Document:

exv10w22

 

Exhibit 10.22

July 14, 2006

Dr. Igor Gonda

Re: Employment Terms

Dear Igor:

Aradigm Corporation (the “Company”), is pleased to offer you the position of President and Chief
Executive Officer (“CEO”), on the following terms. Your employment shall commence as soon as
possible on a date to be mutually agreed upon by you and the Company (the “Employment Commencement
Date”), and in any event is anticipated to be no later than August 8, 2006.

Position

You will serve in an executive capacity and shall perform the duties of CEO as commonly associated
with this position, as specified in the Bylaws of the Company, and as required by the Board of
Directors of the Company (the “Board”). You will report to the Board. As a current director, you
will continue to serve on the Board. However, if your employment with the Company terminates, you
agree to promptly tender your resignation from the Board if you are requested to do so by a
majority of the Board in writing.

You will work at the Company’s corporate headquarters which are currently located in Hayward,
California, subject to necessary business travel. During your employment with the Company, you
will devote your best efforts and substantially all of your business time and attention (except for
vacation periods and reasonable periods of illness or other incapacity permitted by the Company’s
general employment policies) to the business of the Company. Your employment relationship with the
Company shall also be governed by, and you will be required to comply with, the general employment
policies and practices of the Company (except that if the terms of this letter differ from or are
in conflict with the Company’s general employment policies or practices, this letter will control),
including but not limited to the policies set forth in the Company’s Employee Handbook, as may be
in effect from time to time. The Company reserves the right to change the Company’s general
employment policies and procedures, from time to time in its discretion.

Compensation

Your initial annual base salary will be $320,000, less standard payroll deductions and
withholdings. You will be paid in bi-weekly installments on the Company’s standard paydays in
accordance with Company practice and policy. Although the Board will consider increasing your
annual base salary after you have been employed for at least one year, it is not required to
increase your base salary.

The Company will also pay you a special “sign on” bonus of $100,000, which will be paid to you on
your first day of employment with the Company, less standard deductions and withholdings.

 

 

In addition, you will be eligible to earn an annual performance bonus of up to $160,000, consisting
of two separate components, as follows:

Bonus Based on Corporate Performance Goals: You will be eligible to earn an annual bonus
(up to $80,000 or 25% of base pay, whichever is greater), based on corporate performance goals, as
determined by the Board and CEO annually. For purposes of calculating this bonus, performance
levels will be determined as having been either “minimum,” “expected,” or “maximum” levels
(computed as 8.3%, 16.7% or 25% of base salary, respectively). As defined herein, and referred to
in the Company’s Change of Control Agreement and Executive Officer Severance Plan, CEO’s “target
bonus” based on Corporate Performance Goals is 16.7% of CEO’s base salary.

Bonus Based on Personal Performance Goals: You will also be eligible to earn an annual
bonus (up to $80,000 or 25% of base pay, whichever is greater), based upon your meeting personal
performance goals that the Board and CEO agree to in writing on an annual basis (including, by way
of example only, certain financial, business and management goals). For purposes of calculating
this bonus, performance levels will be determined as having been either “minimum,” “expected,” or
“maximum” levels (computed as 8.3%, 16.7% or 25% of base salary, respectively). As defined herein,
and referred to in the Company’s Change of Control Agreement and Executive Officer Severance Plan,
CEO’s “target bonus” based on Corporate Performance Goals is 16.7% of CEO’s base salary.

For the period from the Employment Commencement Date to December 31, 2006, you will be eligible to
earn a prorated bonus in accordance with the foregoing, but you will not otherwise be provided any
partial or prorated bonuses. The Board will determine whether you have earned a bonus and the
amount of any such bonus. You must be an employee in good standing on the bonus calculation date
to earn and be eligible to receive a bonus. Your compensation terms (including base salary and
bonus eligibility) are subject to review and change in the discretion of the Board (or any
authorized committee thereof).

Equity Incentives

Subject to Board approval, the Company will issue you an option (the “Option”) to purchase 500,000
shares of the Company’s common stock under the Company’s 2005 Equity Incentive Plan (the “Plan”) at
an exercise price equal to the fair market value of the stock as of the date of grant as determined
by the Board. The Option will be subject to a four-year vesting period subject to your continued
service to the Company (as defined in the Plan), with twenty-five percent (25%) of the shares
subject to the Option vesting on the one year anniversary of your vesting commencement date, and
one-forty-eighth (1/48th) of the shares subject to the Option vesting for each month of
your continued service thereafter. The Option will be governed in full by the terms and conditions
of the Plan and your individual Option agreement.

In addition, you will be eligible to earn a one-time stock bonus of 100,000 shares under the Plan
based on the achievement of performance objectives to be determined by the Board that will be
designed, to provide you with a reasonable opportunity to earn this bonus by the end of 2008.
However, the value of this stock bonus shall be limited to $1,000,000 and, therefore, if the per
share value of the Company’s common stock exceeds $10.00 when the bonus is earned (as

 

 

determined by the Board at that time), the number of shares subject to your stock bonus shall be
reduced accordingly.

Employee Benefits 

You will be eligible to participate in the Company’s standard employee benefit plans in accordance
with the terms and conditions of the plans and applicable policies which may be in effect from time
to time, and provided by the Company to its executive employees generally, including the Executive
Officer Severance Benefit Plan and a Change of Control Agreement, as well as group medical and
dental insurance coverage, disability insurance coverage, life insurance coverage, 401(k) Plan,
paid vacation, and Company holidays. You will receive additional information concerning the
Company’s benefit plans after you commence employment. The Company may modify its benefits
programs from time to time in its discretion.

Relocation Assistance

In order to assist you and your spouse with the move from Australia to the Bay Area, we will
reimburse you for reasonably documented moving and temporary housing expenses up to $75,000. Any
taxes that may be due in respect of such reimbursement will be your responsibility.

Proprietary Information and Inventions Agreement 

As a condition of employment, you are required to sign and abide by the Company’s Proprietary
Information and Inventions Agreement (the “Proprietary Information Agreement”), a form of which is
attached hereto as Attachment A.

Indemnity Agreement

The Company will enter into its standard form of Indemnity Agreement with you, a copy of which is
attached as Attachment B.

Protection Of Third Party Information

In your work for the Company, you will be expected not to make unauthorized use or disclosure of
any confidential information or materials, including trade secrets, of any former employer or other
third party to whom you have an obligation of confidentiality. Rather, you will be expected to use
only that information generally known and used by persons with training and experience comparable
to your own, which is common knowledge in the industry or otherwise legally in the public domain,
or which is otherwise provided or developed by the Company. By accepting employment with the
Company, you are representing to us that you will be able to perform your duties within the
guidelines described in this paragraph. You represent further that you have disclosed to the
Company any contract you have signed that may restrict your activities on behalf of the Company in
any manner.

 

 

Outside Activities

Throughout your employment with the Company, you may engage in civic and not-for-profit activities
so long as such activities do not interfere with the performance of your duties hereunder or
present a conflict of interest with the Company. Subject to the restrictions set forth herein and
with the prior written consent of the Board, you may serve as a director of other corporations and
may devote a reasonable amount of your time to other types of business or public activities not
expressly mentioned in this paragraph. The Board may rescind consent, in its sole discretion, to
your service as a director of all other corporations or participation in other business or public
activities, if it determines that such activities compromise or threaten to compromise the
Company’s business interests or conflict with your duties to the Company.

During your employment by the Company, except on behalf of the Company, you will not directly or
indirectly serve as an officer, director, stockholder, employee, partner, proprietor, investor,
joint venturer, associate, representative or consultant of any other person, corporation, firm,
partnership or other entity whatsoever known by you to compete with the Company (or is planning or
preparing to compete with the Company), anywhere in the world, in any line of business engaged in
(or planned to be engaged in) by the Company; provided, however, that you may purchase or otherwise
acquire up to (but not more than) one percent (1%) of any class of securities of any enterprise
(but without participating in the activities of such enterprise) if such securities are listed on
any national or regional securities exchange.

At-Will Employment Relationship

Your employment relationship with the Company is at-will. Accordingly, subject to the Company’s
obligations, if any, under the Executive Officer Severance Plan or your Change of Control
Agreement, both you and the Company may terminate the employment relationship at any time, with or
without cause, and with or without advance notice.

Miscellaneous

This letter, including the attached Proprietary Information Agreement, the Indemnity Agreement and
your Change of Control Agreement, constitutes the complete, final and exclusive embodiment of the
entire agreement between you and the Company with regard to the subject matter hereof. It is
entered into without reliance on any promise or representation, written or oral, other than those
expressly contained herein, and it supersedes any other agreements, promises, warranties or
representations concerning its subject matter. Changes in your employment terms, other than those
changes expressly reserved herein to the Company’s or the Board’s discretion, can only be pursuant
to a written agreement approved by the Board and signed by you and a duly-authorized representative
of the Board. This letter agreement will bind the heirs, personal representatives, successors and
assigns of both you and the Company, and inure to the benefit of both you and the Company, their
heirs, successors and assigns. If any provision of this letter agreement is determined to be
invalid or unenforceable, in whole or in part, this determination shall not affect any other
provision of this letter agreement and the provision in question shall be modified so as to be
rendered enforceable in a manner consistent with the intent of the parties insofar as possible
under applicable law. This letter agreement shall be construed and enforced in accordance with the
laws of the State of California without regard

 

 

to conflicts of law principles. Any waiver of a breach of this letter agreement, or rights
hereunder, shall be in writing and shall not be deemed to be a waiver of any successive breach or
rights hereunder. This letter agreement may be executed in counterparts which shall be deemed to
be part of one original, and facsimile signatures shall be equivalent to original signatures.

As required by law, this offer is subject to satisfactory proof of your identity and right to work
in the United States.

If the terms of this offer are agreeable to you, please sign and return this letter by July 14,
2006 to indicate your acceptance of employment with the Company on the terms set forth herein.

