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RENEWAL RIGHTS AGREEMENT
by and between
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
and
COVENTRY HEALTH AND LIFE INSURANCE COMPANY
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TABLE OF CONTENTS
ARTICLE I
Definitions................................................. 1
Section 1.1 Definitions......................................................... 1
ARTICLE II
Renewals................................................... 2
Section 2.1 Cessation of Renewals............................................... 2
Section 2.2 Renewal Rights...................................................... 2
ARTICLE III
Covenants and Agreements........................................... 3
Section 3.1 Expenses............................................................ 3
Section 3.2 Examination of the Books and Records................................ 3
Section 3.3 Further Assurances.................................................. 3
ARTICLE IV
Miscellaneous................................................ 3
Section 4.1 Headings and Schedules.............................................. 3
Section 4.2 Notices............................................................. 3
Section 4.3 Successors and Assigns.............................................. 4
Section 4.4 Execution in Counterpart............................................ 4
Section 4.5 Amendments.......................................................... 4
Section 4.6 Governing Law....................................................... 4
Section 4.7 Integration......................................................... 4
Section 4.8 No Waiver........................................................... 4
Schedules
Schedule 1.01 -- Insurance Business
Exhibits
Exhibit A -- Form of Letter to Brokers
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RENEWAL RIGHTS AGREEMENT
This Renewal Rights Agreement (this "Agreement"), dated (the
"Effective Date"), is entered into by and between Principal Mutual Life
Insurance Company, a corporation organized under the laws of the State of Iowa
(hereinafter referred to as the "Company"), and Coventry Health and Life
Insurance Company, a corporation organized under the laws of the State of Texas
(hereinafter referred to as the "Reinsurer").
W I T N E S S E T H:
WHEREAS, the Company desires to cease renewing the Policies
(as defined below), and the Company and the Reinsurer desire that the Company
assist the Reinsurer in writing renewals of the Policies (the "Renewals"), in
each case subject to the terms and conditions set forth below; and
WHEREAS, this Agreement is entered into pursuant to the terms
and conditions of the Merger Agreement (as defined below);
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. The following terms when used in this
Agreement shall have the following meanings:
"Agreement" has the meaning set forth in the introductory
paragraph.
"Books and Records" means originals or copies of all records,
documents, data and information (in whatever form maintained) of the Company
relating to the Insurance Business, including without limitation all plan rating
manuals, marketing materials and records pertaining to claims, losses and
expenses, customers and sales; provided, however, that Books and Records shall
not include any information received by the Company from the Insureds on a
confidential basis.
"Business Day" means any day that is not a Saturday, Sunday or
a day on which banks in the State of Iowa are authorized or required to close.
"Company" has the meaning set forth in the introductory
paragraph.
"Effective Date" has the meaning set forth in the introductory
paragraph.
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"Merger Agreement" means the Capital Contribution and Merger
Agreement (effective as of November 3, 1997, and amending and restating the
Capital Contribution and Share Exchange Agreement dated November 3, 1997)
executed by and among the Company, Coventry Corporation, Coventry Health Care,
Inc. (a Maryland corporation), Coventry Health Care, Inc. (a Delaware
corporation), Principal Health Care, Inc. and Principal Holding Company on
December __, 1997.
"Insurance Business" means the indemnity health insurance
business written by the Company and described on Schedule 1.01 which is in
effect as of the Effective Date, and such additional business written by the
Company between the Closing Date and January 1, 2000, as contemplated by the
Merger Agreement, that would be included in the Insurance Business if in effect
on the Effective Date.
"Insureds" means those Persons (as defined below) to whom the
Company has issued Policies and such additional Persons to whom the Company
shall issue Policies between the Effective Date and December 31, 1999, as
contemplated by the Merger Agreement.
"Person" means any individual, corporation, partnership, firm,
joint venture, association, limited liability company, joint stock company,
trust, unincorporated association or organization or other entity.
"Policies" means the insurance policies included in the
Insurance Business.
"Reinsurer" has the meaning set forth in the introductory
paragraph.
"Renewals" has the meaning set forth in the second WHEREAS
clause.
ARTICLE II
RENEWALS
Section 2.1 Cessation of Renewals. From and after 12:01 a.m.,
Central Time, January 1, 2000, the Company shall cease renewing any Policies
except (i) to the extent required by applicable state insurance laws, (ii) to
honor quotes outstanding on such date or (iii) to fulfill contractual
obligations of the Company. The Company and Reinsurer acknowledge that the
Company has certain obligations pursuant to state law to continuing issuing new
policies from and after the date hereof.
