EXHIBIT 10.3
	 

	 
		JOINT MARKETING AND NETWORK ACCESS
		AGREEMENT
	 

	 
		This Joint Marketing and Network Access
		Agreement is made by and between Employers Insurance Company of Nevada,
		together with its subsidiaries (“EICN”), on the one hand, and Blue
		Cross of California, BC Life & Health Insurance Company, and Comprehensive
		Integrated Marketing Services (collectively, “Blue Cross”), on the
		other, effective as of January 1, 2006 (“Effective Date”).
	 

	 
		RECITALS
	 

	 
		A.          Blue Cross offers small group medical coverage products
		(“small group medical”) in California.
	 

	 
		B.          Blue Cross and Employers Insurance Company of Nevada are
		currently parties to that certain Joint Marketing and Network Access Agreement,
		dated July 1, 2002 (the “Blue Cross-EICN Agreement”), as amended,
		under which Blue Cross and EICN jointly market an integrated small group
		medical and workers’ compensation product in California.
	 

	 
		C.          Blue Cross and EICN desire to jointly offer and market
		integrated small group medical and workers’ compensation product(s) under
		the terms specified herein.
	 

	 
		D.          Blue Cross and EICN desire to enter into this Agreement
		in order to provide a full statement of their respective
		responsibilities.
	 

	 
		E.          The services to be performed by Blue Cross hereunder
		shall be performed by BC Life & Health Insurance Company and Comprehensive
		Integrated Marketing Services (“CIMS”).
	 

	 
		F.          The services to be performed by EICN hereunder shall be
		performed by Employers Compensation Insurance Company and Employers Insurance
		Company of Nevada.
	 

	 
		NOW, THEREFORE, it is agreed as follows: 
	 

	 
		AGREEMENT
	 

	 
		1.            Scope of Agreement. Subject to the terms of this Agreement, Blue Cross and
		EICN agree to jointly market an integrated small group medical and
		workers’ compensation product(s) (the “Integrated Product” as
		further defined in Exhibit A hereof) on an exclusive basis in the state of
		California. The terms of such exclusivity are defined in Paragraph 17 (a) of
		this Agreement. The scope of this Agreement may be expanded to other states by
		an Addendum to this Agreement agreed to and executed by both parties.
	 

	 
		2.            Term. The
		initial term of this Agreement shall be for two (2) years commencing on the
		Effective Date unless terminated sooner as provided in Paragraph 15 of this
		Agreement. Thereafter, this Agreement shall automatically renew for subsequent
		one (1) year term unless written notice of non-renewal of this Agreement (a
		“non-renewal notice”) has been provided by one party to the other at
		least 60 days prior to the expiration of the then current term.
	 

	 
		 
	 

	 
		* Confidential treatment has been requested
		with respect to certain portions of this exhibit. Such portions are marked with
		a “[*]” in place of the redacted language. Omitted portions are filed
		separately with the Securities and Exchange Commission. 
	 

	 
		 
	 



	 
	 

	 

	 
		3.            Distribution of Product.
	 

	  

	 
		(a)          The Integrated Product will use the Blue Cross
		distribution system, including employees, agents, and general agents
		(collectively “Blue Cross Producers”). EICN shall cooperate with Blue
		Cross in making any necessary agency appointments or entering into any
		necessary brokerage or agency agreements needed to allow Blue Cross Producers
		to market and sell EICN workers’ compensation products as contemplated by
		this Agreement.
	 

	 
		(b)          Blue Cross will administratively make commission
		payments to Blue Cross Producers for all coverage placed through the Blue Cross
		Producers and billed by Blue Cross. EICN will pay commissions due to Blue Cross
		producers for coverage billed by EICN.
	 

	 
		4.            Underwriting.
		Blue Cross will exclusively control small group medical product underwriting
		and eligibility, and EICN will exclusively control workers’ compensation
		underwriting and eligibility. Neither Blue Cross nor EICN will be bound to
		offer an Integrated Product in instances in which either party is unwilling to
		assume underwriting risk consistent with its underwriting policies for its
		component of the Integrated Product.
	 

	 
		Each party will, at a minimum, maintain and
		share with the other party on a confidential basis underwriting guidelines,
		class restrictions and operational practices during the term of this Agreement
		in connection with its component of the Integrated Product, including, but not
		limited to, classes written, eligible groups, etc. Substantial changes in such
		underwriting guidelines, restrictions and practices which significantly and
		materially affect the nature, scope or classes of business written shall be
		made by mutual consent, or unilaterally by a party after giving written notice
		to the other party in the event of a significant adverse change in external
		factors which a party believes in good faith requires a revision to its
		underwriting guidelines, restrictions or practices. The parties will use
		commercially reasonable efforts to extend the number of classes written and
		eligible groups for both workers’ compensation and small group
		medical.
	 

	 
		5.            Advertising/Marketing Materials. Blue Cross shall be responsible for marketing and
		advertising of the Integrated Product. All advertising and collateral material
		for the Integrated Product to be distributed by Blue Cross, including materials
		developed and utilized in conjunction with EICN, will be prepared by Blue Cross
		and must be jointly approved by both parties. The Executive Sponsors shall
		develop an expedited process for review, approval and use of standardized forms
		or other frequently used advertising or marketing materials. EICN may, at its
		own expense, prepare its own marketing and promotional materials for the
		Integrated Product, but use of any such materials shall be subject to Blue
		Cross’s prior approval.
	 

	 
		Blue Cross and EICN agree that mutually
		acceptable product names and logos for the Integrated Product in California
		have been established. Each party will retain complete ownership and control of
		its own service marks, trademarks, trade names, logo types or any similar
		intellectual property and will execute any reasonable license agreements
		requested by the other party. Neither party shall use any such intellectual
		property of the other without the other’s 
	 

	 
		 
	 

	 
		 
	 

	 
		2
	 

	 
		* Confidential treatment has been requested
		with respect to certain portions of this exhibit. Such portions are marked with
		a “[*]” in place of the redacted language. Omitted portions are filed
		separately with the Securities and Exchange Commission. 
	 

	 
		 
	 



	 
	 

	 

	 
		prior written approval. Each party will be
		entitled to market the other party’s networks available for the Integrated
		Product, subject to approval of any written promotional materials by the other
		party. Any new product names, logos, or similar intellectual property developed
		for the Integrated Product shall be jointly owned and, as appropriate,
		registered, by Blue Cross and EICN, subject to the provisions of Paragraph 18
		of this Agreement.
	 

