereby. It is agreed that no delay or omission to exercise
any right, power or remedy accruing to any Party, upon any breach, default or
noncompliance by any other Party under this Agreement shall impair any such
right, power or remedy, nor shall it be construed to be a waiver of any such
breach, default or noncompliance, or any acquiescence therein, or of or in any
similar breach,

25

--------------------------------------------------------------------------------

 

default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character on any Party’s part
of any breach, default or noncompliance under this Agreement or any waiver on
such Party’s part of any provisions or conditions of this Agreement must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement afforded to any Party shall
be cumulative and not alternative.
     SECTION 11.12 Counterparts. This Agreement may be executed via facsimile in
one or more counterparts, and by the different Parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
     IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed
as of the date first written above by their respective officers duly authorized.
SIGNATURES APPEAR ON FOLLOWING PAGE

26

--------------------------------------------------------------------------------

 

            UNITED STATES PHARMACEUTICAL GROUP, LLC
      By /s/ Glenn M. Parker       Its Chief Executive Officer            
NATIONSHEALTH, INC.
      By /s/ Glenn M. Parker       Its Chief Executive Officer            
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
      By /s/ Jonathan N. Ruben       Its Chief Financial Officer          

27

--------------------------------------------------------------------------------

 

                                   

EXHIBIT 1.02
PART D CAPABILITIES
USPG shall establish and maintain throughout the term of this Agreement the
necessary systems and infrastructure in order to perform its obligations under
this Agreement in accordance with CMS and CIGNA requirements reasonably
necessary to support the PDP. Specifically, USPG shall establish and maintain:

A.   Connectivity:

  1.   to CMS via the *** to send and receive enrollment information to and from
CMS for processing;     2.   to CIGNA or its designee to send and receive
eligibility information linked to benefit design for point-of-service claim
processing (protocol, format, and content to be agreed by the Parties);     3.  
to CIGNA to send and receive enrollment, financial, reporting, and other
information as necessary (protocols, formats, and contents to be agreed by the
Parties).

B.   Systems:

  1.   to accept applications from prospective Enrollees, interact with CMS
systems to verify Part D eligibility, make enrollments and disenrollments
effective, issue enrollee membership cards, interact with CIGNA or its designee
to make eligibility information linked to benefit design available for
point-of-service pharmacy claim processing as further described in Exhibit 1.05;
    2.   to track and monitor inbound and outbound member calls and to collect
and report statistics on response times and accuracy and call abandonment rates;
    3.   to track and respond to enrollee correspondence whether received by
regular mail, telecopy, or e-mail;     4.   to provide prospective Enrollees
with information about the PDP over the Internet as further described in
Exhibit 1.03;     5.   to perform Enrollee premium billing and collections as
further described in Exhibit 1.04;     6.   to track, manage, and report on
member grievances as further described in Exhibit 1.06;     7.   to monitor and
audit each area of service to determine compliance with quality, service levels,
and accuracy standards agreed-upon by the parties.

C.   Data Management and Reporting Processes:

  1.   to enable CIGNA to fulfill its reporting obligations to CMS as a PDP
Sponsor. CMS reporting requirements include but are not limited to statistics
regarding enrollment, disenrollment, grievances, and call center measures.    
2.   to enable management and monitoring of the services and systems described
in Exhibits 1.03 – 1.05 and this Exhibit 1.02. The format, content, and timing
of management reports are to be agreed upon by the Parties.

D.   Sufficient personnel (employed and contracted) to ensure the timely
performance of USPG’s obligations hereunder in a manner that provides Medicare
beneficiaries and their representa

28

--------------------------------------------------------------------------------

 

    tives convenient, accessible and accurate service in a courteous,
professional manner, as well as being responsive to diverse groups. All such
personnel shall be trained in accordance with applicable CMS guidance.

E.   Systems and infrastructure *** on or before ***, or such other date as CMS
requires for testing or otherwise.

F.   A detailed Service Level Agreement (“SLA”) mutually agreed to with CIGNA
within *** after the Effective Date. The SLA shall specify standards of
timeliness, accuracy, and quality in addition to, or in excess of, the standards
that are set forth in CMS instructions and guidelines and agreed upon monetary
penalties and incentives for, respectively, failing to meet or exceeding,
service levels with respect to the services to be provided by USPG.

G.   A detailed disaster recovery and business continuation plan within ***
after the Effective Date as further described in Exhibit 7.03.

29

--------------------------------------------------------------------------------

 

EXHIBIT 1.03
MARKETING AND BENEFICIARY COMMUNICATIONS

A.   USPG shall market CIGNA’s PDP in accordance with applicable CMS
requirements set forth at 42 C.F.R. § 423.50 and the CMS marketing guidelines
applicable to the PDP, and the marketing program agreed to by USPG,
NationsHealth and CIGNA. Until such time as CMS issues guidance specific to
PDPs, if any, the parties shall rely on Chapter 3 of CMS’s Managed Care Manual.

  1.   USPG shall create marketing and beneficiary communications materials and
facilitate the approval process with CMS.     2.   CIGNA shall review and
approve marketing and beneficiary communications materials and provide
plan-specific content as required.     3.   The parties shall develop a schedule
for the preparation of all marketing materials for submittal to CMS no later
than August 1, 2005, or earlier if so required by CMS.     4.   The name of
CIGNA (or a CIGNA Affiliate) and the name of NationsHealth or USPG will be
displayed on the identification card distributed to Enrollees.

B.   USPG shall provide the following marketing and distribution services:

  1.   For purposes of this Exhibit 1.03, “marketing materials” include any
informational materials targeted to Medicare beneficiaries which (i) promote the
PDP; (ii) inform Medicare beneficiaries that they may enroll, or remain enrolled
in the PDP; (iii) explain the benefits of enrollment in the PDP, or the rules
that apply to Enrollees; and (iv) explain how Medicare services are covered
under the PDP, including conditions that apply to such coverage.     2.   USPG
shall market the PDP using *** agreed to by USPG, NationsHealth, and CIGNA,
which shall include *** and ***.     3.   USPG shall distribute to prospective
Enrollees and employers written marketing materials regarding the PDP in
accordance with the distribution plan agreed to by USPG, NationsHealth, and
CIGNA.     4.   USPG shall allocate its marketing resources to include the
disabled Medicare population, Dual Eligibles, as well as beneficiaries age 65
and over, and shall establish and maintain a system for confirming that enrolled
beneficiaries have in fact enrolled in the PDP and understand the rules
applicable to and benefits available under the PDP.     5.   Annually and at the
time of enrollment, USPG agrees to provide Enrollees information on the
following features of the PDP:

  •   Enrollment Procedures;     •   Enrollee Procedural Rights;

30

--------------------------------------------------------------------------------

 

  •   Potential for Contract Termination;     •   PDP Benefits for standard
Part D benefits;     •   Types of Pharmacies in the Pharmacy Network;     •  
Out-of-network Pharmacy Access;     •   Premiums;     •   Service Area;     •  
Current PDP Formularies;     •   60-days notice to potential and current
Enrollees of the removal or change in the their placement of any drug on the
plan’s formulary;     •   Information about quality and performance indicators;
    •   Information about utilization management procedures;     •   Information
about the frequency of Enrollee grievances and appeals; and     •   Information
on CIGNA’s financial condition.

