Document:

exv10w5

Exhibit 10.5

2009-000053B

PHYSICAL HEALTH INSURANCE CONTRACT

AGREEMENT BETWEEN

Puerto Rico Health Insurance Administration (PRHIA) a public instrumentality of the
Commonwealth of Puerto Rico organized pursuant to Act 72, of September 7, 1993, as amended,
hereinafter referred to as the “ADMINISTRATION”, and represented by it’s Executive Director, Mr.
Domingo Nevárez Ramírez;

And

TRIPLE-S SALUD, INC., a private corporation duly organized and authorized to do business under
the laws of the Commonwealth of Puerto Rico, with Employer Social Security Number ###-##-####,
hereinafter referred to as “INSURER”, and represented by its Chief Executive Officer, Ms. Socorro
Rivas;

Contractor Name

Acting as

THIRD PARTY ADMINISTRATOR

IN THE METRO-NORTH REGION

 

 

WITNESSETH

In consideration of the mutual covenants and agreements hereinafter set forth, the parties,
their personal representative and successors, agree as follows:

WHEREAS: The parties entered into contract number 09-053 (the Contract) to provide health insurance
coverage for the Metro-North medically indigent population; enrolled in the Government Health
Insurance Plan (GHIP) for the period through November 1, 2008 until December 31, 2009.

WHEREAS: The Contract was amendment through Amendment Number 09-053A to comply with the Center for
Medicare and Medicaid Services (CMS) requirements.

WHEREAS: The Board of Directors of the ADMINISTRATION was in the process of evaluating the entire
proposal submitted by the proponents for the contract of the GHIP for the period from 2009-2010.

WHEREAS: The Board of Directors of the ADMINISTRATION in a Extraordinary Meeting celebrated on
October 2, 2009, decided not to award contracts to any of the proponents who submitted its proposal
to the ADMINISTRATION for the physical, mental and oral health coverage under the Governmental
Health Insurance Plan. The Board recommended that the contracts be extended until June 30, 2010.
In a Meeting of the Board of Directors celebrated on October 30, 2009, the Board directed ASES to
extend the contract for a two month period (from November 1, 2009 to December 31, 2009) to give the
ADMINISTRATION the necessary time to negotiate the contract extension contemplated in the October
2, 2009 Extraordinary Meeting. In consideration of the decision of the Board of Director the
parties agree to extend the Contract until December 31, 2009.

HENCEFORTH: The appearing Parties agree to extend the Contract Number 09-053 and amend the Section
8.6 pages 143-144 EFFECTIVE DATE AND TERM, as follows:

2

 

Article I: To amend provision 1 in SECTION 8.6 “Effective Date and Term” to read as follows:

	 	1.	 	This Agreement shall be in effect from November 1, 2008 starting at 12:01 AM, Puerto
Rico time, November 1, 2008, which shall be the first day that coverage begins for which
payment of service fees is due until December 31, 2009.
	 
	 	2.	 	......
	 
	 	3.	 	......

Article II: To incorporate last sentence in Section 3.3.13 page 49 the following language:

     For the period of the contract extension, effective from November 1, 2009 through December 31,
2009, the ADMINISTRATION assures that it will provide an adequate stop-loss insurance set at five
thousand dollars ($5,000.00).

Article III: To amend Section 5, 5.1.1, pages 101-102 to read as follows:

5.1.1. THE ADMINISTRATION will pay an administrative fee of seven dollars and twenty cents
($7.20) and a reinsurance premium of one dollar and fifty one cents ($1.51) on a monthly
basis hitch will not exceed eight dollars and seventy one cents per member per month ($8.71
pmpm) to the TPA. The ADMINISTRATION will assume financial responsibility for claims costs
for Basic, Special and Dental Coverage risks not negotiated with the HCO’s up to a maximum
of 105% of claim costs. (See Appendix E) Expected claim cost has been established at one
hundred two dollars and eighty seven cents ($102.87 pmpm). TPA will assume financial
responsibility for all costs in excess of 105% of expected claim cost (in excess of
$108.01). Excess costs determination will include all claims paid after 6 months of the end
of the contract year and an agreed IBNR reserve. Expected claim costs do not include nine
dollars and two cents ($9.02) for Mental Health Services and the costs associated with the
Asthma Therapy Management Project.

Article IV: To incorporate a new Appendix F, Guidelines for the Development of Program Integrity
Plan.

3

 

All other terms and conditions of the contract number 09-053 remain unchanged. In witness whereof,
the parties have duly executed this Amendment on this 15 day of
December, 2009 and
affixes below their respective signature.

	 	 	 
	/s/ Domingo Nevárez Ramírez 

Domingo Nevárez Ramírez, MHSA

	 	 
	Executive Director
	 	 
	Puerto Rico Health Insurance Administration
	 	 
	 
	 	 
	/s/ Socorro Rivas 

SOCORRO RIVAS

	 	 
	Chief Executive Officer
	 	 
	TRIPLE-S SALUD, INC.
	 	 
	 
	 	 
	/s/ Luis A. Marini 

LUIS A. MARINI, DMD

	 	 
	Chief Executive Officer
	 	 
	Triple-C, Inc.
	 	 

Cifra
5000-100

4

 

APPENDIX D

The Insurer shall comply with the following Medicaid Integrity Requirements:

	A.	 	60 days after the dated of the agreement the Company must submit to ASES Compliance Office
copy of the policies and procedures for identifying and tracking potential provider fraud
cases, for conducting preliminary and full investigation and for referring cases of suspected
fraud to an appropriate law enforcement agency.

	B.	 	Each company must submit to the Administration’s Compliance Office on a quarterly basis a
report with the following information: preliminary and full investigations, audits performed,
administrative actions against providers, overpayments identified and providers referred to
the Department of Justice (if not submit a certification signed by the Compliance Director and
the President or CFO).

	C.	 	Each company must submit to the Compliance Office on a quarterly basis a report with the
following information: fraud investigations pending, fraud investigations in process, fraud
investigations finished and referrals to the Department of Justice or U.S. Attorney’s Field
Office (if there were no investigations, submit a certification signed by the Compliance
Director and the President or CEO).

	D.	 	Each Company has five (5) days to notify ASES about the referrals made to the US Attorney’s
Field Office and HHS-OIG.

	E.	 	Each company must submit to the Compliance Office a certification signed by the Compliance
Director and the President or CEO indicating that all full investigations are made in
accordance with 42 CFR 455.15.

	F.	 	Each Company has five (5) days to notify ASES about any adverse or negative action that the
MCO has taken on provider application or actions which limit the ability of providers to
participate in the program.

	G.	 	Each company must review the credentialing forms to ensure that they are in accordance with
federal regulation 42 CFR 455.104.

	H.	 	Each company must request to providers to fulfill an ownership and control disclosures form.
The company is responsible to ensure compliance with regulation.

 

 

APPENDIX D

	I.	 	Each company must review providers agreement to incorporate appropriate business transaction
language to ensure accordance with federal regulation 42 CFR 455.105.

	J.	 	Each company must request providers to fulfill a business transaction form and verify
compliance with regulation.

	K.	 	Each company must establish a method to capture criminal conviction information on owners,
persons with control interest, agents and managing employees of providers to ensure that is in
accordance with federal regulation 42 CFR 455.106.

	L.	 	Each company must review the enrollment packages for all provider types to request criminal
conviction information as stated before

	M.	 	Each company should develop and implement procedures to report to HHS-OIG and ASES within 20
working days any criminal conviction disclosures made during the MCO credentialing process.
Copy of the policies should be submitted to ASES Compliance Office.

	N.	 	Each company must submit to the Compliance Office a certification signed by the Compliance
Director and the President or CEO stating compliance with 42 CFR 455.106.

	O.	 	ASES must include in the agreement evidence of compliance with 42 CFR 455.20 EOMB (Evidence
of Medical Benefits).

	P.	 	Each company must comply with requirement establish in 42 CFR 455.20.

	Q.	 	Each company must comply with requirement established in 42 CFR 455.101.

	R.	 	Each company must review the enrollment form and credentialing packages for all provider
types to capture the identity of managing employees.exv10w11

 

Exhibit 10.11

BLUE SHIELD LICENSE AGREEMENT

(Includes revisions, if any, adopted by Member Plans through their November 19, 2009 meeting)

     This agreement by and between Blue Cross and Blue Shield Association (“BCBSA”) and The
Blue Shield Plan, known as  Triple-S Management Corporation   (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:

 

 

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; when working with a bank that
holds the relevant license to use the Licensed Name and Marks, offering: (i) tax-favored savings
accounts for medical expenses and means for accessing such accounts, such as debit cards or checks,
that are provided solely to support access to such tax-favored savings accounts, all pursuant to
such license, or (ii) prepaid rewards cards that are provided for completion of a wellness program,
all pursuant to such license; providing health care management and administration; administering,
but not underwriting, non-health portions of Worker’s Compensation insurance; and delivering health
care services, except hospital services (as defined in the Guidelines to Membership Standards
Applicable to Regular Members).

     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 Controlled 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 Controlled 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
Controlled 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.”); and d) regional Medicare Advantage PPO Products in cooperation with one or more other
Plans through jointly-held Controlled Affiliates, provided that each such Controlled Affiliate is
separately licensed to use the Licensed Marks and Name under the terms and conditions contained in
the Agreement attached as Exhibit 1B hereto (the “Controlled Affiliate License Agreement Applicable
to Regional Medicare Advantage PPO Products”); and e) regional Medicare Part D Prescription Drug
Plan products in cooperation with one or more other Plans through jointly-held Controlled
Affiliates, provided that each such Controlled Affiliate is separately licensed to use the Licensed
Marks and Name under the terms and conditions contained in the Agreement attached as Exhibit 1C
hereto (the “Controlled Affiliate License Agreement Applicable to Regional Medicare Part D
Prescription Drug Plan Products”). 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 and, if the entity meets the standards of subparagraph B but not subparagraph A of this
paragraph, the entity, its owners, and persons with authority to select or appoint members or board
members, other than a Plan or Plans, have received written approval of BCBSA. Absent written
approval by BCBSA of an alternative method of control, bona fide control with respect to the
Controlled Affiliate Licenses authorized in clauses a) through c) of this Paragraph 2 shall mean
that a Plan or Plans authorized to use the Licensed Marks in the Service Area of the Controlled
Affiliate pursuant to this License Agreement(s) with BCBSA, other than such Controlled Affiliate’s
License Agreement(s), (for purposes of subparagraphs 2.A. and 2.B., the “Controlling Plan(s)”),
must have:

Amended as of September 18, 2008

 

 

	A.	 	The legal authority, directly or indirectly through wholly-owned subsidiaries: (a) to
select members of the Controlled Affiliate’s governing body having more than 50% voting control
thereof; (b) to exercise control over the policy and operations of the Controlled Affiliate; (c) to
prevent any change in the articles of incorporation, bylaws or other establishing or governing
documents of the Controlled Affiliate with which the
Controlling Plan(s) do(es) not concur. In addition, a Plan or Plans directly or indirectly
through wholly-owned subsidiaries shall own more than 50% of any for-profit Controlled Affiliate;
or
	 
	B.	 	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 50% voting control
thereof; (b) to prevent any change in the articles of incorporation, bylaws or other establishing
or governing documents of the Controlled Affiliate with which the Controlling Plan(s) do(es) not
concur; (c) to exercise control over the policy and operations of the Controlled Affiliate at least
equal to that exercised by persons or entities (jointly or individually) other than the Controlling
Plan(s). Notwithstanding anything to the contrary in (a) through (c) hereof, the Controlled
Affiliate’s establishing or governing documents must also require written approval by the
Controlling Plan(s) before the Controlled Affiliate can:

1. Change its legal and/or trade name;

2. Change the geographic area in which it
operates;

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

4. Create, or become liable for by way of guarantee, any indebtedness,
other than indebtedness arising in the ordinary course of business;

5. Sell any assets, except for sales in the ordinary course of business
or sales of equipment no longer useful or being replaced;

6. Make any loans or advances except in the ordinary course of business;

7. Enter into any arrangement or agreement with any party directly or
indirectly affiliated with any of the owners of the Controlled Affiliate
or persons or entities with the authority to select or appoint members or
board members of the Controlled Affiliate, other than the Plan or Plans
(excluding owners of stock holdings of under 5% in a publicly traded
Controlled Affiliate);

8. Conduct any business other than under the Licensed Marks and Name;

Amended as of June 11, 1998

-2-

 

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

In addition, a Plan or Plans directly or indirectly through wholly owned subsidiaries
shall own at least 50% of any for-profit Controlled Affiliate. With respect to the
Controlled Affiliate License Agreements authorized in clauses d) and e) of this
Paragraph 2, and absent written approval by BCBSA of an alternative method of control,
bona fide control shall mean that the Controlled Affiliate is organized and operated in
such a manner that it meets the following requirements:

	C.	 	The Controlled Affiliate is owned or controlled by two or more Plans authorized to use
the Licensed Marks pursuant to this License Agreement with BCBSA (for purposes of this
subparagraph 2.C. through subparagraph 2.E., the “Controlling Plans”);
	 
	D.	 	Each Controlling Plan is authorized pursuant to this Agreement to use the
Licensed Marks in a geographic area in the Region (as that term is defined in such
Controlled Affiliate License Agreements) and every geographic area in the Region
is so licensed to at least one of the Controlling Plans; and
	 
	E.	 	The Controlling Plans must have 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 100% voting control thereof; (b) to prevent any change in the
articles of incorporation, bylaws or other establishing or governing documents of the
Controlled Affiliate with which the Controlling Plans do not concur; and (c) to exercise
control over the policy and operations of the Controlled Affiliate. Notwithstanding
anything to the contrary in (a) through (c) of this subparagraph E., the Controlled
Affiliate’s establishing or governing documents must also require written approval by each
of the Controlling Plans before the Controlled Affiliate can:

	 	1.	 	Change its legal and/or trade names;
	 
	 	2.	 	Change the geographic area in which it
operates (except such approval shall not be required with respect to
business of the Controlled Affiliate conducted under the Licensed
Marks within the Service Area of one of the Controlling Plans
pursuant to a separate controlled affiliate license agreement with
BCBSA sponsored by such Controlling Plan);

Amended as of March 17, 2005

(The next page is page 3)

-2a-

 

	 	3.	 	Change any of the type(s) of businesses in
which it engages (except such approval shall not be required with
respect to business of the Controlled Affiliate conducted under the
Licensed Marks within the Service Area of one of the Controlling
Plans pursuant to a separate controlled affiliate license agreement
with BCBSA sponsored by such Controlling Plan);
	 
	 	4.	 	Take any action that any Controlling Plan
or BCBSA reasonably believes will adversely affect the Licensed Marks
and Name.

In addition, the Controlling Plans directly or indirectly through wholly- owned
subsidiaries shall own 100% of any for-profit Controlled Affiliate.

     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 Controlled 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
Applicable to Regular Members 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.

Amended as of March 17, 2005

-3-

 

     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.

     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, and are contained in other
documents referenced herein, 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. In addition to any
and all remedies available hereunder, BCBSA may impose monetary fines on the Plan for the Plan’s
use of the Licensed Marks and Names outside the Service Area, and provided that the procedure used
in imposing a fine is consistent with procedures specifically prescribed by BCBSA from time to time
in regulations of general application. In the case of regional Medicare Advantage PPO and regional
Medicare Part D Prescription Drug Plan products offered by consenting and participating Plans in a
region that includes the Service Areas, or portions thereof, of more than one Plan, such fine may
be imposed jointly on the consenting and participating Plans for use of the Licensed Marks and Name
in any geographic area of the region in which a Plan having exclusive rights to the Licensed Marks
and Name does not consent to and participate in such offering, provided that the basis for
imposition of such fine is consistent with rules specifically prescribed by BCBSA from time to time
in regulations of general application.

     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.

Amended as of November 16, 2006

-3a-

 

     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, provided that BCBSA shall have the right to use the Licensed Marks in
conjunction with any national offering under the Federal Employees Health Benefits Program in the
manner set forth in Exhibit 4, Paragraph 4 (including subparagraphs) to 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.

     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. Except, however, as provided in paragraphs
9(d)(iii), 15(a)(i)-(viii), and 15(a)(x) 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.

Amended as of March 16, 2006

-4-

 

          (b). Notwithstanding 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 to the Plan advising of the specific matters at issue and granting the Plan an opportunity
to be heard and to present its response to Member Plans 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) the pendency of any action instituted against the Plan
seeking its dissolution or liquidation or its assets or seeking appointment of a trustee, interim
trustee, receiver or other custodian for any of its property or business or seeking the declaration
or establishment of a trust for any of its property of business, unless this License Agreement has
been earlier terminated under paragraph 15(a); or (iv) 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
Applicable to Regular Members of BCBSA; nor (ii) the rules and regulations governing 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. The rules and regulations governing National Accounts and
other national programs required by the Membership Standards Applicable to Regular Members of BCBSA
(Exhibit 2) are contained, in addition to those set forth in Exhibit 3, in the following documents,
as amended from time to time: (1) the Transfer Program Policies and Provisions; (2) the Inter-Plan
Programs Policies and Provisions; (3) Inter-Plan Medicare Advantage Program Policies and
Provisions. The voting requirements specified in rules and regulations governing such national
programs may not 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 15, 2007

-4a-

 

          (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: (a) thirty days after the Plan knows, or there is an SEC filing indicating that, any
Institutional Investor, has become the Beneficial Owner of securities representing 10% or more of
the voting power of the Plan (“Excess Institutional Voter”), unless such Excess Institutional Voter
shall cease to be an Excess Institutional Voter prior to such automatic termination becoming
effective; (b) thirty days after the Plan knows, or there is an SEC filing indicating that, any
Noninstitutional Investor has become the Beneficial Owner of securities representing 5% or more of
the voting power of the Plan (“Excess Noninstitutional Voter”) unless such Excess Noninstitutional
Voter shall cease to be an Excess Noninstitutional Voter prior to such automatic termination
becoming effective; (c) thirty days after the Plan knows, or there is an SEC filing indicating
that, any Person has become the Beneficial Owner of 20% or more of the Plan’s then outstanding
common stock or other equity securities which (either by themselves or in combination) represent an
ownership interest of 20% or more pursuant to determinations made under paragraph 9(d)(iv) below
(“Excess Owner”), unless such Excess Owner shall cease to be an Excess Owner prior to such
automatic termination becoming effective; (d) ten business days after 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 (e) ten business days after 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 is an Excess Institutional Voter, an Excess Noninstitutional Voter or an
Excess Owner: provided that, if requested by the affected Plan in a writing received by BCBSA prior
to such automatic termination becoming effective, the provisions of this paragraph 9(d)(iii) may be
waived, in whole or in part,

Amended as of September 17, 1997

-5-

 

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. Any waiver so granted may be conditioned upon
such additional requirements (including but not limited to imposing new and independent grounds for
termination of this License) as shall be approved by the affirmative vote of a majority of the
disinterested Plans and a majority of the total then current weighted vote of the disinterested
Plans. If a timely waiver request is received, no automatic termination shall become effective
until the later of: (1) the conclusion of the applicable time period specified in paragraphs
9(d)(iii)(a)-(d) above, or (2) the conclusion
of the first Member Plan meeting after receipt of such a waiver request.

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 in BCBSA’s sole discretion if, within 30
days of the date of such termination, the Plan demonstrates that the Person referred to in clause
(a), (b) or (c) of the preceding paragraph is no longer an Excess Institutional Voter, an Excess
Noninstitutional Voter or an Excess Owner.

