INTERCOMPANY SERVICE AGREEMENT
This Intercompany Service Agreement ("Agreement") is entered into as of
this _____ day of _______________, 1998 ("Effective Date"), by and among Blue
Cross & Blue Shield United of Wisconsin, a service insurance corporation
organized pursuant to Ch. 000, Xxxxxxxxx Xxxxxxxx ("XXXXXX"), Xxxxxx
Xxxxxxxxx Services, Inc., an insurance holding company organized pursuant
to Ch. 000, Xxxxxxxxx Xxxxxxxx ("XXX"), xxx Xxxxxx Xxxxxxxxx Insurance
Company, a stock insurance corporation organized pursuant to Ch. 611,
Wisconsin Statutes ("UWIC").
RECITALS
WHEREAS, BCBSUW, UWS and UWIC are affiliated corporations, with UWIC
being a wholly owned subsidiary of UWS;
WHEREAS, there is an existing service agreement between BCBSUW and UWS,
and this Agreement is intended to further specify the services, costs, and
allocation methods contemplated by that service agreement;
WHEREAS, BCBSUW and UWS provide to each other business resources and
services that are necessary for the continued operation of BCBSUW's and UWS's
business, and UWIC provides both BCBSUW and UWS with officer services;
WHEREAS, by entering into this Agreement, the parties hereto wish to
establish clearly (i) an officer leasing arrangement; (ii) the services and
resources that BCBSUW and UWS will continue to provide to each other and the
compensation and cost allocations therefor; and (iii) the respective rights
and responsibilities of the parties.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, and of the
mutual covenants hereinafter contained, the parties hereto agree as follows:
1. LEASE OF OFFICERS
a. DEFINITION.
i. "Leased Officers" are those UWS employees that perform
services as officers of BCBSUW, those BCBSUW employees that
perform services as officers of UWS, and those UWIC employees
that perform services as officers of BCBSUW and/or UWS.
(Leased Officers may also be referred to herein as "Officers").
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b. LEASE OF OFFICERS.
i. OBLIGATION TO PROVIDE OFFICERS. BCBSUW and UWS shall
provide to each other, and UWIC shall provide to BCBSUW and/or
UWS, to the extent requested by BCBSUW and/or UWS and with the
consent of the respective company's Board of Directors (the
"Board"), the entire requirement of Leased Officers as shall
be necessary or appropriate for the conduct of BCBSUW's and
UWS's business.
ii. INDEPENDENT HIRING. Notwithstanding Section i.
OBLIGATION TO PROVIDE OFFICERS. BCBSUW and UWS shall provide
to each other, and UWIC shall provide to BCBSUW and/or UWS, to
the extent requested by BCBSUW and/or UWS and with the consent
of the respective company's Board of Directors (the "Board"),
the entire requirement of Leased Officers, the Boards shall
have the right to obtain and hire directly any or all Officers
from any other sources and on any terms to perform such
duties, on behalf of BCBSUW or UWS, as the case may be, as the
Boards may consider appropriate from time to time. Should the
Boards hire officers from other sources, it will not hire any
individual who was a BCBSUW, UWS, or UWIC employee leased
under this Agreement within three (3) months preceding such
hiring, without the written consent of the other party(ies) to
this Agreement.
iii. HUMAN RESOURCES DEPARTMENT. UWS's Human Resources
Department ("Human Resources") shall be responsible for the
implementation, management, and operation of BCBSUW's, UWS's,
and UWIC's leasing obligations under this Agreement.
c. EMPLOYMENT RELATIONSHIPS. BCBSUW, UWS, and UWIC shall be, and
shall have all the privileges, rights, and responsibilities of, common law
employers of all BCBSUW, UWS, and UWIC employees, respectively, whether or
not the employee actually performs services for BCBSUW or UWS. Employment,
termination, and terms of employment of all Leased Officers shall be
reserved to the full Boards of Directors of the Leased Officer's common law
employer (BCBSUW, UWS or UWIC, as the case may be), provided, however, that
while any such individual is leased to perform services as an officer under
this Agreement, BCBSUW, UWS or UWIC, as the case may be, will be consulted
prior to all determinations regarding the employment, or terms thereof, of
such individuals; provided, however, that such input shall be of an
advisory nature and will not be binding on the common law employer of such
individuals. Officers leased to UWS shall remain employees of BCBSUW and
UWIC, respectively, and Officers leased to BCBSUW shall remain employees of
UWS and UWIC, respectively, and shall in no way be treated as or considered
employees of the company to which such Officer is leased.
2. SERVICES AND OTHER RESOURCES
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a. SERVICES AND RESOURCES PROVIDED BY BCBSUW TO UWS. BCBSUW shall
provide to UWS, to the extent requested by UWS and subject to Section 5.
MODIFICATIONS TO LEASED EMPLOYEES AND BCBSUW/UWS SERVICES, the
following services and resources (together "BCBSUW Services"). BCBSUW
shall supply BCBSUW Services only if UWS has determined not to have its
own employees or third parties furnish the BCBSUW Services, subject to
Section 5.
