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EXHIBIT 10.02    
  


     CREDIT AGREEMENT

($250,000,000 364-Day Revolving Credit Facility)  


 dated as of  


 March 30, 2001  


 among  


 WELLPOINT HEALTH NETWORKS INC.

as Borrower,  


 THE LENDERS

FROM TIME TO TIME PARTY HERETO,  


 BANK OF AMERICA, N. A.,

as Administrative Agent,  


 and  


 BANC OF AMERICA SECURITIES LLC

and

JPMORGAN,

as Joint Arrangers and Joint Book Managers  





 
  
 

    TABLE OF CONTENTS    
  



	ARTICLE I Definitions	 	1
	 	 	 	Section 1.01	 	Defined Terms	 	1
	 	 	 	Section 1.02	 	Classification of Loans and Borrowings	 	12
	 	 	 	Section 1.03	 	Terms Generally	 	13
	 	 	 	Section 1.04	 	Accounting Terms; GAAP	 	13
	

ARTICLE II The Credits	
 	

13
	 	 	 	Section 2.01	 	Commitments	 	13
	 	 	 	Section 2.02	 	Loans and Borrowings	 	13
	 	 	 	Section 2.03	 	Requests for Borrowings	 	13
	 	 	 	Section 2.04	 	[Intentionally Omitted]	 	15
	 	 	 	Section 2.06	 	[Intentionally Omitted]	 	15
	 	 	 	Section 2.07	 	[Intentionally Omitted]	 	15
	 	 	 	Section 2.08	 	Funding of Borrowings	 	15
	 	 	 	Section 2.09	 	Interest Elections	 	15
	 	 	 	Section 2.10	 	Termination and Reduction of Commitments	 	16
	 	 	 	Section 2.11	 	Repayment of Loans; Evidence of Debt	 	17
	 	 	 	Section 2.12	 	Prepayment of Loans	 	17
	 	 	 	Section 2.13	 	Fees	 	18
	 	 	 	Section 2.14	 	Interest	 	18
	 	 	 	Section 2.15	 	Alternate Rate of Interest	 	19
	 	 	 	Section 2.16	 	Increased Costs	 	20
	 	 	 	Section 2.17	 	Break Funding Payments	 	20
	 	 	 	Section 2.18	 	Taxes	 	21
	 	 	 	Section 2.19	 	Payments Generally; Pro Rata Treatment; Sharing of Set-offs	 	22
	 	 	 	Section 2.20	 	Mitigation Obligations; Replacement of Lenders	 	23
	

ARTICLE III Representations and Warranties	
 	

24
	 	 	 	Section 3.01	 	Organization; Powers	 	24
	 	 	 	Section 3.02	 	Authorization; Enforceability	 	24
	 	 	 	Section 3.03	 	Governmental Approvals; No Conflicts	 	24
	 	 	 	Section 3.04	 	Financial Condition; No Material Adverse Change	 	24
	 	 	 	Section 3.05	 	Properties	 	25
	 	 	 	Section 3.06	 	Litigation and Environmental Matters	 	25
	 	 	 	Section 3.07	 	Compliance with Laws and Agreements	 	25
	 	 	 	Section 3.08	 	Investment and Holding Company Status	 	25
	 	 	 	Section 3.09	 	Taxes	 	25
	 	 	 	Section 3.10	 	ERISA	 	26
	 	 	 	Section 3.11	 	Disclosure	 	26
	 	 	 	Section 3.12	 	Federal Regulations	 	26
	 	 	 	Section 3.13	 	Nature of Business	 	26
	 	 	 	Section 3.14	 	Purpose of Loans	 	26
	

ARTICLE IV Conditions	
 	

27
	 	 	 	Section 4.01	 	Closing Date	 	27
	 	 	 	Section 4.02	 	Each Credit Event	 	27
	

ARTICLE V Affirmative Covenants	
 	

28
	 	 	 	Section 5.01	 	Financial Statements and Other Information	 	28
	 	 	 	Section 5.02	 	Notices of Material Events	 	29
	 	 	 	Section 5.03	 	Existence; Conduct of Business	 	29



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	 	 	 	Section 5.04	 	Payment of Obligations	 	29
	 	 	 	Section 5.05	 	Maintenance of Properties; Insurance	 	29
	 	 	 	Section 5.06	 	Books and Records; Inspection Rights	 	30
	 	 	 	Section 5.07	 	Compliance with Laws and Agreements	 	30
	 	 	 	Section 5.08	 	Use of Proceeds	 	30
	

ARTICLE VI Negative Covenants-	
 	

30
	 	 	 	Section 6.01	 	Financial Covenants	 	30
	 	 	 	Section 6.02	 	Subsidiary Indebtedness	 	30
	 	 	 	Section 6.03	 	Liens	 	31
	 	 	 	Section 6.04	 	Fundamental Changes	 	32
	 	 	 	Section 6.05	 	Transactions with Affiliates	 	32
	 	 	 	Section 6.06	 	Restrictive Agreements	 	32
	 	 	 	Section 6.07	 	Nature of Business	 	33
	 	 	 	Section 6.08	 	Advances, Investments and Loans	 	33
	 	 	 	Section 6.09	 	Restricted Payments	 	33
	

ARTICLE VII Events of Default	
 	

33
	

ARTICLE VIII The Administrative Agent; the Syndication Agent	
 	

35
	

ARTICLE IX Miscellaneous	
 	

37
	 	 	 	Section 9.01	 	Notices	 	37
	 	 	 	Section 9.02	 	Waivers; Amendments	 	37
	 	 	 	Section 9.03	 	Expenses; Indemnity; Damage Waiver	 	38
	 	 	 	Section 9.04	 	Successors and Assigns	 	39
	 	 	 	Section 9.05	 	Survival	 	41
	 	 	 	Section 9.06	 	Counterparts; Integration; Effectiveness	 	41
	 	 	 	Section 9.07	 	Severability	 	42
	 	 	 	Section 9.08	 	Right of Setoff	 	42
	 	 	 	Section 9.09	 	Governing Law; Jurisdiction; Consent to Service of Process	 	42
	 	 	 	Section 9.10	 	WAIVER OF JURY TRIAL	 	42
	 	 	 	Section 9.11	 	Headings	 	43
	 	 	 	Section 9.12	 	Confidentiality	 	43





SCHEDULES:


Schedule 2.01—Commitments

Schedule 3.06—Disclosed Matters

Schedule 6.02—Existing Subsidiary Indebtedness

Schedule 6.03—Existing Liens

Schedule 6.08—Existing Investments 


EXHIBITS:


Exhibit A—Form
of Assignment and Acceptance

Exhibit B—Form of Opinion of Borrower's Counsel 


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CREDIT AGREEMENT    
  


    THIS 364-DAY CREDIT AGREEMENT dated as of March 30, 2001 among WELLPOINT HEALTH
NETWORKS INC., as Borrower, the LENDERS party hereto, BANK OF AMERICA, N.A., as Administrative Agent and JPMORGAN, a division of Chase Securities Inc., as Syndication Agent. 


 
 

W I T N E S S E T H :    
  


    WHEREAS, the Borrower is party to the Credit Agreement dated as of May 15, 1996 (the
"Existing Credit Agreement") among the Borrower, the lenders parties thereto, and Bank of America, N.A., as administrative agent; and 



    WHEREAS, the Borrower, the Lenders and the Administrative Agent desire to replace the Existing Credit Agreement with this Agreement
upon and subject to the terms and conditions hereinafter set forth. 


    NOW, THEREFORE, IN CONSIDERATION of the premises and other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows: 


 
 

ARTICLE I
  
    DEFINITIONS    
  


    Section 1.01  Defined Terms.


    As
used in this Agreement, the following terms have the meanings specified below: 


    "ABR", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are
bearing interest at a rate determined by reference to the Alternate Base Rate. 


    "Acquisition", by any Person, means the acquisition by such Person of at least a majority of the capital stock or all or substantially
all of the Property of another Person, division of another Person or other business unit of another Person, whether or not involving a merger or consolidation with such Person. 


    "Acquired EBITDA" means, with respect to any acquisition permitted under this Agreement, for any period, for the Borrower and its
Subsidiaries (determined in accordance with GAAP), the sum of (a) consolidated pre-tax net income (exclusive of extraordinary gains or losses) plus (b) to the extent deducted
in determining consolidated pre-tax net income, (i) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and
charges associated with Indebtedness, (ii) depreciation and (iii) amortization, all for such period, as each of the items specified above are reasonably allocable to the assets, capital
stock, division or business group acquired in such acquisition. 


    "Administrative Agent" means Bank of America, in its capacity as administrative agent for the Lenders hereunder. 


    "Administrative Questionnaire" means an Administrative Questionnaire in a form supplied by the Administrative Agent. 



    "Affiliate" means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person specified. 


    "Alternate Base Rate" means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and
(b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds 





 


Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. 


    "Applicable Percentage" means, with respect to any Lender, the percentage of the total Commitments represented by such Lender's
Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments. 



    "Applicable Rate" means, for any day, with respect to any Eurodollar Loan, or with respect to the facility fees or utilization fees
payable hereunder, as the case may be, the applicable rate per annum set forth below (in basis points) under the caption "Eurodollar Spread",
"Facility Fee Rate", or "Utilization Fee Rate", as the case may be, based upon the ratings by Moody's
and S&P, respectively, applicable on such date to the Index Debt: 



	Category
 
	 	S&P /Moody's Rating
	 	Eurodollar Spread
	 	Facility Fee Rate
	 	Utilization Fee Rate

(Commitment Utilization

Percentage greater than

or equal to 50% but less

than 75%)
	 	Utilization Fee Rate

(Commitment Utilization

Percentage greater than

or equal to 75%)

	I	 	Greater than or equal to A/A2	 	30.5	 	7.0	 	10.0	 	20.0
	

II	
 	

Greater than or equal to A-/A3 but less than A/A2	
 	

41.5	
 	

8.5	
 	

10.0	
 	

20.0
	

III	
 	

Greater than or equal to BBB+/Baa1 but less than A-/A3	
 	

65.0	
 	

10.0	
 	

12.5	
 	

25.0
	

IV	
 	

Greater than or equal to BBB/Baa2 but less than BBB+/Baa1	
 	

74.5	
 	

13.0	
 	

12.5	
 	

25.0
	

V	
 	

Greater than or equal to BBB-/Baa3 but less than BBB/Baa2	
 	

82.5	
 	

17.5	
 	

12.5	
 	

25.0
	

VI	
 	

Less than BBB-/Baa3	
 	

102.5	
 	

22.5	
 	

25.0	
 	

50.0





    For purposes of the foregoing, (i) if either Moody's or S&P shall not have in effect a rating for the Index Debt (other than by reason
of the circumstances referred to in the last sentence of this definition), then such rating agency shall be deemed to have established a rating in Category VI; (ii) if the ratings
established or deemed to have been established by Moody's and S&P for the Index Debt
shall fall within different Categories, the Applicable Rate shall be based on the higher of the two ratings unless one of the two ratings is two or more Categories lower than the other, in which case
the Applicable Rate shall be determined by reference to the Category next above that of the lower of the two ratings; and (iii) if the ratings established or deemed to have been established by
Moody's and S&P for the Index Debt shall be changed (other than as a result of a change in the rating system of Moody's or S&P), such change shall be effective as of the date on which it is first
announced by the applicable rating agency. Each change in the Applicable Rate shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding
the effective date of the next such change. If the rating system of Moody's or S&P shall change, or if either such rating agency shall cease to be in the business of rating corporate debt obligations,
the Borrower and the Lenders shall negotiate in good faith to amend this definition to reflect such changed rating 


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system or the unavailability of ratings from such rating agency and, pending the effectiveness of any such amendment, the Applicable Rate shall be determined by reference to the rating most recently
in effect prior to such change or cessation. 