     (iv) The Plan shall not issue any class or series of
security other than (i) shares of common stock having identical terms or options or derivatives of
such common stock, (ii) non-voting, non-convertible debt securities or (iii) such other securities
as the Plan may approve, provided that BCBSA receives notice at least thirty days prior to the
issuance of such securities, including a description of the terms for such securities, and BCBSA
shall have the authority to determine how such other securities will be counted in determining
whether any Person is an Excess Institutional Voter, Excess Noninstitutional Voter or an Excess
Owner.

     (v) 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;

Amended as of September 17, 1997

-5a-

 

          (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 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) A Person shall be deemed an “Institutional Investor” if (but only if) such Person (i) is
an entity or group identified in the SEC’s Rule 13d-1(b)(1)(ii) as constituted on June 1, 1997, and
(ii) every filing made by such Person with the SEC under Regulation 13D-G (or any successor
Regulation) with respect to such Person’s Beneficial Ownership of Plan securities shall have
contained a certification identical to the one required by item 10 of SEC Schedule 13G as
constituted on June 1, 1997.

     (d) “Noninstitutional Investor” means any Person who is not an Institutional Investor.

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

Amended as of September 17, 1997

(The next page is page 6)

-5b-

 

          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; (c) until terminated by the Plan upon eighteen (18) months written notice to BCBSA or upon a
shorter notice period approved by BCBSA in writing at its sole discretion.

          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.

          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.

Amended as of June 16, 2005

-6-

 

          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) any government or any government official, office, agency, branch, or unit
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 by any governmental entity or
officer 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 one hundred thirty (130) days of the date upon which the pleading or other document
commencing the action is served upon the Plan or BCBSA respectively, provided that if the action is
stayed or its prosecution is enjoined, the one hundred thirty (130) day period is tolled for the
duration of the stay or injunction, and provided further, that the Association’s Board of Directors
may toll or extend the 130 day period at any time prior to its expiration, 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 the Plan or BCBSA is ordered dissolved or liquidated, 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, or (x) if, due to regulatory action, the Plan together with any applicable Controlled
Affiliate becomes unable to do business using the Names and Marks in any State or portion thereof
included in its Service Area, provided that: (i) automatic termination shall not occur prior to the
exhaustion by any such Plan of its rights to appeal or challenge such regulatory action; and (ii)
in the event the Plan is licensed to do business using the Names and Marks in multiple States or
portions of States, the termination of its License Agreement shall be solely limited to the
State(s) or portions thereof in which the regulatory action applies. By not appealing or
challenging such regulatory action within the time prescribed by law or regulation, and in any
event no later than 120 days after such action is taken, a Plan shall be deemed to have exhausted
its rights to appeal or challenge, and automatic termination shall proceed.

-7-

 

Notwithstanding any other provision of this Agreement, a declaration or a request for declaration
of the existence of a trust over any of the Plan’s or BCBSA’s property or business shall not in
itself be deemed to constitute or seek appointment of a trustee, interim trustee, receiver or other
custodian for purposes of subparagraphs 15(a)(vii) and (viii) of this Agreement.

Amended as of September 14, 2004

-7a-

 

     (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 Controlled Affiliate, as defined in Exhibit 1 to this License Agreement, the following
conditions shall apply, except that, in the event of a partial termination of this Agreement
pursuant to Paragraph 15 (a)(x)(ii) of this Agreement, the notices, national account listing,
payment and audit right listed below shall be applicable solely with respect to the geographic area
for which the Plan’s license to use the Licensed Names and Marks is terminated:

	 	(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, subject to any conflicting state law and state regulatory requirements. This notice shall be
mailed within 15 days after termination or, if termination is pursuant to paragraph 10(c) of this
Agreement, within 15 days after the written notice to BCBSA described in paragraph 10(c).
	 
	 	(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 June 16, 2005

-8-

 

	 	(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 the Re-Establishment Fee (described below) 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 ReEstablishment Fee 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. The
Re-Establishment Fee shall be indexed to a base fee of $80. The Re-Establishment Fee through
December 31, 2005 shall be $80. The Re-
Establishment Fee for calendar years after December 31, 2005 shall
be adjusted on January 1 of each calendar year up to and including
January 1, 2010 and shall be the base fee multiplied by 100% plus
the cumulative percentage increase or decrease in the Plans’ gross
administrative expense (standard BCBSA definition) per Licensed
Enrollee since December 31, 2004. The adjustment shall end on
January 1, 2011, at which time the Re-Establishment Fee shall be
fixed at the then-current amount and no longer automatically
adjusted. For example, if the Plans’ gross administrative expense
per Licensed Enrollee was $278.60, $285.00 and $290.00 for calendar
year end 2004, 2005 and 2006, respectively, the January 1, 2007
Re-Establishment Fee would be $83.27 (100% of the base fee plus
$1.84 for calendar year 2005 and $1.43 for calendar year 2006).
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

Amended as of June 16, 2005

-8a-

 

	 	 	 	to the extent that, in BCBSA’s opinion, it does not cause the net
worth of the Plan to fall below 100% of the Health Risk-Based
Capital formula or its equivalent under any successor formula, as
set forth in the applicable financial responsibility standards
established by BCBSA (provided such equivalent is approved for
purposes of this sub paragraph by the
affirmative vote of three-fourths of the Plans and three-fourths of
the total then current weighted vote of all the Plans), measured as
of the date of termination and adjusted for the value of any
transactions not made in the ordinary course of business. This
payment shall not be due in connection with transactions
exclusively by or among Plan or their affiliates, including
reorganizations, combinations or mergers, where the BCBSA Board of
Directors determines that the license termination does not result
in a material diminution in the number of Licensed Enrollees or the
extent of their coverage. At least 50% of the Re-Establishment Fee
shall be awarded to the Plan (or Plans) that receive the new
license(s) for the service area(s) at issue; provided, however,
that such award shall not become due or payable until all disputes,
if any, regarding the amount of and BCBSA’s right to such
Re-Establishment Fee have been finally resolved; and provided
further that the award shall be based on the final amount actually
received by BCBSA. The Board of Directors shall adopt a resolution
which it may amend from time to time that shall govern BCBSA’s use
of its portion of the award. In the event that the terminated
entity’s license is reinstated by BCBSA or is deemed to have
remained in effect without interruption by a court of competent
jurisdicition, BCBSA shall reimburse the Plan (and/or its Licensed
Controlled Affiliates, as the case may be) for payments made under
this subparagraph only to the extent that such payments exceed the
amounts due to BCBSA pursuant to subparagraph 15(d)(vi) and any
costs associated with reestablishing the Service Area, including
any payments made by BCBSA to a Plan or Plans (or their Licensed
Controlled Affiliates) for purposes of replacing the terminated
entity.
	 
	 	(iv)	 	The terminated entity shall comply with all financial settlement
procedures set forth in BCBSA’s License Termination Contingency Plan, as
amended from time

Amended as of June 16, 2005

-8b-

 

	 	 	 	to time and shall work diligently and in good faith with BCBSA,
any Alternative Control Licensee or Replacement Licensee and any
existing or potential new account for Blue-branded products and
services to minimize the disruption of termination, and honor, to
the fullest extent
possible, the desire of accounts to continue to receive or obtain
Blue-branded products and services through a new Licensee
(“Transition”). Such diligence and good faith on the part of the
terminated entity shall include, but not be limited to: (a)
working cooperatively with BCBSA to protect the Names and Marks
from potential harm; (b) cooperating with BCBSA’s use of the Names
and Marks in the terminated entity’s former service area during
the termination and Transition; (c) transmitting, upon the request
of an existing Blue account or of BCBSA with consent and on behalf
of an existing Blue account, all member and account-data relating
to the Federal Employee Program to BCBSA, and all member and
account data relating to other programs to an Alternative Control
Licensee or Replacement Licensee; (d) working with BCBSA and the
Alternative Control or Replacement Licensee with respect to
potential new Blue accounts headquartered in the terminated
entity’s former service area; (e) continuing to service Blue
accounts during the Transition; (f) continuing to comply with
National Programs, Federal Employee Program and NASCO policies and
procedures and all voluntary BCBSA programs, policies and
performance standards, such as Away From Home Care, including
being responsible for payment of all penalties for non-compliance
duly levied in conformity with the License Agreements, Membership
Standards, or the Federal Employee Program agreements, that may
arise during the Transition; (g) maintaining and providing access
to its provider networks, as defined by Federal Employee Program
agreements and National Account Program Policies and Provisions,
and Inter-Plan Programs Policies and Provisions, and making those
networks and discounts available to members and providers who
participate in National Programs and the Federal Employee Program
during the Transition; (h) maintaining its technical connections
and processing capabilities during the Transition; and (i) working
diligently to conclude all financial settlements and account
reconciliations as negotiated in the termination transition
agreement.

Amended as of November 16, 2006

-8c-

 

	 	(v)	 	Notwithstanding any other provision in this Agreement, BCBSA shall have
the right, with the approval of its Board of
Directors, to assess additional fines against the terminated entity during
the Transition in the event it fails to maintain and provide access to
provider networks as defined by Federal Employee Program agreements,
National Account Program Policies and Provisons, and Inter-Plans Programs
Policies and Provisions, and/or pass on applicable discounts. Such fines
shall be in addition to any other assessments, fees or liquidated damages
payable herein, or under existing policies and programs and shall be
imposed to make whole BCBSA and/or the Plans. Terminated entity shall pay
any such fines to BCBSA no later than 30 days after they are approved by
the Board of Directors.
	 
	 	(vi)	 	BCBSA shall have the right to examine and audit and/or hire at terminated entity’s
expense a third-party auditor to examine and audit the books and records of the terminated entity
and its Licensed Controlled Affiliates to verify compliance with the terms and requirements of
this paragraph 15(d).
	 
	 	(vii)	 	Subsequent to termination of this Agreement, the terminated entity and its affiliates,
agents, and employees shall have an ongoing and continuing obligation to protect all BCBSA and Blue
Licensee data that was acquired or accessed during the period this Agreement was in force,
including but not limited to all confidential processes, pricing, provider, discount and other
strategic and competitively sensitive information (“Blue Information”) from disclosure, and shall
not, either alone or with another entity, disclose such Blue Information or use it in any manner to
compete without the express written permission of BCBSA.
	 
	 	(viii)	 	As to a breach of 15 (d) (i), (ii), (iii), (iv), (vi), or (vii) the parties agree that
the obligations are immediately enforceable in a court of competent jurisdiction. As to a breach of
15 (d) (i), (ii), (iv), (vi), or (vii) by the Plan, the parties agree there is no adequate remedy
at law and BCBSA is entitled to obtain specific performance.

Amended as of November 16, 2006

-8d-

 

	 	(ix)	 	In the event that the terminated entity’s license is reinstated by BCBSA or is deemed to
have remained in effect without interruption by a court of competent jurisdiction, the Plan and its
Licensed Controlled Affiliates shall be jointly liable for reimbursing BCBSA the reasonable costs
incurred by BCBSA in connection with the termination and the reinstatement or court action, and any
associated legal proceedings, including but not limited to: outside legal fees, consulting fees,
public relations fees, advertising costs, and costs incurred to develop, lease or establish an
interim provider network. Any amount due to BCBSA under this subparagraph may be waived in whole or
in part by the BCBSA Board of Directors in its sole discretion.

          (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.

Amended as of June 16, 2005

-8e-

 

          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 the affirmative
vote of three-fourths of the Plans and three-fourths of the total then current weighted vote of all
the Plans as officially recorded by the BCBSA Corporate Secretary.

          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.

          19a. 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 November 20, 1997

-8f-

 

          19b. Except as provided in paragraphs 9(b), 9(d)(iii), 15(a), and 15(b) above, this Agreement
may be terminated for a breach only upon at least 30 days’ written notice to the Plan advising of
the specific matters at issue and granting the Plan an opportunity to be heard and to present its
response to the Member Plans.

          19c. For all provisions of this Agreement referring to voting, the term ‘Plans’ shall mean all
entities licensed under the Blue Cross License Agreement and/or the Blue Shield License Agreement,
and in all votes of the Plans under this Agreement the Plans shall vote together. For weighted
votes of the Plans, the Plan shall have a number of votes
equal to the number of weighted votes (if any) that it holds as a Blue Cross Plan plus the number
of weighted votes (if any) that it holds as a Blue Shield Plan. For all other votes of the Plans,
the Plan shall have one vote. For all questions requiring an affirmative three-fourths weighted
vote of the Plans, the requirement shall be deemed satisfied with a lesser weighted vote unless the
greater of: (i) 6/52 or more of the Plans (rounded to the nearest whole number, with 0.5 or
multiples thereof being rounded to the next higher whole number) fail to cast weighted votes in
favor of the question; or (ii) three (3) of the Plans fail to cast weighted votes in favor of the
question. Notwithstanding the foregoing provision, if there are thirty-nine (39) Plans, the
requirement of an affirmative three-fourths weighted vote shall be deemed satisfied with a lesser
weighted vote unless four (4) or more Plans fail to cast weighted votes in favor of the question.

Amended as of June 16, 2005

(The next page is page 9)

-8g-

 

          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
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Title	 	 	 	 
	 
	 	 	 	 	 	 
	Date	 	 	 	 
	 
	 	 	 	 	 	 
	Plan:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	By
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Title	 	 	 	 
	 
	 	 	 	 	 	 
	Date	 	 	 	 
	 
	 	 	 	 	 	 

-9-

 

EXHIBIT 1

BLUE SHIELD

CONTROLLED AFFILIATE LICENSE AGREEMENT

(Includes revisions adopted by Member Plans through their November 19, 2009 meeting)

     This Agreement by and among Blue Cross and Blue Shield Association
(“BCBSA”) and                      (“Controlled Affiliate”), a Controlled 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 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 Controlled
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, as defined in BCBSA’s License Agreement with
Plan, and administering the non-health portion of workers’ compensation insurance, and (ii)
underwriting the indemnity portion of workers’ compensation insurance, provided that Controlled
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.
Controlled Affiliate may use the Licensed Marks and Name in its legal name on the following
conditions: (i) the legal name must be approved in advance, in writing, by BCBSA; (ii) Controlled
Affiliate shall not do business outside the Service Area under any name or mark; and (iii)
Controlled Affiliate shall not use the Licensed Marks and Name, or any derivative thereof, as part
of any name or symbol used to identify itself in any securities market. Controlled Affiliate may
use the Licensed Marks and Name in its Trade Name only with the prior, written, consent of BCBSA.

     2. QUALITY CONTROL

     A. Controlled 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.

Amended as of November 16, 2000

 

 

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

     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 or reports 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 this paragraph and the attached Exhibit A.

     D. 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.

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

(1) A Plan or Plans authorized to use the Licensed Marks in the Service Area of the Controlled
Affiliate pursuant to separate License Agreement(s) with BCBSA, other than such Controlled
Affiliate’s License Agreement(s), (the “Controlling Plan(s)”), must have the legal authority
directly or indirectly through wholly-owned subsidiaries to select members of the Controlled
Affiliate’s governing body having not less than 50% voting control thereof and to:

     (a) prevent any change in the articles of incorporation, bylaws or other establishing or
governing documents of the Controlled Affiliate with which the Controlling Plan(s) do(es) not
concur;

     (b) exercise control over the policy and operations of the Controlled Affiliate at least equal
to that exercised by persons or entities (jointly or individually) other than the Controlling
Plan(s); and

Notwithstanding anything to the contrary in (a) through (b) hereof, the Controlled Affiliate’s
establishing or governing documents must also require written approval by the Controlling
Plan(s) before the Controlled Affiliate can:

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

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

          (iii) change any of the type(s) of businesses in which it engages;

2

 

	 	(iv)	 	create, or become liable for by way of guarantee, any indebtedness,
other than indebtedness arising in the ordinary course of business;

	 
	 	(v)	 	sell any assets, except for sales in the ordinary course of business or sales
of equipment no longer useful or being replaced;

	 
	 	(vi)	 	make any loans or advances except in the ordinary course of business;

	 
	 	(vii)	 	enter into any arrangement or agreement with any party directly or indirectly
affiliated with any of the owners or persons or entities with the authority to
select or appoint members or board members of the Controlled Affiliate, other than
the Plan or Plans (excluding owners of stock holdings of under 5% in a publicly
traded Controlled Affiliate);

	 
	 	(viii)	 	conduct any business other than under the Licensed Marks and Name;

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

In addition, a Plan or Plans directly or indirectly through wholly owned subsidiaries shall own at
least 50% of any for-profit Controlled Affiliate.

Or

(2) A Plan or Plans authorized to use the Licensed Marks in the Service Area of the Controlled
Affiliate pursuant to separate License Agreement(s) with BCBSA, other than such Controlled
Affiliate’s License Agreement(s), (the “Controlling Plan(s)”), have the legal authority directly or
indirectly through wholly-owned subsidiaries to select members of the Controlled Affiliate’s
governing body having more than 50% voting control thereof and to:

	 	(a)	 	prevent any change in the articles of incorporation, bylaws or other establishing or
governing documents of the Controlled Affiliate with which the Controlling Plan(s) do(es)
not concur;
	 
	 	(b)	 	exercise control over the policy and operations of the Controlled
Affiliate.
	 
	 	 	 	In addition, a Plan or Plans directly or indirectly through wholly-owned subsidiaries shall
own more than 50% of any for-profit Controlled Affiliate.

3

 

     3. SERVICE MARK USE

     A. Controlled Affiliate recognizes the importance of a comprehensive national network of
independent BCBSA licensees which are committed to strengthening the Licensed Marks and Name. The
Controlled Affiliate further recognizes that its actions
within its Service Area may affect the value of the Licensed Marks and Name nationwide.

     B. Controlled 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
Controlled Affiliates licensed to use the Licensed Marks and Name) relative to service mark use, as
are issued from time-to-time by BCBSA. Controlled Affiliate recognizes and agrees that all use of
the Licensed Marks and Name by Controlled Affiliate shall inure to the benefit of BCBSA.

     C. Controlled 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 Controlled Affiliate engage in activity that may dilute
or tarnish the unique value of the Licensed Marks and Name.

     D. If Controlled Affiliate meets the standards of 2E(1) but not 2E(2) above and any of
Controlled 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, Controlled 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, Controlled Affiliate shall observe the
Service Area limitations applicable to Plan.

     E. Notwithstanding any other provision in the Plan’s License Agreement with BCBSA or in this
Agreement, Controlled Affiliate shall use its best efforts to promote and build the value of the
Licensed Marks and Name.

4

 

     4. SUBLICENSING AND ASSIGNMENT

     Controlled Affiliate shall not, directly or indirectly, 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 Controlled Affiliate.

     5. INFRINGEMENT

     Controlled 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. 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, 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

     Controlled 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 Controlled 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 unless terminated pursuant to the provisions herein.

     B. 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: (i) the Plan ceases
to be authorized to use the Licensed Marks and Name; or (ii) pursuant to Paragraph 15(a)(x) of the
Blue Cross License Agreement the Plan ceases to be authorized to use the Licensed Names and Marks
in the geographic area served by the Controlled Affiliate provided, however, that if the Controlled
Affiliate is serving more than one State or portions thereof, the termination of this Agreement
shall be limited to the State(s) or portions thereof in which the Plan’s license to use the
Licensed Marks and Names is terminated. By not appealing or challenging such regulatory action
within the time prescribed by law or regulation, and in any event no later than 120 days after such
action is taken, a Plan shall be deemed to have exhausted its rights to appeal or challenge, and
automatic termination shall proceed.

