Exhibit 10.10(a)
BLUE CROSS LICENSE
AGREEMENT
(Includes revisions, if any,
adopted by Member Plans through their June 16, 2005
meeting)
This agreement by and between Blue
Cross and Blue Shield Association (“BCBSA”) and The
Blue Cross Plan, known as
(the “Plan”).
Preamble
WHEREAS, the Plan and/or its
predecessor(s) in interest (collectively the “Plan”)
had the right to use the BLUE CROSS and BLUE CROSS 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 in 1972 simultaneously
executed the BCA License Agreement (s) and the Ownership Agreement;
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 CROSS system;
NOW, THEREFORE, in consideration of
the foregoing and the mutual agreements hereinafter set forth and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as
follows:
Agreement
1. BCBSA hereby grants to the Plan,
upon the terms and conditions of this License Agreement, the right
to use BLUE CROSS 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; the offering of debit
cards used solely to support access to tax-favored savings accounts
for medical expenses, subject to a license from BCBSA to the card
issuer; providing health care management and administration;
administering, but not underwriting, non-health portions of
Worker’s Compensation insurance; and delivering health care
services, except hospital services (as defined in the Guidelines to
Membership Standards Applicable to Regular Members).
2. The Plan may use the Licensed
Marks and Name in connection with the offering of: a) health care
plans and related services in the Service Area through Controlled
Affiliates, provided that each such Controlled Affiliate is
separately licensed to use the Licensed Marks and Name under the
terms and conditions contained in the Agreement attached as Exhibit
1 hereto (the “Controlled Affiliate License
Agreement”); and: b) insurance coverages offered by life
insurers under the applicable law in the Service Area, other than
those which the Plan may offer in its own name, provided through
Controlled Affiliates, provided that each such Controlled Affiliate
is separately licensed to use the Licensed Marks and Name under the
terms and conditions contained in the Agreement attached as Exhibit
1A hereto (the “Controlled Affiliate License Agreement
Applicable to Life Insurance Companies”) and further provided
that the offering of such services does not and will not dilute or
tarnish the unique value of the Licensed Marks and Name; and c)
administration and underwriting of Workers’ Compensation
Insurance Controlled Affiliates, provided that each such Controlled
Affiliate is separately licensed to use the Licensed Marks and Name
under the terms and conditions contained in the Agreement attached
as Exhibit 1 hereto (the “Controlled Affiliate
License.”); and d) regional Medicare Advantage PPO products
in cooperation with one or more other Plans through jointly-held
Controlled Affiliates, provided that each such Controlled Affiliate
is separately licensed to use the Licensed Marks and Name under the
terms and conditions contained in the Agreement attached as Exhibit
1B hereto (the “Controlled Affiliate License Agreement
Applicable to Regional Medicare Advantage PPO Products”); and
e) regional Medicare Part D Prescription Drug Plan products in
cooperation with one or more other Plans through jointly-held
Controlled Affiliates, provided that each such Controlled Affiliate
is separately licensed to use the Licensed Marks and Name under the
terms and conditions contained in the Agreement attached as Exhibit
1C hereto (the “Controlled Affiliate License Agreement
Applicable to Regional Medicare Part D Prescription Drug Plan
Products”). As used herein, a Controlled Affiliate is defined
as an entity organized and operated in such a manner that it is
subject to the bona fide control of a Plan or Plans and, if the
entity meets the standards of subparagraph B but not subparagraph A
of this paragraph, the entity, its owners, and persons with
authority to select or appoint members or board members, other than
a Plan or Plans, have received written approval of BCBSA. Absent
written approval by BCBSA of an alternative method of control, bona
fide control with respect to the Controlled Affiliate Licenses
authorized in clauses a) through c) of this Paragraph 2 shall mean
that a Plan or Plans authorized to use the Licensed Marks in the
Service Area of the Controlled Affiliate pursuant to this License
Agreement(s) with BCBSA, other than such Controlled
Affiliate’s License Agreement(s), (for purposes of
subparagraphs 2.A. and 2.B., the “Controlling
Plan(s)”), must have
Amended as of March 17,
2005
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A.
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The legal
authority, directly or indirectly through wholly-owned
subsidiaries: (a) to select members of the Controlled
Affiliate’s governing body having more than 50% voting
control thereof; (b) to exercise control over the policy and
operations of the Controlled Affiliate ; (c) to prevent any
change in the articles of incorporation, bylaws or other
establishing or governing documents of the Controlled Affiliate
with which the Controlling Plan(s) do(es) not concur. In addition,
a Plan or Plans directly or indirectly through wholly-owned
subsidiaries shall own more than 50% of any for-profit Controlled
Affiliate; or
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B.
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The legal
authority directly or indirectly through wholly-owned subsidiaries
(a) to select members of the Controlled Affiliate’s governing
body having not less than 50% voting control thereof; (b) to
prevent any change in the articles of incorporation, bylaws or
other establishing or governing documents of the Controlled
Affiliate with which the Controlling Plan(s) do(es) not concur; (c)
to exercise control over the policy and operations of the
Controlled Affiliate at least equal to that exercised by persons or
entities (jointly or individually) other than the Controlling
Plan(s). Notwithstanding anything to the contrary in (a) through
(c) hereof, the Controlled Affiliate’s establishing or
governing documents must also require written approval by the
Controlling Plan(s) before the Controlled Affiliate can:
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1. Change its legal and/or trade
name;
2. Change the geographic area in
which it operates;
3. Change any of the types of
businesses in which it engages;
4. Create, or become liable for by
way of guarantee, any indebtedness, other than indebtedness arising
in the ordinary course of business;
5. Sell any assets, except for sales
in the ordinary course of business or sales of equipment no longer
useful or being replaced;
6. Make any loans or advances except
in the ordinary course of business;
7. Enter into any arrangement or
agreement with any party directly or indirectly affiliated with any
of the owners of the Controlled Affiliate or persons or entities
with the authority to select or appoint members or board members of
the Controlled Affiliate, other than the Plan or Plans (excluding
owners of stock holdings of under 5% in a publicly traded
Controlled Affiliate);
8. Conduct any business other than
under the Licensed Marks and Name;
Amended as of June 11,
1998
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9. Take any action that any
Controlling Plan or BCBSA reasonably believes will adversely affect
the Licensed Marks or Names.
In addition, a Plan or Plans
directly or indirectly through wholly owned subsidiaries shall own
at least 50% of any for-profit Controlled Affiliate. With respect
to the Controlled Affiliate License Agreements authorized in
clauses d) and e) of this Paragraph 2, and absent written approval
by BCBSA of an alternative method of control, bona fide control
shall mean that the Controlled Affiliate is organized and operated
in such a manner that it meets the following
requirements:
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C.
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The Controlled
Affiliate is owned or controlled by two or more Plans authorized to
use the Licensed Marks pursuant to this License Agreement with
BCBSA (for purposes of this subparagraph 2.C. through subparagraph
2.E., the “Controlling Plans”);
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D.
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Each
Controlling Plan is authorized pursuant to this Agreement to use
the Licensed Marks in a geographic area in the Region (as that term
is defined in such Controlled Affiliate License Agreements) and
every geographic area in the Region is so licensed to at least one
of the Controlling Plans; and
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E.
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The Controlling
Plans must have the legal authority directly or indirectly through
wholly-owned subsidiaries (a) to select members of the Controlled
Affiliate’s governing body having not less than 100% voting
control thereof; (b) to prevent any change in the articles of
incorporation, bylaws or other establishing or governing documents
of the Controlled Affiliate with which the Controlling Plans do not
concur; and (c) to exercise control over the policy and operations
of the Controlled Affiliate. Notwithstanding anything to the
contrary in (a) through (c) of this subparagraph E., the Controlled
Affiliate’s establishing or governing documents must also
require written approval by each of the Controlling Plans before
the Controlled Affiliate can:
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1.
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Change its
legal and/or trade names;
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2.
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Change the
geographic area in which it operates (except such approval shall
not be required with respect to business of the Controlled
Affiliate conducted under the Licensed Marks within the Service
Area of one of the Controlling Plans pursuant to a separate
controlled affiliate license agreement with BCBSA sponsored by such
Controlling Plan);
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Amended as of March 17,
2005
(The next page is page 3)
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3.
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Change any of
the type(s) of businesses in which it engages (except such approval
shall not be required with respect to business of the Controlled
Affiliate conducted under the Licensed Marks within the Service
Area of one of the Controlling Plans pursuant to a separate
controlled affiliate license agreement with BCBSA sponsored by such
Controlling Plan);
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4.
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Take any action
that any Controlling Plan or BCBSA reasonably believes will
adversely affect the Licensed Marks and Name.
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In addition, the Controlling Plans
directly or indirectly through wholly-owned subsidiaries shall own
100% of any for-profit Controlled Affiliate.
