10-Q
Cigna Group (CI)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2025
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission File Number 001-38769
The Cigna Group
(Exact name of registrant as specified in its charter)
| Delaware | 82-4991898 |
|---|---|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
900 Cottage Grove Road
Bloomfield, Connecticut 06002
(Address of principal executive offices) (Zip Code)
(860) 226-6000
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, Par Value $0.01 | CI | New York Stock Exchange, Inc. |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☒ | Accelerated filer | ☐ |
|---|---|---|---|
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
As of July 25, 2025, 266,928,075 shares of the issuer's common stock were outstanding.
THE CIGNA GROUP
TABLE OF CONTENTS
| Page | ||
|---|---|---|
| PART I | FINANCIAL INFORMATION | |
| Item 1. | Financial Statements (Unaudited) | 3 |
| Consolidated Statements of Income | 3 | |
| Consolidated Statements of Comprehensive Income | 4 | |
| Consolidated Balance Sheets | 5 | |
| Consolidated Statements of Changes in Total Equity | 6 | |
| Consolidated Statements of Cash Flows | 8 | |
| Notes to the Consolidated Financial Statements | 9 | |
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 32 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 46 |
| Item 4. | Controls and Procedures | 46 |
| PART II | OTHER INFORMATION | |
| Item 1. | Legal Proceedings | 46 |
| Item 1A. | Risk Factors | 46 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 47 |
| Item 5. | Other Information | 47 |
| Item 6. | Exhibits | 48 |
| SIGNATURE | 49 |
As used herein, the term "Company" refers to one or more of The Cigna Group and its consolidated subsidiaries.
Item 1. FINANCIAL STATEMENTS
| The Cigna Group<br><br>Consolidated Statements of Income | ||||||||
|---|---|---|---|---|---|---|---|---|
| Unaudited | Unaudited | |||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||
| (In millions, except per share amounts) | 2025 | 2024 | 2025 | 2024 | ||||
| Revenues | ||||||||
| Pharmacy revenues | $ | 53,649 | $ | 45,101 | $ | 102,282 | $ | 87,137 |
| Premiums | 9,156 | 11,454 | 21,892 | 23,057 | ||||
| Fees and other revenues | 4,137 | 3,647 | 8,032 | 6,973 | ||||
| Net investment income | 236 | 321 | 474 | 611 | ||||
| TOTAL REVENUES | 67,178 | 60,523 | 132,680 | 117,778 | ||||
| Benefits and expenses | ||||||||
| Pharmacy and other service costs | 53,268 | 44,492 | 101,666 | 85,923 | ||||
| Medical costs and other benefit expenses | 7,749 | 9,515 | 18,247 | 18,955 | ||||
| Selling, general and administrative expenses | 3,433 | 3,684 | 7,646 | 7,389 | ||||
| Amortization of acquired intangible assets | 422 | 420 | 844 | 843 | ||||
| TOTAL BENEFITS AND EXPENSES | 64,872 | 58,111 | 128,403 | 113,110 | ||||
| Income from operations | 2,306 | 2,412 | 4,277 | 4,668 | ||||
| Interest expense and other | (337) | (375) | (699) | (697) | ||||
| Gain (loss) on sale of businesses | — | — | 41 | (19) | ||||
| Net investment gains (losses) | 52 | (48) | 50 | (1,884) | ||||
| Income before income taxes | 2,021 | 1,989 | 3,669 | 2,068 | ||||
| TOTAL INCOME TAXES | 389 | 360 | 628 | 651 | ||||
| Net income | 1,632 | 1,629 | 3,041 | 1,417 | ||||
| Less: Net income attributable to noncontrolling interests | 100 | 81 | 186 | 146 | ||||
| SHAREHOLDERS' NET INCOME | $ | 1,532 | $ | 1,548 | $ | 2,855 | $ | 1,271 |
| Shareholders' net income per share | ||||||||
| Basic | $ | 5.76 | $ | 5.51 | $ | 10.63 | $ | 4.48 |
| Diluted | $ | 5.71 | $ | 5.45 | $ | 10.55 | $ | 4.43 |
The accompanying Notes to the Consolidated Financial Statements (unaudited) are an integral part of these statements.
| The Cigna Group<br>Consolidated Statements of Comprehensive Income | ||||||||
|---|---|---|---|---|---|---|---|---|
| Unaudited | Unaudited | |||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||
| (In millions) | 2025 | 2024 | 2025 | 2024 | ||||
| Net income | $ | 1,632 | $ | 1,629 | $ | 3,041 | $ | 1,417 |
| Other comprehensive income (loss), net of tax | ||||||||
| Net unrealized appreciation on securities and derivatives | 321 | 108 | 221 | 229 | ||||
| Net long-duration insurance and contractholder liabilities measurement adjustments | (609) | (212) | (777) | (772) | ||||
| Net translation gains (losses) on foreign currencies | 65 | (5) | 78 | (31) | ||||
| Postretirement benefits liability adjustment | (3) | (9) | 3 | (4) | ||||
| Other comprehensive loss, net of tax | (226) | (118) | (475) | (578) | ||||
| Total comprehensive income | 1,406 | 1,511 | 2,566 | 839 | ||||
| Less: Net income attributable to noncontrolling interests | 100 | 81 | 186 | 146 | ||||
| SHAREHOLDERS' COMPREHENSIVE INCOME | $ | 1,306 | $ | 1,430 | $ | 2,380 | $ | 693 |
The accompanying Notes to the Consolidated Financial Statements (unaudited) are an integral part of these statements.
| The Cigna Group<br>Consolidated Balance Sheets | ||||
|---|---|---|---|---|
| Unaudited | ||||
| As of <br>June 30, | As of <br>December 31, | |||
| (In millions) | 2025 | 2024 | ||
| Assets | ||||
| Cash and cash equivalents | $ | 4,329 | $ | 7,550 |
| Investments | 813 | 665 | ||
| Accounts receivable, net | 31,148 | 24,227 | ||
| Inventories | 5,967 | 6,692 | ||
| Other current assets | 2,466 | 2,732 | ||
| Assets of businesses held for sale | — | 7,004 | ||
| Total current assets | 44,723 | 48,870 | ||
| Long-term investments | 15,662 | 15,128 | ||
| Reinsurance recoverables | 4,297 | 4,378 | ||
| Property and equipment | 3,621 | 3,654 | ||
| Goodwill | 44,375 | 44,370 | ||
| Other intangible assets | 28,671 | 29,417 | ||
| Other assets | 2,929 | 2,786 | ||
| Separate account assets | 7,373 | 7,278 | ||
| TOTAL ASSETS | $ | 151,651 | $ | 155,881 |
| Liabilities | ||||
| Current insurance and contractholder liabilities | $ | 6,015 | $ | 5,388 |
| Pharmacy and other service costs payable | 29,460 | 28,465 | ||
| Accounts payable | 9,938 | 9,294 | ||
| Accrued expenses and other liabilities | 7,078 | 9,387 | ||
| Short-term debt | 4,288 | 3,035 | ||
| Liabilities of businesses held for sale | — | 2,410 | ||
| Total current liabilities | 56,779 | 57,979 | ||
| Non-current insurance and contractholder liabilities | 10,157 | 10,254 | ||
| Deferred tax liabilities, net | 6,781 | 6,975 | ||
| Other non-current liabilities | 3,651 | 3,215 | ||
| Long-term debt | 26,480 | 28,937 | ||
| Separate account liabilities | 7,373 | 7,278 | ||
| TOTAL LIABILITIES | 111,221 | 114,638 | ||
| Contingencies — Note 16 | ||||
| Shareholders' equity | ||||
| Common stock (1) | 4 | 4 | ||
| Additional paid-in capital | 31,588 | 31,288 | ||
| Accumulated other comprehensive loss | (2,816) | (2,341) | ||
| Retained earnings | 45,564 | 43,519 | ||
| Less: Treasury stock, at cost | (34,126) | (31,437) | ||
| TOTAL SHAREHOLDERS' EQUITY | 40,214 | 41,033 | ||
| Noncontrolling interests | 216 | 210 | ||
| Total equity | 40,430 | 41,243 | ||
| Total liabilities and equity | $ | 151,651 | $ | 155,881 |
(1)Par value per share, $0.01; shares issued, 404 million as of June 30, 2025 and 403 million as of December 31, 2024; authorized shares, 600 million.
The accompanying Notes to the Consolidated Financial Statements (unaudited) are an integral part of these statements.
| The Cigna Group | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Consolidated Statements of Changes in Total Equity | |||||||||||||||||
| Unaudited | |||||||||||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||
| (In millions) | Additional<br>Paid-in<br>Capital | Accumulated<br>Other<br>Comprehensive<br>(Loss) | Retained<br>Earnings | Treasury<br>Stock | Shareholders'<br>Equity | Noncontrolling<br>Interests | Total<br>Equity | Redeemable<br>Noncontrolling<br>Interests | |||||||||
| Balance at March 31, 2025 | 4 | $ | 31,443 | $ | (2,590) | $ | 44,434 | $ | (33,065) | $ | 40,226 | $ | 188 | $ | 40,414 | $ | — |
| Effects of issuing stock for employee benefit plans | 145 | (1) | 144 | 144 | |||||||||||||
| Other comprehensive loss | (226) | (226) | (226) | — | |||||||||||||
| Net income | 1,532 | 1,532 | 100 | 1,632 | — | ||||||||||||
| Common dividends declared (per share: 1.51) | (402) | (402) | (402) | ||||||||||||||
| Repurchase of common stock | — | (1,060) | (1,060) | (1,060) | |||||||||||||
| Other transactions impacting noncontrolling interests | — | — | (72) | (72) | — | ||||||||||||
| Balance at June 30, 2025 | 4 | $ | 31,588 | $ | (2,816) | $ | 45,564 | $ | (34,126) | $ | 40,214 | $ | 216 | $ | 40,430 | $ | — |
| Three Months Ended June 30, 2024 | |||||||||||||||||
| (In millions) | Additional<br>Paid-in<br>Capital | Accumulated<br>Other<br>Comprehensive<br>(Loss) | Retained<br>Earnings | Treasury<br>Stock | Shareholders'<br>Equity | Noncontrolling<br>Interests | Total<br>Equity | Redeemable<br>Noncontrolling<br>Interests | |||||||||
| Balance at March 31, 2024 | 4 | $ | 30,292 | $ | (2,324) | $ | 40,978 | $ | (27,769) | $ | 41,181 | $ | 169 | $ | 41,350 | $ | — |
| Effect of issuing stock for employee benefit plans | 116 | (1) | 115 | 115 | |||||||||||||
| Other comprehensive loss | (118) | (118) | (118) | — | |||||||||||||
| Net income | 1,548 | 1,548 | 81 | 1,629 | — | ||||||||||||
| Common dividends declared (per share: 1.40) | (394) | (394) | (394) | ||||||||||||||
| Repurchase of common stock | 640 | (1,640) | (1,000) | (1,000) | |||||||||||||
| Other transactions impacting noncontrolling interests | — | — | (55) | (55) | — | ||||||||||||
| Balance at June 30, 2024 | 4 | $ | 31,048 | $ | (2,442) | $ | 42,132 | $ | (29,410) | $ | 41,332 | $ | 195 | $ | 41,527 | $ | — |
All values are in US Dollars.
The accompanying Notes to the Consolidated Financial Statements (unaudited) are an integral part of these statements.
| The Cigna Group | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Consolidated Statements of Changes in Total Equity | |||||||||||||||||
| Unaudited | |||||||||||||||||
| Six Months Ended June 30, 2025 | |||||||||||||||||
| (In millions) | Additional Paid-in Capital | Accumulated Other Comprehensive (Loss) | Retained Earnings | Treasury Stock | Shareholders' Equity | Other Non- controlling Interests | Total Equity | Redeemable Noncontrolling Interests | |||||||||
| Balance at December 31, 2024 | 4 | $ | 31,288 | $ | (2,341) | $ | 43,519 | $ | (31,437) | $ | 41,033 | $ | 210 | $ | 41,243 | $ | — |
| Effect of issuing stock for employee benefit plans | 300 | (108) | 192 | 192 | |||||||||||||
| Other comprehensive loss | (475) | (475) | (475) | — | |||||||||||||
| Net income | 2,855 | 2,855 | 186 | 3,041 | — | ||||||||||||
| Common dividends declared (per share: 3.02) | (810) | (810) | (810) | ||||||||||||||
| Repurchase of common stock | — | (2,581) | (2,581) | (2,581) | |||||||||||||
| Other transactions impacting noncontrolling interests | — | — | (180) | (180) | — | ||||||||||||
| Balance at June 30, 2025 | 4 | $ | 31,588 | $ | (2,816) | $ | 45,564 | $ | (34,126) | $ | 40,214 | $ | 216 | $ | 40,430 | $ | — |
| Six Months Ended June 30, 2024 | |||||||||||||||||
| (In millions) | Additional Paid-in Capital | Accumulated Other Comprehensive (Loss) | Retained Earnings | Treasury Stock | Shareholders' Equity | Other Non- controlling Interests | Total Equity | Redeemable Noncontrolling Interests | |||||||||
| Balance at December 31, 2023 | 4 | $ | 30,669 | $ | (1,864) | $ | 41,652 | $ | (24,238) | $ | 46,223 | $ | 21 | $ | 46,244 | $ | 107 |
| Effect of issuing stock for employee benefit plans | 379 | (115) | 264 | 264 | |||||||||||||
| Other comprehensive loss | (578) | (578) | (578) | — | |||||||||||||
| Net income | 1,271 | 1,271 | 146 | 1,417 | — | ||||||||||||
| Common dividends declared (per share: 2.80) | (791) | (791) | (791) | ||||||||||||||
| Repurchase of common stock | — | (5,057) | (5,057) | (5,057) | |||||||||||||
| Other transactions impacting noncontrolling interests | — | — | 28 | 28 | (107) | ||||||||||||
| Balance at June 30, 2024 | 4 | $ | 31,048 | $ | (2,442) | $ | 42,132 | $ | (29,410) | $ | 41,332 | $ | 195 | $ | 41,527 | $ | — |
All values are in US Dollars.
The accompanying Notes to the Consolidated Financial Statements (unaudited) are an integral part of these statements.
The Cigna Group
Consolidated Statements of Cash Flows
| Unaudited | ||||
|---|---|---|---|---|
| Six Months Ended June 30, | ||||
| (In millions) | 2025 | 2024 | ||
| Cash Flows from Operating Activities | ||||
| Net income | $ | 3,041 | $ | 1,417 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Depreciation and amortization | 1,356 | 1,479 | ||
| Investment (gains) losses, net | (50) | 1,884 | ||
| Deferred income tax benefit | (292) | (199) | ||
| (Gain) loss on sale of businesses | (41) | 19 | ||
| Net changes in assets and liabilities, net of non-operating effects: | ||||
| Accounts receivable, net | (6,398) | (7,313) | ||
| Inventories | 726 | 472 | ||
| Reinsurance recoverable and Other assets | (402) | (559) | ||
| Insurance liabilities | 1,702 | (125) | ||
| Pharmacy and other service costs payable | 995 | 7,820 | ||
| Accounts payable and Accrued expenses and other liabilities | (1,020) | (15) | ||
| Other, net | 417 | 225 | ||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 34 | 5,105 | ||
| Cash Flows from Investing Activities | ||||
| Proceeds from investments sold: | ||||
| Debt securities and equity securities | 272 | 393 | ||
| Investment maturities and repayments: | ||||
| Debt securities and equity securities | 553 | 414 | ||
| Commercial mortgage loans | 90 | 37 | ||
| Other sales, maturities and repayments (primarily short-term and other long-term investments) | 431 | 451 | ||
| Investments purchased or originated: | ||||
| Debt securities and equity securities | (1,512) | (493) | ||
| Commercial mortgage loans | (62) | (52) | ||
| Other (primarily short-term and other long-term investments) | (761) | (865) | ||
| Property and equipment purchases, net | (612) | (670) | ||
| Divestitures, net of cash sold | 2,346 | — | ||
| Renewable energy tax credit equity investments | (327) | (335) | ||
| Other, net | (18) | (15) | ||
| NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | 400 | (1,135) | ||
| Cash Flows from Financing Activities | ||||
| Deposits and interest credited to contractholder deposit funds | 74 | 84 | ||
| Withdrawals and benefit payments from contractholder deposit funds | (137) | (135) | ||
| Net change in short-term debt | 296 | (467) | ||
| Repayment of long-term debt | (1,600) | (3,000) | ||
| Net proceeds on issuance of long-term debt | — | 4,462 | ||
| Repurchase of common stock | (2,620) | (5,012) | ||
| Issuance of common stock | 141 | 221 | ||
| Common stock dividend paid | (813) | (793) | ||
| Other, net | (355) | (198) | ||
| NET CASH USED IN FINANCING ACTIVITIES | (5,014) | (4,838) | ||
| Effect of foreign currency rate changes on cash, cash equivalents and restricted cash | 35 | (12) | ||
| Net decrease in cash, cash equivalents and restricted cash | (4,545) | (880) | ||
| Cash, cash equivalents and restricted cash January 1, (1) | 8,931 | 8,337 | ||
| Cash, cash equivalents and restricted cash June 30, (1) | 4,386 | 7,457 | ||
| Cash and cash equivalents reclassified to assets of businesses held for sale | — | (625) | ||
| Cash, cash equivalents and restricted cash June 30, per Consolidated Balance Sheets (1) | $ | 4,386 | $ | 6,832 |
| Supplemental Disclosure of Cash Information: | ||||
| Income taxes paid, net of refunds | $ | 350 | $ | 567 |
| Interest paid | $ | 680 | $ | 643 |
(1)Restricted cash and cash equivalents were reported in other long-term investments.
The accompanying Notes to the Consolidated Financial Statements (unaudited) are an integral part of these statements.
THE CIGNA GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
TABLE OF CONTENTS
| Note Number | Footnote | Page |
|---|---|---|
| BUSINESS AND CAPITAL STRUCTURE | ||
| 1 | Description of Business | 10 |
| 2 | Summary of Significant Accounting Policies | 10 |
| 3 | Accounts Receivable, Net | 11 |
| 4 | Supplier Finance Program | 11 |
| 5 | Divestiture | 12 |
| 6 | Earnings Per Share | 12 |
| 7 | Debt | 13 |
| 8 | Common and Preferred Stock | 14 |
| INSURANCE INFORMATION | ||
| 9 | Insurance and Contractholder Liabilities | 14 |
| 10 | Reinsurance | 17 |
| INVESTMENTS | ||
| 11 | Investments | 18 |
| 12 | Fair Value Measurements | 21 |
| 13 | Accumulated Other Comprehensive Income (Loss) | 24 |
| WORKFORCE MANAGEMENT AND COMPENSATION | ||
| 14 | Strategic Optimization Program | 25 |
| COMPLIANCE, REGULATION AND CONTINGENCIES | ||
| 15 | Income Taxes | 26 |
| 16 | Contingencies and Other Matters | 26 |
| RESULTS DETAILS | ||
| 17 | Segment Information | 27 |
Note 1 – Description of Business
The Cigna Group®, together with its subsidiaries (either individually or collectively referred to as the "Company," "we," "us" or "our"), is a global health company committed to creating a better future for every individual and every community. We relentlessly challenge ourselves to partner and innovate solutions for better health. Powered by our people and our brands, we advance our mission to improve the health and vitality of those we serve.
Our subsidiaries offer a differentiated set of pharmacy, medical, behavioral, dental, and related products and services. The majority of these products and services are offered through employers and other entities, such as governmental and nongovernmental organizations, unions and associations. Cigna Healthcare® also offers health and dental insurance products to individuals in the United States and select international markets. In addition to these operations, The Cigna Group also has certain run-off operations.
A full description of our segments follows:
The Evernorth® Health Services reportable segment includes the Pharmacy Benefit Services and the Specialty and Care Services operating segments, which provide independent and coordinated health solutions and capabilities to enable the health care system to work better and help people live healthier lives.
Pharmacy Benefit Services drives high-quality, cost-effective pharmacy care through various services, such as drug claim adjudication, retail pharmacy network administration, benefit design consultation, drug utilization review, drug formulary management and access to our home delivery pharmacy. Specialty and Care Services provides specialty drugs for the treatment of complex and rare diseases, specialty distribution of pharmaceuticals and medical supplies, as well as clinical programs to help our clients drive better whole-person health outcomes through care services.
The Cigna Healthcare reportable segment includes the U.S. Healthcare and International Health operating segments, which provide comprehensive medical and coordinated solutions to clients and customers. U.S. Healthcare provides medical plans and other benefits and solutions for insured and self-insured clients as well as individual health plans. International Health provides health care solutions in our international markets, as well as health care benefits for globally mobile individuals and employees of multinational organizations. U.S. Healthcare also included the Medicare Advantage and related businesses until the divestiture of such businesses to Health Care Services Corporation ("HCSC") on March 19, 2025 (see Note 5 to the Consolidated Financial Statements for further information).
Other Operations comprises the remainder of our business operations, which includes certain continuing (corporate-owned life insurance ("COLI")), run-off and other non-strategic businesses. Our run-off businesses include the (i) variable annuity reinsurance business that was effectively exited through reinsurance with Berkshire Hathaway Life Insurance Company of Nebraska ("Berkshire") in 2013, (ii) settlement annuity business, and (iii) individual life insurance and annuity and retirement benefits businesses, which were sold through reinsurance agreements.
Corporate reflects amounts not allocated to operating segments, including net interest expense (defined as interest on corporate financing less net investment income on investments not supporting segment and other operations), certain litigation matters, expense associated with our frozen pension plans, charitable contributions, operating severance, certain overhead and enterprise-wide project costs, and eliminations for products and services sold between segments.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
The Consolidated Financial Statements include the accounts of The Cigna Group and its consolidated subsidiaries. Intercompany transactions and accounts have been eliminated in consolidation. These Consolidated Financial Statements were prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). Certain amounts in the Consolidated Statements of Cash Flows have been reclassified to conform to current year presentation and did not have a significant impact on our Consolidated Financial Statements.
Amounts recorded in the Consolidated Financial Statements necessarily reflect management's estimates and assumptions about medical costs, investment, tax and receivable valuations, interest rates, and other factors. Significant estimates are discussed throughout these Notes; however, actual results could differ from those estimates. The impact of a change in estimate is generally included in earnings in the period of adjustment.
These interim Consolidated Financial Statements are unaudited but include all adjustments (including normal recurring adjustments) necessary, in the opinion of management, for a fair statement of financial position and results of operations for the periods reported.
The interim Consolidated Financial Statements and Notes should be read in conjunction with the Consolidated Financial Statements and Notes included in the 2024 Annual Report on Form 10-K ("2024 Form 10-K"). The Company has not included certain footnote disclosures that would substantially duplicate the disclosures contained in its 2024 Form 10-K, unless the information in those disclosures materially changed or is required by GAAP. The preparation of interim Consolidated Financial Statements necessarily relies heavily on estimates. This and other factors, including the seasonal nature of portions of the health care and related benefits business, as well as competitive and other market conditions, call for caution in estimating full-year results based on interim results of operations.
Recent Accounting Pronouncements
The Company's 2024 Form 10-K includes discussion of significant recent accounting pronouncements that either have impacted or may impact our financial statements in the future. There are no updates on significant accounting pronouncements recently adopted or recently issued and not yet adopted that have occurred since the Company filed its 2024 Form 10-K.
Note 3 – Accounts Receivable, Net
The following amounts were included within Accounts receivable, net:
| (In millions) | June 30, 2025 | December 31, 2024 | ||
|---|---|---|---|---|
| Noninsurance customer receivables | $ | 14,690 | $ | 11,879 |
| Pharmaceutical manufacturers receivables | 14,094 | 10,914 | ||
| Insurance customer receivables | 1,606 | 3,199 | ||
| Other receivables | 758 | 162 | ||
| Total | $ | 26,154 | ||
| Accounts receivable, net classified as assets of businesses held for sale | (1,927) | |||
| Total | $ | 31,148 | $ | 24,227 |
These accounts receivable are reported net of our allowances of $6.9 billion and $5.0 billion as of June 30, 2025 and December 31, 2024, respectively. These allowances include contractual allowances for certain rebates receivable with pharmaceutical manufacturers and certain accounts receivable from third-party payors, discounts and claims adjustments issued to customers in the form of client credits, an allowance for current expected credit losses, and other non-credit adjustments.
The Company's allowance for current expected credit losses was $388 million as of June 30, 2025 and $84 million as of December 31, 2024.
Accounts Receivable Factoring Facility
The Company maintains an uncommitted factoring facility (the "Facility") with a total capacity of $1.5 billion under which certain accounts receivable may be sold on a non-recourse basis to a financial institution. The Facility began in July 2023 with an initial term of two years, followed by automatic one-year renewal terms unless terminated by either party.
We sold manufacturer accounts receivable under the Facility of $1.3 billion for both the three months ended June 30, 2025 and 2024 and $2.7 billion and $3.2 billion for the six months ended June 30, 2025 and 2024, respectively. For the three and six months ended June 30, 2025 and 2024, factoring fees paid were not material. As of June 30, 2025, there were $1.0 billion of sold accounts receivable that have not been collected from manufacturers and have been removed from the Company's Consolidated Balance Sheets. As of December 31, 2024, all sold accounts receivable had been collected from manufacturers. As of June 30, 2025 and December 31, 2024, there were $297 million and $1.0 billion, respectively, of collections from manufacturers that have not been remitted to the financial institution. Such amounts are recorded within Accrued expenses and other liabilities in the Consolidated Balance Sheets.
Note 4 – Supplier Finance Program
The Company facilitates a voluntary supplier finance program (the "Program") that provides suppliers the opportunity to sell their accounts receivable due from us (i.e., our payment obligations to the suppliers) to a financial institution, on a non-recourse basis, in order to be paid earlier than our payment terms require.
As of June 30, 2025 and December 31, 2024, $1.7 billion and $1.6 billion, respectively, of the Company's outstanding payment obligations were confirmed as valid within the Program by the financial institution and are reflected in Accounts payable in the Consolidated Balance Sheets. The amounts confirmed as valid for both periods are predominately associated with one supplier.
As of June 30, 2025, we have been informed by the financial institution that $763 million of the Company's outstanding payment obligations were voluntarily elected by suppliers to be sold to the financial institution under the Program.
Note 5 – Divestiture
On March 19, 2025, the Company completed the sale of our Medicare Advantage, Medicare Individual Stand-Alone Prescription Drug Plans, Medicare and Other Supplemental Benefits, and CareAllies® businesses (the "Disposal Group" or the "HCSC transaction"). The purchase price increased from $3.3 billion to $4.8 billion, subject to post-closing contractual adjustments, reflecting higher statutory surplus for the legal entities when conveyed to HCSC.
The Company recognized a gain of $37 million pre-tax ($112 million after-tax) during the three months ended March 31, 2025 within Gain (loss) on sale of businesses in the Consolidated Statements of Income. The Company received $4.2 billion cash proceeds at closing. We expect receipt of the remaining $0.6 billion in the fourth quarter of 2025 upon HCSC's collection of amounts due from the Centers for Medicare and Medicaid Services ("CMS").
The Company determined that the Disposal Group met the criteria to be classified as held for sale and aggregated and classified the assets and liabilities as held for sale in our Consolidated Balance Sheets as of December 31, 2024. The assets and liabilities held for sale as of December 31, 2024 were as follows:
| (In millions) | December 31, 2024 | |
|---|---|---|
| Cash and cash equivalents | $ | 1,339 |
| Investments | 1,444 | |
| Accounts receivable, net | 1,927 | |
| Other assets, including Goodwill (1) | 2,294 | |
| Total assets of businesses held for sale | 7,004 | |
| Insurance and contractholder liabilities | 1,579 | |
| All other liabilities | 831 | |
| Total liabilities of businesses held for sale | $ | 2,410 |
(1) Includes Goodwill of $94 million.
Integration and Transaction-Related Costs
In 2025 and 2024, the Company incurred transaction-related costs associated with the HCSC transaction. These costs incurred consisted primarily of certain projects to separate the Company's systems, products and services; fees for legal, advisory and other professional services; and certain employment-related costs. These costs were $74 million pre-tax ($56 million after-tax) for the three months ended and $290 million pre-tax ($220 million after-tax) for the six months ended June 30, 2025, compared with $63 million pre-tax ($47 million after-tax) for the three months ended and $100 million pre-tax ($76 million after-tax) for the six months ended June 30, 2024.
Note 6 – Earnings Per Share
Basic and diluted earnings per share were computed as follows:
| Three Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2025 | June 30, 2024 | |||||||||||
| (Shares in thousands, dollars in millions, except per share amounts) | Basic | Effect of<br>Dilution | Diluted | Basic | Effect of<br>Dilution | Diluted | ||||||
| Shareholders' net income | $ | 1,532 | $ | 1,532 | $ | 1,548 | $ | 1,548 | ||||
| Shares: | ||||||||||||
| Weighted average | 266,181 | 266,181 | 281,133 | 281,133 | ||||||||
| Common stock equivalents | 1,973 | 1,973 | 2,919 | 2,919 | ||||||||
| Total shares | 266,181 | 1,973 | 268,154 | 281,133 | 2,919 | 284,052 | ||||||
| Earnings per share | $ | 5.76 | $ | (0.05) | $ | 5.71 | $ | 5.51 | $ | (0.06) | $ | 5.45 |
| Six Months Ended | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| June 30, 2025 | June 30, 2024 | |||||||||||
| (Shares in thousands, dollars in millions, except per share amounts) | Basic | Effect of<br>Dilution | Diluted | Basic | Effect of<br>Dilution | Diluted | ||||||
| Shareholders' net income | $ | 2,855 | $ | 2,855 | $ | 1,271 | $ | 1,271 | ||||
| Shares: | ||||||||||||
| Weighted average | 268,511 | 268,511 | 283,799 | 283,799 | ||||||||
| Common stock equivalents | 2,029 | 2,029 | 3,085 | 3,085 | ||||||||
| Total shares | 268,511 | 2,029 | 270,540 | 283,799 | 3,085 | 286,884 | ||||||
| Earnings per share | $ | 10.63 | $ | (0.08) | $ | 10.55 | $ | 4.48 | $ | (0.05) | $ | 4.43 |
The following outstanding employee stock options were not included in the computation of diluted earnings per share because their effect was anti-dilutive:
| Three Months Ended June 30, | Six Months Ended June 30, | |||
|---|---|---|---|---|
| (In millions) | 2025 | 2024 | 2025 | 2024 |
| Anti-dilutive options | 1.5 | 0.8 | 1.9 | 1.2 |
The Company held approximately 137.4 million shares of common stock in treasury as of June 30, 2025, 128.7 million shares as of December 31, 2024 and 122.5 million shares as of June 30, 2024.
Note 7 – Debt
Short-Term and Long-Term Debt. During the six months ended June 30, 2025, the Company redeemed at par its $700 million 5.685% senior notes that were due March 2026 and repaid $900 million 3.250% senior notes that matured in April 2025. For more information regarding our short-term and long-term debt, see Note 7 of the Company's 2024 Form 10-K.
Revolving Credit Agreement. Our revolving credit agreement provides us with the ability to borrow amounts for general corporate purposes, including providing liquidity support if necessary under our commercial paper program discussed below. As of June 30, 2025, there was no outstanding balance under this revolving credit agreement.
In April 2025, the Company replaced its previous revolving credit agreements and entered into a $6.5 billion, five-year revolving credit and letter of credit agreement that will mature in April 2030, with an option to extend the maturity date for additional one-year periods, subject to consent of the banks (the "Credit Agreement"). The Company can borrow up to $6.5 billion under the Credit Agreement for general corporate purposes, with up to $500 million available for issuance of letters of credit.
The Credit Agreement includes an option to increase commitments up to $1.5 billion for a maximum total commitment of $8.0 billion. The Credit Agreement allows for borrowings at either a base rate, term Secured Overnight Financing Rate ("SOFR") or daily simple SOFR plus, in each case, an applicable margin based on the Company's senior unsecured credit ratings.
The Credit Agreement also contains customary covenants and restrictions, including a financial covenant that the Company's leverage ratio, as defined in the Credit Agreement, may not exceed 60%, subject to certain exceptions upon the consummation of an acquisition.
Commercial Paper. Under our commercial paper program, we may issue short-term, unsecured commercial paper notes privately placed on a discounted basis through certain broker-dealers at any time not to exceed an aggregate amount of $6.5 billion. Amounts available under the program may be borrowed, repaid and re-borrowed from time to time. The net proceeds of issuances have been and are expected to be used for general corporate purposes. The commercial paper program had approximately $1.2 billion outstanding as of June 30, 2025 and an average interest rate of 4.51%.
Debt Covenants. The Company was in compliance with its debt covenants as of June 30, 2025.
Interest Expense
Interest expense on long-term and short-term debt was $338 million for the three months ended and $700 million for the six months ended June 30, 2025, compared with $378 million for the three months ended and $747 million for the six months ended June 30, 2024.
Note 8 – Common and Preferred Stock
Dividends
The following table provides details of the Company's dividend payments:
| Record Date | Payment Date | Amount per Share | Total Amount Paid (in millions) |
|---|---|---|---|
| 2025 | |||
| March 5, 2025 | March 20, 2025 | $1.51 | $412 |
| June 3, 2025 | June 18, 2025 | $1.51 | $401 |
| 2024 | |||
| March 6, 2024 | March 21, 2024 | $1.40 | $401 |
| June 4, 2024 | June 20, 2024 | $1.40 | $392 |
On July 22, 2025, the Board of Directors declared the third quarter cash dividend of $1.51 per share of The Cigna Group common stock to be paid on September 18, 2025 to shareholders of record on September 4, 2025. The Company currently intends to pay regular quarterly dividends, with future declarations subject to approval by its Board of Directors and the Board of Director's determination that the declaration of dividends remains in the best interests of The Cigna Group and its shareholders. The decision of whether to pay future dividends and the amount of any such dividends will be based on the Company's financial position, results of operations, cash flows, capital requirements, the requirements of applicable law and any other factors the Board may deem relevant.
Note 9 – Insurance and Contractholder Liabilities
A.Account Balances – Insurance and Contractholder Liabilities
The Company's insurance and contractholder liabilities were comprised of the following:
| June 30, 2025 | December 31, 2024 | June 30, 2024 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In millions) | Current | Non-current | Total | Current | Non-current | Total | Total | |||||||
| Unpaid claims and claim expenses | ||||||||||||||
| Cigna Healthcare | $ | 4,577 | $ | 59 | $ | 4,636 | $ | 4,932 | $ | 86 | $ | 5,018 | $ | 5,202 |
| Other | 169 | 186 | 355 | 147 | 144 | 291 | 316 | |||||||
| Future policy benefits | ||||||||||||||
| Cigna Healthcare | 38 | 154 | 192 | 91 | 507 | 598 | 596 | |||||||
| Other Operations | 147 | 3,145 | 3,292 | 157 | 3,140 | 3,297 | 3,362 | |||||||
| Contractholder deposit funds | ||||||||||||||
| Cigna Healthcare | — | — | — | 9 | 115 | 124 | 135 | |||||||
| Other Operations | 360 | 5,828 | 6,188 | 366 | 5,958 | 6,324 | 6,381 | |||||||
| Market risk benefits | 27 | 740 | 767 | 25 | 760 | 785 | 865 | |||||||
| Unearned premiums | 697 | 45 | 742 | 753 | 31 | 784 | 765 | |||||||
| Total | 6,480 | 10,741 | 17,221 | 17,622 | ||||||||||
| Insurance and contractholder liabilities classified as liabilities of businesses held for sale (1) | (1,092) | (487) | (1,579) | (1,557) | ||||||||||
| Total insurance and contractholder liabilities | $ | 6,015 | $ | 10,157 | $ | 16,172 | $ | 5,388 | $ | 10,254 | $ | 15,642 | $ | 16,065 |
(1) Amounts classified as liabilities of businesses held for sale include $983 million of Unpaid claims, $408 million of Future policy benefits, $85 million of Unearned premiums and $103 million of Contractholder deposit funds as of December 31, 2024 and $900 million of Unpaid claims, $417 million of Future policy benefits, $129 million of Unearned premiums and $111 million of Contractholder deposit funds as of June 30, 2024.
Insurance and contractholder liabilities expected to be paid within one year are classified as current.
B.Unpaid Claims and Claim Expenses – Cigna Healthcare
This liability reflects estimates of the ultimate cost of claims that have been incurred but not reported, expected development on reported claims, claims that have been reported but not yet paid (reported claims in process), and other medical care expenses and services payable that are primarily comprised of accruals for incentives and other amounts payable to health care professionals and facilities.
The total of incurred but not reported liabilities plus expected development on reported claims and reported claims in process was $4.5 billion as of June 30, 2025 and $4.8 billion as of June 30, 2024. The decrease was driven by the HCSC transaction, partially offset by the change in stop loss reserves.
Activity, net of intercompany transactions, in the unpaid claims liability for the Cigna Healthcare segment was as follows:
| Six Months Ended June 30, | ||||
|---|---|---|---|---|
| (In millions) | 2025 (1) | 2024 (1) | ||
| Beginning balance | $ | 5,018 | $ | 5,092 |
| Less: Reinsurance and other amounts recoverable | 159 | 236 | ||
| Beginning balance, net | 4,859 | 4,856 | ||
| Incurred costs related to: | ||||
| Current year | 18,163 | 18,821 | ||
| Prior years | (297) | (284) | ||
| Total incurred | 17,866 | 18,537 | ||
| Paid costs related to: | ||||
| Current year | 13,019 | 14,397 | ||
| Prior years | 3,889 | 3,960 | ||
| Total paid | 16,908 | 18,357 | ||
| Less: Divestiture and other | 1,323 | — | ||
| Ending balance, net | 4,494 | 5,036 | ||
| Add: Reinsurance and other amounts recoverable | 142 | 166 | ||
| Ending balance | $ | 4,636 | $ | 5,202 |
(1) Includes unpaid claims amounts classified as liabilities of businesses held for sale prior to the completion of the HCSC transaction. As of December 31, 2024, June 30, 2024 and December 31, 2023, includes $983 million, $900 million and $823 million classified as liabilities of businesses held for sale, respectively.
Reinsurance and other amounts recoverable reflect amounts due from reinsurers and policyholders to cover incurred but not reported and pending claims of certain business for which the Company administers the plan benefits without any right of offset. See Note 10 to the Consolidated Financial Statements for additional information on reinsurance.
Variances in incurred costs related to prior years' unpaid claims and claim expenses that resulted from the differences between actual experience and the Company's key assumptions were as follows:
| Six Months Ended June 30, | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | |||||
| (Dollars in millions) | % (1) | % (2) | ||||
| Actual completion factors and other | 0.5 | % | 0.2 | % | ||
| Medical cost trend | 127 | 0.3 | 201 | 0.6 | ||
| Total favorable variance | 0.8 | % | 0.8 | % |
All values are in US Dollars.
(1)Percentage of current year incurred costs as reported for the year ended December 31, 2024.
(2)Percentage of current year incurred costs as reported for the year ended December 31, 2023.
Favorable prior year development in both years primarily reflects lower than expected utilization of medical services as compared to our assumptions.
C.Future Policy Benefits
Cigna Healthcare
Future policy benefits for the Cigna Healthcare segment were primarily related to the businesses divested to HCSC on March 19, 2025. Excluding the divestiture, changes in the future policy benefits for the six months ended June 30, 2025 and June 30, 2024 were not material.
Other Operations
The weighted average interest rates applied and duration for future policy benefits in Other Operations, consisting of annuity and life insurance products, were as follows:
| As of | ||||
|---|---|---|---|---|
| June 30, 2025 | June 30, 2024 | |||
| Interest accretion rate | 5.64 | % | 5.64 | % |
| Current discount rate | 5.27 | % | 5.38 | % |
| Weighted average duration | 10.6 years | 11.2 years |
Obligations for annuities represent discounted periodic benefits to be paid to an individual or groups of individuals over their remaining lives. Other Operations' traditional insurance contracts, which are in run-off, have no premium remaining to be collected; therefore, future policy benefit reserves represent the present value of expected future policy benefits, discounted using the current discount rate, and the remaining amortizable deferred profit liability.
Future policy benefits for Other Operations include deferred profit liability of $353 million as of June 30, 2025 and $372 million as of June 30, 2024. Future policy benefits excluding deferred profit liability were $2.9 billion as of both June 30, 2025 and December 31, 2024, $3.0 billion as of June 30, 2024, and $3.2 billion as of December 31, 2023. Undiscounted expected future policy benefits were $4.2 billion as of June 30, 2025 and $4.4 billion as of June 30, 2024. As of both June 30, 2025 and June 30, 2024, $0.9 billion of the future policy benefit reserve was recoverable through treaties with external reinsurers.
D.Contractholder Deposit Funds
Contractholder deposit fund liabilities within Other Operations were $6.2 billion as of June 30, 2025, $6.3 billion as of December 31, 2024, $6.4 billion as of June 30, 2024 and $6.5 billion as of December 31, 2023. Approximately 38% of the balance is reinsured externally. Activity in these liabilities is presented net of reinsurance in the Consolidated Statements of Cash Flows. Changes in contractholder deposit fund liabilities generally relates to withdrawals and benefit payments, partially offset by deposits and interest credited.
As of June 30, 2025, the weighted average crediting rate, net amount at risk and cash surrender value for contractholder deposit fund liabilities not effectively exited through reinsurance were 3.22%, $2.7 billion and $2.8 billion, respectively. The comparative amounts as of June 30, 2024 were 3.25%, $2.9 billion and $2.8 billion, respectively. More than 99% of the $3.9 billion liability as of June 30, 2025 and the $4.0 billion liability as of June 30, 2024 not reinsured externally is for contracts with guaranteed interest rates of 3% - 4%, and approximately $1.2 billion and $1.1 billion, respectively, represented contracts with policies at the guarantee. At these same period ends, $1.1 billion and $1.2 billion was 50 - 150 basis points ("bps") above the guarantee, and the remaining $1.6 billion as of June 30, 2025 and $1.7 billion as of June 30, 2024 represented contracts above the guarantee that pay the policyholder based on the greater of a guaranteed minimum cash value or the actual cash value. As of both June 30, 2025 and June 30, 2024, more than 90% of these contracts have actual cash values of at least 110% of the guaranteed cash value.
