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EXHIBIT 10.08

BLUE SHIELD
CONTROLLED AFFILIATE LICENSE AGREEMENT
APPLICABLE TO LIFE INSURANCE COMPANIES
(Includes revisions adopted by Member Plans through their November 16, 2000
meeting)

    This agreement by and among Blue Cross and Blue Shield Association ("BCBSA")
Greater Georgia Life Insurance Company ("Controlled Affiliate"), a Controlled
Affiliate of the Blue Shield Plan(s), known as WellPoint Health Networks Inc.
("Plan").

WHEREAS, BCBSA is the owner of the BLUE SHIELD and BLUE SHIELD Design service
marks;

WHEREAS, the Plan and the Controlled Affiliate desire that the latter be
entitled to use the BLUE SHIELD and BLUE SHIELD Design service marks
(collectively the "Licensed Marks") as service marks and be entitled to use the
term BLUE SHIELD in a trade name ("Licensed Name");

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
hereinafter set forth and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

    1.  GRANT OF LICENSE

    Subject to the terms and conditions of this Agreement, BCBSA hereby grants
to the Controlled Affiliate the exclusive right to use the licensed Marks and
Names in connection with and only in connection with those life insurance and
related services authorized by applicable state law, other than health care
plans and related services (as defined in the Plan's License Agreements with
BCBSA) which services are not separately licensed to Controlled Affiliate by
BCBSA, in the Service Area served by the Plan, except that BCBSA reserves the
right to use the Licensed Marks and Name in said Service Area, and except to the
extent that said Service Area may overlap the area or areas served by one or
more other licensed Blue Shield Plans as of the date of this License as to which
overlapping areas the rights hereby granted are non-exclusive as to such other
Plan or Plans and their respective Licensed Controlled Affiliates only.
Controlled Affiliate cannot use the Licensed Marks or Name outside the Service
Area or, anything in any other license to Controlled Affiliate notwithstanding,
in its legal or trade name.

    2.  QUALITY CONTROL

    A.  Controlled Affiliate agrees to use the Licensed Marks and Name only in
relation to the sale, marketing and rendering of authorized products and further
agrees to be bound by the conditions regarding quality control shown in
Exhibit A as it may be amended by BCBSA from time-to-time.

Amended as of November 17, 1994

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    B.  Controlled Affiliate agrees that Plan and/or BCBSA may, from
time-to-time, upon reasonable notice, review and inspect the manner and method
of Controlled Affiliate's rendering of service and use of the Licensed Marks and
Name.

    C.  Controlled Affiliate agrees that it will provide on an annual basis (or
more often if reasonably required by Plan or by BCBSA) a report to Plan and
BCBSA demonstrating Controlled Affiliate's compliance with the requirements of
this Agreement including but not limited to the quality control provisions of
Exhibit A.

    D.  As used herein, a Controlled Affiliate is defined as an entity organized
and operated in such a manner that it is subject to the bona fide control of a
Plan or Plans. Absent written approval by BCBSA of an alternative method of
control, bona fide control shall mean the legal authority, directly or
indirectly through wholly-owned subsidiaries: (a) to select members of the
Controlled Affiliate's governing body having not less than 51% voting control
thereof; (b) to exercise operational control with respect to the governance
thereof; and (c) to prevent any change in its articles of incorporation, bylaws
or other governing documents deemed inappropriate. In addition, a Plan or Plans
shall own at least 51% of any for-profit Controlled Affiliate. If the Controlled
Affiliate is a mutual company, the Plan or its designee(s) shall have and
maintain, in lieu of the requirements of items (a) and (c) above, proxies
representing 51% of the votes at any meeting of the policyholders and shall
demonstrate that there is no reason to believe this such proxies shall be
revoked by sufficient policyholders to reduce such percentage below 51%.

    3.  SERVICE MARK USE

    Controlled Affiliate shall at all times make proper service mark use of the
Licensed Marks, including but not limited to use of such symbols or words as
BCBSA shall specify to protect the Licensed Marks, and shall comply with such
rules (applicable to all Controlled Affiliates licensed to use the Marks)
relative to service mark use, as are issued from time-to-time by BCBSA. If there
is any public reference to the affiliation between the Plan and the Controlled
Affiliate, all of the Controlled Affiliate's licensed services in the Service
Area of the Plan shall be rendered under the Licensed Marks. Controlled
Affiliate recognizes and agrees that all use of the Licensed Marks by Controlled
Affiliate shall inure to the benefit of BCBSA.

    4.  SUBLICENSING AND ASSIGNMENT

    Controlled Affiliate shall not sublicense, transfer, hypothecate, sell,
encumber or mortgage, by operation of law or otherwise, the rights granted

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hereunder and any such act shall be voidable at the option of Plan or BCBSA.
This Agreement and all rights and duties hereunder are personal to Controlled
Affiliate.

    5.  INFRINGEMENTS

    Controlled Affiliate shall promptly notify Plan and BCBSA of any suspected
acts of infringement, unfair competition or passing off which may occur in
relation to the Licensed Marks. Controlled Affiliate shall not be entitled to
require Plan or BCBSA to take any actions or institute any proceedings to
prevent infringement, unfair competition or passing off by third parties.
Controlled Affiliate agrees to render to Plan and BCBSA, free of charge, all
reasonable assistance in connection with any matter pertaining to the protection
of the Licensed Marks by BCBSA.

    6.  LIABILITY INDEMNIFICATION

    Controlled Affiliate hereby agrees to save, defend, indemnify and hold Plan
and BCBSA harmless from and against all claims, damages, liabilities and costs
of every kind, nature and description which may arise as a result of Controlled
Affiliate's rendering of health care services under the Licensed Marks.

    7.  LICENSE TERM

    The license granted by this Agreement shall remain in effect for a period of
one (1) year and shall be automatically extended for additional one (1) year
periods upon evidence satisfactory to the Plan and BCBSA that Controlled
Affiliate meets the then applicable quality control standards, unless one of the
parties hereto notifies the other party of the termination hereof at least sixty
(60) days prior to expiration of any license period.

    This Agreement may be terminated by the Plan or by BCBSA for cause at any
time provided that Controlled Affiliate has been given a reasonable opportunity
to cure and shall not effect such a cure within thirty (30) days of receiving
written notice of the intent to terminate (or commence a cure within such thirty
day period and continue diligent efforts to complete the cure if such curing
cannot reasonably be completed within such thirty day period). By way of example
and not for purposes of limitation, Controlled Affiliate's failure to abide by
the quality control provisions of Paragraph 2, above, shall be considered a
proper ground for cancellation of this Agreement.

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    A.  Controlled Affiliate shall no longer comply with Standard No. 1
(Organization and Governance) of Exhibit A or, following an opportunity to cure,
with the remaining quality control provisions of Exhibit A, as it may be amended
from time-to-time; or

    B.  Plan ceases to be authorized to use the Licensed Marks; or

    C.  Appropriate dues for Controlled Affiliate pursuant to item 8 hereof,
which are the royalties for this License Agreement are more than sixty (60) days
in arrears to BCBSA.

    Upon termination of this Agreement for cause or otherwise, Controlled
Affiliate agrees that it shall immediately discontinue all use of the Licensed
Marks including any use in its trade name.

    In the event of any disagreement between Plan and BCBSA as to whether
grounds exist for termination or as to any other term or condition hereof, the
decision of BCBSA shall control, subject to provisions for mediation or
mandatory dispute resolution in effect between the parties.

    Upon termination of this Agreement, Licensed Controlled Affiliate shall
immediately notify all of its customers that it is no longer a licensee of the
Blue Cross and Blue Shield Association and provide instruction on how the
customer can contact the Blue Cross and Blue Shield Association or a designated
licensee to obtain further information on securing coverage. The written
notification required by this paragraph shall be in writing and in a form
approved by the Association. The Association shall have the right to audit the
terminated entity's books and records to verify compliance with this paragraph.