3. The Plan may engage in activities
not required by BCBSA to be directly licensed through Controlled
Affiliates and may indicate its relationship thereto by use of the
Licensed Name as a tag line, provided that the engaging in such
activities does not and will not dilute or tarnish the unique value
of the Licensed Marks and Name and further provided that such tag
line use is not in a manner likely to cause confusion or mistake.
Consistent with the avoidance of confusion or mistake, each tag
line use of the Plan’s Licensed Name: (a) shall be in the
style and manner specified by BCBSA from time-to-time; (b) shall
not include the design service marks; (c) shall not be in a manner
to import more than the Plan’s mere ownership of the
Controlled Affiliate; and (d) shall be restricted to the Service
Area. No rights are hereby created in any Controlled Affiliate to
use the Licensed Name in its own name or otherwise. At least
annually, the Plan shall provide BCBSA with representative samples
of each such use of its Licensed Name pursuant to the foregoing
conditions.
4. The Plan recognizes the
importance of a comprehensive national network of independent BCBSA
licensees which are committed to strengthening the Licensed Marks
and Name. The Plan further recognizes that its actions within its
Service Area may affect the value of the Licensed Marks and Name
nationwide. The Plan agrees (a) to maintain in good standing its
membership in BCBSA; (b) promptly to pay its dues to BCBSA, said
dues to represent the royalties for this License Agreement; (c)
materially to comply with all applicable laws; (d) to comply with
the Membership Standards Applicable to Regular Members of BCBSA, a
current copy of which is attached as Exhibit 2 hereto; and (e)
reasonably to permit BCBSA, upon a written, good faith request and
during reasonable business hours, to inspect the Plan’s books
and records necessary to ascertain compliance herewith. As to other
Plans and third parties, BCBSA shall maintain the confidentiality
of all documents and information furnished by the Plan pursuant
hereto, or pursuant to the Membership Standards, and clearly
designated by the Plan as containing proprietary information of the
Plan.
Amended as of March 17,
2005
-3-
5. The rights hereby granted are
exclusive to the Plan within the geographical area(s) served by the
Plan on June 30, 1972, and/or as to which the Plan has been granted
a subsequent license, which is hereby defined as the “Service
Area,” except that BCBSA reserves the right to use the
Licensed Marks in said Service Area, and except to the extent that
said Service Area may overlap areas served by one or more other
licensed Blue Cross Plans as of said date or subsequent license, as
to which overlapping areas the rights hereby granted are
nonexclusive as to such other Plan or Plans only.
6. Except as expressly provided by
BCBSA with respect to National Accounts, Government Programs and
certain other necessary and collateral uses, the current rules and
regulations governing which are attached as Exhibit 3 and Exhibit 4
hereto, and are contained in other documents referenced herein, or
as expressly provided herein, the Plan may not use the Licensed
Marks and Name outside the Service Area or in connection with other
goods and services, nor may the Plan use the Licensed Marks or Name
in a manner which is intended to transfer in the Service Area the
goodwill associated therewith to another mark or name. Nothing
herein shall be construed to prevent the Plan from engaging in
lawful activity anywhere under other marks and names not
confusingly similar to the Licensed Marks and Name, provided that
engaging in such activity does and will not dilute or tarnish the
unique value of the Licensed Marks and Name. In addition to any and
all remedies available hereunder, BCBSA may impose monetary fines
on the Plan for the Plan’s use of the Licensed Marks and
Names outside the Service Area provided that the procedure used in
imposing a fine is consistent with procedures specifically
prescribed by BCBSA from time to time in regulations of general
application. In the case of regional Medicare Advantage PPO and
regional Medicare Part D Prescription Drug Plan products offered by
consenting and participating Plans in a region that includes the
Service Areas, or portions thereof, of more than one Plan, such
fine may be imposed jointly on the consenting and participating
Plans for use of the Licensed Marks and Name in any geographic area
of the region in which a Plan having exclusive rights to the
Licensed Marks and Name does not consent to and particitpate in
such offering, provided that the basis for imposition of such fine
is consistent with rules specifically prescribed by BCBSA from time
to time in regulations of general application.
7. The Plan agrees that it will
display the Licensed Marks and Name only in such form, style and
manner as shall be specifically prescribed by BCBSA from
time-to-time in regulations of general application in order to
prevent impairment of the distinctiveness of the Licensed Marks and
Name and the goodwill pertaining thereto. The Plan shall cause to
appear on all materials on or in connection with which the Licensed
Marks or Name are used such legends, markings and notices as BCBSA
may reasonably request in order to give appropriate notice of
service mark or other proprietary rights therein or pertaining
thereto.
Amended as of March 17,
2005
-3a-
8. BCBSA agrees that: (a) it will
not grant any other license effective during the term of this
License Agreement for the use of the Licensed Marks or Name which
is inconsistent with the rights granted to the Plan hereunder; and
(b) it will not itself use the Licensed Marks in derogation of the
rights of the Plan or in a manner to deprive the Plan of the full
benefits of this License Agreement. The Plan agrees that it will
not attack the title of BCBSA in and to the Licensed Marks or Name
or attack the validity of the Licensed Marks or of this License
Agreement. The Plan further agrees that all use by it of the
Licensed Marks and Name or any similar mark or name shall inure to
the benefit of BCBSA, and the Plan shall cooperate with BCBSA in
effectuating the assignment to BCBSA of any service mark or
trademark registrations of the Licensed Marks or any similar mark
or name held by the Plan or a Controlled Affiliate of the Plan, all
or any portion of which registration consists of the Licensed
Marks.
9. (a). Should the Plan fail to
comply with the provisions of paragraphs 2-4, 6, 7 and/or 12, and
not cure such failure within thirty (30) days of receiving written
notice thereof (or commence curing such failure within such thirty
day period and continue diligent efforts to complete the curing of
such failure if such curing cannot reasonably be completed within
such thirty day period), BCBSA shall have the right to issue a
notice that the Plan is in a state of noncompliance. Except as to
the termination of a Plan’s License Agreement or the merger
of two or more Plans, disputes as to noncompliance, and all other
disputes between or among BCBSA, the Plan, other Plans and/or
Controlled Affiliates, shall be submitted promptly to mediation and
mandatory dispute resolution pursuant to the rules and regulations
of BCBSA, a current copy of which is attached as Exhibit 5 hereto,
and shall be timely presented and resolved. The mandatory dispute
resolution panel shall have authority to issue orders for specific
performance and assess monetary penalties.. If a state of
noncompliance as aforesaid is undisputed by the Plan or is found to
exist by a mandatory dispute resolution panel and is uncured as
provided above, BCBSA shall have the right to seek judicial
enforcement of the License Agreement. Except, however, as provided
in paragraphs 9(d)(iii), 15(a)(i)(viii), and 15(a)(x) below, no
Plan’s license to use the Licensed Marks and Name may be
finally terminated for any reason without the affirmative vote of
three-fourths of the Plans and three-fourths of the total then
current weighted vote of all the Plans.
Amended as of September 14,
2004
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(b). Notwithstanding any other
provision of this License Agreement, a Plan’s license to use
the Licensed Marks and Name may be forthwith terminated by the
affirmative vote of three-fourths of the Plans and three-fourths of
the total then current weighted vote of all the Plans at a special
meeting expressly called by BCBSA for the purpose on ten (10) days
written notice to the Plan advising of the specific matters at
issue and granting the Plan an opportunity to be heard and to
present its response to Member Plans for: (i) failure to comply
with any minimum capital or liquidity requirement under the
Membership Standard on Financial Responsibility; or (ii) impending
financial insolvency; or (iii) the pendency of any action
instituted against the Plan seeking its dissolution or liquidation
or its assets or seeking appointment of a trustee, interim trustee,
receiver or other custodian for any of its property or business or
seeking the declaration or establishment of a trust for any of its
property of business, unless this License Agreement has been
earlier terminated under paragraph 15(a); or (iv) such other reason
as is determined in good faith immediately and irreparably to
threaten the integrity and reputation of BCBSA, the Plans and/or
the Licensed Marks.
(c). To the extent not otherwise
provided therein, neither: (i) the Membership Standards Applicable
to Regular Members of BCBSA; nor (ii) the rules and regulations
governing Government Programs and certain other uses; nor (iii) the
rules and regulations governing mediation and mandatory dispute
resolution, may be amended unless and until each such amendment is
first adopted by the affirmative vote of three-fourths of the Plans
and of three-fourths of the total then current weighted vote of all
the Plans. The rules and regulations governing National Accounts
and other national programs required by the Membership Standards
Applicable to Regular Members of BCBSA (Exhibit 2) are contained,
in addition to those set forth in Exhibit 3, in the following
documents, as amended from time to time: (1) the National Account
Program Policies and Provisions; (2) the BlueCard Program Policies
and Provisions; (3) the Electronic Claims Routing Process Policies
and Provisions; (4) the Transfer Program Policies and Provisions.
