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Exhibit 10.34
  
    EXECUTION COPY    
  

CREDIT
AGREEMENT

($525,000,000 Five Year Revolving Credit and Competitive Advance Facility) 

dated
as of 

June 28,
2001 

among

HEALTH
NET, INC.,

as Borrower, 

THE
LENDERS

FROM TIME TO TIME PARTY HERETO 

and

BANK
OF AMERICA, N. A.,

as Administrative Agent, Issuing Bank and Swingline Lender 

BANC
OF AMERICA SECURITIES LLC,

as Sole Lead Arranger and Sole Book Manager 

  

 
 

TABLE OF CONTENTS    
  

	

ARTICLE I Definitions	
 	

1
	 	Section 1.01	 	Defined Terms	 	1
	 	Section 1.02	 	Classification of Loans and Borrowings	 	15
	 	Section 1.03	 	Terms Generally	 	15
	 	Section 1.04	 	Accounting Terms; GAAP	 	16
	

ARTICLE II The Credits	
 	

16
	 	Section 2.01	 	Commitments	 	16
	 	Section 2.02	 	Loans and Borrowings	 	16
	 	Section 2.03	 	Requests for Revolving Borrowings	 	17
	 	Section 2.04	 	Requests for Swingline Borrowings	 	18
	 	Section 2.05	 	Competitive Bid Procedure	 	19
	 	Section 2.06	 	Letters of Credit	 	21
	 	Section 2.07	 	Funding of Borrowings	 	25
	 	Section 2.08	 	Interest Elections	 	25
	 	Section 2.09	 	Termination and Reduction of Commitments	 	26
	 	Section 2.10	 	Repayment of Loans; Evidence of Debt	 	27
	 	Section 2.11	 	Prepayment of Loans	 	28
	 	Section 2.12	 	Fees	 	28
	 	Section 2.13	 	Interest	 	29
	 	Section 2.14	 	Alternate Rate of Interest	 	30
	 	Section 2.15	 	Increased Costs	 	31
	 	Section 2.16	 	Break Funding Payments	 	32
	 	Section 2.17	 	Taxes	 	32
	 	Section 2.18	 	Payments Generally; Pro Rata Treatment; Sharing of Set-offs	 	34
	 	Section 2.19	 	Mitigation Obligations; Replacement of Lenders.	 	35
	 	Section 2.20	 	Extension of Maturity Date	 	36
	

ARTICLE III Representations and Warranties	
 	

37
	 	Section 3.01	 	Organization; Powers	 	37
	 	Section 3.02	 	Authorization; Enforceability	 	37
	 	Section 3.03	 	Governmental Approvals; No Conflicts	 	37
	 	Section 3.04	 	Financial Condition; No Material Adverse Change	 	37
	 	Section 3.05	 	Properties	 	38
	 	Section 3.06	 	Litigation and Environmental Matters	 	38
	 	Section 3.07	 	Compliance with Laws and Agreements	 	38
	 	Section 3.08	 	Investment and Holding Company Status	 	39
	 	Section 3.09	 	Taxes	 	39
	 	Section 3.10	 	ERISA	 	39
	 	Section 3.11	 	Disclosure	 	39
	 	Section 3.12	 	Federal Regulations	 	39
	 	Section 3.13	 	Nature of Business	 	40
	 	Section 3.14	 	Purpose of Loans and Letters of Credit	 	40

i

 

	 	Section 3.15	 	Subsidiaries and Significant Subsidiaries	 	40
	

ARTICLE IV Conditions	
 	

40
	 	Section 4.01	 	Closing Date	 	40
	 	Section 4.02	 	Each Credit Event	 	41
	

ARTICLE V Affirmative Covenants	
 	

41
	 	Section 5.01	 	Financial Statements and Other Information	 	41
	 	Section 5.02	 	Notices of Material Events	 	43
	 	Section 5.03	 	Existence; Conduct of Business	 	43
	 	Section 5.04	 	Payment of Obligations	 	43
	 	Section 5.05	 	Maintenance of Properties; Insurance	 	43
	 	Section 5.06	 	Books and Records; Inspection Rights	 	44
	 	Section 5.07	 	Compliance with Laws and Agreements	 	44
	 	Section 5.08	 	Use of Proceeds and Letters of Credit	 	44
	 	Section 5.09	 	Maintenance of Accreditation, Etc.	 	44
	

ARTICLE VI Negative Covenants	
 	

44
	 	Section 6.01	 	Financial Covenants	 	44
	 	Section 6.02	 	Subsidiary Indebtedness	 	45
	 	Section 6.03	 	Liens	 	45
	 	Section 6.04	 	Fundamental Changes	 	46
	 	Section 6.05	 	Transactions with Affiliates	 	47
	 	Section 6.06	 	Restrictive Agreements	 	47
	 	Section 6.07	 	Nature of Business	 	47
	 	Section 6.08	 	Advances, Investments and Loans	 	47
	 	Section 6.09	 	Restricted Payments	 	48
	

ARTICLE VII Events of Default	
 	

48
	

ARTICLE VIII The Administrative Agent	
 	

50
	

ARTICLE IX Miscellaneous	
 	

52
	 	Section 9.01	 	Notices.	 	52
	 	Section 9.02	 	Waivers; Amendments	 	52
	 	Section 9.03	 	Expenses; Indemnity; Damage Waiver	 	53
	 	Section 9.04	 	Successors and Assigns	 	54
	 	Section 9.05	 	Survival	 	56
	 	Section 9.06	 	Counterparts; Integration; Effectiveness	 	57
	 	Section 9.07	 	Severability	 	57
	 	Section 9.08	 	Right of Setoff	 	57
	 	Section 9.09	 	Governing Law; Jurisdiction; Consent to Service of Process	 	57
	 	Section 9.10	 	WAIVER OF JURY TRIAL	 	58
	 	Section 9.11	 	Headings	 	58
	 	Section 9.12	 	Confidentiality	 	58

ii

 

SCHEDULES:  

Schedule
1.01—Existing Letters of Credit 

Schedule
2.01—Commitments 

Schedule
3.06—Disclosed Matters 

Schedule
3.15—Subsidiaries and Significant Subsidiaries 

Schedule
6.02—Existing Subsidiary Indebtedness 

Schedule
6.03—Existing Liens 

Schedule
6.06—Existing Restrictive Agreements 

Schedule
6.07—Existing Investments 

EXHIBITS:  

Exhibit
A—Form of Assignment and Acceptance 

Exhibit
B—Investment Guidelines 

Exhibit
C—Form of Promissory Note 

Exhibit
D-1 and D-2—Forms of Opinions of Borrower's Counsel 

iii

 
 

CREDIT AGREEMENT    
  

    THIS FIVE-YEAR CREDIT AGREEMENT (this "Agreement"),
dated as of June 28, 2001, among HEALTH NET, INC., as Borrower, the LENDERS party hereto and BANK OF AMERICA, N.A., as Administrative Agent, Issuing Bank and Swingline Lender. 

 
 

W I T N E S S E T H:    
  

    WHEREAS, the Borrower is party to the Credit Agreement dated as of July 8, 1997, as amended (the
"Existing Credit Agreement"), among the Borrower, the lenders parties thereto and Bank of America, N.A. (formerly known as Bank of America National
Trust and Savings Association), as administrative agent, issuing bank and swingline lender. 

    WHEREAS, the Borrower desires to replace the Existing Credit Agreement with this Agreement and the 364-Day Facility (as
defined below) upon the terms, and subject to the 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 capital stock of or other equity interests in, or all or
substantially all of the Property of another Person, or of any line or segment of business or division of a Person, whether or not involving a merger or consolidation with such Person. 

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

    "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; provided that no Person shall be deemed to be an Affiliate of the
Borrower or any Subsidiary solely as a result of management or consulting agreements between such Person and the Borrower or any Subsidiary executed by the Borrower or any Subsidiary in the ordinary
course of business. 

    "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 Revolving Loan, or with respect to the facility fees payable
hereunder, as the case may be, the applicable rate per annum set forth below (in basis points) under the caption "Eurodollar Spread" or "Facility 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

	I	 	Greater than or equal to BBB+/Baa1	 	72.0	 	15.5
	II	 	Greater than or equal to BBB/Baa2 but less than BBB+/Baa1	 	82.5	 	17.5
	III	 	Greater than or equal to BBB-/Baa3 but less than BBB/Baa2	 	90.0	 	22.5
	IV	 	Greater than or equal to BB+/Ba1 but less than BBB-/Baa3	 	110.0	 	27.5
	V	 	Less than BB+/Ba1	 	125.0	 	37.5

    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 V; (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 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. 

    "Availability Period" means the period from and including the Closing Date to but excluding the earlier of the Maturity 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 Health Net, Inc., a Delaware corporation, or its successor. 

2

 

    "Borrowing" means (a) Revolving 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, (b) a Competitive Loan or group of Competitive Loans of the same Type made on the same date and as to which a single
Interest Period is in effect or (c) a Swingline Loan. 

    "Borrowing Request" means a request by the Borrower for a Revolving 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" means (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 (i) any domestic commercial bank of recognized standing having capital and surplus in excess of $250,000,000 or
(ii) 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 any variable rate notes issued by, or guaranteed by any domestic
corporation rated A-1 (or the equivalent thereof) or better by S&P or P-1 (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, (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, (f) auction preferred stock rated in the highest short-term credit rating category by S&P or Moody's and (g) shares of money market mutual or similar
funds which invest exclusively in the assets satisfying the requirements of clauses (a) through (f) of this definition. 

    "Change in Control" means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by 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), of shares representing more than 25% 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 

3

 

thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or the Issuing Bank (or, for purposes of Section 2.15(b), by any lending office of
such Lender or by such Lender's or the Issuing Bank's holding company, if any) with any guideline or directive of any Governmental Authority made or issued after the date of this Agreement. 

    "Class", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are
Revolving Loans, Competitive Loans or Swingline Loans. 

    "Closing Date" means the date on which the conditions set forth in Sections 4.01 and 4.02 shall have been satisfied. 

    "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 Revolving Loans and to acquire participations in
Swingline Loans and Letters of Credit hereunder, expressed as an amount representing the maximum aggregate amount of such Lender's Revolving Credit Exposure hereunder, as such commitment may be
(a) reduced from time to time pursuant to Section 2.09 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. 

    "Competitive Bid" means an offer by a Lender to make a Competitive Loan in accordance with Section 2.05. 

    "Competitive Bid Rate" means, with respect to any Competitive Bid, the Margin or the Fixed Rate, as applicable, offered by the Lender
making such Competitive Bid. 

    "Competitive Bid Request" means a request by the Borrower for Competitive Bids in accordance with Section 2.05. 

    "Competitive Loan" means a Loan made pursuant to Section 2.05. 

    "Consolidated Assets" means, at any date, the consolidated assets of the Borrower and the Subsidiaries at such date, as determined in
accordance with GAAP. 

    "Consolidated Capital Expenditures" means, for any period, all cash payments for capital expenditures of the Borrower and the
Subsidiaries on a consolidated basis for such period, as determined in accordance with GAAP; provided, however, that Consolidated Capital Expenditures
shall not include (a) expenditures which constitute the reinvestment of the net cash proceeds of asset dispositions not prohibited hereunder and (b) amounts financed other than by Loans
hereunder (but including principal amounts paid in respect of any such financed amounts). 

    "Consolidated EBITDA" means, for any period, Consolidated Net Income for such period  plus, without duplication and to the extent deducted in computing such Consolidated
Net Income for such period, the sum of (a) income tax
expense, (b) Consolidated Interest Expense, (c) depreciation and amortization expense, (d) 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 operations of the Borrower in determining such Consolidated Net Income for such
period, non-cash losses on sales of assets outside of the ordinary course of business), (e) certain non-recurring charges in an amount not to exceed a
pre-tax total amount of $80 million incurred in connection with the disposition of (i) Foundation Health, a Florida Health Plan, Inc., (ii) an investment in
certain non-public securities and (iii) certain property held for sale and (f) any other non-cash charges, and  minus, without duplication and to the extent added in computing such Consolidated
Net Income for such period, the sum of (i) interest income
(except 

4

 

as otherwise provided in the proviso at the end of this definition), (ii) any extraordinary, unusual or non-recurring non-cash income or non-cash gains
(including, whether or not otherwise includable as a separate item in the statement of operations of the Borrower in determining such Consolidated Net Income for such period, non-cash
gains on the sales of assets outside of the ordinary course of business), and (iii) any other non-cash income (other than non-cash income earned in the ordinary course
of business), all as determined on a consolidated basis; provided, that investment income or loss shall be included in the calculation of Consolidated
EBITDA. 

    "Consolidated Fixed Charge Coverage Ratio" means, for any period of four consecutive fiscal quarters, the ratio of
(a) Consolidated EBITDA for such period plus Consolidated Rental Expense for such period minus
Consolidated Capital Expenditures for such period to (b) Consolidated Scheduled Funded Debt Payments for such period. 

    "Consolidated Funded Indebtedness" means, at any date, all funded debt liabilities of the Borrower and the Subsidiaries (including,
without duplication, unreimbursed letters of credit and all Guarantees of such Person with respect to Funded Indebtedness of another Person (other than a Subsidiary)) that are or should be reflected
at such date on the Borrower's consolidated balance sheet in accordance with GAAP. 

    "Consolidated Interest Expense" means, for any period, the consolidated interest expense of the Borrower and the Subsidiaries for such
period with respect to all outstanding Indebtedness of the Borrower and the Subsidiaries, as determined in accordance with GAAP (including all 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) Consolidated EBITDA for such period. 

    "Consolidated Net Income" means, for any period, the consolidated net income (or loss) of the Borrower and the Subsidiaries for such
period, as determined in accordance with GAAP. 

    "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). 

    "Consolidated Net Worth" means, at any date, the consolidated shareholders' equity of the Borrower and the Subsidiaries at such date,
as determined in accordance with GAAP. 

    "Consolidated Rental Expense" means, for any period, with respect to the Borrower and the Subsidiaries, on a consolidated basis, all
rental expense attributable to Operating Lease Obligations (whether a lease of real property, personal property or mixed) for such period, as determined in accordance with GAAP. 

    "Consolidated Scheduled Funded Debt Payments" means, for any period, the sum of (a) all scheduled payments of principal on
Consolidated Funded Indebtedness of the Borrower and the Subsidiaries (including, without duplication, the principal component of payments due on Capital Lease Obligations during such period) for such
period plus (b) Consolidated Interest Expense for such period plus (c) Consolidated Rental
Expense for such period. 

    "Continuing Lenders" has the meaning assigned to such term in Section 2.20. 

    "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. 

    "Current Anniversary Date" has the meaning assigned to such term in Section 2.20. 

5

 

    "Default" means any event or condition which constitutes an Event of Default whether or not any requirement for the giving of notice,
lapse of time or both has been satisfied. 

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

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

    "Eligible Lenders" means (i) a commercial bank organized under the laws of the United States or any state thereof, or
(ii) a bank acting through a branch or agency located in the United States. 

    "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 or to health and safety matters. 

    "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 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. 

    "Equity Issuance" means any issuance by the Borrower or any Subsidiary to any Person (other than to the Borrower or a Subsidiary) of
(a) any shares of its capital stock, (b) any shares of its capital stock pursuant to the exercise of options or warrants or (c) any shares of its capital stock pursuant to the
conversion of any debt securities to equity. 

    "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. 

6

 

    "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. 

    "Excluded Taxes" means, with respect to the Administrative Agent, any Lender, the Issuing Bank 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 or where such Lender is deemed to be doing business, (b) excise
taxes (to the extent imposed in lieu of income or franchise taxes), (c) 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 or where such Lender is deemed to be doing business, (d) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.19(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 2.17(f), except to the extent that such Foreign Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.17(a) and (e) all interest, penalties and liabilities with respect to any taxes described
in (a), (b), (c) and (d). 

    "Existing Letters of Credit" means the existing letters of credit described by date of issuance, letter of credit number, undrawn
amount, name of beneficiary and date of expiry on Schedule 1.01. 

    "Existing Maturity Date" has the meaning assigned to such term in Section 2.20. 

    "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. 

    "Fee Letter" shall mean the letter agreement dated April 16, 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, treasurer or controller of the Borrower. 

    "Fixed Rate" means, with respect to any Competitive Loan (other than a Eurodollar Competitive Loan), the fixed rate of interest per
annum specified by the Lender making such Competitive Loan in its related Competitive Bid. 

    "Fixed Rate Loan" means a Competitive Loan bearing interest at a Fixed Rate. 

    "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. 

7

  

    "Guarantee" of or by any Person (the "guarantor") means any obligation, contingent or
otherwise, of the guarantor guaranteeing or intended to be 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, directly or indirectly, (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. 

    "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. 

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

    "HMO Regulation" means any law, regulation or administrative order applicable under federal or state law to HMOs and any regulation or
order promulgated or issued pursuant thereto. 

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

    "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 or with respect
to similar cash advances (but excluding any premiums, fees and deposits received in the ordinary course of business), (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
Indebtedness 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, (f) all Guarantees by such Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person,
(h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and (i) all obligations, contingent or otherwise, of such Person in
respect of bankers' acceptances. 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 therefore 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 therefore. Notwithstanding the foregoing, Indebtedness shall exclude 

8

 

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 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 Revolving Borrowing in accordance with
Section 2.08. 

    "Interest Payment Date" means (a) with respect to any ABR Loan (including Swingline Loans that are ABR Loans), the last day of
each March, June, September and December, (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, (c) with respect to any Fixed Rate 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 Fixed Rate Borrowing with an Interest Period of more than 90 days' duration (unless otherwise specified in the applicable Competitive Bid Request), each day prior to the last day of such
Interest Period that occurs at intervals of 90 days' duration after the first day of such Interest Period, and any other dates that are specified in the applicable Competitive Bid Request as
Interest Payment Dates with respect to such Borrowing and (d) with respect to any Quoted Rate Swingline Loan, the date such Loan is required to be repaid. 

    "Interest Period" means (a) 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, six or twelve months thereafter, as the Borrower may elect, and (b) with respect to any Fixed Rate
Borrowing, the period (which shall not be less than 7 days or more than 360 days) commencing on the date of such Borrowing and ending on the date specified in the applicable Competitive
Bid Request; 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. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing
is made and, in the case of a Revolving Borrowing, thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing. 

    "Investment Guidelines" means those investment guidelines adopted by the Finance Committee of the Borrower's board of directors on
March 1, 2000, as set forth in Exhibit B hereto, as the same may be amended from time to time by the Borrower with the approval of the Administrative Agent. 

9

 

    "Issuing Bank" means Bank of America in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity
as provided in Section 2.06(j). 

    "LC Commitment" means $200,000,000. 

    "LC Disbursement" means a payment made by the Issuing Bank pursuant to a Letter of Credit. 

    "LC Exposure" means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time
plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Lender at any time shall be its
Applicable Percentage of the total LC Exposure at such time. 

    "Lenders" means the Persons listed on Schedule 2.01 and any other Eligible
Lender that shall have become a party hereto pursuant to an Assignment and Acceptance; provided, however, the term Lender shall not include any such
Person that ceases to be a party hereto pursuant to an Assignment and Acceptance. 

    "Letter of Credit" means (a) any letter of credit issued pursuant to this Agreement and (b) the Existing Letters of
Credit. 

