Exhibit 10.1 (b)



                         BLUE SHIELD LICENSE AGREEMENT

         This agreement by and between Blue Cross and Blue Shield Association
("BCBSA") and The Blue Shield Plan, known as Trigon Healthcare, Inc. (the
"Plan").

                                    Preamble
                                    --------

         WHEREAS, the Plan and/or its predecessor(s) in interest (collectively
the "Plan") had the right to use the BLUE SHIELD and BLUE SHIELD Design service
marks (collectively the "Licensed Marks") for health care plans in its service
area, which was essentially local in nature;

         WHEREAS, the Plan was desirous of assuring nationwide protection of the
Licensed Marks, maintaining uniform quality controls among Plans, facilitating
the provision of cost effective health care services to the public and otherwise
benefiting the public;

         WHEREAS, to better attain such ends, the Plan and the predecessor of
BCBSA executed the Agreement(s) Relating to the Collective Service Mark "Blue
Shield"; and

         WHEREAS, BCBSA and the Plan desire to supercede said Agreement(s) to
reflect their current practices and to assure the continued integrity of the
Licensed Marks and of the BLUE SHIELD system;

         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 agree
as follows:


<PAGE>


                                   Agreement

         1. BCBSA hereby grants to the Plan, upon the terms and conditions of
this License Agreement, the right to use BLUE SHIELD in its trade and/or
corporate name (the "Licensed Name"), and the right to use the Licensed Marks,
in the sale, marketing and administration of health care plans and related
services in the Service Area set forth and defined in paragraph 5 below. As used
herein, health care plans and related services shall include acting as a
nonprofit health care plan, a for-profit health care plan, or mutual health
insurer operating on a not-for-profit or for-profit basis, under state law;
financing access to health care services; providing health care management and
administration; administering, but not underwriting, non-health portions of
Worker's Compensation insurance; and delivering health care services.

         2. The Plan may use the Licensed Marks and Name in connection with the
offering of: a) health care plans and related services in the Service Area
through Controlled Affiliates, provided that each such affiliate is separately
licensed to use the Licensed Marks and Name under the terms and conditions
contained in the Agreement attached as Exhibit 1 hereto (the "Controlled
Affiliate License Agreement"); and: b) insurance coverages offered by life
insurers under the applicable law in the Service Area, other than those which
the Plan may offer in its own name, provided through Controlled Affiliates,
provided that each such affiliate is separately licensed to use the Licensed
Marks and Name under the terms and conditions contained in the Agreement
attached as Exhibit 1A hereto (the "Controlled Affiliate License Agreement
Applicable to Life Insurance Companies") and further provided that the offering
of such services does not and will not dilute or tarnish the unique value of the
Licensed Marks and Name; and c) administration and underwriting of Workers'
Compensation Insurance Controlled Affiliates, provided that each such Affiliate
is separately licensed to use the Licensed Marks and Name under the terms and
conditions contained in the Agreement attached as Exhibit 1 hereto (the
"Controlled Affiliate License.") With respect to any HMO previously sublicensed
as provided in a License Addendum between BCBSA and the Plan, the Plan shall
have one (1) year from the date hereof to obtain execution of the direct license
required herein. 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:

         A.        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; or

         B.        The legal authority directly or indirectly through
                   wholly-owned subsidiaries (a) to select members of the
                   Affiliate's governing body having not less than 50% voting
                   control; (b) the legal ability to prevent any change in the
                   articles of incorporation, bylaws or other establishing or
                   governing documents of the Affiliate with which it does not
                   concur; (c) at least equal control over the operations of the
                   Affiliate; and (d) to concur before the Affiliate can:

                                            Amended as of November 16, 1995

                                      -2-


<PAGE>


1. Change its legal and/or trade name;

2. Change the geographic area in which it operates;

3. Change the types of businesses in which it engages;

4. Take any action that Plan or BCBSA reasonably believes will adversely affect
the Licensed Marks or Names.

                                            Amended as of November 17, 1994

                                      -2a-


                                                      (The next page is page 3)


<PAGE>


         3. The Plan may engage in activities not required by BCBSA to be
directly licensed through Controlled Affiliates and may indicate its
relationship thereto by use of the Licensed Name as a tag line, provided that
the engaging in such activities does not and will not dilute or tarnish the
unique value of the Licensed Marks and Name and further provided that such tag
line use is not in a manner likely to cause confusion or mistake. Consistent
with the avoidance of confusion or mistake, each tag line use of the Plan's
Licensed Name: (a) shall be in the style and manner specified by BCBSA from
time-to-time; (b) shall not include the design service marks; (c) shall not be
in a manner to import more than the Plan's mere ownership of the affiliate; and
(d) shall be restricted to the Service Area. No rights are hereby created in any
Controlled Affiliate to use the Licensed Name in its own name or otherwise. At
least annually, the Plan shall provide BCBSA with representative samples of each
such use of its Licensed Name pursuant to the foregoing conditions.

         4. The Plan recognizes the importance of a comprehensive national
network of independent BCBSA licensees which are committed to strengthening the
Licensed Marks and Name. The Plan further recognizes that its actions within its
Service Area may affect the value of the Licensed Marks and Name nationwide. The
Plan agrees (a) to maintain in good standing its membership in BCBSA; (b)
promptly to pay its dues to BCBSA, said dues to represent the royalties for this
License Agreement; (c) materially to comply with all applicable laws; (d) to
comply with the Membership Standards of BCBSA, a current copy of which is
attached as Exhibit 2 hereto; and (e) reasonably to permit BCBSA, upon a
written, good faith request and during reasonable business hours, to inspect the
Plan's books and records necessary to ascertain compliance herewith. As to other
Plans and third parties, BCBSA shall maintain the confidentiality of all
documents and information furnished by the Plan pursuant hereto, or pursuant to
the Membership Standards, and clearly designated by the Plan as containing
proprietary information of the Plan.

         5. The rights hereby granted are exclusive to the Plan within the
geographical area(s) served by the Plan on June 30, 1972, and/or as to which the
Plan has been granted a subsequent license, which is hereby defined as the
"Service Area," except that BCBSA reserves the right to use the Licensed Marks
in said Service Area, and except to the extent that said Service Area may
overlap areas served by one or more other licensed Blue Shield Plans as of said
date or subsequent license, as to which overlapping areas the rights hereby
granted are nonexclusive as to such other Plan or Plans only.

                                            Amended as of September 19, 1996


                                      -3-


<PAGE>


          6. Except as expressly provided by BCBSA with respect to National
Accounts, Government Programs and certain other necessary and collateral uses,
the current rules and regulations governing which are attached as Exhibit 3 and
Exhibit 4 hereto, or as expressly provided herein, the Plan may not use the
Licensed Marks and Name outside the Service Area or in connection with other
goods and services, nor may the Plan use the Licensed Marks or Name in a manner
which is intended to transfer in the Service Area the goodwill associated
therewith to another mark or name. Nothing herein shall be construed to prevent
the Plan from engaging in lawful activity anywhere under other marks and names
not confusingly similar to the Licensed Marks and Name, provided that engaging
in such activity does and will not dilute or tarnish the unique value of the
Licensed Marks and Name.

