Exhibit 10.2

 

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SECOND AMENDED AND RESTATED

RFC LOAN AGREEMENT

 

among

 

HUMANA INC.,

 

THE SEVERAL BANKS AND OTHER FINANCIAL INSTITUTIONS

FROM TIME TO TIME PARTIES HERETO,

 

RELATIONSHIP FUNDING COMPANY, LLC,

 

AND

 

JPMORGAN CHASE BANK,

AS ADMINISTRATIVE AGENT,

 

BANK OF AMERICA, N.A.,

 

CITIBANK, N.A.

 

and

 

WACHOVIA BANK, NATIONAL ASSOCIATION

 

and

 

J.P. MORGAN SECURITIES INC.

 

DATED AS OF OCTOBER 1, 2003

 

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TABLE OF CONTENTS

 

              Page

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SECTION 1.

      

DEFINITIONS

   6

1.1  

      

Defined Terms

   6

1.2  

      

Other Definitional Provisions

   22

SECTION 2.

      

AMOUNT AND TERMS OF LOANS

   22

2.1  

      

RFC Loans

   22

2.2  

      

Repayment of RFC Loans; Evidence of Debt

   24

2.3  

      

Fees

   24

2.4  

      

Termination or Changes to Facility Amount or RFC Facility Amount

   25

2.5  

      

Prepayments

   25

2.6  

      

Conversion Options; Minimum Amount of RFC Loans

   26

2.7  

      

Interest Rate and Payment Dates for RFC Loans

   27

2.8  

      

Computation of Interest and Fees

   27

2.9  

      

Inability to Determine Interest Rate

   28

2.10

      

Pro Rata Borrowings and Payments

   29

2.11

      

Illegality

   30

2.12

      

Requirements of Law

   30

2.13

      

Capital Adequacy

   31

2.14

      

Taxes

   32

2.15

      

Indemnity

   33

2.16

      

Application of Proceeds of RFC Loans

   33

2.17

      

Notice of Certain Circumstances; Assignment of Commitments Under Certain Circumstances

   33

2.18

      

Regulation U

   34

2.19

      

Purchase and Termination

   35

2.20

      

Additional Fee Payable to Downgraded Banks

   36

SECTION 3.

      

REPRESENTATIONS AND WARRANTIES

   36

3.1  

      

Corporate Existence; Compliance with Law

   36

3.2  

      

No Legal Obstacle to Agreement; Enforceability

   36

3.3  

      

Litigation

   37

3.4  

      

Disclosure

   37

3.5  

      

Defaults

   37

3.6  

      

Financial Condition

   37

3.7  

      

Changes in Condition

   38

3.8  

      

Assets

   38

3.9  

      

Tax Returns

   38

3.10

      

Contracts, etc

   38

3.11

      

Subsidiaries

   39

3.12

      

Burdensome Obligations

   39

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3.13

  

Pension Plans

   39

3.14

  

Environmental and Public and Employee Health and Safety Matters

   39

3.15

  

Federal Regulations

   40

3.16

  

Investment Company Act; Other Regulations

   40

3.17

  

Solvency

   40

3.18

  

Casualties

   40

3.19

  

Business Activity

   40

3.20

  

Purpose of RFC Loans

   40

SECTION 4.

  

CONDITIONS

   40

4.1  

  

Conditions to the Closing Date

   40

4.2  

  

Conditions to Each Loan

   42

SECTION 5.

  

AFFIRMATIVE COVENANTS

   43

5.1  

  

Taxes, Indebtedness, etc

   43

5.2  

  

Maintenance of Properties; Maintenance of Existence

   43

5.3  

  

Insurance

   44

5.4  

  

Financial Statements

   44

5.5  

  

Certificates; Other Information

   45

5.6  

  

Compliance with ERISA

   46

5.7  

  

Compliance with Laws

   46

5.8  

  

Inspection of Property; Books and Records; Discussions

   46

5.9  

  

Notices

   46

5.10

  

Maintenance of Licenses, Etc

   47

5.11

  

Further Assurances

   48

SECTION 6.

  

NEGATIVE COVENANTS

   48

6.1  

  

Financial Condition Covenants

   48

6.2  

  

Limitation on Subsidiary Indebtedness

   48

6.3  

  

Limitation on Liens

   49

6.4  

  

Limitations on Fundamental Changes

   50

6.5  

  

Limitation on Sale of Assets

   50

6.6  

  

Limitation on Distributions

   51

6.7  

  

Transactions with Affiliates

   51

6.8  

  

Sale and Leaseback

   51

SECTION 7.

  

DEFAULTS

   51

7.1  

  

Events of Default

   51

7.2  

  

Annulment of Defaults

   54

7.3  

  

Waivers

   55

7.4  

  

Course of Dealing

   55

 

3

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SECTION 8.

  

THE AGENT

   55

8.1  

  

Appointment

   55

8.2  

  

Delegation of Duties

   55

8.3  

  

Exculpatory Provisions

   55

8.4  

  

Reliance by Agent

   56

8.5  

  

Notice of Default

   56

8.6  

  

Non-Reliance on Agent and Other Banks

   56

8.7  

  

Indemnification

   57

8.8  

  

Agent in Its Individual Capacity

   57

8.9  

  

Successor Agent

   57

SECTION 9.

  

MISCELLANEOUS

   57

9.1  

  

Amendments and Waivers

   57

9.2  

  

Notices

   58

9.3  

  

No Waiver; Cumulative Remedies

   59

9.4  

  

Survival of Representations and Warranties

   59

9.5  

  

Payment of Expenses and Taxes; Indemnity

   59

9.6  

  

Successors and Assigns; Participations; Purchasing Banks

   60

9.7  

  

Adjustments; Set-off

   63

9.8  

  

Counterparts

   63

9.9  

  

GOVERNING LAW

   63

9.10

  

WAIVERS OF JURY TRIAL

   63

9.11

  

Submission To Jurisdiction; Waivers

   64

9.12

  

Confidentiality of Information

   64

9.13

  

Bankruptcy Petition Against RFC

   64

9.14

  

Special RFC Indemnity

   64

9.15

  

Limited Recourse

   65

 

4

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SCHEDULES

    

SCHEDULE I

  

Lending Offices; Addresses for Notice

SCHEDULE II

  

Pricing Grid

SCHEDULE III

  

Indebtedness

SCHEDULE IV

  

Subsidiaries of the Company

SCHEDULE V

  

Liens

SCHEDULE VI

  

Certain Acquisitions and Dispositions

SCHEDULE VII

  

Other Regulations

SCHEDULE VIII

  

Business Activities

EXHIBITS

    

EXHIBIT A

  

Form of Revolving Credit Note

EXHIBIT B

  

Form of Transfer Supplement

EXHIBIT C

  

Form of Closing Certificate

EXHIBIT D-1

  

Form of Company Counsel Opinion

EXHIBIT D-2

  

Form of Opinion of Fried, Frank, Harris, Shriver & Jacobson

 

5

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SECOND AMENDED AND RESTATED RFC LOAN AGREEMENT, dated as of October 1, 2003,
among HUMANA INC., a Delaware corporation (the “Company”), RELATIONSHIP FUNDING
COMPANY, LLC, a Delaware limited liability company (“RFC”), the institutions
listed in the signature pages hereto as Liquidity Institutions (together with
their successors and permitted assigns, the “Banks”) and JPMORGAN CHASE BANK, a
New York banking corporation, as administrative agent for RFC and the Banks (in
such capacity, the “Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the parties hereto are party to the Amended and Restated RFC Loan
Agreement, dated as of October 2, 2002 (the “Existing Loan Agreement”), among
the Company, RFC, the Banks and the Agent, pursuant to which the Company could
request from RFC, and RFC could, in its sole discretion, agree to make to the
Company, revolving loans;

 

WHEREAS, the Company has requested RFC and the Banks to enter into a loan
agreement that amends and restates the Existing Loan Agreement; and

 

WHEREAS, the Banks are willing to enter into such loan agreement upon and
subject to the terms and conditions hereafter set forth;

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, the parties hereto hereby agree that, effective as of the Closing
Date (as defined below), the Existing Loan Agreement shall be amended and
restated in its entirety as follows:

 

SECTION 1. DEFINITIONS

 

1.1 Defined Terms. As used in this Agreement, the following terms have the
following meanings:

 

“Admitted Asset”: with respect to any HMO Subsidiary or Insurance Subsidiary,
any asset of such HMO subsidiary or Insurance Subsidiary which qualifies as an
“admitted asset” (or any like item) under the applicable Insurance Regulations
and HMO Regulations.

 

“Affiliate”: as to any Person, any other Person (other than a Subsidiary) which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition, “control” of a
Person means the power, directly or indirectly, either to direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise.

 

“Aggregate Outstanding Extensions of Credit”: an amount equal to the aggregate
principal amount of all RFC Loans then outstanding.

 

“Agreement”: this agreement, as the same may be amended, supplemented or
otherwise modified from time to time.

 

6

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“Alternate Base Rate”: for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate
in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and
(c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For
purposes hereof: “Prime Rate” shall mean the rate of interest per annum publicly
announced from time to time by the Agent as its prime rate in effect at its
principal office in New York City (each change in the Prime Rate to be effective
on the date such change is publicly announced); “Base CD Rate” shall mean the
sum of (a) the product of (i) the Three-Month Secondary CD Rate and (ii) a
fraction, the numerator of which is one and the denominator of which is one
minus the C/D Reserve Percentage and (b) the C/D Assessment Rate; “Three-Month
Secondary CD Rate” shall mean, for any day, the secondary market rate for
three-month certificates of deposit reported as being in effect on such day (or,
if such day shall not be a Business Day, the next preceding Business Day) by the
Board of Governors of the Federal Reserve System (the “Board”) through the
public information telephone line of the Federal Reserve Bank of New York (which
rate will, under the current practices of the Board, be published in Federal
Reserve Statistical Release H.15(519) during the week following such day), or,
if such rate shall not be so reported on such day or such next preceding
Business Day, the average of the secondary market quotations for three-month
certificates of deposit of major money center banks in New York City received at
approximately 10:00 A.M., New York City time, on such day (or, if such day shall
not be a Business Day, on the next preceding Business Day) by the Agent from
three New York City negotiable certificate of deposit dealers of recognized
standing selected by it; “C/D Reserve Percentage” shall mean, for any day, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board (or any successor), for determining the maximum reserve
requirement for a member bank of the Federal Reserve System in New York City
with deposits exceeding one billion Dollars in respect of new non-personal
three-month certificates of deposit in the secondary market in Dollars in New
York City and in an amount of $100,000 or more; “C/D Assessment Rate” shall
mean, for any day, the net annual assessment rate (rounded upward to the nearest
1/100th of 1%) determined by JPMorgan Chase Bank to be payable on such day to
the Federal Deposit Insurance Corporation or any successor (“FDIC”) for FDIC’s
insuring time deposits made in Dollars at offices of JPMorgan Chase Bank in the
United States; and “Federal Funds Effective Rate” shall mean, for any day, the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by the
Agent from three federal funds brokers of recognized standing selected by it.
Any change in the Alternate Base Rate due to a change in the Prime Rate, the
Three-Month Secondary CD Rate or the Federal Funds Effective Rate shall be
effective on the effective day of such change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate, respectively.

 

“Allocated Commercial Paper”: has the meaning assigned to it in the definition
of CP Breakage Costs.

 

7

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“Alternate Base Rate Loans”: RFC Loans held by the Banks hereunder at such time
as they are made and/or being maintained at a rate of interest based upon the
Alternate Base Rate.

 

“Applicable Margin”: for each Type of RFC Loan (other than CP Rate Loans), the
rate per annum applicable to such type determined in accordance with the Pricing
Grid.

 

“Available Facility Amount”: at a particular time, an amount equal to the
difference between (a) the amount of the Facility Amount at such time and (b)
the Aggregate Outstanding Extensions of Credit at such time.

 

“Bank Funded Loans”: RFC Loans that have been made by the Banks pursuant to
subsection 2.1(c) or purchased by the Banks pursuant to the Liquidity Agreement.
RFC Loans purchased by the Banks pursuant to the Liquidity Agreement shall be
RFC Loans until the earliest to occur of (i) such RFC Loans being repaid
pursuant hereto, (ii) such RFC Loans being repurchased by RFC pursuant to
subsection 4.12 of the Liquidity Agreement and (iii) such RFC Loans being
converted into loans under the 364 Day Facility pursuant to subsection 2.19.

 

“Banks”: as defined in the preamble hereto.

 

“Benefited Bank”: as defined in subsection 9.7.

 

“Borrowing Date”: any Business Day specified in a notice pursuant to subsection
2.1(b) or 2.1(c) as a date on which the Company requests RFC or each Bank (as
the case may be) to make an RFC Loan hereunder.

 

“Business Day”: a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close,
provided, that with respect to notices and determinations in connection with,
and payments of principal and interest on, Eurodollar Loans, such day is also a
day for trading by and between banks in Dollar deposits in the interbank
eurodollar market.

 

“Capital Stock”: any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants or options to purchase any of the foregoing.

 

“Change in Control”: of any corporation, shall occur where (a) any Person or
“group” (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended), other than the Company, shall acquire more than 30% of the Voting
Stock of such corporation or (b) the Continuing Directors shall not constitute a
majority of the board of directors of such corporation.

 

“Closing Date”: the date on which all of the conditions precedent for the
Closing Date set forth in Section 4 shall have been fulfilled.

 

8

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“Code”: the Internal Revenue Code of 1986, as amended from time to time.

 

“Commercial Paper” means any short-term promissory notes issued by the CP Issuer
in the commercial paper market.

 

“Commitment”: as to any Bank, its Commitment as defined in the Liquidity
Agreement.

 

“Commitment Percentage”: as to any Bank, the percentage of the aggregate
Commitments constituted by such Bank’s Commitment.

 

“Commonly Controlled Entity”: an entity, whether or not incorporated, which is
under common control with the Company within the meaning of Section 4001 of
ERISA or is part of a group which includes the Company and which is treated as a
single employer under Section 414 of the Code.

 

“Conduit Lender”: any special purpose corporation organized and administered by
any Bank for the purpose of making RFC Loans otherwise required to be made by
such Bank and designated by such Bank in a written instrument; provided, that
the designation by any Bank of a Conduit Lender shall not relieve the
designating Bank of any of its obligations to fund a RFC Loan under this
Agreement if, for any reason, its Conduit Lender fails to fund any such RFC
Loan, and the designating Bank (and not the Conduit Lender) shall have the sole
right and responsibility to deliver all consents and waivers required or
requested under this Agreement with respect to its Conduit Lender, and provided,
further, that no Conduit Lender shall (a) be entitled to receive any greater
amount pursuant to subsection 2.12, 2.13, 2.14, 2.15 or 9.5 than the designating
Bank would have been entitled to receive in respect of the extensions of credit
made by such Conduit Lender (and each Bank which designates a Conduit Lender
shall indemnify the Company against any increased taxes, costs, expenses,
liabilities or losses associated with any payment thereunder to such Conduit
Lender) or (b) be deemed to have any Commitment.

 

“Consolidated Assets”: the consolidated assets of the Company and its
Subsidiaries, determined in accordance with GAAP.

 

“Consolidated EBIT”: for any period for which the amount thereof is to be
determined, Consolidated Net Income for such period plus all amounts deducted in
computing such Consolidated Net Income in respect of Consolidated Interest
Expense and income taxes, all determined in accordance with GAAP; provided, that
for purposes of calculating Consolidated EBIT for any period of four full fiscal
quarters, (i) the Consolidated EBIT attributable to any Person or business unit
acquired by the Company or its Subsidiaries during such period (such
Consolidated EBIT to be calculated in the same manner as Consolidated EBIT for
the Company and its Subsidiaries is calculated, mutatis mutandis, provided that
amounts arising prior to the time such acquired Person or business unit was
acquired attributable to (a) any discontinued operations or products of the
acquired Person or business unit or (b) operations or products of the acquired
Person or business unit which the Company expects to discontinue as disclosed in
the

 

9

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Company’s reports filed with the Securities and Exchange Commission within three
months after the date of acquisition of such Person or business unit shall be
excluded in such calculation) shall be included on a pro forma basis for such
period of four full fiscal quarters (assuming the consummation of each such
acquisition and the incurrence, assumption or repayment of any Indebtedness in
connection therewith occurred on the first day of such period of four full
fiscal quarters) and (ii) the Consolidated EBIT of any Person or business unit
disposed of by the Company or its Subsidiaries during such period (such
Consolidated EBIT to be calculated in the same manner as Consolidated EBIT for
the Company and its Subsidiaries is calculated, mutatis mutandis) shall be
deducted on a pro forma basis for such period of four full fiscal quarters
(assuming the consummation of each such disposition and the repayment of any
Indebtedness in connection therewith occurred on the first day of such period of
four full fiscal quarters).

 

“Consolidated EBITDA”: for any fiscal period for which the amount thereof is to
be determined, Consolidated EBIT for such fiscal period plus, to the extent
deducted from Consolidated Net Income for such fiscal period, depreciation and
amortization for such fiscal period.

 

“Consolidated Interest Expense”: for any period for which the amount thereof is
to be determined, all amounts deducted in computing Consolidated Net Income for
such period in respect of interest expense on Indebtedness determined in
accordance with GAAP; provided, that for purposes of calculating Consolidated
Interest Expense for any period of four full fiscal quarters, (i) the
Consolidated Interest Expense of any Person or business unit acquired by the
Company or its Subsidiaries during such period (such Consolidated Interest
Expense to be calculated in the same manner as Consolidated Interest Expense for
the Company and its Subsidiaries is calculated, mutatis mutandis, provided that
amounts arising prior to the time such acquired Person or business unit was
acquired attributable to (a) any discontinued operations or products of the
acquired Person or business unit or (b) operations or products of the acquired
Person or business unit which the Company expects to discontinue as disclosed in
the Company’s reports filed with the Securities and Exchange Commission within
three months after the date of acquisition of such Person or business unit shall
be excluded in such calculation) shall be included on a pro forma basis for such
period of four full fiscal quarters (assuming the consummation of each such
acquisition and the incurrence, assumption or repayment of any Indebtedness in
connection therewith occurred on the first day of such period of four full
fiscal quarters) and (ii) the Consolidated Interest Expense of any Person or
business unit disposed of by the Company or its Subsidiaries during such period
(such Consolidated Interest Expense to be calculated in the same manner as
Consolidated Interest Expense for the Company and its Subsidiaries is
calculated, mutatis mutandis) shall be deducted on a pro forma basis for such
period of four full fiscal quarters (assuming the consummation of each such
disposition and the repayment of any Indebtedness in connection therewith
occurred on the first day of such period of four full fiscal quarters).
Consolidated Interest Expense shall in any event include the Synthetic Lease
Interest Component of any Synthetic Lease entered into by the Company or any of
its Subsidiaries.

 

10

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“Consolidated Net Income”: for any period, the consolidated net income, if any,
after taxes, of the Company and its Subsidiaries for such period determined in
accordance with GAAP; provided, that, for all purposes other than subsection
6.1(a), Consolidated Net Income shall not be reduced or increased by the amount
of any non-cash extraordinary charges or credits that would otherwise be
deducted from or added to revenue in determining such Consolidated Net Income.

 

“Consolidated Net Tangible Assets”: at any date, the total amount of assets
(less applicable reserves and other properly deductible items) after deducting
therefrom (i) all current liabilities as disclosed on the consolidated balance
sheet of the Company (excluding any thereof which are by their terms extendable
or renewable at the option of the obligor thereon to a time more than 12 months
after the time as of which the amount thereof is being computed and excluding
any deferred income taxes that are included in current liabilities), and (ii)
all goodwill, trade names, trademarks, patents, unamortized debt discount and
expense and other like intangible assets, all as set forth on the most recent
consolidated balance sheet of the Company and computed in accordance with GAAP.

 

“Consolidated Net Worth”: at any date, the stockholders’ equity of the Company
and its Subsidiaries at such date, determined in accordance with GAAP.

 

“Consolidated Total Debt”: the aggregate of all Indebtedness (including the
current portion thereof) of the Company and its Subsidiaries on a consolidated
basis.

 

“Continuing Director”: any member of the Board of Directors of the Company who
is a member of such Board on the date of this Agreement, and any Person who is a
member of such Board and whose nomination as a director was approved by a
majority of the Continuing Directors then on such Board.