Section 2.2 Renewal Rights. (a) the Company shall provide to
the Reinsurer on the first Business Day after January 1, 2000, and from time to
time thereafter, a true and complete list of the Insureds and a summary of the
coverages provided under the Policies.
(b) In connection with the non-renewal of the Policies by the
Company, to the extent permitted by applicable law and contractual obligations,
the Company shall send to each Insured written notice substantially in the form
of Exhibit A, encouraging such Insured to renew such Insured's Policy with the
Reinsurer.
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(c) the Reinsurer shall, in connection with the first
expiration of each Policy on or after January 1, 2000, (or, with respect to
Policies renewed by the Company subsequent to January 1, 2000, in connection
with the next such expiration), offer to renew and make a good faith effort to
renew each Policy with the Reinsurer.
ARTICLE III
COVENANTS AND AGREEMENTS
The parties covenant and agree as follows:
Section 3.1 Expenses. The parties to this Agreement shall bear
their respective expenses incurred in connection with the preparation, execution
and performance of this Agreement and the transactions contemplated hereby.
Section 3.2 Examination of the Books and Records. Following
the Effective Date, the Reinsurer shall be entitled, through its employees,
counsel, accountants, or other representatives, to make such examination of the
Books and Records as the Reinsurer may reasonably request for the purpose of
effectuating the Renewals. Any such examination shall be conducted at reasonable
times and upon reasonable prior notice.
Section 3.3 Further Assurances. On and from time to time after
the Effective Date, without further consideration, each of the parties shall
execute such documents and other papers and take such further actions as may be
reasonably required or desirable to carry out the provisions hereof and the
transactions contemplated hereby.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Headings and Schedules. Headings used herein are
not a part of this Agreement and shall not affect the terms hereof. The attached
Schedules are a part of this Agreement.
Section 4.2 Notices. All notices and communications hereunder
shall be in writing and shall become effective when received. Any written notice
shall be by either certified or registered mail, return receipt requested, or
overnight delivery service (providing for delivery receipt) or delivered by
hand. All notices or communications under this Agreement shall be addressed as
follows:
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If to the Company:
Principal Mutual Life Insurance Company
▇▇▇▇ ▇▇▇▇▇
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 the Reinsurer:
Coventry Health and Life Insurance Company
[ ]
[ ]
Attention: President
Section 4.3 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors, assigns and legal representatives. Neither this Agreement, nor any
right hereunder, may be assigned by any party without the prior written consent
of the other party.
Section 4.4 Execution in Counterpart. This Agreement may be
executed by the parties hereto in any number of counterparts, and by each of the
parties hereto in separate counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
Section 4.5 Amendments. This Agreement may not be changed,
altered or modified unless the same shall be in writing executed by the Company
and the Reinsurer.
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Section 4.6 Governing Law. This Agreement shall be interpreted
and governed by the laws of the State of Iowa without regard to its rules with
respect to conflicts of law.
Section 4.7 Integration. This Agreement and the Merger
Agreement constitute the entire agreement between the parties hereto relating to
the subject matter hereof and supersedes all prior and contemporaneous
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties and there are no general or specific warranties,
representations or other agreements by or among the parties in connection with
the entering into of this Agreement or the subject matter hereof except as
specifically set forth or contemplated herein.
Section 4.8 No Waiver. No consent or waiver, express or
implied, by any party to or of any breach or default by any other party in the
performance by such other party of its obligations hereunder shall be deemed or
construed to be a consent or waiver to or of any other breach or default in the
performance of obligations hereunder by such other party hereunder. Failure on
the part of any party to complain of any act or failure to act of any other
party or to declare any other party in default, irrespective of how long such
failure continues, shall not constitute a waiver by such first party of any of
its rights hereunder.
[Remainder of Page Intentionally Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives.
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By:
------------------------------------
Name (Print):
--------------------------
Title:
---------------------------------
COVENTRY HEALTH AND LIFE INSURANCE
COMPANY
By:
------------------------------------
Name (Print):
--------------------------
Title:
---------------------------------
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Schedule 1.01
Insurance Business
[to be provided]
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Exhibit A
Form of Letters to Insureds
[to be provided]