E.Market Risk Benefits
Liabilities for market risk benefits ("MRBs") consist of variable annuity reinsurance contracts in Other Operations. These liabilities arise under annuities and riders to annuities written by ceding companies that guarantee the benefit received at death and, for a subset of policies, also provide contractholders the option, within 30 days of a policy anniversary after the appropriate waiting period, to elect minimum income payments. The Company's capital market risk exposure on variable annuity reinsurance contracts arises when the reinsured guaranteed minimum benefit exceeds the contractholder's account value in the related underlying mutual funds at the time the insurance benefit is payable under the respective contract. The Company receives and pays premium periodically based on the terms of the reinsurance agreements.
Market risk benefits activity was as follows:
| Six Months Ended June 30, | ||||
|---|---|---|---|---|
| (In millions) | 2025 | 2024 | ||
| Balance, beginning of year | $ | 785 | $ | 1,003 |
| Balance, beginning of year, before the effect of nonperformance risk (own credit risk) | 838 | 1,085 | ||
| Changes due to expected run-off | (11) | (6) | ||
| Changes due to capital markets versus expected | (7) | (133) | ||
| Changes due to policyholder behavior versus expected | 3 | (17) | ||
| Balance, end of period, before the effect of changes in nonperformance risk (own credit risk) | 823 | 929 | ||
| Nonperformance risk (own credit risk), end of period | (56) | (64) | ||
| Balance, end of period | $ | 767 | $ | 865 |
| Reinsured market risk benefit, end of period | $ | 822 | $ | 927 |
The following table presents the net amount at risk and the average attained age of contractholders (weighted by exposure) for contracts assumed by the Company. The net amount at risk is the amount the Company would have to pay to contractholders if all deaths or annuitizations occurred as of the earliest possible date in accordance with the insurance contract. The Company should be reimbursed in full for these payments unless the Berkshire reinsurance limit is exceeded, as discussed further in Note 10 to the Consolidated Financial Statements.
| (Dollars in millions, excludes impact of reinsurance ceded) | June 30, 2025 | June 30, 2024 | ||
|---|---|---|---|---|
| Net amount at risk | $ | 1,236 | $ | 1,391 |
| Average attained age of contractholders (weighted by exposure) | 78.0 years | 77.8 years |
Note 10 – Reinsurance
The Company's insurance subsidiaries enter into agreements with other insurance companies to limit losses from large exposures and to permit recovery of a portion of incurred losses. Reinsurance is ceded primarily in acquisition and disposition transactions when the underwriting company is not being acquired. Reinsurance does not relieve the originating insurer of liability. Therefore, reinsured liabilities must continue to be reported along with the related reinsurance recoverables. The Company regularly evaluates the financial condition of its reinsurers and monitors concentrations of its credit risk.
The majority of the Company's reinsurance recoverables resulted from acquisition and disposition transactions in which the underwriting company was not acquired. The Company bears the risk of loss if its reinsurers and retrocessionaires do not meet or are unable to meet their reinsurance obligations to the Company. The Company reviews its reinsurance arrangements and establishes reserves against the recoverables primarily for expected credit losses.
The Company's reinsurance recoverables as of June 30, 2025 are presented at amount due by range of external credit rating and collateral level in the following table, with reinsurance recoverables that are market risk benefits separately presented at fair value:
| (In millions) | Fair Value of Collateral Contractually Required to Meet or Exceed Carrying Value of Recoverable | Collateral Provisions Exist That May Mitigate Risk of Credit Loss (1) | No Collateral | Total | ||||
|---|---|---|---|---|---|---|---|---|
| Ongoing operations | ||||||||
| A- equivalent and higher current ratings (2) | $ | — | $ | 6 | $ | 202 | $ | 208 |
| BBB- to BBB+ equivalent current credit ratings (2) | — | — | 65 | 65 | ||||
| Not rated | 90 | 5 | 3 | 98 | ||||
| Acquisition, disposition or run-off activities | ||||||||
| BBB+ equivalent and higher current ratings (2)(3) | 297 | 2,771 | 201 | 3,269 | ||||
| Not rated | — | 6 | 1 | 7 | ||||
| Total reinsurance recoverables before market risk benefits | $ | 387 | $ | 2,788 | $ | 472 | $ | 3,647 |
| Allowance for uncollectible reinsurance | (30) | |||||||
| Market risk benefits | 822 | |||||||
| Total reinsurance recoverables (4) | $ | 4,439 |
(1)Includes collateral provisions requiring the reinsurer to fully collateralize its obligation if its external credit rating is downgraded to a specified level.
(2)Certified by a nationally recognized statistical ratings organization ("NRSRO").
(3)Comprised of six reinsurers, of which 75% is held by two reinsurers, Lincoln National Life Insurance Company and Lincoln Life and Annuity Company of New York.
(4)Includes $142 million of current reinsurance recoverables that are reported in Other current assets.
The Company entered into an agreement with Berkshire to effectively exit the variable annuity reinsurance business via a reinsurance transaction in 2013. Variable annuity contracts are accounted for as assumed and ceded reinsurance and categorized as market risk benefits as discussed in Note 9 to the Consolidated Financial Statements. Berkshire reinsured 100% of the Company's future cash flows in this business, net of other reinsurance arrangements existing at that time. The reinsurance agreement is subject to an overall limit, with approximately $3.0 billion remaining as of June 30, 2025. As a result of the reinsurance transaction, amounts payable are offset by a corresponding reinsurance recoverable, provided the increased recoverable remains within the overall Berkshire limit. As of both June 30, 2025 and 2024, market risk benefits (shown in the table net of nonperformance risk as of June 30, 2025) were predominantly reinsured by Berkshire, which is rated AA+ by an NRSRO. As of June 30, 2025, approximately 100% of the Berkshire recoverable is secured by assets in a trust.
Note 11 – Investments
The following table summarizes the Company's investments by category and current or long-term classification:
| June 30, 2025 | December 31, 2024 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In millions) | Current | Long-Term | Total | Current | Long-Term | Total | ||||||
| Debt securities | $ | 443 | $ | 7,946 | $ | 8,389 | $ | 463 | $ | 8,960 | $ | 9,423 |
| Equity securities | 15 | 561 | 576 | 7 | 554 | 561 | ||||||
| Commercial mortgage loans | 105 | 1,206 | 1,311 | 108 | 1,243 | 1,351 | ||||||
| Policy loans | — | 1,117 | 1,117 | — | 1,156 | 1,156 | ||||||
| Other long-term investments | — | 4,832 | 4,832 | — | 4,576 | 4,576 | ||||||
| Short-term investments | 250 | — | 250 | 170 | — | 170 | ||||||
| Total | $ | 748 | $ | 16,489 | $ | 17,237 | ||||||
| Investments classified as assets of businesses held for sale (1) | (83) | (1,361) | (1,444) | |||||||||
| Investments per Consolidated Balance Sheets | $ | 813 | $ | 15,662 | $ | 16,475 | $ | 665 | $ | 15,128 | $ | 15,793 |
(1) Investments related to the HCSC transaction that were held for sale as of December 31, 2024. These investments were primarily comprised of debt securities.
A.Investment Portfolio
Debt Securities
The amortized cost and fair value by contractual maturity periods for debt securities were as follows as of June 30, 2025:
| (In millions) | Amortized<br>Cost | Fair<br>Value | ||
|---|---|---|---|---|
| Due in one year or less | $ | 620 | $ | 543 |
| Due after one year through five years | 3,587 | 3,556 | ||
| Due after five years through ten years | 2,280 | 2,203 | ||
| Due after ten years | 2,033 | 1,838 | ||
| Mortgage and other asset-backed securities | 277 | 249 | ||
| Total | $ | 8,797 | $ | 8,389 |
Actual maturities of these securities could differ from their contractual maturities used in the table above because issuers may have the right to call or prepay obligations, with or without penalties.
Gross unrealized appreciation (depreciation) on debt securities by type of issuer is shown below:
| (In millions) | Amortized<br>Cost | Allowance for Credit Loss | Unrealized<br>Appreciation | Unrealized<br>Depreciation | Fair<br>Value | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| June 30, 2025 | ||||||||||
| Federal government and agency | $ | 212 | $ | — | $ | 16 | $ | (4) | $ | 224 |
| State and local government | 24 | — | — | — | 24 | |||||
| Foreign government | 399 | — | 10 | (8) | 401 | |||||
| Corporate | 7,885 | (124) | 145 | (415) | 7,491 | |||||
| Mortgage and other asset-backed | 277 | — | 1 | (29) | 249 | |||||
| Total | $ | 8,797 | $ | (124) | $ | 172 | $ | (456) | $ | 8,389 |
| December 31, 2024 | ||||||||||
| Federal government and agency | $ | 276 | $ | — | $ | 14 | $ | (9) | $ | 281 |
| State and local government | 37 | — | 1 | (1) | 37 | |||||
| Foreign government | 350 | — | 5 | (11) | 344 | |||||
| Corporate | 9,091 | (111) | 102 | (659) | 8,423 | |||||
| Mortgage and other asset-backed | 371 | — | 1 | (34) | 338 | |||||
| Total | $ | 10,125 | $ | (111) | $ | 123 | $ | (714) | $ | 9,423 |
Review of Declines in Fair Value. Management reviews debt securities in an unrealized loss position to determine whether a credit loss allowance is needed based on criteria that include severity of decline; financial health and specific prospects of the issuer; and changes in the regulatory, economic or general market environment of the issuer's industry or geographic region.
The table below summarizes debt securities with a decline in fair value from amortized cost for which an allowance for credit losses has not been recorded (by investment grade and the length of time these securities have been in an unrealized loss position). Unrealized depreciation on these debt securities is primarily due to declines in fair value resulting from increasing interest rates since these securities were purchased.
| June 30, 2025 | December 31, 2024 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in millions) | Fair<br>Value | Amortized<br>Cost | Unrealized<br>Depreciation | Number<br>of Issues | Fair<br>Value | Amortized<br>Cost | Unrealized<br>Depreciation | Number<br>of Issues | ||||||
| One year or less | ||||||||||||||
| Investment grade | $ | 452 | $ | 456 | $ | (4) | 187 | $ | 1,203 | $ | 1,227 | $ | (24) | 545 |
| Below investment grade | 74 | 78 | (4) | 308 | 245 | 250 | (5) | 739 | ||||||
| More than one year | ||||||||||||||
| Investment grade | 3,505 | 3,924 | (419) | 984 | 4,687 | 5,319 | (632) | 1,297 | ||||||
| Below investment grade | 219 | 248 | (29) | 81 | 416 | 469 | (53) | 123 | ||||||
| Total | $ | 4,250 | $ | 4,706 | $ | (456) | 1,560 | $ | 6,551 | $ | 7,265 | $ | (714) | 2,704 |
Equity Securities
The following table provides the values of the Company's equity security investments:
| June 30, 2025 | December 31, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| (In millions) | Cost | Carrying Value | Cost | Carrying Value | ||||
| Equity securities with readily determinable fair values | $ | 639 | $ | 118 | $ | 635 | $ | 37 |
| Equity securities with no readily determinable fair value | 3,218 | 458 | 3,215 | 524 | ||||
| Total | $ | 3,857 | $ | 576 | $ | 3,850 | $ | 561 |
Commercial Mortgage Loans
Mortgage loans held by the Company are made exclusively to commercial borrowers and are diversified by property type, location and borrower. Loans are generally issued at fixed rates of interest and are secured by high-quality, primarily completed and substantially leased operating properties.
The Company regularly evaluates and monitors credit risk from the initial mortgage loan underwriting and throughout the investment holding period. The annual portfolio review performed in the second quarter of 2025 confirmed ongoing strong overall credit quality in line with the previous year's results. For more information on the Company's accounting policies and methodologies regarding these investments, see Note 11 in the Company's 2024 Form 10-K.
The following table summarizes the credit risk profile of the Company's commercial mortgage loan portfolio:
| (Dollars in millions) | June 30, 2025 | December 31, 2024 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Loan-to-Value Ratio | Carrying Value | Average Debt Service Coverage Ratio | Average Loan-to-Value Ratio | Carrying Value | Average Debt Service Coverage Ratio | Average Loan-to-Value Ratio | ||||
| Below 60% | $ | 422 | 2.02 | $ | 547 | 2.07 | ||||
| 60% to 79% | 704 | 1.77 | 595 | 1.83 | ||||||
| 80% to 100% | 185 | 0.83 | 209 | 0.51 | ||||||
| Total | $ | 1,311 | 1.69 | 70 | % | $ | 1,351 | 1.70 | 69 | % |
Other Long-Term Investments
Other long-term investments include investments in unconsolidated entities, including certain limited partnerships and limited liability companies holding real estate, securities or loans. These investments are carried at cost plus the Company's ownership percentage of reporting income or loss, based on the financial statements of the underlying investments that are generally reported at fair value. Income or loss from these investments is reported on a one-quarter lag due to the timing of when financial information is received from the general partner or manager of the investments.
Other long-term investments also include investment real estate carried at depreciated cost less any impairment write-downs to fair value when cash flow estimates indicate that the carrying value may not be recoverable. Additionally, statutory and other restricted deposits and foreign currency swaps carried at fair value are reported in the table below as Other. The following table provides the carrying value information for these investments:
| Carrying Value as of | ||||
|---|---|---|---|---|
| (In millions) | June 30, 2025 | December 31, 2024 | ||
| Real estate investments | $ | 1,866 | $ | 1,763 |
| Securities partnerships | 2,781 | 2,587 | ||
| Other | 185 | 226 | ||
| Total | $ | 4,832 | $ | 4,576 |
B.Derivative Financial Instruments
The Company uses derivative financial instruments to manage the characteristics of investment assets (such as duration, yield, currency and liquidity) to meet the varying demands of the related insurance and contractholder liabilities. The Company also uses derivative financial instruments to hedge the risk of changes in the net assets of certain of its foreign subsidiaries due to changes in foreign currency exchange rates and to hedge the interest rate risk of certain long-term debt.
As of June 30, 2025, the notional value of interest rate swap contracts decreased to $2.6 billion compared with $2.7 billion as of December 31, 2024. There were no other material changes to the Company's individual derivative hedging strategies during the three and six months ended June 30, 2025. Please refer to the Company's 2024 Form 10-K for further discussion of the types of derivative financial instruments and associated accounting policies. The effects of derivative financial instruments used in our individual hedging strategies were not material to the Consolidated Financial Statements as of June 30, 2025 and December 31, 2024. The gross fair values of our derivative financial instruments are presented in Note 12 to the Consolidated Financial Statements.
C.Investment Gains and Losses
Net investment gains (losses), before income taxes were $52 million and $50 million, respectively, for the three and six months ended June 30, 2025, versus $(48) million and $(1,884) million, respectively, for the three and six months ended June 30, 2024. Net investment results for the three and six months ended June 30, 2025 increased, reflecting investment gains related to a change in fair value of certain equity securities in the second quarter of 2025 and the absence of the impairment of equity securities recorded in the first quarter of 2024. These amounts exclude investment gains and losses attributed to the Company's separate accounts because those gains and losses generally accrue directly to separate account policyholders.
Note 12 – Fair Value Measurements
For a description of the policies, methods and assumptions that are used to estimate fair value and determine the fair value hierarchy for each class of financial instruments, see Note 12 in the Company's 2024 Form 10-K.
A.Financial Assets and Financial Liabilities Carried at Fair Value
The following table provides information about the Company's financial assets and liabilities carried at fair value. Further information regarding insurance assets and liabilities carried at fair value is provided in Note 9E to the Consolidated Financial Statements. Separate account assets are also recorded at fair value on the Company's Consolidated Balance Sheets and are reported separately in the Separate Accounts section below as gains and losses related to these assets generally accrue directly to contractholders.
| (In millions) | Quoted Prices in Active Markets for Identical Assets<br>(Level 1) | Significant Other Observable Inputs<br>(Level 2) | Significant Unobservable Inputs<br>(Level 3) | Total | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30,<br>2025 | December 31, 2024 | June 30,<br>2025 | December 31, 2024 | June 30,<br>2025 | December 31, 2024 | June 30,<br>2025 | December 31, 2024 | |||||||||
| Financial assets at fair value | ||||||||||||||||
| Debt securities | ||||||||||||||||
| Federal government and agency | $ | 105 | $ | 165 | $ | 119 | $ | 116 | $ | — | $ | — | $ | 224 | $ | 281 |
| State and local government | — | — | 24 | 37 | — | — | 24 | 37 | ||||||||
| Foreign government | — | — | 401 | 344 | — | — | 401 | 344 | ||||||||
| Corporate | — | — | 7,171 | 8,049 | 320 | 374 | 7,491 | 8,423 | ||||||||
| Mortgage and other asset-backed | — | — | 209 | 295 | 40 | 43 | 249 | 338 | ||||||||
| Total debt securities | 105 | 165 | 7,924 | 8,841 | 360 | 417 | 8,389 | 9,423 | ||||||||
| Equity securities (1) | 63 | 1 | 53 | 36 | 2 | — | 118 | 37 | ||||||||
| Short-term investments | — | — | 250 | 170 | — | — | 250 | 170 | ||||||||
| Derivative assets | — | — | 64 | 168 | — | — | 64 | 168 | ||||||||
| Financial liabilities at fair value | ||||||||||||||||
| Derivative liabilities | $ | — | $ | — | $ | 30 | $ | 1 | $ | — | $ | — | $ | 30 | $ | 1 |
(1)Excludes certain equity securities that have no readily determinable fair value.
Level 3 Financial Assets and Financial Liabilities
Certain inputs for instruments classified in Level 3 are unobservable (supported by little or no market activity) and significant to their resulting fair value measurement. Unobservable inputs reflect the Company's best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date. Additionally, as discussed in Note 9E in the Company's 2024 Form 10-K, the Company classifies variable annuity assets and liabilities in Level 3 of the fair value hierarchy.
Quantitative Information about Unobservable Inputs
The significant unobservable input used to value our corporate and government debt securities and mortgage and other asset-backed securities is an adjustment for liquidity. This adjustment is needed to reflect current market conditions and issuer circumstances when there is limited trading activity for the security.
The following table summarizes the fair value and significant unobservable inputs that were developed directly by the Company and used in pricing these debt securities. The range and weighted average basis point amounts for liquidity reflect the Company's best estimates of the unobservable adjustments a market participant would make to calculate these fair values. An increase in liquidity spread adjustments would result in a lower fair value measurement, while a decrease would result in a higher fair value measurement.
| Fair Value as of | Unobservable Adjustment Range (Weighted Average by Quantity) as of | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (Fair value in millions) | June 30,<br>2025 | December 31,<br>2024 | Unobservable Input<br><br>June 30, 2025 | June 30,<br>2025 | December 31,<br>2024 | ||||
| Debt securities | |||||||||
| Corporate | $ | 319 | $ | 373 | Liquidity | 60 - 2020 (360) | bps | 60 - 1520 (370) | bps |
| Mortgage and other asset-backed securities | 40 | 43 | Liquidity | 110 - 660 (370) | bps | 100 - 550 (280) | bps | ||
| Other debt securities | 1 | 1 | |||||||
| Total Level 3 debt securities | $ | 360 | $ | 417 |
Changes in Level 3 Financial Assets and Financial Liabilities Carried at Fair Value
The following table summarizes the changes in financial assets and financial liabilities classified in Level 3. Gains and losses reported in the table may include net changes in fair value that are attributable to both observable and unobservable inputs.
| Three Months Ended<br><br>June 30, | Six Months Ended<br>June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| (In millions) | 2025 | 2024 | 2025 | 2024 | ||||
| Debt and Equity Securities | ||||||||
| Beginning balance | $ | 373 | $ | 422 | $ | 417 | $ | 447 |
| Losses included in Shareholders' net income | (4) | (40) | (14) | (61) | ||||
| Gains (losses) included in Other comprehensive loss | 3 | (2) | 10 | (5) | ||||
| Purchases, sales and settlements | ||||||||
| Purchases | 25 | 11 | 27 | 11 | ||||
| Sales | (2) | — | (2) | — | ||||
| Settlements | (49) | (1) | (80) | (15) | ||||
| Total purchases, sales and settlements | (26) | 10 | (55) | (4) | ||||
| Transfers into / (out of) Level 3 | ||||||||
| Transfers into Level 3 | 31 | 15 | 49 | 31 | ||||
| Transfers out of Level 3 | (15) | (8) | (45) | (11) | ||||
| Total transfers into / (out of) Level 3 | 16 | 7 | 4 | 20 | ||||
| Ending balance | $ | 362 | $ | 397 | $ | 362 | $ | 397 |
| Total losses included in Shareholders' net income attributable to instruments held at the reporting date | $ | (4) | $ | (41) | $ | (17) | $ | (61) |
| Change in unrealized gain or (loss) included in Other comprehensive loss for assets held at the end of the reporting period | $ | 4 | $ | (2) | $ | 7 | $ | (6) |
Total gains and losses included in Shareholders' net income in the tables above are reflected in the Consolidated Statements of Income as Net investment gains (losses) and Net investment income. Gains and losses included in Other comprehensive loss, net of tax, in the
tables above are reflected in Net unrealized appreciation on securities and derivatives in the Consolidated Statements of Comprehensive Income.
Transfers into or out of the Level 3 category occur when unobservable inputs, such as the Company's best estimate of what a market participant would use to determine a current transaction price, become more or less significant to the fair value measurement. Market activity typically decreases during periods of economic uncertainty, and this decrease in activity reduces the availability of market observable data. As a result, the level of unobservable judgment that must be applied to the pricing of certain instruments increases and is typically observed through the widening of liquidity spreads. Transfers between Level 2 and Level 3 during 2025 and 2024 primarily reflected changes in liquidity estimates for certain private placement issuers across several sectors. See discussion under Quantitative Information about Unobservable Inputs above for more information.
Separate Accounts
The investment income and fair value gains and losses of Separate account assets generally accrue directly to the contractholders and, together with their deposits and withdrawals, are excluded from the Company's Consolidated Statements of Income and Cash Flows. The separate account activity for the six months ended June 30, 2025 and 2024 was primarily driven by changes in the market values of the underlying separate account investments.
Fair values of Separate account assets were as follows:
| Quoted Prices in Active Markets for Identical Assets<br>(Level 1) | Significant Other Observable Inputs<br>(Level 2) | Significant Unobservable Inputs<br>(Level 3) | Total | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In millions) | June 30,<br>2025 | December 31,<br>2024 | June 30,<br>2025 | December 31,<br>2024 | June 30,<br>2025 | December 31,<br>2024 | June 30,<br>2025 | December 31,<br>2024 | ||||||||
| Guaranteed separate accounts (See Note 16) | $ | 240 | $ | 231 | $ | 330 | $ | 345 | $ | — | $ | — | $ | 570 | $ | 576 |
| Non-guaranteed separate accounts (1) | 273 | 267 | 5,651 | 5,575 | 238 | 228 | 6,162 | 6,070 | ||||||||
| Subtotal | $ | 513 | $ | 498 | $ | 5,981 | $ | 5,920 | $ | 238 | $ | 228 | 6,732 | 6,646 | ||
| Non-guaranteed separate accounts priced at net asset value as a practical expedient (1) | 641 | 632 | ||||||||||||||
| Total | $ | 7,373 | $ | 7,278 |
(1)Non-guaranteed separate accounts include $3.8 billion as of both June 30, 2025 and December 31, 2024 in assets supporting the Company's pension plans, including $0.2 billion classified in Level 3 as of both June 30, 2025 and December 31, 2024. Non-guaranteed separate accounts are primarily comprised of securities partnerships, real estate and real estate funds.
Separate account assets classified in Level 3 primarily support the Company's pension plans and include certain newly issued, privately placed, complex or illiquid securities that are priced using methods discussed above, as well as commercial mortgage loans. Activity, including transfers into and out of Level 3, was not material for the three and six months ended June 30, 2025 or 2024.
B.Assets and Liabilities Measured at Fair Value under Certain Conditions
Some financial assets and liabilities are not carried at fair value, such as commercial mortgage loans that are carried at unpaid principal, investment real estate that is carried at depreciated cost and equity securities with no readily determinable fair value when there are no observable market transactions. However, these financial assets and liabilities may be measured using fair value under certain conditions, such as when investments become impaired and are written down to their fair value, or when there are observable price changes from orderly market transactions of equity securities that otherwise had no readily determinable fair value.
For the six months ended June 30, 2025, impairments recognized requiring the assets and liabilities described above to be measured at fair value were not material. For the six months ended June 30, 2024, we determined our investment in VillageMD was impaired and recorded a $1.8 billion loss in Net investment gains (losses) in the Company's Consolidated Statements of Income. Observable price changes for equity securities with no readily determinable fair value were not material for the six months ended June 30, 2025 or June 30, 2024.
C.Fair Value Disclosures for Financial Instruments Not Carried at Fair Value
The following table includes the Company's financial instruments not recorded at fair value but for which fair value disclosure is required. In addition to universal life products and finance leases, financial instruments that are carried in the Company's Consolidated Balance Sheets at amounts that approximate fair value are excluded from the following table.
| Classification in Fair Value Hierarchy | June 30, 2025 | December 31, 2024 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (In millions) | Fair Value | Carrying Value | Fair Value | Carrying Value | |||||||||
| Commercial mortgage loans | Level 3 | $ | 1,256 | $ | 1,311 | $ | 1,256 | $ | 1,351 | ||||
| Long-term debt, including current maturities, excluding finance leases | Level 2 | $ | 27,419 | $ | 29,503 | $ | 28,392 | $ | 31,008 |
Note 13 – Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss) ("AOCI") includes net unrealized appreciation on securities and derivatives, change in discount rate and instrument-specific credit risk for certain long-duration insurance contractholder liabilities (see Note 9 to the Consolidated Financial Statements), foreign currency translation, and the net postretirement benefits liability adjustment. AOCI includes the Company's share from unconsolidated entities reported on the equity method. Generally, tax effects in AOCI are established at the currently enacted tax rate and reclassified to Shareholders' net income in the same period that the related pre-tax AOCI reclassifications are recognized.
Shareholders' other comprehensive loss, net of tax, for the three and six months ended June 30, 2025 and June 30, 2024 is primarily attributable to the change in discount rates for certain long-duration liabilities and unrealized changes in the market values of securities and derivatives, including the impacts from unconsolidated entities reported on the equity method.
Changes in the components of AOCI were as follows:
| Three Months Ended<br><br>June 30, | Six Months Ended<br>June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| (In millions) | 2025 | 2024 | 2025 | 2024 | ||||
| Securities and derivatives | ||||||||
| Beginning balance | $ | 732 | $ | 292 | $ | 832 | $ | 171 |
| Unrealized appreciation on securities and derivatives, before reclassification, net of tax (expense) of $(93), $(29), $(44) and $(68), respectively | 303 | 77 | 169 | 181 | ||||
| Amounts reclassified to Shareholders' net income, net of tax (benefit) of $(4), $(8), $(13) and $(13), respectively | 18 | 31 | 52 | 48 | ||||
| Other comprehensive income, net of tax | 321 | 108 | 221 | 229 | ||||
| Ending balance | $ | 1,053 | $ | 400 | $ | 1,053 | $ | 400 |
| Net long-duration insurance and contractholder liabilities measurement adjustments | ||||||||
| Beginning balance | $ | (2,206) | $ | (1,531) | $ | (2,038) | $ | (971) |
| Net current period change in discount rate for certain long-duration liabilities, before reclassification, net of tax benefit of $205, $76, $238 and $262, respectively | (615) | (212) | (723) | (758) | ||||
| Amounts reclassified to Shareholders' net income, net of tax expense of $—, $—, $16 and $—, respectively | — | — | (56) | — | ||||
| Net current period change in discount rate for certain long-duration liabilities, net of tax benefit of $205, $76, $254 and $262, respectively | (615) | (212) | (779) | (758) | ||||
| Net current period change in instrument-specific credit risk for market risk benefits, net of tax (expense) benefit of $(2), $—, $(1) and $4, respectively | 6 | — | 2 | (14) | ||||
| Other comprehensive (loss), net of tax | (609) | (212) | (777) | (772) | ||||
| Ending balance | $ | (2,815) | $ | (1,743) | $ | (2,815) | $ | (1,743) |
| Translation of foreign currencies | ||||||||
| Beginning balance | $ | (185) | $ | (175) | $ | (198) | $ | (149) |
| Net translation of foreign currencies, before reclassification, net of tax (expense) of $(2), $(1), $(8) and $(3), respectively | 65 | (5) | 78 | (31) | ||||
| Ending balance | $ | (120) | $ | (180) | $ | (120) | $ | (180) |
| Postretirement benefits liability | ||||||||
| Beginning balance | $ | (931) | $ | (910) | $ | (937) | $ | (915) |
| Amounts reclassified to Shareholders' net income, net of tax (benefit) of $(2), $—, $(4) and $(3), respectively | 6 | 7 | 12 | 12 | ||||
| Net change due to valuation update, before reclassification, net of tax benefit of $3, $4, $3 and $4, respectively | (9) | (16) | (9) | (16) | ||||
| Other comprehensive (loss) income, net of tax | (3) | (9) | 3 | (4) | ||||
| Ending balance | $ | (934) | $ | (919) | $ | (934) | $ | (919) |
| Total Accumulated other comprehensive loss | ||||||||
| Beginning balance | $ | (2,590) | $ | (2,324) | $ | (2,341) | $ | (1,864) |
| Shareholders' other comprehensive loss, net of tax benefit of $105, $42, $187 and $183, respectively | (226) | (118) | (475) | (578) | ||||
| Ending balance | $ | (2,816) | $ | (2,442) | $ | (2,816) | $ | (2,442) |
Note 14 – Strategic Optimization Program
In the first quarter of 2025, the Company commenced an enterprise-wide initiative to evolve our business and deliver a more efficient and improved experience for our patients, providers and customers. This program is expected to continue through December 2026 and include severance and other employee costs, asset impairments and accelerated asset amortization, and the operating results of certain small non-strategic businesses that we plan to discontinue. As we continue to evaluate additional opportunities to improve the overall efficiency and effectiveness of our operations, we anticipate future charges.
During the three and six months ended June 30, 2025, we reported total costs of $129 million, pre-tax ($98 million, after-tax) and $344 million, pre-tax ($261 million, after-tax), respectively, associated with this initiative. During the three months ended June 30, 2025, the total costs included a charge in Selling, general and administrative ("SG&A") expenses of $88 million, pre-tax, that was primarily comprised of asset impairments. During the six months ended June 30, 2025, the total costs included a charge in SG&A expenses of $286 million, pre-tax, that was primarily associated with employee severance. The remainder for both periods reflects the operating results of certain non-strategic businesses. We expect substantially all of the accrued liability to be paid by the end of 2025. See Note 17 to the Consolidated Financial Statements for further details of the Strategic Optimization Program impact by segment.
The following table summarizes a roll forward of the accrued liability recorded in Accrued expenses and other liabilities during the six months ended June 30, 2025:
| (In millions) | ||
|---|---|---|
| Balance, December 31, 2024 | $ | — |
| 2025 charges | 194 | |
| 2025 payments | (78) | |
| Balance, June 30, 2025 | $ | 116 |
Note 15 – Income Taxes
Income Tax Expense
The 19.2% effective tax rate for the three months ended June 30, 2025 was higher than the 18.1% rate for the three months ended June 30, 2024. The increase was primarily driven by the absence of tax benefits recorded in 2024 related to the release of tax reserves following favorable state audit resolutions, partially offset by the favorable impact of foreign operations. The 17.1% effective tax rate for the six months ended June 30, 2025 was lower than 31.5% rate for the six months ended June 30, 2024. The decrease was primarily due to the absence of a valuation allowance related to the impairment of equity securities in 2024, partially offset by the absence of tax benefits recorded in 2024 related to the release of tax reserves following favorable state audit resolutions and the impact related to the HCSC transaction.
As of June 30, 2025, we had approximately $847 million in deferred tax assets ("DTAs") associated with the impairment of equity securities as well as unrealized investment losses. A valuation allowance of $636 million, of which $422 million was established in the six months ended June 30, 2024, drove the higher effective tax rate and was almost entirely related to the impairment of equity securities discussed in Note 11 to the Consolidated Financial Statements. We have determined that a valuation allowance against the remaining DTAs is not currently required based on the Company's loss carryback capacity and ability and intent to hold certain securities until recovery. We continue to monitor and evaluate the need for any additional valuation allowance.
Note 16 – Contingencies and Other Matters
The Company, through its subsidiaries, is contingently liable for various guarantees provided in the ordinary course of business.
A.Financial Guarantees: Retiree and Life Insurance Benefits
The Company guarantees that separate account assets will be sufficient to pay certain life insurance or retiree benefits. For the majority of these benefits, the sponsoring employers are primarily responsible for ensuring that assets are sufficient to pay these benefits and are required to maintain assets that exceed a certain percentage of benefit obligations. If employers fail to do so, the Company or an affiliate of the buyer of the retirement benefits business has the right to redirect the management of the related assets to provide for benefit payments. As of June 30, 2025, employers maintained assets that generally exceeded the benefit obligations under these arrangements of approximately $400 million. An additional liability is established if management believes that the Company will be required to make payments under the guarantees; there were no additional liabilities required for these guarantees, net of reinsurance, as of June 30, 2025. Separate account assets supporting these guarantees are classified in Levels 1 and 2 of the GAAP fair value hierarchy.
The Company does not expect that these financial guarantees will have a material effect on the Company's consolidated results of operations, liquidity or financial condition.
B.Certain Other Guarantees
The Company had indemnification obligations as of June 30, 2025 in connection with acquisition and disposition transactions. These indemnification obligations are triggered by the breach of representations or covenants provided by the Company, such as representations for the presentation of financial statements, filing of tax returns, compliance with laws or regulations, or identification of outstanding litigation. These obligations are typically subject to various time limitations, defined by the contract or by operation of law, such as statutes of limitation. In some cases, the maximum potential amount due is subject to contractual limitations based on a stated dollar amount or a percentage of the transaction purchase price, while in other cases limitations are not specified or applicable. The Company does not believe that it is possible to determine the maximum potential amount due under these obligations because not all amounts due under these indemnification obligations are subject to limitation. There were no recorded liabilities for these indemnification obligations as of June 30, 2025.
C.Guaranty Fund Assessments
The Company operates in a regulatory environment that may require its participation in assessments under state insurance guaranty association laws. The Company's exposure to assessments for certain obligations of insolvent insurance companies to policyholders and claimants is based on its share of business written in the relevant jurisdictions. There were no material charges or credits resulting from existing or new guaranty fund assessments for the six months ended June 30, 2025.
D.Legal and Regulatory Matters
The Company is routinely involved in numerous claims, lawsuits, regulatory inquiries and audits, government investigations, including under the federal False Claims Act and state false claims acts initiated by a government investigating body or by a qui tam relator's filing of a complaint under court seal, and other legal matters arising, for the most part, in the ordinary course of managing a global health services business. Additionally, the Company has received and is cooperating with subpoenas or similar processes from various governmental agencies requesting information, all arising in the normal course of its business. Disputed tax matters arising from audits by the Internal Revenue Service or other state and foreign jurisdictions, including those resulting in litigation, are accounted for under GAAP guidance for uncertain tax positions.
Note 17 – Segment Information
See Note 1 to the Consolidated Financial Statements for a description of our segments. A description of our basis for reporting segment operating results is outlined below. Intersegment revenues primarily reflect pharmacy and care services transactions between the Evernorth Health Services and Cigna Healthcare segments. The Chairman and Chief Executive Officer is the chief operating decision maker ("CODM") responsible for making decisions about resources to be allocated to the segment and assessing its performance.
The Company uses "pre-tax adjusted income (loss) from operations" and "adjusted revenues" as its principal financial measures of segment operating performance because management, including the CODM, believes these metrics reflect the underlying results of business operations and facilitate analysis of trends in underlying revenue, expenses and profitability to enable resource allocation decisions. We define pre-tax adjusted income (loss) from operations as income (loss) before income taxes excluding pre-tax income (loss) attributable to noncontrolling interests, net investment gains/losses, amortization of acquired intangible assets and special items. The Cigna Group's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting are also excluded. Special items are matters that management, including the CODM, believes are not representative of the underlying results of operations due to their nature or size. Adjusted income (loss) from operations is measured on an after-tax basis for consolidated results and on a pre-tax basis for segment results.
The Company defines adjusted revenues as total revenues excluding the following adjustments: special items and The Cigna Group's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting. Special items are matters that management, including the CODM, believes are not representative of the underlying results of operations due to their nature or size. We exclude these items from this measure because management, including the CODM, believes they are not indicative of past or future underlying performance of the business.
The Company does not report total assets by segment because this is not a metric used by the CODM to allocate resources or evaluate segment performance.
The following table presents the special items charges (benefits) recorded by the Company, as well as the respective financial statement line items impacted:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| (In millions) | Pre-tax | After-tax | Pre-tax | After-tax | Pre-tax | After-tax | Pre-tax | After-tax | ||||||||
| Strategic optimization program (largely Selling, general and administrative expenses) | 129 | 98 | — | — | 344 | 261 | — | — | ||||||||
| Integration and transaction-related costs (Selling, general and administrative expenses) | $ | 74 | $ | 56 | $ | 63 | $ | 47 | $ | 290 | $ | 220 | $ | 100 | $ | 76 |
| (Gain) loss on sale of businesses | — | — | — | — | (41) | (115) | 19 | (43) | ||||||||
| Deferred tax expenses, net (Income taxes, less amount attributable to noncontrolling interests) | — | 17 | — | 17 | — | 34 | — | 34 | ||||||||
| Total impact from special items | $ | 203 | $ | 171 | $ | 63 | $ | 64 | $ | 593 | $ | 400 | $ | 119 | $ | 67 |
Summarized segment financial information was as follows:
| (In millions) | Evernorth Health Services | Cigna Healthcare | Other Operations | Corporate and Eliminations | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Three months ended June 30, 2025 | ||||||||||
| Revenues from external customers | $ | 57,486 | $ | 9,358 | $ | 98 | $ | — | $ | 66,942 |
| Intersegment revenues | 308 | 1,313 | 13 | (1,634) | ||||||
| Net investment income | 31 | 127 | 73 | 5 | 236 | |||||
| Total revenues | 57,825 | 10,798 | 184 | (1,629) | 67,178 | |||||
| Net investment results from certain equity method investments | — | (44) | — | — | (44) | |||||
| Adjusted revenues | $ | 57,825 | $ | 10,754 | $ | 184 | $ | (1,629) | $ | 67,134 |
| Pharmacy and other service costs | 54,939 | — | ||||||||
| Medical costs | — | 7,482 | ||||||||
| Selling, general and administrative expenses excluding special items | 1,074 | 2,180 | ||||||||
| Other segment items (1) | ||||||||||
| Interest (expense) and other | 1 | 2 | ||||||||
| Less income attributable to noncontrolling interests | 117 | — | ||||||||
| Pre-tax adjusted income (loss) from operations | 1,696 | 1,094 | 25 | (382) | 2,433 | |||||
| Income (loss) before income taxes | $ | 1,430 | $ | 1,098 | $ | (20) | $ | (487) | $ | 2,021 |
| Pre-tax adjustments to reconcile to adjusted income from operations | ||||||||||
| (Income) attributable to noncontrolling interests | (117) | — | — | — | (117) | |||||
| Net investment (gains) losses (2) | (80) | (20) | 4 | — | (96) | |||||
| Amortization of acquired intangible assets | 416 | 6 | — | — | 422 | |||||
| Special items | ||||||||||
| Strategic optimization program | 47 | 10 | 41 | 31 | 129 | |||||
| Integration and transaction-related costs | — | — | — | 74 | 74 | |||||
| Pre-tax adjusted income (loss) from operations | $ | 1,696 | $ | 1,094 | $ | 25 | $ | (382) | $ | 2,433 |
| Other segment information | ||||||||||
| Depreciation and amortization | 587 | 81 | 9 | 5 | 682 |
(1) Other segment items represent the difference between segment adjusted revenues less significant segment expenses and pre-tax adjusted income (loss) from operations, and they do not represent significant segment items relative to the CODM's review and oversight.
(2) Includes Net investment gains/losses as presented in our Consolidated Statements of Income, as well as the Company's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting, which are presented within Fees and other revenues in our Consolidated Statements of Income.
| (In millions) | Evernorth Health Services | Cigna Healthcare | Other Operations | Corporate and Eliminations | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Three months ended June 30, 2024 | ||||||||||
| Revenues from external customers | $ | 48,251 | $ | 11,821 | $ | 130 | $ | — | $ | 60,202 |
| Intersegment revenues | 1,232 | 1,203 | 20 | (2,455) | ||||||
| Net investment income | 65 | 172 | 77 | 7 | 321 | |||||
| Total revenues | 49,548 | 13,196 | 227 | (2,448) | 60,523 | |||||
| Net investment results from certain equity method investments | — | (53) | — | — | (53) | |||||
| Adjusted revenues | $ | 49,548 | $ | 13,143 | $ | 227 | $ | (2,448) | $ | 60,470 |
| Pharmacy and other service costs | 46,852 | — | ||||||||
| Medical costs | — | 9,312 | ||||||||
| Selling, general and administrative expenses excluding special items | 980 | 2,629 | ||||||||
| Other segment items (1) | ||||||||||
| Interest (expense) and other | (2) | 2 | ||||||||
| Less income attributable to noncontrolling interests | 95 | — | ||||||||
| Pre-tax adjusted income (loss) from operations | $ | 1,619 | $ | 1,204 | $ | (16) | $ | (435) | $ | 2,372 |
| Income (loss) before income taxes | $ | 1,299 | $ | 1,205 | $ | (17) | $ | (498) | $ | 1,989 |
| Pre-tax adjustments to reconcile to adjusted income from operations | ||||||||||
| (Income) attributable to noncontrolling interests | (95) | — | — | — | (95) | |||||
| Net investment (gains) losses (2) | (1) | (5) | 1 | — | (5) | |||||
| Amortization of acquired intangible assets | 416 | 4 | — | — | 420 | |||||
| Special items | ||||||||||
| Integration and transaction-related costs | — | — | — | 63 | 63 | |||||
| Pre-tax adjusted income (loss) from operations | $ | 1,619 | $ | 1,204 | $ | (16) | $ | (435) | $ | 2,372 |
| Other segment information | ||||||||||
| Depreciation and amortization | $ | 614 | $ | 113 | $ | 2 | $ | 9 | $ | 738 |
(1) Other segment items represent the difference between segment adjusted revenues less significant segment expenses and pre-tax adjusted income (loss) from operations, and they do not represent significant segment items relative to the CODM's review and oversight.