 

“Contractual Obligation”: as to any Person, any provision of any security issued
by such Person or of any agreement, instrument or undertaking to which such
Person is a party or by which it or any of its property is bound.

 

“Control Group Person”: any Person which is a member of the controlled group or
is under common control with the Company within the meaning of Section 414(b) or
414(c) of the Code or Section 4001(b)(1) of ERISA.

 

“CP Breakage Costs” means, with respect to any CP Excess Amount on any date
(such date, the “CP Payment Date”), an amount equal to the excess, if any, of
(i) the sum of (a) all interest that would have accrued (had such CP Payment
Date not occurred) on such CP Excess Amount through and including the later to
occur of (x) the day on which the principal component of Commercial Paper issued
by the CP Issuer and allocated by the CP Issuer to fund advances under the
Lexington Credit Agreement and used to fund or maintain one or more CP Rate
Loans that will mature on or after the relevant CP Payment Date equals or
exceeds such CP Excess Amount (such principal component, “Allocated Commercial
Paper”) and (y) the day on which the latest maturing rate hedge agreement
entered into by the CP Issuer and relating to the Commercial Paper described

 

11

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in clause (x) hereof matures (such later date, the “Relevant Maturity Date”),
plus (b) any amounts required to be paid to unwind any relevant rate hedge
agreements, over (ii) the amount of income (less the reasonable costs and
expenses of obtaining such income), if any, actually received by the CP Issuer
from investing the CP Excess Amount for the period from such CP Payment Date
until such Relevant Maturity Date.

 

“CP Cost of Funds” means, for each Settlement Period, the sum of (i) the per
annum rate equivalent to the daily weighted average of the per annum rates which
may be paid or are payable by the CP Issuer from time to time as interest on or
otherwise in respect of the Commercial Paper of the CP Issuer and/or rate hedges
that are allocated, in whole or in part, by the CP Issuer to the CP Rate Loans
during the period commencing on the immediately preceding Settlement Date and
ending on (but excluding) the current Settlement Date (such period, a
“Settlement Period”), which rates shall reflect and give effect to (x) the
commissions of placement agents and dealers in respect of Commercial Paper of
the CP Issuer allocated to such period, and (y) net payments owed or received by
the CP Issuer under any rate hedges entered into by the CP Issuer in connection
therewith, plus (ii) the cost of all audit, rating agency and administrative
expenses related to the facility, which shall equal 0.02%; provided that if any
component of such rate is a discount rate, then in calculating the “CP Cost of
Funds” for such Settlement Period, the CP Issuer shall for such component use
the rate resulting from converting such discount rate to an interest-bearing
equivalent rate per annum.

 

“CP Excess Amount”: as defined in subsection 2.15(d)(ii).

 

“CP Issuer”: Lexington Parker Capital Company, LLC, a Delaware limited liability
company, and each other lender under the Lexington Credit Agreement.

 

“CP Margin”: as defined in the Program Fee Letter.

 

“CP Rate”: for each Settlement Period, the sum of (i) the CP Cost of Funds for
such Settlement Period, plus (ii) the CP Margin.

 

“CP Rate Loans”: the RFC Loans held by RFC that bear interest at the CP Rate.

 

“Cross-Over Funding Date”: as defined in subsection 2.3.

 

“Default”: any of the events specified in subsection 7.1, whether or not any
requirement for the giving of notice, the lapse of time, or both, or any other
condition, has been satisfied.

 

“Distribution”: (a) the declaration or payment of any dividend on or in respect
of any shares of any class of Capital Stock of the Company other than dividends
payable solely in shares of common stock of the Company; (b) the purchase,
redemption or other acquisition of any shares of any class of Capital Stock of
the Company directly or indirectly through a Subsidiary or otherwise; and (c)
any other distribution on or in respect of any shares of any class of Capital
Stock of the Company.

 

“Dollars” and”$”: dollars in lawful currency of the United States of America.

 

12

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“Domestic Lending Office”: with respect to each Bank the office of such Bank
located within the United States which shall be making or maintaining Alternate
Base Rate Loans.

 

“Downgrade Deposit”: as defined in Exhibit I to the Liquidity Agreement.

 

“Eligible Assignee”: as defined in Exhibit I to the Liquidity Agreement.

 

“ERISA”: the Employee Retirement Income Security Act of 1974, as amended from
time to time.

 

“Eurocurrency Reserve Requirements”: for any day as applied to a Eurodollar
Loan, the aggregate (without duplication) of the rates (expressed as a decimal
fraction) of reserve requirements in effect on such day (including, without
limitation, basic, supplemental, marginal and emergency reserves under any
regulations of the Board of Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect thereto), dealing with
reserve requirements prescribed for eurocurrency funding (currently referred to
as “Eurocurrency Liabilities” in Regulation D of such Board) maintained by a
member bank of such System.

 

“Eurodollar Lending Office”: with respect to each Bank, the office of such Bank
which shall be making or maintaining Eurodollar Loans.

 

“Eurodollar Loans”: RFC Loans held by the Banks hereunder at such time as they
are being made and/or maintained at a rate of interest based upon the Eurodollar
Rate.

 

“Eurodollar Rate”: with respect to each day during each Interest Period
pertaining to a Eurodollar Loan, the rate per annum equal to the average
(rounded upwards to the nearest whole multiple of one sixteenth of one percent)
of the respective rates notified to the Agent by the Reference Banks as the rate
at which each of their Eurodollar Lending Offices is offered Dollar deposits two
Working Days prior to the beginning of such Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency and exchange
operations of such Eurodollar Lending Office are then being conducted at or
about 10:00 A.M., New York City time, for delivery on the first day of such
Interest Period for the number of days comprised therein and in an amount
comparable to the amount of the Eurodollar Loan of such Reference Bank to be
outstanding during such Interest Period.

 

“Eurodollar Tranche”: the collective reference to Eurodollar Loans having the
same Interest Period (whether or not originally made on the same day).

 

“Event of Default”: any of the events specified in subsection 7.1, provided that
any requirement for the giving of notice, the lapse of time, or both, or any
other condition, event or act has been satisfied.

 

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“Excluded Day”: means any of the following:

 

(1) the last 5 Business Days of a month;

 

(2) the 15th day of the month (or if the 15th is not a Business Day, the next
succeeding Business Day);

 

(3) the last 10 Business Days of November; and

 

(4) the last 15 Business Days of December.

 

“Facility Amount”: means $265,000,000, as such amount may be reduced from time
to time as provided herein.

 

“Facility Period”: the period from and including the Closing Date to but not
including the first to occur of (i) the Termination Date or such earlier date on
which the Facility Amount is reduced to zero as provided herein or (ii) the
Wind-Down Date.

 

“Financing Lease”: any lease of property, real or personal, if the then present
value of the minimum rental commitment thereunder should, in accordance with
GAAP, be capitalized on a balance sheet of the lessee.

 

“GAAP”: (a) with respect to determining compliance by the Company with the
provisions of subsections 6.1, 6.2 and 6.5, generally accepted accounting
principles in the United States of America consistent with those utilized in
preparing the audited financial statements referred to in subsection 3.6 and (b)
with respect to the financial statements referred to in subsection 3.6 or the
furnishing of financial statements pursuant to subsection 5.4 and otherwise,
generally accepted accounting principles in the United States of America from
time to time in effect.

 

“Governmental Authority”: any nation or government, any state or other political
subdivision thereof and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.

 

“Green Bay Facility”: offices of the Company located at 1100 Employers
Boulevard, De Pere, Wisconsin.

 

“Guarantee Obligation”: as to any Person, any arrangement whereby credit is
extended to one party on the basis of any promise of such Person, whether that
promise is expressed in terms of an obligation to pay the Indebtedness of
another, or to purchase an obligation owed by that other, to purchase assets or
to provide funds in the form of lease or other types of payments under
circumstances that would enable that other to discharge one or more of its
obligations, whether or not such arrangement is listed in the balance sheet of
the obligor or referred to in a footnote thereto, but shall not include
endorsements of items for collection in the ordinary course of business.

 

“Headquarters”: the principal executive offices of the Company located at 500
West Main Street, Louisville, Kentucky 40202.

 

14

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“Hedge Agreement” means all interest rate swaps, caps or collar agreements or
similar arrangements dealing with interest rates or currency exchange rates or
the exchange of nominal interest obligations, either generally or under specific
contingencies.

 

“HMO”: a health maintenance organization doing business as such (or required to
qualify or to be licensed as such) under HMO Regulations.

 

“HMO Regulation”: all laws, regulations, directives and administrative orders
applicable under federal or state law specific to health maintenance
organizations and any regulations, orders and directives promulgated or issued
pursuant thereto.

 

“HMO Regulator”: any Person charged with the administration, oversight or
enforcement of an HMO Regulation.

 

“HMO Subsidiary”: any Subsidiary of the Company that is now or hereafter an HMO.

 

“Indebtedness”: of a Person, at a particular date, the sum (without duplication)
at such date of (a) all indebtedness of such Person for borrowed money or for
the deferred purchase price of property or services or which is evidenced by a
note, bond, debenture or similar instrument, (b) all obligations of such Person
under Financing Leases, (c) all obligations of such Person in respect of letters
of credit, acceptances, or similar obligations issued or created for the account
of such Person in excess of $1,000,000, (d) all liabilities secured by any Lien
on any property owned by the Company or any Subsidiary even though such Person
has not assumed or otherwise become liable for the payment thereof, (e) the
amount of any Synthetic Lease Obligations of such Person, (f) all Guarantee
Obligations relating to any of the foregoing in excess of $1,000,000, and (g)
for purposes of subsection 8.1(e) only, all obligations of such Person in
respect of Interest Rate Protection Agreements.

 

“Insolvency” or “Insolvent”: at any particular time, a Multiemployer Plan which
is insolvent within the meaning of Section 4245 of ERISA.

 

“Insurance Regulation”: any law, regulation, rule, directive or order applicable
and specific to an insurance company.

 

“Insurance Regulator”: any Person charged with the administration, oversight or
enforcement of any Insurance Regulation.

 

“Insurance Subsidiary”: any Subsidiary of the Company that is now or hereafter
doing business (or required to qualify or to be licensed) under Insurance
Regulations.

 

“Interest Payment Date”: (a) as to any Alternate Base Rate Loan, the last day of
each March, June, September and December, commencing on the first of such days
to occur after Alternate Base Rate Loans are made or Eurodollar Loans are
converted to Alternate Base Rate Loans and the final maturity date of such RFC
Loan, (b) as to any Eurodollar Loan in

 

15

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respect of which the Company has selected an Interest Period of one, two or
three months, the last day of such Interest Period, (c) as to any Eurodollar
Loan in respect of which the Company has selected a longer Interest Period than
the periods described in clause (b), each day that is three months, or a whole
multiple thereof, after the first day of such Interest Period and (d) with
respect to any CP Rate Loan, the related Settlement Date with respect thereto.

 

“Interest Period”: with respect to any Eurodollar Loans:

 

(i) initially, the period commencing on the borrowing or conversion date, as the
case may be, with respect to such Eurodollar Loans and ending one, two, three or
six months thereafter (or, with the consent of all the Banks, nine or twelve
months thereafter), as selected by the Company in its notice of borrowing as
provided in subsection 2.1(b) or its notice of conversion as provided in
subsection 2.6(b), as the case may be; and

 

(ii) thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Eurodollar Loans and ending one, two, three
or six months thereafter (or, with the consent of all the Banks, nine or twelve
months thereafter), as selected by the Company by irrevocable notice to the
Agent not less than three Business Days prior to the last day of the then
current Interest Period with respect to such Eurodollar Loans;

 

provided that, all of the foregoing provisions relating to Interest Periods are
subject to the following:

 

(1) if any Interest Period pertaining to a Eurodollar Loan would otherwise end
on a day which is not a Business Day, such Interest Period shall be extended to
the next succeeding Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business Day;

 

(2) if the Company shall fail to give notice as provided above, the Company
shall be deemed to have selected an Alternate Base Rate Loan to replace the
affected Eurodollar Loan;

 

(3) any Interest Period pertaining to a Eurodollar Loan that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month;

 

(4) any interest period pertaining to a Eurodollar Loan that would otherwise end
after the Termination Date shall end on the Termination Date;

 

(5) the Company shall select Interest Periods so as not to require a payment or
prepayment of any Eurodollar Loan during an Interest Period for such RFC Loan.

 

“Interest Rate Protection Agreement”: any interest rate protection agreement,
interest rate futures contract, interest rate option, interest rate cap or other
interest rate

 

16

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hedge arrangement to or under which the Company or any of its Subsidiaries is a
party or a beneficiary on the date hereof or becomes a party or a beneficiary
after the date hereof.

 

“Jacksonville Facility”: the offices of the Company located at 76 South Laura
Street, Jacksonville, Florida.

 

“Lender Affiliate”: (a) any Affiliate of any Bank, (b) any Person that is
administered or managed by any Bank and that is engaged in making, purchasing,
holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of its business and (c) with respect to any Bank
which is a fund that invests in commercial loans and similar extensions of
credit, any other fund that invests in commercial loans and similar extensions
of credit and is managed or advised by the same investment advisor as such Bank
or by an Affiliate of such Bank or investment advisor.

 

“Leverage Ratio”: at the last day of any full fiscal quarter of the Company, the
ratio of (a) all Indebtedness of the Company and its Subsidiaries outstanding on
such date to (b) Consolidated EBITDA for the period of four fiscal quarters of
the Company ended on such day.

 

“Lexington”: Lexington Parker Capital Company, LLC, a Delaware limited liability
company.

 

“Lexington Credit Agreement”: the Credit Agreement dated as of December 12,
2000, among RFC, Lexington and the other lenders, as amended, restated,
supplemented or otherwise modified.

 

“Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), or preference, priority or other
security agreement or preferential arrangement that has the same practical
effect as any of the foregoing (including, without limitation, any conditional
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing).

 

“Liquidity Agreement”: the Liquidity Agreement, dated as of October 11, 2001, as
amended by Amendment No. 1 thereto, among RFC, the liquidity institutions from
time to time party thereto and JPMorgan Chase Bank as Administrative Agent, as
the same has been and may be further amended, supplemented and modified from
time to time.

 

“Loan Documents”: this Agreement and the Notes.

 

“Margin Stock”: as defined in Regulation U.

 

“Margin Stock Collateral”: all Margin Stock (other than Portfolio Margin Stock)
of the Company and its Subsidiaries by which the RFC Loans are deemed
“indirectly secured” within the meaning of Regulation U.

 

17

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“Material Adverse Effect”: any material adverse effect on (a) the business,
assets, operations or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole, (b) the ability of the Company to perform its
obligations under this Agreement and the Notes or (c) the rights and remedies of
the Banks with respect to the Company and its Subsidiaries under any of the Loan
Documents.

 

“Multiemployer Plan”: a Plan which is a multiemployer plan as defined in Section
4001(a)(3) of ERISA.

 

“Non-U.S. Bank”: as defined in subsection 2.14(b).

 

“Note”: as defined in subsection 2.2(e).

 

“Other Collateral”: all assets of the Company and its Subsidiaries (other than
Margin Stock) by which the RFC Loans are deemed “indirectly secured” within the
meaning of Regulation U.

 

“Participants”: as defined in subsection 9.6(b).

 

“PBGC”: the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA.

 

“Person”: an individual, partnership, corporation, business trust, joint stock
company, trust, unincorporated association, joint venture, Governmental
Authority or other entity of whatever nature.

 

 

“Plan”: at a particular time, any employee benefit plan which is covered by
ERISA and in respect of which the Company or a Control Group Person is (or, if
such plan were terminated at such time, would under Section 4069 of ERISA be
deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

“Portfolio Margin Stock”: Margin Stock held by Insurance Subsidiaries or HMO
Subsidiaries as portfolio investments, as to which the restrictions of Section 6
shall not apply.

 

“Pricing Grid”: the Pricing Grid set forth in Schedule II.

 

“Program Fee Letter”: the letter dated as of October 3, 2001 between the Agent,
the Company and RFC, as the same may from time to time be amended, modified or
otherwise supplemented.

 

“Purchasing Banks”: as defined in subsection 9.6(d).

 

“Reference Banks”: JPMorgan Chase Bank, Citibank, N.A. and Bank of America, N.A.

 

“Register”: as defined in subsection 9.6(e).

 

18

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“Regulation T”: Regulation T of the Board of Governors of the Federal Reserve
System.

 

“Regulation U”: Regulation U of the Board of Governors of the Federal Reserve
System.

 

“Regulation X”: Regulation X of the Board of Governors of the Federal Reserve
System.

 

“Reorganization”: with respect to any Multiemployer Plan, the condition that
such plan is in reorganization within the meaning of such term as used in
Section 4241 of ERISA.

 

“Reportable Event”: any of the events set forth in Section 4043(b) of ERISA,
other than those events as to which the thirty day notice period is waived under
subsections .22, .23, .25, .27 or .28 of PBGC Reg. § 4043.

 

“Required Banks”: (a) during the Facility Period, Banks whose Commitment
Percentages aggregate at least 51% and (b) after the Facility Amount has been
reduced to zero, Banks whose outstanding Bank Funded Loans represent in the
aggregate at least 51% of all outstanding Bank Funded Loans.

 

“Requirement of Law”: as to any Person, the Certificate of Incorporation and
By-Laws or other organizational or governing documents of such Person, and any
law, treaty, rule or regulation or determination of an arbitrator or a court or
other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.

 

“Responsible Officer”: the chief executive officer, the chief operating officer,
the president, any executive or senior vice president or vice president of the
Company, the chief financial officer, treasurer or controller of the Company.

 

“RFC Facility Amount”: means $265,000,000, as such amount may be reduced from
time to time as provided in subsection 2.4(d).

 

“RFC Loans”: all loans made by any of RFC and/or the Banks hereunder.

 

“RFC Obligations”: as defined in subsection 7.1.

 

“Riverview Square”: the office building of the Company located at 201 West Main
Street, Louisville, Kentucky 40202.

 

“Section 2.1(c) Election”: as defined in subsection 2.1(c).

 

“Settlement Date”: for any CP Rate Loan, one or all of the first five Business
Days of the month following the month in which the Borrowing Date for such RFC
Loan occurs as specified in a notice to the Agent from RFC or any other Business
Day agreeable to the Company and RFC.

 

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“Settlement Period”: as defined in the definition of “CP Cost of Funds”.

 

“Significant Subsidiary”: means, at any particular time, any Subsidiary of the
Company that would be a “significant subsidiary” of the Company within the
meaning of Rule 1-02 under Regulation S-X promulgated by the Securities and
Exchange Commission.

 

“Single Employer Plan”: any Plan which is covered by Title IV of ERISA, but
which is not a Multiemployer Plan.

 

“Solvent”: with respect to any Person (or group of Persons) on a particular
date, that on such date (i) the fair value of the property of such Person (or
group of Persons) is greater than the total amount of liabilities, including,
without limitation, contingent liabilities, of such Person (or group of
Persons), (ii) the present fair salable value of the assets of such Person (or
group of Persons) is not less than the amount that will be required to pay the
probable liability of such Person (or group of Persons) on its debts as they
become absolute and matured, (iii) such Person (or group of Persons) is able to
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (iv) such Person
(or group of Persons) does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person’s (or group of Person’s) ability
to pay as such debts and liabilities mature, (v) such Person (or group of
Persons) is not engaged in a business or a transaction, and is not about to
engage in a business or a transaction, for which such Person’s (or group of
Person’s) property (after giving effect to any engagement in such business or
transaction) would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which such Person
(or group of Persons) is engaged and (vi) such Person (or group of Persons) is
solvent under all applicable HMO Regulations and Insurance Regulations. In
computing the amount of contingent liabilities at any time, it is intended that
such liabilities will be computed at the amount which, in light of all the facts
and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.

 

“Subsidiary”: as to any Person, a corporation of which shares of stock having
ordinary voting power (other than stock having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors or
other managers of such corporation are at the time owned, or the management of
which is otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise qualified, all
references to a “Subsidiary” or to “Subsidiaries” in this Agreement shall refer
to a Subsidiary or Subsidiaries of the Company.

 

“Supplemental Fee”: as defined in subsection 2.3(a).

 

“Synthetic Lease”: each arrangement, however described, under which the obligor
accounts for its interest in the property covered thereby under GAAP as lessee
of a lease which is not a capital lease under GAAP and accounts for its interest
in the property covered thereby for Federal income tax purposes as the owner.