MODIFICATIONS TO LEASED EMPLOYEES AND BCBSUW/UWS SERVICES.
i. OFFICE SPACE AND FACILITIES. Office space and
facilities, including, but not limited to, furniture and equipment,
as shall be necessary or appropriate for the conduct of UWS's
operations.
ii. BUILDING SERVICES. Building services, including, but not
limited to, repair and maintenance of any property and facilities
made available hereunder as shall be necessary to maintain such
property and facilities in good working order, and such other
building services as may be necessary or appropriate for the
conduct of UWS's business.
iii. OFFICE SERVICES. Such office services as shall be
necessary or appropriate for the conduct of UWS's business.
iv. CENTRAL SYSTEMS. Such central systems, including, but not
limited to, telecommunications, centralized mailing, technology
support and central data base maintenance, as shall be necessary or
appropriate for the conduct of UWS's business.
b. SERVICES AND RESOURCES PROVIDED BY UWS TO BCBSUW. UWS shall
provide to BCBSUW, to the extent requested by BCBSUW and subject to
Section 5.
MODIFICATIONS TO LEASED EMPLOYEES AND BCBSUW/UWS SERVICES, the
following services and resources (together "UWS Services"). UWS shall
supply UWS Services only if BCBSUS has determined not to have its own
employees or third parties furnish the UWS Services, subject to Section 5.
MODIFICATIONS TO LEASED EMPLOYEES AND BCBSUW/UWS SERVICES.
i. CORPORATE SUPPORT SERVICES. Such corporate support
services, including, but not limited to, corporate compliance,
legal, and government relations, as shall be necessary or
appropriate for the conduct of BCBSUW's business.
ii. EXECUTIVE SERVICES. Such executive services as shall be
necessary or appropriate for the conduct of BCBSUW's business.
iii. MARKETING AND COMMUNICATIONS. Such corporate marketing and
communications services, including, but not limited to, public
relations and
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employee community events, as shall be necessary or appropriate
for the conduct of BCBSUW's business.
iv. HUMAN RESOURCES. Such human resource services,
including, but not limited to, staffing, labor and employment
relations, training and development, and administration of payroll
and employee benefits, as shall be necessary or appropriate for the
conduct of BCBSUW's business.
v. FINANCIAL SERVICES. Such financial services, including,
but not limited to, tax, treasury, cash management, administration
of financial systems, corporate accounting, and strategic
planning/consulting, as shall be necessary or appropriate for the
conduct of BCBSUW's business.
vi. ACTUARIAL AND UNDERWRITING SERVICES. Such actuarial and
underwriting services as shall be necessary or appropriate for the
conduct of BCBSUW's business.
c. STAFFING. BCBSUW and UWS shall both maintain an adequate
source of qualified employees to ensure the acceptable
performance of BCBSUW and UWS Services.
3. COST ALLOCATION METHODS
a. LEASED OFFICERS.
i. ALLOCATION OF OFFICER COSTS. To the extent that Officers
are leased to BCBSUW or UWS, costs associated with the lease of
such Officers shall be indirectly charged to BCBSUW or UWS, as the
case may be, as provided in Section ii. INDIRECT ALLOCATIONS.
Cost allocations for (i) those BCBSUW Services provided to UWS, as
identified on Schedule 2 ("Schedule 2 Services"), and (ii) those
UWS Services provided to BCBSUW, as identified on Schedule 3
("Schedule 3 Services"), shall be determined annually for the next
succeeding Fiscal Year ("Fiscal Year" shall mean January 1 through
December 31) on the basis of utilization and cost studies performed
by UWS. Through the use of Indirect Allocation Methods, as
described in Schedule 4 attached hereto, utilization of the
services identified on Schedules 2 and 3 shall be reduced to an
allocation percentage for each company in the BCBSUW/UWS Group
("BCBSUW/UWS Group" includes BCBSUW, UWS and UWS subsidiaries).
Each month (i) all costs associated with the utilization of
Schedule 2 Services shall be multiplied by UWS's total allocation
percentage to determine UWS's allocable share of costs for Schedule
2 Services, and (ii) all costs associated with the utilization of
Schedule 3 Services shall be multiplied by BCBSUW's total
allocation percentage to determine BCBSUW's allocable share of
costs for Schedule 3 Services. For any specific Schedule 3
Service, BCBSUW's total allocation percentage shall be determined
by adding the applicable allocation percentage from each of the
service agreements included in Schedule 3.
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Notwithstanding the preceding, (i) allocation percentages are subject
to interim Fiscal Year adjustments to allocate more accurately costs
based on actual utilization by each company in the BCBSUW/UWS
Group, (ii) costs associated with Schedule 2 Services performed
directly for UWS shall be allocable to UWS only and costs
associated with Schedule 3 Services performed directly for BCBSUW
shall be allocable to BCBSUW only, and (iii) subject to approval by
the Vice President of Finance for the BCBSUW/UWS Group, the
Indirect Allocation Method used to allocate costs to UWS for
specific Schedule 2 Services and to BCBSUW for specific Schedule 3
Services shall be subject to agreement by the parties on an annual
basis. Schedule 2, attached hereto, sets forth UWS's annual
allocation percentages for costs and expenses associated with
Schedule 2 Services. Schedule 3, attached hereto, sets forth
BCBSUW's annual allocation percentages for costs and expenses
associated with Schedule 3 Services. Schedule 2 and Schedule 3
shall be amended annually.