          7. The Plan agrees that it will display the Licensed Marks and Name
only in such form, style and manner as shall be specifically prescribed by BCBSA
from time-to-time in regulations of general application in order to prevent
impairment of the distinctiveness of the Licensed Marks and Name and the
goodwill pertaining thereto. The Plan shall cause to appear on all materials on
or in connection with which the Licensed Marks or Name are used such legends,
markings and notices as BCBSA may reasonably request in order to give
appropriate notice of service mark or other proprietary rights therein or
pertaining thereto.

          8. BCBSA agrees that: (a) it will not grant any other license
effective during the term of this License Agreement for the use of the Licensed
Marks or Name which is inconsistent with the rights granted to the Plan
hereunder; and (b) it will not itself use the Licensed Marks in derogation of
the rights of the Plan or in a manner to deprive the Plan of the full benefits
of this License Agreement. The Plan agrees that it will not attack the title of
BCBSA in and to the Licensed Marks or Name or attack the validity of the
Licensed Marks or of this License Agreement. The Plan further agrees that all
use by it of the Licensed Marks and Name or any similar mark or name shall inure
to the benefit of BCBSA, and the Plan shall cooperate with BCBSA in effectuating
the assignment to BCBSA of any service mark or trademark registrations of the
Licensed Marks or any similar mark or name held by the Plan or a Controlled
Affiliate of the Plan, all or any portion of which registration consists of the
Licensed Marks.

                                      -4-


<PAGE>


         9. (a). Should the Plan fail to comply with the provisions of
paragraphs 2-4, 6, 7 and/or 12, and not cure such failure within thirty (30)
days of receiving written notice thereof (or commence curing such failure within
such thirty day period and continue diligent efforts to complete the curing of
such failure if such curing cannot reasonably be completed within such thirty
day period), BCBSA shall have the right to issue a notice that the Plan is in a
state of noncompliance. Except as to the termination of a Plan's License
Agreement or the merger of two or more Plans, disputes as to noncompliance, and
all other disputes between or among BCBSA, the Plan, other Plans and/or
Controlled Affiliates, shall be submitted promptly to mediation and mandatory
dispute resolution pursuant to the rules and regulations of BCBSA, a current
copy of which is attached as Exhibit 5 hereto, and shall be timely presented and
resolved. The mandatory dispute resolution panel shall have authority to issue
orders for specific performance and assess monetary penalties. If a state of
noncompliance as aforesaid is undisputed by the Plan or is found to exist by a
mandatory dispute resolution panel and is uncured as provided above, BCBSA shall
have the right to seek judicial enforcement of the License Agreement and/or to
issue a notice of termination thereof. Except, however, as provided in paragraph
15(a)(i)-(viii) below, no Plan's license to use the Licensed Marks and Name may
be finally terminated for any reason without the affirmative vote of
three-fourths of the Plans and three-fourths of the total then current weighted
vote of all the Plans.

                   (b). Notwithstandng any other provision of this License
Agreement, a Plan's license to use the Licensed Marks and Name may be forthwith
terminated by the affirmative vote of three-fourths of the Plans and
three-fourths of the total then current weighted vote of all the Plans at a
special meeting expressly called by BCBSA for the purpose on ten (10) days
written notice for: (i) failure to comply with any minimum capital or liquidity
requirement under the Membership Standard on Financial Responsibility; or (ii)
impending financial insolvency; or (iii) such other reason as is determined in
good faith immediately and irreparably to threaten the integrity and reputation
of BCBSA, the Plans and/or the Licensed Marks.

                   (c). To the extent not otherwise provided therein, neither:
(i) the Membership Standards; nor (ii) the rules and regulations governing
National Accounts, Government Programs and certain other uses; nor (iii) the
rules and regulations governing mediation and mandatory dispute resolution, may
be amended unless and until each such amendment is first adopted by the
affirmative vote of three-fourths of the Plans and of three-fourths of the total
then current weighted vote of all the Plans.

                                            Amended as of November 17, 1994

                                      -5-


<PAGE>


             9.  (d).  The Plan may operate as a for-profit company on the
following conditions:

         (i) The Plan shall discharge all responsibilities which it has to the
Association and to other Plans by virtue of this Agreement and the Plan's
membership in BCBSA.

         (ii) The Plan shall not use the licensed Marks and Name, or any
derivative thereof, as part of its legal name or any symbol used to identify the
Plan in any securities market. The Plan shall use the licensed Marks and Name as
part of its trade name within its service area for the sale, marketing and
administration of health care and related services in the service area.

         (iii) The Plan's license to use the Licensed Marks and Name shall
automatically terminate effective ten business days after: (a) any Person,
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of securities representing 20% or more of the voting power of
the Plan, unless such Person shall cease to be such a Beneficial Owner prior to
such automatic termination becoming effective; (b) individuals who at the time
the Plan went public constituted the Board of Directors of the Plan (together
with any new directors whose election to the Board was approved by a vote of 2/3
of the directors then still in office who were directors at the time the Plan
went public or whose election or nomination was previously so approved) (the
"Continuing Directors") cease for any reason to constitute a majority of the
Board of Directors; or (c) the Plan consolidates with or merges with or into any
person or conveys, assigns, transfers or sells all or substantially all of its
assets to any person other than a merger in which the Plan is the surviving
entity and immediately after which merger, no person or group beneficially owns
securities representing 20% or more of the voting power of the Plan: provided
that, if requested by the affected Plan prior to such automatic termination
becoming effective, the provisions of this paragraph 9(d)(iii) may be waived or
made conditional, in whole or in part, upon the affirmative vote of a majority
of the disinterested Plans and a majority of the total then current weighted
vote of the disinterested Plans.

In the event that the Plan's license to use the Licensed Marks and Name is
terminated pursuant to this Paragraph 9(d)(iii), the license may be reinstated
by BCBSA if, within 30 days of the date of such termination, the Plan
demonstrates that the Person referred to in the preceding sentence is no longer
the Beneficial Owner of securities representing 20% or more of the voting power
of the Plan.

                                            Amended as of September 29, 1994

                                      -5a-


<PAGE>


The Plan's license to use the Licensed Marks and Name may be terminated if any
Person, together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of securities representing 5% or more of the voting power of
the Plan and such Person's Beneficial Ownership is deemed in BCBSA's absolute
discretion, detrimental to the best interest of the Name and Marks; provided,
however that such termination shall become effective only upon the affirmative
vote of three-fourths of the disinterested Plans and three-fourths of the total
then current weighted vote of the disinterested Plans.

         (iv)  For purposes of paragraph 9(d)(iii), the following definitions
         shall apply:

              (a)    "Affiliate" and "Associate" shall have the respective
                     meanings ascribed to such terms in Rule 12b-2 of the
                     General Rules and Regulations under the Securities Exchange
                     Act of 1934, as amended and in effect on November 17, 1993
                     (the "Exchange Act").