 

20

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“Synthetic Lease Interest Components”: with respect to any Person for any
period, the portion of rent paid or payable (without duplication) for such
period under Synthetic Leases for such Person that would be treated as interest
in accordance with Financial Accounting Standards Board Statement No. 13 if such
Synthetic Leases were treated as capital leases under GAAP.

 

“Synthetic Lease Obligation”: as to any Person with respect to any Synthetic
Lease at any time of determination, the amount of the liability of such Person
in respect of such Synthetic Lease that would (if such lease was required to be
classified and accounted for as a capital lease on a balance sheet of such
Person in accordance with GAAP) be required to be capitalized on the balance
sheet of such Person at such time.

 

“Taxes”: as defined in subsection 2.14.

 

“Termination Date”: the date that is 364 days after the Closing Date (or, if
such date is not a Business Day, the next preceding Business Day).

 

“364-Day Facility” means the Second Amended and Restated 364-Day Revolving
Credit Agreement, dated as of October 1, 2003 among the Company, the several
banks and other financial institutions from time to time party thereto and
JPMorgan Chase Bank, as Agent and CAF Loan Agent thereunder, as the same has
been and may be amended, supplemented and modified from time to time.

 

“Transfer Supplement”: a Transfer Supplement, substantially in the form of
Exhibit B.

 

“Type”: as to any RFC Loan, its nature as an Alternate Base Rate Loan,
Eurodollar Loan or CP Rate Loan.

 

“Waterside Building”: the real property located at 101 East Main Street,
Louisville, Kentucky 40202, including the building housing insurance claim
processing operations of the Company.

 

“Waterside Garage”: the parking garage of the Company located at 201 North Brook
Street, Louisville, Kentucky 40202.

 

“Wind-Down Date”: the date on which RFC receives a notice from the Agent on or
after a Wind-Down Event has occurred and is continuing.

 

“Wind-Down Event”: any one or more of the following events:

 

(1) An Event of Default has occurred and is continuing;

 

(2) Any Default or Event of Default has occurred and is continuing under the
364-Day Facility;

 

(3) the Leverage Ratio on the last day of any full fiscal quarter of the Company
is greater than 2.30 to 1.00:

 

21

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(4) the ratio of (i) Consolidated EBIT for any period of four consecutive fiscal
quarters of the Company to (ii) Consolidated Interest Expense during such
period, is less than 4.20 to 1.00:

 

(5) The Company’s long-term unsecured indebtedness is rated less than BBB- by
S&P and less than Baa3 by Moody’s.

 

“Working Day”: any Business Day on which dealings in foreign currencies and
exchange between banks may be carried on in London, England.

 

1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all
terms defined in this Agreement shall have the defined meanings when used in the
Notes or any certificate or other document made or delivered pursuant hereto.

 

(b) As used herein and in the other Loan Documents, and any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms relating
to the Company and its Subsidiaries not defined in subsection 1.1 and accounting
terms partly defined in subsection 1.1, to the extent not defined, shall have
the respective meanings given to them under GAAP.

 

(c) The words “hereof”, “herein” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement, and Section, subsection, Schedule
and Exhibit references are to this Agreement unless otherwise specified.

 

(d) The meanings given to terms defined herein shall be equally applicable to
both the singular and plural forms of such terms.

 

SECTION 2. AMOUNT AND TERMS OF LOANS

 

2.1 RFC Loans. (a) Subject to the terms and conditions hereof, RFC may, in its
sole discretion, make loans to the Company from time to time during the Facility
Period in an aggregate principal amount at any one time outstanding which does
not exceed the RFC Facility Amount. Subject to the terms and conditions hereof,
the Banks shall make loans pursuant to a Section 2.1(c) Election; provided,
that, after giving effect thereto, the aggregate sum of RFC Loans made by the
Banks pursuant to Section 2.1(c) Elections would not exceed the Facility Amount
less the RFC Facility Amount as reduced pursuant to subsection 2.4(d); provided,
further, that, after giving effect thereto, the sum of the outstanding principal
amount of CP Rate Loans made by RFC and any RFC Loans purchased by the Banks
under the Liquidity Agreement shall not exceed the RFC Facility Amount.
Notwithstanding anything herein, the aggregate principal amount of outstanding
RFC Loans shall not exceed the Facility Amount. During the Facility Period the
Company may use the Facility Amount by borrowing, prepaying the RFC Loans in
whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof. The RFC Loans held by RFC will be CP Rate Loans. RFC Loans
purchased from RFC by the Banks pursuant to the Liquidity Agreement, may be (i)
Eurodollar Loans, (ii) Alternate Base Rate Loans or (iii) a combination thereof,
as determined by the Company and notified to

 

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the Agent in accordance with subsection 2.6. Eurodollar Loans shall be
maintained by each Bank at its Eurodollar Lending Office, and Alternate Base
Rate Loans shall be maintained by each Bank at its Domestic Lending Office.
Notwithstanding anything to the contrary set forth herein, nothing in this
Agreement shall be construed as a commitment by RFC to make RFC Loans to the
Company.

 

(b) The Company may request a borrowing from RFC hereunder during the Facility
Period on any Business Day other than an Excluded Day; provided that the Company
shall give RFC and the Agent irrevocable notice (which notice must be received
by RFC prior to 3:00 P.M., New York City time one Business Day prior to the
requested Borrowing Date) specifying (A) the amount to be borrowed and (B) the
requested Borrowing Date (which shall not be an Excluded Day); provided, that if
such notice is not received prior to such deadline, RFC will use its best
efforts given prevailing market conditions to fund the CP Rate Loan on the
requested Borrowing Date; provided, further, that at no time shall the sum of
any requested borrowing or borrowings pursuant to this subsection 2.1(b) and
subsection 2.1(c) exceed the Available Facility Amount. Each borrowing hereunder
shall be in an aggregate principal amount equal to $10,000,000 or a whole
multiple of $1,000,000 in excess thereof. RFC shall notify the Company and the
Agent by 11:30 A.M., New York City time, on the requested Borrowing Date if it
does not intend to make the requested RFC Loan. If RFC decides to make the
requested RFC Loan, RFC will make the amount thereof available to the Agent for
the account of the Company at the office of the Agent set forth in subsection
9.2 prior to the close of business, New York City time, on the Borrowing Date
requested by the Company in funds immediately available to the Agent. The
proceeds of such RFC Loan will then be promptly made available to the Company by
the Agent at such office of the Agent by crediting the account of the Company on
the books of such office with the aggregate of the amounts made available to the
Agent by RFC.

 

(c) The Company may elect to make a borrowing (such election, a “Section 2.1(c)
Election”) from the Banks hereunder during the Facility Period on any Working
Day if the borrowing is of Eurodollar Loans or on any Business Day if the
borrowing is of Alternate Base Rate Loans; provided that the Company shall give
the Agent irrevocable notice (which notice must be received by the Agent (i)
prior to 11:30 A.M., New York City time three Working Days prior to the
requested Borrowing Date, in the case of Eurodollar Loans, and (ii) prior to
12:00 P.M., New York City time, on the requested Borrowing Date, in the case of
Alternate Base Rate Loans), specifying (A) the amount to be borrowed, (B) the
requested Borrowing Date, (C) whether such Loans are to be Eurodollar Loans,
Alternate Base Rate Loans, or a combination thereof, and (D) if the borrowing is
to be entirely or partly of Eurodollar Loans, the length of the Interest Period
therefor; provided, further, that at no time shall the sum of any requested
borrowing or borrowings pursuant to subsection 2.1(b) and this subsection 2.1(c)
exceed the Available Facility Amount. Each borrowing hereunder shall be in an
aggregate principal amount equal to $10,000,000 or a whole multiple of
$1,000,000 in excess thereof. Upon receipt of such notice from the Company, the
Agent shall promptly notify each Bank thereof. Each Bank will make the amount of
its pro rata share of each borrowing pursuant to a Section 2.1(c) Election
available to the Agent for the account of the Company at the office of the Agent
set forth in subsection 9.2 prior to the close of business, New York City time,
on such date in funds immediately available to the Agent. The proceeds of such
RFC Loan will then be promptly made available to the Company by the Agent at
such office of the Agent by crediting the account

 

23

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of the Company on the books of such office with the aggregate of the amounts
made available to the Agent by Banks.

 

2.2 Repayment of RFC Loans; Evidence of Debt. (a) The Company hereby
unconditionally promises to pay to RFC or the Agent for the account of the
Banks, as the case may be, the then unpaid principal amount of each RFC Loan,
except CP Rate Loans, on the Termination Date (or such earlier date on which the
RFC Loans become due and payable pursuant hereto). The Company hereby further
agrees to pay interest on the unpaid principal amount of the RFC Loans from time
to time outstanding from the date hereof until payment in full thereof at the
rates per annum, and on the dates, set forth in subsection 2.7. The unpaid
principal amount of each CP Rate Loan will be due and payable on the applicable
Settlement Dates and the Termination Date.

 

(b) Each of RFC and each Bank shall maintain for its own account in accordance
with its usual practice an account or accounts evidencing indebtedness of the
Company to RFC or such Bank, as the case may be, resulting from each RFC Loan
from time to time held by it, including the amounts of principal and interest
payable and paid to RFC or to such Bank from time to time under this Agreement.

 

(c) The Agent shall maintain the Register pursuant to subsection 9.6(d), and a
subaccount therein for RFC and each Bank, in which shall be recorded (i) (A) the
amount of each RFC Loan made hereunder, the Type thereof and each Interest
Period, if applicable, thereto, (ii) the amount of any principal or interest due
and payable or to become due and payable from the Company to RFC and to each
Bank hereunder and (iii) both the amount of any sum received by the Agent
hereunder from the Company and RFC’s and each Bank’s share thereof.

 

(d) The entries made in the Register and the accounts of RFC maintained pursuant
to subsection 2.2(b) and (c) shall, to the extent permitted by applicable law,
be primafacie evidence of the existence and amounts of the obligations of the
Company therein recorded; provided, however, that the failure of RFC, any Bank
or the Agent to maintain the Register or any such account, or any error therein,
shall not in any manner affect the obligation of the Company to repay (with
applicable interest) the RFC Loans in accordance with the terms of this
Agreement.

 

(e) The Company agrees that, upon the request to the Agent by any Bank that
holds any RFC Loans after the Facility Period has expired, the Company will
execute and deliver to such Bank a promissory note of the Company evidencing
such loans substantially in the form of Exhibit A with appropriate insertions as
to payee, date and principal amount (a “Note”).

 

2.3 Fees. (a) If a Wind-Down Event occurs after the Cross-Over Funding Date, the
Company shall pay to the Agent, for the account of the Banks, a supplemental fee
calculated as set forth below; provided that such fee shall not be payable if
the Company has terminated this Agreement and repaid all outstanding RFC Loans
and all other amounts owing hereunder prior to the occurrence of such Wind-Down
Event. The supplemental fee is the sum, for each day from the Cross-Over Funding
Date to but excluding the date on which such Wind-Down Event occurs, of an
amount equal to the product of the outstanding face amount of commercial paper
allocable by the CP Issuer to the funding of the RFC Loans on such day and

 

24

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the margin applicable to Eurodollar Loans hereunder on such day divided by 360.
“Cross-Over Funding Date” is the first day on or after the Closing Date on which
the Company’s long-term unsecured indebtedness is rated less than BBB- by S&P or
less than Baa3 by Moody’s. Such fee shall be payable on the fifth Business Day
following the date of such Wind-Down Event.

 

(b) The Company agrees to pay to the Agent the other fees in the amounts, and on
the dates, agreed to by the Company and the Agent in the Program Fee Letter. The
Agent will distribute to the Banks their respective portions of upfront fees
paid by the Company to the Agent, as agreed between the Agent and each Bank.

 

2.4 Termination or Changes to Facility Amount or RFC Facility Amount.

 

(a) The Company shall have the right, upon not less than five Business Days’
notice to the Agent and to RFC, from time to time, to reduce by an equal amount
each of the Facility Amount and the RFC Facility Amount, provided that no such
reduction shall be effective if, after giving effect thereto and to any
prepayments of the RFC Loans made on the effective date thereof (including by
way of converting such RFC Loans to Loans under the 364-Day Facility), the then
outstanding principal amount of the CP Rate Loans and the outstanding principal
amount of any RFC Loans purchased by the Banks under the Liquidity Agreement
would exceed the RFC Facility Amount or the outstanding principal amount of the
RFC Loans would exceed the Facility Amount. Any such reduction shall be in an
amount of $10,000,000 or a whole multiple of $1,000,000 in excess thereof, and
shall reduce permanently the amount of the Facility Amount and the RFC Facility
Amount.

 

(b) The Facility Amount shall be reduced to zero automatically on the date
specified in subsection 2.5(b).

 

(c) This Agreement shall terminate on the date on which the Facility Amount has
been reduced to zero and all amounts owing hereunder to RFC, the Banks and the
Agent have been paid in full.

 

(d) The RFC Facility Amount shall be decreased by RFC Loans made by the Banks
pursuant to a Section 2.1(c) Election and increased by the repayment of any such
loans, in each case, upon written notice from the Administrative Agent to RFC
(which notice the Administrative Agent shall promptly provide to RFC upon such
event); provided, that no such reduction shall be effective if, after giving
effect thereto and to any prepayments of the RFC Loans made on the effective
date thereof (including by way of converting such RFC Loans to Loans under the
364-Day Facility), the then outstanding principal amount of the CP Rate Loans
and the outstanding principal amount of any RFC Loans purchased by the Banks
under the Liquidity Agreement would exceed the RFC Facility Amount or the
outstanding principal amount of the RFC Loans would exceed the Facility Amount.

 

2.5 Prepayments.

 

(a) The Company may at any time and from time to time, prepay the RFC Loans, in
whole or in part, without premium or penalty (subject to the provisions of
subsection 2.15), upon at least three Business Days’ in the case of Eurodollar
Loans, upon at least two Business Days’ in the case of CP Rate Loans and upon at
least one Business Day in the case of

 

25

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Alternate Base Rate Loans, irrevocable notice to the Agent and RFC specifying
the date and amount of prepayment and whether the prepayment is of CP Rate
Loans, Eurodollar Loans or Alternate Base Rate Loans or a combination thereof,
and if of a combination thereof, the amount of prepayment allocable to each.
Upon receipt of such notice the Agent shall promptly notify RFC and, if
applicable, each Bank thereof. If such notice is given, the payment amount
specified in such notice shall be due and payable on the date specified therein,
together with accrued interest to such date and amounts that are owing under
subsection 2.15, on the amount prepaid. Partial prepayments shall be in an
aggregate principal amount of $5,000,000, or a whole multiple of $1,000,000 in
excess thereof, and may only be made if, after giving effect thereto, subsection
2.6(d) shall not have been contravened.

 

(b) The Company shall prepay all outstanding RFC Loans, together with all
accrued interest thereon and any amounts due pursuant to subsection 2.15 on the
date that is 30 days after the date on which a Wind-Down Event occurs.

 

2.6 Conversion Options; Minimum Amount of RFC Loans.

 

(a) CP Rate Loans may not be converted into RFC Loans of another Type except in
accordance with this subsection 2.6(a), it being understood that only RFC Loans
acquired by the Banks under the Liquidity Agreement may be maintained as
Eurodollar Loans or Alternate Base Rate Loans hereunder. Immediately upon the
consummation of a Purchase (as defined in and pursuant to the Liquidity
Agreement) by a Bank, the amount thereof (other than the amount of such Purchase
attributable to Yield (as defined in the Liquidity Agreement)), shall be
automatically converted (without regard to any conditions precedent thereto)
into an Alternate Base Rate Loan of such Bank. Any portion of such Purchase
constituting Yield shall be due and payable to the Banks as accrued interest on
the next Settlement Date applicable to the related CP Rate Loan purchased by
such Bank and shall accrue interest from the date of such Purchase until paid in
full at the rate applicable to Alternate Base Rate Loans.

 

(b) The Company may elect from time to time to convert Eurodollar Loans to
Alternate Base Rate Loans by giving the Agent at least two Business Days’ prior
irrevocable notice of such election (given before 10:00 A.M., New York City
time, on the date on which such notice is required). The Company may elect from
time to time to convert Alternate Base Rate Loans to Eurodollar Loans by giving
the Agent at least three Working Days’ prior irrevocable notice of such election
(given before 11:30 A.M., New York City time, on the date on which such notice
is required). Upon receipt of such notice, the Agent shall promptly notify each
Bank thereof. Promptly following the date on which such conversion is being made
each Bank shall take such action as is necessary to transfer its portion of such
RFC Loans to its Domestic Lending Office or its Eurodollar Lending Office, as
applicable. All or any part of outstanding Eurodollar Loans and Alternate Base
Rate Loans may be converted as provided herein, provided that, unless the
Required Banks otherwise agree, (i) no RFC Loan may be converted into a
Eurodollar Loan when any Event of Default has occurred and is continuing, (ii)
partial conversions shall be in an aggregate principal amount of $5,000,000 or a
whole multiple thereof, and (iii) any such conversion may only be made if, after
giving effect thereto, subsection 2.6(d) shall not have been contravened.

 

26

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(c) Any Eurodollar Loans may be continued as such upon the expiration of an
Interest Period with respect thereto by compliance by the Company with the
notice provisions contained in subsection 2.6(b); provided that, unless the
Required Banks otherwise agree, no Eurodollar Loan may be continued as such when
any Event of Default has occurred and is continuing, but shall be automatically
converted to an Alternate Base Rate Loan on the last day of the then current
Interest Period with respect thereto. The Agent shall notify the Banks promptly
that such automatic conversion contemplated by this subsection 2.6(c) will
occur.

 

(d) All borrowings, conversions, payments, prepayments and selection of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of the RFC Loans comprising any Eurodollar Tranche shall not be less than
$10,000,000. At no time shall there be more than 10 Eurodollar Tranches.

 

2.7 Interest Rate and Payment Dates for RFC Loans. (a) The Eurodollar Loans
comprising each Eurodollar Tranche shall bear interest for each day during each
Interest Period with respect thereto on the unpaid principal amount thereof at a
rate per annum equal to the Eurodollar Rate plus the Applicable Margin.

 

(b) Alternate Base Rate Loans shall bear interest for each day from and
including the date thereof on the unpaid principal amount thereof at a rate per
annum equal to the Alternate Base Rate plus the Applicable Margin.

 

(c) CP Rate Loans shall bear interest for each Settlement Period relating
thereto at the CP Rate applicable to such Settlement Period.

 

(d) If all or a portion of the (i) principal amount of any RFC Loans, (ii) any
interest payable thereon or (iii) any fee or other amount payable hereunder
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum which is
2% above the Alternate Base Rate, and any overdue interest or other amount
payable hereunder shall bear interest at a rate per annum which is 2% above the
Alternate Base Rate, in each case from the date of such non-payment until paid
in full (after as well as before judgment). If all or a portion of the principal
amount of any RFC Loans shall not be paid when due (whether at stated maturity,
by acceleration or otherwise), each Eurodollar Loan shall, unless the Required
Banks otherwise agree, be converted to an Alternate Base Rate Loan at the end of
the last Interest Period with respect thereto.

 

(e) Interest shall be payable in arrears on each Interest Payment Date.

 

2.8 Computation of Interest and Fees. (a) Interest in respect of Alternate Base
Rate Loans shall be calculated on the basis of a (i) 365-day (or 366-day, as the
case may be) year for the actual days elapsed when such Alternate Base Rate
Loans are based on the Prime Rate, and (ii) a 360-day year for the actual days
elapsed when based on the Base CD Rate or the Federal Funds Effective Rate. All
other interest and fees payable hereunder shall be calculated on the basis of a
360-day year for the actual days elapsed. The Agent shall as soon as practicable
notify the Company and the Banks of each determination of a Eurodollar Rate. Any
change in the interest rate on a RFC Loan resulting from a change in the
Alternate Base Rate or the

 

27

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Applicable Margin or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change in the
Alternate Base Rate is announced, such Applicable Margin changes as provided
herein or such change in the Eurocurrency Reserve Requirements shall become
effective, as the case may be. The Agent shall as soon as practicable notify the
Company and the Banks of the effective date and the amount of each such change.

 

(b) Each determination of an interest rate by the Agent pursuant to any
provision of this Agreement or of the CP Rate by RFC shall be conclusive and
binding on the Company and the Banks in the absence of manifest error. The Agent
shall, at the request of the Company, deliver to the Company a statement showing
the quotations used by the Agent in determining any interest rate pursuant to
subsection 2.7(a).