b. BCBSUW AND UWS SERVICES. To the extent that BCBSUW Services
are rendered on behalf of or for the benefit of UWS, and to the extent
that UWS Services are rendered on behalf of or for the benefit of
BCBSUW, costs therefor shall be allocated to UWS and BCBSUW,
respectively, as follows:
i. DIRECT CHARGES. Costs associated with those BCBSUW and UWS
Services identified on Schedule 1 shall be directly charged to UWS
and BCBSUW, respectively, on a monthly basis.
ii. INDIRECT ALLOCATIONS. Cost allocations for (i) those BCBSUW
Services provided to UWS, as identified on Schedule 2 ("Schedule 2
Services"), and (ii) those UWS Services provided to BCBSUW, as
identified on Schedule 3 ("Schedule 3 Services"), shall be
determined annually for the next succeeding Fiscal Year ("Fiscal
Year" shall mean January 1 through December 31) on the basis of
utilization and cost studies performed by UWS. Through the use of
Indirect Allocation Methods, as described in Schedule 4 attached
hereto, utilization of the services identified on Schedules 2 and 3
shall be reduced to an allocation percentage for each company in
the BCBSUW/UWS Group ("BCBSUW/UWS Group" includes BCBSUW, UWS and
UWS subsidiaries). Each month (i) all costs associated with the
utilization of Schedule 2 Services shall be multiplied by UWS's
total allocation percentage to determine UWS's allocable share of
costs for Schedule 2 Services, and (ii) all costs associated with
the utilization of Schedule 3 Services shall be multiplied by
BCBSUW's total allocation percentage to determine BCBSUW's
allocable share of costs for Schedule 3 Services. For any specific
Schedule 3 Service, BCBSUW's total allocation percentage shall be
determined by adding the applicable allocation percentage from each
of the service agreements included in Schedule 3. Notwithstanding
the preceding, (i) allocation percentages are subject to interim
Fiscal Year adjustments to allocate more accurately costs based on
actual utilization by each company in the BCBSUW/UWS Group, (ii)
costs associated
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with Schedule 2 Services performed directly for UWS shall be
allocable to UWS only and costs associated with Schedule 3 Services
performed directly for BCBSUW shall be allocable to BCBSUW only,
and (iii) subject to approval by the Vice President of Finance
for the BCBSUW/UWS Group, the Indirect Allocation Method used to
allocate costs to UWS for specific Schedule 2 Services and to
BCBSUW for specific Schedule 3 Services shall be subject to
agreement by the parties on an annual basis.(1) Schedule 2,
attached hereto, sets forth UWS's annual allocation percentages
for costs and expenses associated with Schedule 2 Services.
Schedule 3, attached hereto, sets forth BCBSUW's annual allocation
percentages for costs and expenses associated with Schedule 3
Services. Schedule 2 and Schedule 3 shall be amended annually.
iii. CHARGEBACKS. Costs associated with those BCBSUW and UWS
Services identified on Schedule 5 ("Chargeback Services") either
shall be (i) indirectly allocated to UWS or BCBSUW, as the case may
be, as discussed in Section ii. INDIRECT ALLOCATIONS. Cost
allocations for (i) those BCBSUW Services provided to UWS, as
identified on Schedule 2 ("Schedule 2 Services"), and (ii) those
UWS Services provided to BCBSUW, as identified on Schedule 3
("Schedule 3 Services"), shall be determined annually for the next
succeeding Fiscal Year ("Fiscal Year" shall mean January 1 through
December 31) on the basis of utilization and cost studies performed
by UWS. Through the use of Indirect Allocation Methods, as
described in Schedule 4 attached hereto, utilization of the
services identified on Schedules 2 and 3 shall be reduced to an
allocation percentage for each company in the BCBSUW/UWS Group
("BCBSUW/UWS Group" includes BCBSUW, UWS and UWS subsidiaries).
Each month (i) all costs associated with the utilization of
Schedule 2 Services shall be multiplied by UWS's total allocation
percentage to determine UWS's allocable share of costs for Schedule
2 Services, and (ii) all costs associated with the utilization of
Schedule 3 Services shall be multiplied by BCBSUW's total
allocation percentage to determine BCBSUW's allocable share of
costs for Schedule 3 Services. For any specific Schedule 3
Service, BCBSUW's total allocation percentage shall be determined
by adding the applicable allocation percentage from each of the
service agreements included in Schedule 3. Notwithstanding the
preceding, (i) allocation percentages are subject to interim Fiscal
Year adjustments to allocate more accurately costs based on actual
utilization by each company in the BCBSUW/UWS Group, (ii) costs
associated with Schedule 2 Services performed directly for UWS
shall be allocable to UWS only and costs associated with Schedule 3
Services performed directly for BCBSUW shall be allocable to BCBSUW
only, and (iii) subject to approval by the Vice President of
Finance for the BCBSUW/UWS Group, the Indirect
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(1) Before granting approval of any negotiated change to the method of
allocating costs for a particular service, the following factors should
be considered: (i) compliance with FAS rules; (ii) other federal government
contracting implications; and (iii) feasibility.
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Allocation Method used to allocate costs to UWS for specific
Schedule 2 Services and to BCBSUW for specific Schedule 3 Services
shall be subject to agreement by the parties on an annual basis.