	 
		It is understood that all Advertising and
		Marketing materials will disclose that Blue Cross assumes no responsibility for
		payment of workers’ compensation claims, and that EICN assume no
		responsibility for payment of small group medical claims.
	 

	 
		6.            Loss Control.
		EICN will perform all duties related to loss control procedures for the
		workers’ compensation portion of the Integrated Product as required by law
		or by EICN’s internal procedures as they may be amended from time to time.
		Blue Cross shall comply with any similar legal requirements relating to small
		group medical.
	 

	 
		7.            Premium Collection & Audit.
	 

	  

	 
		(a)          Billing. Blue
		Cross will prepare and distribute a single, integrated small group medical and
		workers’ compensation premium bill in a manner consistent with current
		practices. EICN will supply to Blue Cross all data required for such billing.
		Blue Cross shall collect all premiums and remit EICN’s portion of the
		premiums (net of administrative fees and commissions) monthly to EICN within
		fifteen (15) days after the end of the month in which they were received by
		Blue Cross. Collection of delinquent workers’ compensation premium will be
		the responsibility of EICN. Collection of any delinquent medical premium will
		be the responsibility of Blue Cross.
	 

	 
		(b)          Audit and Collections. EICN will perform all interim and final payroll audits
		for workers’ compensation premium. For additional workers’
		compensation premium adjustments, EICN will bill the customer, collect the
		premium and remit additional commissions to Blue Cross Producers. For return
		premium adjustments, EICN will provide the funds for Blue Cross to return
		collected funds to the customer for the workers’ compensation product, and
		Blue Cross will bill and collect commission returns from Blue Cross Producers.
		Blue Cross will be responsible for all audit and collection responsibilities
		for the small group medical product.
	 

	 
		(c)          Other. The
		parties agree to share appropriate information concerning administering agents
		and customers who initially select an Integrated Product and then discontinue
		coverage of one segment; including information concerning the discontinuation
		of coverage and the effective date of discontinuation.
	 

	 
		8.            Claims & Reporting.
	 

	  

	 
		(a)          Blue Cross Duties. Blue Cross shall perform all claims functions for the
		small group medical portion of the Integrated Product and all small group
		medical regulatory 
	 

	 
		 
	 

	 
		 
	 

	 
		3
	 

	 
		* Confidential treatment has been requested
		with respect to certain portions of this exhibit. Such portions are marked with
		a “[*]” in place of the redacted language. Omitted portions are filed
		separately with the Securities and Exchange Commission. 
	 

	 
		 
	 



	 
	 

	 

	 
		reporting requirements. Blue Cross shall
		have no responsibility for payment of workers’ compensation claims.
	 

	 
		(b)          EICN Duties.
		EICN shall perform all claims functions for the workers’ compensation
		portion of the Integrated Product. In addition, EICN will be responsible for
		all medical case management and utilization review and satisfy all
		workers’ compensation regulatory and statistical reporting requirements.
		EICN shall have no responsibility for payment of small group medical
		claims.
	 

	 
		(c)          Joint Duties.
		Blue Cross and EICN shall share such medical, claim and benefit information to
		the extent and in any manner permitted by law as may be necessary or desirable
		in connection with the administration of the Integrated Product, including, but
		not limited to, the purposes of detecting fraud and assuring proper payment
		under the appropriate coverage.
	 

	 
		9.            Network Access.
	 

	  

	 
		(a)          During the term of this Agreement and as provided in
		Paragraph 16(a), Blue Cross agrees to provide EICN access to the following Blue
		Cross California networks for the Integrated Product:
	 

	 
		Prudent Buyer Comp Provider professional
		network
	 

	 
		Prudent Buyer Provider professional
		network
	 

	 
		Frontline Occupational professional
		network
	 

	 
		Certain specialty networks related to
		chiropractic and physical therapy
	 

	 
		Prudent Buyer institutional network.
	 

	 
		The foregoing shall be referred to
		collectively as the “Blue Cross Networks” and the contracted
		hospitals, physicians, and other ancillary health care providers and facilities
		included within the Blue Cross Networks shall be referred to as the “Blue
		Cross Providers.” The rates Blue Cross Providers are entitled to receive
		pursuant to provider agreements with Blue Cross shall be referred to as the
		“Blue Cross Contracted Rates.”
	 

	 
		(b)          Blue Cross agrees that it will maintain the Blue Cross
		Networks in California so as to adequately offer and provide the medical
		services (“Medical Services”) to injured workers covered by the
		workers’ compensation component of the Integrated Product (“Eligible
		Employees”) in those parts of California in which the Integrated Product
		is offered. Issues related to the adequacy of the Blue Cross Networks and the
		locations in which the Integrated Product shall be offered shall be considered
		and resolved by consultation between the Executive Sponsors. With respect to
		the Blue Cross Networks, Blue Cross represents and warrants to EICN as follows:
		(i) that at the time it entered into its provider agreements with Blue Cross
		Providers, it required and verified that those providers were duly licensed and
		had professional liability insurance with limits in compliance with Blue
		Cross’s then current credentialing standards; (ii) that as of the
		Effective Date a substantial majority of California Blue Cross Providers have
		been 
	 

	 
		 
	 

	 
		 
	 

	 
		4
	 

	 
		* Confidential treatment has been requested
		with respect to certain portions of this exhibit. Such portions are marked with
		a “[*]” in place of the redacted language. Omitted portions are filed
		separately with the Securities and Exchange Commission. 
	 

	 
		 
	 



	 
	 

	 

	 
		credentialed under Blue Cross’s current
		credentialing requirements, a copy of which has been provided to EICN and which
		requirements include the professional liability insurance minimum limits
		specified in Paragraph 20 hereof and that at all times during the term of this
		Agreement, credentialing requirements shall be actively monitored by Blue
		Cross; (iii) that, as of the Effective Date and at all times during the term of
		this Agreement, California Blue Cross Providers that have not been credentialed
		in accordance with Blue Cross’s current credentialing requirements are
		being actively monitored for potential noncompliance with those requirements;
		(iv) that as of the Effective Date it has in all material respects complied,
		and at all times during the term of this Agreement will comply with all laws
		and regulations regarding the inclusion or exclusion of California providers in
		the Blue Cross Networks and with respect to the provision of medical services
		to injured workers under the workers’ compensation laws as contemplated by
		this Agreement; and (v) that, as of the Effective Date and at all times during
		the term of this Agreement, it is and will be duly licensed, registered and/or
		certified by the appropriate state agency(ies) of any state requiring it to be
		so licensed, registered and/or certified in order to perform its obligations
		and responsibilities under the terms and conditions of this Agreement.
	 