    "Approved Fund" means, with respect to any Lender that is a fund that invests in commercial loans, any other fund that invests in
commercial loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor. 


    "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party
whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent and the Borrower. 


    "Availability Period" means the period from and including the Closing Date to but excluding the earlier of the Commitment Termination
Date and the date of termination of the Commitments. 


    "Bank of America" means Bank of America, N.A. 


    "Board" means the Board of Governors of the Federal Reserve System of the United States of America. 


    "Borrower" means WellPoint Health Networks Inc., a Delaware corporation. 


    "Borrowing" means Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to
which a single Interest Period is in effect. 


    "Borrowing Request" means a request by the Borrower for a Borrowing in accordance with Section 2.03. 


    "Business Day" means any day that is not a Saturday, Sunday or other day on which commercial banks in Charlotte, North Carolina or New
York, New York are authorized or required by law to remain closed; provided that, when used in connection with a Eurodollar Loan, the term
"Business Day" shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market. 



    "Capital Lease Obligations" of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance
sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. 


    "Cash Equivalents" shall mean (a) securities issued or directly and fully guaranteed or insured by the United States of America
or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof) having maturities of not more than twelve months from
the date of acquisition ("Government Obligations"), (b) U.S. dollar denominated (or foreign currency fully hedged) time deposits, certificates of
deposit, Eurodollar time deposits and Eurodollar certificates of deposit of (y) any domestic commercial bank of recognized standing having capital and surplus in excess of $250,000,000 or
(z) any bank whose short-term commercial paper rating from S&P is at least A-1 or the equivalent thereof or from Moody's is at least P-1 or the equivalent
thereof (any such bank being an "Approved Bank"), in each case with maturities of not more than 364 days from the date of acquisition,
(c) commercial paper and variable or fixed rate notes issued by any Approved Bank (or by the parent company thereof) or commercial paper or any variable rate notes issued by, or guaranteed by
any domestic corporation rated A-2 (or the equivalent thereof) or better by S&P or P-2 (or the equivalent thereof) or better by Moody's and maturing within six months of the
date of acquisition, (d) repurchase agreements with a bank or trust company (including a Lender) or a recognized securities dealer having capital and surplus in excess of $500,000,000 for
direct obligations issued by or fully guaranteed by the United States of America, 


3





 


(e) obligations of any state of the United States or any political subdivision thereof for the payment of the principal and redemption price of and interest on which there shall have been
irrevocably deposited Government Obligations maturing as to principal and interest at times and in amounts sufficient to provide such payment and (f) auction preferred stock rated in the
highest short-term credit rating category by S&P or Moody's. 


    "Change in Control" means (a) any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of
the SEC thereunder as in effect on the date hereof) shall have acquired ownership, directly or indirectly, beneficially or of record, of shares representing more than 35% of the aggregate ordinary
voting power represented by the issued and outstanding capital stock of the Borrower; or (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the
Borrower by Persons who were neither (i) nominated by the board of directors of the Borrower nor (ii) appointed by directors so nominated. 


    "Change in Law" means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in
any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender (or, for purposes of
Section 2.16(b), by any lending office of such Lender or by such Lender's holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement. 


    "Closing Date" means the date hereof. 


    "Code" means the Internal Revenue Code of 1986, as amended from time to time. 


    "Commitment" means with respect to each Lender, the commitment of such Lender to make Loans hereunder, as such commitment may be
(a) reduced from time to time pursuant to Section 2.10 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04.
The initial amount of each Lender's Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Commitment, as applicable. 


    "Commitment Termination Date" means the date 364 days following the Closing Date. 


    "Commitment Utilization Percentage" means on any day the percentage equivalent of a fraction (a) the numerator of which is the
sum of the aggregate outstanding principal amount of Loans (the "Used Commitment") and (b) the denominator of which is the aggregate amount of
the Commitments (or, on any day after termination of the Commitments, the aggregate amount of the Commitments in effect immediately preceding such termination). 


    "Consolidated Assets" means the consolidated assets of the Borrower and its Subsidiaries, determined in accordance with GAAP. 


    "Consolidated EBITDA" means, for any period, Consolidated Net Income for such period  plus, without duplication and to the extent reflected as a charge in the statement
of such Consolidated Net Income for such period, the sum of
(a) income tax expense, (b) interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with
Indebtedness (including the Loans), (c) depreciation and amortization expense, (d) amortization of intangibles (including, but not limited to, goodwill) and organization costs,
(e) any extraordinary, unusual or non-recurring non-cash expenses or non-cash losses (including, whether or not otherwise includable as a separate item in
the statement of such Consolidated Net Income for such period, non-cash losses on sales of assets outside of the ordinary course of business), and (f) any other non-cash
charges, and minus, to the extent included in the statement of such Consolidated Net Income for such period, the sum of (a) any extraordinary,
unusual or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such Consolidated Net 


4





 


Income for such period, gains on the sales of assets outside of the ordinary course of business) and (b) any other non-cash income, all as determined on a consolidated basis. 


    "Consolidated Funded Indebtedness" means, at any date, all liabilities of the Borrower and its Subsidiaries that are or should be
reflected at such date on the Borrower's consolidated balance sheet as debt in accordance with GAAP. 


    "Consolidated Interest Coverage Ratio" means, for any period, the ratio of (a) Consolidated EBITDA for such period to
(b) Consolidated Interest Expense for such period. 


    "Consolidated Interest Expense" means, for any period, total cash interest expense (including that attributable to Capital Lease
Obligations) of the Borrower and its Subsidiaries for such period with respect to all outstanding Indebtedness of the Borrower and its Subsidiaries (including all commissions, discounts and other fees
and charges owed with respect to letters of credit and bankers' acceptance financing and net costs under Hedging Agreements in respect of interest rates to the extent such net costs are allocable to
such period in accordance with GAAP). 


    "Consolidated Leverage Ratio" means, for any period, the ratio of (a) Consolidated Funded Indebtedness as of the last day of
such period to (b) the sum of (i) Consolidated EBITDA for such period, plus (ii) with respect to any acquisition permitted under this Agreement made during such period, the
aggregate amount of Acquired EBITDA from the first day of such period to the date on which each such acquisition was made. 



    "Consolidated Net Income" means, for any period, the consolidated net income (or loss) of the Borrower and its Subsidiaries, determined
on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income (or deficit) of any Person accrued prior to
the date it
becomes a Subsidiary of the Borrower or is merged into or consolidated with the Borrower or any of its Subsidiaries, and (b) the income (or deficit) of any Person (other than a Subsidiary of
the Borrower) in which the Borrower or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Borrower or such Subsidiary in the form
of dividends or similar distributions. 


    "Consolidated Net Tangible Assets" means the Consolidated Assets less: (i) all current liabilities and minority interests and
(ii) goodwill and other intangibles (other than patents, trademarks, licenses, copyrights and other intellectual property and prepaid assets). 


    "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of
a Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and
"Controlled" have meanings correlative thereto. 


    "Default" means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless
cured or waived, become an Event of Default. 


    "Disclosed Matters" means the actions, suits and proceedings and the environmental matters disclosed in Schedule 3.06. 


    "dollars" or "$" refers to lawful money of the United States of America. 



    "Environmental Laws" means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or
threatened release of any Hazardous Material. 


    "Environmental Liability" means any liability, contingent or otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of
any 


5





 


Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. 


    "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. 



    "ERISA Affiliate" means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code. 


    "ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan;
(d) the incurrence by the Borrower or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or
any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the
incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the
Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA. 


    "Eurodollar", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are
bearing interest at a rate determined by reference to the LIBO Rate. 


    "Event of Default" has the meaning assigned to such term in Article VII. 


    "Excess Utilization Day" means each day on which the Commitment Utilization Percentage equals or exceeds 50%. 


    "Excluded Taxes" means, with respect to the Administrative Agent, any Lender, or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the
laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits
taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which any Lender is located and (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by the Borrower under Section 2.20(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a
party to this Agreement or is attributable to such Foreign Lender's failure or inability to comply with Section 2.18(e). 


    "Federal Funds Effective Rate" means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) 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 that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. 


6





 


    "Fee Letter" shall mean the letter agreement dated February 9, 2001 addressed to the Borrower from the Administrative Agent, as
amended, modified, restated or otherwise supplemented from time to time. 


    "Financial Officer" means the chief financial officer, principal accounting officer, senior vice president of finance, treasurer or
controller of the Borrower or any officer having substantially the same position for the Borrower. 


    "Five Year Facility" means the Credit Agreement dated as of the date hereof among the Borrower, the lenders parties thereto, Bank of
America, as administrative agent and others, providing for a $750,000,000 credit and competitive advance facility for a five year period, as amended and extended from time to time. 



    "Foreign Lender" means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located.
For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction. 


    "GAAP" means generally accepted accounting principles in the United States of America. 


    "Governmental Authority" means the government of the United States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. 


    "Guarantee" of or by any Person (the "guarantor") means any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account
party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee
shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Guarantee shall be deemed equal to the stated or determinable amount of the primary
obligation in respect of which such contingent obligation is made or, if not stated or if indeterminable, the maximum reasonably anticipated liability in respect of such primary obligation, and in the
case of other Guarantees other than in respect of Hedging Agreements, shall be equal to the maximum reasonably anticipated liability in respect of such Guarantees and, in the case of Guarantees in
respect of Hedging Agreements, shall be equal to the Hedging Agreement Termination Value. 