Schedule 2, attached hereto, sets forth UWS's annual allocation
percentages for costs and expenses associated with Schedule 2
Services. Schedule 3, attached hereto, sets forth BCBSUW's annual
allocation percentages for costs and expenses associated with
Schedule 3 Services. Schedule 2 and Schedule 3 shall be amended
annually, if the cost is a general expense for providing the
Chargeback Service to all users; or (ii) directly charged to a UWS
or BCBSUW cost center, as the case may be, if the cost is an
expense specific to a UWS or BCBSUW cost center. Thus, costs
associated with Chargeback Services shall be either directly
charged or indirectly allocated to UWS and BCBSUW on a monthly
basis, depending on the nature of the cost.
iv. CHARGES AND ALLOCATIONS TO BCBSUW REGIONS. Direct charges
and indirect allocations to BCBSUW subsequently shall be
charged/re-allocated to the regional operations of BCBSUW
("Regions") as follows:
(1) Direct charges to BCBSUW, which are attributable to a
specific regional operation(s) of BCBSUW, shall be charged to
the Region(s).
(2) Indirect cost allocations to BCBSUW for Schedule 3
Services shall be re-allocated to the Regions as follows:
(a) Regional Expenses: Regional expense allocations
shall be determined using only the BCBSUW (Total Less All
Other LOB's) and the FEP services agreements included in
Schedule 3 (the "BCBSUW/FEP Service Agreements"). Schedule
6, attached hereto, identifies certain cost centers from
the BCBSUW/FEP Service Agreements that shall be allocated
to the Regions in the manner specified in Schedule 6. The
remainder of the BCBSUW indirect allocations from the
BCBSUW/FEP Service Agreements shall be re-allocated to
the Regions pro rata based on earned fees.
(b) Unique Lines of Business ("LOB") Expenses: All
service agreements included in Schedule 3, other than the
BCBSUW/FEP Service Agreements, shall be referred to herein
as "Unique LOB Service Agreements." The BCBSUW indirect
allocations from certain Unique LOB Service Agreements
shall be allocated to the Regions as provided in Schedule
7, attached hereto.
Notwithstanding Section (2) Indirect cost allocations to BCBSUW for Schedule
3 Services shall be re-allocated to the Regions as follows:, the methodology
used to allocate BCBSUW
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indirect cost allocations to the Regions shall be subject to negotiation, on
an annual basis, by the Finance Manager of BCBSUW and the directors of the
BCBSUW Regions. Accordingly, Schedule 6 and 7 shall be amended, if necessary,
on an annual basis.
c. FEES IN ADDITION TO ALLOCATED COSTS. To the extent that UWS
leases or utilizes the services of Officers from BCBSUW and/or UWIC, and
to the extent that UWS utilizes BCBSUW Services, BCBSUW and/or UWIC may
charge UWS a reasonable negotiated fee therefor, as set forth in
Schedule 8. To the extent that BCBSUW leases or utilizes the services of
Officers from UWS and/or UWIC, and to the extent that BCBSUW utilizes
UWS Services, UWS and/or UWIC may charge BCBSUW a reasonable negotiated
fee therefor, as set forth in Schedule 9.
4. SUBSTANTIATION OF AND REIMBURSEMENT FOR ALLOCATED COSTS
a. SUBSTANTIATION OF ALLOCATED COSTS. All costs and expenses
shall be allocated in a fair and reasonable manner. BCBSUW, UWS, and
UWIC shall maintain reasonable and appropriate operating procedures to
allocate costs and expenses so as to enable each party's independent
certified public accounting firm to audit such costs and the allocation
thereof. At the end of each month, BCBSUW, UWS, and UWIC shall provide
or make available to each other appropriate documentation respecting the
costs and expenses that are allocated, either directly or indirectly, to
each other for that month in sufficient detail to permit the other party
to identify the sources of such charges.
b. REIMBURSEMENT FOR ALLOCATED COSTS. At the end of each month,
not later than the 30th day of the following month, (i) UWS shall
promptly reimburse BCBSUW and UWIC for all costs and expenses incurred
by BCBSUW and UWIC in furnishing or obtaining the Officers and BCBSUW
Services provided for under Sections I and II, which amount shall be
based on the total of direct charges and indirect allocations to UWS for
the preceding month, and (ii) BCBSUW shall promptly reimburse UWS and
UWIC for all costs and expenses incurred by UWS and UWIC in furnishing
or obtaining the Officers and UWS Services provided for under Sections I
and II, which amount shall be based on the total of direct charges and
indirect allocations to BCBSUW for the preceding month. Notwithstanding
the preceding, the parties reserve the right to offset amounts due to
each other under this Agreement.
5. MODIFICATIONS TO LEASED EMPLOYEES AND BCBSUW/UWS SERVICES
a. MID-CONTRACT YEAR MODIFICATIONS. Each Contract Year, BCBSUW
and UWS shall be required to utilize BCBSUW and UWS Services budgeted to
each other for that Contract Year, unless otherwise negotiated by the
parties. ("Contract Year" shall mean January 1 through December 31.)
If, at any time during the Contract Year, BCBSUW and/or UWS require
services or other resources in addition to those budgeted to each other,
BCBSUW and/or UWS, as the case may be, may obtain such services or
resources from a source outside of the BCBSUW/UWS Group only if such
company's additional needs cannot be accommodated by each other.