  6.   USPG will operate an Internet website the content of which shall be
jointly developed by the parties. The website shall contain the information
listed in 5 above as well as all marketing materials for the PDP. For
information held in the control of CIGNA or its designee, the parties shall
agree to the form, format and schedule for CIGNA to provide such information.
The website shall be available for pre-enrollment and for Enrollees
post-enrollment. CIGNA and USPG may agree to provide enhanced functionality for
post-enrollment support by, for example, using myCIGNA.com functionality and
frameworks.     7.   USPG will maintain a toll-free customer service call center
that is open during usual business hours and provides customer telephone service
for potential and current Enrollees in compliance with standard business
practices. USPG agrees to operate the call center in accordance with the
following:

  •   The call center shall operate Monday through Friday from no less than 8:00
AM – 4:30 PM local time for those time zones where the PDP is offered, including
the continental United States, Hawaii, and Alaska, unless the parties agree
otherwise;     •   *** of all incoming customer calls shall be answered within
***;     •   The *** rate of all incoming customer calls shall not exceed ***;  
  •   The *** rate shall be set forth in the SLA;     •   The call center shall
provide thorough information about the PDP’s benefit plans, including
co-payments, deductibles, and network pharmacies;     •   The call center shall
incorporate procedures for handling customer complaints;     •   The call center
shall provide service to non-English speaking and hearing impaired Enrollees;  
  •   The call center shall provide the information described in 5 above. CIGNA
will provide the information within its, or its designee’s, possession to USPG
or provide the requisite tools to enable USPG’s access to such information.    
•   The call center shall refer appeals and coverage determination issues,
provider inquiries, and potential fraud and abuse matters to CIGNA.

31

--------------------------------------------------------------------------------

 

  8.   USPG shall distribute to Enrollees information jointly developed by the
parties regarding the PDP formularies and tiers, step therapy, PA and dose
limits.     9.   USPG shall distribute to Enrollees information regarding the
coverage determination, exceptions, grievance and appeals process, which
information shall be included in the PDP’s Evidence of Coverage and outreach
materials jointly developed by the parties.     10.   USPG shall provide to
CIGNA the information necessary for CIGNA’s submissions to CMS for the CMS
comparative website in accordance with the requirements set forth at 42 C.F.R. §
423.48.

C.   Additional Obligations of USPG and NationsHealth

  1.   USPG shall require its employees, agents, and representatives engaged in
marketing CIGNA’s PDP to receive training in CMS’ Medicare marketing
instructions and guidelines before they are permitted to talk with prospective
Enrollees. Each such employee, agent, and representative shall sign a form
acknowledging that he or she has received such training. CIGNA shall have a
reasonable period of time within which to review, and comment on, any training
materials.     2.   USPG will make available to prospective and current
Enrollees only those marketing materials that have been approved by CIGNA and
CMS in accordance with 42 C.F.R. § 423.50.     3.   USPG shall report to CIGNA
the ***. The form, content and frequency of such reports shall be agreed to by
the parties.     4.   USPG shall monitor and/or record for later review no less
than ***. The parties shall agree upon standards against which the quality and
accuracy of such monitored or review/call will be assessed. USPG shall report
the results of its call center monitoring and review on a quarterly basis,
together with any corrective actions taken with respect to call center personnel
who fail to meet the parties’ agreed-upon acceptable quality levels.     5.  
USPG shall report to CIGNA the *** for calls, *** rates, and related statistics.
The form, content and frequency of such reports shall be agreed to by the
parties.     6.   USPG shall provide call center statistics as specified in
CMS’s Final Medicare Part D Reporting Requirements in sufficient time for CIGNA
to provide them to CMS at the times set forth in Section VIII thereof.     7.  
USPG shall maintain records and provide support for any CMS or HHS OIG audits of
marketing and call center operations.

32

--------------------------------------------------------------------------------

 

EXHIBIT 1.04
ENROLLEE BILLING AND PREMIUM COLLECTION
USPG shall perform the following premium billing and collection services on
behalf of CIGNA for Enrollees in accordance with CMS requirements set forth at
42 C.F.R. § 423.293 and any CMS guidance, when issued.
1. By the monthly date established in CMS guidelines, USPG shall bill each
Enrollee the monthly premium due under the PDP as communicated by CIGNA to USPG.
USPG shall bill for each individual enrolled in the PDP for that month according
to USPG’s enrollment records.
2. USPG shall permit each Enrollee, at the Enrollee’s option, to make premium
payment through an electronic funds transfer mechanism or other means
established by CMS.
3. USPG shall be able to allow Enrollees to pay their premium via automatic
deductions pursuant to 42 C.F.R. § 422.262(f)(1) and accept such premium
payments. USPG shall not bill the Social Security Administration or the Railroad
Retirement Board for such amounts.
4. USPG shall be able to support any supplemental premium billing to and
collection from Enrollees.
5. USPG shall instruct Enrollees to submit premiums directly to CIGNA, whether
by mail to a post office box maintained by CIGNA or, if payments are made
electronically, to a CIGNA lockbox account. All premiums otherwise collected by
USPG on behalf of CIGNA shall be deposited into a lockbox account maintained by
CIGNA *** by USPG.
6. USPG shall update its enrollee records of all premium payments received ***
of USPG’s receipt of notice from CIGNA that the premium payment has been
deposited.
7. USPG shall administer the policies and procedures jointly developed by the
parties in accordance with any applicable CMS guidance regarding the collection
of delinquent premium payments and disenrollment of Enrollees for nonpayment. In
no event shall an Enrollee be disenrolled without CMS prior approval.
8. USPG shall be able to identify, collect and remit to CMS any late enrollment
penalty amount due from or on behalf of an Enrollee that is identified by CMS.
9. USPG shall modify the billing for any Enrollee who becomes eligible for or
loses eligibility for Medicaid.
10. USPG shall be able to apply *** for *** categories of Enrollees ***.

33

--------------------------------------------------------------------------------

 

EXHIBIT 1.05
ENROLLMENT AND ELIGIBILITY

A.   Systems Capability. USPG shall establish and maintain an eligibility system
that satisfies CMS requirements and has the following features and capabilities:

  1.   Accept low income status data from CMS;     2.   Generate eligibility
data for low income status Enrollees that identifies their separate benefit
design;     3.   Notify CIGNA or CIGNA’s designee when low income status changes
occur to support co-payment and coinsurance refunds and State Pharmaceutical
Assistance Program (“SPAP”) payments *** of its receipt of such information;    
4.   Generate eligibility information for Enrollees that identifies their low
income status in support of point-of-service claim processing;     5.   Provide
confirmation to long-term care and other special populations of their status;  
  6.   Accept individual and batch enrollments in any form, including online,
paper, and electronic feeds;     7.   Administer an annual enrollment period at
the following times: (a) for contract year 2006: November 15, 2005 through
May 15, 2006; and (b) for contract year 2007 and thereafter: November 15 through
December 31 of each year for the upcoming contract year;     8.   Support
special enrollment periods for age-ins, enrollees of other Part D plans who move
out of the service areas of such other Part D plans, and other circumstances set
forth in 42 CFR § 423.38(c);     9.   Collect and exchange information for
coordination of benefits purposes information regarding other coverage that an
Enrollee has for prescription drugs in support of coordination of benefits
services required of CIGNA by CMS; and,     10.   Collect and transmit data
elements specified by CMS for the purposes of enrolling and disenrolling
beneficiaries in accordance with timeframes specified in CMS instructions and
any standards agreed upon in the SLA.

B.   Enrollment Forms and Materials. USPG shall:

  1.   Jointly develop with CIGNA enrollment forms that satisfy CMS requirements
and are approved by CMS;     2.   Within the time period required by CMS after
USPG’s receipt of notice from CMS of an Enrollee’s acceptance, mail
identification cards to Enrollees with the following features:

34

--------------------------------------------------------------------------------

 

  •   include the Enrollees’ drug co-payments,     •   exclude the Enrollees’
Social Security Number and HIC, and utilize an enrollee’s ID number, and     •  
include the contract number of CIGNA’s contract with CMS;

C.   Enrollment Process. USPG shall:

  1.   Administer an enrollment process jointly developed with CIGNA that
satisfies CMS guidelines and that includes:

  •   communicating with beneficiaries who are applying for enrollment in the
PDP within timeframes specified by CMS or otherwise agreed upon by the parties;
    •   initiating appropriate follow up with beneficiaries who have incomplete
enrollment applications within *** calendar days of receipt of such applications
or such period specified in the SLA; and     •   making enrollments effective
according to the effective date policy associated with the enrollment period in
which the enrollment is received.