              (b)    A Person shall be deemed the "Beneficial Owner" of and
                     shall be deemed to "beneficially own" any securities:

                     (i)   which such Person or any of such Person's Affiliates
                     or Associates beneficially owns, directly or indirectly;

                     (ii) which such Person or any of such Person's Affiliates
                     or Associates has (A) the right to acquire (whether such
                     right is exercisable immediately or only after the passage
                     of time) pursuant to any agreement, arrangement or
                     understanding, or upon the exercise of conversion rights,
                     exchange rights, warrants or options, or otherwise; or (B)
                     the right to vote pursuant to any agreement, arrangement or
                     understanding; provided, however, that a Person shall not
                     be deemed the Beneficial Owner of, or to beneficially own,
                     any security if the agreement, arrangement or understanding
                     to vote such security (1) arises solely from a revocable
                     proxy or consent given to such Person in response to a
                     public proxy or consent solicitation made pursuant to, and
                     in accordance with, the applicable rules and regulations
                     promulgated under the Exchange Act and (2) is not also then
                     reportable on Schedule 13D under the Exchange Act (or any
                     comparable or successor report); or

                     (iii) which are beneficially owned, directly or indirectly,
                     by any other Person (or any Affiliate or Associate thereof)
                     with which such Person (or any of such Person's Affiliates
                     or Associates) has any agreement, arrangement or
                     understanding (other than customary agreements with and
                     between

                                               Amended as of September 29, 1994

                                      -5b-


<PAGE>


                     underwriters and selling group members with respect to a
                     bona fide public offering of securities) relating to the
                     acquisition, holding, voting (except to the extent
                     contemplated by the proviso to (b)(ii)(B) above) or
                     disposing of any securities of the Plan.

                     Notwithstanding anything in this definition of Beneficial
                     Ownership to the contrary, the phrase "then outstanding,"
                     when used with reference to a Person's Beneficial Ownership
                     of securities of the Plan, shall mean the number of such
                     securities then issued and outstanding together with the
                     number of such securities not then actually issued and
                     outstanding which such Person would be deemed to own
                     beneficially hereunder.

              (c)    "Person" shall mean any individual, firm, partnership,
                     corporation, trust, association, joint venture or other
                     entity, and shall include any successor (by merger or
                     otherwise) or such entity.

                                            Amended as of September 29, 1994

                                      -5c-


                                                       (The next page is page 6)


<PAGE>





         10. This License Agreement shall remain in effect: (a) until terminated
as provided herein; or (b) until this and all such other License Agreements are
terminated by the affirmative vote of three-fourths of the Plans and
three-fourths of the total then current weighted vote of all the Plans; or (c)
until terminated by the Plan upon six (6) months written notice to BCBSA.

         11. Except as otherwise provided in paragraph 15 below or by the
affirmative vote of three-fourths of the Plans and three-fourths of the total
then current weighted vote of all the Plans, or unless this and all such other
License Agreements are simultaneously terminated by force of law, the
termination of this License Agreement for any reason whatsoever shall cause the
reversion to BCBSA of all rights in and to the Licensed Marks and Name, and the
Plan agrees that it will promptly discontinue all use of the Licensed Marks and
Name, will not use them thereafter, and will promptly, upon written notice from
BCBSA, change its corporate name so as to eliminate the Licensed Name therefrom.

         12. The license hereby granted to Plan to use the Licensed Marks and
Name is and shall be personal to the Plan so licensed and shall not be
assignable by any act of the Plan, directly or indirectly, without the written
consent of BCBSA. Said license shall not be assignable by operation of law, nor
shall Plan mortgage or part with possession or control of this license or any
right hereunder, and the Plan shall have no right to grant any sublicense to use
the Licensed Marks and Name.

         13. BCBSA shall maintain appropriate service mark registrations of the
Licensed Marks and BCBSA shall take such lawful steps and proceedings as may be
necessary or proper to prevent use of the Licensed Marks by any person who is
not authorized to use the same. Any actions or proceedings undertaken by BCBSA
under the provisions of this paragraph shall be at BCBSA's sole cost and
expense. BCBSA shall have the sole right to determine whether or not any legal
action shall be taken on account of unauthorized use of the Licensed Marks, such
right not to be unreasonably exercised. The Plan shall report any unlawful usage
of the Licensed Marks to BCBSA in writing and agrees, free of charge, to
cooperate fully with BCBSA's program of enforcing and protecting the service
mark rights, trade name rights and other rights in the Licensed Marks.


                                      -6-


<PAGE>


         14. The Plan hereby agrees to save, defend, indemnify and hold BCBSA
and any other Plan(s) harmless from and against all claims, damages, liabilities
and costs of every kind, nature and description which may arise exclusively and
directly as a result of the activities of the Plan. BCBSA hereby agrees to save,
defend, indemnify and hold the Plan and any other Plan(s) harmless from and
against all claims, damages, liabilities and costs of every kind, nature and
description which may arise exclusively and directly as a result of the
activities of BCBSA.

         15. (a). This Agreement shall automatically terminate upon the
occurrence of any of the following events: (i) a voluntary petition shall be
filed by the Plan or by BCBSA seeking bankruptcy, reorganization, arrangement
with creditors or other relief under the bankruptcy laws of the United States or
any other law governing insolvency or debtor relief, or (ii) an involuntary
petition or proceeding shall be filed against the Plan or BCBSA seeking
bankruptcy, reorganization, arrangement with creditors or other relief under the
bankruptcy laws of the United States or any other law governing insolvency or
debtor relief and such petition or proceeding is consented to or acquiesced in
by the Plan or BCBSA or is not dismissed within sixty (60) days of the date upon
which the petition or other document commencing the proceeding is served upon
the Plan or BCBSA respectively, or(iii) an order for relief is entered against
the Plan or BCBSA in any case under the bankruptcy laws of the United States, or
the Plan or BCBSA is adjudged bankrupt or insolvent (as that term is defined in
the Uniform Commercial Code as enacted in the state of Illinois) by any court of
competent jurisdiction, or (iv) the Plan or BCBSA makes a general assignment of
its assets for the benefit of creditors, or (v) the Department of Insurance or
other regulatory agency assumes control of the Plan or delinquency proceedings
(voluntary or involuntary) are instituted, or (vi) an action is brought by the
Plan or BCBSA seeking its dissolution or liquidation of its assets or seeking
the appointment of a trustee, interim trustee, receiver or other custodian for
any of its property or business, or (vii) an action is instituted against the
Plan or BCBSA seeking its dissolution or liquidation of its assets or seeking
appointment of a trustee, interim trustee, receiver or other custodian for any
of its property or business and such action is consented to or acquiesced in by
the Plan or BCBSA or is not dismissed within sixty (60) days of the date upon
which the pleading or other document commencing the action is served upon the
Plan or BCBSA respectively, or(viii) a trustee, interim trustee, receiver or
other custodian for any of the Plan's or BCBSA's property or business is
appointed, or (ix) the Plan shall fail to pay its dues and shall not cure such
failure within thirty (30) days of receiving written notice thereof.

                                            Amended November 21, 1996

                                      -7-


<PAGE>


         (b). BCBSA, or the Plans (as provided and in addition to the rights
conferred in Paragraph 10(b) above), may terminate this Agreement immediately
upon written notice upon the occurrence of either of the following events: (a)
the Plan or BCBSA becomes insolvent (as that term is defined in the Uniform
Commercial Code enacted in the state of Illinois), or (b) any final judgment
against the Plan or BCBSA remains unsatisfied or unbonded of record for a period
of sixty (60) days or longer.