    "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 average rate (rounded upwards as necessary to the next 1/100th of one percent) at which dollar deposits approximately equal to the average principal amount of the Reference
Banks' portions of such Eurodollar Borrowing and for a maturity comparable to such Interest Period are offered to the principal London offices of the Reference Banks 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, or (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. 

    "Loan" or "Loans" means the loans made by the Lenders to the Borrower pursuant to this
Agreement (including, without limitation, the Swingline Loans). 

    "Mandatory Borrowing" has the meaning assigned to such term in Section 2.06(f). 

    "Margin" means, with respect to any Competitive Loan bearing interest at a rate based on the LIBO Rate, the marginal rate of interest,
if any, to be added to or subtracted from the LIBO Rate to determine the rate of interest applicable to such Loan, as specified by the Lender making such Loan in its related Competitive Bid. 

    "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 

10

 

ability of the Borrower to perform its material obligations under this Agreement or (c) the material legal rights or remedies available to the Lenders under this Agreement. 

    "Maturity Date" means the fifth anniversary of the Closing Date, as extended from time to time in accordance with Section 2.20. 

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

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

    "Net Cash Proceeds" means the aggregate cash proceeds (including cash actually received by way of deferred payment pursuant to a
promissory note, receivable, or otherwise) received by the Borrower or any Subsidiary from any Equity Issuance, net of (a) direct costs (including, without limitation, legal, accounting and
investment banking fees and sales commissions) and (b) taxes paid or payable as a result thereof; it being understood that "Net Cash Proceeds" shall include, without limitation, any cash
received upon the sale or other disposition of any non-cash consideration received by the Borrower or any Subsidiary in any Equity Issuance. 

    "Operating Lease Obligations" of any Person means the obligations of such Person under any lease (including, without limitation, leases
which may be terminated by the lessee at any time) of any real or personal property, or a combination thereof which would not constitute a Capital Lease Obligation other than any such lease in which
that Person is the lessor. 

    "Other Taxes" means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar
levies (except with respect to Excluded Taxes) 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 Acquisition" means an Acquisition by the Borrower or any Subsidiary,  provided that (a) the capital stock, other equity interests, Property, line or
segment of business or division acquired in such Acquisition
relates to a line of business similar to the business that the Borrower or any Subsidiary is engaged in on the Closing Date; (b) in the case of an Acquisition of the capital stock or other
equity interests of another Person, (i) the board of directors (or other comparable governing body) of such other Person shall have duly approved such Acquisition and (ii) such Person
shall become a direct or indirect Subsidiary of the Borrower or such Person shall be merged into, or consolidated or combined with, the Borrower or any Subsidiary in a transaction in which the
Borrower or such Subsidiary, as the case may be, is the surviving entity; (c) the representations and warranties made by the Borrower herein shall be true and correct in all material respects
at and as if made as of the date of such Acquisition (prior to and after giving effect thereto) except to the extent such representations and warranties expressly relate to an earlier date, and no
Default or Event of Default shall exist as of the date of such Acquisition (prior to and after giving effect thereto); and (d) if the aggregate consideration for any such Acquisition exceeds
$250,000,000, the Borrower shall have delivered to the Administrative Agent, not less than 10 days prior to the consummation of such Acquisition, a pro forma certificate from a Financial
Officer demonstrating that, upon giving effect to such Acquisition on a pro forma basis, the Borrower shall be in compliance with each of the covenants set forth in Section 6.01. 

    "Permitted Encumbrances" means: 

    (a) Liens
imposed by law for taxes, fees, assessments and other governmental charges or claims that are not yet due or that remain payable without penalty or that are
being contested in compliance with Section 5.04; 

11

 

    (b) carriers', warehousemen's, mechanics', materialmen's, repairmen's, landlord'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 that remain payable without penalty or that are being contested in compliance with Section 5.04; 

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

    (d) Liens
incurred or deposits made 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; 

    (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 materially interfere with the ordinary conduct of business of the Borrower
and the Subsidiaries taken as a whole; 

    (f)  Liens
arising solely by virtue of any statutory or common law provision or granted to banks in the ordinary course of business relating to banker's Liens, rights
of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; and 

    (g) Liens
arising from the rendering of a judgment that is not a final judgment or order against the Borrower or any Subsidiary with respect to which the Borrower or
such Subsidiary is then proceeding with an appeal or other proceeding for review or in connection with surety or appeal bonds in connection with such attachment or judgment, and Liens arising from a
judgment or order that does not constitute an Event of Default under clause (k) of Article VII; 

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

    "Permitted Investments" means: 

    (a) cash
and Cash Equivalents; 

    (b) Permitted
Market Investments; 

    (c) receivables
owing to the Borrower or any Subsidiary or any receivables and advances to suppliers, in each case if created, acquired or made in the ordinary course
of business and payable or dischargeable in accordance with customary trade terms; provided that such trade terms may include such
concessionary trade terms that the Borrower or any Subsidiary deems reasonable under the circumstances; 

    (d) 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; 

    (e) investments
existing as of the Closing Date and set forth in Schedule 6.07 and any extension or renewal
thereof; 

    (f)  advances
and loans to employees, directors or officers 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; 

    (g) other
advances and loans to employees, directors, officers, shareholders or agents; 

12

 

    (h) Permitted Acquisitions; 

    (i)  advances
and loans made by the Borrower to any Subsidiary and made by any Subsidiary to the Borrower or any other Subsidiary; 

    (j)  capital
contributions to, or equity investments in, a Subsidiary by the Borrower or another Subsidiary; 

    (k) Guarantees
constituting Indebtedness not prohibited by Section 6.02; 

    (l)  investments
arising out of the receipt by the Borrower or any Subsidiary of noncash consideration for the sale of a Subsidiary other than a Significant Subsidiary; 

    (m) investments
in the form of Hedging Agreements; 

    (n) investments
in prepaid expenses and lease, utility and workers' compensation and similar deposits; 

    (o) investments
in joint ventures; provided that, after giving effect to any such investment, no more than $100,000,000
(book value) of investment made pursuant to this (o) shall be outstanding; and 

    (p) additional
advances, loans and/or investments of a nature not contemplated by the foregoing clauses hereof, provided
that such advances, loans and/or investments made pursuant to this clause (p) shall not exceed an aggregate amount of more than two and one-half percent (21/2%) of
the Consolidated Assets determined as of the end of the most recently completed fiscal quarter of the Borrower. 

    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, other equity interests, property, assets, indebtedness or other obligations or securities or by loan, advance, capital contribution or
otherwise. 

    "Permitted Market Investments" means any investment that satisfies the Borrower's Investment Guidelines. 

    "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. 

    "Property" means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. 

    "Quoted Rate" means a fixed percentage rate per annum offered by the Swingline Lender and accepted by the Borrower with respect to a
Swingline Loan as provided in accordance with the provisions of Section 2.04. 

    "Quoted Rate Swingline Loan" means a Swingline Loan bearing interest at a Quoted Rate. 

13

 

    "Ratings Downgrade" means the date on which it is announced by Moody's or S&P that the ratings established or deemed to have been
established for the Index Debt shall be less than BBB- or Baa3, respectively. 

    "Reference Banks" means, at any date, the four Lenders with the highest Commitments under this Agreement on such date. 

    "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. 

    "Requested Maturity Date" has the meaning assigned to such term in Section 2.20. 

    "Required Lenders" means, at any time, Lenders having Revolving Credit Exposures and unused Commitments representing more than 50% of
the sum of the total Revolving Credit Exposures and unused Commitments at such time; provided that, for purposes of declaring the Loans to be due and
payable pursuant to Article VII, and for all purposes after the Commitments expire or terminate, the outstanding Competitive Loans of the Lenders shall be included in their respective Revolving
Credit Exposures in determining the Required Lenders. 

    "Restricted Payment" means (a) any dividend or other distribution, direct or indirect, on account of any shares of any class of
capital stock of the Borrower or any Subsidiary, now or hereafter outstanding, (b) 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 Subsidiary, now or hereafter outstanding, and (c) 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 Subsidiary, now or hereafter outstanding. 

    "Revolving Credit Exposure" means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender's
Revolving Loans, Swingline Exposure and LC Exposure at such time. 

    "Revolving Loan" means a Loan made pursuant to Section 2.03. 

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

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

    "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, with respect to any Lender for an Interest Period, 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 applicable for each day during such Interest Period (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which such 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. 

14

  

    "subsidiary" shall have the meaning assigned to such term under GAAP. 

    "Subsidiary" means any subsidiary of the Borrower. 

    "Swingline Committed Amount" shall have the meaning assigned to such term in Section 2.04(a). 

    "Swingline Exposure" means, at any time, the aggregate amount of all Swingline Loans outstanding at such time. The Swingline Exposure
of any Lender at any time shall be its Applicable Percentage of the total Swingline Exposure at such time. 

    "Swingline Lender" means Bank of America, in its capacity as lender of Swingline Loans hereunder, and its successors in such capacity. 

    "Swingline Loan" means a Loan made pursuant to Section 2.04. 

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

    "Terminating Lender" has the meaning assigned to such term in Section 2.20. 

    "364-Day Facility" means the Credit Agreement, dated as of the date hereof, among the Borrower, the lenders parties thereto
and Bank of America, as administrative agent, providing for a $175,000,000 revolving credit facility for a 364-day period, as amended or extended from time to time. 

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

    "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, the Alternate Base Rate or, in the case of a Competitive Loan or Borrowing, the LIBO Rate or a Fixed Rate. 

    "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 Class (e.g., a "Revolving Loan") or
by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a "Eurodollar Revolving Loan").
Borrowings also may be classified and referred to by Class (e.g., a "Revolving Borrowing") or by Type
(e.g., a "Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Borrowing"). 

 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 

15

 

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 Revolving Loans to the Borrower from time to time during the Availability
Period in an aggregate principal amount that will not result in (a) such Lender's Revolving Credit Exposure exceeding such Lender's Commitment or (b) the sum of the total Revolving
Credit Exposures plus the aggregate principal amount of outstanding Competitive 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 Revolving Loans. 

 Section 2.02  Loans and Borrowings.  

    (a) Each
Revolving Loan shall be made as part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in accordance with their respective Commitments.
Each Competitive Loan shall be made in accordance with the procedures set forth in Section 2.05. 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 and Competitive Bids
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 2.14, (i) each Revolving Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in
accordance herewith, and (ii) each Competitive Borrowing shall be comprised entirely of Eurodollar Loans or Fixed Rate Loans as the Borrower may request in accordance herewith. Each Swingline
Loan shall be an ABR Loan or a Quoted Rate Swingline Loan 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 Lender to make such Loan; provided that (i) 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 and (ii) unless the Borrower shall request that a specific branch or Affiliate of a Lender make a 

16

 

Loan, a Lender may not recover for increased costs under Section 2.15 or 2.17 incurred as a result of such branch or Affiliate of such Lender, rather than such Lender, making a Loan, if such
Loan could have been made in a manner that would have avoided such increased costs under Section 2.15 or 2.17. 

    (c) At
the commencement of each Interest Period for any Eurodollar Revolving Borrowing, such Borrowing shall be in a minimum aggregate amount of $10,000,000 and
integral multiples of $5,000,000 in excess thereof. At the time that each ABR Revolving Borrowing is made, such Borrowing shall be in a minimum aggregate amount of $5,000,000 and integral multiples of
$1,000,000 in excess thereof; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the
total Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.06(e). Each Competitive Borrowing shall be in a minimum aggregate amount of
$25,000,000 and integral multiples of $5,000,000 in excess thereof. Borrowings of more than one Type and Class may be outstanding at the same time;  provided that there shall not at any time be more than
an aggregate total of 20 Eurodollar Revolving 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 the Maturity Date. 

 Section 2.03  Requests for Revolving Borrowings.  

    To request a Revolving 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 2.07. 

    If
no election as to the Type of Revolving Borrowing is specified, then the requested Revolving Borrowing shall be a Eurodollar Borrowing if sufficient advance notice in accordance
with clause (a) has been given, otherwise the requested Revolving Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Revolving
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. 

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 Section 2.04  Requests for Swingline Borrowings.  

    (a) Subject
to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the Borrower from time to time during the Availability
Period; provided that (i) the aggregate principal amount of Swingline Loans outstanding at any time shall not exceed $50,000,000 (the
"Swingline Committed Amount"), and (ii) the sum of the total Revolving Credit Exposures plus the aggregate principal amount of outstanding
Competitive Loans shall not exceed the total Commitments. Subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow Swingline Loans. 

    (b) Whenever
the Borrower desires a Swingline Loan hereunder it shall give written notice (or telephonic notice promptly confirmed in writing) to the Swingline Lender
not later than 1:00 P.M., (Charlotte, North Carolina time), on the Business Day of the requested Swingline Loan. Each such notice shall be irrevocable and shall specify (i) that a
Swingline Loan is requested, (ii) the date of the requested Swingline Loan (which shall be a Business Day) and (iii) the principal amount of the Swingline Loan requested. Promptly
following receipt of such notice, the Swingline Lender shall notify the Borrower of the Quoted Rate at which the Swingline Lender is prepared to make such Loan. Each Swingline Loan shall be made, at
the option of the Borrower, as an ABR Loan or a Quoted Rate Swingline Loan, as notified by the Borrower to the Swingline Lender, and shall have such maturity date as set forth in clause (d)
below. The Swingline Lender shall make each Swingline Loan available to the Borrower by 3:00 P.M., (Charlotte, North Carolina time), on the Business Day of the requested Borrowing. 

    (c) Each
Swingline Loan shall be in a minimum principal amount of $1,000,000 and integral multiples of $1,000,000 in excess thereof (or the remaining amount of the
Swingline Committed Amount, if less). 

    (d) The
principal amount of all Swingline Loans shall be due and payable on the earlier of (i) the maturity date agreed to by the Swingline Lender and the
Borrower (which maturity date shall be a date not more than seven (7) Business Days from the date of advance thereof) or (ii) the Maturity Date. The Borrower may prepay all or a portion
of any Swingline Loan at any time without premium or penalty. The Swingline Lender may, at any time, in its sole discretion, upon one Business Day's prior written notice to the Borrower and the
Lenders, demand repayment of any Swingline Loan by way of a Revolving Borrowing, in which case the Borrower shall be deemed to have requested a Revolving Borrowing comprised solely of ABR Loans in the
amount of such Swingline Loan. Each Lender hereby irrevocably agrees to make a Revolving Loan ratably in accordance with its respective Commitment as set forth in Section 2.02(b) in the amount,
in the manner and on the date specified in the preceding sentence notwithstanding (i) the amount of such Borrowing may not comply with the
minimum amount for ABR Revolving Borrowings otherwise required hereunder, (ii) whether any conditions specified in Section 4.02 are then satisfied, (iii) whether a Default or an
Event of Default then exists, (iv) failure of any such request or deemed request for an ABR Revolving Borrowing to be made by the time otherwise required hereunder, (v) whether the date
of such Borrowing is a date on which ABR Revolving Borrowings are otherwise permitted to be made hereunder or (vi) any termination of the Commitments relating thereto immediately prior to or
contemporaneously with such Borrowing. In the event that any Revolving Borrowing cannot for any reason be made on the date otherwise required above (including, without limitation, as a result of the
commencement of a proceeding under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect), then each Lender hereby agrees that it shall forthwith
purchase (as of the date such Borrowing would otherwise have occurred, but adjusted for any payments received from the Borrower on or after such date and prior to such purchase) from the Swingline
Lender its Applicable Percentage of the
outstanding Swingline Loans as shall be necessary to cause each such Lender to share in such Swingline Loans ratably based upon its Applicable Percentage (determined before giving effect to 

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any termination of the Commitments pursuant to Section 2.09), provided that (i) all interest payable on the Swingline Loans shall be for
the account of the Swingline Lender until the date as of which the respective interests in the outstanding Swingline Loans are purchased and (ii) at the time any purchase of the respective
interests in the outstanding Swingline Loans pursuant to this sentence is actually made, the purchasing Lender shall be required to pay to the Swingline Lender, to the extent not paid to the Swingline
Lender by the Borrower in accordance with Section 2.13, interest on the principal amount of the outstanding Swingline Loans purchased for each day from and including the day upon which such
Borrowing would otherwise have occurred to but excluding the date of payment for such purchase, at the rate equal to the Federal Funds Effective Rate. 

 Section 2.05  Competitive Bid Procedure.  

    (a) Subject
to the terms and conditions set forth herein, from time to time during the Availability Period the Borrower may request Competitive Bids and may (but shall
not have any obligation to) accept Competitive Bids and borrow Competitive Loans; provided that the sum of the total Revolving Credit Exposures plus the
aggregate principal amount of outstanding Competitive Loans at any time shall not exceed the total Commitments. To request Competitive Bids, the Borrower shall notify the Administrative Agent of such
request by telephone, in the case of a Eurodollar Borrowing, not later than 12:00 noon, (Charlotte, North Carolina time), four Business Days before the date of the proposed Borrowing and, in the case
of a Fixed Rate Borrowing, not later than 12:00 noon, (Charlotte, North Carolina time), one Business Day before the date of the proposed Borrowing;  provided that the Borrower may submit up to (but not
more than) three Competitive Bid Requests on the same day, but a Competitive Bid Request shall not
be made within five Business Days after the date of any previous Competitive Bid Request, unless any and all such previous Competitive Bid Requests shall have been withdrawn or all Competitive Bids
received in response thereto rejected. Each such telephonic Competitive Bid Request shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Competitive Bid
Request in a form approved by the Administrative Agent and signed by the Borrower. Each such telephonic and written Competitive Bid 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 a Eurodollar Borrowing or a Fixed Rate Borrowing; 

    (iv) the
Interest Period to be applicable to such Borrowing, 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 2.07. 

Promptly
following receipt of a Competitive Bid Request in accordance with this Section, the Administrative Agent shall notify the Lenders of the details thereof by telecopy, inviting the Lenders to
submit Competitive Bids. 

    (b) Each
Lender may (but shall not have any obligation to) make one or more Competitive Bids to the Borrower in response to a Competitive Bid Request. Each Competitive
Bid by a Lender must be in a form approved by the Administrative Agent and must be received by the Administrative Agent by telecopy, in the case of a Eurodollar Competitive Borrowing, not later than
11:00 a.m. (Charlotte, North Carolina time), three Business Days before the proposed date of such Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later than
11:00 a.m. (Charlotte, North Carolina time), on the proposed date of such Competitive Borrowing. Competitive Bids that do not conform substantially to the form approved by the Administrative 

19

 

Agent may be rejected by the Administrative Agent, and the Administrative Agent shall notify the applicable Lender as promptly as practicable. Each Competitive Bid shall specify (i) the
principal amount (which shall be a minimum of $2,500,000 and integral multiples of $1,000,000 in excess thereof and which may equal the entire principal amount of the Competitive Borrowing requested
by the Borrower) of the Competitive Loan or Loans that the Lender is willing to make, (ii) the Competitive Bid Rate or Rates at which the Lender is prepared to make such Loan or Loans
(expressed as a percentage rate per annum in the form of a decimal to no more than four decimal places) and (iii) the Interest Period applicable to each such Loan and the last day thereof. 