  2.   Within *** of its receipt of a complete application, transmit the
application to CMS in the CMS-required format. Notify applicants of the
acceptance or denial of their enrollment application within *** days of USPG’s
receipt of notification of such acceptance or denial.     3.   Notify each
Enrollee prior to or at the time of enrollment, of expected uses and disclosures
of the Enrollee’s protected health information, and the Enrollee’s rights and
CIGNA’s duties with respect to such information.     4.   Administer a process
to confirm that beneficiaries have enrolled in the PDP and understand the PDP’s
rules. Such process shall involve a signed attestation by the Enrollee and, upon
receipt of notice of enrollment acceptance, *** as jointly developed by the
Parties. As the Parties may so agree, USPG shall make a *** within such time and
using such script as jointly agreed to by the Parties.     5.   Accept
enrollments from beneficiaries beginning November 15, 2005.     6.   Enroll
Medicare beneficiaries who are eligible for Part D and reside in the PDP’s
Service Area during allowable enrollment periods according to CMS requirements
with no underwriting;     7.   ***.     8.   Not enroll beneficiaries except
during allowable enrollment periods specified by CMS.     9.   Accept and
process any automatic enrollment by CMS of full-benefit dual eligible
individuals and low income subsidy beneficiaries who fail to enroll in a Part D
plan.

35

--------------------------------------------------------------------------------

 

  10.   Develop policies and procedures for addressing beneficiary requests for
a Special Enrollment Periods under 42 CFR § 423.38(c) and verifying a
beneficiary’s eligibility for a Special Enrollment Period.     11.   Receive
enrollment forms from Enrollees and retain such forms in paper form.     12.  
Certify the enrollment data in accordance with Section 9(b) of this Agreement.  
  13.   Agree in the SLA to timeliness and upon high accuracy standards for the
foregoing functions.

D.   Maintenance of Enrollment. An Enrollee shall remain enrolled in the PDP
until one of the following occurs:

  •   The individual enrolls in another Part D plan or MA-PD plan;     •   The
individual voluntarily disenrolls from the PDP;     •   The individual is
involuntary disenrolled from the PDP in accordance with 42 C.F.R. §
423.44(b)(2);     •   The PDP is discontinued within the Service Area in which
the individual resides; or     •   CMS enrolls a Dual Eligible Enrollee in
another Part D Plan in accordance with 42 C.F.R. § 423.34(c).

E.   Disenrollment Management. USPG shall administer the PDP’s disenrollment
process in accordance with policies and procedures jointly developed by the
parties and in accordance with CMS disenrollment procedure requirements.

  1.   Voluntary Disenrollments. USPG will accept and process voluntary
disenrollments requests from Enrollees only during allowable periods as
specified by CMS. USPG will:

  (i)   Submit a disenrollment notice to CMS within timeframes CMS specifies;  
  (ii)   Provide the Enrollee with a notice of disenrollment as CMS determines
and approves; and     (iii)   File and retain disenrollment requests for the
period specified in CMS instructions.

  2.   Involuntary Disenrollments.

  (i)   USPG shall initiate and process involuntary disenrollments of Enrollees
in accordance with applicable CMS requirements. Except as permitted by CMS
regulations, USPG shall not involuntarily disenroll an individual from the PDP,
or orally or in writing, or by any action or inaction, request or encourage an
Enrollee to disenroll.     (ii)   Optional Involuntary Disenrollment. USPG shall
disenroll an Enrollee from the PDP in any of the following circumstances: (a)
***; or (b) ***.     (iii)   Required Involuntary Disenrollment. USPG shall
disenroll an Enrollee from the PDP in any of the following circumstances:
(a) The Enrollee no longer resides in the

36

--------------------------------------------------------------------------------

 

      PDP’s Service Area; (b) The Enrollee loses eligibility for Part D;
(c) Death of the Enrollee; (d) CIGNA’s contract is terminated by CMS or by CIGNA
or through mutual consent; and (e) The individual materially misrepresents
information, as determined by CMS, to the CIGNA or USPG that the individual has
or expects to receive reimbursement for third-party coverage. USPG shall
disenroll affected Enrollees in accordance with the procedures for disenrollment
set forth at 42 C.F.R. § 423.507 through § 423.510.     (iv)   Monthly
Reconciliations. USPG shall prepare a monthly reconciliation of involuntary
disenrollments to ensure prompt crediting of premiums collected from CMS for
involuntarily disenrolled enrollees.

  3.   Notice Requirement.

  (i)   If the disenrollment is for any of the reasons specified in Sections B,
C(i) or (iv) of this section (that is, other than death or loss of Part D
eligibility) USPG shall give the individual timely notice of the disenrollment
with an explanation of why CIGNA is planning to disenroll the individual
pursuant to 42 CFR § 423.44 and any CMS guidance.     (ii)   Notices for reasons
specified in Sections B, C(i) and (iii) shall:

  •   Be provided to the individual before submission of the disenrollment
notice to CMS; and     •   Include an explanation of the individual’s right to
file a grievance under the PDP’s grievance procedures.

  4.   Termination of CMS Contract. USPG will notify Enrollees in the event of a
contract termination of the termination and alternatives for obtaining
prescription drug coverage under Part D in accordance with Part 423 regulations.
    5.   Agree in the SLA to timeliness and accuracy standards for selected
disenrollment functions.

F.   Maintenance and Reporting of Data. USPG shall provide the data required in
Section 1 of the Final Medicare Part D Reporting Requirements in the formats and
at the times specified therein. USPG shall maintain sufficient records to
support the accuracy of such reported data in the event of an audit by CMS or
the HHS OIG.

37

--------------------------------------------------------------------------------

 

EXHIBIT 1.06
ENROLLEE INQUIRIES AND GRIEVANCE PROCESSING
USPG shall be responsible for communications from Enrollees as set forth herein.
USPG shall administer the PDP’s enrollee inquiries grievance procedures in
accordance with CMS requirements set forth at 42 C.F.R. § 423.564 and any other
guidelines established by CMS. For purposes of this Section E, a “grievance” is
any complaint or dispute, other than one that involves a coverage determination,
expressing dissatisfaction with any aspect of CIGNA’s or any of its
subcontractors’ and providers’ operations, activities, or behavior, regardless
of whether remedial action is requested. The grievance procedure is separate and
distinct from the appeal procedure. The PDP’s appeal procedure shall be the sole
responsibility of CIGNA. An “inquiry” is any communication from an Enrollee that
is not a grievance or an appeal. An “Enrollee” includes an Enrollee’s
representative. All communications from providers shall be directed to CIGNA.

A.   General Requirements

  1.   USPG will develop protocols and definitions sufficient to enable its
Customer Service Representatives (“CSRs”) accurately to distinguish and classify
Enrollee inquiries, grievances (including types of grievances), and appeals.
Such protocols and definitions are subject to review and comment by CIGNA.    
2.   USPG will maintain an accuracy rate to be determined in the SLA in its
identification and classification of inquiries, grievances, and appeals.     3.
  USPG will audit for the accuracy of its identification and classification of
inquiries, grievances, and appeals based on audit frequencies and sample sizes
agreed upon by the parties.     4.   CIGNA will provide, or provide access to,
any information within its, or its designee’s, control necessary to USPG to
perform the services described herein.     5.   The Parties shall develop
processes which will enable USPG to refer all communications from providers to
CIGNA and all Enrollee communications about *** to CIGNA.