         (c). If this License Agreement is terminated as to BCBSA for any reason
stated in subparagraphs 15(a) and (b) above, the ownership of the Licensed Marks
shall revert to each of the Plans.

         (d). Upon termination of this License Agreement or any Controlled
Affiliate License Agreement of a Larger Affiliate, as defined in Exhibit 1 to
this License Agreement:

                           (i)     The terminated entity shall send a notice
                                   through the U.S. mails, with first class
                                   postage affixed, to all individual and group
                                   customers, providers, brokers and agents of
                                   products or services sold, marketed,
                                   underwritten or administered by the
                                   terminated entity or its Controlled
                                   Affiliates under the Licensed Marks and Name.
                                   The form and content of the notice shall be
                                   specified by BCBSA and shall, at a minimum,
                                   notify the recipient of the termination of
                                   the license, the consequences thereof, and
                                   instructions for obtaining alternate products
                                   or services licensed by BCBSA.  This notice
                                   shall be mailed within 15 days after
                                   termination or, if termination is pursuant to
                                   paragraph 10(d) of this Agreement, within 15
                                   days after the written notice to BCBSA
                                   described in paragraph 10(d).

                           (ii)    The terminated entity shall deliver to BCBSA
                                   within five days of a request by BCBSA a
                                   listing of national accounts in which the
                                   terminated entity is involved (in a Control,
                                   Participating or Servicing capacity),
                                   identifying the national account and the
                                   terminated entity's role therein. For those
                                   accounts where the terminated entity is the
                                   Control Plan, the Plan must also indicate the
                                   Participating and Servicing Plans in the
                                   national account syndicate.

                                            Amended as of September 19, 1996

                                      -8-


<PAGE>



                           (iii)   Unless the cause of termination is an event
                                   stated in paragraph 15(a) or (b) above
                                   respecting BCBSA, the Plan and its Licensed
                                   Controlled Affiliates shall be jointly liable
                                   for payment to BCBSA of an amount equal to
                                   $25 multiplied by the number of Licensed
                                   Enrollees of the terminated entity and its
                                   Licensed Controlled Affiliates; provided that
                                   if any other Plan is permitted by BCBSA to
                                   use marks or names licensed by BCBSA in the
                                   Service Area established by this Agreement,
                                   the payment shall be multiplied by a
                                   fraction, the numerator of which is the
                                   number of Licensed Enrollees of the
                                   terminated entity and its Licensed Controlled
                                   Affiliates and the denominator of which is
                                   the total number of Licensed Enrollees in the
                                   Service Area.  Licensed Enrollee means each
                                   and every person and covered dependent who is
                                   enrolled as an individual or member of a
                                   group receiving products or services sold,
                                   marketed or administered under marks or names
                                   licensed by BCBSA as determined at the
                                   earlier of (a) the end of the last fiscal
                                   year of the terminated entity which ended
                                   prior to termination or (b) the fiscal year
                                   which ended before any transactions causing
                                   the termination began.  Notwithstanding the
                                   foregoing, the amount payable pursuant to
                                   this subparagraph (d)(iii) shall be due only
                                   to the extent that, in BCBSA's opinion, it
                                   does not cause the net worth of the Plan to
                                   fall below 100% of the capital benchmark
                                   formula or its equivalent under any successor
                                   formula, as set forth in the applicable
                                   financial responsibility standards
                                   established by BCBSA, measured as of the date
                                   of termination and adjusted for the value of
                                   any transactions not made in the ordinary
                                   course of business.

                           (iv)    BCBSA shall have the right to audit the books
                                   and records of the terminated entity and its
                                   Licensed Controlled Affiliates to verify
                                   compliance with this paragraph 15(d).

                                            Amended as of September 19, 1996

                                      -8a-


<PAGE>




                           (v)     As to a breach of 15 (d) (i), (ii), (iii) or
                                   (iv), the parties agree that the obligations
                                   are immediately enforceable in a court of
                                   competent jurisdiction. As to a breach of 15
                                   (d) (i), (ii) or (iv) by the Plan, the
                                   parties agree there is no adequate remedy at
                                   law and BCBSA is entitled to obtain specific
                                   performance.

              (e). BCBSA shall be entitled to enjoin the Plan or any related
party in a court of competent jurisdiction from entry into any transaction which
would result in a termination of this License Agreement unless the License
Agreement has been terminated pursuant to paragraph 10 (d) of this Agreement
upon the required six (6) month written notice.

              (f).         BCBSA acknowledges that it is not the owner of assets
of the Plan.

         16. This Agreement supersedes any and all other agreements between the
parties with respect to the subject matter herein, and contains all of the
covenants and agreements of the parties as to the licensing of the Licensed
Marks and Name. This Agreement may be amended only by a signed writing, the form
of which shall have been approved by the affirmative vote of three-fourths of
the Plans and three-fourths of the total then current weighted vote of all the
Plans.

         17. If any provision or any part of any provision of this Agreement is
judicially declared unlawful, each and every other provision, or any part of any
provision, shall continue in full force and effect notwithstanding such judicial
declaration.

         18. No waiver by BCBSA or the Plan of any breach or default in
performance on the part of BCBSA or the Plan 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.

         19. All notices provided for hereunder shall be in writing and shall be
sent in duplicate by regular mail to BCBSA or the Plan at the address currently
published for each by BCBSA and shall be marked respectively to the attention of
the President and, if any, the General Counsel, of BCBSA or the Plan.

                                            Amended as of September 19, 1996

                                      -8b-


                                                       (The next page is page 9)


<PAGE>


         20. Nothing herein contained shall be construed to constitute the
parties hereto as partners or joint venturers, or either as the agent of the
other, and Plan shall have no right to bind or obligate BCBSA in any way, nor
shall it represent that it has any right to do so. BCBSA shall have no liability
to third parties with respect to any aspect of the business, activities,
operations, products, or services of the Plan.

         21. This Agreement shall be governed, 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.

BLUE CROSS AND BLUE SHIELD ASSOCIATION

By  /s/ PATRICK G. HAYS
    -------------------
    PATRICK G. HAYS

Title  President

Date  February 5, 1997

TRIGON HEALTHCARE, INC.


By  /s/ PHYLLIS L. COTHRAN
    ----------------------
    PHYLLIS L. COTHRAN

Title  President

Date  January 28, 1997



                                      -9-


<PAGE>


                                                                     EXHIBIT 1

                                  BLUE SHIELD

                          AFFILIATE LICENSE AGREEMENT

         This Agreement by and among Blue Cross and Blue Shield Association
("BCBSA") and _______________________________________________ ("Affiliate"), an
affiliate of the Blue Shield Plan(s), known as _____________________ ("Plan"),
which is also a Party signatory hereto.

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

         WHEREAS, Plan and 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 Affiliate the right to use the Licensed Marks and Name in connection
with, and only in connection with: (i) health care plans and related services
and administering the non-health portion of workers' compensation insurance, and
(ii) underwriting the indemnity portion of workers' compensation insurance,
provided that Affiliate's total premium revenue comprises less than 15 percent
of the sponsoring Plan's net subscription revenue.

This grant of rights is non-exclusive and is limited to the Service Area served
by the Plan. Affiliate may not use the Licensed Marks and Name in its legal name
and may use the Licensed Marks and Name in its Trade Name only with the prior
consent of BCBSA.