Sincerely,

Aradigm Corporation

	 	 	 
	/s/ Virgil Thompson
 

Virgil Thompson

	 	 
	Board of Directors
	 	 

Understood, Accepted and Agreed:

	 	 	 
	/s/ Igor Gonda
	 	 
	 

Dr. Igor Gonda

	 	 
	 
	 	 
	7/14/2006
 

Date

	 	 

 

 

Attachment A

	 	 	 
	 

	 	Employee Name:

ARADIGM CORPORATION

EMPLOYEE PROPRIETARY INFORMATION

AND INVENTIONS AGREEMENT

     In consideration of my employment or continued employment by Aradigm Corporation (the
"Company”), and the compensation now and hereafter paid to me, I hereby agree as follows:

1. NONDISCLOSURE.

     1.1 Recognition of Company’s Rights; Nondisclosure. At all times during my employment and
thereafter, I will hold in strictest confidence and will not disclose, use, lecture upon or publish
any of the Company’s Proprietary Information (defined below), except as such disclosure, use or
publication may be required in connection with my work for the Company, or unless an officer of the
Company expressly authorizes such in writing. I will obtain Company’s written approval before
publishing or submitting for publication any material (written, verbal, or otherwise) that relates
to my work at Company and/or incorporates any Proprietary Information. I hereby assign to the
Company any rights I may have or acquire in such Proprietary Information and recognize that all
Proprietary Information shall be the sole property of the Company and its assigns.

     1.2 Proprietary Information. The term “Proprietary Information” shall mean any and all
confidential and/or proprietary knowledge, data or information of the Company. By way of
illustration but not limitation, “Proprietary Information” includes (a) information relating to
products, know-how, drawings, clinical data, test data, formulas, methods, samples, developmental
or experimental work, (hereinafter collectively referred to as “Inventions”); and (b) information
regarding plans for research, development, manufacturing, new products, marketing and selling,
business plans, budgets and unpublished financial statements, licenses, prices and costs, suppliers
and customers; and (c) information regarding the skills and compensation of other employees of the
Company. Notwithstanding the foregoing, it is understood that, at all such times, I am free to use
information which is generally known in the trade or industry, which is not gained as result of a
breach of this Agreement, and my own, skill, knowledge, know-how and experience to whatever extent
and in whichever way I wish.

     1.3 Third Party Information. I understand, in addition, that the Company has received and in
the future will receive from third parties confidential or proprietary information (“Third Party
Information”) subject to a duty on the Company’s part to maintain the confidentiality of such
information and to use it only for certain limited purposes. During the term of my employment and
thereafter, I will hold Third Party Information in the strictest confidence and will not disclose
to anyone (other than Company personnel who need to know such information in connection with their
work for the Company) or use, except in connection with my work for the Company, Third Party
Information unless expressly authorized by an officer of the Company in writing.

     1.4 No Improper Use of Information of Prior Employers and Others. During my employment by the
Company I will not improperly use or disclose any confidential information or trade secrets, if
any, of any former employer or any other person to whom I have an obligation of confidentiality,
and I will not bring onto the premises of the Company any unpublished documents or any property
belonging to any former employer or any other person to whom I have an obligation of
confidentiality unless consented to in writing by that former employer or person. I will use in
the performance of my duties only information which is generally known and used by persons with
training and experience comparable to my own, which is common knowledge in the industry or
otherwise legally in the public domain, or which is otherwise provided or developed by the Company.

2. ASSIGNMENT OF INVENTIONS.

     2.1 Proprietary Rights. The term “Proprietary Rights” shall mean all trade secret, patent,
copyright, mask work and other intellectual property rights throughout the world.

 

 

     2.2 Prior Inventions. Inventions, if any, patented or unpatented, which I made prior to the
commencement of my employment with the Company are excluded from the scope of this Agreement. To
preclude any possible uncertainty, I have set forth on Exhibit B (Previous Inventions) attached
hereto a complete list of all Inventions that I have, alone or jointly with others, conceived,
developed or reduced to practice or caused to be conceived, developed or reduced to practice prior
to the commencement of my employment with the Company, that I consider to be my property or the
property of third parties and that I wish to have excluded from the scope of this Agreement
(collectively referred to as “Prior Inventions”). If disclosure of any such Prior Invention would
cause me to violate any prior confidentiality agreement, I understand that I am not to list such
Prior Inventions in Exhibit B but am only to disclose a cursory name for each such invention, a
listing of the party(ies) to whom it belongs and the fact that full disclosure as to such
inventions has not been made for that reason. A space is provided on Exhibit B for such purpose.
If no such disclosure is attached, I represent that there are no Prior Inventions. If, in the
course of my employment with the Company, I incorporate a Prior Invention into a Company product,
process or machine, the Company is hereby granted and shall have a nonexclusive, royalty-free,
irrevocable, perpetual, worldwide license (with rights to sublicense through multiple tiers of
sublicensees) to make, have made, modify, use and sell such Prior Invention. Notwithstanding the
foregoing, I agree that I will not incorporate, or permit to be incorporated, Prior Inventions in
any Company Inventions without the Company’s prior written consent.

     2.3 Assignment of Inventions. Subject to Sections 2.4, and 2.6, I hereby assign and agree to
assign in the future (when any such Inventions or Proprietary Rights are first reduced to practice
or first fixed in a tangible medium, as applicable) to the Company all my right, title and interest
in and to any and all Inventions (and all Proprietary Rights with respect thereto) whether or not
patentable or registrable under copyright or similar statutes, made or conceived or reduced to
practice or learned by me, either alone or jointly with others, during the period of my employment
with the Company. Inventions assigned to the Company, or to a third party as directed by the
Company pursuant to this Section 2, are hereinafter referred to as “Company Inventions.”

     2.4 Nonassignable Inventions. This Agreement does not apply to an Invention which qualifies
fully as a nonassignable Invention under Section 2870 of the California Labor Code (hereinafter
"Section 2870”). I have reviewed the notification on Exhibit A (Limited Exclusion Notification)
and agree that my signature acknowledges receipt of the notification.

     2.5 Obligation to Keep Company Informed. During the period of my employment and for six (6)
months after termination of my employment with the Company, I will promptly disclose to the Company
fully and in writing all Inventions authored, conceived or reduced to practice by me, either alone
or jointly with others. In addition, I will promptly disclose to the Company all patent
applications filed by me or on my behalf within a year after termination of employment. At the
time of each such disclosure, I will advise the Company in writing of any Inventions that I believe
fully qualify for protection under Section 2870; and I will at that time provide to the Company in
writing all evidence necessary to substantiate that belief. The Company will keep in confidence
and will not use for any purpose or disclose to third parties without my consent any confidential
information disclosed in writing to the Company pursuant to this Agreement relating to Inventions
that qualify fully for protection under the provisions of Section 2870. I will preserve the
confidentiality of any Invention that does not fully qualify for protection under Section 2870.

     2.6 Government or Third Party. I also agree to assign all my right, title and interest in and
to any particular Invention to a third party, including without limitation the United States, as
directed by the Company.

     2.7 Works for Hire. I acknowledge that all original works of authorship which are made by me
(solely or jointly with others) within the scope of my employment and which are protectable by
copyright are “works made for hire,” pursuant to United States Copyright Act (17 U.S.C., Section
101).

     2.8 Enforcement of Proprietary Rights. I will assist the Company in every proper way to
obtain, and from time to time enforce, United States and foreign Proprietary Rights relating to
Company Inventions in any and all countries. To that end I will execute, verify and deliver such
documents and perform such other acts (including appearances as a witness) as the Company may
reasonably request for use in applying for, obtaining, perfecting, evidencing, sustaining and
enforcing such Proprietary Rights and the assignment thereof. In addition, I will execute, verify
and deliver assignments of such Proprietary Rights to the Company or its designee. My obligation
to assist the Company with respect to Proprietary

 

 

Rights relating to such Company Inventions in any
and all countries shall continue beyond the termination of my employment, but the Company shall
compensate me at a reasonable rate after my termination for the time actually spent by me at the
Company’s request on such assistance.

     In the event the Company is unable for any reason, after reasonable effort, to secure my
signature on any document needed in connection with the actions specified in the preceding
paragraph, I hereby irrevocably designate and appoint the Company and its duly authorized officers
and agents as my agent and attorney in fact, which appointment is coupled with an interest, to act
for and in my behalf to execute, verify and file any such documents and to do all other lawfully
permitted acts to further the purposes of the preceding paragraph with the same legal force and
effect as if executed by me. I hereby waive and quitclaim to the Company any and all claims, of
any nature whatsoever, which I now or may hereafter have for infringement of any Proprietary Rights
assigned hereunder to the Company.

3. RECORDS. I agree to keep and maintain adequate and current records (in the form of notes,
sketches, drawings and in any other form that may be required by the Company) of all Proprietary
Information developed by me and all Inventions made by me during the period of my employment at the
Company, which records shall be available to and remain the sole property of the Company at all
times.

4. ADDITIONAL ACTIVITIES. I agree that during the period of my employment by the Company I will
not, without the Company’s express written consent, engage in any employment or business activity
which is competitive with, or would otherwise conflict with, my employment by the Company. I agree
further that for the period of my employment by the Company and for one (l) year after the date of
termination of my employment by the Company I will not induce any employee of the Company to leave
the employ of the Company.

5. NO CONFLICTING OBLIGATION. I represent that my performance of all the terms of this Agreement
and as an employee of the Company does not and will not breach any agreement to keep in confidence
information acquired by me in confidence or in trust prior to my employment by the Company. I have
not entered into, and I agree I will not enter into, any agreement either written or oral in
conflict herewith.

6. RETURN OF COMPANY DOCUMENTS. When I leave the employ of the Company, I will deliver to the
Company any and all drawings, notes, memoranda, specifications, devices, formulas, and documents,
together with all copies thereof, and any other material containing or disclosing any Company
Inventions, Third Party Information or Proprietary Information of the Company. I further agree
that any property situated on the Company’s premises and owned by the Company, including disks and
other storage media, filing cabinets or other work areas, is subject to inspection by Company
personnel at any time with or without notice. Prior to leaving, I will cooperate with the Company
in completing and signing the Company’s termination statement.

7. LEGAL AND EQUITABLE REMEDIES. Because my services are personal and unique and because I may
have access to and become acquainted with the Proprietary Information of the Company, the Company
shall have the right to enforce this Agreement and any of its provisions by injunction, specific
performance or other equitable relief, without bond and without prejudice to any other rights and
remedies that the Company may have for a breach of this Agreement.

8. NOTICES. Any notices required or permitted hereunder shall be given to the appropriate party at
the address specified below or at such other address as the party shall specify in writing. Such
notice shall be deemed given upon personal delivery to the appropriate address or if sent by
certified or registered mail, three (3) days after the date of mailing.

9. NOTIFICATION OF NEW EMPLOYER. In the event that I leave the employ of the Company, I hereby
consent to the notification of my new employer of my rights and obligations under this Agreement.

10. GENERAL PROVISIONS.

     10.1 Governing Law; Consent to Personal Jurisdiction. This Agreement will be governed by and
construed according to the laws of the State of California, as such laws are applied to agreements
entered into and to be performed entirely within California between California residents. I hereby
expressly consent to the personal jurisdiction of the state and federal courts located in Alameda
County, California for any lawsuit filed there against me by Company arising from or related to
this Agreement.