B.   Enrollee Inquiries

  1.   Telephone Inquiries. USPG shall handle all telephonic inquiries by
Enrollees or Enrollee representatives in a timely, courteous, professional, and
culturally competent manner.

  (a)   The service levels for timeliness and accuracy in responding to such
inquiries shall be the same as set forth in Exhibit 1.03 of this Agreement.    
(b)   USPG shall maintain and report data on telephonic inquiries in the formats
and at the times set forth in Section VIII of CMS’s Final Medicare Part D
Reporting Requirements. USPG shall maintain sufficient records to support the
accuracy of such reported data in the event of an audit by CMS or the HHS OIG.

38

--------------------------------------------------------------------------------

 

  2.   Written Inquiries. USPG shall be responsible for responding to all
written inquiries from Enrollees or Enrollee representatives in a timely,
accurate, professional, and culturally competent manner. Written inquiries
include any correspondence that has been mailed, telecopied, or e-mailed.

  (a)   USPG will implement procedures for date stamping, marking for
identification, and tracking all written Enrollee inquiries. Date stamping of a
percentage specified in the SLA of such inquiries will be accomplished ***; ***
of inquiries shall be date stamped within *** of their receipt.     (b)  
Written acknowledgement of a written inquiry shall be mailed within *** of
USPG’s receipt of the inquiry unless a different period is established in the
SLA.     (c)   The SLA shall specify written disposition of a specific
percentage of all written inquiries shall be mailed within *** of USPG’s receipt
of the inquiry; written disposition of *** of all written inquiries shall be
mailed within *** of USPG’s receipt of the inquiry.     (d)   The minimum
acceptable accuracy rate of USPG’s written dispositions shall be identified as a
percentage specified in the SLA.     (e)   USPG will implement a process for
auditing and monitoring the timeliness and accuracy of USPG disposition of
written inquiries based on audit frequencies and sample sizes to be agreed upon
by the parties. USPG will provide, on a quarterly basis, reports to CIGNA of
USPG’s audits, together with any corrective action taken to remedy any
non-compliance with the timeliness and accuracy levels set forth herein.

C.   Grievances

  1.   USPG will administer a process jointly developed with CIGNA that is
designed to track and address Enrollees’ grievances that includes appropriate
timelines, policies and procedures, as well as definitions and protocols for
identifying the different types of grievances identified in 42 CFR § 423.564 and
Section V of the Final Medicare Part D Reporting Requirements.     2.   USPG
will train its staff and any subcontractors involved in the grievance procedure
on such policies and procedures in accordance with 42 C.F.R. § 423.564.     3.  
USPG will accept grievances from Enrollees by telephone and in writing
(including facsimile and in whatever other form CMS requires CIGNA to accept
grievances, and reject any that are untimely under 42 CFR § 423.524(d)(2).    
4.   Fraud and Abuse grievances, as defined in Section V of the Final Medicare
Part D Reporting Requirements, shall be referred to CIGNA for disposition.    
5.   USPG shall notify the Enrollee of the grievance decision as expeditiously
as the case requires, based on the Enrollee’s health status, but no later than
30 days after the date USPG receives the oral or written grievance; provided
that USPG may extend the 30-day

39

--------------------------------------------------------------------------------

 

      timeframe by up to 14 days if the Enrollee requests the extension or if
USPG justifies a need for additional information and documents how the delay is
in the interest of the Enrollee. When USPG extends the deadline, it shall
immediately notify the Enrollee in writing of the reason(s) for the delay.    
6.   USPG shall inform the Enrollee of the disposition of the grievance in
accordance with the following procedures:

  •   All grievances submitted in writing must be responded to in writing.     •
  Grievances submitted orally may be responded to either orally or in writing,
unless the Enrollee requests a written response.     •   Quality of care
grievances must be responded to in writing.

  7.   USPG shall respond to an Enrollee’s grievance within *** if the complaint
involves a refusal by CIGNA to grant an Enrollee’s request for an expedited
coverage determination under 42 C.F.R. § 423.570 or an expedited redetermination
under 42 C.F.R. § 423.584, and the Enrollee has not yet purchased or received
the drug that is in dispute.     8.   USPG will maintain, and provide upon
request by CIGNA or CMS, access to records on all grievances received both
orally and in writing, that includes:

  •   Date of receipt of the grievance     •   Mode of receipt of grievance
(i.e. fax, telephone, letter, etc.)     •   Person or entity that filed the
grievance     •   Subject of the grievance     •   Final disposition of the
grievance     •   Date the Enrollee was notified of the disposition.

  9.   USPG shall maintain and report data or grievances required in Section V
of the Final Medicare Part D Reporting Requirements in the formats and at the
times specified therein. USPG shall maintain sufficient records to support the
accuracy of such data in the event of an audit by CMS or the HHS Office of
Inspector General.

D.   Appeals

     The parties shall jointly develop procedures for transmitting to CIGNA, as
expeditiously as possible, any appeals received by USPG.

40

--------------------------------------------------------------------------------

 

EXHIBIT 1.07
NATIONSHEALTH ***
NationsHealth *** are currently *** to be ***, which *** represents the *** for
NationsHealth or USPG *** the systems, capabilities and functionalities *** and
to otherwise satisfy the *** including, but not limited to, the following:

  •   The *** described in Exhibit ***, except for item (E).     •   The ***
described in Exhibits *** through *** including necessary *** and ***.     •  
Necessary enhancements to NationsHealth and/or USPG *** in order to comply with
*** that are reasonably necessary to support the PDP that have not been *** to
NationsHealth or USPG as of the Effective Date of this Agreement.     •  
Obtaining *** pursuant to Section ***.

The above ***. NationsHealth will *** required for the purposes described in the
first paragraph above, provided, however, that NationsHealth’s *** shall not
exceed *** without the prior written consent of CIGNA.

41

--------------------------------------------------------------------------------

 

EXHIBIT 2.02
CIGNA ***
     CIGNA *** include:

•   CIGNA *** required to support the PDP currently estimated at ***.

•   *** (***) of *** required to support the PDP currently estimated at ***.

•   *** (***) of *** required to support the PDP currently estimated at ***.

***. CIGNA will *** develop PDP capabilities, provided, however, that CIGNA’s
*** shall not exceed *** without the prior written consent of NationsHealth.

42

--------------------------------------------------------------------------------

 

EXHIBIT 3.01
COMPENSATION
     General Principles
     The Parties, meaning CIGNA on one hand and USPG and/or NationsHealth on the
other hand, intend to account for the activities described in this Agreement as
if such activities constituted a separate line of business for purposes of ***
the financial effects of certain PDP-associated expense variances.
     No Intent to Create Reinsurance
     In agreeing to this arrangement, both parties have independently formed a
belief that, in the event of a loss under any of CIGNA’s Part D contracts
covered by this Agreement, this provision does not give rise to a contract for
reinsurance against an underwriting loss by CIGNA. ***. The parties acknowledge
that the unprecedented nature of the Medicare Part D product makes it impossible
to predict the profitability of the Part D contracts with any certainty. If CMS,
or any other Governmental Authority, *** constituted a form of reinsurance, the
parties agree to negotiate, in good faith, an alternative *** that approximates
the *** of the Parties that will arise under this arrangement.
A. Definitions
     Each of the following shall be as finally determined by CIGNA for
applicable periods:
     ***
     “Aggregate Actual Premium” means the total premiums received from Enrollees
and from CMS.
     ***
     “Aggregate CIGNA *** Recovery” means the product of actual Enrollee months
multiplied by the CIGNA *** Recovery Rate.
     “Aggregate CIGNA Target Margin” means the CIGNA Target Margin multiplied by
the actual number of Enrollee months.
     ***
     "*** Recovery Rate” means a PEPM amount, calculated as the sum of ***
actually incurred by CIGNA *** divided by ***, plus, if additional *** are
incurred in any month ***, an additional PEPM amount calculated as the
additional *** divided by *** (i.e., the *** Recovery Rate represents the rate
at which *** would be fully recovered over *** at the ***; provided however, the
Parties understand and agree that the time frame within which CIGNA will recoup