(2) Includes Net investment gains/losses as presented in our Consolidated Statements of Income, as well as the Company's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting, which are presented within Fees and other revenues in our Consolidated Statements of Income.
| (In millions) | Evernorth Health Services | Cigna Healthcare | Other Operations | Corporate and Eliminations | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Six months ended June 30, 2025 | ||||||||||
| Revenues from external customers | $ | 109,488 | $ | 22,526 | $ | 192 | $ | — | $ | 132,206 |
| Intersegment revenues | 1,956 | 2,544 | 25 | (4,525) | ||||||
| Net investment income | 62 | 260 | 142 | 10 | 474 | |||||
| Total revenues | 111,506 | 25,330 | 359 | (4,515) | 132,680 | |||||
| Net investment results from certain equity method investments | — | (94) | — | — | (94) | |||||
| Adjusted revenues | $ | 111,506 | $ | 25,236 | $ | 359 | $ | (4,515) | $ | 132,586 |
| Pharmacy and other service costs | 106,060 | — | ||||||||
| Medical costs | — | 17,867 | ||||||||
| Selling, general and administrative expenses | 2,098 | 4,992 | ||||||||
| Other segment items (1) | ||||||||||
| Interest (expense) and other | 1 | 4 | ||||||||
| Less: Income attributable to noncontrolling interests | 219 | — | ||||||||
| Pre-tax adjusted income (loss) from operations | 3,130 | 2,381 | 25 | (793) | 4,743 | |||||
| Income (loss) before income taxes | $ | 2,538 | $ | 2,462 | $ | (40) | $ | (1,291) | $ | 3,669 |
| Pre-tax adjustments to reconcile to adjusted income from operations | ||||||||||
| (Income) attributable to noncontrolling interests | (219) | — | — | — | (219) | |||||
| Net investment (gains) losses (2) | (84) | (67) | 7 | — | (144) | |||||
| Amortization of acquired intangible assets | 831 | 13 | — | — | 844 | |||||
| Special items | ||||||||||
| Integration and transaction-related costs | — | — | — | 290 | 290 | |||||
| Strategic optimization program | 68 | 10 | 58 | 208 | 344 | |||||
| (Gain) on sale of businesses | (4) | (37) | — | — | (41) | |||||
| Pre-tax adjusted income (loss) from operations | $ | 3,130 | $ | 2,381 | $ | 25 | $ | (793) | $ | 4,743 |
| Other segment information | ||||||||||
| Depreciation and amortization | $ | 1,171 | $ | 164 | $ | 11 | $ | 10 | $ | 1,356 |
(1)Other segment items represent the difference between segment adjusted revenues less significant segment expenses and pre-tax adjusted income (loss) from operations, and they do not represent significant segment items relative to the CODM's review and oversight.
(2)Includes Net investment gains/losses as presented in our Consolidated Statements of Income, as well as the Company's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting, which are presented within Fees and other revenues in our Consolidated Statements of Income.
| (In millions) | Evernorth Health Services | Cigna Healthcare | Other Operations | Corporate and Eliminations | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Six months ended June 30, 2024 | ||||||||||
| Revenues from external customers | $ | 93,137 | $ | 23,833 | $ | 196 | $ | 1 | $ | 117,167 |
| Intersegment revenues | 2,513 | 2,327 | 45 | (4,885) | ||||||
| Net investment income | 124 | 321 | 152 | 14 | 611 | |||||
| Total revenues | 95,774 | 26,481 | 393 | (4,870) | 117,778 | |||||
| Net investment results from certain equity method investments | — | (61) | — | — | (61) | |||||
| Adjusted revenues | $ | 95,774 | $ | 26,420 | $ | 393 | $ | (4,870) | $ | 117,717 |
| Pharmacy and other service costs | 90,690 | — | ||||||||
| Medical costs | — | 18,531 | ||||||||
| Selling, general and administrative expenses | 1,931 | 5,349 | ||||||||
| Other segment items (1) | ||||||||||
| Interest (expense) and other | (2) | 4 | ||||||||
| Less: income attributable to noncontrolling interests | 172 | — | ||||||||
| Pre-tax adjusted income (loss) from operations | 2,979 | 2,544 | 2 | (844) | 4,681 | |||||
| Income (loss) before income taxes | $ | 863 | $ | 2,148 | $ | 1 | $ | (944) | $ | 2,068 |
| Pre-tax adjustments to reconcile to adjusted income from operations | ||||||||||
| (Income) attributable to noncontrolling interests | (172) | — | — | — | (172) | |||||
| Net investment losses (2) | 1,455 | 367 | 1 | — | 1,823 | |||||
| Amortization of acquired intangible assets | 833 | 10 | — | — | 843 | |||||
| Special items | ||||||||||
| Integration and transaction-related costs | — | — | — | 100 | 100 | |||||
| Loss on sale of businesses | — | 19 | — | — | 19 | |||||
| Pre-tax adjusted income (loss) from operations | $ | 2,979 | $ | 2,544 | $ | 2 | $ | (844) | $ | 4,681 |
| Other segment information | ||||||||||
| Depreciation and amortization | $ | 1,220 | $ | 237 | $ | 3 | $ | 19 | $ | 1,479 |
(1)Other segment items represent the difference between segment adjusted revenues less significant segment expenses and pre-tax adjusted income (loss) from operations, and they do not represent significant segment items relative to the CODM's review and oversight.
(2)Includes Net investment gains/losses as presented in our Consolidated Statements of Income, as well as the Company's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting, which are presented within Fees and other revenues in our Consolidated Statements of Income.
Revenue from external customers includes Pharmacy revenues, Premiums and Fees and other revenues. The following table presents these revenues by product, premium and service type:
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||
|---|---|---|---|---|---|---|---|---|
| (In millions) | 2025 | 2024 | 2025 | 2024 | ||||
| Products (Pharmacy revenues) (ASC 606) | ||||||||
| Network revenues | $ | 30,582 | $ | 25,276 | $ | 58,794 | $ | 49,442 |
| Home delivery and specialty revenues | 19,974 | 18,017 | 38,911 | 34,475 | ||||
| Other revenues | 3,433 | 2,897 | 6,510 | 5,443 | ||||
| Total Evernorth Health Services | 53,989 | 46,190 | 104,215 | 89,360 | ||||
| Other Operations | 14 | 16 | 27 | 33 | ||||
| Corporate and eliminations | (354) | (1,105) | (1,960) | (2,256) | ||||
| Total Pharmacy revenues | 53,649 | 45,101 | 102,282 | 87,137 | ||||
| Insurance premiums (ASC 944) | ||||||||
| Cigna Healthcare | ||||||||
| U.S. Healthcare | ||||||||
| Employer insured | 4,684 | 4,350 | 9,372 | 8,743 | ||||
| Medicare Advantage | — | 2,207 | 2,363 | 4,494 | ||||
| Stop loss | 1,879 | 1,665 | 3,747 | 3,333 | ||||
| Individual and Family Plans | 941 | 975 | 1,800 | 2,015 | ||||
| Other | 462 | 1,220 | 2,334 | 2,478 | ||||
| U.S. Healthcare | 7,966 | 10,417 | 19,616 | 21,063 | ||||
| International Health | 1,026 | 891 | 2,004 | 1,776 | ||||
| Total Cigna Healthcare | 8,992 | 11,308 | 21,620 | 22,839 | ||||
| Other Operations | 78 | 115 | 159 | 163 | ||||
| Corporate and eliminations | 86 | 31 | 113 | 55 | ||||
| Total Premiums | 9,156 | 11,454 | 21,892 | 23,057 | ||||
| Services (Fees) (ASC 606) and Other revenues (1) | ||||||||
| Evernorth Health Services | 3,805 | 3,293 | 7,229 | 6,290 | ||||
| Cigna Healthcare | 1,679 | 1,716 | 3,450 | 3,321 | ||||
| Other Operations | 19 | 19 | 31 | 45 | ||||
| Corporate and eliminations | (1,366) | (1,381) | (2,678) | (2,683) | ||||
| Total Fees and other revenues (1) | 4,137 | 3,647 | 8,032 | 6,973 | ||||
| Total revenues from external customers | $ | 66,942 | $ | 60,202 | $ | 132,206 | $ | 117,167 |
(1)Other revenues for the three months ended June 30, 2025 and 2024 were $114 million and $152 million, respectively, and for the six months ended June 30, 2025 and 2024 were $276 million and $242 million, respectively.
Financial and performance guarantees. Evernorth Health Services may also provide certain financial and performance guarantees, including a minimum level of discounts a client may receive, generic utilization rates and various service levels. Clients may be entitled to receive compensation if we fail to meet the guarantees. Actual performance is compared to the contractual guarantee for each measure throughout the period, and the Company defers revenue for any estimated payouts within Accrued expenses and other liabilities (current). These estimates are adjusted and paid following the end of the annual guarantee period. Historically, adjustments to original estimates have not been material. This guarantee liability was $1.4 billion as of June 30, 2025 and $1.9 billion December 31, 2024.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide information to assist you in better understanding and evaluating our financial condition as of June 30, 2025 compared with December 31, 2024 and our results of operations for the three and six months ended June 30, 2025 compared with the same periods last year, and is intended to help you understand the ongoing trends in our business. We encourage you to read this MD&A in conjunction with our Consolidated Financial Statements included in Part I, Item 1 in this Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2024 ("2024 Form 10-K"). In particular, we encourage you to refer to the "Risk Factors" contained in Part I, Item 1A of our 2024 Form 10-K.
Unless otherwise indicated, financial information in this MD&A is presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). See Note 2 to the Consolidated Financial Statements in our 2024 Form 10-K for
additional information regarding the Company's significant accounting policies and see Note 2 to the Consolidated Financial Statements in this Form 10-Q for updates to those policies resulting from adopting new accounting guidance, if any. The preparation of interim consolidated financial statements necessarily relies heavily on estimates. This and certain other factors call for caution in estimating full-year results based on interim results of operations. In some of our financial tables in this MD&A, we present either percentage changes or "N/M" when those changes are so large as to become not meaningful. Changes in percentages are expressed in basis points ("bps").
In this MD&A, our consolidated measures "adjusted income from operations," earnings per share on that same basis and "adjusted revenues" are not determined in accordance with GAAP and should not be viewed as substitutes for the most directly comparable GAAP measures of "shareholders' net income," "earnings per share" and "total revenues." We also use pre-tax adjusted income (loss) from operations and adjusted revenues to measure the results of our segments.
The Company uses "pre-tax adjusted income (loss) from operations" and "adjusted revenues" as its principal financial measures of segment operating performance because management believes these metrics reflect the underlying results of business operations and facilitate analysis of trends in underlying revenue, expenses and profitability. We define adjusted income (loss) from operations as shareholders' net income (or income (loss) before income taxes less pre-tax income (loss) attributable to noncontrolling interests for the segment metric) excluding net investment gains/losses, amortization of acquired intangible assets and special items. The Cigna Group's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting are also excluded. Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size. Adjusted income (loss) from operations is measured on an after-tax basis for consolidated results and on a pre-tax basis for segment results. Consolidated adjusted income (loss) from operations is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, shareholders' net income. See the below Financial Highlights section for a reconciliation of consolidated adjusted income from operations to shareholders' net income.
The Company defines adjusted revenues as total revenues excluding the following adjustments: special items and The Cigna Group's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting. Special items are matters that management believes are not representative of the underlying results of operations due to their nature or size. We exclude these items from this measure because management believes they are not indicative of past or future underlying performance of the business. Adjusted revenues is not determined in accordance with GAAP and should not be viewed as a substitute for the most directly comparable GAAP measure, total revenues. See the below Financial Highlights section for a reconciliation of consolidated adjusted revenues to total revenues.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on The Cigna Group's current expectations and projections about future trends, events and uncertainties. These statements are not historical facts. Forward-looking statements may include, among others, statements concerning future financial or operating performance, including our ability to improve the health and vitality of those we serve; future growth, business strategy, and strategic or operational initiatives; economic, regulatory or competitive environments, particularly with respect to the pace and extent of change in these areas and the impact of developing inflationary and interest rate pressures; financing or capital deployment plans and amounts available for future deployment; our prospects for growth in the coming years; strategic transactions and their expected benefits; and other statements regarding The Cigna Group's future beliefs, expectations, plans, intentions, liquidity, cash flows, financial condition or performance. You may identify forward-looking statements by the use of words such as "believe," "expect," "project," "plan," "intend," "anticipate," "estimate," "predict," "potential," "may," "should," "will" or other words or expressions of similar meaning, although not all forward-looking statements contain such terms.
Forward-looking statements are subject to risks and uncertainties, both known and unknown, that could cause actual results to differ materially from those expressed or implied in forward-looking statements. Such risks and uncertainties include, but are not limited to: our ability to achieve our strategic and operational initiatives; our ability to adapt to changes in an evolving and rapidly changing industry; our ability to compete effectively, differentiate our products and services from those of our competitors, and maintain or increase market share; price competition, inflation and other pressures that could compress our margins or result in premiums that are insufficient to cover the cost of services delivered to our customers; the potential for actual claims to exceed our estimates related to expected medical claims; our ability to develop and maintain satisfactory relationships with health care payors, physicians, hospitals, other health service providers and with producers and consultants; our ability to maintain relationships with one or more key pharmaceutical manufacturers or if payments made or discounts provided decline; changes in the pharmacy provider marketplace or pharmacy networks; changes in drug pricing or industry pricing benchmarks; our ability to invest in and properly maintain our information technology and other business systems; our ability to prevent or contain effects of a potential cyberattack or other privacy or data security incident; risks related to our use of artificial intelligence and machine learning; political, legal, operational, regulatory, economic and other risks that could affect our multinational operations, including currency exchange rates; risks related to strategic
transactions and realization of the expected benefits of such transactions, as well as integration or separation difficulties or underperformance relative to expectations, which could lead to an impairment charge; dependence on success of relationships with third parties; risk of significant disruption within our operations or among key suppliers or third parties; potential liability in connection with managing medical practices and operating pharmacies, onsite clinics and other types of medical facilities; the substantial level of government regulation over our business and the potential effects of new laws or regulations or changes in existing laws or regulations; uncertainties surrounding participation in government-sponsored programs and providing services to payors who participate in government-sponsored programs; the outcome of litigation, regulatory audits and investigations; compliance with applicable privacy, security and data laws, regulations and standards; potential failure of our prevention, detection and control systems; unfavorable economic and market conditions, the risk of a recession or other economic downturn and resulting impact on employment metrics, stock market or changes in interest rates; risks related to a downgrade in financial strength ratings of our insurance subsidiaries; the impact of our significant indebtedness and the potential for further indebtedness in the future; credit risk related to our reinsurers; as well as more specific risks and uncertainties discussed in Part I, Item 1A - "Risk Factors" in our 2024 Form 10-K, discussed in Part II, Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2024 Form 10-K, and as described from time to time in our future reports filed with the Securities and Exchange Commission.
You should not place undue reliance on forward-looking statements, which speak only as of the date they are made, are not guarantees of future performance or results, and are subject to risks, uncertainties and assumptions that are difficult to predict or quantify. The Cigna Group undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by law.
EXECUTIVE OVERVIEW
The Cigna Group, together with its subsidiaries (either individually or collectively referred to as the "Company," "we," "us" or "our"), is a global health company committed to creating a better future for every individual and every community. Our subsidiaries offer a differentiated set of pharmacy, medical, behavioral, dental, and related products and services. For further information on our business and strategy, see Part I, Item 1 - "Business" in our 2024 Form 10-K.
Financial Highlights
| Consolidated Results of Operations (GAAP basis) | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| (Dollars in millions) | 2025 | 2024 | Change | 2025 | 2024 | Change | ||||||||||
| Pharmacy revenues | $ | 53,649 | $ | 45,101 | 19 | % | $ | 102,282 | $ | 87,137 | 17 | % | ||||
| Premiums | 9,156 | 11,454 | (20) | 21,892 | 23,057 | (5) | ||||||||||
| Fees and other revenues | 4,137 | 3,647 | 13 | 8,032 | 6,973 | 15 | ||||||||||
| Net investment income | 236 | 321 | (26) | 474 | 611 | (22) | ||||||||||
| Total revenues | 67,178 | 60,523 | 11 | 132,680 | 117,778 | 13 | ||||||||||
| Pharmacy and other service costs | 53,268 | 44,492 | 20 | 101,666 | 85,923 | 18 | ||||||||||
| Medical costs and other benefit expenses | 7,749 | 9,515 | (19) | 18,247 | 18,955 | (4) | ||||||||||
| Selling, general and administrative expenses | 3,433 | 3,684 | (7) | 7,646 | 7,389 | 3 | ||||||||||
| Amortization of acquired intangible assets | 422 | 420 | — | 844 | 843 | — | ||||||||||
| Total benefits and expenses | 64,872 | 58,111 | 12 | 128,403 | 113,110 | 14 | ||||||||||
| Income from operations | 2,306 | 2,412 | (4) | 4,277 | 4,668 | (8) | ||||||||||
| Interest expense and other | (337) | (375) | (10) | (699) | (697) | — | ||||||||||
| Gain (loss) on sale of businesses | — | — | N/M | 41 | (19) | N/M | ||||||||||
| Net investment gains (losses) | 52 | (48) | N/M | 50 | (1,884) | N/M | ||||||||||
| Income before income taxes | 2,021 | 1,989 | 2 | 3,669 | 2,068 | 77 | ||||||||||
| Total income taxes | 389 | 360 | 8 | 628 | 651 | (4) | ||||||||||
| Net income | 1,632 | 1,629 | — | 3,041 | 1,417 | 115 | ||||||||||
| Less: Net income attributable to noncontrolling interests | 100 | 81 | 23 | 186 | 146 | 27 | ||||||||||
| Shareholders' net income | $ | 1,532 | $ | 1,548 | (1) | % | $ | 2,855 | $ | 1,271 | 125 | % | ||||
| Consolidated effective tax rate | 19.2 | % | 18.1 | % | 110 | bps | 17.1 | % | 31.5 | % | (1,440) | bps | ||||
| Medical customers (in thousands) | 18,046 | 19,043 | (5) | % | ||||||||||||
| Reconciliation of Shareholders' Net Income (GAAP) to Adjusted Income from Operations | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| (In millions) | Pre-tax | After-tax | Pre-tax | After-tax | Pre-tax | After-tax | Pre-tax | After-tax | ||||||||
| Shareholders' net income | $ | 1,532 | $ | 1,548 | $ | 2,855 | $ | 1,271 | ||||||||
| Adjustments to reconcile to adjusted income from operations | ||||||||||||||||
| Net investment (gains) losses (1) | $ | (96) | (103) | $ | (5) | (20) | $ | (144) | (151) | $ | 1,823 | 1,807 | ||||
| Amortization of acquired intangible assets | 422 | 330 | 420 | 317 | 844 | 666 | 843 | 639 | ||||||||
| Special items | ||||||||||||||||
| Strategic optimization program | 129 | 98 | — | — | 344 | 261 | — | — | ||||||||
| Integration and transaction-related costs | 74 | 56 | 63 | 47 | 290 | 220 | 100 | 76 | ||||||||
| (Gain) loss on sale of businesses | — | — | — | — | (41) | (115) | 19 | (43) | ||||||||
| Deferred tax expenses, net (2) | — | 17 | — | 17 | — | 34 | — | 34 | ||||||||
| Total special items | $ | 203 | 171 | $ | 63 | 64 | $ | 593 | 400 | $ | 119 | 67 | ||||
| Adjusted income from operations | $ | 1,930 | $ | 1,909 | $ | 3,770 | $ | 3,784 |
(1)Includes Net investment gains/losses as presented in our Consolidated Statements of Income, as well as the Company's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting, which are presented within Fees and other revenues in our Consolidated Statements of Income.
(2)Represents amortization of a foreign tax attribute. See Note 20 to the Consolidated Financial Statements in our 2024 Form 10-K for additional details.
| Reconciliation of Shareholders' Net Income (GAAP) to Adjusted Income from Operations | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| (Diluted earnings per share) | Pre-tax | After-tax | Pre-tax | After-tax | Pre-tax | After-tax | Pre-tax | After-tax | ||||||||
| Shareholders' net income | $ | 5.71 | $ | 5.45 | $ | 10.55 | $ | 4.43 | ||||||||
| Adjustments to reconcile to adjusted income from operations | ||||||||||||||||
| Net investment (gains) losses (1) | $ | (0.36) | (0.38) | $ | (0.02) | (0.07) | $ | (0.53) | (0.56) | $ | 6.36 | 6.30 | ||||
| Amortization of acquired intangible assets | 1.57 | 1.23 | 1.48 | 1.11 | 3.12 | 2.47 | 2.94 | 2.23 | ||||||||
| Special items | ||||||||||||||||
| Strategic optimization program | 0.48 | 0.37 | — | — | 1.27 | 0.97 | — | — | ||||||||
| Integration and transaction-related costs | 0.28 | 0.21 | 0.22 | 0.17 | 1.07 | 0.81 | 0.34 | 0.26 | ||||||||
| (Gain) loss on sale of businesses | — | — | — | — | (0.15) | (0.43) | 0.07 | (0.15) | ||||||||
| Deferred tax expenses, net (2) | — | 0.06 | — | 0.06 | — | 0.13 | — | 0.12 | ||||||||
| Total special items | $ | 0.76 | 0.64 | $ | 0.22 | 0.23 | $ | 2.19 | 1.48 | $ | 0.41 | 0.23 | ||||
| Adjusted income from operations | $ | 7.20 | $ | 6.72 | $ | 13.94 | $ | 13.19 |
(1) Includes Net investment gains/losses as presented in our Consolidated Statements of Income, as well as the Company's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting, which are presented within Fees and other revenues in our Consolidated Statements of Income.
(2) Represents amortization of a foreign tax attribute. See Note 20 to the Consolidated Financial Statements in our 2024 Form 10-K for additional details.
| Financial highlights by segment | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| (Dollars in millions, except per share amounts) | 2025 | 2024 | Change | 2025 | 2024 | Change | ||||||
| Revenues | ||||||||||||
| Adjusted revenues by segment | ||||||||||||
| Evernorth Health Services | $ | 57,825 | $ | 49,548 | 17 | % | $ | 111,506 | $ | 95,774 | 16 | % |
| Cigna Healthcare | 10,754 | 13,143 | (18) | 25,236 | 26,420 | (4) | ||||||
| Other Operations | 184 | 227 | (19) | 359 | 393 | (9) | ||||||
| Corporate, net of eliminations | (1,629) | (2,448) | (33) | (4,515) | (4,870) | (7) | ||||||
| Adjusted revenues | 67,134 | 60,470 | 11 | 132,586 | 117,717 | 13 | ||||||
| Net investment results from certain equity method investments | 44 | 53 | (17) | 94 | 61 | 54 | ||||||
| Total revenues | $ | 67,178 | $ | 60,523 | 11 | % | $ | 132,680 | $ | 117,778 | 13 | % |
| Shareholders' net income | $ | 1,532 | $ | 1,548 | (1) | % | $ | 2,855 | $ | 1,271 | 125 | % |
| Adjusted income from operations | $ | 1,930 | $ | 1,909 | 1 | % | $ | 3,770 | $ | 3,784 | — | % |
| Earnings per share (diluted) | ||||||||||||
| Shareholders' net income | $ | 5.71 | $ | 5.45 | 5 | % | $ | 10.55 | $ | 4.43 | 138 | % |
| Adjusted income from operations | $ | 7.20 | $ | 6.72 | 7 | % | $ | 13.94 | $ | 13.19 | 6 | % |
| Pre-tax adjusted income (loss) from operations by segment | ||||||||||||
| Evernorth Health Services | $ | 1,696 | $ | 1,619 | 5 | % | $ | 3,130 | $ | 2,979 | 5 | % |
| Cigna Healthcare | 1,094 | 1,204 | (9) | 2,381 | 2,544 | (6) | ||||||
| Other Operations | 25 | (16) | N/M | 25 | 2 | N/M | ||||||
| Corporate, net of eliminations | (382) | (435) | (12) | (793) | (844) | (6) | ||||||
| Consolidated pre-tax adjusted income from operations | 2,433 | 2,372 | 3 | 4,743 | 4,681 | 1 | ||||||
| Income attributable to noncontrolling interests | 117 | 95 | 23 | 219 | 172 | 27 | ||||||
| Net investment income (losses) (1) | 96 | 5 | N/M | 144 | (1,823) | N/M | ||||||
| Amortization of acquired intangible assets | (422) | (420) | — | (844) | (843) | — | ||||||
| Special items | (203) | (63) | 222 | (593) | (119) | N/M | ||||||
| Income before income taxes | $ | 2,021 | $ | 1,989 | 2 | % | $ | 3,669 | $ | 2,068 | 77 | % |
(1)Includes Net investment gains/losses as presented in our Consolidated Statements of Income, as well as the Company's share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting, which are presented within Fees and other revenues in our Consolidated Statements of Income.
For further analysis and explanation of each segment's results, see the "Segment Reporting" section in this MD&A.
Commentary: Three and Six Months Ended June 30, 2025 versus Three and Six Months Ended June 30, 2024
The commentary presented below, and the segment commentaries that follow, compare results for the three and six months ended June 30, 2025 with results for the three and six months ended June 30, 2024. Commentary regarding percentage changes (or bps) and dollar variances represents the driver's impact on the overall category.
Shareholders' net income for the six months ended increased 125%, primarily reflecting the absence of the impairment of VillageMD equity securities that was recorded in the first quarter of 2024.
Adjusted income from operations. See discussion of segment results in the "Segment Reporting" section.
Medical customers decreased 5%, primarily reflecting the closing of the HCSC transaction (defined below) in the three months ended March 31, 2025.
Pharmacy revenues increased 19% and 17%, primarily reflecting higher utilization of prescription drugs from customer growth in Evernorth Health Services.
Premiums decreased 20% and 5%, primarily driven by the impact of the HCSC transaction (-26% and -10%, respectively), partially offset by higher premiums within our ongoing U.S. Healthcare businesses (+5% and +4%, respectively).
Fees and other revenues increased 13% and 15%, primarily reflecting growth in affordability services (defined below) within our Pharmacy Benefit Services operating segment.
Net investment income decreased 26% and 22%, primarily due to lower average assets, due in part to the impact of the HCSC transaction.
Pharmacy and other service costs increased 20% and 18%, primarily reflecting higher utilization of prescription drugs from customer growth in Evernorth Health Services.
Medical costs and other benefit expenses decreased 19% and 4%, primarily driven by the impact of the HCSC transaction (-27% and -11%, respectively), partially offset by higher medical costs in our ongoing U.S. Healthcare businesses (+9% and +8%, respectively).
Selling, general and administrative ("SG&A") expenses decreased 7% for the three months ended and increased 3% for the six months ended. Both periods were primarily impacted by the HCSC transaction (-12% and -4%, respectively), the strategic optimization program (+2% and +4%, respectively), and supporting business growth (+2% and +3%, respectively).
Gain (loss) on sale of businesses primarily reflects the HCSC transaction for the six months ended. See the "Divestiture of Medicare Advantage and Related Businesses" section below and Note 5 to the Consolidated Financial Statements for further discussion of the HCSC transaction.
Investment results for the three and six months ended increased, reflecting investment gains related to the change in fair value of certain equity securities in the second quarter of 2025 and the absence of the impairment of VillageMD equity securities that was recorded in the first quarter of 2024.
The effective tax rate increased for the three months ended, primarily driven by the absence of tax benefits recorded in 2024 related to favorable state audit resolutions (+2%), partially offset by the favorable impact of foreign operations (-1%). For the six months ended, the effective tax rate decreased, primarily driven by the absence of a valuation allowance related to the impairment of equity securities recorded in 2024 (-21%), partially offset by the absence of state tax benefits recorded in 2024 (+6%) and the impact related to the HCSC transaction (+1%). See Note 15 to the Consolidated Financial Statements for further discussion of these matters.
Developments
Divestiture of Medicare Advantage and Related Businesses
On March 19, 2025, the Company completed the sale of our Medicare Advantage, Medicare Individual Stand-Alone Prescription Drug Plans, Medicare and Other Supplemental Benefits, and CareAllies businesses within the U.S. Healthcare operating segment to Health Care Service Corporation ("HCSC," and such transaction, the "HCSC transaction"). The purchase price increased from $3.3 billion to $4.8 billion, subject to post-closing contractual adjustments, reflecting higher statutory surplus for the legal entities when conveyed to HCSC. The Company received $4.2 billion cash proceeds at closing. We expect receipt of the remaining $0.6 billion in the fourth quarter of 2025 upon HCSC's collection of amounts due from the Centers for Medicare and Medicaid Services ("CMS"). See Note 5 to the Consolidated Financial Statements for further information.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
We maintain liquidity at two levels: the subsidiary level and the parent company level.
Subsidiary Level. Cash requirements at the subsidiary level generally consist of pharmacy, medical costs and other benefit payments; expense requirements, primarily for employee compensation and benefits, information technology, and facilities costs; income taxes; and debt service.
Our subsidiaries normally meet their liquidity requirements by maintaining appropriate levels of cash, cash equivalents and short-term investments; using cash flows from operating activities; matching durations of investments to estimated durations for the related insurance and contractholder liabilities; selling investments; and borrowing from affiliates, subject to applicable regulatory limits.
Parent Company Level. Cash requirements at the parent company level generally consist of debt service, payment of declared dividends to shareholders, lending to subsidiaries as needed and pension plan funding.
The parent company normally meets its liquidity requirements by maintaining appropriate levels of cash and various types of marketable investments; collecting dividends from its subsidiaries; using proceeds from issuing debt and common stock; and borrowing from its subsidiaries, subject to applicable regulatory limits.
Regulatory Restrictions. Dividends from our insurance, Health Maintenance Organization ("HMO") and certain foreign subsidiaries are subject to regulatory restrictions. See Note 19 to the Consolidated Financial Statements in our 2024 Form 10-K for additional information regarding these restrictions. Most of the Evernorth Health Services segment operations are not subject to regulatory restrictions regarding dividends and therefore provide significant financial flexibility to The Cigna Group.
Investment Portfolio. We support the liquidity needs of our businesses by managing the duration of invested assets to be consistent with the duration of liabilities. We manage the portfolio to both optimize returns in the current economic environment and meet our liquidity needs.
Cash flows for the six months ended June 30 were as follows:
| Six Months Ended June 30, | ||||
|---|---|---|---|---|
| (In millions) | 2025 | 2024 | ||
| Operating activities | $ | 34 | $ | 5,105 |
| Investing activities | $ | 400 | $ | (1,135) |
| Financing activities | $ | (5,014) | $ | (4,838) |
The following discussion explains variances in the various categories of cash flows for the six months ended June 30, 2025 compared with the same period in 2024.
Operating Activities. Cash flows from operating activities consist principally of cash receipts and disbursements for pharmacy revenues and costs, premiums and medical costs, fees, investment income, taxes, and other expenses.
Operating cash flows decreased for the six months ended June 30, 2025 primarily due to the absence of the favorable net cash flow impacts from onboarding significant new clients in 2024 as well as the unfavorable impact of pharmacy and services costs payments, due in part to timing.
Investing Activities. The increase in cash provided by investing activities reflects the net proceeds on the HCSC transaction, partially offset by higher investment purchases.
Financing Activities. The increase in cash used in financing activities in 2025 is driven by net debt repayments in 2025 compared with net debt issuances in 2024, offset by lower share repurchases.
Capital Resources
Our capital resources consist primarily of cash, cash equivalents and investments maintained at regulated subsidiaries required to underwrite insurance risks, cash flows from operating activities, our commercial paper program, revolving credit facility, and the issuance of long-term debt and equity securities. Our businesses generate significant cash flows from operations, some of which is subject to regulatory restrictions relative to the amount and timing of dividend payments to the parent company. Dividends received from U.S.-regulated subsidiaries were $0.5 billion for the six months ended June 30, 2025 and $1.1 billion for the six months ended June 30, 2024. Non-regulated subsidiaries also generate significant cash flows from operating activities, which is typically available immediately to the parent company for general corporate purposes.
We prioritize our use of capital resources to (i) invest in capital expenditures (primarily related to technology to support innovative solutions for our clients and customers), provide the capital necessary to maintain or improve the financial strength ratings of subsidiaries, and to repay debt and fund pension obligations if necessary; (ii) pay dividends to shareholders; (iii) consider acquisitions and investments that are strategically and economically advantageous; and (iv) return capital to shareholders through share repurchases.
Funds Available
Commercial Paper Program. The commercial paper program had an approximately $1.2 billion outstanding balance as of June 30, 2025.
Revolving Credit Agreement. Our revolving credit agreement provides us with the ability to borrow amounts for general corporate purposes, including for the purpose of providing liquidity support if necessary under our commercial paper program discussed above. In April 2025, the Company replaced its previous revolving credit agreements and entered into a $6.5 billion, five-year revolving credit and letter of credit agreement that will mature in April 2030. See Note 7 to the Consolidated Financial Statements for further information on our credit agreement and commercial paper program.
As of June 30, 2025, we had $6.5 billion of undrawn committed capacity under our revolving credit agreement (these amounts are available for general corporate purposes, including providing liquidity support for our commercial paper program), $5.3 billion of remaining capacity under our commercial paper program, and $4.6 billion in cash and short-term investments, approximately $1.0 billion of which was held by the parent company or certain nonregulated subsidiaries.
Our debt-to-capitalization ratio (calculated as Short-term debt and Long-term debt ("Total debt") as a percentage of Total shareholders' equity and Total debt ("Total capitalization")) was 43.3% and 43.1% as of June 30, 2025 and March 31, 2025, respectively. We actively monitor our debt obligations and engage in issuance or redemption activities as needed in accordance with our capital management strategy.
Subsidiary Borrowings. In addition to the sources of liquidity discussed above, the parent company can borrow an additional $1.1 billion from its subsidiaries without further approvals as of June 30, 2025.
Use of Capital Resources
Short-Term and Long-Term Debt. During the three months ended March 31, 2025, the Company redeemed at par its $700 million 5.685% senior notes that were due March 2026. In April 2025, $900 million of 3.250% senior notes were repaid at maturity.
Capital Expenditures. Capital expenditures for property, equipment and computer software were $0.6 billion in the six months ended June 30, 2025 compared with $0.7 billion in the six months ended June 30, 2024.
Dividends. The Company currently intends to pay regular quarterly dividends, with future declarations subject to approval by its Board of Directors and the Board's determination that the declaration of dividends remains in the best interests of The Cigna Group and its shareholders. See Note 8 to the Consolidated Financial Statements for further information regarding dividend payments and declarations.
Share Repurchases. The Company maintains a share repurchase program authorized by the Board of Directors, under which it may repurchase shares of its common stock from time to time. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternate uses of capital. The share repurchase program may be effected through open market purchases in compliance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including through Rule 10b5-1 trading plans or privately negotiated transactions. The program may be suspended or discontinued at any time.
We repurchased 8.2 million shares for approximately $2.6 billion during the six months ended June 30, 2025, compared with 14.7 million shares for approximately $5.0 billion during the six months ended June 30, 2024.
Other Sources of Funds and Uses of Capital Resources
Divestiture. As discussed in the "Developments" section above, the HCSC transaction was completed on March 19, 2025. We used the proceeds in alignment with our capital deployment priorities, with the majority allocated to share repurchases.
Risks to Liquidity and Capital Resources
Risks to our liquidity and capital resources outlook include cash projections that may not be realized, and the demand for funds could exceed available cash if our ongoing businesses experience unexpected shortfalls in earnings or we experience material adverse effects from one or more risks or uncertainties described more fully in the "Risk Factors" section in our 2024 Form 10-K.
Guarantees and Contractual Obligations
We are contingently liable for various contractual obligations and financial and other guarantees entered into in the ordinary course of business. See Note 16 to the Consolidated Financial Statements for discussion of various guarantees.
Due to the redemption and maturity of senior notes in the six months ended June 30, 2025, our long-term debt obligations as of June 30, 2025 have been updated compared to those previously provided in our 2024 Form 10-K. See Note 7 to the Consolidated Financial Statements for further discussion. Except for the item listed below, there have been no material changes to other information presented in our guarantees and contractual obligations set forth in our 2024 Form 10-K.
Long-Term Debt. Total scheduled payments on long-term debt are $46.1 billion through February 2054 (of which $1.9 billion relate to the remainder of 2025), which include scheduled interest payments and maturities of long-term debt.
CRITICAL ACCOUNTING ESTIMATES
The preparation of Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures in the Consolidated Financial Statements. Management considers an accounting estimate to be critical if:
•it requires assumptions to be made that were uncertain at the time the estimate was made; and
•changes in the estimate or different estimates that could have been selected could have a material effect on our consolidated results of operations or financial condition.
Management has discussed how critical accounting estimates are developed and selected with the Audit Committee of our Board of Directors, and the Audit Committee has reviewed the disclosures presented in our 2024 Form 10-K. We regularly evaluate items that may impact critical accounting estimates.
Our most critical accounting estimates, as well as the effect of hypothetical changes in material assumptions used to develop each estimate, are described in our 2024 Form 10-K. As of June 30, 2025, there were no significant changes to the critical accounting estimates from what was reported in our 2024 Form 10-K.
SEGMENT REPORTING
The following section in this MD&A discusses the results of each of our segments. See Note 1 to the Consolidated Financial Statements for further description of our segments.
In segment discussions, we present "adjusted revenues" and "pre-tax adjusted income (loss) from operations," defined as income (loss) before income taxes excluding pre-tax income (loss) attributable to noncontrolling interests, net investment gains/losses, amortization of acquired intangible assets and special items. The Company uses "pre-tax adjusted income (loss) from operations" and "adjusted revenues" as its principal financial measures of segment operating performance because management believes these metrics reflect the underlying results of business operations and facilitate analysis of trends in underlying revenue, expenses and profitability. The Cigna Group share of certain investment results of its joint ventures reported in the Cigna Healthcare segment using the equity method of accounting are also excluded. Special items are matters that management, including the chief operating decision maker, believes are not representative of the underlying results of operations due to their nature or size. Ratios presented in this segment discussion exclude the same items as adjusted revenues and pre-tax adjusted income (loss) from operations. See Note 17 to the Consolidated Financial Statements for additional discussion of these metrics and a reconciliation of income (loss) before income taxes to pre-tax adjusted income (loss) from operations, as well as a reconciliation of Total revenues to adjusted revenues. Note 17 to the Consolidated Financial Statements also explains that segment revenues include both external revenues and sales between segments that are eliminated in Corporate.
In these segment discussions, we also present "pre-tax margin," calculated as pre-tax adjusted income (loss) from operations divided by adjusted revenues.
See the "Executive Overview" section in this MD&A for summarized financial results of each of our segments.
Evernorth Health Services Segment
Evernorth Health Services includes a broad range of coordinated and point solution health services and capabilities within our Pharmacy Benefit Services and Specialty and Care Services operating segments. As described in the introduction to Segment Reporting, the performance of Evernorth Health Services is measured using adjusted revenues and pre-tax adjusted income (loss) from operations.
Key Factors Affecting Segment Performance
The key factors that impact the segment's revenues and income from operations are claims utilization, claims composition and contract affordability services. Specialty and Care Services revenues are also impacted by customer and client growth. These key factors are discussed further below. See Note 2 to the Consolidated Financial Statements included in our 2024 Form 10-K for additional information on revenue and cost recognition policies for this segment.
Key factors that impact both Pharmacy Benefit Services and Specialty and Care Services:
•Pharmacy claim volume (also referred to as "utilization") relates to processing prescription claims filled by retail pharmacies in our network and dispensing prescription claims from our home delivery and specialty pharmacies, along with other claims.
Pharmacy claim volume is impacted by new clients or organic customer growth through the expansion of existing clients or through the loss of customers and business.
•The composition of claims generally considers the types of drugs, including the mix of claims among branded and higher priced specialty drugs compared to generic or biosimilar alternatives. We manage pharmaceutical manufacturer increase in prices through programs designed to reduce drug spend, providing positive impacts on our clients, our customers and us. Changes to claims mix, including types of drugs, distribution methods, pharmaceutical manufacturer prices, and alternative uses of drugs within our formularies continue to be a significant driver of organic growth for our revenues and income from operations in the current environment.
•Our client contract pricing is impacted by our ongoing ability to negotiate favorable contracts for pharmacy network, pharmaceutical and wholesaler purchasing, and manufacturer rebates (also referred to as "affordability improvements" or "affordability services"). Through these affordability improvements, we seek to improve the effectiveness of our combined and standalone solutions for our clients by continuously innovating, improving affordability and implementing drug purchasing contract initiatives. Our continued affordability improvements further reduce drug costs for our customers and clients, and we share in the value delivered, which generally results in a favorable impact on our income from operations.
Key factors that impact Specialty and Care Services:
•Customer and client growth, both organic and new business, in our Specialty and Care Services business generally results in increased revenues and income from operations. This includes client movement in our specialty, specialty distribution services, virtual care, physical primary care, benefits management and behavioral health services as we expand our businesses and build upon our cross-enterprise leverage.
