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EXHIBIT 10.9
LICENSE AGREEMENT
THIS LICENSE AGREEMENT ("the Agreement") is entered into effective as
of the ____ day of _____________________, 1998, by and between PRINCIPAL MUTUAL
LIFE INSURANCE COMPANY, a corporation incorporated under the laws of the State
of Iowa, having its principal place of business at 000 Xxxx Xxxxxx, Xxx Xxxxxx,
Xxxx (hereinafter referred to as "Licensor"), and Coventry Health Care, Inc., a
corporation incorporated under the laws of the State of Delaware, having its
principal place of business at 0000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, XX
00000 (hereinafter referred to as "Licensee").
RECITALS
WHEREAS, Licensor is the owner of (1) the name and xxxx PRINCIPAL
HEALTH CARE, (2) the name and xxxx THE PRINCIPAL, (3) the name and xxxx THE
PRINCIPAL FINANCIAL GROUP, (4) the name and xxxx PRINCIPAL HEALTH CARE 65, and
(5) the name and xxxx PRINCHOICE, including design xxxx versions thereof as
listed in Appendix A (collectively hereinafter sometimes referred to as the
"names and marks"); and
WHEREAS, Licensee is entering into a 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 on December __, 1997 (the "Merger Agreement"), and whereby certain
assets and liabilities of PRINCIPAL HEALTH CARE, INC., a subsidiary of Licensor,
will be transferred to Licensee and in connection with which agreement
Licensor's subsidiary will receive, in consideration of such transfer, shares
representing forty percent (40%) of the voting shares of Licensee; and
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WHEREAS, Licensee is desirous of making some continuing use of certain
of the names and marks after the closing date set forth in the Merger Agreement;
and
WHEREAS, Licensor is willing to grant a license to Licensee for use of
the names and marks upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the sufficiency of which the parties acknowledge, Licensor and
Licensee hereby agree as follows:
GRANT OF LICENSE
Licensor hereby grants to Licensee and each of the subsidiaries of
Licensee, subject to the terms and conditions of this Agreement, a royalty free,
nonexclusive, nonsublicenseable, nontransferable, right to use the names and
marks in the United States solely in connection with managed health care
services provided by Licensee or Licensee's subsidiaries.
ACKNOWLEDGMENT OF OWNERSHIP, VALIDITY AND VALUE
Licensee acknowledges the value and validity, as well as Licensor's
ownership of the names and marks and agrees that it will not at any time do
anything to challenge or in any way diminish the value of the rights licensed
herein.
QUALITY CONTROL AND INDEMNIFICATION
1. Licensee agrees to use the names and marks only in connection with
managed health care services provided by Licensee or Licensee's subsidiaries and
only in such geographic locations as PRINCIPAL HEALTH CARE, INC. is operating
health maintenance organizations as of the date of this Agreement, and Licensee
further agrees that any services provided by it or in connection with the names
and marks during the term
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of this license shall be provided in accordance with all applicable laws and
regulations and in accordance with all applicable industry standards. Licensor
shall have the right during the term of this license to inspect the quality of
the services provided pursuant to this Agreement upon reasonable notice to
Licensee. Licensor shall further have the right during the term of this license
to prompt and timely notice of compliance problems identified in market conduct
or similar examinations conducted by regulators to which Licensee is subject and
any corrective action taken in respect of such deficiencies.
2. Licensee agrees to use the names and marks solely in accordance with
requirements and design standards communicated to it by Licensor, and Licensee
agrees to submit all proposed uses of the names and marks to Licensor for review
of conformance to such standards and for Licensor's approval prior to any use.
All advertising of any kind by Licensee which contains the name or marks subject
to this Agreement shall be subject to the prior approval by Licensor.
3. Licensee agrees to make no use of the prefix PRIN apart from the
above-mentioned name and xxxx PRINCHOICE in connection with product names,
marketing materials, advertising or otherwise without the prior written approval
of Licensor.
4. Licensee agrees not to use the Licensor's wedge shaped design xxxx
with any descriptor other than "HEALTH CARE," or the name "PRINCIPAL" except as
part of the name of what is, as of the date of this Agreement, a PRINCIPAL
HEALTH CARE, INC. operation or to refer to an affiliation or marketing
arrangement with Licensor.
5. Licensee agrees that in no circumstances may Licensee refer to
itself as "a member of The Principal Financial Group." Licensee agrees that any
reference to relationship or association with Licensor or The Principal
Financial Group shall be subject
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to Licensor's prior approval. The parties shall act on good faith to agree on
Licensee's reference to relationship or association with Licensee or The
Principal Financial Group.
6. Licensee agrees to hold Licensor harmless from any and all liability
or damages, including attorneys fees and punitive or extracontractual damages
arising out of Licensee's exercise of any rights granted to it under the terms
of this Agreement and specifically including, without limiting the generality of
the foregoing, liability or damages in respect of claims arising under a theory
of medical malpractice, medical malfeasance or a failure to provide treatment,
and covenants to maintain such liability insurance, including medical
malpractice insurance, and in like amounts, as is customary in the health
maintenance organization or managed care business.
PROPRIETARY DATA
In performing its duties hereunder, Licensee may be given access to
certain Proprietary Data belonging to Licensor, including trade secrets and
other confidential information. To the extent Licensee has such access, Licensee
agrees that it will not, during the term of this Agreement or thereafter, do
anything to impair the confidentiality or Licensor's rights to the Proprietary
Data. The confidentiality provisions of this Agreement shall survive termination
of this Agreement.
TERM AND TERMINATION
This Agreement shall remain in effect, unless terminated sooner as
provided for herein, for a term not to exceed three (3) years.
For a failure to comply with the Quality Control requirements of this
Agreement or any of them, Licensor shall have the right to terminate upon thirty
(30) days written notice provided that Licensee shall have received notice of
such non-compliance and shall not
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have cured such non-compliance within thirty (30) days of such notice. At
Licensor's option, any such time as Licensor's subsidiary's ownership of voting
shares of Licensee is reduced below ten percent (10%) of the voting shares of
Licensee, this Agreement shall terminate without requirement of further notice.
This Agreement and its interpretation shall be governed by and in
accordance with the laws of the State of Iowa.
[Signatures follow on following page.]
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IN WITNESS WHEREOF, the parties hereto by their duly authorized
officers have executed this Agreement as of the day and year first above
written.
PRINCIPAL MUTUAL LIFE
COVENTRY HEALTH CARE, INC. INSURANCE COMPANY
By: By:
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Name: Name:
Title: Title:
Dated: Date:
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