    8.  DUES

    Controlled Affiliate will pay to BCBSA a fee for this license in accordance
with the following formula:

•An annual fee of five thousand dollars ($5,000) per license, plus

•.05% of gross revenue per year from branded group products, plus

•.5% of gross revenue per year from branded individual products plus

•.14% of gross revenue per year from branded individual annuity products.

Amended as of November 20, 1997

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The foregoing percentages shall be reduced by one-half where both a BLUE CROSS®
and BLUE SHIELD® license are issued to the same entity. In the event that any
License period is greater or less than one (1) year, any amounts due shall be
prorated. Royalties under this formula will be calculated, billed and paid in
arrears.

    Plan will promptly and timely transmit to BCBSA all dues owed by Controlled
Affiliate as determined by the above formula and if Plan shall fail to do so,
Controlled Affiliate shall pay such dues directly.

    9.  JOINT VENTURE

    Nothing contained in this Agreement shall be construed as creating a joint
venture, partnership, agency or employment relationship between Plan and
Controlled Affiliate or between either and BCBSA.

    9A.  VOTING

    For all provisions of this Agreement referring to voting, the term "Plans'
shall mean all entities licensed under the Blue Cross License Agreement and/or
the Blue Shield License Agreement, and in all votes of the Plans under this
Agreement the Plans shall vote together. For weighted votes of the Plans, the
Plan shall have a number of votes equal to the number of weighted votes (if any)
that it holds as a Blue Cross Plan plus the number of weighted votes (if any)
that it holds as a Blue Shield Plan. For all other votes of the Plans, the Plan
shall have one vote. For all questions requiring an affirmative three-fourths
weighted vote of the Plans, the requirement shall be deemed satisfied with a
lesser weighted vote unless six (6) or more Plans fail to cast weighted votes in
favor of the question.

    10.  NOTICES AND CORRESPONDENCE

    Notices regarding the subject matter of this Agreement or breach or
termination thereof shall be in writing and shall be addressed in duplicate to
the last known address of each other party, marked respectively to the attention
of its President and, if any, its General Counsel.

Amended as of June 16, 2000

4a

(The next page is page 5)

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    11.  COMPLETE AGREEMENT

    This Agreement contains the complete understandings of the parties in
relation to the subject matter hereof. This Agreement may only be amended by a
writing executed by all parties.

    12.  SEVERABILITY

    If any term of this Agreement is held to be unlawful by a court of competent
jurisdiction, such finding shall in no way effect the remaining obligations of
the parties hereunder and the court may substitute a lawful term or condition
for any unlawful term or condition so long as the effect of such substitution is
to provide the parties with the benefits of this Agreement.

    13.  NONWAIVER

    No waiver by BCBSA of any breach or default in performance on the part of
the Controlled Affiliate or any other licensee of any of the terms, covenants or
conditions of this Agreement shall constitute a waiver of any subsequent breach
or default in performance of said terms, covenants or conditions.

    14.  GOVERNING LAW

    This Agreement shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Illinois.

IN WITNESS WHEREOF, the parties have caused this License Agreement to be
executed, effective as of the date of last signature written below.

Greater Georgia Life Insurance Company:    
By:
 
/s/ HUGH J. STEDMAN   

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Hugh J. Stedman
 
 
Date:
 
3-15-01

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WellPoint Health Networks Inc.:
 
 
By:
 
/s/ LEONARD D. SCHAEFFER   

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Leonard D. Schaeffer
 
 
Date:
 
3-15-01

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BLUE CROSS AND BLUE SHIELD ASSOCIATION
 
 
By:
 
/s/ ROGER G. WILSON   

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Roger G. Wilson
 
 
Date:
 
3-15-01

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EXHIBIT A
CONTROLLED AFFILIATE LICENSE STANDARDS
LIFE INSURANCE COMPANIES
Page 1 of 2

PREAMBLE

    The standards for licensing Life Insurance Companies (Life and Health
Insurance companies, as defined by state statute) are established by BCBSA and
are subject to change from time-to-time upon the affirmative vote of
three-fourths (3/4) of the Plans and three-fourths (3/4) of the total weighted
vote of all Plans. Each Licensed Plan is required to use a standard controlled
affiliate license form provided by BCBSA and to cooperate fully in assuring that
the licensed Life Insurance Company maintains compliance with the license
standards.

    An organization meeting the following standards shall be eligible for a
license to use the Licensed Marks within the service area of its sponsoring
Licensed Plan to the extent and the manner authorized under the Controlled
Affiliate License applicable to Life Insurance Companies and the principal
license to the Plan.

Standard 1—Organization and Governance

    The LIC shall be organized and operated in such a manner that it is
controlled by a licensed Plan or Plans which have, directly or indirectly:
1) not less than 51% of the voting control of the LIC; and 2) the legal ability
to prevent any change in the articles of incorporation, bylaws or other
establishing or governing documents of the LIC with which it does not concur;
and 3) operational control of the LIC.

    If the LIC is a mutual company, the Plan or its designee(s) shall have and
maintain, in lieu of the requirements of items 1 and 2 above, proxies
representing at least 51% of the votes at any policyholder meeting and shall
demonstrate that there is no reason to believe such proxies shall be revoked by
sufficient policyholders to reduce such percentage below 51%.

Standard 2—State Licensure

    The LIC must maintain unimpaired licensure or certificate of authority to
operate under applicable state laws as a life and health insurance company in
each state in which the LIC does business.

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CONTROLLED AFFILIATE LICENSE STANDARDS
LIFE INSURANCE COMPANIES
Page 2 of 2

Standard 3—Records and Examination

    The LIC and its sponsoring licensed Plan(s) shall maintain and furnish, on a
timely and accurate basis, such records and reports regarding the LIC as may be
required in order to establish compliance with the license agreement. The LIC
and its sponsoring licensed Plan(s) shall permit BCBSA to examine the affairs of
the LIC and shall agree that BCBSA's board may submit a written report to the
chief executive officer(s) and the board(s) of directors of the sponsoring
Plan(s).

Standard 4—Mediation

    The LIC and its sponsoring Plan(s) shall agree to use the then-current BCBSA
mediation and mandatory dispute resolution processes, in lieu of a legal action
between or among another licensed controlled affiliate, a licensed Plan or
BCBSA.

Standard 5—Financial Responsibility

    The LIC shall maintain adequate financial resources to protect its customers
and meet its business obligations.

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EXHIBIT 2

Membership Standards
Page 1 of 4

Preamble

    The Membership Standards apply to all organizations seeking to become or to
continue as Regular Members of the Blue Cross and Blue Shield Association. Any
organization seeking to become a Regular Member must be found to be in
substantial compliance with all Membership Standards at the time membership is
granted and the organization must be found to be in substantial compliance with
all Membership Standards for a period of two (2) years preceding the date of its
application. If Membership is sought by an entity which controls or is
controlled by one or more Plans, such compliance shall be determined on the
basis of compliance by such Plan or Plans.

    The Regular Member Plans shall have authority to interpret these Standards.
Compliance with any Membership Standard may be excused, at the Plans'
discretion, if the Plans agree that compliance with such Standard would require
the Plan to violate a law or governmental regulation governing its operation or
activities.

    A Regular Member Plan that operates as a "Shell Holding Company" is defined
as an entity that assumes no underwriting risk and has less than 1% of the
consolidated enterprise assets (excludes investments in subsidiaries) and less
than 5% of the consolidated enterprise general and administrative expenses.

    A Regular Member Plan that operates as a "Hybrid Holding Company" is defined
as an entity that assumes no underwriting risk and has either more than 1% of
the consolidated enterprise assets (excludes investments in subsidiaries) or
more than 5% of the consolidated enterprise general and administrative expenses.