    "Hazardous Materials" means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or
wastes of any nature regulated pursuant to any Environmental Law. 


    "Hedging Agreement" means any interest rate protection agreement, foreign currency exchange agreement, commodity price protection
agreement or other interest or currency exchange rate or commodity price hedging arrangement. 


    "Hedging Agreement Termination Value" means, in respect of any one or more Hedging Agreements, after taking into account the effect of
any legally enforceable netting agreement relating to such Hedging Agreements, (a) for any date on or after the date such Hedging Agreements have been closed out and the termination value or
values determined in accordance therewith, such 


7





 


termination values, and (b) for any date prior to the date referenced in clause (a) the amounts determined as the mark-to-market value or values for such Hedging
Agreements. 


    "HMO" means a health maintenance organization (or similar entity) doing business as such (or required to qualify or to be licensed as
such) under HMO Regulations. 


    "HMO Regulation" means all laws, regulations, directives and administrative orders applicable under federal or state law to health
maintenance organizations (or similar entities) and any regulations, orders and directives promulgated or issued pursuant thereto. 


    "HMO Regulator" means any Person charged with the administration, oversight or enforcement of an HMO Regulation and the Blue Cross Blue
Shield Association. 


    "HMO Subsidiary" means any Subsidiary of the Borrower that is now or hereafter an HMO. 


    "Indebtedness" of any Person means, without duplication, (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person under conditional sale or other title retention agreements relating
to property acquired by such Person, (d) all obligations of such Person in respect of the deferred purchase price of property or services (excluding current accounts payable or other like
obligations incurred in the ordinary course of business), (e) all Guarantees by such Person of Indebtedness of others, (f) all Capital Lease Obligations of such Person, (g) all
obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit, (h) all obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances and (i) all indebtedness referred to in clauses (a) through (h) above of others secured by (or for which the holder of such indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the indebtedness secured thereby has been assumed. The Indebtedness of any Person shall
include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor. Notwithstanding the foregoing, Indebtedness
shall exclude Indebtedness of the Borrower to any Subsidiary and of any Subsidiary to the Borrower or any other Subsidiary. 


    "Indemnified Taxes" means Taxes other than Excluded Taxes. 


    "Index Debt" means senior, unsecured, long-term indebtedness for borrowed money of the Borrower that is not guaranteed by
any other Person or subject to any other credit enhancement. 


    "Insurance Regulation" means any law, regulation, rule, directive or order applicable to an insurance company. 


    "Insurance Regulator" means any Person charged with the administration, oversight or enforcement of any Insurance Regulation. 


    "Insurance Subsidiary" means any Subsidiary of the Borrower that is now or hereafter doing business (or required to qualify or to be
licensed) under Insurance Regulations. 


    "Interest Election Request" means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.09. 


    "Interest Payment Date" means (a) with respect to any ABR Loan, the last day of each March, June, September and December, and
(b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months' duration, each day prior to the last day of such Interest Period that occurs at intervals of three months' duration after the first day of such Interest Period. 


8







  




    "Interest Period" means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the Borrower may elect; provided, that (i) if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such
Interest Period shall end on the immediately preceding Business Day and (ii) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. 


    "Lenders" means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an
Assignment and Acceptance, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance. 



    "LIBO Rate" means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750 of Telerate (or on
any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as
determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event
that such rate is not available at such time for any reason, then the "LIBO Rate" with respect to such Eurodollar Borrowing for such Interest Period
shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately
available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period. 


    "Lien" means, with respect to any asset (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge or
security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities issued by any Subsidiary, any purchase option, call or similar
right of a third party with respect to such securities; provided, however, that a "Lien" shall not be
deemed to arise from reverse repurchase agreements where the Borrower is the seller or from programs where the Borrower lends securities. 


    "Loan" or "Loans" means the loans made by the Lenders to the Borrower pursuant to this
Agreement. 


    "Material Adverse Effect" means a material adverse effect on (a) the business, property, operations or financial condition of
the Borrower and the Subsidiaries taken as a whole, (b) the ability of the Borrower to perform its obligations under this Agreement or (c) the legal rights of or benefits available to
the Lenders under this Agreement. 


    "Material Indebtedness" means Indebtedness (other than the Loans), or obligations in respect of one or more Hedging Agreements, of any
one or more of the Borrower and its Subsidiaries in an aggregate principal amount exceeding $40,000,000. For purposes of determining Material Indebtedness, the "principal amount" of the obligations of
the Borrower or any Subsidiary in respect of any Hedging Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary
would be required to pay if such Hedging Agreement were terminated at such time. 


    "Maturity Date" means March 29, 2003. 


9





 


    "Moody's" means Moody's Investors Service, Inc. 


    "Multiemployer Plan" means a multiemployer plan as defined in Section 4001(a)(3) of ERISA. 



    "Other Taxes" means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement. 


    "PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar
functions. 



    "Permitted Encumbrances" means: 



    (a) Liens
imposed by law for taxes that are not yet due or are being contested in compliance with Section 5.04; 


    (b) carriers',
warehousemen's, mechanics', materialmen's, repairmen's and other like Liens imposed by law, arising in the ordinary course of business and securing
obligations that are not overdue by more than 60 days or are being contested in compliance with Section 5.04; 


    (c) pledges
and deposits made in the ordinary course of business in compliance with workers' compensation, unemployment insurance and other social security laws or
regulations; 


    (d) deposits
to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a
like nature, in each case in the ordinary course of business; and 


    (e) easements,
zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of
business that do not secure any monetary obligations and do not materially detract from the value of the affected property or interfere with the ordinary conduct of business of the Borrower or any
Subsidiary; 


provided that the term "Permitted Encumbrances" shall not include any Lien securing Indebtedness. 




    "Permitted Investments" shall mean: 



    (a) cash
and Cash Equivalents; 


    (b) receivables
owing to the Borrower or any of its Subsidiaries or any receivables and advances to clients, customers or suppliers, in each case if created, acquired
or made in the ordinary course of business; 



    (c) investments
(including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business; 


    (d) investments
existing as of the Closing Date and set forth in Schedule 6.08; 


    (e) loans
to employees, directors or officers of the Borrower or any Subsidiary in the ordinary course of business, including, without limitation, in connection with
the award of convertible bonds or stock under a stock incentive plan, stock option plan or other equity-based compensation plan or arrangement in the ordinary course of business; 



    (f)  Guarantees
by the Borrower of the obligations of any Subsidiary or by any Subsidiary of the obligations of any other Subsidiary; 


    (g) equity
investments by the Borrower and its Subsidiaries in Subsidiaries of the Borrower and Indebtedness permitted under Section 6.02(b); 



10





 


    (h) Hedging Agreements in the ordinary course of business; 



    (i)  Acquisitions; 


    (j)  readily
marketable securities acquired in conformance with the Borrower's "investment policy" dated August 5, 1998 (a copy of which has been delivered to
the Administrative Agent and the Lenders) and any amendments to such investment policy so long as such amendments do not substantially modify such investment policy;  provided, however that (i) the amount invested in equity securities (other than such securities
of Subsidiaries of the Borrower) at any one time shall not exceed 20% of the amount invested in all securities (other than securities of Subsidiaries of the Borrower) and (ii) the amount
invested in repurchase agreements at any one time shall not exceed 20% of the amount invested in all securities (other than securities of Subsidiaries of the Borrower); and 


    (k) additional
loan advances and/or investments not included within the foregoing clauses hereof, provided that such
loans, advances and/or investments made pursuant to this clause (k) shall not exceed an aggregate amount of more than ten percent (10%) of the Consolidated Assets determined as of the end of
the most recently completed fiscal year. 




    As
used herein, "investment" means all investments, in cash or by delivery of property made, directly or indirectly in, to or from any
Person, whether by acquisition of shares of capital stock, indebtedness or other obligations or securities or by loan advance, capital contribution or otherwise. 


    "Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity. 


    "Plan" means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. 


    "Prime Rate" means the rate of interest per annum publicly announced from time to time by Bank of America as its prime rate in effect
at its principal office in Charlotte, North Carolina; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. 


    "Register" has the meaning set forth in Section 9.04. 



    "Related Parties" means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers,
employees, agents and advisors of such Person and such Person's Affiliates. 


    "Required Lenders" means, at any time, Lenders having Loans and unused Commitments representing more than 50% of the sum of the total
Loans and unused Commitments at such time. 


    "Restricted Payment" means (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of
capital stock of the Borrower or any of its Subsidiaries, now or hereafter outstanding, (ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of capital stock of the Borrower or any of its Subsidiaries, now or hereafter outstanding, and (iii) any payment made to retire, or to
obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of capital stock of the Borrower or any of its Subsidiaries, now or hereafter outstanding. 


    "SEC" means the United States Securities and Exchange Commission. 


    "S&P" means Standard & Poor's Ratings Services. 


11





 


    "Significant Subsidiary" means, at any particular time, any Subsidiary of the Borrower (or such Subsidiary and its Subsidiaries taken
together) that would be a "significant subsidiary" of the Borrower within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC. 


    "Statutory Reserve Rate" means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of
which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to
which the Administrative Agent or any Lender is subject for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve percentages
shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of
or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in any reserve percentage. 


    "subsidiary" means, with respect to any Person (the "parent") at any date, any
corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements
if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of
which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general
partnership interests are, as of such date, owned, Controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent. 


    "Subsidiary" means any subsidiary of the Borrower. 


    "Syndication Agent" means JPMorgan, a division of Chase Securities, Inc., in its capacity as Syndication Agent hereunder. 


    "Taxes" means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority. 


    "Transactions" means the execution, delivery and performance by the Borrower of this Agreement, the borrowing of Loans and the use of
the proceeds thereof. 


    "Type", when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans
comprising such Borrowing, is determined by reference to the LIBO Rate or the Alternate Base Rate. 


    "Used Commitment" has the meaning set forth in the definition of "Commitment Utilization Percentage" in Section 1.01. 



    "Withdrawal Liability" means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer
Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA. 


    Section 1.02  Classification of Loans and Borrowings.


    For
purposes of this Agreement, Loans may be classified and referred to by Type (e.g., a "Eurodollar Loan"). Borrowings also may be
classified and referred to by Type (e.g., a "Eurodollar Borrowing"). 


12





 

    Section 1.03  Terms Generally.


    The
definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be
construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments,
supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein",
"hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to
Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words "asset" and "property" shall
be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. 


    Section 1.04  Accounting Terms; GAAP.


    Except
as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time;  provided that, if the Borrower notifies
the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect
of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders
request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in
accordance herewith. 