     10.2 Severability. In case any one or more of the provisions contained in this Agreement
shall, for any reason, be held to be invalid, illegal or

 

 

unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect the other provisions of this Agreement,
and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. If moreover, any one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to duration, geographical scope,
activity or subject, it shall be construed by limiting and reducing it, so as to be enforceable to
the extent compatible with the applicable law as it shall then appear.

     10.3 Successors and Assigns. This Agreement will be binding upon my heirs, executors,
administrators and other legal representatives and will be for the benefit of the Company, its
successors, and its assigns.

     10.4 Survival. The provisions of this Agreement shall survive the termination of my
employment and the assignment of this Agreement by the Company to any successor in interest or
other assignee.

     10.5 Employment. I agree and understand that nothing in this Agreement shall confer any right
with respect to continuation of employment by the Company, nor shall it interfere in any way with
my right or the Company’s right to terminate my employment at any time, with or without cause.

     10.6 Waiver. No waiver by the Company of any breach of this Agreement shall be a waiver of
any preceding or succeeding breach. No waiver by the Company of any right under this Agreement
shall be construed as a waiver of any other right. The Company shall not be required to give
notice to enforce strict adherence to all terms of this Agreement.

     10.7 Entire Agreement. The obligations pursuant to Sections 1 and 2 of this Agreement shall
apply to any time during which I was previously employed, or am in the future employed, by the
Company as a consultant if no other agreement governs nondisclosure and assignment of inventions
during such period. This Agreement is the final, complete and exclusive agreement of the parties
with respect to the subject matter hereof and supersedes and merges all prior discussions between
us. No modification of or amendment to this Agreement, nor any waiver of any rights under this
Agreement, will be effective unless in writing and signed by the party to be charged. Any
subsequent change or changes in my duties, salary or compensation will not affect the validity or
scope of this Agreement.

 

 

     This Agreement shall be effective as of the first day of my employment with the Company,
namely:                      , 2006.

     I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND AND AGREE TO ITS TERMS. I HAVE ALSO
COMPLETELY FILLED OUT EXHIBIT B TO THIS AGREEMENT.

	 	 	 	 	 	 	 
	ACCEPTED AND AGREED TO:	 	ACCEPTED AND AGREED TO:	 
	 	 	 	 
	 	 	 
	Dated:
	 	 	 
	ARADIGM CORPORATION
	 
	 	 	 	 
	3929 Point Eden Way
	 
	 	 	 	 
	Hayward, CA 94545
	 
	 	 	 	 
	 	 	 
	 
	 	 	By:
	 	 	 
	 	 	 	 	 
	 

(Aradigm Officer)
	 
	 	 	 	 
	 	 	 
	 	 	 	Title:
	 	 	 
	 	 	 	 

	 	 	 

 

 

EXHIBIT A

LIMITED EXCLUSION NOTIFICATION

     THIS IS TO NOTIFY you in accordance with Section 2872 of the California Labor Code that
the foregoing Agreement between you and the Company does not require you to assign or offer to
assign to the Company any invention that you developed entirely on your own time without using the
Company’s equipment, supplies, facilities or trade secret information except for those inventions
that either:

     (1) Relate at the time of conception or reduction to practice of the invention to the
Company’s business, or actual or demonstrably anticipated research or development of the Company;

     (2) Result from any work performed by you for the Company.

     To the extent a provision in the foregoing Agreement purports to require you to assign an
invention otherwise excluded from the preceding paragraph, the provision is against the public
policy of this state and is unenforceable.

     This limited exclusion does not apply to any patent or invention covered by a contract between
the Company and the United States or any of its agencies requiring full title to such patent or
invention to be in the United States.

     I ACKNOWLEDGE RECEIPT of a copy of this notification.

	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 

WITNESSED BY:

	 	 	 
	 

	 	 
	Dated:                                         
	 	 

 

 

EXHIBIT B

	 	 	 
	TO:

	 	ARADIGM CORPORATION
	 
	 	 
	FROM:
	 	 
	 
	 	 
	DATE:

	 	                                        
	 
	 	 
	SUBJECT:

	 	Previous Inventions

     1. Except as listed in Section 2 below, the following is a complete list of all inventions or
improvements relevant to the subject matter of my employment by Aradigm Corporation (the “Company”)
that have been made or conceived or first reduced to practice by me alone or jointly with others
prior to my engagement by the Company:

	 	 	 	 	 
	 

	 	o
	 	No inventions or improvements.
	 
	 	 	 	 
	 

	 	o
	 	See below:
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	o
	 	Additional sheets attached.

     2. Due to a prior confidentiality agreement, I cannot complete the disclosure under Section 1
above with respect to inventions or improvements generally listed below, the proprietary rights and
duty of confidentiality with respect to which I owe to the following party(ies):

	 	 	 	 	 	 	 
	 

	 	Invention or Improvement
	 	Party(ies)
	 	Relationship
	 
	 	 	 	 	 	 
	1.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	2.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	3.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	 
	 	 	 	 	 	 
	 	 	o     Additional sheets attached.	 	 

1

 

Attachment B

ARADIGM CORPORATION

INDEMNITY AGREEMENT

     THIS
AGREEMENT is made and entered into as of the ___ day of
___  20___ by and between
Aradigm Corporation, a California corporation (the “Corporation”), and                      (the
“Indemnified Person”).

RECITALS

     WHEREAS, the Indemnified Person performs a valuable service to the Corporation in such
person’s capacity as                      of the Corporation;

     WHEREAS, the shareholders of the Corporation have adopted provisions in the Articles of
Incorporation (the “Articles”) and the bylaws (the “Bylaws”) providing for the indemnification of
the directors, officers, employees and other agents of the Corporation, including persons serving
at the request of the Corporation in such capacities with other corporations or enterprises, as
authorized by the California General Corporation Law (the “Code”);

     WHEREAS, the Articles, the Bylaws and the Code, by their nonexclusive nature, permit contracts
between the Corporation and its directors, officers, employees and other agents with respect to
indemnification of such persons; and

     WHEREAS, in order to induce the Indemnified Person to continue to serve as                      of the
Corporation, the Corporation has determined and agreed to enter into this Agreement with the
Indemnified Person;

     NOW, THEREFORE, in consideration of the Indemnified Person’s continued service as                     
after the date hereof, the parties hereto agree as follows:

AGREEMENT

     1. Services to the Corporation. The Indemnified Person will serve, at the will of
the Corporation or under separate contract, if any such contract exists, as                      of the
Corporation or as a director, officer or other fiduciary of an affiliate of the Corporation
(including any employee benefit plan of the Corporation) faithfully and to the best of the
Indemnified Person’s ability so long as the Indemnified Person is duly elected and qualified in
accordance with the provisions of the Bylaws or other applicable charter documents of the
Corporation or such affiliate; provided, however, that the Indemnified Person may at any time and
for any reason resign from such position (subject to any contractual obligation that the
Indemnified Person may have assumed apart from this Agreement) and that the Corporation or any
affiliate shall have no obligation under this Agreement to continue the Indemnified Person in any
such position.

1

 

     2. Indemnity. The Corporation hereby agrees to hold harmless and indemnify the
Indemnified Person to the fullest extent authorized or permitted by the provisions of the Bylaws
and the Code, as the same may be amended from time to time, (but only to the extent that any such
amendment permits the Corporation to provide broader indemnification rights than the Bylaws or the
Code permitted prior to adoption of any such amendment).

     3. Additional Indemnity. Subject to a determination pursuant to Section 9 hereof,
the Corporation hereby agrees to hold harmless and indemnify the Indemnified Person:

          (a) against any and all expenses (including attorneys’ fees), witness fees, damages,
judgments, fines and amounts paid in settlement and any other amounts that the Indemnified Person
becomes legally obligated to pay because of any claim or claims made against or by such person in
connection with any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, arbitral, administrative or investigative (including an action by or in the right of the
Corporation) to which the Indemnified Person is, was or at any time becomes a party, or is
threatened to be made a party, by reason of the fact that the Indemnified Person is, was or at any
time becomes a director, officer, employee or other agent of Corporation, or is or was serving or
at any time serves at the request of the Corporation as a director, officer, employee or other
agent of another corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise; and

          (b) otherwise to the fullest extent not prohibited by the Articles, the Bylaws or the Code.

     4. Limitations on Indemnity. To the extent that any of the matters set forth in
subsections (a) through (l) of this Section 4 are successfully established by the Corporation as
defenses in accordance with the provisions of Section 9 hereof, no indemnity pursuant to Sections 2
or 3 hereof will be payable by the Corporation:

          (a) on account of any claim against the Indemnified Person for an accounting of profits made
from the purchase or sale by the Indemnified Person of securities of the Corporation pursuant to
the provisions of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or
similar provisions of any federal, state or local statutory law;

          (b) on account of the Indemnified Person’s conduct from which the Indemnified Person derived
an improper personal benefit;

          (c) on account of the Indemnified Person’s conduct that he or she believed to be contrary to
the best interests of the Corporation or its shareholders or that involved the absence of good
faith on the part of the Indemnified Person;

          (d) on account of the Indemnified Person’s conduct that constituted intentional misconduct or
a knowing and culpable violation of law;

          (e) on account of the Indemnified Person’s conduct that showed a reckless disregard for the
Indemnified Person’s duty to the Corporation or its shareholders in circumstances in which the
Indemnified Person was aware, or should have been aware, in the ordinary course of performing his
or her duties, of a risk of serious injury to the Corporation or its shareholders;

2

 

          (f) on account of the Indemnified Person’s conduct that constituted an unexcused pattern of
inattention that amounted to an abdication of the Indemnified Person’s duty to the Corporation or
its shareholders;

          (g) on account of the Indemnified Person’s conduct which constituted a violation of the
Indemnified Person’s duties under Section 310 (interested party transactions) or Section 316
(distributions, loans or guarantees) of the Code;

          (h) for which payment is actually made to the Indemnified Person under a valid and
collectible insurance policy or under a valid and enforceable indemnity clause, bylaw or agreement,
except in respect of any excess beyond payment under such insurance, clause, bylaw or agreement;

          (i) if indemnification is not lawful (and, in this respect, both the Corporation and the
Indemnified Person have been advised that the Securities and Exchange Commission believes that
indemnification for liabilities arising under the federal securities laws is against public policy
and is, therefore, unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication);

          (j) in connection with any proceeding (or part thereof) initiated by the Indemnified Person,
or any proceeding by the Indemnified Person against the Corporation or its directors, officers,
employees or other agents, unless (i) such indemnification is expressly required to be made by law,
(ii) the proceeding was authorized by the Board of Directors of the Corporation, (iii) such
indemnification is provided by the Corporation, in its sole discretion, pursuant to the powers
vested in the Corporation under the Code, or (iv) the proceeding is initiated pursuant to Section 9
hereof;

          (k) with respect to any action by or in the right of the Corporation:

               (i) if the Indemnified Person is adjudged to be liable to the Corporation in performance of
the Indemnified Person’s duty to the Corporation and its shareholders, unless and only to the
extent that the court in which such action is or was pending shall determine upon application that,
in view of all of the circumstances of the case, the Indemnified Person is fairly and reasonably
entitled to indemnity for expenses, and then only to the extent that the court shall determine;

               (ii) for expenses incurred in defending a pending action which is settled or otherwise
disposed of without court approval; or

               (iii) for amounts paid in settling or otherwise disposing of a pending action without court
approval; and

          (l) to the extent, and only to the extent, that indemnification with respect to such action
(i) would be inconsistent with the Articles of Incorporation or Bylaws, or a resolution of the
shareholders or agreement of the Corporation prohibiting or otherwise limiting such indemnification
and in effect at the time of the accrual of the action or (ii) would be inconsistent with any
condition expressly imposed by a court in approving a settlement, unless the Indemnified Person has
been successful on the merits or unless the indemnification has been

3

 

approved by the shareholders of the corporation in accordance with Section 153 of the Code (with
the shares of the Indemnified Person not being entitled to vote thereon).