43

--------------------------------------------------------------------------------

 

the *** based on the *** Recovery Rate will be shorter or longer than ***
depending ***. Once CIGNA has recouped the ***, the *** Recovery Rate will be
zero.
     ***
     “CMS Contract Year Month” means a month within a CMS contract year.
     ***
     “PEPM” means per Enrollee per month.
     ***
     “Start-Up Month” means each of the months from *** through ***.
***

B.   Establishment of Target Margin and *** Levels; Year-End ***.

     1.) Annual Identification of CIGNA Target Margin and *** Levels
     By *** for the 2006 CMS contract year and not less than *** prior to
required bid submission date (which the Parties anticipate will be the ***) for
*** for every subsequent CMS contract year CIGNA shall specify its required
CIGNA Target Margin. *** shall be determined by CIGNA.
     2.) Year-End ***
     No later than *** following the end of each CMS contract year, CIGNA shall
perform a *** of *** under this Agreement. As part of such *** CIGNA will *** to
NationsHealth the ***, if any, due to NationsHealth for the expiring CMS
contract year including the *** of all ***.
     3.) Termination
     A final settlement will be made within *** upon termination or expiration
of the Agreement to capture any late reporting of the components used in the
Monthly Settlement Process. No additional adjustment will be made for ***.

C.   NationsHealth *** Process

     1.) Start-Up Months. Not later than *** prior to each Start-Up Month CIGNA
and Nations Health will mutually agree to the expected level of *** for the
upcoming Start-Up Month. CIGNA will make *** to NationsHealth in *** equal
payments of *** of this amount by *** of the corresponding ***.

44

--------------------------------------------------------------------------------

 

     2.) CMS Contract Year Months. Not later than *** prior to the start of a
CMS contract year CIGNA and NationsHealth will mutually agree to the ***. Not
later than *** following CIGNA’s receipt of the monthly premium amount from CMS,
CIGNA will make *** to NationsHealth of the *** of the *** multiplied by the ***
actually received.

D.   Monthly Settlement Process

     1.) Information Deliveries. Not later than *** after the last day of the
preceding month NationsHealth shall furnish to CIGNA the *** and the
NationsHealth *** for the preceding month. Not later than *** after the last day
of the preceding month CIGNA shall furnish to NationsHealth the ***, the CIGNA
***, and ***. NationsHealth shall furnish to CIGNA the ***. After a review
period of not more than *** after the date of CIGNA’s delivery of the
information described above, CIGNA shall*** to NationsHealth in accordance
with*** Exhibit ***.
     2. ) Calculation of Monthly Amount due to NationsHealth
     CIGNA shall calculate the amount due to NationsHealth as the sum of the
following for the prior month:
          a.) ***;
          b.) plus ***% of the ***;
          c.) plus ***;
          d.) plus ***;
          e.) minus the *** made by *** for *** and ***;
          f.) minus any *** pursuant to Section ***.
     3.) Determination of ***. CIGNA shall determine the *** for each month as
follows:
     *** shall be determined subtracting from *** all of the following as
calculated for the ***:
          a.) ***;
          b.) ***;
          c.) ***;
          d.) ***;
          e.) ***;
          f.) ***; and,
          g.) ***.
Attachment: ***

45

--------------------------------------------------------------------------------

 

EXHIBIT 3.02
FORM OF SECURITIES PURCHASE AGREEMENT

46

--------------------------------------------------------------------------------

 

EXHIBIT 3.03
FORM OF WARRANT AGREEMENT

47

--------------------------------------------------------------------------------

 

EXHIBIT 3.04
FORM OF REGISTRATION RIGHTS AGREEMENT

48

--------------------------------------------------------------------------------

 

EXHIBIT 4.03(b)
EXCEPTION TO LICENSURE REPRESENTATION
     The Parties acknowledge and agree that on the Effective Date NationsHealth
and USPG do not hold, under any state laws, any licenses to act as insurance
producers or third-party administrators. The Parties acknowledge and agree that
regulatory authorities may require NationsHealth and/or USPG to obtain such
licenses in connection with providing the Services hereunder.

49

--------------------------------------------------------------------------------

 

EXHIBIT 4.06
BUSINESS ASSOCIATE AGREEMENT
This Agreement, effective _____________ , is by and between ______________
Insert name of specific CIGNA Covered Entity], its subsidiaries and affiliates,
(“CIGNA”) and ___________ [Insert name of vendor] (“Vendor”).
WHEREAS, CIGNA and Vendor have entered into certain agreements, including but
not limited to those agreements referred to in Appendix “A”, under which Vendor
provides certain services to CIGNA; and
WHEREAS, the parties are entering into this Agreement to comply with the Privacy
Standards and the Security Standards as those terms are defined in this
Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which the parties hereby acknowledge, and in affirmation of the existing
agreements referred to in Appendix “A”, intending to be legally bound, the
parties hereto agree as follows:
I. DEFINITIONS
Capitalized terms used herein without definition shall have the respective
meanings assigned to such terms herein, including Part III of this Agreement.
Such defined terms shall supercede similar defined terms as set forth in the
applicable Vendor Agreements.
II. OBLIGATIONS OF VENDOR
Section 1. Use and Disclosure of Protected Health Information.
Vendor may use and disclose Protected Health Information only to carry out the
obligations of Vendor set forth in this Agreement, the applicable Vendor
Agreement or as required by law, subject to the provisions set forth in this
Agreement. Vendor shall neither use nor disclose Protected Health Information
for the purpose of creating de-identified information that will be used for any
purpose other than to carry out the obligations of Vendor set forth in this
Agreement or the applicable Vendor Agreement, or as required by law.
Section 2. Safeguards Against Misuse of Information.
Vendor agrees that it will implement appropriate safeguards to prevent the use
or disclosure of Protected Health Information in any manner other than pursuant
to the terms and conditions of this Agreement. Vendor shall implement
administrative, physical, and technical safeguards that reasonably and
appropriately protect the confidentiality, integrity, and availability of the
Elec

50

--------------------------------------------------------------------------------

 

tronic Protected Health Information that it creates, receives, maintains, or
transmits on behalf of CIGNA as required by the Security Standards.
Section 3. Reporting of Disclosures of Protected Health Information; Reporting
of Security Incidents.

Upon becoming aware of a use or disclosure of Protected Health Information in
violation of this Agreement or upon becoming aware of any Security Incident,
Vendor shall promptly report such use or disclosure or Security Incident to
CIGNA in the following time and manner: (i) any actual, successful Security
Incident will be reported to CIGNA in writing within 3 business days of the date
on which Vendor first becomes aware of such actual, successful Security Incident
and (ii) any attempted, unsuccessful Security Incident of which Vendor becomes
aware will reported to CIGNA in writing on a reasonable basis. If the Security
Standards are amended to remove the requirement to report unsuccessful attempts
of unauthorized access, this requirement shall no longer apply as of the
effective date of that amendment.
Section 4. Agreements with Third Parties.
Vendor shall ensure that any agent or subcontractor of Vendor to whom Vendor
provides Protected Health Information that is received from CIGNA, or created or
received by Vendor on behalf of CIGNA, agrees to be bound by the same
restrictions and conditions that apply to Vendor pursuant to this Agreement with
respect to such Protected Health Information. Vendor warrants and represents
that in the event of a disclosure of Protected Health Information to any third
party, Vendor will make reasonable efforts to limit the information disclosed to
the minimum that is necessary to accomplish the intended purpose of the
disclosure. Vendor shall ensure that any agent or subcontractor of Vendor to
whom Vendor provides Electronic Protected Health Information agrees to implement
reasonable and appropriate safeguards to protect such information.
Section 5. Access to Information.
In the event Vendor maintains Protected Health Information in a Designated
Record Set, Vendor shall, within five (5) business days of receipt of a request
from CIGNA, provide to CIGNA Protected Health Information in Vendor’s possession
that is required for CIGNA to respond to an individual’s request for access to
Protected Health Information made pursuant to 45 C.F.R. § 164.524 or other
applicable law. In the event any individual requests access to Protected Health
Information directly from Vendor, whether or not Vendor is in possession of
Protected Health Information, Vendor may not approve or deny access to the
Protected Health Information requested. Rather, Vendor shall, within two
(2) business days, forward such request to CIGNA.
Section 6. Availability of Protected Health Information for Amendment.
In the event Vendor maintains Protected Health Information in a Designated
Record Set, Vendor shall, within five (5) business days of receipt of a request
from CIGNA, provide to CIGNA Protected Health Information in Vendor’s possession
that is required for CIGNA to respond to an individual’s request to amend
Protected Health Information made pursuant to 45 C.F.R. §164.526

