Document:

<PAGE>
                                                                    EXHIBIT 10.9

             THIS IS A FAIR AND ACCURATE ENGLISH TRANSLATION OF THE
           ORIGINAL EMPLOYMENT CONTRACT BY AND BETWEEN DR. ALEJANDRO
                E. FRANCO AND TRIPLE-S, INC. WHICH IS IN SPANISH

                               EMPLOYMENT CONTRACT

In the city of San Juan, Puerto Rico, today the 6th of December of 2001.

                                     APPEAR

FOR THE FIRST PART: TRIPLE-S, INC., a corporation organized and engaged in
business in conformance with Commonwealth of Puerto Rico laws, represented here
by its Board of Director's President, DR. FERNANDO L. LONGO, and by its Senior
Executive Officer, MR. MIGUEL A. VAZQUEZ DEYNES, of legal age, married, the
latter a physician by trade, and residing in Guaynabo, Puerto Rico, and the
former an executive residing in Carolina, Puerto Rico, whose authorities and
duties they are prepared to justify as soon as it is required of them.

FOR THE SECOND PART: ALEJANDRO E. FRANCO LINARES, of legal age, married, a
physician by trade and a resident of Rio Piedras, Puerto Rico.

The undersigned , whom I know personally and whose personal circumstances are
known to me by their declarations, assure me they have, and to my knowledge and
judgement have the legal capacity to execute this document, and to that effect,
freely and voluntarily.

                                     EXPOSE

FIRST: For purposes of abbreviation and ease in understanding and analyzing this
agreement of intentions, the following terms shall have the meaning stated in
these definitions:

         a.       The "SEO"; The Senior Executive Officer of Triple-S, Inc., Mr.
                  Miguel A. Vazquez Deynes

         b.       The "BOARD"; The Board of Directors of Triple-S, Inc.

         c.       The "PBD"; President of the BOARD, Dr. Fernando L. Longo

         d.       The "VMDP"; The Senior Vice-president of the Medical, Dental
                  and Professional Matters Division, Dr. Alejandro E. Franco
                  Linares,

                  And

         e.       The "CONTRACT"; This Employment Contract.

SECOND: That Triple-S, Inc. is a company dedicated, among other activities, to
providing insurance coverage for the receipt of medical-hospital services
throughout the Commonwealth of Puerto Rico.
<PAGE>

THIRD: that the VMDP is a vastly experienced professional in the Medical Field,
having obtained a Doctor of Medicine Degree from the University of Puerto Rico,
interning and specializing in internal medicine and Rheumatology at the
University of Puerto Rico School of Medicine's University Hospital. The VMDP
also is knowledgeable about health insurance plans, and the concepts of limiting
costs and of professional relationships, having served as Senior Vice-president
of the Medical, Dental and Professional Matters Division of Triple-S, Inc. since
June 10, 1996.

FOURTH: Since the VMDP's employment contract expires on December 31, 2001, the
parties to this agreement have agreed that the VMDP keep acting as such, with
obligations, functions, responsibilities, powers and rights similar to the ones
that constitute the employment relationship which will furthermore be agreed to
and noted here.

FIFTH: For purposes of establishing the internal relationship between both
contracting parts as herein stated, they agree to the present CONTRACT subject
to the following Clauses and Conditions.

                               GENERAL PROVISIONS

         1.       EXCELLENCE IN PERFORMANCE. Through this CONTRACT, the VMDP is
                  under the obligation of dedicating and directing all of his
                  working time, intellect, attention, energy, experience and
                  knowledge towards the protection of Triple-S, Inc.'s best
                  interests, within the framework of excellence his capacity and
                  ability permit.

         2.       OFFICER AND TITLE. The VMDP will carry the Title of Senior
                  Vice-president of the Medical, Dental and Professional Matters
                  Division of Triple-S, Inc.

         3.       HIERARCHY. The VMDP will respond directly to Triple-S, Inc.'s
                  SEO, and will inform the Board of Directors about Triple-S,
                  Inc.'s medical, dental and professional problems.

         4.       FIDUCIARY NORMS AND OBLIGATIONS. The VMDP will be under the
                  obligation to conform loyally and fully with all
                  administrative guidelines, rules, regulations and norms
                  established by Triple-S, Inc., developing and establishing the
                  operational controls necessary to protect Triple-S, Inc.'s
                  best interests. The VMDP will be loyal to Triple-S, Inc. at
                  all times, and will solemnly recognize the obligation
                  represented in his acceptance of the current title.

                               SPECIFIC PROVISIONS
<PAGE>

         5.       PRINCIPAL FUNCTIONS. The functions the VMDP will undertake
                  through this contract will be all those related to Triple-S,
                  Inc.'s medical, dental and professional matters, and he will
                  be the person the SEO will turn to in dealing with these
                  medical, dental and professional matters. The VMDP's functions
                  will invariably be performed in Triple-S, Inc.'s best
                  interests and for its protection. The VMDP will participate in
                  meetings held by the Professional Relations and Reasonable Fee
                  Committee, the Dental and Reasonable Fee Committee, the
                  Revision of Use and Reasonable Fee Committee, and in the Board
                  of Directors, in the role of Advisor. His presence will be
                  required in the meetings held by these committees and by the
                  Board of Directors, unless the President of the Committee in
                  question, or the Board's, excuse his presence.

         6.       INCIDENTAL OR ACCESSORY FUNCTIONS. The VMDP should also
                  fulfill all those functions, tasks and commissions, incidental
                  or accessory, which the SEO assigns him from time to time,
                  including his presence in other Board Committees.

         7.       ECONOMIC REMUNERATION. The VMDP will be economically
                  remunerated in the following manner for the services that, in
                  keeping with this CONTRACT, he is under the obligation to
                  fulfill:

         a.       Salary. An annual salary of $214,745.00, equivalent to
                  $17,895.42 a month.

         b.       Christmas Bonus. A Christmas bonus equivalent to 5% of his
                  annual salary, plus half a month's salary, plus any bonus
                  Triple-S, Inc. is obligated by law provisions to pay. This
                  Christmas bonus will be paid in conformance to the Triple-S,
                  Inc.'s policies and norms applicable to their management
                  employees, and as modified from time to time.

         c.       Optional Additional Annual Bonus. The Board of Directors can
                  also, at their option, grant an optional additional annual
                  bonus that will be computed by the Board of Directors each
                  year, as is established in the following clause.

         8.       COMPUTING THE OPTIONAL ADDITIONAL ANNUAL BONUS. The Optional
                  Additional Annual Bonus (AAB) will be determined annually, at
                  the Board of Director's option, immediately after Triple-S,
                  Inc. receives its financial statements for the pertinent
                  economic year, certified by their internal auditors. The AAB
                  will be credited to the VMDP as soon as the Board has
                  determined it, and according to the criteria it establishes
                  for its payment. The Board of Directors will compute the AAB
                  at the time it considers the Vice Presidents' AABs.
<PAGE>

         9.       DEFERRED COMPENSATION. The VMDP will have the power to, from
                  time to time, defer payments for any of the before mentioned
                  economic remuneration concepts in keeping with his wishes, if
                  and when such action is in accordance to the applicable law
                  provisions and to good corporate practices.

         10.      ANNUAL SALARY REVISION. The VMDP's SALARY will be reviewed
                  annually, effective January 1st of each year, beginning on
                  January 1, 2002. Said revision would take into account the
                  percent of change in Puerto Rico's general economic inflation
                  rate, as determined by the Planning Board for the previous
                  year, and other factors regarding compensation of other
                  Officers of same or similar position and responsibility within
                  the local industry and commerce, and any other relevant
                  factor. The BOARD shall do the computing of the salary change
                  at the time it reviews compensation to Vice-presidents.

         11.      FRINGE BENEFITS. The VMDP will have the right to all fringe
                  benefits such as: Retirement Plan, Health Plan, vacations,
                  sick leave, disability insurance and others, in conformance to
                  Triple-S, Inc.'s policies and norms as applicable to its
                  management employees, and as modified from time to time.

         Triple-S, Inc. also will reimburse or pay the VMDP the following:

         A.       Representation, travel and miscellaneous expenses which are
                  reasonably and necessarily incurred in carrying out his
                  official duties;

         B.       Annual membership fees to two professional associations such
                  as the Puerto Rico College of Physicians and Surgeons, and the
                  Puerto Rico Medical Association, per prior approval from the
                  SEO, and

         C.       any other related expenses that the SEO deems necessary in
                  carrying out his duties.

         12.      DEDUCTIONS. Triple-S, Inc. will make all deductions from the
                  VMDP's remuneration that the law requires, such as: social
                  security, retained income taxes, and his spouse's and any
                  other optional dependent's life and disability insurance
                  portion. The VMDP is authorized to acquire any life insurance
                  coverage in addition to the one currently held by Triple-S,
                  Inc. , at his own responsibility and cost.
<PAGE>

         13.      EXCLUSION FROM THE MINIMUM WAGE LAW. The VMDP recognizes that
                  the duties he will undertake are excluded from the Puerto Rico
                  Minimum Wage Law.

         14.      EFFECTIVENESS AND TERM OF CONTRACT. This contract's effective
                  date is established to be January 1, 2002 and its ending date
                  is December 31, 2005. The Board of Directors can, at their
                  option, renew this contract. The Board of Directors must
                  notify the VMDP no later than one year before the ending date
                  of this original contract term or of its renovation, of their
                  decision to renew or not renew it.

         If Triple-S, Inc. decides not to renew the Contract, it is under the
                  obligation to pay the VMDP one year's salary. Triple-S, Inc.
                  must also have fulfilled all obligations to the VMDP which
                  correspond to his contract's terms, including those regarding
                  compensation and fringe benefits. Disbursement of this amount
                  shall occur no later than the last effective date of this
                  contract. In case this contract is renewed and then terminated
                  before the renovation's ending date, Triple-S, Inc. is under
                  the obligation of providing the VMDP with the same
                  compensation.

         15.      UNILATERAL RESOLUTION- JUST CAUSE. It is understood that
                  Triple-S, Inc. is assisted by just cause for unilaterally
                  dissolving this CONTRACT when the VMDP incurs in any of the
                  following behaviors:

         a.       negligence in carrying out his duties, or their late,
                  inadequate or inept performance;

         b.       conviction of a felony or misdemeanor involving moral
                  depravation;

         c.       insubordination;

         d.       material non-conformance to corporate norms, rules and
                  agreements, or those of this CONTRACT;

         e.       improper or disorderly conduct;

         f.       existence of a conflict of interests;

         g.       total , temporary or partial closing of Triple-S, Inc.`s
                  operations;

         h.       employment reductions that result from Triple-S, Inc.'s
                  diminishing business volume.

         16.      UNILATERAL RESOLUTION. The parties agree that Triple-S, Inc.
                  has the right to dissolve this contract at any time before the
                  agreed ending date. To exercise this right, the PBD and the
                  SEO will jointly notify the VMDP thirty days before the
                  effective date of said unilateral dissolution. As a condition
                  for Triple-S, Inc. to exercise this right, it must proceed
                  immediately with the total cash liquidation of the balance of
                  this professional employment contract, in addition
<PAGE>

                  to the one year salary specified in paragraph 14, including
                  the fringe benefits, and subtracting the discounts applicable
                  by law. Triple-S, Inc. will have the option of continuing
                  monthly payments until the contract is completed.

         17.      PREMATURE TERMINATION- DEATH, DISABILITY OR BANKRUPTCY. If the
                  VMDP should die during this CONTRACT term, Triple-S, Inc. will
                  liquidate his wages through payment to the heirs. Besides the
                  life insurance the VMDP is entitled to as specified, and the
                  liquidation of his wages, the VMDP's heirs are not entitled to
                  any additional compensation.