         2.       QUALITY CONTROL

         A. Affiliate agrees to use the Licensed Marks and Name only in
connection with the licensed services and further agrees to be bound by the
conditions regarding quality control shown in attached Exhibit A as they may be
amended by BCBSA from time-to-time.


                                      -1-


<PAGE>


         B. Affiliate agrees to comply with all applicable federal, state and
local laws.

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

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

         E. As used herein, an Affiliate is defined as an entity organized and
operated in such a manner, that it meets the following requirements:

(1)      If the Plan has 50 percent of the voting control of the Affiliate:

         (a) the Plan must have the legal ability to prevent any change in the
         articles of incorporation, bylaws or other establishing or governing
         documents of the Affiliate with which it does not concur;

         (b) the Plan must have at least equal control over the operations of
         the Affiliate;

         (c) the Plan must concur in writing before the Affiliate can:

                  (i)      change its legal and/or trade names;

                  (ii)     change the geographic area in which it operates;

                  (iii)    change the fundamental type(s) of business in which
                           it engages;

                  (iv)     take any action that Plan or BCBSA reasonably
                           believes will adversely affect the Licensed Marks and
                           Name.

(2)      If the Plan has more than 50 percent voting control of the Affiliate:

         (a) the Plan must have the legal ability to prevent any change in the
articles of incorporation, bylaws or other establishing or governing documents
of the Affiliate with which it does not concur;

                                      -2-
<PAGE>


         (b) the Plan must have control over the policy and operations of the
Affiliate.

         3.       SERVICE MARK USE

         A. Affiliate shall at all times make proper service mark use of the
Licensed Marks and Name, including but not limited to use of such symbols or
words as BCBSA shall specify to protect the Licensed Marks and Name and shall
comply with such rules (generally applicable to Affiliates licensed to use the
Licensed Marks and Name) relative to service mark use, as are issued from
time-to-time by BCBSA. Affiliate recognizes and agrees that all use of the
Licensed Marks and Name by Affiliate shall inure to the benefit of BCBSA.

         B. Affiliate may not directly or indirectly use the Licensed Marks and
Name in a manner that transfers or is intended to transfer in the Service Area
the goodwill associated therewith to another mark or name, nor may Affiliate
engage in activity that may dilute or tarnish the unique value of the Licensed
Marks and Name.

         C. If Affiliate meets the standards of 2E(1) but not 2E(2) above and
any of Affiliate's advertising or promotional material is reasonably determined
by BCBSA and/or the Plan to be in contravention of rules and regulations
governing the use of the Licensed Marks and Name, Affiliate shall for ninety
(90) days thereafter obtain prior approval from BCBSA of advertising and
promotional efforts using the Licensed Marks and Name, approval or disapproval
thereof to be forthcoming within five (5) business days of receipt of same by
BCBSA or its designee. In all advertising and promotional efforts, Affiliate
shall observe the Service Area limitations applicable to Plan.

         D. Affiliate shall use its best efforts in the Service Area to promote
and build the value of the Licensed Marks and Name.

         4.       SUBLICENSING AND ASSIGNMENT

         Affiliate shall not sublicense, transfer, hypothecate, sell, encumber
or mortgage, by operation of law or otherwise, the rights granted hereunder and
any such act shall be voidable at the sole option of Plan or BCBSA. This
Agreement and all rights and duties hereunder are personal to Affiliate.

         5.       INFRINGEMENT

         Affiliate shall promptly notify Plan and Plan shall promptly notify
BCBSA of any suspected acts of infringement, unfair competition or passing off
that may occur in relation to the Licensed Marks and Name. Affiliate shall not
be entitled


                                      -3-

<PAGE>


to require Plan or BCBSA to take any actions or institute any proceedings to
prevent infringement, unfair competition or passing off by third parties.
Affiliate agrees to render to Plan and BCBSA, without charge, all reasonable
assistance in connection with any matter pertaining to the protection of the
Licensed Marks and Name by BCBSA.

         6.       LIABILITY INDEMNIFICATION

         Affiliate and Plan hereby agree to save, defend, indemnify and hold
BCBSA harmless from and against all claims, damages, liabilities and costs of
every kind, nature and description (except those arising solely as a result of
BCBSA's negligence) that may arise as a result of or related to Affiliate's
rendering of services under the Licensed Marks and Name.

         7.       LICENSE TERM

         A. Except as otherwise provided herein, 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 Affiliate meets the then applicable
quality control standards.

         B. This Agreement and all of Affiliate's rights hereunder shall
immediately terminate without any further action by any party or entity in the
event that Plan ceases to be authorized to use the Licensed Marks and Name.

         C. Notwithstanding any other provision of this Agreement, this license
to use the Licensed Marks and Name may be forthwith terminated by the Plan or
the affirmative vote of the majority of the Board of Directors of BCBSA present
and voting at a special meeting expressly called by BCBSA for the purpose on ten
(10) days written notice for: (1) failure to comply with any applicable minimum
capital or liquidity requirement under the quality control standards of this
Agreement; or (2) failure to comply with the "Organization and Governance"
quality control standard of this Agreement; or (3) impending financial
insolvency; or (4) for a Smaller Affiliate (as defined in Exhibit A), failure to
comply with any of the applicable requirements of Standards 2, 3, 4, 5 or 7 of
attached Exhibit A; or (5) such other reason as is determined in good faith
immediately and irreparably to threaten the integrity and reputation of BCBSA,
the Plans, any other licensee including Affiliate and/or the Licensed Marks and
Name.

                                      -4-

<PAGE>


         D. Except as otherwise provided in Paragraphs 7(B), 7(C) or 7(E)
herein, should Affiliate fail to comply with the provisions of this Agreement
and not cure such failure within thirty (30) days of receiving written notice
thereof (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) BCBSA or the Plan shall have the right to issue a
notice that the Affiliate is in a state of noncompliance. If a state of
noncompliance as aforesaid is undisputed by the Affiliate or is found to exist
by a mandatory dispute resolution panel and is uncured as provided above, BCBSA
shall have the right to seek judicial enforcement of the Agreement or to issue a
notice of termination thereof. Notwithstanding any other provisions of this
Agreement, any disputes as to the termination of this License pursuant to
Paragraphs 7(B), 7(C) or 7(E) of this Agreement shall not be subject to
mediation and mandatory dispute resolution. All other disputes between BCBSA,
the Plan and/or Affiliate shall be submitted promptly to mediation and mandatory
dispute resolution. The mandatory dispute resolution panel shall have authority
to issue orders for specific performance and assess monetary penalties. Except,
however, as provided in Paragraphs 7(B) and 7(E) of this Agreement, this license
to use the Licensed Marks and Name may not be finally terminated for any reason
without the affirmative vote of a majority of the present and voting members of
the Board of Directors of BCBSA.