     5. Continuation of Indemnity. All agreements and obligations of the Corporation
contained herein shall continue during the period the Indemnified Person is a director, officer,
employee or other agent of the Corporation (or is serving or has served at the request of the
Corporation as a director, officer, employee or other agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise) and shall continue thereafter so
long as the Indemnified Person shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal, arbitral, administrative or
investigative, by reason of the fact that the Indemnified Person had served in the capacity
referred to herein.

     6. Partial Indemnification. The Indemnified Person shall be entitled under this
Agreement to indemnification by the Corporation for a portion of the expenses (including attorneys’
fees), witness fees, damages, judgments, fines and amounts paid in settlement and any other amounts
that the Indemnified Person becomes legally obligated to pay in connection with any action, suit or
proceeding referred to in Section 3 hereof even if not entitled hereunder to indemnification for
the total amount thereof, and the Corporation shall indemnify the Indemnified Person for the
portion thereof to which the Indemnified Person is entitled.

     7. Notification and Defense of Claim. Not later than thirty (30) days after receipt
by the Indemnified Person of notice of the commencement of any action, suit or proceeding, the
Indemnified Person will, if a claim in respect thereof is to be made against the Corporation under
this Agreement, notify the Corporation of the commencement thereof; but the omission so to notify
the Corporation will not relieve it from any liability which it may have to the Indemnified Person
otherwise than under this Agreement. With respect to any such action, suit or proceeding as to
which Agent notifies the Corporation of the commencement thereof:

          (a) the Corporation will be entitled to participate therein at its own expense;

          (b) except as otherwise provided below, the Corporation may, at its option and jointly with
any other indemnifying party similarly notified and electing to assume such defense, assume the
defense thereof, with counsel reasonably satisfactory to the Indemnified Person. After notice from
the Corporation to the Indemnified Person of its election to assume the defense thereof, the
Corporation will not be liable to the Indemnified Person under this Agreement for any legal or
other expenses subsequently incurred by the Indemnified Person in connection with the defense
thereof except for reasonable costs of investigation or otherwise as provided below. The
Indemnified Person shall have the right to employ separate counsel in such action, suit or
proceeding but the fees and expenses of such counsel incurred after notice from the Corporation of
its assumption of the defense thereof shall be at the expense of the Indemnified Person unless (i)
the employment of counsel by the Indemnified Person has been authorized by the Corporation, (ii)
the Indemnified Person shall have reasonably concluded that there may be a conflict of interest
between the Corporation and the Indemnified Person in the conduct of the defense of such action or
(iii) the Corporation shall not in fact have employed counsel to assume the defense of such action,
in each of which cases the fees and expenses of the Indemnified Person’s separate counsel shall be
at the expense of the Corporation. The Corporation shall not be entitled to assume the defense of
any action, suit or proceeding brought by or on behalf of the

4

 

Corporation or as to which the Indemnified Person shall have made the conclusion provided for in
clause (ii) above; and

          (c) the Corporation shall not be liable to indemnify the Indemnified Person under this
Agreement for any amounts paid in settlement of any action or claim effected without its written
consent, which shall not be unreasonably withheld. The Corporation shall be permitted to settle
any action except that it shall not settle any action or claim in any manner which would impose any
penalty or limitation on the Indemnified Person without the Indemnified Person’s written consent,
which may be given or withheld in the Indemnified Person’s sole discretion.

     8. Expenses. The Corporation shall advance, prior to the final disposition of any
proceeding, within 20 days after request therefor, all expenses incurred by the Indemnified Person
in connection with such proceeding upon receipt of an undertaking by or on behalf of the
Indemnified Person to repay said amounts if it shall be determined ultimately that the Indemnified
Person is not entitled to be indemnified under the provisions of this Agreement, the Bylaws, the
Articles, the Code or otherwise. Notwithstanding the foregoing, unless otherwise determined
pursuant to Section 9, no advance shall be made by the corporation if within 20 days after a
request for such advance a reasonable determination is made by the Board of Directors by a majority
vote of a quorum consisting of directors who are not parties to the proceeding (or, if no such
quorum exists, by independent legal counsel in a written opinion) that the facts known to the
decision making party at the time such determination is made clearly and convincingly demonstrate
that such person acted in bad faith or in a manner that such person did not believe to be in the
best interests of the Corporation and its shareholders.

     9. Determination by the Corporation. To the extent required by the Code, promptly
after receipt of a request for indemnification hereunder made by the Indemnified Person (and in any
event within 90 days), the Corporation shall make a reasonable, good faith determination as to
whether indemnification of the Indemnified Person is proper under the Code by means of:

          (a) A majority vote of a quorum consisting of directors who are not parties to such
proceeding;

          (b) If such quorum is not obtainable, by independent legal counsel in a written opinion; or

          (c) Approval or ratification by the affirmative vote of a majority of the shares of the
Corporation represented and voting at a duly held meeting in which a quorum is present (which
shares voting affirmatively also constitute at least a majority of the required quorum) or by
written consent of a majority of the outstanding shares entitled to vote, where in each case the
shares owned by the person to be indemnified shall not be considered entitled to vote thereon.

     Such determination shall be reasonably made in good faith by the decision making party based
upon the facts known to the decision making party at the time such determination is made.

     10. Enforcement. Any right to indemnification or advances granted by this Agreement
to the Indemnified Person shall be enforceable by or on behalf of the Indemnified Person in the
forum in which the proceeding is or was pending, or, if such forum is not available or a
determination is made that such forum is not convenient, in any court of competent jurisdiction if

5

 

(i) the claim for indemnification or advances is denied, in whole or in part, or (ii) no
disposition of such claim is made within ninety (90) days of request therefor. The Indemnified
Person, in such enforcement action, if successful in whole or in part, shall be entitled to be paid
also the expense of prosecuting his or her claim. The Corporation shall be entitled to raise by
pleading as an affirmative defense to any action for which a claim for indemnification is made
under Sections 2 or 3 hereof that the Indemnified Person is not entitled to indemnification because
of the limitations set forth in Section 4 hereof. Neither the failure of the Corporation
(including its Board of Directors, its shareholders or independent legal counsel) to have made a
determination prior to the commencement of such enforcement action that indemnification of the
Indemnified Person is proper in the circumstances, nor an actual determination by the Corporation
(including its Board of Directors, its shareholders or independent legal counsel) that such
indemnification is improper shall be a defense to the action or create a presumption that the
Indemnified Person is not entitled to indemnification under this Agreement or otherwise.

     11. Subrogation. In the event of payment under this Agreement, the Corporation shall
be subrogated to the extent of such payment to all of the rights of recovery of the Indemnified
Person, who shall execute all documents required and shall do all acts that may be necessary to
secure such rights and to enable the Corporation effectively to bring suit to enforce such rights.

     12. Nonexclusivity of Rights. The rights conferred on the Indemnified Person by this
Agreement shall not be exclusive of any other right which the Indemnified Person may have or
hereafter acquire under any statute, provision of the Articles or Bylaws, agreement, vote of
shareholders or directors, or otherwise, both as to action in such person’s official capacity and
as to action in another capacity while holding office.

     13. Survival of Rights.

          (a) The rights conferred on the Indemnified Person by this Agreement shall continue after the
Indemnified Person has ceased to be a director, officer, employee or other agent of the Corporation
or to serve at the request of the Corporation as a director, officer, employee or other agent of
another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise
and shall inure to the benefit of the Indemnified Person’s heirs, executors and administrators.

          (b) The Corporation shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business or assets of the
Corporation, expressly to assume and agree to perform this Agreement in the same manner and to the
same extent that the Corporation would be required to perform if no such succession had taken
place.

     14. Separability. Each of the provisions of this Agreement is a separate and
distinct agreement and independent of the others, so that if any provision hereof shall be held to
be invalid for any reason, such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof. Furthermore, if this Agreement shall be invalidated
in its entirety on any ground, then the Corporation shall nevertheless indemnify the Indemnified
Person to the fullest extent provided by the Articles, the Bylaws, the Code or any other applicable
law.

6

 

     15. Governing Law. This Agreement shall be interpreted and enforced in accordance
with the laws of the State of California, without giving effect to principles of conflict of laws.

     16. Amendment and Termination. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless in writing signed by both parties hereto.

     17. Identical Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original but all of which
together shall constitute but one and the same Agreement. Only one such counterpart need be
produced to evidence the existence of this Agreement.

     18. Headings. The headings of the sections of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or to affect the
construction hereof.

     19. Notices. All notices, requests, demands and other communications hereunder shall
be in writing and shall be deemed to have been duly given (i) upon delivery if delivered by hand to
the party to whom such communication was directed or (ii) upon the third business day after the
date on which such communication was mailed if mailed by certified or registered mail with postage
prepaid:

     (a) If to the Indemnified Person, at the address indicated below such person’s
signature hereunder.

     (b) If to the Corporation, to

Aradigm Corporation

3929 Point Eden Way

Hayward, CA 94545

or to such other address as may have been furnished to the Indemnified Person by the Corporation.

7

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and
year first above written.