The voting requirements specified in rules and regulations
governing such national programs may not be amended unless and
until each such amendment is first adopted by the affirmative vote
of three-fourths of the Plans and of three-fourths of the total
then current weighted vote of all the Plans.
Amended as of March 13,
2003
-4a-
9. (d). The Plan may operate as a
for-profit company on the following conditions:
(i) The Plan shall discharge all
responsibilities which it has to the Association and to other Plans
by virtue of this Agreement and the Plan’s membership in
BCBSA.
(ii) The Plan shall not use the
licensed Marks and Name, or any derivative thereof, as part of its
legal name or any symbol used to identify the Plan in any
securities market. The Plan shall use the licensed Marks and Name
as part of its trade name within its service area for the sale,
marketing and administration of health care and related services in
the service area.
(iii) The Plan’s license to
use the Licensed Marks and Name shall automatically terminate
effective: (a) thirty days after the Plan knows, or there is an SEC
filing indicating that, any Institutional Investor, has become the
Beneficial Owner of securities representing 10% or more of the
voting power of the Plan (“Excess Institutional
Voter”), unless such Excess Institutional Voter shall cease
to be an Excess Institutional Voter prior to such automatic
termination becoming effective; (b) thirty days after the Plan
knows, or there is an SEC filing indicating that, any
Noninstitutional Investor has become the Beneficial Owner of
securities representing 5% or more of the voting power of the Plan
(“Excess Noninstitutional Voter”) unless such Excess
Noninstitutional Voter shall cease to be an Excess Noninstitutional
Voter prior to such automatic termination becoming effective; (c)
thirty days after the Plan knows, or there is an SEC filing
indicating that, any Person has become the Beneficial Owner of 20%
or more of the Plan’s then outstanding common stock or other
equity securities which (either by themselves or in combination)
represent an ownership interest of 20% or more pursuant to
determinations made under paragraph 9(d)(iv) below (“Excess
Owner”), unless such Excess Owner shall cease to be an Excess
Owner prior to such automatic termination becoming effective; (d)
ten business days after individuals who at the time the Plan went
public constituted the Board of Directors of the Plan (together
with any new directors whose election to the Board was approved by
a vote of 2/3 of the directors then still in office who were
directors at the time the Plan went public or whose election or
nomination was previously so approved) (the “Continuing
Directors”) cease for any reason to constitute a majority of
the Board of Directors; or (e) ten business days after the Plan
consolidates with or merges with or into any person or conveys,
assigns, transfers or sells all or substantially all of its assets
to any person other than a merger in which the Plan is the
surviving entity and immediately after which merger, no person is
an Excess Institutional Voter, an Excess Noninstitutional Voter or
an Excess Owner: provided that, if requested by the affected Plan
in a writing received by BCBSA prior to such automatic termination
becoming effective, the provisions of this paragraph 9(d)(iii) may
be waived, in whole or in part,
Amended as of September 17,
1997
-5-
upon the affirmative vote of a majority of the
disinterested Plans and a majority of the total then current
weighted vote of the disinterested Plans. Any waiver so granted may
be conditioned upon such additional requirements (including but not
limited to imposing new and independent grounds for termination of
this License) as shall be approved by the affirmative vote of a
majority of the disinterested Plans and a majority of the total
then current weighted vote of the disinterested Plans. If a timely
waiver request is received, no automatic termination shall become
effective until the later of: (1) the conclusion of the applicable
time period specified in paragraphs 9(d)(iii)(a)-(d) above, or (2)
the conclusion of the first Member Plan meeting after receipt of
such a waiver request.
In the event that the Plan’s license to
use the Licensed Marks and Name is terminated pursuant to this
Paragraph 9(d)(iii), the license may be reinstated in BCBSA’s
sole discretion if, within 30 days of the date of such termination,
the Plan demonstrates that the Person referred to in clause (a),
(b) or (c) of the preceding paragraph is no longer an Excess
Institutional Voter, an Excess Noninstitutional Voter or an Excess
Owner.
(iv) The Plan shall not issue any
class or series of security other than (i) shares of common stock
having identical terms or options or derivatives of such common
stock, (ii) non-voting, non-convertible debt securities or (iii)
such other securities as the Plan may approve, provided that BCBSA
receives notice at least thirty days prior to the issuance of such
securities, including a description of the terms for such
securities, and BCBSA shall have the authority to determine how
such other securities will be counted in determining whether any
Person is an Excess Institutional Voter, Excess Noninstitutional
Voter or an Excess Owner.
(v) For purposes of paragraph
9(d)(iii), the following definitions shall apply:
(a) “Affiliate” and
“Associate” shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended and in effect
on November 17, 1993 (the “Exchange Act”).
(b) A Person shall be deemed the
“Beneficial Owner” of and shall be deemed to
“beneficially own” any securities:
(i) which such Person or any of such
Person’s Affiliates or Associates beneficially owns, directly
or indirectly;
Amended as of September 17,
1997
-5a-
(ii) which such Person or any of
such Person’s Affiliates or Associates has (A) the right to
acquire (whether such right is exercisable immediately or only
after the passage of time) pursuant to any agreement, arrangement
or understanding, or upon the exercise of conversion rights,
exchange rights, warrants or options, or otherwise; or (B) the
right to vote pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to beneficially own, any security if
the agreement, arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and (2) is not also
then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or
(iii) which are beneficially owned,
directly or indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person (or any of such
Person’s Affiliates or Associates) has any agreement,
arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to
a bona fide public offering of securities) relating to the
acquisition, holding, voting (except to the extent contemplated by
the proviso to (b)(ii)(B) above) or disposing of any securities of
the Plan.
Notwithstanding anything in this
definition of Beneficial Ownership to the contrary, the phrase
“then outstanding,” when used with reference to a
Person’s Beneficial Ownership of securities of the Plan,
shall mean the number of such securities then issued and
outstanding together with the number of such securities not then
actually issued and outstanding which such Person would be deemed
to own beneficially hereunder.
(c) A Person shall be deemed an
“Institutional Investor” if (but only if) such Person
(i) is an entity or group identified in the SEC’s Rule
13d-1(b)(1)(ii) as constituted on June 1, 1997, and (ii) every
filing made by such Person with the SEC under Regulation 13D-G (or
any successor Regulation) with respect to such Person’s
Beneficial Ownership of Plan securities shall have contained a
certification identical to the one required by item 10 of SEC
Schedule 13G as constituted on June 1, 1997.
(d) “Noninstitutional
Investor” means any Person who is not an Institutional
Investor.
(e) “Person” shall mean
any individual, firm, partnership, corporation, trust, association,
joint venture or other entity, and shall include any successor (by
merger or otherwise) of such entity.
Amended as of September 17,
1997
(The next page is page 6)
-5b-
10. This License Agreement shall
remain in effect: (a) until terminated as provided herein; or (b)
until this and all such other License Agreements are terminated by
the affirmative vote of three-fourths of the Plans and
three-fourths of the total then current weighted vote of all the
Plans; or (c) until termination of aforesaid Ownership Agreement;
or (d) until terminated by the Plan upon eighteen (18) months
written notice to BCBSA or upon a shorter notice period approved by
BCBSA in writing at its sole discretion.
11. Except as otherwise provided in
paragraph 15 below or by the affirmative vote of three-fourths of
the Plans and three-fourths of the total then current weighted vote
of all the Plans, or unless this and all such other License
Agreements are simultaneously terminated by force of law, the
termination of this License Agreement for any reason whatsoever
shall cause the reversion to BCBSA of all rights in and to the
Licensed Marks and Name, and the Plan agrees that it will promptly
discontinue all use of the Licensed Marks and Name, will not use
them thereafter, and will promptly, upon written notice from BCBSA,
change its corporate name so as to eliminate the Licensed Name
therefrom.
12. The license hereby granted to
Plan to use the Licensed Marks and Name is and shall be personal to
the Plan so licensed and shall not be assignable by any act of the
Plan, directly or indirectly, without the written consent of BCBSA.
Said license shall not be assignable by operation of law, nor shall
Plan mortgage or part with possession or control of this license or
any right hereunder, and the Plan shall have no right to grant any
sublicense to use the Licensed Marks and Name.
13. BCBSA shall maintain appropriate
service mark registrations of the Licensed Marks and BCBSA shall
take such lawful steps and proceedings as may be necessary or
proper to prevent use of the Licensed Marks by any person who is
not authorized to use the same. Any actions or proceedings
undertaken by BCBSA under the provisions of this paragraph shall be
at BCBSA’s sole cost and expense. BCBSA shall have the sole
right to determine whether or not any legal action shall be taken
on account of unauthorized use of the Licensed Marks, such right
not to be unreasonably exercised. The Plan shall report any
unlawful usage of the Licensed Marks to BCBSA in writing and
agrees, free of charge, to cooperate fully with BCBSA’s
program of enforcing and protecting the service mark rights, trade
name rights and other rights in the Licensed Marks.