    (c) The
Administrative Agent shall promptly notify the Borrower by telecopy of the Competitive Bid Rate and the principal amount specified in each Competitive Bid and
the identity of the Lender that shall have made such Competitive Bid. 

    (d) Subject
only to the provisions of this paragraph, the Borrower may accept or reject any Competitive Bid. The Borrower shall not be obligated to accept any
Competitive Bid. The Borrower shall notify the Administrative Agent by telephone, confirmed by telecopy in a form approved by the Administrative Agent, whether and to what extent it has decided to
accept or reject each Competitive Bid, in the case of a Eurodollar Competitive Borrowing, not later than 12:00 noon, (Charlotte, North Carolina time), three Business Days before the date of the
proposed Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later than 12:00 noon, (Charlotte, North Carolina time), on the proposed date of the Competitive Borrowing;  provided that
(i) the failure of the Borrower to give such notice shall be deemed to be a rejection of each Competitive Bid, (ii) the
Borrower shall not accept a Competitive Bid made at a particular Competitive Bid Rate if the Borrower rejects a Competitive Bid made at a lower Competitive Bid Rate unless the Borrower determines that
the higher bid is more favorable to the Borrower, (iii) the aggregate amount of the Competitive Bids accepted by the Borrower shall not exceed the aggregate amount of the requested Competitive
Borrowing specified in the related Competitive Bid Request, (iv) to the extent necessary to comply with clause (iii) above, the Borrower may accept Competitive Bids at the same
Competitive Bid Rate in part, which acceptance, in the case of multiple Competitive Bids at such Competitive Bid Rate, shall be made pro rata in accordance with the amount of each such Competitive
Bid, unless the Borrower determines that acceptance of Competitive Bids in some other order is more favorable to the Borrower, and (v) except pursuant to clause (iv) above, no
Competitive Bid shall be accepted for a Competitive Loan unless such Competitive Loan is in a minimum principal amount of $2,500,000 and integral multiples of $1,000,000 in excess thereof;  provided further that if a Competitive Loan must be in an amount less than $2,500,000 because of the provisions of clause (iv) above, such
Competitive Loan may be for a minimum of $1,000,000 or any integral multiple thereof, and in calculating the pro rata allocation of acceptances of portions of multiple Competitive Bids at a particular
Competitive Bid Rate pursuant to clause (iv) the amounts shall be rounded to integral multiples of $1,000,000 in a manner determined by the Borrower. A notice given by the Borrower pursuant to
this paragraph shall be irrevocable. 

    (e) The
Administrative Agent shall promptly notify each bidding Lender by telecopy whether or not its Competitive Bid has been accepted (and, if so, the amount and
Competitive Bid Rate so accepted), and each successful bidder will thereupon become bound, subject to the terms and conditions hereof, to make the Competitive Loan in respect of which its Competitive
Bid has been accepted. 

    (f)  If
the Administrative Agent shall elect to submit a Competitive Bid in its capacity as a Lender, it shall submit such Competitive Bid directly to the Borrower at
least one quarter of an hour earlier than the time by which the other Lenders are required to submit their Competitive Bids to the Administrative Agent pursuant to paragraph (b) of this
Section. 

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 Section 2.06  Letters of Credit.  

    (a) General. Subject to the terms and conditions set forth herein, the Borrower may request the issuance (or the
amendment, renewal or extension) of Letters of Credit for its own account or the account of any Subsidiary, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any
time and from time to time during the Availability Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of
credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement
shall control. Notwithstanding any language in a letter of credit application or other agreement, no Lien shall be granted by the Borrower or any Subsidiary pursuant to such application or agreement. 

    (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To request the issuance of a Letter of Credit
(or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have
been approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent (not less than 2 Business Days in advance of the requested date of issuance, amendment, renewal or extension) a
letter of credit application on the Issuing Bank's standard form requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying
the date of issuance, amendment, renewal or extension, the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of
Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. A Letter of Credit shall be issued,
amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be deemed to represent and warrant that), after giving effect to
such issuance, amendment, renewal or extension, (i) the sum of the total Revolving Credit Exposures plus the aggregate principal amount of outstanding Competitive Loans shall not exceed the
total Commitments and (ii) the LC Exposure shall not exceed the LC Commitment. 

    (c) Expiration Date. No Letter of Credit shall (i) have an original expiry date more than one year from the date
of issuance (provided that any such Letter of Credit may contain customary "evergreen" provisions pursuant to which the expiry date is automatically extended by a specific time period unless the
Issuing Lender gives notice to the beneficiary of such Letter of Credit at least a specified time period prior to the expiry date then in effect) and (ii) as originally issued or extended, have
an expiry date extending beyond the date that is five Business Days prior to the Maturity Date. 

    (d) Participations. Each Lender, with respect to the Existing Letters of Credit, hereby purchases a participation
interest in such Existing Letters of Credit and, with respect to each Letter of Credit issued on or after the Closing Date, upon issuance of such Letter of Credit (or an amendment to a Letter of
Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from
the Issuing Bank, a participation in such Letter of Credit equal to such Lender's Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and
in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender's Applicable Percentage
of each LC Disbursement made by the Issuing Bank and not reimbursed as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Borrower for any
reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters 

21

 

of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. 

    (e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower
shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, (Charlotte, North Carolina time), on the date that such LC
Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m., (Charlotte, North Carolina time), on such date, or, if such notice has not been
received by the Borrower prior to such time on such date, then not later than 12:00 noon, (Charlotte, North Carolina time), on the Business Day immediately following the day that the Borrower receives
such notice, if such notice is not received prior to such time on the day of receipt. Unless the Borrower shall immediately notify the Issuing Bank and the Administrative Agent of its intent to
otherwise reimburse the Issuing Bank for an LC Disbursement, the Borrower shall be deemed to have requested a Revolving Borrowing in the amount of the LC Disbursement as provided in clause (f)
below, the proceeds of which will be used to satisfy its reimbursement obligation. If the LC Disbursement is not reimbursed as provided above, the Administrative Agent shall notify each Lender of the
applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender's Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay
to the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.07 with respect to Loans made by such Lender (and
Section 2.07 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the
Issuing Bank the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this paragraph, the Administrative
Agent shall distribute such payment to the Issuing Bank or, to the extent that Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing
Bank as their interests may appear. Any payment made by a Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the funding of a Revolving Borrowing as
contemplated in clause (f) below) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement. 

    (f)  Repayment with Revolving Loans. On any day on which the Borrower shall have requested, or been deemed to have
requested, a Revolving Borrowing to reimburse an LC Disbursement, the Administrative Agent shall give notice to the Lenders that a Revolving Borrowing has been requested or deemed requested in
connection with an LC Disbursement, in which case a Revolving Borrowing comprised entirely of ABR Loans (each such Borrowing, a "Mandatory Borrowing")
shall be immediately made (without giving effect to any termination of the Commitments hereunder) ratably by the Lenders based on each Lender's respective Applicable Percentage of the total
Commitments (determined before giving effect to any termination of the Commitments hereunder) and the proceeds thereof shall be paid directly to the Issuing Bank for application to the applicable LC
Disbursement. Each Lender hereby irrevocably agrees to make its Revolving Loan immediately upon any such request or deemed request on account of each Mandatory Borrowing in the amount and in the
manner specified in the preceding sentence and on the same date notwithstanding (i) the amount of the Mandatory Borrowing may not comply with the
minimum amount for ABR Revolving Borrowings otherwise required hereunder, (ii) whether any conditions specified in Section 4.02 are then satisfied, (iii) whether a Default or
Event of Default then exists, (iv) failure of any such request or deemed request for an ABR Revolving Borrowing to be made by the time otherwise required hereunder, (v) the date of the
Mandatory Borrowing or 

22

 

(vi) any reduction in the total Commitments after any such Letter of Credit may have been drawn upon. 

    (g) Obligations Absolute. The Borrower's obligation to reimburse LC Disbursements as provided in paragraph (e) of
this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of: 

     (i) any
lack of validity or enforceability of any Letter of Credit or any term or provision therein; 

    (ii) any
amendment or waiver of all or any of the provisions of any Letter of Credit; 

    (iii) the
existence of any claim, setoff, defense or other right that the Borrower, any other party guaranteeing, or otherwise obligated with, the Borrower, any
Subsidiary or other Affiliate thereof or any other Person may at any time have against the beneficiary under any Letter of Credit, the Issuing Bank, the Administrative Agent or any Lender or any other
Person, whether in connection with this Agreement or any other related or unrelated agreement or transaction; 

    (iv) any
draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect; 

    (v) payment
by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit;
and 

    (vi) any
other act or omission to act or delay of any kind of the Issuing Bank, the Lenders, the Administrative Agent or any other Person or any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of the Borrower's obligations
hereunder. 

provided that the Borrower shall not be obligated (i) to reimburse the Issuing Bank for any payment or indemnify the Issuing Bank for any
wrongful dishonor or any other matter to the extent resulting from acts or omissions constituting gross negligence or willful misconduct by the Issuing Bank or (ii) to reimburse any Lender for
any payment or indemnify any Lender for any matter to the extent resulting from acts or omissions constituting gross negligence or willful misconduct by such Lender. 

    Nothing
in this Agreement shall be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims
in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank's failure to exercise the agreed standard
of care (as set forth below) in determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that the Issuing
Bank shall have exercised the agreed standard of care in the absence of gross negligence or willful misconduct on the part of the Issuing Bank and if performed in accordance with the standards of care
specified in the Uniform Commercial Code of the State of New York and The Uniform Customs and Practice for Documentary Credits. 

    (h) Disbursement Procedures. The Issuing Bank shall, promptly following its receipt thereof, examine all documents
purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy) of such
demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in
giving such 

23

 

notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Lenders with respect to any such LC Disbursement. 

    (i)  Interim Interest. If the Issuing Bank shall make any LC Disbursement, then, unless the Borrower shall reimburse
such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that such LC Disbursement is reimbursed, at the rate per annum then applicable to ABR Revolving Loans. Interest accrued pursuant to this paragraph shall be for the
account of the Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be for the
account of such Lender to the extent of such payment. 

    (j)  Replacement of the Issuing Bank. The Issuing Bank may be replaced at any time by written agreement among the
Borrower, the Administrative Agent and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall
become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12(b). From and after the effective date of any such
replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and
(ii) references herein to the term "Issuing Bank" shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context
shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank
under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit. 

    (k) Cash Collateralization. If any Event of Default shall occur and be continuing, on the Business Day that the Borrower
receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Lenders with LC Exposure representing greater than 50% of the total LC
Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Borrower shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for
the benefit of the Lenders, an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest and fees thereon; provided
that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the
occurrence of any Event of Default with respect to the Borrower described in clause (h) or (i) of Article VII. Such deposit shall be held by the Administrative Agent as collateral
for the payment and performance of the obligations of the Borrower under this Agreement. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. Other than any income earned on the investment of such deposits in Cash Equivalents, which investments the Administrative Agent agrees to make at the Borrower's risk and
expense, such deposits shall not otherwise bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the
Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower for the LC Exposure at such time (including, without limitation, reimbursement of the Lenders with LC Exposure), or, if the maturity of the Loans has been accelerated (but
subject to the consent of Lenders with LC Exposure representing greater than 50% of the total LC Exposure), be applied to satisfy other obligations of the Borrower under this Agreement. If the
Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of 

24

 

Default, such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within two Business Days after all Events of Default have been cured or waived. 

 Section 2.07  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 12:00 noon (Charlotte,
North Carolina time), to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders; provided that
Swingline Loans shall be made as provided in Section 2.04. 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 or Competitive Bid Request;  provided that ABR Revolving Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.06(e) shall be remitted by the
Administrative Agent to the Issuing Bank. 

    (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 the subject Loan. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender's Loan included in such Borrowing. 

 Section 2.08  Interest Elections.  

    (a) Each
Revolving Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Revolving 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 Revolving 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. This Section shall not apply to Competitive Borrowings or Swingline Borrowings, which may not be
converted or continued. 

    (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 Revolving 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. 

25

 

    (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 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 Revolving 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 on the date of the applicable conversion or continuation (i) no outstanding Revolving Borrowing may be converted to or continued as a Eurodollar Borrowing and
(ii) unless repaid, each Eurodollar Revolving Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto. 

 Section 2.09  Termination and Reduction of Commitments.  

    (a) Unless
previously terminated, the Commitments shall terminate on the Maturity Date. 

    (b) The
Borrower may at any time terminate, or from time to time reduce, the Commitments; provided that (i) each
reduction of the Commitments shall be in an aggregate amount of 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 2.11, the sum of the Revolving Credit Exposures plus the aggregate principal
amount of outstanding Competitive 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 one
Business Day 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, 

26

 

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 2.10  Repayment of Loans; Evidence of Debt.  

    (a) The
Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Lender the then unpaid principal amount of each
Revolving Loan made by such Lender hereunder and all interest, fees and other amounts payable hereunder on the Maturity Date, (ii) to the Administrative Agent for the account of each Lender the
then unpaid principal amount of each Competitive Loan made by such Lender on the last day of the Interest Period applicable to such Loan and (iii) to the Swingline Lender, the then unpaid
principal amount of each Swingline Loan on the maturity date agreed to by the Swingline Lender and the Borrower (which maturity date shall be a date not more than seven (7) Business Days from
the date of advance thereof). 

    (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 Class and 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, substantially in the form of Exhibit C hereto. 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). 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). 

27

  

 Section 2.11  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, without premium or penalty, subject to
Section 2.16 and subject to prior notice in accordance with paragraph (b) of this Section; provided that the Borrower shall not have the
right to prepay any Competitive Loan without the prior consent of the Lender thereof. 

    (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 Revolving Borrowing, not later than 12:00 noon, (Charlotte, North Carolina time), three Business Days before the date of prepayment, (ii) in the case of prepayment of an ABR
Revolving Borrowing, not later than 12:00 noon, (Charlotte, North Carolina time), on the date of prepayment or (iii) in the case of prepayment of a Swingline Loan, not later than 12:00 noon
(Charlotte, North Caroline time) on 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 2.09, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.09. Promptly following receipt of any such notice
relating to a Revolving Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Revolving Borrowing shall be in an amount that would be
permitted in the case of an advance of a Revolving Borrowing of the same Type as provided in Section 2.02. Each prepayment of a Revolving 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 2.13. 

 Section 2.12  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 Revolving Credit Exposure after its Commitment terminates, then such facility fee shall continue to
accrue on the daily amount of such Lender's Revolving Credit Exposure from and including the date on which its Commitment terminates to but excluding the date on which such Lender ceases to have any
Revolving Credit Exposure. 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 (i) to the Administrative Agent for the account of each Lender a participation fee with respect to its participations in Letters
of Credit, which shall accrue at a rate per annum equal to the Applicable Rate applicable to interest on Eurodollar Revolving Loans on the average daily amount of such Lender's LC Exposure (excluding
any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Closing Date to but excluding the later of the date on which such Lender's Commitment
terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue at the rate of 0.125% per annum on the average daily
amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Closing Date to but excluding the later of the date of
termination of the Commitments and the date on which there ceases to be any LC Exposure, as 

28

 

well as the Issuing Bank's standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting
fees accrued through and including the last day of March, June, September and December of each year shall be payable on the third Business Day following such last day, commencing on the first such
date to occur after the Closing Date; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees
accruing after the date on which the Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within 10 days
after demand. All participation fees and fronting 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 (or to the Issuing Bank, in the case of fees
payable to it) for distribution, in the case of facility fees and participation fees, to the Lenders. Fees paid shall not be refundable under any circumstances. 

 Section 2.13  Interest.  

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

    (b) The
Loans comprising each Eurodollar Borrowing shall bear interest at a rate per annum equal to (i) in the case of a Eurodollar Revolving Loan, the LIBO Rate
for the Interest Period in effect for such Borrowing plus the Applicable Rate, or (ii) in the case of a Eurodollar Competitive Loan, the LIBO Rate for the Interest Period in effect for such
Borrowing plus (or minus, as applicable) the Margin applicable to such Loan. 

    (c) Each
Swingline Loan shall bear interest at the rate per annum equal to (i) the Alternative Base Rate or (ii) the Quoted Rate in accordance with the
provisions of Section 2.04. 

    (d) Each
Fixed Rate Loan shall bear interest at a rate per annum equal to the Fixed Rate applicable to such Loan. 

    (e) 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. 

    (f)  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 (e) 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 Revolving 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. 

    (g) 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 

29

 

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. 

    (h) 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 the 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 Revolving 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 Revolving Loan. 

    (i)  Each
Reference Bank agrees to use its reasonable efforts to furnish quotations to the Administrative Agent as contemplated hereby by 10:30 a.m., (Charlotte,
North Carolina time), on the day such quotations are required to be furnished hereunder. If any Reference Bank does not furnish a timely quotation, the Administrative Agent shall determine the
relevant LIBO Rate on the basis of the quotations, if any, furnished by the remaining Reference Banks, and, in the event that all Reference Banks fail to so furnish a quotation, on the basis of such
other information as the Borrower and the Administrative Agent shall agree. 

 Section 2.14  Alternate Rate of Interest.  

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

    (a) the
Administrative Agent 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 (or, in the case of a Eurodollar Competitive Loan, the Lender that is required to make such Loan) that,
in the good faith determination of such Lenders (or Lender), the LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining
their Loans (or its Loan) included in such Borrowing for such Interest Period; 

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 Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be ineffective, (ii) if any Borrowing Request requests a Eurodollar Revolving Borrowing, such Borrowing shall be made as
an ABR Borrowing or, if the Borrower so requests, shall be cancelled without premium or penalty and (iii) any request by the Borrower for a Eurodollar Competitive Borrowing shall be
ineffective; provided that (A) if the circumstances giving rise to such notice do not affect all the Lenders, then requests by the Borrower for
Eurodollar Competitive Borrowings may be made to Lenders that are not affected thereby and (B) if the circumstances giving rise to such notice affect only one Type of Borrowings, then the other
Type of Borrowings shall be permitted. 

30

 

 Section 2.15  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 or the Issuing Bank (except for any reserves referred to in Section 2.13(h)); or 

    (ii) impose
on any Lender or the Issuing Bank or the London interbank market any other condition affecting this Agreement or Eurodollar Loans or Fixed Rate Loans made
by such Lender or any Letter of Credit or participation therein; 

and
the result of any of the foregoing shall be to increase the cost (except with respect to Excluded Taxes) to such Lender of making or maintaining any Eurodollar Loan or Fixed Rate Loan (or of
maintaining its obligation to make any such Loan) or to increase the cost (except with respect to Excluded Taxes) to such Lender or the Issuing Bank of participating in, issuing or maintaining any
Letter of Credit or to reduce the amount of any sum received or receivable (except to the extent caused by Excluded Taxes) by such Lender or the Issuing Bank hereunder (whether of principal, interest
or otherwise) by an amount deemed by such Lender or the Issuing Bank to be material, then the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or
amounts as will compensate such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered. 

    (b) If
any Lender or the Issuing Bank 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 or the Issuing Bank's capital or on the capital of such Lender's or the Issuing Bank's holding company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank, or such Lender's or the
Issuing Bank's holding company, could have achieved but for such Change in Law (taking into consideration such Lender's or the Issuing Bank's policies and the policies of such Lender's or the Issuing
Bank's holding company with respect to capital adequacy), then, subject to clauses (d) and (e) below, from time to time the Borrower will pay to such Lender or the Issuing Bank, as the
case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company for any such reduction suffered. 