         If the VMDP should suffer a significant mental or physical disability,
                  or if Triple-S, Inc. should be brought, voluntarily or
                  involuntarily, to a bankruptcy process, Triple-S, Inc. can, at
                  its option entirely, dissolve this contract unilaterally. This
                  without the assumption that the VMDP's rights are violated in
                  case of a physical disability, due to the disability insurance
                  stated before.

         For purposes of the last paragraph, it will be understood that the VMDP
                  suffers from significant physical or mental disability when he
                  absents himself from his employment for six consecutive
                  months, or he is absent in excess of NINETY PERCENT of said
                  SIX consecutive month period. In termination for any of the
                  before mentioned reasons, the payment of one year's salary
                  will not apply.

         18.      PREMATURE TERMINATION- TURNING 65 YEARS OLD. The VMDP, in
                  agreement with the SEO, can finalize this contract on the date
                  the VMDP turns 65 years old. This will be done through the
                  VMDP notification at least six months before the date he would
                  turn said age. In termination for the before mentioned
                  reasons, the payment of one year's salary will not apply.

         19.      PRIVILEGED MATERIAL- CONFIDENTIALITY. Except as formerly
                  stated, all the information Triple-S, Inc. shares with the
                  VMDP, or that he is privy to as a consequence of his employee
                  relationship with Triple-S, Inc., in the guise of any chores,
                  relationships, contacts, businesses, clients and duties, will
                  constitute privileged and confidential material.

         Consequently, the VMDP will not divulge said information to third
                  parties, including Triple-S, Inc. employees, functionaries or
                  officers who do not have a legitimate reason to know this
                  information. The confidentiality and privilege obligation
                  discussed here shall survive the conclusion, unilateral
                  resolution or termination of this CONTRACT.
<PAGE>

         20.      DOCUMENTS. At the end of this contract, the VMDP will keep or
                  return all documents, objects, materials and the rest of the
                  information he has obtained through Triple-S, Inc. business,
                  in the Triple-S, Inc. offices, recognizing at the same time
                  that said documents, objects, materials and related
                  information are the exclusive property of Triple-S, Inc.

         21.      LIMITATION- OTHER EMPLOYMENT OR DUTIES. The VMDP is not to
                  count on third parties for supplying any service, independent
                  of whether economic compensation is involved or not, unless
                  the SEO and PBD have previously given their express consent.

         22.      TRIPLE-S, INC. PERSONNEL. The VMDP will not solicit or
                  encourage the Triple-S, Inc. personnel to quit their jobs and
                  join him or a third party in other activities that are not to
                  Triple-S, Inc.'s benefit.

THIS CONTRACT IS AGREED UPON BY THE UNDERSIGNED IN CONSIDERATION OF THE
FOLLOWING:

                            MISCELLANEOUS PROVISIONS

         23.      CONTRACT CONSTRUCTION. Triple-S, Inc. and their legal
                  representative wrote this contract, therefore its intellectual
                  property and author's rights are theirs. At the same time, the
                  contract is a product of negotiations between both parties, so
                  no assumption or inference should be made in favor of any of
                  them.

         24.      CEDING. The VMDP may not totally or partially cede the
                  obligations and responsibilities assumed through this CONTRACT
                  to a third party.

         25.      PACT TOTALITY. This document constitutes the total and
                  complete pact agreed to by the contracting parts. No other
                  former agreement, contract or pact should be considered valid
                  or effective.

         26.      AMENDMENTS. In case the undersigned wish to amend the content
                  of any clause in this CONTRACT, this should be done in
                  writing, clearly stating which clause is being amended and
                  what the amendment consists of.

         27.      HEADINGS. The headings included in this CONTRACT have been
                  added to aid in reading and analyzing it. At no time should
                  these headings be interpreted as the pact agreed upon by the
                  undersigned, or that they amend the content of the clauses
                  each one heads.
<PAGE>

         28.      LIMITED INVALIDITY. In case any clause in this CONTRACT is
                  declared null or illegal, the rest of the clauses will
                  continue with full effectiveness and force.

         29.      INTERPRETATION. This CONTRACT will be interpreted according to
                  the prevailing judicial order in the Commonwealth of Puerto
                  Rico.

         30.      JURISDICTION AND COMPETENCE. If it were necessary to
                  judicially annul any controversy related to this CONTRACT, the
                  parties will submit voluntarily to the jurisdiction of the
                  Puerto Rico Court of First Instance and would choose the San
                  Juan Halls of the Superior or District Court, as were the
                  case, to void it.

SUCH IS THE PACT agreed upon by contracting parties, which they recognize and
sign in San Juan, Puerto Rico on the date stated above.

Triple-S, Inc.

Signed                             Signed
-----------------------------      -----------------------------------
By: Dr. Fernando L. Longo          By: Dr. Alejandro E. Franco Linares

Signed
-----------------------------
By:  Miguel A. Vazquez Deynes<PAGE>
                                                                  EXHIBIT 10.10

                          BLUE SHIELD LICENSE AGREEMENT

         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:

<PAGE>
                                    AGREEMENT

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

         2.       The Plan may use the Licensed Marks and Name in connection
with the offering of: a) health care plans and related services in the Service
Area through Controlled Affiliates, provided that each such 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."). 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 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
Agreements) with BCBSA, other than such Controlled Affiliate's License
Agreement(s), (the "Controlling Plans)"), must have:

         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 Affiliates (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

                                                     AMENDED AS OF JUNE 11, 1998

                                      -2-
<PAGE>
                          BLUE SHIELD LICENSE AGREEMENT

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

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

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

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

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

<PAGE>

                                    AGREEMENT

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

         2.       The Plan may use the Licensed Marks and Name in connection
with the offering of: a) health care plans and related services in the Service
Area through Controlled Affiliates, provided that each such 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."). 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 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
Agreements) with BCBSA, other than such Controlled Affiliate's License
Agreement(s), (the "Controlling Plan(s)"), must have:

         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 Affiliates (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 Plans) doles) 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

                                                     AMENDED AS OF JUNE 11, 1998

                                      -2-
<PAGE>

         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 Plans) 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;

                           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.

                                                     AMENDED AS OF JUNE 11, 1998

                                      -2a-
                                                       (The next page is page 3)

<PAGE>
         3.       The Plan may engage in activities not required by BCBSA to be
directly licensed through Controlled Affiliates and may indicate its
relationship thereto by use of the Licensed Name as a tag line, provided that
the engaging in such activities does not and will not dilute or tarnish the
unique value of the Licensed Marks and Name and further provided that such tag
line use is not in a manner likely to cause confusion or mistake. Consistent
with the avoidance of confusion or mistake, each tag line use of the Plan's
Licensed Name: (a) shall be in the style and manner specified by BCBSA from
time-to-time; (b) shall not include the design service marks; (c) shall not be
in a manner to import more than the Plan's mere ownership of the 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.

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

                                                 AMENDED AS OF NOVEMBER 20, 1997

                                      -3-
<PAGE>

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

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

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

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

                    (b). 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 National Accounts, Government Programs and
certain other uses; nor (iii) the rules and regulations governing mediation and
mandatory dispute resolution, may be amended unless and until each such
amendment is first adopted by the affirmative vote of three-fourths of the Plans
and of three-fourths of the total then current weighted vote of all the Plans.

                                                    AMENDED AS OF MARCH 12, 1998

                                       -5-

<PAGE>
                  9.       (d). The Plan may operate as a for-profit company on
the following

         (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 Vote") 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 Non institutional 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

                                      -5a-

<PAGE>
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

                                      -5b-
<PAGE>

                           (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.

                                                AMENDED AS OF SEPTEMBER 17, 1997

                                      -5c-

<PAGE>
         (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

                                      -5d-

                                                       (The next page is page 6)

<PAGE>

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

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

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

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

                                      -6-
<PAGE>

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

         15.      (a). This Agreement shall automatically terminate upon the
occurrence of any of the following events: (i) a voluntary petition shall be
filed by the Plan or by BCBSA seeking bankruptcy, reorganization, arrangement
with creditors or other relief under the bankruptcy laws of the United States or
any other law governing insolvency or debtor relief, or (ii) an involuntary
petition or proceeding shall be filed against the Plan or BCBSA seeking
bankruptcy, reorganization, arrangement with creditors or other relief under the
bankruptcy laws of the United States or any other law governing insolvency or
debtor relief and such petition or proceeding is consented to or acquiesced in
by the Plan or BCBSA or is not dismissed within sixty (60) days of the date upon
which the petition or other document commencing the proceeding is served upon
the Plan or BCBSA respectively, or (iii) an order for relief is entered against
the Plan or BCBSA in any case under the bankruptcy laws of the United States, or
the Plan or BCBSA is adjudged bankrupt or insolvent (as that term is defined in
the Uniform Commercial Code as enacted in the state of Illinois) by any court of
competent jurisdiction, or (iv) the Plan or BCBSA makes a general assignment of
its assets for the benefit of creditors, or (v) the Department of Insurance or
other regulatory agency assumes control of the Plan or delinquency proceedings
(voluntary or involuntary) are instituted, or (vi) an action is brought by the
Plan or BCBSA seeking its dissolution or liquidation of its assets or seeking
the appointment of a trustee, interim trustee, receiver or other custodian for
any of its property or business, or (vii) an action is instituted 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. 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 MARCH 12, 1998

                                      -7-
<PAGE>
         (b).     BCBSA, or the Plans (as provided and in addition to the rights
conferred in Paragraph 10(b) above), may terminate this Agreement immediately
upon written notice upon the occurrence of either of the following events: (a)
the Plan or BCBSA becomes insolvent (as that term is defined in the Uniform
Commercial Code enacted in the state of Illinois), or (b) any final judgment
against the Plan or BCBSA remains unsatisfied or unbonded of record for a period
of sixty (60) days or longer.

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

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

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

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

                                                AMENDED AS OF SEPTEMBER 19, 1996

                                      -8-
<PAGE>

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

                                                 AMENDED AS OF NOVEMBER 19, 1998

                                      -8a-

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

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

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

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

         16.      This Agreement supersedes any and all other agreements between
the parties with respect to the subject matter herein, and contains all of the
covenants and agreements of the parties as to the licensing of the Licensed
Marks and Name. This Agreement may be amended only by 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

                                      -8b-

                                                       (The next page is page 9)

<PAGE>

         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.

                                      -8c-

<PAGE>

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

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

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

 BLUE CROSS AND BLUE SHIELD ASSOCIATION

By /s/
  --------------------------------------

Title President & CEO
     -----------------------------------

Date 1-4-99
    ------------------------------------

By /s/
  --------------------------------------

Title      President and CEO
     -----------------------------------

Date       January 4, 1999
    ------------------------------------

                                      -9-

<PAGE>
EXHIBIT A

CONTROLLED AFFILIATE LICENSE STANDARDS
June 1998

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' contract
                  enrollment?

                                       14

<PAGE>

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

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

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
contract enrollment of the Plan and licensed Controlled Affiliates, the
Controlled Affiliate shall:

                                       15

<PAGE>
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 Capital Benchmark or "Managed Care
         Organizations Risk-Based Capital (NICO-RBC)" 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 contract enrollment, as defined in BCBSA's
Quarterly Enrollment Report (excluding rider and freestanding coverage).