14. The Plan hereby agrees to save,
defend, indemnify and hold BCBSA and any other Plan(s) harmless
from and against all claims, damages, liabilities and costs of
every kind, nature and description which may arise exclusively and
directly as a result of the activities of the Plan. BCBSA hereby
agrees to save, defend, indemnify and hold the Plan and any other
Plan(s) harmless from and against all claims, damages, liabilities
and costs of every kind, nature and description which may arise
exclusively and directly as a result of the activities of
BCBSA.
Amended as of June 16,
2005
-6-
15. (a). This Agreement shall
automatically terminate upon the occurrence of any of the following
events: (i) a voluntary petition shall be filed by the Plan or by
BCBSA seeking bankruptcy, reorganization, arrangement with
creditors or other relief under the bankruptcy laws of the United
States or any other law governing insolvency or debtor relief, or
(ii) an involuntary petition or proceeding shall be filed against
the Plan or BCBSA seeking bankruptcy, reorganization, arrangement
with creditors or other relief under the bankruptcy laws of the
United States or any other law governing insolvency or debtor
relief and such petition or proceeding is consented to or
acquiesced in by the Plan or BCBSA or is not dismissed within sixty
(60) days of the date upon which the petition or other document
commencing the proceeding is served upon the Plan or BCBSA
respectively, or (iii) an order for relief is entered against the
Plan or BCBSA in any case under the bankruptcy laws of the United
States, or the Plan or BCBSA is adjudged bankrupt or insolvent (as
that term is defined in the Uniform Commercial Code as enacted in
the state of Illinois) by any court of competent jurisdiction, or
(iv) the Plan or BCBSA makes a general assignment of its assets for
the benefit of creditors, or (v) any government or any government
official, office, agency, branch, or unit assumes control of the
Plan or delinquency proceedings (voluntary or involuntary) are
instituted, or (vi) an action is brought by the Plan or BCBSA
seeking its dissolution or liquidation of its assets or seeking the
appointment of a trustee, interim trustee, receiver or other
custodian for any of its property or business, or (vii) an action
is instituted by any governmental entity or officer against the
Plan or BCBSA seeking its dissolution or liquidation of its assets
or seeking appointment of a trustee, interim trustee, receiver or
other custodian for any of its property or business and such action
is consented to or acquiesced in by the Plan or BCBSA or is not
dismissed within one hundred thirty (130) days of the date upon
which the pleading or other document commencing the action is
served upon the Plan or BCBSA respectively, provided that if the
action is stayed or its prosecution is enjoined, the one hundred
thirty (130) day period is tolled for the duration of the stay or
injunction, and provided further, that the Association’s
Board of Directors may toll or extend the 130 day period at any
time prior to its expiration, or (viii) a trustee, interim trustee,
receiver or other custodian for any of the Plan’s or
BCBSA’s property or business is appointed, or the Plan or
BCBSA is ordered dissolved or liquidated, or (ix) the Plan shall
fail to pay its dues and shall not cure such failure within thirty
(30) days of receiving written notice thereof, or (x) if, due to
regulatory action, the Plan together with any applicable Controlled
Affiliate becomes unable to do business using the Names and Marks
in any State or portion thereof included in its Service Area,
provided that: (i) automatic termination shall not occur prior to
the exhaustion by any such Plan of its rights to appeal or
challenge such regulatory action; and (ii) in the event the Plan is
licensed to do business using the Names and Marks in multiple
States or portions of States, the termination of its License
Agreement shall be solely limited to the State(s) or portions
thereof in which the regulatory action applies. By not appealing or
challenging such regulatory action within the time prescribed by
law or regulation, and in any event no later than 120 days after
such action is taken, a Plan shall be deemed to have exhausted its
rights to appeal or challenge, and automatic termination shall
proceed.
-7-
Notwithstanding any other provision of this
Agreement, a declaration or a request for declaration of the
existence of a trust over any of the Plan’s or BCBSA’s
property or business shall not in itself be deemed to constitute or
seek appointment of a trustee, interim trustee, receiver or other
custodian for purposes of subparagraphs 15(a)(vii) and (viii) of
this Agreement.
Amended as of September 14,
2004
-7a-
(b). BCBSA, or the Plans (as
provided and in addition to the rights conferred in Paragraph 10(b)
above), may terminate this Agreement immediately upon written
notice upon the occurrence of either of the following
events: (a) the Plan or BCBSA becomes insolvent (as that term is
defined in the Uniform Commercial Code enacted in the state of
Illinois), or (b) any final judgment against the Plan or BCBSA
remains unsatisfied or unbonded of record for a period of sixty
(60) days or longer.
(c). If this License Agreement is
terminated as to BCBSA for any reason stated in subparagraphs 15(a)
and (b) above, the ownership of the Licensed Marks shall revert to
each of the Plans.
(d). Upon termination of this
License Agreement or any Controlled Affiliate License Agreement of
a Larger Controlled Affiliate, as defined in Exhibit 1 to this
License Agreement, the following conditions shall apply, except
that, in the event of a partial termination of this Agreement
pursuant to Paragraph 15 (a)(x)(ii) of this Agreement, the notices,
national account listing, payment and audit right listed below
shall be applicable solely with respect to the geographic area for
which the Plan’s license to use the Licensed Names and Marks
is terminated:
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(i)
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The terminated
entity shall send a notice through the U.S. mails, with first class
postage affixed, to all individual and group customers, providers,
brokers and agents of products or services sold, marketed,
underwritten or administered by the terminated entity or its
Controlled Affiliates under the Licensed Marks and Name. The form
and content of the notice shall be specified by BCBSA and shall, at
a minimum, notify the recipient of the termination of the license,
the consequences thereof, and instructions for obtaining alternate
products or services licensed by BCBSA, subject to any conflicting
state law and state regulatory requirements. This notice shall be
mailed within 15 days after termination or, if termination is
pursuant to paragraph 10(d) of this Agreement, within 15 days after
the written notice to BCBSA described in paragraph
10(d).
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(ii)
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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.
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Amended as of June 16,
2005
-8-
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(iii)
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Unless the
cause of termination is an event stated in paragraph 15(a) or (b)
above respecting BCBSA, the Plan and its Licensed Controlled
Affiliates shall be jointly liable for payment to BCBSA of an
amount equal to the Re-Establishment Fee (described below)
multiplied by the number of Licensed Enrollees of the terminated
entity and its Licensed Controlled Affiliates; provided that if any
other Plan is permitted by BCBSA to use marks or names licensed by
BCBSA in the Service Area established by this Agreement, the
Re-Establishment Fee shall be multiplied by a fraction, the
numerator of which is the number of Licensed Enrollees of the
terminated entity and its Licensed Controlled Affiliates and the
denominator of which is the total number of Licensed Enrollees in
the Service Area. The Re-Establishment Fee shall be indexed to a
base fee of $80. The Re-Establishment Fee through December 31, 2005
shall be $80. The Re-Establishment Fee for calendar years after
December 31, 2005 shall be adjusted on January 1 of each calendar
year up to and including January 1, 2010 and shall be the base fee
multiplied by 100% plus the cumulative percentage increase or
decrease in the Plans’ gross administrative expense (standard
BCBSA definition) per Licensed Enrollee since December 31, 2004.