Results of Operations
| Financial Summary | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended<br>June 30, | Six Months Ended<br>June 30, | ||||||||||||||||
| (Dollars in millions) | 2025 | 2024 | Change | 2025 | 2024 | Change | |||||||||||
| Adjusted revenues (1) | $ | 57,825 | $ | 49,548 | 17 | % | $ | 111,506 | $ | 95,774 | 16 | % | |||||
| Pre-tax adjusted income from operations (1) | $ | 1,696 | $ | 1,619 | 5 | % | $ | 3,130 | $ | 2,979 | 5 | % | |||||
| Pre-tax margin (1)(2) | 2.9 | % | 3.3 | % | (40) | bps | 2.8 | % | 3.1 | % | (30) | bps | |||||
| SG&A expense ratio (3) | 1.9 | % | 2.0 | % | (10) | bps | 1.9 | % | 2.0 | % | (10) | bps |
(1)See Note 17 to the Consolidated Financial Statements for reconciliation of adjusted revenues and pre-tax adjusted income from operations to Total revenues and Income before income taxes, respectively.
(2)Pre-tax margin is calculated as pre-tax adjusted income from operations divided by adjusted revenues.
(3)SG&A expense ratio is calculated as segment selling, general and administrative expenses divided by adjusted revenues. See Note 17 to the Consolidated Financial Statements for further details.
In this selected financial information, we present adjusted revenues and pre-tax income from operations by our two operating segments, Pharmacy Benefit Services and Specialty and Care Services.
| Selected Financial Information | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended<br>June 30, | Change | Six Months Ended<br>June 30, | Change | ||||||||||
| (Dollars and adjusted scripts in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||
| Total adjusted revenues | |||||||||||||
| Pharmacy Benefit Services | $ | 31,954 | $ | 26,630 | 20 | % | $ | 61,696 | $ | 52,737 | 17 | % | |
| Specialty and Care Services | 25,871 | 22,918 | 13 | 49,810 | 43,037 | 16 | |||||||
| Total adjusted revenues | $ | 57,825 | $ | 49,548 | 17 | % | $ | 111,506 | $ | 95,774 | 16 | % | |
| Pre-tax adjusted income from operations | |||||||||||||
| Pharmacy Benefit Services | $ | 833 | $ | 816 | 2 | % | $ | 1,377 | $ | 1,341 | 3 | % | |
| Specialty and Care Services | 863 | 803 | 7 | 1,753 | 1,638 | 7 | |||||||
| Total pre-tax adjusted income from operations | $ | 1,696 | $ | 1,619 | 5 | % | $ | 3,130 | $ | 2,979 | 5 | % | |
| Pharmacy claim volume (1) | 548 | 533 | 3 | % | 1,087 | 1,046 | 4 | % |
(1)Non-specialty network prescriptions filled through 90-day programs and home delivery prescriptions are counted as three claims. All other network and specialty prescriptions are counted as one claim.
Three and Six Months Ended June 30, 2025 versus Three and Six Months Ended June 30, 2024
Commentary in parentheses regarding percentage changes represents the driver's impact on the overall category.
Adjusted revenues increased 17% and 16% for the three and six months ended, respectively, primarily reflecting higher utilization of prescription drugs from customer growth in Pharmacy Benefit Services (+7% and +7%, respectively) and Specialty and Care Services (+6% and +7%, respectively) and an increase due to claims composition in Pharmacy Benefit Services (+4% and +2%, respectively).
Pre-tax adjusted income from operations increased 5% and 5% for the three and six months ended, respectively, primarily reflecting specialty pharmacy growth in Specialty and Care Services (+8% and +6%, respectively), and contract affordability improvements and customer growth in Pharmacy Benefit Services (+3% and +3%, respectively), partially offset by strategic investments and initiatives to support business growth in Specialty and Care Services (-3% and -2%, respectively) and Pharmacy Benefit Services (-1% and -2%, respectively).
The SG&A expense ratio decreased 10 bps for both the three and six months ended, primarily reflecting higher adjusted revenues as discussed above.
Cigna Healthcare Segment
Cigna Healthcare includes the U.S. Healthcare and International Health businesses, which provide comprehensive medical and coordinated solutions to clients and customers. As described in the introduction to Segment Reporting, performance of the Cigna Healthcare segment is measured using adjusted revenues and pre-tax adjusted income from operations.
On March 19, 2025, the Company completed the sale of our Medicare Advantage, Medicare Individual Stand-Alone Prescription Drug Plans, Medicare and Other Supplemental Benefits, and CareAllies businesses within the U.S. Healthcare operating segment. See "Developments" for further discussion.
Key Factors Affecting Segment Performance
The key factors that impact the segment's revenues and income from operations include revenue growth, customer growth, medical cost trend, percentage of Medicare Advantage customers in plans eligible for quality bonus payments, the medical care ratio ("MCR") and the SG&A expense ratio. These key factors are discussed further below. See Note 2 to the Consolidated Financial Statements included in our 2024 Form 10-K for additional information on revenue and cost recognition policies for this segment.
•Revenue growth includes increases to premium rates in consideration of anticipated medical cost increases, customer growth driven by new clients and customers, and increased fee revenue from the expansion of products and services to existing clients and customers, including solutions provided by Evernorth Health Services.
•Higher medical costs (also referred to as higher medical cost trend) is impacted by utilization (the quantity of medical services consumed by our customers), unit costs (the cost per medical service) and mix of services.
•Prior to the divestiture of our Medicare Advantage and related businesses to HCSC, the percentage of Medicare Advantage customers in bonus-eligible plans impacted the amount of quality bonus payments we receive.
•MCR represents medical costs as a percentage of premiums for our segment's insured businesses, and it is impacted by medical cost trend and premium rates. Affordability initiatives that serve to mitigate medical cost inflation also impact the MCR.
•The SG&A expense ratio represents the segment's selling, general and administrative expenses divided by adjusted revenues.
Results of Operations
| Financial Summary | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended<br>June 30, | Change | Six Months Ended<br>June 30, | Change | ||||||||||||||
| (Dollars in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Adjusted revenues (1) | $ | 10,754 | $ | 13,143 | (18) | % | $ | 25,236 | $ | 26,420 | (4) | % | |||||
| Pre-tax adjusted income from operations (1) | $ | 1,094 | $ | 1,204 | (9) | % | $ | 2,381 | $ | 2,544 | (6) | % | |||||
| Pre-tax margin (1)(2) | 10.2 | % | 9.2 | % | 100 | bps | 9.4 | % | 9.6 | % | (20) | bps | |||||
| Medical care ratio | 83.2 | % | 82.3 | % | 90 | bps | 82.6 | % | 81.1 | % | 150 | bps | |||||
| SG&A expense ratio (3) | 20.3 | % | 20.0 | % | 30 | bps | 19.8 | % | 20.2 | % | (40) | bps |
(1)See Note 17 to the Consolidated Financial Statements for reconciliation of adjusted revenues and pre-tax adjusted income from operations to Total revenues and Income before income taxes, respectively.
(2)Pre-tax margin is calculated as pre-tax adjusted income from operations divided by adjusted revenues.
(3)SG&A expense ratio is calculated as segment selling, general and administrative expenses divided by adjusted revenues. See Note 17 to the Consolidated Financial Statements for further details.
Three and Six Months Ended June 30, 2025 versus Three and Six Months Ended June 30, 2024
Commentary regarding percentage changes (or bps) and dollar variances represents the driver's impact on the overall category.
Adjusted revenues decreased 18%, or $2,389 million, and 4%, or $1,184 million, primarily due to the impact of the HCSC transaction (-$3,137 million and -$2,527 million, respectively), partially offset by higher premiums within employer insured (+$334 million and +$629 million, respectively) and stop loss (+$214 million and +$414 million, respectively), primarily reflecting premium rate increases to cover expected increases in underlying medical costs across those businesses.
Pre-tax adjusted income from operations decreased 9%, or $110 million, and 6%, or $163 million, primarily due to a higher MCR.
The medical care ratio increased 90 bps and 150 bps, primarily due to higher stop loss medical costs.
The SG&A expense ratio increased 30 bps for the three months ended June 30, 2025, primarily due to the impact of the HCSC transaction (+120 bps), partially offset by revenue growth outpacing volume-related expenses within the ongoing businesses (-90 bps). The SG&A expense ratio decreased 40 bps for the six months ended June 30, 2025, primarily due to revenue growth outpacing volume-related expenses within the ongoing businesses.
Medical Customers
Medical customers include individuals who meet any of the following criteria: (i) are covered under a medical insurance policy, managed care arrangement or administrative services agreement issued by Cigna Healthcare; (ii) have access to the Cigna Healthcare provider network for covered services under their medical plan; or (iii) have medical claims that are administered by Cigna Healthcare.
| Cigna Healthcare Medical Customers | ||||
|---|---|---|---|---|
| As of June 30, | ||||
| (In thousands) | 2025 | 2024 | Change | |
| U.S. Healthcare | 2,574 | 3,845 | (33) | % |
| International Health (1) | 1,250 | 1,206 | 4 | |
| Insured | 3,824 | 5,051 | (24) | % |
| U.S. Healthcare | 13,781 | 13,559 | 2 | |
| International Health (1) | 441 | 433 | 2 | |
| Administrative services only | 14,222 | 13,992 | 2 | |
| Total | 18,046 | 19,043 | (5) | % |
(1)International Health excludes medical customers served by less than 100%-owned subsidiaries, as well as certain customers served by our third-party administrator.
Total medical customers decreased 5%, primarily due to the HCSC transaction.
Unpaid Claims and Claim Expenses
| As of <br>June 30, | As of<br>December 31, | |||||
|---|---|---|---|---|---|---|
| (In millions) | 2025 | 2024 | Change | |||
| Unpaid claims and claim expenses | $ | 4,636 | $ | 5,018 | (8) | % |
Our unpaid claims and claim expenses liability decreased 8%, driven by the HCSC transaction (-$983 million), partially offset by the change in stop loss reserves (+$641 million), primarily due to seasonality.
Other Operations
Other Operations includes corporate-owned life insurance ("COLI"), the Company's run-off operations and other non-strategic businesses. As described in the introduction of Segment Reporting, performance of Other Operations is measured using adjusted revenues and pre-tax adjusted income from operations.
Results of Operations
| Financial Summary | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended June 30, | Change | Six Months Ended<br>June 30, | Change | ||||||||||||||
| (Dollars in millions) | 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Adjusted revenues | $ | 184 | $ | 227 | (19) | % | $ | 359 | $ | 393 | (9) | % | |||||
| Pre-tax adjusted income from operations | $ | 25 | $ | (16) | N/M | % | $ | 25 | $ | 2 | N/M | % | |||||
| Pre-tax margin | 13.6 | % | (7.0) | % | 2,060 | bps | 7.0 | % | 0.5 | % | 650 | bps |
Three and Six Months Ended June 30, 2025 versus Three and Six Months Ended June 30, 2024
Adjusted revenues primarily reflects premiums and net investment income associated with COLI and our run-off operations, as well as revenues from other non-strategic businesses.
Pre-tax adjusted income from operations increased for both periods, primarily driven by the decision to discontinue certain small non-strategic businesses.
Corporate
Corporate reflects amounts not allocated to operating segments, including net interest expense (defined as interest on corporate financing less net investment income on investments not supporting segment and other operations), certain litigation matters, expense associated with our frozen pension plans, charitable contributions, operating severance, certain overhead and enterprise-wide project costs, and eliminations for products and services sold between segments.
| Financial Summary | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended June 30, | Change | Six Months Ended<br>June 30, | Change | ||||||||||
| (In millions) | 2025 | 2024 | 2025 | 2024 | |||||||||
| Pre-tax adjusted loss from operations | $ | (382) | $ | (435) | (12) | % | $ | (793) | $ | (844) | (6) | % |
Three and Six Months Ended June 30, 2025 versus Three and Six Months Ended June 30, 2024
Pre-tax adjusted loss from operations decreased for both periods, primarily due to lower interest expense.
INVESTMENT ASSETS
Information regarding our investment assets is included in Notes 11, 12 and 13 to the Consolidated Financial Statements.
Investment Outlook
Future realized and unrealized investment results will be driven largely by market conditions, and these future conditions are not reasonably predictable. We believe that the vast majority of our investments will continue to perform under their contractual terms. We manage the portfolio for long-term economics; therefore, we expect to hold a significant portion of these assets for the long term. Although future declines in investment fair values remain possible due to interest rate movements and credit deterioration due to both
investment-specific uncertainties and global economic uncertainties as discussed below, we do not expect these losses to have a material unfavorable effect on our financial condition or liquidity. The below discussion addresses the strategies and risks associated with our various classes of investment assets. See Part I, Item 1A - "Risk Factors" in our 2024 Form 10-K for additional information regarding risks associated with our investment portfolio.
Debt Securities
The carrying value of our debt securities portfolio decreased from $9.4 billion as of December 31, 2024 to $8.4 billion as of June 30, 2025, primarily reflecting the HCSC transaction. See Note 5 to the Consolidated Financial Statements for further information. Our portfolio remains in a net unrealized depreciation position due to generally increasing interest rates over the past few years.
As of June 30, 2025, $7.3 billion, or 87%, of the debt securities in our investment portfolio were investment grade (Baa and above, or equivalent) and the remaining $1.1 billion were below investment grade. The majority of the bonds that are below investment grade were rated at the higher end of the non-investment-grade spectrum. These quality characteristics have not materially changed since the prior year and remain consistent with our investment strategy.
Investments in debt securities are diversified by issuer, geography and industry. On an aggregate basis, the debt securities portfolio continues to perform according to original expectations, which includes a long-term economic investment strategy. Primary risks facing many of the issuers in our portfolio include ongoing geopolitical events and economic conditions. To date, most issuers have been successful in managing these issues without a meaningful change in credit quality. We continue to monitor the economic environment and its effect on our portfolio; we also continue to consider the impact of various factors in determining the allowance for credit losses on debt securities, which is discussed in Note 11 to the Consolidated Financial Statements.
Commercial Mortgage Loans
As of June 30, 2025, our $1.3 billion commercial mortgage loan portfolio consisted of approximately 40 fixed-rate loans, diversified by property type, location and borrower. These loans are carried in our Consolidated Balance Sheets at their unpaid principal balance, net of an allowance for expected credit losses. As a result of increasing market interest rates since the majority of these loans were made, the carrying value exceeds the market value of these loans as of June 30, 2025. Given the quality and diversity of the underlying real estate, positive debt service coverage, and significant borrower cash invested in the property generally ranging between 30% and 40%, we remain confident that the vast majority of borrowers will continue to perform as expected under their contract terms. For further discussion of the results and changes in key credit quality indicators, see Note 11 to the Consolidated Financial Statements.
Office sector fundamentals are weak but have begun to stabilize for higher-quality assets. Lower-quality assets will likely continue to experience value erosion due to weak tenant demand and low investor interest. Additionally, the current macroeconomic headwinds are impacting capital markets and reducing investor appetite for capital-intensive assets (e.g., offices and regional shopping malls). Our commercial mortgage loan portfolio has no exposure to regional shopping malls and less than 25% exposure to office properties. Although future losses remain possible due to further credit deterioration, we do not expect these losses to have a material unfavorable effect on our results of operations, financial condition or liquidity.
Other Long-Term Investments
Other long-term investments of $4.8 billion as of June 30, 2025 included investments in securities limited partnerships and real estate limited partnerships, direct investments in real estate joint ventures, and other deposit activity that is required to support various insurance and health services businesses. These limited partnership entities typically invest in mezzanine debt or equity of privately held companies and equity real estate. Given our subordinate position in the capital structure of these underlying entities, we assume a higher level of risk for higher expected returns. To mitigate risk, these investments are diversified by industry sector or property type and geographic region. No single partnership investment exceeded 3% of our securities and real estate limited partnership portfolio.
We expect continued volatility in private equity and real estate fund performance going forward as fair market valuations are adjusted to reflect market and portfolio transactions. Less than 4% of our other long-term investments are exposed to real estate in the office sector.
Unconsolidated Subsidiary Investments Portfolio
We participate in an insurance joint venture in China with a 50% ownership interest. We account for this joint venture under the equity method of accounting. Our 50% share of the investment portfolio supporting the joint venture's liabilities was approximately $17.1 billion as of June 30, 2025. These investments were comprised of approximately 75% debt securities, including government and corporate debt diversified by issuer, industry and geography; 15% equities, including mutual funds, equity securities and private equity partnerships; and 10% long-term deposits and policy loans. We continuously review the joint venture's investment strategy and
its execution. There were no investments with a material unrealized loss as of June 30, 2025. See Note 14 to the Consolidated Financial Statements in our 2024 Form 10-K for additional information regarding unconsolidated subsidiaries.
MARKET RISK
Financial Instruments
Our assets and liabilities include financial instruments subject to the risk of potential losses from adverse changes in market rates and prices. Our primary market risk exposure is interest rate risk. We encourage you to read this in conjunction with "Market Risk – Financial Instruments" included in the MD&A section in our 2024 Form 10-K.
As of June 30, 2025, there was no material change in our risk exposure as reported in our 2024 Form 10-K.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information responsive to this item is contained under the caption "Market Risk" in Item 2 above, Management's Discussion and Analysis of Financial Condition and Results of Operations, and is incorporated herein by reference.
Item 4. CONTROLS AND PROCEDURES
Based on an evaluation of the effectiveness of The Cigna Group's disclosure controls and procedures conducted under the supervision and with the participation of The Cigna Group's management (including The Cigna Group's Chief Executive Officer and Chief Financial Officer), The Cigna Group's Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, The Cigna Group's disclosure controls and procedures are effective to ensure that information required to be disclosed by The Cigna Group in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and is accumulated and communicated to The Cigna Group's management (including The Cigna Group's Chief Executive Officer and Chief Financial Officer) as appropriate to allow timely decisions regarding required disclosure.
Change in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, The Cigna Group's internal control over financial reporting.
Part II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The information contained under "Legal and Regulatory Matters" in Note 16 to the Consolidated Financial Statements is incorporated herein by reference.
Item 1A. RISK FACTORS
For information regarding factors that could affect the Company's results of operations, financial condition and liquidity, see the risk factors discussed in Part I, Item 1A - "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table provides information about The Cigna Group share repurchase activity for the quarter ended June 30, 2025:
| Period | Total # of shares purchased (1) | Average price paid per share (1) | Total # of shares purchased as part of<br><br>publicly announced program (2) | Approximate dollar value of shares<br><br>that may yet be purchased as part<br><br>of publicly announced program (3) (in millions) | ||
|---|---|---|---|---|---|---|
| April 1 - 30, 2025 | 3,166,395 | $ | 332.60 | 3,166,234 | $ | 7,738 |
| May 1 - 31, 2025 | 20,482 | $ | 339.80 | 18,891 | $ | 7,732 |
| June 1 - 30, 2025 | 2,048 | $ | 321.73 | — | $ | 7,732 |
| Total | 3,188,925 | $ | 332.64 | 3,185,125 | N/A |
(1)Includes shares tendered by employees under the Company's equity compensation plans as follows: 1) payment of taxes on vesting of restricted stock (grants and units) and strategic performance shares and 2) payment of the exercise price and taxes for certain stock options exercised. Employees tendered 161 shares in April, 1,591 shares in May and 2,048 shares in June 2025.
(2)Additionally, the Company maintains a share repurchase program authorized by the Board. Under this program, the Company may repurchase shares from time to time, depending on market conditions and alternate uses of capital. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternate uses of capital. The share repurchase program may be effected through Rule 10b5-1 plans, open market purchases, each in compliance with Rule 10b-18 under the Exchange Act, or privately negotiated transactions. The program may be suspended or discontinued at any time and does not have an expiration date.
(3)Approximate dollar value of shares is as of the last date of the applicable month and excludes the impact of excise tax.
Item 5. OTHER INFORMATION
Rule 10b5-1 Plan Elections
During the three months ended June 30, 2025, the following 10b5-1 director and officer trading plan arrangement changes occurred:
1.On May 6, 2025, David Cordani, Chairman and Chief Executive Officer of The Cigna Group, adopted a 10b5-1 plan. Mr. Cordani's plan provides for (i) the sale of shares of The Cigna Group common stock issuable upon vesting of a performance award (the actual number of shares depends on actual performance achieved and may range from 0% to 200% of the 32,586 shares subject to the award at the target level of performance) and (ii) the exercise of vested stock options and the associated sale of up to 212,543 shares of The Cigna Group common stock, in each case through May 5, 2026.
2.On May 7, 2025, Brian Evanko, President and Chief Operating Officer, adopted a 10b5-1 plan. Mr. Evanko's plan provides for the exercise of vested stock options and the associated sale of up to 18,429 shares of The Cigna Group common stock through May 8, 2026.
3.On May 8, 2025, Nicole Jones, Executive Vice President, Chief Administrative Officer and General Counsel, adopted a 10b5-1 plan. Ms. Jones' plan provides for (i) the sale of up to 3,773 shares of The Cigna Group common stock, (ii) the sale of shares of The Cigna Group common stock issuable upon vesting of a performance award (the actual number of shares depends on actual performance achieved and may range from 0% to 200% of the 5,661 shares subject to the award at the target level of performance) and (iii) the exercise of vested stock options and the associated sale of up to 27,430 shares of The Cigna Group common stock, in each case through May 8, 2026.
4.On May 22, 2025, Everett Neville, Executive Vice President of Strategy and Business Development, adopted a 10b5-1 plan. Mr. Neville's plan provides for the sale of shares of The Cigna Group common stock issuable upon vesting of a performance award (the actual number of shares depends on actual performance achieved and may range from 0% to 200% of the 3,565 shares subject to the award at the target level of performance) through May 8, 2026.
These trading plans were entered into during an open insider trading window and are intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Securities Exchange Act of 1934 and the Company's policies regarding insider transactions.
Item 6. EXHIBITS
INDEX TO EXHIBITS
| Number | Description | Method of Filing |
|---|---|---|
| 3.1 | Restated Certificate of Incorporation of The Cigna Group | Filed by the registrant as Exhibit 3.1 to the Quarterly Report on Form 10-Q for the period ended June 30, 2023 and incorporated herein by reference. |
| 3.2 | Amended and Restated By-laws of The Cigna Group | Filed by the registrant as Exhibit 3.3 to the Current Report on Form 8-K on February 13, 2023 and incorporated herein by reference. |
| 10.1‡ | Agreement and Release between The Cigna Group and Eric Palmer dated April 15, 2025 | Filed herewith. |
| 10.2 | Revolving Credit and Letter of Credit Agreement, dated as of April 24, 2025, with the banks named therein, JPMorgan Chase Bank, N.A., as administrative agent, and BofA Securities, Inc., Citibank, N.A., Morgan Stanley Senior Funding, Inc. and Wells Fargo Securities, LLC, as joint lead arrangers and joint bookrunners | Filed herewith. |
| 31.1 | Certification of Chief Executive Officer of The Cigna Group pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 | Filed herewith. |
| 31.2 | Certification of Chief Financial Officer of The Cigna Group pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 | Filed herewith. |
| 32.1 | Certification of Chief Executive Officer of The Cigna Group pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350 | Furnished herewith. |
| 32.2 | Certification of Chief Financial Officer of The Cigna Group pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350 | Furnished herewith. |
| 101 | The following materials from The Cigna Group's Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Income; (ii) the Consolidated Statements of Comprehensive Income; (iii) the Consolidated Balance Sheets; (iv) the Consolidated Statements of Total Equity; (v) the Consolidated Statements of Cash Flows;and (vi) the Notes to the Consolidated Financial Statements | Filed herewith. |
| 104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) | Filed herewith. |
‡ Indicates a management contract or compensatory plan or arrangement.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: July 31, 2025
| THE CIGNA GROUP | |
|---|---|
| /s/ Ann M. Dennison | |
| Ann M. Dennison | |
| Executive Vice President and Chief Financial Officer | |
| (Principal Financial Officer and Authorized Signatory) |
49
Document
Exhibit 10.1
AGREEMENT AND RELEASE
This Agreement and Release is dated March 10, 2025, and is between Eric Palmer (you), and the Company.
You and the Company (defined below) intend to be legally bound by the Agreement and are entering into it in reliance on the promises made to each other in this Agreement. Under the Agreement, your employment will end, and you and the Company agree to settle all issues concerning your employment and termination of employment.
Definitions.
“ADA” – the Americans with Disabilities Act, as amended. “ADEA” – the Age Discrimination in Employment Act, as amended.
“Agreement” – this Agreement and Release between you and the Company. “Cigna” – The Cigna Group and any subsidiaries or affiliates of The Cigna Group. “Company” – Cigna Management Company, LLC.
“Covenants” – the promises contained in paragraphs 2.b-d of this Agreement. “EEOC” – the Equal Employment Opportunity Commission.
“ERISA” – the Employee Retirement Income Security Act, as amended.
“Executive Severance Plan” – the Cigna Executive Severance Benefits Plan (as amended and restated effective December 21, 2020).
“Federal Court” – the United States District Court for the State of Delaware. “FLSA” – the Fair Labor Standards Act, as amended.
“FMLA” – the Family and Medical Leave Act, as amended. “NLRA” – the National Labor Relations Act, as amended. “NLRB” – the National Labor Relations Board.
“Delaware Courts” – any Delaware court where venue is appropriate and that has subject matter jurisdiction over the dispute described in paragraph 6 of this Agreement.
“Released Persons” – collectively, Cigna, the various plan fiduciaries for the benefit plans maintained by or on behalf of Cigna, and their successors, assigns, affiliates, shareholders, directors, officers, representatives, agents and employees.
“SEA” – the Securities Exchange Act of 1934, as amended. “SEC” – the Securities Exchange Commission.
“Section 409A” – Section 409A of the Internal Revenue Code of 1986 (as amended) and the regulations thereunder.
“Severance Pay Commencement Date” – the later of the second regular payroll date following the Termination Date and the first regular payroll date following the date on which the executed Agreement is no longer subject to revocation pursuant to Section 10.
“Termination Date” – your last day of employment with the Company as described in paragraph 1 of this Agreement.
“Title VII” – Title VII of the Civil Rights Act of 1964, as amended. “Today” – the date of this Agreement as indicated on the top of page 1.
1.Your Termination Date.
Your employment with the Company will end on April 26, 2025 which will be your Termination Date. Your formal job responsibilities will begin to transition immediately and will end on March 31, 2025. You agree to be available to assist with transition and other matters through your Termination Date as deemed necessary by the Company.
2.Your Promises to the Company.
a.On or before your Termination Date, you will return to Cigna any Cigna property that you now have (for example: identification card, access card, office keys, computer, mobile phone, iPhone, iPad, company manuals, office equipment, records and files). You will remain subject to Cigna’s policies and procedures, including its Code of Ethics. You also agree that, by signing this Agreement, you are formally resigning from all officer or director positions you hold with Cigna effective on your Termination Date and will sign any additional paperwork that may be required by Cigna or law to effectuate such resignation.
b.You agree and acknowledge that the promises contained in any Confidentiality, Non-Competition and Non-Solicitation Agreements you accepted at hire, promotion, and/or in connection with the acceptance of your equity awards under the Cigna Long-Term Incentive Plan (including, but not limited to, those relating to non-competition, non-solicitation,
confidentiality and cooperation) (the “Promises”) shall survive the termination of your employment and continue to apply in full force and effect. You affirm that the Promises are reasonable and necessary to protect the legitimate interests of Cigna, that you received adequate consideration in exchange for agreeing to the Promises and that you will abide by the Promises.
Notwithstanding anything to the contrary, (1) the Company acknowledges and agrees that any outside activities that you engaged in or had approval from Cigna to engage in during your employment, including without limitation your service on the board of LifeStance Health will not violate any non-competition or non-solicitation provisions of the Promises and (2) you will be permitted to solicit and/or hire your executive assistant at any time following your Termination Date, provided that you provide a minimum of fourteen (14) days advance written notice to the Company, which shall not constitute a violation of the Promises. Further, to the extent you assist Cigna in litigation and related matters under the cooperation provisions of the Promises, the Company will fully indemnify you with respect thereto and compensate you at an hourly rate of $1,500.
c.You agree that you will not at any time make any verbal or written statement, whether in public or in private, that disparages in any way Cigna’s integrity, business reputation, or performance, or disparages any of Cigna's directors, officers, or employees. It shall not, however, be a violation of this paragraph for you to make truthful statements (i) when required to do so by a court of law or arbitrator, by any governmental agency having supervisory authority over Cigna's business or by any administrative or legislative body (including a committee thereof) with actual or apparent jurisdiction to order you to divulge, disclose or make accessible such information, (ii) to the extent necessary concerning any litigation, arbitration or mediation involving this Agreement or enforcement of this Agreement or (iii) in connection with any proceeding or investigation conducted by a federal, state or local government agency, including but not limited to, the EEOC, or when exercising rights protected by the NLRA or the SEA.
The Company agrees that David Cordani, Brian Evanko, and Kari Stevens (the “Cigna Parties”) will not at any time make any verbal or written statement, whether in public or in private, that disparages in any way your integrity, business reputation, or performance. It shall not, however, be a violation of this paragraph for the Cigna Parties to make truthful statements (i) when required to do so by a court of law or arbitrator, by any governmental agency having supervisory authority over Cigna's business or by any administrative or legislative body (including a
committee thereof) with actual or apparent jurisdiction to order you to divulge, disclose or make accessible such information, (ii) to the extent necessary concerning any litigation, arbitration or mediation involving this Agreement or enforcement of this Agreement or (iii) in connection with any proceeding or investigation conducted by a federal, state or local government agency, including but not limited to, the EEOC, or when exercising rights protected by the NLRA or the SEA.
d.The terms of this Agreement are confidential. You agree (on behalf of yourself and anyone acting for you) not to disclose in any way this Agreement or any of its terms or any of the negotiations leading to the signing of this Agreement (i) to any person other than your spouse, lawyer, financial advisor, or accountant, and then only after informing such individuals about this confidentiality provision and that they must comply with its terms to the same extent that you must, or (ii) pursuant to a lawfully issued subpoena or court order. In the event you receive a subpoena or court order directing you to disclose this Agreement, its terms or any of the negotiations leading to the signing of this Agreement, you will immediately send a copy of such subpoena or court order to the Company and will not disclose such information until the Company has had an opportunity to move to quash such subpoena or apply to the court for relief from its order. It shall not, however, be a violation of this paragraph for you to provide information, including information about this Agreement, to any federal, state or local governmental agency, including but not limited to, the EEOC, the SEC, or the NLRB.
e.If you have received any payment from Cigna that you were not entitled to receive (an “overpayment”), you hereby authorize the Company to deduct such overpayment or money owed from the amount of your severance payment(s) described in paragraph 3e. below. You also agree that if you have any outstanding unpaid charges, including outstanding finance charges, on your corporate-issued credit card as of the Termination Date, the Company is authorized by you to deduct such unpaid charges, including finance charges, from the amount of your severance payment(s) described in paragraph 3e. below.
f.You hereby acknowledge that you are aware that the securities laws of the United States generally prohibit any person who has material non-public information about a company from, among other things, (1) purchasing or selling securities of such company or securities convertible into such securities on the basis of such information or (2) communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person may purchase or sell such securities or securities convertible into such securities. Accordingly, you agree that you will not make any purchase or sale of, or otherwise consummate any transactions involving, The Cigna Group securities or
securities convertible into The Cigna Group securities, including with respect to your Cigna 401(k) account, while in possession of material Confidential Information regarding The Cigna Group, nor will you communicate such information in a manner that violates the securities laws of the United States (regardless of whether such communication would be permitted elsewhere in this Agreement.) If you consummate a transaction involving The Cigna Group securities (or securities convertible into The Cigna Group securities), you will file (or cause to be filed) any and all reports or notifications that may be required under Section 16 of the SEA.
3.Your Severance Arrangements.
a.From Today until your Termination Date, the Company will continue to pay you a salary at your current regular salary rate, and you and your eligible dependents may continue to participate in the Company’s employee benefits programs in accordance with the terms of those programs and your applicable elections.
b.You understand and agree that you will not be covered by the Cigna
Short-Term Disability Plan or Cigna Long-Term Disability Plan after your Termination Date.
c.You will continue to accrue Paid Time Off through your Termination Date. The Company will make a lump sum payment to you within 30 days after your Termination Date for any accrued and unused Paid Time Off in accordance with Company policy.
If you die before the Company pays you all amounts due under paragraph 3 of the Agreement, the remaining amounts will be paid to your surviving spouse in a lump sum within 90 calendar days after the date of your death. (However, plan benefits under paragraph 3.g will be payable under the terms of the applicable plan.) If you have no surviving spouse, the payment will be made to your estate. If you die before your Termination Date, the date you die will automatically be your new Termination Date (but the lump sum payment shall include unpaid salary calculated as if you had remained alive and employed until the original Termination Date).
d.The Company will make payments to you totaling up to $5,169,634.71 (less applicable withholding) pursuant to the Executive Severance Plan, as follows:
(1)Basic Severance Pay totaling $1,500,000.06 payable in accordance with the Company’s payroll cycle over a total period of 78 weeks commencing on the Severance Pay Commencement Date;
(2)Supplemental Severance Pay totaling $3,000,000 payable in a single lump-sum on the Severance Pay Commencement Date;
(3)Pro Rata Bonus Severance totaling $635,616.44 payable in a single lump-sum on the Severance Pay Commencement Date; and
(4)A COBRA Subsidy Payment totaling up to $34,218.21 payable in accordance with the Company’s payroll cycle over a total period of 78 weeks commencing on the Severance Pay Commencement Date; provided, however, that if you commence new employment and are eligible for new group medical plans or benefits in connection with that new employment, you must notify the Company and this COBRA Subsidy Payment will end.
e.Your active Cigna benefits will end on the Sunday following your Termination Date. However, if you elect COBRA coverage, you may continue coverage of your medical, dental and vision benefits subject to and in accordance with the terms and conditions of COBRA. You will be billed monthly for any applicable COBRA coverage. You may convert certain group benefits coverages to individual coverages under the terms of the Company’s benefits program.
f.Any benefits you may have earned under any Cigna deferred compensation, pension, supplemental pension, 401(k) and supplemental 401(k) plans or other deferred payment arrangements (including any Express Scripts plans or arrangements) will be paid to you under the terms and provisions of those plans and arrangements.
g.Until your Termination Date any options to purchase The Cigna Group stock that you hold will continue to vest under the terms of the applicable plan and your applicable grant, including the terms and conditions that you must continue to honor. You may exercise vested options only in accordance with the terms of the plan and grants and subject to The Cigna Group’s Insider Trading Policy. Any unexercised and unvested options that you hold on your Termination Date will be subject to the terms of the applicable plans and grant documents. Your rights with respect to shares of restricted The Cigna Group stock (RSGs), Restricted Stock Units (RSUs), and Strategic Performance Shares (SPSs) that you hold on your Termination Date will be determined by the terms of the applicable plan and grant documents, including the terms and conditions of the award.
h.Pursuant to the Executive Severance Benefits Plan, the Company will provide you with reasonable outplacement services, in accordance with the Company’s standard program for executive level employees in effect
Today for a period of 12 months following the Termination Date, and other reasonable transition-related support.
i.You acknowledge and agree that you will not receive and are not entitled to any other money or benefits from the Company except as provided in this Agreement.
j.Any payments under this paragraph 3 are intended to be exempt from, or comply with, the requirements of Section 409A, are subject to the provisions of Section 409A detailed in Section 13 of the Executive Severance Plan, and this Agreement shall in all respects be administered in accordance with Section 409A. Notwithstanding anything herein to the contrary, if any payments under this paragraph 3 are subject to Section 409A, (1) such payments shall only be made in a manner and upon an event permitted under Section 409A, (2) such payments shall only be made upon a “separation from service” under Section 409A, and (3) in no event shall you, directly or indirectly, designate the calendar year in which any such payment is made except in accordance with Section 409A. In no event shall Cigna be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by you on account of non- compliance with Section 409A.
None of the payments described in this paragraph 3, except for salary payments under paragraph 3.a, will be treated as eligible earnings for any benefits purposes, and salary payments will be treated as eligible earnings only to the extent provided by the terms of the applicable benefit plan.
4.Acknowledgment and Release of Claims.
a.You acknowledge that there are various local, state, and federal laws that prohibit, among other things, employment discrimination on the basis of age, sex, race, color, national origin, religion, disability, sexual orientation, or veteran status and that these laws are enforced through the EEOC, Department of Labor, and state or local human rights agencies. Such laws include, without limitation, Title VII, ADEA, ADA, ERISA, 42 U.S.C. Section 1981, FMLA, FLSA, state and local human or civil rights laws, and other statutes that regulate employment, as each may have been amended, and the common law of contracts and torts. You acknowledge that the Company has not (i) discriminated against you in contravention of these laws; (ii) breached any contract with you; (iii) committed any civil wrong (tort) against you; or (iv) otherwise acted unlawfully toward you.
You further acknowledge that the Company has paid and, upon payment of the amounts provided for in this Agreement, will have paid you: (i) all salary, wages, bonuses and other compensation that might be due to you; and (ii) all reimbursable expenses, if any, to which you may be entitled
and if not, that you agree to bring to the attention of the Company in writing any such unpaid amount(s) of compensation or expenses claimed to still be due or owing before signing this Agreement.
b.On behalf of yourself, your heirs, executors, administrators, successors and assigns, you hereby unconditionally release and discharge all Released Persons from all claims (including claims for attorneys’ fees and costs), charges, actions and causes of action, demands, damages, and liabilities of any kind or character, in law or equity, suspected or unsuspected, past or present, that you ever had, may now have, or may later assert against any Released Person, arising out of or related to your employment with, or termination of employment from, the Company. To the fullest extent permitted by law, this release includes, but is not limited to: (i) claims arising under the ADEA, the Older Workers Benefit Protection Act, the Workers’ Adjustment and Retraining Notification Act, ERISA, FMLA, ADA, FLSA, and any other federal, state, or local law prohibiting age, race, color, gender, creed, religion, sexual preference/orientation, marital status, national origin, mental or physical disability, veteran status, or any other form of unlawful discrimination or claim with respect to or arising out of your employment with or termination from the Company, including wage claims; (ii) claims (whether based on common law or otherwise) arising out of or related to any contract (whether express or implied); (iii) claims under any federal, state or local constitutions, statutes, rules or regulations; (iv) claims (whether based on common law or otherwise) arising out of any kind of tortious conduct (whether intentional or otherwise) including but not limited to, wrongful termination, defamation, violation of public policy; and (v) claims included in, related to, or which could have been included in any presently pending federal, state or local lawsuit filed by you or on your behalf against any Released Person, which you agree to immediately dismiss with prejudice. For purposes of implementing a full and complete release and discharge of all Released Persons, you expressly acknowledge that this release is intended to include not only claims that are known, anticipated, or disclosed, but also claims that are unknown, unanticipated, or undisclosed. You are aware that there may be discovery of claims or facts in addition to or different from those known or believed to be true with respect to the matters related herein. Nevertheless, it is your intention fully, finally, and forever to settle and release all such matters, and all claims related to such matters, which may now exist or which may have previously existed between you and any Released Person, whether suspected or unsuspected. You agree that this Agreement shall remain in effect as a full and complete release of all such matters, even if any additional or different related claims or facts exist now or are later discovered.
You also understand that, by signing this Agreement, you are giving up any right to become, and you are promising not to agree to become, a member of any class in a case in which claims are asserted against any Released Person if those claims are related in any way to your employment with, or termination of employment from the Company and involve events that happened on or before the date you signed this Agreement. If, without your prior knowledge and consent, you are made a member of a class in any such case, you will opt out of the class at your first opportunity after you learn of your inclusion. You agree to sign, without objection or delay, any “opt-out” form presented to you either by the court in which the case is pending or by counsel for any Released Person made a defendant in the case.
c.This release does not include (and you are not releasing):
(1)any claims against the Company for promises it is making to you in this Agreement;
(2)any claims for employee benefit payments to which the applicable Plan Administrator determines you are entitled under the terms of any retirement, savings, or other employee benefit programs in which the Company participates (but your release does cover any claims you may make for severance benefits, under the Executive Severance Plan or otherwise, beyond those described or referred to in this Agreement and any claims for benefits beyond those provided under the terms of the applicable plan);
(3)any claims that may arise after the date you sign the Agreement;
(4)any claims covered by workers compensation or other laws that are not, or may not be, as a matter of law, releasable or waivable; any rights you have to indemnification under the Company’s (and, if applicable, any Company affiliate’s) by-laws, directors and officers liability insurance or this Agreement or any rights you may have to obtain contribution as permitted by law if any judgment is entered against you as a result of any act or failure to act for which you and the Company are jointly liable; and
(5)any claims that you did not knowingly and voluntarily waive your rights under the ADEA.
5.No Admission of Wrongdoing.
Just because the Company is entering into this Agreement and paying you money, neither the Company nor any Released Persons are admitting that they have done anything wrong or violated any law, rule, order, policy, procedure, or contract, express or
implied, or otherwise incurred any liability. Similarly, by entering into this Agreement, you are not admitting that you have done anything wrong or violated any law, rule, order, policy, procedure, or contract, express or implied, or otherwise incurred any liability.
6.Applicable Law and Exclusive Forum.
This Agreement (including the Covenants) will be interpreted, enforced and governed under the laws of Delaware (without regard to its conflict of laws principles); provided, however, that your eligibility for, or the amount of any, employee benefits shall be subject to the terms of the applicable benefit plans and the provisions of ERISA. You and Cigna agree that any action by you or Cigna seeking emergency, temporary or permanent injunctive relief arising out of or relating to the Covenants shall be brought exclusively in the Federal Court or in Delaware Courts if the Federal Court lacks subject matter jurisdiction over the dispute, and you and Cigna expressly waive any defense of inconvenient forum and any other venue or jurisdiction-related defenses that each might otherwise have in such a lawsuit.
7.Arbitration.
Any dispute or claim relating to this Agreement shall be resolved through arbitration if you entered into an arbitration agreement with the Company.
8.Final and Entire Agreement; Amending the Agreement.
This Agreement is intended to be the complete, final and entire Agreement between you and the Company. It fully replaces all earlier agreements or understandings. However, it does not replace the terms of any:
a.Cigna stock or option grant you might have received, the terms of any employee benefit plan or the Promises contained in the agreements referenced in paragraph 2b above;
b.Arbitration agreement that you currently have with Cigna which shall remain in full force and effect; or
c.other agreement you might have entered into with the Company that requires you to pay back money to the Company, or that authorizes the Company to deduct money from your pay, when your employment terminates or at any other time.