Amended as of September 14, 2004

5

 

     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 to the Plan advising of the
specific matters at issue and granting the Plan an opportunity to be heard and to present its
response to the Board 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 Controlled
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) the pendency of any action instituted
against the Controlled Affiliate 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 or seeking the declaration or establishment of a trust for any of its property or
business, unless this Controlled Affiliate License Agreement has been earlier terminated under
paragraph 7(e); or (6) failure by a Controlled Affiliate that meets the standards of 2E(1) but not
2E(2) above to obtain BCBSA’s written consent to a change in the identity of any owner, in the
extent of ownership, or in the identity of any person or entity with the authority to select or
appoint members or board members, provided that as to publicly traded Controlled Affiliates this
provision shall apply only if the change affects a person or entity that owns at least 5% of the
Controlled Affiliate’s stock before or after the change; or (7) 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 Controlled Affiliate and/or the Licensed Marks and
Name.

     D. Except as otherwise provided in Paragraphs 7(B), 7(C) or 7(E) herein, should Controlled
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 Controlled Affiliate is in a state of noncompliance. If a state of noncompliance as
aforesaid is undisputed by the
Controlled 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 Controlled 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.

6

 

     E. 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:

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

     (2) Appropriate dues, royalties and other payments for Controlled 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 Controlled
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 Controlled 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 and such petition or
proceeding is consented to or acquiesced in by Controlled Affiliate 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 Controlled Affiliate, or (iii) an order for relief is entered against Controlled
Affiliate in any case under the bankruptcy laws of the United States, or Controlled Affiliate is
adjudged bankrupt or insolvent as those terms are defined in the Uniform Commercial Code as enacted
in the State of Illinois by any court of competent jurisdiction, or (iv) Controlled Affiliate makes
a general assignment of its assets for the benefit of creditors, or (v) any government or any
government official, office, agency, branch, or unit assumes control of Controlled Affiliate or
delinquency proceedings (voluntary or involuntary) are instituted, or (vi) an action is brought by
Controlled 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 by any governmental entity or officer against Controlled
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 Controlled Affiliate or is not dismissed within one
hundred thirty (130) days of the date upon which the pleading or other document commencing the
action is served upon the Controlled Affiliate, provided that if the action is stayed or its
prosecution is enjoined, the one hundred thirty (130) day period is tolled for the duration of the
stay or injunction, and provided further, that the Association’s Board of Directors may toll or
extend the 130 day period at any time prior to its expiration, or (viii) a trustee, interim
trustee, receiver or other custodian for any of Controlled Affiliate’s property or business is
appointed or the Controlled Affiliate is ordered dissolved or liquidated. Notwithstanding any other
provision of this
Agreement, a declaration or a request for declaration of the existence of a trust over any of the
Controlled Affiliate’s property or business shall not in itself be deemed to constitute or seek
appointment of a trustee, interim trustee, receiver or other custodian for purposes of
subparagraphs 7(e)(3)(vii) and (viii) of this Agreement.

Amended as of March 18, 2004

7

 

     F. Upon termination of this Agreement for cause or otherwise, Controlled 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, Controlled 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 this Agreement terminates pursuant to 7(b) hereof, or in the event the
Controlled Affiliate is a Larger Controlled Affiliate (as defined in Exhibit A), upon termination
of this Agreement, the provisions of Paragraph 7.G. shall not apply and the following provisions
shall apply, except that, in the event of a partial termination of this Agreement pursuant to
Paragraph 7(B)(ii) of this Agreement, the notices, national account listing, payment, and audit
right listed below shall be applicable solely with respect to the geographic area for which the
Plan’s license to use the Licensed Names and Marks is terminated:

     (1) The Controlled Affiliate 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 Controlled Affiliate 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, subject to any
conflicting state law and state regulatory requirements. This notice shall be mailed within 15 days
after termination.

     (2) The Controlled Affiliate shall deliver to BCBSA within five days of a request by BCBSA a
listing of national accounts in which the Controlled Affiliate is involved (in a control,
participating or servicing capacity), identifying the national account and the Controlled
Affiliate’s role therein.

     (3) Unless the cause of termination is an event respecting BCBSA stated in paragraph 15(a) or
(b) of the Plan’s license agreement with BCBSA to use the Licensed Marks and Name, the Controlled
Affiliate, the Plan, and any other Licensed Controlled Affiliates of the Plan shall be jointly
liable for payment to BCBSA of an amount equal to the Re-Establishment Fee (described below)
multiplied by the number of Licensed Enrollees of the Controlled Affiliate; 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 Re-Establishment Fee shall be multiplied by a fraction, the
numerator of which is the number of Licensed Enrollees of the Controlled Affiliate, the Plan, and
any other Licensed Controlled Affiliates and the denominator of which is the total
number of Licensed Enrollees in the Service Area.

Amended as of June 16, 2005

8

 

The
Re-Establishment Fee shall be indexed to a base fee of $80. The Re-Establishment Fee through December 31, 2005 shall be $80. The Re-Establishment Fee for calendar
years after December 31, 2005 shall be adjusted on January 1 of each calendar year up to and
including January 1, 2010 and shall be the base fee multiplied by 100% plus the cumulative
percentage increase or decrease in the Plans’ gross administrative expense (standard BCBSA
definition) per Licensed Enrollee since December 31, 2004. The adjustment shall end on January 1,
2011, at which time the Re-Establishment Fee shall be fixed at the then-current amount and no
longer automatically adjusted. For example, if the Plans’ gross administrative expense per Licensed
Enrollee was $278.60, $285.00 and $290.00 for calendar year end 2004, 2005 and 2006, respectively,
the January 1, 2007 Re-Establishment Fee would be $83.27 (100% of base fee plus $1.84 for calendar
year 2005 and $1.43 for calendar year 2006. 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 (i) the end of the last fiscal year of the terminated entity which ended prior to
termination or (ii) the fiscal year which ended before any transactions causing the termination
began. Notwithstanding the foregoing, the amount payable pursuant to this subparagraph H. (3) shall
be due only to the extent that, in BCBSA’s opinion, it does not cause the net worth of the
Controlled Affiliate, the Plan or any other Licensed Controlled Affiliates of the Plan to fall
below 100% of the Health Risk-Based Capital formula, or its equivalent under any successor formula,
as set forth in the applicable financial responsibility standards established by BCBSA (provided
such equivalent is approved for purposes of this sub paragraph by the affirmative vote of
three-fourths of the Plans and three-fourths of the total then current weighted vote of all the
Plans); measured as of the date of termination, and adjusted for the value of any transactions not
made in the ordinary course of business. This payment shall not be due in connection with
transactions exclusively by or among Plans or their affiliates, including reorganizations,
combinations or mergers, where the BCBSA Board of Directors determines that the license termination
does not result in a material diminution in the number of Licensed Enrollees or the extent of their
coverage. At least 50% of the Re-Establishment Fee shall be awarded to the Plan (or Plans) that
receive the new license(s) for the service area(s) at issue; provided, however, that such award
shall not become due or payable until all disputes, if any, regarding the amount of and BCBSA’s
right to such Re-Establishment Fee have been finally resolved; and provided further that the award
shall be based on the final amount actually received by BCBSA. The Board of Directors shall adopt a
resolution which it may amend from time to time that shall govern BCBSA’s use of its portion of the
award. In the event that the Controlled Affiliate’s license is reinstated by BCBSA or is deemed to
have remained in effect without interruption by a court of competent jurisdiction,
BCBSA shall reimburse the Controlled Affiliate (and/or the Plan or its other Licensed Controlled
Affiliates, as the case may be) for payments made under this subparagraph 7.H.(3) only to the
extent that such payments exceed the amounts due to BCBSA pursuant to paragraph 7.M. and any cost
associated with reestablishing the Service Area, including any payments made by BCBSA to a Plan or
Plans (or their Licensed Controlled Affiliates) for purposes of replacing the Controlled Affiliate.

Amended as June 16, 2005

9

 

     (4) BCBSA shall have the right to examine and audit and/or hire at terminated entity’s
expense a third party auditor to examine and audit the books and records of the Controlled
Affiliate, the Plan, and any other Licensed Controlled Affiliates of the Plan to verify compliance
with this paragraph 7.H.

     (5) Subsequent to termination of this Agreement, the terminated entity and its affiliates,
agents, and employees shall have an ongoing and continuing obligation to protect all BCBSA and Blue
Licensee data that was acquired or accessed during the period this Agreement was in force,
including but not limited to all confidential processes, pricing, provider, discount and other
strategic and competitively sensitive information (“Blue Information”) from disclosure, and shall
not, either alone or with another entity, disclose such Blue Information or use it in any manner to
compete without the express written permission of BCBSA.

     (6) As to a breach of 7.H.(1), (2), (3), (4) or (5) the parties agree that the obligations are
immediately enforceable in a court of competent jurisdiction. As to a breach of 7.H.(1), (2) or (4)
by the Controlled Affiliate, the parties agree there is no adequate remedy at law and BCBSA is
entitled to obtain specific performance.

     I. This Agreement shall remain in effect until terminated by the Controlled Affiliate upon not
less than eighteen (18) months written notice to the Association or upon a shorter notice period
approved by BCBSA in writing at its sole discretion, or until terminated as otherwise provided
herein.

     J. In the event the Controlled Affiliate is a Smaller Controlled Affiliate (as defined in
Exhibit A), the Controlled Affiliate agrees to be jointly liable for the amount described in
H.3.and M. hereof upon termination of the BCBSA license agreement of any Larger Controlled
Affiliate of the Plan.

     K. BCBSA shall be entitled to enjoin the Controlled Affiliate or any related party in a court
of competent jurisdiction from entry into any transaction which would result in a termination of
this Agreement unless the Plan’s license from BCBSA to use the Licensed Marks and Names has been
terminated pursuant to 10(d) of the Plan’s license agreement upon the required 6 month written
notice.

     L. BCBSA acknowledges that it is not the owner of assets of the Controlled Affiliate.

     M. In the event that the Plan has more than 50 percent voting control of the Controlled
Affiliate under Paragraph 2(E)(2) above and is a Larger Controlled 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 Plans and three-fourths of the total then current weighted vote of all the
Plans.

Amended as of June 16, 2005

10

 

     N. In the event this Agreement terminates and is subsequently reinstated by BCBSA or is
deemed to have remained in effect without interruption by a court of competent jurisdicition, the
Controlled Affiliate, the Plan, and any other Licensed Controlled Affiliates of the Plan shall be
jointly liable for reimbursing BCBSA the reasonable costs incurred by BCBSA in connection with the
termination and the reinstatement or court action, and any associated legal proceedings, including
but not limited to: outside legal fees, consulting fees, public relations fees, advertising costs,
and costs incurred to develop, lease or establish an interim provider network. Any amount due to
BCBSA under this subparagraph may be waived in whole or in part by the BCBSA Board of Directors in
its sole discretion.

     8. DISPUTE RESOLUTION

     The parties agree that any disputes between them or between or among either of them and one or
more Plans or Controlled Affiliates of Plans that use in any manner the Blue Shield 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 Exhibit 5 as
amended from time-to-time, which documents are incorporated herein by reference as though fully set
forth herein.

     9. LICENSE FEE

     Controlled 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 Controlled Affiliate or between
either and BCBSA.

Amended as of September 20, 2007

11

 

     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 the affirmative vote of three-fourths of the
Plans and three-fourths of the total then current weighted vote of all the Plans as officially
recorded by the BCBSA Corporate Secretary.

     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 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.

     14A. VOTING

For all provisions of this Agreement referring to voting, the term ‘Plans’ shall mean all entities
licensed under the Blue Cross License Agreement and/or the Blue Shield License Agreement, and in
all votes of the Plans under this Agreement the Plans shall vote together. For weighted votes of
the Plans, the Plan shall have a number of votes equal to the number of weighted votes (if any)
that it holds as a Blue Cross Plan plus the number of weighted votes (if any) that it holds as a
Blue Shield Plan. For all other votes of the Plans, the Plan shall have one vote. For all questions
requiring an affirmative three-fourths weighted vote of the Plans, the requirement shall be deemed
satisfied with a lesser weighted vote unless the greater of: (i) 6/52 or more of the Plans (rounded
to the nearest whole number, with 0.5 or multiples thereof being rounded to the next higher whole
number) fail to cast weighted votes in favor of the question; or (ii) three (3) of the Plans fail
to cast weighted votes in favor of the question.
Notwithstanding the foregoing provision, if there are thirty-nine (39) Plans, the requirement of an
affirmative three-fourths weighted vote shall be deemed satisfied with a lesser weighted vote
unless four (4) or more Plans fail to cast weighted votes in favor of the question.

Amended as of June 16, 2005

12

 

THIS PAGE IS INTENTIONALLY BLANK.

13

 

     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.

Controlled Affiliate:

	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Date:	 	 	 	 
	 
	 	 	 	 	 	 
	Plan:
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Date:	 	 	 	 
	 
	 	 	 	 	 	 
	BLUE CROSS AND BLUE SHIELD ASSOCIATION
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Date:	 	 	 	 
		 	 	 	 

14

 

EXHIBIT A

CONTROLLED AFFILIATE LICENSE STANDARDS

November 2009

PREAMBLE

The standards for licensing Controlled 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
Controlled Affiliate license form provided by BCBSA and to cooperate fully in assuring that the
licensed Controlled Affiliate maintains compliance with the license standards.

The Controlled Affiliate License provides a flexible vehicle to accommodate the potential range of
health and workers’ compensation related products and services Plan Controlled Affiliates provide.
The Controlled Affiliate License collapses former health Controlled 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:

	•	 	Percent of Controlled Affiliate controlled by parent: Greater than 50 percent
or 50 percent?
	 
	•	 	Risk assumption: yes or no?
	 
	•	 	Medical care delivery: yes or no?
	 
	•	 	Size of the Controlled Affiliate: If the Controlled Affiliate has health or
workers’ compensation administration business, does such business constitute 15 percent or more of
the parent’s and other licensed health subsidiaries’ member enrollment?

Amended as of September 19, 2002

15

 

EXHIBIT A (continued)

For purposes of definition:

	•	 	A “smaller Controlled Affiliate:” (1) comprises less than fifteen percent (15%) of
Plan’s and its licensed Controlled Affiliates’ total member 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.
	 
	•	 	A “larger Controlled Affiliate” comprises fifteen percent (15%) or more of Plan’s and
its licensed Controlled Affiliates’ total member enrollment (as reported on the BCBSA
Quarterly Enrollment Report, excluding rider and freestanding coverage, and treating an
entity seeking licensure as licensed.)*

Changes in Controlled Affiliate status:

If any Controlled Affiliate’s status changes regarding: its Plan ownership level, its risk
acceptance or direct delivery of medical care, the Controlled 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 Controlled Affiliate’s health and workers’ compensation administration business
reaches or surpasses fifteen percent (15%) of the total member enrollment of the Plan and licensed
Controlled Affiliates, the Controlled Affiliate shall:

Amended as of September 19, 2002

16

 

EXHIBIT A (continued)

	1.	 	Within thirty (30) days, notify BCBSA of this fact in writing, including evidence that the
Controlled Affiliate meets the minimum liquidity and capital (BCBSA “Health Risk-Based
Capital (HRBC)” as defined by the NAIC and state-established minimum reserve) requirements of
the larger Controlled Affiliate Financial Responsibility standard; and

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

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

 

			
	*	 	For purposes of this calculation,

The numerator equals:

Applicant Controlled Affiliate’s member enrollment, as defined in BCBSA’s Quarterly
Enrollment Report (excluding rider and freestanding coverage).

The denominator equals:

Numerator PLUS Plan and all other licensed Controlled Affiliates’ member enrollment, as reported
in BCBSA’s Quarterly Enrollment Report (excluding rider and freestanding coverage).

Amended as of September 19, 2002

17

 

EXHIBIT A (continued)

STANDARDS FOR LICENSED CONTROLLED AFFILIATES

As described in Preamble section of Exhibit A to the Affiliate License Agreement, each
controlled affiliate seeking licensure must answer four questions. Depending on the controlled
affiliate’s answers, certain standards apply:

	1. What percent of the controlled affiliate is controlled by the parent Plan?
More than 50% 50% 100% and Primary Business is
Government Non-Risk
Standard 1A, 4 Standard 1B, 4
Standard 4*,10A
* Applicable only if using the names and marks.
IN ADDITION,
2. Is risk being assumed? Yes No
Controlled Affiliate Controlled Affiliate Controlled Affiliate Controlled Affiliate Controlled Affiliate Controlled
underwrites any comprises 15% comprises 15% comprises 15% comprises 15% Affiliate’s Primary
indemnity portion of total member of total member of total member of total member Business is
of workers’ enrollment of Plan enrollment of Plan enrollment of Plan enrollment of Plan Government Non-
compensation            and its licensed and its licensed and its licensed and its licensed Risk
insurance            affiliates, and does affiliates, and does affiliates            affiliates
not underwrite the not underwrite the
Standards 7A-7E, indemnity portion of indemnity portion of
12 workers’ workers’
compensation            compensation Standard 6H            Standard 10B
insurance            insurance
Standard 2 Standard 6H            Standard 2
(Guidelines 1.1,1.2) (Guidelines 1.1,1.3)
and Standard 11 and Standard 11
IN ADDITION,
3. Is medical care being directly provided?
Yes No
Standard 3A Standard 3B
IN ADDITION,
4. If the controlled affiliate has health or workers’ compensation administration business, does
such business comprise 15% or more of the total member enrollment of Plan and its licensed
controlled affiliates?
Yes            No
Standards 6A-6J Controlled Affiliate Controlled Affiliate is Controlled Affiliate is not a Controlled Affiliate’s
is not a former a former primary            former primary licensee Primary Business is
primary licensee            licensee            and does not elect to            Government Non-Risk
and elects to            participate in BCBSA
participate in            national programs
BCBSA national
programs
Standards 5,8,9B,12 Standards            Standards 5,8,12 Standards 8, 10(C),12
5,8,9A,11,12

18

 

EXHIBIT A (continued)

Standard 1 — Organization and Governance

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

A Controlled Affiliate shall be organized and operated in such a manner that a licensed Plan or
Plans authorized to use the Licensed Marks in the Service Area of the Controlled
Affiliate pursuant to separate License Agreement(s) with BCBSA, other than such Controlled
Affiliate’s License Agreement(s), (the “Controlling Plan(s)”), have the legal
authority, directly or indirectly through wholly-owned subsidiaries: 1) to select members of the
Controlled Affiliate’s governing body having more than 50% voting control thereof; and 2) to
prevent any change in the articles of incorporation, bylaws or other establishing or governing
documents of the Controlled Affiliate with which the Controlling Plan(s) do(es) not concur; and 3)
to exercise control over the policy and operations of the Controlled Affiliate. In addition, a Plan
or Plans directly or indirectly through wholly-owned subsidiaries shall own more than 50% of any
for-profit Controlled Affiliate.