51

--------------------------------------------------------------------------------

 

or other applicable law. If the request is approved, Vendor shall incorporate
any such amendments to the Protected Health Information as required by 45 C.F.R.
§164.526 or other applicable law. In the event that the request for the
amendment of Protected Health Information is made directly to the Vendor,
whether or not Vendor is in possession of Protected Health Information, Vendor
may not approve or deny the requested amendment. Rather, Vendor shall, within
two (2) business days forward such request to CIGNA.
Section 7. Accounting of Disclosures.
Vendor shall, within ten (10) business days of receipt of a request from CIGNA,
provide to CIGNA such information as is in Vendor’s possession and is required
for CIGNA to respond to a request for an accounting made in accordance with 45
C.F.R. § 164.528 or other applicable law. In the event the request for an
accounting is delivered directly to Vendor, Vendor shall, within ten (10)
business days, forward such request to CIGNA and any such information as is in
Vendor’s possession and is required for CIGNA to respond to a request for an
accounting made in accordance with 45 C.F.R. § 164.528 or other applicable law.
It shall be CIGNA’s responsibility to prepare and deliver any such accounting
requested.
Section 8. Availability of Books and Records.
Vendor hereby agrees to make its applicable internal practices, books and
records available to the Secretary for purposes of determining CIGNA’s
compliance with the Privacy Standards and the Security Standards. The practices,
books and records subject to this Section shall include those practices, books
and records that relate to the use and disclosure of Protected Health
Information that is created by Vendor on behalf of CIGNA, received by Vendor
from CIGNA, or received by Vendor from a third party on behalf of CIGNA.
Section 9. Return of Records.
Upon the termination of each Vendor Agreement, Vendor shall, if feasible, return
or destroy all Protected Health Information received from, created or received
on behalf of CIGNA that Vendor maintains in any form under such Vendor
Agreement, and shall not retain any copies of such Protected Health Information,
or if such return or destruction is not feasible, extend the protections in this
Agreement to such Protected Health Information and limit further uses and
disclosures to those purposes that make the return or destruction of such
Protected Health Information infeasible.
Section 10. Authorization to Terminate.
Vendor hereby authorizes CIGNA to terminate the applicable Vendor Agreement and
this Agreement if it determines that Vendor has violated a material term of this
Agreement in accordance with the terms of the Vendor Agreement.

52

--------------------------------------------------------------------------------

 

Section 11. Liability
Any and all matters concerning indemnification and/or limitations as set forth
on liability shall be as set forth in the Vendor Agreement.
III. DEFINITIONS FOR USE IN THIS AGREEMENT
“Designated Record Set” shall mean a group of records maintained by or for CIGNA
that is (i) the medical records and billing records about individuals maintained
by or for CIGNA, (ii) the enrollment, payment, claims adjudication, and case or
medical management record systems maintained by or for a health plan; or
(iii) used, in whole or in part, by or for CIGNA to make decisions about
individuals. As used herein, the term “Record” means any item, collection, or
grouping of information that includes Protected Health Information and is
maintained, collected, used, or disseminated by or for CIGNA.
“Electronic Media” shall mean (1) electronic storage media including memory
devices in computers (hard drives) and any removable/transportable digital
memory medium, such as magnetic tape or disk, optical disk, or digital memory
card; or (2) transmission media used to exchange information already in
electronic storage media. Transmission media include, for example, the internet
(wide-open), extranet (using internet technology to link a business with
information accessible only to collaborating parties), leased lines, dial-up
lines, private networks, and the physical movement of removable/transportable
electronic storage media. Certain transmissions, including paper, via facsimile,
and of voice, via telephone, are not considered to be transmissions via
electronic media, because the information being exchanged did not exist in
electronic form before transmission.
“Electronic Protected Health Information” shall mean Protected Health
Information that is transmitted by or maintained in Electronic Media.
“Individually Identifiable Health Information” shall mean information that is a
subset of health information, including demographic information collected from
an individual, and

  (i)   is created or received by a health care provider, health plan, employer,
or health care clearinghouse; and     (ii)   relates to the past, present, or
future physical or mental health or condition of an individual; the provision of
health care to an individual; or the past, present or future payment for the
provision of health care to an individual; and (a) identifies the individual, or
(b) with respect to which there is a reasonable basis to believe the information
can be used to identify the individual; and     (iii)   relates to identifiable
non-health information including but not limited to an individual’s address,
phone number and/or Social Security number.

53

--------------------------------------------------------------------------------

 

“Privacy Standards” shall mean the Health Insurance Portability and
Accountability Act of 1996 and the regulations promulgated thereunder, including
the Standards for Privacy of Individually Identifiable Health Information, 45
C.F.R. Parts 160 and 164.
“Protected Health Information” shall mean Individually Identifiable Health
Information transmitted or maintained in any form or medium that Vendor creates
or receives from or on behalf of CIGNA in the course of fulfilling its
obligations under this Agreement. “Protected Health Information” shall not
include (i) education records covered by the Family Educational Rights and
Privacy Act, as amended, 20 U.S.C. §1232g, (ii) records described in 20 U.S.C.
§1232g(a)(4)(B)(iv), and (iii) employment records held by CIGNA in its role as
employer.
“Secretary” shall mean the Secretary of the Department of Health and Human
Services.
“Security Incident”, as defined in 45 C.F.R. §164.304, shall mean the attempted
or successful unauthorized access, use, disclosure, modification, or destruction
of information or interference with systems operations in an information system.
“Security Standards” shall mean the Security Standards, 45 C.F.R. Parts 160 and
164, Subpart C.
“Vendor Agreements” shall mean the agreement(s) in Appendix “A”, and any other
agreement under which CIGNA may (a) disclose to Vendor Protected Health
Information or (b) Vendor may use Protected Health Information.
IV. EFFECT OF AGREEMENT
To the extent that this Agreement conflicts with the terms of the applicable
Vendor Agreement or any other agreement between CIGNA and Vendor relating to the
confidentiality of Protected Health Information received or created by Vendor on
behalf of CIGNA.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate and signed by their respective officers duly authorized to do so.