Neither you nor the Company has relied upon any other statement, agreement or contract, written or oral, in deciding to enter into this Agreement.
Any amendment to this Agreement must be in writing and signed by both you and the Company. Any waiver by any person of any provision of this Agreement shall be effective only if in writing, specifically referring to the provision being waived and
signed by the person against whom enforcement of the waiver is being sought. No waiver of any provision of this Agreement shall be effective as to any other provision of this Agreement except to the extent specifically provided in an effective written waiver. If any provision or portion of this Agreement (other than your release of claims under paragraph 4 above) is determined to be invalid or unenforceable in a legal forum with competent jurisdiction to so determine, the remaining provisions or portions of this Agreement shall remain in full force and effect to the fullest extent permitted by law and the invalid or unenforceable provisions or portions shall be deemed to be reformed so as to give maximum legal effect to the agreements of the parties contained herein.
9.Your Understanding.
By signing this Agreement, you admit and agree that:
a.You have read this Agreement.
b.You understand it is legally binding, and you were advised and, by virtue of this Agreement are further advised, to review it with a lawyer of your choice.
c.You have had (or had the opportunity to take) at least 21 calendar days to discuss it with a lawyer of your choice before signing it and, if you sign it before the end of that period, you do so of your own free will and with the full knowledge that you could have taken the full period.
d.You realize and understand that the release covers certain claims, demands, and causes of action against the Company and any Released Persons relating to your employment or termination of employment, including those under ADEA.
e.You understand that the terms of this Agreement are not part of an exit incentive or other employment termination program being offered to a group or class of employees.
f.You are signing this Agreement knowingly, voluntarily and with the full understanding of its consequences, and you have not been forced or coerced in any way.
10.Revoking the Agreement.
You have seven calendar days from the date you sign this Agreement to revoke and cancel it. To do that, a clear, written cancellation letter, signed by you, must be received by Executive Compensation, The Cigna Group, 1601 Chestnut Street TL05Z, Philadelphia, PA, 19192 before 5:00 p.m. Eastern Time on the seventh calendar day following the date you sign this Agreement. The Agreement will have no force and
effect until the end of that seventh day; provided that, during such seven-day period, the Company shall not be able to revoke this Agreement or cancel it.
11.If Legal Action Is Started by You.
You understand and agree that the Company's main reason for entering into this Agreement is to avoid lawsuits and other litigation. Therefore, if any legal action covered by this Agreement is started by you (or by someone else on your behalf) against any Released Person, you agree to withdraw such proceeding or claim with prejudice.
If you fail to withdraw such proceeding or claim (or fail to opt out of a class action that includes you) within 30 days of receipt of written notice from the Released Person requesting that you withdraw such proceeding or claim (or in the case of a class action, within 30 days of the later of such request or your being given the opportunity to opt out), then in addition to any other equitable or legal relief that the Company may be entitled to:
a.You may forfeit all or any portion of the amounts due hereunder;
b.You agree to pay back to the Company within 60 days after receipt of written notice from the Company all the money you receive under paragraph 3 (except sub-paragraphs 3.a and 3.g); and
c.You agree to pay the Company the reasonable costs and attorneys' fees it incurs in defending such action.
You represent that you have not assigned to any other party, and agree not to assign, any claim released by you under this Agreement. (If you claim that your release of ADEA claims was not knowing and voluntary, the Company reserves its right to recover from you its attorneys’ fees and/or costs in defending that claim, at the conclusion of that action.) Upon a finding by a court of competent jurisdiction or arbitrator that a release or waiver of claims provided for by paragraph 4 above is illegal, void or unenforceable, the Company may require you to execute promptly a release that is legal and enforceable and does not extend to claims not released under paragraph 4. If you fail to execute such a release within a reasonable period of time, then this Agreement shall be null and void from Today on, and any money paid to you by the Company after Today under paragraph 3 (except sub-paragraphs 3.a and 3.g) and not previously returned to the Company, will be treated as an overpayment. You will have to repay that overpayment to the Company with interest, compounded annually at the rate of 6%. However, the repayment provision in this paragraph does not apply to legal actions in which you claim that your release of ADEA claims was not knowing and voluntary.
This paragraph 11 does not apply to anything of value given to you for which you actually performed services and by law you are entitled to receive.
Neither this paragraph 11, nor anything else in this Agreement is intended to prevent you from instituting legal action for the sole purpose of enforcing this Agreement or from
filing a charge with, furnishing information to, or participating in an investigation conducted by, the EEOC, the NLRB, the SEC or any comparable federal, state or local governmental agency; provided however, that, with the exception of any whistleblower award from the SEC, you expressly waive and relinquish any right you might have to recover damages or other relief, whether equitable or legal, in any such proceeding concerning events or actions that arose on or before the date you signed this Agreement. You agree to inform the EEOC, any other governmental agency, any court or any arbitration organization that takes jurisdiction over any matter relating to your employment or termination of employment that this Agreement constitutes a full and final settlement by you of all claims released hereunder.
12.Representations.
The Company represents and warrants that (a) the execution, delivery and performance of this Agreement has been fully and validly authorized by all necessary corporate action (including, without limitation, by any action required to be taken by the board of directors of the Company or any affiliate, any committee of such board or any committee or designee administering the applicable Cigna plans); (b) the officer signing this Agreement on behalf of the Company is duly authorized to do so; (c) the execution, delivery and performance of this Agreement does not violate any applicable law, regulation, order, judgment or decree or any agreement, plan or corporate governance document to which the Company or any affiliate is a party or by which it is bound; and
(d) upon execution and delivery of this Agreement by the parties, it shall be a valid and binding obligation of the Company enforceable against it in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.
13.Notices.
Except as provided below, any notice, request or other communication given in connection with this Agreement shall be in writing and shall be deemed to have been given (a) when personally delivered to the recipient or (b) provided that a written acknowledgement of receipt is obtained, three days after being sent by prepaid certified or registered mail, or two days after being sent by a nationally recognized overnight courier, to the applicable address specified below (or such other address as the recipient shall have specified by ten days’ advance written notice given in accordance with this paragraph 13). Such communication shall be addressed to you as follows (unless you have made an address change in accordance with this paragraph 13):
Eric Palmer
with a copy which shall not constitute notice to:
Jeremy L. Goldstein
Sterlington PLLC
and to the Company or Cigna as follows: Executive Compensation
The Cigna Group
1601 Chestnut Street TL05Z Philadelphia, PA 19192
However, Cigna and you may deliver any notices or other communications related to any employee benefit or compensation plans, programs or arrangements in the same manner that similar communications are delivered to or from other current or former employees, including by electronic transmission and first class mail.
14.Successors and Assigns.
This Agreement will be binding on and inure to the benefit of the parties and their respective successors, heirs (in your case) and permitted assigns. No rights or obligations of the Company under this Agreement may be assigned or transferred without your prior written consent, except that such rights or obligations may be assigned or transferred without your consent pursuant to a merger or consolidation in which the Company is not the continuing entity, or a sale, liquidation or other disposition of the assets of the Company, provided that the assignee or transferee is the successor to the Company (or in connection with a purchase of Company assets, assumes the liabilities, obligations and duties of the Company under this Agreement), either contractually or as a matter of law. Your rights or obligations under this Agreement may not be assigned or transferred by you, without the Company’s prior written consent, other than your rights to compensation and benefits, which may be transferred only by will or operation of law or pursuant to the terms of the applicable plan, program, grant or agreement of Cigna or the Company. If you die or a court determines you are legally incompetent, all references in this Agreement to “you” shall be deemed to refer, where appropriate, to your legal representative, or, where appropriate, to your beneficiary or beneficiaries.
15.Injunctive Relief.
You agree that (a) any breach or threatened breach of the Covenants would cause irreparable injury to Cigna; (b) monetary damages alone would not provide an adequate remedy; (c) in addition to any other relief available at law or equity, Cigna shall be entitled to injunctive relief and/or to have the Covenants specifically enforced by a court of competent jurisdiction (without the requirement to post a bond); and (d) these remedies are cumulative and in addition to any other rights and remedies Cigna may have at law, in equity or pursuant to any other agreement.
16.When Effective.
This Agreement is not effective or binding on either party until fully signed by both parties. This Agreement may be executed by the parties in counterparts, and counterparts may be exchanged by electronic transmission, each of which will be deemed an original, but both such counterparts will together constitute one and the same document.
The persons named below have signed this Agreement on the dates shown below:
| April 15, 2025 | /s/ Eric Palmer |
|---|---|
| Date | Eric Palmer |
| April 15, 2025 | /s/ Kari Knight Stevens |
| Date | Kari Knight Stevens |
| on behalf of the Company |
15
exh_102cigna-5xyearrevol
Exhibit 10.2 ═══════════════════════════════════════ REVOLVING CREDIT AND LETTER OF CREDIT AGREEMENT Dated as of April 24, 2025 Among THE CIGNA GROUP, THE GUARANTORS FROM TIME TO TIME PARTY HERETO, THE BANKS FROM TIME TO TIME PARTY HERETO, and JPMORGAN CHASE BANK, N.A., as Administrative Agent ═══════════════════════════════════════ JPMORGAN CHASE BANK, N.A., BofA SECURITIES, INC., CITIBANK, N.A., MORGAN STANLEY SENIOR FUNDING, INC., and WELLS FARGO SECURITIES, LLC, as Joint Lead Arrangers and Joint Bookrunners and BANK OF AMERICA, N.A., CITIBANK, N.A., MORGAN STANLEY SENIOR FUNDING, INC., and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Documentation Agents
i TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND ACCOUNTING TERMS ...................................................................... 1 SECTION 1.01. Certain Defined Terms ...................................................................................... 1 SECTION 1.02. Computation of Time Periods ......................................................................... 24 SECTION 1.03. Accounting Terms; Terms Generally .............................................................. 24 SECTION 1.04. Interest Rates; Benchmark Notification .......................................................... 25 SECTION 1.05. Divisions ......................................................................................................... 25 ARTICLE II LETTERS OF CREDIT ........................................................................................................ 26 SECTION 2.01. Letters of Credit .............................................................................................. 26 SECTION 2.02. Reimbursement for LC Disbursements, Cover, Etc. ....................................... 28 SECTION 2.03. LC Disbursement Procedures. ........................................................................ 30 SECTION 2.04. Interest. ........................................................................................................... 30 SECTION 2.05. Provision of Cover. ......................................................................................... 30 SECTION 2.06. Replacement of an Issuing Bank; Additional Issuing Banks. ......................... 31 SECTION 2.07. Defaulting Banks. ........................................................................................... 32 ARTICLE III ADVANCES ........................................................................................................................ 34 SECTION 3.01. The Advances ................................................................................................. 34 SECTION 3.02. Making the Advances ..................................................................................... 34 SECTION 3.03. Notes ............................................................................................................... 36 SECTION 3.04. Termination, Reduction, Extension or Increase of the Revolving Credit Commitments ....................................................................................... 36 SECTION 3.05. Repayment of Advances and Evidence of Indebtedness ................................ 39 SECTION 3.06. Interest on Advances ....................................................................................... 40 SECTION 3.07. Interest Rate Determination ............................................................................ 40 SECTION 3.08. Optional Conversion of Advances .................................................................. 43 SECTION 3.09. Optional Prepayment of Advances ................................................................. 43 SECTION 3.10. Use of Proceeds .............................................................................................. 44 ARTICLE IV FEES; CERTAIN COMMON PROVISIONS ..................................................................... 44 SECTION 4.01. Fees ................................................................................................................. 44 SECTION 4.02. Increased Costs ............................................................................................... 45 SECTION 4.03. Illegality .......................................................................................................... 46 SECTION 4.04. Payments and Computations ........................................................................... 46 SECTION 4.05. Taxes ............................................................................................................... 48 SECTION 4.06. Replacement of Banks .................................................................................... 51 ARTICLE V CONDITIONS PRECEDENT .............................................................................................. 52 SECTION 5.01. Effective Date. ................................................................................................ 52 SECTION 5.02. Conditions Precedent to Each Extension of Credit and Each Amendment of each Letter of Credit .............................................................. 53 ARTICLE VI REPRESENTATIONS AND WARRANTIES .................................................................... 54 SECTION 6.01. Representations and Warranties of the Company ........................................... 54
ii ARTICLE VII COVENANTS OF THE COMPANY ................................................................................ 55 SECTION 7.01. Affirmative Covenants .................................................................................... 55 SECTION 7.02. Negative Covenants ........................................................................................ 58 SECTION 7.03. Guaranties ....................................................................................................... 59 ARTICLE VIII EVENTS OF DEFAULT .................................................................................................. 60 SECTION 8.01. Events of Default ............................................................................................ 60 SECTION 8.02. Application of Payments ................................................................................. 62 ARTICLE IX THE ADMINISTRATIVE AGENT .................................................................................... 63 SECTION 9.01. Appointment and Authority ............................................................................ 63 SECTION 9.02. Rights as a Bank ............................................................................................. 63 SECTION 9.03. Exculpatory Provisions ................................................................................... 63 SECTION 9.04. Reliance by Administrative Agent .................................................................. 64 SECTION 9.05. Indemnification ............................................................................................... 64 SECTION 9.06. Guaranty Matters ............................................................................................ 65 SECTION 9.07. Resignation of Administrative Agent ............................................................. 65 SECTION 9.08. Non-Reliance on Administrative Agent and Other Banks .............................. 66 SECTION 9.09. No Other Duties, Etc. ...................................................................................... 66 SECTION 9.10. Delegation of Duties ....................................................................................... 67 SECTION 9.11. Certain ERISA Matters ................................................................................... 67 SECTION 9.12. Acknowledgements of Banks ......................................................................... 68 ARTICLE X MISCELLANEOUS.............................................................................................................. 70 SECTION 10.01. Amendments, Etc. ........................................................................................... 70 SECTION 10.02. Notices, Etc. .................................................................................................... 71 SECTION 10.03. No Waiver; Remedies ..................................................................................... 73 SECTION 10.04. Costs, Expenses and Indemnification ............................................................. 73 SECTION 10.05. Binding Effect ................................................................................................. 74 SECTION 10.06. Assignments and Participations ...................................................................... 74 SECTION 10.07. Governing Law; Submission to Jurisdiction. .................................................. 78 SECTION 10.08. Severability ..................................................................................................... 78 SECTION 10.09. Counterparts; Integration; Effectiveness; Electronic Execution ..................... 79 SECTION 10.10. Survival ........................................................................................................... 80 SECTION 10.11. Sharing of Set-Offs, Etc. ................................................................................. 80 SECTION 10.12. Waiver of Jury Trial ........................................................................................ 81 SECTION 10.13. Confidentiality ................................................................................................ 81 SECTION 10.14. USA PATRIOT Act ........................................................................................ 82 SECTION 10.15. No Advisory or Fiduciary Relationship .......................................................... 82 SECTION 10.16. Acknowledgement and Consent to Bail-In of Affected Financial Institutions ...................................................................................................... 82 ARTICLE XI GUARANTEES ................................................................................................................... 83 SECTION 11.01. The Guarantees ............................................................................................... 83 SECTION 11.02. Guarantee Unconditional ................................................................................ 83 SECTION 11.03. Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances ................................................................................................. 84 SECTION 11.04. Subrogation ..................................................................................................... 84
iii SECTION 11.05. Waivers ........................................................................................................... 85 SECTION 11.06. Limit on Liability ............................................................................................ 85 SECTION 11.07. Stay of Acceleration ........................................................................................ 85 SECTION 11.08. Benefit to Guarantors ...................................................................................... 85 SECTION 11.09. Guarantor Covenants ...................................................................................... 85 SCHEDULE 1 - COMMITMENTS SCHEDULE 2 - PRICING SCHEDULE SCHEDULE 3 - EXISTING LETTERS OF CREDIT EXHIBITS EXHIBIT A-1 - Form of Notice of Issuance EXHIBIT A-2 - Form of Notice of Increase EXHIBIT A-3 - Form of Notice of Reduction EXHIBIT B - [Reserved] EXHIBIT C - Form of Note EXHIBIT D - Form of Assignment and Assumption EXHIBIT E - Form of Additional Guarantor Supplement EXHIBIT F-1 - Form of United States Tax Compliance Certificate (For Foreign Banks That Are Not Partnerships For United States Federal Income Tax Purposes) EXHIBIT F-2 - Form of United States Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For United States Federal Income Tax Purposes) EXHIBIT F-3 - Form of United States Tax Compliance Certificate (For Foreign Participants That Are Partnerships For United States Federal Income Tax Purposes) EXHIBIT F-4 - Form of United States Tax Compliance Certificate (For Foreign Banks That Are Partnerships For United States Federal Income Tax Purposes)
REVOLVING CREDIT AND LETTER OF CREDIT AGREEMENT (this “Agreement”) dated as of April 24, 2025 among THE CIGNA GROUP, a Delaware corporation (together with its successors and assigns, the “Company”), the direct and indirect Subsidiaries of the Company from time to time party to this Agreement, as Guarantors, the financial institutions (together with their respective successors and assigns and each financial institution that becomes a lender pursuant to Sections 3.04(e) and 3.04(f), each a “Bank” and, collectively, the “Banks”) listed under the heading “Banks” on the signature pages hereof, and JPMORGAN CHASE BANK, N.A. (“JPMorgan”), as administrative agent (in such capacity, together with its successors in such capacity, the “Administrative Agent”) as herein provided. WHEREAS, the Company has requested that the Banks, on the terms and subject to the conditions herein set forth, extend credit to the Company to enable it to borrow on a standby revolving credit basis on and after the date hereof and at any time and from time to time prior to the latest Commitment Termination Date (such term and each other capitalized term used but not defined herein having the meaning assigned to it in Article I) a principal amount not in excess of $6,500,000,000, a portion of which not in excess of $500,000,000 will be available for the issuance of Letters of Credit. The proceeds of such borrowings are to be used for general corporate purposes. The Banks are willing to extend such credit, and the Issuing Banks are willing to issue such Letters of Credit, on the terms and subject to the conditions herein set forth. NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. Certain Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): “Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition by the Company or any of its Subsidiaries of all or substantially all of the assets of a Person, or of any business or division of a Person, (b) the acquisition by the Company or any of its Subsidiaries of in excess of 50% of the capital stock, partnership interests, membership interests or equity of any Person (other than a Person that is a Subsidiary), or otherwise causing any Person to become a Subsidiary of the Company, or (c) a merger or consolidation or any other combination by the Company or any of its Subsidiaries with another Person (other than a Person that is a Subsidiary) provided that the Company (or a Person that succeeds to the Company pursuant to Section 7.02(b) in connection with such transaction or series of related transactions) or a Subsidiary of the Company (or a Person that becomes a Subsidiary of the Company as a result of such transaction) is the surviving entity; provided that any Person that is a Subsidiary at the time of execution of the definitive agreement related to any such transaction or series of related transactions (or, in the case of a tender offer or similar transaction, at the time of filing of the definitive offer document) shall constitute a Subsidiary for purposes of this definition even if in connection with such transaction or series of related transactions, such Person becomes a direct or indirect holding company of the Company. “Acquisition Debt” means any Debt of the Company or any of its Subsidiaries that has been issued or incurred for the purpose of financing, in whole or in part, a Material Acquisition and any related transactions or series of related transactions (including for the purpose of refinancing or replacing all or a portion of any pre-existing Debt of the Company, any of its Subsidiaries or the person(s) or assets to be acquired); provided that (a) the release of the proceeds thereof to the Company and its Subsidiaries is
2 contingent upon the consummation of such Material Acquisition and, pending such release, such proceeds are held in escrow (and, if the definitive agreement (or, in the case of a tender offer or similar transaction, the definitive offer document) for such acquisition is terminated prior to the consummation of such Material Acquisition or if such Material Acquisition is otherwise not consummated by the date specified in the definitive documentation relating to such Debt, such proceeds shall be promptly applied to satisfy and discharge all obligations of the Company and its Subsidiaries in respect of such Debt) or (b) such Debt contains a “special mandatory redemption” provision (or other similar provision) or otherwise permits such Debt to be redeemed or prepaid if such Material Acquisition is not consummated by the date specified in the definitive documentation relating to such Debt (and if the definitive agreement (or, in the case of a tender offer or similar transaction, the definitive offer document) for such Material Acquisition is terminated in accordance with its terms prior to the consummation of such Material Acquisition or such Material Acquisition is otherwise not consummated by the date specified in the definitive documentation relating to such Debt, such Debt is so redeemed or prepaid within 90 days of such termination or such specified date, as the case may be). “Additional Commitment Bank” has the meaning set forth in Section 3.04(e). “Adjusted Leverage Ratio Period” has the meaning set forth in Section 7.02(c). “Administrative Agent” has the meaning set forth in the introduction hereto. “Administrative Agent’s Account” means the account of the Administrative Agent maintained by the Administrative Agent at JPMorgan at 500 Stanton Christiana Rd., NCC5 / 1st Floor, Newark, Delaware 19713, ABA#021 000 021, Account No. 9008113381H0521, Attention: LS2 Incoming Account, Reference: Cigna, or such other account as may from time to time be designated by the Administrative Agent to the Company and the Banks in writing. “Administrative Questionnaire” means an Administrative Questionnaire in a form supplied by the Administrative Agent. “Advance” means an advance by a Bank to the Company as part of a Borrowing and refers to a Base Rate Advance, a Term Benchmark Advance or a Daily Simple SOFR Advance (each of which shall be a “Type” of Advance). “Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK Financial Institution. “Affiliate” means, as to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person. “Agent Parties” has the meaning set forth in Section 10.02(c). “Ancillary Document” has the meaning set forth in Section 10.09(b). “Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Company or any of its Affiliates from time to time concerning or relating to money laundering, bribery or corruption, including, without limitation, the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder, and the UK Bribery Act 2010.
3 “Applicable Commitment Fee Rate” means, for any Rating Level Period, the rate per annum set forth in Schedule 2 opposite the reference to such Rating Level Period under the heading “Applicable Commitment Fee Rate”. Each change in the Applicable Commitment Fee Rate resulting from a Rating Level Change shall be effective on the date of such Rating Level Change. “Applicable Margin” means, (a) with respect to any Term Benchmark Advance or any Daily Simple SOFR Advance, for any Rating Level Period, the rate per annum set forth in Schedule 2 opposite the reference to such Rating Level Period under the heading “Applicable Margin for Term Benchmark Advances or Daily Simple SOFR Advances” and (b) with respect to any Base Rate Advance, for any Rating Level Period, the rate per annum set forth in Schedule 2 opposite the reference to such Rating Level Period under the heading “Applicable Margin for Base Rate Advances”. Each change in the Applicable Margin resulting from a Rating Level Change shall be effective on the date of such Rating Level Change. “Applicable Percentage” means, with respect to any Bank, at any time, the ratio, expressed as a percentage, of (a) the aggregate amount of such Bank’s Commitment at such time to (b) the Total Commitments at such time; provided that, in the case of SECTION 2.07 when a Defaulting Bank shall exist, “Applicable Percentage” shall mean the percentage of the Total Commitments (disregarding any Defaulting Bank’s Commitment) represented by such Bank’s Commitment. If the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments and to any Bank’s status as a Defaulting Bank at the time of determination. “Arrangers” means JPMorgan Chase Bank, N.A., BofA Securities, Inc., Citibank, N.A., Morgan Stanley Senior Funding, Inc. and Wells Fargo Securities, LLC, in their respective capacities as joint lead arrangers and joint bookrunners under this Agreement. “Assignment and Assumption” means an assignment and assumption entered into by a Bank and an Eligible Bank (with the consent of any party whose consent is required by Section 10.06), and accepted by the Administrative Agent, substantially in the form of Exhibit D or any other form approved by the Administrative Agent. “Available Tenor” means, as of any date of determination and with respect to the then- current Benchmark, as applicable, any tenor for such Benchmark (or component thereof) or payment period for interest calculated with reference to such Benchmark (or component thereof), as applicable, that is or may be used for determining the length of an Interest Period for any term rate or otherwise, for determining any frequency of making payments of interest calculated pursuant to this Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 3.07(h). “Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution. “Bail-In Legislation” means, (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time that is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment
4 firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings). “Bank” and “Banks” have the meanings set forth in the introduction hereto (and shall include each Issuing Bank unless the context otherwise requires). “Bank Insolvency Event” means that (a) a Bank or its Parent Company is insolvent, or is generally unable to pay its debts as they become due, or admits in writing its inability to pay its debts as they become due, or makes a general assignment for the benefit of its creditors, or (b) such Bank or its Parent Company is the subject of a Bail-In Action or a bankruptcy, insolvency, reorganization, liquidation or similar proceeding, or a receiver, trustee, conservator, intervenor or sequestrator or the like has been appointed for such Bank or its Parent Company, or such Bank or its Parent Company has taken any action in furtherance of or indicating its consent to or acquiescence in any such proceeding or appointment; provided that a Bank Insolvency Event shall not have occurred solely by virtue of the ownership or acquisition of any equity interest in such Bank or its Parent Company by a governmental authority so long as such ownership interest does not result in or provide such Bank with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Bank (or such governmental authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Bank. “Base Rate” means, for any day, a fluctuating interest rate per annum in effect from time to time, which rate per annum shall at all times be equal to the highest of: (a) the Prime Rate in effect on such day; (b) 0.50% per annum above the NYFRB Rate for such day; and (c) the Term SOFR Rate for a one month Interest Period as published two U.S. Government Securities Business Days prior to such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%; provided that for the purpose of this definition, the Term SOFR Rate for any day shall be based on the Term SOFR Reference Rate at approximately 5:00 a.m. Chicago time on such day (or any amended publication time for the Term SOFR Reference Rate, as specified by the CME Term SOFR Administrator in the Term SOFR Reference Rate methodology). Any change in the Base Rate due to a change in the Prime Rate, the NYFRB Rate or the Term SOFR Rate shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Term SOFR Rate, respectively. If the Base Rate is being used as an alternate rate of interest pursuant to Section 3.07 (for the avoidance of doubt, only until the Benchmark Replacement has been determined pursuant to Section 3.07(h)), then the Base Rate shall be the higher of clauses (a) and (b) above and shall be determined without reference to clause (c) above. For the avoidance of doubt, if the Base Rate as determined pursuant to the foregoing would be less than 1.00%, such rate shall be deemed to be 1.00% for purposes of this Agreement. “Base Rate Advance” means an Advance that bears interest as provided in Section 3.06(a). “Base Rate Borrowing” means, as to any Borrowing, the Base Rate Advances comprising such Borrowing.
5 “Benchmark” means, initially, with respect to any (i) Daily Simple SOFR Advance, the Daily Simple SOFR or (ii) Term Benchmark Advance, the Term SOFR Rate; provided that if a Benchmark Transition Event, and the related Benchmark Replacement Date have occurred with respect to the Daily Simple SOFR or Term SOFR Rate, as applicable, or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 3.07(e). “Benchmark Replacement” means, for any Available Tenor the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Company as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for dollar- denominated syndicated credit facilities at such time in the United States and (b) the related Benchmark Replacement Adjustment. If the Benchmark Replacement as determined pursuant to the above would be less than zero, the Benchmark Replacement will be deemed to be zero for the purposes of this Agreement and the other Loan Documents. “Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Company for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date and/or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for dollar-denominated syndicated credit facilities at such time. “Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement and/or any Benchmark, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent decides in its reasonable discretion may be appropriate to reflect the adoption and implementation of such Benchmark and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement and the other Loan Documents).
6 “Benchmark Replacement Date” means, with respect to any Benchmark, the earlier to occur of the following events with respect to such then-current Benchmark: (1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or (2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or component thereof) have been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be no longer representative; provided, that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (3) and even if such Benchmark (or component thereof) or, if such Benchmark is a term rate, any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date. For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof). “Benchmark Transition Event” means, with respect to any Benchmark, the occurrence of one or more of the following events with respect to such then-current Benchmark: (1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, any Available Tenor of such Benchmark (or such component thereof); (2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the NYFRB, the CME Term SOFR Administrator, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), in each case, which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, any Available Tenor of such Benchmark (or such component thereof); or
7 (3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such Benchmark (or such component thereof) or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof) are no longer, or as of a specified future date will no longer be, representative. For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof). “Benchmark Unavailability Period” means, with respect to any Benchmark, the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 3.07 and (y) ending at the time that a Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any Loan Document in accordance with Section 3.07. “Beneficial Ownership Certification” means a certification regarding beneficial ownership or control as required by the Beneficial Ownership Regulation. “Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230. “Beneficiary” means the beneficiary of a Letter of Credit. “Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Internal Revenue Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Internal Revenue Code) the assets of any such “employee benefit plan” or “plan”. “Borrowing” means a borrowing consisting of simultaneous Advances of the same Type and, in the case of Term Benchmark Advances, having the same Interest Period made by each of the Banks pursuant to Section 3.01(a). “Business Day” means, any day (other than a Saturday or a Sunday) on which banks are open for business in New York City; provided that, in addition to the foregoing, a Business Day shall be any such day that is only a U.S. Government Securities Business Day (a) in relation to Daily Simple SOFR Advances and any interest rate settings, fundings, disbursements, settlements or payments of any such Daily Simple SOFR Advances, or any other dealings of such Daily Simple SOFR Advances and (b) in relation to Advances referencing the Term SOFR Rate and any interest rate settings, fundings, disbursements, settlements or payments of any such Advances referencing the Term SOFR Rate or any other dealings of such Advances referencing the Term SOFR Rate. “Capital Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases or financing leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP and subject to Section 1.03.
8 “Capital Markets Debt” means any Debt consisting of bonds, debentures, notes or other similar debt securities issued in (a) a public offering registered under the Securities Act of 1933 or (b) a private placement to institutional investors that is resold in accordance with Rule 144A or Regulation S of the Securities Act of 1933, whether or not it includes registration rights entitling the holders of such debt securities to registration thereof with the Securities and Exchange Commission. The term “Capital Markets Debt” shall not, for the avoidance of doubt, be construed to include any Debt issued to institutional investors in a direct placement of such Debt that is not resold by an intermediary (it being understood that, without limiting the foregoing, a financing that is distributed to not more than ten Persons (provided that multiple managed accounts and affiliates of any such Persons shall be treated as one Person for the purposes of this definition) shall be deemed not to be so underwritten or resold), or any Debt under any commercial bank facility or similar Debt, Capital Lease Obligation or recourse transfer of any financial asset or any other type of Debt incurred in a manner not customarily viewed as a “securities offering.” “Change in Control” means any of the following events: (a) direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its subsidiaries taken as a whole to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) other than to the Company or one of its Subsidiaries; or (b) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) other than the Company or one of its Subsidiaries becomes the beneficial owner, directly or indirectly, of more than 30% of the then outstanding number of shares of the Company’s voting stock; provided, however, that a transaction will not be deemed to involve a Change in Control if (i) the Company becomes a wholly-owned subsidiary of a holding company and (ii)(A) the holders of the voting stock of such holding company immediately following that transaction are substantially the same as the holders of the Company’s voting stock immediately prior to that transaction or (B) immediately following that transaction no Person is the beneficial owner, directly or indirectly, of more than 30% of the voting stock of such holding company. For purposes of this definition, “voting stock” means capital stock of any class or kind the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of the Company, even if the right to vote has been suspended by the happening of such a contingency. “Change in Law” has the meaning set forth in Section 4.02(a). “CME Term SOFR Administrator” means CME Group Benchmark Administration Limited as administrator of the forward-looking term Secured Overnight Financing Rate (SOFR) (or a successor administrator). “Collateral Account” has the meaning set forth in Section 2.05(a). “Commitment” means, with respect to each Bank, the amount set forth opposite the name of such Bank on Schedule 1 under the heading “Commitments”, or in the Assignment and Assumption or other documentation or record (as such term is defined in Section 9-102(a)(70) of the New York Uniform Commercial Code) as provided in Section 10.06(b)(iv), pursuant to which such Bank shall have assumed its Commitment, as applicable, and giving effect to (a) any reduction in such amount from time to time pursuant to Section 3.04(b), (b) any increase in such amounts from time to time pursuant to Section 3.04(f), or (c) any reduction or increase in such amount from time to time pursuant to assignments by or to such
9 Bank pursuant to Section 10.06; provided that at no time shall the Revolving Credit Exposure of any Bank exceed its Commitment. The initial aggregate amount of the Banks’ Commitments is $6,500,000,000.00. “Commitment Termination Date” means April 24, 2030, subject to extension (in the case of each Bank consenting thereto) as provided in Section 3.04(e); provided that if such day is not a Business Day the Commitment Termination Date shall be the immediately preceding Business Day. “Communications” has the meaning set forth in Section 10.02(b). “Company” has the meaning set forth in the introduction hereto. “Company Materials” has the meaning set forth in Section 7.01. “Confidential Information” means information furnished to the Administrative Agent or any Bank by or on behalf of the Company or any Subsidiary of the Company relating to the Company or any of its Subsidiaries or their respective businesses, other than any such information that is available to the Administrative Agent or any Bank on a nonconfidential basis prior to such disclosure by the Company or any Subsidiary. “Confirming Bank” means, with respect to any Letter of Credit and any Bank, any other bank that has confirmed, by a document acceptable to the Beneficiary, the obligations of such Bank under such Letter of Credit. “Consolidated Subsidiary” means, at any time, any Subsidiary of the Company or other entity the accounts of which would, in accordance with GAAP, be consolidated with those of the Company in its consolidated financial statements if such statements were prepared as of such date. “Continue” and “Continuation” refers to the continuation of Term Benchmark Advances from one Interest Period to the next as Term Benchmark Advances. “Continuing Banks” has the meaning set forth in Section 3.04(e). “Convert”, “Conversion” and “Converted” each refers to a conversion of Advances of one Type into Advances of the other Type pursuant to Section 3.07 or 3.08. “Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor. “Cover” has the meaning set forth in Section 2.05(b). “Daily Simple SOFR” means, for any day (a “SOFR Rate Day”), a rate per annum equal to SOFR for the day (such day “SOFR Determination Date”) that is five (5) U.S. Government Securities Business Days prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website; provided that if the Daily Simple SOFR as so determined would be less than zero, such rate shall be deemed to be equal to zero for the purposes of this Agreement. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Company. If
10 by 5:00 p.m. (New York City time) on the second (2nd) U.S. Government Securities Business Day immediately following any SOFR Determination Date, SOFR in respect of such SOFR Determination Date has not been published on the SOFR Administrator’s Website and a Benchmark Replacement Date with respect to the Daily Simple SOFR has not occurred, then SOFR for such SOFR Determination Date will be SOFR as published in respect of the first preceding U.S. Government Securities Business Day for which such SOFR was published on the SOFR Administrator’s Website. “Daily Simple SOFR Advance” means an Advance that bears interest as provided in Section 3.06(c). “Daily Simple SOFR Borrowing” means, as to any Borrowing, the Daily Simple SOFR Advances comprising such Borrowing. “Debt” of any Person means (a) indebtedness of such Person for borrowed money, (b) obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) obligations of such Person to pay the deferred purchase price of property or services, (d) Capital Lease Obligations, (e) Debt of others secured by a Lien on the property of such Person, whether or not the respective Debt so secured has been assumed by such Person (but excluding, in the case of this clause (e), involuntary Liens on the property of such Person that are being contested in good faith and by appropriate proceedings and for which adequate reserves with respect thereto are maintained on the books of such Person), and (f) obligations of such Person under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (a) through (e) above (but excluding, in the case of this clause (f), involuntary obligations of such Person that are being contested in good faith and by appropriate proceedings and for which adequate reserves with respect thereto are maintained on the books of such Person in accordance with GAAP); provided that the term “Debt” shall exclude Non-Recourse Debt. “Default” means an Event of Default or an event that, with notice or lapse of time or both, would become an Event of Default. “Default Interest” has the meaning set forth in Section 3.06(d). “Defaulting Bank” means at any time, subject to Section 2.07(f), (a) any Bank that has failed for two or more Business Days to comply with its obligations under this Agreement to make an Advance, make a payment to an Issuing Bank in respect of its LC Exposure or make any other payment due hereunder (each, a “funding obligation”), unless such Bank has notified the Administrative Agent and the Company in writing that such failure is the result of such Bank’s good faith determination that one or more conditions precedent to funding has not been satisfied (which conditions precedent, together with the applicable default, if any, will be specifically identified in such writing), (b) any Bank that has notified the Administrative Agent, the Company or an Issuing Bank in writing, or has stated publicly, that it does not intend to comply with its funding obligations hereunder, unless such writing or statement states that such position is based on such Bank’s good faith determination that one or more conditions precedent to funding cannot be satisfied (which conditions precedent, together with the applicable default, if any, will be specifically identified in such writing or public statement), (c) any Bank that has defaulted on its funding obligations under other loan agreements or credit agreements or other similar financing agreements generally, (d) any Bank that has, for three or more Business Days after written request of the Administrative Agent or the Company, failed to confirm in writing to the Administrative Agent and the Company that it will comply with its prospective funding obligations hereunder (provided that such Bank will cease to be a Defaulting Bank pursuant to this clause (d) upon the Administrative Agent’s and the Company’s receipt of
11 such written confirmation), (e) any Bank with respect to which, or with respect to whose Parent Company, a Bank Insolvency Event has occurred and is continuing or (f) any Bank that has become the subject of a Bail-In Action (provided, in each case, that neither the reallocation of funding obligations provided for in Section 2.07(a) as a result of a Bank’s being a Defaulting Bank nor the performance by Non-Defaulting Banks of such reallocated funding obligations will by themselves cause the relevant Defaulting Bank to become a Non-Defaulting Bank). Any determination by the Administrative Agent that a Bank is a Defaulting Bank under any of clauses (a) through (f) above will be conclusive and binding absent manifest error, and such Bank will be deemed to be a Defaulting Bank (subject to Section 2.07(f)) upon notification of such determination by the Administrative Agent to the Company and the Banks. “Disclosed Litigation” means the legal actions or proceedings disclosed in the report of the Company on form 10-K, 10-Q or 8-K most recently filed with the Securities and Exchange Commission prior to the date hereof. “Dollars” and the sign “$” mean lawful money in the United States of America. “Domestic Subsidiary” means a Subsidiary of the Company that is not a Foreign Subsidiary or FSHCO. “EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent. “EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway. “EEA Resolution Authority” means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution. “Effective Date” has the meaning set forth in Section 5.01. “Electronic Signature” means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record. “Eligible Bank” means (a) a commercial bank organized under the laws of the United States, or any State thereof, and having total assets in excess of $5,000,000,000; (b) a commercial bank organized under the laws of any other country that is a member of the Organization for Economic Cooperation and Development or has concluded special lending arrangements with the International Monetary Fund associated with its General Arrangements to Borrow or of the Cayman Islands, or a political subdivision of any such country, and having total assets in excess of $5,000,000,000 so long as such bank is acting through a branch or agency located in the United States or in the country in which it is organized or another country that is described in this clause (b), (c) each Person that is a Bank under this Agreement on the date hereof, (d) Goldman Sachs Lending Partners LLC and (e) Morgan Stanley Senior Funding, Inc.; provided that none of the Company nor any Guarantor nor any of their respective Affiliates may be an Eligible Bank.
12 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time. “EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time. “Event of Default” has the meaning specified in Section 8.01. “Exchange Act” means the Securities Exchange Act of 1934, as amended. “Excluded Taxes” means any of the following Taxes imposed on or with respect to a payment by a Loan Party under the Loan Documents or required to be withheld or deducted from a payment by a Loan Party under the Loan Documents: (i) in the case of each Bank and the Administrative Agent, Taxes imposed on its net income (however denominated), and franchise Taxes and branch profits Taxes imposed on it, by the jurisdiction under the laws of which such Bank or the Administrative Agent (as the case may be) is organized or where its principal office is located or, in each case, any political subdivision thereof and, in the case of each Bank, Taxes imposed on its income (however denominated), and franchise Taxes and branch profits Taxes imposed on it, by the jurisdiction of such Bank’s Lending Office or any political subdivision thereof or, in the case of each Bank and the Administrative Agent, Taxes that are imposed as a result of a present or former connection between such Bank or the Administrative Agent, and the jurisdiction of the governmental authority imposing such Tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Administrative Agent or such Bank having executed, delivered or performed its obligations or received a payment under this Agreement) (such Taxes arising from a present or former connection, “Other Connection Taxes”), (ii) United States withholding Tax imposed on amounts payable to or for the account of each Bank or Administrative Agent, pursuant to a law in effect on the date on which (I) such Bank or Administrative Agent becomes party to this Agreement (other than pursuant to an assignment request by the Company under Section 4.06) or (II) such Bank changes its Lending Office, except in each case to the extent that, pursuant to Section 4.05, amounts with respect to such Taxes were payable either to such Bank’s assignor immediately before such Bank became party to this Agreement, or to such Bank immediately before it changed its Lending Office, (iii) Taxes attributable to a Bank’s failure to comply with Section 4.05(e) and (iv) any United States withholding Tax imposed as a result of FATCA. “Existing Credit Agreements” means (i) that certain 364-Day Revolving Credit Agreement dated as of April 25, 2024 among the Company, as borrower, the lenders from time to time party thereto, the guarantors, if any, from time to time party thereto and JPMorgan, as administrative agent, and (ii) that certain Revolving Credit and Letter of Credit Agreement dated as of April 25, 2024 among the Company, as borrower, the lenders from time to time party thereto, the guarantors, if any, from time to time party thereto and JPMorgan, as administrative agent. “Existing Letter of Credit” means each letter of credit described on Schedule 3. “Existing Termination Date” has the meaning set forth in Section 3.04(e). “Extension Date” has the meaning set forth in Section 3.04(e). “Extension Request” has the meaning set forth in Section 3.04(e). “FATCA” means Sections 1471 through 1474 of the Internal Revenue Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially
13 more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section 1471(b)(1) of the Internal Revenue Code, any intergovernmental agreement entered into in connection with the implementation of such Sections of the Internal Revenue Code and any fiscal or regulatory legislation, regulation or rule adopted pursuant to such intergovernmental agreements. “Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary institutions, as determined in such manner as shall be set forth on the NYFRB’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as the effective federal funds rate; provided that if the Federal Funds Effective Rate as so determined would be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement. “Foreign Subsidiary” means (a) each Subsidiary which is organized under the laws of a jurisdiction other than the United States of America or any state thereof or the District of Columbia and (b) each Subsidiary of a “controlled foreign corporation” within the meaning of section 957(a) of the Internal Revenue Code. “Fronting Commitment” means, at any time, for any Issuing Bank, the amount agreed by such Issuing Bank, the Company and the Administrative Agent as such Issuing Bank’s commitment to issue Letters of Credit, as such amount is set forth for such Issuing Bank in the Register. “FSHCO” shall mean any Subsidiary that owns no material assets other than equity interests (including rights to purchase or otherwise acquire, warrants, options, participations or other equivalents of or interests in (however designated) equity or ownership, and including preferred stock) in (a) one or more Foreign Subsidiaries that are “controlled foreign corporations” within the meaning of section 957(a) of the Internal Revenue Code or (b) other FSHCOs. “GAAP” means, subject to Section 1.03, generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied. “Guarantor” and “Guarantors” has the meaning set forth in Section 7.03(a). “Guaranty” and “Guaranties” has the meaning set forth in Section 7.03(a). “Hybrid Securities” means, at any time, trust preferred securities, deferrable interest subordinated debt securities, mandatory convertible debt or other hybrid securities issued by the Company or any Subsidiary that is accorded at least some equity treatment by Moody’s or S&P at the time of issuance thereof. “Hybrid Securities Amount” means, with respect to any Hybrid Securities, the principal amount (which principal amount may be a portion of the aggregate principal amount) of such Hybrid Securities that is accorded equity treatment by Moody’s or S&P at the time of issuance thereof. “Increase Date” has the meaning set forth in Section 3.04(f).