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

    (d) Failure
or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's or the
Issuing Bank's right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant
to this Section for any increased costs or reductions incurred more than six months prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the Change in
Law giving rise to such increased costs or reductions and of such Lender's or the Issuing Bank'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. 

    (e) Notwithstanding
the foregoing provisions of this Section, a Lender shall not be entitled to compensation pursuant to this Section in respect of any Competitive Loan
or Swingline Loan if the 

31

 

Change in Law that would otherwise entitle it to such compensation shall have been publicly announced prior to submission of the Competitive Bid or Quoted Rate, as the case may be, pursuant to which
such Loan was made. 

 Section 2.16  Break Funding Payments.  

    In the event of (a) the payment of any principal of any Eurodollar Loan or Fixed Rate 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 Revolving Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice is permitted to be revocable under
Section 2.11(b) and is revoked in accordance herewith; provided that if such failure hereunder to borrow is due to a default by any Lender
hereunder such defaulting Lender shall have no claim hereunder in respect of such failure, (d) the failure to borrow any Competitive Loan after accepting the Competitive Bid to make such Loan,
or (e) the assignment of any Eurodollar Loan or Fixed Rate 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 2.19, 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 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 reasonably determines it 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 and, in reasonable detail, the methodology for calculating, and the calculation of, such amount or amounts, shall be delivered to the Borrower. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 Business Days after receipt thereof. 

 Section 2.17  Taxes.  

    (a) Except
as otherwise provided herein, any and all payments by or on 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 by the amount necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative
Agent, Lender or Issuing Bank (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, each Lender and the Issuing Bank, within 20 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 

32

 

to amounts payable under this Section) paid by the Administrative Agent, such Lender or the Issuing Bank, 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;  provided that the Borrower shall not be
obligated to make payment to the Administrative Agent, any Lender or the Issuing Bank pursuant to this
Section 2.17(c) in respect of penalties, interest or other similar liabilities attributable to such Indemnified Taxes or Other Taxes if such penalties, interest or other similar liabilities are
attributable to the gross negligence or wilful misconduct of the Person seeking indemnification. In addition, the Borrower shall not be required to indemnify the Administrative Agent, any Lender or
the Issuing Bank for any Indemnified Taxes or Other Taxes pursuant to this Section 2.17(c) if such party fails to notify the Borrower of such Indemnified Taxes or Other Taxes at least
30 days prior to the lapse of any applicable appeal period. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender or the Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error. 

    (d) If
a Lender, the Administrative Agent or the Issuing Bank shall become aware that it is entitled to claim a refund from a Governmental Authority in respect of
Indemnified Taxes or Other Taxes paid by the Borrower pursuant to this Section 2.17, including Indemnified Taxes or Other Taxes as to which it has been indemnified by the Borrower, or with
respect to which the Borrower has paid additional amounts, pursuant to this Section 2.17, it shall promptly notify the Borrower of the availability of such refund claim and, if the Lender, the
Administrative Agent or the Issuing Bank, as the case may be, determines in good faith that making a claim for refund will not have any adverse consequence to its taxes or business operations, shall,
within 30 days after receipt of a request by the Borrower, make a claim to such Governmental Authority for such refund at the Borrower's expense. If a Lender, the Administrative Agent or the
Issuing Bank receives a refund in respect of any Indemnified Taxes or Other Taxes paid by the Borrower pursuant to this Section 2.17, it shall within 30 days from the date of such
receipt pay over such refund to the Borrower (but only to the extent of Indemnified Taxes or Other Taxes paid by the Borrower pursuant to this Section 2.17, including indemnity payments made or
additional amounts paid by the Borrower under this Section 2.17 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of such Lender, the Administrative Agent or the Issuing Bank and without interest (other than interest paid by the relevant Governmental Authority with
respect to such refund); provided that the Borrower, upon the request of such Lender, the Administrative Agent or the Issuing Bank agrees to repay the
amount paid over to the Borrower (plus penalties, interest or other charges) to such Lender, the Administrative Agent or the Issuing Bank in the event such Lender, the Administrative Agent or the
Issuing Bank is required to repay such refund to such Governmental Authority. 

    (e) 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. 

    (f)  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 (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. 

33

  

 Section 2.18  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, fees or reimbursement of LC Disbursements, or under
Section 2.15, 2.16 or 2.17, or otherwise) prior to 12:00 noon, (Charlotte, North Carolina time), on the date when due, in immediately available funds, without set-off, deduction or
counterclaim. Any amounts paid after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been paid 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 payments to be made directly to the
Issuing Bank as expressly provided herein and except that payments pursuant to Sections 2.15, 2.16, 2.17 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, unreimbursed LC Disbursements,
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 and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal and unreimbursed LC Disbursements 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 Revolving Loans or participations in LC Disbursements or participations in Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its
Revolving Loans and participations in LC Disbursements and Swingline 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 Revolving Loans and participations in LC Disbursements and Swingline 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 Revolving Loans and participations
in LC Disbursements and Swingline Loans; provided that (i) if any such participations are purchased and all or any 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 or participations in LC Disbursements or participations in Swingline 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 or the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative 

34

 

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 or the Issuing Bank, as the case may
be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative
Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank 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), 2.07(b) or 2.18(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 2.19  Mitigation Obligations; Replacement of Lenders.

    (a) If
any Lender requests compensation under Section 2.15, 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 2.17, 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 good faith and reasonable judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, 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 economically 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 2.15, 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 2.17, 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 (other than any outstanding Competitive Loans held by it) to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment); provided that (i) if the assignee is not a Lender, 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 (other than Competitive Loans) and participations in LC Disbursements and Swingline Loans, accrued and unpaid interest thereon, accrued and unpaid fees and all other
amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal 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 2.15 or payments required to be made pursuant to Section 2.17, 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. 

35

 

 Section 2.20  Extension of Maturity Date.

    (a) The
Borrower may request, in a notice given as herein provided to the Administrative Agent (which the Administrative Agent, working with the Borrower, will
distribute to each of the Lenders) during the 60 day period commencing on the date that is the first day after the third anniversary of the Closing Date and each anniversary of the Closing Date
thereafter (the most recent such anniversary, the "Current Anniversary Date"), that the Maturity Date then in effect (the
"Existing Maturity Date") be extended for a twelve month period, which notice shall specify the new Maturity Date (which shall not be later than the
fifth anniversary of the Current Anniversary Date) to be in effect following such extension (the "Requested Maturity Date"). Each Lender, acting in its
sole discretion, shall, not later than a date 30 days after its receipt of any such notice from the Borrower, notify the Borrower and the Administrative Agent in writing of its election to
extend or not to extend the Maturity Date with respect to its Commitment. Any Lender which shall not timely notify the Borrower and the Administrative Agent of its election to extend the Maturity Date
shall be deemed to have elected not to extend the Maturity Date with respect to its Commitment (any Lender who timely notifies the Borrower and the Administrative Agent of an election not to extend
its Commitment and any Lender so deemed to have elected not to extend its Commitment being referred to as a "Terminating Lender").
The election of any Lender to agree to a requested extension shall not obligate any other Lender to agree. 

    (b) If
and only if Lenders holding Commitments that aggregate at least 662/3% of the aggregate amount of the Commitments on the date of the notice
delivered by the Borrower pursuant to paragraph (a) above (including Commitments of all Terminating Lenders on such date) shall have agreed during the 30 day period referred to in such
paragraph (a) to extend the Existing Maturity Date, then (i) the Commitments of the Lenders other than Terminating Lenders (the "Continuing
Lenders") shall, subject to the other provisions of this Agreement, be extended to the Requested Maturity Date specified in the notice from the Borrower, and as to such Lenders
the term "Maturity Date", as used herein, shall on and after the date as of which the requested extension is effective mean such Requested Maturity Date,  provided that if such date is not a Business Day,
 then such Requested Maturity Date shall be the immediately preceding Business Day and (ii) the
Commitments of the Terminating Lenders shall continue until the Existing Maturity Date, and shall then terminate, and as to the Terminating Lenders, the term "Maturity Date", as used herein, shall
continue to mean such Existing Maturity Date. Notwithstanding anything to the contrary contained in this Section 2.20, the Maturity Date may not be extended for more than two additional
twelve-month periods. 

    (c) In
the event that the Maturity Date shall have been extended for the Continuing Lenders in accordance with paragraph (b) above and, in connection with such
extension, there are Terminating Lenders, the Borrower may, at its own expense, require any Terminating Lender to transfer and assign, without recourse (in accordance with Section 9.04(b)) all
or part of its interests, rights and obligations under this Agreement to an assignee (which assignee may be another Lender, if another Lender accepts such assignment) that shall assume such assigned
obligations and that shall agree that its Commitment will expire on the Maturity Date in effect for Continuing Lenders pursuant to such paragraph (b); provided,
however, that (i) the Borrower shall have received a written consent of the Administrative Agent in the case of an assignee that is not a Lender (which consent shall not
unreasonably be withheld) and (ii) the assigning Lender shall have received from the Borrower or such assignee full payment in immediately available funds of the principal of, interest,
facility fees and utilization fees accrued to the date of such payment on the Loans made by it and its Commitment hereunder to the extent that such Loans and Commitment are subject to such assignment
and all other amounts owed to it hereunder (including any amounts that would be payable to the assigning Lender pursuant to Section 2.16 if such assignment were, instead, a prepayment of the
Loans of such Lender). Any such assignee's initial 

36

 

Maturity Date shall be the Maturity Date in effect for the Continuing Lenders at the time of such assignment. The Borrower shall not have any right to require a Lender to assign any part of its
interests, rights and obligations under this Agreement pursuant to this paragraph (c) unless it has notified such Lender of its intention to require the assignment thereof at least ten days
prior to the proposed assignment date. 

 
 

ARTICLE III
  
    REPRESENTATIONS AND WARRANTIES    
  

    The Borrower represents and warrants to the Lenders that: 

 Section 3.01  Organization; Powers.

    Each
of the Borrower and the 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 applicable to the
Borrower or any Subsidiary, including, without limitation, HMO Regulations and Insurance Regulations, or the charter, by-laws or other organizational documents of the Borrower or any
Subsidiary 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 Subsidiary or its assets, or give rise to a right thereunder to require any payment to be made by the Borrower or any Subsidiary, except
for such violations and defaults 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 Subsidiary (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, 2000, audited by Deloitte & Touche LLP, independent auditors, and (ii) its consolidated balance sheet and statements of operations
and cash flows as of and for the fiscal quarter ended March 31, 2001, certified by its chief financial officer. Such financial statements present fairly, in all material respects, the financial
position and results of operations and cash 

37

 

flows of the Borrower and its consolidated Subsidiaries as of such dates and for such periods in accordance 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, 2000, there has been no material adverse change in the business, assets, operations or financial condition of the Borrower and the
Subsidiaries, taken as a whole. 

 Section 3.05  Properties.

    (a) Each
of the Borrower and the Subsidiaries has good title to, or valid leasehold interests in, all its real and personal property material to its business, except
for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes, except where any such
failure, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. 

    (b) Each
of the Borrower and the 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 the 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 Subsidiary (i) that 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 Subsidiary (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, (iii) has received notice of any claim with respect to any Environmental Liability or
(iv) knows of any basis for 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 a Material
Adverse Effect. 

 Section 3.07  Compliance with Laws and Agreements.

    Each
of the Borrower and the Subsidiaries is in compliance with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon 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. Without limiting the generality of the immediately preceding sentence, each of the Borrower and the Subsidiaries (i) is in compliance with all material terms and
provisions of the HMO Regulations and Insurance Regulations pertaining to fiscal soundness, solvency or financial condition and (ii) has not received any assertion in writing by an HMO
Regulator or Insurance Regulator that it is taking administrative action against the Borrower or any Subsidiary (A) to revoke or modify any contract of insurance, license, permit,
certification, authorization, accreditation or charter or (B) to enforce the fiscal soundness, solvency or financial provisions or requirements of the HMO Regulations or Insurance Regulations
against the Borrower or any Subsidiary, except to the extent that any such non-compliance 

38

 

by the Borrower or any Subsidiary or any such administrative action against the Borrower or any Subsidiary could not reasonably be expected to result in a Material Adverse Effect. 

 Section 3.08  Investment and Holding Company Status.

    The
Borrower is not (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 the 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 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 the fair market value of the assets of such Plan by any
amount that could reasonably be expected to result in a Material Adverse Effect, 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 the fair market value of the
assets of all such underfunded Plans by any amount that could reasonably be expected to result in a Material Adverse Effect. 

 Section 3.11  Disclosure.

    The
reports, financial statements, certificates or other written information when furnished by the Borrower or any authorized representative of the Borrower to the Administrative
Agent or any Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information when so furnished), taken as a whole, did not contain
any material misstatement of fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not materially misleading;  provided that, with respect to projected financial information and other forward looking information, the Borrower represents only that such information
was prepared in good faith based upon assumptions believed to be reasonable at the time, it being understood that no assurance is given that the results forecasted in such projections and other
forward looking information will in fact be achieved and such projections and other forward looking information are subject to significant uncertainties and contingencies many of which are beyond the
control of the Borrower and the Subsidiaries. 

 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. 

39

  

 Section 3.13  Nature of Business.

    The
Borrower is an integrated managed care organization which administers the delivery of managed health care services. Through its Subsidiaries, the Borrower is also engaged in the
business of delivering managed health care products related to behavioral health, dental, vision and prescription drugs, and offers government-sponsored managed care plans and products related to
administration and cost containment. 

 Section 3.14  Purpose of Loans and Letters of Credit.

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

 Section 3.15  Subsidiaries and Significant Subsidiaries.

    Set
forth on Schedule 3.15 is a complete and accurate list of all Subsidiaries and all Significant Subsidiaries as of the
Closing Date. 

 
 

ARTICLE IV
  
    CONDITIONS    
  

 Section 4.01  Closing Date.

    The
obligations of the Lenders to make the initial Loans and of the Issuing Bank to issue Letters of Credit 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 a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Closing Date) of
Skadden, Arps, Slate, Meagher & Flom (Illinois), counsel for the Borrower, and General Counsel to the Borrower, substantially in the form of Exhibit D-1 and D-2,
respectively. 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 reasonably 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 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, the reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder. 

40

 

    (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 and of the Issuing Bank to issue Letters of Credit 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 June 28, 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, and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, 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 in all material respects on and as of the date of, and
after giving effect to, such Borrowing or the date of, and after giving effect to, the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, except to the extent such
representations and warranties expressly relate to an earlier date in which case such representations and warranties shall be true and correct in all material respects on and as of such earlier date;  provided, that, if any commercial paper is outstanding and this Agreement provides liquidity for such commercial paper, 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. 

    (b) At
the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no
Default shall have occurred and be continuing. 

    Each
Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit 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 and all Letters of Credit shall have
expired or terminated and all LC Disbursements shall have been reimbursed, 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 (with copies for each Lender): 

    (a) within
100 days after the end of each fiscal year of the Borrower, its audited consolidated balance sheet and related statements of operations, 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 Deloitte & Touche 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 

41

 

consolidated basis in accordance with GAAP (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 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 (beginning with the fiscal quarter ending on
June 30, 2001), its consolidated balance sheet and related statements of operations and cash flows as of the end of and for such fiscal quarter and 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, 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,
(ii) setting forth reasonably detailed calculations demonstrating compliance with Section 6.01 and
(iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in Section 3.04 and, if any such change
has occurred, specifying the effect of such change on the financial statements accompanying such certificate; 

    (d) concurrently
with any delivery of financial statements under clause (a) above, a certificate of the accounting firm that reported on such financial
statements stating whether they obtained knowledge during the course of their examination of such financial statements of any Default (which certificate may be limited to the extent required by
accounting rules or guidelines); 

    (e) within
30 days after the filing for each fiscal year, copies of financial reports of the Significant Subsidiaries prepared in accordance with statutory
accounting principles; provided, however, following any Ratings Downgrade, within 30 days after the filing for each fiscal quarter following such
Ratings Downgrade, copies of financial reports of the Significant Subsidiaries prepared in accordance with statutory accounting principles; 

    (f)  promptly
after the same become publicly available or upon transmission or receipt thereof, (i) copies of all periodic and other reports, proxy statements
and other materials filed by the Borrower or any Subsidiary with the SEC, or any Governmental Authority succeeding to any or all of the functions of the SEC, 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 (f) and (ii) upon the request of the Administrative Agent, all material reports and
other annual statements that the Borrower or any Subsidiary may render to or file with any Governmental Authority, including without limitation the Department of Health and Human Services Office of
Inspector General; and 

    (g) 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. 

42

 

 Section 5.02  Notices of Material Events.

    Upon
obtaining knowledge thereof, the Borrower will furnish to the Administrative Agent and each Lender prompt (but in any event not later than five Business Days after obtaining such
knowledge) written notice of the following: 

    (a) the
occurrence of any Default; 

    (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; 

    (c) the
occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in a Material
Adverse Effect; 

    (d) the
non-compliance with any contractual obligation or requirement of law, including, without limitation, HMO Regulations and Insurance Regulations, that
is not currently being contested in good faith by appropriate proceedings, if all such non-compliance in the aggregate could reasonably be expected to result in a Material Adverse Effect; 

    (e) the
revocation of any license, permit, authorization, certificate, qualification or accreditation of the Borrower or any Subsidiary by any Governmental Authority,
including, without limitation, HMO Regulators and Insurance Regulators, if all such revocations in the aggregate could reasonably be expected to result in a Material Adverse Effect; and 

    (f)  any
other development that results in, or 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 the 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
take all reasonable action to maintain the rights, licenses, permits, privileges and franchises material to the conduct of its business, except to the extent failure to do so could not reasonably be
expected to result in a Material Adverse Effect; provided that the foregoing shall not prohibit 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 Subsidiary to, pay its obligations, including Tax liabilities, 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, (b) the
Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect. 

 Section 5.05  Maintenance of Properties; Insurance.

    The
Borrower will, and will cause each Subsidiary to, (a) keep and maintain all property material to the conduct of the business of the Borrower and the Subsidiaries, taken as
a whole, in good working 

43

 

order and condition, ordinary wear and tear excepted, except where the failure to keep and maintain such property could not reasonably be expected to result in a Material Adverse Effect, 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 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 Subsidiary to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in
relation to its business and activities. The Borrower will, and will cause each Subsidiary to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior
notice, 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
(it being understood that the Borrower has a right to be present during any discussion with the Borrower's 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 Subsidiary 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) and all indentures, agreements and other instruments binding upon it
or its property, except in each case 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 and Letters of Credit.

    The
proceeds of the Loans and the Letters of Credit 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 any of the regulations of the Board, including Regulations U and X. 

 Section 5.09  Maintenance of Accreditation, Etc.

    The
Borrower will preserve and maintain, and cause each Subsidiary to preserve and maintain, all licenses, permits, authorizations, certifications and qualifications (including,
without limitation, those qualifications with respect to solvency and capitalization) 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 would not result in a Material Adverse Effect. 

 
 

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 and all
Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders that: 

 Section 6.01  Financial Covenants.

    (a)  Consolidated Leverage Ratio.  The Consolidated Leverage Ratio for any period of four consecutive
fiscal quarters shall be less than or equal to 3.0 to 1.0. 