 
 

ARTICLE II
  
    THE CREDITS    
  


    Section 2.01  Commitments.



    Subject
to the terms and conditions set forth herein, each Lender agrees to make Loans to the Borrower from time to time during the Availability Period in an aggregate principal
amount that will not result in (a) the aggregate principal amount of such Lender's Loans exceeding such Lender's Commitment or (b) the aggregate principal amount of Loans exceeding the
total Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Loans. 


    Section 2.02  Loans and Borrowings.



    (a) Each
Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their respective Commitments. The failure of any
Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender's failure to make Loans as required. 


    (b) Subject
to Section 2.15, (i) each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance
herewith. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such 



13





 


Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance
with the terms of this Agreement. 


    (c) At
the commencement of each Interest Period for any Eurodollar Borrowing or ABR Borrowing, such Borrowing shall be in a minimum aggregate amount of $5,000,000 and
integral multiples of $500,000 in excess thereof; provided that an ABR Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Commitments. Borrowings of more than one Type may be outstanding at the same time; provided that there shall not at any time be
more than an aggregate total of ten Eurodollar Borrowings outstanding. 


    (d) Notwithstanding
any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the
Interest Period requested with respect thereto would end after (i) the Commitment Termination Date, if the Interest Period would begin prior to the Commitment Termination Date, or
(ii) the Maturity Date, if the Interest Period would begin on or after the Commitment Termination Date. 




    Section 2.03  Requests for Borrowings.


    To
request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 12:00 noon
(Charlotte, North Carolina time), three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00 noon (Charlotte, North Carolina
time), on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Borrowing Request in a form approved by the Administrative Agent and signed by the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in
compliance with Section 2.02: 



    (i)  the
aggregate amount of the requested Borrowing; 


    (ii) the
date of such Borrowing, which shall be a Business Day; 


    (iii) whether
such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; 


    (iv) in
the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term
"Interest Period"; and 


    (v) the
location and number of the Borrower's account to which funds are to be disbursed, which shall comply with the requirements of Section 2.08. 




    If
no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested
Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month's duration. Promptly following receipt of a Borrowing Request in accordance with this Section,
the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender's Loan to be made as part of the requested Borrowing. 


14





 


    Section 2.04  [Intentionally Omitted].


    Section 2.05  [Intentionally Omitted].


    Section 2.06  [Intentionally Omitted].



    Section 2.07  [Intentionally Omitted].


    Section 2.08  Funding of Borrowings.



    (a) Each
Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 2:00 p.m.
(Charlotte, North Carolina time), to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Administrative Agent in Charlotte, North Carolina and
designated by the Borrower in the applicable Borrowing Request. 


    (b) Unless
the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender's share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of
this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing
available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such
Lender, the Federal Funds Effective Rate or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative Agent, then such
amount shall constitute such Lender's Loan included in such Borrowing. 




    Section 2.09  Interest Elections.



    (a) Each
Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar
Borrowing, may elect Interest Periods therefore, all as provided in this Section. The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case
each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. 


    (b) To
make an election pursuant to this Section, the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request
would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic
Interest Election Request shall be irrevocable
and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the
Borrower. 



15





 


    (c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02: 



    (i)  the
Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions
thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting
Borrowing); 


    (ii) the
effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day; 


    (iii) whether
the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and 


    (iv) if
the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term "Interest Period." 





    If
any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of
one month's duration. 



    (d) Promptly
following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender's portion of
each resulting Borrowing. 


    (e) If
the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable
thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision
hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as an Event of Default is
continuing (i) no outstanding Borrowing may be
converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable
thereto. 




    Section 2.10  Termination and Reduction of Commitments.



    (a) Unless
previously terminated, the Commitments shall terminate on the Commitment Termination Date (provided that the Lenders shall thereafter continue to make
extensions and conversions of Loans outstanding on the Commitment Termination Date until the Maturity Date). 


    (b) The
Borrower may at any time terminate, or from time to time reduce, the Commitments in whole or in part; provided
that (i) each reduction of the Commitments shall be in an aggregate amount not less than $50,000,000 and integral multiples of $10,000,000 in excess thereof and (ii) the Borrower shall
not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.12, the aggregate principal amount of outstanding Loans
would exceed the total Commitments. 


    (c) The
Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least three
Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable; provided that a
notice of termination of the Commitments delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, 



16





 


in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or
reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments. 




    Section 2.11  Repayment of Loans; Evidence of Debt.



    (a) The
Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Loan and all
interest, fees and other amounts payable hereunder on the Maturity Date. 


    (b) Each
Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from
each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. 



    (c) The
Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Type thereof and the Interest
Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of
any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender's share thereof. 


    (d) The
entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima
facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender or the
Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement. 


    (e) Any
Lender may request that Loans made by it be evidenced by a promissory note. In such event, the Borrower shall prepare, execute and deliver to such Lender a
promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent and the Borrower.
Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns). 




    Section 2.12  Prepayment of Loans.



    (a) The
Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with
paragraph (b) of this Section. 


    (b) The
Borrower shall notify the Administrative Agent by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a
Eurodollar Borrowing, not later than
11:00 a.m. (Charlotte, North Carolina time), three Business Days before the date of prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m.
(Charlotte, North Carolina time), one Business Day before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing
or portion thereof to be prepaid; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the
Commitments as contemplated by Section 2.10, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.10. Promptly following
receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each 



17





 


partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02. Each prepayment of a
Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.14. 




    Section 2.13  Fees.



    (a) The
Borrower agrees to pay to the Administrative Agent for the account of each Lender a facility fee, which shall accrue at the Applicable Rate on the daily amount
of the Commitment of such Lender (whether used or unused) during the period from and including the Closing Date to but excluding the date on which such Commitment terminates;  provided that, if such
Lender continues to have any outstanding Loans after its Commitment terminates, then such facility fee shall continue to accrue
on the daily aggregate principal amount of such Lender's outstanding Loans from and including the date on which its Commitment terminates to but excluding the date on which such Lender ceases to have
any outstanding Loans. Accrued facility fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which the Commitments terminate,
commencing on the first such date to occur after the date hereof; provided that any facility fees accruing after the date on which the Commitments
terminate shall be payable on demand. All facility fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day
but excluding the last day). 


    (b) The
Borrower agrees to pay to the Administrative Agent for the account of each Lender a utilization fee equal to (i) the Applicable Rate in effect from time
to time for each day on which the Commitment Utilization Percentage is less than 75%, but greater than or equal to 50% and (ii) at a rate equal to the Applicable Rate in effect from time to
time for each day on which the Commitment Utilization Percentage equals or exceeds 75%, which fee shall accrue on the daily amount of the Used Commitment of such Lender for each Excess Utilization Day
during the period from and including the Closing Date to but excluding the date on which such Lender's Commitment terminates; provided that, if such
Lender continues to have any outstanding Loans after its Commitment terminates, then such utilization fee shall continue to accrue on the daily aggregate principal amount of such Lender's Loans
for each Excess Utilization Day from and including the date on which its Commitment terminates to but excluding the date on which such Lender ceases to have any outstanding Loans. Accrued utilization
fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which the Commitments terminate, commencing on the first such date to occur
after the date hereof; provided that any utilization fees accruing after the date on which the Commitments terminate shall be payable on demand. All
utilization fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). 



    (c) The
Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the
Borrower and the Administrative Agent. 


    (d) All
fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, in the case of facility
fees and utilization fees, to the Lenders. Fees paid shall not be refundable under any circumstances. 




    Section 2.14  Interest.



    (a) The
Loans comprising each ABR Borrowing shall bear interest at a rate per annum equal to the Alternate Base Rate. 



18





 


    (b) The Loans comprising each Eurodollar Borrowing shall bear interest at a rate per annum equal to the LIBO Rate for the Interest Period in effect for such Borrowing
plus the Applicable Rate. 


    (c) Notwithstanding
the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due,
whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue
principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided above or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Loans as provided above. 


    (d) Accrued
interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan; provided that
(i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of
an ABR Loan prior to the end of the Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment, (iii) in the
event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefore, accrued interest on such Loan shall be payable on the effective date of such conversion and
(iv) all accrued interest shall be payable upon termination of the Commitments. 


    (e) All
interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times
when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the
actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error. 


    (f)  If
any Lender shall be required under the regulations of the Board to maintain reserves with respect to liabilities or assets consisting of, or including,
Eurocurrency Liabilities (as defined in Regulation D of the Board), the Borrower shall pay to the Administrative Agent for the account of such Lender, additional interest on the unpaid
principal amount of each Eurodollar Loan made to the Borrower by such Lender, from the date of such Loan until such Loan is paid in full, at an interest rate per annum equal at all times during the
Interest Period for such Eurodollar Loan to the remainder obtained by subtracting (i) the LIBO Rate for such Interest Period from (ii) the rate obtained by multiplying LIBO Rate as
referred to in clause (i) above by the Statutory Reserve Rate applicable to such Lender for such Interest Period. Such additional interest shall be determined by such Lender and notified to the
Borrower (with a copy to the Administrative Agent) not later than five Business Days before the next Interest Payment Date for such Eurodollar Loan, and such additional interest so notified to the
Borrower by any Lender shall be payable to the Administrative Agent for the account of such Lender on each Interest Payment Date for such Eurodollar Loan. 




    Section 2.15  Alternate Rate of Interest.


    If
prior to the commencement of any Interest Period for a Eurodollar Borrowing: 



    (a) the
Administrative Agent reasonably determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for
ascertaining the LIBO Rate for such Interest Period; or 


    (b) the
Administrative Agent is advised by the Required Lenders that the LIBO Rate for such Interest Period will not, in their reasonable judgment, adequately and
fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period; 



19







  




    then
the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative
Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing
to, or continuation of any Borrowing as, a Eurodollar shall be ineffective, and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing;  provided that if the circumstances giving rise to such notice affect only one Type of Borrowings, then the other Type of Borrowings shall be permitted. 


    Section 2.16  Increased Costs.



    (a) If
any Change in Law shall: 



    (i)  impose,
modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended
by, any Lender (other than any reserves included in the Statutory Reserve Rate); or 


    (ii) impose
on any Lender or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender; 





and
the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to reduce
the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise), then the Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered. 



    (b) If
any Lender reasonably determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company, if any, as a consequence of this Agreement or the Loans made by such Lender, to a level below that which such Lender or such
Lender's holding company could have achieved but for such Change in Law (taking into consideration such Lender's policies and the policies of such Lender's holding company with respect to capital
adequacy), then from time to time the
Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender's holding company for any such reduction suffered. 