14 “Indemnified Party” has the meaning set forth in Section 10.04(b). “Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes. “Index Debt” means long-term senior, unsecured, non-credit-enhanced indebtedness of the Company for borrowed money. “Interest Period” means, for each Term Benchmark Advance comprising part of the same Borrowing, the period commencing on the date of such Term Benchmark Advance or the date of the Conversion of any Base Rate Advance into such Term Benchmark Advance and ending on the last day of the period selected by the Company pursuant to the provisions below and thereafter each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Company pursuant to the provisions below. The duration of each such Interest Period shall be one, three or six months, as the Company may, upon notice received by the Administrative Agent not later than 1:00 p.m. (New York City time) on the second Business Day prior to the first day of such Interest Period, select; provided that: (a) any Interest Period that would otherwise begin before and end after the Commitment Termination Date shall end on the Commitment Termination Date; (b) Interest Periods commencing on the same date for Term Benchmark Advances comprising part of the same Borrowing shall be of the same duration; (c) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to fall on the next succeeding Business Day, except that if such extension would cause the last day of such Interest Period to fall in the next following calendar month, the last day of such Interest Period shall fall on the next preceding Business Day; (d) whenever the first day of any Interest Period occurs on the last Business Day of an initial calendar month or a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month; and (e) no tenor that has been removed from this definition pursuant to Section 3.07(h) shall be available for specification in such borrowing request or conversion request. “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended. “ISP” means, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance). “Issuing Bank” means each Bank that has a Fronting Commitment on the date of this Agreement, and each other Bank that has agreed to become an Issuing Bank and has been approved as an “Issuing Bank” by the Administrative Agent and the Company in their reasonable discretion, each in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in
15 Section 2.06. Each Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of such Issuing Bank that are Eligible Banks, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate. Each Bank identified on Schedule 3 as the Issuing Bank in respect of an Existing Letter of Credit shall be deemed to be an Issuing Bank. “JPMorgan” means JPMorgan Chase Bank, N.A., a national banking association, and its successors and assigns. “LC Disbursement” means each payment made by a Bank or an Issuing Bank pursuant to a Letter of Credit. “LC Expiry Date” means, at any time for any Letter of Credit, the expiry date of such Letter of Credit. “LC Exposure” means, at any time, for any Bank, the sum of (a) such Bank’s Applicable Percentage of the undrawn portion of the Maximum Amount of all Letters of Credit at such time plus (b) such Bank’s Applicable Percentage of the aggregate amount of any and all LC Disbursements that have not been reimbursed by or on behalf of the Company at such time. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn and the obligations of the Company and each Bank shall remain in full force and effect until the Issuing Bank and each Bank shall have no further obligations to make any payments or disbursements under any circumstances with respect to any Letter of Credit. “LC Reimbursement Obligation” means the obligation of the Company under Section 2.02 to reimburse to each Bank the amount of each LC Disbursement by such Bank. “LC Sublimit” means $500,000,000. “Lending Office” means, with respect to any Bank, the office of such Bank specified as its “Lending Office” in its Administrative Questionnaire, or such other office of such Bank as such Bank may from time to time specify to the Company and the Administrative Agent. “Letter of Credit” means (a) any letter of credit issued by an Issuing Bank pursuant to Section 2.01(a)(1)(i) and (b) each of the Existing Letters of Credit, and in each case any Replacement Letter of Credit therefor. “Leverage Ratio” means, at any time, the ratio of (a) Total Consolidated Debt to (b) Total Consolidated Capitalization; provided that the Leverage Ratio shall be computed without taking into account (i) “Net unrealized appreciation (depreciation), fixed maturities” as determined in accordance with GAAP in the consolidated balance sheets of the Company or (ii) “Postretirement pension benefits liability adjustment” as determined in accordance with GAAP in the consolidated balance sheets of the Company. “Lien” means any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including the lien or retained security title of a conditional vendor.
16 “Loan Documents” means this Agreement, the Notes (if any), the Guaranties (if any, evidenced by an agreement other than this Agreement), and any amendments to any of the foregoing. “Loan Party” means the Company and each Guarantor, if any. “Majority Banks” means, at any time, Banks having a majority of the sum of the then aggregate amount of the Revolving Credit Exposures and LC Exposures; provided that the Revolving Credit Exposure and LC Exposure of any Defaulting Bank shall be disregarded in determining Majority Banks at any time. “Margin Stock” means margin stock within the meaning of Regulation U. “Material Acquisition” means any Acquisition the total consideration for which is equal to or greater than $250,000,000. “Material Adverse Change” or “Material Adverse Effect” means a material adverse change in or a material adverse effect on (a) the business, financial condition, operations or properties of the Company and its Subsidiaries, taken as a whole, or (b) the legality, validity or enforceability of any Loan Document. “Material Debt” means (i) any Debt contemplated by clauses (a) (including commitments with respect to any revolving credit facility) and (b) of the definition thereof (other than Capital Markets Debt) in an aggregate committed or principal amount in excess of $1,000,000,000 and (ii) any Capital Markets Debt, in each case, of the Company. “Material Subsidiary” means each Subsidiary of the Company (a) whose assets constitute 10% or more of the total assets of the Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) or (b) whose revenues constituted 10% or more of the total revenues of the Company and its Consolidated Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) during the most recently concluded fiscal year of the Company. “Maximum Amount” of any Letter of Credit means the amount specified in such Letter of Credit as the maximum aggregate amount that may be drawn thereunder; provided, however, that with respect to any Letter of Credit that, by its terms or the terms of any related documentation, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time. “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto. “Moody’s Rating” means, at any time, the rating of the Index Debt then most recently announced by Moody’s. “New/Increasing Bank” has the meaning set forth in Section 3.04(f). “Non-Consenting Bank” has the meaning set forth in Section 4.06. “Non-Defaulting Bank” means, at any time, a Bank that is not a Defaulting Bank.
17 “Non-Extending Bank” has the meaning set forth in Section 3.04(e). “Non-Recourse Debt” means any Debt of the Company, any of the Company’s Subsidiaries or any consolidated variable interest entities shown on a separate line of the Company’s consolidated balance sheet as “non-recourse obligations” if, and so long as, such Debt meets the requirements of clause (a) or clause (b) below; provided that Debt will not fail to qualify as Non-Recourse Debt or be considered an indirect liability of the company solely because a Subsidiary of the Company has indemnified any lender in respect of such Debt against damages resulting from exceptions to non-recourse liability in general usage in the relevant industry at the time such Debt is incurred (such as fraud, waste, misapplication of funds, failure to maintain insurance coverage, and environmental liability): (a) (i) the instruments governing such Debt limit the recourse (whether direct or indirect) of the holder or holders thereof against the Company and its Subsidiaries for the payment of such Debt to the property securing such Debt and (ii) if such Debt is incurred after the date hereof by the Company or a Subsidiary of the Company which is organized under the laws of the United States or any State thereof, the property securing such Debt is not material to the business, financial condition, operations or properties of the Company and its Subsidiaries, taken as a whole, as determined at the time such Debt is incurred; or (b) (i) the sole obligors of such Debt are (x) a corporation or other entity (such obligor, a “Specified Entity”) formed solely for the purpose of owning (or owning and operating) property which is (or may be) subject to a Lien securing such Debt and (y) other entities that are not Subsidiaries of the Company or other entities in which the Company or any Subsidiary of the Company holds a direct or indirect ownership or other beneficial interest, (ii) such Specified Entity owns no other material property, (iii) the sole collateral security provided by the Company and its Subsidiaries with respect to such Debt (if any) consists of property owned by such Specified Entity and/or the capital stock of (or equivalent ownership interests in) such Specified Entity and (iv) neither the Company nor any of its other Subsidiaries has any liability, direct or indirect, in respect of such Debt other than indemnification obligations to any lender in respect of such Debt against damages resulting from exceptions to nonrecourse liability in general usage in the relevant industry at the time such Debt is incurred such as fraud, waste, misapplication of funds, failure to maintain insurance coverage, and environmental liability. “Note” shall have the meaning set forth in Section 3.03. “Notice of Borrowing” means a request by the Company for a Borrowing in accordance with Error! Reference source not found., which shall be substantially in the form approved by the Administrative Agent and separately provided to the Company. “Notice of Increase” has the meaning set forth in Section 2.01(d). “Notice of Issuance” has the meaning set forth in Section 2.01(d). “Notice of Reduction” has the meaning set forth in Section 2.01(d). “NYFRB” means the Federal Reserve Bank of New York. “NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are
18 published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a federal funds transaction quoted at 1:00 p.m. on such day received by the Administrative Agent from a federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates as so determined would be less than zero, such rate shall be deemed to be zero for purposes of this Agreement. “NYFRB’s Website” means the website of the NYFRB at http://www.newyorkfed.org, or any successor source. “Obligations” means, with respect to the Company, all obligations of the Company to pay principal and interest on the Advances, all fees and charges payable hereunder, and all other payment obligations, covenants and duties of the Company or any of its Subsidiaries arising under any Loan Document, in each case whether now existing or hereafter arising, due or to become due, direct or indirect, absolute or contingent, and howsoever evidenced, held or acquired. “Other Connection Taxes” has the meaning specified in the definition of “Excluded Taxes”. “Other Taxes” has the meaning set forth in Section 4.05(b). “Outside Expiry Date” means the date ten Business Days prior to the Commitment Termination Date. “Overnight Bank Funding Rate” means, for any day, the rate comprised of both overnight federal funds and overnight eurodollar transactions denominated in Dollars by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the NYFRB as set forth on the NYFRB’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate. “Parent Company” means, with respect to a Bank, the bank holding company (as defined in Federal Reserve Board Regulation Y), if any, of such Bank, and/or any Person owning, beneficially or of record, directly or indirectly, a majority of the shares of such Bank. “Participant Register” has the meaning set forth in Section 10.06(f). “Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56, signed into law October 26, 2001. “Payment” has the meaning set forth in Section 9.12. “Payment Notice” has the meaning set forth in Section 9.12. “Permitted Investments” means securities issued or unconditionally guaranteed by the Government of the United States of America or any agency thereof and securities issued or unconditionally guaranteed by the central government of any country that is a member of the OECD, rated AA or better (or the equivalent). “Person” means an individual, partnership, corporation (including a business trust), limited liability company, joint stock company, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof.
19 “Platform” has the meaning set forth in Section 7.01. “Prime Rate” means the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as determined by the Administrative Agent). Each change in the Prime Rate shall be effective from and including the date such change is publicly announced or quoted as being effective. “Protected Person” has the meaning set forth in Section 10.04(b). “PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time. “Public Bank” has the meaning set forth in Section 7.01. “Quarterly Dates” means the last day of March, June, September and December in each year, the first of which shall be the first such day after the date hereof. “Rating” means the Moody’s Rating or the S&P Rating, as the case may be. “Rating Level Change” means a change in the Moody’s Rating or the S&P Rating that results in a change from one Rating Level Period to another, which Rating Level Change shall be deemed to take effect as of the third Business Day following the date on which the relevant change in rating is first announced by Moody’s or S&P, as applicable. “Rating Level Period” means a Rating Level 1 Period, a Rating Level 2 Period, a Rating Level 3 Period, a Rating Level 4 Period or a Rating Level 5 Period, as applicable; provided that: (i) “Rating Level 1 Period” means a period during which the Moody’s Rating is at or above A1 or the S&P Rating is at or above A+; (ii) “Rating Level 2 Period” means a period that is not a Rating Level 1 Period, during which the Moody’s Rating is at or above A2 or the S&P Rating is at or above A; (iii) “Rating Level 3 Period” means a period that is not a Rating Level 1 Period or a Rating Level 2 Period, during which the Moody’s Rating is at or above A3 or the S&P Rating is at or above A-; (iv) “Rating Level 4 Period” means a period that is not a Rating Level 1 Period, a Rating Level 2 Period or a Rating Level 3 Period, during which the Moody’s Rating is at or above Baa1 or the S&P Rating is at or above BBB+; and (v) “Rating Level 5 Period” means a period that is not a Rating Level 1 Period, a Rating Level 2 Period, a Rating Level 3 Period or a Rating Level 4 Period; provided further that (a) if the Moody’s Rating and the S&P Rating differ by one rating level, then the applicable Rating Level Period shall be the higher of such Ratings and (b) if the Moody’s Rating and the S&P Rating differ by more than one rating level, then the applicable Rating Level Period shall be the Rating
20 Level Period that is one level below the higher of the two rating levels (for purposes of the foregoing, Rating Level 1 Period is the highest and Rating Level 5 Period is the lowest); and provided further that any period during which there is (a) only one Rating then in effect, the rating level corresponding to the rating that is one level below such rating shall apply and (b) any period during which there is no Rating shall be a Rating Level 5 Period. “Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is the Term SOFR Rate, 5:00 a.m. (Chicago time) on the day that is two U.S. Government Securities Business Days preceding the date of such setting, (2) if such Benchmark is Daily Simple SOFR, then four U.S. Government Securities Business Days prior to such setting or (3) if such Benchmark is none of the Term SOFR Rate or Daily Simple SOFR, the time determined by the Administrative Agent in its reasonable discretion. “Register” has the meaning set forth in Section 10.06(d). “Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System, as from time to time amended. “Regulation X” means Regulation X of the Board of Governors of the Federal Reserve System, as from time to time amended. “Regulatory Authority” has the meaning set forth in Section 10.13. “Related Parties” means, with respect to any Person (a) any controlling Person, controlled Affiliate or Subsidiary of such Person, (b) the respective directors, officers or employees of such Person or any of its Subsidiaries, controlled Affiliates or controlling Persons and (c) the respective agents and advisors of such Person or any of its Subsidiaries, controlled Affiliates or controlling Persons. “Relevant Governmental Body” means, the Federal Reserve Board and/or the NYFRB, the CME Term SOFR Administrator, as applicable, or a committee officially endorsed or convened by the Federal Reserve Board and/or the NYFRB or, in each case, any successor thereto. “Relevant Rate” means (i) with respect to any Term Benchmark Borrowing, the Term SOFR Rate or (ii) with respect to any Daily Simple SOFR Borrowing, the Daily Simple SOFR, as applicable. “Replacement Letter of Credit” means any letter of credit issued in accordance with the provisions of Section 2.07(e) or 10.06(b)(v), in replacement of and in the same form as the relevant replaced Letter of Credit. “Resignation Effective Date” has the meaning set forth in Section 9.07(a). “Resolution Authority” means an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority. “Responsible Officer” means the Chief Financial Officer, the Treasurer or any Assistant Treasurer of the Company or any Vice President of the Company in the finance department. “Revolving Credit Availability Period” means the period from the Effective Date until the Commitment Termination Date.
21 “Revolving Credit Commitment” means, for any Bank, at any time, (i) such Bank’s Commitment, minus (ii) such Bank’s Applicable Percentage of the aggregate Maximum Amount of all outstanding Letters of Credit at such time. “Revolving Credit Exposure” means, at any time, for any Bank, the sum of (a) the unused amount of such Bank’s Revolving Credit Commitment plus (b) the aggregate outstanding principal amount of all Advances by such Bank. “S&P” means Standard & Poor’s Global Ratings, a Standard & Poor’s Financial Services LLC business, and any successor thereto. “S&P Rating” means, at any time, the rating of the Index Debt then most recently announced by S&P. “Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic, Crimea, the non-government controlled areas of Zaporizhzhia and Kherson Regions of Ukraine, Cuba, Iran, North Korea and Syria). “Sanctioned Person” means, at any time, (a) any Person (i) listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury at its official website or any other replacement official publication of such list or (ii) listed in any sanctions-related list of sanctioned Persons maintained by the U.S. Department of State, the United Nations Security Council, His Majesty’s Treasury of the United Kingdom, Hong Kong Monetary Authority, the European Union, any European Union member state or Canada (including Global Affairs Canada), (b) any Person organized or resident in a Sanctioned Country, (c) any Person in which a 50% or greater ownership interest is held by any such Person or Persons described in the foregoing clauses (a) and (b), or which is otherwise controlled by a Person or Persons described in the foregoing clauses (a) and (b) or (d) any Person otherwise the subject of any Sanctions. “Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any European Union member state, Hong Kong Monetary Authority, His Majesty’s Treasury of the United Kingdom or Canada (including Global Affairs Canada). “SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator. “SOFR Administrator” means the NYFRB (or a successor administrator of the secured overnight financing rate). “SOFR Administrator’s Website” means the NYFRB’s Website, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time. “SOFR Determination Date” has the meaning specified in the definition of “Daily Simple SOFR”.
22 “SOFR Rate Day” has the meaning specified in the definition of “Daily Simple SOFR”. “Solvent” means, with respect to any Person at any time, that (a) the fair value of the assets of the Company and its Subsidiaries on a consolidated basis, at a fair valuation, will exceed the debts and liabilities, direct, subordinated, contingent or otherwise, of the Company and its Subsidiaries on a consolidated basis, (b) the present fair saleable value of the property of the Company and its Subsidiaries on a consolidated basis will be greater than the amount that will be required to pay the probable liability of the Company and its Subsidiaries on a consolidated basis on their debts and other liabilities, direct, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured, (c) the Company and its Subsidiaries on a consolidated basis will be able to pay their debts and liabilities, direct, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured and (d) the Company and its Subsidiaries on a consolidated basis will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted following the Effective Date. “Step-Up Acquisition” means any Acquisition designated in writing as such by the Company to the Administrative Agent at the time of consummation thereof for total cash consideration that is equal to or greater than $1,000,000,000; provided that immediately after giving effect to such Step-Up Acquisition, no Default shall have occurred and be continuing or would result therefrom. “Step-Up Acquisition Debt” means Debt of the Company or any of its Subsidiaries that has been issued or incurred for the purpose of financing, in whole or in part, a Step-Up Acquisition and any related transactions or series of related transactions (including for the purpose of refinancing or replacing all or a portion of any pre-existing Debt of the Company, any of its Subsidiaries or the person(s) or assets to be acquired, in each case, in connection with such Step-Up Acquisition). “Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership, limited liability company or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries of such Person. “Taxes” has the meaning set forth in Section 4.05(a). “Term Benchmark” when used in reference to any Advance or Borrowing, refers to whether such Advance, or the Advances comprising such Borrowing, are bearing interest at a rate determined by reference to the Term SOFR Rate. “Term Benchmark Advance” means an Advance that bears interest as provided in Section 3.06(b). “Term Benchmark Borrowing” means, as to any Borrowing, the Term Benchmark Advances comprising such Borrowing. “Term SOFR Determination Day” has the meaning assigned to it under the definition of “Term SOFR Reference Rate”.
23 “Term SOFR Rate” means, with respect to any Term Benchmark Borrowing and for any tenor comparable to the applicable Interest Period, the Term SOFR Reference Rate at approximately 5:00 a.m., Chicago time, two U.S. Government Securities Business Days prior to the commencement of such tenor comparable to the applicable Interest Period, as such rate is published by the CME Term SOFR Administrator; provided that if the Term SOFR Rate as so determined would be less than zero, such rate shall be deemed to be equal to zero for the purposes of this Agreement. “Term SOFR Reference Rate” means, for any day and time (such day, the “Term SOFR Determination Day”), with respect to any Term Benchmark Borrowing denominated in Dollars and for any tenor comparable to the applicable Interest Period, the rate per annum published by the CME Term SOFR Administrator and identified by the Administrative Agent as the forward-looking term rate based on SOFR. If by 5:00 pm (New York City time) on such Term SOFR Determination Day, the “Term SOFR Reference Rate” for the applicable tenor has not been published by the CME Term SOFR Administrator and a Benchmark Replacement Date with respect to the Term SOFR Rate has not occurred, then, so long as such day is otherwise a U.S. Government Securities Business Day, the Term SOFR Reference Rate for such Term SOFR Determination Day will be the Term SOFR Reference Rate as published in respect of the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate was published by the CME Term SOFR Administrator, so long as such first preceding U.S. Government Securities Business Day is not more than five (5) U.S. Government Securities Business Days prior to such Term SOFR Determination Day. “Total Commitments” means an amount equal to the aggregate amount of the Commitments of all Banks hereunder as such amounts may be reduced pursuant to Section 3.04(b) or increased pursuant to Section 3.04(f). “Total Consolidated Capitalization” means, at any time, the sum of (i) Total Consolidated Debt plus (ii) the total amount of shareholder’s equity of the Company. “Total Consolidated Debt” means, at any time, the aggregate outstanding principal amount of Debt of the Company and its Consolidated Subsidiaries of the kinds referred to in clause (a), (b) or (d) of the definition of “Debt” in this Section 1.01, or of the kinds referred to in clause (e) or (f) thereof to the extent relating to Debt of the kinds referred to in said clause (a), (b) or (d), all determined on a consolidated basis in accordance with GAAP, but excluding the aggregate Hybrid Securities Amount to the extent that if such Hybrid Securities Amount were included as Total Consolidated Debt, such Hybrid Securities Amount would not exceed 15% of Total Consolidated Capitalization. “Type” has the meaning specified in the definition of “Advance.” “UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York. “U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities. “U.S. Tax Compliance Certificate” has the meaning set forth in Section 4.05(e)(i)(B). “UK Financial Institutions” means any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential
24 Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms. “UK Resolution Authority” means the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution. “Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment. “Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers. SECTION 1.02. Computation of Time Periods. In this Agreement in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” mean “to but excluding”. SECTION 1.03. Accounting Terms; Terms Generally. (a) All accounting terms not specifically defined herein shall be construed in accordance with GAAP consistent with those applied in the preparation of the financial statements referred to in Section 6.01(e); provided that if at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in this Agreement, and either the Company or the Majority Banks shall so request, the Administrative Agent, the Banks and the Company shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Majority Banks and the Company); provided that, until so amended, such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein. Notwithstanding any other provision contained herein, (a) all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under FASB Accounting Standards Codification 825-Financial Instruments, or any successor thereto (including pursuant to the FASB Accounting Standards Codification), to value any Debt of the Company or any Subsidiary at “fair value,” as defined therein and (b) all leases of any Person that are or would be characterized as operating leases in accordance with GAAP immediately prior to December 31, 2016 (whether or not such operating leases were in effect on such date) shall continue to be accounted for as operating leases (and not as capital leases or financing leases) for purposes of this Agreement and the definition of Capital Lease Obligations regardless of any change in GAAP following such date that would otherwise require such leases to be recharacterized as capital leases. (b) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (i) any definition of or
25 reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (iv) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (v) any reference to any law, rule or regulation herein shall, unless otherwise specified, refer to such law, rule or regulation as amended, modified or supplemented from time to time and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. SECTION 1.04. Interest Rates; Benchmark Notification. The interest rate on an Advance denominated in dollars may be derived from an interest rate benchmark that may be discontinued or is, or may in the future become, the subject of regulatory reform. Upon the occurrence of a Benchmark Transition Event, Section 3.07(e) provides a mechanism for determining an alternative rate of interest. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission, performance or any other matter related to any interest rate used in this Agreement, or with respect to any alternative or successor rate thereto, or replacement rate thereof, including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, the existing interest rate being replaced or have the same volume or liquidity as did any existing interest rate prior to its discontinuance or unavailability. The Administrative Agent and its affiliates and/or other related entities may engage in transactions that affect the calculation of any interest rate used in this Agreement or any alternative, successor or alternative rate (including any Benchmark Replacement) and/or any relevant adjustments thereto, in each case, in a manner adverse to the Company. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain any interest rate used in this Agreement, any component thereof, or rates referenced in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to the Company, any Bank or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service. SECTION 1.05. Divisions. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized and acquired on the first date of its existence by the holders of its equity interests at such time.
26 ARTICLE II LETTERS OF CREDIT SECTION 2.01. Letters of Credit. (a) Letters of Credit. (1) Subject to the terms and conditions of this Agreement, (i) each Issuing Bank severally agrees, at the request of the Company, to issue one or more standby letters of credit hereunder (as from time to time amended, each a “Letter of Credit”) on any Business Day on or before the Outside Expiry Date and (ii) each Issuing Bank severally agrees to increase the Maximum Amount of any such Letter of Credit from time to time on or before the Outside Expiry Date; provided that each such issuance of, or increase in the Maximum Amount of, any Letter of Credit shall be subject to the limitations set forth in Section 2.01(a)(4). (2) Each Letter of Credit shall be in form and substance reasonably satisfactory to the relevant Issuing Bank and the Company. (3) Each Letter of Credit shall be issued by an Issuing Bank as sole issuer, and the Banks shall be deemed to acquire participations therein on the terms and conditions of Section 2.01(b). (4) Anything in this Agreement to the contrary notwithstanding, (i) the sum of (x) the aggregate amount of the LC Exposures of all of the Banks plus (y) the aggregate amount of the Revolving Credit Exposures of all of the Banks may not at any time exceed the Total Commitments, (ii) the aggregate amount of the LC Exposures of each Bank plus (y) the aggregate amount of the Revolving Credit Exposure of such Bank may not at any time exceed such Bank’s Commitment, (iii) the aggregate Maximum Amount of all Letters of Credit may not at any time exceed the LC Sublimit and the Maximum Amount of all Letters of Credit issued by any Issuing Bank may not exceed the Fronting Commitment of such Issuing Bank, and (iv) no Letter of Credit may provide for an LC Expiry Date later than the Outside Expiry Date. Subject to clause (iv), any Letter of Credit shall, if requested by the Company, include customary evergreen provisions (including appropriate language allowing the relevant Issuing Bank to exercise non-renewal rights). (5) Notwithstanding anything herein to the contrary, the Banks shall have no obligation hereunder to issue, and shall not issue, any Letter of Credit the proceeds of which would be made available to any Person to fund any activity or business in any manner that would result in a violation of any Sanctions by any party to this Agreement. (6) An Issuing Bank shall not be under any obligation to issue, amend or extend any Letter of Credit if any order, judgment or decree of any governmental authority or arbitrator shall by its terms purport to enjoin or restrain such Issuing Bank from issuing, amending or extending such Letter of Credit, or any law applicable to such Issuing Bank shall prohibit, the issuance, amendment or extension of letters of credit generally or such Letter of Credit in particular, or any such order, judgment or decree, or law shall impose upon such Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital or liquidity requirement (for which such Issuing Bank is not otherwise compensated hereunder) not in effect on the Effective Date, or shall impose upon such Issuing Bank any unreimbursed loss, cost or expense that was not applicable on the Effective Date and that such Issuing Bank in good faith deems material to it. (b) Participations in Letters of Credit. (1) Upon the issuance by an Issuing Bank of a Letter of Credit (and any amendment to a Letter of Credit increasing the amount thereof) in accordance herewith, and without any further action on the part of such Issuing Bank or any Bank, such Issuing Bank
27 hereby grants to each Bank, and each Bank hereby acquires from such Issuing Bank, a participation in such Letter of Credit equal to such Bank’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. Each Bank acknowledges and agrees that its acquisition of participations pursuant to this Section 2.01(b) in respect of each Letter of Credit shall be automatic, absolute and unconditional irrespective of the occurrence or continuance of any Default, or any reduction or termination of the Commitments, or any other circumstance whatsoever. (2) In consideration and in furtherance of the foregoing, each Bank severally agrees to pay to the Administrative Agent, for the account of each Issuing Bank, such Bank’s Applicable Percentage of each LC Disbursement made by such Issuing Bank under a Letter of Credit promptly upon the request of such Issuing Bank, through the Administrative Agent, at any time from the time of such LC Disbursement until such LC Disbursement is reimbursed by the Company in full or at any time after any reimbursement payment is required to be refunded to the Company for any reason. (3) The obligation of each Bank to make payments under clause (2) shall be absolute and unconditional irrespective of any amendment, renewal or extension of any Letter of Credit, the occurrence or continuance of any Default, any reduction or termination of the Commitments, any circumstance referred to in Section 2.02(b), or any other circumstance whatsoever. Each such payment shall be made without setoff, counterclaim, abatement, withholding or reduction whatsoever and shall be made in the manner provided in Section 3.02 with respect to Advances made by such Bank, and the Administrative Agent shall promptly pay to such Issuing Bank the amounts so received by it from the Banks. Promptly following receipt by the Administrative Agent of any payment from the Company pursuant to this paragraph, the Administrative Agent shall distribute such payment to the relevant Issuing Bank or, to the extent that the Banks have made payments pursuant to this paragraph to reimburse such Issuing Bank, then to such Banks and such Issuing Bank as their interests may appear. Any payment made by a Bank pursuant to this paragraph to reimburse an Issuing Bank for any LC Disbursement shall not relieve the Company of its obligation to reimburse such LC Disbursement. (c) [Reserved]. (d) Existing Letters of Credit. Effective on the Effective Date, each Existing Letter of Credit shall be deemed to be a Letter of Credit issued and outstanding under this Agreement (and without limiting the foregoing, effective from and after the Effective Date, Section 2.01(b) shall be deemed to apply to each such Existing Letter of Credit as if each such Existing Letter of Credit, for this purpose, were issued on the Effective Date). (e) Notices of Issuance, Increase, Reduction of Letters of Credit. To request the issuance of a Letter of Credit or an increase in the Maximum Amount of a Letter of Credit as provided in Section 2.01(a), the Company shall transmit by electronic communication to the applicable Issuing Bank and the Administrative Agent not later than 1:00 p.m. New York City time two (2) Business Days prior (or such shorter time as may be reasonably agreed to by the applicable Issuing Bank) to the requested date of issuance or amendment a written notice in substantially the form of Exhibit A-1 (the “Notice of Issuance”) or Exhibit A-2 (a “Notice of Increase”) or such other form as may be reasonably required and previously provided to the Company by the applicable Issuing Bank, as the case may be, specifying, in the case of the Notice of Issuance, the date of issuance thereof, the initial Maximum Amount thereof and the Issuing Bank in respect thereof, and, in the case of a Notice of Increase, the Letter of Credit to which such Notice of Increase relates, the proposed effective date of the amendment effecting the increase in the Maximum
28 Amount thereof and the increased Maximum Amount. If requested by the applicable Issuing Bank, the Company also shall submit a letter of credit application in connection with any request for a Letter of Credit in a form reasonably satisfactory to such Issuing Bank. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Company to, or entered into by the Company with, any Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. In addition, the Company may from time to time, by giving notice to the Administrative Agent in substantially the form of Exhibit A-3 (a “Notice of Reduction”) by the time provided for notices in the preceding sentence, and with the prior written consent of the Beneficiary of the relevant Letter of Credit, elect to reduce the Maximum Amount of such Letter of Credit in increments of $1,000,000 (or, if less, the remaining undrawn amount thereof). The Administrative Agent shall promptly notify the Banks of its receipt of any such notice. The relevant Issuing Bank shall, in the case of any such increase or reduction and subject in the case of a reduction, to its receipt of any required consent from the Beneficiary of such Letter of Credit in form and substance reasonably satisfactory to it, promptly execute and deliver an amendment to such Letter of Credit effecting such increase or reduction, and notify the Administrative Agent and the Company of such increase or reduction (confirming the effective date thereof). The Administrative Agent shall promptly notify the Banks of its receipt of any such notice. If an Issuing Bank has received, at its office specified herein, written notice from the Company or the Administrative Agent at least one Business Day prior to the requested date of issuance or amendment of a Letter of Credit, that a condition set forth in Section 5.02(a) or (b) to such issuance or amendment has not been satisfied, such Issuing Bank shall not proceed with such issuance or amendment. If the Administrative Agent has received any notice from any of the Banks prior to the requested date of issuance or amendment of a Letter of Credit, that a condition set forth in Section 5.02(a) or (b) to such issuance or amendment has not been satisfied, the Administrative Agent shall promptly notify the applicable Issuing Bank. (f) Notices of Non-Extension. In the case of any Letter of Credit that contains evergreen provisions, it is deemed to be extended on an annual basis unless notice of termination is given by the applicable Issuing Bank; provided that any such extension shall not cause the applicable Letter of Credit to mature after the Outside Expiry Date. (g) Applicability of ISP. Unless otherwise expressly agreed by the applicable Issuing Bank and the Company when a Letter of Credit is issued (including any such agreement applicable to an Existing Letter of Credit), the rules of the ISP shall apply to each Letter of Credit. SECTION 2.02. Reimbursement for LC Disbursements, Cover, Etc. (a) Reimbursement. The Company agrees to reimburse each Issuing Bank for the full amount of each LC Disbursement under a Letter of Credit issued by such Issuing Bank, each such reimbursement to be made by paying to the Administrative Agent an amount equal to the amount of such LC Disbursement not later than 1:00 p.m., New York City time, on the Business Day that the Company receives notice of such LC Disbursement if such notice is received by it prior to 10:00 a.m., New York City time, on a Business Day or not later than 1:00 p.m., New York City time, on the Business Day immediately following the day that the Company receives such notice, if such notice is received by it on a day which is not a Business Day or is not received prior to 10:00 a.m., New York City time, on a Business Day. If the Company fails to make such payment when due with respect to a Letter of Credit, (i) the Administrative Agent shall notify each Bank of the applicable LC Disbursement under such Letter of Credit, the payment then due from the Company in respect thereof and such Bank’s Applicable Percentage thereof, (ii) the Company shall be deemed to have given a timely Notice of Borrowing to the Administrative Agent requesting the Banks to make Base Rate Advances on such date the Company fails
29 to make such payment in an amount in Dollars equal to the amount of such LC Disbursement and (iii) subject to satisfaction or waiver of the conditions specified in Section 5.02, the Banks shall, on such date, make Base Rate Advances in the amount of such LC Disbursement, the proceeds of which shall be applied directly by the Administrative Agent to reimburse such Issuing Bank for the amount of such LC Disbursement; and provided further that if for any reason proceeds of Base Rate Advances are not received by such Issuing Bank on such date in an amount equal to the amount of such LC Disbursement, the Company shall reimburse such Issuing Bank, on demand, in an amount in same day funds equal to the excess of the amount of such LC Disbursement over the aggregate amount of such Base Rate Advances, if any, which are so received. Reimbursements under this Section 2.02(a) may be made with the Company’s funds or, subject to the terms and conditions of this Agreement, with the proceeds of a Borrowing. After giving effect to reimbursements in accordance with this Section 2.02(a), the applicable Issuing Bank shall deliver to the Company a copy of any draft submitted by the Beneficiary under the applicable Letter of Credit. (b) LC Reimbursement Obligations Absolute. (1) The obligation of the Company to reimburse the Issuing Banks for LC Disbursements as provided in Section 2.02(a) shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under all circumstances, including the following: (i) any lack of validity or enforceability of any Letter of Credit, or of any term or provision therein, (ii) any draft or other document presented under the relevant Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment under the relevant Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the Company’s obligations hereunder. (2) The Company shall be obligated to make the reimbursements provided for in this Section 2.02 in respect of each Letter of Credit regardless of the identity of the account party on such Letter of Credit. (3) None of the Administrative Agent, any Bank or any Issuing Bank or any of their respective directors, officers, employees or representatives shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding clause), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit, any error in interpretation of technical terms or any consequence arising from causes beyond their control; provided that the foregoing shall not be construed to excuse the Administrative Agent, a Bank or an Issuing Bank from liability to the Company to the extent of any direct damages (as opposed to special, indirect, consequential and punitive damages, claims in respect of which are hereby waived by the Company to the extent permitted by applicable law) suffered by the Company that are caused by the gross negligence or willful misconduct of the Administrative Agent, such Bank or such Issuing Bank, as the case may be, as determined by a court of competent jurisdiction by final and non-appealable judgment. The parties expressly agree that: (A) the Administrative Agent and each Issuing Bank may accept documents that appear on their face to be in substantial compliance with the terms of the relevant Letter of Credit without responsibility for further investigation, regardless of any notice or information to the contrary, and may make payment upon presentation of documents that
30 appear on their face to be in substantial compliance with the terms of the relevant Letter of Credit; (B) the Administrative Agent or an Issuing Bank, as the case may be, shall have the right, in its sole discretion, to decline to accept such documents and to make such payment if such documents are not in strict compliance with the terms of the relevant Letter of Credit; and (C) without prejudice to Section 9.02, this sentence shall establish the standard of care to be exercised by the Administrative Agent or an Issuing Bank, as the case may be, when determining whether drafts and other documents presented under any Letter of Credit comply with the terms thereof (and the parties hereto hereby waive, to the extent permitted by applicable law, any standard of care inconsistent with the foregoing). SECTION 2.03. LC Disbursement Procedures. Each Issuing Bank shall, within a reasonable time following its receipt thereof or within the period stipulated by the terms and conditions of the applicable Letter of Credit, examine any draft submitted by the Beneficiary under a Letter of Credit and promptly after such examination notify the Company by telephone (confirmed by electronic means) of receipt of such draft. With respect to any drawing properly made under any Letter of Credit, the applicable Issuing Bank will make the amount of each such LC Disbursement available to the relevant Beneficiary by promptly crediting such amount to such account as such Beneficiary shall direct. Promptly following the making of any LC Disbursement, the Issuing Bank in respect thereof will notify the Administrative Agent and the Company thereof; provided that any failure to give or delay in giving such notice shall not relieve the Company of any of its obligations hereunder. SECTION 2.04. Interest. Without prejudice to the obligations of the Company under Section 2.02, if the Company does not reimburse the relevant Issuing Bank for the full amount of an LC Disbursement under a Letter of Credit on the date such LC Disbursement is made (without regard for when notice thereof is given), the Company agrees to pay interest on the LC Reimbursement Obligation relating to such LC Disbursement, for each day (a) from the date such LC Disbursement is made until reimbursement thereof is due, at a rate per annum equal to the Base Rate plus the Applicable Margin for Base Rate Advances from time to time, such interest payable on the date such reimbursement is due and (b) from the date such reimbursement is due until the date that the Company reimburses such LC Disbursement in full, at a rate per annum equal to 2% per annum plus the Base Rate plus the Applicable Margin for Base Rate Advances from time to time, such interest under this clause (b) to be payable on demand. SECTION 2.05. Provision of Cover. (a) If there shall occur an Event of Default and the Company is as a result thereof required pursuant to Section 8.01 to provide cover for the Letters of Credit, the Administrative Agent will forthwith establish a separate collateral account (the “Collateral Account”) at JPMorgan, which shall be a “securities account” (as defined in Section 8-501 of the UCC) in respect of which the Administrative Agent is the “entitlement holder” (as defined in Section 8-102(a)(7) of the UCC), into which there shall be deposited from time to time the amounts paid to the Administrative Agent as cover. (b) As collateral security for the prompt payment in full when due of all LC Reimbursement Obligations (whether now existing or hereafter from time to time arising), all interest thereon, and all other present and future obligations of the Company to the Banks or the Issuing Banks and the Administrative Agent hereunder, the Company hereby grants to the Administrative Agent, for the benefit of the Banks and the Issuing Banks and the Administrative Agent, a security interest in all of its
31 right, title and interest in, to and under the Collateral Account and the balances from time to time in the Collateral Account (including any and all securities and other financial assets from time to time carried therein) and any and all proceeds thereof (all such collateral being herein collectively called the “Cover”). The balances from time to time in the Collateral Account shall not constitute payment of any obligation of the Company until applied by the Administrative Agent as provided herein. Anything in this Agreement to the contrary notwithstanding, funds held in the Collateral Account shall be subject to withdrawal only as provided in this Section 2.05. (c) Amounts on deposit in the Collateral Account shall be invested and reinvested by the Administrative Agent in such Permitted Investments as the Administrative Agent shall determine in its sole discretion. All such investments and reinvestments and proceeds shall be held in the name and be under the sole dominion and control of the Administrative Agent and shall be credited to the Collateral Account. (d) At any time and from time to time while an Event of Default has occurred and is continuing, the Administrative Agent shall have the rights and remedies of a secured party under the UCC and, without limiting the foregoing, shall, if so instructed by the Majority Banks, liquidate the Cover and credit the proceeds thereof to the Collateral Account and apply or cause to be applied such proceeds and any other balances in the Collateral Account to the payment of the obligations secured thereby. (e) When all of the obligations of the Company under this Agreement (other than contingent obligations for which no claim has been made) shall have been paid in full and each Letter of Credit has expired or been terminated and no Commitments remain in effect, the Administrative Agent shall promptly deliver to the Company, but without recourse, warranty or representation whatsoever, the balances remaining in the Collateral Account. SECTION 2.06. Replacement of an Issuing Bank; Additional Issuing Banks. (a) An Issuing Bank may be replaced at any time by written agreement between the Company, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Banks of any such replacement of an Issuing Bank. At the time any such replacement shall become effective, the Company shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 4.01(b). From and after the effective date of any such replacement, the successor Issuing Bank shall have all the rights and obligations of the replaced Issuing Bank under this Agreement with respect to Letters of Credit to be issued by it thereafter and references herein to the term “Issuing Bank” shall be deemed to include such successor or any previous Issuing Bank, or such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit. If an Issuing Bank is to be replaced with respect to an outstanding Letter of Credit that is issued by it, such replacement may be accomplished by (i) cancellation of the relevant outstanding Letter of Credit with the consent of the Beneficiary and simultaneous replacement thereof by the successor Issuing Bank or (ii) making other arrangements satisfactory to the replaced Issuing Bank to effectively assume the obligations of the replaced Issuing Bank with respect to such Letter of Credit and the replaced Issuing Bank shall to the extent thereof be released from its obligations as Issuing Bank with respect to such Letter of Credit. (b) The Company may, at any time, designate any Bank or any Affiliate of a Bank that is an Eligible Bank as an additional Issuing Bank hereunder with the written consent of such Bank or
32 Affiliate (which such Bank or Affiliate shall be free to grant or withhold in its sole and absolute discretion) and of the Administrative Agent (which consent shall not be unreasonably withheld or delayed), with a Fronting Commitment as specified by the Company (and consented to by such Bank or Affiliate). The Administrative Agent shall notify the Banks of any such additional Issuing Bank. From and after the effective date of such designation, the additional Issuing Bank shall have all the rights and obligations of an Issuing Bank hereunder with a Fronting Commitment equal to the Fronting Commitment so specified by the Company and consented to by such Issuing Bank and references herein to the term “Issuing Bank” shall be deemed to include such additional Issuing Bank and any other Issuing Bank, as the context shall require. SECTION 2.07. Defaulting Banks. (a) If any Letters of Credit are outstanding at the time a Bank becomes a Defaulting Bank, and the Commitments have not been terminated in accordance with Section 8.01, then: (i) so long as no Default has occurred and is continuing, all or any part of the participations in outstanding Letters of Credit shall be reallocated among the Banks that are Non- Defaulting Banks in accordance with their respective Applicable Percentages (disregarding any Defaulting Bank’s Commitment) but only to the extent that the sum of the aggregate principal amount of all Advances made by the Non-Defaulting Banks (in their capacity as Banks) and outstanding at such time, plus the Non-Defaulting Banks’ aggregate LC Exposures, plus such Defaulting Bank’s LC Exposure, does not exceed the total of all Non-Defaulting Banks’ Commitments; (ii) if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Company shall within one Business Day following notice by any Issuing Bank, cash collateralize such Defaulting Bank’s LC Exposure (after giving effect to any partial reallocation pursuant to clause (i) above) by paying cash collateral to such Issuing Bank; provided that, so long as no Default is continuing, such cash collateral shall be released promptly upon the earliest of the reallocation of the LC Exposure of the Defaulting Bank to Non-Defaulting Banks in accordance with clause (i) above, a reduction in the outstanding amount available to be drawn under all outstanding Letters of Credit to zero, the termination of the Defaulting Bank status of the applicable Bank, such Issuing Bank’s good faith determination that there exists excess cash collateral (in which case, an amount equal to such excess cash collateral shall be released) or the posting of cash collateral for the amount of a Defaulting Bank as contemplated by Section 2.07(g). In the event any Letter of Credit or a portion thereof is collateralized, no fees shall be payable by the Company on the collateralized amount of such Letter of Credit or a portion thereof; (iii) to the extent the Applicable Percentages of Letters of Credit of the Non- Defaulting Banks are reallocated pursuant to this Section 2.07(a), then the fees payable to the Banks pursuant to Section 4.01(b) shall be adjusted in accordance with the Non-Defaulting Banks’ Applicable Percentages of Letters of Credit as reallocated; or (iv) to the extent any Defaulting Bank’s Applicable Percentage of Letters of Credit is neither cash collateralized nor reallocated pursuant to Section 2.07(a), then, without prejudice to any rights or remedies of any Issuing Bank or any Bank hereunder, all letter of credit fees payable under Section 4.01(b) with respect to such Defaulting Bank’s Applicable Percentage of Letters of Credit that has not been reallocated or collateralized shall be payable to the applicable Issuing Bank until such Defaulting Bank’s Applicable Percentage of Letters of Credit has been fully cash collateralized and/or reallocated.