 

(c) If any Reference Bank’s Commitment shall terminate (otherwise than on
termination of all the Commitments), or its RFC Loans shall be assigned for any
reason whatsoever, such Reference Bank shall thereupon cease to be a Reference
Bank, and if, as a result of the foregoing, there shall only be one Reference
Bank remaining, then the Agent (after consultation with the Company and the
Banks) shall, by notice to the Company and the Banks, designate another Bank as
a Reference Bank so that there shall at all times be at least two Reference
Banks.

 

(d) Each Reference Bank shall use its best efforts to furnish quotations of
rates to the Agent as contemplated hereby. If any of the Reference Banks shall
be unable or otherwise fails to supply such rates to the Agent upon its request,
the rate of interest shall be determined on the basis of the quotations of the
remaining Reference Banks or Reference Bank.

 

2.9 Inability to Determine Interest Rate. In the event that:

 

(i) the Agent shall have determined in its reasonable judgment (which
determination shall be conclusive and binding upon the Company) that, by reason
of circumstances affecting the interbank eurodollar market generally, adequate
and reasonable means do not exist for ascertaining the Eurodollar Rate for any
requested Interest Period;

 

(ii) only one of the Reference Banks is able to obtain bids for its Dollar
deposits for such Interest Period in the manner contemplated by the term
“Eurodollar Rate”; or

 

(iii) the Agent shall have received notice prior to the first day of such
Interest Period from Banks constituting the Required Banks that the interest
rate determined pursuant to subsection 2.7(a) for such Interest Period does not
accurately reflect the cost to such Banks (as conclusively certified by such
Banks) of making or maintaining their affected RFC Loans during such Interest
Period;

 

with respect to (A) proposed RFC Loans that the Company has requested the Banks
make as Eurodollar Loans, (B) Eurodollar Loans that will result from the
requested conversion of Alternate Base Rate Loans into Eurodollar Loans or (C)
the continuation of Eurodollar Loans beyond the expiration of the then current
Interest Period with respect thereto, the Agent shall forthwith give facsimile
or telephonic notice of such determination to the Company and the

 

28

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Banks at least one day prior to, as the case may be, the requested Borrowing
Date for such Eurodollar Loans, the conversion date of such Eurodollar Loans or
the last day of such Interest Period. If such notice is given (x) any requested
Eurodollar Loans shall be made as Alternate Base Rate Loans, (y) any Alternate
Base Rate Loans that were to have been converted to Eurodollar Loans shall be
continued as Alternate Base Rate Loans and (z) any outstanding Eurodollar Loans
shall be converted, on the last day of the then current Interest Period with
respect thereto, to Alternate Base Rate Loans. Until the Agent has withdrawn
such notice, the Company shall not have the right to convert Alternate Base Rate
Loans to Eurodollar Loans. The Agent shall withdraw such notice upon its
determination that the event or events which gave rise to such notice no longer
exist.

 

2.10 Pro Rata Borrowings and Payments. (a) Each borrowing by the Company of RFC
Loans pursuant to subsection 2.1(c) shall be made ratably from the Banks in
accordance with their Commitment Percentages.

 

(b) If the Company pays less than the amount of interest due hereunder on any
date, the Agent shall distribute such interest to RFC and each Bank based on the
ratio that the amount of such interest then due and owing to RFC or such Bank
bears to the amount then due and owing to RFC and all Banks.

 

(c) Each payment (including each prepayment) by the Company on account of
principal of the RFC Loans shall be made first to the payment in full of RFC
Loans held by RFC and then to the payment in full of RFC Loans held by the
Banks, pro rata according to the respective outstanding principal amounts of
such RFC Loans then held by the Banks.

 

(d) All payments (including prepayments) to be made by the Company on account of
principal, interest and fees shall be made without set-off or counterclaim and
shall be made to RFC or the Agent, for the account the Banks, as the case may
be, at RFC’s or the Agent’s office set forth in subsection 9.2, as applicable,
in lawful money of the United States of America and in immediately available
funds. The Agent shall distribute any such payments it receives to the Banks
promptly upon receipt in like funds as received. If any payment hereunder
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day, and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension. Any amount received by RFC later than 11:00 A.M., New
York City time, on a Business Day will be deemed to have been received on the
following Business Day and such amount shall continue to accrue interest at the
applicable rate until the next Business Day.

 

(e) Unless the Agent shall have been notified in writing by any Bank prior to a
Borrowing Date that such Bank will not make the amount which would constitute
its Commitment Percentage of the borrowing of RFC Loans pursuant to subsection
2.1(c) on such date available to the Agent, the Agent may assume that such Bank
has made such amount available to the Agent on such Borrowing Date, and the
Agent may, in reliance upon such assumption, make available to the Company a
corresponding amount. If such amount is made available to the Agent on a date
after such Borrowing Date, such Bank shall pay to the Agent on demand an amount
equal to the product of (i) the daily average Federal Funds Effective Rate
during such period as quoted by the Agent, times (ii) the amount of such Bank’s
Commitment

 

29

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Percentage of such borrowing, times (iii) a fraction the numerator of which is
the number of days that elapse from and including such Borrowing Date to the
date on which such Bank’s Commitment Percentage of such borrowing shall have
become immediately available to the Agent and the denominator of which is 360. A
certificate of the Agent submitted to any Bank with respect to any amounts owing
under this subsection 2.10(e) shall be conclusive, absent manifest error. If
such Bank’s Commitment Percentage of such borrowing is not in fact made
available to the Agent by such Bank within three Business Days of such Borrowing
Date, the Agent shall be entitled to recover such amount with interest thereon
at the rate per annum applicable to Alternate Base Rate Loans hereunder, on
demand, from the Company.

 

2.11 Illegality. Notwithstanding any other provisions herein, if after the date
hereof the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Bank to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
Bank shall, within 30 Working Days after it becomes aware of such fact, notify
the Company, through the Agent, of such fact, (b) the commitment of such Bank
hereunder to make Eurodollar Loans or to convert Alternate Base Rate Loans to
Eurodollar Loans shall forthwith be cancelled and (c) such Bank’s RFC Loans then
outstanding as Eurodollar Loans, if any, shall be converted automatically to
Alternate Base Rate Loans on the respective last days of the then current
Interest Periods for such RFC Loans or within such earlier period as required by
law. Each Bank shall take such action as may be reasonably available to it
without material legal or financial disadvantage (including changing its
Eurodollar Lending Office) to prevent the adoption of or any change in any such
Requirement of Law from becoming applicable to it.

 

2.12 Requirements of Law. (a) If after the date hereof the adoption of or any
change in any Requirement of Law or in the interpretation or application thereof
or compliance by any Bank with any request or directive (whether or not having
the force of law) after the date hereof from any central bank or other
Governmental Authority:

 

(i) shall subject any Bank to any tax of any kind whatsoever (other than a
withholding tax) with respect to this Agreement, any Note, or any Eurodollar
Loans held by it, or change the basis of taxation of payments to such Bank of
principal, facility fee, interest or any other amount payable hereunder in
respect of RFC Loans (except for changes in the rate of tax on the overall net
income of such Bank);

 

(ii) shall impose, modify or hold applicable any reserve, special deposit,
compulsory loan or similar requirement against assets held by, or deposits or
other liabilities in or for the account of, advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office of such
Bank which are not otherwise included in the determination of the Eurodollar
Rate hereunder; or

 

(iii) shall impose on such Bank any other condition;

 

and the result of any of the foregoing is to increase the cost to such Bank, by
any amount which such Bank reasonably deems to be material, of making, renewing
or maintaining advances or extensions of credit or to reduce any amount
receivable hereunder, in each case, in respect thereof, then, in any such case,
the Company shall promptly pay such Bank, upon its demand,

 

30

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any additional amounts necessary to compensate such Bank for such additional
cost or reduced amount receivable; provided, however, that notwithstanding
anything contained in this subsection 2.12(a) to the contrary, such Bank shall
not be entitled to receive any amounts pursuant to this subsection 2.12(a) that
it is also entitled to pursuant to subsection 2.14(a). If a Bank becomes
entitled to claim any additional amounts pursuant to this subsection 2.12(a), it
shall, within 30 Business Days after it becomes aware of such fact, notify the
Company, through the Agent, of the event by reason of which it has become so
entitled. A certificate as to any additional amounts payable pursuant to the
foregoing sentence submitted by such Bank, through the Agent, to the Company
shall be conclusive in the absence of manifest error. Each Bank shall take such
action as may be reasonably available to it without legal or financial
disadvantage (including changing its Eurodollar Lending Office) to prevent any
such Requirement of Law or change from becoming applicable to it. This covenant
shall survive the termination of this Agreement and payment of the outstanding
RFC Loans and all other amounts payable hereunder.

 

(b) In the event that after the date hereof a Bank is required to maintain
reserves of the type contemplated by the definition of “Eurocurrency Reserve
Requirements”, such Bank may require the Company to pay, promptly after
receiving notice of the amount due, additional interest on the related
Eurodollar Loan of such Bank at a rate per annum determined by such Bank up to
but not exceeding the excess of (i) (A) the applicable Eurodollar Rate divided
by (B) one minus the Eurocurrency Reserve Requirements over (ii) the applicable
Eurodollar Rate. Any Bank wishing to require payment of any such additional
interest on account of any of its Eurodollar Loans shall notify the Company no
more than 30 Working Days after each date on which interest is payable on such
Eurodollar Loan of the amount then due it under this subsection 2.12(b), in
which case such additional interest on such Eurodollar Loan shall be payable to
such Bank at the place indicated in such notice. Each such notification shall be
accompanied by such information as the Company may reasonably request.

 

2.13 Capital Adequacy. If any Bank shall have determined that after the date
hereof the adoption of or any change in any Requirement of Law regarding capital
adequacy or in the interpretation or application thereof or compliance by such
Bank or any corporation controlling such Bank with any request or directive
after the date hereof regarding capital adequacy (whether or not having the
force of law) from any central bank or Governmental Authority, does or shall
have the effect of reducing the rate of return on such Bank’s or such
corporation’s capital as a consequence of its obligations hereunder or its
obligations under the Liquidity Agreement to a level below that which such Bank
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Bank’s or such corporation’s policies
with respect to capital adequacy) by an amount which is reasonably deemed by
such Bank to be material, then from time to time, promptly after submission by
such Bank, through the Agent, to the Company of a written request therefor (such
request shall include details reasonably sufficient to establish the basis for
such additional amounts payable and shall be submitted to the Company within 30
Working Days after it becomes aware of such fact), the Company shall promptly
pay to such Bank such additional amount or amounts as will compensate such Bank
for such reduction. The agreements in this subsection 2.13 shall survive the
termination of this Agreement, the Liquidity Agreement and payment of the RFC
Loans and the Notes and all other amounts payable hereunder.

 

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2.14 Taxes. (a) All payments made by the Company under this Agreement shall be
made free and clear of, and without reduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority excluding, in the
case of the Agent, RFC (and its beneficial owners) and each Bank, net income and
franchise taxes imposed on the Agent, RFC (or its beneficial owners) or such
Bank by the jurisdiction under the laws of which the Agent, RFC (or its
beneficial owners) or such Bank is organized or any political subdivision or
taxing authority thereof or therein, or by any jurisdiction in which such Bank’s
Domestic Lending Office or Eurodollar Lending Office, as the case may be, is
located or any political subdivision or taxing authority thereof or therein (all
such non-excluded taxes, levies, imposts, deductions, charges or withholdings
being hereinafter called “Taxes”). If any Taxes are required to be withheld from
any amounts payable to the Agent, RFC or any Bank hereunder or under the Notes,
the amounts so payable to the Agent, RFC or such Bank shall be increased to the
extent necessary to yield to the Agent, RFC or such Bank (after payment of all
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement and the Notes. Whenever any Taxes are
payable by the Company, as promptly as possible thereafter, the Company shall
send to the Agent for its own account or for the account of RFC or such Bank, as
the case may be, a certified copy of any original official receipt that is
received by the Company showing payment thereof (or, if no official receipt is
received by the Company, a statement of the Company indicating payment thereof).
If the Company fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Agent the required receipts or other required
documentary evidence, the Company shall indemnify the Agent, RFC and the Banks
for any incremental taxes, interest or penalties that may become payable by the
Agent, RFC or any Bank as a result of any such failure, except to the extent
such failure is attributable to a failure by a Non-U.S. Bank to comply with the
form delivery and notice requirements of paragraph (b) below or a breach of the
representations contained in paragraph (d) below.

 

(b) Each of the Agent, RFC and each Bank (or Transferee) that, is not a citizen
or resident of the United States of America, a corporation, partnership or other
entity created or organized in or under the laws of the United States of America
(or any jurisdiction thereof), or any estate or trust that is subject to federal
income taxation regardless of the source of its income (in each case, a
“Non-U.S. Bank”) shall deliver to the Company and the Agent (or, in the case of
a Participant, to the Bank from which the related participation shall have been
purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or
Form W-8ECI, or any subsequent versions thereof or successors thereto, properly
completed and duly executed by such Non-U.S. Bank claiming complete exemption
from U.S. federal withholding tax on all payments by the Company under this
Agreement. Such forms shall be delivered by each Non-U.S. Bank on or before the
date it becomes a party to this Agreement (or, in the case of any Participant,
on or before the date such Participant purchases the related participation). In
addition, each Non-U.S. Bank shall deliver such forms promptly upon the
obsolescence or invalidity of any form previously delivered by such Non-U.S.
Bank. Each Non-U.S. Bank shall promptly notify the Company at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Company (or any other form of certification adopted
by the U.S. taxing authorities for such purpose). Notwithstanding any other
provision of this paragraph, a Non-U.S. Bank shall not be required to deliver
any form pursuant to this paragraph that such Non-U.S. Bank is not legally able
to deliver, provided, however, that in the

 

32

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event that the failure to be able to deliver such form is not attributable to a
change in law, the Company shall be relieved of the obligation to make
additional payments under subsection 2.14(a) above.

 

(c) The agreements in subsection 2.14 shall survive the termination of this
Agreement and the payment of the RFC Loans and all other amounts payable
hereunder.

 

(d) RFC represents that it is solely owned by a domestic partnership within the
meaning of Code Section 7701(a)(30)(B) as of the Closing Date, and that it will
remain solely owned by a domestic partnership within the meaning of Code Section
7701(a)(30)(B) or a domestic corporation within the meaning of Code Section
7701(a)(30)(C).

 

2.15 Indemnity. The Company agrees to indemnify RFC and each Bank and to hold
RFC and each Bank harmless from any loss or expense (other than any loss of
anticipated margin or profit) which RFC or such Bank may sustain or incur as a
consequence of (a) default by the Company in payment when due of the principal
amount of or interest on CP Rate Loans by RFC or any Eurodollar Loans of such
Bank, (b) default by the Company in making a borrowing or conversion after the
Company has given a notice of borrowing in accordance with subsection 2.1(b) or
a notice of continuation or conversion pursuant to subsection 2.6, (c) default
by the Company in making any prepayment after the Company has given a notice in
accordance with subsection 2.6 or (d) the making of (i) a prepayment of a
Eurodollar Loan on a day which is not the last day of an Interest Period with
respect and/or (ii) a prepayment of principal of a CP Rate Loan in an amount
that is excess of the principal amount of Allocated Commercial Paper that is
maturing on such prepayment date (“CP Excess Amount”), including, without
limitation, in respect of Eurodollar Loans, any such loss or expense arising
from the reemployment of funds obtained by it to maintain its Eurodollar Loans
hereunder or from fees payable to terminate the deposits from which such funds
were obtained and in respect of CP Rate Loans, CP Breakage Costs. Any Bank
claiming any amount under this subsection 2.15 shall provide calculations, in
reasonable detail, of the amount of its loss or expense. This covenant shall
survive termination of this Agreement and payment of the outstanding RFC Loans
and all other amounts payable hereunder.

 

2.16 Application of Proceeds of RFC Loans. Subject to the provisions of the
following sentence, the Company may use the proceeds of the RFC Loans for any
lawful general corporate purpose, including acquisitions. The Company will not,
directly or indirectly, apply any part of the proceeds of any such RFC Loan for
the purpose of “purchasing” or “carrying” any Margin Stock within the respective
meanings of each of the quoted terms under Regulation U, or to refund any
indebtedness incurred for such purpose, provided that the Company may use the
proceeds of RFC Loans for such purposes, if such usage does not violate
Regulation U as now and from time to time hereafter in effect.

 

2.17 Notice of Certain Circumstances; Assignment of Commitments Under Certain
Circumstances. (a) Any Bank claiming any additional amounts payable pursuant to
subsections 2.12, 2.13 or 2.14 or exercising its rights under subsection 2.11,
shall, in accordance with the respective provisions thereof, provide notice to
the Company and the Agent. Such notice to the Company and the Agent shall
include details reasonably sufficient to establish the basis for such additional
amounts payable or the rights to be exercised by the Bank.

 

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(b) Any Bank claiming any additional amounts payable pursuant to subsections
2.12, 2.13 or 2.14 or exercising its rights under subsection 2.11, shall use
reasonable efforts (consistent with legal and regulatory restrictions) to file
any certificate or document requested by the Company or to change the
jurisdiction of its applicable lending office if the making of such filing or
change would avoid the need for or reduce the amount of any such additional
amounts which may thereafter accrue or avoid the circumstances giving rise to
such exercise and would not, in the reasonable determination of such Bank, be
otherwise disadvantageous in any material respect to such Bank.

 

(c) In the event that the Company shall be required to make any additional
payments to any Bank pursuant to subsections 2.12, 2.13 or 2.14 or any Bank
shall exercise its rights under subsection 2.11, the Company shall have the
right at its own expense, upon notice to such Bank and the Agent, to require
such Bank to transfer and to assign without recourse (in accordance with and
subject to the terms of subsection 10.6) all its interest, rights and
obligations under this Agreement to another financial institution (including any
Bank) acceptable to the Agent and RFC (which approval shall not be unreasonably
withheld) which shall assume such obligations; provided that (i) no such
assignment shall conflict with any Requirement of Law and (ii) such assuming
financial institution shall pay to such Bank in immediately available funds on
the date of such assignment the outstanding principal amount of the RFC Loans
held by such Bank together with accrued interest thereon and all other amounts
accrued for its account or owed to it hereunder, including, but not limited to
additional amounts payable under subsections 2.11, 2.12, 2.13 or 2.14.

 

2.18 Regulation U. (a) If at any time the Company shall use the proceeds of any
RFC Loans for the purpose of “purchasing” or “carrying” any Margin Stock within
the respective meanings of each of the quoted terms under Regulation U, or to
refund any indebtedness incurred for such purpose, and, after giving effect to
such purchase or refund, more than 25% of the value (determined in accordance
with Regulation U) of the assets subject to the restrictions of Section 7 would
be represented by Margin Stock, the Company shall give notice thereof to the
Agent, RFC and the Banks, and thereafter the RFC Loans made by each Bank shall
at all times be treated for purposes of Regulation U as two separate extensions
of credit (the “A Credit” and the “B Credit” of such Bank and, collectively, the
“A Credits” and the “B Credits”), as follows:

 

(i) the aggregate amount of the A Credit of RFC or such Bank shall be an amount
equal to such RFC or such Bank’s pro rata share (based on the amount of its
Commitment Percentage) of the maximum loan value (as determined in accordance
with Regulation U), of all Margin Stock Collateral; and

 

(ii) the aggregate amount of the B Credit of RFC or such Bank shall be an amount
equal to RFC or such Bank’s pro rata share (based on the amount of its
Commitment Percentage) of all RFC Loans outstanding hereunder minus such Bank’s
A Credit.

 

In the event that any Margin Stock Collateral is acquired or sold, the amount of
the A Credit of such Bank shall be adjusted (if necessary), to the extent
necessary by prepayment, to an amount equal to such Bank’s pro rata share (based
on the amount of its Commitment Percentage) of the

 

34

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maximum loan value (determined in accordance with Regulation U) as of the date
of such acquisition or sale) of the Margin Stock Collateral immediately after
giving effect to such acquisition or sale. Nothing contained in this subsection
2.18 shall be deemed to permit any sale of Margin Stock Collateral in violation
of any other provisions of this Agreement.

