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TRANSITIONAL SERVICE AGREEMENT
This Transitional Services Agreement, dated as of ______________ ("Agreement")
is made and entered into by and between Principal Mutual Life Insurance Company,
an Iowa mutual life insurance company ("Mutual"), Principal Health Care, Inc. an
Iowa corporation ("Principal"), Coventry Corporation, a Tennessee Corporation
("Coventry") and Coventry Health Care, Inc., a Delaware Corporation ("Newco")
with reference to the following facts:
PREMISES
A. On or about December __, ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and Principal executed
a Capital Contribution and Merger Agreement (effective as of November 3, 1997,
amending and restating the Capital Contribution and Share Exchange Agreement
dated November 3, 1997) ("Merger Agreement") and pursuant to which Principal
will contribute certain assets ("Assets") and Mutual will contribute certain
health insurance business to Newco, and the shareholders of Coventry will
exchange their shares for shares of Newco (the "Transaction").
B. Currently, certain administrative functions for the Assets are performed for
Principal by Mutual in Des Moines, Iowa.
C. Coventry and Newco desire to engage Mutual for a transitional period of time,
to furnish other services and perform certain functions necessary for the
operation of the Assets until those services and functions can be transitioned
to Newco's administrative systems; and Mutual desires to accept such
transitional engagement in accordance with the terms and subject to the
conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the above premises and the promises,
covenants, conditions, representations, and warranties exchanged by the parties
hereinbelow, Mutual, Principal, Coventry and Newco hereby agree as follows:
ARTICLE 1.
RESPONSIBILITIES OF MUTUAL
1.1 Services and Support. During the term of this Agreement, Mutual, through its
employees, affiliates, or employees of its affiliates, shall be responsible for
furnishing the services described in Exhibit A attached hereto ("Services").
1.2 Cooperation. During the entire Term, Mutual will maintain an effective
liaison and cooperative working relationship with Newco and its staff to ensure
the orderly transition from administrative systems and processes currently used
by Principal in its operations to administrative systems and processes utilized
by Newco through the provisions of the services described in this Agreement, any
services directly related to, reasonably incidental to, or in furtherance of
completion of such services, and any extraordinary services as mutually agreed
to by Mutual and Newco.
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1.3 Termination of Intercompany Agreements. Before or as of the closing of the
Merger Agreement, Mutual shall terminate, or shall direct the termination of,
any agreements, arrangements, or commitments between Mutual, on the one hand,
and Principal or any Principal subsidiaries on the other hand. As of the closing
of the Merger Agreement, neither Principal nor any Principal subsidiaries shall
have any further or continuing obligations or amounts owed to Mutual in respect
of past or future services or support furnished or required to be furnished
under such agreements, arrangements, or commitments.
ARTICLE 2.
RESPONSIBILITIES OF COVENTRY AND NEWCO
2.1 Administration of the Assets. Subsequent to the closing, Newco shall be
responsible and accountable for administration of the Assets and shall retain
overall and ultimate responsibility, supervision, and control of the
administration of such plans and products.
2.2 Cooperation; Exchange Information. During the term of this Agreement,
Coventry or Newco will maintain an effective liaison and cooperative working
relationship with Mutual and its staff to ensure a smooth transition of services
and a consistency in the level of services required to be furnished by Mutual.
Coventry or Newco shall provide Mutual with all relevant information reasonably
necessary for Mutual to perform the services required of it under this
Agreement, including, without limitation, information concerning the Assets.
ARTICLE 3.
COMPENSATION
3.1 Compensation. In consideration of the services to be performed by Mutual
under this Agreement, Coventry or Newco shall compensate Mutual as described in
Exhibit B attached hereto. To the extent that Services provided are increased or
decreased materially from those described in Exhibit A, the parties agree to
negotiate in good faith to establish appropriate compensation for the Services
provided.
ARTICLE 4.
TERM AND TERMINATION
4.1 Term. The term of this Agreement shall commence on closing of the Merger
Agreement and shall continue through ___________________ ("Term").
4.2 Termination. This Agreement may be terminated prior to the expiration of the
Term only as follows:
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(a) Mutual Consent. This Agreement may be terminated at any time upon
the mutual consent of Mutual and Newco.
(b) Newco's Unilateral Termination. Newco shall have the unilateral
right to terminate this Agreement upon thirty (30) days prior written notice to
Mutual.