Standard 1:   A Plan's Board shall not be controlled by any special interest
group, and shall act in the interest of its Corporation in providing
cost-effective health care services to its customers. A Plan shall maintain a
governing Board, which shall control the Plan, composed of a majority of persons
other than providers of health care services, who shall be known as public
members. A public member shall not be an employee of or have a financial
interest in a health care provider, nor be a member of a profession which
provides health care services.     Amended as of November 19, 1998

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EXHIBIT 2

Membership Standards
Page 2 of 4

Standard 2:
 
A Plan shall furnish to the Association on a timely and accurate basis reports
and records relating to compliance with these Standards and the License
Agreements between the Association and the Plans. Such reports and records are
the following:
 
 
A.
 
BCBSA Membership Information Request;
 
 
B.
 
Biennial trade name and service mark usage material, including disclosure
material under Standard 7;
 
 
C.
 
Changes in the governance of the Plan, including changes in a Plan's Charter,
Articles of Incorporation, or Bylaws, changes in a Plan's Board composition, or
changes in the identity of the Plan's Principal Officers;
 
 
D.
 
Quarterly Financial Report, Semi-annual "Managed Care Organizations Risk-Based
Capital (MCO-RBC) Report" as defined by the NAIC, Combined Annual Financial
Forecast, Annual Certified Audit Report, Insurance Department Examination
Report, Annual Statement filed with State Insurance Department (with all
attachments), Plan, Subsidiary and Affiliate Report; and
 
 
 
 
•
 
Plans that are a Shell Holding Company as defined in the Preamble hereto are
required to furnish only a calendar year-end "Managed Care Organizations
Risk-Based Capital (MCO-RBC) Report" as defined by the NAIC.

Amended as of November 16, 2000

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EXHIBIT 2

Membership Standards
Page 3 of 4

 
 
E.
 
Quarterly Enrollment Report, Semi-Annual Benefit Cost Management Report and
Member Touchpoint Measures Index (MTM) starting 12/31/00 and semi-annually
thereafter; and
 
 
 
 
•
 
Plans that are a Shell Holding Company as defined in the Preamble hereto are not
required to furnish any items identified in Paragraph E.
Standard 3:
 
A Plan shall be operated in a manner that provides reasonable financial
assurance that it can fulfill its contractual obligations to its customers.
Standard 4:
 
A Plan shall be operated in a manner responsive to customer needs and
requirements.
Standard 5:
 
A Plan shall effectively and efficiently participate in each national program as
from time to time may be adopted by the Member Plans for the purposes of
providing portability of membership between the Plans and ease of claims
processing for customers receiving benefits outside of the Plan's Service Area.
 
 
Such programs are applicable to Blue Cross and Blue Shield Plans, and include:
 
 
A.
 
Transfer Program;     B.   Inter-Plan Teleprocessing System (ITS);     C.  
BlueCard Program; and     D.   Electronic Claims Routing Process

Amended as of November 16, 2000

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EXHIBIT 2

Membership Standards
Page 4 of 4

Standard 6:
 
In addition to requirements under the national programs listed in Standard 5:
Participation in National Programs, a Plan shall take such action as required to
ensure its financial performance in programs and contracts of an inter-Plan
nature or where the Association is a party.
Standard 7:
 
A Plan shall make adequate disclosure in contracting with third parties and in
disseminating public statements of (i) the structure of the Blue Cross and Blue
Shield System, (ii) the independent nature of every Plan, and (iii) the Plan's
financial condition.
Standard 8:
 
A Plan shall cooperate with the Association's Board of Directors and its Plan
Performance and Financial Standards Committee in the administration of the Plan
Performance Response Process and in addressing Plan performance problems
identified thereunder.
Standard 9:
 
A Plan shall obtain a rating of its financial strength from an independent
rating agency approved by the Association's Board of Directors for such purpose.
Standard 10:
 
During each year, a Plan and its Controlled Affiliate(s) engaged in providing
licensable services (excluding Life Insurance and Charitable Foundation
Services) shall use their best efforts in the designated Service Area to promote
and build the value of the Blue Cross and Blue Shield Marks.
Standard 11
 
Neither a Plan nor any Larger Controlled Affiliate shall cause or permit an
entity other than a Plan or a Licensed Controlled Affiliate thereof to obtain
control of the Plan or Larger Controlled Affiliate or to acquire a substantial
portion of its assets related to licensable services.

Amended as of June 18, 1999

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EXHIBIT 3

GUIDELINES WITH RESPECT TO USE OF
LICENSED NAME AND MARKS IN CONNECTION WITH NATIONAL ACCOUNTS
Page 1 of 3

    1.  The strength of the Blue Cross/Blue Shield National Accounts mechanism,
and the continued provision of cost effective, quality health care benefits to
National Accounts, are predicated on locally managed provider networks
coordinated on a national scale in a manner consistent with effective service to
National Account customers and consistent with the preservation of the integrity
of the Blue Cross/Blue Shield system and the Licensed Marks. These guidelines
shall be interpreted in keeping with such ends.

    2.  A National Account is an entity with employee and/or retiree locations
in more than one Plan's Service Area. Unless otherwise agreed, a National
Account is deemed located in the Service Area in which the corporate
headquarters of the National Account is located. The Control Plan of a National
Account is the Plan in whose Service Area the National Account is located. A
participating ("Par") Plan is a Plan in whose Service Area the National Account
has employee and/or retiree locations, but in which the National Account is not
located.

    3.  The National Account Guidelines enunciated herein below shall be
applicable only with respect to the business of new National Accounts acquired
after January 1, 1991.

    4.  Control Plans shall utilize National Account identification cards
complying with then currently effective BCBSA graphic standards in connection
with all National Accounts business to facilitate administration thereof, to
minimize subscriber and provider confusion, and to reflect a commitment to
cooperation among Plans.

    5.  Disputes among Plans and/or BCBSA as to the interpretation or
implementation of these Guidelines or as to other National Accounts issues shall
be submitted to mediation and mandatory dispute resolution as provided in the
License Agreement. For two years from the effective date of the License
Agreement, however, such disputes shall be subject to mediation only, with the
results of such mediation to be collected and reported in order to establish
more definitive operating parameters for National Accounts business and to serve
as ground rules for future binding dispute resolution.

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EXHIBIT 3

Page 2 of 3

    6.  The Control Plan may use the BlueCard Program (as defined by IPOC) to
deliver benefits to employees and non-Medicare eligible retirees in a
Participating Plan's service area if an alternative arrangement with the
Participating Plan cannot be negotiated. The Participating Plan's minimum
servicing requirement for those employees and non-Medicare retirees in its
service area is to deliver benefits using the BlueCard Program. Account delivery
is subject to the policies, provisions and procedures of the BlueCard Program.

    7.  For provider payments in a Participating Plan's area (on non-BlueCard
claims), payment to the provider may be made by the Participating Plan or the
Control Plan at the Participating Plan's option. If the Participating Plan
elects to pay the provider, it may not withhold payment of a claim verified by
the Control Plan or its designated processor, and payment must be in conformity
with service criteria established by the Board of Directors of BCBSA (or an
authorized committee thereof) to assure prompt payment, good service and minimum
confusion with providers and subscribers. The Control Plan, at the Participating
Plan's request, will also assure that measures are taken to protect the
confidentiality of the data pertaining to provider reimbursement levels and
profiles.

    8.  For claim payments in a Participating Plan's area (on non-BlueCard
claims), Participating Plans are strongly encouraged, but not required, to pass
along to the Control Plan part or all of local provider discounts and
differentials for use by the Control Plan in negotiating financial arrangements
with National Accounts. However, since the size, basis, form and use of local
differentials can vary substantially among Plans and also by individual National
Account characteristics, the degree and form of any discount or differential
passed along to the Control Plan shall be strictly a matter of negotiated
contractual agreement between a Participating Plan and the Control Plan and may
also vary from one National Account to another. In order to facilitate the
quotation of national account pricing and the offering of a variety of National
Account delivery systems, all Plans are strongly encouraged to periodically
publish to other Plans and the BCBSA their National Account contracting policies
with respect to the handling of differentials.