The adjustment shall end on January 1, 2011, at which time the
Re-Establishment Fee shall be fixed at the then-current amount and
no longer automatically adjusted. For example, if the Plans’
gross administrative expense per Licensed Enrollee was $278.60,
$285.00 and $290.00 for calendar year end 2004, 2005 and 2006,
respectively, the January 1, 2007 Re-Establishment Fee would be
$83.27 (100% of the base fee plus $1.84 for calendar year 2005 and
$1.43 for calendar year 2006). Licensed Enrollee means each and
every person and covered dependent who is enrolled as an individual
or member of a group receiving products or services sold, marketed
or administered under marks or names licensed by BCBSA as
determined at the earlier of (a) the end of the last fiscal year of
the terminated entity which ended prior to termination or (b) the
fiscal year which ended before any transactions causing the
termination began. Notwithstanding the foregoing, the amount
payable pursuant to this subparagraph (d)(iii) shall be due only to
the extent that, in BCBSA’s
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Amended as of June 16,
2005
-8a-
opinion, it does not cause the net
worth of the Plan to fall below 100% of the Health Risk-Based
Capital formula or its equivalent under any successor formula, as
set forth in the applicable financial responsibility standards
established by BCBSA (provided such equivalent is approved for
purposes of this sub paragraph by the affirmative vote of
three-fourths of the Plans and three-fourths of the total then
current weighted vote of all the Plans), measured as of the date of
termination and adjusted for the value of any transactions not made
in the ordinary course of business. This payment shall not be due
in connection with transactions exclusively by or among Plan or
their affiliates, including reorganizations, combinations or
mergers, where the BCBSA Board of Directors determines that the
license termination does not result in a material diminution in the
number of Licensed Enrollees or the extent of their coverage. At
least 50% of the Re-Establishment Fee shall be awarded to the Plan
(or Plans) that receive the new license(s) for the service area(s)
at issue; provided, however, that such award shall not become due
or payable until all disputes, if any, regarding the amount of and
BCBSA’s right to such Re-Establishment Fee have been finally
resolved; and provided further that the award shall be based on the
final amount actually received by BCBSA. The Board of Directors
shall adopt a resolution which it may amend from time to time that
shall govern BCBSA’s use of its portion of the award. In the
event that the terminated entity’s license is reinstated by
BCBSA or is deemed to have remained in effect without interruption
by a court of competent jurisdiction, BCBSA shall reimburse the
Plan (and/or its Licensed Controlled Affiliates, as the case may
be) for payments made under this subparagraph only to the extent
that such payments exceed the amounts due to BCBSA pursuant to
subparagraph 15(d)(vi) and any costs associated with reestablishing
the Service Area, including any payments made by BCBSA to a Plan or
Plans (or their Licensed Controlled Affiliates) for purposes of
replacing the terminated entity.
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(iv)
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The terminated
entity shall comply with all financial settlement procedures set
forth in BCBSA’s License Termination Contingency Plan, as
amended from time
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Amended as of June 16,
2005
-8b-
to time and shall work diligently
and in good faith with BCBSA, any Alternative Control Licensee or
Replacement Licensee and any existing or potential new account for
Blue-branded products and services to minimize the disruption of
termination, and honor, to the fullest extent possible, the desire
of accounts to continue to receive or obtain Blue-branded products
and services through a new Licensee (“Transition”).
Such diligence and good faith on the part of the terminated entity
shall include, but not be limited to: (a) working cooperatively
with BCBSA to protect the Names and Marks from potential harm; (b)
cooperating with BCBSA’s use of the Names and Marks in the
terminated entity’s former service area during the
termination and Transition; (c) transmitting, upon the request of
an existing Blue account or of BCBSA with consent and on behalf of
an existing Blue account, all member and account-data relating to
the Federal Employee Program to BCBSA, and all member and account
data relating to other programs to an Alternative Control Licensee
or Replacement Licensee; (d) working with BCBSA and the Alternative
Control or Replacement Licensee with respect to potential new Blue
accounts headquartered in the terminated entity’s former
service area; (e) continuing to service Blue accounts during the
Transition; (f) continuing to comply with National Programs,
Federal Employee Program and NASCO policies and procedures and all
voluntary BCBSA programs, policies and performance standards, such
as Away From Home Care, including being responsible for payment of
all penalties for non-compliance duly levied in conformity with the
License Agreements, Membership Standards, or the Federal Employee
Program agreements, that may arise during the Transition; (g)
maintaining and providing access to its provider networks, as
defined by Federal Employee Program agreements and National Program
policies and procedures, and making those networks and discounts
available to members and providers who participate in National
Programs and the Federal Employee Program during the Transition;
(h) maintaining its technical connections and processing
capabilities during the Transition; and (i) working diligently to
conclude all financial settlements and account reconciliations as
negotiated in the termination transition agreement.
Amended as of June 16,
2005
-8c-
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(v)
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Notwithstanding
any other provision in this Agreement, BCBSA shall have the right,
with the approval of its Board of Directors, to assess additional
fines against the terminated entity during the Transition in the
event it fails to maintain and provide access to provider networks
as defined by Federal Employee Program agreements and National
Program policies and procedures, and/or pass on applicable
discounts. Such fines shall be in addition to any other
assessments, fees or liquidated damages payable herein, or under
existing policies and programs and shall be imposed to make whole
BCBSA and/or the Plans. Terminated entity shall pay any such fines
to BCBSA no later than 30 days after they are approved by the Board
of Directors.
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(vi)
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BCBSA shall
have the right to examine and audit and/or hire at terminated
entity’s expense a third-party auditor to examine and audit
the books and records of the terminated entity and its Licensed
Controlled Affiliates to verify compliance with the terms and
requirements this paragraph 15(d).
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(vii)
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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.
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(viii)
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As to a breach
of 15 (d) (i), (ii), (iii), (iv), (vi), or (vii) the parties agree
that the obligations are immediately enforceable in a court of
competent jurisdiction. As to a breach of 15 (d) (i), (ii), (iv),
(vi), or (vii) by the Plan, the parties agree there is no adequate
remedy at law and BCBSA is entitled to obtain specific
performance.
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Amended as of June 16,
2005
-8d-
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(ix)
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In the event
that the terminated entity’s license is reinstated by BCBSA
or is deemed to have remained in effect without interruption by a
court of competent jurisdiction, the Plan and its Licensed
Controlled Affiliates shall be jointly liable for reimbursing BCBSA
the reasonable costs incurred by BCBSA in connection with the
termination and the reinstatement or court action, and any
associated legal proceedings, including but not limited to: outside
legal fees, consulting fees, public relations fees, advertising
costs, and costs incurred to develop, lease or establish an interim
provider network. Any amount due to BCBSA under this subparagraph
may be waived in whole or in part by the BCBSA Board of Directors
in its sole discretion.
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(e). BCBSA shall be entitled to
enjoin the Plan or any related party in a court of competent
jurisdiction from entry into any transaction which would result in
a termination of this License Agreement unless the License
Agreement has been terminated pursuant to paragraph 10 (d) of this
Agreement upon the required six (6) month written
notice.
(f). BCBSA acknowledges that it is
not the owner of assets of the Plan.
Amended as of June 16,
2005
-8e-
16. This Agreement supersedes any
and all other agreements between the parties with respect to the
subject matter herein, and contains all of the covenants and
agreements of the parties as to the licensing of the Licensed Marks
and Name. This Agreement may be amended only by the affirmative
vote of three-fourths of the Plans and three-fourths of the total
then current weighted vote of all the Plans as officially recorded
by the BCBSA Corporate Secretary.
17. If any provision or any part of
any provision of this Agreement is judicially declared unlawful,
each and every other provision, or any part of any provision, shall
continue in full force and effect notwithstanding such judicial
declaration.
18. No waiver by BCBSA or the Plan
of any breach or default in performance on the part of BCBSA or the
Plan or any other licensee of any of the terms, covenants or
conditions of this Agreement shall constitute a waiver of any
subsequent breach or default in performance of said terms,
covenants or conditions.
19a. All notices provided for
hereunder shall be in writing and shall be sent in duplicate by
regular mail to BCBSA or the Plan at the address currently
published for each by BCBSA and shall be marked respectively to the
attention of the President and, if any, the General Counsel, of
BCBSA or the Plan.
Amended as of November 20,
1997
-8f-
19b. Except as provided in
paragraphs 9(b), 9(d)(iii), 15(a), and 15(b) above, this Agreement
may be terminated for a breach only upon at least 30 days’
written notice to the Plan advising of the specific matters at
issue and granting the Plan an opportunity to be heard and to
present its response to the Member Plans.
19c. For all provisions of this
Agreement referring to voting, the term ‘Plans’ shall
mean all entities licensed under the Blue Cross License Agreement
and/or the Blue Shield License Agreement, and in all votes of the
Plans under this Agreement the Plans shall vote together. For
weighted votes of the Plans, the Plan shall have a number of votes
equal to the number of weighted votes (if any) that it holds as a
Blue Cross Plan plus the number of weighted votes (if any) that it
holds as a Blue Shield Plan. For all other votes of the Plans, the
Plan shall have one vote. For all questions requiring an
affirmative three-fourths weighted vote of the Plans, the
requirement shall be deemed satisfied with a lesser weighted vote
unless the greater of: (i) 6/52 or more of the Plans (rounded to
the nearest whole number, with 0.5 or multiples thereof being
rounded to the next higher whole number) fail to cast weighted
votes in favor of the question; or (ii) three (3) of the Plans fail
to cast weighted votes in favor of the question. Notwithstanding
the foregoing provision, if there are thirty-nine (39) Plans, the
requirement of an affirmative three-fourths weighted vote shall be
deemed satisfied with a lesser weighted vote unless four (4) or
more Plans fail to cast weighted votes in favor of the
question.
Amended as of June 16,
2005
(The next page is page 9)
-8g-
20. Nothing herein contained shall
be construed to constitute the parties hereto as partners or joint
venturers, or either as the agent of the other, and Plan shall have
no right to bind or obligate BCBSA in any way, nor shall it
represent that it has any right to do so. BCBSA shall have no
liability to third parties with respect to any aspect of the
business, activities, operations, products, or services of the
Plan.