 

(b) Each Bank will maintain its records to identify the A Credit of such Bank
and the B Credit of such Bank, and, solely for the purposes of complying with
Regulation U, the A and B Credits shall be treated as separate extensions of
credit. Each Bank hereby represents and warrants that the loan value of the
Other Collateral is sufficient for such Bank to lend its pro rata share of the B
Credit.

 

(c) The benefits of the indirect security in Margin Stock Collateral created by
any provisions of this Agreement shall be allocated first to the benefit and
security of the payment of the principal of and interest on the A Credits of the
Banks and of all other amounts payable by the Company under this Agreement in
connection with the A Credits (collectively, the “A Credit Amounts”) and second,
only after the payment in full of the A Credit Amounts, to the benefit and
security of the payment of the principal of and interest on the B Credits of the
Banks and of all other amounts payable by the Company under this Agreement in
connection with the B Credits (collectively, the “B Credit Amounts”). The
benefits of the indirect security in Other Collateral created by any provisions
of this Agreement, shall be allocated first to the benefit and security of the
payment of the B Credit Amounts and second, only after the payment in full of
the B Credit Amounts, to the benefit and security of the payment of the A Credit
Amounts.

 

(d) The Company shall furnish to each Bank at the time of each acquisition and
sale of Margin Stock Collateral such information and documents as the Agent or
such Bank may require to determine the A and B Credits, and at any time and from
time to time, such other information and documents as the Agent or such Bank may
reasonably require to determine compliance with Regulation U.

 

(e) Each Bank shall be responsible for its own compliance with and
administration of the provisions of this subsection 2.18 and Regulation U, and
the Agent shall have no responsibility for any determinations or allocations
made or to be made by any Bank as required by such provisions.

 

2.19 Purchase and Termination.

 

If (x) a Wind-Down Event has occurred, or (y) at any time when all of the RFC
Loans are held by the Banks or no CP Rate Loans are outstanding, or (z) on or
after the tenth Business Day immediately preceding the Termination Date, the
Company may deliver a notice (the “CP Termination Notice”) to the Administrative
Agent, RFC and the CP Issuer. Upon delivery of a CP Termination Notice and in
the case of (x) and (z) of the preceding sentence, RFC shall take such action as
set forth in subsection 4.13 of the Liquidity Agreement. The Company agrees to
pay any amounts owing under subsection 2.15 in connection with any such
purchase. Upon the delivery of the CP Termination Notice and, in the case of (x)
and (z) of the first sentence of this subsection 2.19, payment of such amounts
as may be due RFC pursuant to subsection 4.13 of the Liquidity Agreement, the
Company shall convert the outstanding amount

 

35

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of such RFC Loans into loans under the 364-Day Facility in accordance with
subsection 2.1(d) thereof. Upon such conversion the Facility Amount shall be
zero.

 

2.20 Additional Fee Payable to Downgraded Banks.

 

If a Bank funds a Downgrade Deposit under the Liquidity Agreement, then the
Company shall pay to the Agent, for the account of such Bank, on the amount of
such Downgrade Deposit from time to time, an amount per annum equal to the
Applicable Margin with respect to Eurodollar Loans as an additional fee
hereunder. Such fee shall be payable by the Company in arrears on the last day
of each month, commencing on the first of such days to occur after such Bank
funds its Downgrade Deposit and on the Termination Date.

 

SECTION 3. REPRESENTATIONS AND WARRANTIES

 

The Company hereby represents and warrants that:

 

3.1 Corporate Existence; Compliance with Law. Each of the Company and its
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has the corporate power
and authority, and the legal right, to make, deliver and perform the Loan
Documents to which it is a party, to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
and (d) is in compliance with all Requirements of Law, including, without
limitation, HMO Regulations and Insurance Regulations, except to the extent that
the failure to be so qualified or to comply therewith would not have a Material
Adverse Effect.

 

3.2 No Legal Obstacle to Agreement; Enforceability. Neither the execution and
delivery of any Loan Document, nor the making by the Company of any borrowings
hereunder, nor the consummation of any transaction herein or therein referred to
or contemplated hereby or thereby nor the fulfillment of the terms hereof or
thereof or of any agreement or instrument referred to in this Agreement, has
constituted or resulted in or will constitute or result in a breach of any
Requirement of Law, including without limitation, HMO Regulations and Insurance
Regulations, or any Contractual Obligation of the Company or any of its
Subsidiaries, or result in the creation under any agreement or instrument of any
security interest, lien, charge or encumbrance upon any of the assets of the
Company or any of its Subsidiaries. No approval, authorization or other action
by any Governmental Authority, including, without limitation, HMO Regulators and
Insurance Regulators, or any other Person is required to be obtained by the
Company or any of its Subsidiaries in connection with the execution, delivery
and performance of this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby, or the making of any borrowing by
the Company hereunder. This Agreement has been, and each other Loan Document
will be, duly executed and delivered on behalf of the Company. This Agreement
constitutes, and each other Loan Document when executed and delivered will
constitute, a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of

 

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creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

 

3.3 Litigation. Except as disclosed in the Company’s Annual Report on Form 10-K
for its fiscal year ended December 31, 2002 and the Company’s Quarterly Reports
on Form 10-Q for its fiscal quarters ended March 31, 2003 and June 30, 2003
filed with the Securities and Exchange Commission and previously distributed to
the Banks, as of the date hereof, there is no litigation, at law or in equity,
or any proceeding before any federal, state, provincial or municipal board or
other governmental or administrative agency, including without limitation, HMO
Regulators and Insurance Regulators, pending or to the knowledge of the Company
threatened which, after giving effect to any applicable insurance, could
reasonably be expected to have a Material Adverse Effect or which seeks to
enjoin the consummation of any of the transactions contemplated by this
Agreement or any other Loan Document, and no judgment, decree, or order of any
federal, state, provincial or municipal court, board or other governmental or
administrative agency, including without limitation, HMO Regulators and
Insurance Regulators, has been issued against the Company or any Subsidiary
which has, or may involve, a material risk of a Material Adverse Effect. The
Company does not believe that the final resolution of the matters disclosed in
its Annual Report on Form 10-K for its fiscal year ended December 31, 2002 and
the Company’s Quarterly Reports on Form 10-Q for its fiscal quarters ended March
31, 2003 and June 30, 2003 filed with the Securities and Exchange Commission and
previously distributed to the Banks, will have a Material Adverse Effect.

 

3.4 Disclosure. Neither this Agreement nor any agreement, document, certificate
or statement furnished to the Banks by the Company in connection herewith
(including, without limitation, the information relating to the Company and its
Subsidiaries included in the Confidential Information Memorandum dated September
2003 delivered in connection with the syndication of the credit facilities
hereunder) contains any untrue statement of material fact or, taken as a whole
together with all other information furnished to the Banks by the Company, omits
to state a material fact necessary in order to make the statements contained
herein or therein not misleading. All pro forma financial statements made
available to the Banks have been prepared in good faith based upon reasonable
assumptions. There is no fact known to the Company which materially adversely
affects or in the future could reasonably be expected to materially adversely
affect the business, operations, affairs or condition of the Company and its
Subsidiaries on a consolidated basis, except to the extent that they may be
affected by future general economic conditions.

 

3.5 Defaults. Neither the Company nor any of its Subsidiaries is in default
under or with respect to any Requirement of Law or Contractual Obligation in any
respect which has had, or may have, a Material Adverse Effect. No Default or
Event of Default has occurred and is continuing.

 

3.6 Financial Condition. The Company has furnished to the Agent and each Bank
copies of the following:

 

(a) The Annual Report of the Company on Form 10-K for the fiscal year ended
December 31, 2002; and

 

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(b) the Quarterly Reports of the Company on Form 10-Q for the fiscal quarters
ended March 31, 2003 and June 30, 2003.

 

The financial statements included therein, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as disclosed therein). As of the date of
such financial statements, neither the Company nor any of its Subsidiaries had
any known contingent liabilities of any significant amount which in accordance
with GAAP are required to be referred to in said financial statements or in the
notes thereto which could reasonably be expected to have a Material Adverse
Effect. During the period from December 31, 2002 to and including the date
hereof, there has been no sale, transfer or other disposition by the Company or
any of its consolidated Subsidiaries of any asset reflected on the balance sheet
referred to above that would have been a material part of its business or
property and no purchase or other acquisition of any business or property
(including any capital stock of any other Person) material in relation to the
consolidated financial condition of the Company and its consolidated
Subsidiaries at December 31, 2002 other than as disclosed in Schedule VI.

 

3.7 Changes in Condition. Since December 31, 2002, there has been no development
or event nor any prospective development or event, which has had, or could
reasonably be expected to have, a Material Adverse Effect.

 

3.8 Assets. The Company and each Subsidiary have good and marketable title to
all material assets carried on their books and reflected in the financial
statements referred to in subsection 4.6 or furnished pursuant to subsection
6.4, except for assets held on Financing Leases or purchased subject to security
devices providing for retention of title in the vendor, and except for assets
disposed of as permitted by this Agreement.

 

3.9 Tax Returns. The Company and each of its Subsidiaries have filed all tax
returns which are required to be filed and have paid, or made adequate provision
for the payment of, all taxes which have or may become due pursuant to said
returns or to assessments received. All federal tax returns of the Company and
its Subsidiaries through their fiscal years ended in 1999 have been audited by
the Internal Revenue Service or are not subject to such audit by virtue of the
expiration of the applicable period of limitations, and the results of such
audits are fully reflected in the balance sheets referred to in subsection 3.6.
The Company knows of no material additional assessments since said date for
which adequate reserves have not been established.

 

3.10 Contracts, etc. Attached hereto as Schedule III is a statement of
outstanding Indebtedness of the Company and its Subsidiaries for borrowed money
in excess of $2,000,000 as of the date set forth therein, and a complete and
correct list of all agreements, contracts, indentures, instruments, documents
and amendments thereto to which the Company or any Subsidiary is a party or by
which it is bound pursuant to which any such Indebtedness of the Company and its
Subsidiaries is outstanding on the date hereof. Said Schedule III also includes
a complete and correct list of all such Indebtedness of the Company and its
Subsidiaries outstanding on the date indicated in respect of Guarantee
Obligations in excess of $2,000,000 and letters of credit in excess of
$2,000,000, and there have been no increases in such Indebtedness since said
date other than as permitted by this Agreement.

 

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3.11 Subsidiaries. As of the date hereof, the Company has only the Subsidiaries
set forth in Schedule IV, all of the outstanding capital stock of each of which
is duly authorized, validly issued, fully paid and nonassessable and owned as
set forth in said Schedule IV. Schedule IV indicates all Subsidiaries of the
Company which are not Wholly-Owned Subsidiaries and the percentage ownership of
the Company and its Subsidiaries in each such Subsidiary. The capital stock and
securities owned by the Company and its Subsidiaries in each of the Company’s
Subsidiaries are owned free and clear of any mortgage, pledge, lien,
encumbrance, charge or restriction on the transfer thereof other than
restrictions on transfer imposed by applicable securities laws and restrictions,
liens and encumbrances outstanding on the date hereof and listed in said
Schedule IV.

 

3.12 Burdensome Obligations. Neither the Company nor any Subsidiary is a party
to or bound by any agreement, deed, lease or other instrument, or subject to any
charter, by-law or other corporate restriction which, in the reasonable opinion
of the management thereof, is so unusual or burdensome as to in the foreseeable
future have a Material Adverse Effect. The Company does not presently anticipate
that future expenditures of the Company and its Subsidiaries needed to meet the
provisions of any federal or state statutes, orders, rules or regulations will
be so burdensome as to have a Material Adverse Effect.

 

3.13 Pension Plans. Each Plan maintained by the Company, any Subsidiary or any
Control Group Person or to which any of them makes or will make contributions is
in material compliance with the applicable provisions of ERISA and the Code.
Neither the Company nor any Subsidiary nor any Control Group Person maintains,
contributes to or participates in any Plan that is a “defined benefit plan” as
defined in ERISA. Neither the Company, any Subsidiary, nor any Control Group
Person has since August 31, 1987 maintained, contributed to or participated in
any Multiemployer Plan, with respect to which a complete withdrawal would result
in any withdrawal liability. The Company and its Subsidiaries have met all of
the funding standards applicable to all Plans that are not Multiemployer Plans,
and there exists no event or condition which would permit the institution of
proceedings to terminate any Plan that is not a Multiemployer Plan. The current
value of the benefits guaranteed under Title IV of ERISA of each Plan that is
not a Multiemployer Plan does not exceed the current value of such Plan’s assets
allocable to such benefits.

 

3.14 Environmental and Public and Employee Health and Safety Matters. The
Company and each Subsidiary has complied with all applicable Federal, state, and
other laws, rules and regulations relating to environmental pollution or to
environmental regulation or control or to public or employee health or safety,
except to the extent that the failure to so comply would not be reasonably
likely to result in a Material Adverse Effect. The Company’s and the
Subsidiaries’ facilities do not contain, and have not previously contained, any
hazardous wastes, hazardous substances, hazardous materials, toxic substances or
toxic pollutants regulated under the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response Compensation and Liability Act, the
Hazardous Materials Transportation Act, the Toxic Substance Control Act, the
Clean Air Act, the Clean Water Act or any other applicable law relating to
environmental pollution or public or employee health and safety, in violation of
any such law, or any rules or regulations promulgated pursuant thereto, except
for violations that would not be reasonably likely to result in a Material
Adverse Effect. The Company is aware of no events, conditions or circumstances
involving environmental pollution or contamination or

 

39

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public or employee health or safety, in each case applicable to it or its
Subsidiaries, that would be reasonably likely to result in a Material Adverse
Effect.

 

3.15 Federal Regulations. No part of the proceeds of any RFC Loans will be used
in any transaction or for any purpose which violates the provisions of
Regulations T, U or X as now and from time to time hereafter in effect. If
requested by any Bank or the Agent, the Company will furnish to the Agent and
each Bank a statement to the foregoing effect in conformity with the
requirements of Form FR U-1 or Form FR G-3 referred to in Regulation U.

 

3.16 Investment Company Act; Other Regulations. The Company is not an
“investment company”, or a company “controlled” by an “investment company”,
within the meaning of the Investment Company Act of 1940, as amended. Except as
set forth in Schedule VII, the Company is not subject to regulation under any
Federal or State statute or regulation (other than Regulation X) which limits
its ability to incur Indebtedness.

 

3.17 Solvency. Each of the Company, and the Company and its Subsidiaries taken
as a whole, is Solvent.

 

3.18 Casualties. Neither the businesses nor the properties of the Company or any
of its Subsidiaries are affected by any fire, explosion, accident, strike,
lockout or other material labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy or other casualty (whether or not
covered by insurance) that could reasonably be expected to have a Material
Adverse Effect.

 

3.19 Business Activity. Except as set forth in Schedule VIII, neither the
Company nor any of its Subsidiaries is engaged in any line of business that is
not related to the healthcare industry other than the sale of life insurance in
connection with the sale of medical insurance or other healthcare services, sale
of long term care insurance, or any business or activity which is immaterial to
the Company and its Subsidiaries on a consolidated basis.

 

3.20 Purpose of RFC Loans. The proceeds of the RFC Loans shall be used to
finance any lawful general corporate purpose, including acquisitions, provided
that no part of the proceeds of any RFC Loans will be used in any transaction or
for any purpose which violates the provisions of Regulation U as now and from
time to time hereafter in effect.

 

SECTION 4. CONDITIONS

 

4.1 Conditions to the Closing Date. The Company will not request the initial RFC
Loan hereunder unless the Company has satisfied the following conditions:

 

(a) Loan Documents. The Agent shall have received this Agreement and the
Liquidity Agreement, executed and delivered by a duly authorized officers of
each of the parties thereto.

 

(b) Legal Opinions. The Agent shall have received, with a copy for each Bank,
opinions rendered by (i) the assistant general counsel of the Company,
substantially in the form of Exhibit D-1, and (ii) Fried, Frank, Harris, Shriver
& Jacobson, counsel to the Company, substantially in the form of Exhibit D-2.

 

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(c) Closing Certificate. The Agent shall have received, with a copy for each
Bank, a Closing Certificate, substantially in the form of Exhibit C and dated
the Closing Date, executed by a Responsible Officer of the Company.

 

(d) Legality, etc. The consummation of the transactions contemplated hereby
shall not contravene, violate or conflict with any Requirement of Law including,
without limitation, HMO Regulations and Insurance Regulations, and all necessary
consents, approvals and authorizations of any Governmental Authority or any
Person to or of such consummation shall have been obtained and shall be in full
force and effect.

 

(e) Fees. The Agent shall have received the fees to be received on the Closing
Date referred to in subsection 2.3(b).

 

(f) Corporate Proceedings. The Agent shall have received a copy of the
resolutions, in form and substance reasonably satisfactory to the Agent, of the
Board of Directors of the Company authorizing (i) the execution, delivery and
performance of this Agreement, the Notes and the other Loan Documents, and (ii)
the borrowings contemplated hereunder, certified by the Secretary or an
Assistant Secretary of the Company as of the Closing Date, which certificate
shall state that the resolutions thereby certified have not been amended,
modified, revoked or rescinded and shall be in form and substance reasonably
satisfactory to the Agent.

 

(g) Corporate Documents. The Agent shall have received true and complete copies
of the certificate of incorporation and by-laws of the Company, certified as of
the Closing Date as complete and correct copies thereof by the Secretary or an
Assistant Secretary of the Company.

 

(h) No Material Litigation. Except as previously disclosed to the Agent pursuant
to subsection 3.3, no litigation, inquiry, investigation, injunction or
restraining order (including any proposed statute, rule or regulation) shall be
pending, entered or threatened which, in the reasonable judgment of the Required
Banks, could reasonably be expected to have a Material Adverse Effect.

 

(i) Incumbency Certificate. The Agent shall have received a certificate of the
Secretary or an Assistant Secretary of the Company, dated the Closing Date, as
to the incumbency and signature of the officers of the Company executing each
Loan Document and any certificate or other document to be delivered by it
pursuant hereto and thereto, together with evidence of the incumbency of such
Secretary or Assistant Secretary.

 

(j) Good Standing Certificates. The Agent shall have received copies of
certificates dated as of a recent date from the Secretary of State or other
appropriate authority of such jurisdiction, evidencing the good standing of the
Company in its jurisdiction of incorporation and in Kentucky.

 

(k) No Change. There shall not have occurred any change, or event, and the Agent
shall not have become aware of any previously undisclosed information regarding
the Company and its Subsidiaries, which in each case in the reasonable judgment
of the Required Banks, could reasonably be expected to have a Material Adverse
Effect.

 

41

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(l) Conditions under 364-Day Facility. On or prior to the Closing Date, all
conditions to the funding of the initial loans under the 364-Day Facility shall
have been satisfied and the Agent shall have received a certificate of a
Responsible Officer of the Company to such effect.

 

4.2 Conditions to Each Loan. The Company will not request any RFC Loan hereunder
unless the Company has satisfied the following conditions:

 

(a) Representations and Warranties. Each of the representations and warranties
made by the Company and its Subsidiaries in or pursuant to the Loan Documents
shall be true and correct in all material respects on and as of such date as if
made on and as of such date.

 

(b) No Default. No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to the RFC Loans requested to be
made on such date.

 

(c) Additional Matters. All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Agreement and the other Loan Documents shall be reasonably
satisfactory in form and substance to the Agent, and the Agent shall have
received such other documents, instruments, legal opinions or other items of
information reasonably requested by it, including, without limitation, copies of
any debt instruments, security agreements or other material contracts to which
the Company may be a party in respect of any aspect or consequence of the
transactions contemplated hereby or thereby as it shall reasonably request.

 

(d) Regulations. In the case of any RFC Loan the proceeds of which will be used,
in whole or in part, to finance an acquisition, such acquisition shall be in
full compliance with all applicable requirements of law, including, without
limitation, Regulations T, U and X of the Board of Governors of the Federal
Reserve System.

 

(e) Governmental, Third Party Approvals. In the case of any RFC Loan the
proceeds of which will be used, in whole or in part, to finance an acquisition,
all necessary governmental and regulatory approvals, and all third party
approvals the failure to obtain which would result in the acceleration of
indebtedness unless such indebtedness is paid when due, in connection with such
acquisition or in connection with this Agreement shall have been obtained and
remain in effect, and all applicable waiting periods with respect to antitrust
matters shall have expired without any action being taken by any competent
authority which restrains such acquisition.

 

(f) No Restraints. In the case of any RFC Loan the proceeds of which will be
used, in whole or in part, to finance an acquisition, there shall exist no
judgment, order, injunction or other restraint which would prevent the
consummation of such acquisition.