33 (b) So long as any Bank is a Defaulting Bank, no Issuing Bank shall be required to issue, amend or increase any Letter of Credit, unless it is satisfied that the related exposure will be 100% covered by the Commitments of the Non-Defaulting Banks and/or cash collateral will be provided by the Company in accordance with Section 2.07(a) or provided in accordance with Section 2.07(g), and participating interests in any such newly issued, amended or increased Letter of Credit shall be allocated among Non- Defaulting Banks in a manner consistent with Section 2.07(a)(i) (and Defaulting Banks shall not participate therein). (c) No Commitment of any Bank shall be increased or otherwise affected, and, except as otherwise expressly provided in this Section 2.07, performance by the Company of its obligations shall not be excused or otherwise modified as a result of the operation of this Section 2.07. The rights and remedies against a Defaulting Bank under this Section 2.07 are in addition to any other rights and remedies which the Company, the Administrative Agent, any Bank or any Issuing Bank may have against such Defaulting Bank. (d) [Reserved]. (e) [Reserved]. (f) If the Company, the Administrative Agent and each Issuing Bank agree in writing in their reasonable determination that a Defaulting Bank should no longer be deemed to be a Defaulting Bank, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any cash collateral), that Bank will, to the extent applicable, purchase, at par, that portion of outstanding Advances of the other Banks or take such other actions as the Administrative Agent may determine to be necessary to cause the Advances and funded and unfunded participations in Letters of Credit to be held on a pro rata basis by the Banks in accordance with their Applicable Percentages (without giving effect to Section 2.07(a)), whereupon such Bank will cease to be a Defaulting Bank; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Company while that Bank was a Defaulting Bank; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Bank to Non-Defaulting Bank will constitute a waiver or release of any claim of any party hereunder arising from such Bank’s having been a Defaulting Bank. (g) Notwithstanding anything to the contrary contained in this Agreement, any payment of principal, interest, commitment fees, Letter of Credit commissions or other amounts received by the Administrative Agent for the account of any Defaulting Bank under this Agreement (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Bank to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Bank to any Issuing Bank hereunder; third, as the Company may request (so long as no Default exists), to the funding of any Advance in respect of which that Defaulting Bank has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fourth, as the Company may request, to be held in a cash collateral account to cash collateralize such Defaulting Bank’s participations in Letters of Credit that are then outstanding; fifth, if so determined by the Administrative Agent and the Company, to be held in a cash collateral account and released in order to satisfy obligations of such Defaulting Bank to fund Advances under this Agreement; sixth, if so determined by the Administrative Agent and the Company, to be held in a cash collateral account to cash collateralize such Defaulting Bank’s participations in Letters of Credit, seventh, to the payment of any amounts owing
34 to the Banks or the Issuing Banks as a result of any judgment of a court of competent jurisdiction obtained by any Bank or Issuing Bank against such Defaulting Bank as a result of such Defaulting Bank’s breach of its obligations under this Agreement; eighth, so long as no Default exists, to the payment of any amounts owing to the Company as a result of any judgment of a court of competent jurisdiction obtained by the Company against such Defaulting Bank as a result of such Defaulting Bank’s breach of its obligations under this Agreement; and ninth, to such Defaulting Bank or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Advance in respect of which such Defaulting Bank has not fully funded its appropriate share, and (y) such Advances were made or the related Letters of Credit were issued at a time when the applicable conditions set forth in Article V were satisfied or waived, such payment shall be applied solely to pay the Advances of all Non- Defaulting Banks on a pro rata basis prior to being applied to the payment of any Advances of such Defaulting Bank; and provided further that any amounts held as cash collateral for funding obligations of a Defaulting Bank shall be returned to such Defaulting Bank upon the termination of this Agreement and the satisfaction of such Defaulting Bank’s obligations hereunder. Any payments, prepayments or other amounts paid or payable to a Defaulting Bank that are applied (or held) to pay amounts owed by a Defaulting Bank or to post cash collateral pursuant to this Section 2.07 shall be deemed paid to and redirected by such Defaulting Bank, and each Bank irrevocably consents hereto. (h) The Commitment, Revolving Credit Exposure and LC Exposure of any Defaulting Bank shall not be included in determining whether the Majority Banks or any other requisite Banks have taken or may take any action hereunder or under any Note (including any consent to any amendment, waiver or other modification pursuant to Section 10.01) except as set forth in Section 10.01. ARTICLE III ADVANCES SECTION 3.01. The Advances. (a) Each Bank severally agrees, on the terms and conditions hereinafter set forth, to make Advances in Dollars to the Company from time to time on any Business Day during the Revolving Credit Availability Period in an aggregate amount not to exceed at any one time outstanding such Bank’s Revolving Credit Commitment. (b) Each Borrowing shall (i) be in an aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof (or, if less, the aggregate amount of the unused Revolving Credit Commitments); provided that any Borrowing made to finance an LC Reimbursement Obligation shall be in the aggregate amount of such LC Reimbursement Obligation and (ii) consist of Advances of the same Type made on the same day by the Banks ratably according to their respective Commitments. (c) Within the limits of each Bank’s Revolving Credit Commitment, the Company may borrow under this Section 3.01, prepay pursuant to Section 3.09 and reborrow under this Section 3.01. For the avoidance of doubt, any reborrowing under this Section 3.01 shall be subject to the satisfaction (or waiver in accordance with Section 10.01) of the conditions set forth in Section 5.02. (d) Anything in this Agreement to the contrary notwithstanding, the sum of (i) the aggregate amount of the LC Exposures of all Banks plus (ii) the aggregate amount of the Revolving Credit Exposures of all Banks may not at any time exceed the Total Commitments. SECTION 3.02. Making the Advances.
35 (a) Each Borrowing shall be made on notice, given (i) not later than 1:00 p.m. (New York City time) on the second Business Day prior to the date of the proposed Borrowing in the case of a Borrowing consisting of Term Benchmark Advances, (ii) not later than 1:00 p.m. (New York City time) on the date of the proposed Borrowing in the case of a Borrowing consisting of Daily Simple SOFR Advances or (iii) not later than 1:00 p.m. (New York City time) on the date of the proposed Borrowing in the case of a Borrowing consisting of Base Rate Advances, by the Company to the Administrative Agent, which shall give to each Bank prompt notice thereof in writing (which may be by e-mail). Each such Notice of Borrowing shall be delivered promptly in writing (which may be by e-mail), and separately provided to the Company, specifying therein the requested (i) date of such Borrowing, (ii) Type of Advances comprising such Borrowing, (iii) aggregate amount of such Borrowing and (iv) in the case of a Borrowing consisting of Term Benchmark Advances, the initial Interest Period for each such Advance. Each Bank shall, before 11:00 a.m. (New York City time), in the case of a Borrowing consisting of Term Benchmark Advances, or before 2:30 p.m. (New York City time), in the case of a Borrowing consisting of Base Rate Advances or Daily Simple SOFR Advances, on the date of such Borrowing, make available for the account of its Lending Office to the Administrative Agent at the Administrative Agent’s Account, in same day funds, such Bank’s ratable portion of such Borrowing. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Section 5.02, the Administrative Agent will make such same day funds available to the Company at the Company’s account at the Administrative Agent’s address referred to in Section 10.02; provided that Advances made to finance an LC Reimbursement Obligation as provided in Section 2.02 shall be remitted by the Administrative Agent to the respective Issuing Bank or the Banks as their interests may appear. (b) Anything in Section 3.02(a) to the contrary notwithstanding, (i) the Company may not select Term Benchmark Advances or Daily Simple SOFR Advances for any Borrowing if the aggregate amount of such Borrowing is less than $10,000,000 or if the obligation of the Banks to make Term Benchmark Advances or Daily Simple SOFR Advances shall then be suspended pursuant to Section 3.07 and (ii) the Term Benchmark Advances may not be outstanding as part of more than ten separate Borrowings in the aggregate. (c) Each Notice of Borrowing shall be irrevocable and binding on the Company. (d) (i) Unless the Administrative Agent shall have received notice from a Bank prior to the time of any Borrowing that such Bank will not make available to the Administrative Agent such Bank’s ratable portion of such Borrowing, the Administrative Agent may assume that such Bank has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with Section 3.02(a) and the Administrative Agent may, in reliance upon such assumption, make available to the Company on such date a corresponding amount. If and to the extent that such Bank shall not have so made such ratable portion available to the Administrative Agent, such Bank and the Company severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to the Company to but excluding the date of payment to the Administrative Agent, at (x) in the case of the Company, the interest rate applicable at the time to Advances comprising such Borrowing and (y) in the case of such Bank, the NYFRB Rate. If such Bank shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Bank’s Advance as part of such Borrowing for purposes of this Agreement.
36 (ii) Unless the Administrative Agent shall have received notice from the Company prior to the date on which any payment is due to the Administrative Agent for the account of the Banks or hereunder that the Company will not make such payment, the Administrative Agent may assume that the Company has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Banks the amount due. In such event, if the Company has not in fact made such payment, then each of the Banks severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Bank in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the NYFRB Rate. A notice of the Administrative Agent to any Bank or the Company with respect to any amount owing under this clause (d) shall be conclusive, absent manifest error. (e) The failure of any Bank to make any LC Disbursement or any payment under Section 2.01(b)(2) or the Advance to be made by it as part of any Borrowing shall not relieve any other Bank of its obligation, if any, hereunder to make its LC Disbursement or payment or its Advance, but no Bank shall be responsible for the failure of any other Bank to make such LC Disbursement or payment or the Advance to be made by such other Bank. (f) Subject to Section 3.07, each Advance shall be comprised entirely of Base Rate Advances, Daily Simple SOFR Advances or Term Benchmark Advances, as the Company may request in accordance herewith. Each lender at its option may make any Advance by causing any domestic or foreign branch or Affiliate of such lender to make such Advance; provided that any exercise of such option shall not affect the obligation of the Company to repay such Advance in accordance with the terms of this Agreement. SECTION 3.03. Notes. Any Bank may request that the Advances made or to be made by it be evidenced by a promissory note of the Company. In such event, the Company shall promptly prepare, execute and deliver to such Bank a promissory note payable to such Bank (and its registered assigns), in substantially the form of Exhibit C (a “Note”), in an amount equal to the Commitment of such Bank. SECTION 3.04. Termination, Reduction, Extension or Increase of the Revolving Credit Commitments. (a) Unless previously terminated, the Commitments shall automatically terminate on the last day of the Revolving Credit Availability Period. (b) The Company may at any time terminate, or from time to time reduce ratably in part, the Commitments; provided that (i) any reduction of the Commitments shall be in the aggregate amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof and (ii) the Company shall not terminate or reduce the aggregate amount of the Commitments if, after giving effect thereto, the sum of the aggregate LC Exposures plus the aggregate principal amount of the Advances then outstanding would exceed the aggregate amount of the Commitments. No termination or reduction of any of the Commitments shall in any way reduce or otherwise alter the obligations of any Issuing Bank under an outstanding Letter of Credit or the obligations of any of the Banks under or in connection with any outstanding Letter of Credit. (c) The Company shall notify the Administrative Agent of any election to terminate or reduce the Commitments under Section 3.04(b) at least three (3) Business Days prior to the effective date of each such termination or reduction, specifying such election and the effective date thereof; provided that a notice of termination delivered by the Company may state that such notice is conditioned upon the
37 occurrence of any event, in which case such notice may be revoked by the Company (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Promptly following receipt of any notice, the Administrative Agent shall advise the Banks of the contents thereof. (d) Each termination or reduction of the Commitments shall be permanent. (e) (i) The Company may, by notice to the Administrative Agent (which shall promptly notify the Banks) not more than 45 Business Days and not less than 30 Business Days prior to any anniversary of the Effective Date (such anniversary date, the “Extension Date”), request (each, an “Extension Request”) that the Banks extend the Commitment Termination Date then in effect (the “Existing Termination Date”) for an additional year. Each Bank, acting in its sole discretion, shall, by notice to the Company and the Administrative Agent given at least 15 Business Days (or such day as shall be acceptable to the Company) prior to the relevant Extension Date, advise the Company whether or not such Bank agrees to such extension; provided that any Bank that does not so advise the Company shall be deemed to have rejected such Extension Request. The election of any Bank to agree to such extension shall not obligate any other Bank to so agree. (ii) The Company shall have the right at any time on or prior to the relevant Extension Date to replace any non-extending Bank (a “Non-Extending Bank”) with, and otherwise add to this Agreement, one or more other banks (which may include any Bank) each of which shall be an Eligible Bank (each an “Additional Commitment Bank”; each Additional Commitment Bank, together with any Bank that extends its Commitment, being collectively called the “Continuing Banks”), in each case with the consent of the Administrative Agent (other than in the case of an Additional Commitment Bank that is already a Bank hereunder) and each Issuing Bank (each such consent not to be unreasonably withheld or delayed). Each Additional Commitment Bank which has been so approved shall enter into an agreement in form and substance satisfactory to the Company and the Administrative Agent pursuant to which such Additional Commitment Bank shall, effective as of the relevant Extension Date, undertake a Commitment and (if not already a Bank under this Agreement) become a Bank hereunder (and, if such Additional Commitment Bank is already a Bank, agree to increase its Commitment hereunder) in the agreed amount. With respect to any Non-Extending Bank that shall not be replaced by an Additional Commitment Bank on the relevant Extension Date, the Existing Termination Date for such Non-Extending Bank shall remain unchanged (and the Advances made by such Bank shall be repayable on such date). (iii) Effective as of such Extension Date, the Commitment Termination Date (with respect to the Commitment of each Bank that has agreed to so extend its Commitment and of each Additional Commitment Bank) shall be extended to the date falling one year after the Existing Termination Date and each Additional Commitment Bank shall thereupon become a “Bank” for all purposes of this Agreement and the Commitment of each Non-Extending Bank that is to be replaced by an Additional Commitment Bank on such Extension Date shall be terminated and (C) each Additional Commitment Bank if not already a Bank under this Agreement shall become a Bank under this Agreement. (iv) Notwithstanding the foregoing, the extension of the Existing Termination Date shall not be effective with respect to any Continuing Bank unless: (A) no Default shall have occurred and be continuing on the relevant Extension Date and after giving effect to such extension; and
38 (B) the Administrative Agent shall have received a certificate from a Responsible Officer certifying that the representations and warranties contained in this Agreement are true and correct on and as of the relevant Extension Date and after giving effect to such extension as though made on and as of such date; provided that, for purposes of the foregoing, the date set forth in the last sentence of Section 6.01(e) shall be deemed to be December 31 of the year for which the Company shall most recently have delivered the annual audited financial statements referenced in Section 7.01(f)(ii). (v) If any Advances or Letters of Credit shall be outstanding on the relevant Extension Date (to the extent that there are Additional Commitment Banks on such Extension Date) or on the relevant Existing Termination Date (to the extent that there are Non-Extending Banks whose Commitment is terminating on such Existing Termination Date), the Company shall borrow from each of the Continuing Banks, and the Continuing Banks shall make Advances to the Company (in the case of Term Benchmark Advances, with Interest Period(s) ending on the date(s) of any then outstanding Interest Period(s)) and shall be deemed to have acquired the participations of any Non-Extending Bank whose Commitment is terminating on either such date in any outstanding Letters of Credit, and (notwithstanding the provisions of Section 4.04(g) requiring that borrowings and prepayments be made ratably in accordance with the principal amounts of the Advances held by the Banks) the Company shall have paid in full the principal of and interest on all of the Advances made by such Non-Extending Bank to the Company hereunder, together with any other amounts payable hereunder to such Non-Extending Bank (including any amounts owing pursuant to Section 10.04(c) as a result of such payment), so that after giving effect to such Advances, purchases and prepayments, the Advances (and Interest Period(s) of Term Benchmark Advance(s)) and LC Exposure in respect of all outstanding Letters of Credit shall be held by the Continuing Banks ratably in accordance with the respective amounts of their Commitments (as modified on the either such date) and, in that connection, the Issuing Bank shall be deemed to have released such Non-Extending Bank on either such date if such Non-Extending Bank’s Commitment is to be terminated on such date. (f) The Company shall have the right, so long as no Default shall have occurred and be continuing, without the consent of any Bank (except as described in clause (i) below) but with the consent of the Administrative Agent and each Issuing Bank (each such consent not to be unreasonably withheld or delayed), at any time on one or more occasions, to increase the aggregate amount of the Commitments in an aggregate amount set forth in such request by requesting any Bank or Banks to increase its (or their) Commitment (or Commitments) and/or adding one or more banks hereto each of which shall be an Eligible Bank (each such bank to thereupon become a “Bank” hereunder) (any such new or increasing Bank, a “New/Increasing Bank”); provided that: (i) in no event shall any Bank’s Commitment be increased without the consent of such Bank (and any Bank that does not affirmatively accept such request by a time identified by the Company in its request shall be deemed to have rejected it); (ii) any such increase shall be in an integral multiple of $10,000,000 and in no event shall any such increase result in the aggregate amount of Total Commitments under this Agreement to exceed $8,000,000,000; (iii) the Company, the Administrative Agent and, as applicable, each New/Increasing Bank shall have executed and delivered to the Administrative Agent an agreement in form and substance reasonably satisfactory to each such Person;
39 (iv) the Administrative Agent shall have received the relevant Notice of Issuance or Notice of Increase in accordance with Section 2.01(d); (v) the Administrative Agent shall have received evidence reasonably satisfactory to it (including without limitation a certified copy of a resolution of the Board of Directors of the Company and a customary legal opinion of counsel to the Company) that such increase in the Commitments, and borrowings thereunder, have been duly authorized and a certificate from a Responsible Officer certifying that all the representations and warranties contained in Section 6.01 are true and correct in all material respects (other than any representation or warranty qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) on and as of the relevant Increase Date as though made on and as of such Increase Date; provided that, for purposes of the foregoing, the date set forth in the last sentence of Section 6.01(e) shall be deemed to be December 31 of the year for which the Company shall most recently have delivered the annual audited financial statements referenced in Section 7.01(f)(ii); and (vi) if the aggregate offered increased Commitments of the New/Increasing Banks exceeds the amount of the requested increase, such increased Commitments will be allocated among the New/Increasing Banks as determined by the Company in consultation with the Administrative Agent. Notwithstanding anything herein to the contrary, if any Advances or Letters of Credit shall be outstanding on the date that any such increase is to become effective (an “Increase Date”), each relevant Bank shall assign to each relevant New/Increasing Bank, and each relevant New/Increasing Bank shall purchase at the principal amount thereof such interests in such Advances or Letters of Credit as shall be necessary so that after giving effect to such assignments and purchases, the Advances (and Interest Period(s) of Term Benchmark Advance(s)) and LC Exposure in respect of all outstanding Letters of Credit shall be held by the Banks ratably in accordance with the respective amounts of their Commitments (as modified on such Increase Date) and, in that connection, the Issuing Bank shall be deemed to have released each relevant Bank on such Increase Date to the extent required to effect the foregoing. SECTION 3.05. Repayment of Advances and Evidence of Indebtedness. (a) The Company shall repay to the Administrative Agent for the ratable account of the Banks on the Commitment Termination Date the aggregate principal amount of the Advances then outstanding. (b) Each Bank shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Company to such Bank resulting from each Advance made by such Bank, including the amounts of principal and interest payable and paid to such Bank from time to time hereunder. The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Advance made hereunder, the Type thereof and the Interest Period, if any, applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Company to each Bank hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Banks and each Bank’s share thereof. The entries made in the accounts maintained pursuant to this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that (x) the failure of any Bank or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Company to repay the Advances in accordance with the terms of this Agreement and (y) if there shall be any difference in the amounts reflected in the accounts maintained by the Administrative Agent pursuant to the second sentence of this Section 3.05(b) and the accounts maintained by the Banks pursuant to the first sentence of this
40 Section 3.05(b), in the absence of manifest error the accounts maintained by the Administrative Agent shall control. SECTION 3.06. Interest on Advances. The Company shall pay interest on the unpaid principal amount of each Advance, from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum: (a) Base Rate Advances. During such periods as such Advance is a Base Rate Advance, a rate per annum equal at all times to the sum of (i) the Base Rate in effect from time to time plus (ii) the Applicable Margin, payable quarterly in arrears on the last day of each March, June, September, December and the Commitment Termination Date. (b) Term Benchmark Advances. During such periods as such Advance is a Term Benchmark Advance, a rate per annum equal at all times during each Interest Period for such Advance to the sum of (i) the Term SOFR Rate for such Interest Period for such Advance plus (ii) the Applicable Margin, payable in arrears on the last day of such Interest Period and, if such Interest Period has a duration of more than three months, on each day that occurs during such Interest Period every three months from the first day of such Interest Period, on the date such Advance shall be Converted or paid in full and on the Commitment Termination Date. (c) Daily Simple SOFR Advances. During such periods as such Advance is a Daily Simple SOFR Advance, a rate per annum equal to the sum of (i) the Daily Simple SOFR plus (ii) the Applicable Margin, payable monthly in arrears on the last day of each month and the Commitment Termination Date. (d) Default Interest. Notwithstanding Sections 3.06(a), 3.06(b) and 3.06(c), upon the occurrence and during the continuance of an Event of Default under Section 8.01(a), the Administrative Agent may, and upon the request of the Majority Banks shall, require the Company to pay interest (“Default Interest”) on the outstanding principal amount of each overdue Advance, and on the unpaid overdue amount of all interest, fees and other amounts payable by the Company hereunder, such interest to be paid in arrears on the date such amount shall be paid in full and on demand, at a rate per annum equal at all times to (i) in the case of any amount of principal, 2% per annum above the rate per annum required to be paid pursuant to paragraph (a), (b) or (c) above, as the case may be and (ii) in the case of all other amounts, 2% per annum above the Base Rate plus the Applicable Margin from time to time; provided, however, that following acceleration of the Advances pursuant to Section 8.01, Default Interest shall accrue and be payable hereunder whether or not previously required by the Administrative Agent. SECTION 3.07. Interest Rate Determination. (a) The Administrative Agent shall give prompt notice to the Company and the Banks of the applicable interest rate determined by the Administrative Agent for purposes of Section 3.06(a) (solely with respect to Base Rate Advances determined on the basis of the one month Term SOFR Rate) and Section 3.06(b). (b) If the Company shall fail to select the duration of any Interest Period for any Term Benchmark Advances in accordance with the provisions contained in the definition of “Interest Period” in Section 1.01, the Administrative Agent will forthwith so notify the Company and the Banks and the Company will be deemed to have selected an Interest Period of one month.
41 (c) If the aggregate unpaid principal amount of Term Benchmark Advances comprising any Borrowing or Daily Simple SOFR Advances comprising any Borrowing, in either case, shall be reduced, by payment or prepayment or otherwise, to less than $10,000,000, such Term Benchmark Advances shall automatically Convert into Base Rate Advances on the last day of the Interest Period applicable thereto and such Daily Simple SOFR Advances shall automatically Convert into Base Rate Advances on the last day of the calendar month. (d) Subject to clauses (e), (f), (g), (h), (i) and (j) of this Section 3.07, if: (i) the Administrative Agent determines (which determination shall be conclusive absent manifest error) (A) prior to the commencement of any Interest Period for a Term Benchmark Borrowing, that adequate and reasonable means do not exist for ascertaining the Term SOFR Rate or the Term SOFR Rate (including because the Term SOFR Reference Rate is not available or published on a current basis), for such Interest Period or (B) at any time, that adequate and reasonable means do not exist for ascertaining the Daily Simple SOFR; or (ii) the Administrative Agent is advised by the Majority Banks that (A) prior to the commencement of any Interest Period for a Term Benchmark Borrowing, the Term SOFR Rate for such Interest Period will not adequately and fairly reflect the cost to such Banks of making or maintaining their Advances included in such Borrowing for such Interest Period or (B) at any time, the Daily Simple SOFR will not adequately and fairly reflect the cost to such Banks of making or maintaining their Advances included in such Borrowing; then the Administrative Agent shall give notice thereof to the Company and the Banks by telephone, telecopy or electronic mail as promptly as practicable thereafter and, until (x) the Administrative Agent notifies the Company and the Banks that the circumstances giving rise to such notice no longer exist with respect to the relevant Benchmark and (y) the Company delivers a new notice of Conversion in accordance with the terms of Section 3.08 or a new Notice of Borrowing in accordance with the terms of Section 3.02, (1) any notice of Conversion that requests the conversion of any Borrowing to, or Continuation of any Borrowing as, a Term Benchmark Borrowing and any Notice of Borrowing that requests a Term Benchmark Borrowing shall instead be deemed to be a notice of Conversion or Continuation or a Notice of Borrowing, as applicable, for (x) a Daily Simple SOFR Borrowing so long as the Daily Simple SOFR is not also the subject of Section 3.07(d)(i) or (ii) above or (y) a Base Rate Borrowing if the Daily Simple SOFR also is the subject of Section 3.07(d)(i) or (ii) above and (2) any Notice of Borrowing that requests a Daily Simple SOFR Borrowing shall instead be deemed to be a Notice of Borrowing, as applicable, for a Base Rate Borrowing; provided that if the circumstances giving rise to such notice affect only one Type of Borrowings, then all other Types of Borrowings shall be permitted. Furthermore, if any Term Benchmark Advance or Daily Simple SOFR Advance is outstanding on the date of the Company’s receipt of the notice from the Administrative Agent referred to in this Section 3.07(d) with respect to a Relevant Rate applicable to such Term Benchmark Advance or Daily Simple SOFR Advance, then until (x) the Administrative Agent notifies the Company and the Banks that the circumstances giving rise to such notice no longer exist with respect to the relevant Benchmark and (y) the Company delivers a new notice of Conversion in accordance with the terms of Section 3.08 or a new Notice of Borrowing in accordance with the terms of Section 3.02, (1) any Term Benchmark Advance shall on the last day of the Interest Period applicable to such Advance (or the next succeeding Business Day if such day is not a Business Day), be converted by the Administrative Agent to, and shall constitute, (x) a Daily Simple SOFR Borrowing so long as the Daily Simple SOFR is not also the subject of Section 3.07(d)(i) or (ii) above or (y) a Base Rate Advance if the Daily Simple SOFR also is the subject of Section 3.07(d)(i) or (ii)
42 above, on such day, and (2) any Daily Simple SOFR Advance shall on and from such day be converted by the Administrative Agent to, and shall constitute a Base Rate Advance. (e) Notwithstanding anything to the contrary herein or in any other Loan Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then such Benchmark Replacement will replace such Benchmark (including any related adjustments) for all purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Banks without any amendment to, or further action or consent of any other party to, this Agreement or any other Loan Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Banks comprising the Majority Banks. (f) Notwithstanding anything to the contrary herein or in any other Loan Document, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Loan Document. (g) The Administrative Agent will promptly notify the Company and the Banks of (and, if applicable, provide the relevant amendment to this Agreement related to) (i) any occurrence of a Benchmark Transition Event, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes, (iv) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (h) below and (v) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Bank pursuant to this Section 3.07, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Loan Document, except, in each case, as expressly required pursuant to this Section 3.07. (h) Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then- current Benchmark is a term rate (including the Term SOFR Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Administrative Agent may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor. (i) Upon the Company’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Company may revoke any request for (i) a Term Benchmark Borrowing,
43 conversion to or continuation of Term Benchmark Advances to be made, converted or continued or (ii) a Daily Simple SOFR Borrowing or conversion to Daily Simple SOFR Advances, during any Benchmark Unavailability Period and, failing that, the Company will be deemed to have converted any request for a Term Benchmark Borrowing or Daily Simple SOFR Borrowing, as applicable, into a request for a Borrowing of or conversion to (A) solely with respect to any such request for a Term Benchmark Borrowing, a Daily Simple SOFR Borrowing so long as the Daily Simple SOFR is not the subject of a Benchmark Transition Event or (B) a Base Rate Borrowing if the Daily Simple SOFR is the subject of a Benchmark Transition Event. During any Benchmark Unavailability Period or at any time that a tenor for the then- current Benchmark is not an Available Tenor, the component of the Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of the Base Rate. Furthermore, if any Term Benchmark Advance or Daily Simple SOFR Advance is outstanding on the date of the Company’s receipt of notice of the commencement of a Benchmark Unavailability Period with respect to a Relevant Rate applicable to such Term Benchmark Advance or Daily Simple SOFR Advance, then until such time as a Benchmark Replacement is implemented pursuant to this Section 3.07, (1) any Term Benchmark Advance shall on the last day of the Interest Period applicable to such Advance (or the next succeeding Business Day if such day is not a Business Day), be converted by the Administrative Agent to, and shall constitute, (x) a Daily Simple SOFR Borrowing so long as the Daily Simple SOFR is not the subject of a Benchmark Transition Event or (y) a Base Rate Advance if the Daily Simple SOFR is the subject of a Benchmark Transition Event, on such day and (2) any Daily Simple SOFR Advance shall on and from such day be converted by the Administrative Agent to, and shall constitute a Base Rate Advance. (j) Notwithstanding any contrary provision of this Agreement, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Majority Banks, so notifies the Company, then, so long as such Event of Default is continuing (i) unless repaid, each Term Benchmark Advance will automatically, on the final day of the then existing Interest Period therefor, Convert into a Base Rate Advance, (ii), unless repaid, each Daily Simple SOFR Advance will on the last day of the calendar month therefor, Convert into a Base Rate Advance, and (iii) the obligation of the Banks to Convert Base Rate Advances into Term Benchmark Advances or Daily Simple SOFR Advances shall be suspended. SECTION 3.08. Optional Conversion of Advances. The Company may on any Business Day, upon notice given to the Administrative Agent not later than 1:00 p.m. (New York City time) on the second Business Day prior to the date of the proposed Conversion, Convert all Advances of one Type comprising the same Borrowing into Advances of the other Type or Continue Term Benchmark Advances (and in the absence of timely notice of Continuation, such Term Benchmark Advances shall Convert to Base Rate Advances on the last day of the then current Interest Period); provided that any Conversion of Term Benchmark Advances into Base Rate Advances or Daily Simple SOFR Advances shall be made only on the last day of an Interest Period for such Term Benchmark Advances, any Conversion of Base Rate Advances into Term Benchmark Advances or Daily Simple SOFR Advances shall be in an amount not less than the minimum amount specified in Section 3.02(b) and no Conversion of any Advances shall result in more separate Borrowings than permitted under Section 3.02(b). Each such notice of a Conversion shall, within the restrictions specified above, specify (i) the date of such Conversion, (ii) the Advances to be Converted, and (iii) if such Conversion is into Term Benchmark Advances, the duration of the initial Interest Period for such Advances. Each notice of Conversion or Continuation shall be irrevocable and binding on the Company. SECTION 3.09. Optional Prepayment of Advances. The Company may, upon same day notice not later than 1:00 p.m. (New York City time), in the case of Base Rate Advances or Daily
44 Simple SOFR Advances, and upon not less than two (2) Business Days’ notice, in the case of Term Benchmark Advances, to the Administrative Agent stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given the Company shall, prepay the outstanding principal amount of the Advances comprising part of the same Borrowing in whole or ratably in part, together with accrued interest (solely with respect to Term Benchmark Advances) to the date of such prepayment on the principal amount prepaid; provided that (x) each partial prepayment shall be in a minimum aggregate principal amount of $10,000,000 or an integral multiple of $1,000,000 in excess thereof and (y) in the event of any such prepayment of a Term Benchmark Advance, the Company shall be obligated to reimburse the Banks in respect thereof pursuant to Section 10.04(c), to the extent applicable; provided, further, that, if a notice of prepayment is given in connection with a conditional notice of termination of Commitments as contemplated by Section 3.04(c), then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 3.04(c) and the Company shall remain liable for any amounts in respect of such proposed prepayment pursuant to Section 10.04(c). SECTION 3.10. Use of Proceeds. The proceeds of the Advances shall be available (and the Company agrees that such proceeds shall be used) for general corporate purposes of the Company and its Subsidiaries, including for payment of LC Reimbursement Obligations. ARTICLE IV FEES; CERTAIN COMMON PROVISIONS SECTION 4.01. Fees. (a) Commitment Fee. The Company shall pay to the Administrative Agent for the account of each Bank a commitment fee at the Applicable Commitment Fee Rate on the daily average unused amount of the Revolving Credit Commitment of such Bank during the period from the date of this Agreement until, but excluding, the last day of the Revolving Credit Availability Period, for commitment fees accrued through and including each Quarterly Date payable in arrears on the fifteenth day following such Quarterly Date and on the date of termination of the Revolving Credit Commitments (or, if later, within three Business Days after the Company receives an invoice therefor from the Administrative Agent); provided that no Defaulting Bank shall be entitled to receive any commitment fee in respect of its unused Revolving Credit Commitment for any period during which that Bank is a Defaulting Bank (and the Company shall not be required to pay such fee that otherwise would have been required to have been paid to that Defaulting Bank). All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day and the last day of each period but excluding the date on which the Commitments terminate). (b) Letter of Credit Fees. The Company shall pay to the Administrative Agent for the account of each Bank a letter of credit commission at a rate per annum equal to the Applicable Margin for Term Benchmark Advances on the average daily aggregate undrawn amount of each Letter of Credit during the period from the date of issuance thereof until the date on which such Bank ceases to have any LC Exposure; provided, that no Defaulting Bank shall be entitled to receive any commission in respect of Letters of Credit for any period during which that Bank is a Defaulting Bank (and the Company shall not be required to pay such commission to that Defaulting Bank but shall pay such commission in the manner and to the extent set forth in Section 2.07), and directly to each Issuing Bank a fronting fee, which shall accrue at the rate or rates per annum separately agreed upon between the Company and such Issuing Bank, on the average daily amount of the LC Exposure with respect to outstanding Letters of Credit issued by such Issuing Bank (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of termination of the
45 Commitments and the date on which there ceases to be any LC Exposure in respect of Letters of Credit issued by such Issuing Bank, as well as such Issuing Bank’s standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Letter of credit commission and fronting fees accrued through and including each Quarterly Date shall be payable on the fifteenth day following such Quarterly Date (or, if later, within three Business Days after the Company receives an invoice therefor from the Administrative Agent), commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the date on which the Commitments terminate and any such fees accruing after the date on which the Commitments terminate shall be payable on demand. Any other fees payable to an Issuing Bank pursuant to this paragraph shall be payable within 10 days after written demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). (c) Agent’s Fee. The Company shall pay to the Administrative Agent for its own account all fees payable in the amounts and at the times separately agreed upon between the Company and the Administrative Agent with respect to the performance of its agency duties hereunder. (d) Payment of Fees. All commitment fees and letter of credit commissions payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, in the case of commitment fees and letter of credit commissions, to the Banks entitled thereto. Fees paid hereunder shall not be refundable under any circumstances. SECTION 4.02. Increased Costs. (a) If, due to either (i) the introduction of or any change in any law or regulation or in the interpretation or administration of any law or regulation by any governmental authority charged with the interpretation or administration thereof occurring after the date of this Agreement (a “Change in Law”) or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), made or issued after the date of this Agreement, there shall be any increase in the cost (other than due to any imposition of or increase in Taxes described in clauses (ii) through (iv) of the definition of Excluded Taxes, Indemnified Taxes or Other Connection Taxes that are imposed on the Bank’s income (however denominated) or that are franchise or branch profits Taxes) to any Bank of agreeing to make or making, continuing, converting to, funding or maintaining Term Benchmark Advances or Daily Simple SOFR Advances by an amount deemed by such Bank to be material, then the Company shall from time to time, upon demand by such Bank (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Bank additional amounts sufficient to compensate such Bank for such increased cost. A certificate as to the amount of such increased cost submitted to the Company and the Administrative Agent by such Bank shall be conclusive and binding for all purposes, absent manifest error. The Company shall pay such Bank the amount shown as due on any such certificate within 15 Business Days after receipt thereof. (b) If any Bank determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority, made or issued after the date of this Agreement, (whether or not having the force of law, and for the avoidance of doubt, including any changes resulting from requests, rules, guidelines or directives concerning capital adequacy or liquidity issued in connection with (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory
46 authorities, regardless of the date enacted, adopted or issued) affects or would affect the amount of capital or liquidity required or expected to be maintained by such Bank or any company controlling such Bank and that the amount of such capital or liquidity is increased by or based upon the existence of such Bank’s Commitment, the Letters of Credit or the Advances, then, upon demand by such Bank (with a copy of such demand to the Administrative Agent), the Company shall pay to the Administrative Agent for the account of such Bank, from time to time as specified by such Bank, additional amounts sufficient to compensate such Bank or such company in the light of such circumstances, to the extent that such Bank reasonably determines such increase in capital to be allocable to the existence thereof. A certificate as to such amounts submitted to the Company and the Administrative Agent by such Bank shall be conclusive and binding for all purposes, absent manifest error. Such certificate shall certify that the claim for additional amounts referred to therein is generally consistent with such Bank’s treatment of similarly situated customers of such Bank whose transactions with such Bank are similarly affected by the change in circumstances giving rise to such payment, but such Bank shall not be required to disclose any confidential or proprietary information therein. The Company shall pay such Bank the amount shown as due on any such certificate within 15 Business Days after receipt thereof. (c) Failure or delay on the part of any Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Bank’s right to demand such compensation; provided that the Company shall not be required to compensate a Bank pursuant to this Section for any increased costs incurred or reductions suffered more than six months prior to the date that such Bank notifies the Company of the relevant circumstance giving rise to such increased costs or reductions, and of such Bank’s intention to claim compensation therefor (except that, if the legal requirement giving rise to such increased costs or reductions is retroactive, then the six-month period referred to above shall be extended to include the period of retroactive effect thereof). SECTION 4.03. Illegality. Notwithstanding any other provision of this Agreement, if any Bank shall notify the Administrative Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for such Bank or its Lending Office to perform its obligations hereunder to make Term Benchmark Advances or Daily Simple SOFR Advances or to fund or maintain Term Benchmark Advances or Daily Simple SOFR Advances hereunder, (i) each Term Benchmark Advance or Daily Simple SOFR Advance of such Bank, as applicable, will automatically, upon such demand, Convert into a Base Rate Advance and (ii) the obligation of such Bank to make, or to Convert Advances into, Term Benchmark Advances or Daily Simple SOFR Advances shall be suspended until the Administrative Agent shall notify the Company and such Bank that the circumstances causing such suspension no longer exist and such Bank shall make Base Rate Advances in the amount and on the dates that it would have been requested to make Term Benchmark Advances or Daily Simple SOFR Advances had no such suspension been in effect. SECTION 4.04. Payments and Computations. (a) The Company shall make each payment required to be made by it hereunder (whether of principal of, or interest on, the Advances, fees, LC Reimbursement Obligations or otherwise) prior to 1:00 p.m. New York City time, on the day when due (or, if later, within three Business Days after the Company receives an invoice therefor from the Administrative Agent), in Dollars and immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon.