21. This Agreement shall be
governed, construed and interpreted in accordance with the laws of
the State of Illinois.
IN WITNESS WHEREOF, the parties have caused this
License Agreement to be executed, effective as of the date of last
signature written below.
BLUE CROSS AND BLUE SHIELD
ASSOCIATION
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By
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Title
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Date
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By
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Title
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Date
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-9-
EXHIBIT 1
BLUE CROSS
CONTROLLED AFFILIATE LICENSE
AGREEMENT
(Includes revisions adopted by
Member Plans through their June 16, 2005 meeting)
This Agreement by and among Blue
Cross and Blue Shield Association (“BCBSA”) and
(“Controlled Affiliate”), a Controlled Affiliate of the
Blue Cross Plan(s), known as
(“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:
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(i)
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change its
legal and/or trade names;
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(ii)
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change the
geographic area in which it operates;
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(iii)
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change any of
the type(s) of businesses in which it engages;
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(iv)
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create, or
become liable for by way of guarantee, any indebtedness, other than
indebtedness arising in the ordinary course of business;
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(v)
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sell any
assets, except for sales in the ordinary course of business or
sales of equipment no longer useful or being replaced;
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(vi)
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make any loans
or advances except in the ordinary course of business;
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(vii)
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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);
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(viii)
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conduct any
business other than under the Licensed Marks and Name;
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(ix)
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take any action
that any Controlling Plan or BCBSA reasonably believes will
adversely affect the Licensed Marks and Name.
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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:
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(a)
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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;
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(b)
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exercise
control over the policy and operations of the Controlled
Affiliate.
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In addition, a Plan or Plans directly or
indirectly through wholly-owned subsidiaries shall own more than
50% of any for-profit Controlled Affiliate.
3
3. SERVICE MARK
USE
A. Controlled Affiliate recognizes
the importance of a comprehensive national network of independent
BCBSA licensees which are committed to strengthening the Licensed
Marks and Name. The Controlled Affiliate further recognizes that
its actions within its Service Area may affect the value of the
Licensed Marks and Name nationwide.
B. Controlled Affiliate shall at all
times make proper service mark use of the Licensed Marks and Name,
including but not limited to use of such symbols or words as BCBSA
shall specify to protect the Licensed Marks and Name and shall
comply with such rules (generally applicable to Controlled
Affiliates licensed to use the Licensed Marks and Name) relative to
service mark use, as are issued from time-to-time by BCBSA.
Controlled Affiliate recognizes and agrees that all use of the
Licensed Marks and Name by Controlled Affiliate shall inure to the
benefit of BCBSA.
C. Controlled Affiliate may not
directly or indirectly use the Licensed Marks and Name in a manner
that transfers or is intended to transfer in the Service Area the
goodwill associated therewith to another mark or name, nor may
Controlled Affiliate engage in activity that may dilute or tarnish
the unique value of the Licensed Marks and Name.
D. If Controlled Affiliate meets the
standards of 2E(1) but not 2E(2) above and any of Controlled
Affiliate’s advertising or promotional material is reasonably
determined by BCBSA and/or the Plan to be in contravention of rules
and regulations governing the use of the Licensed Marks and Name,
Controlled Affiliate shall for ninety (90) days thereafter obtain
prior approval from BCBSA of advertising and promotional efforts
using the Licensed Marks and Name, approval or disapproval thereof
to be forthcoming within five (5) business days of receipt of same
by BCBSA or its designee. In all advertising and promotional
efforts, Controlled Affiliate shall observe the Service Area
limitations applicable to Plan.
E. Notwithstanding any other
provision in the Plan’s License Agreement with BCBSA or in
this Agreement, Controlled Affiliate shall use its best efforts to
promote and build the value of the Licensed Marks and
Name.
Amended as of June 16,
2005
4
4. SUBLICENSING AND
ASSIGNMENT
Controlled Affiliate shall not,
directly or indirectly, sublicense, transfer, hypothecate, sell,
encumber or mortgage, by operation of law or otherwise, the rights
granted hereunder and any such act shall be voidable at the sole
option of Plan or BCBSA. This Agreement and all rights and duties
hereunder are personal to Controlled Affiliate.
5.
INFRINGEMENT
Controlled Affiliate shall promptly
notify Plan and Plan shall promptly notify BCBSA of any suspected
acts of infringement, unfair competition or passing off that may
occur in relation to the Licensed Marks and Name. Controlled
Affiliate shall not be entitled to require Plan or BCBSA to take
any actions or institute any proceedings to prevent infringement,
unfair competition or passing off by third parties. Controlled
Affiliate agrees to render to Plan and BCBSA, without charge, all
reasonable assistance in connection with any matter pertaining to
the protection of the Licensed Marks and Name by BCBSA.
6. LIABILITY
INDEMNIFICATION
Controlled Affiliate and Plan hereby
agree to save, defend, indemnify and hold BCBSA harmless from and
against all claims, damages, liabilities and costs of every kind,
nature and description (except those arising solely as a result of
BCBSA’s negligence) that may arise as a result of or related
to Controlled Affiliate’s rendering of services under the
Licensed Marks and Name.
7. LICENSE
TERM
A. Except as otherwise provided
herein, the license granted by this Agreement shall remain in
effect for a period of one (1) year and shall be automatically
extended for additional one (1) year periods unless terminated
pursuant to the provisions herein.
B. This Agreement and all of
Controlled Affiliate’s rights hereunder shall immediately
terminate without any further action by any party or entity in the
event that: (i) the Plan ceases to be authorized to use the
Licensed Marks and Name; or (ii) pursuant to Paragraph 15(a)(x) of
the Blue Cross License Agreement the Plan ceases to be authorized
to use the Licensed Names and Marks in the geographic area served
by the Controlled Affiliate provided, however, that if the
Controlled Affiliate is serving more than one State or portions
thereof, the termination of this Agreement shall be limited to the
State(s) or portions thereof in which the Plan’s license to
use the Licensed Marks and Names is terminated. By not appealing or
challenging such regulatory action within the time prescribed by
law or regulation, and in any event no later than 120 days after
such action is taken, a Plan shall be deemed to have exhausted its
rights to appeal or challenge, and automatic termination shall
proceed.
Amended as of September 14,
2004
5
C. Notwithstanding any other
provision of this Agreement, this license to use the Licensed Marks
and Name may be forthwith terminated by the Plan or the affirmative
vote of the majority of the Board of Directors of BCBSA present and
voting at a special meeting expressly called by BCBSA for the
purpose on ten (10) days written notice to the Plan advising of the
specific matters at issue and granting the Plan an opportunity to
be heard and to present its response to the Board for: (1) failure
to comply with any applicable minimum capital or liquidity
requirement under the quality control standards of this Agreement;
or (2) failure to comply with the “Organization and
Governance” quality control standard of this Agreement; or
(3) impending financial insolvency; or (4) for a Smaller Controlled
Affiliate (as defined in Exhibit A), failure to comply with any of
the applicable requirements of Standards 2, 3, 4, 5 or 7 of
attached Exhibit A; or (5) the pendency of any action instituted
against the Controlled Affiliate seeking its dissolution or
liquidation of its assets or seeking appointment of a trustee,
interim trustee, receiver or other custodian for any of its
property or business or seeking the declaration or establishment of
a trust for any of its property or business, unless this Controlled
Affiliate License Agreement has been earlier terminated under
paragraph 7(e); or (6) failure by a Controlled Affiliate that meets
the standards of 2E(1) but not 2E(2) above to obtain BCBSA’s
written consent to a change in the identity of any owner, in the
extent of ownership, or in the identity of any person or entity
with the authority to select or appoint members or board members,
provided that as to publicly traded Controlled Affiliates this
provision shall apply only if the change affects a person or entity
that owns at least 5% of the Controlled Affiliate’s stock
before or after the change; or (7) such other reason as is
determined in good faith immediately and irreparably to threaten
the integrity and reputation of BCBSA, the Plans, any other
licensee including Controlled Affiliate and/or the Licensed Marks
and Name.