	 	 	 	 	 	 	 
	CORPORATION:	 	ARADIGM CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	INDEMNIFIED PERSON:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

8exv10w1

 

Exhibit 10.1

AMENDMENT NO. 5

(dated and effective September 22, 2006)

to

CREDIT AGREEMENT

(that was dated as of September 14, 2004)

by and among

LASALLE BANK NATIONAL ASSOCIATION,

as Administrative Agent and Co-Lead Arranger,

WACHOVIA CAPITAL MARKETS, LLC, as Co-Lead Arranger,

WACHOVIA BANK, NATIONAL ASSOCIATION, as Syndication Agent,

the LENDERS,

and CENTENE CORPORATION,

as Company

     In consideration of their mutual agreements herein and for other sufficient consideration, the
receipt of which is hereby acknowledged, CENTENE CORPORATION, a Delaware corporation (Company),
LASALLE BANK NATIONAL ASSOCIATION (Administrative Agent), and the Lenders agree as follows:

1. Definitions; Section References. The term Original Loan Agreement means the Credit Agreement dated
as of September 14, 2004 among Company, Administrative Agent, and the Lenders party thereto, as
amended by that certain Amendment No. 1 thereto dated as of July 18, 2005, as further amended by
that certain Amendment No. 2 thereto dated as of September 9, 2005, as further amended by that
certain Amendment No. 3 thereto dated as of November 7, 2005, as further amended by that certain
Amendment No. 4 thereto dated as of April 7, 2006. The term this Amendment means this Amendment
No. 5. The term Loan Agreement means the Original Loan Agreement as amended by this Amendment.
Capitalized terms used and not otherwise defined herein have the meanings defined in the Loan
Agreement. Section and Exhibit references are to sections of, and exhibits to, respectively, the
Original Loan Agreement unless otherwise specified.

2. Conditions to Effectiveness of this Amendment. This Amendment is effective as of September 22,
2006, but only if (i) this Amendment has been duly executed by Company, Administrative Agent, and
each Lender, and (ii) all of the documents listed on Exhibit A to this Amendment have been
delivered and, as applicable, executed, sealed, attested, acknowledged, certified, or
authenticated, each in form and substance satisfactory to Administrative Agent, and all of the
requirements described in Exhibit A to this Amendment have been satisfied.

3. Amendments to Original Loan Agreement. The Original Loan Agreement is hereby amended as follows:

3.1. Agent Fee Letter. The definition of “Agent Fee Letter” in Section 1 is deleted in its
entirety and replaced with the following:

Agent Fee Letter means the fee letter dated as of August 8, 2006
between the Company and Administrative Agent.

3.2. Applicable Margin. The definition of “Applicable Margin” in Section 1 is amended by
deleting the table therein in its entirety and replacing it with the following:

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Total Debt	 	 	 	 	 	 	 	 
	 	 	 	 	to EBITDA	 	LIBOR	 	Base Rate	 	Non-Use	 	L/C Fee
	Level	 	Ratio	 	Margin	 	Margin	 	Fee Rate	 	Rate
	I	 	 	Greater than or
equal to 2.5:1
	 	 	1.75	%	 	 	0.25	%	 	 	0.275	%	 	 	1.75	%
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	II	 	Greater than or
equal to 2.0:1 but
less than 2.5:1
	 	 	1.50	%	 	 	0.00	%	 	 	0.25	%	 	 	1.50	%
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	III	 	Greater than or
equal to 1.5:1 but
less than 2.0:1
	 	 	1.25	%	 	 	0.00	%	 	 	0.225	%	 	 	1.25	%
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	IV	 	Greater than or
equal to 1.0:1 but
less than 1.5:1
	 	 	1.00	%	 	 	0.00	%	 	 	0.175	%	 	 	1.00	%
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	V	 	 	Less than 1.0:1
	 	 	0.75	%	 	 	0.00	%	 	 	0.15	%	 	 	0.75	%

	 	3.3.	 	Centene Plaza Divestiture. The following definition is inserted in Section 1:
	 
	 	 	 	Centene Plaza Divestiture means the sale, transfer, or
contribution by the applicable Loan Party of its right, title, and
interest in and to the real property and improvements known as Centene
Plaza on fair and reasonable terms and on an arm’s length basis to another
Loan Party (of which at least 50% of the Capital Securities are owned
directly or indirectly by Company and the remaining Capital Securities are
owned directly or indirectly by Company’s development partners with
respect to the Centene Plaza Project).
	 
	 	3.4.	 	Centene Plaza Documents. The following definition is inserted in Section 1:
	 
	 	 	 	Centene Plaza Documents means those loan documents entered into
between any applicable Loan Party and the lenders thereunder related to
the financing of the Centene Plaza Project, and all notes, instruments,
documents, and agreements executed or delivered from time to time in
connection therewith, in each case as amended, restated, supplemented or
otherwise modified from time to time.
	 
	 	3.5.	 	Centene Plaza Project. The following definition is inserted in Section 1:
	 
	 	 	 	Centene Plaza Project means the development and construction of
the office building complex project in Clayton, Missouri known as Centene
Plaza.

3.6. EBITDA. The definition of “EBITDA” in Section 1 is deleted in its entirety and replaced
with the following:

EBITDA means, for any period, Consolidated Net Income for such
period plus, to the extent deducted in determining such
Consolidated Net Income, Interest Expense, income tax expense,
depreciation and

2

 

amortization for such period, non-cash charges associated
with stock-based compensation expenses pursuant to the financial reporting
guidance of the Financial Accounting Standards Board concerning
stock-based compensation as in effect from time to time, and other
extraordinary or non-recurring non-cash expenses, minus, to the
extent added in determining such Consolidated Net Income, any
extraordinary or non-recurring non-cash income. EBITDA shall be
determined on a pro forma basis after giving effect to all Acquisitions
made by the Company or any Subsidiary at any time during the applicable
fiscal period, in each case as if such Acquisition had occurred at the
beginning of such fiscal period.

	 	3.7.	 	FirstGuard Divestiture. The following definition is inserted in Section 1:
	 
	 	 	 	FirstGuard Divestiture means the sale, transfer, or contribution
by the applicable Loan Parties of their right, title, and interest in and
to the Capital Securities or assets of those Loan Parties obligated under
the FirstGuard Health Plans on fair and reasonable terms and on an arm’s
length basis.
	 
	 	3.8.	 	FirstGuard Health Plans. The following definition is inserted in Section 1:
	 
	 	 	 	FirstGuard Health Plans means the health plans managed by certain
Loan Parties under contracts between certain Loan Parties and the States
of Missouri and Kansas.

3.9. Loan Party. The definition of “Loan Party” in Section 1 is deleted in its entirety and
replaced with the following:

Loan Party means the Company and each of its Subsidiaries (direct or
indirect, whether now existing or hereafter created) separately, excluding any
Dormant Subsidiary so long as it qualifies as a Dormant Subsidiary hereunder, but
specifically including Centene Management Company LLC, a Wisconsin limited
liability company, Centene Company of Texas, L.P., a Texas limited partnership,
Managed Health Services Insurance Corp., a Wisconsin corporation, Superior
HealthPlan, Inc., a Texas corporation, Coordinated Care Corporation Indiana, Inc.,
an Indiana corporation, MHS Consulting Corporation, a Wisconsin corporation,
Bankers Reserve Life Insurance Company of Wisconsin, a Wisconsin insurance company,
University Health Plans, Inc., a New Jersey corporation, CenCorp Consulting
Company, Inc., a Delaware corporation, Buckeye Community Health Plan, Inc., an Ohio
corporation, Centene Holdings LLC, a Delaware limited liability company, CCTX
Holdings, LLC, a Delaware limited liability company, AirLogix, Inc., a Delaware
corporation, FirstGuard, Inc., a Delaware corporation, FirstGuard Health Plan,
Inc., a Missouri corporation, Peach State Health Plan, Inc., a Georgia corporation,
CMC Real Estate Company, LLC, a Delaware limited liability company, Cenphiny
Management, LLC, a Delaware limited liability company, NurseWise Holdings LLC, a
Delaware limited liability company, NurseWise (SM) LP, a Delaware limited
partnership, Cenpatico Behavioral Health, LLC, a California limited liability
company, Cenpatico Behavioral Health of Texas, Inc., a Texas corporation, Desert
Springs Professionals, LLC, an Arizona limited liability company, CBHSP Arizona,
Inc., an Arizona corporation, Integrated Mental

3

 

	 	 	 	Health Management, LLC, a Texas
limited liability company, Integrated Mental Health Services, a Texas corporation,
Cenpatico Behavioral Health Wisconsin, LLC, a Wisconsin limited liability company,
Cenpatico Behavioral Health of Arizona, LLC, an Arizona limited liability company,
Firstguard Health Plan Kansas, Inc., a Kansas corporation, Centene Plaza
Redevelopment Corporation, a Missouri corporation, US Script, Inc., a Delaware
corporation, LBB Industries, Inc., a Texas corporation, RX Direct, Inc., a Texas
corporation, OptiCare Managed Vision, Inc., a Delaware corporation, Nurse Response,
Inc., a Delaware corporation, Cardium Health Services Corp., a Delaware
corporation, SilverSummit Healthplan, Inc., a Nevada corporation, Bridgeway Health
Solutions LLC, a Delaware limited liability company, Bridgeway Health Solutions
Arizona LLC, an Arizona limited liability company, OptiCare Vision Company, Inc., a
Delaware corporation, Opticare Vision Insurance Company, Inc., a South Carolina
corporation, Opticare IPA of New York, Inc., a New York corporation, Total Vision,
Inc., a Delaware corporation, AECC Total Vision Health Plan of Texas, Inc., a Texas
corporation, OcuCare Systems, Inc., a Florida corporation, and HealthSuite
Partners, LLC, a Delaware limited liability company. The words “Loan Parties”
refer to the Company and its now existing or hereafter created Subsidiaries
(whether direct or indirect), excluding any Dormant Subsidiary so long as it
qualifies as a Dormant Subsidiary hereunder, but specifically including each of the
Persons specifically mentioned in the prior sentence, collectively. The Company
agrees that any Subsidiary which is a Dormant Subsidiary will automatically become
a Loan Party hereunder without any further action if at any time such Subsidiary
ceases to be a Dormant Subsidiary.
	 