 

(g) Form FR U-1; Form FR G-3. In the case of any RFC Loan the proceeds of which
will be used, in whole or in part, to purchase or carry Margin Stock, the
Company shall have executed and delivered to the Agent and each Bank a statement
on Form FR U-1 referred to

 

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in Regulation U or, if applicable, Form FR G-3 referred to in Regulation U,
showing compliance with Regulation U after giving effect to such RFC Loan.

 

(h) Legal Opinion. In the case of any RFC Loan the proceeds of which will be
used, in whole or in part, to purchase or carry Margin Stock, the Agent shall
have received a written legal opinion of Fried, Frank, Harris, Shriver &
Jacobson, counsel to the Company, or such other counsel reasonably acceptable to
the Agent, to the effect that such RFC Loan and the Company’s use of the
proceeds thereof does not violate Regulation U or Regulation X.

 

(i) Liquidity Agreement. With respect to any requested RFC Loans that are CP
Rate Loans only, the Liquidity Agreement is in full force and effect and no
default has occurred and is continuing thereunder or would result from such
requested RFC Loans.

 

(j) Wind-Down Event. No Wind-Down Event has occurred and is continuing or would
result from the requested RFC Loan.

 

Each borrowing by the Company hereunder shall constitute a representation and
warranty by the Company as of the date of such extension of credit that the
conditions contained in this subsection 4.2 have been satisfied.

 

SECTION 5. AFFIRMATIVE COVENANTS

 

The Company hereby agrees that, from and after the Closing Date and so long as
the Commitments remain in effect, any Note remains outstanding and unpaid or any
other amount is owing to RFC, any Bank or the Agent hereunder, the Company shall
and (except in the case of delivery of financial information, reports and
notices) shall cause each of its Subsidiaries to:

 

5.1 Taxes, Indebtedness, etc. Duly pay, discharge or otherwise satisfy, or cause
to be paid, discharged or otherwise satisfied, before the same shall become in
arrears, all taxes, assessments, levies and other governmental charges imposed
upon such corporation and its properties, sales and activities, or any part
thereof, or upon the income or profits therefrom; provided, however, that any
such tax, assessment, charge or levy need not be paid if the validity or amount
thereof shall currently be contested in good faith by appropriate proceedings
and if the Company or the Subsidiary in question shall have set aside on its
books appropriate reserves in conformity with GAAP with respect thereto. Each of
the Company and its Subsidiaries will promptly pay when due, or in conformance
with customary trade terms, all other Indebtedness, liabilities and other
obligations of whatever nature incident to its operations; provided, however,
that any such Indebtedness, liability or obligation need not be paid if the
validity or amount thereof shall currently be contested in good faith and if the
Company or the Subsidiary in question shall have set aside on its books
appropriate reserves in conformity with GAAP with respect thereto.

 

5.2 Maintenance of Properties; Maintenance of Existence. Keep its material
properties in good repair, working order and condition and will comply at all
times with the provisions of all material leases and other material agreements
to which it is a party so as to

 

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prevent any material loss or forfeiture thereof or thereunder unless compliance
therewith is being contested in good faith by appropriate proceedings and if the
Company or the Subsidiary in question shall have set aside on its books
appropriate reserves in conformity with GAAP with respect thereto; and in the
case of the Company or any Subsidiary of the Company while such Person remains a
Subsidiary, will do all things necessary to preserve, renew and keep in full
force and effect and in good standing its corporate existence and all rights,
privileges and franchises necessary to continue such businesses.

 

5.3 Insurance. Maintain or cause to be maintained, with financially sound and
reputable insurers including any Subsidiary which is engaged in the business of
providing insurance protection, insurance (including, without limitation, public
liability insurance, business interruption insurance, reinsurance for medical
claims and professional liability insurance against claims for malpractice) with
respect to its material properties and business and the properties and business
of its Subsidiaries in at least such amounts and against at least such risks as
are customarily carried under similar circumstances by other corporations
engaged in the same or a similar business; and furnish to the Agent, upon
written request, full information as to the insurance carried. Such insurance
may be subject to co-insurance, deductibility or similar clauses which, in
effect, result in self-insurance of certain losses, and the Company may
self-insure against such loss or damage, provided that adequate insurance
reserves are maintained in connection with such self-insurance.

 

5.4 Financial Statements. The Company will and will cause each of its
Subsidiaries to maintain a standard modern system of accounting in which full,
true and correct entries will be made of all dealings or transactions in
relation to its business and affairs in accordance with GAAP consistently
applied, and will furnish (or make available via the IntraLinks website) the
following to the Agent (if not provided via IntraLinks, in duplicate if so
requested):

 

(a) Annual Statements. As soon as available, and in any event within 100 days
after the end of each fiscal year, the consolidated balance sheet as at the end
of each fiscal year and consolidated statements of profit and loss and of
retained earnings for such fiscal year of the Company and its Subsidiaries,
together with comparative consolidated figures for the next preceding fiscal
year, accompanied by reports or certificates of PricewaterhouseCoopers, or, if
they cease to be the auditors of the Company, of other independent public
accountants of national standing and reputation, to the effect that such balance
sheet and statements were prepared in accordance with GAAP consistently applied
and fairly present the financial position of the Company and its Subsidiaries as
at the end of such fiscal year and the results of their operations and changes
in financial position for the year then ended and the statement of such
accountants and of the treasurer of the Company that such said accountants and
treasurer have caused the provisions of this Agreement to be reviewed and that
nothing has come to their attention to lead them to believe that any Default
exists hereunder or, if such is not the case, specifying such Default or
possible Default and the nature thereof. In addition, such financial statements
shall be accompanied by a certificate of the treasurer of the Company containing
computations showing compliance with subsections 6.1, 6.2, 6.3 and 6.5.

 

(b) Quarterly Statements. As soon as available, and in any event within 55 days
after the close of each of the first three fiscal quarters of the Company and
its Subsidiaries

 

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in each year, consolidated balance sheets as at the end of such fiscal quarter
and consolidated profit and loss and retained earnings statements for the
portion of the fiscal year then ended, of the Company and its Subsidiaries,
together with computations showing compliance with subsections 6.1, 6.2, 6.3 and
6.5, accompanied by a certificate of the treasurer of the Company that such
statements and computations have been properly prepared in accordance with GAAP,
consistently applied, and fairly present the financial position of the Company
and its Subsidiaries as at the end of such fiscal quarter and the results of
their operations and changes in financial position for such quarter and for the
portion of the fiscal year then ended, subject to normal audit and year-end
adjustments, and to the further effect that he has caused the provisions of this
Agreement and all other agreements to which the Company or any of its
Subsidiaries is a party and which relate to Indebtedness to be reviewed, and has
no knowledge that any Default has occurred under this Agreement or under any
such other agreement, or, if said treasurer has such knowledge, specifying such
Default and the nature thereof.

 

(c) ERISA Reports. The Company will furnish the Agent with copies of any request
for waiver of the funding standards or extension of the amortization periods
required by Sections 303 and 304 of ERISA or Section 412 of the Code promptly
after any such request is submitted by the Company to the Department of Labor or
the Internal Revenue Service, as the case may be. Promptly after a Reportable
Event occurs, or the Company or any of its Subsidiaries receives notice that the
PBGC or any Control Group Person has instituted or intends to institute
proceedings to terminate any pension or other Plan, or prior to the Plan
administrator’s terminating such Plan pursuant to Section 4041 of ERISA, the
Company will notify the Agent and will furnish to the Agent a copy of any notice
of such Reportable Event which is required to be filed with the PBGC, or any
notice delivered by the PBGC evidencing its institution of such proceedings or
its intent to institute such proceedings, or any notice to the PBGC that a Plan
is to be terminated, as the case may be. The Company will promptly notify the
Agent upon learning of the occurrence of any of the following events with
respect to any Plan which is a Multiemployer Plan: a partial or complete
withdrawal from any Plan which may result in the incurrence by the Company or
any of is Subsidiaries of withdrawal liability in excess of $1,000,000 under
Subtitle E of Title IV of ERISA, or of the termination, insolvency or
reorganization status of any Plan under such Subtitle E which may result in
liability to the Company or any of its Subsidiaries in excess of $1,000,000. In
the event of such a withdrawal, upon the request of the Agent, the Company will
promptly provide information with respect to the scope and extent of such
liability, to the best of the Company’s knowledge.

 

5.5 Certificates; Other Information. Furnish (or make available via the
IntraLinks website) to the Agent:

 

(a) within five Business Days after the same are sent, copies of all financial
statements and reports which the Company sends to its stockholders, and within
five Business Days after the same are filed, copies of all financial statements
and reports which the Company may make to, or file with, the Securities and
Exchange Commission;

 

(b) not later than thirty days prior to the end of each fiscal year of the
Company, a schedule of the Company’s insurance coverage and such supplemental
schedules with respect thereto as the Agent may from time to time reasonably
request;

 

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(c) within five Business Days after the consummation of a transaction described
in subsection 6.4(c) or (d) or subsection 6.5(f) which, in each case, involves a
Significant Subsidiary or assets which, if they constituted a separate
Subsidiary, would constitute a Significant Subsidiary, a certificate of the
treasurer or chief financial officer of the Company demonstrating pro forma
compliance with the financial covenants in this Agreement after giving effect to
such transaction; and

 

(d) promptly, such additional financial and other information as the Agent may
from time to time reasonably request.

 

5.6 Compliance with ERISA. Each of the Company and its Subsidiaries will meet,
and will cause all Control Group Persons to meet, all minimum funding
requirements applicable to any Plan imposed by ERISA or the Code (without giving
effect to any waivers of such requirements or extensions of the related
amortization periods which may be granted), and will at all times comply, and
will cause all Control Group Persons to comply, in all material respects with
the provisions of ERISA and the Code which are applicable to the Plans. At no
time shall the aggregate actual and contingent liabilities of the Company under
Sections 4062, 4063, 4064 and other provisions of ERISA (calculated as if the
30% of collective net worth amount referred to in Section 4062(b)(1)(A)(i)(II)
of ERISA exceeded the actual total amount of unfunded guaranteed benefits
referred to in Section 4062(B)(1)(A)(i)(I) of ERISA) with respect to all Plans
(and all other pension plans to which the Company, any Subsidiary, or any
Control Group Person made contributions prior to such time) exceed $5,000,000.
Neither the Company nor its Subsidiaries will permit any event or condition to
exist which could permit any Plan which is not a Multiemployer Plan to be
terminated under circumstances which would cause the lien provided for in
Section 4068 of ERISA to attach to the assets of the Company or any of its
Subsidiaries.

 

5.7 Compliance with Laws. Comply with all Contractual Obligations and
Requirements of Law (including, without limitation, the HMO Regulations,
Insurance Regulations, Regulation X and laws relating to the protection of the
environment), except where the failure to comply therewith could not, in the
aggregate, have a Material Adverse Effect.

 

5.8 Inspection of Property; Books and Records; Discussions. Keep proper books of
records and account in which full, true and correct entries in conformity with
GAAP, all Requirements of Law, including but not limited to, HMO Regulations and
Insurance Regulations, and the terms hereof shall be made of all dealings and
transactions in relation to its business and activities; and permit, upon
reasonable notice, representatives of any Bank to visit and inspect any of its
properties and examine and make abstracts from any of its books and records at
any reasonable time and as often as may reasonably be desired and to discuss the
business, operations, properties and financial and other condition of the
Company and its Subsidiaries with officers and employees of the Company and its
Subsidiaries and with its independent certified public accountants.

 

5.9 Notices. Promptly give notice to the Agent and to RFC of:

 

(a) the occurrence of any Default, Event of Default or Wind-Down Event;

 

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(b) any (i) default or event of default under any Contractual Obligation of the
Company or any of its Subsidiaries or (ii) litigation, investigation or
proceeding which exists at any time between the Company or any of its
Subsidiaries and any Governmental Authority (including, without limitation, HMO
Regulators and Insurance Regulators), which in either case, if not cured or if
adversely determined, as the case may be, could reasonably be expected to have a
Material Adverse Effect;

 

(c) the commencement of any litigation or proceeding or a material development
or material change in any ongoing litigation or proceeding affecting the Company
or any of its Subsidiaries as a result of which commencement, development or
change the Company or one of its Subsidiaries could reasonably be expected to
incur a liability (as a result of an adverse judgment or ruling, settlement,
incurrence of legal fees and expenses or otherwise) of $10,000,000 or more and
not covered by insurance or in which material injunctive or similar relief is
sought;

 

(d) the following events, as soon as possible and in any event within 30 days
after the Company knows: (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan, or any withdrawal from, or the
termination, Reorganization or Insolvency of any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC or the
Company or any Commonly Controlled Entity or any Multiemployer Plan with respect
to the withdrawal from, or the terminating, Reorganization or Insolvency of, any
Plan;

 

(e) a development or event which could reasonably be expected to have a Material
Adverse Effect;

 

(f) the material non-compliance with any Contractual Obligation or Requirement
of Law, including, without limitation, HMO Regulations and Insurance
Regulations, that is not currently being contested in good faith by appropriate
proceedings;

 

(g) the revocation of any material license, permit, authorization, certificate
or, qualification of the Company or any Subsidiary by any Governmental
Authority, including, without limitation, the HMO Regulators and Insurance
Regulators; and

 

(h) any significant change in or material additional restriction placed on the
ability of a Significant Subsidiary to continue business as usual, including,
without limitation, any such restriction prohibiting the payment to the Company
of dividends by any Significant Subsidiary, by any Governmental Authority,
including, without limitation, the HMO Regulators and Insurance Regulators.

 

Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Company proposes to take with respect thereto.

 

5.10 Maintenance of Licenses, Etc. Preserve and maintain, and cause each of its
Subsidiaries to preserve and maintain, all licenses, permits, authorizations,
certifications and qualifications (including, without limitation, those
qualifications with respect to solvency and

 

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capitalization) required under the HMO Regulations or the Insurance Regulations
in connection with the ownership or operation of HMO’s or insurance companies
except were the failure to do so would not result in a Material Adverse Effect.

 

5.11 Further Assurances. Execute any and all further documents, and take all
further action which the Agent may reasonably request in order to effectuate the
transactions contemplated by the Loan Documents.

 

SECTION 6. NEGATIVE COVENANTS

 

The Company hereby agrees that, from and after the Closing Date and so long as
the Commitments remain in effect, any Note remains outstanding and unpaid or any
other amount is owing to RFC, any Bank or the Agent hereunder, the Company shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly:

 

6.1 Financial Condition Covenants.

 

(a) Maintenance of Net Worth. Permit Consolidated Net Worth at any time to be
less than 75% of its Consolidated Net Worth of the Company and its consolidated
subsidiaries as at March 31, 2001 plus 50% of Consolidated Net Income for each
full fiscal quarter after March 31, 2001 (without any deduction for any such
fiscal quarter in which such Consolidated Net Income is a negative number).

 

(b) Interest Coverage. Permit the ratio of (i) Consolidated EBIT for any period
of four consecutive fiscal quarters of the Company to (ii) Consolidated Interest
Expense during such period, to be less than 4.00 to 1.00:

 

(c) Maximum Leverage Ratio. Permit the Leverage Ratio on the last day of any
full fiscal quarter of the Company to be more than 2.50 to 1.00:

 

6.2 Limitation on Subsidiary Indebtedness. The Company shall not permit any of
the Subsidiaries of the Company to create, incur, assume or suffer to exist any
Indebtedness, except:

 

(a) Indebtedness of any Subsidiary to the Company or any other Subsidiary;

 

(b) Indebtedness of a corporation which becomes a Subsidiary after the date
hereof, provided that (i) such indebtedness existed at the time such corporation
became a Subsidiary and was not created in anticipation thereof and (ii)
immediately before and after giving effect to the acquisition of such
corporation by the Company no Default or Event of Default shall have occurred
and be continuing; or

 

(c) additional Indebtedness of Subsidiaries of the Company not exceeding
$125,000,000 in aggregate principal amount at any one time outstanding.

 

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6.3 Limitation on Liens. Create, incur, assume or suffer to exist any Lien upon
any of its property, assets or revenues, whether now owned or hereafter
acquired, except for:

 

(a) Liens, if any, securing the obligations of the Company under this Agreement
and the Notes;

 

(b) Liens for taxes not yet due or which are being contested in good faith by
appropriate proceedings, provided that adequate reserves with respect thereto
are maintained on the books of the Company or its Subsidiaries, as the case may
be, in conformity with GAAP;

 

(c) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other
like Liens arising in the ordinary course of business which are not overdue for
a period of more than 60 days or which are being contested in good faith by
appropriate proceedings;

 

(d) pledges or deposits in connection with workers’ compensation, unemployment
insurance and other social security legislation;

 

(e) deposits to secure the performance of bids, trade contracts (other than for
borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;

 

(f) easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate, are not
substantial in amount and which do not in any case materially detract from the
value of the property subject thereto or materially interfere with the ordinary
conduct of the business of the Company or such Subsidiary;

 

(g) Liens in existence on the Closing Date listed on Schedule V, securing
Indebtedness in existence on the Closing Date, provided that no such Lien is
spread to cover any additional property after the Closing Date and that the
amount of Indebtedness secured thereby is not increased;

 

(h) Liens securing Indebtedness of the Company and its Subsidiaries not
prohibited hereunder incurred to finance the acquisition of fixed or capital
assets, provided that (i) such Liens shall be created substantially
simultaneously with the acquisition of such fixed or capital assets, (ii) such
Liens do not at any time encumber any property other than the property financed
by such Indebtedness and (iii) the principal amount of Indebtedness secured by
any such Lien shall at no time exceed 80% of the original purchase price of such
property;

 

(i) Liens on the property or assets of a corporation which becomes a Subsidiary
after the date hereof, provided that (i) such Liens existed at the time such
corporation became a Subsidiary and were not created in anticipation thereof,
(ii) any such Lien is not spread to cover any other property or assets after the
time such

 

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corporation becomes a Subsidiary and (iii) the amount of Indebtedness secured
thereby, if any, is not increased;

 

(j) Liens on the Headquarters, Riverview Square, the Waterside Garage, the Green
Bay Facility, the Jacksonville Facility and the Waterside Building; or

 

(k) Liens not otherwise permitted under this subsection 6.3 securing obligations
in an aggregate amount not exceeding at any time 10% of Consolidated Net
Tangible Assets as at the end of the immediately preceding fiscal quarter of the
Company.

 

6.4 Limitations on Fundamental Changes. Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or make any material change in its method of
conducting business, or purchase or otherwise acquire all or substantially all
of the Capital Stock, or the property, business or assets, of any other Person
(other than any Subsidiary) or any business division thereof except:

 

(a) any Subsidiary of the Company may be merged or consolidated with or into the
Company (provided that the Company shall be the continuing or surviving
corporation) and any Subsidiary of the Company may be merged or consolidated
with or into any one or more wholly owned Subsidiaries of the Company (provided
that the surviving corporation shall be a wholly owned Subsidiary);

 

(b) the Company may merge into another corporation owned by the Company for the
purpose of causing the Company to be incorporated in a different jurisdiction;

 

(c) the Company or a wholly owned Subsidiary of the Company may merge with
another corporation, provided that (i) the Company or such wholly owned
Subsidiary (subject to clause (ii)), as the case may be, shall be the continuing
or surviving corporation of such merger, (ii) in the case of a wholly owned
Subsidiary of the Company which is merged into another corporation which is the
continuing or surviving corporation of such merger, the Company shall cause such
continuing or surviving corporation to be a wholly owned Subsidiary of the
Company and (iii) immediately before and after giving effect to such merger no
Default or Event of Default shall have occurred and be continuing; or

 

(d) the Company and its Subsidiaries may purchase or otherwise acquire all or
substantially all of the Capital Stock, or the property, business or assets, of
any other Person, or any business division thereof, so long as no Default or
Event of Default shall have occurred and be continuing.