44

 

    (b)  Consolidated Fixed Charge Coverage Ratio.  The Consolidated Fixed Charge Coverage Ratio for any
period of four consecutive fiscal quarters shall be greater than or equal to 1.5 to 1.0. 

    (c)  Consolidated Net Worth.  The Consolidated Net Worth shall at all times be greater than or equal to
$945,000,000 less the sum of (i) the net of tax equivalent amount of the pre-tax charges, not to exceed $80 million, as described in the definition of Consolidated EBITDA,
and (ii) the net of tax equivalent amount of pre-tax charges related to the write-off of any goodwill (A) in anticipation of, (B) concurrent with or
(C) subsequent to the adoption of the financial accounting standard entitled "Business Combinations and Intangible Assets—Accounting for Goodwill, increased by the sum of, on a
cumulative basis as of the end of each fiscal quarter of the Borrower, commencing with the fiscal quarter ending June 30, 2001, (i) an amount equal to 50% of Consolidated Net Income (to
the extent positive) for the fiscal quarter then ended plus (ii) an amount equal to 100% of the Net Cash Proceeds from any Equity Issuance occurring after the Closing Date. 

 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
to the Borrower or any other Subsidiary; 

    (c) Guarantees
of Indebtedness of any other Subsidiary; 

    (d) Indebtedness
incurred to finance the acquisition, construction, improvement or repair of any fixed or capital asset, including Capital Lease Obligations, mortgage
financings, purchase money Indebtedness and any Indebtedness assumed in connection with the acquisition of any such asset or secured by a Lien on any such asset prior to the acquisition thereof, and
extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof; provided that (i) such Indebtedness is incurred prior to or within
360 days after such acquisition or the completion of such construction, improvement or repair and (ii) the aggregate principal amount of Indebtedness permitted by this clause (d)
shall not exceed $50,000,000 in the aggregate at any time outstanding; 

    (e) Indebtedness
of any Subsidiary as an account party in respect of trade letters of credit; 

    (f)  Indebtedness
(i) in respect of performance, bid, surety or appeal bonds and completion guarantees provided in the ordinary course of business and
(ii) under Hedging Agreements entered into to protect against fluctuations in exchange and interest rates and not for speculative purposes; and 

    (g) other
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; 

45

 

    (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, 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
attributable to sale-leaseback transactions and Capital Lease Obligations not otherwise prohibited by this Agreement; 

    (e) Liens
in favor of the Borrower or any Subsidiary; 

    (f)  Liens
on any fixed or capital asset acquired, constructed, repaired or improved by the Borrower or any Subsidiary;  provided that (i) such Liens secure Indebtedness not prohibited by Section 6.02(d),
(ii) such Liens and the Indebtedness secured
thereby are incurred prior to or within 360 days after such acquisition or the completion of such construction, repair or improvement and (iii) such Liens shall not apply to any other
property or assets of the Borrower or any other Subsidiary; 

    (g) Liens
not otherwise permitted under this Section securing obligations in an aggregate amount not exceeding at any time ten percent (10%) of Consolidated Net
Tangible Assets as at the end of the immediately preceding fiscal quarter of the Borrower; and 

    (h) any
extension, renewal or replacement (or successive extensions, renewals or replacements) of Liens, in whole or in part, referred to in clauses (a) through
(g) above; provided that any such extension, renewal or replacement Lien shall be limited to the property covered by the Lien extended, renewed
or replaced. 

 Section 6.04  Fundamental Changes.

    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 Subsidiary (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 (a) any Person may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (b) any Person, including any Affiliate, may merge into any
Subsidiary in a transaction in which the surviving entity is a Subsidiary, (c) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to the Borrower or to another
Subsidiary, (d) 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, sale, transfer, lease or other disposition is in the best interests of the Borrower and is not materially
disadvantageous to the Lenders, (e) the Borrower may sell the assets or the stock of Foundation Health, a Florida Health Plan, Inc., (f) the Borrower may sell, transfer,
contribute or otherwise dispose of all or substantially all 

46

 

the assets of or all or substantially all the stock of a Subsidiary in connection with an investment made pursuant to clause (o) of the definition of "Permitted Investments" and
Section 6.08 and (g) the Borrower and the Subsidiaries may sell, transfer, lease or otherwise dispose of (in one transaction or in a series of transactions) all or substantially all the
assets of a Subsidiary, or all or substantially all the stock of a Subsidiary; provided that the aggregate amount of all dispositions pursuant to this
clause (g) shall not exceed five percent (5%) of Consolidated Assets (determined as of the fiscal quarter of the Borrower ending immediately prior to the date of the initial disposition
pursuant to this clause (g)). 

 Section 6.05  Transactions with Affiliates.

    The
Borrower will not, and will not permit any of the 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) on terms and conditions not less favorable to the Borrower or such Subsidiary than
could be obtained on an arm's-length basis (considering such transaction and all other related transactions as a whole), (b) transactions between or among the Borrower and the Subsidiaries or
between or among the Subsidiaries or (c) as otherwise permitted by this Agreement. 

 Section 6.06  Restrictive Agreements.

    The
Borrower will not, and will not permit any of the 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: (a) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or (b) the ability of
any Subsidiary to make or repay loans or advances to the Borrower or any other Subsidiary or (c) the ability of any Subsidiary to Guarantee Indebtedness of the Borrower or any other Subsidiary
or (d) the creation or assumption of any Lien upon its Property, whether now owned or hereafter acquired, or requiring the grant of any security for such obligation if security is given for
some other obligation (other than "equal and ratable" restriction typically contained in public note indentures); provided that the foregoing shall not
apply to (i) restrictions and conditions imposed by law, rule, regulation or regulatory administrative agreement or determination (including those imposed by HMO Regulations and Insurance
Regulations) or by this Agreement or the 364-Day Facility, (ii) restrictions and conditions existing on the date hereof identified on  Schedule 6.06 and all extensions, renewals and
replacements thereof, (iii) restrictions and conditions contained in agreements entered
into in the ordinary course of business of the Borrower and the Subsidiaries; provided that such restrictions and conditions are not materially more
restrictive as a whole than those imposed by HMO Regulations and Insurance Regulations or those identified on Schedule 6.06, (iv) 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 and (v) any Lien permitted under Section 6.03. 

 Section 6.07  Nature of Business.

    The
Borrower will not, and will not permit any of its Significant Subsidiaries to, substantially alter the character or conduct of the business 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 the 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. 

47

  

 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 (directly or indirectly through
Subsidiaries) and ratably to minority shareholders 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 following any Ratings Downgrade, the aggregate amount of all such Restricted Payments
pursuant to this clause (c) shall not exceed $75,000,000 for any consecutive four quarter period, beginning with the first fiscal quarter following such Ratings Downgrade. 

 
 

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 or any reimbursement obligation in respect of any LC Disbursement (other than as a result of the failure by
the Administrative Agent or any Lender to comply with Section 2.06(f)) 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 (i) any interest on any Loan or (ii) 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 in the case of clause (i)
and for a period of five days after notice thereof from the Administrative Agent in the case of clause (ii); 

    (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(a), 5.03 (with respect to the Borrower's
existence), 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; 

    (f)  the
Borrower or any Subsidiary shall fail to observe or perform any term, covenant, condition or agreement contained in any agreement or instrument evidencing or
governing Indebtedness having an aggregate principal amount in excess of $40,000,000 or any other event shall occur, if the effect of any such failure or event is to permit the holder or holders of
such Indebtedness or a trustee on its or their behalf (with the giving of notice if required and after the expiration of all grace periods applicable thereto) to cause such Indebtedness to become due
prior to its stated maturity; provided that this clause (f) shall not apply to (i) any failure or event that has been waived by the holder
or holders, or a trustee on its or their behalf, of such Indebtedness or cured, (ii) secured Indebtedness that becomes due as a result of the voluntary sale or transfer 

48

 

of the property or assets securing such Indebtedness or (iii) the Indebtedness under this Agreement or the 364-Day Facility; 

    (g) the
Borrower or any Subsidiary shall fail to observe or perform any term, covenant, condition or agreement contained in any agreement or instrument evidencing or
governing Indebtedness having an aggregate principal amount in excess of $40,000,000 or any other event shall occur, if the effect of any such failure or event is to cause such Indebtedness to become
due prior to its stated maturity, or the Borrower or any Subsidiary shall fail to repay the principal amount of any such Indebtedness at its stated maturity;  provided that this clause (g) shall not
apply to (i) secured Indebtedness that becomes due as a result of the voluntary sale or transfer
of the property or assets securing such Indebtedness or (ii) the Indebtedness under this Agreement or the 364-Day 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)  an
Event of Default shall occur and be continuing under the 364-Day Facility; 

    (k) one
or more judgments or decrees shall be rendered against the Borrower, any Subsidiary or any combination thereof and the same shall not have been paid, vacated,
discharged, stayed or bonded pending appeal within 60 days from the entry thereof that involves in the aggregate a liability (to the extent not paid or covered by insurance) of $25,000,000 or
more; 

    (l)  (i) any
non-compliance by the Borrower or any Subsidiary with any material term or provision of the HMO Regulations or Insurance Regulations
pertaining to fiscal soundness, solvency or financial condition and such non-compliance shall not have been cured or waived within 30 days, to the extent such event will or is
reasonably expected to have a Material Adverse Effect; 

    (m) an
ERISA Event shall have occurred that, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in a Material
Adverse Effect; or 

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

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, with the consent of the Required Lenders, may, and at the request of the Required Lenders shall, by notice to the Borrower, take any or all of the following actions,
at the same 

49

 

or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, (ii) demand the deposit of an amount in cash equal to the LC Exposure as of
such date plus any accrued and unpaid interest and fees thereon pursuant to Section 2.06(k), and (iii) 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. For purposes of the
Events of Default set forth in clause (f) and (g) above, Indebtedness shall include obligations in respect of Hedging Agreements, and 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. 

 
 

ARTICLE VIII 
  
    THE ADMINISTRATIVE AGENT    
  

    Each of the Lenders and the Issuing Bank 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 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 Subsidiary 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 

50

 

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 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. 

    Subject
to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders,
the Issuing Bank and the Borrower. Upon any such resignation, the Borrower shall have the right, with the consent of the Required Lenders, to appoint a successor. If no successor shall have been so
appointed by the Borrower and shall have accepted such appointment within (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative
Agent may appoint, after consulting with the Lenders and with the consent of Borrower, a successor administrative agent from among the Lenders. The Borrower, with the consent of the Lenders (other
than the Administrative Agent) holding more than 662/3% of the Commitments (other than Commitments held by the Administrative Agent), may remove the Administrative Agent and appoint a
successor. Upon the acceptance of its appointment as successor administrative agent hereunder, any 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 or removal 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. 

    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. 

51

  

 
 

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 Health Net, Inc., 21650 Oxnard Street, Woodland Hills, CA 91367, Attention: Senior Vice President and Treasurer (Telecopy No.
(818) 676-5139), with a copy to Attention: Senior Vice President, General Counsel and Secretary (Telecopy No. (818) 676-7503); 

    (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—Neal Hendrix, Telephone: 704-386-4220, Telecopy: 704-409-0017. 

    (c) if
to the Issuing Bank, 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—Neal Hendrix, Telephone: 704-386-4220, Telecopy: 704-409-0017; and 

    (d) 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, the Issuing Bank 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, the Issuing Bank 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 or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or the Issuing Bank 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 LC Disbursement 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 LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such 

52

 

payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender directly affected thereby, (iv) change Section 2.18(b) or
(c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (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 of each Lender or (vi) change or amend Section 2.04 without the consent of the Swingline Lender; provided
further  that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or the Issuing Bank hereunder without the prior written
consent of the Administrative Agent or the Issuing Bank, as the case may be. 

 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),
(ii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any
demand for payment thereunder and (iii) all reasonable out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank or any Lender, including the
reasonable fees, charges and disbursements of any counsel for the Administrative Agent, the Issuing Bank or any Lender, in connection with the enforcement of its rights in connection with this
Agreement, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder. 

    (b) The
Borrower shall indemnify the Administrative Agent, the Issuing Bank 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 Letter of Credit or the actual or proposed use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a
demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit) or (iii) 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 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 or the Issuing Bank under paragraph (a) or
(b) of this Section, each Lender severally agrees to pay to the Administrative Agent or the Issuing Bank, as the case may be, 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 

53

 

incurred by or asserted against the Administrative Agent or the Issuing Bank 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 Letter of Credit or the use of the proceeds thereof. 

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

 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, the Issuing Bank 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 (and, in the case of an assignment of all or a portion of a Commitment or any Lender's obligations in respect of its LC
Exposure, the Issuing Bank and with respect to the Swingline Exposure, the Swingline Lender) 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, except that this clause (iii) shall not apply to rights in respect of outstanding Competitive
Loans, (iv) such assigning Lender shall simultaneously assign an identical percentage of the loans and commitments of such Lender under the 364-Day 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 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 

54

 

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 2.15, 2.16, 2.17 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 and LC Disbursements
owing to, each Lender 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, the Issuing Bank 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 or the Issuing Bank, 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, the Issuing Bank 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 2.15,
2.16 and 2.17 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 2.15 or 2.17 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 2.17 unless the Borrower is notified 

55

 

of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.17(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 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. Each party hereto acknowledges and agrees that no SPC shall have any voting rights hereunder and that the voting rights attributable to any extension of credit made
by an SPC shall be exercised only by the relevant Granting Lender. Each Granting Lender shall serve as attorney in fact for its SPC and
shall on behalf of its SPC: (i) receive any and all payments made for the benefit of such SPC and (ii) give and receive all communications and notices and take all actions hereunder to
the extent, if any, such SPC shall have any rights hereunder. To the extent an SPC shall have the right to receive or give any notice or take any such action in writing, it shall be signed by its
Granting Lender, as administrative agent and attorney in fact for such SPC and need not be signed by such SPC on its own behalf. 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 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, with the prior written consent of the Borrower and the Administrative Agent, 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;  provided that such
SPC shall obtain the prior written consent of the Borrower to any such disclosure of any such non-public information. 

 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 

56

 

delivery of this Agreement and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank 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 or any Letter of
Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.15, 2.16, 2.17 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 Letters of Credit and 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. 

 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 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. 

57

 

    (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, the Issuing Bank 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 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, the Issuing Bank 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, on a need to know basis (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 such Information confidential in accordance
with the terms hereof), 

58

 

(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) to the extent that such confidential Information is directly relevant to the subject matter thereof, 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, the Issuing Bank or any Lender on a nonconfidential basis from a source other than the Borrower who is not, to the knowledge of the Administrative Agent, the
Issuing Bank 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 or on behalf of the Borrower or any Subsidiary relating to the Borrower, any Subsidiary or any of
their respective businesses or assets, other than any such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by
the Borrower; provided that, in the case of information received from or on behalf of the Borrower or any Subsidiary after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have
complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential
information. 

59

    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:	
 	

HEALTH NET, INC.
	

 	
 	

By:	
 	

/s/ Steven P. Erwin
 Name: Steven P. Erwin

Title: Executive Vice President & Chief Financial Officer
	

ADMINISTRATIVE AGENT:	
 	

BANK OF AMERICA, N.A.
	

 	
 	

By:	
 	

  
 Name:

Title:
	

LENDERS:	
 	

BANK OF AMERICA, N.A.
	

 	
 	

By:	
 	

  
 Name:

Title:

	

ADMINISTRATIVE AGENT:	
 	

BANK OF AMERICA, N.A.

as Administrative Agent and a Lender
	

 	
 	

By:	
 	

/s/ Joseph L. Corah
 Name: Joseph L. Corah

Title: Principal
	

[signature pages continue]

	 	 	THE CHASE MANHATTAN BANK
	

 	
 	

By:	
 	

/s/ Robert Bottamedi
 Name: Robert Bottamedi

Title: VP
	

[signature pages continue]

	 	 	FLEET NATIONAL BANK
	

 	
 	

By:	
 	

/s/ Judi N. Cyr
 Name: Judi N. Cyr

Title: Vice President
	

[signature pages continue]

	 	 	CITICORP, USA
	

 	
 	

By:	
 	

/s/ Stephen P. Zwick
 Name: Stephen P. Zwick

Title: V.P.
	

[signature pages continue]

	 	 	THE BANK OF NOVA SCOTIA
	

 	
 	

By:	
 	

/s/ R.P. Reynolds
 Name: R.P. Reynolds

Title: Director
	

[signature pages continue]

	 	 	SUMITOMO MITSUI BANKING CORPORATION
	

 	
 	

By:	
 	

/s/ Al Galluzzo
 Name: Al Galluzzo

Title: Senior Vice President
	

[signature pages continue]

	 	 	THE BANK OF NEW YORK
	

 	
 	

By:	
 	

/s/ Rebecca K. Levine
 Name: Rebecca K. Levine

Title: VP
	

[signature pages continue]

	 	 	WELLS FARGO BANK
	

 	
 	

By:	
 	

/s/ Beth Filipponi
 Name: Beth Filipponi

Title: Vice President
	

[signature pages continue]

	 	 	UNION BANK OF CALIFORNIA, N.A.
	

 	
 	

By:	
 	

/s/ Philip M. Roesner
 Name: Philip M. Roesner

Title: Vice President Senior Credit Executive
	

[signature pages continue]

	 	 	THE DAI-ICHI KANGYO BANK, LTD.
	

 	
 	

By:	
 	

/s/ John S. Sneed, Jr.
 Name: John S. Sneed, Jr.

