Document:

exv10w2

Exhibit 10.2

BLUE CROSS

CONTROLLED AFFILIATE LICENSE AGREEMENT

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

     This Agreement by and among Blue Cross and Blue Shield Association (“BCBSA”) and Triple-S
Salud, Inc. (“Controlled Affiliate”), a Controlled Affiliate of the Blue Cross Plan(s), known as
Triple-S Management Corporation (“Plan”), which is also a Party signatory hereto.

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

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

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

     1. GRANT OF LICENSE

     Subject to the terms and conditions of this Agreement, BCBSA hereby grants to Controlled
Affiliate the right to use the Licensed Marks and Name in connection with, and only in connection
with: (i) health care plans and related services, as defined in BCBSA’s License Agreement with
Plan, and administering the non-health portion of workers’ compensation insurance, and (ii)
underwriting the indemnity portion of workers’ compensation insurance, provided that Controlled
Affiliate’s total premium revenue comprises less than 15 percent of the sponsoring Plan’s net
subscription revenue.

This grant of rights is non-exclusive and is limited to the Service Area served by the Plan.
Controlled Affiliate may use the Licensed Marks and Name in its legal name on the following
conditions: (i) the legal name must be approved in advance, in writing, by BCBSA; (ii) Controlled
Affiliate shall not do business outside the Service Area under any name or mark; and (iii)
Controlled Affiliate shall not use the Licensed Marks and Name, or any derivative thereof, as part
of any name or symbol used to identify itself in any securities market. Controlled Affiliate may
use the Licensed Marks and Name in its Trade Name only with the prior, written, consent of BCBSA.

     2. QUALITY CONTROL

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

Amended as of November 16, 2000

 

 

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

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

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

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

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

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

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

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

	 	(i)	 	change its legal and/or trade names;
	 
	 	(ii)	 	change the geographic area in which it operates;
	 
	 	(iii)	 	change any of the type(s) of businesses in which it engages;

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	 	(iv)	 	create, or become liable for by way of guarantee, any
indebtedness, other than indebtedness arising in the ordinary course of
business;
	 
	 	(v)	 	sell any assets, except for sales in the ordinary course of
business or sales of equipment no longer useful or being replaced;
	 
	 	(vi)	 	make any loans or advances except in the ordinary course of
business;
	 
	 	(vii)	 	enter into any arrangement or agreement with any party
directly or indirectly affiliated with any of the owners or persons or entities
with the authority to select or appoint members or board members of the
Controlled Affiliate, other than the Plan or Plans (excluding owners of stock
holdings of under 5% in a publicly traded Controlled Affiliate);
	 
	 	(viii)	 	conduct any business other than under the Licensed Marks and Name;
	 
	 	(ix)	 	take any action that any Controlling Plan or BCBSA reasonably
believes will adversely affect the Licensed Marks and Name.

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

Or

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

	 	(a)	 	prevent any change in the articles of incorporation, bylaws or other
establishing or governing documents of the Controlled Affiliate with which the
Controlling Plan(s) do(es) not concur;
	 
	 	(b)	 	exercise control over the policy and operations of the Controlled Affiliate.

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

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     3. SERVICE MARK USE

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

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

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

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

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

Amended as of June 16, 2005

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     4. SUBLICENSING AND ASSIGNMENT

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

     5. INFRINGEMENT

     Controlled Affiliate shall promptly notify Plan and Plan shall promptly notify BCBSA of any
suspected acts of infringement, unfair competition or passing off that may occur in relation to the
Licensed Marks and Name. Controlled Affiliate shall not be entitled to require Plan or BCBSA to
take any actions or institute any proceedings to prevent infringement, unfair competition or
passing off by third parties. Controlled Affiliate agrees to render to Plan and BCBSA, without
charge, all reasonable assistance in connection with any matter pertaining to the protection of the
Licensed Marks and Name by BCBSA.

     6. LIABILITY INDEMNIFICATION

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

     7. LICENSE TERM

     A. Except as otherwise provided herein, the license granted by this Agreement shall remain in
effect for a period of one (1) year and shall be automatically extended for additional one (1) year
periods unless terminated pursuant to the provisions herein.

