Document:

exv10w14

  

Exhibit 10.14

BLUE CROSS

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
 Triple-S Salud, Inc. (“Controlled Affiliate”), a Controlled Affiliate of the Blue Cross Plan(s), known
as  Triple-S Management Corporation  (“Plan”), which is also a Party signatory hereto.

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

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

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

1. GRANT OF LICENSE

     Subject to the terms and conditions of this Agreement, BCBSA hereby grants to 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;

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	 	(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;
	 
	 	(ix)	 	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.

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     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.

     C. 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.

Amended as of June 16, 2005

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

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     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.

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     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 (desribed 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

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The Re-Establishment Fee shall be indexed to a base fee of $80. The ReEstablishment Fee
through December 31, 2005 shall be $80. The Reestablishment 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 ReEstablishment 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

Amended as of June 16, 2005

9

 

any costs associated with reestablishing the Service Area, including payments made by BCBSA
to a Plan or Plans (or their Licensed Controlled Affiliates) for purposes of replacing the
Controlled Affiliate.

     (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 jurisdiction, 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 Cross and Blue Cross
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 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 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 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 a            Controlled Affiliate is not a            Controlled Affiliate’s
is not a former            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 5,8,9A,11, Standards 8, 10(C),
Standards 5,8,9B,12 12 Standards 5,8,12 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 Cross 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 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 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 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 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 November 15, 2007

27

 

EXHIBIT A (continued)

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 Captial (HRBC) Report.

Amended 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 BlueCard Program obligations in a form, and from a
guarantor, acceptable to BCBSA.

Amended 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 November 15, 2007

32

 

EXHIBIT 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 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 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 June 14, 2007

35exv10w24

Exhibit 10.24

EMPLOYMENT CONTRACT

     In the City of San Juan, Puerto Rico, on March 4, 2010.

APPEAR

     AS THE FIRST PARTY: Triple-S Management Corporation, a corporation organized and doing
business under the laws of the Commonwealth of Puerto Rico, represented herein by Luis A. Clavell
Rodríguez, M.D., of legal age, married, medical doctor, resident of Guaynabo, Puerto Rico, and
Chairman of the Board of Directors of Triple-S Management Corporation, with authority given by the
Board of Directors to execute this Contract.

     AS THE SECOND PARTY: Ramón M. Ruiz Comas, of legal age, married, executive and resident of
Guaynabo, Puerto Rico.

     The appearing parties have the legal capacity to execute this Contract and to such effect,
they freely and voluntarily

STATE

     FIRST: That in order to abbreviate and facilitate the understanding and analysis of this
Contract, the terms below will have the meaning set forth in the following definitions:

	 	a.	 	“ASTB” — shall mean the Annual Short Term Bonus, as specified in Article 7 of
this Contract.
	 
	 	b.	 	“Base Salary” — shall mean that provided in Article 7(a) of this Contract.
	 
	 	c.	 	“Board” — shall mean the Board of Directors of Triple-S Management
Corporation.
	 
	 	d.	 	“CEO” — shall mean the Chief Executive Officer of Triple-S Management
Corporation, Ramon M. Ruiz Comas.
	 
	 	e.	 	“Change of Control” — shall have the meaning ascribed to such term in Article
21(c) of this Contract.
	 
	 	f.	 	“Compensation Policy” — shall mean the Executive Compensation Philosophy
approved by the Board of Directors of TSM on February 20, 2007, as may be amended from
time to time.
	 
	 	g.	 	“Contract” — shall mean this Employment Contract.
	 
	 	h.	 	“Confidential Information” — shall have the meaning ascribed to such term in
Article 15 of this Contract.
	 
	 	i.	 	“Fringe Benefits” — shall mean those fringe benefits provided pursuant to the
standards and policies of TSM generally applicable to its executives, as may be

1

 

	 	 	 	modified from time to time by the Board of Directors, which are referred to in Article
10 of this Contract and identified in Exhibit A to this Contract as “Fringe Benefits.”
	 
	 	j.	 	“Good Cause” — shall have the meaning ascribed to such term in Article 21(d)
of this Contract.
	 
	 	k.	 	“Cause” — shall mean that the CEO shall have incurred in any of the acts or
conduct described in Article 14 of this Contract.
	 
	 	l.	 	“Other Benefits” — shall mean those benefits, other than the Fringe Benefits,
provided by the standards and policies of TSM generally applicable to its executives,
as may be modified from time to time.
	 
	 	m.	 	“Subsidiary Corporations” — shall mean the subsidiary corporations of TSM.
	 
	 	n.	 	“TSM” — shall mean Triple-S Management Corporation.
	 
	 	o.	 	 “Total Compensation” — shall have the meaning ascribed to such term in Article
21(d) of this Contract.
	 
	 	p.	 	“Without Cause” — shall mean a termination of employment of the CEO for a
cause other that regarded as “Cause” under Article 14 of this Contract.