    The Control Plan, in its financial agreements with a National Account, is
expected to reasonably reflect the aggregate amount of differentials passed
along to the Control Plan by all Participating Plans in a National Account. The
exact form and substance of this may vary from one National Account to another
and shall be a matter of

Amended as of June 14, 1996

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EXHIBIT 3

Page 3 of 3

explicit negotiation and contractual relationship between the National Account
and the Control Plan. The specifics in an agreement between the Control Plan and
the National Account may vary in form (e.g., a guaranteed offset against
retentions, or a direct pass through, or a guaranteed aggregate percentage
discount, or no pass back at all, etc.), and the Control Plan has the
responsibility and the Authority to negotiate precise arrangements. However,
irrespective of the final arrangements between the Control Plan and the National
Account, a Participating Plan's liability for passing along differentials shall
be limited to the contractual agreement the Participating Plan has with the
Control Plan on a specific National Account.

    9.  Other than in contracting with health care providers or soliciting such
contracts in areas contiguous to a Plan's Service Area in order to serve its
subscribers or those of its licensed Controlled Affiliate residing or working in
its Service Area, a Control Plan may not use the Licensed Marks and/or Name, as
a tag line or otherwise, to negotiate directly with providers outside its
Service Area.

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EXHIBIT 4

GOVERNMENT PROGRAMS AND CERTAIN OTHER USES
Page 1 of 2

    1.  A Plan and its licensed Controlled Affiliate may use the Licensed Marks
and Name in bidding on and executing a contract to serve a Government Program,
and in thereafter communicating with the Government concerning the Program. With
respect, however, to such contracts entered into after the 1st day of January,
1991, the Licensed Marks and Name will not be used in communications or
transactions with beneficiaries or providers in the Government Program located
outside a Plan's Service Area, unless the Plan can demonstrate to the
satisfaction of BCBSA's governing body that such a restriction on use of the
Licensed Marks and Name will jeopardize its ability to procure the contract for
the Government Program. As to both existing and future contracts for Government
Programs, Plans will discontinue use of the Licensed Marks and Name as to
beneficiaries and Providers outside their Service Area as expenditiously as
circumstances reasonably permit. Effective January 1, 1995, except as provided
in the first sentence above, all use by a Plan of the Licensed Marks and Name in
Government Programs outside of the Plan's Service Area shall be discontinued.
Incidental communications outside a Plan's Service Area with resident or former
resident beneficiaries of the Plan, and other categories of necessary incidental
communications approved by BCBSA, are not prohibited.

    2.  In connection with activity otherwise in furtherance of the License
Agreement, a Plan may use the Licensed Marks and Name outside its Service Area
in the following circumstances which are deemed legitimate and necessary and not
likely to cause consumer confusion:

a.sending letterhead, envelopes, and similar items for administrative purposes
which do not solicit the sale of health care plans and related services;

b.distributing business cards other than in marketing and selling;

c.contracting with health care providers or soliciting such contracts in areas
contiguous to a Plan's Service Area in order to serve its subscribers or those
of its licensed Controlled Affiliate residing or working in its service area;

d.issuing a small sign containing the legal name or trade name of the Plan or
its licensed Controlled Affiliate for display by a provider to identify the
latter as a participating provider of the Plan or Controlled Affiliate;

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EXHIBIT 4

1 Page 2 of 2

e.advertising in publications or electronic media solely to persons for
employment;

f.advertising in print, electronic or other media which serve, as a substantial
market, the Service Area of the Plan or licensed Controlled Affiliate, provided
that no Plan may advertise outside its Service Area on the national broadcast
and cable networks and that advertisements in national print media are limited
to the smallest regional edition encompassing the Service Area;

g.advertising by direct mail where the addressee's zip code plus 4 includes, at
least in part, the Plan's Service Area or that of a licensed Controlled
Affiliate.

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EXHIBIT 5

MEDIATION AND MANDATORY DISPUTE RESOLUTION (MMDR) RULES

    The Blue Cross and Blue Shield Plans ("Plans") and the Blue Cross Blue
Shield Association ("BCBSA") recognize and acknowledge that the Blue Cross and
Blue Shield system is a unique nonprofit and for-profit system offering cost
effective health care financing and services. The Plans and BCBSA desire to
utilize Mediation and Mandatory Dispute Resolution ("MMDR") to avoid expensive
and time-consuming litigation that may otherwise occur in the federal and state
judicial systems. Even MMDR should be viewed, however, as methods of last
resort, all other procedures for dispute resolution having failed. Except as
otherwise provided in the License Agreements, the Plans, their Controlled
Affiliates and BCBSA agree to submit all disputes to MMDR pursuant to these
Rules and in lieu of litigation.

1.  Initiation of Proceedings

    A.  Pre-MMDR Efforts  

    Before filing a Complaint to invoke the MMDR process, the CEO of a
complaining party, or his/her designated representative, shall undertake good
faith efforts with the other side(s) to try to resolve any dispute.

    B.  Complaint  

    To commence a proceeding, the complaining party (or parties) shall provide
by certified mail, return receipt requested, a written Complaint to the BCBSA
Corporate Secretary (which shall also constitute service on BCBSA if it is a
respondent) and to any Plan(s) and/or Controlled Affiliate(s) named therein. The
Complaint shall contain:

i.identification of the complaining party (or parties) requesting the
proceeding;

ii.identification of the respondent(s);

iii.identification of any other persons or entities who are interested in a
resolution of the dispute;

iv.a full statement describing the nature of the dispute;

v.identification of all of the issues that are being submitted for resolution;

Amended as of November 21, 1996

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vi.the remedy sought;

vii.a statement as to whether the complaining party (or parties) elect(s) first
to pursue Mediation;

viii.any request, if applicable, that one or more members of the Mediation
Committee be disqualified from the proceeding and the grounds for such request;

ix.any request, if applicable, that the matter be handled on an expedited basis
and the reasons therefor; and

x.a statement signed by the CEO of the complaining party affirming that the CEO
has undertaken efforts, or has directed efforts to be undertaken, to resolve the
dispute before resorting to the MMDR process.

The complaining party (or parties) shall file and serve with the Complaint
copies of all documents which the party (or parties) intend(s) to offer at the
Arbitration Hearing and a statement identifying the witnesses the party (or
parties) intend(s) to present at the Hearing, along with a summary of each
witness' expected testimony.

    C.  Answer  

    Within twenty (20) days after receipt of the Complaint, each respondent
shall serve on the BCBSA and on the complaining party (or parties) and on the
Chairman of the Mediation Committee;

i.a full Answer to the aforesaid Complaint;

ii.a statement of any Counterclaims against the complaining party (or parties),
providing with respect thereto the information specified in Paragraph 1.B.,
above;

iii.a statement as to whether the respondent elects to first pursue Mediation;

iv.any request, if applicable, that one or more members of the Mediation
Committee be disqualified from the proceeding and the grounds for such request;
and

v.any request, if applicable, that the matter be handled on an expedited basis
and the reasons therefor.

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The respondent(s) shall file and serve with the Answer or by the date of the
Initial Conference set forth in Paragraph 3.B., below, copies of all documents
which the respondent(s) intend(s) to offer at the Arbitration Hearing and a
statement identifying the witnesses the party (or parties) intend(s) to present
at the Hearing, along with a summary of each witness' expected testimony.

    D.  Reply To Counterclaim  

    Within ten (10) days after receipt of any Counterclaim, the complaining
party (or parties) shall serve on BCBSA and on the responding party (or parties)
and on the Chairman of the Mediation Committee, a Reply to the Counterclaim.
Such Reply must provide the same information required by Paragraph 1.C.