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

         (1) Affiliate shall no longer comply with item 2(E) above;

         (2) Appropriate dues, royalties and other payments for Affiliate
pursuant to paragraph 9 hereof, which are the royalties for this License
Agreement, are more than sixty (60) days in arrears to BCBSA; or

         (3) Any of the following events occur: (i) a voluntary petition shall
be filed by Affiliate seeking bankruptcy, reorganization, arrangement with
creditors or other relief under the bankruptcy laws of the United States or any
other law governing insolvency or debtor relief, or (ii) an involuntary petition
or proceeding shall be filed against Affiliate seeking bankruptcy,
reorganization, arrangement with creditors or other relief under the bankruptcy
laws of the United States of any other law governing insolvency or debtor relief
and such petition or proceeding is consented to or acquiesced in by Affiliate or
is not dismissed within sixty (60) days of the date upon which it was filed, or
(iii) an order for relief is entered against Affiliate in any case under the
bankruptcy laws of the United States, or Affiliate is adjudged bankrupt or
insolvent as those terms are defined in the Uniform Commercial Code as enacted
in the State of Illinois

                                      -5-



<PAGE>


by any court of competent jurisdiction, or (iv) Affiliate makes a general
assignment of its assets for the benefit of creditors, or (v) the Department of
Insurance or other regulatory agency assumes control of Affiliate or delinquency
proceedings (voluntary or involuntary) are instituted, or (vi) an action is
brought by Affiliate seeking its dissolution or liquidation of its assets or
seeking the appointment of a trustee, interim trustee, receiver or other
custodian for any of its property or business, or (vii) an action is instituted
against Affiliate seeking its dissolution or liquidation of its assets or
seeking the appointment of a trustee, interim trustee, receiver or other
custodian for any of its property or business and such action is consented to or
acquiesced in by Affiliate or is not dismissed within sixty (60) days of the
date upon which it was instituted, or (viii) a trustee, interim trustee,
receiver or other custodian for any of Affiliate's property or business is
appointed.

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

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

         H. In the event that the Plan has more than 50 percent voting control
of the Affiliate under Paragraph 2(E)(2) above and is a Larger Affiliate (as
defined in Exhibit A), then the vote called for in Paragraphs 7(C) and 7(D)
above shall require the affirmative vote of three-fourths of the Blue Shield
Plans which are Regular Members of BCBSA and three-fourths of the total then
current weighted vote of all the Blue Shield Plans which are Regular Member
Plans of BCBSA.

         8.       DISPUTE RESOLUTION

         The parties agree that any disputes between them or between or among
either of them and one or more Plans or Affiliates of Plans that use in any
manner the Blue Cross and Blue Shield Marks and Name are subject to the
Mediation and Mandatory Dispute Resolution process attached to and made a part
of Plan's License from BCBSA to use the Licensed Marks and Name as Exhibits 5,
5A and 5B as amended from time-to-time, which documents are incorporated herein
by reference as though fully set forth herein.

                                      -6-

<PAGE>



         9.       LICENSE FEE

         Affiliate will pay to BCBSA a fee for this License determined pursuant
to the formula(s) set forth in Exhibit B.

         10.      JOINT VENTURE

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

         11.      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.

         12.      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 hereto or by the vote of three-fourths of the
Plans and three-fourths of the total then current weighted vote of all the
Plans.

         13.      SEVERABILITY

         If any term of this Agreement is held to be unlawful by a court of
competent jurisdiction, such findings shall in no way affect 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.

         14.      NONWAIVER

         No waiver by BCBSA of any breach or default in performance on the part
of 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.


                                      -7-

<PAGE>



                        THIS PAGE IS INTENTIONALLY BLANK.

                                      -8-

<PAGE>



         15.      GOVERNING LAW

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

         16.      HEADINGS

         The headings inserted in this agreement are for convenience only and
shall have no bearing on the interpretation hereof.

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

Affiliate ________________________________

By:_______________________________________

Date:_____________________________________

Plan _____________________________________

By:_______________________________________

Date:_____________________________________


BLUE CROSS AND BLUE SHIELD ASSOCIATION

By:_______________________________________

Date:_____________________________________

                                      -9-

<PAGE>



EXHIBIT A

AFFILIATE LICENSE STANDARDS
June 1996

PREAMBLE

The standards for licensing affiliates 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. Each licensed Plan
is required to use a standard affiliate license form provided by BCBSA and to
cooperate fully in assuring that the licensed affiliate maintains compliance
with the license standards.

The Affiliate License provides a flexible vehicle to accommodate the potential
range of health and workers' compensation related products and services Plan
affiliates provide. The Affiliate License collapses former health affiliate
licenses (HCC, HMO, PPO, TPA, and IDS) into a single license using the following
business-based criteria to provide a framework for license standards:

o    Percent of affiliate controlled by parent:  Greater than 50 percent or 50
     percent?

o    Risk assumption:  yes or no?

o    Medical care delivery:  yes or no?

o    Importance of the affiliate to the parent: If the affiliate has health or
     workers' compensation administration business, does such business
     constitute 15 percent or more (referred to as a "larger" affiliate) of the
     parent's and other licensed health subsidiaries' contract enrollment?


                                      -10-
<PAGE>


EXHIBIT A (continued)

For purposes of definition:

o    A "smaller affiliate:" (1) comprises less than fifteen percent (15%) of
     Plan's and its licensed affiliates' total contract enrollment (as reported
     on the BCBSA Quarterly Enrollment Report, excluding rider and freestanding
     coverage, and treating an entity seeking licensure as licensed);* or (2)
     underwrites the indemnity portion of workers' compensation insurance and
     has total premium revenue less than 15 percent of the sponsoring Plan's net
     subscription revenue.

o    A "larger affiliate" comprises fifteen percent (15%) or more of Plan's and
     its licensed affiliates' total contract enrollment (as reported on the
     BCBSA Quarterly Enrollment Report, excluding rider and freestanding
     coverage, and treating an entity seeking licensure as licensed.)*

Conversion to the new license shall be:

o    For smaller affiliates:
     -   immediately for new applicants, and
     -   January 1, 1996 for existing HMO, PPO, TPA and IDS licensees under
         fifteen percent (15%).

o    For larger affiliates:
     -   immediately for new applicants,
     -   July 1, 1995 for existing health coverage carrier licensees, and
     -   June 1996, for all other currently licensed affiliates presently at or
         over fifteen percent(15%).

Changes in affiliate status:

If any affiliate's status changes regarding: its Plan ownership level, its risk
acceptance or direct delivery of medical care, the affiliate shall notify BCBSA
within thirty (30) days of such occurrence in writing and come into compliance
with the applicable standards within six (6) months.

If a smaller affiliate's health and workers' compensation administration
business surpasses fifteen percent (15%) of the total contract enrollment of the
Plan and licensed affiliates, the affiliate shall:

                                      -11-


<PAGE>


EXHIBIT A (continued)

1.   Within thirty (30) days, notify BCBSA of this fact in writing, including
     evidence that the affiliate meets the minimum liquidity and capital (BCBSA
     Capital Benchmark and state-established minimum reserve) requirements of
     the larger affiliate Financial Responsibility standard; and

2.   Within six (6) months after surpassing the fifteen percent (15%) threshold,
     demonstrate compliance with all license requirements for a larger
     affiliate.

If an affiliate that underwrites the indemnity portion of workers' compensation
insurance receives a change in rating or proposed change in rating, the
affiliate shall notify BCBSA within 30 days of notification by the external
rating agency.

-----------

*For purposes of this calculation,

The numerator equals:

Applicant affiliate's contract enrollment, as defined in BCBSA's Quarterly
Enrollment Report (excluding rider and freestanding coverage).