The denominator equals:

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

                                       16

<PAGE>
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:

<TABLE>
<S>      <C>                                 <C>                      <C>
1. What percent of the controlled affiliate is controlled by the parent Plan?
-----------------------------------------------------------------------------------------------------------------------------------
          More than 50%                           50%                   100% and Primary
                                                                      Business Government
         Standard lA, 4                      Standard 1B, 4               Non-Risk

                                                                         Standard 4 - 10A
-----------------------------------------------------------------------------------------------------------------------------------
* Applicable only if using the names and marks.
</TABLE>

                                                     IN ADDITION,

2. Is risk being assumed?
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
<S>                    <C>                    <C>                   <C>                      <C>
                          Yes

 Controlled            Controlled             Controlled             Controlled              Controlled     Controlled
 Affiliate             Affiliate              Affiliate              Affiliate               Affiliate      Affiliate
 underwrites           comprises <            comprises _>           comprises <             comprises _>   Primary
 any indemnity         15% of total           15% of total           15% of total            15% of total   Business is
 portion of            contract               contract               contract                contract       Government
 workers'              enrollment of          enrollment of          enrollment of           enrollment of  Non-Risk
 compensation          Plan and its           Plan and its           Plan and its            Plan and its
 insurance             licensed               licensed               licensed                licensed       Standard 10B
                       affiliates,            affiliates,            affiliates              affiliates
 Standards 7A-         and does not           and does not
 7E                    underwrite the         underwrite the
                       indemnity              indemnity
                       portion of             portion of             Standard 2              Standard 6H
                       workers'               workers'               (Guidelines
                       compensation           compensation           2.1,2.3)
                       insurance              insurance

                       Standard 2             Standard 6H
                       (Guidelines
                       2.1,2.2)
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                                     IN ADDITION,

3.       Is medical care being directly provided?

<TABLE>
<S>                         <C>                                                               <C>
-----------------------------------------------------------------------------------------------------------------------------------
                                Yes                                                               No

                            Standard 3A                                                       Standard 3B
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                                        IN ADDITION,

4.       If the controlled affiliate has health or workers' compensation
         administration business, does such business comprise 15$ or more of the
         total contract enrollment of Plan and its licensed controlled
         affiliates?

<TABLE>
<S>                             <C>                                                              <C>
-----------------------------------------------------------------------------------------------------------------------------------
                                Yes                                                               No

-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       17
<PAGE>

<TABLE>
<S>                       <C>                      <C>                  <C>
-----------------------------------------------------------------------------------------------------------------------------------

Standards 6A-6I           Controlled               Controlled           Controlled
                          Affiliate is a           Affiliate is         Affiliate's
                          former primary           not a former         Primary Business
                          licensee                 primary              is Government
                                                   licensee             Non-Risk

                           Standards               Standards            Standards 8,
                            5, 8, 9                   5,8                   10(C)
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       18
<PAGE>
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 govern 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
<PAGE>

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:

         -        change the geographic area in which it operates

         -        change its legal and/or trade names

         -        change any of the types of businesses in which it engages

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

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

         -        make any loans or advances except in the ordinary course of
                  business

         -        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)

         -        conduct any business other than under the Licensed Marks and
                  Name

         -        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
<PAGE>

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 Shield and/or Blue Shield 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 Plans) will provide for services to its
(their) customers.

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
Shield 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:

                                       21
<PAGE>

EXHIBIT A (CONTINUED)

A Controlled Affiliate and/or its licensed 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 - 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:

         A.       Transfer Program;

         B.       BlueCard Program;

                                       22
<PAGE>

EXHIBIT A (continued)

         C.       Inter-Plan Teleprocessing Systems (ITS); and

         D.       Inter-Plan Data Reporting (IPDR) Program, through January 1,
                  1999.

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): Best Efforts

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

Standard 6(H): Financial Responsibility

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.

                                      23
<PAGE>

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, Quarterly Plan Capital Benchmark Worksheet
         through 6/30/99, Semi-annual "Managed Care Organizations Risk-Based
         Capital (MCO-RBC) Report" starting 12/31/98 and thereafter 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 Consolidating
         Financial Statement;

E)       Quarterly Utilization Report through 12/31/99, Quarterly Enrollment
         Report, Semi-Annual Benefit Cost Management Report starting 6/30/00 and
         thereafter, and NMIS Quarterly Report.

F)       Quarterly Year 2000 Readiness Report, in format approved by the
         Plan Performance and Financial Standards Committee (Note: Authorization
         for this report sunsets 12/31/99 unless extension adopted by the
         Member Plans).

                                      24
<PAGE>
EXHIBIT A (CONTINUED)

STANDARD 6(J): Control by Unlicensed Entities Prohibited

No Controlled Affiliate shall cause or permit an unlicensed entity 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, and Annual
         Financial Forecast; and

                                       25
<PAGE>

EXHIBIT A (CONTINUED)

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

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.

                                       26
<PAGE>

EXHIBIT A (CONTINUED)

STANDARD 8 - COOPERATION WITH CONTROLLED AFFILIATE LICENSE PERFORMANCE RESPONSE
PROCESS PROTOCOL

A Controlled Affiliate and its Sponsoring Plans) 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 - PARTICIPATION IN NATIONAL PROGRAMS BY SMALLER CONTROLLED AFFILIATES

A smaller Controlled Affiliate for which this standard applies pursuant to the
Preamble section of Exhibit 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 and be subject to certain relevant financial
and reporting requirements.

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.

                                       27
<PAGE>

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.

                                       28
<PAGE>

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 subscription
revenue and contracts arising from products using the marks. The payment by each
sponsoring Plan of its dues to BCBSA, including that portion described in this
paragraph, will satisfy the requirement of this paragraph, and no separate
payment will be necessary.

For 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.
<PAGE>

EXHIBIT B (CONTINUED)

FOR NONRISK PRODUCTS:

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.

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.
<PAGE>

                                   BLUE SHIELD
                     CONTROLLED AFFILIATE LICENSE AGREEMENT

         This Agreement by and among Blue Cross and Blue Shield Association
("BCBSA") and Triple-S, Inc. ("Controlled Affiliate"), a Controlled Affiliate of
the Blue Shield Plan(s), known as Triple-S, Management Corporation ("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 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 not use the Licensed Marks and Name in its
legal name and may use the Licensed Marks and Name in its Trade Name only with
the prior consent of BCBSA.

         2.       QUALITY CONTROL

         A.       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.
<PAGE>

         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 types) of businesses in which it engages;

                                       2
<PAGE>

         (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 at least 50% of any for-profit Controlled Affiliate.

                                       3
<PAGE>

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

                                       4
<PAGE>

         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 Plan ceases to be authorized to use the Licensed Marks
and Name.

         C.       Notwithstanding any other provision of this Agreement, this
license to use the Licensed Marks and Name may be forthwith terminated by the
Plan or the affirmative vote of the majority of the Board of Directors of BCBSA
present and voting at a special meeting expressly called by BCBSA for the
purpose on ten (10) days written notice 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

                                       5
<PAGE>

Member Plans 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
<PAGE>

         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) the
Department of Insurance or other regulatory agency 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

                                       7
<PAGE>

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 i(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.

         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:

         (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 Plan, and any
other Licensed Controlled Affiliates of the Plan 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 other Plan is
permitted by BCBSA to use marks or names licensed by BCBSA in the Service Area
established by this Agreement, the payment shall be multiplied by a fraction,
the

                                       8
<PAGE>

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. 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 capital benchmark 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.

         (4)      BCBSA shall have the right to 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)      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.

         I.       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. hereof upon termination of the
BCBSA license agreement of any Larger Controlled Affiliate of the Plan.

         J.       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

                                       9
<PAGE>

pursuant to 10(d) of the Plan's license agreement upon the required 6 month
written notice.

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

         L.       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 Blue Shield Plans which are Regular Members of BCBSA and
three-fourths of the total then current weighted vote of all the Blue Shield
Plans which are Regular Member Plans of BCBSA.

         8.       DISPUTE RESOLUTION

         The parties agree that any disputes between them or between or among
either of them and one or more Plans or 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 Exhibits 5,
5A and 5B 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 formulas) set forth in Exhibit B.

                                       10
<PAGE>

         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.

         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.

                                       11
<PAGE>

                        THIS PAGE IS INTENTIONALLY BLANK.

                                       12
<PAGE>

         15.      GOVERNING LAW

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

         16.      HEADINGS

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

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

CONTROLLED AFFILIATE: TRIPLE-S, INC.

By: /s/
   ---------------------------------------------------

Date:   January 4, 1999
     -------------------------------------------------

PLAN: TRIPLE-S MANAGEMENT CORPORATION

By: /s/
   ---------------------------------------------------

Date:   January 4, 1999
     -------------------------------------------------

BLUE CROSS AND BLUE SHIELD ASSOCIATION

By: /s/
   ---------------------------------------------------

Date:   January 4, 1999
     -------------------------------------------------

                                       13
<PAGE>
EXHIBIT A

CONTROLLED AFFILIATE LICENSE STANDARDS
June 1998

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' contract enrollment?

                                       14
<PAGE>

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

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

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
contract enrollment of the Plan and licensed Controlled Affiliates, the
Controlled Affiliate shall:

                                       15
<PAGE>

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 Capital Benchmark or "Managed Care
         Organizations Risk-Based Capital (MCO-RBC)" 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 contract enrollment, as defined in BCBSA's
Quarterly Enrollment Report (excluding rider and freestanding coverage).

The denominator equals:

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

                                       16
<PAGE>

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?

<Table>
      <S>                    <C>                    <C>
--------------------------------------------------------------------------------
      More than 50%                50%              100% and Primary Business is

     Standard 1A, 4          Standard 1B,4                  Standard ?????
--------------------------------------------------------------------------------
</Table>
* Applicable only if using the names and marks.

                                  IN ADDITION,

2.  Is risk being assumed?

<Table>
<S>                   <C>                   <C>                   <C>                   <C>                   <C>
----------------------------------------------------------------------------------------------------------------------------------
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 contract     of total contract     of total contract     of total contract     Business
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     indemnity portion
                      of workers'           of workers'
                      compensation          compensation          Standard 2            Standard 6H           Standard 10B
                      insurance             insurance             (Guidelines 2.1, 2.3)

                      Standard 2            Standard 6H
                      (Guidelines 2.1,2.2)
----------------------------------------------------------------------------------------------------------------------------------
</Table>

                                 IN ADDITION,

3.  Is medical care being directly provided?

<Table>
--------------------------------------------------------------------------------
                 <S>                                      <C>
                     Yes                                       No

                 Standard 3A                              Standard 3B
--------------------------------------------------------------------------------
</Table>

                                  IN ADDITION,

4.  If the controlled affiliate has health or workers' compensation
administration business, does such business comprise 15% or more of the total
contract enrollment of Plan and its licensed controlled affiliates?

<Table>
---------------------------------------------------------------------------------------------
  <S>                <C>                        <C>                   <C>
        Yes                                         No

  Standards 6A-6I    Controlled Affiliate is    Controlled            Controlled Affiliate's
                     a former primary           Affiliate is not a    Primary Business is
                     licensee                   former primary        Government Non-
                                                licensee              Risk

                     Standards 5,8,9            Standards 5,8         Standards 8,10(C)
---------------------------------------------------------------------------------------------
</Table>

                                       17
<PAGE>
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 Plans)"), 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
Plans) 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).

                                       18
<PAGE>

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:

         -        change the geographic area in which it operates

         -        change its legal and/or trade names

         -        change any of the types of businesses in which it engages

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

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

         -        make any loans or advances except in the ordinary course of
                  business

         -        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)

         -        conduct any business other than under the Licensed Marks and
                  Name

         -        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.

                                       19
<PAGE>

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 Shield and/or Blue Shield 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.

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
Shield 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:

                                       20
<PAGE>

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:

         A.       Transfer Program;

         B.       BlueCard Program;

                                       21
<PAGE>

EXHIBIT A (CONTINUED)

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

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): Best Efforts

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

Standard 6(H): Financial Responsibility

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.

                                       22
<PAGE>

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, Quarterly Plan Capital Benchmark Worksheet
         through 6/30/99, Semi-annual "Managed Care Organizations Risk-Based
         Capital (MCO-RBC) Report" starting 12/31/98 and thereafter 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 Utilization Report through 12/31/99, Quarterly Enrollment
         Report, Semi-Annual Benefit Cost Management Report starting 6/30/00 and
         thereafter, and NMIS Quarterly Report; and

F)       Quarterly Year 2000 Readiness Report, in format approved by the Plan
         Performance and Financial Standards Committee (Note: Authorization for
         this report sunsets 12/31/99 unless extension adopted by the Member
         Plans).