2.  Mediation

    A.  Mediation Committee  

    To facilitate the mediation of disputes between or among BCBSA, the Plans
and/or their Controlled Affiliates, the BCBSA Board has established a Mediation
Committee. Mediation may be pursued in lieu of or in an effort to obviate the
Mandatory Dispute Resolution process, and all parties are strongly urged to
exhaust the mediation procedure.

    B.  Election To Mediate  

    If any party elects first to pursue Mediation, and if it appears to the
Corporate Secretary that the dispute falls within the jurisdiction of the
Mediation Committee, as set forth in Exhibit 5-A hereto, then the Corporate
Secretary will promptly furnish the Mediation Committee with copies of the
Complaint, Answer, Counterclaim and Reply to Counterclaim, and other documents
referenced in Paragraph 1, above.

    C.  Selection of Mediators  

    The parties shall promptly attempt to agree upon: (i) the number of
mediators desired, not to exceed three mediators; and (ii) the selection of the
mediator(s) who may include members of the Mediation Committee and/or
experienced mediators from an independent entity to mediate all disputes set
forth in the Complaint and Answer (and Counterclaim and Reply, if any). In the
event the parties cannot agree upon the number of mediators desired, that number
shall default to three. In the event the parties cannot agree upon the selection
of mediator(s), the Chairman will select the mediator(s), at least one of which
shall be an experienced mediator from an independent entity, consistent with the
provisions set forth in this Paragraph. No member of the Mediation Committee who
is a representative of any party to the Mediation may be

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selected to mediate the dispute. The Chairman shall also endeavor not to select
as a mediator any member of the Mediation Committee whom a party has requested
to be disqualified. If, after due regard for availability, expertise, and such
other considerations as may best promote an expeditious Mediation, the Chairman
believes that he or she must consider for selection a member of the Mediation
Committee whom a party has requested to be disqualified, the other members of
the Committee eligible to be selected to mediate the dispute shall decide the
request for disqualification. By agreeing to participate in the Mediation of a
dispute, a member of the Mediation Committee represents to the party (or
parties) thereto that he or she knows of no grounds which would require his or
her disqualification.

    D.  Binding Decision  

    Before the date of the Mediation Hearing described below, the Corporate
Secretary will contact the party (or parties) to determine whether they wish to
be bound by any recommendation of the selected mediators for resolution of the
disputes. If all wish to be bound, the Corporate Secretary will send appropriate
documentation to them for their signatures before the Mediation Hearing begins.

    E.  Mediation Procedure  

    The Chairman shall promptly advise the parties of a scheduled Mediation
Hearing date. Unless a party requests an expedited procedure, or unless all
parties to the proceeding agree to one or more extensions of time, the Mediation
Hearing set forth below shall be completed within forty (40) days of BCBSA's
receipt of the Complaint. The selected mediators, unless the parties otherwise
agree, shall adhere to the following procedure:

i.Each party must be represented by its CEO or other representative who has been
delegated full authority to resolve the dispute. However, parties may send
additional representatives as they see fit.

ii.By no later than five (5) days prior to the date designated for the Mediation
Hearing, each party shall supply and serve a list of all persons who will be
attending the Mediation Hearing, and indicate who will have the authority to
resolve the dispute.

iii.Each party will be given one-half hour to present its case, beginning with
the complaining party (or parties), followed by the other party or parties. The
parties are free to structure their presentations as they see fit, using oral
statements or direct examination of witnesses. However, neither
cross-examination nor questioning of opposing representatives will be

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permitted. At the close of each presentation, the selected mediators will be
given an opportunity to ask questions of the presenters and witnesses. All
parties must be present throughout the Mediation Hearing. The selected mediators
may extend the time allowed for each party's presentation at the Mediation
Hearing. The selected mediators may meet in executive session, outside the
presence of the parties, or may meet with the parties separately, to discuss the
controversy.

iv.After the close of the presentations, the parties will attempt to negotiate a
settlement of the dispute. If the parties desire, the selected mediators, or any
one or more of the selected mediators, will sit in on the negotiations.

v.After the close of the presentations, the selected mediators may meet
privately to agree upon a recommendation for resolution of the dispute which
would be submitted to the parties for their consideration and approval. If the
parties have previously agreed to be bound by the results of this procedure,
this recommendation shall be binding upon the parties.

vi.The purpose of the Mediation Hearing is to assist the parties to settle their
grievances short of mandatory dispute resolution. As a result, the Mediation
Hearing has been designed to be as informal as possible. Rules of evidence shall
not apply. There will be no transcript of the proceedings, and no party may make
a tape recording of the Mediation Hearing.

vii.In order to facilitate a free and open discussion, the Mediation proceeding
shall remain confidential. A "Stipulation to Confidentiality" which prohibits
future use of settlement offers, all position papers or other statements
furnished to the selected mediators, and decisions or recommendations in any
Mediation proceeding shall be executed by each party.

viii.Upon request of the selected mediators, or one of the parties, BCBSA staff
may also submit documentation at any time during the proceedings.

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    F.  Notice Of Termination Of Mediation  

    If the Mediation cannot be completed within the prescribed or agreed time
period due to the lack of cooperation of any party, as determined by the
selected mediators, or if the Mediation does not result in a final resolution of
all disputes at the Mediation Hearing or within forty (40) days after the
Complaint was served, whichever comes first, any party or any one of the
selected mediators may so notify the Corporate Secretary, who shall promptly
issue a Notice of termination of mediation to all parties, to the selected
mediators, and to the MDR Administrator, defined below. Such notice shall serve
to bring the Mediation to an end and to initiate Mandatory Dispute Resolution.
Upon agreement of all parties and the selected mediators, the Mediation process
may continue at the same time the MDR process is invoked. The Notice described
above would serve to initiate the MDR proceeding and would not terminate the
proceedings.

3.  Mandatory Dispute Resolution (MDR)

    If all parties elect not to first pursue Mediation, or if a notice of
termination of Mediation is issued as set forth in Paragraph 2.F., above, then
the unresolved disputes set forth in any Complaint and Answer (and Counterclaim
and Reply, if any) shall be subject to MDR.

    A.  MDR Administrator  

    The Administrator shall be an independent entity such as the Center for
Public Resources, Inc. or Endispute, Inc., specializing in alternative dispute
resolution. The Administrator shall be designated initially, and may be changed
from time to time, by the affirmative vote of a majority of the Plans present
and voting and a majority of the total then current weighted vote of all the
Plans present and voting.

    B.  Initial Conference  

    Within five (5) days after a Notice of Termination has issued, or within
five (5) days after the time for filing and serving the Reply to any
Counterclaim if the parties elect first not to mediate, the parties shall confer
with the Administrator to discuss selecting a dispute resolution panel ("the
Panel"). This Initial Conference may be by telephone. The parties are encouraged
to agree to the composition of the Panel and to present that agreement to the
Administrator at the Initial Conference. If the parties do not agree on the
composition of the Panel by the time of the Initial Conference, or by any
extension thereof agreed to by all parties and the Administrator, then the Panel
Selection Process set forth in subparagraph C shall be followed.

Amended September 21, 2000

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    C.  Panel Selection Process  

    The Administrator shall designate at least seven potential arbitrators. The
exact number designated shall be sufficient to give each party at least two
peremptory strikes. Each party shall be permitted to strike any designee for
cause and the Administrator shall determine the sufficiency thereof in its sole
discretion. The Administrator will designate a replacement for any designee so
stricken. Each party shall then be permitted two peremptory strikes. From the
remaining designees, the Administrator shall select a three member Panel. The
Administrator shall set the dates for exercising all strikes and shall complete
the Panel Selection Process within fifteen (15) days of the Initial Conference.
Each Arbitrator shall be compensated at his or her normal hourly rate or, in the
absence of an established rate, at a reasonable hourly rate to be promptly fixed
by the Administrator for all time spent in connection with the proceedings and
shall be reimbursed for any travel and other reasonable expenses.