    (c) A
certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in
paragraph (a) or (b) of this Section and the method of calculating such amounts, in reasonable detail, shall be delivered to the Borrower and shall be conclusive absent manifest error.
The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. 


    (d) Failure
or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's right to demand such
compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions
incurred more than six months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's intention to claim
compensation therefore; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the
six-month period referred to above shall be extended to include the period of retroactive effect thereof. 




    Section 2.17  Break Funding Payments.



    In
the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event
of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any
Loan on the date specified in any notice 


20





 


delivered pursuant hereto (regardless of whether such notice is permitted to be revocable under Section 2.12(b) and is revoked in accordance herewith), (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.20, then, in any such event, the Borrower
shall compensate each Lender for the loss, cost and expense (but not loss of profit) attributable to such event. In the case of a Eurodollar Loan, the loss to any Lender attributable to any such event
shall be deemed to include an amount reasonably determined by such Lender to be equal to the excess, if any, of (i) the amount of interest that such Lender would pay for a deposit equal to the
principal amount of such Loan for the period from the date of such payment, conversion, failure or assignment to the last day of the then current Interest Period for such Loan (or, in the case of a
failure to borrow, convert or continue, the duration of the Interest Period that would have resulted from such borrowing, conversion or continuation) if the interest rate payable on such deposit were
equal to the LIBO Rate for such Interest Period, over (ii) the amount of interest that such Lender would earn on such principal amount for such period if such Lender were to invest such
principal amount for such period at the interest rate that would be bid by such Lender (or an affiliate of such Lender) for dollar deposits from other banks in the eurodollar market at the
commencement of such period. A certificate of any Lender setting forth any amount or
amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof. 


    Section 2.18  Taxes.



    (a) Any
and all payments by or an account of any obligation of the Borrower hereunder shall be made free and clear of and without deduction for any Indemnified Taxes or
Other Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum
payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, Lender
(as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower
shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. 


    (b) In
addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. 


    (c) The
Borrower shall indemnify the Administrative Agent and each Lender, within 10 days after written demand therefore, for the full amount of any Indemnified
Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Administrative Agent or such Lender, as the
case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender, or by the Administrative Agent on its own behalf or
on behalf of a Lender, shall be conclusive absent manifest error. 


    (d) As
soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such
payment reasonably satisfactory to the Administrative Agent. 


    (e) Any
Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrower is located, or any
treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Borrower 



21





 


(with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower, such properly completed and executed documentation prescribed by
applicable law as will permit such payments to be made without withholding or at a reduced rate. 


    (f)  If
the Borrower pays any additional amount under this Section 2.18 in respect of any Lender and such Lender determines in its sole judgment that it has
actually received or realized in connection therewith any refund or any reduction of, or credit against, its Tax liabilities in or with respect to the taxable year in which the additional amount is
paid (a "Tax Benefit"), such Lender shall pay to the Borrower an amount that such Lender determines, in its sole judgment, is equal to the net benefit, after tax, which was obtained by such Lender in
such year as a consequence of such Tax Benefit; provided, however, that (i) such Lender may determine, in its sole judgment consistent with the policies of such Lender, whether to seek a Tax
Benefit, (ii) any Taxes that are imposed on such Lender as a result of a disallowance or reduction (including through the expiration of any tax credit carryover or carryback of such lender that
otherwise would not have expired) of any Tax Benefit with respect to which such Lender has made a payment to the Borrower pursuant to the Section 2.18(f) shall be treated as a Tax for which the
Borrower is obligated to indemnify such Lender pursuant to this Section 2.18 without any exclusions or defenses and (iii) nothing in this Section 2.18(f) shall require such Lender
to disclose any confidential information to the Borrower (including, without limitation, its tax returns). 




    Section 2.19  Payments Generally; Pro Rata Treatment; Sharing of Set-offs.



    (a) The
Borrower shall make each payment required to be made by it hereunder (whether of principal, interest or fees under Section 2.16, 2.17 or 2.18, or
otherwise) prior to 12:00 noon(Charlotte, North Carolina time), on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time
on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 100 North Tryon, Charlotte, North Carolina except that payments pursuant to Sections 2.16, 2.17, 2.18 and 9.03 shall be made directly to the
Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt
thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in dollars. 



    (b) If
at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, interest and fees then due
hereunder, such funds shall be applied (i) first, to pay interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, to pay principal then
due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties. 


    (c) If
any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any
of its Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and accrued interest thereon than the proportion received by any other Lender, then
the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans of other Lenders to the extent necessary so that the benefit of all such payments shall
be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans; provided that
(i) if any such participations are purchased and all or any 



22





 


portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a
Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to
which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation. 


    (d) Unless
the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the
account of the Lenders hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the
date of payment to the Administrative Agent, at the Federal Funds Effective Rate. 


    (e) If
any Lender shall fail to make any payment required to be made by it pursuant to Section 2.06(d) or (e), 2.08(b) or 2.19(d), then the Administrative Agent
may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are fully paid. 




    Section 2.20  Mitigation Obligations; Replacement of Lenders.



    (a) If
any Lender requests compensation under Section 2.16, or if the Borrower is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.18, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.16 or 2.18, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment. 


    (b) If
any Lender requests compensation under Section 2.16, or if the Borrower is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.18, or if any Lender defaults in its obligation to fund Loans hereunder, then the Borrower may, at its sole expense and effort,
upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding principal 



23





 


and accrued interest and fees) or the Borrower (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.16
or payments required to be made pursuant to Section 2.18, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment
and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. 



 
 

ARTICLE III
  
    REPRESENTATIONS AND WARRANTIES    
  


    The Borrower represents and warrants to the Lenders that: 


    Section 3.01  Organization; Powers.



    Each
of the Borrower and its Significant Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all
requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a
Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required. 


    Section 3.02  Authorization; Enforceability.


    The
Transactions are within the Borrower's corporate powers and have been duly authorized by all necessary corporate and, if required, shareholder action. This Agreement has been duly
executed and delivered by the Borrower and constitutes a legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. 


    Section 3.03  Governmental Approvals; No Conflicts.


    The
Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, including, without limitation,
HMO Regulators and Insurance Regulators, except such as have been obtained or made and are in full force and effect, (b) will not violate any applicable law or regulation, including, without
limitation, HMO Regulations and Insurance Regulations, or the charter, by-laws or other organizational documents of the Borrower or any of its Subsidiaries or any order of any Governmental
Authority, including, without limitation, HMO Regulations and Insurance Regulations, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon
the Borrower or any of its Subsidiaries or its assets, or give rise to a right thereunder to require any payment to be made by the Borrower or any of its Subsidiaries (except for any such violations,
defaults or rights that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect), and (d) will not result in the creation or imposition of any
Lien on any asset of the Borrower or any of its Subsidiaries (other than Liens permitted under Section 6.03). 


    Section 3.04  Financial Condition; No Material Adverse Change.



    (a) The
Borrower has heretofore furnished to the Lenders (i) its consolidated balance sheet and statements of operations, shareholders' equity and cash flows as
of and for the fiscal year ended December 31, 1999, audited by PricewaterhouseCoopers LLP, independent public accountants, and (ii) its
consolidated balance sheet and statements of operations and cash flows as of and for the fiscal quarter ended September 30, 2000. Such financial statements present fairly, in all material
respects, the financial position and results of operations and cash flows of the Borrower and its consolidated Subsidiaries as of such dates and for such periods in accordance 



24





 


with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the statements referred to in clause (ii) above. 



    (b) Since
December 31, 1999, there has been no material adverse change in the business, assets, operations, or financial condition of the Borrower and its
Subsidiaries, taken as a whole, other than as disclosed in the Borrower's quarterly report on Form 10-Q for its fiscal quarter ending on September 30, 2000 as filed with the
SEC prior to the date hereof. 




    Section 3.05  Properties.



    (a) Each
of the Borrower and its Subsidiaries has good title to, or valid leasehold interests in, all its real and personal property material to its business, except
for such defects in title that, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 


    (b) Each
of the Borrower and its Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to
its business, and the use thereof by the Borrower and its Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect. 




    Section 3.06  Litigation and Environmental Matters.



    (a) There
are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Subsidiaries as to which there is a reasonable possibility of an adverse determination and (i) that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) that involve this Agreement or the Transactions. 



    (b) Except
for the Disclosed Matters or except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a
Material Adverse Effect, neither the Borrower nor any of its Subsidiaries (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other
approval required under any Environmental Law, (ii) has become subject to any Environmental Liability or (iii) has received written notice of any claim with respect to any Environmental
Liability. 


    (c) Since
the date of this Agreement, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has resulted in, or could
reasonably be expected to result in, a Material Adverse Effect. 




    Section 3.07  Compliance with Laws and Agreements.


    Each
of the Borrower and its Subsidiaries is in compliance with all laws, rules, regulations and orders of any Governmental Authority (including the HMO Regulations and Insurance
Regulations) applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. 


    Section 3.08  Investment and Holding Company Status.



    Neither
the Borrower nor any of its Subsidiaries is (a) an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940 or
(b) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935. 


    Section 3.09  Taxes.


    Each
of the Borrower and its Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed (taking into account any extensions granted by
the applicable taxing 


25





 


authority) and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which the
Borrower or such Subsidiary, as applicable, has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material
Adverse Effect. 


    Section 3.10  ERISA.



    No
ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could
reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $25,000,000 the fair market value of the
assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $25,000,000 the fair market value of the assets of all such underfunded
Plans. 


    Section 3.11  Disclosure.


    None
of the reports, financial statements, certificates or other information furnished by or on behalf of the Borrower to the Administrative Agent or any Lender in connection with the
negotiation of this Agreement or delivered hereunder (when considered as a whole and as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits
to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;  provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time. 


    Section 3.12  Federal Regulations.


    No
part of the proceeds of any Loans will be used in any transaction or for any purpose which violates the provisions of Regulation T, U or X of the Board of Governors of the
Federal Reserve System, as now and from time to time hereafter in effect. If requested by any Lender or the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender
a statement to the foregoing effect in conformity with the requirements of Form FR U-1 referred to in said Regulation U. 


    Section 3.13  Nature of Business.


    As
of the Closing Date, the Borrower and its Subsidiaries are primarily engaged in the business of offering of health insurance products and services, including preferred provider
organization plans, point-of-sale and hybrid plans, indemnity plans, health maintenance organization plans and specialty products such as pharmacy benefit management, dental,
utilization management, vision, behavioral
health, life and disability insurance, long term care insurance, flexible spending accounts, COBRA administration and Medicare supplements, managed care services, other health care services and
activities reasonably related thereto. 


    Section 3.14  Purpose of Loans.