                                       23
<PAGE>

EXHIBIT A (CONTINUED)

STANDARD 6(J): CONTROL BY UNLICENSED ENTITIES PROHIBITED

No Controlled Affiliate shall cause or permit an unlicensed entity 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, and Annual
         Financial Forecast; and

                                       24
<PAGE>

EXHIBIT A (CONTINUED)

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

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.

                                       25
<PAGE>

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 - PARTICIPATION IN NATIONAL PROGRAMS BY SMALLER CONTROLLED AFFILIATES

A smaller Controlled Affiliate for which this standard applies pursuant to the
Preamble section of Exhibit 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 and be subject to certain relevant financial
and reporting requirements.

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.

                                       26
<PAGE>

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.

                                       27
<PAGE>

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 subscription
revenue and contracts arising from products using the marks. The payment by each
sponsoring Plan of its dues to BCBSA, including that portion described in this
paragraph, will satisfy the requirement of this paragraph, and no separate
payment will be necessary.

For 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 nonrisk:

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.

                                       28
<PAGE>

EXHIBIT B (CONTINUED)

FOR NONRISK PRODUCTS:

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.

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(R) and BLUE
SHIELD(R) 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.

                                       29
<PAGE>

                                                                      EXHIBIT 1A

                     CONTROLLED AFFILIATE LICENSE AGREEMENT
                     APPLICABLE TO LIFE INSURANCE COMPANIES

         This agreement by and among Blue Cross and Blue Shield Association
("BCBSA") ___________________________ ("Controlled Affiliate"), a Controlled
Affiliate of the Blue Shield Plan(s), known as _________________________________
("Plan").

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

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

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

         1.       GRANT OF LICENSE

                  Subject to the terms and conditions of this Agreement, BCBSA
hereby grants to the Controlled Affiliate the exclusive right to use the
licensed Marks and Names in connection with and only in connection with those
life insurance and related services authorized by applicable state law, other
than health care plans and related services (as defined in the Plan's License
Agreements with BCBSA) which services are not separately licensed to Controlled
Affiliate by BCBSA, in the Service Area served by the Plan, except that BCBSA
reserves the right to use the Licensed Marks and Name in said Service Area, and
except to the extent that said Service Area may overlap the area or areas served
by one or more other licensed Blue Shield Plans as of the date of this License
as to which overlapping areas the rights hereby granted are nonexclusive as to
such other Plan or Plans and their respective Licensed Controlled Affiliates
only. Controlled Affiliate cannot use the Licensed Marks or Name outside the
Service Area or, anything in any other license to Controlled Affiliate
notwithstanding, in its legal or trade name.

         2.       QUALITY CONTROL

                  A.       Controlled Affiliate agrees to use the Licensed Marks
and Name only in relation to the sale, marketing and rendering of authorized
products and further agrees to be bound by the conditions regarding quality
control shown in Exhibit A as it may be amended by BCBSA from time-to-time.

                                                 AMENDED AS OF NOVEMBER 17, 1994

                                      -1-
<PAGE>

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

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

         D.       As used herein, a Controlled Affiliate is defined as an entity
organized and operated in such a manner that it is subject to the bona fide
control of a Plan or Plans. Absent written approval by BCBSA of an alternative
method of control, bona fide control shall mean the legal authority, directly or
indirectly through wholly-owned subsidiaries: (a) to select members of the
Controlled Affiliate's governing body having not less than 51% voting control
thereof; (b) to exercise operational control with respect to the governance
thereof; and (c) to prevent any change in its articles of incorporation, bylaws
or other governing documents deemed inappropriate. In addition, a Plan or Plans
shall own at least 51% of any for-profit Controlled Affiliate. If the
Controlled Affiliate is a mutual company, the Plan or its designee(s) shall have
and maintain, in lieu of the requirements of items (a) and (c) above, proxies
representing 51% of the votes at any meeting of the policyholders and shall
demonstrate that there is no reason to believe this such proxies shall be
revoked by sufficient policyholders to reduce such percentage below 51%.

         3.       SERVICE MARK USE

                  Controlled Affiliate shall at all times make proper service
mark use of the Licensed Marks, including but not limited to use of such symbols
or words as BCBSA shall specify to protect the Licensed Marks, and shall comply
with such rules (applicable to all Controlled Affiliates licensed to use the
Marks) relative to service mark use, as are issued from time-to-time by BCBSA.
If there is any public reference to the affiliation between the Plan and the
Controlled Affiliate, all of the Controlled Affiliate's licensed services in the
Service Area of the Plan shall be rendered under the Licensed Marks. Controlled
Affiliate recognizes and agrees that all use of the Licensed Marks by Controlled
Affiliate shall inure to the benefit of BCBSA.

         4.       SUBLICENSING AND ASSIGNMENT

                  Controlled Affiliate shall not sublicense, transfer,
hypothecate, sell, encumber or mortgage, by operation of law or otherwise, the
rights granted hereunder and any such act shall be

                                      -2-
<PAGE>

voidable at the option of Plan or BCBSA. This Agreement and all rights and
duties hereunder are personal to Controlled Affiliate.

         5.       INFRINGEMENTS

                  Controlled Affiliate shall promptly notify Plan and BCBSA of
any suspected acts of infringement, unfair competition or passing off which may
occur in relation to the Licensed Marks. Controlled Affiliate shall not be
entitled to require Plan or BCBSA to take any actions or institute any
proceedings to prevent infringement, unfair competition or passing off by third
parties. Controlled Affiliate agrees to render to Plan and BCBSA, free of
charge, all reasonable assistance in connection with any matter pertaining to
the protection of the Licensed Marks by BCBSA.

         6.       LIABILITY INDEMNIFICATION

                  Controlled Affiliate hereby agrees to save, defend, indemnify
and hold Plan and BCBSA harmless from and against all claims, damages,
liabilities and costs of every kind, nature and description which may arise as a
result of Controlled Affiliate's rendering of health care services under the
Licensed Marks.

         7.       LICENSE TERM

                  The license granted by this Agreement shall remain in effect
for a period of one (1) year and shall be automatically extended for additional
one (1) year periods upon evidence satisfactory to the Plan and BCBSA that
Controlled Affiliate meets the then applicable quality control standards, unless
one of the parties hereto notifies the other party of the termination hereof at
least sixty (60) days prior to expiration of any license period.

                  This Agreement may be terminated by the Plan or by BCBSA for
cause at any time provided that Controlled Affiliate has been given a reasonable
opportunity to cure and shall not effect such a cure within thirty (30) days of
receiving written notice of the intent to terminate (or commence a cure within
such thirty day period and continue diligent efforts to complete the cure if
such curing cannot reasonably be completed within such thirty day period). By
way of example and not for purposes of limitation, Controlled Affiliate's
failure to abide by the quality control provisions of Paragraph 2, above, shall
be considered a proper ground for cancellation of this Agreement.

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

                                      -3-
<PAGE>

         A.       Controlled Affiliate shall no longer comply with Standard No.
1 (Organization and Governance) of Exhibit A or, following an opportunity to
cure, with the remaining quality control provisions of Exhibit A, as it may be
amended from time-to-time; or

         B.       Plan ceases to be authorized to use the Licensed Marks; or

         C.       Appropriate dues for Controlled Affiliate pursuant to item 8
hereof, which are the royalties for this License Agreement are more than sixty
(60) days in arrears to BCBSA.

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

         In the event of any disagreement between Plan and BCBSA as to whether
grounds exist for termination or as to any other term or condition hereof, the
decision of BCBSA shall control, subject to provisions for mediation or
mandatory dispute resolution in effect between the parties.

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

         8.       DUES

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

         -        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(R) and BLUE SHIELD(R) license are issued to the same entity.
         In the event that any License period is greater or less than one (1)
         year, any amounts due shall be prorated. Royalties under this formula
         will be calculated, billed and paid in arrears.

                                                 AMENDED AS OF NOVEMBER 17, 1994

                                      -4-
<PAGE>

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

         9.       JOINT VENTURE

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

                                                       (The next page is page 5)

                                      -4a-
<PAGE>

         10.      NOTICES AND CORRESPONDENCE

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

         11.      COMPLETE AGREEMENT

         This Agreement contains the complete understandings of the parties in
relation to the subject matter hereof. This Agreement may only be amended by a
writing executed by all parties.

         12.      SEVERABILITY

         If any term of this Agreement is held to be unlawful by a court of
competent jurisdiction, such finding shall in no way effect the remaining
obligations of the parties hereunder and the court may substitute a lawful term
or condition for any unlawful term or condition so long as the effect of such
substitution is to provide the parties with the benefits of this Agreement.

         13.      NONWAIVER

         No waiver by BCBSA of any breach or default in performance on the part
of the Controlled Affiliate or any other licensee of any of the terms, covenants
or conditions of this Agreement shall constitute a waiver of any subsequent
breach or default in performance of said terms, covenants or conditions.

         14.      GOVERNING LAW

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

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

BLUE CROSS AND BLUE SHIELD ASSOCIATION

By:
   ------------------------------------------------

Date:
     ----------------------------------------------

---------------------------------------------------
Controlled Affiliate

By:
   ------------------------------------------------

Date:
     ----------------------------------------------

Plan:
     ----------------------------------------------

                                       -5-
<PAGE>

EXHIBIT A

CONTROLLED AFFILIATE LICENSE STANDARDS
LIFE INSURANCE COMPANIES
Page 1 of 2

PREAMBLE

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

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

STANDARD 1 - ORGANIZATION AND GOVERNANCE

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

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

STANDARD 2 - STATE LICENSURE

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

STANDARD 3 - RECORDS AND EXAMINATION

The LIC and its sponsoring licensed Plan(s) shall maintain and furnish, on a
timely and accurate basis, such records and reports regarding the LIC as may be
required in order to establish compliance with the license agreement. The LIC
and its sponsoring licensed Plan(s) shall permit BCBSA to examine the affairs of
the LIB and shall agree that BCBSA's board may submit a written report to the
chief executive officer(s) and the board(s) of directors of the sponsoring
Plan(s).

                                       -1-

<PAGE>

CONTROLLED AFFILIATE LICENSE STANDARDS
LIFE INSURANCE COMPANIES
Page 2 of 2

STANDARD 4 - MEDIATION

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

STANDARD 5 - FINANCIAL RESPONSIBILITY

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

                                       -2-

<PAGE>

EXHIBIT 2

MEMBERSHIP STANDARDS
Page 1 of 4

Preamble

The Membership Standards apply to all organizations seeking to become or to
continue as Regular Members of the Blue Cross and Blue Shield Association. Any
organization seeking to become a Regular Member must be found to be in
substantial compliance with all Membership Standards at the time membership is
granted and the organization must be found to be in substantial compliance with
all Membership Standards for a period of two (2) years preceding the date of its
application. If Membership is sought by an entity which controls or is
controlled by one or more Plans, such compliance shall be determined on the
basis of compliance by such Plan or Plans.

The Regular Member Plans shall have authority to interpret these Standards.
Compliance with any Membership Standard may be excused, at the Plans'
discretion, if the Plans agree that compliance with such Standard would require
the Plan to violate a law or governmental regulation governing its operation or
activities.

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 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 general and administrative expenses.

Standard 1:       A Plan's Board shall not be controlled by any special interest
                  group, and shall act in the interest of its Corporation in
                  providing cost effective health care services to its
                  customers. A Plan shall maintain a governing Board, which
                  shall control the Plan, composed of a majority of persons
                  other than providers of health care services, who shall be
                  known as public members. A public member shall not be an
                  employee of or have a financial interest in a health care
                  provider, nor be a member of a profession which provides
                  health care services.