     SECOND: That TSM is a holding company of entities engaged in the business of insurance,
businesses related to insurance and other types of businesses and other activities, with its
principal office located in the Commonwealth of Puerto Rico.

     THIRD: That the CEO is a professional with vast experience in business, a bachelors degree in
business administration and a law degree, both from the University of Puerto Rico, and
certification as a Certified Public Accountant. Additionally, the CEO has knowledge of the
insurance business and since June 11, 1990, has served in several capacities in TSM, including as
President and CEO of TSM during the past seven and a half years.

     FOURTH: That the parties hereto, intending to be legally bound hereby, in consideration of the
premises and mutual covenants contained herein and for other good and valuable consideration, the
receipt of which is hereby acknowledged, agree to enter into this Contract subject to the following
Terms and Conditions:

GENERAL PROVISIONS

1. Excellence in Performance. By this Contract, the CEO agrees to devote full time,
attention and energies to the business of TSM and the protection of the best interests of
TSM and its Subsidiary Corporations.

2. Official Title. The CEO will hold the title of President and Chief Executive Officer of
Triple-S Management Corporation.

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3. Hierarchy. The CEO, in carrying out his duties under this Contract, shall report directly
to the Board.

4. Standards and Fiduciary Duty. The CEO will be obligated to (i) faithfully and fully
comply with each of the guidelines, rules, regulations and administrative policies
established by TSM and (ii) develop and implement the strategies, plans and business methods
and the operational controls that are necessary for the successful administration, direction
and protection of the best interests of TSM. The CEO will be loyal to TSM and its Subsidiary
Corporations at all times and will recognize the fiduciary duty entailed by the acceptance
of the employment.

SPECIFIC PROVISIONS

5. Principal Functions. The functions and duties that the CEO will perform under this
Contract will be all those necessary and proper of the chief executive officer of a
corporation of the size, complexity and nature of TSM. The functions which the CEO must
perform will be invariably for the protection of TSM and its best interests.

6. Incidental Functions. The CEO must also perform all those duties, functions, tasks and
incidental assignments which the Board assigns to him from time to time.

7. Base Salary; Incentive Compensation. The CEO will be compensated for his services under
this Contract as follows:

	 	a.	 	Base Salary. An annual salary as set forth in Exhibit
A of this Contract, as it may be modified from time to time pursuant to Article
9 of this Contract.
	 
	 	b.	 	Annual Short Term Bonus (ASTB). An Annual Short Term
Bonus to be computed each year pursuant to the Compensation Policy approved by
the Board. The determination of the ASTB will remain at the sound discretion
of the Board upon interpreting and applying said policy.
	 
	 	c.	 	Other Incentive Compensation. The Board may, but is
not obligated to, provide other types of short or long term incentive
compensation to the CEO. If any other incentive compensation is approved by
the Board, said compensation shall be provided in accordance with the terms and
conditions established by the Board.

8. Deferred Compensation. The CEO shall have the option, from time to time, to defer the
payment of any of the compensation set forth in Article 7 above, as he wishes, provided such
process complies with the applicable provisions of law and in accordance with a deferred
compensation plan approved by the Board.

9. Annual Review of Compensation. The compensation of the CEO will be reviewed yearly
pursuant to the Compensation Policy, provided that the Base Salary shall never be less than
the amount agreed to in Exhibit A to this Contract.

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10. Fringe Benefits; Other Benefits; Reimbursement of Expenses. The CEO will have the right
to the Fringe Benefits and the Other Benefits. Additionally, TSM will reimburse and/or pay
to the CEO the following items upon submission of documentation reasonably satisfactory to
TSM of such expenses:

	 	a.	 	necessary business, travel and miscellaneous expenses that are
reasonably incurred in the performance of his official functions;
	 
	 	b.	 	the right to the use of an automobile of a category in
accordance with the position held;
	 
	 	c.	 	the annual fees of a private club and of two business related
clubs;
	 
	 	d.	 	the annual fees of two professional associations such as the
Association of Certified Public Accountants and the American Institute of
Certified Public Accountants; and
	 
	 	e.	 	any other related expenses which the Board deems necessary
for the exercise of his functions.