    The
proceeds of the Loans shall be used to finance any lawful general corporate purpose, including acquisitions and working capital. 


26






  



 
 

ARTICLE IV
  
    CONDITIONS    
  


    Section 4.01  Closing Date.


    The
obligations of the Lenders to make Loans hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with
Section 9.02): 



    (a) The
Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a
counterpart of this Agreement. 


    (b) The
Administrative Agent shall have received favorable written opinions (addressed to the Administrative Agent and the Lenders and dated the Closing Date) of
Gibson, Dunn & Crutcher LLP, counsel for the Borrower, and of General Counsel to the Borrower, substantially in the form of Exhibit B, and covering such other matters relating to the
Borrower, this Agreement or the Transactions as the Required Lenders shall reasonably request. The Borrower hereby requests such counsel to deliver such opinion. 



    (c) The
Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of the Borrower, the authorization of the Transactions and any other legal matters relating to the Borrower, this Agreement or the Transactions, all in form
and substance satisfactory to the Administrative Agent and its counsel. 


    (d) The
Administrative Agent shall have received a certificate, dated the Closing Date and signed by the President, a Vice President or a Financial Officer of the
Borrower, confirming compliance, as of the Closing Date, with the conditions set forth in paragraphs (a) and (b) of Section 4.02. 



    (e) The
Administrative Agent shall have received all fees and other amounts relating to the Transaction due and payable on or prior to the Closing Date, including,
without limitation the fees set forth in the Fee Letter and to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by
the Borrower hereunder. 


    (f)  The
commitments under the Existing Credit Agreement shall have been terminated and all amounts owing thereunder shall have been paid. 




    The
Administrative Agent shall notify the Borrower and the Lenders of the Closing Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations
of the Lenders to make Loans hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at or prior to 3:00 p.m.
(Charlotte, North Carolina time), on March 30, 2001 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time). 


    Section 4.02  Each Credit Event.


    The
obligation of each Lender to make a Loan on the occasion of any Borrowing is subject to the satisfaction of the following conditions: 



    (a) The
representations and warranties of the Borrower set forth in this Agreement shall be true and correct on and as of the date of such Borrowing (except to the
extent such representations and warranties relate to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date);  provided, that the
representation and warranty contained in Section 3.04(b) shall be deemed made, and shall be required to be true and correct,
only on the Closing Date. 



27






 


    (b) At the time of and immediately after giving effect to such Borrowing, no Default shall have occurred and be continuing. 




    Each
Borrowing shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of
this Section. 


 
 

ARTICLE V
  
    AFFIRMATIVE COVENANTS    
  



    Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in
full, the Borrower covenants and agrees with the Lenders that: 


    Section 5.01  Financial Statements and Other Information.


    The
Borrower will furnish to the Administrative Agent: 



    (a) within
100 days after the end of each fiscal year of the Borrower, its audited consolidated balance sheet and related statements of income, shareholders'
equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by PricewaterhouseCoopers LLP or
other independent public accountants of recognized national standing (without a "going concern" or like qualification or exception and without any qualification or exception as to the scope of such
audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently applied (the Lenders agree that the Borrower's obligations under this paragraph (a) will be satisfied in respect of any
fiscal year by delivery to the Administrative Agent, with copies for each Lender, within 100 days after the end of such fiscal year of its annual report for such fiscal year on
Form 10-K (without a "going concern" or like qualification or exception and without any qualification or exception as to the scope of such audit) as filed with the SEC); 


    (b) within
55 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower (including the fiscal quarter ending on
March 31, 2001), its consolidated balance sheet, related statements of income as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, and related
statements of cash flows for the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the
balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes (the Lenders agree that the Borrower's obligations under this paragraph (b) will be satisfied in respect of any fiscal quarter by delivering to the Administrative Agent,
with copies for each Lender, within 55 days after the end of such fiscal quarter of its quarterly report for such fiscal quarter on Form 10-Q as filed with the SEC); 


    (c) concurrently
with any delivery of financial statements under clause (a) or (b) above, a certificate of a Financial Officer of the Borrower
(i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, and
(ii) setting forth reasonably detailed calculations demonstrating compliance with Section 6.01; 


    (d) promptly
after the same become publicly available or after transmission or receipt thereof, copies of all periodic reports, proxy statements and registration
statements (other than exhibits thereto) filed by the Borrower or any Subsidiary with the Securities and Exchange 



28





 


Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed by the Borrower to its shareholders
generally, as the case may be, provided that, with respect to materials filed with any national securities exchange, only material filings shall be
required to be delivered pursuant to this clause (d); and 


    (e) promptly
following any request therefor, such other information regarding the operations, business affairs and financial condition of the Borrower or any
Subsidiary, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender (acting through the Administrative Agent) may reasonably request. 




    Section 5.02  Notices of Material Events.


    The
Borrower will furnish to the Administrative Agent and each Lender prompt written notice of, but in any event not later than five (5) Business Days after an executive
officer of the Borrower obtains knowledge of, the following: 



    (a) the
occurrence of any Default if such Default is continuing; and 


    (b) the
filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority (including, without limitation, HMO Regulators
and Insurance Regulators) against or affecting the Borrower or any Affiliate thereof that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect. 




    Each
notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower setting forth the details of the event
or development requiring such notice and any action taken or proposed to be taken with respect thereto. 


    Section 5.03  Existence; Conduct of Business.



    The
Borrower will, and will cause each of its Significant Subsidiaries to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges certifications, and qualifications (including, without limitation, those qualifications with respect to solvency and capitalization), and
franchises material to the conduct of its business and/or required under the HMO Regulations or the Insurance Regulations in connection with the ownership or operation of HMOs or insurance companies
except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect; provided, that the foregoing shall not apply
to any merger, consolidation, liquidation, dissolution or stock or asset sale permitted under Section 6.04. 


    Section 5.04  Payment of Obligations.


    The
Borrower will, and will cause each of its Subsidiaries to, pay its obligations, including Tax liabilities (other than agreements and other instruments evidencing Indebtedness,
except where the failure to pay such Indebtedness would constitute an Event of Default pursuant clause (f) of Article VII), that, if not paid, could reasonably be expected to result in a
Material Adverse Effect before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings and
(b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP. 


    Section 5.05  Maintenance of Properties; Insurance.


    The
Borrower will, and will cause each of its Subsidiaries to, (a) keep and maintain all property material to the conduct of its business in good working order and condition,
except for ordinary wear and tear and sales and other dispositions permitted under this Agreement, and (b) maintain, with financially sound and reputable insurance companies, insurance in such
amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the 


29





 


same or similar locations or maintain a system or systems of self-insurance or assumption of risk which accords with the practices of similar businesses. 



    Section 5.06  Books and Records; Inspection Rights.


    The
Borrower will, and will cause each of its Subsidiaries to, keep proper books of record and account in which entries in conformity with GAAP are made of all transactions in
relation to its business and activities. The Borrower will, and will cause each of its Subsidiaries to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable
prior notice and subject to such confidentiality restrictions as the Borrower may reasonably impose, to visit and inspect its properties, to examine and make extracts from its books and records, and
to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested. 



    Section 5.07  Compliance with Laws and Agreements.


    The
Borrower will, and will cause each of its Subsidiaries to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property
(including, without limitation, the HMO Regulations and Insurance Regulations pertaining to fiscal soundness, solvency or financial condition), except where the failure to do so, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse Effect. 


    Section 5.08  Use of Proceeds.



    The
proceeds of the Loans will be used for the purposes described in Section 3.14. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of Regulation U or Regulation X of the Regulations of the Board. 


 
 

ARTICLE VI
  
    NEGATIVE COVENANTS    
  


    Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full, the
Borrower covenants and agrees with the Lenders that: 


    Section 6.01  Financial Covenants.



    (a) Consolidated Leverage Ratio. The Borrower will not permit the Consolidated Leverage Ratio for any period of four
consecutive fiscal quarters to be greater than 3.0 to 1.0. 


    (b) Consolidated Interest Coverage Ratio. The Borrower will not permit the Consolidated Interest Coverage Ratio for any
period of four consecutive fiscal quarters to be less than 3.0 to 1.0. 




    Section 6.02  Subsidiary Indebtedness.


    The
Borrower will not permit any Subsidiary to create, incur, assume or permit to exist any Indebtedness, except: 



    (a) Indebtedness
existing on the date hereof and set forth in Schedule 6.02 and extensions, renewals and
replacements of any such Indebtedness that do not increase the outstanding principal amount thereof; 



    (b) Indebtedness
of any Subsidiary to the Borrower or any other Subsidiary; 


    (c) Guarantees
by any Subsidiary of Indebtedness of any other Subsidiary; 


    (d) Capital
Lease Obligations and purchase money Indebtedness and any refinancings, renewals or extensions thereof; provided that the aggregate amount of Indebtedness
evidenced by Capital Lease Obligations and the aggregate principal amount of such purchase money 



30





 


Indebtedness, and all such refinancings, renewals or extensions, outstanding under this clause (d) shall not at any time exceed $50,000,000; 


    (e) Hedging
Agreements in the ordinary course of business; or 


    (f)  other
unsecured Indebtedness in an aggregate principal amount not exceeding $75,000,000 at any time outstanding. 




    Section 6.03  Liens.



    The
Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it, except: 



    (a) Permitted
Encumbrances; 


    (b) any
Lien on any property or asset of the Borrower or any Subsidiary existing on the date hereof and set forth in Schedule 6.03;  provided that (i) such Lien shall not apply to any other property or
asset of the Borrower or any Subsidiary (except proceeds thereof) and
(ii) such Lien shall secure only those obligations which it secures on the date hereof and extensions, renewals and replacements thereof that do not increase the outstanding principal amount
thereof; 


    (c) any
Lien existing on any property or asset prior to the acquisition thereof by the Borrower or any Subsidiary or existing on any property or asset of any Person
that becomes a Subsidiary after the date hereof prior to the time such Person becomes a Subsidiary; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other property or assets of the Borrower
or any Subsidiary and (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as the case may be and
extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof; 


    (d) Liens
consisting of judgment or judicial attachment liens; provided that the enforcement of such Liens is
effectively stayed and all such Liens in the aggregate at any time outstanding for the Borrower and its Subsidiaries do not exceed $25,000,000; 


    (e) Liens
arising solely by virtue of any statutory or common law provisions relating to bankers' liens, rights of setoff or similar rights and remedies as to deposit
accounts or other funds maintained with a creditor depository institution; provided that (i) such deposit account is not a dedicated cash
collateral account and is not subject to restrictions against access by the Borrower in excess of those set forth by regulations promulgated by the Board and (ii) such deposit account is not
intended by the Borrower or any of its Subsidiaries to provide collateral to the depository institution in respect of specifically identified or contemplated obligations; 


    (f)  deposits,
reserves or contingent payment arrangements required under or pursuant to HMO Regulations or Insurance Regulations or securing regulatory capital or
other financial responsibility requirements; 


    (g) Liens
arising by reason of arrangements constituting Cash Equivalents of the type specified in clause (d) of the definition of "Cash Equivalents"; 



    (h) Liens
on property securing purchase money Indebtedness (including Capital Lease Obligations), provided that
(i) such Lien attaches to such property within 90 days after the acquisition of such property, (ii) such Liens secure only the payment of the purchase money Indebtedness (and
refinancings, renewals or extensions thereof) and (iii) such Lien attaches only to the property subject to the purchase money Indebtedness and does not encumber any other property of the
Borrower or such Subsidiary; or 



31





 


    (i)  Liens not otherwise permitted under this Section 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 Borrower. 