The denominator equals:

Numerator PLUS Plan and all other licensed affiliates' contract enrollment, as
reported in BCBSA's Quarterly Enrollment Report (excluding rider and
freestanding coverage).

                                      -12-
<PAGE>


EXHIBIT A (continued)

                       STANDARDS FOR LICENSED AFFILIATES


                                      -13-

<PAGE>



EXHIBIT A (continued)

Standard 1 - Organization and Governance

1A.)  The Standard for more than 50% Plan ownership is:

An affiliate 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)
more than 50% of the voting control of the affiliate; and 2) the legal ability
to prevent any change in the articles of incorporation, bylaws or other
establishing or governing documents of the affiliate with which it does not
concur; and 3) operational control of the affiliate.

1B.)  The Standard for 50% Plan ownership is:

An affiliate shall be organized and operated in such a manner that a licensed
Plan or Plans have directly or indirectly:

1)       not less than 50% of the voting control of the affiliate; and

2)       the legal ability to prevent any change in the articles of
         incorporation, bylaws or other establishing or governing documents of
         the affiliate with which it does not concur; and

3)       at least equal direct or indirect control over the operations of the
         affiliate; and

4)       sufficient authority so that changes in the following require the
         approval of the Licensed Plan or Plans:

         o        geographic operating area of the affiliate

         o        the legal and trade names of the affiliate

         o        the types of activity in which the affiliate engages

         o        any action which would cause the affiliate to be in violation
                  of the Standards applicable to Licensure by BCBSA.


                                      -14-

<PAGE>


EXHIBIT A (continued)

Standard 2 - Financial Responsibility

An affiliate shall be operated in a manner that provides reasonable financial
assurance that it can fulfill all of its contractual obligations to its
customers. If a risk-assuming affiliate ceases operations for any reason, Blue
Cross and/or Blue Shield Plan coverage will be offered to all affiliate
subscribers without exclusions, limitations or conditions based on health
status. If a nonrisk-assuming affiliate ceases operations for any reason,
sponsoring Plan(s) will provide for services to its (their) customers.

Standard 3 - State Licensure/Certification

3A.)  The Standard for an affiliate that employs, owns or contracts on a
      substantially exclusive basis for medical services is:

An affiliate shall maintain unimpaired licensure or certification for its
medical care providers to operate under applicable state laws.

3B.)  The Standard for an affiliate that does not employ, own or contract on
      a substantially exclusive basis for medical services is:

An affiliate shall maintain unimpaired licensure or certification to operate
under applicable state laws.

Standard 4 - Certain Disclosures

An affiliate shall make adequate disclosure in contracting with third parties
and in disseminating public statements of 1) the structure of the Blue Cross and
Blue Shield System; and 2) the independent nature of every licensee; and 3) the
affiliate's financial condition.

Standard 5 - Reports and Records for Certain Smaller Affiliates

For a smaller affiliate that does not underwrite the indemnity portion of
workers' compensation insurance, the Standard is:

An affiliate and/or its licensed Plan(s) shall furnish, on a timely and accurate
basis, reports and records relating to these Standards and the License
Agreements between BCBSA and affiliate.

                                      -15-

<PAGE>


EXHIBIT A (continued)

Standard 6 - Other Standards for Larger Affiliates

Standards 6(A) - (I) that follow apply to larger affiliates.

Standard 6(A):  Board of Directors

An affiliate Governing Board shall act in the interest of its Corporation in
providing cost-effective health care services to its customers. An affiliate
shall maintain a governing Board, which shall control the affiliate, 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.

Standard 6(B):  Responsiveness to Customers

An affiliate shall be operated in a manner responsive to customer needs and
requirements.

Standard 6(C):  Participation in National Programs

An affiliate 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 licensees and ease of claims
processing for customers receiving benefits outside of the affiliate's Service
Area.

Such programs are applicable to licensees, and include:

         A.       Inter-Plan Transfer Agreement;

         B.       National Account Equalization Program;

         C.       BlueCard Program;


                                      -16-

<PAGE>


EXHIBIT A (continued)

         D.       Inter-Plan Teleprocessing System (ITS); and

         E.       Inter-Plan Data Reporting (IPDR) Program.

Standard 6(D):   Financial Performance Requirements

In addition to requirements under the national programs listed in Standard 6C:
Participation in National Programs, an affiliate shall take such action as
required to ensure its financial performance in programs and contracts of an
inter-licensee nature or where BCBSA is a party.

Standard 6(E):  Cooperation with Plan Performance Response Process

An affiliate shall cooperate with BCBSA's Board of Directors and its Plan
Performance and Financial Standards Committee in the administration of the Plan
Performance Response Process and in addressing affiliate performance problems
identified thereunder.

Standard 6(F):  Independent Financial Rating

An affiliate shall obtain a rating of its financial strength from an independent
rating agency approved by BCBSA's Board of Directors for such purpose.

Standard 6(G):  Best Efforts

During each year, an affiliate shall use its best efforts in the designated
Service Area to promote and build the value of the Blue Shield Mark.

Standard 6(H):  Financial Responsibility

An affiliate shall be operated in a manner that provides reasonable financial
assurance that it can fulfill all of its contractual obligations to its
customers.

                                      -17-

<PAGE>


EXHIBIT A (continued)

Standard 6(I):  Reports and Records

An affiliate shall furnish to BCBSA on a timely and accurate basis reports and
records relating to compliance with these Standards and the License Agreements
between BCBSA and affiliate. Such reports and records are the following:

A)                Annual Application for Renewal of Standard Affiliate License
                  for affiliates, including trade name and service mark usage
                  material;

B)                Changes in the ownership and governance of the affiliate,
                  including changes in its charter, articles of incorporation,
                  or bylaws, changes in an affiliate's Board composition, or
                  changes in the identity of the affiliate's Principal Officers,
                  and changes in risk acceptance, contract growth, or direct
                  delivery of medical care; and

C)                Quarterly Financial Report including the Capital Benchmark
                  Worksheet, Annual Financial Forecast, Annual Certified Audit
                  Report, Insurance Department Examination Report, Annual
                  Statement filed with State Insurance Department (with all
                  attachments); and

D)                Quarterly Utilization Report, Quarterly Enrollment Report,
                  Cost Containment Report, NMIS Quarterly Report.

Standard 7 - Other Standards for Risk-Assuming Workers' Compensation Affiliates

Standards 7(A) - (E) that follow apply to affiliates that underwrite the
indemnity portion of workers' compensation insurance.

Standard 7 (A):  Financial Responsibility

An affiliate shall be operated in a manner that provides reasonable financial
assurance that it can fulfill all of its contractual obligations to its
customers.