11. Withholdings. TSM will withhold all amounts from the compensation of the CEO pursuant to
law, such as social security and income tax. The CEO is authorized to acquire coverage
additional to that provided by the life insurance presently in effect in Triple-S Vida,
Inc., at his cost and expense.

12. Effectiveness and Expiration of the Contract. This Contract shall be effective as of
January 1, 2010 and shall end on December 31, 2012, subject to earlier termination as
provided in this Contract.

     The parties may renew the Contract by written agreement which will be executed on or
before its expiration date. The parties are not obligated to renew the Contract. If either
party wishes to renew the Contract, it will notify the other party in writing at least
ninety (90) days prior to the expiration of the Contract. If either party gives notice of
its intention to renew but the other does not wish to renew the Contract, or if both parties
notify their intention to renew but do not reach an agreement as to the terms of the renewed
contract, the employment of the CEO will terminate and the Contract will expire on December
31, 2012, except for Articles 15, 17 and 18, which shall survive such expiration. Upon
the occurrence of any of the events described above in this paragraph, TSM will pay the CEO
the equivalent of one year’s Base Salary in monthly installments and will extend the Fringe
Benefits for one year, but only if the CEO was not the party notifying his interest not to
renew the Contract.

     If the negotiations for a new contract extend beyond the expiration date and the CEO
continues performing his services to TSM, TSM will continue to pay the CEO in accordance
with Articles 7 and 10 of this Contract until such date as a new contract is signed or
either party notifies, in writing, its decision to discontinue the negotiations, at which
time all further CEO compensation will cease, except that TSM will pay the CEO

4

 

the equivalent of one year’s Base Salary in monthly installments and will extend the
Fringe Benefits for one year if the CEO is not the party that notifies its decision to
discontinue the negotiations. The CEO and TSM hereby accept and acknowledge that the
Contract will not be automatically renewed nor deemed to have been renewed because of the
extension of the negotiations beyond the expiration date.

     Upon the expiration of this Contract or discontinuation of the negotiations described
above, the CEO will also have the right to payment of the deferred compensation under
Article 8, all vested amounts under TSM’s pension plan and the no competition compensation
provided in Article 18.

13. Termination Without Cause. The parties agree that TSM has full rights to unilaterally
terminate this Contract and the CEO’s employment hereunder Without Cause at any time prior
to its expiration date, provided that the terms of Articles 15, 17 and 18 shall continue in
effect. In such event of termination, the only obligations of TSM under this Contract will
be to:

	 	a.	 	pay to the CEO the Base Salary up to the normal expiration date
of this Contract, or the Base Salary of one year, whichever is greater,
withholding from said payments those amounts pursuant to law. TSM shall have
the option to make that payment in a lump sum or in monthly payments, which
will not extend beyond the period remaining of the Contract or one year,
whichever is greater;
	 
	 	b.	 	extend to the CEO the Fringe Benefits for the remainder of the
term of this Contract or one year, whichever is longer;
	 
	 	c.	 	pay any deferred compensation under Article 8;
	 
	 	d.	 	pay all amounts related to the CEO’s vested rights under TSM’s
pension plan; and
	 
	 	e.	 	pay the no-competition compensation provided in Article 18.

14. Termination with Cause. It will be understood that TSM shall have “Cause” for the
termination of this Contract and the employment of the CEO hereunder, when the CEO incurs in
any of the following:

	 	a.	 	material breach of his obligations and duties as specified in
this Contract;
	 
	 	b.	 	conviction or allegation of nolo contendere of any felony or
the conviction or allegation of nolo contendere of a misdemeanor involving
fraud, dishonest or disreputable conduct or moral torpitude;
	 
	 	c.	 	insubordination;

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	 	d.	 	material non-compliance of this Contract or the rules,
regulations, guidelines, policies, or code of ethics of TSM;
	 
	 	e.	 	improper or disorderly conduct;
	 
	 	f.	 	the existence of a conflict of interest not previously
disclosed to the Board; or
	 
	 	g.	 	substantial reduction of the operations of TSM and its
subsidiaries.