     B. This Agreement and all of Controlled Affiliate’s rights hereunder shall immediately
terminate without any further action by any party or entity in the event that: (i) the Plan ceases
to be authorized to use the Licensed Marks and Name; or (ii) pursuant to Paragraph 15(a)(x) of the
Blue Cross License Agreement the Plan ceases to be authorized to use the Licensed Names and Marks
in the geographic area served by the Controlled Affiliate provided, however, that if the Controlled
Affiliate is serving more than one State or portions thereof, the termination of this Agreement
shall be limited to the State(s) or portions thereof in which the Plan’s license to use the
Licensed Marks and Names is terminated. By not appealing or challenging such regulatory action
within the time prescribed by law or regulation, and in any event no later than 120 days after such
action is taken, a Plan shall be deemed to have exhausted its rights to appeal or challenge, and
automatic termination shall proceed.

Amended as of September 14, 2004

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     C. Notwithstanding any other provision of this Agreement, this license to use the Licensed
Marks and Name may be forthwith terminated by the Plan or the affirmative vote of the majority of
the Board of Directors of BCBSA present and voting at a special meeting expressly called by BCBSA
for the purpose on ten (10) days written notice to the Plan advising of the specific matters at
issue and granting the Plan an opportunity to be heard and to present its response to the Board
for: (1) failure to comply with any applicable minimum capital or liquidity requirement under the
quality control standards of this Agreement; or (2) failure to comply with the “Organization and
Governance” quality control standard of this Agreement; or (3) impending financial insolvency; or
(4) for a Smaller Controlled Affiliate (as defined in Exhibit A), failure to comply with any of the
applicable requirements of Standards 2, 3, 4, 5 or 7 of attached Exhibit A; or (5) the pendency of
any action instituted against the Controlled Affiliate seeking its dissolution or liquidation of
its assets or seeking appointment of a trustee, interim trustee, receiver or other custodian for
any of its property or business or seeking the declaration or establishment of a trust for any of
its property or business, unless this Controlled Affiliate License Agreement has been earlier
terminated under paragraph 7(e); or (6) failure by a Controlled Affiliate that meets the standards
of 2E(1) but not 2E(2) above to obtain BCBSA’s written consent to a change in the identity of any
owner, in the extent of ownership, or in the identity of any person or entity with the authority to
select or appoint members or board members, provided that as to publicly traded Controlled
Affiliates this provision shall apply only if the change affects a person or entity that owns at
least 5% of the Controlled Affiliate’s stock before or after the change; or (7) such other reason
as is determined in good faith immediately and irreparably to threaten the integrity and reputation
of BCBSA, the Plans, any other licensee including Controlled Affiliate and/or the Licensed Marks
and Name.

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

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

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

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

     (3) Any of the following events occur: (i) a voluntary petition shall be filed by Controlled
Affiliate seeking bankruptcy, reorganization, arrangement with creditors or other relief under the
bankruptcy laws of the United States or any other law governing insolvency or debtor relief, or
(ii) an involuntary petition or proceeding shall be filed against Controlled Affiliate seeking
bankruptcy, reorganization, arrangement with creditors or other relief under the bankruptcy laws of
the United States or any other law governing insolvency or debtor relief and such petition or
proceeding is consented to or acquiesced in by Controlled Affiliate or is not dismissed within
sixty (60) days of the date upon which the petition or other document commencing the proceeding is
served upon the Controlled Affiliate, or (iii) an order for relief is entered against Controlled
Affiliate in any case under the bankruptcy laws of the United States, or Controlled Affiliate is
adjudged bankrupt or insolvent as those terms are defined in the Uniform Commercial Code as enacted
in the State of Illinois by any court of competent jurisdiction, or (iv) Controlled Affiliate makes
a general assignment of its assets for the benefit of creditors, or (v) any government or any
government official, office, agency, branch, or unit assumes control of Controlled Affiliate or
delinquency proceedings (voluntary or involuntary) are instituted, or (vi) an action is brought by
Controlled Affiliate seeking its dissolution or liquidation of its assets or seeking the
appointment of a trustee, interim trustee, receiver or other custodian for any of its property or
business, or (vii) an action is instituted by any governmental entity or officer against Controlled
Affiliate seeking its dissolution or liquidation of its assets or seeking the appointment of a
trustee, interim trustee, receiver or other custodian for any of its property or business and such
action is consented to or acquiesced in by Controlled Affiliate or is not dismissed within one
hundred thirty (130) days of the date upon which the pleading or other document commencing the
action is served upon the Controlled Affiliate, provided that if the action is stayed or its
prosecution is enjoined, the one hundred thirty (130) day period is tolled for the duration of the
stay or injunction, and provided further, that the Association’s Board of Directors may toll or
extend the 130 day period at any time prior to its expiration, or (viii) a trustee, interim
trustee, receiver or other custodian for any of Controlled Affiliate’s property or business is
appointed or the Controlled Affiliate is ordered dissolved or liquidated. Notwithstanding any
other provision of this Agreement, a declaration or a request for declaration of the existence of a
trust over any of the Controlled Affiliate’s property or business shall not in itself be deemed to
constitute or seek appointment of a trustee, interim trustee, receiver or other custodian for
purposes of subparagraphs 7(e)(3)(vii) and (viii) of this Agreement