	 
		(c)          Blue Cross will use commercially reasonable efforts to
		ensure that, at all times during the term of this Agreement, all Blue Cross
		Providers provide access to EICN at the most favorable rates available for
		insured products which integrate small group medical and workers compensation
		product(s) under their agreements with Blue Cross and accept such rates as
		payment in full for Medical Services to Eligible Employees, and shall give EICN
		prompt notice of any circumstance under which it is unable to do so. Blue Cross
		shall provide EICN with access to Blue Cross’s Provider Finder. To the
		extent applicable and in the possession of Blue Cross, such listing shall
		include each Blue Cross Provider’s address, telephone number, facsimile
		machine number, taxpayer identification number, professional or institutional
		license number, specialty, and professional or group affiliation. Blue Cross
		may provide access to the Blue Cross Networks to other workers’
		compensation insurers or self-insured entities; provided, however, that at all
		times during the term of this Agreement, Blue Cross agrees that the network
		access fees provided to EICN in connection with the Integrated Product shall be
		lower than any network access fees provided to any other workers’
		compensation insurer for any insured products which integrates small group
		medical and workers’ compensation, and the scope and breadth of the Blue
		Cross Networks provided to EICN in connection with the Integrated Product shall
		be broader than the scope and breadth of the Blue Cross Network access provided
		to any other workers’ compensation insurer for any insured products which
		integrate small group medical and workers’ compensation product(s).
		Notwithstanding the foregoing, Blue Cross may continue to offer both network
		access contracts, including but not limited to those currently in effect with
		the California State Compensation Insurance Fund, Western Growers Insurance
		Company, and Springfield Insurance Company, GMIS, and managed care service
		arrangements, including but not limited to that with Keenan and Associates.
		Blue Cross agrees that its workers’ compensation network access contracts
		and workers’ compensation managed 
	 

	 
		 
	 

	 
		 
	 

	 
		5
	 

	 
		* Confidential treatment has been requested
		with respect to certain portions of this exhibit. Such portions are marked with
		a “[*]” in place of the redacted language. Omitted portions are filed
		separately with the Securities and Exchange Commission. 
	 

	 
		 
	 



	 
	 

	 

	 
		care service agreements with may not be
		advertised or marketed by Blue Cross or the other parties to such arrangements
		as insured Integrated Products in California.
	 

	 
		(d)          EICN reserves the right to supplement Blue Cross
		Networks for the Integrated Product by use of it own proprietary networks or
		contracted networks with the prior approval of Blue Cross. EICN also reserves
		the right to contract directly with providers who are or later become Blue
		Cross Providers. However, should a provider be included in both the Blue Cross
		and EICN networks, the Blue Cross provider contract shall be utilized for the
		Integrated Product.
	 

	 
		(e)          Blue Cross shall require that each Blue Cross Provider
		shall, at all times, provide treatment to Eligible Employees in a manner
		consistent with sound professional judgment and practice. Nothing in this
		Agreement is intended to require (or shall be construed to require) a Blue
		Cross Provider to take any action inconsistent with its professional judgment,
		or refrain from taking any action consistent with its professional judgment,
		concerning the professional medical care and treatment to be provided to an
		Eligible Employee.
	 

	 
		10.          Confidentiality of Medical Records and
		Privacy. To the extent required by law,
		Blue Cross and EICN shall keep, confidential, and to take the usual precautions
		to prevent the unauthorized disclosure of, any and all medical records required
		to be prepared or maintained by Blue Cross or EICN. Blue Cross and EICN will
		comply with all federal and state laws and regulations regarding privacy
		including those involving non-public personal information.
	 

	 
		11.          Administrative Fee. EICN will pay Blue Cross’ insurance agency
		subsidiary, CIMS, an administrative fee (the “Administrative Fee”) in
		accordance with the following schedule for all other services performed by Blue
		Cross under this Agreement:
	 

	 
			
				
				  Percentage of Collected
				  California
 Workers’
				  Compensation Premium
				

			 	
				
				  Annual Collected California
				  Workers’
 Compensation
				  Integrated Premium
				

			 
	
				
				  ****%
				

			 	
				
				  *****************, plus
				

			 
	
				
				  ****%
				

			 	
				
				  *****************, plus
				

			 
	
				
				  ****%
				

			 	
				
				  *****************
				

			 

 

	 
		 
	 

	 
		The Administrative Fee shall be billed to
		EICN on a monthly basis and may, at Blue Cross’s discretion, be deducted
		and withheld from monies owed by Blue Cross to EICN, or if Blue Cross elects
		not to withhold the Administrative Fee from amounts owed to EICN, shall be paid
		by EICN within fifteen (15) days of its receipt of the pertinent billing. The
		Administrative Fee shall be based on collected premiums on that portion of
		policyholder billings relating to periods on or after the Effective Date and
		ending on the date of termination of this Agreement.
	 

	 
		 
	 

	 
		6
	 

	 
		* Confidential treatment has been requested
		with respect to certain portions of this exhibit. Such portions are marked with
		a “[*]”in place of the redacted language. Omitted portions are filed
		separately with the Securities and Exchange Commission. 
	 

	 
		 
	 



	 
	 

	 

	 
		Pro-rata adjustments shall be made for
		premiums collected after the Effective Date or date of termination that relate
		to policyholder billings which include periods prior to the Effective Date or
		after the date of termination of this Agreement. The Annual California
		Workers’ Compensation Integrated Premium amount shall be defined as the
		amount of premium collected on integrated policyholder billings (net of return
		premiums) on that portion of policyholder billings relating to the annual
		period beginning on the Effective Date, or anniversary thereof, as the case may
		be.
	 

	 
		12.            Termination.
	 

	  

	 
		(a)          Termination Without Cause. After the first year that this Agreement is in effect,
		either party shall have the right to terminate this Agreement without cause
		upon providing sixty (60) days prior written notice to the other party.
	 