Title: Senior Vice President
	

[signature pages continue]

	 	 	CREDIT LYONNAIS NEW YORK BRANCH
	

 	
 	

By:	
 	

/s/ Charles Heidsieck
 Name: Charles Heidsieck

Title: Senior Vice President
	

[signature pages continue]

	 	 	THE TOKAI BANK, LIMITED
	

 	
 	

By:	
 	

/s/ Shinichi Nakatani
 Name: Shinichi Nakatani

Title: Assistant General Manager
	

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	 	 	THE FUJI BANK, LIMITED
	

 	
 	

By:	
 	

/s/ Masahito Fukuda
 Name: Masahito Fukuda

Title: Senior Vice President
	

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	 	 	THE INDUSTRIAL BANK OF JAPAN, LIMITED
	

 	
 	

By:	
 	

/s/ Vicente L. Timiraos
 Name: Vicente L. Timiraos

Title: Joint General Manager
	

[signature pages continue]

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Exhibit 10.34 EXECUTION COPY

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

ARTICLE IX MISCELLANEOUSPrepared by MERRILL CORPORATION

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Exhibit 10.35
  
    EXECUTION COPY    
  

CREDIT
AGREEMENT

($175,000,000 364-Day Revolving Credit Facility) 

dated
as of 

June 28,
2001 

among

HEALTH
NET, INC.,

as Borrower, 

THE
LENDERS

FROM TIME TO TIME PARTY HERETO 

and 

BANK
OF AMERICA, N. A.,

as Administrative Agent 

BANC
OF AMERICA SECURITIES LLC,

as Sole Lead Arranger and Sole Book Manager 

  

 
 

TABLE OF CONTENTS    
  

	ARTICLE I Definitions	 	1
	 	Section 1.01	 	Defined Terms.	 	1
	 	Section 1.02	 	Classification of Loans and Borrowings.	 	14
	 	Section 1.03	 	Terms Generally.	 	14
	 	Section 1.04	 	Accounting Terms; GAAP.	 	14
	

ARTICLE II The Credits	
 	

14
	 	Section 2.01	 	Commitments.	 	14
	 	Section 2.02	 	Loans and Borrowings.	 	14
	 	Section 2.03	 	Requests for Revolving Borrowings.	 	15
	 	Section 2.04	 	[Intentionally Omitted].	 	16
	 	Section 2.05	 	[Intentionally Omitted].	 	16
	 	Section 2.06	 	[Intentionally Omitted].	 	16
	 	Section 2.07	 	Funding of Borrowings.	 	16
	 	Section 2.08	 	Interest Elections.	 	16
	 	Section 2.09	 	Termination and Reduction of Commitments.	 	17
	 	Section 2.10	 	Repayment of Loans; Evidence of Debt.	 	18
	 	Section 2.11	 	Prepayment of Loans.	 	18
	 	Section 2.12	 	Fees.	 	19
	 	Section 2.13	 	Interest.	 	20
	 	Section 2.14	 	Alternate Rate of Interest.	 	21
	 	Section 2.15	 	Increased Costs.	 	21
	 	Section 2.16	 	Break Funding Payments.	 	22
	 	Section 2.17	 	Taxes.	 	22
	 	Section 2.18	 	Payments Generally; Pro Rata Treatment; Sharing of Set-offs.	 	24
	 	Section 2.19	 	Mitigation Obligations; Replacement of Lenders.	 	25
	

ARTICLE III Representations and Warranties	
 	

26
	 	Section 3.01	 	Organization; Powers.	 	26
	 	Section 3.02	 	Authorization; Enforceability.	 	26
	 	Section 3.03	 	Governmental Approvals; No Conflicts.	 	26
	 	Section 3.04	 	Financial Condition; No Material Adverse Change.	 	26
	 	Section 3.05	 	Properties.	 	27
	 	Section 3.06	 	Litigation and Environmental Matters.	 	27
	 	Section 3.07	 	Compliance with Laws and Agreements.	 	27
	 	Section 3.08	 	Investment and Holding Company Status.	 	28
	 	Section 3.09	 	Taxes.	 	28
	 	Section 3.10	 	ERISA.	 	28
	 	Section 3.11	 	Disclosure.	 	28
	 	Section 3.12	 	Federal Regulations.	 	28
	 	Section 3.13	 	Nature of Business.	 	29
	 	Section 3.14	 	Purpose of Loans.	 	29
	 	Section 3.15	 	Subsidiaries and Significant Subsidiaries.	 	29
	

ARTICLE IV Conditions	
 	

29
	 	Section 4.01	 	Closing Date.	 	29
	 	Section 4.02	 	Each Credit Event.	 	30
	

ARTICLE V Affirmative Covenants	
 	

30
	 	Section 5.01	 	Financial Statements and Other Information.	 	30

i

 

	 	Section 5.02	 	Notices of Material Events.	 	31
	 	Section 5.03	 	Existence; Conduct of Business.	 	33
	 	Section 5.04	 	Payment of Obligations.	 	33
	 	Section 5.05	 	Maintenance of Properties; Insurance.	 	33
	 	Section 5.06	 	Books and Records; Inspection Rights.	 	33
	 	Section 5.07	 	Compliance with Laws and Agreements.	 	33
	 	Section 5.08	 	Use of Proceeds.	 	34
	 	Section 5.09	 	Maintenance of Accreditation, Etc.	 	34
	

ARTICLE VI Negative Covenants	
 	

34
	 	Section 6.01	 	Financial Covenants.	 	34
	 	Section 6.02	 	Subsidiary Indebtedness.	 	34
	 	Section 6.03	 	Liens.	 	35
	 	Section 6.04	 	Fundamental Changes.	 	36
	 	Section 6.05	 	Transactions with Affiliates.	 	36
	 	Section 6.06	 	Restrictive Agreements.	 	36
	 	Section 6.07	 	Nature of Business.	 	37
	 	Section 6.08	 	Advances, Investments and Loans.	 	37
	 	Section 6.09	 	Restricted Payments.	 	37
	

ARTICLE VII Events of Default	
 	

37
	

ARTICLE VIII The Administrative Agent	
 	

40
	

ARTICLE IX Miscellaneous	
 	

41
	 	Section 9.01	 	Notices.	 	41
	 	Section 9.02	 	Waivers; Amendments.	 	41
	 	Section 9.03	 	Expenses; Indemnity; Damage Waiver.	 	42
	 	Section 9.04	 	Successors and Assigns.	 	43
	 	Section 9.05	 	Survival.	 	46
	 	Section 9.06	 	Counterparts; Integration; Effectiveness.	 	46
	 	Section 9.07	 	Severability.	 	46
	 	Section 9.08	 	Right of Setoff.	 	46
	 	Section 9.09	 	Governing Law; Jurisdiction; Consent to Service of Process.	 	47
	 	Section 9.10	 	WAIVER OF JURY TRIAL.	 	47
	 	Section 9.11	 	Headings.	 	47
	 	Section 9.12	 	Confidentiality.	 	47

ii

 

SCHEDULES: 

Schedule 2.01—Commitments

Schedule 3.06—Disclosed Matters

Schedule 3.15—Subsidiaries and Significant Subsidiaries

Schedule 6.02—Existing Subsidiary Indebtedness

Schedule 6.03—Existing Liens

Schedule 6.06—Existing Restrictive Agreements

Schedule 6.07—Existing Investments 

EXHIBITS: 

Exhibit A—Form
of Assignment and Acceptance

Exhibit B—Investment Guidelines

Exhibit C—Form of Promissory Note

Exhibit D-1 and D-2—Forms of Opinions of Borrower's Counsel 

iii

 
 

CREDIT AGREEMENT    
  

    THIS 364-DAY CREDIT AGREEMENT (this "Agreement"),
dated as of June 28, 2001, among HEALTH NET, INC., as Borrower, the LENDERS party hereto and BANK OF AMERICA, N.A., as Administrative Agent. 

 
 

W I T N E S S E T H:    
  

    WHEREAS, the Borrower is party to the Credit Agreement dated as of July 8, 1997, as amended (the
"Existing Credit Agreement"), among the Borrower, the lenders parties thereto and Bank of America, N.A. (formerly known as Bank of America National
Trust and Savings Association), as administrative agent, issuing bank and swingline lender. 

    WHEREAS, the Borrower desires to replace the Existing Credit Agreement with this Agreement and the Five Year Facility (as defined
below) upon the terms, and subject to the 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 capital stock of or other equity interests in, or all or
substantially all of the Property of another Person, or of any line or segment of business or division of a Person, whether or not involving a merger or consolidation with such Person. 

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

    "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; provided that no Person shall be deemed to be an Affiliate of the
Borrower or any Subsidiary solely as a result of management or consulting agreements between such Person and the Borrower or any Subsidiary executed by the Borrower or any Subsidiary in the ordinary
course of business. 

    "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 Revolving Loan, or with respect to the facility fees payable
hereunder, as the case may be, the applicable rate per annum set forth below (in basis points) under the caption "Eurodollar Spread" or "Facility 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

	I	 	Greater than or equal to BBB+/Baa1	 	74.5	 	13.0
	II	 	Greater than or equal to BBB/Baa2 but less than BBB+/Baa1	 	85.0	 	15.0
	III	 	Greater than or equal to BBB-/Baa3 but less than BBB/Baa2	 	95.5	 	17.0
	IV	 	Greater than or equal to BB+/Ba1 but less than BBB-/Baa3	 	115.5	 	22.0
	V	 	Less than BB+/Ba1	 	130.5	 	32.0

    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 V; (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 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. 

    "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 Health Net, Inc., a Delaware corporation, or its successor. 

2

 

    "Borrowing" means Revolving 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 Revolving 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" means (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 (i) any domestic commercial bank of recognized standing having capital and surplus in excess of $250,000,000 or
(ii) 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 any variable rate notes issued by, or guaranteed by any domestic
corporation rated A-1 (or the equivalent thereof) or better by S&P or P-1 (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, (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, (f) auction preferred stock rated in the highest short-term credit rating category by S&P or Moody's and (g) shares of money market mutual or similar
funds which invest exclusively in the assets satisfying the requirements of clauses (a) through (f) of this definition. 

    "Change in Control" means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by 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), of shares representing more than 25% 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 2.15(b), by any lending office of such Lender or by such 

3

 

Lender's holding company, if any) with any guideline or directive of any Governmental Authority made or issued after the date of this Agreement. 

    "Closing Date" means the date on which the conditions set forth in Sections 4.01 and 4.02 shall have been satisfied. 

    "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 Revolving Loans hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's Revolving Credit Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.09 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. 

    "Consolidated Assets" means, at any date, the consolidated assets of the Borrower and the Subsidiaries at such date, as determined in
accordance with GAAP. 

    "Consolidated Capital Expenditures" means, for any period, all cash payments for capital expenditures of the Borrower and the
Subsidiaries on a consolidated basis for such period, as determined in accordance with GAAP; provided, however, that Consolidated Capital Expenditures
shall not include (a) expenditures which constitute the reinvestment of the net cash proceeds of asset dispositions not prohibited hereunder and (b) amounts financed other than by Loans
hereunder (but including principal amounts paid in respect of any such financed amounts). 

    "Consolidated EBITDA" means, for any period, Consolidated Net Income for such period  plus, without duplication and to the extent deducted in computing such Consolidated
Net Income for such period, the sum of (a) income tax
expense, (b) Consolidated Interest Expense, (c) depreciation and amortization expense, (d) 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 operations of the Borrower in determining such Consolidated Net Income for such
period, non-cash losses on sales of assets outside of the ordinary course of business), (e) certain non-recurring charges in an amount not to exceed a
pre-tax total amount of $80 million incurred in connection with the disposition of (i) Foundation Health, a Florida Health Plan, Inc., (ii) an investment in
certain non-public securities and (iii) certain property held for sale and (f) any other non-cash charges, and  minus, without duplication and to the extent added in computing such Consolidated
Net Income for such period, the sum of (i) interest income
(except as otherwise provided in the proviso at the end of this definition), (ii) any extraordinary, unusual or non-recurring non-cash income or non-cash
gains (including, whether or not otherwise includable as a separate item in the statement of operations of the Borrower in determining such Consolidated Net Income for such period,
non-cash gains on the sales of assets outside of the ordinary course of business), and (iii) any other non-cash income (other than non-cash income earned in
the ordinary course of business), all as determined on a consolidated basis; provided, that investment income or loss shall be included in the
calculation of Consolidated EBITDA. 

    "Consolidated Fixed Charge Coverage Ratio" means, for any period of four consecutive fiscal quarters, the ratio of
(a) Consolidated EBITDA for such period plus Consolidated Rental Expense for such period minus
Consolidated Capital Expenditures for such period to (b) Consolidated Scheduled Funded Debt Payments for such period. 

    "Consolidated Funded Indebtedness" means, at any date, all funded debt liabilities of the Borrower and the Subsidiaries (including,
without duplication, unreimbursed letters of credit and 

4

 

all Guarantees of such Person with respect to Funded Indebtedness of another Person (other than a Subsidiary)) that are or should be reflected at such date on the Borrower's consolidated balance sheet
in accordance with GAAP. 

    "Consolidated Interest Expense" means, for any period, the consolidated interest expense of the Borrower and the Subsidiaries for such
period with respect to all outstanding Indebtedness of the Borrower and the Subsidiaries, as determined in accordance with GAAP (including all 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) Consolidated EBITDA for such period. 

    "Consolidated Net Income" means, for any period, the consolidated net income (or loss) of the Borrower and the Subsidiaries for such
period, as determined in accordance with GAAP. 

    "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). 

    "Consolidated Net Worth" means, at any date, the consolidated shareholders' equity of the Borrower and the Subsidiaries at such date,
as determined in accordance with GAAP. 

    "Consolidated Rental Expense" means, for any period, with respect to the Borrower and the Subsidiaries, on a consolidated basis, all
rental expense attributable to Operating Lease Obligations (whether a lease of real property, personal property or mixed) for such period, as determined in accordance with GAAP. 

    "Consolidated Scheduled Funded Debt Payments" means, for any period, the sum of (a) all scheduled payments of principal on
Consolidated Funded Indebtedness of the Borrower and the Subsidiaries (including, without duplication, the principal component of payments due on Capital Lease Obligations during such period) for such
period plus (b) Consolidated Interest Expense for such period plus (c) Consolidated Rental
Expense for such period. 

    "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 whether or not any requirement for the giving of notice,
lapse of time or both has been satisfied. 

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

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

    "Eligible Lenders" means (i) a commercial bank organized under the laws of the United States or any state thereof, or
(ii) a bank acting through a branch or agency located in the United States. 

    "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 or to health and safety matters. 

    "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 

5

 

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 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. 

    "Equity Issuance" means any issuance by the Borrower or any Subsidiary to any Person (other than to the Borrower or a Subsidiary) of
(a) any shares of its capital stock, (b) any shares of its capital stock pursuant to the exercise of options or warrants or (c) any shares of its capital stock pursuant to the
conversion of any debt securities to equity. 

    "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. 

    "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 or where such Lender is deemed to
be doing business, (b) excise taxes (to the extent imposed in lieu of income or franchise taxes), (c) 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 or where such Lender is deemed to be doing business, (d) in the case of a Foreign Lender (other than an assignee pursuant to a
request by the Borrower under Section 2.19(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 2.17(f), except to the extent that such Foreign Lender's assignor (if any) was entitled, at the time of
assignment, to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.17(a) and (e) all interest, penalties and liabilities with respect
to any taxes described in (a), (b), (c) and (d). 

6

  

    "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. 

    "Fee Letter" shall mean the letter agreement dated April 16, 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, treasurer or controller of the Borrower. 

    "Five Year Facility" means the Credit Agreement dated as of the date hereof among the Borrower, the lenders parties thereto and Bank of
America, as administrative agent, issuing bank and swingline lender, providing for a $525,000,000 revolving 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 intended to be 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, directly or indirectly, (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. 

    "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. 

7

 

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

    "HMO Regulation" means any law, regulation or administrative order applicable under federal or state law to HMOs and any regulation or
order promulgated or issued pursuant thereto. 

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

    "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 or with respect
to similar cash advances (but excluding any premiums, fees and deposits received in the ordinary course of business), (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 Indebtedness 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, (f) all Guarantees by such
Person of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h) all obligations, contingent or otherwise, of such Person as an account party in respect of letters
of credit and (i) all obligations, contingent or otherwise, of such Person in respect of bankers' acceptances. 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 therefore 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 therefore. 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 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 Revolving Borrowing in accordance with
Section 2.08. 

    "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. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such Borrowing. 

    "Investment Guidelines" means those investment guidelines adopted by the Finance Committee of the Borrower's board of directors on
March 1, 2000, as set forth in Exhibit B hereto, as the same may be amended from time to time by the Borrower with the approval of the Administrative Agent. 

    "Lenders" means the Persons listed on Schedule 2.01 and any other Eligible
Lender that shall have become a party hereto pursuant to an Assignment and Acceptance; provided, however, the term Lender shall not include 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 average rate (rounded upwards as
necessary to the next 1/100th of one percent) at which dollar deposits approximately equal to the average principal amount of the Reference Banks' portions of such Eurodollar Borrowing
and for a maturity comparable to such Interest Period are offered to the principal London offices of the Reference Banks 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, or (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. 

    "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 material obligations under this Agreement or (c) the material legal rights or remedies
available to the Lenders under this Agreement. 

    "Maturity Date" means the date two years following the Commitment Termination Date. 

9

 

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

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

    "Net Cash Proceeds" means the aggregate cash proceeds (including cash actually received by way of deferred payment pursuant to a
promissory note, receivable, or otherwise) received by the Borrower or any Subsidiary from any Equity Issuance, net of (a) direct costs (including, without limitation, legal, accounting and
investment banking fees and sales commissions) and (b) taxes paid or payable as a result thereof; it being understood that "Net Cash Proceeds" shall include, without limitation, any cash
received upon the sale or other disposition of any non-cash consideration received by the Borrower or any Subsidiary in any Equity Issuance. 

    "Operating Lease Obligations" of any Person means the obligations of such Person under any lease (including, without limitation, leases
which may be terminated by the lessee at any time) of any real or personal property, or a combination thereof which would not constitute a Capital Lease Obligation other than any such lease in which
that Person is the lessor. 

    "Other Taxes" means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar
levies (except with respect to Excluded Taxes) 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 Acquisition" means an Acquisition by the Borrower or any Subsidiary,  provided that (a) the capital stock, other equity interests, Property, line or
segment of business or division acquired in such Acquisition
relates to a line of business similar to the business that the Borrower or any Subsidiary is engaged in on the Closing Date; (b) in the case of an Acquisition of the capital stock or other
equity interests of another Person, (i) the board of directors (or other comparable governing body) of such other Person shall have duly approved such Acquisition and (ii) such Person
shall become a direct or indirect Subsidiary of the Borrower or such Person shall be merged into, or consolidated or combined with, the Borrower or any Subsidiary in a transaction in which the
Borrower or such Subsidiary, as the case may be, is the surviving entity; (c) the representations and warranties made by the Borrower herein shall be true and correct in all material respects
at and as if made as of the date of such Acquisition (prior to and after giving effect thereto) except to the extent such representations and warranties expressly relate to an earlier date, and no
Default or Event of Default shall exist as of the date of such Acquisition (prior to and after giving effect thereto); and (d) if the aggregate consideration for any such Acquisition exceeds
$250,000,000, the Borrower shall have delivered to the Administrative Agent, not less than 10 days prior to the consummation of such Acquisition, a pro forma certificate from a Financial
Officer demonstrating that, upon giving effect to such Acquisition on a pro forma basis, the Borrower shall be in compliance with each of the covenants set forth in Section 6.01. 