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

                                                 AMENDED AS OF NOVEMBER 19, 1998

<PAGE>

EXHIBIT 2

MEMBERSHIP STANDARDS
Page 2 of 4

                  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, including the Quarterly
                           Plan Capital Benchmark Worksheet through 6/30/99,
                           Semi-annual "Managed Care Organizations Risk-Based
                           Capital (MCO-RBC) Report" starting 12/31/98 and
                           thereafter 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), Consolidating Financial Statement; and

                           -        Starting 12/31/98 and thereafter, Plans that
                                    are a Shell Holding Company as defined in
                                    the Preamble hereto are required to furnish
                                    only a calendar year-end "Managed Care
                                    Organizations Risk-Based Capital (MCO-RBC)
                                    Report" as defined by the NAIC.

                           -        Starting 1/1/99 and thereafter, Plans that
                                    are a Shell Holding Company as defined in
                                    the Preamble hereto are not required to
                                    furnish a Quarterly Plan Capital Benchmark
                                    Worksheet.

                  E.       Quarterly Utilization Report through 12/31/99,
                           Quarterly Enrollment Report, Semi-Annual Benefit Cost
                           Management Report starting 6/30/00 and thereafter,
                           and NMIS Quarterly Report.

                           -        Starting 1/1/99 and thereafter, Plans that
                                    are a Shell Holding Company as defined in
                                    the Preamble hereto are not required to
                                    furnish any items identified in Paragraph E.

                                                 AMENDED AS OF NOVEMBER 19, 1998

<PAGE>

EXHIBIT 2

MEMBERSHIP STANDARDS
Page 3 of 4

                  F.       Quarterly Year 2000 Readiness Report, in format
                           approved by the Plan Performance and Financial
                           Standards Committee (Note: Authorization for this
                           report sunsets 12/31/99 unless extension adopted by
                           the Member Plans).

                           -        Plans that are a Shell Holding Company as
                                    defined in the Preamble hereto are not
                                    required to furnish a Quarterly Year 2000
                                    Readiness Report.

Standard 3:       A Plan shall be operated in a manner that provides
                  reasonable financial assurance that it can fulfill its
                  contractual obligations to its customers.

Standard 4:       A Plan shall be operated in a manner responsive to customer
                  needs and requirements.

Standard 5:       A Plan shall effectively and efficiently participate in
                  each national program as from time to time may be adopted by
                  the Member Plans for the purposes of providing portability of
                  membership between the Plans and ease of claims processing for
                  customers receiving benefits outside of the Plan's Service
                  Area.

                  Such programs are applicable to Blue Cross and Blue Shield
                  Plans, and include:

         A.       Transfer Program;

         B.       Inter-Plan Data Reporting (IPDR) Program through January 1,
                  1999;

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

         D.       BlueCard Program.

                                                 AMENDED AS OF NOVEMBER 19, 1998

<PAGE>

EXHIBIT 2

MEMBERSHIP STANDARDS
Page 4 of 4

Standard 6:                In addition to requirements under the national
                           programs listed in Standard 5: Participation in
                           National Programs, a Plan shall take such action as
                           required to ensure its financial performance in
                           programs and contracts of an inter-Plan nature or
                           where the Association is a party.

Standard 7:                A Plan shall make adequate disclosure in contracting
                           with third parties and in disseminating public
                           statements of (i) the structure of the Blue Cross and
                           Blue Shield System, (ii) the independent nature of
                           every Plan, and (iii) the Plan's financial condition.

Standard 8:                A Plan shall cooperate with the Association's Board
                           of Directors and its Plan Performance and Financial
                           Standards Committee in the administration of the Plan
                           Performance Response Process and in addressing Plan
                           performance problems identified thereunder.

Standard 9:                A Plan shall obtain a rating of its financial
                           strength from an independent rating agency approved
                           by the Association's Board of Directors for such
                           purpose.

Standard 10:               During each year, a Plan and its Controlled
                           Affiliate(s) engaged in providing licensable services
                           (excluding Life Insurance and Charitable Foundation
                           Services) shall use their best efforts in the
                           designated Service Area to promote and build the
                           value of the Blue Cross and Blue Shield Marks.

Standard 11                Neither a Plan nor any Larger Controlled Affiliate
                           shall cause or permit an unlicensed entity 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 NOVEMBER 19, 1998

<PAGE>

EXHIBIT 3

GUIDELINES WITH RESPECT TO USE OF
LICENSED NAME AND MARKS IN CONNECTION WITH NATIONAL ACCOUNTS

Page 1 of 3

1.       The strength of the Blue Cross/Blue Shield National Accounts mechanism,
and the continued provision of cost effective, quality health care benefits to
National Accounts, are predicated on locally managed provider networks
coordinated on a national scale in a manner consistent with effective service to
National Account customers and consistent with the preservation of the integrity
of the Blue Cross/Blue Shield system and the Licensed Marks. These guidelines
shall be interpreted in keeping with such ends.

2.       A National Account is an entity with employee and/or retiree locations
in more than one Plan's Service Area. Unless otherwise agreed, a National
Account is deemed located in the Service Area in which the corporate
headquarters of the National Account is located. The Control Plan of a National
Account is the Plan in whose Service Area the National Account is located. A
participating ("Par") Plan is a Plan in whose Service Area the National Account
has employee and/or retiree locations, but in which the National Account is not
located.

3.       The National Account Guidelines enunciated herein below shall be
applicable only with respect to the business of new National Accounts acquired
after January 1, 1991.

4.       Control Plans shall utilize National Account identification cards
complying with then currently effective BCBSA graphic standards in connection
with all National Accounts business to facilitate administration thereof, to
minimize subscriber and provider confusion, and to reflect a commitment to
cooperation among Plans.

5.       Disputes among Plans and/or BCBSA as to the interpretation or
implementation of these Guidelines or as to other National Accounts issues shall
be submitted to mediation and mandatory dispute resolution as provided in the
License Agreement. For two years from the effective date of the License
Agreement, however, such disputes shall be subject to mediation only, with the
results of such mediation to be collected and reported in order to establish
more definitive operating parameters for National Accounts business and to serve
as ground rules for future binding dispute resolution.

<PAGE>

EXHIBIT 3

Page 2 of 3

6.       The Control Plan may use the BlueCard Program (as defined by IPOC) to
deliver benefits to employees and non-Medicare eligible retirees in a
Participating Plan's service area if an alternative arrangement with the
Participating Plan cannot be negotiated. The Participating Plan's minimum
servicing requirement for those employees and non-Medicare retirees in its
service area is to deliver benefits using the BlueCard Program. Account delivery
is subject to the policies, provisions and procedures of the BlueCard Program.

7.       For provider payments in a Participating Plan's area (on non-BlueCard
claims), payment to the provider may be made by the Participating Plan or the
Control Plan at the Participating Plan's option. If the Participating Plan
elects to pay the provider, it may not withhold payment of a claim verified by
the Control Plan or its designated processor, and payment must be in conformity
with service criteria established by the Board of Directors of BCBSA (or an
authorized committee thereof) to assure prompt payment, good service and minimum
confusion with providers and subscribers. The Control Plan, at the Participating
Plan's request, will also assure that measures are taken to protect the
confidentiality of the data pertaining to provider reimbursement levels and
profiles.

8.       For claim payments in a Participating Plan's area (on non-BlueCard
claims), Participating Plans are strongly encouraged, but not required, to pass
along to the Control Plan part or all of local provider discounts and
differentials for use by the Control Plan in negotiating financial arrangements
with National Accounts. However, since the size, basis, form and use of local
differentials can vary substantially among Plans and also by individual National
Account characteristics, the degree and form of any discount or differential
passed along to the Control Plan shall be strictly a matter of negotiated
contractual agreement between a Participating Plan and the Control Plan and may
also vary from one National Account to another. In order to facilitate the
quotation of national account pricing and the offering of a variety of National
Account delivery systems, all Plans are strongly encouraged to periodically
publish to other Plans and the BCBSA their National Account contracting policies
with respect to the handling of differentials.

         The Control Plan, in its financial agreements with a National Account,
is expected to reasonably reflect the aggregate amount of differentials passed
along to the Control Plan by all Participating Plans in a National Account. The
exact form and substance of this may vary from one National Account to another
and shall be a matter of

                                                     AMENDED AS OF JUNE 14, 1996

<PAGE>

EXHIBIT 3

Page 3 of 3

explicit negotiation and contractual relationship between the National Account
and the Control Plan. The specifics in an agreement between the Control Plan and
the National Account may vary in form (e.g., a guaranteed offset against
retentions, or a direct pass through, or a guaranteed aggregate percentage
discount, or no pass back at all, etc.), and the Control Plan has the
responsibility and the Authority to negotiate precise arrangements. However,
irrespective of the final arrangements between the Control Plan and the National
Account, a Participating Plan's liability for passing along differentials shall
be limited to the contractual agreement the Participating Plan has with the
Control Plan on a specific National Account.

9.       Other than in contracting with health care providers or soliciting such
contracts in areas contiguous to a Plan's Service Area in order to serve its
subscribers or those of its licensed Controlled Affiliate residing or working in
its Service Area, a Control Plan may not use the Licensed Marks and/or Name, as
a tag line or otherwise, to negotiate directly with providers outside its
Service Area.

<PAGE>

EXHIBIT 4

GOVERNMENT PROGRAMS AND CERTAIN OTHER USES

Page 1 of 2

1.       A Plan and its licensed Controlled Affiliate may use the Licensed Marks
and Name in bidding on and executing a contract to serve a Government Program,
and in thereafter communicating with the Government concerning the Program. With
respect, however, to such contracts entered into after the 1st day of January,
1991, the Licensed Marks and Name will not be used in communications or
transactions with beneficiaries or providers in the Government Program located
outside a Plan's Service Area, unless the Plan can demonstrate to the
satisfaction of BCBSA's governing body that such a restriction on use of the
Licensed Marks and Name will jeopardize its ability to procure the contract for
the Government Program. As to both existing and future contracts for Government
Programs, Plans will discontinue use of the Licensed Marks and Name as to
beneficiaries and Providers outside their Service Area as expenditiously as
circumstances reasonably permit. Effective January 1, 1995, except as provided
in the first sentence above, all use by a Plan of the Licensed Marks and Name in
Government Programs outside of the Plan's Service Area shall be discontinued.
Incidental communications outside a Plan's Service Area with resident or former
resident beneficiaries of the Plan, and other categories of necessary incidental
communications approved by BCBSA, are not prohibited.

2.       In connection with activity otherwise in furtherance of the License
Agreement, a Plan may use the Licensed Marks and Name outside its Service Area
in the following circumstances which are deemed legitimate and necessary and not
likely to cause consumer confusion:

         a.       sending letterhead, envelopes, and similar items for
                  administrative purposes which do not solicit the sale of
                  health care plans and related services;

         b.       distributing business cards other than in marketing and
                  selling;

         C.       contracting with health care providers or soliciting such
                  contracts in areas contiguous to a Plan's Service Area in
                  order to serve its subscribers or those of its licensed
                  Controlled Affiliate residing or working in its service area;

         d.       issuing a small sign containing the legal name or trade name
                  of the Plan or its licensed Controlled Affiliate for display
                  by a provider to identify the latter as a participating
                  provider of the Plan or Controlled Affiliate;

<PAGE>

EXHIBIT 4

Page 2 of 2

         e.       advertising in publications or electronic media solely to
                  persons for employment;

         f.       advertising in print, electronic or other media which serve,
                  as a substantial market, the Service Area of the Plan or
                  licensed Controlled Affiliate, provided that no Plan may
                  advertise outside its Service Area on the national broadcast
                  and cable networks and that advertisements in national print
                  media are limited to the smallest regional edition
                  encompassing the Service Area;

         g.       advertising by direct mail where the addressee's zip code plus
                  4 includes, at least in part, the Plan's Service Area or that
                  of a licensed Controlled Affiliate.