ARTICLE 5.
MISCELLANEOUS PROVISIONS
5.1 Notices. Any and all notices, requests, consents, demands, or other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given (i) when delivered, if sent by
United States registered or certified mail (return receipt requested); (ii) when
delivered, if delivered personally by commercial courier; (iii) on the second
following business day, if sent by United States Express Mail or overnight
courier, in each case to the parties at the following addressees (or at such
other addresses as shall be specified by like notice) with postage or delivery
charges prepaid; or (iv) upon the date reflected on a fax confirmation from the
transmitting fax machine, if sent by facsimile transmission and delivery of the
facsimile transmission is confirmed telephonically within one (1) business day,
in each case to the parties at the following addresses or facsimile numbers (or
at such other addresses or facsimile number as shall be specified by like
notice) with applicable postage or delivery charges prepaid:
If to Newco:
▇▇▇▇ ▇▇▇▇
Coventry Health Care, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number:
With a copy to:
▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Mutual:
▇▇▇▇ ▇▇▇▇▇
Principal Mutual Life Insurance Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Green, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Principal Mutual Life Insurance Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to Coventry:
▇▇▇▇ ▇▇▇▇
Coventry Health Care, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number:
With a copy to:
▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Bass, ▇▇▇▇▇ & ▇▇▇▇ PLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Principal:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Principal Health Care, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number:
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Green, P.C.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Principal Health Care, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
5.2 Governing Law. This Agreement and the rights and obligations of the parties
hereunder shall be construed, interpreted, and enforced in accordance with, and
governed by, the Laws of the State of Iowa and of the United States.
5.3 Integrated Agreement. This Agreement, together with the exhibits and
schedules hereto, constitute the final written integrated expression of all of
the agreements between the parties respecting the matters addressed herein. This
Agreement supersedes all prior or contemporaneous, written or oral, memoranda,
arrangements, contracts or understandings between the parties hereto relating to
the subject matter hereof.
Any representations, promises, warranties, or statements made by any party which
differ in any way from the terms of this Agreement shall be given no force or
effect. The parties specifically represent, each to the other, that there are no
additional or supplemental agreements or contracts between them related in any
way to the matters herein contained unless specifically included or referred to
herein.
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5.4 Severability. In the event that any provision in this Agreement shall be
found to be invalid, illegal, or unenforceable, such provision shall be
construed and enforced as if it had been narrowly drawn so as not to be invalid,
illegal, or unenforceable, and the validity, legality, and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
5.5 Amendment. No amendment, modification, or addition to this Agreement shall
be valid unless expressly set forth in a dated, written instrument which has
been signed by all the parties.
5.6 Waivers. No Waiver of compliance with any term, provision, or condition of
this Agreement and no consent provided for herein shall be effective unless
evidenced by a dated written instrument executed by the party against whom
enforcement is sought. No waiver of any provisions hereof shall be construed as
a further or continuing waiver of such provision or any other provision hereof.
5.7 Successors and Assigns. No party may assign this Agreement or any rights
hereunder, whether voluntary, involuntary, or by operation of law, except with
the prior written consent of the other parties. Subject to the foregoing
limitations, this Agreement shall be binding upon the parties hereto and their
respective successors, successors-in-interests, transferees, and assigns.
5.8 Construction. This Agreement has been drafted with the joint participation
of each of the parties hereto and shall be construed to be neither against nor
in favor of any party hereto, but rather in accordance with the fair meaning
hereof.
5.9 Section Headings. The section and article headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
5.10 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
be considered one and the same agreement.
[Remainder of page left blank. Signature Page follows.]
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IN WITNESS WHEREOF, Mutual, Principal, Coventry and Newco have
executed this Agreement on the date set forth below.
PRINCIPAL HEALTH CARE, Inc.
an Iowa corporation
By:
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Title:
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PRINCIPAL MUTUAL LIFE
INSURANCE COMPANY
an Iowa corporation
By:
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Title:
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COVENTRY CORPORATION
a Tennessee corporation
By:
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Title:
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COVENTRY HEALTH CARE, INC.
a Delaware corporation
By:
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Title:
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EXHIBIT A - SERVICES
CHECK WRITE
CLAIM SCANNING
PAYROLL PROCESSING
HR/BENEFITS ADMINISTRATION
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EXHIBIT B
COMPENSATION
The parties shall negotiate in good faith compensation for the Services
provided.