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

A Controlled Affiliate shall be organized and operated in such a manner that a licensed
Plan or Plans authorized to use the Licensed Marks in the Service Area of the Controlled
Affiliate pursuant to separate License Agreement(s) with BCBSA, other than such Controlled
Affiliate’s License Agreement(s), (the “Controlling Plan(s)”), have the legal authority,
directly or indirectly through wholly-owned subsidiaries:

	1)	 	to select members of the Controlled Affiliate’s governing body having not less than 50% voting
control thereof; and
	 
	2)	 	to prevent any change in the articles of incorporation, bylaws or other establishing or
governing documents of the Controlled Affiliate with which the Controlling Plan(s) do(es) not
concur; and
	 
	3)	 	to exercise control over the policy and operations of the Controlled Affiliate at least equal to
that exercised by persons or entities (jointly or individually) other than the Controlling Plan(s).

19

 

EXHIBIT A (continued)

Notwithstanding anything to the contrary in 1) through 3) hereof, the Controlled Affiliate’s
establishing or governing documents must also require written approval by the Controlling Plan(s)
before the Controlled Affiliate can:

	 	o	 	change the geographic area in which it operates
	 
	 	o
	 	change its legal and/or trade names
	 
	 	o
	 	change any of the types of businesses in which it engages
	 
	 	o
	 	create, or become liable for by way of guarantee, any indebtedness, other than
indebtedness arising in the ordinary course of business
	 
	 	o
	 	sell any assets, except for sales in the ordinary course of business or sales of equipment
no longer useful or being replaced
	 
	 	o
	 	make any loans or advances except in the ordinary course of business
	 
	 	o
	 	enter into any arrangement or agreement with any party directly or indirectly affiliated
with any of the owners or persons or entities with the authority to select or appoint members or
board members of the Controlled Affiliate, other than the Plan or Plans (excluding owners of stock
holdings of under 5% in a publicly traded Controlled Affiliate)
	 
	 	o
	 	conduct any business other than under the Licensed Marks and Name
	 
	 	o
	 	take any action that any Controlling Plan or BCBSA reasonably believes will adversely
affect the Licensed Marks and Name.

In addition, a Plan or Plans directly or indirectly through wholly-owned subsidiaries
shall own at least 50% of any for-profit Controlled Affiliate.

20

 

EXHIBIT A (continued)

Standard 2 — Financial Responsibility

A Controlled 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
Controlled Affiliate ceases operations for any reason, Blue Cross and/or Blue Cross Plan coverage
will be offered to all Controlled Affiliate subscribers without exclusions, limitations or
conditions based on health status. If a nonrisk-assuming
Controlled Affiliate ceases operations for any reason, sponsoring Plan(s) will provide for services
to its (their) customers. The requirements of the preceding two sentences shall apply to all lines
of business unless a line of business is specially exempted from the requirement(s) by the BCBSA
Board of Directors.

Standard 3 — State Licensure/Certification

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

A Controlled Affiliate shall maintain unimpaired licensure or certification for its medical
care providers to operate under applicable state laws.

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

A Controlled Affiliate shall maintain unimpaired licensure or certification to operate
under applicable state laws.

Standard 4 — Certain Disclosures

A Controlled 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 Controlled Affiliate’s financial
condition.

Standard 5 — Reports and Records for Certain Smaller Controlled Affiliates

For a smaller Controlled Affiliate that does not underwrite the indemnity portion of workers’
compensation insurance, the Standard is:

	 	 	 
	 

	 	Amended as of June 16, 2005

21

 

EXHIBIT A (continued)

A Controlled 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
Controlled Affiliate.

Standard 6 — Other Standards for Larger Controlled Affiliates

Standards 6(A) — (I) that follow apply to larger Controlled Affiliates.

Standard 6(A): Board of Directors

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

A Controlled Affiliate shall be operated in a manner responsive to customer needs and
requirements.

Standard 6(C): Participation in National Programs

A Controlled 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 Controlled Affiliate’s Service Area.

Such programs are applicable to licensees, and include:

	1.	 	Transfer Program;

	2.	 	BlueCard Program;

22

 

EXHIBIT A (continued)

	3.	 	Inter-Plan Teleprocessing System (ITS);

	4.	 	National Account Programs;

	5.	 	Business Associate Agreement for Blue Cross and Blue Shield Licensees, effective April
14, 2003; and

	6.	 	Inter-Plan Medicare Advantage Program.

Standard 6(D): Financial Performance Requirements

In addition to requirements under the national programs listed in
Standard 6C: Participation in National Programs, a Controlled 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

A Controlled 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 Controlled Affiliate performance problems identified thereunder.

Standard 6(F): Independent Financial Rating

A Controlled 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): Local and National Best Efforts

Notwithstanding any other provision in the Plan’s License Agreement with BCBSA or in this
License Agreement, during each year, a Controlled Affiliate shall use its best efforts to
promote and build the value of the Blue Shield Mark.

Standard 6(H): Financial Responsibility

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

Amended as of November 15, 2007

23

 

EXHIBIT A (continued)

Standard 6(I): Reports and Records

A Controlled 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
Controlled Affiliate. Such reports and records are the following:

	A)	 	BCBSA Controlled Affiliate Licensure Information Request; and

	B)	 	Biennial trade name and service mark usage material, including disclosure material; and

	C)	 	Changes in the ownership and governance of the Controlled Affiliate, including changes in its
charter, articles of incorporation, or bylaws, changes in a Controlled Affiliate’s Board
composition, or changes in the identity of the Controlled Affiliate’s Principal Officers, and
changes in risk acceptance, contract growth, or direct delivery of medical care; and

	D)	 	Quarterly Financial Report, Semi-annual “Health Risk-Based Capital (HRBC) Report” as defined
by the NAIC, Annual Financial Forecast, Annual Certified Audit Report, Insurance Department
Examination Report, Annual Statement filed with
State Insurance Department (with all attachments), and

	E)	 	Quarterly Enrollment Report.

Amended as of March 14, 2002

24

 

EXHIBIT A (continued)

Standard 6(J): Control by Unlicensed Entities Prohibited

No Controlled Affiliate shall cause or permit an entity other than a Plan or a Licensed
Controlled Affiliate thereof to obtain control of the Controlled Affiliate or to acquire a
substantial portion of its assets related to licensable services.

Standard 7 — Other Standards for Risk-Assuming Workers’ Compensation Controlled Affiliates

Standards 7(A) — (E) that follow apply to Controlled Affiliates that underwrite the indemnity
portion of workers’ compensation insurance.

Standard 7 (A): Financial Responsibility

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

Standard 7(B): Reports and Records

A Controlled 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
Controlled Affiliate. Such reports and records are the following:

	A.	 	BCBSA Controlled Affiliate Licensure Information Request; and
	 
	B.	 	Biennial trade name and service mark usage materials, including disclosure
materials; and
	 
	C.	 	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, Annual Financial Forecast;
and
	 
	D.	 	Quarterly Financial Report, Quarterly Estimated Risk-Based Capital for Property and
Casualty Insurers, Insurance Department Examination Report, Quarterly Enrollment
Report; and

Amended as of September 19, 2002

25

 

EXHIBIT A (continued)

	E.	 	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

	F.	 	Changes in the ownership and governance of the Controlled Affiliate including changes
in its charter, articles of incorporation, or bylaws, changes in a Controlled Affiliate’s
Board composition, Plan control, state license status, operating area, the Controlled
Affiliate’s Principal Officers or direct delivery of medical care.

Standard 7(C): Loss Prevention

A Controlled Affiliate shall apply loss prevention protocol to both new and existing
business.

Standard 7(D): Claims Administration

A Controlled 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

A Controlled 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.

Amended as of November 16, 2000

26

 

EXHIBIT A (continued)

Standard
8 — Cooperation with Controlled Affiliate License Performance Response Process Protocol

A Controlled 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 Controlled Affiliate License Performance Response Process Protocol (ALPRPP) and in
addressing Controlled Affiliate compliance problems identified thereunder.

Standard
9(A) — Participation in National Programs by Smaller Controlled Affiliates that were former Primary Licensees

A smaller controlled affiliate that formerly was a Primary Licensee 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 Controlled Affiliate’s service area and be subject to certain relevant
financial and reporting requirements.

	A.	 	National program requirements include:

	 	•	 	BlueCard Program;
	 
	 	•	 	Inter-Plan Teleprocessing System (ITS);
	 
	 	•	 	Transfer Program;
	 
	 	•	 	National Account Programs.

	B.	 	Financial Requirements include:

	 	•	 	Standard 6(D): Financial Performance Requirements and Standard 6(H): Financial
Responsibility; or
	 
	 	•	 	A financial guarantee covering the Controlled Affiliate’s Inter-Plan Programs
obligations in a form, and from a guarantor, acceptable to BCBSA.

Amended as of November 15, 2007

EXHIBIT A (continued)

27

 

Standard 9(A) — Participation in National Programs by Smaller Controlled Affiliates that were
former Primary Licensees

	C.	 	Reporting requirements include:

	 	•	 	The Semi-annual Health Risk-Based Capital (HRBC) Report.

Amended as of June 13, 2002

28

 

Exhibit A (continued)

Standard 9(B) — Participation in National Programs by Smaller Controlled Affiliates

A smaller controlled affiliate that voluntarily elects to participate in national programs in
accordance with BlueCard and other relevant Policies and Provisions shall effectively and
efficiently participate in 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 controlled affiliate’s service area and be subject to
certain relevant financial and reporting requirements.

	A.	 	National program requirements include:

	 	•	 	BlueCard Program;
	 
	 	•	 	Inter-Plan Teleprocessing System (ITS);
	 
	 	•	 	National Account Programs.

	B.	 	Financial Requirements include:

	 	•	 	Standard 6(D): Financial Performance Requirements and Standard 6(H):
Financial Responsibility; or
	 
	 	•	 	A financial guarantee covering the Controlled Affiliate’s Inter-Plan
Programs obligations in a form, and from a guarantor, acceptable to BCBSA.

Amended as of November 15, 2007

29

 

EXHIBIT A (continued)

Standard 10 — Other Standards for Controlled Affiliates Whose Primary Business is Government
Non-Risk

Standards 10(A) — (C) that follow apply to Controlled Affiliates whose primary business is
government non-risk.

Standard 10(A) — Organization and Governance

A Controlled Affiliate shall be organized and operated in such a manner that it is 1) wholly
owned by a licensed Plan or Plans and 2) the sponsoring licensed Plan or Plans have the legal
ability to prevent any change in the articles of incorporation, bylaws or other establishing or
governing documents of the Controlled Affiliate with which it does not concur.

30

 

EXHIBIT A (continued)

Standard 10(B) — Financial Responsibility

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

Standard 10(C):- Reports and Records

A Controlled 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 Controlled Affiliate. Such reports and records are the following:

	A.	 	BCBSA Affiliate Licensure Information Request; and
	 
	B.	 	Biennial trade name and service mark usage materials, including disclosure material;
and
	 
	C.	 	Annual Certified Audit Report, Annual Statement (if required) as filed with the State
Insurance Department (with all attachments), Annual NAIC Risk-Based Capital Worksheets
(if required) as filed with the State Insurance Department (with all attachments), and
Insurance Department Examination Report (if applicable)*; and
	 
	D.	 	Changes in the ownership and governance of the Controlled
Affiliate, including changes in its charter, articles of incorporation, or
bylaws, changes in the Controlled Affiliate’s Board composition, Plan control,
state license status, operating area, the Controlled Affiliate’s Principal
Officers or direct delivery of medical care.

31

 

EXHIBIT A (continued)

Standard 11- Participation in Inter-Plan Medicare Advantage Program

A smaller controlled affiliate for which this standard applies pursuant to the Preamble
section of Exihibit A of the Controlled 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 controlled affiliate’s service area.

National program requirements include:

     A. Inter-Plan Medicare Advantage Program.

Amended as of November 15, 2007

32

 

EXIHIBIT A (continued)

Standard 12: Participation in Master Business Associate Agreement by Smaller Controlled
Affiliate Licensees

Effective April 14, 2003, all smaller controlled affiliates shall comply with the terms of
the Business Associate Agreement for Blue Cross and Blue Shield Licensees to the extent they
perform the functions of a business associate or
subcontractor to a business associate, as defined by the Business Associate Agreement.

Amended as of September 19, 2002

33

 

EXHIBIT B

ROYALTY FORMULA FOR SECTION 9 OF THE

CONTROLLED AFFILIATE LICENSE AGREEMENT

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

FOR RISK AND GOVERNMENT NON-RISK PRODUCTS:

For Controlled 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 Controlled Affiliate’s members using the Marks on health
care plans and related services as reported on the Quarterly Enrollment Report with BCBSA.
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 Controlled Affiliates underwriting the indemnity portion of workers’ compensation
insurance:

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

For Controlled Affiliates whose primary business is government non-risk:

An amount equal to its pro-rata share of each sponsoring Plan’s dues payable to BCBSA
computed with the addition of the Controlled Affiliate’s government non-risk
beneficiaries.

Amended as of June 14, 2007

34

 

EXHIBIT B (continued)

FOR NONRISK PRODUCTS:

For third-party administrative business, an amount equal to its pro rata share of each
sponsoring Plan’s dues payable to BCBSA computed with the addition of the
Controlled Affiliate’s members using the Marks on health care plans and related services as
reported on the Quarterly Enrollment Report with BCBSA. 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 non-third party administrative business (e.g., case management, provider networks,
etc.), an amount equal to 0.24 percent of the gross revenue per annum of Controlled
Affiliate arising from products using the marks; plus:

	1)	 	An annual fee of $5,000 per license for a Controlled Affiliate subject to Standard 6 D.

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

The
foregoing shall be reduced by one-half where both a BLUE CROSS®
and BLUE SHIELD® License are
issued to the same Controlled 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.

Amended as of June 14, 2007

35

 

EXHIBIT 1A

CONTROLLED AFFILIATE LICENSE AGREEMENT

APPLICABLE TO LIFE INSURANCE COMPANIES

(Includes revisions adopted by Member Plans through their November 19, 2009 meeting)

     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 in its legal or trade name;
provided, however, that if and only for so long as Controlled Affiliate also holds a Blue Shield
Affiliate License Agreement applicable to health care plans and related services, Controlled
Affiliate may use the Licensed Marks and Name in its legal and trade name according to the terms
of such license agreement.

Amended as of June 12, 2003

-1-

 

     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.

          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.

-2-

 

     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
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.

-3-

 

     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:

     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.

-4a-

 

8. DUES

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

	 	•	 	An annual fee of five thousand dollars ($5,000) per license, plus
	 
	 	•	 	.05% of gross revenue per year from branded group products, plus
	 
	 	•	 	.5% of gross revenue per year from branded individual products plus
	 
	 	•	 	.14% of gross revenue per year from branded individual annuity products.

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

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

Amended as of November 20, 1997

-4b-

 

          9. JOINT VENTURE

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

          9A. VOTING

               For all provisions of this Agreement referring to voting, the term ‘Plans’ shall mean all
entities licensed under the Blue Cross License Agreement and/or the Blue Shield License Agreement,
and in all votes of the Plans under this Agreement the Plans shall vote together. For weighted
votes of the Plans, the Plan shall have a number of votes equal to the number of weighted votes (if
any) that it holds as a Blue Cross Plan plus the number of weighted votes (if any) that it holds as
a Blue Shield Plan. For all other votes of the Plans, the Plan shall have one vote. For all
questions requiring an affirmative three-fourths weighted vote of the Plans, the requirement shall
be deemed satisfied with a lesser weighted vote unless the greater of: (i) 6/52 or more of the
Plans (rounded to the nearest whole number, with 0.5 or multiples thereof being rounded to the next
higher whole number) fail to cast weighted votes in favor of the question; or (ii) three (3) of the
Plans fail to cast weighted votes in favor of the question. Notwithstanding the foregoing
provision, if there are thirty-nine (39) Plans, the requirement of an affirmative three-fourths
weighted vote shall be deemed satisfied with a lesser weighted vote unless four (4) or more Plans
fail to cast weighted votes in favor of the question.

          10. NOTICES AND CORRESPONDENCE

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

Amended as of June 16, 2005

(The next page is page 5)

-4c-

 

          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.

-5-

 

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	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 

	 	 
	Date:
	 	 	 
	 

	 	 

	 	 

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EXHIBIT A

CONTROLLED AFFILIATE LICENSE STANDARDS

LIFE INSURANCE COMPANIES

Page 1 of 2

PREAMBLE

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

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

Standard 1 — Organization and Governance

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

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

Standard 2 — State Licensure

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

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.

-1-

 

EXHIBIT A

CONTROLLED AFFILIATE LICENSE STANDARDS

LIFE INSURANCE COMPANIES

Page 2 of 2

LIC and its sponsoring licensed Plan(s) shall permit BCBSA to examine the affairs of the LIC and
shall agree that BCBSA’s board may submit a written report to the chief executive officer(s) and
the board(s) of directors of the sponsoring Plan(s).

Standard 4 — Mediation

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

Standard 5 — Financial Responsibility

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

Standard 6 — Cooperation with Affiliate License Performance Response Process Protocol

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

-2-

 

Exhibit 1B

BLUE SHIELD

CONTROLLED AFFILIATE LICENSE AGREEMENT

APPLICABLE TO REGIONAL MEDICARE ADVANTAGE PPO PRODUCTS

(Adopted by Member Plans at their November19, 2009)

     This Agreement by and among Blue Cross and Blue Shield Association (“BCBSA”) and                     
(“Controlled Affiliate”), a Controlled Affiliate of the Blue Cross Plan(s), known as                     
(“Controlling Plans”), each of which is also a Party signatory hereto.

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

     WHEREAS, under the Medicare Modernization Act, companies may apply to and be awarded a
contract by the Centers for Medicare and Medicaid Services (“CMS”) to offer Medicare Advantage PPO
products in geographic regions designated by CMS (hereafter “regional MAPPO products”).

     WHEREAS, some of the CMS-designated regions include the Service Areas, or portions thereof, of
more than one Plan.

     WHEREAS, the Controlling Plans and 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”) to offer regional MAPPO products in a region that
includes the Service Areas, or portions thereof, of more than one Controlling Plan;

     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 Controlled
Affiliate the right to use the Licensed Marks and Name in connection with, and only in connection
with the sale, marketing and administration of regional MAPPO products and related services.

     This grant of rights is non-exclusive and is limited to the following states:
                     (the “Region”). Controlled Affiliate may use the Licensed

-1-

 

Marks and Name in its legal name on the following conditions: (i) the legal name must be approved
in advance, in writing, by BCBSA; (ii) Controlled Affiliate shall not do business outside the
Region under any name or mark except business conducted in the Service Area of a Controlling Plan
provided that Controlled Affiliate is separately licensed by BCBSA to use the Licensed Marks and
Name in connection with health care plans and related services in the Service Area of such
Controlling Plan; and (iii) Controlled Affiliate shall not use the Licensed Marks and Name, or any
derivative thereof, as part of any name or symbol used to identify itself in any securities market.
Controlled Affiliate may use the Licensed Marks and Name in its Trade Name only with the prior,
written, consent of BCBSA.

     2. QUALITY CONTROL

     A. Controlled 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.

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

     C. Controlled Affiliate agrees that it will provide on an annual basis (or more often if
reasonably required by the Controlling Plans or by BCBSA) a report or reports to the Controlling
Plans and BCBSA demonstrating Controlled 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. Controlled Affiliate agrees that the Controlling Plans 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.