D. Except as otherwise provided in
Paragraphs 7(B), 7(C) or 7(E) herein, should Controlled Affiliate
fail to comply with the provisions of this Agreement and not cure
such failure within thirty (30) days of receiving written notice
thereof (or commence a cure within such thirty day period and
continue diligent efforts to complete the cure if such curing
cannot reasonably be completed within such thirty day period) BCBSA
or the Plan shall have the right to issue a notice that the
Controlled Affiliate is in a state of noncompliance. If a state of
noncompliance as aforesaid is undisputed by the Controlled
Affiliate or is found to exist by a mandatory dispute resolution
panel and is uncured as provided above, BCBSA shall have the right
to seek judicial enforcement of the Agreement or to issue a notice
of termination thereof. Notwithstanding any other provisions of
this Agreement, any disputes as to the termination of this License
pursuant to Paragraphs 7(B), 7(C) or 7(E) of this Agreement shall
not be subject to mediation and mandatory dispute resolution. All
other disputes between BCBSA, the Plan and/or Controlled Affiliate
shall be submitted promptly to mediation and mandatory dispute
resolution. The mandatory dispute resolution panel shall have
authority to issue orders for specific performance and assess
monetary penalties. Except, however, as provided in Paragraphs 7(B)
and 7(E) of this Agreement, this license to use the Licensed Marks
and Name may not be finally terminated for any reason without the
affirmative vote of a majority of the present and voting members of
the Board of Directors of BCBSA.
6
E. This Agreement and all of
Controlled Affiliate’s rights hereunder shall immediately
terminate without any further action by any party or entity in the
event that:
(1) Controlled Affiliate shall no
longer comply with item 2(E) above;
(2) Appropriate dues, royalties and
other payments for Controlled Affiliate pursuant to paragraph 9
hereof, which are the royalties for this License Agreement, are
more than sixty (60) days in arrears to BCBSA; or
(3) Any of the following events
occur: (i) a voluntary petition shall be filed by Controlled
Affiliate seeking bankruptcy, reorganization, arrangement with
creditors or other relief under the bankruptcy laws of the United
States or any other law governing insolvency or debtor relief, or
(ii) an involuntary petition or proceeding shall be filed against
Controlled Affiliate seeking bankruptcy, reorganization,
arrangement with creditors or other relief under the bankruptcy
laws of the United States or any other law governing insolvency or
debtor relief and such petition or proceeding is consented to or
acquiesced in by Controlled Affiliate or is not dismissed within
sixty (60) days of the date upon which the petition or other
document commencing the proceeding is served upon the Controlled
Affiliate, or (iii) an order for relief is entered against
Controlled Affiliate in any case under the bankruptcy laws of the
United States, or Controlled Affiliate is adjudged bankrupt or
insolvent as those terms are defined in the Uniform Commercial Code
as enacted in the State of Illinois by any court of competent
jurisdiction, or (iv) Controlled Affiliate makes a general
assignment of its assets for the benefit of creditors, or (v) any
government or any government official, office, agency, branch, or
unit assumes control of Controlled Affiliate or delinquency
proceedings (voluntary or involuntary) are instituted, or (vi) an
action is brought by Controlled Affiliate seeking its dissolution
or liquidation of its assets or seeking the appointment of a
trustee, interim trustee, receiver or other custodian for any of
its property or business, or (vii) an action is instituted by any
governmental entity or officer against Controlled Affiliate seeking
its dissolution or liquidation of its assets or seeking the
appointment of a trustee, interim trustee, receiver or other
custodian for any of its property or business and such action is
consented to or acquiesced in by Controlled Affiliate or is not
dismissed within one hundred thirty (130) days of the date upon
which the pleading or other document commencing the action is
served upon the Controlled Affiliate, provided that if the action
is stayed or its prosecution is enjoined, the one hundred thirty
(130) day period is tolled for the duration of the stay or
injunction, and provided further, that the Association’s
Board of Directors may toll or extend the 130 day period at any
time prior to its expiration, or (viii) a trustee, interim trustee,
receiver or other custodian for any of Controlled Affiliate’s
property or business is appointed or the Controlled Affiliate is
ordered dissolved or liquidated. Notwithstanding any other
provision of this Agreement, a declaration or a request for
declaration of the existence of a trust over any of the Controlled
Affiliate’s property or business shall not in itself be
deemed to constitute or seek appointment of a trustee, interim
trustee, receiver or other custodian for purposes of subparagraphs
7(e)(3)(vii) and (viii) of this Agreement
Amended as of March 18,
2004
7
F. Upon termination of this
Agreement for cause or otherwise, Controlled Affiliate agrees that
it shall immediately discontinue all use of the Licensed Marks and
Name, including any use in its trade name.
G. Upon termination of this
Agreement, Controlled Affiliate shall immediately notify all of its
customers that it is no longer a licensee of BCBSA and, if directed
by the Association’s Board of Directors, shall provide
instruction on how the customer can contact BCBSA or a designated
licensee to obtain further information on securing coverage. The
notification required by this paragraph shall be in writing and in
a form approved by BCBSA. The BCBSA shall have the right to audit
the terminated entity’s books and records to verify
compliance with this paragraph.
H. In the event this Agreement
terminates pursuant to 7(b) hereof, or in the event the Controlled
Affiliate is a Larger Controlled Affiliate (as defined in Exhibit
A), upon termination of this Agreement, the provisions of Paragraph
7.G. shall not apply and the following provisions shall apply,
except that, in the event of a partial termination of this
Agreement pursuant to Paragraph 7(B)(ii) of this Agreement, the
notices, national account listing, payment, and audit right listed
below shall be applicable solely with respect to the geographic
area for which the Plan’s license to use the Licensed Names
and Marks is terminated:
(1) The Controlled Affiliate shall
send a notice through the U.S. mails, with first class postage
affixed, to all individual and group customers, providers, brokers
and agents of products or services sold, marketed, underwritten or
administered by the Controlled Affiliate under the Licensed Marks
and Name. The form and content of the notice shall be specified by
BCBSA and shall, at a minimum, notify the recipient of the
termination of the license, the consequences thereof, and
instructions for obtaining alternate products or services licensed
by BCBSA, subject to any conflicting state law and state regulatory
requirements. This notice shall be mailed within 15 days after
termination.
(2) The Controlled Affiliate shall
deliver to BCBSA within five days of a request by BCBSA a listing
of national accounts in which the Controlled Affiliate is involved
(in a control, participating or servicing capacity), identifying
the national account and the Controlled Affiliate’s role
therein.
(3) Unless the cause of termination
is an event respecting BCBSA stated in paragraph 15(a) or (b) of
the Plan’s license agreement with BCBSA to use the Licensed
Marks and Name, the Controlled Affiliate, the Plan, and any other
Licensed Controlled Affiliates of the Plan shall be jointly liable
for payment to BCBSA of an amount equal to the Re-Establishment Fee
(described below) multiplied by the number of Licensed Enrollees of
the Controlled Affiliate; provided that if any other Plan is
permitted by BCBSA to use marks or names licensed by BCBSA in the
Service Area established by this Agreement, the Re-Establishment
Fee shall be multiplied by a fraction, the numerator of which is
the number of Licensed Enrollees of the Controlled Affiliate, the
Plan, and any other Licensed Controlled Affiliates and the
denominator of which is the total number of Licensed Enrollees in
the Service Area.
Amended as of June 16,
2005
8
The Re-Establishment Fee shall be
indexed to a base fee of $80. The Re-Establishment Fee through
December 31, 2005 shall be $80. The Re-establishment Fee for
calendar years after December 31, 2005 shall be adjusted on January
1 of each calendar year up to and including January 1, 2010 and
shall be the base fee multiplied by 100% plus the cumulative
percentage increase or decrease in the Plans’ gross
administrative expense (standard BCBSA definition) per Licensed
Enrollee since December 31, 2004. The adjustment shall end on
January 1, 2011, at which time the Re-Establishment Fee shall be
fixed at the then-current amount and no longer automatically
adjusted. For example, if the Plans’ gross administrative
expense per Licensed Enrollee was $278.60, $285.00 and $290.00 for
calendar year end 2004, 2005 and 2006, respectively, the January 1,
2007 Re-Establishment Fee would be $83.27 (100% of base fee plus
$1.84 for calendar year 2005 and $1.43 for calendar year 2006).