	 
		(b)          Termination For Cause. Either party shall have the right to terminate this
		Agreement upon providing thirty (30) days prior written notice to the other
		party if the party to whom such notice is given has materially breached any
		provision of this Agreement. The party claiming the right to terminate shall
		set forth in the thirty (30) days notice of termination, the facts underlying
		its claim that the other party is in breach of this Agreement. Cure of such
		breach within fifteen (15) days of the receipt of such notice shall continue
		the Agreement for the remaining term, subject to other rights of termination
		contained in this Agreement.
	 

	 
		(c)          Immediate Termination. Either party shall have the right to terminate this
		Agreement immediately upon written notice to the other party in the event
		of:
	 

	 
			
				
				   
				

			 	
				
				  i.
				

			 	
				
				  failure to obtain, or suspension,
				  revocation or restriction of a regulatory license or approval required for a
				  party to perform under this Agreement;
				

			 
	
				
				   
				

			 	
				
				  ii.
				

			 	
				
				  an indictment charging, or
				  conviction of, any officer of either party of a felony or of a crime involving
				  moral turpitude as it relates to the operation of this Agreement;
				

			 
	
				
				   
				

			 	
				
				  iii.
				

			 	
				
				  insolvency, liquidation,
				  conservatorship, rehabilitation or receivership of a party, or the commencement
				  of any proceedings regarding same;
				

			 
	
				
				   
				

			 	
				
				  iv.
				

			 	
				
				  an assignment in violation of
				  Paragraph 29(d) of this Agreement or the entering into of a sale transfer or
				  reinsurance arrangement in violation of Paragraph 17(c) hereof.
				

			 

 

	 
		(d)          Termination (And Other Relief) For Failure To Make
		Available Provide Coverage Through B++ Rated Carrier. EICN shall, in connection with the Integrated Product,
		(i) provide all workers’ compensation coverage through a carrier rated
		“B++” or better by A.M. Best Company, and (ii) shall make such
		coverage available upon commercially 
	 

	 
		 
	 

	 
		 
	 

	 
		7
	 

	 
		* Confidential treatment has been requested
		with respect to certain portions of this exhibit. Such portions are marked with
		a “[*]” in place of the redacted language. Omitted portions are filed
		separately with the Securities and Exchange Commission. 
	 

	 
		 
	 



	 
	 

	 

	 
		reasonable terms consistent with terms
		available in the market place. Should EICN at any time fail to comply with the
		requirements of (f)(i) or (f)(ii), Blue Cross shall at its option, without
		prejudice to any other available rights or remedies, and upon written notice to
		EICN, be excused from performance under Section 17 of the Agreement.
		Furthermore, in such event Blue Cross may at its option, without prejudice to
		any other available rights or remedies, immediately terminate the Agreement. A
		waiver of either remedy with respect to any default shall not act as a waiver
		as to any further default.
	 

	 
		(e)          Survival Post-Termination. The termination of this Agreement shall not affect any
		rights or obligations hereunder which by their nature relate to obligations
		required to be performed, completed or adhered to following termination,
		including, but not limited to, Paragraphs 8, 10(g), 11, 16, 17, 19, 23, 25, 27,
		28 and 29.
	 

	 
		13.            Service Obligations Upon and After
		Termination.
	 

	  

	 
		(a)          Blue Cross Network Provider Services. Blue Cross agrees, and shall ensure that Blue Cross
		Providers also agree, that Blue Cross Providers’ responsibilities to an
		Eligible Employee upon termination of this Agreement shall continue until the
		Medical Services being rendered to any such Eligible Employee as of the
		effective date of termination are completed and that during such time as EICN
		shall remain financially liable to such Blue Cross Provider for Medical
		Services provided to such Eligible Employee. EICN shall reimburse the Blue
		Cross Provider for medical services rendered after termination of this
		Agreement in accordance with the Blue Cross Contracted Rates and shall continue
		to be responsible for payment of the related network access fees to Blue Cross.
		Blue Cross shall cooperate, and shall use commercially reasonable efforts to
		cause Blue Cross Providers to cooperate, with EICN in the event that EICN is
		required, pursuant to any litigation or settlement negotiations with an insured
		or Eligible Employee over medical services provided to such Eligible Employee,
		to justify its managed care decision(s), including any utilization review and
		other medical management determinations. All relevant provisions of Paragraph 9
		shall continue in effect following termination as necessary to effectuate the
		intent of this Paragraph.
	 

	 
		(b)          Premium Collection, Billing, And Bill
		Review. As of the effective date of
		termination, or earlier if agreed by the parties, EICN shall assume
		responsibility for billing and collection of all premiums for the workers’
		compensation component of the Integrated Product and for review of all new
		bills. Blue Cross shall provide EICN with all data and information necessary
		for EICN to assume or to have a third party assume responsibilities formerly
		provided by Blue Cross. As soon as possible after termination, Blue Cross shall
		submit its final invoice for its Administrative Fee, and its final invoice for
		bill review services.
	 

	 
		14.            Exclusivity and Non-Solicitation of Other Party’s
		Business.
	 

	  

	 
		(a)          Blue Cross and EICN agree that neither party shall enter
		into another joint marketing agreement for an Integrated Product with a third
		party during the term of this 
	 

	 
		 
	 

	 
		 
	 

	 
		8
	 

	 
		* Confidential treatment has been requested
		with respect to certain portions of this exhibit. Such portions are marked with
		a “[*]” in place of the redacted language. Omitted portions are filed
		separately with the Securities and Exchange Commission. 
	 

	 
		 
	 



	 
	 

	 

	 
		Agreement for the writing of small group
		business in California (or any additional states later added by addendum to
		this Agreement) until the expiration of a one hundred twenty (120) day period
		following written notice to the other party of its intent to do so. Nothing in
		this Agreement shall be construed herein as to preclude either Blue Cross or
		EICN from independently offering (either directly or through agents and
		brokers) stand-alone small group medical or workers’ compensation
		coverage, respectively, or from entering into third party arrangements not
		related to an insured integrated small group medical/workers’ compensation
		product (including but not limited to workers’ compensation managed care
		services arrangements not related to an insured integrated small group
		medical/workers’ compensation product). In addition, nothing shall
		preclude either party from: (a) continuing current integrated products, (b)
		continuing existing integrated operations obtained via acquisitions
		subsequently made, or (c) continuing insured operations subsequently
		acquired.
	 