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

     (1) Controlled Affiliate is owned or controlled by two or more Controlling Plans;

     (2) Each Controlling Plan is authorized pursuant to a separate Blue Shield License Agreement
to use the Licensed Marks in a geographic area in the Region and every geographic area in the
Region is so licensed to at least one of the Controlling Plans; and

-2-

 

     (3) The Controlling Plans must have 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 100%
voting control thereof;

     (b) to prevent any change in the articles of incorporation, bylaws or other establishing or
governing documents of the Controlled Affiliate with which the Controlling Plans do not concur;

     (c) to exercise control over the policy and operations of the Controlled Affiliate; and

Notwithstanding anything to the contrary in (a) through (c) hereof, the Controlled Affiliate’s
establishing or governing documents must also require written approval by each of the Controlling
Plans before the Controlled Affiliate can:

	 	(i)	 	change its legal and/or trade names;
	 
	 	(ii)	 	change the geographic area in which it operates (except such approval shall
not be required with respect to business of the Controlled Affiliate conducted
under the Licensed Marks within the Service Area of one of the Controlling Plans
pursuant to a separate controlled affiliate license agreement with BCBSA sponsored
by such Controlling Plan);
	 
	 	(iii)	 	change any of the type(s) of businesses in which it engages (except such
approval shall not be required with respect to business of the Controlled Affiliate
conducted under the Licensed Marks within the Service Area of one of the
Controlling Plans pursuant to a separate controlled affiliate license agreement
with BCBSA sponsored by such Controlling Plan);
	 
	 	(iv)	 	take any action that any Controlling Plan or BCBSA reasonably
believes will adversely affect the Licensed Marks and Name.

In addition, the Controlling Plans directly or indirectly through wholly owned subsidiaries
shall own 100% of any for-profit Controlled Affiliate.

-3-

 

     3. SERVICE MARK USE

     A. Controlled Affiliate recognizes the importance of a comprehensive national network of
independent BCBSA licensees which are committed to strengthening the Licensed Marks and Name. The
Controlled Affiliate further recognizes that its actions within the Region may affect the value of
the Licensed Marks and Name nationwide.

     B. Controlled 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
Controlled Affiliates licensed to use the Licensed Marks and Name) relative to service mark use, as
are issued from time-to-time by BCBSA. Controlled Affiliate recognizes and agrees that all use of
the Licensed Marks and Name by Controlled Affiliate shall inure to the benefit of BCBSA.

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

     D. Controlled Affiliate shall use its best efforts to promote and build the value of the
Licensed Marks and Name in connection with the sale, marketing and administration of regional MAPPO
products and related services.

     4. SUBLICENSING AND ASSIGNMENT

     Controlled Affiliate shall not, directly or indirectly, 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 any Controlling Plan or BCBSA. This Agreement and
all rights and duties hereunder are personal to Controlled Affiliate.

-4-

 

     5. INFRINGEMENT

     Controlled Affiliate shall promptly notify the Controlling Plans and the
Controlling Plans 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. Controlled
Affiliate shall not be entitled to require the Controlling Plans 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 the
Controlling Plans 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

     Controlled Affiliate and the Controlling Plans 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 Controlled 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 unless terminated pursuant to the provisions herein.

     B. 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: (i) any one of the
Controlling Plans ceases to be authorized to use the Licensed Marks and Name; or (ii) pursuant to
Paragraph 15(a)(x) of the Blue Shield License Agreement any one of the Controlling Plans ceases to
be authorized to use the Licensed Names and Marks in the Region.

     C. Notwithstanding any other provision of this Agreement, this license to use the Licensed
Marks and Name may be forthwith terminated by the Controlling Plans 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 to the Controlling Plans advising
of the specific matters at issue and granting the Controlling Plans an opportunity to be heard and
to present their response to the Board for: (1) failure to comply with any applicable minimum
capital or liquidity requirement under the quality control standards of this

-5-

 

Agreement; or (2) failure to comply with the “Organization and Governance” quality control standard
of this Agreement; or (3) impending financial insolvency; or (4) failure to comply with any of the
applicable requirements of Standards 2, 3, 4, or 5 of attached Exhibit A; or (5) the pendency of
any action instituted against the Controlled Affiliate 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 or seeking the declaration or establishment of a trust for any of
its property or business, unless this Controlled Affiliate License Agreement has been earlier
terminated under paragraph 7(E); or (6) such other reason as is determined in good faith
immediately and irreparably to threaten the integrity and reputation of BCBSA, the Plans (including
the Controlling Plans), any other licensee including Controlled Affiliate and/or the Licensed Marks
and Name.

     D. Except as otherwise provided in Paragraphs 7(B), 7(C) or 7(E) herein, should Controlled
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 Controlling Plans shall have the right to
issue a notice that the Controlled Affiliate is in a state of noncompliance. If a state of
noncompliance as aforesaid is undisputed by the Controlled 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 or among BCBSA, any of the
Controlling Plans and/or Controlled 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 Controlled Affiliate’s rights hereunder shall immediately
terminate without any further action by any party or entity in the event that:

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

     (2) Appropriate dues, royalties and other payments for Controlled 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

-6-

 

     (3) Any of the following events occur: (i) a voluntary petition shall be filed by Controlled
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 Controlled 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 and such petition or
proceeding is consented to or acquiesced in by Controlled Affiliate 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 Controlled Affiliate, or (iii) an order for relief is entered against Controlled
Affiliate in any case under the bankruptcy laws of the United States, or Controlled Affiliate is
adjudged bankrupt or insolvent as those terms are defined in the Uniform Commercial Code as enacted
in the State of Illinois by any court of competent jurisdiction, or (iv) Controlled Affiliate makes
a general assignment of its assets for the benefit of creditors, or (v) any government or any
government official, office, agency,
branch, or unit assumes control of Controlled Affiliate or delinquency proceedings (voluntary or
involuntary) are instituted, or (vi) an action is brought by Controlled 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
by any governmental entity or officer against Controlled 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 Controlled Affiliate or is not dismissed within one hundred thirty (130) days of the date
upon which the pleading or other document commencing the action is served upon the Controlled
Affiliate, provided that if the action is stayed or its prosecution is enjoined, the one hundred
thirty (130) day period is tolled for the duration of the stay or injunction, and provided further,
that the Association’s Board of Directors may toll or extend the 130 day period at any time prior
to its expiration, or (viii) a trustee, interim trustee, receiver or other custodian for any of
Controlled Affiliate’s property or business is appointed or the Controlled Affiliate is ordered
dissolved or liquidated. Notwithstanding any other provision of this Agreement, a declaration or a
request for declaration of the existence of a trust over any of the Controlled Affiliate’s property
or business shall not in itself be deemed to constitute or seek appointment of a trustee, interim
trustee, receiver or other custodian for purposes of subparagraphs 7(E)(3)(vii) and (viii) of this
Agreement.

     F. Upon termination of this Agreement for cause or otherwise, Controlled Affiliate agrees that
it shall immediately discontinue all use of the Licensed Marks and Name, including any use in its
trade name, except to the extent that it continues to be authorized to use the Licensed Marks
within the Service Area of one of the Controlling Plans pursuant to a separate controlled affiliate
license agreement with BCBSA sponsored by such Controlling Plan.

-7-

 

     G. Upon termination of this Agreement, Controlled Affiliate shall immediately notify all of
its customers to whom it provides products or services under the Licensed Marks pursuant to this
Agreement 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 this Agreement terminates pursuant to 7(B) hereof, upon termination of this
Agreement the provisions of Paragraph 7(G) shall not apply and the following provisions shall
apply, except that, in the event that Controlled Affiliate is separately licensed by BCBSA to use
the Licensed Marks in the Service Area of a Controlling Plan and termination of this Agreement is
due to a partial termination of such Controlling Plan’s license pursuant to Paragraph 15(a)(x)(ii)
of the Blue Shield License Agreement, the notices, national account listing, payment, and audit
right listed below shall be applicable solely with respect to the Region and the geographic area
for which the Controlling Plan’s license to use the Licensed Names and Marks is terminated:

     (1) The Controlled Affiliate 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 Controlled Affiliate 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.

     (2) The Controlled Affiliate shall deliver to BCBSA within five days of a request by BCBSA a
listing of national accounts in which the Controlled Affiliate is involved (in a control,
participating or servicing capacity), identifying the national account and the Controlled
Affiliate’s role therein.

     (3) Unless the cause of termination is an event respecting BCBSA stated in paragraph 15(a) or
(b) of the Plan’s license agreement with BCBSA to use the Licensed Marks and Name, the Controlled
Affiliate, the Controlling Plans, and any other Licensed Controlled Affiliates of the Controlling
Plans shall be jointly liable for payment to BCBSA of an amount equal to $25 multiplied by the
number of Licensed Enrollees of the Controlled Affiliate; provided that if any Plan other than a
Controlling Plan is permitted by BCBSA to use marks or names licensed by BCBSA in a geographic area
in the Region, the payment for Licensed Enrollees in such

-8-

 

geographic area shall be multiplied by a fraction, the numerator of which is the number of Licensed
Enrollees of the Controlled Affiliate, the Controlling Plans, and any other Licensed Controlled
Affiliates of the Controlling Plans in such geographic area and the denominator of which is the
total number of Licensed Enrollees in such geographic 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 (i) the end of the last fiscal year of the terminated entity which
ended prior to termination or (ii) the fiscal year which ended before any transactions causing the
termination began. Notwithstanding the foregoing, the amount payable pursuant to this subparagraph
H. (3) shall be due only to the extent that, in BCBSA’s opinion, it does not cause the net worth of
the Controlled Affiliate, the Controlling Plans or any other Licensed Controlled Affiliates of the
Controlling Plans to fall below 100% of the Health Risk-Based Capital formula, or its equivalent
under any successor formula, as set forth in the applicable financial responsibility standards
established by BCBSA (provided such equivalent is approved for purposes of this subparagraph by the
affirmative vote of three-fourths of the Plans and three-fourths of the total then current weighted
vote of all the Plans); measured as of the date of termination, and adjusted for the value of any
transactions not made in the ordinary course of business. This payment shall not be due in
connection with transactions exclusively by or among Plans (including the Controlling Plans) or
their affiliates, including reorganizations, combinations or mergers, where the BCBSA Board of
Directors determines that the license termination does not result in a material
diminution in the number of Licensed Enrollees or the extent of their coverage. In the event that
the Controlled Affiliate’s license is reinstated by BCBSA or is deemed to have remained in effect
without interruption by a court of competent jurisdiction, BCBSA shall reimburse the Controlled
Affiliate (and/or the Controlling Plans or their other Licensed Controlled Affiliates, as the case
may be) for payments made under this subparagraph 7.H.(3) only to the extent that such payments
exceed the amounts due to BCBSA pursuant to paragraph 7.K. and any costs associated with
reestablishing the terminated Controlling Plan’s Service Area or the Region, including any payments
made by BCBSA to a Plan or Plans (including the other Controlling Plans), or their Licensed
Controlled Affiliates, for purposes of replacing the Controlled Affiliate.

     (4) BCBSA shall have the right to audit the books and records of the Controlled Affiliate,
the Controlling Plans, and any other Licensed Controlled Affiliates of the Controlling Plans to
verify compliance with this paragraph 7.H.

     (5) As to a breach of 7.H.(1), (2), (3) or (4), the parties agree that the obligations are
immediately enforceable in a court of competent jurisdiction. As to a breach of 7.H.(1), (2) or (4)
by the Controlled Affiliate, the parties agree there is no adequate remedy at law and BCBSA is
entitled to obtain specific performance.

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     I. BCBSA shall be entitled to enjoin the Controlled Affiliate or any related party in a court
of competent jurisdiction from entry into any transaction which would result in a termination of
this Agreement unless a Controlling Plan’s license from BCBSA to use the Licensed Marks and Names
has been terminated pursuant to 10(d) of such Controlling Plan’s license agreement upon the
required 6 month written notice.

     J. BCBSA acknowledges that it is not the owner of assets of the Controlled Affiliate.

     K. In the event this Agreement terminates and is subsequently reinstated by BCBSA or is deemed
to have remained in effect without interruption by a court of competent jurisdiction, the
Controlled Affiliate, the Controlling Plans, and any other Licensed Controlled Affiliates of the
Controlling Plans shall be jointly liable for reimbursing BCBSA the reasonable costs incurred by
BCBSA in connection with the termination and the reinstatement or court action, and any associated
legal proceedings, including but not limited to: outside legal fees, consulting fees, public
relations fees, advertising costs, and costs incurred to develop, lease or establish an interim
provider network. Any amount due to BCBSA under this subparagraph may be waived in whole or in part
by the BCBSA Board of Directors in its sole discretion.

     8. DISPUTE RESOLUTION

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

     9. LICENSE FEE

     Controlled 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 this Agreement shall be construed as creating a joint venture,
partnership, agency or employment relationship between the Controlling Plans and Controlled
Affiliate or between either and BCBSA.

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     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 the affirmative vote of three-fourths of the
Plans and three-fourths of the total then current weighted vote of all the Plans as officially
recorded by the BCBSA Corporate Secretary.

     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 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.

     14A. VOTING

     For all provisions of this Agreement referring to voting, the term ‘Plans’ shall mean all
entities licensed under the Blue Cross License Agreement and/or the Blue Shield License Agreement,
and in all votes of the Plans under this Agreement the Plans shall vote together. For weighted
votes of the Plans, the Plan shall have a number of votes equal to the number of weighted votes (if
any) that it holds as a Blue Cross Plan plus the number of weighted votes (if any) that it holds as
a Blue Shield Plan. For all other votes of the Plans, the Plan shall have one vote. For all
questions requiring an affirmative three-fourths weighted vote of the Plans, the requirement shall
be deemed satisfied with a lesser weighted vote unless the greater of: (i) 6/52 or more of the
Plans (rounded to the nearest whole number, with

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0.5 or multiples thereof being rounded to the next higher whole number) fail to cast weighted votes
in favor of the question; or (ii) three (3) of the Plans fail to cast weighted votes in favor of
the question. Notwithstanding the foregoing provision, if there are thirty-nine (39) Plans, the
requirement of an affirmative three-fourths weighted vote shall be deemed satisfied with a lesser
weighted vote unless four (4) or more Plans fail to cast weighted votes in favor of the question.

     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.

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

	 	 	 	 	 
	Controlled Affiliate:	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	Date:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Controlling Plan:	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	Date:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Controlling Plan:	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	Date:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	BLUE CROSS AND BLUE SHIELD ASSOCIATION	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	Date:
	 	 	 	 
	 

	 	 

	 	 

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EXHIBIT A

CONTROLLED AFFILIATE LICENSE STANDARDS

APPLICABLE TO REGIONAL MEDICARE

ADVANTAGE PPO PRODUCTS

November 2009

PREAMBLE

The standards for licensing Controlled Affiliates for Medicare Advantage PPO Products 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
Controlling Plan is required to use a standard
Controlled Affiliate license form provided by BCBSA and to cooperate fully in assuring that the
licensed Controlled Affiliate maintains compliance with the license standards.

Standard 1 — Organization and Governance

A Controlled Affiliate is defined as an entity organized and operated in such a manner, that
it meets the following requirements:

     (1) Controlled Affiliate is owned or controlled by two or more Controlling Plans;

     (2) Each Controlling Plan is authorized pursuant to a separate Blue Shield License Agreement
to use the Licensed Marks in a geographic area in the Region and every geographic area in the
Region is so licensed to at least one of the Controlling Plans; and

     (3) The Controlling Plans must have 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 100%
voting control thereof;

          (b) prevent any change in the articles of incorporation, bylaws or other
establishing or governing documents of the Controlled Affiliate with which the Controlling Plans do
not concur;

          (c) exercise control over the policy and operations of the Controlled Affiliate; and

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EXHIBIT A (continued)

Notwithstanding anything to the contrary in (a) through (c) hereof, the Controlled Affiliate’s
establishing or governing documents must also require written approval by each of the Controlling
Plans before the Controlled Affiliate can:

	 	(i)	 	change its legal and/or trade names;
	 
	 	(ii)	 	change the geographic area in which it operates (except such approval shall
not be required with respect to business of the Controlled Affiliate conducted
under the Licensed Marks within the Service Area of one of the Controlling Plans
pursuant to a separate controlled affiliate license agreement with BCBSA sponsored
by such Controlling Plan);
	 
	 	(iii)	 	change any of the type(s) of businesses in which it engages (except such
approval shall not be required with respect to business of the Controlled Affiliate
conducted under the Licensed Marks within the Service Area of one of the
Controlling Plans pursuant to a separate controlled affiliate license agreement
with BCBSA sponsored by such Controlling Plan);
	 
	 	(iv)	 	take any action that any Controlling Plan or BCBSA reasonably believes will
adversely affect the Licensed Marks and Name.

In addition, the Controlling Plans directly or indirectly through wholly-owned subsidiaries
shall own 100% of any for-profit Controlled Affiliate.

Standard 2 — Financial Responsibility

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

Standard 3 — State Licensure/Certification

A Controlled Affiliate shall maintain appropriate and unimpaired licensure and certifications.

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EXHIBIT A (continued)

Standard 4 — Certain Disclosures

A Controlled Affiliate shall make adequate disclosure in contracting with third parties and in
disseminating public statements of:

	 	a.	 	the structure of the Blue Cross and Blue Shield System; and
	 
	 	b.	 	the independent nature of every licensee.

Standard 5 — Reports and Records for Controlled Affiliates

A Controlled Affiliate and/or its Controlling Plans shall furnish, on a timely and accurate
basis, reports and records relating to these Standards and the License Agreements between BCBSA
and Controlled Affiliate.

Standard 6 — Best Efforts

During each year, a Controlled Affiliate shall use its best efforts to promote and build the value
of the Blue Shield Marks.

Standard 7 — Participation in Certain National Programs

A Controlled Affiliate 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 Controlled Affiliate’s service area.

National program requirements include:

	 	a.	 	Inter-Plan Teleprocessing System (ITS); and
	 
	 	b.	 	Inter-Plan Medicare Advantage Program.

Standard 8 — Participation in Master Business Associate Agreement

Controlled Affiliates shall comply with the terms of the Business Associate
Agreement for Blue Cross and Blue Shield Licensees to the extent they perform the functions of a
business associate or subcontractor to a business associate, as defined by the Business Associate
Agreement.

Amended as of November 15, 2007

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EXHIBIT B

ROYALTY FORMULA FOR SECTION 9 OF THE

CONTROLLED AFFILIATE LICENSE AGREEMENTS

APPLICABLE TO REGIONAL MEDICARE ADVANTAGE PPO PRODUCTS

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

An amount equal to its pro rata share of each Controlling Plan dues payable to BCBSA computed
with the addition of the Controlled Affiliate’s members using the Marks on regional MAPPO
products and related services as reported on the Quarterly Enrollment Report with BCBSA. The
payment by each
Controlling 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.

Amended as of June 14, 2007

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Exhibit 1C

BLUE SHIELD

CONTROLLED AFFILIATE LICENSE AGREEMENT

APPLICABLE TO REGIONAL MEDICARE PART D PRESCRIPTION DRUG PLAN

PRODUCTS

(Adopted by Member Plans at their November 19, 2009)

     This Agreement by and among Blue Cross and Blue Shield Association (“BCBSA”) and                     
(“Controlled Affiliate”), a Controlled Affiliate of the Blue Cross Plan(s), known as                     
(“Controlling Plans”), each of which is also a Party signatory hereto.

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

     WHEREAS, under the Medicare Modernization Act, companies may apply to and be awarded a
contract by the Centers for Medicare and Medicaid Services (“CMS”) to offer Medicare Part D
Prescription Drug Plan products in geographic regions designated by CMS (hereafter “regional PDP
products”).