Amended as of March 18, 2004

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

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

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

     (1) The Controlled Affiliate shall send a notice through the U.S. mails, with first class
postage affixed, to all individual and group customers, providers, brokers and agents of products
or services sold, marketed, underwritten or administered by the Controlled Affiliate under the
Licensed Marks and Name. The form and content of the notice shall be specified by BCBSA and shall,
at a minimum, notify the recipient of the termination of the license, the consequences thereof, and
instructions for obtaining alternate products or services licensed by BCBSA, subject to any
conflicting state law and state regulatory requirements. This notice shall be mailed within 15
days after termination.

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

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

Amended as of June 16, 2005

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

Amended as of June 16, 2005

9

 

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

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

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

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

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

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

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

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

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

Amended as of June 16, 2005

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

     8. DISPUTE RESOLUTION

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

     9. LICENSE FEE

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

     10. JOINT VENTURE

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

Amended as of September 20, 2007

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     11. NOTICES AND CORRESPONDENCE

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

     12. COMPLETE AGREEMENT

     This Agreement contains the complete understandings of the parties in relation to the subject
matter hereof. This Agreement may only be amended by the affirmative vote of three-fourths of the
Plans and three-fourths of the total then current weighted vote of all the Plans as officially
recorded by the BCBSA Corporate Secretary.

     13. SEVERABILITY

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

     14. NONWAIVER

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

     14A. VOTING

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

Amended as of June 16, 2005

12

 

THIS PAGE IS INTENTIONALLY BLANK.

13

 

     15. GOVERNING LAW

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

     16. HEADINGS

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

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

Triple-S Salud, Inc.:

	 	 	 	 	 
	By:
	 	/s/ Socorro Rivas	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Date:
	 	6/22/09	 	 
	 

	 	 

	 	 

Triple-S Management Corporation:

	 	 	 	 	 
	By:
	 	/s/ Ramón M. Ruiz Comas	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Date:
	 	June 22, 2009	 	 
	 

	 	 

	 	 

BLUE CROSS AND BLUE SHIELD ASSOCIATION

	 	 	 	 	 
	By:
	 	/s/ Roger G. Wilson	 	 
	 

	 	 

Roger G. Wilson

SVP, General Counsel and Corporate Secretary
	 	 
	 
	 	 	 	 
	Date:
	 	July 1, 2009	 	 
	 

	 	 

	 	 

14

 

EXHIBIT A

CONTROLLED AFFILIATE LICENSE STANDARDS

March 2009

PREAMBLE

The standards for licensing Controlled Affiliates are established by BCBSA and are subject to
change from time-to-time upon the affirmative vote of three-fourths (3/4) of the Plans and
three-fourths (3/4) of the total weighted vote. Each licensed Plan is required to use a standard
Controlled Affiliate license form provided by BCBSA and to cooperate fully in assuring that the
licensed Controlled Affiliate maintains compliance with the license standards.

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

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

Amended September 19, 2002

15

 

EXHIBIT A (continued)

For purposes of definition:

	•	 	A “smaller Controlled Affiliate:” (1) comprises less than fifteen percent (15%) of
Plan’s and its licensed Controlled Affiliates’ total member enrollment (as reported on the
BCBSA Quarterly Enrollment Report, excluding rider and freestanding coverage, and treating
an entity seeking licensure as licensed);* or (2) underwrites the indemnity portion of
workers’ compensation insurance and has total premium revenue less than 15 percent of the
sponsoring Plan’s net subscription revenue.
	 