	 
		(b)          It is further agreed that, prior to the termination of
		this Agreement, Blue Cross shall not solicit, individually or jointly with
		others through a joint venture or otherwise, or provide any information
		allowing a third party to solicit, any California policyholders or former
		policyholders of EICN, who have purchased or renewed the Integrated Product
		during the term of this Agreement, for the purpose of causing such
		policyholders to purchase a policy of workers’ compensation insurance
		which is not part of the Integrated Product and subject to this Agreement.
		Likewise, prior to the termination of this Agreement, EICN shall not solicit,
		individually or jointly with others, or provide any information allowing a
		third party to solicit, any California subscribers or policyholders or former
		subscribers or policyholders of Blue Cross who have purchased or renewed the
		Integrated Product during the term of this Agreement, for the purpose of
		causing such policyholders or subscribers to purchase small group medical
		coverage which is not part of the Integrated Product and subject to this
		Agreement.
	 

	 
		(c)          If, prior to the termination of this Agreement, either
		party sells or offers to sell, transfer or reinsure (pursuant to a 100%
		reinsurance and assumption agreement) to a non-affiliated third party any part
		of its business that is or has been part of or associated with the Integrated
		Product and is subject to this Agreement, that party shall provide written
		notice of its intention to the other party. The party receiving such notice
		shall be given a reasonable opportunity to either purchase such business itself
		on mutually acceptable terms or meet and confer with the prospective purchaser
		of such business for the purpose of negotiating with such prospective purchaser
		a continuation of some or all of the terms of this Agreement. Nothing in this
		Agreement shall impose any obligation on such purchaser unless so agreed by the
		purchaser. If a sale or transfer pursuant to this Paragraph relates
		substantially to one or more jurisdictions subject to the exclusivity
		provisions of this Agreement, the non-selling party shall be released from the
		exclusivity provisions of this Agreement with respect to such jurisdiction or
		jurisdictions. In the event of a sale, transfer or reinsurance arrangement as
		described above by the selling party which would reasonably be expected to
		reduce by fifty percent (50%) or more that party’s expected annual premium
		from the Integrated Product, the non-selling party shall 
	 

	 
		 
	 

	 
		 
	 

	 
		9
	 

	 
		* Confidential treatment has been requested
		with respect to certain portions of this exhibit. Such portions are marked with
		a “[*]” in place of the redacted language. Omitted portions are filed
		separately with the Securities and Exchange Commission. 
	 

	 
		 
	 



	 
	 

	 

	 
		have a right to terminate this Agreement
		upon the completion of such sale, transfer or reinsurance arrangement.
	 

	 
		15.          Jointly Owned Intellectual Property. It is agreed that upon termination of this Agreement
		any jointly owned product names or other jointly owned-intellectual property
		(excluding any listing of agents, brokers, subscribers or policyholders
		associated with the Integrated Product) may not be used by either party until
		the parties mutually agree otherwise or one party purchases all rights to such
		intellectual property from the other in accordance with the following
		procedure. Either party may offer the other party the right to both purchase or
		sell the intellectual property at a specified price. The party receiving the
		offer shall have ten (10) business days to elect to purchase or sell such
		property at such price. Thereafter the parties shall execute a mutually
		acceptable agreement transferring all rights in the intellectual property
		accordingly.
	 

	 
		16.          Indemnification.
		To the fullest extent allowed by law, Blue Cross shall indemnify and hold
		harmless EICN, its subsidiaries, affiliates, agents and their directors,
		officers, employees and agents, for any claim, demand, loss, lawsuit,
		settlement, judgment, or other liability, and all related expenses which may
		accrue, arising from or in connection with a claim of a third party arising
		from a negligent or otherwise wrongful act or omission of Blue Cross, its
		agents, or employees (including but not limited to any failure by Blue Cross to
		pay an Integrated Product small group medical claim). EICN shall provide Blue
		Cross with written notice within ten (10) business days of discovering the
		existence of any claim, demand or other matter to which the indemnification
		obligations contained herein would apply, and shall include with such
		notification a true copy of any and all complaints, correspondence, documents,
		and other materials relating to such claim, suit, proceeding, action or demand.
		Upon request, Blue Cross shall provide EICN with written assurance that it will
		defend EICN, at Blue Cross’s expense and with counsel of EICN’s
		selection. If Blue Cross should fail to provide EICN with such written
		assurance, or otherwise fails to defend EICN, EICN, upon written notice to Blue
		Cross, shall have the right, but not the obligation, to undertake the defense
		of, and to compromise and settle (exercising reasonable business judgment) the
		claim, demand, suit, proceeding or action on behalf, for the account, and at
		the risk of, Blue Cross.
	 

	 
		To the fullest extent allowed by law, EICN
		shall indemnify and hold harmless Blue Cross, its subsidiaries, affiliates,
		agents and their directors, officers, employees and agents, for any claim,
		demand, loss, lawsuit, settlement, judgment, or other liability, and all
		related expenses which may accrue, arising from or in connection with a claim
		of a third party arising from a negligent or otherwise wrongful act or omission
		of EICN, its agents or employees (including but not limited to any failure by
		EICN or by any company on whose paper Integrated Product workers’
		compensation coverage is written to pay any Integrated Product workers’
		compensation claim). Blue Cross shall provide EICN with written notice within
		ten (10) business days of discovering the existence of any claim, demand or
		other matter to which the indemnification obligations contained herein would
		apply, and shall include with such notification a true copy of any and all
		complaints, correspondence, documents, and other materials relating to such
		claim, suit, proceeding, action or demand. Upon request, EICN shall provide
		Blue Cross with written assurance that it will defend Blue Cross, at
		EICN’s expense and with counsel of Blue Cross’s 
	 

	 
		 
	 

	 
		 
	 

	 
		10
	 

	 
		* Confidential treatment has been requested
		with respect to certain portions of this exhibit. Such portions are marked with
		a “[*]” in place of the redacted language. Omitted portions are filed
		separately with the Securities and Exchange Commission. 
	 

	 
		 
	 



	 
	 

	 

	 
		selection. If EICN should fail to provide
		Blue Cross with such written assurance, or otherwise fails to defend Blue
		Cross, Blue Cross, upon written notice to EICN, shall have the right, but not
		the obligation, to undertake the defense of, and to compromise and settle
		(exercising reasonable business judgment) the claim, demand, suit, proceeding
		or action on behalf, for the account, and at the risk of, EICN.
	 