Licensed Enrollee means each and every person and covered dependent
who is enrolled as an individual or member of a group receiving
products or services sold, marketed or administered under marks or
names licensed by BCBSA as determined at the earlier of (i) the end
of the last fiscal year of the terminated entity which ended prior
to termination or (ii) the fiscal year which ended before any
transactions causing the termination began. Notwithstanding the
foregoing, the amount payable pursuant to this subparagraph H. (3)
shall be due only to the extent that, in BCBSA’s opinion, it
does not cause the net worth of the Controlled Affiliate, the Plan
or any other Licensed Controlled Affiliates of the Plan to fall
below 100% of the Health Risk-Based Capital formula, or its
equivalent under any successor formula, as set forth in the
applicable financial responsibility standards established by BCBSA
(provided such equivalent is approved for purposes of this sub
paragraph by the affirmative vote of three-fourths of the Plans and
three-fourths of the total then current weighted vote of all the
Plans); measured as of the date of termination, and adjusted for
the value of any transactions not made in the ordinary course of
business. This payment shall not be due in connection with
transactions exclusively by or among Plans or their affiliates,
including reorganizations, combinations or mergers, where the BCBSA
Board of Directors determines that the license termination does not
result in a material diminution in the number of Licensed Enrollees
or the extent of their coverage. At least 50% of the
Re-Establishment Fee shall be awarded to the Plan (or Plans) that
receive the new license(s) for the service area(s) at issue;
provided, however, that such award shall not become due or payable
until all disputes, if any, regarding the amount of and
BCBSA’s right to such Re-Establishment Fee have been finally
resolved; and provided further that the award shall be based on the
final amount actually received by BCBSA. The Board of Directors
shall adopt a resolution which it may amend from time to time that
shall govern BCBSA’s use of its portion of the award. In the
event that the Controlled Affiliate’s license is reinstated
by BCBSA or is deemed to have remained in effect without
interruption by a court of competent jurisdiction, BCBSA shall
reimburse the Controlled Affiliate (and/or the Plan or its other
Licensed Controlled Affiliates, as the case may be) for payments
made under this subparagraph 7.H.(3) only to the extent that such
payments exceed the amounts due to BCBSA pursuant to paragraph 7.M.
and
Amended as of June 16,
2005
9
any costs associated with
reestablishing the Service Area, including payments made by BCBSA
to a Plan or Plans (or their Licensed Controlled Affiliates) for
purposes of replacing the Controlled Affiliate.
(4) BCBSA shall have the right to
examine and audit and/or hire at terminated entity’s expense
a third party auditor to examine and audit the books and records of
the Controlled Affiliate, the Plan, and any other Licensed
Controlled Affiliates of the Plan to verify compliance with this
paragraph 7.H.
(5) Subsequent to termination of
this Agreement, the terminated entity and its affiliates, agents,
and employees shall have an ongoing and continuing obligation to
protect all BCBSA and Blue Licensee data that was acquired or
accessed during the period this Agreement was in force, including
but not limited to all confidential processes, pricing, provider,
discount and other strategic and competitively sensitive
information (“Blue Information”) from disclosure, and
shall not, either alone or with another entity, disclose such Blue
Information or use it in any manner to compete without the express
written permission of BCBSA.
(6) As to a breach of 7.H.(1), (2),
(3), (4) or (5) the parties agree that the obligations are
immediately enforceable in a court of competent jurisdiction. As to
a breach of 7.H.(1), (2) or (4) by the Controlled Affiliate, the
parties agree there is no adequate remedy at law and BCBSA is
entitled to obtain specific performance.
I. This Agreement shall remain in
effect until terminated by the Controlled Affiliate upon not less
than eighteen (18) months written notice to the Association or upon
a shorter notice period approved by BCBSA in writing at its sole
discretion, or until terminated as otherwise provided
herein.
J. In the event the Controlled
Affiliate is a Smaller Controlled Affiliate (as defined in Exhibit
A), the Controlled Affiliate agrees to be jointly liable for the
amount described in H.3. and M. hereof upon termination of the
BCBSA license agreement of any Larger Controlled Affiliate of the
Plan.
K. BCBSA shall be entitled to enjoin
the Controlled Affiliate or any related party in a court of
competent jurisdiction from entry into any transaction which would
result in a termination of this Agreement unless the Plan’s
license from BCBSA to use the Licensed Marks and Names has been
terminated pursuant to 10(d) of the Plan’s license agreement
upon the required 6 month written notice.
L. BCBSA acknowledges that it is not
the owner of assets of the Controlled Affiliate.
M. In the event that the Plan has
more than 50 percent voting control of the Controlled Affiliate
under Paragraph 2(E)(2) above and is a Larger Controlled Affiliate
(as defined in Exhibit A), then the vote called for in Paragraphs
7(C) and 7(D) above shall require the affirmative vote of
three-fourths of the Plans and three-fourths of the total then
current weighted vote of all the Plans.
Amended as of June 16,
2005
10
N. In the event this Agreement
terminates and is subsequently reinstated by BCBSA or is deemed to
have remained in effect without interruption by a court of
competent jurisdiction, the Controlled Affiliate, the Plan, and any
other Licensed Controlled Affiliates of the Plan shall be jointly
liable for reimbursing BCBSA the reasonable costs incurred by BCBSA
in connection with the termination and the reinstatement or court
action, and any associated legal proceedings, including but not
limited to: outside legal fees, consulting fees, public relations
fees, advertising costs, and costs incurred to develop, lease or
establish an interim provider network. Any amount due to BCBSA
under this subparagraph may be waived in whole or in part by the
BCBSA Board of Directors in its sole discretion.
8. DISPUTE
RESOLUTION
The parties agree that any disputes
between them or between or among either of them and one or more
Plans or Controlled Affiliates of Plans that use in any manner the
Blue Cross and Blue Cross Marks and Name are subject to the
Mediation and Mandatory Dispute Resolution process attached to and
made a part of Plan’s License from BCBSA to use the Licensed
Marks and Name as 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 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 June 16,
2005
11
11. NOTICES AND
CORRESPONDENCE
Notices regarding the subject matter
of this Agreement or breach or termination thereof shall be in
writing and shall be addressed in duplicate to the last known
address of each other party, marked respectively to the attention
of its President and, if any, its General Counsel.
12. COMPLETE
AGREEMENT
This Agreement contains the complete
understandings of the parties in relation to the subject matter
hereof. This Agreement may only be amended by the affirmative vote
of three-fourths of the Plans and three-fourths of the total then
current weighted vote of all the Plans as officially recorded by
the BCBSA Corporate Secretary.
13.
SEVERABILITY
If any term of this Agreement is
held to be unlawful by a court of competent jurisdiction, such
findings shall in no way affect the remaining obligations of the
parties hereunder and the court may substitute a lawful term or
condition for any unlawful term or condition so long as the effect
of such substitution is to provide the parties with the benefits of
this Agreement.
14.
NONWAIVER
No waiver by BCBSA of any breach or
default in performance on the part of Controlled Affiliate or any
other licensee of any of the terms, covenants or conditions of this
Agreement shall constitute a waiver of any subsequent breach or
default in performance of said terms, covenants or
conditions.
14A. VOTING
For all provisions of this Agreement referring
to voting, the term ‘Plans’ shall mean all entities
licensed under the Blue Cross License Agreement and/or the Blue
Shield License Agreement, and in all votes of the Plans under this
Agreement the Plans shall vote together. For weighted votes of the
Plans, the Plan shall have a number of votes equal to the number of
weighted votes (if any) that it holds as a Blue Cross Plan plus the
number of weighted votes (if any) that it holds as a Blue Shield
Plan. For all other votes of the Plans, the Plan shall have one
vote. For all questions requiring an affirmative three-fourths
weighted vote of the Plans, the requirement shall be deemed
satisfied with a lesser weighted vote unless the greater of: (i)
6/52 or more of the Plans (rounded to the nearest whole number,
with 0.5 or multiples thereof being rounded to the next higher
whole number) fail to cast weighted votes in favor of the question;
or (ii) three (3) of the Plans fail to cast weighted votes in favor
of the question. Notwithstanding the foregoing provision, if there
are thirty-nine (39) Plans, the requirement of an affirmative
three-fourths weighted vote shall be deemed satisfied with a lesser
weighted vote unless four (4) or more Plans fail to cast weighted
votes in favor of the question.
Amended as of June 16,
2005
12
THIS PAGE IS INTENTIONALLY BLANK.
13
15. GOVERNING
LAW
This Agreement shall be governed by,
and construed and interpreted in accordance with, the laws of the
State of Illinois.
16.
HEADINGS
The headings inserted in this
agreement are for convenience only and shall have no bearing on the
interpretation hereof.
IN WITNESS WHEREOF, the parties have
caused this License Agreement to be executed and effective as of
the date of last signature written below.
Controlled Affiliate:
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Plan:
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By:
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BLUE CROSS
AND BLUE SHIELD ASSOCIATION
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14
EXHIBIT A
CONTROLLED AFFILIATE LICENSE
STANDARDS
June 2005
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:
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•
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Percent of
Controlled Affiliate controlled by parent: Greater than 50 percent
or 50 percent?
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•
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Risk
assumption: yes or no?
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•
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Medical care
delivery: yes or no?
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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?
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Amended September 19,
2002
15
EXHIBIT A (continued)
For purposes of definition:
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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.
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•
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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.)*
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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.
Amended September 19,
2002
16
EXHIBIT A (continued)
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:
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1.
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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
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2.
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Within six (6)
months after reaching or surpassing the fifteen percent (15%)
threshold, demonstrate compliance with all license requirements for
a larger Controlled Affiliate.
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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?
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More than 50%
|
|
50%
|
|
100% and Primary Business is
Government Non-Risk
|
|
|
|
|
|
|