     WHEREAS, some of the CMS-designated regions include the Service Areas, or portions thereof, of
more than one Plan.

     WHEREAS, the Controlling Plans and 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”) to
offer regional PDP products in a region that includes the Service Areas, or portions thereof, of
more than one Controlling Plan;

     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 Controlled
Affiliate the right to use the Licensed Marks and Name in connection with, and only in connection
with the sale, marketing and administration of regional PDP products and related services.

     This grant of rights is non-exclusive and is limited to the following states:
                                         (the “Region”). Controlled Affiliate may use the Licensed

-1-

 

Marks and Name in its legal name on the following conditions: (i) the legal name must be approved
in advance, in writing, by BCBSA; (ii) Controlled Affiliate shall not do business outside the
Region under any name or mark except business conducted in the Service Area of a Controlling Plan
provided that Controlled Affiliate is separately licensed by BCBSA to use the Licensed Marks and
Name in connection with health care plans and related services in the Service Area of such
Controlling Plan; and (iii) Controlled Affiliate shall not use the Licensed Marks and Name, or any
derivative thereof, as part of any name or symbol used to identify itself in any securities market.
Controlled Affiliate may use the Licensed Marks and Name in its Trade Name only with the prior,
written, consent of BCBSA.

     2. QUALITY CONTROL

     A. Controlled 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.

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

     C. Controlled Affiliate agrees that it will provide on an annual basis (or more often if
reasonably required by the Controlling Plans or by BCBSA) a report or reports to the Controlling
Plans and BCBSA demonstrating Controlled 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. Controlled Affiliate agrees that the Controlling Plans 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.

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

     (1) Controlled Affiliate is owned or controlled by two or more Controlling Plans;

     (2) Each Controlling Plan is authorized pursuant to a separate Blue Shield License Agreement
to use the Licensed Marks in a geographic area in the Region and every geographic area in the
Region is so licensed to at least one of the Controlling Plans; and

-2-

 

     (3) The Controlling Plans must have 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 100%
voting control thereof;

     (b) to prevent any change in the articles of incorporation, bylaws or other establishing or
governing documents of the Controlled Affiliate with which the Controlling Plans do not concur;

     (c) to exercise control over the policy and operations of the Controlled Affiliate; and

Notwithstanding anything to the contrary in (a) through (c) hereof, the Controlled Affiliate’s
establishing or governing documents must also require written approval by each of the Controlling
Plans before the Controlled Affiliate can:

	 	(i)	 	change its legal and/or trade names;
	 
	 	(ii)	 	change the geographic area in which it operates (except such approval shall
not be required with respect to business of the Controlled Affiliate conducted
under the Licensed Marks within the Service Area of one of the Controlling Plans
pursuant to a separate controlled affiliate license agreement with BCBSA sponsored
by such Controlling Plan);
	 
	 	(iii)	 	change any of the type(s) of businesses in which it engages (except such
approval shall not be required with respect to business of the Controlled Affiliate
conducted under the Licensed Marks within the Service Area of one of the
Controlling Plans pursuant to a separate controlled affiliate license agreement
with BCBSA sponsored by such Controlling Plan);
	 
	 	(iv)	 	take any action that any Controlling Plan or BCBSA reasonably believes will
adversely affect the Licensed Marks and Name.

In addition, the Controlling Plans directly or indirectly through wholly owned subsidiaries
shall own 100% of any for-profit Controlled Affiliate.

-3-

 

     3. SERVICE MARK USE

     A. Controlled Affiliate recognizes the importance of a comprehensive national network of
independent BCBSA licensees which are committed to strengthening the Licensed Marks and Name. The
Controlled Affiliate further recognizes that its actions within the Region may affect the value of
the Licensed Marks and Name nationwide.

     B. Controlled 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 Controlled Affiliates licensed to use the Licensed Marks and
Name) relative to service mark use, as are issued from time-to-time by BCBSA. Controlled Affiliate
recognizes and agrees that all use of the Licensed Marks and Name by Controlled Affiliate shall
inure to the benefit of BCBSA.

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

     D. Controlled Affiliate shall use its best efforts to promote and build the value of the
Licensed Marks and Name in connection with the sale, marketing and administration of regional PDP
products and related services.

     4. SUBLICENSING AND ASSIGNMENT

     Controlled Affiliate shall not, directly or indirectly, 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 any Controlling Plan or BCBSA. This Agreement and
all rights and duties hereunder are personal to Controlled Affiliate.

-4-

 

     5. INFRINGEMENT

     Controlled Affiliate shall promptly notify the Controlling Plans and the
Controlling Plans 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. Controlled
Affiliate shall not be entitled to require the Controlling Plans 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 the Controlling Plans 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

     Controlled Affiliate and the Controlling Plans 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 Controlled 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 unless terminated pursuant to the
provisions herein.

     B. 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: (i) any one of the
Controlling Plans ceases to be authorized to use the Licensed Marks and Name; or (ii) pursuant to
Paragraph 15(a)(x) of the Blue Shield License Agreement any one of the Controlling Plans ceases to
be authorized to use the Licensed Names and Marks in the Region.

     C. Notwithstanding any other provision of this Agreement, this license to use the Licensed
Marks and Name may be forthwith terminated by the Controlling Plans 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 to the Controlling Plans advising
of the specific matters at issue and granting the Controlling Plans an opportunity to be heard and
to present their response to the Board for: (1) failure to comply with any applicable minimum
capital or liquidity requirement under the quality control standards of this

-5-

 

Agreement; or (2) failure to comply with the “Organization and Governance” quality control standard
of this Agreement; or (3) impending financial insolvency; or (4) failure to comply with any of the
applicable requirements of Standards 2, 3, 4, or 5 of attached Exhibit A; or (5) the pendency of
any action instituted against the Controlled Affiliate 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 or seeking the declaration or establishment of a trust for any of
its property or business, unless this Controlled Affiliate License Agreement has been earlier
terminated under paragraph 7(E); or (6) such other reason as is determined in good faith
immediately and irreparably to threaten the integrity and reputation of BCBSA, the Plans (including
the Controlling Plans), any other licensee including Controlled Affiliate and/or the Licensed Marks
and Name.

     D. Except as otherwise provided in Paragraphs 7(B), 7(C) or 7(E) herein, should Controlled
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 Controlling Plans shall have the right to
issue a notice that the Controlled Affiliate is in a state of noncompliance. If a state of
noncompliance as aforesaid is undisputed by the Controlled 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 or among BCBSA, any of the
Controlling Plans and/or Controlled 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 Controlled Affiliate’s rights hereunder shall immediately
terminate without any further action by any party or entity in the event that:

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

     (2) Appropriate dues, royalties and other payments for Controlled 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

-6-

 

     (3) Any of the following events occur: (i) a voluntary petition shall be filed by Controlled
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 Controlled 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 and such petition or
proceeding is consented to or acquiesced in by Controlled Affiliate 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 Controlled Affiliate, or (iii) an order for relief is entered against Controlled
Affiliate in any case under the bankruptcy laws of the United States, or Controlled Affiliate is
adjudged bankrupt or insolvent as those terms are defined in the Uniform Commercial Code as enacted
in the State of Illinois by any court of competent jurisdiction, or (iv) Controlled Affiliate makes
a general assignment of its assets for the benefit of creditors, or (v) any government or any
government official, office, agency, branch, or unit assumes control of Controlled Affiliate or
delinquency proceedings (voluntary or involuntary) are instituted, or (vi) an action is brought by
Controlled 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 by any governmental entity or officer against Controlled
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 Controlled Affiliate or is not dismissed within one
hundred thirty (130) days of the date upon which the pleading or other document commencing the
action is served upon the Controlled Affiliate, provided that if the action is stayed or its
prosecution is enjoined, the one hundred thirty (130) day period is tolled for the duration of the
stay or injunction, and provided further, that the Association’s Board of Directors may toll or
extend the 130 day period at any time prior to its expiration, or (viii) a trustee, interim
trustee, receiver or other custodian for any of Controlled Affiliate’s property or business is
appointed or the Controlled Affiliate is
ordered dissolved or liquidated. Notwithstanding any other provision of this Agreement, a
declaration or a request for declaration of the existence of a trust over any of the Controlled
Affiliate’s property or business shall not in itself be deemed to constitute or seek appointment of
a trustee, interim trustee, receiver or other custodian for purposes of subparagraphs 7(E)(3)(vii)
and (viii) of this Agreement.

     F. Upon termination of this Agreement for cause or otherwise, Controlled Affiliate agrees that
it shall immediately discontinue all use of the Licensed Marks and Name, including any use in its
trade name, except to the extent that it continues to be authorized to use the Licensed Marks
within the Service Area of one of the Controlling Plans pursuant to a separate controlled affiliate
license agreement with BCBSA sponsored by such Controlling Plan.

-7-

 

     G. Upon termination of this Agreement, Controlled Affiliate shall immediately notify all of
its customers to whom it provides products or services under the Licensed Marks pursuant to this
Agreement 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 this Agreement terminates pursuant to 7(B) hereof, upon termination of this
Agreement the provisions of Paragraph 7(G) shall not apply and the following provisions shall
apply, except that, in the event that Controlled Affiliate is separately licensed by BCBSA to use
the Licensed Marks in the Service Area of a Controlling Plan and termination of this Agreement is
due to a partial termination of such Controlling Plan’s license pursuant to Paragraph 15(a)(x)(ii)
of the Blue Shield License Agreement, the notices, national account listing, payment, and audit
right listed below shall be applicable solely with respect to the Region and the geographic area
for which the Controlling Plan’s license to use the Licensed Names and Marks is terminated:

     (1) The Controlled Affiliate 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 Controlled Affiliate 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.

     (2) The Controlled Affiliate shall deliver to BCBSA within five days of a request by BCBSA a
listing of national accounts in which the Controlled Affiliate is involved (in a control,
participating or servicing capacity), identifying the national account and the Controlled
Affiliate’s role therein.

     (3) Unless the cause of termination is an event respecting BCBSA stated in paragraph 15(a) or
(b) of the Plan’s license agreement with BCBSA to use the Licensed Marks and Name, the Controlled
Affiliate, the Controlling Plans, and any other Licensed Controlled Affiliates of the Controlling
Plans shall be jointly liable for payment to BCBSA of an amount equal to $25 multiplied by the
number of Licensed Enrollees of the Controlled Affiliate; provided that if any Plan other than a
Controlling Plan is permitted by BCBSA to use marks or names licensed by BCBSA in a geographic area
in the Region, the payment for Licensed Enrollees in such

-8-

 

geographic area shall be multiplied by a fraction, the numerator of which is the number of Licensed
Enrollees of the Controlled Affiliate, the Controlling Plans, and any other Licensed Controlled
Affiliates of the Controlling Plans in such geographic area and the denominator of which is the
total number of Licensed Enrollees in such geographic 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 (i) the end of the last fiscal year of the terminated entity which
ended prior to termination or (ii) the fiscal year which ended before any transactions causing the
termination began. Notwithstanding the foregoing, the amount payable pursuant to this subparagraph
H. (3) shall be due only to the extent that, in BCBSA’s opinion, it does not cause the net worth of
the Controlled Affiliate, the Controlling Plans or any other Licensed Controlled Affiliates of the
Controlling Plans to fall below 100% of the Health Risk-Based Capital formula, or its equivalent
under any successor formula, as set forth in the applicable financial responsibility standards
established by BCBSA (provided such equivalent is approved for purposes of this subparagraph by the
affirmative vote of three-fourths of the Plans and three-fourths of the total then current weighted
vote of all the Plans); measured as of the date of termination, and adjusted for the value of any
transactions not made in the ordinary course of business. This payment shall not be due in
connection with transactions exclusively by or among Plans (including the Controlling Plans) or
their affiliates, including reorganizations, combinations or mergers, where the BCBSA Board of
Directors determines that the license termination does not result in a material diminution in the
number of Licensed Enrollees or the extent of their coverage. In the event that the Controlled
Affiliate’s license is reinstated by BCBSA or is deemed to have remained in effect without
interruption by a court of competent jurisdiction, BCBSA shall reimburse the Controlled Affiliate
(and/or the Controlling Plans or their other Licensed Controlled Affiliates, as the case may be)
for payments made under this subparagraph 7.H.(3) only to the extent that such payments exceed the
amounts due to BCBSA pursuant to paragraph 7.K. and any costs associated with reestablishing the
terminated Controlling Plan’s Service Area or the Region, including any payments made by BCBSA to a
Plan or Plans (including the other Controlling Plans), or their Licensed Controlled Affiliates, for
purposes of replacing the Controlled Affiliate.

     (4) BCBSA shall have the right to audit the books and records of the Controlled Affiliate,
the Controlling Plans, and any other Licensed Controlled Affiliates of the Controlling Plans to
verify compliance with this paragraph 7.H.

     (5) As to a breach of 7.H.(1), (2), (3) or (4), the parties agree that the obligations are
immediately enforceable in a court of competent jurisdiction. As to a breach of 7.H.(1), (2) or (4)
by the Controlled Affiliate, the parties agree there is no adequate remedy at law and BCBSA is
entitled to obtain specific performance.

-9-

 

     I. BCBSA shall be entitled to enjoin the Controlled Affiliate or any related party in a court
of competent jurisdiction from entry into any transaction which would result in a termination of
this Agreement unless a Controlling Plan’s license from BCBSA to use the Licensed Marks and Names
has been terminated pursuant to 10(d) of such Controlling Plan’s license agreement upon the
required 6 month written notice.

     J. BCBSA acknowledges that it is not the owner of assets of the Controlled Affiliate.

     K. In the event this Agreement terminates and is subsequently reinstated by BCBSA or is deemed
to have remained in effect without interruption by a court of competent jurisdiction, the
Controlled Affiliate, the Controlling Plans, and any other Licensed Controlled Affiliates of the
Controlling Plans shall be jointly liable for reimbursing BCBSA the reasonable costs incurred by
BCBSA in connection with the termination and the reinstatement or court action, and any associated
legal proceedings, including but not limited to: outside legal fees, consulting fees, public
relations fees, advertising costs, and costs incurred to develop, lease or establish an interim
provider network. Any amount due to BCBSA under this subparagraph may be waived in whole or in part
by the BCBSA Board of Directors in its sole discretion.

     8. DISPUTE RESOLUTION

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

     9. LICENSE FEE

     Controlled 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 this Agreement shall be construed as creating a joint venture,
partnership, agency or employment relationship between the Controlling Plans and Controlled
Affiliate or between either and BCBSA.

-10-

 

     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 the affirmative vote of three-fourths of the
Plans and three-fourths of the total then current weighted vote of all the Plans as officially
recorded by the BCBSA Corporate Secretary.

     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 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.

     14A. VOTING

     For all provisions of this Agreement referring to voting, the term ‘Plans’ shall mean all
entities licensed under the Blue Cross License Agreement and/or the Blue Shield License Agreement,
and in all votes of the Plans under this Agreement the Plans shall vote together. For weighted
votes of the Plans, the Plan shall have a number of votes equal to the number of weighted votes (if
any) that it holds as a Blue Cross Plan plus the number of weighted votes (if any) that it holds as
a Blue Shield Plan. For all other votes of the Plans, the Plan shall have one vote. For all
questions requiring an affirmative three-fourths weighted vote of the Plans, the requirement shall
be deemed satisfied with a lesser weighted vote unless the greater of: (i) 6/52 or more of the
Plans (rounded to the nearest whole number, with

-11-

 

0.5 or multiples thereof being rounded to the next higher whole number) fail to cast weighted votes
in favor of the question; or (ii) three (3) of the Plans fail to cast weighted votes in favor of
the question. Notwithstanding the foregoing provision, if there are thirty-nine (39) Plans, the
requirement of an affirmative three-fourths weighted vote shall
be deemed satisfied with a lesser weighted vote unless four (4) or more Plans fail to cast weighted
votes in favor of the question.

     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.

-12-

 

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

Controlled Affiliate:

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Date:
	 	 	 	 
	 

	 	 	 	 

Controlling Plan:

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Date:
	 	 	 	 
	 

	 	 	 	 

Controlling Plan:

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Date:
	 	 	 	 
	 

	 	 	 	 

BLUE CROSS AND BLUE SHIELD ASSOCIATION

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Date:
	 	 	 	 
	 

	 	 	 	 

-13-

 

EXHIBIT A

CONTROLLED AFFILIATE LICENSE STANDARDS

APPLICABLE TO REGIONAL MEDICARE

PART D PRESCRIPTION DRUG PLAN PRODUCTS

November 2009

PREAMBLE

The standards for licensing Controlled Affiliates for Medicare Part D Prescription Drug Plan
Products 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
Controlling Plan is required to use a standard Controlled Affiliate license form provided by BCBSA
and to cooperate fully in assuring that the licensed Controlled Affiliate maintains compliance with
the license standards.

Standard 1 — Organization and Governance

A Controlled Affiliate is defined as an entity organized and operated in such a manner, that
it meets the following requirements:

     (1) Controlled Affiliate is owned or controlled by two or more Controlling Plans;

     (2) Each Controlling Plan is authorized pursuant to a separate Blue Shield License Agreement
to use the Licensed Marks in a geographic area in the Region and every geographic area in the
Region is so licensed to at least one of the Controlling Plans; and

     (3) The Controlling Plans must have 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 100%
voting control thereof;

          (b) prevent any change in the articles of incorporation, bylaws or other establishing or
governing documents of the Controlled Affiliate with which the Controlling Plans do not concur;

          (c) exercise control over the policy and operations of the Controlled Affiliate; and

-14-

 

EXHIBIT A (continued)

Notwithstanding anything to the contrary in (a) through (c) hereof, the Controlled Affiliate’s
establishing or governing documents must also require written approval by each of the Controlling
Plans before the Controlled Affiliate can:

	 	(i)	 	change its legal and/or trade names;
	 
	 	(ii)	 	change the geographic area in which it operates (except such approval shall
not be required with respect to business of the Controlled Affiliate conducted under the Licensed Marks within the Service Area of one of the
Controlling Plans pursuant to a separate controlled affiliate license agreement
with BCBSA sponsored by such Controlling Plan);
	 
	 	(iii)	 	change any of the type(s) of businesses in which it engages (except such
approval shall not be required with respect to business of the Controlled Affiliate
conducted under the Licensed Marks within the Service Area of one of the
Controlling Plans pursuant to a separate controlled affiliate license agreement
with BCBSA sponsored by such Controlling Plan);
	 
	 	(iv)	 	take any action that any Controlling Plan or BCBSA reasonably believes will
adversely affect the Licensed Marks and Name.

In addition, the Controlling Plans directly or indirectly through wholly-owned subsidiaries
shall own 100% of any for-profit Controlled Affiliate.

Standard 2 — Financial Responsibility

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

Standard 3 — State Licensure/Certification

A Controlled Affiliate shall maintain appropriate and unimpaired licensure and certifications.

-15-

 

EXHIBIT A (continued)

Standard 4 — Certain Disclosures

A Controlled Affiliate shall make adequate disclosure in contracting with third parties and in
disseminating public statements of:

	 	a.	 	the structure of the Blue Cross and Blue Shield System; and
	 
	 	b.	 	the independent nature of every licensee.