	 
		If each party claims and is entitled to
		indemnity from the other, the liability of each to the other shall be
		determined according to principles of comparative fault. Indemnity shall
		include damages, reasonable costs, reasonable expense, and reasonable
		attorney’s fees as incurred by the party indemnified.
	 

	 
		17.          Insurance. Blue
		Cross shall require Blue Cross Providers to carry and maintain appropriate
		professional liability insurance with limits of no less than One Million
		Dollars ($1,000,000) for any single incident and Three Million Dollars
		($3,000,000) aggregate (or such lower limits which Blue Cross’s provider
		contracts permit Blue Cross Providers to carry in certain jurisdictions because
		of lower local provider community standards for maintenance of
		insurance).
	 

	 
		18.            Notice. Notices
		under this Agreement shall be addressed as follows:
	 

	  

	 
		To Blue Cross at:
	 

	 
		2000 Corporate Center Drive 
	 

	 
		Newbury Park, CA 91320
	 

	 
		Attention: Deborah F. Lachman 
	 

	 
		President, ISG, Western Region
	 

	 
			
				
				   
				

			 	
				
				  and
				

			 	
				
				    One WellPoint Way
				

			 

 

	 
		Thousand Oaks, CA 91362 
	 

	 
		Attention: General Counsel
	 

	 
			
				
				   
				

			 	
				
				  To EICN at:
				

			 	
				
				   9790 Gateway Drive, Suite
				  200
				

			 

 

	 
		Reno, NV 89511 
	 

	 
		Attention: General Counsel
	 

	 
		 
	 

	 
		19.          Binding Agreement. Subject to Paragraph 29(d) hereof, this Agreement
		shall be binding upon and inure to the benefit of the successors and assigns of
		the parties hereto.
	 

	 
		20.          Governing Law.
		This Agreement shall be governed by and construed in accordance with the
		internal laws of the State of California without regard to conflicts of laws
		principles thereof.
	 

	 
		21.          Management of Integrated Product. The parties agree that the success of the Integrated
		Product will require continuous communication and coordination between the
		managements of EICN and Blue Cross. Each party shall appoint a Senior Officer
		as an 
	 

	 
		 
	 

	 
		 
	 

	 
		11
	 

	 
		* Confidential treatment has been requested
		with respect to certain portions of this exhibit. Such portions are marked with
		a “[*]” in place of the redacted language. Omitted portions are filed
		separately with the Securities and Exchange Commission. 
	 

	 
		 
	 



	 
	 

	 

	 
		Executive Sponsor who shall for that party
		make all decisions related to the underwriting, distribution, marketing,
		advertising and other administration of the Integrated Product pursuant to this
		Agreement. All performance standards for administration of the Integrated
		Product and procedures for oversight and monitoring of integrated Product
		Operations in effect under the Blue Cross-Fremont Agreement shall remain in
		force upon EICN’s acquisition of the Fremont workers’ compensation
		business and thereafter, except as mutually agreed by the parties hereto. The
		Executive Sponsors shall meet no less frequently than annually to review
		outstanding issues and the performance of the program, including all marketing
		and advertising issues. Barry Lapidus is designated as the initial Executive
		Sponsor for EICN and Deborah F. Lachman is designated as the initial Executive
		Sponsor for Blue Cross. Each party may designate a replacement Executive
		Sponsor upon written notice to the other.
	 

	 
		22.          Dispute
		Resolution and Arbitration. Any
		controversy, claim or dispute arising out of or relating to this Agreement, or
		any other matter between or among the parties hereto, their assignees,
		affiliates, attorneys, or agents, shall be settled by binding arbitration in
		Los Angeles County, California. Arbitration shall be conducted in accordance
		with the currently prevailing commercial arbitration rules of the American
		Arbitration Association, but shall be before J.A.M.S./Endispute
		(“JAMS”), with the following exceptions if in conflict: (a) one
		neutral arbitrator shall be chosen by JAMS if the parties are first unable to
		mutually agree on one arbitrator; (b) each party to the arbitration will pay
		its pro rata share of the expenses and fees of the arbitrator, together with
		other expenses of the arbitration incurred or approved by the arbitrator; and
		(c) arbitration may proceed in the absence of any party if written notice
		(pursuant to the American Arbitration Association’s rules and regulations)
		of the proceedings has been given to such party. The parties agree to abide by
		all decisions and awards rendered in such proceedings. Such decisions and
		awards rendered by the arbitrator(s) shall be final and conclusive and may be
		entered in any court having jurisdiction thereof as a basis of judgment and of
		the issuance of execution for its collection. All such controversies, claims or
		disputes shall be settled in this manner in lieu of any action at law or
		equity. The arbitrator shall not have the power or authority to award punitive
		damages, consequential damages, lost profits or speculative damages, but shall
		be empowered to award equitable remedies as appropriate. The parties shall keep
		confidential the existence of the claim, controversy or disputes from third
		parties (other than the arbitrator), and the determination thereof, unless
		otherwise required by law. IF FOR ANY REASON THIS ARBITRATION CLAUSE BECOMES
		NOT APPLICABLE, THEN EACH PARTY, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
		LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY ISSUE
		RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR
		RELATING TO THIS AGREEMENT OR ANY OTHER MATTER INVOLVING THE PARTIES
		HERETO.
	 

	 
		23.            Independent Contractor Status.
	 

	  

	 
		(a)          At all times, the relationship between the parties
		hereto shall be that of independent entities contracting with one another at
		arm’s length toward an independent contractor relationship. Neither party
		shall be deemed the agent of the other, and no joint venture or partnership
		shall be deemed to result from this Agreement.
	 

	 
		 
	 

	 
		12
	 

	 
		* Confidential treatment has been requested
		with respect to certain portions of this exhibit. Such portions are marked with
		a “[*]” in place of the redacted language. Omitted portions are filed
		separately with the Securities and Exchange Commission. 
	 

	 
		 
	 



	 
	 

	 

	 
		(b)          Neither party shall have the authority to bind the
		other, nor propose to do so in any dealings with third parties.
	 