                                      -18-

<PAGE>


EXHIBIT A (continued)

Standard 7(B):  Reports and Records

An affiliate shall furnish, on a timely and accurate basis, reports and records
relating to compliance with these Standards and the License Agreements between
BCBSA and the affiliate.  Such reports and records are the following:

A.    Annual Application for Renewal of Standard Affiliate License for
      affiliates, including trade name and service mark usage materials; and

B.    Annual Certified Audit Report, Annual Statement as filed with the State
      Insurance Department (with all attachments), Annual NAIC's Risk-Based
      Capital Worksheets for Property and Casualty Insurers, and Annual
      Financial Forecast; and

C.    Quarterly Financial Report, Quarterly Estimated Risk-Based Capital for
      Property and Casualty Insurers, Insurance Department Examination Report,
      and Quarterly NMIS Report (for licensed health business only); and

D.    Notification of all changes and proposed changes to independent ratings
      within 30 days of receipt and submission of  a copy of all rating reports;
      and

E.    Changes in the ownership and governance of the affiliate including changes
      in its charter, articles of incorporation, or bylaws, changes in an
      affiliate's Board composition, Plan control, state license status,
      operating area, the affiliate's Principal Officers or direct delivery of
      medical care.

Standard 7(C):  Loss Prevention

An affiliate shall apply loss prevention protocol to both new and existing
business.


                                      -19-


<PAGE>


EXHIBIT A (continued)

Standard 7(D):  Claims Administration

An affiliate shall maintain an effective claims administration process that
includes all the necessary functions to assure prompt and proper resolution of
medical and indemnity claims.

Standard 7(E):  Disability and Provider Management

An affiliate shall arrange for the provision of appropriate and necessary
medical and rehabilitative services to facilitate early intervention by medical
professionals and timely and appropriate return to work.

Standard 8 - Cooperation with Affiliate License Performance Response Process
Protocol

An affiliate 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 affiliate compliance problems identified thereunder.

Standard 9:  Participation in National Programs by Smaller Affiliates

A smaller affiliate for which this standard applies pursuant to the Preamble
section of Exhibit A of the Affiliate License Agreement shall effectively and
efficiently participate in certain national programs from time to time as may be
adopted by Member Plans for the purposes of providing ease of claims processing
for customers receiving benefits outside of the affiliate's service area and be
subject to certain relevant financial and reporting requirements.

                                      -20-

<PAGE>



EXHIBIT B

ROYALTY FORMULA FOR SECTION 9 OF THE
AFFILIATE LICENSE AGREEMENT

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

FOR RISK PRODUCTS:

For affiliates not underwriting the indemnity portion of workers' compensation
insurance:

An amount equal to its pro rata share of each sponsoring Plan's dues payable to
BCBSA computed with the addition of the affiliate's subscription revenue and
contracts arising from products using the marks. The payment by each sponsoring
Plan of its dues to BCBSA, including that portion described in this paragraph,
will satisfy the requirement of this paragraph, and no separate payment will be
necessary.

For affiliates underwriting the indemnity portion of workers' compensation
insurance:

An amount equal to 0.35 percent of the gross revenue per annum of affiliate
arising from products using the marks; plus, an annual fee of $5,000 per license
for an affiliate subject to Standard 7.

FOR NONRISK PRODUCTS:

An amount equal to 0.24 percent of the gross revenue per annum of affiliate
arising from products using the marks; plus:

1)     An annual fee of $5,000 per license for an affiliate subject to
       Standard 6.

2)     An annual fee of $2,000 per license for all other affiliates.

The foregoing shall be reduced by one-half where both a BLUE CROSS(R) and BLUE
SHIELD(R) License are issued to the same affiliate. 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.

<PAGE>


                                                                      EXHIBIT 1A

                     CONTROLLED AFFILIATE LICENSE AGREEMENT
                     APPLICABLE TO LIFE INSURANCE COMPANIES

         This agreement by and among Blue Cross and Blue Shield Association
("BCBSA") _______________________________("Controlled Affiliate"), a controlled
affiliate of the Blue Shield Plan(s), known as ________________________("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

                                      -1-


<PAGE>


            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
hereunder and any such act shall be

                                      -2-


<PAGE>


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:

                                      -3-


<PAGE>


         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:

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

         o  .05 percent of gross revenue per annum of Licensee arising from
            group products using the Marks, plus

         o  .5 percent of gross revenue per annum of Licensee arising from
            individual products using the Marks

         The foregoing percentages shall be reduced by one-half where both a
BLUE CROSS(R) and BLUE SHIELD(R) 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.

                                            Amended as of September 29, 1994

                                      -4-


<PAGE>



         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.

                                      -4a-


                                                       (The next page is page 5)


<PAGE>


         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.

         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.

BLUE CROSS AND BLUE SHIELD ASSOCIATION

By: ___________________________________

Date: _________________________________

_______________________________________
Controlled Affiliate

By: ___________________________________

Date: _________________________________

Plan: _________________________________


                                      -5-


<PAGE>


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.

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).

                                      -1-

<PAGE>


CONTROLLED AFFILIATE LICENSE STANDARDS
LIFE INSURANCE COMPANIES

Page 2 of 2

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.

                                      -2-


<PAGE>


EXHIBIT 2

Membership Standards
Page 1 of 3

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.

   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.

   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;

                                            Amended as of November 21, 1996


<PAGE>



EXHIBIT 2

Membership Standards
Page 2 of 3

                         D.    Quarterly Financial Report including the Plan
                               Capital Benchmark Worksheet, Annual Financial
                               Forecast, Annual Certified Audit Report,
                               Insurance Department Examination Report, Annual
                               Statement filed with State Insurance Department
                               (with all attachments), and Consolidating
                               Financial Statement;

                         E.    Quarterly Utilization Report, Quarterly
                               Enrollment Report, Cost Containment Report, and
                               NMIS Quarterly Report.

   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.    Inter-Plan Transfer Agreement;

                         B.    National Account Equalization Program;

                         C.    Inter-Plan Data Reporting (IPDR) Program;

                         D.    Inter-Plan Teleprocessing System (ITS); and

                         E.    BlueCard Program.

                                         Amended as of November 21, 1996

<PAGE>


EXHIBIT 2

Membership Standards
Page 3 of 3

   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 Affiliate shall cause or
                         permit an unlicensed entity to obtain control of the
                         Plan or Larger Affiliate or to acquire a substantial
                         portion of its assets related to licensable services.

                                            Amended as of September 19, 1996



<PAGE>


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.

<PAGE>


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


<PAGE>


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.


<PAGE>


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;


<PAGE>


EXHIBIT 4

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.


<PAGE>


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


<PAGE>



                  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.


<PAGE>


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 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


<PAGE>


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 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.


<PAGE>


                  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.

         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.


<PAGE>


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 fifty-one (51) percent of the
Plans and fifty-one (51) percent of the total then current weighted vote of all
the Plans.

         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.

         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.


<PAGE>


         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.

         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(R) or BLUE SHIELD(R) 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(R) or BLUE SHIELD(R)
                      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.

<PAGE>

         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. ss. 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.

         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.


<PAGE>


                  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.

<PAGE>

         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 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.
ss. 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.

<PAGE>

         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.

                  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.


<PAGE>


                  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.


<PAGE>


                  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.

         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. ss. 1,
et seq.


<PAGE>


         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.


<PAGE>


         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.
<PAGE>

         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.       Amendments

         These MMDR Rules may be altered or amended from time to time by the
affirmative vote of fifty-one (51) percent of the Plans and fifty-one (51)
percent of the total then current weighted vote of all the Plans.

         H.       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.

         I.       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.


<PAGE>


         J.       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.

         K.       Neutral Evaluation

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


<PAGE>


                                                                    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