<PAGE>

EXHIBIT 5

MEDIATION AND MANDATORY DISPUTE RESOLUTION (MMDR) RULES

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

1.       INITIATION OF PROCEEDINGS

         A.       Pre-MMDR Efforts

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

         B.       Complaint

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

                  i.       identification of the complaining party (or parties)
                           requesting the proceeding;

                  ii.      identification of the respondent(s);

                  iii.     identification of any other persons or entities who
                           are interested in a resolution of the dispute;

                  iv.      a full statement describing the nature of the
                           dispute;

                  v.       identification of all of the issues that are being
                           submitted for resolution:

                                                 AMENDED AS OF NOVEMBER 21, 1996

<PAGE>

                  vi.      the remedy sought;

                  vii.     a statement as to whether the complaining party (or
                           parties) elects) first to pursue Mediation;

                  viii.    any request, if applicable, that one or more members
                           of the Mediation Committee be disqualified from the
                           proceeding and the grounds for such request;

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

                  x.       a statement signed by the CEO of the complaining
                           party affirming that the CEO has undertaken efforts,
                           or has directed efforts to be undertaken, to resolve
                           the dispute before resorting to the MMDR process.

The complaining party (or parties) shall file and serve with the Complaint
copies of all documents which the party (or parties) intend(s) to offer at the
Arbitration Hearing and a statement identifying the witnesses the party (or
parties) intend(s) to present at the Hearing, along with a summary of each
witness' expected testimony.

         C.       Answer

         Within twenty (20) days after receipt of the Complaint, each respondent
shall serve on the BCBSA and on the complaining party (or parties) and on the
Chairman of the Mediation Committee;

                  i.       a full Answer to the aforesaid Complaint;

                  ii.      a statement of any Counterclaims against the
                           complaining party (or parties), providing with
                           respect thereto the information specified in
                           Paragraph 1.B., above;

                  iii.     a statement as to whether the respondent elects to
                           first pursue Mediation;

                  iv.      any request, if applicable, that one or more members
                           of the Mediation Committee be disqualified from the
                           proceeding and the grounds for such request; and

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

<PAGE>

The respondent(s) shall file and serve with the Answer or by the date of the
Initial Conference set forth in Paragraph 3.B., below, copies of all documents
which the respondent(s) intend(s) to offer at the Arbitration Hearing and a
statement identifying the witnesses the party (or parties) intend(s) to present
at the Hearing, along with a summary of each witness' expected testimony.

         D.       Reply To Counterclaim

         Within ten (10) days after receipt of any Counterclaim, the complaining
party (or parties) shall serve on BCBSA and on the responding party (or parties)
and on the Chairman of the Mediation Committee, a Reply to the Counterclaim.
Such Reply must provide the same information required by Paragraph 1.C.

2.       MEDIATION

         A.       Mediation Committee

         To facilitate the mediation of disputes between or among BCBSA, THE
PLANS and/or their Controlled Affiliates, the BCBSA Board has established a
Mediation Committee. Mediation may be pursued in lieu of or in an effort to
obviate the Mandatory Dispute Resolution process, and all parties are strongly
urged to exhaust the mediation procedure.

         B.       Election To Mediate

         If any party elects first to pursue Mediation, and if it appears to the
Corporate Secretary that the dispute falls within the jurisdiction of the
Mediation Committee, as set forth in Exhibit 5-A hereto, then the Corporate
Secretary will promptly furnish the Mediation Committee with copies of the
Complaint, Answer, Counterclaim and Reply to Counterclaim, and other documents
referenced in Paragraph 1, above.

         C.       Selection of Mediators

         The parties shall promptly attempt to agree upon: (i) the number of
mediators desired, not to exceed three mediators; and (ii) the selection of the
mediator(s) who may include members of the Mediation Committee and/or
experienced mediators from an independent entity to mediate all disputes set
forth in the Complaint and Answer (and Counterclaim and Reply, if any). In the
event the parties cannot agree upon the number of mediators desired, that
number shall default to three. In the event the parties cannot agree upon the
selection of mediator(s), the Chairman will select the mediator(s), at least
one of which shall be an experienced mediator from an independent entity,
consistent with the provisions set forth in this Paragraph. No member of the
Mediation Committee who is a representative of any party to the Mediation may
be selected to mediate the dispute. The Chairman shall also endeavor not to
select as a mediator any member of the Mediation Committee whom a party has
requested to be disqualified. If, after due regard for availability, expertise,
and such other considerations as may best promote an expeditious Mediation, the
Chairman

<PAGE>

believes that he or she must consider for selection a member of the Mediation
Committee whom a party has requested to be disqualified, the other members of
the Committee eligible to be selected to mediate the dispute shall decide the
request for disqualification. By agreeing to participate in the Mediation of a
dispute, a member of the Mediation Committee represents to the party (or
parties) thereto that he or she knows of no grounds which would require his or
her disqualification.

         D.       Binding Decision

         Before the date of the Mediation Hearing described below, the Corporate
Secretary will contact the party (or parties) to determine whether they wish to
be bound by any recommendation of the selected mediators for resolution of the
disputes. If all wish to be bound, the Corporate Secretary will send appropriate
documentation to them for their signatures before the Mediation Hearing begins.

         E.       Mediation Procedure

         The Chairman shall promptly advise the parties of a scheduled Mediation
Hearing date. Unless a party requests an expedited procedure, or unless all
parties to the proceeding agree to one or more extensions of time, the Mediation
Hearing set forth below shall be completed within forty (40) days of BCBSA's
receipt of the Complaint. The selected mediators, unless the parties otherwise
agree, shall adhere to the following procedure:

                  i.       Each party must be represented by its CEO or other
                           representative who has been delegated full authority
                           to resolve the dispute. However, parties may send
                           additional representatives as they see fit.

                  ii.      By no later than five (5) days prior to the date
                           designated for the Mediation Hearing, each party
                           shall supply and serve a list of all persons who will
                           be attending the Mediation Hearing, and indicate who
                           will have the authority to resolve the dispute.

                  iii.     Each party will be given one-half hour to present its
                           case, beginning with the complaining party (or
                           parties), followed by the other party or parties. The
                           parties are free to structure their presentations as
                           they see fit, using oral statements or direct
                           examination of witnesses. However, neither
                           cross-examination nor questioning of opposing
                           representatives will be permitted. At the close of
                           each presentation, the selected mediators will be
                           given an opportunity to ask questions of the
                           presenters and witnesses. All parties must be present
                           throughout the Mediation Hearing. The selected
                           mediators may extend the time allowed for each
                           party's presentation at the Mediation Hearing. The
                           selected mediators may meet in executive session,
                           outside the presence of the parties, or may meet with
                           the parties separately, to discuss the controversy.

<PAGE>

                  iv.      After the close of the presentations, the parties
                           will attempt to negotiate a settlement of the
                           dispute. If the parties desire, the selected
                           mediators, or any one or more of the selected
                           mediators, will sit in on the negotiations.

                  v.       After the close of the presentations, the selected
                           mediators may meet privately to agree upon a
                           recommendation for resolution of the dispute which
                           would be submitted to the parties for their
                           consideration and approval. If the parties have
                           previously agreed to be bound by the results of this
                           procedure, this recommendation shall be binding upon
                           the parties.

                  vi.      The purpose of the Mediation Hearing is to assist the
                           parties to settle their grievances short of mandatory
                           dispute resolution. As a result, the Mediation
                           Hearing has been designed to be as informal as
                           possible. Rules of evidence shall not apply. There
                           will be no transcript of the proceedings, and no
                           party may make a tape recording of the Mediation
                           Hearing.

                  vii.     In order to facilitate a free and open discussion,
                           the Mediation proceeding shall remain confidential. A
                           "Stipulation to Confidentiality" which prohibits
                           future use of settlement offers, all position papers
                           or other statements furnished to the selected
                           mediators, and decisions or recommendations in any
                           Mediation proceeding shall be executed by each party.

                  viii.    Upon request of the selected mediators, or one of the
                           PARTIES, BCBSA staff may also submit documentation at
                           any time during the proceedings.

         F.       Notice Of Termination Of Mediation

         If the Mediation cannot be completed within the prescribed or agreed
time period due to the lack of cooperation of any party, as determined by the
selected mediators, or if the Mediation does not result in a final resolution of
all disputes at the Mediation Hearing or within forty (40) days after the
Complaint was served, whichever comes first, any party or any one of the
selected mediators may so notify the Corporate Secretary, who shall promptly
issue a Notice of termination of mediation to all parties, to the selected
mediators, and to the MDR Administrator, defined below. Such notice shall serve
to bring the Mediation to an end and to initiate Mandatory Dispute Resolution.
Upon agreement of all parties and the selected mediators, the Mediation process
may continue at the same time the MDR process is invoked. The Notice described
above would serve to initiate the MDR proceeding and would not terminate the
proceedings.

<PAGE>

3.       MANDATORY DISPUTE RESOLUTION (MDR)

         If all parties elect not to first pursue Mediation, or if a notice of
termination of Mediation is issued as set forth in Paragraph 2.F., above, then
the unresolved disputes set forth in any Complaint and Answer (and Counterclaim
and Reply, if any) shall be subject to MDR.

         A.       MDR Administrator

         The Administrator shall be an independent entity such as the Center for
Public Resources, Inc. or Endispute, Inc., specializing in alternative dispute
resolution. The Administrator shall be designated initially, and may be changed
from time to time, by the affirmative vote of fifty-one (51) percent of the
Plans and fifty-one (51) percent of the total then current weighted vote of all
the Plans.

         B.       Initial Conference

         Within five (5) days after a Notice of Termination has issued, or
within five (5) days after the time for filing and serving the Reply to any
Counterclaim if the parties elect first not to mediate, the parties shall confer
with the Administrator to discuss selecting a dispute resolution panel ("the
Panel"). This Initial Conference may be by telephone. The parties are encouraged
to agree to the composition of the Panel and to present that agreement to the
Administrator at the Initial Conference. If the parties do not agree on the
composition of the Panel by the time of the Initial Conference, or by any
extension thereof agreed to by all parties and the Administrator, then the Panel
Selection Process set forth in subparagraph C shall be followed.

         C.       Panel Selection Process

         The Administrator shall designate at least seven potential arbitrators.
The exact number designated shall be sufficient to give each party at least two
peremptory strikes. Each party shall be permitted to strike any designee for
cause and the Administrator shall determine the sufficiency thereof in its sole
discretion. The Administrator will designate a replacement for any designee so
stricken. Each party shall then be permitted two peremptory strikes. From the
remaining designees, the Administrator shall select a three member Panel. The
Administrator shall set THE DATES for exercising all strikes and shall complete
the Panel Selection Process within fifteen (15) days of the Initial Conference.
Each Arbitrator shall be compensated at his or her normal hourly rate or, in the
absence of an established rate, at a reasonable hourly rate to be promptly fixed
by the Administrator for all time spent in connection with the proceedings and
shall be reimbursed for any travel and other reasonable expenses.

<PAGE>

         D.       Duties Of The Arbitrators

         The Panel shall promptly designate a Presiding Arbitrator for the
purposes reflected below, but shall retain the power to review and modify any
ruling or other action of said Presiding Arbitrator. Each Arbitrator shall be an
independent Arbitrator, shall be governed by the Code of Ethics for Arbitrators
in Commercial Disputes, appended as Exhibit "5-B" hereto, and shall at or prior
to the commencement of any Arbitration Hearing take an oath to that effect. Each
Arbitrator shall promptly disclose in writing to the Panel and to the parties
any circumstances, whenever arising, that might cause doubt as to such
Arbitrator's compliance, or ability to comply, with said Code of Ethics, and,
absent resignation by such Arbitrator, the remaining Arbitrators shall determine
in their sole discretion whether the circumstances so disclosed constitute
grounds for disqualification and for replacement. With respect to such
circumstances arising or coming to the attention of a party after an
Arbitrator's selection, a party may likewise request the Arbitrator's
resignation or a determination as to disqualification by the remaining
Arbitrators. With respect to a sole Arbitrator, the determination as to
disqualification shall be made by the Administrator.