	 
		24.           Confidentiality and Proprietary Rights.
	 

	  

	 
		(a)          Each party acknowledges that the other party’s
		confidential information constitutes valuable property and trade secrets of the
		other party, which are entitled to protection. Subject to the following two
		sentences, each party shall hold all confidential information of the other
		party in strict confidence and neither party nor any of its affiliates or
		representatives shall directly or indirectly: a) use or permit the use of any
		of the confidential information for, or in connection with, any business of the
		other or any affiliated company, its representatives of any other person
		whatsoever, or for any purpose other than the performance under this Agreement,
		or b) disclose or permit the disclosure of any of the other party’s
		confidential information to any person or entity other than the other
		party’s representatives. However, the agreement to hold confidential
		information in confidence and not to disclose it shall not extend to the
		following information that would otherwise constitute confidential
		information:
	 

	 
			
				
				   
				

			 	
				
				  i.
				

			 	
				
				  Information that, at the time of the
				  use or disclosure, was readily ascertainable from public sources or was known
				  by or available to competitors, clients or customers of either party, by
				  publication or otherwise, except for sources which arise by virtue of this
				  Agreement;
				

			 
	
				
				   
				

			 	
				
				  ii.
				

			 	
				
				  Information that comes into one
				  party’s possession from a third party and that was not acquired by such
				  third party from the other in violation of such third party’s obligations
				  of confidentiality.
				

			 
	
				
				   
				

			 	
				
				  iii.
				

			 	
				
				  Information that has become
				  generally available to the public through no act or omission of the receiving
				  party or any of its subsidiaries or representatives; or
				

			 
	
				
				   
				

			 	
				
				  iv.
				

			 	
				
				  Information required to be disclosed
				  by law, regulation or judicial or administrative order. In addition, either
				  party may disclose confidential information of the other party to the
				  disclosing party’s legal counsel.
				

			 

 

	 
		(b)          Notwithstanding anything to the contrary in this
		Paragraph 27, EICN is not restricted from directly contracting with any of the
		Blue Cross Providers during the term of this Agreement or otherwise, and,
		following termination of this Agreement, neither party shall be restricted in
		using information regarding the agents, brokers, subscribers and policyholders
		associated with the Integrated Product.
	 

	 
		(c)          Other than in furtherance of such party’s
		obligations under this Agreement, neither party shall duplicate, copy or
		reproduce any of the confidential information 
	 

	 
		 
	 

	 
		 
	 

	 
		13
	 

	 
		* Confidential treatment has been requested
		with respect to certain portions of this exhibit. Such portions are marked with
		a “[*]” in place of the redacted language. Omitted portions are filed
		separately with the Securities and Exchange Commission. 
	 

	 
		 
	 



	 
	 

	 

	 
		except with the prior consent of the other
		party, or except for review by such party’s officers or shareholders or
		their representatives. If either party consents to the copying of any
		confidential information, then the receiving party or its representative, as
		the case may be, may make duplicate copies of the confidential information but
		such duplicate copies shall be subject to all of the provisions of this
		Agreement including, without limitations, the provisions set forth in this
		Section.
	 

	 
		(d)          Within ten (10) days after a party receives a written
		request from the other party for the return of confidential information, the
		receiving party shall deliver all documents constituting such confidential
		information, including all copies, reproductions, extracts and summaries of
		such confidential information to such requesting party except to the extent
		that such confidential information relates to a client of the receiving party
		and is necessary to continue to meet the obligations of the receiving party to
		its client or must be maintained to document the services provided to client.
		Any portion of the confidential information that consists of analysis,
		computations, studies or notes prepared by the receiving party or its
		representatives, shall be either held by the receiving party and kept
		confidential subject to the terms of this Agreement or destroyed.
	 

	 
		(e)          Without in any way limiting any other obligations or
		liability of each party under this Agreement, each party shall take all
		appropriate and reasonable action by instruction or otherwise, to prevent the
		unauthorized use, disclosure or copying of confidential information, and shall
		take reasonable precautions to protect and maintain the confidentiality of the
		confidential information. Each party shall advise its representatives of the
		terms of this Section, and use reasonable efforts to cause each of them to
		comply with its terms. Each party shall immediately notify the other of the
		circumstances surrounding any breach of this Paragraph of which any party
		becomes aware.
	 

	 
		(f)           Each party agrees that if it breaches any provision of
		this Paragraph 27, the other party may not have an adequate remedy at law, and,
		in addition to any other available remedies, the damaged party is entitled to
		injunctive relief against the breaching party.
	 

	 
		(g)          Without limiting the scope of the term
		“confidential information,” the parties specifically agree that the
		term includes pricing (including network contract rates), rating, eligibility
		and other underwriting information of each party.
	 

	 
		25.           Books, Records, And Financial Reporting.
	 

	 
		(a)          EICN shall have the right through its representatives to
		make an examination and audit, at EICN’s sole expense, upon reasonable
		prior notice and subject to such written agreement as Blue Cross shall
		reasonably determine may be necessary or desirable to protect confidential,
		proprietary of trade secret information, during normal business hours, of any
		records kept pursuant to this Agreement by Blue Cross as may, under recognized
		accounting practices, contain information bearing upon the amount of fees
		payable to EICN or Blue Cross under this Agreement or as to the services
		provided by Blue Cross under this Agreement. Prompt adjustment shall be made by
		the proper party to 
	 

	 
		 
	 

	 
		 
	 

	 
		14
	 

	 
		* Confidential treatment has been requested
		with respect to certain portions of this exhibit. Such portions are marked with
		a “[*]” in place of the redacted language. Omitted portions are filed
		separately with the Securities and Exchange Commission. 
	 

	 
		 
	 



	 
	 

	 

	 
		compensate for any errors or omissions
		disclosed by such examination or audit which are accepted by the party to be
		charged as correct. Any such audit shall not, however, be conducted by any
		person or entity which is related to, or is affiliated with, a competitor of
		Blue Cross.
	 

	 
		(b)          Blue Cross shall have the right through its
		representatives to make an examination and audit, at Blue Cross’s sole
		expense, upon reasonable prior notice and subject to such written agreement as
		EICN shall reasonably determine may be necessary or desirable to protect
		confidential, proprietary or trade secret information, during normal business
		hours, of any records kept pursuant to this Agreement by EICN as may, under
		recognized accounting practices, contain information bearing upon the amount of
		fees payable to EICN or Blue Cross under this Agreement or as to the services
		provided by EICN under this Agreement. Prompt adjustment shall be made by the
		proper party to compensate for any errors or omissions disclosed by such
		examination or audit which are accepted by the party to be charged as correct.
		Any such audit shall not, however, be conducted by any person or entity which
		is related to, or is affiliated with, a competitor of EICN.
	 