    D.  Duties Of The Arbitrators  

    The Panel shall promptly designate a Presiding Arbitrator for the purposes
reflected below, but shall retain the power to review and modify any ruling or
other action of said Presiding Arbitrator. Each Arbitrator shall be an
independent Arbitrator, shall be governed by the Code of Ethics for Arbitrators
in Commercial Disputes, appended as Exhibit "5-B" hereto, and shall at or prior
to the commencement of any Arbitration Hearing take an oath to that effect. Each
Arbitrator shall promptly disclose in writing to the Panel and to the parties
any circumstances, whenever arising, that might cause doubt as to such
Arbitrator's compliance, or ability to comply, with said Code of Ethics, and,
absent resignation by such Arbitrator, the remaining Arbitrators shall determine
in their sole discretion whether the circumstances so disclosed constitute
grounds for disqualification and for replacement. With respect to such
circumstances arising or coming to the attention of a party after an
Arbitrator's selection, a party may likewise request the Arbitrator's
resignation or a determination as to disqualification by the remaining
Arbitrators. With respect to a sole Arbitrator, the determination as to
disqualification shall be made by the Administrator.

    There shall be no ex parte communication between the parties or their
counsel and any member of the Panel.

    E.  Panel's Jurisdiction And Authority  

    The Panel's jurisdiction and authority shall extend to all disputes between
or among the Plans, their Controlled Affiliates, and/or BCBSA, except for those
disputes excepted from these MMDR procedures as set forth in the License
Agreements.

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    With the exception of punitive or treble damages, the Panel shall have full
authority to award the relief it deems appropriate to resolve the parties'
disputes, including monetary awards and injunctions, mandatory or prohibitory.
The Panel has no authority to award punitive or treble damages except that the
Panel may allocate or assess responsibility for punitive or treble damages
assessed by another tribunal. Subject to the above limitations, the Panel may,
by way of example, but not of limitation:

i.interpret or construe the meaning of any terms, phrase or provision in any
license between BCBSA and a Plan or a Controlled Affiliate relating to the use
of the BLUE CROSS® or BLUE SHIELD® service marks.

ii.determine whether BCBSA, a Plan or a Controlled Affiliate has violated the
terms or conditions of any license between the BCBSA and a Plan or a Controlled
Affiliate relating to the use of the BLUE CROSS® or BLUE SHIELD® service marks.

iii.decide challenges as to its own jurisdiction.

iv.issue such orders for interim relief as it deems appropriate pending Hearing
and Award in any Arbitration.

    It is understood that the Panel is expected to resolve issues based on
governing principles of law, preserving to the maximum extent legally possible
the continued integrity of the Licensed Marks and the BLUE CROSS/BLUE SHIELD
system. The Panel shall apply federal law to all issues which, if asserted in
the United States District Court, would give rise to federal question
jurisdiction, 28 U.S.C. § 1331. The Panel shall apply Illinois law to all issues
involving interpretation, performance or construction of any License Agreement
or Controlled Affiliate License Agreement unless the agreement otherwise
provides. As to other issues, the Panel shall choose the applicable law based on
conflicts of law principles of the State of Illinois.

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    F.  Administrative Conference And Preliminary Arbitration Hearing

    Within ten (10) days of the Panel being selected, the Presiding Arbitrator
will schedule an Administrative Conference to discuss scheduling of the
Arbitration Hearing and any other matter appropriate to be considered including:
any written discovery in the form of requests for production of documents or
requests to admit facts; the identity of any witness whose deposition a party
may desire and a showing of exceptional good cause for the taking of any such
deposition; the desirability of bifurcation or other separation of the issues;
the need for and the type of record of conferences and hearings, including the
need for transcripts; the need for expert witnesses and how expert testimony
should be presented; the appropriateness of motions to dismiss and/or for full
or partial summary judgment; consideration of stipulations; the desirability of
presenting any direct testimony in writing; and the necessity for any on-site
inspection by the Panel.

    G.  Discovery  

i.Requests for Production of Documents:  All requests for the production of
documents must be served as of the date of the Administrative Conference as set
forth in Paragraph 3.F., above. Within twenty (20) days after receipt of a
request for documents, a party shall produce all relevant and non-privileged
documents to the requesting party. In his or her discretion, the Presiding
Arbitrator may require the parties to provide lists in such detail as is deemed
appropriate of all documents as to which privilege is claimed and may further
require in-camera inspection of the same.

ii.Requests for Admissions:  Requests for Admissions may be served up to 21 days
prior to the Arbitration Hearing. A party served with Requests For Admissions
must respond within twenty (20) days of receipt of said request. The good faith
use of and response to Requests for Admissions is encouraged, and the Panel
shall have full discretion, with reference to the Federal Rules of Civil
Procedure, in awarding appropriate sanctions with respect to abuse of the
procedure.

iii.Depositions:  As a general rule, the parties will not be permitted to take
deposition testimony for discovery purposes. The Presiding Arbitrator, in his or
her sole discretion, shall have the authority to permit a party to take such
deposition testimony upon a showing of exceptional good cause, provided that no
deposition, for discovery purposes or otherwise, shall exceed three (3) hours,
excluding objections and colloquy of counsel.

iv.Expert witness(es):  If a party intends to present the testimony of an expert
witness during the oral hearing, it shall provide all other parties with a
written statement setting forth the information required to be provided by Fed.
R. Civ. P. 26(b)(4)(A)(i) prior to the expiration of the discovery period.

v.Discovery cut-off:  The Presiding Arbitrator shall determine the date on which
the discovery period will end, but the discovery period shall not exceed
forty-five (45) days from its commencement, without the agreement of all
parties.

vi.Additional discovery:  Any additional discovery will be at the discretion of
the Presiding Arbitrator. The Presiding Arbitrator is authorized to resolve all
discovery disputes, which resolution will be binding on the parties unless
modified by the Arbitration Panel. If a party refuses to comply with a decision
resolving a discovery dispute, the Panel, in keeping with Fed. R. Civ. P. 37,
may refuse to allow that party to support or oppose designated claims or
defenses, prohibit that party from introducing designated matters into evidence
or, in extreme cases, decide an issue submitted for resolution adversely to that
party.

    H.  Panel Suggested Settlement/Mediation  

    At any point during the proceedings, the Panel at the request of any party
or on its own initiative, may suggest that the parties explore settlement and
that they do so at or before the conclusion of the Arbitration Hearing, and the
Panel shall give such assistance in settlement negotiations as the parties may
request and the Panel may deem appropriate. Alternatively, the Panel may direct
the parties to

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endeavor to mediate their disputes as provided above, or to explore a mini-trial
proceeding, or to have an independent party render a neutral evaluation of the
parties' respective positions. The Panel shall enter such sanctions as it deems
appropriate with respect to any party failing to pursue in good faith such
Mediation or other alternate dispute resolution methods.

    I.  Subpoenas On Third Parties  

    Pursuant to, and consistent with, the Federal Arbitration Act, 9 U.S.C. § 9
et seq., a party may request the issuance of a subpoena on a third party, to
compel testimony or documents, and, if good and sufficient cause is shown, the
Panel shall issue such a subpoena.

    J.  Arbitration Hearing  

    An Arbitration Hearing will be held within thirty (30) days after the
Administrative Conference if no discovery is taken, or within thirty (30) days
after the close of discovery, unless all parties and the Panel agree to extend
the Arbitration Hearing date, or unless the parties agree in writing to waive
the Arbitration Hearing. The parties may mutually agree on the location of the
Arbitration Hearing. If the parties fail to agree, the Arbitration Hearing shall
be held in Chicago, Illinois, or at such other location determined by the
Presiding Arbitrator to be most convenient to the participants. The Panel will
determine the date(s) and time(s) of the Arbitration Hearing(s) after
consultation with all parties and shall provide reasonable notice thereof to all
parties or their representatives.