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b. CONTRACT YEAR RENEWAL MODIFICATIONS. BCBSUW shall provide UWS
and/or UWIC and UWS shall provide BCBSUW and/or UWIC with at least
three (3) months' written notice prior to the next Contract Year (unless
the parties mutually agree upon a shorter period) of its intent to do
any of the following:
i. Increase or decrease the number or utilization of
Officers or BCBSUW or UWS Services, as the case may be, with
respect to the next Contract Year;
ii. Obtain services or other resources, which are available
from each other, from a party outside the BCBSUW/UWS Group with
respect to the next Contract Year.
c. PROVISION OF SERVICES BY BCBSUW/UWS GROUP. BCBSUW and UWS have
the right to provide BCBSUW and UWS Services to each other either
directly or indirectly, through any company in the BCBSUW/UWS Group.
BCBSUW and UWS may provide services and other resources to each other
indirectly through purchase from or contract with a source outside the
BCBSUW/UWS Group ("Outside Services") only with the other party's
consent. Costs for Outside Services shall be subject to a cost
structure negotiated by the parties hereto.
6. EXECUTION OF ANCILLARY AGREEMENTS
a. RIGHT TO REQUEST EXECUTION OF ANCILLARY AGREEMENTS. In the
event of the Change of Control (as hereinafter defined in this Section)
of any party hereto and while this Agreement remains in effect, BCBSUW,
UWS, or UWIC may, for the sole purpose of documenting in more detail the
terms and respective rights and obligations of the parties with respect
to Officers and Services provided hereunder, request that any of the
following types of ancillary agreements be executed by any parties
hereto and effected thereby:
i. Officer Lease Agreement;
ii. Office and Equipment Lease;
iii. Management Information Systems Agreement;
iv. Service Agreement(s); or
v. Any other Agreement deemed necessary or expedient by the
parties (together "Ancillary Agreements").
The terms of any executed Ancillary Agreement shall (i) be subject
to negotiation of the respective parties, and (ii) control in case of any
conflict with Sections 1.
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LEASE OF through 5. MODIFICATIONS TO LEASED EMPLOYEES AND CBSUW/UWS
SERVICES of this Agreement. Executed Ancillary Agreements shall be
attached to this Agreement as amendments hereto. "Change of Control"
for purposes of this section shall mean an event whereby a person,
group, or entity that is not affiliated with the BCBSUW/UWS Group
purchases all or substantially all of the assets or acquires the
ownership of 50% or more of the voting stock of a party hereto.
b. EFFECT OF A REQUEST TO EXECUTE. If any party hereto requests
the execution of an Ancillary Agreement ("Requesting Party"), the
parties shall have sixty 60 days (unless the parties hereto mutually
agree to a different period) to negotiate and execute the Ancillary
Agreement, during which time the parties hereto shall remain obligated
to perform in accordance with the terms of this Agreement. If after 60
days (unless a different period is mutually agreed upon by the parties
hereto) the requested Ancillary Agreement has not been executed, the
Requesting Party may terminate this Agreement in accordance with Section
ii. This Agreement may be terminated pursuant to Section VI.B by the
Requesting Party giving three (3) months advance written notice to the
nonterminating parties of its intention to terminate.. The parties
hereby agree that any negotiations subject to this Section ERROR! NOT A
VALID BOOKMARK SELF-REFERENCE. shall be performed in good faith and
every reasonable effort shall be made to effect the execution of a
requested Ancillary Agreement.
7. ADDITIONAL COVENANTS
a. AVAILABILITY OF RECORDS. BCBSUW, UWS, and UWIC shall make
available to each other, for inspection, examination and copying, all
of its books and records pertaining to the Officers and BCBSUW/UWS
Services provided under this Agreement each Contract Year:
i. At all reasonable times at the principal places of business
of BCBSUW, UWS, and UWIC, or at such other place as the parties
hereto may otherwise agree to and designate;
ii. In a form maintained in accordance with generally accepted
accounting principles and with any other general standards or laws
applicable to such book or record;
iii. For a term of at least five (5) years, from the end of each
Contract Year, irrespective of the termination of this Agreement.
b. CONFIDENTIALITY.
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i. The parties acknowledge and agree that they may deliver
to each other information about themselves and their business which
is nonpublic, confidential or proprietary in nature. All such
information, regardless of the manner in which it is delivered, is
referred to as "Proprietary Information." However, Proprietary
Information does not include information which 1. is or becomes
generally available to the public other than as a result of a
disclosure by the other party, 2. was available to the other party
on a nonconfidential basis prior to its disclosure by the
disclosing party, or 3. becomes available to the other party on a
nonconfidential basis from a person other than by the disclosing
party. Unless otherwise agreed to in writing by the disclosing
party, the other party shall a. except as required by law, keep all
Proprietary Information confidential and not disclose or reveal any
Proprietary Information to any person other than those employed by
the other party, or who is actively and directly participating in
the performance under this Agreement on behalf of the other party
("Involved Persons"); b. cause each Involved Person to keep all
Proprietary Information confidential and not disclose or reveal any
Proprietary Information to any person other than another Involved
Person; and c. not use the Proprietary Information, and ensure that
each Involved Person does not use the Proprietary Information, for
any purpose other than in connection with the performance under
this Agreement.
ii. Upon termination of this Agreement for any reason
whatsoever, each party shall promptly surrender and deliver to each
other party all records, materials, documents, data and any other
Proprietary Information of the other parties and shall not retain
any description containing or pertaining to any Proprietary
Information of the other parties, unless otherwise consented to in
writing by a duly authorized officer of BCBSUW, UWS, or UWIC, as
the case may be.
c. COVENANT NOT TO COMPETE. BCBSUW and UWS agree not to directly
compete with the products or markets of each other during the term of
this Agreement. BCBSUW and UWS further agree that for a period of two
(2) years following the termination of this Agreement for any reason,
the parties will not directly compete with each other in any market in
which the other operates or does business at the termination of this
Agreement.
d. COOPERATION. The parties hereto will fully cooperate with
each other and their respective counsel, if any, agents and accountants
in connection with any action to be taken in the performance of their
obligations under this Agreement. In the conduct of their affairs and
the performance of this Agreement the parties hereto shall, unless
otherwise agreed, maintain the working relationships of the parties on
substantially the same terms as before the execution of this Agreement.