	 	3.10.	 	Other Bank Documents. The following definition is inserted in Section 1:
	 
	 	 	 	Other Bank Documents means that certain Revolving Loan Agreement
for $25,000,000 between CMC Real Estate Company, LLC and Regions Bank,
N.A. dated as of May 22, 2006, that certain promissory note dated August
8, 2003 in the original principal amount of $8,000,000 executed by CMC
Real Estate Company, LLC and payable to the order of Midwest BankCentre,
that certain promissory note dated November 30, 2004 in the original
principal amount of $5,500,000 executed by CMC Real Estate Company, LLC
and payable to the order of Midwest BankCentre, and all instruments,
documents, and agreements executed or delivered from time to time in
connection therewith, in each case as amended, restated, supplemented or
otherwise modified from time to time.

3.11. Required Capital. The definition of “Required Capital” in Section 1 is amended by
replacing the figure “210%” with the figure “300%”.

3.12. Revolving Commitment. The definition of “Revolving Commitment” in Section 1 is amended by
replacing the figure “$200,000,000.00” with the figure “$300,000,000.00”.

3.13. Term Indebtedness. The following definition is inserted in Section 1:

4

 

Term Indebtedness means the Debt of Company under any Term
Indebtedness Documents from time to time.

3.14. Term Indebtedness Documents. The following definition is inserted in Section 1:

Term Indebtedness Documents means that certain indenture and/or
other instruments, documents, and agreements to be executed or delivered
from time to time in connection with any Term Indebtedness Transaction, in
each case as amended, restated, supplemented or otherwise modified from
time to time.

3.15. Term Indebtedness Transaction. The following definition is inserted in Section 1:

Term Indebtedness Transaction means any transaction pursuant to
which Company publicly issues its bonds.

3.16. Termination Date. The definition of “Termination Date” in Section 1 is amended by
replacing the date “September 9, 2010” with the date “September 21, 2011”.

3.17. Increase in Revolving Commitment.
Section 2.1.2 is amended by replacing the words “up to an aggregate amount not exceeding
$75,000,000 (resulting in a maximum Revolving Commitment of $275,000,000)” in the first
sentence with the words “up to an aggregate amount not exceeding $100,000,000 (resulting in
a maximum Revolving Commitment of $400,000,000)”.

3.18. L/C Commitment. Section 2.1.3 is amended by replacing the words “the aggregate Stated
Amount of all Letters of Credit shall not at any time exceed $50,000,000” in clause (a)
with the words “the aggregate Stated Amount of all Letters of Credit shall not at any time
exceed $75,000,000”.

3.19. Financial Condition. Section 9.4 is amended by replacing the dates “December 31, 2004” and
“June 30, 2005” with the dates “December 31, 2005” and “June 30, 2006”, respectively.

3.20. No Material Adverse Change. Section 9.5 is amended by replacing the date “December 31,
2004” with the date “December 31, 2005”.

3.21. No Default. Section 9.22 is amended by inserting the following sentence at the end
thereof: “No breach or default by Company has occurred with respect to any Term
Indebtedness.”

3.22. Capital Leases. Section 9.29 is amended by deleting the figure “$15,000,000” and replacing
it with the words “the aggregate amount permitted with respect to Capital Leases permitted
under Sections 11.1(i) and (j).”

3.23. Negative Pledges. Section 9.31 is deleted in its entirety and replaced with the following:

9.31 Negative Pledges. Except for the Loan Documents, the Other
Bank Documents, the Centene Plaza Documents, and any Term Indebtedness
Documents, no Loan Party is a party to or bound by any

5

 

contract, note,
bond, indenture, deed, mortgage, deed of trust, security agreement,
pledge, hypothecation agreement, assignment, or other agreement or
undertaking, or any security, which prohibits the creation or existence of
any Lien upon or assignment or conveyance of any of its assets.

3.24. Term Indebtedness Transaction and Term Indebtedness Documents. 10.1 is amended by
inserting the following Section 10.1.12:

10.1.12 Term Indebtedness Documents. Promptly upon execution of
any Term Indebtedness Documents, true and correct copies of all Term
Indebtedness Documents (together with any amendments, restatements,
supplements, or modifications thereto).

3.25. Debt. Section 11.1 is deleted in its entirety and replaced with the following:

11.1 Debt. Not, and not permit any other Loan Party to, create,
incur, assume or suffer to exist any Debt, except:

     (a) Obligations under this Agreement and the other Loan
Documents;

     (b) Debt of Loan Parties (including the Company) secured
by Liens on real or personal property permitted by Section
11.2(d), and extensions, renewals and refinancings thereof;
provided that the aggregate amount of all such Debt at any time
outstanding shall not exceed $10,000,000;

     (c) Debt of Loan Parties other than the Company (and which
is non-recourse to the Company) secured only by Liens on real property
permitted by Section 11.2(d), and extensions, renewals and
refinancings thereof; provided, that the aggregate amount of all
such Debt at any time outstanding shall not exceed $45,000,000;

     (d) Debt (including any Term Indebtedness) which is
unsecured provided that (i) the incurrence of such Debt (or Term
Indebtedness) would not reasonably be expected to cause, either
immediately or in the foreseeable future, a violation of the covenant
contained in Section 11.14.2 and (ii) the documents governing
such Debt (or any Term Indebtedness Documents in the case of any Term
Indebtedness) do not contain covenants (including quantitative covenants
and financial covenants) which are more restrictive than the covenants
contained in this Agreement or which the Loan Parties could violate
without violating the covenants contained in this Agreement;

     (e) Subordinated Debt which is unsecured;

     (f) Debt of Loan Parties the proceeds of which are used
for the Centene Plaza Project, secured only by Liens permitted by
Section 11.2(e), and extensions, renewals and refinancings
thereof; provided, that (i) the aggregate amount of all such Debt
at any time outstanding

6

 

shall not exceed $70,000,000, and (ii) the
incurrence of such Debt would not reasonably be expected to cause, either
immediately or in the foreseeable future, a violation of the covenant
contained in Section 11.14.2

     (g) Hedging Obligations approved by Administrative Agent
and incurred in favor of a Lender or an Affiliate thereof for bona fide
hedging purposes and not for speculation;

     (h) Debt described on Schedule 11.1 and any extension,
renewal or refinancing thereof so long as the principal amount thereof is
not increased (it being agreed that any increase will be permitted
without the consent of the Administrative Agent and the Required Lenders
only to the extent that such additional Debt is otherwise permitted
pursuant to clauses (b), (c), (d),
(e), or (f) of this Section 11.1);

     (i) Debt under intercompany Capital Leases, in which both
lessor and lessee are Loan Parties, relating to any Loan Party’s
occupancy of office space within the complex known as Centene Plaza for
capital assets whose aggregate cost if purchased would not exceed
$70,000,000 (provided, that the aggregate Debt under
clause (f) of this Section 11.1 and this
clause (i) of this Section 11.1 which the Company
would be required under GAAP to show on its consolidated balance sheet
will not exceed $70,000,000);

     (j) Debt under Capital Leases (excluding any Capital
Leases permitted under clause (i) of this Section
11.1) for capital assets whose aggregate cost if purchased would not
exceed $30,000,000;

     (k) Indirect Obligations which do not exceed $2,000,000 in
the aggregate at any time;

     (l) Indirect Obligations arising with respect to customary
indemnification obligations in favor of sellers in connection with
Acquisitions permitted under Section 11.5 and purchasers in
connection with dispositions permitted under Section 11.5;

     (m) Indirect Obligations arising with respect to
performance guaranties (which may include payment obligations)
provided by a Loan Party on behalf of another Loan Party in the
ordinary course of business; and

     (n) Debt of any Loan Party to the Company which results
from an Investment made by the Company in such Loan Party pursuant to,
and permitted by, Section 11.11(b).

3.26. Liens. Section 11.2 is deleted in its entirety and replaced with the following:

11.2 Liens. Not, and not permit any other Loan Party to, create
or permit to exist any Lien on any of its real or personal properties,
assets

7

 

or rights of whatsoever nature (whether now owned or hereafter
acquired), except:

     (a) Liens for taxes or other governmental charges not at
the time delinquent or thereafter payable without penalty or being
contested in good faith by appropriate proceedings and, in each case, for
which it maintains adequate reserves;

     (b) Liens arising in the ordinary course of business (such
as (i) Liens of landlords, carriers, warehousemen, mechanics and
materialmen and other similar Liens imposed by law and (ii) Liens in the
form of deposits or pledges incurred in connection with worker’s
compensation, unemployment compensation and other types of social
security (excluding Liens arising under ERISA) or in connection with
surety bonds, bids, performance bonds and similar obligations) for sums
not overdue or being contested in good faith by appropriate proceedings
and not involving any advances or borrowed money or the deferred purchase
price of property or services and, in each case, for which it maintains
adequate reserves;

     (c) Liens described on Schedule 11.2 as of the
Closing Date;

     (d) (i) subject to the limitation set forth in
Sections 11.1(b) and (c), Liens that constitute purchase money
security interests on any property (including mortgage liens on real
property) securing debt incurred for the purpose of financing all or any
part of the cost of acquiring such property, provided that any
such Lien attaches to such property within 20 days of the acquisition
thereof and attaches solely to the property so acquired; and (ii) subject
to the limitation set forth in Section 11.1(i) and Section
11.1(j), Liens arising in connection with Capital Leases (and
attaching only to the property being leased);

     (e) Liens in the real property, fixtures, improvements,
construction materials, surveys, plans, designs, specifications,
construction contracts and architecture contracts relating to the Centene
Plaza Project, together with any other assets of any Loan Party relating
to such development and construction which customarily secure
construction loans, which secure Debt permitted by Section
11.1(f);

     (f) attachments, appeal bonds, judgments and other similar
Liens, for sums not exceeding $5,000,000 arising in connection with court
proceedings, provided the execution or other enforcement of such
Liens is effectively stayed and the claims secured thereby are being
actively contested in good faith and by appropriate proceedings;

     (g) easements, rights of way, restrictions, minor defects
or irregularities in title and other similar Liens not interfering in any
material respect with the ordinary conduct of the business of any Loan
Party;

8

 

     (h) Liens arising under the Loan Documents; and

     (i) the replacement, extension or renewal of any Lien
permitted by clause (c) above upon or in the same property
subject thereto arising out of the extension, renewal or replacement of
the Debt secured thereby (without increase in the amount thereof).

3.27. Centene Plaza Divestiture and FirstGuard Divestiture.
Section 11.5 is amended by inserting the words “, the Centene Plaza Divestiture, or the
FirstGuard Divestiture” after the words “GPA Divestiture”.

3.28. Inconsistent Agreements. Section 11.9 is amended by deleting clause (b) in its entirety
and replacing it with the following: “(b) prohibit any Loan Party from granting a Lien on
any of its assets to Administrative Agent and the Lenders (provided, however, that
this clause (b) shall not be deemed to be violated by Company entering into any
Term Indebtedness Documents, the Other Bank Documents, or the Centene Plaza Documents),”.