	•	 	A “larger Controlled Affiliate” comprises fifteen percent (15%) or more of Plan’s and its
licensed Controlled Affiliates’ total member enrollment (as reported on the BCBSA Quarterly
Enrollment Report, excluding rider and freestanding coverage, and treating an entity
seeking licensure as licensed.)*

Changes in Controlled Affiliate status:

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

If a smaller Controlled Affiliate’s health and workers’ compensation administration business
reaches or surpasses fifteen percent (15%) of the total member enrollment of the Plan and licensed
Controlled Affiliates, the Controlled Affiliate shall:

Amended September 19, 2002

16

 

EXHIBIT A (continued)

	1.	 	Within thirty (30) days, notify BCBSA of this fact in writing, including evidence that the
Controlled Affiliate meets the minimum liquidity and capital (BCBSA “Health Risk-Based Capital
(HRBC)” as defined by the NAIC and state-established minimum reserve) requirements of the
larger Controlled Affiliate Financial Responsibility standard; and
	 
	2.	 	Within six (6) months after reaching or surpassing the fifteen percent (15%) threshold,
demonstrate compliance with all license requirements for a larger Controlled Affiliate.

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

*For purposes of this calculation,

The numerator equals:

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

The denominator equals:

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

Amended September 19, 2002

17

 

EXHIBIT A (continued)

STANDARDS FOR LICENSED CONTROLLED AFFILIATES

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

1. What percent of the controlled affiliate is controlled by the parent Plan?

 

			
	*	 	Applicable only if using the names and marks.

IN ADDITION,

2. Is risk being assumed?

IN ADDITION,

3. Is medical care being directly provided?

IN ADDITION,

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

18

 

EXHIBIT A (continued)

Standard 1 — Organization and Governance

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

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

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

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

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

19

 

EXHIBIT A (continued)

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

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

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

20

 

EXHIBIT A (continued)

Standard 2 — Financial Responsibility

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

Standard 3 — State Licensure/Certification

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

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

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

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

Standard 4 — Certain Disclosures

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

Standard 5 — Reports and Records for Certain Smaller Controlled Affiliates

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

Amended as of June 16, 2005

21

 

EXHIBIT A (continued)

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

Standard 6 — Other Standards for Larger Controlled Affiliates

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

Standard 6(A): Board of Directors

A Controlled Affiliate Governing Board shall act in the interest of its Corporation in providing
cost-effective health care services to its customers. A Controlled Affiliate shall maintain a
governing Board, which shall control the Controlled Affiliate, composed of a majority of persons
other than providers of health care services, who shall be known as public members. A public
member shall not be an employee of or have a financial interest in a health care provider, nor be a
member of a profession which provides health care services.

Standard 6(B): Responsiveness to Customers

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

Standard 6(C): Participation in National Programs

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

Such programs are applicable to licensees, and include:

	1.	 	Transfer Program;
	 
	2.	 	BlueCard Program;

22

 

EXHIBIT A (continued)

	3.	 	Inter-Plan Teleprocessing System (ITS);
	 
	4.	 	National Account Programs;
	 
	5.	 	Business Associate Agreement for Blue Cross and Blue Shield Licensees, effective April 14,
2003; and
	 
	6.	 	Inter-Plan Medicare Advantage Program.

Standard 6(D): Financial Performance Requirements

In addition to requirements under the national programs listed in

Standard 6C: Participation in National Programs, a Controlled Affiliate shall take such action as
required to ensure its financial performance in programs and contracts of an inter-licensee nature
or where BCBSA is a party.

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

A Controlled Affiliate shall cooperate with BCBSA’s Board of Directors and its Plan Performance and
Financial Standards Committee in the administration of the Plan Performance Response Process and in
addressing Controlled Affiliate performance problems identified thereunder.

Standard 6(F): Independent Financial Rating

A Controlled Affiliate shall obtain a rating of its financial strength from an independent rating
agency approved by BCBSA’s Board of Directors for such purpose.

Standard 6(G): Local and National Best Efforts

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

Standard 6(H): Financial Responsibility

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

Amended November 15, 2007

23

 

EXHIBIT A (continued)

Standard 6(I): Reports and Records

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

	A)	 	BCBSA Controlled Affiliate Licensure Information Request; and
	 
	B)	 	Biennial trade name and service mark usage material, including disclosure material; and
	 
	C)	 	Changes in the ownership and governance of the Controlled Affiliate, including changes in its
charter, articles of incorporation, or bylaws, changes in a Controlled Affiliate’s Board
composition, or changes in the identity of the Controlled Affiliate’s Principal Officers, and
changes in risk acceptance, contract growth, or direct delivery of medical care; and
	 
	D)	 	Quarterly Financial Report, Semi-annual “Health Risk-Based Capital (HRBC) Report”as defined
by the NAIC, Annual Financial Forecast, Annual Certified Audit Report, Insurance Department
Examination Report, Annual Statement filed with State Insurance Department (with all
attachments), and
	 
	E)	 	Quarterly Enrollment Report.