Standard 5 — Reports and Records for Controlled Affiliates

A Controlled Affiliate and/or its Controlling Plans shall furnish, on a timely and accurate
basis, reports and records relating to these Standards and the License Agreements between BCBSA
and Controlled Affiliate.

Standard 6 — Best Efforts

During each year, a Controlled Affiliate shall use its best efforts to promote and build the
value of the Blue Shield Marks.

Standard 7 — Participation in Master Business Associate Agreement

Controlled Affiliates shall comply with the terms of the Business Associate
Agreement for Blue Cross and Blue Shield Licensees to the extent they perform the functions of a
business associate or subcontractor to a business associate, as defined by the Business Associate
Agreement.

-16-

 

EXHIBIT B

ROYALTY FORMULA FOR SECTION 9 OF THE

CONTROLLED AFFILIATE LICENSE AGREEMENTS

APPLICABLE TO REGIONAL MEDICARE PART D PRESCRIPTION DRUG PLAN

PRODUCTS

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

An amount equal to its pro rata share of each Controlling Plan dues payable to BCBSA computed
with the addition of the Controlled Affiliate’s members using the Marks on regional PDP products
and related services as reported on the Quarterly Enrollment Report with BCBSA. The payment by
each Controlling 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.

Amended as of June 14, 2007

-17-

 

EXHIBIT 2

Membership Standards

Page 1 of 5

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.

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

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

	Standard 1: 	 	 	A Plan shall maintain a governing Board, which shall control the Plan and ensure that
the Plan follows appropriate practices of corporate governance. A Plan’s Board shall not be
controlled by any special interest group, shall make an annual determination that a majority of
its directors are independent, and shall act in the best interest of its Corporation and its
customers. The Board shall be composed of a majority of persons other than providers of health
care services, who shall be known as public members.
A public member shall not be an employee of or have a financial interest in a
health care provider, nor be a member of a profession which provides health
care services.

Amended as of March 15, 2007

 

 

EXHIBIT 2

Membership Standards

Page 2 of 5

	Standard 2: 	 	 	 A Plan shall furnish to the Association on a timely and accurate basis reports and
records relating to compliance with these Standards and the License Agreements between the
Association and the Plans. Such reports and records are the following:

	 	A.	 	BCBSA Membership Information Request;
	 
	 	B.	 	Biennial trade name and service mark usage material, including disclosure material
under Standard 7;
	 
	 	C.	 	Changes in the governance of the Plan, including changes in a Plan’s Charter, Articles
of Incorporation, or Bylaws, changes in a Plan’s Board composition, or changes in the identity
of the Plan’s Principal Officers;
	 
	 	D.	 	Quarterly Financial Report, Semi-annual “Health Risk-Based Capital (HRBC) Report” as
defined by the NAIC, Annual Financial Forecast, Annual
Certified Audit Report, Insurance Department Examination Report, Annual Statement filed with State
Insurance Department (with all attachments), Plan, Subsidiary and Affiliate Report; and

	 	•	 	Plans that are a Shell Holding Company as defined in
the Preamble hereto are required to furnish only a calendar year-end
“Health Risk-Based Capital (HRBC) Report” as defined by the NAIC.

Amended as of November 15, 2001

 

 

EXHIBIT 2

Membership Standards

Page 3 of 5

	 	E.	 	Quarterly Enrollment Report, Member Touchpoint Measures Index (MTM) (current version)
through 12/31/2010, MTM
Index (first revised version) starting 1/1/2011 through
12/31/2011, and MTM Index (second revised version) starting
1/1/2012 and thereafter.

	 	•	 	Plans that are a Shell Holding Company as defined in
the Preamble hereto are not required to furnish a Quarterly Enrollment
Report.
	 
	 	•	 	For purposes of MTM reporting only, a Plan shall
file a separate MTM report for each Geographic Market and on an
enterprise basis, except that the enterprise report shall not include
the Geographic Market as defined in section (c) of footnote 2 to the
guidelines to administer Regular Member Standard 4.

	Standard 3: 	 	 	 A Plan shall be operated in a manner that provides reasonable financial assurance that
it can fulfill its contractual obligations to its customers.
	 
	Standard 4:  	 	 	A Plan shall be operated in a manner responsive to customer needs and requirements.
	 
	Standard 5: 	 	 	 A Plan shall effectively and efficiently participate in each national program as from
time to time may be adopted by the Member Plans for the purposes of providing portability of
membership between the Plans and ease of claims processing for customers receiving benefits outside
of the Plan’s Service Area.
	 
	 	 	 	Such programs are applicable to Blue Cross and Blue Shield Plans, and include:

	 	A.	 	Transfer Program;
	 
	 	B.	 	Inter-Plan Teleprocessing System (ITS);
	 
	 	C.	 	BlueCard Program;
	 
	 	D.	 	National Account Programs;
	 
	 	E.	 	Business Associate Agreement for Blue Cross and Blue Shield
Licensees, effective April 14, 2003; and
	 
	 	F.	 	Inter-Plan Medicare Advantage Program.

Amended as of November 19, 2009

 

 

EXHIBIT 2

Membership Standards

Page 4 of 5

	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: 	 	 	 Notwithstanding any other provision in this License Agreement, 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 to promote and build the
value of the Blue Shield Marks.
	 
	Standard 11:  	 	 	Neither a Plan nor any Larger Controlled Affiliate shall cause or permit an entity
other than a Plan or a Licensed Controlled Affiliate thereof to obtain control of the Plan or
Larger Controlled Affiliate or to acquire a substantial portion of its assets related to licensable
services.

Amended as of June 16, 2005

 

 

EXHIBIT 2

Membership Standards

Page 5 of 5

	Standard 12: 	 	 	No provider network, or portion thereof, shall be rented or otherwise made available
to a National Competitor if the Licensed Marks or Names are used in any way with such network.
	 
	 	 	 	A provider network may be rented or otherwise made available, provided there is no use of the
Licensed Marks or Names with respect to the network being rented.

Amended as of March 18, 2004

 

 

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. A local plant, office or
division headquarters of an entity may be deemed a separate National Account when that local plant,
office or division headquarters 1) has employee locations in more than one Service Area, and 2) has
independent health benefit decision-making authority for the employees working at such local plant,
office or division headquarters and for employees working at other locations outside the Service
Area. In such a case, the local plant, office or division headquarters is a National Account that
is deemed located in the Service Area in which such local plant, office or division headquarters 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. In
the event that a National Account parent company consolidates health benefit-decision making for
itself and its wholly-owned subsidiary companies, the parent company and the subsidiary companies
shall be considered one National Account. The Control Plan for such a National Account shall be
the Plan in whose Service Area the parent company headquarters is 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.

Amended as of June 12, 2003

 

 

Exhibit 3

Page 2 of 3

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.

6. The Control Plan may use the BlueCard Program (as defined by IPPC) 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.

Amended as of June 14, 1996

 

 

Exhibit 3

Page 3 of 3

8. 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.

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.

Amended as of March 13, 2003

 

 

EXHIBIT 4

GOVERNMENT PROGRAMS AND CERTAIN OTHER USES

Page 1 of 10

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. For purposes of this Paragraph 1, the term
“Government Programs” shall mean Medicare Part A, Medicare Part B and other non-risk government
programs.

2. In connection with activity otherwise in furtherance of the License Agreement, a Plan and its
Controlled Affiliates that are licensed to use the Licensed Marks and Name in its Service Area
pursuant to the Controlled Affiliate License Agreements authorized in clauses a) through c) of
Paragraph 2 of the Plan’s License Agreement with BCBSA may use the Licensed Marks and Name outside
the Plan’s 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 solely for administrative purposes
(e.g., not for purposes of marketing, advertising, promoting, selling or soliciting 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
the Plan’s Service Area in order to serve its subscribers or those of such licensed Controlled
Affiliates residing or working in its service area;

Amended as of March 17, 2005

 

 

EXHIBIT 4

Page 2 of 10

	 	d.	 	issuing a small sign containing the legal name or trade name
of the Plan or such licensed Controlled Affiliates for display by a provider to identify
the latter as a participating provider of the Plan or Controlled Affiliate;
	 
	 	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 or Controlled
Affiliate 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.
	 
	 	h.	 	negotiating rates with a health care provider for services to a specific member,
provided that all of the following conditions are met:

	 	(1)	 	the health care provider does not have a contract, applicable to the services
rendered or to be rendered, with the Licensee (or any of the Licensees in the case
of overlapping Service Areas) in whose Service Area the health care provider is
located; and
	 
	 	(2)	 	the Plan or Controlled Affiliate reasonably determines that the member did/does
not have a reasonable opportunity to access a participating provider whose contract
applies to the services rendered or to be rendered; and
	 
	 	(3)	 	at least one of the following circumstances exists:

	 	(i)	 	the member received emergency services and the Plan or Controlled
Affiliate knows or reasonably anticipates that the charges on the claim
will meet or exceed $5,000; or

Amended as of June 19, 2008

 

 

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	 	(ii)	 	a provider, in consultation pre- or post- treatment with the Plan or
Controlled Affiliate, makes/made a treatment recommendation or referral to
a non-par provider or to a par provider whose contract does not apply to
the services to be rendered; or
	 
	 	(iii)	 	the member inadvertently accessed a non-par provider or
non-contracted services in the course of receiving services from a par
provider (e.g., the member sees a non-par consulting specialist in a
participating hospital); and

	 	(4)	 	the Licensee (and in the case of overlapping Service Areas, all of the
Licensees) in whose Service Area the health care provider is located consent(s) in
advance.

Amended as of June 19, 2008

 

 

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	 	i.	 	contracting with a pharmacy management organization (“Pharmacy
Intermediary”) to gain access to a national or regional pharmacy network to provide
self-administered prescription drugs to deliver a pharmacy benefit for all of the
Plan’s or licensed Controlled Affiliate’s members nationwide, provided, however,
that the Pharmacy Intermediary may not use the Licensed Marks or Name in
contracting with the pharmacy providers in such network;
	 
	 	j.	 	contracting with the corporate owner of a national or regional retail pharmacy chain to
gain access to the pharmacies in the chain to provide self-administered prescription drugs
to deliver a pharmacy benefit for all of the Plan’s or licensed Controlled Affiliate’s
members nationwide, provided that (1) the Plan and the Controlled Affiliate may not
contract directly with pharmacists or pharmacy stores outside the Plan’s Service Area, and
(2) neither the Plan’s or the Controlled Affiliate’s name nor the Licensed Marks or Name
may be posted or otherwise displayed at or by any pharmacy store outside the Plan’s Service
Area;
	 
	 	k.	 	contracting with a dental management organization (“Dental
Intermediary”) to gain access to a national or regional dental network to deliver a
routine dental benefit for all of the Plan’s or licensed Controlled Affiliate’s
members nationwide, provided, however, that the Dental Intermediary may not use the
Licensed Marks or Name in contracting with the dental providers in such network;
	 
	 	l.	 	contracting with a vision management organization (“Vision
Intermediary”) to gain access to a national or regional vision network to deliver a
routine vision benefit for all of the Plan’s or licensed Controlled Affiliate’s
members nationwide, provided, however, that the Vision Intermediary may not use the
Licensed Marks or Name in contracting with the vision providers in such network;
	 
	 	m.	 	contracting with an independent clinical laboratory for analysis and clinical assessment
of specimens that are collected within the Plan’s Service Area;

Amended as of March 17, 2005

 

 

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	 	n.	 	contracting with a durable medical equipment or home medical equipment company for
durable medical equipment and supplies and home medical equipment and supplies that are
shipped to a location within the Plan’s Service Area;
	 
	 	o.	 	contracting with a speciality pharmaceutical company for non-routine biological
therapeutics that are ordered by a health care professional located within the Plan’s
Service Area;
	 
	 	p.	 	contracting with a company that operates provider sites in the Plan’s
Service Area, provided that the contract is solely for services rendered at a site
(e.g., hospital, mobile van) that is within the Plan’s Service Area;
	 
	 	q.	 	contracting with a company that makes health care professionals available in the Plan’s
Service Area (e.g., traveling home health nurse), provided that the contract is solely for
services rendered by health care professionals who are located within the Plan’s Service
Area.
	 
	 	r.	 	entering into a license agreement between and among BCBSA, the
Plan and a debit card issuer located outside the Plan’s Service Area, and entering
into a corresponding operating agreement or agreements, in order to offer a debit
card bearing the Licensed Marks and Name to eligible persons as defined by the
aforementioned license agreement.
	 
	 	s.	 	in conjunction with contracting with a National Account as Control
Licensee or Alternate Control Licensee (as those terms are defined in the
Inter-Plan Programs Policies and Provisions (“IP Policies”)) to offer Blue-branded
Health Coverage to the National Account, offering Blue-branded Health and Wellness
Programs to all members of the National Account, including members who have not
enrolled in the Blue-branded Health Coverage (“non-Blue Health Coverage members”),
provided that:

	 	(i)	 	the Plan and/or licensed Controlled Affiliate has no contact or interaction
with providers outside of the Plan’s Service Area regarding such non-Blue Health
Coverage members, except as specifically provided in the IP Policies; and

Amended as of March 19, 2009

 

 

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	 	(ii)	 	if in accordance with IP Policies another Licensee is soliciting or servicing
under the Brands a local plant, office or division of the account that is outside
of the Plan’s Service Area, the Plan and/or licensed Controlled Affiliate may not
offer Blue-branded Health and Wellness Programs to any employees working at such
local plant, office or division without the consent of such other Licensee; and
	 
	 	(iii)	 	if the Plan and/or licensed Controlled Affiliate provides an information card
to the non-Blue Health Coverage members, the card may not display the Symbols in
the masthead, must contain a prominent disclosure conveying that it is not a health
insurance card, and otherwise must be designed so that it is dissimilar to a Blue
member identification card.

For purposes of this subparagraph s, the following definitions apply:

“Health and Wellness Program” shall mean a program that includes at least one of
the following elements or a related element:

— Health Risk Assessment and/or Preventive Screenings

— Exercise and Fitness Programs

— Health and Wellness Events (e.g., attendance at a health fair, a 5K walk)

— Nutrition and Weight Management

— Health Education (e.g., smoking cessation
classes)

— Prenatal and Parenting Education

— Disease or Chronic Condition
Management

The above listing is intended to represent examples of the types of programs that
may be offered, and other programs, including those offered through different media
such as the internet or telephonically, may also be deemed Health and Wellness
programs.

“Health Coverage” shall mean providing or administering medical, surgical,
hospital, major medical, or catastrophic coverage, or any HMO, PPO, POS or other
managed care plan for the foregoing services.

Amended as of November 13, 2008

 

 

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	3.	 	In connection with activity otherwise in furtherance of the License Agreement, a Controlled
Affiliate that is licensed to use the Licensed Marks and Name pursuant to a Controlled Affiliate
License Agreement authorized in clauses d) or e) of Paragraph 2 of the Plan’s License Agreement
with BCBSA may use the Licensed Marks and Name
outside the Region (as that term is defined in such respective Controlled Affiliate License
Agreements) in the following circumstances which are deemed legitimate and necessary and not likely
to cause consumer confusion:

	 	a.	 	sending letterhead, envelopes, and similar items solely for administrative purposes
(e.g., not for purposes of marketing, advertising, promoting, selling or soliciting 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
the Region in order to serve its subscribers residing in the Region, provided that the Controlled
Affiliate may not use the names of any of its Controlling Plans in connection with such contracting
unless the provider is located in a geographic area that is also contiguous to such Controlling
Plan’s Service Area;
	 
	 	d.	 	issuing a small sign containing the legal name or trade name of the
Controlled Affiliate for display by a provider to identify the latter as a
participating provider of the Controlled Affiliate, provided that the Controlled
Affiliate may not use the names of any of its Controlling Plans on such signs
unless the provider is located in a geographic area that is also contiguous to such
Controlling Plan’s Service Area;
	 
	 	e.	 	advertising in publications or electronic media solely to persons for employment;

Amended as of March 17, 2005

 

 

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	 	f.	 	advertising in print, electronic or other media which serve, as a substantial market, the
Region, provided that the Controlled Affiliate may not advertise outside its Region on the national
broadcast and cable networks and that advertisements in national print media are limited to the
smallest regional edition encompassing the Region, and provided further that any such advertising
by the Controlled Affiliate may not reference the name of any of its Controlling Plans unless the
respective Controlling Plan is authorized under paragraph 2 of this Exhibit 4 to advertise in such
media;
	 
	 	g.	 	advertising by direct mail where the addressee’s zip code plus 4 includes, at least in
part, the Region, provided that such advertising by the Controlled Affiliate may not reference the
name of any of its Controlling Plans unless the respective Controlling Plan is authorized under
paragraph 2 of this Exhibit 4 to send direct mail to such zip code plus 4.
	 
	 	h.	 	[Intentionally left blank, pending review by the Inter-Plan Programs Committee of the
applicability of the case management rule to such Controlled Affiliates.]
	 
	 	i.	 	contracting with a pharmacy management organization (“Pharmacy Intermediary”) to gain
access to a national or regional pharmacy network to provide self-administered prescription drugs
to deliver a pharmacy benefit for the Controlled Affiliate’s regional Medicare Advantage PPO or
regional Medicare Part D Prescription Drug members enrolled under the Licensed Marks pursuant to
such respective Controlled Affiliate License Agreements, provided, however, that the Pharmacy
Intermediary may not use the Licensed Marks or Name in contracting with the pharmacy providers in
such network;
	 
	 	j.	 	contracting with the corporate owner of a national or regional retail pharmacy chain to
gain access to the pharmacies in the chain to provide self-administered prescription drugs to
deliver a pharmacy benefit to the Controlled Affiliate’s regional Medicare Advantage PPO

Amended as of March 17, 2005

 

 

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	 	 	 	or regional Medicare Part D Prescription Drug members enrolled under the Licensed Marks
pursuant to such respective Controlled Affiliate License Agreements, provided that (1) the
Controlled Affiliate may not contract directly with pharmacists or pharmacy stores outside the
Region, and (2) neither the Controlled Affiliate’s name nor the Licensed Marks or Name may be
posted or otherwise displayed at or by any pharmacy store outside the Region;
	 
	 	k.	 	contracting with a dental management organization (“Dental
Intermediary”) to gain access to a national or regional dental network to deliver a
routine dental benefit for the Controlled Affiliate’s regional Medicare Advantage
PPO members enrolled under the Licensed Marks pursuant to such Controlled Affiliate
License Agreement, provided, however, that the Dental Intermediary may not use the
Licensed Marks or Name in contracting with the dental providers in such network;
	 
	 	l.	 	contracting with a vision management organization (“Vision
Intermediary”) to gain access to a national or regional vision network to deliver a
routine vision benefit for the Controlled Affiliate’s regional Medicare Advantage
members enrolled under the Licensed Marks pursuant to such Controlled Affiliate
License Agreement, provided, however, that the Vision Intermediary may not use the
Licensed Marks or
Name in contracting with the vision providers in such network;
	 
	 	m.	 	contracting with an independent clinical laboratory for analysis and clinical assessment
of specimens that are collected within the Controlled Affiliate’s Region;
	 
	 	n.	 	contracting with a durable medical equipment or home medical equipment company for durable
medical equipment and supplies and home medical equipment and supplies that are shipped to a
location within the Controlled Affiliate’s Region;
	 
	 	o.	 	contracting with a specialty pharmaceutical company for non-routine biological therapeutics
that are ordered by a health care professional located within the Region;

Amended as of March 17, 2005

 

 

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	 	p.	 	contracting with a company that operates provider sites in the Region, provided that the
contract is solely for services rendered at a site (e.g., hospital, mobile van) that is within the
Region;
	 
	 	q.	 	contracting with a company that makes health care professionals available in the Region
(e.g., traveling home health nurse), provided that the contract is solely for services rendered by
health care professionals who are located within the Region.