Notwithstanding the preceding, the parties do not intend, nor should
this Agreement be construed, to restrict any party's ability to contract
with any other person or entity to provide services similar to or the
same as those which are the subject of this Agreement.
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8. TERM AND TERMINATION
a. TERM. This Agreement shall commence on the Effective Date and
shall automatically renew annually therefrom until such time as
otherwise terminated pursuant to Section
b. TERMINATION.
i. This Agreement may be terminated by any party at any time
by giving one (1) years advance written notice to the
nonterminating parties of its intention to terminate.
ii. This Agreement may be terminated pursuant to Section b.
EFFECT OF A REQUEST TO EXECUTE. If any party hereto requests the
execution of an Ancillary Agreement ("Requesting Party"), the
parties shall have sixty 60 days (unless the parties hereto
mutually agree to a different period) to negotiate and execute the
Ancillary Agreement, during which time the parties hereto shall
remain obligated to perform in accordance with the terms of this
Agreement. If after 60 days (unless a different period is mutually
agreed upon by the parties hereto) the requested Ancillary
Agreement has not been executed, the Requesting Party may terminate
this Agreement in accordance with Section ii.
This Agreement may be terminated pursuant to Section VI.B
by the Requesting Party giving three (3) months advance written
notice to the nonterminating parties of its intention to
terminate. The parties hereby agree that any negotiations subject
to this Section ERROR! NOT A VALID BOOKMARK SELF-REFERENCE. shall
be performed in good faith and every reasonable effort shall be
made to effect the execution of a requested Ancillary Agreement. by
the Requesting Party giving three (3) months advance written notice
to the nonterminating parties of its intention to terminate.
iii. This Agreement shall terminate immediately at the
election of and upon written notice from the non-defaulting party
in the event of any of the following:
(1) A party hereto becomes incapable of fully performing
its duties and obligations according to the terms of this
Agreement for the following reason(s): insolvency, bankruptcy,
or substantial cessation or interruption of its business
operations for any reason whatsoever;
(2) A party hereto commits fraud or gross negligence in
performing its obligations under this Agreement;
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HOWEVER, if the defaulting party provides the non-defaulting parties
with prompt notice of the event of default, the defaulting party shall have
30 days to cure the defect, during which time the non-defaulting party may
not exercise the termination right under this section iii. This Agreement
shall terminate immediately at the election of and upon written notice from
the non-defaulting party in the event of any of the following:.
iv. Liabilities After Termination. The termination of this
Agreement shall not limit the obligation or liabilities of any party
hereto incurred but not discharged prior to termination.
9. INDEMNIFICATION
a. INDEMNIFICATION BY BCBSUW.
i. Notwithstanding anything to the contrary in this
Agreement, neither UWIC, UWS, nor any UWS subsidiaries, nor any
person who is or was, at the time of any action or inaction
affecting BCBSUW, a director, officer, employee or agent of UWIC,
UWS or any UWS subsidiary (collectively "Indemnitees") shall be
liable to BCBSUW for any action or inaction taken or omitted to be
taken by such Indemnitee; PROVIDED, HOWEVER, that such Indemnitee
acted (or failed to act) in good faith and such action or inaction
does not constitute actual fraud, gross negligence or willful or
wanton misconduct.
ii. BCBSUW shall, to the fullest extent not prohibited by
law, indemnify and hold harmless each Indemnitee against any
liability, damage, cost, expense, loss, claim or judgment
(including, without limitation, reasonable attorneys' fees and
expenses) resulting to, imposed upon or incurred by such Indemnitee
a. in connection with any action, suit, arbitration or proceeding
to which such Indemnitee was or is a party or is threatened to be
made a party by reason of the Officers and/or UWS Services provided
to BCBSUW hereunder; PROVIDED, HOWEVER, that such Indemnitee acted
(or failed to act) in good faith and such action or inaction does
not constitute actual fraud, gross negligence or willful or wanton
misconduct, or b. by reason of, arising out of or resulting from
any breach or misrepresentation by BCBSUW under this Agreement.
b. INDEMNIFICATION BY UWS.
i. Notwithstanding anything to the contrary in this
Agreement, neither UWIC, BCBSUW, nor any person who is or was, at
the time of any action or inaction affecting UWS, a director,
officer, employee or agent of UWIC or BCBSUW (collectively
"Indemnitees") shall be liable to UWS or any UWS subsidiary for any
action or inaction taken or omitted to be taken by such
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Indemnitee; PROVIDED, HOWEVER, that such Indemnitee acted (or failed
to act) in good faith and such action or inaction does not constitute
actual fraud, gross negligence or willful or wanton misconduct.