          Date __________   [NAME OF VENDOR]
      By:   /s/         Duly Authorized              Date __________   [NAME OF
CIGNA COMPANY]
      By:   /s/         Duly Authorized           

54

--------------------------------------------------------------------------------

 

         

EXHIBIT 4.07
PERMITTED SUBCONTRACTS
***
***

55

--------------------------------------------------------------------------------

 

EXHIBIT 5.03
FUTURE ENDEAVORS
In connection with the Parties’ respective business capacities and strengths,
the Parties hereby agree as follows with respect to future business endeavors:
1. ***. The Parties shall negotiate in good faith to determine the ***
feasibility of developing a model for jointly offering *** to ***, and shall
enter into a separate agreement to carry out the terms of such an undertaking on
the basis of a *** consisting of *** NationsHealth and *** CIGNA (or the
economic equivalent thereof) if such agreement is mutually determined by the
Parties to be feasible. If the Parties comply with their obligations set forth
above in this paragraph but an agreement is not effectuated, and if subsequently
the Law related to a possible model is changed or the interpretation thereof is
changed, or if new Law related to such a model is enacted, then the Parties
shall again be required to comply with the obligations set forth above in this
paragraph.
2. ***. The Parties shall use *** to determine whether there is a model
consistent with *** that will allow each Party to ***. In connection with making
such determination, each Party agrees that, in collaboration with the other
Party, it shall use *** to develop such a model, to prepare a joint written
proposal regarding such model, and to deliver such written proposal, on a date
mutually determined by the Parties, to the ***, as mutually identified by the
Parties. Furthermore, if the Parties so deliver such written proposal, then the
Parties shall use *** to obtain the *** of such ***, to amend the Agreement in a
manner consistent with such proposal, and to implement and effectuate such
proposal. If the Parties comply with their obligations set forth above in this
paragraph but such proposal is not effectuated, and if subsequently the Law
related to such proposal is changed or the interpretation thereof is changed, or
if new Law related to such proposal is enacted, then the Parties shall again be
required to comply with the obligations set forth above in this paragraph. For
purposes of this paragraph, the Parties agree that the obligation to use “***”
shall not in any way require either Party to pursue a claim or suit against, or
participate in a claim or suit against, any ***.
3. ***. The Parties shall use *** to develop a proposal (such as a proposal for
the operation of a demonstration project) for delivery to CMS that combines both
*** with the *** and/or offering of ***, under which NationsHealth or USPG
would, to the extent ***, be the *** of such ***. Each Party agrees that, in
collaboration with the other Party, it shall use *** to prepare such a joint
written proposal and to deliver such written proposal, on a date mutually
determined by the Parties, to the ***, as mutually identified by the Parties.
Furthermore, if the Parties so deliver such written proposal, then the Parties
shall use *** to obtain the *** of such **, to amend the Agreement in a manner
consistent with such proposal, and to implement and effectuate such proposal,
including, without limitation, mutually agreeable compensation arrangements
pertaining thereto. If the Parties comply with their obligations set forth above
in this paragraph but such proposal

56

--------------------------------------------------------------------------------

 

is not effectuated, and if subsequently the Law related to such proposal is
changed or the interpretation thereof is changed, or if new Law related to such
proposal is enacted, then the Parties shall again be required to comply with the
obligations set forth above in this paragraph. For purposes of this paragraph,
the Parties agree that the obligation to use “***” shall not in any way require
either Party to pursue a claim or suit against, or participate in a claim or
suit against, ***.
So long as each Party complies with its obligations set forth above, failure to
achieve or effectuate any of the future business endeavors described above shall
not constitute a breach of the Agreement, and shall not give rise to any right
of termination or rescission or amendment of the Agreement in any manner by any
Party.

57

--------------------------------------------------------------------------------

 

EXHIBIT 7.03
DATA
1.0 Ownership of CIGNA Data. All CIGNA Data is, or shall be, and shall remain
the property of CIGNA and shall be deemed CIGNA Confidential Information. Other
than as necessary for USPG’s or NationsHealth’s performance under this
Agreement, without CIGNA’s approval (in its sole discretion), the CIGNA Data
shall not be (a) used by USPG or NationsHealth, (b) disclosed, sold, assigned,
leased or otherwise provided to third parties by USPG or NationsHealth or to
other third parties or (c) commercially exploited by or on behalf of USPG or
NationsHealth. USPG and NationsHealth shall not possess or assert liens or other
rights in or to CIGNA Data. To the extent applicable, USPG and NationsHealth
hereby irrevocably and perpetually assign, transfer and convey to CIGNA without
further consideration all of its and their right, title and interest in and to
the CIGNA Data. Upon request by CIGNA, and at CIGNA’s expense, USPG and/or
NationsHealth shall execute and deliver any financing statements or other
documents that may be necessary or desirable under any Law to preserve, or
enable CIGNA to enforce, its rights hereunder with respect to the CIGNA Data
          1.1 Correction of Errors. USPG and or NationsHealth shall promptly
correct any errors or inaccuracies in the CIGNA Data and the reports delivered
to CIGNA under this Agreement, to the extent caused by USPG or NationsHealth. If
requested, and at CIGNA’s request expense, USPG and or NationsHealth shall
promptly correct any other errors or inaccuracies in the CIGNA Data or such
reports.
          1.2 Return of Data. Upon request by CIGNA at any time during the term
of this Agreement and upon expiration or termination of this Agreement (or at
the end of the Termination Assistance Period if directed by CIGNA), USPG and or
NationsHealth shall (a) promptly return to CIGNA, in the format and on the media
requested by CIGNA, all or any part of the CIGNA Data and (b) erase or destroy
all or any part of the CIGNA Data in USPG’s or NationsHealth’s possession, in
each case to the extent so requested by CIGNA. Any archival tapes containing
CIGNA Data shall be used by USPG or NationsHealth solely for back-up purposes.
          1.3 Reconstruction. USPG and NationsHealth shall be responsible for
developing and maintaining procedures for the reconstruction of lost CIGNA Data
to the extent the storage of such CIGNA Data is under USPG’s or NationsHealth’s
control. USPG and/or NationsHealth shall correct, at CIGNA’s request and sole
discretion and at no charge to CIGNA, any destruction, loss or alteration of any
CIGNA Data caused by USPG, NationsHealth, or any of their while in USPG’s
possession or under USPG’s control.
          1.4 Data Safeguards. USPG and NationsHealth shall establish and
maintain safeguards against the destruction, loss, or alteration of CIGNA Data
in the possession of USPG or NationsHealth.
2.0 Ownership of NationsHealth Data.. All NationsHealth Data is, or shall be,
and shall remain the property of NationsHealth and/or USPG. Other than as
necessary for CIGNA’s performance under this Agreement, the NationsHealth Data
shall not, without NationsHealth’s or USPG’s approval (in their sole
discretion), be (a) used by CIGNA, (b) disclosed, sold, assigned,

58

--------------------------------------------------------------------------------

 