3.29. Total Debt to EBITDA Ratio. Section 11.14.2 is deleted in its entirety and replaced with
the following:

11.14.2 Total Debt to EBITDA Ratio. Not permit the Total Debt to EBITDA
Ratio for any Computation Period ending prior to the incurrence of any
Term Indebtedness or while any Term Indebtedness is not outstanding to
exceed 2.75 to 1.00, and not permit the Total Debt to EBITDA Ratio for any
other Computation Period to exceed 3.00 to 1.00.

3.30. Minimum Net Worth. Section 11.14.3 is deleted in its entirety and replaced with the
following:

11.14.3 Minimum Net Worth. Not permit the Net Worth of the
Company and its Subsidiaries to be less than $315,000,000 (the “Initial
Required Net Worth Amount”) as of June 30, 2006, or as of the end of each
Fiscal Quarter to be less than an amount equal to the sum of $315,000,000
plus the sum of (a) an amount equal to 50% of Consolidated Net Income
(without deduction for losses) on a cumulative basis from and after July
1, 2006, (b) an amount equal to 50% of the net proceeds (defined as gross
proceeds less reasonable brokers’ and underwriters’ fees and commissions
and other reasonable expenses of the issuance) of the issuance by Company
or any other Loan Party of any Capital Securities on a cumulative basis
from the Closing Date through the date of measurement, and (c) an amount
equal to 50% of any increase in the Net Worth of the Company and its
Subsidiaries associated with an Acquisition permitted by Section
11.5 on a cumulative basis from the Closing Date through the date of
measurement, provided, that for purposes of this Section
11.14.3, Company’s Net Worth shall be calculated net of the effect of
any non-cash impairments taken related to the FirstGuard Health Plans and
up to five percent (5%) of the Initial Required Net Worth Amount for any
cash expenses related to exit costs for the FirstGuard Health Plans.

3.31. Guaranties. Section 11 is amended by inserting the following Section 11.21:

9

 

11.21 Guaranties. Not permit any Loan Party to deliver a
guaranty in respect of any Term Indebtedness or otherwise become directly
or indirectly liable for all or any part of any Term Indebtedness, and not
permit any Loan Party to deliver a guaranty in respect of any other Debt
or otherwise become directly or indirectly liable for all or any part of
any other Debt, except for guaranties of Debt (other than any Term
Indebtedness) permitted by Section 11.1.

3.32. Non-Payment of Other Debt. Section 13.1.2 is deleted in its entirety and replaced with the
following:

13.1.2 Default under Other Debt. Any default shall occur under
the terms applicable to any Debt of any Loan Party individually or in an
aggregate amount (for all such Debt so affected and including undrawn
committed or available amounts and amounts owing to all creditors under
any combined or syndicated credit arrangement) exceeding $5,000,000, or
under the terms applicable to any Term Indebtedness, and such default
shall (a) consist of the failure to pay such Debt (including any Term
Indebtedness) when due, whether by acceleration or otherwise, or (b)
accelerate the maturity of such Debt (including any Term Indebtedness) or
permit the holder or holders thereof, or any trustee or agent for such
holder or holders, to cause such Debt (including any Term Indebtedness) to
become due and payable (or require any Loan Party to purchase or redeem
such Debt (including any Term Indebtedness) or post cash Collateral in
respect thereof) prior to its expressed maturity.

3.33. Indemnification. Section 15.17 is amended by inserting the word “, PENALTIES” after the
words “SUITS, LOSSES, LIABILITIES, DAMAGES”.

3.34. Annex A. Annex A is deleted in its entirety and replaced with Annex A
attached hereto.

3.35. Annex B. Annex B is deleted in its entirety and replaced with Annex B
attached hereto.

3.36. Exhibit B. Exhibit B is deleted in its entirety and replaced with Exhibit
B attached hereto.

3.37. Schedules. Schedules 9.8, 9.16, 9.17, and 11.11 are amended as described in Exhibit
C attached hereto.

4. Representations and Warranties. Company hereby represents and warrants to Administrative Agent and
each Lender that (i) this Amendment and each and every other document and instrument delivered by
Company in connection with this Amendment (each, an Amendment Document and, collectively, the
Amendment Documents) has been duly authorized by its Board of Directors, (ii) no consents are
necessary from any third Person
for its execution, delivery or performance of the Amendment Documents to which it is a party which
have not been obtained and a copy thereof delivered to Administrative Agent, (iii) each of the
Amendment Documents to which it is a party constitutes its legal, valid and binding obligation
enforceable against it in accordance with its terms, except to the extent that the enforceability
thereof against it may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws affecting the enforceability of creditors’ rights generally or by
equitable principles of general application (whether

10

 

considered in an action at law or in equity),
(iv) all of the representations and warranties contained in the Loan Agreement, as amended hereby,
are true and correct with the same force and effect as if made on and as of the effective date of
this Amendment, except that with respect to the representations and warranties made regarding
financial data, such representations and warranties are hereby made with respect to the most recent
financial statements and other financial data (in the form required by the Original Loan Agreement)
delivered by it to Administrative Agent, and (v) there exists no Unmatured Event of Default or
Event of Default under the Original Loan Agreement.

5. Effect of Amendment. The execution, delivery and effectiveness of this Amendment shall not operate
as a waiver of any right, power or remedy of Administrative Agent or the Lenders under the Original
Loan Agreement or any of the other Loan Documents, nor constitute a waiver of any provision of the
Original Loan Agreement or any of the other Loan Documents or any Unmatured Event of Default or
Event of Default, nor act as a release or subordination of the Liens (if any) of Administrative
Agent under the Loan Documents, except as expressly provided herein. Each reference in the
Original Loan Agreement to the Agreement, hereunder, hereof, herein, or words of like import, shall
be read as referring to the Original Loan Agreement as amended hereby. Each reference in the other
Loan Documents to the Loan Agreement shall be read as referring to the Original Loan Agreement, as
amended hereby.

6. Reaffirmation. Company hereby acknowledges and confirms that (i) except as expressly amended
hereby, the Original Loan Agreement and other Loan Documents remain in full force and effect, (ii)
the Loan Agreement, as amended hereby, is in full force and effect, (iii) it has no defenses to its
obligations under the Loan Agreement or any of the other Loan Documents to which it is a party,
(iv) the Liens of Administrative Agent under the Loan Documents (if any) continue in full force and
effect and have the same priority as before this Amendment except as expressly provided herein, and
(v) it has no claim against Administrative Agent or any Lender arising from or in connection with
the Loan Agreement or the other Loan Documents.

7. Counterparts. This Amendment may be executed by the parties hereto on any number of separate
counterparts, each of which shall be deemed an original, but all of which counterparts taken
together shall constitute one and the same instrument. It shall not be necessary in making proof
of this Amendment to produce or account for more than one counterpart signed by the party to be
charged.

8. Counterpart Facsimile Execution. This Amendment, or a signature page thereto intended to be
attached to a copy of this Amendment, signed and transmitted by electronic mail, facsimile machine
or telecopier shall be deemed and treated as an original document. The signature of any Person
thereon, for purposes hereof, is to be
considered as an original signature, and the document transmitted is to be considered to have the
same binding effect as an original signature on an original document. At the request of any party
hereto, any electronic mail, facsimile or telecopy document is to be re-executed in original form
by the Persons who executed the electronic mail, facsimile or telecopy document. No party hereto
may raise the use of electronic mail, facsimile machine or telecopier or the fact that any
signature was transmitted through the use of electronic mail or a facsimile or telecopier machine
as a defense to the enforcement of this Amendment.

9. Governing Law. This Amendment and the rights and obligations of the parties hereunder shall be
governed by and construed and interpreted in accordance with the internal laws of the State of
Illinois applicable to contracts made and to be performed wholly within such state, without regard
to choice or conflict of laws provisions.

11

 

10. Section Titles. The section titles in this Amendment are for convenience of reference only and
shall not be construed so as to modify any provisions of this Amendment.

11. Incorporation By Reference. Administrative Agent, the Lenders, and Company hereby agree that all
of the terms of the Loan Documents are incorporated in and made a part of this Amendment by this
reference.

12. New Titles. Wachovia Bank, National Association is hereby given the title of “Syndication Agent”
under the Loan Agreement and the Loan Documents. Nothing contained in the foregoing sentence shall
give Wachovia Bank, National Association any additional rights or obligations under the Loan
Agreement or the Loan Documents. The title of “Co-Syndication Agent” is hereby removed from
National City Bank and Wachovia Bank, National Association.

13. Statutory Notice — Oral Commitments. Nothing contained in such notice shall be deemed to limit or
modify the terms of the Loan Documents or this Amendment:

ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING
REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO
PROTECT YOU (COMPANY) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY
AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE
COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE
IN WRITING TO MODIFY IT.

COMPANY ACKNOWLEDGES THAT THERE ARE NO OTHER AGREEMENTS BETWEEN ADMINISTRATIVE AGENT OR ANY LENDER
AND COMPANY, ORAL OR WRITTEN, CONCERNING THE SUBJECT MATTER OF THE LOAN DOCUMENTS, AND THAT ALL
PRIOR AGREEMENTS CONCERNING THE SAME SUBJECT MATTER,
INCLUDING ANY PROPOSAL, TERM SHEET OR LETTER, ARE MERGED INTO THE LOAN DOCUMENTS AND THEREBY
EXTINGUISHED.

{remainder of page intentionally left blank}

12

 

     IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by appropriate
duly authorized officers as of the date first above written.