ii. UWS shall, to the fullest extent not prohibited by law,
indemnify and hold harmless each Indemnitee against any liability,
damage, cost, expense, loss, claim or judgment (including, without
limitation, reasonable attorneys' fees and expenses) resulting to,
imposed upon or incurred by such Indemnitee a. in connection with
any action, suit, arbitration or proceeding to which such
Indemnitee was or is a party or is threatened to be made a party by
reason of the Officers and/or BCBSUW Services provided to UWS
hereunder; PROVIDED, HOWEVER, that such Indemnitee acted (or failed
to act) in good faith and such action or inaction does not
constitute actual fraud, gross negligence or willful or wanton
misconduct, or b. by reason of, arising out of or resulting from
any breach or misrepresentation by UWS under this Agreement.
c. INDEMNIFICATION BY UWIC. UWIC hereby agrees to indemnify and
hold harmless BCBSUW and UWS, and their successors and assigns, from and
against any liability, damage, cost, expense, loss, claim or judgment
(including, without limitation, reasonable attorneys' fees and expenses)
resulting to, imposed upon or incurred by BCBSUW and/or UWS by reason
of, arising out of, or resulting from any breach or misrepresentation by
UWIC under this Agreement.
10. MISCELLANEOUS
a. ASSIGNMENT. Neither this Agreement nor any rights or
obligations hereunder may be assigned or transferred by any of the
parties hereto without the prior written consent of the other parties.
A Change of Control shall be deemed an assignment requiring the consent
of the other parties hereto.
b. AMENDMENT. The parties recognize that it may be desirable to
alter the terms of this Agreement in the future to take into account such
events or conditions as may from time to time occur. Any amendments to
this Agreement shall be in writing and shall be executed by all parties;
however, Ancillary Agreements need only be executed by the parties
affected thereby.
c. WAIVER; REMEDIES. No failure or delay of a party in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any
other right or power. In addition to any rights granted herein, the
parties hereto shall have and may exercise any and all rights and
remedies now or hereafter provided by law except as may be limited by
Section d. RESOLUTION OF DISPUTES. of this Agreement.
d. RESOLUTION OF DISPUTES.
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i. INFORMAL RESOLUTION.
(1) Coordinating Committee: Any conflicts or disputes
regarding occupancy, utilization or delivery of BCBSUW or UWS
Services, or scheduling, performance and utilization of
Officers necessary for the conduct of BCBSUW's or UWS's
business shall be submitted to a coordinating committee for
resolution. The coordinating committee shall consist of three
(3) persons, each of whom shall 1. represent the respective
interest of a party hereto, and 2. be mutually agreed upon by
the parties hereto. If the coordinating committee is unable to
unanimously resolve the dispute, then the parties hereto may
resort to the dispute resolution process provided for in
Section ii. FORMAL RESOLUTION.
(2) Audit Committee: Any conflicts or disputes
regarding allocation methods, allocated costs, offsets, fees
or any matter related thereto shall be submitted to an audit
committee for resolution. The audit committee shall consist
of three (3) persons, each of whom shall 1. represent the
respective interest of a party hereto, and 2. be mutually
agreed upon by the parties hereto. If the audit committee is
unable to unanimously resolve the dispute, then the parties
hereto may resort to the dispute resolution process provided
for in Section ii. FORMAL RESOLUTION.
ii. FORMAL RESOLUTION.
(1) Any dispute, controversy or claim between or among
the parties hereto that arises out of or relates to this
Agreement or any Ancillary Agreement entered into pursuant
hereto, and which otherwise has been unresolved by a
coordinating committee pursuant to Section (1) Coordinating
Committee: Any conflicts or disputes regarding occupancy,
utilization or delivery of BCBSUW or UWS Services, or
scheduling, performance and utilization of Officers necessary
for the conduct of BCBSUW's or UWS's business shall be
submitted to a coordinating committee for resolution. The
coordinating committee shall consist of three (3) persons,
each of whom shall 1. represent the respective interest of a
party hereto, and 2. be mutually agreed upon by the parties
hereto. If the coordinating committee is unable to
unanimously resolve the dispute, then the parties hereto may
resort to the dispute resolution process provided for in
Section ii. FORMAL RESOLUTION.. or an audit committee
pursuant to Section (2) Audit Committee: Any conflicts or
disputes regarding allocation methods, allocated costs,
offsets, fees or any matter related thereto shall be submitted
to an audit committee for resolution. The audit committee
shall consist of three (3) persons, each of whom shall 1.
represent the
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respective interest of a party hereto, and 2. be mutually
agreed upon by the parties hereto. If the audit committee
is unable to unanimously resolve the dispute, then the
parties hereto may resort to the dispute resolution process
provided for in Section ii. FORMAL RESOLUTION.. shall
be settled by arbitration. In order to initiate an
arbitration, BCBSUW, UWS, or UWIC (as the case may be) shall
deliver a written notice of demand for arbitration to the
other affected party(ies). Within thirty (30) days of the
giving of such written notice, each party involved shall
appoint an individual as arbitrator (the "Party Arbitrators").
Within thirty (30) days of their appointment, the Party
Arbitrators shall collectively select one (or two if necessary
to constitute an odd total number of arbitrators) additional
arbitrator (together the "Panel Arbitrators") and shall give
the parties involved notice of such choice.