    Section 6.04  Fundamental Changes.



    (a) The
Borrower will not, and will not permit any Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all of its assets, or all or substantially all of the
stock of any of its Subsidiaries (in each case, whether now owned or hereafter acquired), or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect thereto no
Default shall have occurred and be continuing (i) any Person may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (ii) any Person, including
any Affiliate, may merge with any Subsidiary in a transaction in which the surviving entity is a Subsidiary, (iii) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets
(including the stock of any of its Subsidiaries) to the Borrower or to another Subsidiary, (iv) any Subsidiary may liquidate or dissolve or the Borrower or any Subsidiary may sell, transfer,
lease or otherwise dispose of the assets or stock of any Subsidiary if, in each case, the Borrower determines in good faith that such liquidation, dissolution or disposition is in the best interests
of the Borrower, and (v) the Borrower and its Subsidiaries may sell immaterial businesses, including Subsidiaries. 




    Section 6.05  Transactions with Affiliates.


    The
Borrower will not, and will not permit any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any of its Affiliates, except (a) in the ordinary course of business and pursuant to the reasonable requirements of
the business of the Company or such Subsidiary, (b) at prices and on terms and conditions not less favorable to the Borrower or such Subsidiary than could be obtained on an arm's-length basis
from unrelated third parties, (c) transactions between or among the Borrower and its Subsidiaries not involving any other Affiliates or (d) as otherwise permitted by this Agreement. 


    Section 6.06  Restrictive Agreements.


    The
Borrower will not, and will not permit any of its Significant Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or to make or repay loans or
advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or any other Subsidiary; provided that the foregoing shall
not apply to (i) restrictions and conditions imposed by law, rule, regulation or regulatory administrative agreement or determination or by this Agreement, (ii) customary restrictions
and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale
is permitted hereunder, (iii) any agreement or other instrument of a Person acquired by the Borrower or any Subsidiary at the time of such acquisition, which restriction is not applicable to
any Person, or the assets of any Person, other than the Person so acquired or the assets of the Person so acquired and was not entered into in contemplation of such acquisition,
(iv) restrictions and conditions contained in the Amended and Restated Undertakings dated as of March 5, 1996 among Blue Cross of California, a California nonprofit public benefit
corporation, the Borrower, CaliforniaCare Health Plans, Wellpoint Dental Plan, Wellpoint Pharmacy Plan, Wellpoint Life Insurance Company, Unicare Life Insurance Company and Comprehensive Integrated
Marketing Services, Inc, and in the undertakings dated as of July 31, 1997 by and among Wellpoint Health Networks Inc., Wellpoint California Services, Inc. and Blue Cross of
California or (v) restrictions and 


32





 


conditions contained in that certain order dated December 27, 1995 of the Georgia Department of Insurance. 


    Section 6.07  Nature of Business.


    The
Borrower will not, and will not permit any of its Significant Subsidiaries to, substantively alter the general character of its business from that conducted by such Person as of
the Closing Date. 


    Section 6.08  Advances, Investments and Loans.


    The
Borrower will not, and will not permit any of its Subsidiaries to, directly or indirectly lend money or extend credit or make advances to any Person, or purchase or acquire any
stock, obligations or securities of, or any other interest in, or make any capital contribution to, or otherwise make an investment in, any Person except for Permitted Investments. 


    Section 6.09  Restricted Payments.



    The
Borrower will not, nor will it permit any Subsidiary to, directly or indirectly, declare, order, make or set apart any sum for or pay any Restricted Payment, except (a) to
make dividends payable solely in the same class of capital stock of such Person, (b) to make dividends or other distributions payable to the Borrower or any Subsidiary of the Borrower and
(c) other distributions in respect of the capital stock of such Person or the redemption, retirement, purchase or other acquisition of the capital stock of such Person (or any warrant, option
or other rights with respect to any shares of capital stock (now or hereafter outstanding) of such Person) if no Default has occurred and is continuing or would result from such action;  provided that,
unless the Borrower has an "investment grade rating", prior to making or declaring any Restricted Payment in excess of $50,000,000 under
this clause (c), the Borrower shall provide to the Administrative Agent a compliance certificate certifying that prior to and after giving effect to any such action, no Default will exist or be
continuing. 


 
 

ARTICLE VII
  
    EVENTS OF DEFAULT    
  


    If any of the following events ("Events of Default") shall occur: 



    (a) the
Borrower shall fail to pay any principal of any Loan when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise; 


    (b) the
Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Article)
payable under this Agreement, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five days; 


    (c) any
representation or warranty made or deemed made by or on behalf of the Borrower or any Subsidiary in or in connection with this Agreement or any amendment or
modification hereof, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any amendment or modification hereof, shall
prove to have been incorrect in any material respect when made or deemed made; 


    (d) the
Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02, 5.03 (as to the existence of the Borrower) or
5.08 or in Article VI; 


    (e) the
Borrower shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in clause (a),
(b) or (d) of this Article), and such failure shall continue unremedied for a period of 30 days after notice thereof from the Administrative Agent (given at the request of any
Lender) to the Borrower; 



33





 


    (f)  the Borrower or any Subsidiary shall fail to make any payment of principal or interest in respect of any Material Indebtedness, when and as the same shall become
due and payable (beyond any applicable grace period with respect thereto); 


    (g) (i) any
event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with the
giving of notice if required) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall not apply to
(x) secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness or (y) any requirement to repurchase any of
the Borrower's Zero Coupon Convertible Subordinated Debentures Due 2019 (the "Securities") on or about July 2, 2002, at the option of any holder
thereof, pursuant to and at the purchase price specified in paragraph 6(a) or (b) of the Securities and Section 3.08 of the Indenture dated as of July 22, 1999 between the
Borrower and The Bank of New York, as trustee, or any similar requirement to repurchase other debt securities issued by the Borrower after the date of this Agreement or (ii) an Event of Default
shall occur and be continuing under the Five Year Facility; 


    (h) an
involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of
the Borrower or any Significant Subsidiary or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Significant
Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of
the foregoing shall be entered; 


    (i)  the
Borrower or any Significant Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in clause (h) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Significant Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing; 



    (j)  the
Borrower or any Significant Subsidiary shall become unable, admit in writing or fail generally to pay its debts as they become due; 


    (k) one
or more judgments or decrees shall be rendered against the Borrower, any Significant Subsidiary or any combination thereof and the same shall not have been
paid, vacated, discharged, stayed or bonded pending appeal within 45 days from the entry thereof that involves in the aggregate a liability (not paid or fully covered by insurance or for which
no adequate reserve has been established) of $25,000,000 or more; 



    (l)  an
ERISA Event shall have occurred that, when taken together with all other ERISA Events that have occurred, has resulted in a Material Adverse Effect; or 


    (m) a
Change in Control of the Borrower shall occur; 



34







  




then,
and in every such event (other than an event with respect to the Borrower described in clause (h) or (i) of this Article), and at any time thereafter during the continuance of such
event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to the Borrower, take either or both of the following actions, at the same or different times:
(i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans then outstanding to be due and payable in whole (or in part, in which
case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with
accrued interest thereon and all fees and other obligations of the Borrower accrued hereunder, shall become due and payable immediately (and the Commitments shall terminate), without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; and in case of any event with respect to the Borrower described in clause (h) or (i) of this
Article, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrower
accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower. 


 
 

ARTICLE VIII
  
    THE ADMINISTRATIVE AGENT; THE SYNDICATION AGENT    
  


    Each of the Lenders hereby irrevocably appoints the Administrative Agent as its agent and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof, together with such actions and powers as are reasonably incidental thereto. 



    The
bank serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it
were not the Administrative Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent hereunder. 


    The
Administrative Agent shall not have any duties or obligations except those expressly set forth herein. Without limiting the generality of the foregoing, (a) the
Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have
any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Administrative Agent is required to
exercise in writing by the Required Lenders, and (c) except (i) with respect to the information delivered to the Administrative Agent in accordance with Section 4.01
and 5.01 hereof and (ii) as expressly requested by a Lender or as otherwise set forth herein, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Borrower or any of its Subsidiaries that is communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any
capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders or in the absence of its own gross negligence
or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a
Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this
Agreement, (ii) the contents of any certificate, report or other document delivered hereunder or in connection herewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement or any other agreement, instrument or document, or
(v) the satisfaction of any condition set 


35





 


forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent. 


    The
Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document
or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. 


    The
Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative
Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. 


    The
Administrative Agent may resign as Administrative Agent upon 30 days' notice to the Lenders. If the Administrative Agent resigns under this Agreement, the Required Lenders
shall appoint from among the Lenders a successor administrative agent for the Lenders which successor administrative agent shall be consented to by the Borrower at all times other than during the
existence of an Event of Default (which consent of the Borrower shall not be unreasonably withheld or delayed). If no successor administrative agent is appointed prior to the effective date of the
resignation of the Administrative Agent, the Administrative Agent may appoint, after consulting with the Lenders and the Borrower, a successor administrative agent from among the Lenders. Upon the
acceptance of its appointment as
successor administrative agent hereunder, such successor administrative agent shall succeed to all the rights, powers and duties of the retiring Administrative Agent and the term "Administrative
Agent" shall mean such successor administrative agent and the retiring Administrative Agent's appointment, powers and duties as Administrative Agent shall be terminated. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Article and Section 9.03 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement. If no successor administrative agent has accepted appointment as Administrative Agent by the date which is 30 days following a
retiring Administrative Agent's notice of resignation, the retiring Administrative Agent's resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of
the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. 


    Each
Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this
Agreement, any related agreement or any document furnished hereunder or thereunder. 


    The
Syndication Agent, in its capacity as such, shall have no duties or responsibilities, and shall incur no liabilities, under this Agreement. 


