Exhibit 10.67

 

 

BLUE CROSS

CONTROLLED AFFILIATE LICENSE AGREEMENT

APPLICABLE TO LIFE INSURANCE COMPANIES

(Includes revisions adopted by Member Plans through their June 13, 2002 meeting)

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

 

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

 

WHEREAS, the Plan and the Controlled Affiliate desire that the latter be
entitled to use the BLUE CROSS and BLUE CROSS Design service marks (collectively
the “Licensed Marks”) as service marks and be entitled to use the term BLUE
CROSS 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 Cross 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.

 

                                    This Agreement and all of Controlled
Affiliate’s rights hereunder shall immediately terminate without any further
action by any party or entity in the event that:

 

 

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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

 

 

(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.

 

 

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

 

BLUE CROSS AND BLUE SHIELD ASSOCIATION

 

 

 

By:

/s/ ROGER G. WILSON

 

 

 

Date:

9/19/02

 

 

 

Healthy Alliance Life Insurance Company:

 

 

 

By:

/s/ STUART K. CAMPBELL

 

 

 

Date:

9/27/02

 

 

 

WellPoint Health Networks Inc.:

 

 

 

By:

/s/ LEONARD SCHAEFFER

 

 

 

Date:

10/4/02

 

 

 

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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.

 

Standard 6 - Cooperation with Affiliate License Performance Response Process
Protocol

 

The LIC and its Sponsoring Plan(s) shall cooperate with BCBSA’s Board of
Directors and its Plan Performance and Financial Standards Committee in the
administration of the Affiliate License Performance Response Process Protocol
(ALPRPP) and in addressing LIC compliance problems identified thereunder.

 

 

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