     Should the termination of this Contract by TSM be for Cause, or should this Contract be
terminated due to CEO’s resignation or death, the CEO will not have a right to further
compensation, payment or any benefit under this Contract as of the date of the termination.
Notwithstanding the above, the CEO will have the right to receive payment of the Base Salary
earned up to the termination date; the liquidation of Other Benefits accumulated up to such
date; the payment of the amount accumulated as deferred compensation pursuant to Article 8
of this Contract; and the payments regarding the vested rights under TSM’s pension plan. If
the termination of the Contract is for Cause or due to resignation, the CEO will also have
the right to the payment provided in Article 18.

15. Confidentiality. The CEO recognizes that the knowledge of information concerning, or
the relations with the employees, clients and agents of TSM and its Subsidiary Corporations,
that the CEO has acquired and acquires during his employment with TSM are valuable and
exclusive assets of TSM. The CEO accepts that he will not use for his benefit or for the
benefit of third parties, nor disclose, without the written consent of TSM, any information,
data, documentation or material or substantial knowledge about TSM and/or its Subsidiary
Corporations, its business, its personnel or its plans, to any person, company, corporation,
or other entity for any reason. The CEO accepts that all memoranda, notes, records and
other documents, as well as information maintained electronically, generated or compiled by
the CEO or which has been made available to the CEO about TSM’s business, its Subsidiary
Corporations, its employees and its clients are the exclusive property of TSM and will be
returned by the CEO to TSM at the conclusion of his employment or at any other time at the
request of TSM.

     The CEO accepts that the services he renders and will render to TSM and its
subsidiaries are of a special and unique nature and that consequently, he will have and has
had access to confidential information about TSM’s business, its subsidiaries and its
clients. Hence, the CEO is aware that if he materially breaches any of the provisions of
this Contract with regard to these confidentiality agreements and non use of the
confidential information, TSM may suffer irreparable damage, and, therefore, in addition to
any other remedy which TSM may have under this Contract or the law, TSM will have the right
to request an injunction restraining the CEO from breaching or continuing to breach the
provisions of this Contract. The term “Confidential Information” means:

	 	a.	 	The information described above;
	 
	 	b.	 	Proprietary information of TSM or its Subsidiary Corporations
or their clients;

6

 

	 	c.	 	Information marked or designated by TSM as confidential;
	 
	 	d.	 	Information, written or unwritten, and in any manner and
regardless of not having been designated as confidential, which the CEO knows
is treated as confidential by TSM; and
	 
	 	e.	 	Information provided to TSM by third parties that TSM is in the
obligation of maintaining confidential, specifically including client lists and
client information.

     “Confidential Information” does not include any information which TSM discloses
publicly, becomes public without the CEO’s fault, is public in nature or is collected
routinely by companies like TSM.

     The provisions of this Article 15 will survive and continue in effect after the
expiration or earlier termination of this Contract for any reason.

16. Documents. At the termination of this Contract, the CEO agrees to return all the
documents, objects, materials and other information obtained by him with regard to the
business of TSM and its Subsidiary Corporations, recognizing, in turn, that said documents,
objects, materials and related information constitute the exclusive property of TSM.

17. TSM Personnel. The CEO agrees not to solicit nor promote that the personnel of TSM
and/or its Subsidiary Corporations end, voluntarily or involuntarily, their employment to
join him or third parties in other efforts that are not for the benefit of TSM during the
duration of this Contract and during twelve (12) months after the expiration or earlier
termination of this Contract.

18. Covenant Not to Compete. During the term of this Contract and for a period of twelve
(12) months after the expiration or earlier termination thereof, or of any extension of the
same, the CEO, directly or indirectly, personally or through an entity or business, will not
act as consultant, agent, principal, partner, stockholder, corporate officer, employee,
director or in any individual or representative capacity to engage or participate in any
business which directly competes with the business of TSM or its Subsidiary Corporations.

     It is agreed that the restrictions provided above will apply after the termination of
this Contract, be it by its expiration or by resignation of the CEO or by dismissal of the
CEO, with or without Cause, by TSM.

     The restrictions provided above will apply exclusively within the territory of the
Commonwealth of Puerto Rico.

