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EXHIBIT 10.10
MARKETING SERVICE AGREEMENT
This Marketing 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") and Coventry Health Care, Inc., a
Delaware Corporation ("Newco") with reference to the following facts:
PREMISES
A. Newco and Mutual, along with Coventry Corporation ("Coventry") and Principal
Health Care, Inc. ("Principal") entered 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)
("Merger Agreement"), executed on December __, 1997, pursuant to which (i)
Principal agreed to contribute certain assets to Newco ("Assets"); (ii) Newco
agreed to enter into a management agreement with respect to certain health
insurance business of Newco ("Managed Health Insurance Business") until December
31, 1999; and (iii) effective January 1, 2000, Mutual will reinsure such health
insurance business with Coventry Health and Life Insurance Company ("Coventry
Health").
B. Upon consummation of the Merger Agreement, Newco will conduct operations in
the market areas now served by Principal and Coventry, including Western
Pennsylvania, the St. Louis area (Eastern Missouri and Southern Illinois),
Central Pennsylvania, Florida (Jacksonville, Southern Florida, Tampa, Pensacola
and Orlando areas), Northern Illinois (Chicago area), Iowa, Central and
Southwestern Virginia, the Atlanta area, the Kansas City area, Delaware,
Louisiana, the Wichita area and North Carolina (Charlotte and Raleigh areas)
(the "Newco Markets"); and
C. Mutual requires certain marketing and other support services in the Newco
Markets for certain of its business other than the Managed Health Insurance
Business and desires to engage Newco to provide marketing services outlined in
this Agreement and Newco desires to accept such engagement 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 and Newco hereby agree as follows:
ARTICLE 1
RESPONSIBILITIES OF NEWCO
1.1 Marketing Services and Support. During the term of this Agreement, Newco,
through its employees, affiliates, or employees of its affiliates, shall be
responsible for furnishing to
Mutual the following services ("Marketing Services"):
A. Inclusion of Mutual Non-medical products in sales initiatives of
Newco affiliates.
B. Inclusion of Mutual medical products in sales initiatives of Newco
affiliates.
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C. Cooperation in National Accounts sales of Mutual.
D. Participation in account renewals, enrollment meetings and delivery
of group materials.
E. Administrative cooperation for the Mutual Triple Option products.
F. Cooperative advertising and community promotions including Mutual.
G. Develop synergistic product combinations when appropriate for
strategic accounts.
1.2 Cooperation. During the entire Term, Newco will maintain an effective
liaison and cooperative working relationship with Mutual.
ARTICLE 2
RESPONSIBILITIES OF MUTUAL
2.1 Compensation. Mutual recognizes that Newco and its affiliates will be
required to commit substantial resources, specialized expertise and efforts to
the establishment of and ongoing support for promotion and distribution of
medical and non-medical group insurance and managed care products. Mutual
recognizes that Newco and its affiliates will incur significant incremental
expense in providing the services described in Section 1.1. In consideration for
the services described above, Mutual agrees to compensate Newco in the amount of
four million dollars ($4,000,000) per calendar quarter in 1998, and two million
five hundred thousand dollars ($2,500,000) per calendar quarter in 1999. The
parties hereto acknowledge that such amount represents an arms length, fair
market rate for the services to be provided. To the extent that services
provided are increased or decreased materially from those described above, the
parties agree to negotiate in good faith to establish appropriate compensation
for the services provided. In the event the Merger Agreement does not close on
or before March 31, 1998, Mutual and Newco shall meet to negotiate in good faith
the amount of compensation to be paid for services provided in 1998.
2.2 Cooperation; Exchange Information. During the term of this Agreement, Mutual
will maintain an effective liaison and cooperative working relationship with
Newco and its staff to ensure a consistency in the level of services required to
be furnished by Newco. Mutual shall provide Newco with all relevant information
reasonably necessary for Newco to perform the services required of it under this
Agreement, including, without limitation, information concerning the Assets.
ARTICLE 3
TERM AND TERMINATION
3.1 Term. The term of this Agreement shall commence on the closing of this
Transaction and shall continue through December 31, 1999 ("Term").
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3.2 Termination. This Agreement may be terminated prior to the expiration of the
Term only as follows:
(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 4
MISCELLANEOUS PROVISIONS
4.1 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 Mutual:
Xxxx Xxxxx
Principal Mutual Life Insurance Company
000 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Telecopy Number: 515/247-0130
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With a copy to:
Xxxxx X. Xxxxx, Esq.
Principal Mutual Life Insurance Company
000 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Telecopy Number: 515/248-3011
and:
Xxxxxx X. Xxxxx, Esq.
Xxxxxxx Xxxxxx & Green, PC
0000 00xx Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, XX 00000
Telecopy Number: 202/296-2882
If to Newco:
Xxxx Xxxx
Coventry Health Care, Inc.
00 Xxxxxxx Xxxxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
With a copy to:
Xxx X. Xxxxxxxx, Esq.
Bass, Xxxxx & Xxxx, PLC
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Telecopy Number: 615/742-6298
4.2 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.
4.3 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
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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.
4.4 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.
4.5 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.
4.6 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.
4.7 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.
4.8 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.
4.9 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.
4.10 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.
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IN WITNESS WHEREOF, MUTUAL AND NEWCO have executed this Agreement on the date
set forth below.
PRINCIPAL MUTUAL LIFE INSURANCE
COMPANY
an Iowa corporation
By:
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Name (Print):
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Title:
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COVENTRY HEALTH CARE, INC.
a Delaware corporation
By:
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Name (Print):
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Title:
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