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EXHIBIT 10.44
CONFORMED COPY
AMENDMENT NO. 2 TO THE CREDIT AGREEMENT AND AMENDED AND RESTATED
SECURITY DOCUMENTS AND WAIVER
AMENDMENT NO. 2 TO CREDIT AGREEMENT AND AMENDED AND RESTATED
SECURITY DOCUMENTS AND WAIVER dated as of August 13, 1998 among COVENTRY
CORPORATION (the "BORROWER"), COVENTRY HEALTH CARE, INC., (the "GUARANTOR"), the
BANKS listed on the signature pages hereof (the "BANKS"), and ▇▇▇▇▇▇ GUARANTY
TRUST COMPANY OF NEW YORK, as Agent (the "AGENT").
W I T N E S S E T H :
WHEREAS, the Borrower, the Banks and the Agent entered into a
Credit Agreement dated as of December 29, 1997, and amended by Amendment Number
1, dated as of March 10, 1998, (as so amended, the "CREDIT AGREEMENT");
WHEREAS, certain Loan Parties (as defined in the Credit
Agreement) and the Agent entered into the Amended and Restated Security
Documents dated as of December 29, 1997, and amended by Amendment Number 1 dated
as of March 10, 1998, (as so amended, the "AMENDED AND RESTATED SECURITY
DOCUMENTS"); and
WHEREAS, pursuant to a letter dated August 12, 1998, the
Borrower has asked the Banks, and the Banks are willing, on the terms and
conditions set forth herein, to (i) exclude certain nonrecurring charges
incurred by the Borrower and (ii) waive the Subsidiary capital requirement of
Section 5.17 with respect to Riverside Health Plan, Inc., HealthAmerica
Pennsylvania, Inc., Coventry Health and Life Insurance Company and Coventry
Health Plan of West Virginia, Inc. through the Termination Date.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise
specifically defined herein, each term used herein which is defined in the
Credit Agreement shall have the meaning assigned to such term in the Credit
Agreement.
SECTION 2. Waiver and Amendment of Sections 5.17, 5.18 and
5.19 of the Credit Agreement. Commencing June 30, 1998, calculations of (i) the
statutory capital and surplus of any of the Borrower's Subsidiaries that is an
HMO Company or of CHLIC, (ii) the ratio of Adjusted Cash Flow to Fixed Charges
and (iii) Consolidated Adjusted Net Worth pursuant to Sections 5.17, 5.18 and
5.19, respectively, shall exclude the pretax nonrecurring charges not in excess
of $60,000,000 incurred by the Borrower in connection with the commencement of
bankruptcy proceedings by AHERF and reflected in the Borrower's consolidated
statement of income for the fiscal quarter ended June 30, 1998.
SECTION 3. Representation by Borrower. The Borrower represents
and warrants that except as heretofore disclosed in writing to the Banks, (i)
after giving effect to the amendments and waiver
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contained herein, no Default has occurred and is continuing, and (ii) since June
30, 1998, there has been no material adverse change in the business, financial
position, results of operations of the Coventry Group, considered as a whole.
SECTION 4. New Pledgors. Each of Principal Health Care
Management Corporation, Principal Health Care of South Carolina, Inc., Principal
Health Care of Tennessee, Inc. and United HealthCare Services of Iowa, Inc.
hereby (i) agrees to enter into the Amended and Restated Security Documents as a
Pledgor (as defined therein) within 20 days from the date of the effectiveness
hereof, (ii) agrees to be bound thereby and (iii) confirms to the Agent the
grant of security as contemplated thereby.
SECTION 5A. Waiver regarding Riverside Health Plan, Inc. The
Borrower has advised the Banks and the Agent that Riverside Health Plan, Inc. is
not currently in compliance with the capital requirement of Section 5.17 of the
Credit Agreement. The Banks waive any Default which may occur as a result of
Riverside Health Plan, Inc.'s failure to satisfy the requirements of Section
5.17 through the Termination Date, provided that Riverside Health Plan, Inc.
remains an inactive Subsidiary and complies with the applicable state
requirement.
SECTION 5B. Waiver regarding certain Subsidiaries. The
Borrower has advised the Banks and the Agent that HealthAmerica Pennsylvania,
Inc., Coventry Health and Life Insurance Company and Coventry Health Plan of
West Virginia, Inc. may not remain in compliance with the capital requirement of
Section 5.17 of the Credit Agreement. The Banks waive any Default which may
occur as a result of such noncompliance through the Termination Date, provided
that a determination by the applicable state regulator that the capitalization
of any of such Subsidiaries is inadequate and the failure of any of such
Subsidiaries to comply within 30 days of receipt of notice of such determination
shall constitute a Default under the Credit Agreement.
SECTION 6. Governing Law. This Amendment and Waiver shall be
governed by and construed in accordance with the laws of the State of New York.
SECTION 7. Consent by Other Loan Parties. By signing this
Amendment and Waiver below, each Loan Party (other than the Borrower) that is a
party to any Security Document affirms its obligations under each Security
Document to which it is a party and acknowledges that this Amendment and Waiver
shall not alter, release, discharge or otherwise affect any of such obligation,
all of which shall remain in full force and effect and are hereby notified and
confirmed in all respects.
SECTION 8. Counterparts; Effectiveness. This Amendment and
Waiver may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Amendment and Waiver shall become effective as of the
date hereof upon receipt by the Agent of duly executed counterparts hereof
signed by the Borrower, the other Loan Parties that are parties to any Security
Document and the Required Banks (or, in the case of any party as to which an
executed counterpart shall not have been received, the Agent shall have received
telegraphic, telex or other written confirmation from such party of execution of
a counterpart hereof by such party).
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment and Waiver to be duly executed as of the date first above written.
COVENTRY CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Vice President
COVENTRY HEALTH CARE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Senior Vice President
▇▇▇▇▇▇ GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Vice President
NATIONSBANK, N.A.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Vice President
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EACH OF THE UNDERSIGNED PLEDGORS
CONSENTS TO THE FOREGOING AMENDMENT AND WAIVER AND
CONFIRMS ITS AGREEMENT WITH SECTION 7
THEREOF:
COVENTRY HEALTHCARE
MANAGEMENT CORPORATION (Delaware)
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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Title: President
COVENTRY HEALTHCARE MANAGEMENT
CORPORATION (Virginia)
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Vice President Finance & CFO
SOUTHERN HEALTH BENEFIT SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Vice President Finance & CFO
PENNSYLVANIA HEALTHCARE USA, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Title: Treasurer
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HEALTHPASS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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Title: President
COVENTRY HEALTHCARE DEVELOPMENT CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
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Title: President
PRINCIPAL HEALTH CARE MANAGEMENT CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Senior Vice President
PRINCIPAL HEALTH CARE OF SOUTH
CAROLINA, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Senior Vice President
PRINCIPAL HEALTH CARE OF TENNESSEE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Senior Vice President
UNITED HEALTHCARE SERVICES OF IOWA, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Senior Vice President