 

6.5 Limitation on Sale of Assets. Convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets (including, without
limitation, receivables and leasehold interests), whether now owned or hereafter
acquired, except:

 

(a) obsolete or worn out property disposed of in the ordinary course of
business;

 

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(b) the sale or discount without recourse of accounts receivable arising in the
ordinary course of business in connection with the compromise or collection
thereof;

 

(c) the sale or other disposition of the Headquarters, Riverview Square, the
Waterside Garage, the Green Bay Facility, the Jacksonville Facility and the
Waterside Building;

 

(d) the sale or other disposition of securities held for investment purposes in
the ordinary course of business;

 

(e) any wholly owned Subsidiary may sell, lease, transfer or otherwise dispose
of any or all of its assets (upon voluntary liquidation or otherwise) to the
Company or any other wholly owned Subsidiary of the Company (except to a
Subsidiary referred to in subsection 6.2(b)); or

 

(f) the sale or other disposition of any other property so long as no Default or
Event of Default shall have occurred and be continuing; provided that the
aggregate book value of all assets so sold or disposed of in any period of
twelve consecutive calendar months shall not exceed in the aggregate 12% of the
Consolidated Assets of the Company and its Subsidiaries as on the first day of
such period.

 

6.6 Limitation on Distributions. The Company shall not make any Distribution
except that, so long as no Default exists or would exist after giving effect
thereto, the Company may make a Distribution.

 

6.7 Transactions with Affiliates. Enter into any transaction (unless such
transaction or any series of such transactions is immaterial), including,
without limitation, any purchase, sale, lease or exchange of property or the
rendering of any service, with any Affiliate (other than the Company and its
Subsidiaries) unless such transaction is otherwise permitted under this
Agreement, is in the ordinary course of the Company’s or such Subsidiary’s
business and is upon fair and reasonable terms no less favorable to the Company
or such Subsidiary, as the case may be, than it would obtain in an arm’s length
transaction.

 

6.8 Sale and Leaseback. Enter into any arrangement with any Person providing for
the leasing by the Company or any Subsidiary of real or personal property which
has been or is to be sold or transferred by the Company or such Subsidiary to
such Person or to any other Person to whom funds have been or are to be advanced
by such Person on the security of such property or rental obligations of the
Company or such Subsidiary, unless such arrangement is upon fair and reasonable
terms no less favorable to the Company or such Subsidiary than would be obtained
in a comparable arm’s length transaction between an informed and willing seller
or lessor under no compulsion to sell or lease and an informed and willing buyer
or lessee under no compulsion to buy or lease.

 

SECTION 7. DEFAULTS

 

7.1 Events of Default. Upon the occurrence of any of the following events.

 

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(a) any default shall be made by the Company in any payment in respect of: (i)
interest on any of the RFC Loans or any fee payable hereunder as the same shall
become due and such default shall continue for a period of five days; or (ii)
any principal of the RFC Loans as the same shall become due, whether at
maturity, by prepayment, by acceleration or otherwise; or

 

(b) any default shall be made by either the Company or any Subsidiary of the
Company in the performance or observance of any of the provisions of subsections
6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7 and 6.8; or

 

(c) any default shall be made in the due performance or observance of any other
covenant, agreement or provision to be performed or observed by the Company
under this Agreement, and such default shall not be rectified or cured within a
period of 30 days; or

 

(d) any representation or warranty made or deemed made by the Company herein or
in any other Loan Document or which is contained in any certificate, document or
financial or other statement furnished at any time under or in connection with
this Agreement shall have been untrue in any material respect on or as of the
date made and the facts or circumstances to which such representation or
warranty relates shall not have been subsequently corrected to make such
representation or warranty no longer incorrect in any material respect; or

 

(e) any default shall be made in the payment of any item of Indebtedness of the
Company or any Subsidiary, or under the terms of any agreement relating to any
Indebtedness of the Company or any Subsidiary, and such default shall continue
without having been duly cured, waived or consented to, beyond the period of
grace, if any, therein specified; provided, however, that such default shall not
constitute an Event of Default unless the aggregate outstanding principal amount
of such item of Indebtedness and all other items of Indebtedness of the Company
and its Subsidiaries as to which such defaults exist and have continued without
being duly cured, waived or consented to beyond the respective periods of grace,
if any, therein specified exceeds $25,000,000; or

 

(f) either the Company or any Subsidiary shall be involved in financial
difficulties as evidenced:

 

(i) by its commencement of a voluntary case under Title 11 of the United States
Code as from time to time in effect, or by its authorizing, by appropriate
proceedings of its board of directors or other governing body, the commencement
of such a voluntary case;

 

(ii) by the filing against it of a petition commencing an involuntary case under
said Title 11 which shall not have been dismissed within 60 days after the date
on which said petition is filed or by its filing an answer or other pleading
within said 60-day period admitting or failing to deny the material allegations
of such a petition or seeking, consenting or acquiescing in the relief therein
provided;

 

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(iii) by the entry of an order for relief in any involuntary case commenced
under said Title 11;

 

(iv) by its seeking relief as a debtor under any applicable law, other than said
Title 11, of any jurisdiction relating to the liquidation or reorganization of
debtors or to the modification or alteration of the rights of creditors, or by
its consenting to or acquiescing in such relief;

 

(v) by the entry of an order by a court of competent jurisdiction (i) finding it
to be bankrupt or insolvent, (ii) ordering or approving its liquidation,
reorganization or any modification or alteration of the rights of its creditors,
or (iii) assuming custody of, or appointing a receiver or other custodian for,
all or a substantial part of its property; or

 

(vi) by its making an assignment for the benefit of, or entering into a
composition with, its creditors, or appointing or consenting to the appointment
of a receiver or other custodian for all or a substantial part of its property;
or

 

(vii) the Company or any of its Subsidiaries shall generally not, or shall be
unable to, or shall admit in writing its inability to, pay its debts as they
become due; or

 

(g) a Change in Control of the Company shall occur;

 

(h) (i) any Person shall engage in any “prohibited transaction” (as defined in
Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any
“accumulated funding deficiency” (as defined in Section 302 of ERISA), whether
or not waived, shall exist with respect to any Plan, (iii) a Reportable Event
shall occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of proceedings or
appointment of a trustee is, in the reasonable opinion of the Required Banks,
likely to result in the termination of such Plan for purposes of Title IV of
ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) the Company or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Required Banks is likely to, incur any liability in
connection with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur or exist,
with respect to a Plan; and in each case in clauses (i) through (vi) above, such
event or condition, together with all other such events or conditions, if any,
could subject the Company or any of its Subsidiaries to any tax, penalty or
other liabilities which in the aggregate could have a Material Adverse Effect;
or

 

(i) one or more judgments or decrees shall be entered against the Company or any
of its Subsidiaries and such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 45 days from the entry
thereof that (i) involves in the aggregate a liability (not paid or fully
covered by insurance) of

 

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$25,000,000 or more, or (ii) could reasonably be expected to have a Material
Adverse Effect; or

 

(j) (i) any material non-compliance by the Company or any Significant Subsidiary
with any term or provision of the HMO Regulations or Insurance Regulations
pertaining to fiscal soundness, solvency or financial condition; or (ii) the
assertion in writing by an HMO Regulator or Insurance Regulator that it is
taking administrative action against the Company or any Significant Subsidiary
to revoke or suspend any contract of insurance, license, permit, certification,
authorization, accreditation or charter or to enforce the fiscal soundness,
solvency or financial provisions or requirements of the HMO Regulations or
Insurance Regulations against any of such entities and the Company or such
Significant Subsidiary shall have been unable to cause such HMO Regulator or
Insurance Regulator to withdraw such written notice within five Business Days
following receipt of such written notice by the Company or such Significant
Subsidiary, in each of clauses (i) and (ii), to the extent such event will or is
reasonably expected to have a Material Adverse Effect; or

 

(k) on or after the Closing Date, (i) for any reason any Loan Document ceases to
be or is not in full force and effect or (ii) the Company shall assert that any
Loan Document has ceased to be or is not in full force and effect;

 

then, and in any such event, (A) if such event is an Event of Default specified
in paragraph (f) above with respect to the Company, automatically the Facility
Period shall immediately terminate and the RFC Loans hereunder (with accrued
interest thereon and amounts payable pursuant to subsection 2.15) and all other
amounts owing under this Agreement and the Notes shall immediately become due
and payable, and (B) if such event is any other Event of Default, either or both
of the following actions may be taken: (i) with the consent of the Required
Banks, the Agent may, or upon the request of the Required Banks, the Agent
shall, by notice to the Company and to RFC, declare the Facility Period to be
terminated forthwith, whereupon the Facility Period shall immediately terminate;
and (ii) with the consent of the Required Banks, the Agent may, or upon the
request of the Required Banks, the Agent shall, by notice of default to the
Company and to RFC, declare the RFC Loans hereunder (with accrued interest
thereon and amounts payable pursuant to subsection 2.15) and all other amounts
owing under this Agreement (the “RFC Obligations”) to be due and payable
forthwith, whereupon the same shall immediately become due and payable.

 

Except as expressly provided above in this subsection, presentment, demand,
protest and all other notices of any kind are hereby expressly waived.

 

7.2 Annulment of Defaults. An Event of Default shall not be deemed to be in
existence for any purpose of this Agreement if the Agent, with the consent of or
at the direction of the Required Banks, subject to subsection 9.1, shall have
waived such event in writing or stated in writing that the same has been cured
to its reasonable satisfaction, but no such waiver shall extend to or affect any
subsequent Event of Default or impair any rights of the Agent or the Banks upon
the occurrence thereof.

 

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7.3 Waivers. The Company hereby waives to the extent permitted by applicable law
(a) all presentments, demands for performance, notices of nonperformance (except
to the extent required by the provisions hereof), protests, notices of protest
and notices of dishonor in connection with any RFC Loans, (b) any requirement of
diligence or promptness on the part of RFC or any Bank in the enforcement of its
rights under the provisions of this Agreement or any Note, and (c) any and all
notices of every kind and description which may be required to be given by any
statute or rule of law.

 

7.4 Course of Dealing. No course of dealing between the Company and RFC or any
Bank shall operate as a waiver of any of RFC’s or the Banks’ rights under this
Agreement or any Note. No delay or omission on the part of RFC or any Bank in
exercising any right under this Agreement or any Note or with respect to any of
the RFC Obligations shall operate as a waiver of such right or any other right
hereunder. A waiver on any one occasion shall not be construed as a bar to or
waiver of any right or remedy on any future occasion. No waiver or consent shall
be binding upon RFC or any Bank unless it is in writing and signed by the Agent
or RFC and/or such of the Banks as may be required by the provisions of this
Agreement. The making of a RFC Loan during the existence of a Default shall not
constitute a waiver thereof.

 

SECTION 8. THE AGENT

 

8.1 Appointment. RFC and each Bank hereby irrevocably designates and appoints
JPMorgan Chase Bank as the Agent of such Person under this Agreement, and each
such Person irrevocably authorizes JPMorgan Chase Bank, as the Agent for such
Person, to take such action on its behalf under the provisions of this Agreement
and to exercise such powers and perform such duties as are expressly delegated
to the Agent, as the case may be, by the terms of this Agreement, together with
such other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement, the Agent shall not have
any duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with RFC or any Bank, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or otherwise exist against the Agent.

 

8.2 Delegation of Duties. The Agent may execute any of its duties under this
Agreement by or through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties. The Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.

 

8.3 Exculpatory Provisions. Neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be (a)
liable for any action lawfully taken or omitted to be taken by it or such Person
under or in connection with this Agreement (except for its or such Person’s own
gross negligence or willful misconduct), or (b) responsible in any manner to RFC
or any of the Banks for any recitals, statements, representations or warranties
made by the Company or any officer thereof contained in this Agreement or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or the Notes or for any failure of the Company to perform its
obligations hereunder. The Agent shall not be

 

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under any obligation to RFC or any Bank to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement, or to inspect the properties, books or records of the
Company.

 

8.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any Note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Company), independent accountants and other experts
selected by the Agent. The Agent may deem and treat the payee of any Note as the
owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the Agent. The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement unless it shall first receive such advice or concurrence of RFC and/or
the Required Banks as it deems appropriate or it shall first be indemnified to
its satisfaction by the Banks against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement and the Notes in accordance with a request of RFC
or the Required Banks, as the case may be, and such request and any action taken
or failure to act pursuant thereto shall be binding upon RFC and all the Banks
and all future holders of the Notes.

 

8.5 Notice of Default. The Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default hereunder unless the Agent
has received notice from RFC, a Bank or the Company referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
“notice of default”. In the event that the Agent receives such a notice, the
Agent shall promptly give notice thereof to RFC and the Banks. The Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Banks; provided that, unless and until the
Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of RFC and the Banks.

 

8.6 Non-Reliance on Agent and Other Banks. Each of RFC and each Bank expressly
acknowledges that neither the Agent nor any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representations
or warranties to it and that no act by the Agent hereinafter taken, including
any review of the affairs of the Company, shall be deemed to constitute any
representation or warranty by the Agent to RFC or to any Bank. Each of RFC and
each Bank represents to the Agent that it has, independently and without
reliance upon the Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Company and made its own decision to make
its RFC Loans hereunder and enter into this Agreement. Each Bank also represents
that it will, independently and without reliance upon the Agent, RFC or any
other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement, and to make
such investigation as it deems necessary to inform itself as to

 

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the business, operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and other documents
expressly required to be furnished to the Banks by the Agent hereunder, the
Agent shall not have any duty or responsibility to provide any Bank with any
credit or other information concerning the business, operations, property,
financial and other condition or creditworthiness of the Company which may come
into the possession of the Agent or any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates.

 

8.7 Indemnification. The Banks agree to indemnify the Agent in its capacity as
such (to the extent not reimbursed by the Company and without limiting the
obligation of the Company to do so), ratably according to the respective amounts
of their then existing Commitments, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including without limitation at any time following the payment of the RFC
Loans) be imposed on, incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement, or any documents contemplated by
or referred to herein or the transactions contemplated hereby or any action
taken or omitted by the Agent under or in connection with any of the foregoing;
provided that no Bank shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Agent’s gross negligence or
willful misconduct. The agreements in this subsection shall survive the payment
of the RFC Loans and all other amounts payable hereunder.

 

8.8 Agent in Its Individual Capacity. The Agent and its Affiliates may make
loans to, accept deposits from and generally engage in any kind of business with
the Company as though the Agent were not the Agent hereunder. With respect to
its RFC Loans held by it and any Note issued to it, the Agent shall have the
same rights and powers under this Agreement as any Bank and may exercise the
same as though it were not the Agent, and the terms “Bank” and “Banks” shall
include the Agent in its individual capacity.

 

8.9 Successor Agent. The Agent may resign as Agent, upon 10 days’ notice to the
Banks and RFC. If the Agent shall resign as Agent under this Agreement, then the
Required Banks shall appoint from among the Banks a successor agent for the
Banks which successor agent shall be approved by the Company and RFC, whereupon
such successor agent shall succeed to the rights, powers and duties of the Agent
and the term “Agent” shall mean such successor agent effective upon its
appointment, and the former Agent’s rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement or any holders of the Notes. After
any retiring Agent’s resignation hereunder as Agent, the provisions of this
Section 8 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.

 

SECTION 9. MISCELLANEOUS

 

9.1 Amendments and Waivers. Neither this Agreement, any Note, nor any terms
hereof or thereof may be amended, supplemented or modified except in accordance
with the provisions of this subsection. With the written consent of the Required
Banks and RFC, the

 

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Agent and the Company may, from time to time, enter into written amendments,
supplements or modifications hereto for the purpose of adding any provisions to
this Agreement or the Notes or changing in any manner the rights of the Banks or
of the Company hereunder or thereunder or waiving, on such terms and conditions
as the Agent may specify in such instrument, any of the requirements of this
Agreement or the Notes or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall (a) extend the maturity (whether as stated, by acceleration
or otherwise) of any Note, or reduce the rate or extend the time of payment of
interest thereon, or reduce or extend the payment of any fee payable to the
Banks hereunder, or reduce the principal amount thereof, or amend, modify, waive
any provision of subsection 2.10, in each case without the consent of each Bank
directly affected thereby, or (b) amend, modify or waive any provision of this
subsection 9.1 or reduce the percentage specified in the definition of Required
Banks or consent to the assignment or transfer by the Company of any of its
rights and obligations under this Agreement, in each case without the written
consent of all the Banks, or (c) amend, modify or waive any provision of Section
8 without the written consent of the then Agent. Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the Banks
and shall be binding upon the Company, the Banks, RFC, the Agent and all future
holders of the Notes. In the case of any waiver, the Company, RFC, the Banks and
the Agent shall be restored to their former position and rights hereunder and
under the outstanding Notes, and any Default or Event of Default waived shall be
deemed to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right consequent
thereon.

 

9.2 Notices. All notices, requests and demands to or upon the respective parties
hereto to be effective shall be in writing (including by telecopy), and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made when delivered by hand, or three Business Days after being deposited in the
mail, postage prepaid, or one Business Day after being deposited with an
overnight courier service, or, in the case of telecopy notice, when sent,
confirmation of receipt received, addressed (i) in the case of notices, requests
and demands to or upon the Company, the Agent, and RFC, as set forth below and
(ii) in the case of notices, requests and demands to or upon any Bank, as set
forth in an administrative questionnaire delivered by such Bank to the Agent,
or, in each case, to such other address as may be hereafter notified by the
respective parties hereto and any future holders of the Notes:

 

The Company:

 

Humana Inc.
The Humana Building
500 West Main Street 
Louisville, Kentucky 40202
Attention:   James H. Bloem

Senior Vice President and

Chief Financial Officer

Telecopy: (502) 580-3615

The Agent:

  JPMorgan Chase Bank
1111 Fannin, 10th Floor
Houston, TX 77272
Attention: Cherry Arnaez
Telecopy: (713) 750-2782

 

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RFC:

 

c/o The Liberty Hampshire Company, LLC

227 West Monroe

Suite 4000

Chicago, Illinois 60606

Attn: Operations Department

Fax: (312) 977-1967/1699

 

provided that any notice, request or demand to or upon the Agent, RFC or the
Banks pursuant to Section 2 shall not be effective until received.

 

9.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Agent, RFC or any Bank, any right, remedy, power
or privilege hereunder, shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein
provided are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.

 

9.4 Survival of Representations and Warranties. All representations and
warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the Notes.

 

9.5 Payment of Expenses and Taxes; Indemnity. (a) The Company agrees (i) to pay
or reimburse the Agent and RFC for all their reasonable out-of-pocket costs and
expenses incurred in connection with the development, preparation and execution
of, and any amendment, supplement or modification to, this Agreement, the
Liquidity Agreement and the Notes and any other documents prepared in connection
herewith, and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees and disbursements of
counsel to the Agent and to RFC, (ii) to pay or reimburse, RFC each Bank and the
Agent for all their reasonable costs and expenses incurred in connection with
the enforcement or preservation of any rights under this Agreement, the Notes
and any such other documents, including, without limitation, reasonable fees and
disbursements of counsel (including, without limitation, the allocated cost of
in-house counsel) to the Agent, to RFC and to the several Banks, and (iii) to
pay, indemnify, and hold RFC, each Bank and the Agent harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other taxes, if any, which
may be payable or determined to be payable in connection with the execution and
delivery of, or consummation of any of the transactions contemplated by, or any
amendment, supplement or modification of, or any waiver or consent under or in
respect of, this Agreement, the Notes and any such other documents.

 

(b) The Company will indemnify each of the Agent, RFC, the CP Issuer and the
Banks and the directors, officers, managers, members and employees thereof and
each Person, if any, who controls each one of the Agent, RFC, the CP Issuer and
the Banks (any of the foregoing, an “Indemnified Person”) and hold each
Indemnified Person harmless from and

 

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against any and all claims, damages, liabilities and expenses (including without
limitation (i) all fees and disbursements of counsel (including without
limitation, the allocated cost of in-house counsel) with whom an Indemnified
Person may consult in connection therewith and all expenses of litigation or
preparation therefore and (ii) any amounts paid or payable by any Bank pursuant
to its indemnity obligations under subsection 4.8 of the Liquidity Agreement)
which an Indemnified Person may incur or which may be asserted against it in
connection with any litigation or investigation (whether or not such Indemnified
Person is a party to such litigation or investigation) involving this Agreement,
the use of any proceeds of any RFC Loans under this Agreement by the Company or
any Subsidiary, any officer, director, member, manager or employee thereof,
excluding litigation commenced by the Company against any of the Agent or the
Banks which (i) seeks enforcement of any of the Company’s rights hereunder and
(ii) is determined adversely to any of the Agent or the Banks (all such
non-excluded claims, damages, liabilities and expenses, “Indemnified
Liabilities”), provided that the Company shall have no obligation hereunder to
any Indemnified Person with respect to Indemnified Liabilities to the extent
such Indemnified Liabilities resulted from the gross negligence or willful
misconduct of such Indemnified Person.