    K.  Arbitration Hearing Memoranda  

    Twenty (20) days prior to the Arbitration Hearing, each party shall submit
to the other party (or parties) and to the Panel an Arbitration Hearing
Memorandum which sets forth the applicable law and any argument as to any
relevant issue. The Arbitration Hearing Memorandum will supplement, and not
repeat, the allegations, information and documents contained in or with the
Complaint, Answer, Counterclaim and Reply, if any. Ten (10) days prior to the
Arbitration Hearing, each party may submit to the other party (or parties) and
to the Panel a Response Arbitration Hearing Memorandum which sets forth any
response to another party's Arbitration Hearing Memorandum.

    L.  Notice For Testimony  

    Ten (10) days prior to the Arbitration Hearing, any party may serve a Notice
on any other party (or parties) requesting the attendance at the Arbitration
Hearing of any officer, employee or director of the other party (or parties) for
the purpose of providing noncumulative testimony. If a party fails to produce
one of its officers, employees or directors whose noncumulative testimony during
the Arbitration Hearing is reasonably requested by an adverse party, the Panel
may refuse to allow that party to support or oppose designated claims or
defenses, prohibit that party from introducing designated matters into evidence
or, in extreme cases, decide an issue submitted for mandatory dispute resolution
adversely to that party. This Rule may not be used for the purpose of burdening
or harassing any party, and the Presiding Arbitrator may impose such orders as
are appropriate so as to prevent or remedy any such burden or harassment.

    M.  Arbitration Hearing Procedures  

i.Attendance at Arbitration Hearing:  Any person having a direct interest in the
proceeding is entitled to attend the Arbitration Hearing. The Presiding
Arbitrator shall otherwise have the power to require the exclusion of any
witness, other than a party or other essential person, during the testimony of
any other witness. It shall be discretionary with the Presiding Arbitrator to
determine the propriety of the attendance of any other person.

ii.Confidentiality:  The Panel and all parties shall maintain the privacy of the
Arbitration Proceeding. The parties and the Panel shall treat the Arbitration
Hearing and any discovery or other proceedings or events related thereto,
including any award resulting therefrom, as confidential except as otherwise
necessary in connection with a judicial challenge to or enforcement of an award
or unless otherwise required by law.

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iii.Stenographic Record:  Any party, or if the parties do not object, the Panel,
may request that a stenographic or other record be made of any Arbitration
Hearing or portion thereof. The costs of the recording and/or of preparing the
transcript shall be borne by the requesting party and by any party who receives
a copy thereof. If the Panel requests a recording and/or a transcript, the costs
thereof shall be borne equally by the parties.

iv.Oaths:  The Panel may require witnesses to testify under oath or affirmation
administered by any duly qualified person and, if requested by any party, shall
do so.

v.Order of Arbitration Hearing:  An Arbitration Hearing shall be opened by the
recording of the date, time, and place of the Arbitration Hearing, and the
presence of the Panel, the parties, and their representatives, if any. The Panel
may, at the beginning of the Arbitration Hearing, ask for statements clarifying
the issues involved.

Unless otherwise agreed, the complaining party (or parties) shall then present
evidence to support their claim(s). The respondent(s) shall then present
evidence supporting their defenses and Counterclaims, if any. The complaining
party (or parties) shall then present evidence supporting defenses to the
Counterclaims, if any, and rebuttal.

Witnesses for each party shall submit to questions by adverse parties and/or the
Panel.

The Panel has the discretion to vary these procedures, but shall afford a full
and equal opportunity to all parties for the presentation of any material and
relevant evidence.

vi.Evidence:  The parties may offer such evidence as is relevant and material to
the dispute and shall produce such evidence as the Panel may deem necessary to
an understanding and resolution of the dispute. Unless good cause is shown, as
determined by the Panel or agreed to by all other parties, no party shall be
permitted to offer evidence at the Arbitration Hearing which was not disclosed
prior to the Arbitration Hearing by that party. The Panel may receive and
consider the evidence of witnesses by affidavit upon such terms as the Panel
deems appropriate.

The Panel shall be the judge of the relevance and materiality of the evidence
offered, and conformity to legal rules of evidence, other than enforcement of
the attorney-client privilege and the work product protection, shall not be
necessary. The Federal Rules of Evidence shall be considered by the Panel in
conducting the Arbitration Hearing but those rules shall not be controlling. All
evidence shall be taken in the presence of the Panel and all of the parties,
except where any party is in default or has waived the right to be present.

Settlement offers by any party in connection with Mediation or MDR proceedings,
decisions or recommendations of the selected mediators, and a party's position
papers or statements furnished to the selected mediators shall not be admissible
evidence or considered by the Panel without the consent of all parties.

vii.Closing of Arbitration Hearing:  The Presiding Arbitrator shall specifically
inquire of all parties whether they have any further proofs to offer or
witnesses to be heard. Upon receiving negative replies or if he or she is
satisfied that the record is complete, the Presiding Arbitrator shall declare
the Arbitration Hearing closed with an appropriate notation made on the record.
Subject to being reopened as provided below, the time within which the Panel is
required to make the award shall commence to run, in the absence of contrary
agreement by the parties, upon the closing of the Arbitration Hearing.

With respect to complex disputes, the Panel may, in its sole discretion, defer
the closing of the Arbitration Hearing for a period of up to thirty (30) days
after the presentation of proofs in order to permit the parties to submit
post-hearing briefs and argument, as the Panel deems appropriate, prior to
making an award.

For good cause, the Arbitration Hearing may be reopened for up to thirty
(30) days on the Panel's initiative, or upon application of a party, at any time
before the award is made

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    N.  Awards  

    An Award must be in writing and shall be made promptly by the Panel and,
unless otherwise agreed by the parties or specified by law, no later than thirty
(30) days from the date of closing the Arbitration Hearing. If all parties so
request, the Award shall contain findings of fact and conclusions of law. The
Award, and all other rulings and determinations by the Panel, may be by a
majority vote.

    Parties shall accept as legal delivery of the Award the placing of the Award
or a true copy thereof in the mail addressed to a party or its representative at
its last known address or personal service of the Award on a party or its
representative.

    Awards are binding only on the parties to the Arbitration and are not
binding on any non-parties to the Arbitration and may not be used or cited as
precedent in any other proceeding.

    After the expiration of twenty (20) days from initial delivery, the Award
(with corrections, if any) shall be final and binding on the parties, and the
parties shall undertake to carry out the Award without delay.

    Proceedings to confirm, modify or vacate an Award shall be conducted in
conformity with and controlled by the Federal Arbitration Act. 9 U.S.C. § 1, et
seq.

    O.  Return Of Documents  

    Within sixty (60) days after the Award and the conclusion of any judicial
proceedings with respect thereto, each party and the Panel shall return any
documents produced by any other party, including all copies thereof. If a party
receives a discovery request in any other proceeding which would require it to
produce any documents produced to it by any other party in a proceeding
hereunder, it shall not produce such documents without first notifying the
producing party and giving said party reasonable time to respond, if
appropriate, to the discovery request.

4.  Miscellaneous

    A.  Expedited Procedures  

    Any party to a Mediation may direct a request for an expedited Mediation
Hearing to the Chairman of the Mediation Committee, to the selected Mediators,
and to all other parties at any time. The Chairman of the Mediation Committee,
or at his or her direction, the then selected Mediators, shall grant any request
which is supported by good and sufficient reasons. If such a request is granted,
the Mediation shall be completed within as short a period as practicable, as
determined by the Chairman of the Mediation Committee or, at his or her
direction, the then selected Mediators.

    Any party to an Arbitration may direct a request for expedited proceedings
to the Administrator, to the Panel, and to all other parties at any time. The
Administrator, or the Presiding Arbitrator if the Panel has been selected, shall
grant any such request which is supported by good and sufficient reasons. If
such a request is granted, the Arbitration shall be completed within as short a
time as practicable, as determined by the Administrator and/or the Presiding
Arbitrator.