         There shall be no ex parts communication between the parties or their
counsel and any member of the Panel.

         E.       Panel's Jurisdiction And Authority

         The Panel's jurisdiction and authority shall extend to all disputes
between or among the Plans, their Controlled Affiliates, and/or BCBSA, except
for those disputes excepted from these MMDR procedures as set forth in the
License Agreements.

         With the exception of punitive or treble damages, the Panel shall have
full authority to award the relief it deems appropriate to resolve the parties'
disputes, including monetary awards and injunctions, mandatory or prohibitory.
The Panel has no authority to award punitive or treble damages except that the
Panel may allocate or assess responsibility for punitive or treble damages
assessed by another tribunal. Subject to the above limitations, the Panel may,
by way of example, but not of limitation:

                  i.       interpret or construe the meaning of any terms,
                           phrase or provision in any license between BCBSA and
                           a Plan or a Controlled Affiliate relating to the use
                           of the BLUE CROSS(R)or BLUE SHIELD@ 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.

<PAGE>

                  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. ss. 1331. The Panel shall apply Illinois law to all
issues involving interpretation, performance or construction of any License
Agreement or Controlled Affiliate License Agreement unless the agreement
otherwise provides. As to other issues, the Panel shall choose the applicable
law based on conflicts of law principles of the State of Illinois.

         F.       Administrative Conference And Preliminary Arbitration Hearing

         Within ten (10) days of the Panel being selected, the Presiding
Arbitrator will schedule an Administrative Conference to discuss scheduling of
the Arbitration Hearing and any other matter appropriate to be considered
including: any written discovery in the form of requests for production of
documents or requests to admit facts; the identity of any witness whose
deposition a party may desire and a showing of exceptional good cause for the
taking of any such deposition; the desirability of bifurcation or other
separation of the issues; the need for and the type of record of conferences and
hearings, including the need for transcripts; the need for expert WITNESSES AND
HOW EXPERT testimony should be presented; the appropriateness of motions to
dismiss and/or for full or partial summary judgment; consideration of
stipulations; the desirability of presenting any direct testimony in writing;
and the necessity for any on-site inspection by the Panel.

         G.       Discovery

                  i.       REQUESTS FOR PRODUCTION OF DOCUMENTS: All requests
                           for the production of documents must be served as of
                           the date of the Administrative Conference as set
                           forth in Paragraph 3.F., above. Within twenty (20)
                           days after receipt of a request for documents, a
                           party shall produce all relevant and non-privileged
                           documents to the requesting party. In his or her
                           discretion, the Presiding Arbitrator may require the
                           parties to provide lists in such detail as is deemed
                           appropriate of all documents as to which privilege is
                           claimed and may further require in-camera inspection
                           of the same.

<PAGE>

                  ii.      REQUESTS FOR ADMISSIONS: Requests for Admissions may
                           be served up to 21 days prior to the Arbitration
                           Hearing. A party served with Requests For Admissions
                           must respond within twenty (20) days of receipt of
                           said request. The good faith use of and response to
                           Requests for Admissions is encouraged, and the Panel
                           shall have full discretion, with reference to the
                           Federal Rules of Civil Procedure, in awarding
                           appropriate sanctions with respect to abuse of the
                           procedure.

                  iii.     DEPOSITIONS As a general rule, the parties will not
                           be permitted to take deposition testimony for
                           discovery purposes. The Presiding Arbitrator, in his
                           or her sole discretion, shall have the authority to
                           permit a party to take such deposition testimony upon
                           a showing of exceptional good cause, provided that no
                           deposition, for discovery purposes or otherwise,
                           shall exceed three (3) hours, excluding objections
                           and colloquy of counsel.

                  iv.      EXPERT WITNESS(ES): If a party intends to present the
                           testimony of an expert witness during the oral
                           hearing, it shall provide all other parties with a
                           written statement setting forth the information
                           required to be provided by Fed. R. Civ. P.
                           26(b)(4)(A)(i) prior to the expiration of the
                           discovery period.

                  v.       DISCOVERY CUT-OFF. The Presiding Arbitrator shall
                           determine the date on which the discovery period will
                           end, but the discovery period shall not exceed
                           forty-five (45) days from its commencement, without
                           the agreement of all parties.

                  vi.      ADDITIONAL DISCOVERY. Any additional discovery will
                           be at the discretion of the Presiding Arbitrator. The
                           Presiding Arbitrator is authorized to resolve all
                           discovery disputes, which resolution will be binding
                           on the parties unless modified by the Arbitration
                           Panel. If a party refuses to comply with a decision
                           resolving a discovery dispute, the Panel. in keeping
                           with Fed. R. Civ. P. 37, may refuse to allow that
                           party to support or oppose designated claims or
                           defenses, prohibit that party from introducing
                           designated matters into evidence or, in extreme
                           cases, decide an issue submitted for resolution
                           adversely to that party.

<PAGE>

         H.       Panel Suggested Settlement/Mediation

         At any point during the proceedings, the Panel at the request of any
party or on its own initiative, may suggest that the parties explore settlement
and that they do so at or before the conclusion of the Arbitration Hearing, and
the Panel shall give such assistance in settlement negotiations as the parties
may request and the Panel may deem appropriate. Alternatively, the Panel may
direct the parties to endeavor to mediate their disputes as provided above, or
to explore a mini-trial proceeding, or to have an independent party render a
neutral evaluation of the parties' respective positions. The Panel shall enter
such sanctions as it deems appropriate with respect to any party failing to
pursue in good faith such Mediation or other alternate dispute resolution
methods.

         I.       Subpoenas On Third Parties

         Pursuant to, and consistent with, the Federal Arbitration Act, 9
U.S.C.ss.9 et seq., a party may request the issuance of a subpoena on a third
party, to compel testimony or documents, and, if good and sufficient cause is
shown, the Panel shall issue such a subpoena.

         J.       Arbitration Hearing

         An Arbitration Hearing will be held within thirty (30) days after the
Administrative Conference if no discovery is taken, or within thirty (30) days
after the close of discovery, unless all parties and the Panel agree to extend
the Arbitration Hearing date, or unless the parties agree in writing to waive
the Arbitration Hearing. The parties may mutually agree on the location of the
Arbitration Hearing. If the parties fail to agree, the Arbitration Hearing shall
be held in Chicago, Illinois, or at such other location determined by the
Presiding Arbitrator to be most convenient to the participants. The Panel
will determine the date(s) and time(s) of the Arbitration Hearing(s) after
consultation with all parties and shall provide reasonable notice thereof to
all parties or their representatives.

         K.       Arbitration Hearing Memoranda

         Twenty (20) days prior to the Arbitration Hearing, each party shall
submit to the other party (or parties) and to the Panel an Arbitration Hearing
Memorandum which sets forth the applicable law and any argument as to any
relevant issue. The Arbitration Hearing Memorandum will supplement, and not
repeat, the allegations, information and documents contained in or with the
Complaint, Answer, Counterclaim and Reply, if any. Ten (10) days prior to the
Arbitration Hearing, each party may submit to the other party (or parties) and
to the Panel a Response Arbitration Hearing Memorandum which sets forth any
response to another party's Arbitration Hearing Memorandum.

<PAGE>

         L.       Notice For Testimony

         Ten (10) days prior to the Arbitration Hearing, any party may serve a
Notice on any other party (or parties) requesting the attendance at the
Arbitration Hearing of any officer, employee or director of the other party (or
parties) for the purpose of providing noncumulative testimony. If a party fails
to produce one of its officers, employees or directors whose noncumulative
testimony during the Arbitration Hearing is reasonably requested by an adverse
party, the Panel may refuse to allow that party to support or oppose designated
claims or defenses, prohibit that party from introducing designated matters into
evidence or, in extreme cases, decide an issue submitted for mandatory dispute
resolution adversely to that party. This Rule may not be used for the purpose of
burdening or harassing any party, and the Presiding Arbitrator may impose such
orders as are appropriate so as to prevent or remedy any such burden or
harassment.

         M.       Arbitration Hearing Procedures

                  i.       ATTENDANCE AT ARBITRATION HEARING: Any person having
                           a direct interest in the proceeding is entitled to
                           attend the Arbitration Hearing. The Presiding
                           Arbitrator shall otherwise have the power to require
                           the exclusion of any witness, other than a party or
                           other essential person, during the testimony of any
                           other witness. It shall be discretionary with the
                           Presiding Arbitrator to determine the propriety of
                           the attendance of any other person.

                  ii.      CONFIDENTIALITY. The Panel and all parties shall
                           maintain the privacy of the Arbitration Proceeding.
                           The parties and the Panel shall treat the Arbitration
                           Hearing and any discovery or other proceedings or
                           events related thereto, including any award resulting
                           therefrom, as confidential except as otherwise
                           necessary in connection with a judicial challenge to
                           or enforcement of an award or unless otherwise
                           required by law.

                  iii.     STENOGRAPHIC RECORD: Any party, or if the parties do
                           not object, the Panel, may request that a
                           stenographic or other record be made of any
                           Arbitration Hearing or portion thereof. The costs of
                           the recording and/or of preparing the transcript
                           shall be borne by the requesting party and by any
                           party who receives a copy thereof. If the Panel
                           requests a recording and/or a transcript, the costs
                           thereof shall be borne equally by the parties.

                  iv.      OATHS: The Panel may require witnesses to testify
                           under oath or affirmation administered by any duly
                           qualified person and, if requested by any party,
                           shall do so.

<PAGE>

                  v.       ORDER OF ARBITRATION HEARING: An Arbitration Hearing
                           shall be opened by the recording of the date, time,
                           and place of the Arbitration Hearing, and the
                           presence of the Panel, the parties, and their
                           representatives, if any. The Panel may, at the
                           beginning of the Arbitration Hearing, ask for
                           statements clarifying the issues involved.

                           Unless otherwise agreed, the complaining party (or
                           parties) shall then present evidence to support their
                           claim(s). The respondent(s) shall then present
                           evidence supporting their defenses and Counterclaims,
                           if any. The complaining party (or parties) shall then
                           present evidence supporting defenses to the
                           Counterclaims, if any, and rebuttal.

                           Witnesses for each party shall submit to questions by
                           adverse PARTIES and/or the Panel.

                           The Panel has the discretion to vary these
                           procedures, but shall afford a full and equal
                           opportunity to all parties for the presentation of
                           any material and relevant evidence

                  vi.      EVIDENCE: The parties may offer such evidence as is
                           relevant and material to the dispute and shall
                           produce such evidence as the Panel may deem necessary
                           to an understanding and resolution of the dispute.
                           Unless good cause is shown, as determined by the
                           Panel or agreed to by all other parties, no party
                           shall be permitted to offer evidence at the
                           Arbitration Hearing which was not disclosed prior to
                           the Arbitration Hearing by that party. The Panel may
                           receive and consider the evidence of witnesses by
                           affidavit upon such terms as the Panel deems
                           appropriate.

                           The Panel shall be the judge of the relevance and
                           materiality of the evidence offered, and conformity
                           to legal rules of evidence, other than enforcement of
                           the attorney-client privilege and the work product
                           protection, shall not be necessary. The Federal Rules
                           of Evidence shall be considered by the Panel in
                           conducting the Arbitration Hearing but those rules
                           shall not be controlling. All evidence shall be taken
                           in the presence of the Panel and all of the parties,
                           except where any party is in default or has waived
                           the right to be present.

                           Settlement offers by any party in connection with
                           Mediation or MDR proceedings, decisions or
                           recommendations of the selected mediators, and a
                           party's position papers or statements furnished to
                           the selected mediators shall not be admissible
                           evidence or considered by the Panel without the
                           consent of all parties.