     In consideration for the covenant not to compete provided above, upon the expiration or
earlier termination of this Contract or of an extension of the same, TSM will

7

 

compensate the CEO an amount equal to the Base Salary, payable in twelve (12) monthly
installments starting on the month following the date of expiration or earlier termination
of this Contract.

     The CEO agrees and accepts that the term, the restrictions, the geographical area and
the compensation to be received in connection with this covenant not to compete are
reasonable and that the aforementioned payment is sufficient cause for the same.

     In addition, during the term of this Contract and any extension of the same, the CEO
will not, directly or indirectly, provide the services herein contracted to any person or
entity other than TSM and its Subsidiary Corporations. During the term of this Contract and
any extension of the same, the CEO will not act nor, directly or indirectly, participate
personally or through any entity or business, as a consultant, agent, principal, partner,
stockholder, corporate officer, director with any person or entity other than TSM or its
Subsidiary Corporations, excluding from this limitation the participation in boards of
directors, Blue Cross Blue Shield Association committees, professional associations, or
civil and professional entities, provided said participation, in the opinion of the Board,
does not interfere with the CEO’s duties nor TSM’s best interests. These restrictions will
apply to any location in which TSM does or may do business during the effectiveness of this
Contract.

     The CEO acknowledges that if he breaches this covenant not to compete during his
employment or after the expiration or earlier termination of this Contract, TSM may suffer
irreparable damages, and therefore, in addition to any other remedy which TSM may have under
this Contract or the law, TSM shall have the right to request an injunction restraining the
CEO from breaching or continuing to breach this covenant.

19. Dispute Resolution. Both parties agree to try to resolve in good faith any dispute
arising under this Contract or related to its termination using the most cost effective
resources and will try to avoid any unnecessary costs. In addition, both parties shall make
all good faith efforts to maintain all information regarding any dispute confidential.

20. Court proceedings. If the parties are not able to resolve any dispute arising under this
Contract or related to its termination for any reason including alleged violations of the
laws of Puerto Rico or of the United States which prohibit discrimination in employment, the
aggrieved party may proceed directly to a court of law within the Commonwealth of Puerto
Rico.

21. Change of Control.

	 	a.	 	If during the term of this Contract there occurs a “Change of
Control” of TSM, as this term is defined in sub-paragraph “c” of this Article
21, and as a result thereof the CEO resigns for “Good Cause” (as such term is
defined below) or is terminated from his employment Without Cause, the CEO will
have the right to receive from TSM a compensation for termination in
consideration for having remained as an employee of TSM and having failed to
pursue other

8

 

	 	 	 	present or potential professional or business opportunities. Such compensation
for termination will be a sum equivalent to twice the “Total Compensation” (as
such term is defined below) of the CEO, payable on or before the thirtieth
(30th) day following the date on which the CEO concludes his employment as a
result of a Change of Control. TSM will also provide for the continuation of
the Fringe Benefits then in effect during twenty-four (24) months. The Fringe
Benefits shall not be payable in a lump sum and TSM’s obligation to pay such
Fringe Benefits will cease as soon as the CEO obtains employment with a
comparable benefit. Such compensation for termination shall be in substitution
of, and not in addition to, any compensation to which the CEO is entitled under
Articles 12, 13 or 14, but will not substitute his rights to payment of the
deferred compensation under Article 8, all vested amounts under TSM’s pension
plan, and compensation under Article 18 of this Contract.
	 
	 	b.	 	For purposes of this Article 21, the term “Total Compensation”
means: (i) the highest Base Salary of the CEO paid to him in any of the three
(3) years prior to the date of the Change of Control, in addition to the
average of the ASTB of the three (3) years prior to said date.
	 
	 	c.	 	A “Change of Control” will be understood to have occurred if:

	 	(i)	 	any party acquires ownership of TWENTY-FIVE PERCENT
(25%) or more of the total votes required for the election of the directors
of TSM’s Board of Directors, or of such amount which, based on the
cumulative vote, if this were allowed by the Articles of Incorporation and
By-Laws of TSM, would permit such party to elect TWENTY-FIVE PERCENT (25%)
or more of the directors of TSM;
	 
	 	(ii)	 	as a result of, or in connection with, a tender offer
or exchange offer of TSM stock, a consolidation, merger or other business
combination, sale of assets or any combination of the aforementioned
transactions, the persons who were directors of TSM’s Board of Directors
prior to such transaction fail to constitute a majority of the Board of
Directors of TSM or its successor;
	 
	 	(iii)	 	there is a change of at least 30% of the directors of
TSM’s Board of Directors as a result of a “proxy fight”, as such term is
defined in Regulation 14A of the Securities Exchange Act of 1934, as
amended; or
	 
	 	(iv)	 	a sale or transfer of substantially all the assets of
TSM to another corporation not affiliated to TSM occurs.