(2) The arbitration hearings shall be held in Milwaukee,
Wisconsin. Each party shall submit its case to the Panel
Arbitrators within sixty (60) days of the selection of the
Panel Arbitrators or within such longer period as may be
agreed by the Panel Arbitrators. The decision rendered by a
majority of the Panel Arbitrators shall be final and binding
on the parties involved. Such decision shall be a condition
precedent to any right of legal action arising out of the
arbitrated dispute. Judgment upon the award rendered may be
entered in any court having jurisdiction thereof.
(3) Each involved party shall a. pay the fees and
expenses of its own Party Arbitrator, and pay its own legal,
accounting, and other professional fees and expenses, b.
jointly share in the payment of the fees and expenses of the
other one (or two) arbitrator(s) selected by the Party
Arbitrators, and c. jointly share in the payment of the other
expenses jointly incurred by the involved parties directly
related to the arbitration proceeding.
(4) Except as provided above, the arbitration shall be
conducted in accordance with the Commercial Arbitration Rules
of the American Arbitration Association.
e. NOTICES. All notices, requests, demands, and other
communications hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, or if mailed (by registered or
certified mail, postage prepaid, return receipt requested), or if
transmitted by facsimile or e-mail, as follows:
i. If to BCBSUW:
Xx. Xxxxx Xxxxxxxx
Blue Cross & Blue Shield United of Wisconsin
0000 Xxxxx XxxxxXxxxxx Xxxxx
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Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile Telephone Number: (000) 000-0000
With copies to:
Xx. Xxxxx Xxxxxxx
Blue Cross & Blue Shield United of Wisconsin
X00X00000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000
Facsimile Telephone Number: (000) 000-0000
ii. If to UWS:
Mr. C. Xxxxxx Xxxxx
United Wisconsin Services, Inc.
000 Xxxx Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile Telephone Number: (000) 000-0000
iii. If to UWIC:
Xx. Xxxx Xxxxxxx
United Wisconsin Insurance Company
000 Xxxx Xxxxxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile Telephone Number; (000) 000-0000
Any notice or other communication given as provided in this Section e.
NOTICES. All notices, requests, demands, and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally, or if mailed (by registered or certified mail, postage
prepaid, return receipt requested), or if transmitted by facsimile or e-mail,
as follows:, shall be deemed given upon the first business day after actual
delivery to the party to whom such notice or other communication is sent (as
evidenced by the
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return receipt or shipping invoice signed by a representative of such party
or by the facsimile confirmation or e-mail return receipt). Any party from
time to time may change its address for purpose of notices to that party by
giving a similar notice specifying a new address.
f. RELATIONSHIP OF THE PARTIES. Negotiations relating to this
Agreement have occurred and shall continue to be carried out on an arm's
length basis. Further, the officers, services and other resources
contemplated by this Agreement shall be provided to BCBSUW and UWS on an
independent contractor basis. Nothing in this Agreement shall be construed
to create an employer-employee relationship between (i) Officers leased by
BCBSUW hereunder and UWS and/or UWIC, or (ii) Officers leased by UWS
hereunder and BCBSUW and/or UWIC.
g. ENTIRE AGREEMENT. This Agreement, including the schedules and
exhibits referred to herein constitute the entire understanding and
agreement of the parties hereto and supersede all prior agreements and
understandings, written or oral, between the parties with respect to the
transactions contemplated herein. Provided, however, the foregoing shall
not operate or be construed to prohibit proof of prior understandings and
agreements between or among the parties to the extent necessary to properly
construe or interpret this Agreement. Notwithstanding the preceding, the
parties acknowledge that there are, and/or may be in the future, any number
of independent third party contracts between various companies in the
BCBSUW/UWS Group for various services and/or business arrangements, and any
such contracts, whether written or oral, shall survive the execution of
this Agreement and any renewal hereof.
h. HEADINGS. The headings used in this Agreement have been inserted
for convenience and do not constitute matter to be construed or interpreted
in connection with this Agreement.
i. NO THIRD PARTY BENEFICIARIES. This Agreement is only for the
benefit of the parties hereto and does not confer any right, benefit, or
privilege upon any person or entity not a party to this Agreement.
j. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Wisconsin (without giving
effect to principles of conflicts of laws) as to all matters, including,
without limitation, matters of validity, construction, effect, performance
and remedies.
k. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable under any present or future law, and if
the rights or obligations of any party under this Agreement will not be
materially and adversely affected thereby, 1. such provision will be fully
severable, 2. this Agreement will be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised a part
hereof, 3. the remaining provisions of this Agreement will remain in
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full force and effect and will not be affected by the illegal, invalid, or
unenforceable provision or by its severance herefrom, and 4. in lieu of
such illegal, invalid, or unenforceable provision, there will be added
automatically as part of this Agreement, a legal, valid, and enforceable
provision as similar terms to such illegal, invalid, or unenforceable
provision as may be possible.
l. COUNTERPARTS. This Agreement may be executed simultaneously in
any number of counterparts, each of which will be deemed an original, but
all of which will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the Effective Date.
BLUE CROSS BLUE SHIELD UNITED OF WISCONSIN
By:
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Title:
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By:
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Title:
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UNITED WISCONSIN SERVICES, INC.
By:
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Title:
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UNITED WISCONSIN INSURANCE COMPANY
By:
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Title:
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