    "Permitted Encumbrances" means: 

    (a) Liens
imposed by law for taxes, fees, assessments and other governmental charges or claims that are not yet due or that remain payable without penalty or that are
being contested in compliance with Section 5.04; 

    (b) carriers',
warehousemen's, mechanics', materialmen's, repairmen's, landlord'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 that remain payable without penalty or that are being contested in compliance with Section 5.04; 

10

 

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

    (d) Liens
incurred or deposits made 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; 

    (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 materially interfere with the ordinary conduct of business of the Borrower
and the Subsidiaries taken as a whole; 

    (f)  Liens
arising solely by virtue of any statutory or common law provision or granted to banks in the ordinary course of business relating to banker's Liens, rights
of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; and 

    (g) Liens
arising from the rendering of a judgment that is not a final judgment or order against the Borrower or any Subsidiary with respect to which the Borrower or
such Subsidiary is then proceeding with an appeal or other proceeding for review or in connection with surety or appeal bonds in connection with such attachment or judgment, and Liens arising from a
judgment or order that does not constitute an Event of Default under clause (k) of Article VII; 

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

    "Permitted
Investments" means: 

    (a) cash
and Cash Equivalents; 

    (b) Permitted
Market Investments; 

    (c) receivables
owing to the Borrower or any Subsidiary or any receivables and advances to suppliers, in each case if created, acquired or made in the ordinary course
of business and payable or dischargeable in accordance with customary trade terms; provided that such trade terms may include such concessionary trade
terms that the Borrower or any Subsidiary deems reasonable under the circumstances; 

    (d) 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; 

    (e) investments
existing as of the Closing Date and set forth in Schedule 6.07 and any extension or renewal
thereof; 

    (f)  advances
and loans to employees, directors or officers 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; 

    (g) other
advances and loans to employees, directors, officers, shareholders or agents; 

    (h) Permitted
Acquisitions; 

    (i)  advances
and loans made by the Borrower to any Subsidiary and made by any Subsidiary to the Borrower or any other Subsidiary; 

11

 

    (j)  capital contributions to, or equity investments in, a Subsidiary by the Borrower or another Subsidiary; 

    (k) Guarantees
constituting Indebtedness not prohibited by Section 6.02; 

    (l)  investments
arising out of the receipt by the Borrower or any Subsidiary of noncash consideration for the sale of a Subsidiary other than a Significant Subsidiary; 

    (m) investments
in the form of Hedging Agreements; 

    (n) investments
in prepaid expenses and lease, utility and workers' compensation and similar deposits; 

    (o) investments
in joint ventures; provided that, after giving effect to any such investment, no more than $100,000,000
(book value) of investment made pursuant to this (o) shall be outstanding; and 

    (p) additional
advances, loans and/or investments of a nature not contemplated by the foregoing clauses hereof, provided
that such advances, loans and/or investments made pursuant to this clause (p) shall not exceed an aggregate amount of more than two and one-half percent (21/2%) of
the Consolidated Assets determined as of the end of the most recently completed fiscal quarter of the Borrower. 

    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, other equity interests, property, assets, indebtedness or other obligations or securities or by loan, advance, capital contribution or
otherwise. 

    "Permitted Market Investments" means any investment that satisfies the Borrower's Investment Guidelines. 

    "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. 

    "Property" means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. 

    "Ratings Downgrade" means the date on which it is announced by Moody's or S&P that the ratings established or deemed to have been
established for the Index Debt shall be less than BBB- or Baa3, respectively. 

    "Reference Banks" means, at any date, the four Lenders with the highest Commitments under this Agreement on such date. 

    "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. 

12

  

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

    "Restricted Payment" means (a) any dividend or other distribution, direct or indirect, on account of any shares of any class of
capital stock of the Borrower or any Subsidiary, now or hereafter outstanding, (b) 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 Subsidiary, now or hereafter outstanding, and (c) 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 Subsidiary, now or hereafter outstanding. 

    "Revolving Credit Exposure" means, with respect to any Lender at any time, the outstanding principal amount of such Lender's Revolving
Loans. 

    "Revolving Loan" means a Loan made pursuant to Section 2.03. 

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

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

    "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, with respect to any Lender for an Interest Period, 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 applicable for each day during such Interest Period (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which such 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" shall have the meaning assigned to such term under GAAP. 

    "Subsidiary" means any subsidiary of the Borrower. 

    "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. 

    "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. 

13

 

 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"). 

 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 Revolving Loans to the Borrower from time to time during the Availability
Period in an aggregate principal amount that will not result in (a) such Lender's Revolving Credit Exposure exceeding such Lender's Commitment or (b) the total Revolving Credit Exposures
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 Revolving Loans. 

 Section 2.02  Loans and Borrowings.  

    (a) Each
Revolving Loan shall be made as part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in accordance with their respective Commitments.
The failure of any 

14

 

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 2.14, each Revolving 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 Lender to make such Loan;  provided that (i) 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 and (ii) unless the Borrower shall request that a specific branch or Affiliate of a Lender make a Loan, a Lender may not recover for increased costs under Section 2.15 or
2.17 incurred as a result of such branch or Affiliate of such Lender, rather than such Lender, making a Loan, if such Loan could have been made in a manner that would have avoided such increased costs
under Section 2.15 or 2.17. 

    (c) At
the commencement of each Interest Period for any Eurodollar Revolving Borrowing, such Borrowing shall be in a minimum aggregate amount of $10,000,000 and
integral multiples of $5,000,000 in excess thereof. At the time that each ABR Revolving Borrowing is made, such Borrowing shall be in a minimum aggregate amount of $5,000,000 and integral multiples of
$1,000,000 in excess thereof; provided that an ABR Revolving 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 20 Eurodollar Revolving 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 the Maturity Date. 

 Section 2.03  Requests for Revolving Borrowings.  

    To request a Revolving 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 2.07. 

    If
no election as to the Type of Revolving Borrowing is specified, then the requested Revolving Borrowing shall be a Eurodollar Borrowing if sufficient advance notice in accordance
with clause (a) has been given, otherwise the requested Revolving Borrowing shall be an ABR Borrowing. If no 

15

 

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. 

 Section 2.04  [Intentionally Omitted].  

 Section 2.05  [Intentionally Omitted].  

 Section 2.06  [Intentionally Omitted].  

 Section 2.07  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 12:00 noon (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 the subject Loan. If such Lender pays such amount to the Administrative Agent, then
such amount shall constitute such Lender's Loan included in such Borrowing. 

 Section 2.08  Interest Elections.  

    (a) Each
Revolving Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Revolving 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 Revolving 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 Revolving 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 

16

 

to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower. 

    (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 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 Revolving 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 on the date of the applicable conversion or continuation (i) no outstanding Revolving Borrowing may be converted to or continued as a Eurodollar Borrowing and
(ii) unless repaid, each Eurodollar Revolving Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto. 

 Section 2.09  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
conversions and continuations 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; provided that (i) each
reduction of the Commitments shall be in an aggregate amount of not less than $20,000,000 and integral multiples of $5,000,000 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 2.11, the total Revolving Credit Exposures 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 one
Business Day prior to 

17

 

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, 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 2.10  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 Revolving
Loan made by such Lender hereunder 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, substantially in the form of Exhibit C hereto. 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). 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 2.11  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, without premium or penalty, subject to
Section 2.16 and 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 Revolving Borrowing, not later than 12:00 noon, (Charlotte, North Carolina time), three Business Days before the date of prepayment or (ii) in the case of prepayment of an ABR
Revolving Borrowing, not later than 12:00 noon, (Charlotte, North Carolina time), on the date of prepayment. Each such notice shall 

18

 

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 2.09, then such notice of prepayment may be revoked if such
notice of termination is revoked in accordance with Section 2.09. Promptly following receipt of any such notice relating to a Revolving Borrowing, the Administrative Agent shall advise the
Lenders of the contents thereof. Each partial prepayment of any Revolving Borrowing shall be in an amount that would be permitted in the case of an advance of a Revolving Borrowing of the same Type as
provided in Section 2.02. Each prepayment of a Revolving 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 2.13. 

 Section 2.12  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 Revolving Credit Exposure after its Commitment terminates, then such facility fee shall continue to
accrue on the daily amount of such Lender's Revolving Credit Exposure from and including the date on which its Commitment terminates to but excluding the date on which such Lender ceases to have any
Revolving Credit Exposure. Accrued facility fees shall be payable in arrears on the last day of March, June, September and December of each year and on the Maturity Date, commencing on the first such
date to occur after the date hereof; provided that any facility fees accruing after the Maturity Date 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 its own account, fees payable in the amounts and at the times separately agreed upon between the
Borrower and the Administrative Agent. 

    (c) 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, to the Lenders. Fees paid shall not be refundable under any circumstances. 

19

  

 Section 2.13 Interest.  

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

    (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 Revolving 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 the Maturity Date. 

    (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 the 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 Revolving 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 Revolving Loan. 

    (g) Each
Reference Bank agrees to use its reasonable efforts to furnish quotations to the Administrative Agent as contemplated hereby by 10:30 a.m., (Charlotte,
North Carolina time), on the day such quotations are required to be furnished hereunder. If any Reference Bank does not furnish a timely quotation, the Administrative Agent shall determine the
relevant LIBO Rate on the basis of the quotations, if any, furnished by the remaining Reference Banks, and, in the event 

20

 

that all Reference Banks fail to so furnish a quotation, on the basis of such other information as the Borrower and the Administrative Agent shall agree. 

 Section 2.14 Alternate Rate of Interest.  

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

    (a) the
Administrative Agent 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, in the good faith determination of such Lenders (or Lender), the LIBO Rate for such Interest
Period will not adequately and fairly
reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period; 

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 Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request requests a Eurodollar Revolving Borrowing, such Borrowing shall be made
as an ABR Borrowing or, if the Borrower so requests, shall be cancelled without premium or penalty; 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 2.15 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 (except for any reserves referred to in Section 2.13(f)); or 

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

and
the result of any of the foregoing shall be to increase the cost (except with respect to Excluded Taxes) to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost (except with respect to Excluded Taxes) to such Lender or to reduce the amount of any sum received or receivable (except to the extent caused
by Excluded Taxes) by such Lender hereunder (whether of principal, interest or otherwise) by an amount deemed by such Lender to be material, 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, subject to clauses
(d) and (e) below, 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. 

21

 

    (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, and the calculation of, such amounts, in reasonable detail, shall be delivered to the Borrower. The Borrower
shall pay such Lender the amount shown as due on any such certificate within 10 Business 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 2.16 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 Revolving Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice is permitted to be revocable under
Section 2.11(b) and is revoked in accordance herewith; provided that if such failure hereunder to borrow is due to a default by any Lender
hereunder such defaulting Lender shall have no claim hereunder in respect of such failure or (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 2.19, 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 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
reasonably determines it 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 and, in reasonable detail, the methodology for calculating, and the calculation of, such amount or amounts, shall be delivered to the
Borrower. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 Business Days after receipt thereof. 

 Section 2.17 Taxes.  

    (a) Except
as otherwise provided herein, any and all payments by or on 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 by the amount necessary so that after making all required deductions (including deductions applicable to additional sums payable under
this Section) the Administrative Agent or 

22

 

Lender 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 20 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, 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; provided that the Borrower shall not be obligated to make payment to the Administrative Agent or any Lender pursuant to
this Section 2.17(c) in respect of penalties, interest or other similar liabilities attributable to such Indemnified Taxes or Other Taxes if such penalties, interest or other similar
liabilities are attributable to the gross negligence or wilful misconduct of the Person seeking indemnification. In addition, the Borrower shall not be required to indemnify the Administrative Agent
or any Lender for
any Indemnified Taxes or Other Taxes pursuant to this Section 2.17(c) if such party fails to notify the Borrower of such Indemnified Taxes or Other Taxes at least 30 days prior to
the lapse of any applicable appeal period. 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) If
a Lender or the Administrative Agent shall become aware that it is entitled to claim a refund from a Governmental Authority in respect of Indemnified Taxes or
Other Taxes paid by the Borrower pursuant to this Section 2.17, including Indemnified Taxes or Other Taxes as to which it has been indemnified by the Borrower, or with respect to which the
Borrower has paid additional amounts, pursuant to this Section 2.17, it shall promptly notify the Borrower of the availability of such refund claim and, if the Lender or the Administrative
Agent determines in good faith that making a claim for refund will not have any adverse consequence to its taxes or business operations, shall, within 30 days after receipt of a request by the
Borrower, make a claim to such Governmental Authority for such refund at the Borrower's expense. If a Lender or the Administrative Agent receives a refund in respect of any Indemnified Taxes or Other
Taxes paid by the Borrower pursuant to this Section 2.17, it shall within 30 days from the date of such receipt pay over such refund to the Borrower (but only to the extent of
Indemnified Taxes or Other Taxes paid by the Borrower pursuant to this Section 2.17, including indemnity payments made or additional amounts paid by the Borrower under this Section 2.17
with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of such Lender or the Administrative Agent and without
interest (other than interest paid by the relevant Governmental Authority with respect to such refund); provided that the Borrower, upon the request of
such Lender or the Administrative Agent agrees to repay the amount paid over to the Borrower (plus penalties, interest or other charges) to such Lender or the Administrative Agent in the event such
Lender or the Administrative Agent is required to repay such refund to such Governmental Authority. 

    (e) 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. 

23

 

    (f)  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 (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. 

 Section 2.18 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 or under Section 2.15, 2.16 or 2.17, or
otherwise) prior to 12:00 noon, (Charlotte, North Carolina time), on the date when due, in immediately available funds, without set-off, deduction or counterclaim. Any amounts paid after
such time on any date may, in the discretion of the Administrative Agent, be deemed to have been paid 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 2.15, 2.16, 2.17 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 Revolving Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving 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 Revolving 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 Revolving Loans;  provided that
(i) if any such participations are purchased and all or any 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. 

24

 

    (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 2.07(b) or 2.18(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 2.19 Mitigation Obligations; Replacement of Lenders.  

    (a) If
any Lender requests compensation under Section 2.15, 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 2.17, 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 good faith and reasonable judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, 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 economically 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 2.15, 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 2.17, 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) if the assignee is not a Lender, 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 and unpaid interest thereon, accrued and unpaid fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding
principal 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 2.15 or payments required to be made pursuant to Section 2.17, 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. 

25

  

 
 

ARTICLE III
  
    REPRESENTATIONS AND WARRANTIES    
  

    The Borrower represents and warrants to the Lenders that: 

 Section 3.01  Organization; Powers.  

    Each of the Borrower and the 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 applicable to the Borrower or any Subsidiary, including, without limitation, HMO Regulations and Insurance Regulations, or the charter, by-laws or other organizational
documents of the Borrower or any Subsidiary 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 Subsidiary or its assets, or give rise to a right thereunder to require any payment to be made by the
Borrower or any Subsidiary, except for such violations and defaults 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 Subsidiary (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, 2000, audited by Deloitte & Touche LLP, independent auditors, and (ii) its consolidated balance sheet and statements of operations
and cash flows as of and for the fiscal quarter ended March 31, 2001, certified by its chief financial officer. 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 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, 2000, there has been no material adverse change in the business, assets, operations or financial condition of the Borrower and the
Subsidiaries, taken as a whole. 

26

 

 Section 3.05  Properties.  

    (a) Each
of the Borrower and the Subsidiaries has good title to, or valid leasehold interests in, all its real and personal property material to its business, except
for minor defects in title that do not interfere with its ability to conduct its business as currently conducted or to utilize such properties for their intended purposes, except where any such
failure, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. 

    (b) Each
of the Borrower and the 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 the 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 Subsidiary (i) that 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 Subsidiary (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, (iii) has received notice of any claim with respect to any Environmental Liability or
(iv) knows of any basis for 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 a Material
Adverse Effect. 

 Section 3.07  Compliance with Laws and Agreements.  

    Each of the Borrower and the Subsidiaries is in compliance with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its
property and all indentures, agreements and other instruments binding upon 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. Without limiting the generality of the immediately preceding sentence, each of the Borrower and the Subsidiaries (i) is in compliance with all material
terms and provisions of the HMO Regulations and Insurance Regulations pertaining to fiscal soundness, solvency or financial condition and (ii) has not received any assertion in writing by an
HMO Regulator or Insurance Regulator that it is taking administrative action against the Borrower or any Subsidiary (A) to revoke or modify any contract of insurance, license, permit,
certification, authorization, accreditation or charter or (B) to enforce the fiscal soundness, solvency or financial provisions or requirements of the HMO Regulations or Insurance Regulations
against the Borrower or any Subsidiary, except to the extent that any such non-compliance by the Borrower or any Subsidiary or any such administrative action against the Borrower or any
Subsidiary could not reasonably be expected to result in a Material Adverse Effect. 

27

 

 Section 3.08  Investment and Holding Company Status.  

    The Borrower is not (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 the 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 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 the fair market value of the
assets of such Plan by any amount that could reasonably be expected to result in a Material Adverse Effect, 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 the
fair market value of the assets of all such underfunded Plans by any amount that could reasonably be expected to result in a Material Adverse Effect. 

 Section 3.11  Disclosure.  

    The reports, financial statements, certificates or other written information when furnished by the Borrower or any authorized representative of the Borrower to
the Administrative Agent or any Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information when so furnished), taken as a
whole, did not contain any material misstatement of fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not
materially misleading; provided that, with respect to projected financial information and other forward looking information, the Borrower represents
only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time, it being understood that no assurance is given that the results forecasted in such
projections and other forward looking information will in fact be achieved and such projections and other forward looking information are subject to significant uncertainties and contingencies many of
which are beyond the control of the Borrower and the Subsidiaries. 

 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. 

28

 

 Section 3.13  Nature of Business.  

    The Borrower is an integrated managed care organization which administers the delivery of managed health care services. Through its Subsidiaries, the Borrower
is also engaged in the business of delivering managed health care products related to behavioral health, dental, vision and prescription drugs, and offers government-sponsored managed care plans and
products related to administration and cost containment. 

 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. 

 Section 3.15  Subsidiaries and Significant Subsidiaries.  

    Set forth on Schedule 3.15 is a complete and accurate list of all Subsidiaries and all Significant
Subsidiaries as of the Closing Date. 

 
 

ARTICLE IV
  
    CONDITIONS    
  

 Section 4.01  Closing Date.  

    The obligations of the Lenders to make the initial Loans 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 a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Closing Date) of
Skadden, Arps, Slate, Meagher & Flom (Illinois), counsel for the Borrower, and General Counsel to the Borrower, substantially in the form of Exhibit D-1 and D-2,
respectively. 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 reasonably 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 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, the 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. 

29

 

    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 June 28, 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 in all material respects on and as of the date of, and
after giving effect to, such Borrowing, except to the extent such representations and warranties expressly relate to an earlier date in which
case such representations and warranties shall be true and correct in all material respects on and as of such earlier date; provided, that, if any
commercial paper is outstanding and this Agreement provides liquidity for such commercial paper, 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. 

    (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 (with copies for each Lender): 

    (a) within
100 days after the end of each fiscal year of the Borrower, its audited consolidated balance sheet and related statements of operations, 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 Deloitte & Touche 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 (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 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 (beginning with the fiscal quarter ending on
June 30, 2001), its consolidated balance sheet and related statements of operations and cash flows as of the end of and for such fiscal 

30

 

quarter and 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, 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,
(ii) setting forth reasonably detailed calculations demonstrating compliance with Section 6.01 and (iii) stating whether any change in GAAP or in the application thereof has
occurred since the date of the audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements
accompanying such certificate; 

    (d) concurrently
with any delivery of financial statements under clause (a) above, a certificate of the accounting firm that reported on such financial
statements stating whether they obtained knowledge during the course of their examination of such financial statements of any Default (which certificate may be limited to the extent required by
accounting rules or guidelines); 

    (e) within
30 days after the filing for each fiscal year, copies of financial reports of the Significant Subsidiaries prepared in accordance with statutory
accounting principles; provided, however, following any Ratings Downgrade, within 30 days after the filing for each fiscal quarter following such
Ratings Downgrade, copies of financial reports of the Significant Subsidiaries prepared in accordance with statutory accounting principles; 

    (f)  promptly
after the same become publicly available or upon transmission or receipt thereof, (i) copies of all periodic and other reports, proxy statements
and other materials filed by the Borrower or any Subsidiary with the SEC, or any Governmental Authority succeeding to any or all of the functions of the SEC, 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 (f) and (ii) upon the request of the Administrative Agent, all material reports and
other annual statements that the
Borrower or any Subsidiary may render to or file with any Governmental Authority, including without limitation the Department of Health and Human Services Office of Inspector General; and 

    (g) 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.  