36





 
 
 

ARTICLE IX
  
    MISCELLANEOUS    
  


    Section 9.01  Notices.


    Except
in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows: 



    (a) if
to the Borrower, to it at WellPoint Health Networks Inc., 1 WellPoint Way, Thousand Oaks, CA 91362, Attention: R. David Kretschmer (Telecopy No.
(805) 557-6834); 


    (b) if
to the Administrative Agent, to Bank of America, N.A., Independence Center, 15th Floor, NC1-001-15-04, 101
North Tryon Street, Charlotte, North Carolina 28255, Attn: Agency Services—Elizabeth Garver, Telephone: 704-386-8451, Telecopy:
704-409-0004; and 


    (c) if
to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire. 




    Any
party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications
given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt. 


    Section 9.02  Waivers; Amendments.



    (a) No
failure or delay by the Administrative Agent or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver
of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and
then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be
construed as a waiver of any Default, regardless of whether the Administrative Agent or any Lender may have had notice or knowledge of such Default at the time. 



    (b) Neither
this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the
Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders; provided that no such
agreement shall (i) increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or reduce the rate of interest thereon,
or reduce any fees payable hereunder, without the written consent of each Lender directly affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan, or
any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender directly affected thereby, (iv) change Section 2.19(b) or (c) in a manner that would alter
the pro rata sharing of payments required thereby, without the written consent of each Lender, or (v) change any of the provisions of this Section or the definition of "Required Lenders" or any
other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder, without the
written consent 



37





 


of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent
hereunder without the prior written consent of the Administrative Agent. 




    Section 9.03  Expenses; Indemnity; Damage Waiver.



    (a) The
Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including
the reasonable fees, charges and disbursements of counsel for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and
administration of this Agreement or any amendments, modifications or waivers of the provisions hereof (whether or not the transactions contemplated hereby or thereby shall be consummated), and
(ii) all reasonable out-of-pocket expenses incurred by the Administrative Agent or any Lender, including the fees and disbursements of any counsel for the Administrative
Agent or any Lender, in connection with the enforcement or protection of its rights in connection with this Agreement, including its rights under this Section, or in connection with the Loans made
hereunder, including in connection with any workout, restructuring or negotiations in respect thereof. 


    (b) The
Borrower shall indemnify the Administrative Agent and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an
"Indemnitee") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees
and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Loan or the actual or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from
any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party
thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnitee. 


    (c) To
the extent that the Borrower fails to pay any amount required to be paid by it to the Administrative Agent under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent, such Lender's Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment
is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against the Administrative Agent in its capacity as such. 


    (d) To
the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument
contemplated hereby, the Transactions, any Loan or the use of the proceeds thereof. 



    (e) All
amounts due under this Section shall be payable promptly after written demand therefor. 



38





 

    Section 9.04  Successors and Assigns.



    (a) The
provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby,
except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by
the Borrower without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement. 


    (b) Any
Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and
the Loans at the time owing to it); provided that (i) except in the case of an assignment to a Lender, an Affiliate of a Lender, or an Approved
Fund with respect thereto, each of the Borrower and the Administrative Agent must give their prior written consent to such assignment (which consent shall not be unreasonably withheld or delayed),
(ii) except in the case of an assignment to a Lender, an Affiliate of a Lender, an Approved Fund with respect thereto or an assignment of the entire remaining amount of the assigning Lender's
Commitment, the amount of the Commitment of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered
to the Administrative Agent) shall not be less than $5,000,000 unless each of the Borrower and the
Administrative Agent otherwise consent and, after giving effect to such assignment, the assigning Lender and its Affiliates and the Approved Funds with respect to such Lender shall have a Commitment
of at least $5,000,000, except in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment, unless each of the Borrower and the Administrative Agent otherwise
consents, (iii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement, (iv) such
assigning Lender shall simultaneously assign an identical percentage of the loans and commitments of such Lender under the Five Year Facility to such assignee, (v) the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500 and (vi) the assignee, if it shall not be
a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire; provided further that any consent of the Borrower otherwise
required under this paragraph shall not be required if an Event of Default under Article VII has occurred and is continuing. Upon acceptance and recording pursuant to paragraph (d) of
this Section, from and after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such
Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.16, 2.17, 2.18 and 9.03). Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance
with paragraph (e) of this Section. 


    (c) The
Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices in Charlotte, North Carolina a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans owing to, each Lender 



39





 


pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive, and the Borrower, the Administrative
Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary. 


    (d) Upon
its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee's completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such
assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph. 


    (e) Any
Lender may, without the consent of the Borrower, the Administrative Agent, sell participations to one or more banks or other entities (a
"Participant") in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitment and the
Loans owing to it); provided that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement;  provided that such agreement or instrument
may provide that such Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant. Subject to paragraph (f) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.16, 2.17 and 2.18 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. 


    (f)  A
Participant shall not be entitled to receive any greater payment under Section 2.16 or 2.18 than the applicable Lender would have been entitled to receive
with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent. A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.18 unless the Borrower is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.18(e) as though it were a Lender. 


    (g) Any
Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender,
including any such pledge or assignment to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest;  provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder or substitute any such
assignee for such Lender as a party hereto. 


    (h) Notwithstanding
anything to the contrary contained herein, any Lender (a "Granting Lender") may grant to a special
purpose funding vehicle (an "SPC") of such Granting Lender, identified as such in writing from time to time by the Granting Lender to the Administrative
Agent and the Borrower, the option to provide to the Borrower all or any part of any Loan that such Granting Lender would otherwise be obligated to make to the Borrower pursuant to
Section 2.01, provided that (i) nothing herein shall constitute a commitment to make any Loan by any SPC and (ii) if an SPC elects
not to exercise such option or otherwise fails to provide all or 



40





 


any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPC hereunder shall utilize the Commitment of the Granting
Lender to the same extent, and as if, such Loan were made by the Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for any payment under this Agreement for which a Lender
would otherwise be liable, for so long as, and to the extent, the related Granting Lender
makes such payment. In furtherance of the foregoing, each party hereto hereby agrees that, prior to the date that is one year and one day after the payment in full of all outstanding senior
indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or
similar proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section 9.04 or in Section 9.12, any
SPC may (i) with notice to, but without the prior written consent of, the Borrower or the Administrative Agent and without paying any processing fee therefore, assign all or a portion of its
interests in any Loans to its Granting Lender or to any financial institutions providing liquidity and/or credit facilities to or for the account of such SPC to fund the Loans made by such SPC or to
support the securities (if any) issued by such SPC to fund such Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating
agency, commercial paper dealer or provider of a surety, guarantee or credit or liquidity enhancement to such SPC. 




    Section 9.05  Survival.



    All
covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this
Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans, regardless of any
investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default or incorrect representation
or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount
payable under this Agreement is outstanding and unpaid and so long as the Commitments have not expired or terminated. The provisions of Sections 2.16, 2.17, 2.18 and 9.03 and Article VIII shall
survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Commitments or the
termination of this Agreement or any provision hereof. 


    Section 9.06  Counterparts; Integration; Effectiveness.


    This
Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken
together shall constitute a single contract. This Agreement and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which,
when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement. 


41





 

    Section 9.07  Severability.


    Any
provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity,
illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction
shall not invalidate such provision in any other jurisdiction. 


    Section 9.08  Right of Setoff.


    If
an Event of Default in the payment of any obligation under this Agreement shall have occurred and be continuing, each Lender is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing
by such Lender to or for the credit or the account of the Borrower against any of and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition
to other rights and remedies (including other rights of setoff) which such Lender may have. 


    Section 9.09  Governing Law; Jurisdiction; Consent to Service of Process.



    (a) This
Agreement shall be construed in accordance with and governed by the law of the State of New York. 


    (b) The
Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New
York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against
the Borrower or its properties in the courts of any jurisdiction. 


    (c) The
Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. 


    (d) Each
party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other manner permitted by law. 




    Section 9.10  WAIVER OF JURY TRIAL.


    EACH
PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES 


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THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER
AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. 



    Section 9.11  Headings.


    Article
and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or
be taken into consideration in interpreting, this Agreement. 


    Section 9.12  Confidentiality.


    Each
of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' and its Approved Funds' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such Information and instructed to keep, and agree to keep, such Information confidential), (b) to the extent requested by any
regulatory authority, (c) to the extent, and only to the extent, required by applicable laws or regulations or by any subpoena or similar legal process, provided that the Person required to
disclose such information shall take reasonable efforts (at Borrower's expense) to ensure that any Information so disclosed shall be afforded confidential treatment, (d) to any other party to
this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder,
(f) subject to an agreement containing provisions substantially the same as those of this Section, to any assignee of or Participant in, or any prospective assignee of or Participant in, any of
its rights or obligations under this Agreement, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of
a breach of this Section or (ii) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Borrower who is not, to the knowledge of the
Administrative Agent or such Lender, under an obligation of confidentiality to Borrower with respect to such Information. For the purposes of this Section,
"Information" means all information received from the Borrower relating to the Borrower or its business, other than any such information that is
available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower. 


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



	BORROWER:	 	WELLPOINT HEALTH NETWORKS INC.
	

 	
 	

By:	
 	

/s/ R. DAVID KRETSCHMER   

	 	 	 	 	Name: R. David Kretschmer
	 	 	 	 	Title: Vice President
	

ADMINISTRATIVE AGENT:	
 	

BANK OF AMERICA, N.A.
	

 	
 	

By:	
 	

/s/ JOSEPH L. CORAH   

	 	 	 	 	Name: Joseph L. Corah
	 	 	 	 	Title: Principal
	

SYNDICATION AGENT:	
 	

JPMORGAN, A DIVISION OF CHASE SECURITIES INC.
	

 	
 	

By:	
 	

/s/ ANDREW T. BROCE   

	 	 	 	 	Name: Andrew T. Broce
	 	 	 	 	Title: Vice President
	

[Lenders signatures follow]	
 	

 	
 	

 




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QuickLinks


EXHIBIT 10.02

TABLE OF CONTENTS


CREDIT AGREEMENT

W I T N E S S E T H

ARTICLE I DEFINITIONS


ARTICLE II THE CREDITS


ARTICLE III REPRESENTATIONS AND WARRANTIES


ARTICLE IV CONDITIONS

ARTICLE V AFFIRMATIVE COVENANTS

ARTICLE VI NEGATIVE COVENANTS

ARTICLE VII EVENTS OF DEFAULT



ARTICLE VIII THE ADMINISTRATIVE AGENT; THE SYNDICATION AGENT

ARTICLE IX MISCELLANEOUS