leased or otherwise provided to third parties by CIGNA or to other third parties
or (c) commercially exploited by or on behalf of CIGNA. CIGNA shall not possess
or assert liens or other rights in or to NationsHealth Data. To the extent
applicable, CIGNA hereby irrevocably and perpetually assigns, transfer and
conveys to NationsHealth and/or USPG without further consideration all of its
right, title and interest in and to the NationsHealth Data. Upon request by
NationsHealth or USPG and at NationsHealth and/or USPG’s expense, CIGNA shall
execute and deliver any financing statements or other documents that may be
necessary or desirable under any Law to preserve, or enable NationsHealth or
USPG to enforce, their rights hereunder with respect to the NationsHealth Data.
          2.1 Return of Data. Upon request by NationsHealth or USPG, at any time
during the term of this Agreement and upon expiration or termination of this
Agreement (or at the end of the Termination Assistance Period if directed by
NationsHealth or USPG), CIGNA shall (a) promptly return to NationsHealth or
USPG, in the format and on the media requested by NationsHealth or USPG, all or
any part of the NationsHealth Data or (b) erase or destroy all or any party of
the NationsHealth Data in CIGNA’s possession, in each case to the extent to
requested by NationsHealth or USPG. Any archival tapes containing NationsHealth
Data shall be used by CIGNA solely for back-up purposes.
3.0 Duplicative Data Fields. The Parties agree that there may be duplicative
data fields in the CIGNA Data and the NationsHealth Data.
4.0 Intellectual Property
          4. 1 During the term of this Agreement, USPG and NationsHealth shall
assist CIGNA or its designee, at CIGNA’s expense, in every reasonable way to
secure all of CIGNA’s worldwide rights, title and interest in CIGNA Intellectual
Property in any and all countries, including the disclosure to CIGNA of all
pertinent information and data with respect thereto, the execution of all
applications, registrations, filings, specifications, oaths, assignments,
confirmation of assignments and all other instruments which CIGNA shall deem
reasonably necessary or appropriate in order to apply for and obtain such
rights, title and interest and in order to assign and convey to CIGNA, its
successors, assigns and nominees the sole and exclusive rights, title and
interests in and to CIGNA Intellectual Property. USPG and NationsHealth further
agree that their obligation to execute or cause to be executed any such
instrument or papers shall continue after the expiration or termination of this
Agreement. If testimony or information relative to any of said matters or
related to any interference or litigation is requested by CIGNA either during
the term of this Agreement or following its expiration or termination, USPG and
NationsHealth agree to give all information and testimony and do all things
reasonably requested by CIGNA and at CIGNA’s expense. If CIGNA is unable because
of USPG’ s and/or NationsHealth refusal or dissolution to secure a signature by
or on behalf of USPG to apply for or to pursue any application, registration,
filing or other instrument for any United States or foreign intellectual
property rights covering the CIGNA Intellectual Property, then USPG hereby
irrevocably designates and appoints CIGNA and its duly authorized officers and
agents as USPG’s agent and attorney in fact, to act for and on USPG’ s and
NationsHealth’s behalf and stead to execute and file any such application,
registration, filing or other instrument, and to do all other lawfully permitted
acts to further the prosecution and issuance of such intellectual property
rights, with the same legal force and effect as if executed by USPG or
NationsHealth.

59

--------------------------------------------------------------------------------

 

          4.2 During the term of this Agreement, CIGNA shall assist
NationsHealth, USPG or its or their designee, at NationsHealth or USPG’s
expense, in every reasonable way to secure all of NastionsHealth’s or USPG’s
worldwide rights, title and interest in NationsHealth/USPG Intellectual Property
in any and all countries, including the disclosure to NationsHealth or USPG of
all pertinent information and data with respect thereto, the execution of all
applications, registrations, filings, specifications, oaths, assignments,
confirmation of assignments and all other instruments which NationsHealth or
USPG shall deem reasonably necessary or appropriate in order to apply for and
obtain such rights, title and interest and in order to assign and convey to
NationsHealth, USPG, its or their successors, assigns and nominees the sole and
exclusive rights, title and interests in and to the NationsHealth/USPG
Intellectual Property. CIGNA further agree that their obligation to execute or
cause to be executed any such instrument or papers shall continue after the
expiration or termination of this Agreement. If testimony or information
relative to any of said matters or related to any interference or litigation is
requested by NationsHealth or USPG either during the term of this Agreement or
following its expiration or termination, CIGNA agrees to give all information
and testimony and do all things reasonably requested by NationsHealth or USPG
and at NationsHealth’s or USPG’s expense. If NationsHealth or USPG is unable
because of CIGNA’s refusal or dissolution to secure a signature by or on behalf
of NationsHealth or USPG to apply for or to pursue any application,
registration, filing or other instrument for any United States or foreign
intellectual property rights covering the NationsHealth/USPG Intellectual
Property, then CIGNA hereby irrevocably designates and appoints NationsHealth
and USPG and their duly authorized officers and agents as CIGNA’s agent and
attorney in fact, to act for and on CIGNA’s behalf and stead to execute and file
any such application, registration, filing or other instrument, and to do all
other lawfully permitted acts to further the prosecution and issuance of such
intellectual property rights, with the same legal force and effect as if
executed by CIGNA.
5.0 Continued Provision of Services
          5.1 Business Continuation.. USPG and NationsHealth shall (a) *** after
the Effective Date, develop a detailed disaster recovery and business
continuation plan, including resource and infrastructure requirements that shall
enable USPG and NationsHealth to provide the Services in accordance with this
Agreement, (b) during the term of this Agreement, implement and comply with the
disaster recovery and business continuation services described in this
Exhibit 7.03 and the plans developed pursuant to sub-section (a) above and
(c) test and successfully verify to CIGNA that the disaster recovery and
business continuation plan is fully operational and capable of restoring
operations so that USPG or NationsHealth is providing the Services as
contemplated in this Agreement. Upon the discovery by USPG or NationsHealth of a
disaster or business interruption, USPG or NationsHealth shall promptly provide
CIGNA and the impacted CIGNA entities with a notice of a disaster or business
interruption or otherwise affecting the provision or receipt of the Services.
          5.2 Implementation of Plan and Restoration of Services. In the event
of a disaster or business interruption (including a Force Majeure Event, as
defined below), USPG and NationsHealth shall implement or cause to be
implemented the disaster recovery and business continuation plan. In the event
USPG and NationsHealth do not implement, or cause to be implemented, the
disaster recovery and business continuation plan and restore the Services in
accordance with such plan as set forth in this Exhibit CIGNA may terminate this
Agreement in whole or in part,

60

--------------------------------------------------------------------------------

 

for cause upon notice to USPG and NationsHealth without regard to any cure
period and CIGNA may pursue any and all available rights and remedies. In the
event of a disaster, USPG shall not increase its charges under this Agreement or
charge any CIGNA entity usage fees in addition to the fees to be paid under this
Agreement.
          5.3 Force Majeure. If and to the extent that the performance by CIGNA
or USPG or NationsHealth (an “Affected Party”) of any of its obligations
pursuant to this Agreement, as applicable, is prevented, hindered or delayed
directly by an act of God, riot, war, earthquake, acts of terrorism by public
enemy, strikes, lockouts or labor disputes or any other similar cause beyond the
reasonable control of such Affected Party (excluding labor disputes or strikes
involving a Party’s own personnel) (each, a “Force Majeure Event”), and such
non-performance, hindrance or delay could not have been prevented by reasonable
precautions, then the Affected Party shall be excused for such hindrance, delay
or non-performance, as applicable, of those obligations affected by the Force
Majeure Event for as long as such Force Majeure Event continues and the Affected
Party continues to use commercially diligent efforts to recommence performance
whenever and to whatever extent reasonably possible without delay, including
through the use of alternate sources, workaround plans or other means; provided,
however, that the use of such alternate sources, workaround plans or other means
shall cease, upon the cessation of the Force Majeure Event. For so long as a
Force Majeure Event continues, the non-Affected Party shall, upon the Affected
Party’s reasonable request cooperate with the Affected Party. The Affected Party
shall immediately notify the other Party of the occurrence of the Force Majeure
Event and describe in reasonable detail the nature of the Force Majeure Event.
The occurrence of a Force Majeure Event does not excuse, limit or otherwise
affect USPG’s obligation to provide either normal recovery procedures or any
other disaster recovery services, except to the extent that such procedures or
services are directly affected by such Force Majeure Event. For the avoidance of
doubt but without limiting the foregoing, each party shall be deemed in breach
of this Agreement for failures to perform its obligations other than failures
due to Force Majeure Events.
          5.4 Alternate Source. If and for so long as any Force Majeure Event
prevents, or substantially hinders or delays, the performance of any critical
Service for longer than the recovery period specified in the applicable disaster
recovery and business continuation plan, CIGNA may procure part or all of the
Services from an alternate source (after consultation with USPG) in which case
CIGNA shall have no obligation to compensate USPG for the Services for time
period that the Services, or part of them, are procured from an alternate
source.

61

--------------------------------------------------------------------------------

 

EXHIBIT 10.01 (a)
KNOWLEDGE OF USPG and NATIONSHEALTH
***
***
***
***
***

62

--------------------------------------------------------------------------------

 

EXHIBIT 10.01(b)
KNOWLEDGE OF CIGNA
***
***
***
***

63