<PAGE>

                  vii.     CLOSING OF ARBITRATION HEARING: The Presiding
                           Arbitrator shall specifically inquire of all parties
                           whether they have any further proofs to offer or
                           witnesses to be heard. Upon receiving negative
                           replies or if he or she is satisfied that the record
                           is complete, the Presiding Arbitrator shall declare
                           the Arbitration Hearing closed with an appropriate
                           notation made on the record. Subject to being
                           reopened as provided below, the time within which the
                           Panel is required to make the award shall commence to
                           run, in the absence of contrary agreement by the
                           parties, upon the closing of the Arbitration Hearing.

                           With respect to complex disputes, the Panel may, in
                           its sole discretion, defer the closing of the
                           Arbitration Hearing for a period of up to thirty (30)
                           days after the presentation of proofs in order to
                           permit the parties to submit post-hearing briefs and
                           argument, as the Panel deems appropriate, prior to
                           making an award.

                           For good cause, the Arbitration Hearing may be
                           reopened for up to thirty (30) days on the Panel's
                           initiative, or upon application of a party, at any
                           time before the award is made

         N.       AWARDS

         An Award must be in writing and shall be made promptly by the Panel
and, unless otherwise agreed by the parties or specified by law, no later than
thirty (30) days from the date of closing the Arbitration Hearing. If all
parties so request, the AWARD shall contain findings of fact and conclusions of
law. The Award, and all other rulings and determinations by the Panel, may be by
a majority vote.

         Parties shall accept as legal delivery of the Award the placing of the
Award or a true copy thereof in the mail addressed to a party or its
representative at its last known address or personal service of the Award on a
party or its representative.

         Awards are binding only on the parties to the Arbitration and are not
binding on any non-parties to the Arbitration and may not be used or cited as
precedent in any other proceeding.

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

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

<PAGE>

         O.       Return Of Documents

         Within sixty (60) days after the Award and the conclusion of any
judicial proceedings with respect thereto, each party and the Panel shall return
any documents produced by any other party, including all copies thereof. If a
party receives a discovery request in any other proceeding which would require
it to produce any documents produced to it by any other party in a proceeding
hereunder, it shall not produce such documents without first notifying the
producing party and giving said party reasonable time to respond, if
appropriate, to the discovery request.

4.       MISCELLANEOUS

         A.       Expedited Procedures

         Any party to a Mediation may direct a request for an expedited
Mediation Hearing to the Chairman of the Mediation Committee, to the selected
Mediators, and to all other parties at any time. The Chairman of the Mediation
Committee, or at his or her direction, the then selected Mediators, shall grant
any request which is supported by good and sufficient reasons. If such a request
is granted, the Mediation shall be completed within as short a period as
practicable, as determined by the Chairman of the Mediation Committee or, at his
or her direction, the then selected Mediators.

         Any party to an Arbitration may direct a request for expedited
proceedings to the Administrator, to the Panel, and to all other parties at any
time. The Administrator, or the Presiding Arbitrator if the Panel has been
selected, shall grant any such request which is supported by good and sufficient
reasons. If such a request is granted, the Arbitration shall be completed within
as short a time as practicable, as determined by the Administrator and/or the
Presiding Arbitrator.

         B.       Temporary Or Preliminary Injunctive Relief

         Any party may seek temporary or preliminary injunctive relief with the
filing of a Complaint or at any time thereafter. If such relief is sought prior
to the time that an Arbitration Panel has been selected, then the Administrator
shall select a single Arbitrator who is a lawyer who has no interest in the
subject matter of the dispute, and no connection to any of the parties, to hear
and determine the request for temporary or preliminary injunction. If such
relief is sought after the time that an Arbitration Panel has been selected,
then the Arbitration Panel will hear and determine the request. The request for
temporary or preliminary injunctive relief will be determined with reference to
the temporary or preliminary injunction standards set forth in Fed. R. Civ. P.
65.

<PAGE>

         C.       Defaults And Proceedings In The Absence Of A Party

         Whenever a party fails to comply with the MDR Rules in a manner deemed
material by the Panel, the Panel shall fix a reasonable time for compliance and,
if the party does not comply within said period, the Panel may enter an Order of
default or afford such other relief as it deems appropriate. Arbitration may
proceed in the event of a default or in the absence of any party who, after due
notice, fails to be present or fails to obtain an extension. An Award shall not
be made solely on the default or absence of a party, but the Panel shall require
the party who is present to submit such evidence as the Panel may require for
the making of findings, determinations, conclusions, and Awards.

         D.       Notice

         Each party shall be deemed to have consented that any papers, notices,
or process necessary or proper for the initiation or continuation of a
proceeding under these rules or for any court action in connection therewith may
be served on a party by mail addressed to the party or its representative at its
last known address or by personal service, in or outside the state where the MDR
proceeding is to be held.

         The Corporate Secretary and the parties may also use facsimile
transmission, telex, telegram, or other written forms of electronic
communication to give the notices required by these rules.

         E.       Expenses

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

         F.       Disqualification Or Disability Of A Panel Member

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

                  i.       shall designate a replacement, subject to the right
                           of any party to challenge such replacement for cause.

<PAGE>

                  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.

         G.       Amendments

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

         H.       Extensions of Time

         Any time limit set forth in these Rules may be extended upon agreement
of the parties and approval of: (i) the Chairman of the Mediation Committee if
the proceeding is then in Mediation; (ii) the Administrator if the proceeding is
in Arbitration, but no Arbitration Panel has been selected; or (iii) the
Arbitration Panel, if the proceeding is in Arbitration and the Arbitration Panel
has been selected.

         1.       Intervention

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

<PAGE>
         J.       BCBSA Assistance In Resolution of Disputes

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

         K.       Neutral Evaluation

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

         L.       Recovery of Attorney Fees and Expenses

                  I.       Motions to Compel

         Notwithstanding any other provisions of these Rules, any Party subject
         to the License Agreements (for purposes of this Section L and all of
         its sub-sections 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 L, 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 Section 3-N hereof, 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
         20 days to submit a response to such request to the Arbitration Panel
         with a copy to the Party seeking reimbursement.

                                                           AMENDED JUNE 11, 1998

<PAGE>
                                                                     EXHIBIT 5-A

                               MEDIATION COMMITTEE

REPORTS TO: Board of Directors

CHARGE:           1.       Develop and implement processes for resolving
                  misunderstandings or disagreements between Plans or between
                  Plans and the Association under the following circumstances:

                           a.       Matters at issue regarding relationships
                                    between Plans or between Plans and the
                                    Association.

                           b.       Matters at issue regarding relationships
                                    between Plans or between Plans and the
                                    Association.

                           c.       Matters at issue under the Inter-Plan Bank,
                                    Reciprocity, and Transfer Programs.

                           d.       Matters at issue regarding contractor
                                    selection or performance under the Medicare
                                    Part A Program.

                  2.       Determination of equalization allowances and/or cost
                  allowances under FEP shall not be considered by this
                  Committee.

MEMBERSHIP: Six to Eight

STAFF:      Senior Vice President and General Counsel
<PAGE>

                          ADDENDUM TO LICENSE AGREEMENT

         This agreement is an Addendum to the Blue Shield License Agreement
("Addendum") entered into by and between the Blue Cross and Blue Shield
Association ("BCBSA") and Triple-S Management Corporation (the "Plan").

                                    PREAMBLE

         WHEREAS, BCBSA is the owner of the BLUE SHIELD service marks and the
BLUE SHIELD Design service marks (the "Licensed Marks") and the name BLUE SHIELD
(the "Licensed Name");

         WHEREAS, simultaneously with this Addendum, BCBSA and the Plan are
entering into a License Agreement granting the Plan certain rights to use the
Licensed Marks and Name (the "License Agreement");

         WHEREAS, the Plan, upon consummation of its proposed restructuring
transaction (the "Transaction"), must achieve compliance with the requirements
of the License Agreement applying to for-profit Primary Licensees if it is to
retain its license from BCBSA;

         WHEREAS, the Plan has agreed to an action plan that either will bring
it into compliance with the for-profit requirements of the License Agreement or
will result in automatic termination of the License Agreement;

         WHEREAS, BCBSA has determined that it is in the best interest of the
Licensed Marks, BCBSA, and its Member Plans to enter into this Addendum with the
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 agree
as follows:

<PAGE>

                                    AGREEMENT

         1.0      Trigger Date. The "Trigger Date" for purposes of this addendum
shall be the date of the first meeting of the Plan's shareholders after the
Transaction's consummation. If the Plan's shareholders meet on the date of
consummation, then that date shall be the Trigger Date.

         2.0      Modifications to Governing Documents. On or before the Trigger
Date, the Plan shall modify its articles of incorporation, bylaws, and all other
applicable governing documents (collectively "Charter Documents") to:

                  (a)      Provide that no investor may own 5% or more of its
                           stock; and

                  (b)      Reallocate the three classes of Plan board members
                           according to the schedule attached hereto as Exhibit
                           A and adopt appropriate amendments to the Charter
                           Documents to reflect this commitment to reconfigure
                           the Plan Board so that each class consists of as
                           equal a number of directors as possible.

         3.0      Deadline. The modifications to the Charter Documents required
in paragraph 2.0 shall be effective no later than thirty (30) days after the
Trigger Date.

         4.0      Automatic Termination. This Addendum and the License Agreement
shall automatically terminate thirty-one (31) days after (1) the Trigger Date if
the Plan fails to comply with any of the obligations in paragraphs 2.0 and 3.0;
or (2) any actions described in Exhibit A are not taken within the time limits
set forth therein.

         5.0      Relationship to License Agreement. This Addendum is in
addition to the terms and conditions of the License Agreement and does not limit
the parties' rights and obligations under the License Agreement; provided, that
this Addendum shall govern to the extent it conflicts with any term or condition
of the License Agreement.

         6.0      Miscellaneous Terms and Conditions.

         6.1      This Agreement sets forth the entire understanding of the
parties as to the subject matter hereof and supercedes any prior or
contemporaneous written or oral agreement with regard to the subject matter
hereof.

         6.2      Each person who signs this Addendum in a representative
capacity warrants that he or she is duly authorized to do so.

                                       2
<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Addendum to be
executed on the dates set forth below, signed:

BLUE CROSS AND BLUE SHIELD ASSOCIATION

By:  /s/
   --------------------------------------

Title: President & CEO
       ----------------------------------

Date:   1-4-99
     ------------------------------------

TRIPLE-S MANAGEMENT CORPORATION

By:  /s/
   --------------------------------------

Title:  President and CEO
       ----------------------------------

Date:  January 4, 1999
     ------------------------------------

                                       3
<PAGE>

                                                                       EXHIBIT A

                         BOARD OF DIRECTOR'S COMPOSITION

The Board of Directors will be divided in three groups plus the President of the
Corporation, of which the first one will be composed by five (5) directors, the
second group will be composed by six (6) directors and the third group will be
composed by seven (7) directors. The groups will be scaled; therefore, the term
of the first directors of the first group will fall due at the Annual
Stockholders Meeting of 2005; the term of the first directors of the second
group will fall due at the Annual Stockholders Meeting of 2006, and the term of
the first directors of the third group will fall due at the Annual Stockholders
Meeting of 2007.

The term during which the members of each group, elected in each annual
stockholders meetings, will be in force, will be three (3) years. Every director
will continue in office until his/her successor is duly elected and in
possession of his/her post. No director, with the exception of the President of
the Corporation, while carrying on such hierarchical functions, may be elected
for more than three (3) terms, nor serve for more than nine (9) years. In
addition, the President of the Corporation, who is member of the Board of
Directors, will be exempt from inclusion in any of the groups stated above.

In order to achieve uniformity in the number of directors in each group, as
stated in this Article, a director will be elected in April of 2001 for one (1)
year term, from April of 2001 to April of 2002. With the only purpose to comply
with the Staggered terms, the three (3) terms or nine (9) years disposition will
be waived with the only purpose that a person can serve for the only term of one
(1) year. In the case of the first members of the Board of Directors, the amount
of time in which the director functioned as such, in Triple-S, Inc., until its
merger with Triple-S Salud, will be taken into consideration.

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