Amended March 14, 2002

24

 

EXHIBIT A (continued)

Standard 6(J): Control by Unlicensed Entities Prohibited

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

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

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

Standard 7 (A): Financial Responsibility

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

Standard 7(B): Reports and Records

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

	A.	 	BCBSA Controlled Affiliate Licensure Information Request; and
	 
	B.	 	Biennial trade name and service mark usage materials, including disclosure
materials; and
	 
	C.	 	Annual Certified Audit Report, Annual Statement as filed with the State Insurance
Department (with all attachments), Annual NAIC’s Risk-Based Capital Worksheets for
Property and Casualty Insurers, Annual Financial Forecast; and
	 
	D.	 	Quarterly Financial Report, Quarterly Estimated Risk-Based Capital for Property and
Casualty Insurers, Insurance Department Examination Report, Quarterly Enrollment
Report; and

Amended September 19, 2002

25

 

EXHIBIT A (continued)

	E.	 	Notification of all changes and proposed changes to independent ratings within 30
days of receipt and submission of a copy of all rating reports; and
	 
	F.	 	Changes in the ownership and governance of the Controlled Affiliate including
changes in its charter, articles of incorporation, or bylaws, changes in a
Controlled Affiliate’s Board composition, Plan control, state license status,
operating area, the Controlled Affiliate’s Principal Officers or direct delivery of
medical care.

Standard 7(C): Loss Prevention

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

Standard 7(D): Claims Administration

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

Standard 7(E): Disability and Provider Management

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

Amended November 16, 2000

26

 

EXHIBIT A (continued)

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

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

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

A smaller controlled affiliate that formerly was a Primary Licensee shall effectively and
efficiently participate in certain national programs from time to time as may be adopted by Member
Plans for the purposes of providing ease of claims processing for customers receiving benefits
outside of the Controlled Affiliate’s service area and be subject to certain relevant financial and
reporting requirements.

	A.	 	National program requirements include:

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

	B.	 	Financial Requirements include:

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

Amended November 15, 2007

27

 

EXHIBIT A (continued)

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

	C.	 	Reporting requirements include:

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

Amended June 13, 2002

28

 

EXHIBIT A (continued)

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

A smaller controlled affiliate that voluntarily elects to participate in national programs
in accordance with BlueCard and other relevant Policies and Provisions shall effectively and
efficiently participate in national programs from time to time as may be adopted by Member
Plans for the purposes of providing ease of claims processing for customers receiving
benefits outside of the controlled affiliate’s service area and be subject to certain
relevant financial and reporting requirements.

	A.	 	National program requirements include:

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

	B.	 	Financial Requirements include:

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

Amended November 15, 2007

29

 

EXHIBIT A (continued)

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

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

Standard 10(A) — Organization and Governance

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

30

 

EXHIBIT A (continued)

Standard 10(B) — Financial Responsibility

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

Standard 10(C):- Reports and Records

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

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

31

 

EXHIBIT A (continued)

Standard 11- Participation in Inter-Plan Medicare Advantage Program

A smaller controlled affiliate for which this standard applies pursuant to the Preamble section of
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.

National program requirements include:

	A.	 	Inter-Plan Medicare Advantage Program.

Amended November 15, 2007

32

 

EXHIBIT A (continued)

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

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

Amended September 19, 2002

33

 

EXHIBIT B

ROYALTY FORMULA FOR SECTION 9 OF THE

CONTROLLED AFFILIATE LICENSE AGREEMENT

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

FOR RISK AND GOVERNMENT NON-RISK PRODUCTS:

For Controlled Affiliates not underwriting the indemnity portion of workers’ compensation
insurance:

An amount equal to its pro rata share of each sponsoring Plan’s dues payable to BCBSA
computed with the addition of the Controlled Affiliate’s members using the Marks on health
care plans and related services as reported on the Quarterly Enrollment Report with BCBSA.
The payment by each sponsoring Plan of its dues to BCBSA, including that portion described
in this paragraph, will satisfy the requirement of this paragraph, and no separate payment
will be necessary.