	 
		(c)          EICN will furnish Blue Cross with copies of quarterly
		and annual financial statements as filed with the Insurance regulatory or it
		domiciliary state.
	 

	 
		26.           General Provisions.
	 

	  

	 
		(a)          Non-solicitation of Employees For the period commencing on the effective date of this
		Agreement and ending on the day that is one (1) year after termination of this
		Agreement, neither party shall, solicit to hire or solicit to employ any
		employee of the other party or induce or endeavor to induce any employee of the
		other party to leave his or her employment, other than as part of a general
		solicitation of employees not directed specifically to the other party or the
		other party’s employees. For purposes hereof, the term
		“employee” shall not include a person whose employment has been
		terminated or who has been given notice that he or she is to be
		terminated.
	 

	 
		(b)          Waiver. The
		waiver by either party of a breach or a violation of any provision of this
		Agreement shall not operate or be construed to operate as a waiver of any
		subsequent breach hereof.
	 

	 
		(c)          Entire Agreement. This Agreement contains all the terms and conditions
		agreed upon by the parties hereto regarding the subject matter of this
		Agreement. Any prior agreements, promises, negotiations, or representations,
		either oral or written, relating to the subject matter of this Agreement not
		expressly set forth in this Agreement are of no force or effect.
	 

	 
		(d)          Assignment. This
		Agreement, including the right to receive money, shall not be assigned without
		the prior written consent of the parties, which consent shall not be
		unreasonably withheld; and any purported assignment made contrary hereto shall
		be void as to the non-assigning party. For purposes of this Paragraph, the term
		“assignment”
	 

	 
		 
	 

	 
		 
	 

	 
		15
	 

	 
		* Confidential treatment has been requested
		with respect to certain portions of this exhibit. Such portions are marked with
		a “[*]” in place of the redacted language. Omitted portions are filed
		separately with the Securities and Exchange Commission. 
	 

	 
		 
	 



	 
	 

	 

	 
		shall include an assignment by operation of
		law (by merger or otherwise), or a change in control of the majority of the
		outstanding shares of Blue Cross or EICN. Consent may be withheld by either
		party if the proposed assignee fails to execute an agreement similar to this
		Agreement satisfactory to either party, or if any payments remain due either
		party at the time of such assignment. Notwithstanding the foregoing, the
		parties agree that either party shall be free without the other’s consent
		to assign rights or delegate duties to a wholly-owned subsidiary.
	 

	 
		(e)          Third Party Beneficiary Rights. It is not the intent of the Agreement to create any
		third party beneficiary rights in Blue Cross providers or anyone else and this
		Agreement shall not be deemed to create any such rights.
	 

	 
		(f)           Amendment. This
		Agreement may be amended, supplemented or modified only by a written instrument
		duly executed by or on behalf of each party hereto. The parties agree to
		negotiate in good faith appropriate amendment to this Agreement, upon the
		request of one party to either expand joint marketing activities to include
		medical coverage written by Blue Cross affiliates in states other than
		California or to expand joint marketing activities to include medical coverage
		written by Blue Cross’ Large Group division.
	 

	 
		 
	 

	 
		 
	 

	 
		16
	 

	 
		* Confidential treatment has been requested
		with respect to certain portions of this exhibit. Such portions are marked with
		a “[*]” in place of the redacted language. Omitted portions are filed
		separately with the Securities and Exchange Commission. 
	 

	 
		 
	 



	 
	 

	 

	 
		IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
		executed by their respective officers or agents thereunto duly authorized, as
		of the Effective Date.
	 

	  

	 
			
				
				  BLUE CROSS
				

			 	 	
				
				  EICN
				

			 
	 	 	 
	
				
				  /s/ Brian Sassi
				

			 	 	
				
				  /s/ Douglas D. Dirks
				

			 
	
				
				  Brian Sassi
				

			 	 	
				
				  Douglas D. Dirks
				

			 
	
				
				  General Manager
				

			 	 	
				
				  President and Chief Executive
				  Officer
				

			 
	
				
				  Small Group Services-West
				  Region
				

			 	 	 

 

	  

	  

	 
		 
	 

	 
		 
	 

	 
		17
	 

	 
		* Confidential treatment has been requested
		with respect to certain portions of this exhibit. Such portions are marked with
		a “[*]” in place of the redacted language. Omitted portions are filed
		separately with the Securities and Exchange Commission. 
	 

	 
		 
	 



	 
	 

	 

	 
		EXHIBIT A
	 

	 
		DEFINITION OF INTEGRATED
		PRODUCT
	 

	 
		The Integrated Product shall be defined by
		the following:
	 

	 
		Customer Group: California employer groups designated and classified
		by Blue Cross as “small group business” and written by Blue
		Cross.
	 

	 
		Products Offered:
	 

	 
		Blue Cross: insured small group medical
		products.
	 

	 
		EICN: insured workers’ compensation
		coverage.
	 

	 
		For purposes of exclusivity, an Integrated
		Product is defined as any insured product sold or offered to Customer Groups
		for which Blue Cross offers small group medical coverage and EICN offers
		workers’ compensation coverage and which has joint marketing collateral
		and a jointly utilized network arrangement.
	 

	 
		New Product Design and
		Approval: Both parties are encouraged
		to design and implement new components of Integrated Products during the course
		of the Agreement. Mutual consent as to the joint structure and combination of
		any new components of Integrated Products will be required. Examples of product
		design considerations include but are not limited to: products offered, product
		decisions and approval.
	 

	 
		Pricing: Blue Cross anticipates that it will continue its
		current practice of considering purchase of the Integrated Product as a factor
		in determining the premium rate for small group medical coverage; however, Blue
		Cross may adjust or terminate such pricing methodology at any time at its
		discretion. Similarly, EICN anticipates that it will continue to offer a
		workers’ compensation rate adjustment on an Integrated Product; however,
		EICN may adjust or terminate such rate adjustment at its discretion.
	 

	 
		 
	 

	 
		* Confidential treatment has been requested
		with respect to certain portions of this exhibit. Such portions are marked with
		a “[*]” in place of the redacted language. Omitted portions are filed
		separately with the Securities and Exchange Commission.