	 	 	 	 	 	 	 
	 	 	Company:	 	 
	 
	 	 	 	 	 	 
	 	 	CENTENE CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ J. Per Brodin	 	 
	 

	 	 	 	 	 	 
	 	 	Name: J. Per Brodin	 	 
	 	 	Title: SrVP & CFO	 	 
	 
	 	 	 	 	 	 
	 	 	Administrative Agent:	 	 
	 
	 	 	 	 	 	 
	 	 	LASALLE BANK NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Sam L. Dendrinos	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Sam L. Dendrinos	 	 
	 	 	Title: First Vice President	 	 

 

 

	 	 	 	 	 
	Lenders:	 	 
	 
	 	 	 	 
	LASALLE BANK NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 
	By:

	 	/s/ Sam L. Dendrinos	 	 
	 

	 	 	 	 
	Name: Sam L. Dendrinos	 	 
	Title: First Vice President	 	 
	 
	 	 	 	 
	WACHOVIA BANK, NATIONAL ASSOCIATION
	 
	 	 	 	 
	By:

	 	/s/ Jeanette A. Griffin	 	 
	 

	 	 	 	 
	Name: Jeanette A. Griffin	 	 
	Title: Director	 	 
	 
	 	 	 	 
	NATIONAL CITY BANK (formerly National City Bank of the Midwest)
	 
	 	 	 	 
	By:

	 	/s/ Heather Hinkelman	 	 
	 

	 	 	 	 
	Name: Heather Hinkelman	 	 
	Title: Banking Officer	 	 
	 
	 	 	 	 
	SUNTRUST BANK	 	 
	 
	 	 	 	 
	By:

	 	/s/ John W. Teasley	 	 
	 

	 	 	 	 
	Name: John W. Teasley	 	 
	Title: Director	 	 
	 
	 	 	 	 
	REGIONS BANK	 	 
	 
	 	 	 	 
	By:

	 	/s/ Anne D. Silvestri	 	 
	 

	 	 	 	 
	Name: Anne D. Silvestri	 	 
	Title: SVP	 	 
	 
	 	 	 	 
	MERRILL LYNCH CAPITAL CORPORATION
	 
	 	 	 	 
	By:

	 	/s/ John C. Rowland	 	 
	 

	 	 	 	 
	Name: John C. Rowland	 	 
	Title: Vice President	 	 

 

 

ANNEX A

LENDERS AND PRO RATA SHARES

	 	 	 	 	 	 	 	 	 
	 	 	Revolving	 	 
	Lender	 	Commitment Amount	 	Pro Rata Share
	LaSalle Bank National Association
	 	$	90,000,000.00	 	 	 	30.000000000	%
	 
	 	 	 	 	 	 	 	 
	Wachovia Bank, National Association
	 	$	65,000,000.00	 	 	 	21.666666667	%
	 
	 	 	 	 	 	 	 	 
	National City Bank
	 	$	35,000,000.00	 	 	 	11.666666667	%
	 
	 	 	 	 	 	 	 	 
	SunTrust Bank
	 	$	35,000,000.00	 	 	 	11.666666667	%
	 
	 	 	 	 	 	 	 	 
	Regions Bank
	 	$	35,000,000.00	 	 	 	11.666666667	%
	 
	 	 	 	 	 	 	 	 
	Merrill Lynch Capital Corporation
	 	$	40,000,000.00	 	 	 	13.333333333	%
	 
	 	 	 	 	 	 	 	 
	TOTALS
	 	$	300,000,000.00	 	 	 	100.000000000	%

 

 

ANNEX B

ADDRESSES FOR NOTICES

CENTENE CORPORATION

7711 Carondelet Avenue, Suite 800

Clayton, Missouri 63105

Attention: J. Per Brodin, Chief Financial Officer

Telephone: 314-725-4477

Facsimile: 314-725-5180

LASALLE BANK NATIONAL ASSOCIATION, as Administrative Agent, Co-Lead Arranger, Issuing
Lender and a Lender

Notices of Borrowing , Conversion, and Continuation

135 South LaSalle Street

Chicago, Illinois 60603

Attention: Israel Balaguer

Telephone: (312) 992-2843

Facsimile: (312) 904-4448

Notices of Letter of Credit Issuance

135 South LaSalle Street

Chicago, Illinois 60603

Attention: Bryen Zimmerman

Telephone: (312) 904-7745

Facsimile: (312) 904-6303

All Other Notices

135 South LaSalle Street

Chicago, Illinois 60603

Attention: Sam L. Dendrinos

Telephone: (312) 904-8101

Facsimile: (312) 904-4364

WACHOVIA BANK, NATIONAL ASSOCIATION, as Syndication Agent, Co-Lead Arranger, and a Lender

301 South College Street

Charlotte, North Carolina 28288

Attention: James Hill

Telephone: (704) 383-6234

Facsimile: (704) 383-7992

 

 

With a copy to:

1 S. Broad Street, PA4152

Philadelphia, Pennsylvania 19107

Jeanette Griffin

Telephone: (267) 321-6615

Facsimile: (267) 321-6700

NATIONAL CITY BANK, as a Lender

120 S. Central Avenue

Locator 56-SLWB08

Clayton, Missouri 63105

Attention: S. Farris Tzinberg

Telephone: (314) 898-1215

Facsimile: (314) 898-1401

SUNTRUST BANK, as a Lender

201 4th Avenue, North

Nashville, Tennessee 37219

Attention: William Priester

Telephone: (615) 748-5969

Facsimile: (615) 748-5269

REGIONS BANK, as a Lender

8182 Maryland Avenue

St. Louis, Missouri 63105

Attention: Anne Silvestri

Telephone: (314) 615-2372

Facsimile: (314) 615-2355

MERRILL LYNCH CAPITAL CORPORATION, as a Lender

4 World Financial Center (22nd Floor)

New York, New York 10080

Attention: John Rowland

Telephone: (212) 449-1351

Facsimile: (212) 738-1186

 

 

Exhibit A

Documents and Requirements

	1.	 	Revolving Notes:

	 	a.	 	LaSalle Bank National Association ($90,000,000.00)
	 
	 	b.	 	Wachovia Bank, National Association ($65,000,000.00)
	 
	 	c.	 	National City Bank ($35,000,000.00)
	 
	 	d.	 	SunTrust Bank ($35,000,000.00)
	 
	 	e.	 	Regions Bank ($35,000,000.00)
	 
	 	f.	 	Merrill Lynch Capital Corporation ($40,000,000.00)

	2.	 	Closing Certificate
	 
	3.	 	Master Assignment and Acceptance Agreement
	 
	4.	 	Agent Fee Letter
	 
	5.	 	Current insurance certificates for Company and each Loan Party evidencing that Company
and each Loan Party has in force insurance meeting the applicable requirements of the
Credit Agreement
	 
	6.	 	UCC Searches for Company with Delaware Secretary of State
	 
	7.	 	Secretary’s Certificate of Company (certifying resolutions, Certificate of
Incorporation, By-laws and Incumbency)
	 
	8.	 	Organizational chart, certified by Company as true, correct, and complete
	 
	9.	 	Good Standing Certificates for Company from the Secretaries of State of Missouri and
Delaware.
	 
	10.	 	Legal Opinion of Company’s counsel
	 
	11.	 	Such other documents, reports and information as Administrative Agent or Administrative
Agent’s counsel deems reasonable and necessary
	 
	12.	 	Payment of Administrative Agent’s costs and expenses (including payment of Lewis, Rice
& Fingersh invoice) and payment of all fees due Administrative Agent and the Lenders under
the Agent Fee Letter.

 

 

Exhibit B

Compliance Certificate

FORM OF COMPLIANCE CERTIFICATE

To: LaSalle Bank National Association, as Administrative Agent

     Please refer to the Credit Agreement dated as of September 14, 2004 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”) among Centene
Corporation (the “Company”), various financial institutions and LaSalle Bank National
Association, as Administrative Agent. Terms used but not otherwise defined herein are used herein
as defined in the Credit Agreement.

	I.	 	Reports. A copy of the [annual audited/quarterly] report of the Company as at
___, ___(the “Computation Date”), which report fairly presents in all
material respects the financial condition and results of operations [(subject to the absence
of footnotes and to normal year-end adjustments)] of the Company as of the Computation Date
and has been prepared in accordance with GAAP consistently applied [is enclosed herewith][may
be found at the Company’s website at www.centene.com].

	II.	 	Financial Tests. The Company hereby certifies and warrants to Administrative Agent,
Issuing Lender and each Lender that the following is a true and correct computation as at the
Computation Date of the following ratios and/or financial restrictions contained in the Credit
Agreement and each of the enclosed are true and correct as at the Computation Date:

A. Section 11.14.1 — Minimum Fixed Charge Coverage Ratio

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	1.	 	 	EBITDA	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	a.
	 	Consolidated Net Income
	 	$              
      
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	b.
	 	cash Interest Expense
	 	$              
      
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	c.
	 	income tax expense
	 	$               
     
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	d.
	 	depreciation expense
	 	$            
        
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	e.
	 	amortization expense
	 	$            
        
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	f.
	 	other non-cash expenses (see definition)
	 	$            
        
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	g.
	 	minus non-cash income (see definition)
	 	$            
        
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	h.
	 	pro forma EBITDA from Acquisitions
(without duplication of above)
	 	$            
        
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	i.
	 	EBITDA (sum of a, b, c, d, e, f, and h,
minus g)
	 	$            
        
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	2.	 	 	income taxes paid	 	$             
       

ii

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	3.	 	 	unfinanced Capital Expenditures	 	$             
       
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	4.	 	 	cash dividends paid	 	$             
       
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	5.	 	 	sum of (2), (3),and (4)	 	$             
       
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	6.	 	 	remainder of (1)(i) minus (5)	 	$             
       
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	7.	 	 	cash Interest Expense	 	$             
       
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	8.	 	 	required payments of
principal of Funded Debt
(excluding Revolving Loans)	 	$             
       
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	9.	 	 	sum of (7) and (8)	 	$             
       
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	10.	 	 	ratio of (6) to (9)	 	              to 1
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	11.	 	 	minimum required	 	1.75 to 1
	 
	 	 	 	 	 	 	 	 	 	 
	B. Section 11.14.2 - Maximum Total Debt to EBITDA Ratio	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	1.	 	 	Total Debt	 	$             
       
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	2.	 	 	EBITDA (from (A)(1)(i) above)	 	$             
       
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	3.	 	 	ratio of (1) to (2)	 	             
to 1
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	4.	 	 	maximum allowed	 	2.75 to 1 or 3.00 to 1 (as applicable)

C Section 11.14.3 — Minimum Net Worth

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	1.	 	 	Net Worth	 	$          
          

	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	2.	 	 	minimum required Net Worth	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	a.
	 	base amount
	 	$	315,000,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	b.
	 	50% of cumulative
Consolidated Net Income
since 7/1/06
	 	$        
            

	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	c.
	 	50% of net proceeds from
issuance of Capital Securities
	 	$          
          

	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	d.
	 	50% of net proceeds from
increases in Net Worth
attributable to Acquisitions
	 	$          
          

	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	e.
	 	minimum required
Net Worth
(sum of a, b, c, and d)
	 	$          
          ]

 

 

     The Company further certifies to you that no Event of Default or Unmatured Event of Default
has occurred and is continuing.

     The Company has caused this Certificate to be executed and delivered by its duly authorized
officer on ___, ___.

	 	 	 	 	 	 	 
	 	 	CENTENE CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 

	 	 

ii

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}]]