 

(c) The agreements in this subsection 9.5 shall survive repayment of the RFC
Loans and all other amounts payable hereunder.

 

9.6 Successors and Assigns; Participations; Purchasing Banks. (a) This Agreement
shall be binding upon and inure to the benefit of the Company, the Banks, the
Agent, all future holders of the Notes and their respective successors and
assigns, except that the Company may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of each Bank
and RFC.

 

(b) Any Bank other than a Conduit Lender may, in the ordinary course of its
commercial banking business and in accordance with applicable law, at any time
sell to one or more banks or other entities (“Participants”) participating
interests in any RFC Loans owing to such Bank, any Notes held by such Bank,
and/or any other interests of such Bank hereunder and under the other Loan
Documents. In the event of any such sale by a Bank of a participating interest
to a Participant, such Bank’s obligations under this Agreement to the other
parties under this Agreement shall remain unchanged, such Bank shall remain
solely responsible for the performance thereof, such Bank shall remain the
holder of any such Notes for all purposes under this Agreement, and the Company,
RFC and the Agent shall continue to deal solely and directly with such Bank in
connection with such Bank’s rights and obligations under this Agreement and
under the other Loan Documents. The Company agrees that if amounts outstanding
under this Agreement and the Notes are due or unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of offset in respect
of its participating interest in amounts owing under this Agreement and any
Notes to the same extent as if the amount of its participating interest were
owing directly to it as a Bank under this Agreement or any Notes, provided that
such right of offset shall be subject to the obligation of such Participant to
share with the Banks, and the Banks agree to share with such Participant, as
provided in subsection 9.7. The Company also agrees that each Participant shall
be entitled to the benefits of subsections 2.12, 2.13 and 2.14 with respect to
its participation in the Commitments and the Eurodollar Loans outstanding from
time to time; provided that no Participant shall be entitled to receive any
greater amount pursuant

 

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to such subsections than the transferor Bank would have been entitled to receive
in respect of the amount of the participation transferred by such transferor
Bank to such Participant had no such transfer occurred. No Participant shall be
entitled to consent to any amendment, supplement, modification or waiver of or
to this Agreement or any Note, unless the same is subject to clause (a) of the
proviso to subsection 9.1.

 

(c) Any Bank other than a Conduit Lender may, in the ordinary course of its
commercial banking business and in accordance with applicable law, at any time
sell to any Bank or any Lender Affiliate thereof, and, with the consent of the
Company (unless an Event of Default is continuing), RFC and the Agent (which in
each case shall not be unreasonably withheld) to one or more additional banks or
financial institutions (“Purchasing Banks”) all or any part of its rights and/or
obligations under this Agreement and the Notes pursuant to a Transfer
Supplement, executed by such Purchasing Bank, such transferor Bank and the Agent
(and, in the case of a Purchasing Bank that is not then a Bank or a Lender
Affiliate, and subject to the other qualifiers above, by the Company and RFC)
and agreement by such Purchasing Banks to be bound by the terms of this
agreement including without limitation the provisions of subsection 9.15 hereof;
provided, however, that (i) each such sale shall be accompanied by a
corresponding simultaneous assignment of such selling Bank’s pro rata share to
the Purchasing Bank of (x) its Commitment by taking such action as set forth in
subsection 4.5(a) of the Liquidity Agreement and (y) its Tranche B Commitment
(as defined in the 364-Day Facility) pursuant to and in accordance with the
provisions of subsection 10.6(d) of the 364-Day Facility and (ii) the Purchasing
Bank shall be an Eligible Assignee (as defined in the Liquidity Agreement). Upon
(i) such execution of such Transfer Supplement, (ii) delivery of an executed
copy thereof to the Company and RFC, (iii) compliance with the assignment
procedures under subsection 4.5(a) of the Liquidity Agreement and (iv) payment,
if any, by such Purchasing Bank, such Purchasing Bank shall for all purposes be
a Bank party to this Agreement and shall have all the rights and obligations of
a Bank under this Agreement, to the same extent as if it were an original party
hereto. Such Transfer Supplement shall be deemed to amend this Agreement to the
extent, and only to the extent, necessary to reflect the addition of such
Purchasing Bank and the resulting adjustment of all or a portion of the rights
and obligations of such transferor Bank under this Agreement and the Notes. Upon
the consummation of any transfer to a Purchasing Bank, pursuant to this
subsection 9.6(c), the transferor Bank, the Agent and the Company shall make
appropriate arrangements so that, if required, replacement Notes are issued to
such transferor Bank and new Notes or, as appropriate, replacement Notes, are
issued to such Purchasing Bank, in each case in principal amounts reflecting
their interests or, as appropriate, their outstanding RFC Loans as adjusted
pursuant to such Transfer Supplement. Notwithstanding the foregoing, any Conduit
Lender may assign at any time to its designating Bank hereunder with the consent
of RFC, which consent shall not be unreasonably withheld, but without the
consent of the Company or the Agent any or all of the RFC Loans it may have
funded hereunder and pursuant to its designation agreement and without regard to
the limitations set forth in the first sentence of this subsection 9.6(c);
provided, that such designating Bank affirms its obligations pursuant to
subsection 9.15.

 

(d) The Agent shall maintain at its address referred to in subsection 9.2 (a)
copy of Transfer Supplement delivered to it and a register (the “Register”) for
the recordation of the names and addresses of the Banks and the Commitment of,
and principal amount of the RFC Loans owing to, RFC and to each Bank from time
to time. The entries in the Register shall be

 

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conclusive, in the absence of manifest error, and the Company, the Agent, RFC
and the Banks may treat each Person whose name is recorded in the Register as
the owner of the RFC Loan recorded therein for all purposes of this Agreement.
The Register shall be available for inspection by the Company, RFC or any Bank
at any reasonable time and from time to time upon reasonable prior notice.

 

(e) Upon its receipt of a Transfer Supplement executed by a transferor Bank and
a Purchasing Bank (and, in the case of a Purchasing Bank that is not then a Bank
or an affiliate thereof, by the Company, RFC and the Agent) together with
payment to the Agent of a registration and processing fee of $3,500, the Agent
shall (i) promptly accept such Transfer Supplement (ii) on the Transfer
Effective Date determined pursuant thereto record the information contained
therein in the Register and give notice of such acceptance and recordation to
RFC, the Banks and the Company.

 

(f) The Company authorizes each Bank to disclose to any Participant or
Purchasing Bank (each, a “Transferee”) and any prospective Transferee any and
all financial information in such Bank’s possession concerning the Company which
has been delivered to such Bank by the Company pursuant to this Agreement or
which has been delivered to such Bank by the Company in connection with such
Bank’s credit evaluation of the Company prior to entering into this Agreement.

 

(g) If, pursuant to this subsection 9.6, any interest in this Agreement or any
Note is transferred to a Non-U.S. Bank, the transferor Bank shall cause such
Transferee, concurrently with the effectiveness of such transfer to comply with
the provisions of subsection 2.14.

 

(h) For the avoidance of doubt, the parties to this Agreement acknowledge that
the provisions of this subsection 9.6 concerning assignments relate only to
absolute assignments and that such provisions do not prohibit assignments
creating security interests, including any pledge or assignment by a Bank to any
Federal Reserve Bank in accordance with applicable law.

 

(i) Each of the Company, each Bank and the Agent hereby confirms that it will
not institute against a Conduit Lender or join any other Person in instituting
against a Conduit Lender any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceeding under any state bankruptcy or similar law, for one
year and one day after the payment in full of the latest maturing commercial
paper note issued by such Conduit Lender; provided, however, that each Bank
designating any Conduit Lender hereby agrees to indemnify, save and hold
harmless each other party hereto for any loss, cost, damage or expense arising
out of its inability to institute such a proceeding against such Conduit Lender
during such period of forbearance.

 

(j) Nothing in this section is intended to modify the requirements contained in
the Liquidity Agreement for replacement, addition or participation of Banks
thereto.

 

(k) RFC may, without the consent of any party, assign the RFC Loans at any time
to a Liquidity Institution pursuant to the terms of the Liquidity Agreement.

 

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9.7 Adjustments; Set-off. Except to the extent that this Agreement provides for
payments to be allocated to a particular Bank or Banks, if any Bank (a
“Benefited Bank”) shall at any time receive any payment of all or part of its
RFC Loans, or interest thereon, or receive any collateral in respect thereof
(whether voluntarily or involuntarily, by offset, pursuant to events or
proceedings of the nature referred to in subsection 7.1(f), or otherwise) in a
greater proportion than any such payment to and collateral received by any other
Bank, if any, in respect of such other Bank’s RFC Loans, or interest thereon,
such Benefited Bank shall purchase for cash from the other Banks such portion of
each such other Bank’s RFC Loans, or shall provide such other Banks with the
benefits of any such collateral, or the proceeds thereof, as shall be necessary
to cause such Benefited Bank to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Banks; provided, however, that
if all or any portion of such excess payment or benefits is thereafter recovered
from such Benefited Bank, such purchase shall be rescinded, and the purchase
price and benefits returned, to the extent of such recovery, but without
interest. The Company agrees that each Bank so purchasing a portion of another
Bank’s RFC Loan may exercise all rights of a payment (including, without
limitation, rights of offset) with respect to such portion as fully as if such
Bank were the direct holder of such portion.

 

(b) In addition to any rights and remedies of the Banks provided by law, at any
time when an Event of Default is in existence, each Bank shall have the right,
without prior notice to the Company, any such notice being expressly waived by
the Company to the extent permitted by applicable law, upon any amount becoming
due and payable by the Company hereunder (whether at the stated maturity, by
acceleration or otherwise), to set off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Bank or any branch or
agency thereof to or for the credit or the account of the Company. Each Bank
agrees promptly to notify the Company and the Agent after any such setoff and
application made by such Bank, provided that the failure to give such notice
shall not affect the validity of such setoff and application.

 

9.8 Counterparts. This Agreement may be executed by one or more of the parties
to this Agreement on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Company and the Agent.

 

9.9 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

9.10 WAIVERS OF JURY TRIAL. THE COMPANY, RFC, THE AGENT AND THE BANKS EACH
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.

 

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9.11 Submission To Jurisdiction; Waivers. The Company hereby irrevocably and
unconditionally:

 

(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof; and

 

(b) consents that any such action or proceeding may be brought in such courts,
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same.

 

9.12 Confidentiality of Information. Each Bank acknowledges that some of the
information furnished to such Bank pursuant to this Agreement may be received by
such Bank prior to the time such information shall have been made public, and
each Bank agrees that it will keep all information so furnished confidential and
shall make no use of such information until it shall have become public, except
(a) in connection with matters involving operations under or enforcement of this
Agreement or the Notes, (b) in accordance with each Bank’s obligations under law
or regulation or pursuant to subpoenas or other process to make information
available to governmental or regulatory agencies and examiners or to others, (c)
to each Bank’s Affiliates, employees, agents (including accountants, legal
counsel and other advisors) and Transferees and prospective Transferees so long
as such Persons agree to be bound by this subsection 9.12 and (d) with the prior
written consent of the Company. Notwithstanding anything herein to the contrary
or any contrary understanding or agreement, immediately upon commencement of
discussion, any party subject to confidentiality obligations hereunder or under
any other related documents (and any employee, representative or other agent of
such party) may disclose to any and all persons, without limitation of any kind,
such party’s U.S. federal tax treatment and the U.S. federal tax structure of
the transactions contemplated by this Agreement or any agreement relating hereto
relating to such party and all materials of any kind (including opinions or
other tax analyses) that are provided to it related to such tax treatment and
tax structure. However, no such party shall disclose any information relating to
such tax treatment or tax structure to the extent nondisclosure is reasonably
necessary in order to comply with applicable securities laws.

 

9.13 Bankruptcy Petition Against RFC. Each party to this Agreement hereby
covenants and agrees that on behalf of itself and each of its affiliates, that
prior to the date which is one year and one day after the payment in full of all
outstanding indebtedness of RFC, such party will not institute against, or join
any other Person in instituting against, RFC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States or any state of the United States. The
agreements contained in this subsection and the parties’ respective obligations
hereunder shall survive the termination of this Agreement.

 

9.14 Special RFC Indemnity. The Company agrees to indemnify RFC and its
officers, managers, members (and the direct and indirect owners of such
members), employees, representatives and agents from and against all
liabilities, losses, suits, costs or expenses of any

 

64

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kind in any way related to the acquisition by RFC of RFC Loans (collectively,
“Indemnified Amounts”), provided, however that the Company shall not have any
obligations pursuant to this subsection 9.14 relating to any Indemnified Amounts
resulting solely from the gross negligence or willful misconduct of the Person
seeking indemnification. The Company’s liability with respect to any Indemnified
Amounts with respect to income taxes shall be limited to the amount of tax
(calculated based upon the highest marginal U.S. federal income tax rate for
individuals and the highest marginal state and local tax rates for individuals
resident in New York City), plus interest and penalties thereon, on the increase
in net income of RFC as a result of, arising out of, or in any way related to or
by reason of the successful assertion by any governmental authority that the
Intended Characterization is inappropriate in any regard. As used herein,
“Intended Characterization” means that, for all applicable state, local and
federal income tax purposes, RFC’s acquisition of RFC Loans shall be treated as
the acquisition by RFC of a debt instrument. This indemnity is in addition to
any obligations of the Company set forth in subsection 9.5. The agreements
contained in this subsection and the parties’ respective obligations hereunder
shall survive the termination of this Agreement.

 

9.15 Limited Recourse. Each party to this Agreement acknowledges and agrees that
all transactions with RFC shall be without recourse of any kind to RFC. RFC
shall have no obligation to pay any amounts constituting fees, reimbursement for
expense or indemnities owing under this Agreement (collectively, “Expense
Claims”) and such Expense Claims shall not constitute a claim (as defined in
Section 101 of Title 11 of the United States Bankruptcy Code) against RFC unless
and until RFC has received sufficient amounts pursuant to the CP Rate Loans to
pay such Expense Claims and such amounts are not required to pay the outstanding
indebtedness of RFC. The agreements contained in this section and the parties’
respective obligations hereunder shall survive the termination of this
Agreement.

 

[remainder of this page intentionally blank – signature pages follow]

 

65

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.

 

HUMANA INC. By:  

/s/ James H. Bloem

 

--------------------------------------------------------------------------------

   

Name: James H. Bloem

   

Title:   Senior Vice President &
       Chief Financial Officer

 

RELATIONSHIP FUNDING COMPANY, LLC By:  

/s/ Thomas J. Irvin

 

--------------------------------------------------------------------------------

   

Name: Thomas J. Irvin

   

Title:   Manager

 

JPMORGAN CHASE BANK, as Agent, as CAF
Loan Agent and as a Bank By:  

/s/ James S. Ely, III

 

--------------------------------------------------------------------------------

   

Name: James S. Ely, III

   

Title:   Managing Director

 

BANK OF AMERICA, N.A By:  

/s/ Kevin Bertelsen

 

--------------------------------------------------------------------------------

   

Name: Kevin Bertelsen

   

Title:   Vice President

 

CITIBANK, N.A. By:  

/s/ David A. Dodge

 

--------------------------------------------------------------------------------

   

Name: David A. Dodge

   

Title:   Managing Director

 

364 Day Credit Agreement

--------------------------------------------------------------------------------

WOCHOVIA BANK, NATIONAL ASSOCIATION By:  

/s/ Kimberly Shaffer

 

--------------------------------------------------------------------------------

   

Name: Kimberly Shaffer

   

Title:   Director

 

LEHMAN BROTHERS HOLDINGS, INC. By:  

/s/ Jane E. Gillard

 

--------------------------------------------------------------------------------

   

Name: Jane E. Gillard

   

Title:   Associate

 

THE BANK OF NOVA SCOTIA By:  

/s/ Carolyn A. Calloway

 

--------------------------------------------------------------------------------

   

Name: Carolyn A. Calloway

   

Title:   Managing Director

 

U.S. BANK NATIONAL ASSOCIATION By:  

/s/ Sandra J. Hartay

 

--------------------------------------------------------------------------------

   

Name: Sandra J. Hartay

   

Title:   Vice President

 

PNC BANK, NATIONAL ASSOCIATION By:  

/s/ Richard M. Ellis

 

--------------------------------------------------------------------------------

   

Name: Richard M. Ellis

   

Title:   Senior Vice President

 

364 Day Credit Agreement

--------------------------------------------------------------------------------

BRANCH BANKING AND TRUST COMPANY By:  

/s/ Thatcher L. Townsend III

 

--------------------------------------------------------------------------------

   

Name: Thatcher L. Townsend III

   

Title:   Senior Vice President

 

NATIONAL CITY BANK OF KENTUCKY By:  

/s/ Deroy Scott

 

--------------------------------------------------------------------------------

   

Name: Deroy Scott

   

Title:   Senior Vice President

 

364 Day Credit Agreement

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SCHEDULE I

 

Lending Offices; Addresses for Notices

 

JPMORGAN CHASE BANK

 

270 Park Ave, 15th Floor

New York, NY 10017

Attention: Shamir Khan

Telephone: (212) 270-5833

 

PNC BANK, NATIONAL ASSOCIATION

 

1600 Market Street, 22nd Floor

Philadelphia, PA 19103

Attention: Nicholas A. Aponte

Telephone: (215) 585-5407

 

THE BANK OF NOVA SCOTIA

 

600 Peachtree St. N.E

Atlanta, GA 30308

Attention: Pat Brown

Telephone: (404) 877-1506

 

LEHMAN BROTHERS HOLDING, INC.

 

745 7th Avenue, 19th Floor

New York, NY 10019

Attention: Francis Chang

Telephone: (212) 526-5390

 

THE BANK OF NEW YORK

 

One Wall Street

New York, NY 10286

Attention: Patrick Vatel

Telephone: (212) 635-7882

 

NATIONAL CITY BANK OF KENTUCKY

 

101 South Fifth Street, 37th Floor

Louisville, KY 40202

Attention: Deroy Scott

Telephone: (502) 581-7821

 

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BANK OF AMERICA, N.A.

 

100 N. Tryon Street, NC 1-007-17-11

Charlotte, NC 28255

Attention: Joe Corah

Telephone (704) 386-5976

 

WACHOVIA BANK, NATIONAL ASSOCIATION

 

1339 Chestnut Street

3rd Floor PA 4819

Philadelphia, PA 19107

Charlotte, NC 28288

Attention: Kimberly Shaffer

Telephone: (267) 321-7033

 

CITIBANK, N.A.

 

388 Greenwich Street

New York, NY 10013

Attention: David Dodge

Telephone: (212) 816-4143

 

U.S. BANK NATIONAL ASSOCIATION

 

777 E. Wisconsin Avenue, MK-WI-TGCB

Milwaukee, WI 53202

Attention: Sandra J. Hartay

Telephone: (414) 765-6004

 

BRANCH BANKING AND TRUST COMPANY

 

500 West Broadway

Louisville, KY 40202

Attention: Frank Eckerd

Telephone: (502) 562-5877

 

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SCHEDULE II

 

PRICING GRID

 

Public Debt Ratings
S&P/Moody’s

--------------------------------------------------------------------------------

   Alternate Base
Rate Margin

--------------------------------------------------------------------------------

   Eurodollar Margin

--------------------------------------------------------------------------------

Level 1 ³ BBB+/Baa1

   0 bps    85 bps

Level 2 ³ BBB/Baa2

   0 bps    95 bps

Level 3 ³ BBB-/Baa3

   5 bps    105 bps

Level 4 ³ BB+/Ba1

   20 bps    120 bps

Level 5 < BB+/Ba1

   37.5 bps    137.5 bps

 

Pricing will be determined based upon the lower of the ratings from S&P or
Moody’s, but in the event the Company’s ratings are more than one Level apart,
the pricing will be determined by using the rating which is one Level above the
lower rating; provided, that (i) if on any day the ratings from S&P or Moody’s
are not at the same Level, then the Level applicable to the lower of such
ratings shall be applicable for such day, (ii) if on any day the rating of only
one of S&P or Moody’s is available, then the Level of such rating shall be
applicable for such day and (iii) if on any day a rating is available from
neither of S&P or Moody’s, then Level 5 shall be applicable for such day. Any
change in the applicable Level resulting from a change in the rating of a S&P or
Moody’s shall become effective on the date such change is publicly announced by
S&P or Moody’s, as applicable.