	 	 	 	Notwithstanding the provisions of this Article 21, a Change of Control of TSM
will not be deemed to have occurred in the event that TSM suffers a

9

 

	 	 	 	corporate reorganization which does not materially alter the composition of
directors or the percentage of votes owned by the existing stockholders.
	 
	 	d.	 	Resignation for “Good Cause” for purposes of this Article 21
shall mean:

	 	(i)	 	a change in the nature or scope of the CEO’s duties or
functions from those performed on the date immediately preceding the date
of the Change of Control;
	 
	 	(ii)	 	a reduction in the CEO’s Base Salary from that received
on the date immediately preceding the date of the Change of Control;
	 
	 	(iii)	 	a reduction in the CEO’s ability to participate in the
compensation plans, such as bonus, stock options, incentives or other
compensation plans, in which he participated on the date immediately
preceding the Change of Control, which reduction will be determined in
comparison to the opportunities that TSM (including its Subsidiary
Corporations) provides to executives with comparable duties or the
opportunities of participation that the CEO had under said plans on the
date immediately preceding the date of the Change of Control;
	 
	 	(iv)	 	a change in the location of the CEO’s principal place
of employment of more than twenty-five miles from the place where the CEO
maintained his work office on the date immediately preceding the date of
the Change of Control; or
	 
	 	(v)	 	the reasonable determination by the Board to the effect
that, as a result of the Change of Control and a change in the
circumstances thereafter affecting the employment position of the CEO, the
CEO is unable to exercise the authority, powers, functions or duties
assigned to his position in TSM on the date immediately preceding the date
of the Change of Control.

MISCELLANEOUS PROVISIONS

22. Interpretation of the Contract. This Contract is the result of the negotiations of the
parties, so that no presumption or inference may be made in favor of either of them.

23. Assignment. The CEO may not assign, in whole or in part, to a third party the his
obligations or commitments under this Contract.

24. Entire Agreement. This Contract is the full and complete agreement between the
appearing parties. Any other prior agreement, contract or covenant shall not be construed as
valid or in effect.

25. Amendments. Any amendments to this Contract must be made by mutual agreement of the
parties, in a written instrument executed by the parties or their legal

10

 

representatives. Notwithstanding the foregoing, TSM has sole discretion to repeal, modify
or create any standard, policy, rule or operational or employment condition of all
employees, including compensation policies, benefits and insurance.

26. Section Headings. The headings included in this Contract have been added to facilitate
its reading and analysis. At no time shall said headings be construed to constitute the
agreement between the parties or amend the content of the terms that each one of them
precedes.

27. Separability. In the event that any term of this Contract is declared void or illegal,
the rest of its terms will continue in full force and effect.

28. Interpretation. This Contract shall be construed and enforced in accordance with the
laws of the Commonwealth of Puerto Rico.

     IN WITNESS WHEREOF, the parties accept, acknowledge and execute this Contract in San Juan,
Puerto Rico, on the date indicated above.

	 	 	 	 	 	 	 
	TRIPLE-S MANAGEMENT CORPORATION
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	/s/ Luis A. Clavell Rodríguez
	 	 	 	/s/ Ramón M. Ruiz-Comas	 	 
	 

	 	 
	 	 

	 	 
	By: Luis A. Clavell Rodriguez,
M.D. 

       Chairman of the Board of Directors
	 	 	 	Ramón M. Ruiz Comas  	 	 

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EXHIBIT A

TO EMPLOYMENT CONTRACT

dated March 4, 2010

between

Triple-S Management Corporation

and Ramón M. Ruiz Comas

	 	1)	 	Base Salary: $611,949
	 
	 	2)	 	Fringe Benefits:

	 	•	 	Christmas Bonus
	 
	 	•	 	Family health insurance
	 
	 	•	 	Long term disability insurance
	 
	 	•	 	Life insurance

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00169-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00169-of-00352.parquet"}]]