	4.	 	BCBSA shall retain the right to use the Licensed Marks in conjunction with the
Federal Employee Program and with any other national offering made to federal employees
pursuant to the Federal Employees Health Benefits Program (FEHBP), including the right to
license such use to its vendors, but ony in the following manner.

	 	a.	 	the Licensed Marks may only be used by BCBSA with the term
“Federal Employee Program”, “Federal”, “FEP”, or similar language identifying the
program as a benefit program for federal employees;
	 
	 	b.	 	the Licensed Marks may not be used by BCBSA with the name(s) of a specific Plan or
Plans and;
	 
	 	c.	 	any use by BCBSA in conjunction with a new national FEHBP program proposed after the
enactment of this amendment will require the approval of the BCBSA Board of Directors.

Amended as of March 16, 2006

 

 

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MEDIATION AND MANDATORY DISPUTE RESOLUTION (MMDR) RULES

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

	1.	 	Initiation of Proceedings

	 	A.	 	Pre-MMDR Efforts

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

	 	B.	 	Complaint

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

	 	i.	 	identification of the complaining party (or parties) requesting the proceeding;
	 
	 	ii.	 	identification of the respondent(s);
	 
	 	iii.	 	identification of any other persons or entities who are interested in a
resolution of the dispute;
	 
	 	iv.	 	a full statement describing the nature of the dispute;
	 
	 	v.	 	identification of all of the issues that are being submitted for
resolution;

Amended as of November 21, 1996

 

 

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	 	vi.	 	the remedy sought;
	 
	 	vii.	 	a statement as to whether the complaining party (or parties) elect(s) first to
pursue Mediation;
	 
	 	viii.	 	any request, if applicable, that the matter be handled on an expedited
basis and the reasons therefor; and
	 
	 	ix.	 	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 BCBSA
and on the complaining party (or parties):

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

The respondent(s) shall file and serve with the Answer or by the date of the Initial Conference set
forth in Paragraph 3.C., 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.

Amended as of September 20, 2007

 

 

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	 	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) a Reply to the Counterclaim. Such
Reply must provide the same information required by Paragraph 1.C., above.

	2.	 	Mediation

     To facilitate the mediation of disputes between or among BCBSA, the Plans and/or their
Controlled Affiliates, the BCBSA Board has provided for Mediation under these Rules. Mediation may
be pursued in lieu of or in an effort to obviate the Mandatory Dispute Resolution process, and all
parties are strongly urged, but not required, to exhaust the mediation procedure provided for
herein. In the event any party refuses to proceed with Mediation, the parties shall proceed
immediately to Mandatory Dispute Resolution, as provided in Section 3.

	 	A.	 	Selection of Mediators

     If all parties agree to pursue Mediation, they shall promptly attempt to agree upon: (i) the
number of mediators desired, not to exceed three mediators; and (ii) the selection of experienced
mediator(s) 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 are unable to agree upon the
selection or number of mediators, both within five (5) days of the service of the Answer or Reply
to Counterclaim, whichever is later, the BCBSA Corporate Secretary shall immediately refer the
matter to a nationally recognized professional ADR organization (such as CPR or JAMS) for mediation
by a single mediator to be selected by the ADR organization.

	 	B.	 	Binding Decision

     Before the Mediation Hearing described below, the BCBSA Corporate Secretary shall contact the
parties to determine whether they wish to be bound by any recommendation of the selected
mediator(s) 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.

Amended as of September 20, 2007

 

 

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	 	C.	 	Mediation Procedure

     The Mediator(s) shall apply the mediation procedures and processes provided for herein (not
the rules of the ADR organization with which they are affiliated) and 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 mediator(s), 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.	 	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 mediator(s) will be given an opportunity to ask questions of the
presenters and witnesses. All parties must be present throughout the Mediation
Hearing. The selected mediator(s) may extend the time allowed for each party’s
presentation at the Mediation Hearing. The selected mediator(s) may meet in
executive session, outside the presence of the parties, or may meet with the
parties separately, to discuss the controversy.
	 
	 	iii.	 	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 mediator(s), will sit in on the negotiations.

Amended as of September 20, 2007

 

 

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	 	iv.	 	After the close of the presentations, the selected mediator(s) 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.
	 
	 	v.	 	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.
	 
	 	vi.	 	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 mediator(s), and decisions
or recommendations in any Mediation proceeding shall be executed by each party.
	 
	 	vii.	 	Upon request of the selected mediator(s), or one of the parties, BCBSA staff
may also submit documentation at any time during the proceedings.

	 	D.	 	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 mediator(s), or if the Mediation
does not result in a final resolution of all disputes at the Mediation Hearing or within ten (10)
days after the Mediation Hearing, any party or any one of the selected mediator(s) shall so notify
the BCBSA Corporate Secretary, who shall promptly issue a Notice of Termination of Mediation to all
parties, to the selected mediator(s), and to the MDR Administrator. Such notice shall serve to
bring the Mediation to an end and to initiate Mandatory Dispute Resolution. Upon agreement of all
parties and the mediator(s), the Mediation process may continue at the same time the MDR process is
invoked. In such case, the Notice of Termination of Mediation described above serves to initiate
the MDR proceeding, but does not terminate mediation proceedings, which may proceed simultaneous
with the MDR proceeding.

Amended as of September 20, 2007

 

 

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	3.	 	Mandatory Dispute Resolution (MDR)

     If any party elects not to first pursue Mediation, or if a Notice of Termination of Mediation
is issued as set forth in Paragraph 2.D., above, then the unresolved disputes set forth in any
Complaint and Answer (and Counterclaim and Reply, if any) shall be subject
to mandatory binding arbitration (herein referred to as “MDR”).

	 	A.	 	MDR Administrator

     The Administrator for purposes of Mandatory Arbitration shall be an independent nationally
recognized entity such as CPR or JAMS, specializing in alternative dispute resolution. In the event
the parties pursued Mediation with CPR, JAMS or a similar organization, that organization also
shall serve as the MDR Administrator, unless all parties notify the BCBSA Corporate Secretary in
writing within two (2) days of receiving the Notice of Termination of Mediation that they wish to
pursue MDR with another nationally recognized organization serving as MDR Administrator.

     In the event the parties (i) did not pursue Mediation, (ii) pursued mediation with a Mediator
not affiliated with an ADR organization that offers a panel of arbitrators, or (iii) all parties
that pursued Mediation notified the BCBSA Corporate Secretary that they wish to have an MDR
Administrator that is different from the organization with which their mediator was affiliated,
they shall promptly attempt to agree on a nationally recognized ADR entity that supplies a panel of
arbitrators. If they reach such agreement within five (5) days of the Notice of Termination of
Mediation or receipt of the Answer or Reply to Counterclaim (whichever is later), the parties shall
promptly inform the BCBSA Corporate Secretary of their agreed upon ADR organization. In the event
the parties are unable to reach agreement on an MDR Administrator within that timeframe, the BCBSA
Corporate Secretary shall immediately refer the matter to CPR, JAMS or a similar organization for
MDR.

     Any person who served as a Mediator shall not serve as an arbitrator for the same or similar
dispute for purposes of MDR.

	 	B.	 	Rules for MDR

     The rules controlling all aspects of MDR shall be exclusively those provided for herein. The
rules promulgated or otherwise used by the MDR Administrator organization shall not apply.

Amended as of September 20, 2007

 

 

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	 	C.	 	Initial Conference

     Within seven (7) days after a Notice of Termination has issued, or the matter has otherwise
been referred to an MDR Administrator, or within five (5) days after the time for filing and
serving the Answer or Reply to any Counterclaim (whichever is later) 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 conference (the “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
D, below, shall be followed.

	 	D.	 	Panel Selection Process

     The Administrator shall designate, prior to the Initial Conference, at least seven potential
arbitrators. 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 one peremptory strike
from the list of designees. The Administrator shall set the dates for exericising all strikes,
which shall be set to encourage the prompt selection of arbitrators.

     After the parties exercise any designee strikes for cause and their peremptory strike against
any designee of their choice, the parties shall each rank the remaining panel members in order of
preference and provide the Administrator, without serving on any other party, their ranked list.
The Administrator shall not disclose any party’s ranked list to members of the panel or to other
parties.

     From the remaining designees, and after considering opportunities to maximize, so far as
possible, the collectively stated arbitrator preferences provided by the parties on their ranked
lists, the Administrator shall select a three member Panel. The Panel Selection Process shall be
completed no later than ten (10) days after 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.

Amended as of September 20, 2007

 

 

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	 	E.	 	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, 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.

	 	F.	 	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:

Amended as of September 20, 2007

 

 

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	 	i.	 	interpret or construe the meaning of any terms, phrase or provision in any
license between BCBSA and a Plan or a Controlled Affiliate relating to the use of
the BLUE CROSS® or BLUE SHIELD® service marks.
	 
	 	ii.	 	determine whether BCBSA, a Plan or a Controlled Affiliate has violated the
terms or conditions of any license between the BCBSA and a Plan or a Controlled
Affiliate relating to the use of the BLUE
CROSS® or BLUE SHIELD® service marks.
	 
	 	iii.	 	decide challenges as to its own jurisdiction.
	 
	 	iv.	 	issue such orders for interim relief as it deems appropriate pending
Hearing and Award in any Arbitration.

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

	 	G.	 	Administrative Conference

     Within five (5) days of the Panel being selected, the Presiding Arbitrator shall confer with
the parties and the other members of the Panel and shall schedule, in writing, a conference in
which the parties and the Panel shall participate (the “Administrative Conference”). The
Administrative Conference shall take place no later than fifteen (15) days after the Panel is
selected. At the Administrative Conference the parties and the Panel shall discusss the scheduling
of the Arbitration Hearing and any other matter appropriate to be considered, including but not
limited to: 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

Amended as of September 20, 2007

 

 

EXHIBIT 5

Page 10 of 23

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. If the parties agree, the Administrative Conference may be by telephone.

	 	H.	 	Discovery

	 	i.	 	Requests for Production of Documents: All requests for the production of
documents must be served no later than five (5) days after the date of
the Initial Conference. Within twenty (20) days after receipt of a request for
production of documents, a party shall (a) serve responses and objections to the
request, (b) produce all responsive, non-privileged documents to the requesting
party, and (c) to the extent any responsive documents are withheld on the grounds
of attorney-client privilege or work product, produce a log identifying such
documents in the manner specified in Fed. R. Civ.
P. 26(b)(5). If, after reviewing a privilege log, the requesting party believes
attorney-client privilege or work product protection was improperly claimed by
the producing party with respect to any document, the requesting party may ask
the Presiding Arbitrator to conduct an in-camera inspection of the same. With
respect to documentary and other discovery produced in any MDR proceeding by
BCBSA, the fact that a party’s CEO or other senior officers may serve on the
BCBSA Board of Directors, BCBSA Board Committees or other BCBSA work groups,
task forces and the like, shall not be a basis for defeating an otherwise valid
claim of attorney-client privilege or work product protection over such
documentary or other discovery materials by BCBSA.
	 
	 	ii.	 	Requests for Admissions: Requests for Admissions may be served up to twenty-one
(21) days prior to the discovery cut-off set by the Presiding Arbitrator. 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.

Amended as of September 20, 2007

 

 

Page 11 of 23

	 	iii.	 	Depositions: As a general rule, the parties will not be permitted to take
party or non-party 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.
The parties will be permitted to take de bene esse deposition1 testimony
to the fullest extent permitted by law of any witness who cannot be compelled to
testify at the Arbitration Hearing. No deposition, for discovery purposes or
otherwise, shall exceed three (3) hours, excluding objections and colloquy of
counsel. Depositions may be recorded in any manner recognized by the Federal Rules
of Civil
Procedure and the parties shall specify in each notice of deposition or request for
permission to take deposition testimony the manner in which such deposition shall
be recorded.
	 
	 	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(a)(2)(B) ten (10) days prior to the discovery cut-off set by the Presiding
Arbitrator. If a party intends to present the testimony of a rebuttal expert
witness during the Arbitration 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(a)(2)(B) within twenty (20) days after the date on which the written
statement of the expert witness whose testimony is to be rebutted was produced.
	 
	 	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 thirty
(30) days from the date of the Administrative Conference without the agreement of
all parties.

Amended as of September 20, 2007

 

			
	1	 	As used in these Rules, “de bene esse deposition” means a deposition that is not
taken for discovery purposes, but is taken for the purpose of reading part or all of the deposition
transcript into the record at the Arbitration Hearing, to the extent permitted by the Panel,
because the witness cannot be compelled to testify at the Arbitration Hearing or has exercised a
right provided under these Rules to provide deposition testimony in lieu of testimony at the
Arbitration Hearing.

 

 

Page 12 of 23

	 	vi.	 	Additional discovery: Any additional discovery will be at the discretion of
the Presiding Arbitrator.
	 
	 	vii.	 	Discovery Disputes: Any discovery disputes shall be raised by motion to the
Presiding Arbitrator, who is authorized to resolve all such disputes, and whose
resolution will be binding on the parties unless modified by the Arbitration Panel.
Prior to raising any discovery dispute with the Presiding Arbitrator, the parties
shall meet and confer, telephonically or in person, in an attempt to resolve or
narrow the dispute. 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.
	 
	 	viii.	 	Extensions: The time for responding to discovery requests may be extended by
the Presiding Arbitrator for good and sufficient cause shown. Any request for such
an extension shall be made in writing.

	 	I.	 	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.

Amended as of September 20, 2007

 

 

Page 13 of 23

	 	J.	 	Subpoenas on Third Parties

     Pursuant to, and consistent with, the Federal Arbitration Act, 9 U.S.C. § 9 et seq., and
subject to Paragraph 3.G(iii) above, a party may request the issuance of a subpoena on any third
party, including but not limited to any third party Blue Plan or any officer, employee or director
of a third party Blue Plan, to compel deposition testimony or the production of documents, and, if
good and sufficient cause is shown, the Panel shall issue such a subpoena.

	 	K.	 	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.

	 	L.	 	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 shall
submit to each other party a list of all expert and fact witnesses (but not including rebuttal fact
witness) that such party intends to have testify at the Arbitration Hearing and a brief summary of
the testimony each such witness is expected to give. In addition, no later than five (5) days prior
to the Arbitration, each party may submit to each other party and to the Panel a Response
Arbitration Hearing Memorandum which sets forth any response to another party’s Arbitration Hearing
Memorandum.

Amended as of September 20, 2007

 

 

Page 14 of 23

	 	M.	 	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; provided, however, that a party may refuse to
produce a director to testify if, within two (2) days of receiving a notice requesting the
attendance of such director at the Arbitration Hearing, the party agrees to make the director
available for a de bene esse deposition at a mutually convenient time at any location within fifty
(50) miles of the director’s primary residence chosen by the party requesting the director’s
testimony. 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.

     Pursuant to, and consistent with, the Federal Arbitration Act, 9 U.S.C. § 9 et seq., twenty
(20) days or more prior to the Arbitration Hearing, a party may request the issuance of a subpoena
on any third party, including but not limited to any third party Blue Plan, BCBSA or any officer,
employee or director of a third party Blue Plan or BCBSA for the purpose of providing
noncummulative testimony at the Arbitration Hearing, and, if good and sufficient cause is shown,
the Panel shall issue such a
subpoena; provided however, that a director of a third party Blue Plan or BCBSA may refuse to
testify if, within two (2) days of receiving a subpoena requesting the attendance of such director
at the Arbitration Hearing, the director agrees to make him/herself available for a de bene esse
deposition at a mutually convenient time at any location within fifty (50) miles of the director’s
primary residence chosen by the party requesting the director’s testimony. Each Blue Plan agrees to
waive, on its own behalf and on behalf of its directors and officers, any objection it otherwise
might have to any such subpoena based on service, venue or extraterritoriality.

Amended as of September 20, 2007

 

 

Page 15 of 23

	 	N.	 	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.
	 
	 	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.

Amended as of September 20, 2007

 

 

Page 16 of 23

	 	 	 	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 17 of 23

	 	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

	 	O.	 	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.

Amended as of September 20, 2007

 

 

Page 18 of 23

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

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

	 	P.	 	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.

 

 

Page 19 of 23

	 	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.

	 	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.

 

 

Page 20 of 23

	 	E.	 	Expenses

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

	 	F.	 	Disqualification or Disability of A Panel Member

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

	 	i.	 	shall designate a replacement, subject to the right of any party to challenge
such replacement for cause.
	 
	 	ii.	 	shall decide the extent to which previously held hearings shall be repeated.

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

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

 

 

Page 21 of 23

	 	G.	 	Extensions of Time

     Subject to the provisions of Paragraph 3.H.(viii), any time limit set forth in these Rules may
be extended upon agreement of the parties and approval of: (1) the Mediator if the proceeding is
then in Mediation; (2) the Administrator if the proceeding is in Arbitration, but no Arbitration
Panel has been selected; or (3) the Arbitration Panel, if the proceeding is in Arbitration and the
Arbitration Panel has been selected.

	 	H.	 	Intervention

     The Plans, their Controlled Affiliates, and BCBSA, to the extent subject to
MMDR pursuant to their License Agreements, shall have the right to move to intervene in any pending
Arbitration. A written motion for intervention shall be made to: (1) the Administrator, if the
proceeding is in Arbitration, but no Arbitration Panel has been selected; or (2) the Arbitration
Panel, if the proceeding is in Arbitration and the Arbitration Panel has been selected. The written
motion for intervention shall be delivered to the BCBSA Corporate Secretary (which shall also
constitute service on the BCBSA if it is a respondent) and to any Plan(s) and/or Controlled
Affiliate(s) which are parties to the proceeding. Any party to the proceeding can submit written
objections to the motion to intervene. The motion for intervention shall be granted upon good cause
shown. Intervention also may be allowed by stipulation of the parties to the Arbitration
proceeding. Intervention shall be allowed upon such terms as the Arbitration Panel decides.

	 	I.	 	BCBSA Assistance In Resolution of Disputes

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

	 	J.	 	Neutral Evaluation

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

Amended as of September 20, 2007

 

 

EXHIBIT 5

Page 22 of 23

	 	K.	 	Recovery of Attorney Fees and Expenses

	 	i.	 	Motions to Compel

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

	 	ii 	 	Recovery of Fees, Expenses and Costs

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

	 	iii 	 	Requests for Reimbursement

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

Amended as of September 20, 2007

 

 

EXHIBIT 5

Page 23 of 23

	L.	 	Calculation of Time and Deadlines

          In computing any period of time prescribed or allowed under these rules, the day of the act or
event from which the designated period of time begins to run shall not be included. The last day of
the period so computed shall be included, unless it is a Saturday, a Sunday, or a legal holiday, in
which event the period runs until the end of the next day which is not one of the aforementioned
days. When the period of time prescribed is less than six (6) days, intermediate Saturdays, Sundays
and legal holidays shall be excluded in the computation. As used in this rule, “legal holiday”
includes New Year’s Day, Martin Luther King, Jr. Day, Washington’s Birthday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day, Christmas Day and any
other day appointed as a holiday by the President or the Congress of the United States.

Amended as of September 20, 2007

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