    Upon obtaining knowledge thereof, the Borrower will furnish to the Administrative Agent and each Lender prompt (but in any event not later than five Business
Days after obtaining such knowledge) written notice of the following: 

    (a) the
occurrence of any Default; 

31

 

    (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; 

    (c) the
occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in a Material
Adverse Effect; 

    (d) the
non-compliance with any contractual obligation or requirement of law, including, without limitation, HMO Regulations and Insurance Regulations, that
is not currently being contested in good faith by appropriate proceedings, if all such non-compliance in the aggregate could reasonably be expected to result in a Material Adverse Effect; 

    (e) the
revocation of any license, permit, authorization, certificate, qualification or accreditation of the Borrower or any Subsidiary by any Governmental Authority,
including, without limitation, HMO
Regulators and Insurance Regulators, if all such revocations in the aggregate could reasonably be expected to result in a Material Adverse Effect; and 

    (f)  any
other development that results in, or 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. 

32

  

 Section 5.03 Existence; Conduct of Business.  

    The Borrower will, and will cause each of the 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 take all reasonable action to maintain the rights, licenses, permits, privileges and franchises material to the conduct of its business, except to the extent failure to do so
could not reasonably be expected to result in a Material Adverse Effect; provided that the foregoing shall not prohibit 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 Subsidiary to, pay its obligations, including Tax liabilities, 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,
(b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest
could not reasonably be expected to result in a Material Adverse Effect. 

 Section 5.05 Maintenance of Properties; Insurance.  

    The Borrower will, and will cause each Subsidiary to, (a) keep and maintain all property material to the conduct of the business of the Borrower and the
Subsidiaries, taken as a whole, in good working order and condition, ordinary wear and tear excepted, except where the failure to keep and maintain such property could not reasonably be expected to
result in a Material Adverse Effect, 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 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 Subsidiary to, keep proper books of record and account in which full, true and correct entries are made of all dealings
and transactions in relation to its business and activities. The Borrower will, and will cause each Subsidiary to, permit any representatives designated by the Administrative Agent or any Lender, upon
reasonable prior notice, 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 (it being understood that the Borrower has a right to be present during any discussion with the Borrower's 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 Subsidiary 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) and all indentures, agreements and other
instruments binding upon it or its property, except in each case where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. 

33

 

 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 any of the regulations of the Board, including Regulations U and X. 

 Section 5.09 Maintenance of Accreditation, Etc.  

    The Borrower will preserve and maintain, and cause each Subsidiary to preserve and maintain, all licenses, permits, authorizations, certifications and
qualifications (including, without limitation, those qualifications with respect to solvency and capitalization) 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 would not result in a Material Adverse Effect. 

 
 

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 Consolidated Leverage Ratio for any period of four consecutive
fiscal quarters shall be less than or equal to 3.0 to 1.0. 

    (b)  Consolidated Fixed Charge Coverage Ratio.  The Consolidated Fixed Charge Coverage Ratio for any
period of four consecutive fiscal quarters shall be greater than or equal to 1.5 to 1.0. 

    (c)  Consolidated Net Worth.  The Consolidated Net Worth shall at all times be greater than or equal to
$945,000,000 less the sum of (i) the net of tax equivalent amount of the pre-tax charges, not to exceed $80 million, as described in the definition of Consolidated EBITDA,
and (ii) the net of tax equivalent amount of pre-tax charges related to the write-off of any goodwill (A) in anticipation of, (B) concurrent with or
(C) subsequent to the adoption of the financial accounting standard entitled "Business Combinations and Intangible Assets—Accounting for Goodwill, increased by the sum of, on a
cumulative basis as of the end of each fiscal quarter of the Borrower, commencing with the fiscal quarter ending June 30, 2001, (i) an amount equal to 50% of Consolidated Net Income (to
the extent positive) for the fiscal quarter then ended plus (ii) an amount equal to 100% of the Net Cash Proceeds from any Equity Issuance
occurring after the Closing Date. 

 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
to the Borrower or any other Subsidiary; 

    (c) Guarantees
of Indebtedness of any other Subsidiary; 

    (d) Indebtedness
incurred to finance the acquisition, construction, improvement or repair of any fixed or capital asset, including Capital Lease Obligations, mortgage
financings, purchase 

34

 

money Indebtedness and any Indebtedness assumed in connection with the acquisition of any such asset or secured by a Lien on any such asset prior to the acquisition thereof, and extensions, renewals
and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof; provided that (i) such Indebtedness is
incurred prior to or within 360 days after such acquisition or the completion of such construction, improvement or repair and (ii) the aggregate principal amount of Indebtedness
permitted by this clause (d) shall not exceed $50,000,000 in the aggregate at any time outstanding; 

    (e) Indebtedness
of any Subsidiary as an account party in respect of trade letters of credit; 

    (f)  Indebtedness
(i) in respect of performance, bid, surety or appeal bonds and completion guarantees provided in the ordinary course of business and
(ii) under Hedging Agreements entered into to protect against fluctuations in exchange and interest rates and not for speculative purposes; and 

    (g) other
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, 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
attributable to sale-leaseback transactions and Capital Lease Obligations not otherwise prohibited by this Agreement; 

    (e) Liens
in favor of the Borrower or any Subsidiary; 

    (f)  Liens
on any fixed or capital asset acquired, constructed, repaired or improved by the Borrower or any Subsidiary;  provided that (i) such Liens secure Indebtedness not prohibited by Section 6.02(d),
(ii) such Liens and the Indebtedness secured
thereby are incurred prior to or within 360 days after such acquisition or the completion of such construction, repair or improvement and (iii) such Liens shall not apply to any other
property or assets of the Borrower or any other Subsidiary; 

    (g) Liens
not otherwise permitted under this Section securing obligations in an aggregate amount not exceeding at any time ten percent (10%) of Consolidated Net
Tangible Assets as at the end of the immediately preceding fiscal quarter of the Borrower; and 

35

 

    (h) any extension, renewal or replacement (or successive extensions, renewals or replacements) of Liens, in whole or in part, referred to in clauses (a) through
(g) above; provided that any such extension, renewal or replacement Lien shall be limited to the property covered by the Lien extended, renewed
or replaced. 

 Section 6.04 Fundamental Changes.  

    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 Subsidiary (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 (a) any Person may merge into the Borrower in a transaction in which the Borrower is the surviving corporation, (b) any Person, including any
Affiliate, may merge into any Subsidiary in a transaction in which the surviving entity is a Subsidiary, (c) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets to the
Borrower or to another Subsidiary, (d) 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, sale, transfer, lease or other disposition is in the best interests of the Borrower and is not
materially disadvantageous to the Lenders, (e) the Borrower may sell the assets or the stock of Foundation Health, a Florida Health Plan, Inc., (f) the Borrower may sell,
transfer, contribute or otherwise dispose of all or substantially all the assets of or all or substantially all the stock of a Subsidiary in connection with an investment made pursuant to
clause (o) of the definition of "Permitted Investments" and Section 6.08 and (g) the Borrower and the Subsidiaries may sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or substantially all the assets of a Subsidiary, or all or substantially all the stock of a Subsidiary;  provided that the aggregate amount of all
dispositions pursuant to this clause (g) shall not exceed five percent (5%) of Consolidated Assets
(determined as of the fiscal quarter of the Borrower ending immediately prior to the date of the initial disposition pursuant to this clause (g)). 

 Section 6.05 Transactions with Affiliates.  

    The Borrower will not, and will not permit any of the 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) on terms and conditions not less favorable to the Borrower
or such Subsidiary than could be obtained on an arm's-length basis (considering such transaction and all other related transactions as a whole), (b) transactions between or among the Borrower
and the Subsidiaries or between or among the Subsidiaries or (c) as otherwise permitted by this Agreement. 

 Section 6.06 Restrictive Agreements.  

    The Borrower will not, and will not permit any of the 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: (a) the ability of any Subsidiary to pay dividends or other distributions with respect to any shares of its capital stock or
(b) the ability of any Subsidiary to make or repay loans or advances to the Borrower or any other Subsidiary or (c) the ability of any Subsidiary to Guarantee Indebtedness of the
Borrower or any other Subsidiary or (d) the creation or assumption of any Lien upon its Property, whether now owned or hereafter acquired, or requiring the grant of any security for such
obligation if security is given for some other obligation (other than "equal and ratable" restriction typically contained in public note indentures);  provided that the foregoing shall not apply to
(i) restrictions and conditions imposed by law, rule, regulation or regulatory administrative
agreement 

36

 

or determination (including those imposed by HMO Regulations and Insurance Regulations) or by this Agreement or the Five Year Facility, (ii) restrictions and conditions existing on the date
hereof identified on Schedule 6.06 and all extensions, renewals and replacements thereof, (iii) restrictions and conditions contained in
agreements entered into in the ordinary course of business of the Borrower and the Subsidiaries; provided that such restrictions and conditions are not
materially more restrictive as a whole than those imposed by HMO Regulations and Insurance Regulations or those identified on Schedule 6.06, (iv) 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 and (v) any Lien permitted under Section 6.03. 

 Section 6.07 Nature of Business.  

    The Borrower will not, and will not permit any of its Significant Subsidiaries to, substantially alter the character or conduct of the business 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 the 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 (directly or
indirectly through Subsidiaries) and ratably to minority shareholders 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 following any Ratings Downgrade, the aggregate amount of all such Restricted
Payments pursuant to this clause (c) shall not exceed $75,000,000 for any consecutive four quarter period, beginning with the first fiscal quarter following such Ratings Downgrade. 

 
 

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 (i) any interest on any Loan or (ii) 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 in the case of clause (i)
and for a period of five days after notice thereof from the Administrative Agent in the case of clause (ii); 

    (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 

37

 

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(a), 5.03 (with respect to the Borrower's
existence), 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; 

    (f)  the
Borrower or any Subsidiary shall fail to observe or perform any term, covenant, condition or agreement contained in any agreement or instrument evidencing or
governing Indebtedness having an aggregate principal amount in excess of $40,000,000 or any other event shall occur, if the effect of any such failure or event is to permit the holder or holders of
such Indebtedness or a trustee on its or their behalf (with the giving of notice if required and after the expiration of all grace periods applicable thereto) to cause such Indebtedness to become due
prior to its stated maturity; provided that this clause (f) shall not apply to (i) any failure or event that has been waived by the holder
or holders, or a trustee on its or their behalf, of such Indebtedness or cured, (ii) secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Indebtedness or (iii) the Indebtedness under this Agreement or the Five Year Facility; 

    (g) the
Borrower or any Subsidiary shall fail to observe or perform any term, covenant, condition or agreement contained in any agreement or instrument evidencing or
governing Indebtedness having an aggregate principal amount in excess of $40,000,000 or any other event shall occur, if the effect of any such failure or event is to cause such Indebtedness to become
due prior to its stated maturity, or the Borrower or any Subsidiary shall fail to repay the principal amount of any such Indebtedness at its
stated maturity; provided that this clause (g) shall not apply to (i) secured Indebtedness that becomes due as a result of the voluntary
sale or transfer of the property or assets securing such Indebtedness or (ii) the Indebtedness under this Agreement or 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)  an
Event of Default shall occur and be continuing under the Five Year Facility; 

38

 

    (k) one or more judgments or decrees shall be rendered against the Borrower, any Subsidiary or any combination thereof and the same shall not have been paid, vacated,
discharged, stayed or bonded pending appeal within 60 days from the entry thereof that involves in the aggregate a liability (to the extent not paid or covered by insurance) of $25,000,000 or
more; 

    (l)  (i) any
non-compliance by the Borrower or any Subsidiary with any material term or provision of the HMO Regulations or Insurance Regulations
pertaining to fiscal soundness, solvency or financial condition and such non-compliance shall not have been cured or waived within 30 days, to the extent such event will or is
reasonably expected to have a Material Adverse Effect; 

    (m) an
ERISA Event shall have occurred that, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in a Material
Adverse Effect; or 

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

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, with the consent of the Required Lenders, may, and at the request of the Required Lenders shall, by notice to the Borrower, take any or all 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. For purposes of the Events of Default set forth in clause (f) and (g) above, Indebtedness shall include obligations in respect of Hedging Agreements, and 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. 

39

  

 
 

ARTICLE VIII
  
    THE ADMINISTRATIVE 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 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 Subsidiary 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 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. 

40

 

    Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders
and the Borrower. Upon any such resignation, the Borrower shall have the right, with the consent of the Required Lenders, to appoint a successor. If no successor shall have been so appointed by the
Borrower and shall have accepted such appointment within (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may appoint,
after consulting with the Lenders and with the consent of Borrower, a successor administrative agent from among the Lenders. The Borrower, with the consent of the Lenders (other than the
Administrative Agent) holding more than 662/3% of the Commitments (other than Commitments held by the Administrative Agent), may remove the Administrative Agent and appoint a successor.
Upon the acceptance of its appointment as successor administrative agent hereunder, any 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 or removal 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. 

    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. 

 
 

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 Health Net, Inc., 21650 Oxnard Street, Woodland Hills, CA 91367, Attention: Senior Vice President and Treasurer (Telecopy No.
(818) 676-5139), with a copy to Attention: Senior Vice President, General Counsel and Secretary (Telecopy No. (818) 676-7503); 

    (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—Neal Hendrix, Telephone: 704-386-4220, Telecopy: 704-409-0017;
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 

41

 

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, 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 2.18(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 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 reasonable fees, charges and disbursements of any counsel for the Administrative Agent or any Lender, in connection with the enforcement of its rights
in connection with this Agreement, including its rights under this Section, or in connection with the Loans made hereunder. 

    (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 or (iii) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, 

42

 

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 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 therefore. 

 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 

43

 

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 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 2.15, 2.16, 2.17 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
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 and 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 2.15, 2.16 and 2.17 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 2.15 or 2.17 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 

44

 

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 2.17 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 2.17(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 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. Each party hereto acknowledges and agrees that no SPC shall have any voting rights hereunder and that the voting rights attributable to any extension of credit made
by an SPC shall be exercised only by the relevant Granting Lender. Each Granting Lender shall serve as attorney in fact for its SPC and shall on behalf of its SPC: (i) receive any and all
payments made for the benefit of such SPC and (ii) give and receive all communications and notices and take all actions hereunder to the extent, if any, such SPC shall have any rights
hereunder. To the extent an SPC shall have the right to receive or give any notice or take any such action in writing, it shall be signed by its Granting Lender, as administrative agent and attorney
in fact for such SPC and need not be signed by such SPC on its own behalf. 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 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, with the prior written consent of the Borrower and the Administrative Agent, 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; provided
that such SPC shall obtain the prior written consent of the Borrower to any such disclosure of any such non-public information. 

45

  

 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 2.15, 2.16, 2.17 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 and 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. 

 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 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. 

46

 

 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 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 

47

 

and other advisors, on a need to know basis (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
such Information confidential in accordance with the terms hereof), (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) to the extent that such confidential Information is
directly relevant to the subject matter thereof, 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 or on behalf of the Borrower or any Subsidiary relating to the Borrower, any Subsidiary or any of
their respective businesses or assets, 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;  provided that, in the case of information received from or on behalf of the Borrower or any Subsidiary after the date hereof, such information is
clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. 

48

    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:	 	HEALTH NET, INC.
	

 	
 	

By:	

/s/ Steven P. Erwin

	 	 	 	Name:	Steven P. Erwin
	 	 	 	Title:	Executive Vice President & Chief Financial Officer
	

 	
 	

 	

 	

 
	ADMINISTRATIVE AGENT:	 	BANK OF AMERICA, N.A.
	

 	
 	

By:	

             

	 	 	 	Name:	 
	 	 	 	Title:	 
	

 	
 	

 	

 	

 
	LENDERS:	 	BANK OF AMERICA, N.A.
	

 	
 	

By:	

             

	 	 	 	Name:	 
	 	 	 	Title:	 

	ADMINISTRATIVE AGENT:	 	BANK OF AMERICA, N.A.

as Administrative Agent and a Lender
	

 	
 	

By:	

/s/ Joseph L. Corah

	 	 	 	Name:	Joseph L. Corah
	 	 	 	Title:	Principal

[signature
pages continue] 

	 	 	THE CHASE MANHATTAN BANK
	

 	
 	

By:	

/s/ Robert Bottamedi

	 	 	 	Name:	Robert Bottamedi
	 	 	 	Title:	Vice President

[signature
pages continue] 

	 	 	FLEET NATIONAL BANK
	

 	
 	

By:	

/s/ Judi N. Cyr

	 	 	 	Name:	Judi N. Cyr
	 	 	 	Title:	Vice President

[signature
pages continue] 

	 	 	THE BANK OF NOVA SCOTIA
	

 	
 	

By:	

/s/ R. P. Reynolds

	 	 	 	Name:	R. P. Reynolds
	 	 	 	Title:	Director

[signature
pages continue] 

	 	 	SUMITOMO MITSUI BANKING CORPORATION
	

 	
 	

By:	

/s/ Al Galluzzo

	 	 	 	Name:	Al Galluzzo
	 	 	 	Title:	Senior Vice President

[signature
pages continue] 

	 	 	THE BANK OF NEW YORK
	

 	
 	

By:	

/s/ Rebecca K. Levine

	 	 	 	Name:	Rebecca K. Levine
	 	 	 	Title:	Vice President

[signature
pages continue] 

	 	 	WELLS FARGO BANK
	

 	
 	

By:	

/s/ Beth Filipponi

	 	 	 	Name:	Beth Filipponi
	 	 	 	Title:	Vice President

[signature
pages continue] 

	 	 	UNION BANK OF CALIFORNIA, N.A.
	

 	
 	

By:	

/s/ Philip M. Roesner

	 	 	 	Name:	Philip M. Roesner
	 	 	 	Title:	Vice President & Senior Credit Executive

[signature
pages continue] 

	 	 	THE DAI-ICHI KANGYO BANK, LTD.
	

 	
 	

By:	

/s/ John S. Sneed, Jr.

	 	 	 	Name:	John S. Sneed, Jr.
	 	 	 	Title:	Senior Vice President

[signature
pages continue] 

	 	 	CREDIT LYONNAIS NEW YORK BRANCH
	

 	
 	

By:	

/s/ Charles Heidsieck

	 	 	 	Name:	Charles Heidsieck
	 	 	 	Title:	Senior Vice President

[signature
pages continue] 

	 	 	THE TOKAI BANK, LIMITED
	

 	
 	

By:	

/s/ Shinichi Nakatani

	 	 	 	Name:	Shinichi Nakatani
	 	 	 	Title:	Assistant General Manager

[signature
pages continue] 

	 	 	THE FUJI BANK, LIMITED
	

 	
 	

By:	

/s/ Masahit Fukuda

	 	 	 	Name:	Masahito Fukuda
	 	 	 	Title:	Senior Vice President

[signature
pages continue] 

	 	 	THE INDUSTRIAL BANK OF JAPAN, LIMITED
	

 	
 	

By:	

/s/ Vicente L. Timiraos

	 	 	 	Name:	Vicente L. Timiraos
	 	 	 	Title:	Joint General Manager

[signature
pages continue] 

QuickLinks

Exhibit 10.35 EXECUTION COPY

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

ARTICLE IX MISCELLANEOUS

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