For Controlled Affiliates underwriting the indemnity portion of workers’ compensation
insurance:

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

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

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

Amended June 14, 2007

34

 

EXHIBIT B (continued)

FOR NONRISK PRODUCTS:

For third-party administrative business, an amount equal to its pro rata share of each
sponsoring Plan’s dues payable to BCBSA computed with the addition of the Controlled
Affiliate’s members using the Marks on health care plans and related services as reported on
the Quarterly Enrollment Report with BCBSA. The payment by each sponsoring Plan of its dues
to BCBSA, including that portion described in this paragraph, will satisfy the requirement
of this paragraph, and no separate payment will be necessary.

For non-third party administrative business (e.g., case management, provider networks,
etc.), an amount equal to 0.24 percent of the gross revenue per annum of Controlled
Affiliate arising from products using the marks; plus:

	1)	 	An annual fee of $5,000 per license for a Controlled Affiliate subject to
Standard 6 D.
	 
	2)	 	An annual fee of $2,000 per license for all other Controlled Affiliates.

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

Amended June 14, 2007

35exv10w24

Exhibit 10.24

AMENDMENT NO. 1

TO THE

INVESTMENT AGREEMENT

          This AMENDMENT NO. 1 (“Amendment”) to the Investment Agreement (“Investment Agreement”) dated
as of May 20, 2009 by and between PolyMedix, Inc., a Delaware corporation (the “Company”) and
Dutchess Equity Fund, LP, a Delaware Limited Partnership (the “Investor”), is dated as of July 8,
2009. Capitalized terms used herein but not defined shall have the meanings set forth in the
Investment Agreement.

W I T N E S S E T H:

          WHEREAS, the Company and the Investor entered into the Investment Agreement pursuant to which,
upon the terms and subject to the conditions set forth therein, the Investor agreed to invest up to
ten million dollars ($10,000,000) to purchase the Company’s common stock; and

          WHEREAS, the parties desire to amend Section 2(J) of the Investment Agreement as provided for
herein.

          NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:

     (1) Section 2(J) of the Investment Agreement shall be amended and restated in its entirety as
follows:

(J) LIMITATION ON AMOUNT OF OWNERSHIP. Notwithstanding anything to
the contrary in this Agreement, in no event shall the Company be
entitled to put Shares to the Investor to the extent that such
Shares, which when added to the number of shares of Common Stock
beneficially owned (as such term is defined under Section 13(d) and
Rule 13d-3 of the 1934 Act) by the Investor, would cause the
Investor’s beneficial ownership to exceed 4.99% of the number of
shares of Common Stock outstanding (as determined in accordance with
Rule 13d-1 of the 1934 Act) on the applicable Closing Date. The
percentage limitation set forth in this Section 2(J) shall not be
waivable by the Investor; in no event shall the Investor have the
right to waive this Section 2(J) and purchase (or refuse to
purchase) any Shares in excess of the percentage limitation set
forth herein at the Investor’s discretion.

     (2) Except as expressly modified hereby, the Investment Agreement shall remain in full force
and effect in accordance with its original terms.

     (3) This Amendment may be executed in two or more identical counterparts, all of which shall
be considered one and the same agreement and shall become effective when

 

counterparts have been signed by each party and delivered to the other party; provided that a
facsimile signature or an e-mail delivery of a “.pdf” format data file shall be considered due
execution and shall be binding upon the signatory thereto with the same force and effect as if the
signature were an original signature.

[Signature Page Follows.]

-2-

 

          IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to the Investment Agreement
to be executed by their respective officers thereunto duly authorized as of the date first above
written.

	 	 	 	 	 
	 	DUTCHESS EQUITY FUND, LP

 	 
	 	By:  	/s/ Douglas H. Leighton
 	 
	 	Name: 	Douglas H. Leighton 	 
	 	Title: 	Managing Member of:

Dutchess Capital Management, LLC

General Partner to:

Dutchess Equity Fund, LP 	 
	 
	 	POLYMEDIX, INC.

 	 
	 	By:  	/s/ Edward F. Smith
 	 
	 	Name: 	Edward F. Smith 	 
	 	Title: 	Vice President, Finance

Chief Financial Officer 	 

Signature Page to Amendment No. 1 to the Investment Agreement

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