    B.  Temporary Or Preliminary Injunctive Relief  

    Any party may seek temporary or preliminary injunctive relief with the
filing of a Complaint or at any time thereafter. If such relief is sought prior
to the time that an Arbitration Panel has been selected, then the Administrator
shall select a single Arbitrator who is a lawyer who has no interest in the
subject matter of the dispute, and no connection to any of the parties, to hear
and determine the request for temporary or preliminary injunction. If such
relief is sought after the time that an Arbitration Panel has been selected,
then the Arbitration Panel will hear and determine the request. The request for
temporary or preliminary injunctive relief will be determined with reference to
the temporary or preliminary injunction standards set forth in Fed. R. Civ. P.
65.

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    C.  Defaults And Proceedings In The Absence Of A Party  

    Whenever a party fails to comply with the MDR Rules in a manner deemed
material by the Panel, the Panel shall fix a reasonable time for compliance and,
if the party does not comply within said period, the Panel may enter an Order of
default or afford such other relief as it deems appropriate. Arbitration may
proceed in the event of a default or in the absence of any party who, after due
notice, fails to be present or fails to obtain an extension. An Award shall not
be made solely on the default or absence of a party, but the Panel shall require
the party who is present to submit such evidence as the Panel may require for
the making of findings, determinations, conclusions, and Awards.

    D.  Notice  

    Each party shall be deemed to have consented that any papers, notices, or
process necessary or proper for the initiation or continuation of a proceeding
under these rules or for any court action in connection therewith may be served
on a party by mail addressed to the party or its representative at its last
known address or by personal service, in or outside the state where the MDR
proceeding is to be held.

    The Corporate Secretary and the parties may also use facsimile transmission,
telex, telegram, or other written forms of electronic communication to give the
notices required by these rules.

    E.  Expenses  

    The expenses of witnesses shall be paid by the party causing or requesting
the appearance of such witnesses. All expenses of the MDR proceeding, including
compensation, required travel and other reasonable expenses of the Panel, and
the cost of any proof produced at the direct request of the Panel, shall be
borne equally by the parties and shall be paid periodically on a timely basis,
unless they agree otherwise or unless the Panel in the Award assesses such
expenses, or any part thereof against any party (or parties). In exceptional
cases, the Panel may award reasonable attorneys' fees as an item of expense, and
the Panel shall promptly determine the amount of such fees based on affidavits
or such other proofs as the Panel deems sufficient.

    F.  Disqualification Or Disability Of A Panel Member  

    In the event that any Arbitrator of a Panel with more than one Arbitrator
should become disqualified, resign, die, or refuse or be unable to perform or
discharge his or her duties after the commencement of MDR but prior to the
rendition of an Award, and the parties are unable to agree upon a replacement,
the remaining Panel member(s):

i.shall designate a replacement, subject to the right of any party to challenge
such replacement for cause.

ii.shall decide the extent to which previously held hearings shall be repeated.

    If the remaining Panel members consider the proceedings to have progressed
to a stage as to make replacement impracticable, the parties may agree, as an
alternative to the recommencement of the Mandatory Dispute Resolution process,
to resolution of the dispute by the remaining Panel members.

    In the event that a single Arbitrator should become disqualified, resign,
die, or refuse or be unable to perform or discharge his or her duties after the
commencement of MDR but prior to the rendition of an Award, and the parties are
unable to agree upon a replacement, the Administrator shall appoint a successor,
subject to the right of any party to challenge such successor for cause, and the
successor shall decide the extent to which previously held proceedings shall be
repeated.

    G.  Extensions of Time  

    Any time limit set forth in these Rules may be extended upon agreement of
the parties and approval of: (i) the Chairman of the Mediation Committee if the
proceeding is then in Mediation; (ii) the Administrator if the proceeding is in
Arbitration, but no Arbitration Panel has been selected; or (iii) the
Arbitration Panel, if the proceeding is in Arbitration and the Arbitration Panel
has been selected.

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    H.  Intervention  

    The Plans, their Controlled Affiliates, and BCBSA, to the extent subject to
MMDR pursuant to their License Agreements, shall have the right to move to
intervene in any pending Arbitration. A written motion for intervention shall be
made to: (i) the Administrator, if the proceeding is in Arbitration, but no
Arbitration Panel has been selected; or (ii) the Arbitration Panel, if the
proceeding is in Arbitration and the Arbitration Panel has been selected. The
written motion for intervention shall be delivered to the BCBSA Corporate
Secretary (which shall also constitute service on the BCBSA if it is a
respondent) and to any Plan(s) and/or Controlled Affiliate(s) which are parties
to the proceeding. Any party to the proceeding can submit written objections to
the motion to intervene. The motion for intervention shall be granted upon good
cause shown. Intervention also may be allowed by stipulation of the parties to
the Arbitration proceeding. Intervention shall be allowed upon such terms as the
Arbitration Panel decides.

    I.  BCBSA Assistance In Resolution of Disputes  

    The resources and personnel of the BCBSA may be requested by any member Plan
at any time to try to resolve disputes with another Plan.

Amended September 21, 2000

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    J.  Neutral Evaluation  

    The parties can voluntarily agree at any time to have an independent party
render a neutral evaluation of the parties' respective positions.

    K.  Recovery of Attorney Fees and Expenses  

Motions to Compel

Nothwithstanding any other provisions of these Rules, any Party subject to the
License Agreements (for purposes of this Section L and all of its sub-sections
only hereinafter referred to collectively and individually as a "Party") that
initiates a court action or administrative proceeding solely to compel adherence
to these Rules shall not be determined to have violated these Rules by
initiating such action or proceeding.

Recovery of Fees, Expenses and Costs

The Arbitration Panel may, in its sole discretion, award a Party its reasonable
attorneys' fees, expenses and costs associated with a filing to compel adherence
to these Rules and/or reasonable attorneys' fees, expenses and costs incurred in
responding to an action filed in violation of these Rules; provided, however,
that neither fees, expenses, nor costs shall be awarded by the Arbitration Panel
if the Party from which the award is sought can demonstrate to the Arbitration
panel, in its sole discretion, that it did not violate these Rules or that it
had reasonable grounds for believing that its action did not violate these
Rules.

Requests for Reimbursement

For purposes of this Section L, any Party may request reimbursement of fees,
expenses and/or costs by submitting said request in writing to the Arbitration
Panel at any time before an award is delivered pursuant to Section 3-N hereof,
with a copy to the Party from which reimbursement is sought, explaining why it
is entitled to such reimbursement. The Party from which reimbursement is sought
shall have 20 days to submit a response to such request to the Arbitration Panel
with a copy to the Party seeking reimbursement.

Amended September 21, 2000

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EXHIBIT 5-A

MEDIATION COMMITTEE

REPORTS TO:   Board of Directors
CHARGE:
 
1. Develop and implement processes for resolving misunderstandings or
disagreements between Plans or between Plans and the Association under the
following circumstances:
 
 
    a.
 
Matters at issue regarding relationships between Plans or between Plans and the
Association.
 
 
    b.
 
Matters at issue regarding relationships between Plans or between Plans and the
Association.
 
 
    c.
 
Matters at issue under the Inter-Plan Bank, Reciprocity, and Transfer Programs.
 
 
    d.
 
Matters at issue regarding contractor selection or performance under the
Medicare Part A Program.
 
 
2. Determination of equalization allowances and/or cost allowances under FEP
shall not be considered by this Committee.
MEMBERSHIP:
 
Six to Eight
STAFF:
 
Senior Vice President and General Counsel

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QuickLinks

EXHIBIT 10.08
BLUE SHIELD CONTROLLED AFFILIATE LICENSE AGREEMENT APPLICABLE TO LIFE INSURANCE
COMPANIES (Includes revisions adopted by Member Plans through their November 16,
2000 meeting)
EXHIBIT 5-A
MEDIATION COMMITTEE