47 (b) All such payments shall be made to the Administrative Agent at the Administrative Agent’s Account, except that payments pursuant to Section 10.04 shall be made directly to the Persons entitled thereto and payments to be made directly to an Issuing Bank as expressly provided herein shall be so made. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. (c) If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. (d) Upon its acceptance of an Assignment and Assumption and recording of the information contained therein in the Register, from and after the effective date specified in such Assignment and Assumption, the Administrative Agent shall make all payments hereunder in respect of the interest assigned thereby to the Bank assignee thereunder, and the parties to such Assignment and Assumption shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves. (e) If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts then due hereunder, such funds shall be applied (i) first, to pay costs and expenses, if any, of the Administrative Agent required to be reimbursed hereunder, (ii) second, to pay interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to them, and (iii) third, to pay principal of Advances and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of Advances and unreimbursed LC Disbursements, respectively, then due to them. (f) All computations of interest based on the Base Rate at times when the Base Rate is based on the Prime Rate shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Term SOFR Rate, the Daily Simple SOFR or the NYFRB Rate and of commitment fees, and of letter of credit commissions shall be made by the Administrative Agent on the basis of a year of 360 days, in each case for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest, commitment fees, or letter of credit commissions are payable. Each determination by the Administrative Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. (g) Except to the extent otherwise provided herein (i) each payment of principal of Advances shall be for the pro rata account of the Banks in accordance with the amounts of the Advances made by them, (ii) each reimbursement of LC Disbursements shall be for the pro rata account of the Banks or the applicable Issuing Bank, as the case may be, in accordance with the amounts of the LC Disbursements made by them or it, (iii) each payment of commitment fee and letter of credit commission shall be for the pro rata account of the Banks, and each increase or reduction of the Maximum Amount or reduction of the amount of the Commitments under Section 3.04(b) shall be applied pro rata to the respective obligations of the Banks, according to their respective Applicable Percentages; and (iii) each payment of interest shall be made for the pro rata account of the Banks in accordance with the amounts of interest then due and payable to them. (h) Unless the Administrative Agent shall have received notice from the Company prior to the date on which any payment is due to the Administrative Agent for the account of the Banks or the Issuing Banks hereunder that the Company will not make such payment, the Administrative Agent may assume that the Company made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Banks or the Issuing Banks the amount due. In such event, if the
48 Company has not in fact made such payment, then each of the Banks or the Issuing Banks severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Bank or Issuing Bank with interest thereon, for each day from the date such amount is distributed to it to the date of payment to the Administrative Agent, at the NYFRB Rate. SECTION 4.05. Taxes. (a) Any and all payments by a Loan Party under the Loan Documents shall be made free and clear of and without deduction or withholding for any and all present or future taxes, or similar levies, imposts, deductions, charges or withholdings, and all interest, additions to tax or penalties applicable thereto (“Taxes”), except as required by applicable law. If a Loan Party or the Administrative Agent shall be required by law to deduct or withhold any Tax from or in respect of any sum payable hereunder or under the Notes to any Bank or the Administrative Agent, (i) if such Tax is an Indemnified Tax, the sum payable shall be increased as may be necessary so that after making all required deductions and withholdings (including deductions and withholdings applicable to additional sums payable under this Section 4.05) such Bank or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions or withholdings been made, (ii) the Loan Party or the Administrative Agent shall make such deductions or withholdings and (iii) the Loan Party or the Administrative Agent shall pay the full amount deducted or withheld to the relevant taxing authority or other authority in accordance with applicable law. (b) In addition, the Loan Parties agree to pay any present or future stamp or documentary Taxes or any other excise or property Taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, the Loan Documents, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to a request by the Company under Section 4.06) (“Other Taxes”). (c) The Loan Parties will jointly and severally indemnify each Bank and the Administrative Agent for the full amount of Indemnified Taxes or Other Taxes (including any Indemnified Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this Section 4.05) paid by such Bank, or the Administrative Agent (as the case may be) and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally asserted by the relevant taxing authority. This indemnification shall be made within 30 days from the date such Bank, or the Administrative Agent (as the case may be) makes written demand therefor. A certificate as to the amount of such Indemnified Taxes and Other Taxes, submitted to the Company and the Administrative Agent by such Bank shall be conclusive and binding (as between the Loan Parties, the Banks and the Administrative Agent) for all purposes, absent manifest error. Nothing herein shall preclude the Company from contesting the applicability of any Indemnified Taxes or Other Taxes as against any governmental entity, and each Bank and the Administrative Agent agrees to cooperate in such manner as the Company may reasonably request in contesting any such Indemnified Taxes or Other Taxes (provided that neither any Bank nor the Administrative Agent shall be required to so cooperate with the Company to the extent such Bank or the Administrative Agent reasonably believes that (i) such Indemnified Taxes or Other Taxes have been correctly asserted or (ii) such cooperation would be disadvantageous to it in any material way). (d) Within 30 days after the date of any payment of Indemnified Taxes, the Company will furnish to the Administrative Agent, at its address referred to in Section 10.02, the original or a certified
49 copy of a receipt evidencing payment thereof or other proof of payment of such Indemnified Taxes reasonably satisfactory to the Administrative Agent. (e) Any Bank that is entitled to an exemption from or reduction of withholding Tax with respect to payments made pursuant to this Agreement shall deliver to the Company and the Administrative Agent, at the time or times reasonably requested by the Company or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Company or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Bank, if reasonably requested by the Company or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Company or the Administrative Agent as will enable the Company or the Administrative Agent to determine whether or not such Bank is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 4.05(e)(i), (ii) and (iii) below) shall not be required if in the Bank’s reasonable judgment such completion, execution or submission would subject such Bank to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Bank. (i) Each Bank organized under the laws of a jurisdiction outside the United States, on or prior to the date of the execution and delivery of this Agreement (in the case of each Bank party hereto as of the date hereof) and on the date of the Assignment and Assumption pursuant to which it becomes a Bank (in the case of each other Bank), and from time to time thereafter if requested in writing by the Company (but only so long as such Bank remains lawfully able to do so), shall provide the Company with whichever of the following is applicable: (A) executed copies of Internal Revenue Service Form W-8ECI or W- 8BEN-E, or any successor form prescribed by the Internal Revenue Service, certifying that: (i) such Bank is entitled to benefits under an income tax treaty to which the United States is a party which reduces the rate of withholding Tax on any payment pursuant to any Loan Document or (ii) the income receivable pursuant to this Agreement or any other Loan Document is effectively connected with the conduct of a trade or business in the United States; (B) in the case of a Bank claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Internal Revenue Code, (x) a certificate substantially in the form of Exhibit F-1 to the effect that such Bank is not a “bank” within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, a “10 percent shareholder” of the Company within the meaning of Section 881(c)(3)(B) of the Internal Revenue Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Internal Revenue Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of Internal Revenue Service Form W-8BEN-E; or (C) executed copies of Internal Revenue Service Form W-8IMY, accompanied by Internal Revenue Service Form W-8ECI, Internal Revenue Service Form W-8BEN, Internal Revenue Service Form W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit F-2 or Exhibit F-3, Internal Revenue Service Form W- 9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Bank is a partnership and one or more direct or indirect partners of such Bank are claiming the portfolio interest exemption, such Bank may provide a U.S. Tax
50 Compliance Certificate substantially in the form of Exhibit F-4 on behalf of each such direct and indirect partner. (ii) In the case of a Bank that is a “United States person” as defined in Section 7701(a)(30) of the Internal Revenue Code, such Bank shall provide the Company, on or prior to the date of the execution and delivery of this Agreement (in the case of each Bank party hereto as of the date hereof) and on the date of the Assignment and Assumption pursuant to which it becomes a Bank (in the case of each other Bank), and from time to time thereafter if requested in writing by the Company, with executed copies of Internal Revenue Service Form W-9 (or any successor form) certifying that such Bank is exempt from U.S. federal backup withholding Tax. (iii) If a payment made to a Bank would be subject to United States federal withholding Tax imposed by FATCA if such Bank were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), such Bank shall deliver to the Company and the Administrative Agent, at the time or times prescribed by law and at such time or times reasonably requested in writing by the Company or the Administrative Agent, such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Internal Revenue Code) and such additional documentation reasonably requested in writing by the Company or the Administrative Agent as may be necessary for the Company or the Administrative Agent to comply with its obligations under FATCA, to determine that such Bank has complied with such Bank’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (iii), “FATCA” shall include any amendments made to FATCA after the date of this Agreement. (iv) Each Bank shall, to the extent it is legally entitled to do so, deliver to the Company and the Administrative Agent (in such number of copies as shall be requested by the Company or the Administrative Agent) on or prior to the date on which such Bank becomes a Bank under this Agreement (and from time to time thereafter upon the reasonable request of the Company or the Administrative Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Company or the Administrative Agent to determine the withholding or deduction required to be made. Each Bank agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Company and the Administrative Agent in writing of its legal inability to do so. (f) Any Bank claiming any additional amounts payable pursuant to this Section 4.05 shall use reasonable efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts that may thereafter accrue and would not, in the reasonable judgment of such Bank, be otherwise disadvantageous to such Bank. (g) If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 4.05 (including by the payment of additional amounts pursuant to this Section 4.05), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 4.05 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of
51 such indemnified party and without interest (other than any interest paid by the relevant governmental authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this paragraph (g) (plus any penalties, interest or other charges imposed by the relevant governmental authority) in the event that such indemnified party is required to repay such refund to such governmental authority. Notwithstanding anything to the contrary in this paragraph (g), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (g) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person. (h) Each Bank shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Bank (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Bank’s failure to comply with the provisions of Section 10.06(f)(i) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Bank, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant governmental authority. A certificate as to the amount of such payment or liability delivered to any Bank by the Administrative Agent shall be conclusive absent manifest error. Each Bank hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Bank under any Loan Document or otherwise payable by the Administrative Agent to the Bank from any other source against any amount due to the Administrative Agent under this paragraph (h). (i) Each party’s obligations under this Section shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Bank, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document. SECTION 4.06. Replacement of Banks. If (a) any Bank requests compensation under Section 4.02, (b) the Company is required to pay additional amounts to any Bank or any governmental authority for the account of any Bank pursuant to Section 4.05, (c) any Bank is a Defaulting Bank, (d) any Bank is a Non-Extending Bank, (e) any Bank does not approve any consent, waiver or amendment that (x) requires the approval of all Banks or all affected Banks in accordance with the terms of Section 10.01 and (y) has been approved by the Majority Banks (a “Non-Consenting Bank”) or (f) any Bank is not an Eligible Bank, then the Company may, at its sole expense and effort, upon notice to such Bank and the Administrative Agent, require such Bank to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.06(b)), all of its interests, rights and obligations under this Agreement to an Eligible Bank that shall assume such obligations (which assignee may be another Bank, if a Bank accepts such assignment); provided that: (i) the Company shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 10.06(b)(v);
52 (ii) such Bank shall have received payment of an amount equal to the outstanding principal of its Advances and funded participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder (including any amounts under Section 10.04(c)) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Company (in the case of all other amounts); (iii) in the case of any such assignment resulting from a claim for compensation under Section 4.02 or payments required to be made pursuant to Section 4.05, such assignment will result in a reduction in such compensation or payments thereafter; (iv) such assignment does not conflict with applicable law; (v) in the case of any assignment resulting from a Bank becoming a Non- Consenting Bank, the applicable assignee shall have consented to the applicable amendment, waiver or consent; and (vi) in the case of any assignment resulting from a Bank becoming a Non- Extending Bank, the applicable assignee shall be a Continuing Bank. A Bank shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Bank or otherwise, the circumstances entitling the Company to require such assignment and delegation cease to apply. ARTICLE V CONDITIONS PRECEDENT SECTION 5.01. Effective Date. This Agreement shall become effective on the first date (the “Effective Date”) on which the following conditions precedent have been satisfied or waived in accordance with Section 10.01: (a) The Administrative Agent (or its counsel) shall have received from each party hereto a counterpart of this Agreement (which subject to Section 10.09(b), may include any Electronic Signatures transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page). (b) The Administrative Agent (or its counsel) shall have received: (i) certified copies of (x) the organizational documents of each Loan Party and (y) the resolutions or similar authorizing documentation of the governing body of each Loan Party authorizing such Loan Party’s entry into and performance of its obligations under the Loan Documents to which it is a party. (ii) a certificate of the Secretary or an Assistant Secretary of each Loan Party certifying the names and true signatures of the officers of such Loan Party authorized to sign the Loan Documents and the other documents to be delivered hereunder. (iii) a certificate as to the good standing of each Loan Party dated a date reasonably close to the Effective Date from the jurisdiction of formation of such Loan Party. (iv) a customary legal opinion from outside counsel to the Loan Parties.
53 (v) a certificate of a Responsible Officer of the Company certifying that (x) no Default or Event of Default has occurred and is continuing as of the date thereof, and (y) the representations and warranties contained in Section 6.01 are true and correct on and as of the Effective Date. (c) All fees and other amounts due and payable under or in connection with this Agreement, on or prior to the Effective Date and including, to the extent invoiced at least three Business Days (or such shorter period as reasonably agreed by the Company) prior to the Effective Date, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Company hereunder shall have been paid. (d) (i) The Administrative Agent shall have received all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including, without limitation, the Patriot Act, at least three Business Days prior to the Effective Date (to the extent requested in writing by the Arrangers at least ten days prior to the Effective Date) and (ii) to the extent the Company qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, any Bank that has requested, in a written notice to the Company at least ten days prior to the Effective Date, a Beneficial Ownership Certification in relation to the Company shall have received such Beneficial Ownership Certification at least three Business Days prior to the Effective Date. (e) All obligations under the Existing Credit Agreements shall have been paid in full (other than contingent obligations not then due and payable and that by their terms survive the termination of the Existing Credit Agreements) and all commitments to extend credit thereunder shall have been terminated. On the Effective Date, the Administrative Agent will notify the Banks and the Company in writing of the occurrence of the Effective Date, which notice shall be conclusive evidence of the occurrence of the Effective Date. SECTION 5.02. Conditions Precedent to Each Extension of Credit and Each Amendment of each Letter of Credit. (i) The obligation of each Bank to make an Advance on the occasion of each Borrowing and (ii) the obligation of each Issuing Bank to (x) issue any Letter of Credit and (y) to amend any Letter of Credit to increase the Maximum Amount thereof pursuant to Section 2.01 shall be subject to the conditions precedent that the Effective Date shall have occurred and on the date of such issuance, such Borrowing or such increase the following statements shall be true (and each of the giving of the applicable Notice of Issuance, Notice of Borrowing or Notice of Increase and the acceptance by the Company of the proceeds of such Borrowing shall constitute a representation and warranty by the Company that on the date of such issuance, Borrowing or increase, as the case may be, such statements are true): (a) the representations and warranties contained in Section 6.01 (other than the last sentence of Section 6.01(e) and other than Section 6.01(f)) shall be true and correct in all material respects (other than any representation or warranty qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) on and as of the date of such issuance, Borrowing or increase (except to the extent such representations and warranties expressly relate to an earlier date in which case they are true and correct in all material respects as of such earlier date (other than any representation or warranty qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects)) before and after giving effect thereto and, in the case of a Borrowing, to the application of the proceeds thereof, as though made on and as of such date,
54 (b) no Default or Event of Default shall have occurred and be continuing, or would result from such issuance, Borrowing or increase or, in the case of a Borrowing, from the application of the proceeds thereof, and (c) the Administrative Agent shall have received the relevant Notice of Issuance or Notice of Increase in accordance with Section 2.01(e), or the relevant Notice of Borrowing in accordance with Section 3.02(a). ARTICLE VI REPRESENTATIONS AND WARRANTIES SECTION 6.01. Representations and Warranties of the Company. The Company represents and warrants to the Banks and the Administrative Agent as follows: (a) Each Loan Party (i) is duly organized, validly existing and, except to the extent that the failure to be in good standing would not reasonably be expected to result in a Material Adverse Effect, in good standing under the laws of its jurisdiction of incorporation and (ii) has all requisite power and authority to own or lease and operate its property and to carry on its business as now conducted and as proposed to be conducted, except to the extent the failure to have such power or authority would not reasonably be expected to result in a Material Adverse Effect. (b) The execution, delivery and performance by each Loan Party of this Agreement and the other Loan Documents, if any, are (x) within such Loan Party’s powers, have been duly authorized by all necessary corporate or other organizational action, and (y) do not (i) contravene such Loan Party’s organizational or governing documents, (ii) contravene any material contractual restriction binding on such Loan Party or (iii) violate any law, rule or regulation (including the Securities Act of 1933 and the Exchange Act and the regulations thereunder and Regulations U and X issued by the Board of Governors of the Federal Reserve System, each as from time to time amended), or order, writ, judgment, injunction, decree, determination or award, except, in the case of clauses (ii) and (iii), as would not result in a Material Adverse Effect. (c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body that has not been obtained, taken or made by the Loan Parties is required to be obtained, taken or made by any Loan Party for the due execution, delivery and performance by such Loan Party of this Agreement and the other Loan Documents, if any. (d) This Agreement is, and each other Loan Document, if any, have been duly executed and delivered for value and constitute the legal, valid and binding obligation of the Loan Parties party hereto and thereto, enforceable against such Loan Party in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally, concepts of reasonableness and general equitable principles, regardless of whether considered in a proceeding in equity or at law. (e) The Company has heretofore furnished to each of the Banks the consolidated balance sheets of the Company and its Consolidated Subsidiaries as of December 31, 2024, and the related consolidated statements of income, comprehensive income, changes in total equity and cash flows of the Company and its Consolidated Subsidiaries for the fiscal year then ended, with the opinion thereon of PricewaterhouseCoopers, LLP. All such financial statements present fairly, in all material respects, the financial position of the Company and its Consolidated Subsidiaries as at such date and the consolidated results of the operations and cash flows of the Company and its Consolidated Subsidiaries for the fiscal
55 period ended on such date, all in conformity with accounting principles generally accepted in the United States of America. Since December 31, 2024, no Material Adverse Change has occurred, except as may have been disclosed in the Company’s report on Form 10-K most recently filed with the Securities and Exchange Commission prior to the Effective Date and any subsequent reports on Form 10-Q or Form 8-K filed with the Securities and Exchange Commission prior to the Effective Date. (f) Except for the Disclosed Litigation, there is no pending or, to the knowledge of the Company, threatened action or proceeding against the Company or any of its Material Subsidiaries before any court, governmental agency or arbitrator which (i) would reasonably be expected to result in a Material Adverse Effect or (ii) which purports to adversely affect the legality, validity or enforceability of any Loan Document and as to which there is a reasonable possibility of an adverse decision. (g) No Loan Party is engaged in the business of extending credit for the purpose of buying or carrying Margin Stock, and no part of the proceeds of any Advance hereunder will be used in any manner which would violate Regulation U or Regulation X. (h) No Loan Party is an “investment company” as such term is defined in the Investment Company Act of 1940, as amended. (i) None of the written information (other than projections and information of a general economic or industry nature) that was made available by the Company or on the Company’s behalf by any of its representatives to the Administrative Agent or any Bank in connection with the negotiation of this Agreement, taken as a whole, as of the date furnished, contained any untrue statement of a material fact or omitted to state a fact necessary to make the statements contained therein not misleading in light of the time and circumstances under which such statements were made. (j) The Company is Solvent as of the Effective Date. (k) Without limiting the foregoing paragraphs (a) through (j), the Company and each of its Material Subsidiaries is in compliance with all laws, statutes, rules, regulations and orders binding on or applicable to the Company, its Material Subsidiaries and all of their respective properties, except to the extent failure to so comply would not (either individually or in the aggregate) reasonably be expected to have a Material Adverse Effect. (l) The Company has implemented and maintains in effect policies and procedures designed to ensure compliance by the Company, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions. The Company, its Subsidiaries and their respective officers and, to the knowledge of the Company, their respective directors, employees and agents, are in compliance with Anti-Corruption Laws, applicable Sanctions and the Patriot Act in all material respects. None of (a) the Company, any Subsidiary or any of their respective directors, officers or employees, or (b) to the knowledge of the Company, any agent of the Company or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. The use of proceeds of any Borrowing by the Company or its Subsidiaries will not violate the Patriot Act, any Anti-Corruption Law or applicable Sanctions. ARTICLE VII COVENANTS OF THE COMPANY SECTION 7.01. Affirmative Covenants. Following the Effective Date, so long as any Advance shall remain unpaid or any Bank shall have any Commitment, LC Exposure or Revolving Credit
56 Exposure hereunder, and until payment in full of all other amounts payable by the Company hereunder (other than expense reimbursement, indemnification, increased cost or Tax gross-up amounts for which no claim has been made), the Company covenants and agrees that, unless the Majority Banks shall otherwise consent in writing: (a) Corporate Existence, Compliance with Laws, Etc. The Company will maintain its existence, and will comply, and will cause each Material Subsidiary to comply, with all applicable laws, statutes, rules, regulations and orders, such compliance to include compliance with ERISA and applicable environmental, health and safety laws and regulations, except for any non-compliance which would not reasonably be expected to have a Material Adverse Effect. The Company will maintain in effect policies and procedures designed to ensure compliance by the Company, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions. (b) Payment of Taxes and other Obligations. The Company will, and will cause each of its Material Subsidiaries to, pay and discharge at or before maturity all of their respective material obligations and liabilities (including claims of materialmen, warehousemen and the like which if unpaid might by law give rise to a Lien) and pay and discharge all taxes, assessments and governmental charges or levies imposed on it or on its income or profits or on any of its property prior to the date on which penalties attach thereto, except for any such obligation, liability, tax, assessment, charge or levy the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained in accordance with GAAP or where the failure to pay or discharge such obligation, liability, tax, assessment, charge or levy would not have a Material Adverse Effect. (c) Maintenance and Inspection of Books and Records. The Company will, and will cause each of its Material Subsidiaries to, (i) maintain appropriate books and records in which entries shall be made of all dealings and transactions material to the Company and its Subsidiaries, taken as a whole, in relation to its business and activities and (ii) subject to applicable law, permit representatives of the Administrative Agent (or if an Event of Default has occurred and is continuing, any Bank), during normal business hours and as often as may be desired (but in no event more frequently than once in any twelve- month period unless an Event of Default has occurred and is continuing) at their own cost and expense (provided that if an Event of Default has occurred and is continuing the Company shall indemnify each Bank and the Administrative Agent for such costs and expenses that are reasonable and, where possible, documented) to examine, copy and make extracts from its books and records, and to discuss its business and affairs with its officers; provided however, rights of the Administrative Agent and Banks shall not extend to any information covered by attorney-client or other legal privilege or to the extent the exercise of such inspection rights would reasonably be expected to result in violation or other breach of any third-party confidentiality agreements. (d) Maintenance of Property; Insurance. The Company will, and will cause each of its Material Subsidiaries to, (i) maintain all of its property useful and necessary in the business conducted by the Company and its Material Subsidiaries in good working order and condition, ordinary wear and tear excepted, except where failure to do so would not result in a Material Adverse Effect, and (ii) maintain insurance with creditworthy insurance companies, or self-insure, against such risks and in such amounts as are usually maintained or insured against by other companies of established repute engaged in the same or a similar business or consistent with the Company’s past practice. (e) [Reserved]. (f) Reporting Requirements. The Company will furnish to the Banks:
57 (i) as soon as available and in any event within five Business Days after the date on which the Company is required to file the quarterly report of the Company for each of the first three fiscal quarters of each fiscal year on Form 10-Q with the Securities and Exchange Commission (after giving effect to any extension (not to exceed 10 Business Days) of such due date that is obtained by the Company), the quarterly report of the Company for such fiscal quarter on Form 10-Q filed with the Securities and Exchange Commission; (ii) as soon as available and in any event within five Business Days after the date on which the Company is required to file the annual report of the Company for each fiscal year on Form 10-K with the Securities and Exchange Commission (after giving effect to any extension (not to exceed 20 Business Days) of such due date that is obtained by the Company), the annual report of the Company for such fiscal year on Form 10-K filed with the Securities and Exchange Commission; (iii) promptly after a Responsible Officer of the Company obtains knowledge of the occurrence of any Default that is then continuing, a statement of a Responsible Officer of the Company setting forth details of such Default and the action which the Company has taken and proposes to take with respect thereto; (iv) within the time periods provided for in clauses (i) and (ii) above for the delivery of the financial statements provided for therein, as applicable, a duly completed certificate, signed by the chief accounting officer or chief financial officer or assistant treasurer or treasurer or controller of the Company setting forth in reasonable detail the data and computations necessary to demonstrate compliance with the ratio contained in Section 7.02(c) hereof; (v) promptly after the filing thereof, copies of each Form 8-K that the Company files with the Securities and Exchange Commission, or notice of the filing thereof with an electronic link thereto; and (vi) promptly from time to time such other information respecting the financial condition or operations of the Company or any of its Material Subsidiaries as any Bank through the Administrative Agent may from time to time reasonably request (provided that the Company shall not be obligated to furnish to any Bank any information pursuant to this clause (vi) that the Company reasonably believes to be material non-public information). Documents required to be delivered pursuant to Section 7.01(f)(i), (ii) or (v) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (x) on which the Company posts such documents, or provides a link thereto on the Company’s website on the Internet at thecignagroup.com (or any successor thereto), (y) on which such documents are made publicly available on the Securities and Exchange Commission’s EDGAR system website or (z) on which such documents are posted by the Administrative Agent on the Company’s behalf on an Internet or intranet website, if any, to which each Bank and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent). The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and each Bank shall be solely responsible for requesting delivery to it or maintaining its copies of such documents. The Company hereby acknowledges that (a) the Administrative Agent and/or any Arranger may, but shall not be obligated to, make available to the Banks materials and/or information provided by or on behalf of the Company hereunder (collectively, “Company Materials”) by posting the Company Materials on IntraLinks, Syndtrak, ClearPar, or a substantially similar electronic transmission system (the “Platform”)
58 and (b) certain of the Banks (each, a “Public Bank”) may have personnel who do not wish to receive material non-public information with respect to the Company or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. The Company hereby agrees that (i) all Company Materials that are to be made available to Public Banks shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (ii) by marking Company Materials “PUBLIC,” the Company shall be deemed to have authorized the Administrative Agent, any Arranger, the and the Banks to treat such Company Materials as not containing any material non-public information with respect to the Company or its securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Company Materials constitute Confidential Information, they shall be treated as set forth in Section 10.13); (iii) all Company Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (iv) the Administrative Agent and any Arranger shall be entitled to treat any Company Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.” Notwithstanding the foregoing, the Company shall be under no obligation to mark any Company Materials “PUBLIC.” SECTION 7.02. Negative Covenants. Following the Effective Date, so long as any Advance shall remain unpaid or any Bank shall have any Commitment, LC Exposure or Revolving Credit Exposure hereunder, and until payment in full of all other amounts payable by the Company hereunder (other than expense reimbursement, indemnification, increased cost and Tax gross-up amounts for which no claim has been made), the Company covenants and agrees that, without the written consent of the Majority Banks: (a) Liens. The Company will not, and will not permit any of its Material Subsidiaries to, at any time create, assume or suffer to exist any Lien upon or with respect to any of the capital stock of any of its Material Subsidiaries, other than (i) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 7.01(b), (ii) judgment Liens in respect of judgments that do not constitute Events of Default under Section 8.01(g) and (iii) Liens existing on the capital stock of any person at the time such person becomes a Material Subsidiary (including by merger or consolidation). (b) Mergers. The Company will not consolidate or merge with or into any other Person or convey or transfer (or permit the conveyance or transfer of) all or substantially all of the properties and assets of the Company and its Consolidated Subsidiaries taken as a whole to any other Person unless (i) the surviving or acquiring entity is a Person organized under the laws of the United States of America, any State thereof or the District of Columbia, (ii) the surviving or acquiring Person, if other than the Company, (A) expressly assumes the performance of the obligations of the Company under this Agreement and all Notes, if any, pursuant to an instrument executed and delivered to the Administrative Agent, and in form and substance reasonably satisfactory to the Administrative Agent and (B) delivers to the Administrative Agent information and documentation of the type referred to in Sections 5.01(b) and 5.01(d) and (iii) immediately after giving effect to such transaction, no Default shall exist. (c) Leverage Ratio. The Company will not permit the Leverage Ratio on the last day of any fiscal quarter (commencing with the first fiscal quarter the last day of which is after the Effective Date) for which financial statements are delivered (or are required to be delivered) pursuant to Section 7.01(f)(i) and (ii) to be greater than 0.600 to 1.00; provided that, at any time after the definitive agreement for any Material Acquisition shall have been executed (or, in the case of a Material Acquisition in the form of a tender offer or similar transaction, after the offer shall have been launched) and prior to the consummation of such Material Acquisition (or termination of the definitive documentation in respect
59 thereof (or such later date as such indebtedness ceases to constitute Acquisition Debt as set forth in the definition of “Acquisition Debt”)), any Acquisition Debt (and the proceeds of such Debt) shall be excluded from the determination of the Leverage Ratio; provided, further, that, for each of the first four quarter end dates following the incurrence or issuance by the Company or any of its Subsidiaries of any Step-Up Acquisition Debt, the required Leverage Ratio pursuant to this Section 7.02(c) shall increase to, and shall not be permitted to be greater than, 0.650 to 1.00 (such four fiscal quarter period, an “Adjusted Leverage Ratio Period”); and provided, further, that following any Adjusted Leverage Ratio Period, the Leverage Ratio shall be equal to or less than 0.600 to 1.00 for at least two fiscal quarter end dates before the required Leverage Ratio may be increased again pursuant to the foregoing proviso as a result of a subsequent Step- Up Acquisition. (d) Use of Proceeds. The Company will not request any Borrowing or Letter of Credit, and the Company shall not use, and shall ensure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing or Letter of Credit (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws or (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person or in any Sanctioned Country, in each case of this clause (B) in violation of applicable Sanctions, or in any manner that would result in the violation of any Sanctions applicable to any party hereto. SECTION 7.03. Guaranties. (a) The payment and performance of the Obligations of the Company shall at all times be guaranteed by each direct and indirect existing or future Domestic Subsidiary that guarantees the Company’s obligations under any Material Debt, pursuant to Article XI. (b) In the event any Domestic Subsidiary is required pursuant to the terms of Section 7.03(a) above to become a Guarantor hereunder, the Company shall cause such Domestic Subsidiary to execute and deliver to the Administrative Agent a guaranty agreement in form and substance reasonably acceptable to the Administrative Agent, as the same may be amended, modified or supplemented from time to time (individually a “Guaranty” and collectively the “Guaranties”; and each such Subsidiary executing and delivering this Agreement as a Guarantor (including any Subsidiary hereafter executing and delivering a Guaranty), a “Guarantor” and collectively the “Guarantors”) or an Additional Guarantor Supplement substantially in the form attached as Exhibit E or such other form reasonably acceptable to the Administrative Agent, and the Company shall also deliver to the Administrative Agent, or cause such Domestic Subsidiary to deliver to the Administrative Agent, at the Company’s cost and expense, such other instruments, documents, certificates and opinions of the type delivered on the Effective Date pursuant to Sections 5.01(b)(i), 5.01(b)(ii), 5.01(b)(iii) and 5.01(b)(iv), to the extent reasonably required by the Administrative Agent in connection therewith. (c) A Guarantor, upon delivery of written notice provided to the Administrative Agent (a copy of which shall be posted by the Administrative Agent to the Banks on an Internet or intranet website to which each Bank has access) by a Responsible Officer of the Company certifying that, after giving effect to any substantially concurrent transactions, including any repayment of Debt, release of a guaranty or any sale or other disposition, either: (i) such Guarantor does not guarantee the obligations of the Company under any Material Debt of the Company or (ii) such Guarantor is no longer a Domestic Subsidiary of the Company as a result of a transaction not prohibited hereunder, shall be automatically released from its obligations (including its Guaranty) hereunder without further required action by any Person. The Administrative Agent, at the Loan Parties’ expense, shall execute and deliver to the applicable Guarantor
60 any documents or instruments as such Guarantor may reasonably request to evidence the release of such Guaranty. ARTICLE VIII EVENTS OF DEFAULT SECTION 8.01. Events of Default. If any of the following events (each an “Event of Default”) shall occur and be continuing: (a) The Company shall fail to pay in full when due any principal of any Advance or any LC Reimbursement Obligation; or the Company shall fail to pay any interest on any Advance or LC Reimbursement Obligation, or any commitment fee or letter of credit commission, when due and such failure remains unremedied for three Business Days; or the Company shall fail to pay any other amount payable hereunder when due and such failure remains unremedied for three Business Days after notice thereof shall have been given to the Company by the Administrative Agent or any Bank (through the Administrative Agent); or (b) Any representation or warranty made by the Company herein or in any certificate delivered by the Company pursuant to Section 5.01, or by the Company or any Guarantor (or any of their respective officers) in connection with the Loan Documents or any Notice of Issuance, Notice of Borrowing or Notice of Increase shall prove to have been incorrect in any material respect when made; or (c) (i) The Company shall fail to perform or observe any term, covenant or agreement contained in Section 7.01(f)(iii), or 7.02; or (ii) the Company or any Guarantor shall fail to perform or observe any other term or covenant of this Agreement on its part to be performed or observed, and such failure remains unremedied for 30 days after written notice thereof shall have been given to the Company by the Administrative Agent or any Bank (through the Administrative Agent); or (d) The Company or any Material Subsidiary shall fail to pay any principal of any other Debt of the Company or such Material Subsidiary which is outstanding in a principal amount of at least $300,000,000 (or its equivalent in other currencies) in the aggregate when the same becomes due and payable (whether at scheduled maturity, by required prepayment, acceleration, demand or otherwise) and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt unless adequate provision for such payment has been made in form and substance satisfactory to the Majority Banks; or any such Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled or required prepayment), redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall be required to be made, in each case prior to the stated maturity thereof as a result of a breach by the Company or such Material Subsidiary (as the case may be) of the agreement or instrument relating to such Debt and the Debt remains due and payable or required to be prepaid, redeemed, purchased or defeased, or an offer to prepay, redeem, purchase or defease such Debt shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Debt unless adequate provision for such payment has been made in form and substance satisfactory to the Majority Banks; provided this clause (d) shall not apply to secured Debt that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Debt; or (e) The Company or any of its Material Subsidiaries shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Company or any of its Material Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any applicable law relating to bankruptcy,
61 insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against the Company or any of its Material Subsidiaries, such proceeding shall remain undismissed or unstayed for a period of 60 days; or the Company or any of its Material Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (e); or (f) [Reserved]; (g) One or more enforceable judgments in an aggregate amount in excess of $300,000,000 (to the extent not covered by insurance or indemnities as to which the applicable insurance company or third party has not denied its obligation) shall be rendered against the Company or any of its Material Subsidiaries and the same shall remain undischarged for a period of 60 consecutive days during which either (i) enforcement proceedings shall have been commenced by any creditor upon any such judgment or order and such proceedings shall not have been stayed or (ii) a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (h) A Change in Control shall occur; or (i) The Company or any Material Subsidiary shall fail to pay when due an amount or amounts which it shall have become liable to pay under Title IV of ERISA and, in the aggregate, could reasonably be expected to result in a Material Adverse Effect; or (j) Any Guaranty, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations (other than contingent obligations that survive the termination of this Agreement), ceases to be in full force and effect; or any Loan Party contests in writing the validity or enforceability of any Guaranty; or any Loan Party denies in writing that it has any or further liability or obligation under any Guaranty, or in writing purports to revoke, terminate or rescind any Guaranty for any reason other than as expressly permitted hereunder or thereunder; THEN, and in every such event, and at any time thereafter during the continuance of such event, the Administrative Agent shall, if requested by the Majority Banks, by notice to the Company take any or all of the following actions, at the same or different times: (i) terminate the Commitments, whereupon they shall forthwith terminate (without prejudice to the obligations of any Bank (including any Issuing Bank) under any Letter of Credit as then in effect), (ii) demand provision of cover from the Company in an amount equal to the then aggregate amount of LC Exposure of the Banks, whereupon the Company shall forthwith pay such amount in Dollars and immediately available funds to the Collateral Account and (iii) declare that the Advances, all interest thereon, all fees, commissions and other obligations of the Company accrued hereunder to be forthwith due and payable immediately, whereupon they shall forthwith become due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company; provided that in the case of any of the Events of Default specified in clause (e) above with respect to the Company, without any notice to the Company or any other act by the Administrative Agent or the Banks, the Commitments shall thereupon terminate (without prejudice to the obligations of the Banks under any Letters of Credit as then in effect), and the Advances, all such interest and all such fees, commissions and other obligations of the Company accrued hereunder, including the obligation to provide cover as aforesaid, shall automatically become due and payable without presentment, demand, protest or notice of any kind, all of which are hereby waived by each Company.
62 SECTION 8.02. Application of Payments. Notwithstanding anything herein to the contrary, to the extent following the occurrence and during the continuance of an Event of Default, the Administrative Agent has declared amounts due and payable pursuant to clause (iii) of the immediately preceding paragraph or an Event of Default pursuant to Section 8.01(e) has occurred: (a) all payments received on account of the Obligations shall, subject to Section 2.07, be applied by the Administrative Agent as follows: (i) first, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts payable to the Administrative Agent (including fees and disbursements and other charges of counsel to the Administrative Agent payable under Section 10.04 and amounts pursuant to Section 4.01(c) payable to the Administrative Agent in its capacity as such); (ii) second, to payment of that portion of the Obligations constituting fees, expenses, indemnities and other amounts (other than principal, reimbursement obligations in respect of LC Disbursements, interest and Letter of Credit fees) payable to the Banks and the Issuing Banks (including fees and disbursements and other charges of counsel to the Banks and the Issuing Banks payable under Section 10.04) arising under the Loan Documents, ratably among them in proportion to the respective amounts described in this clause (ii) payable to them; (iii) third, to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit fees and charges and interest on the Advances and unreimbursed LC Disbursements, ratably among the Banks and the Issuing Banks in proportion to the respective amounts described in this clause (iii) payable to them; (iv) fourth, (A) to payment of that portion of the Obligations constituting unpaid principal of the Advances and unreimbursed LC Disbursements and (B) to cash collateralize that portion of LC Exposure comprising the undrawn amount of Letters of Credit to the extent not otherwise cash collateralized by the Company pursuant to Section 2.01 or 2.06, ratably among the Banks and the Issuing Banks in proportion to the respective amounts described in this clause (iv) payable to them; provided that (x) any such amounts applied pursuant to subclause (B) above shall be paid to the Administrative Agent for the ratable account of the applicable Issuing Banks to cash collateralize Obligations in respect of Letters of Credit, (y) subject to Section 2.01 or 2.06, amounts used to cash collateralize the aggregate amount of Letters of Credit pursuant to this clause (iv) shall be used to satisfy drawings under such Letters of Credit as they occur and (z) upon the expiration of any Letter of Credit (without any pending drawings), the pro rata share of cash collateral shall be distributed to the other Obligations, if any, in the order set forth in this Section 8.02; (v) fifth, to the payment in full of all other Obligations, in each case ratably among the Administrative Agent, the Banks and the Issuing Banks based upon the respective aggregate amounts of all such Obligations owing to them in accordance with the respective amounts thereof then due and payable; and (vi) finally, the balance, if any, after all Obligations have been indefeasibly paid in full, to the Company or as otherwise required by law; and (b) if any amount remains on deposit as cash collateral after all Letters of Credit have either been fully drawn or expired (without any pending drawings), such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.
63 ARTICLE IX THE ADMINISTRATIVE AGENT SECTION 9.01. Appointment and Authority. Each Bank hereby irrevocably appoints JPMorgan to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof, together with such actions and powers as are reasonably incidental thereto. Except as set forth in Sections 9.06 and 9.07, the provisions of this Article are solely for the benefit of the Administrative Agent and the Banks, and the Loan Parties shall not have rights as a third party beneficiary of any such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties. SECTION 9.02. Rights as a Bank. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Bank as any other Bank and may exercise the same as though it were not the Administrative Agent, and the term “Bank” or “Banks” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for, and generally engage in any kind of business with, the Company or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Banks. SECTION 9.03. Exculpatory Provisions. (a) Neither the Administrative Agent nor any Arranger, as applicable, shall have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. The motivations of the Administrative Agent are commercial in nature and are not to invest in the general performance or operations of the Company. Without limiting the generality of the foregoing, the Administrative Agent and each Arranger, as applicable: (i) shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing; (ii) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Majority Banks (or such other number or percentage of the Banks as shall be expressly provided for herein or in the other Loan Documents); provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to this Agreement or applicable law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any debtor relief law or that may effect a forfeiture, modification or termination of property of a Defaulting Bank in violation of any debtor relief law; and (iii) shall not, except as expressly set forth herein, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Company or any
64 of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent, any Arranger or any of its Affiliates in any capacity. (b) The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Majority Banks (or such other number or percentage of the Banks as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.01 and 8.01) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and non- appealable judgment. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given to the Administrative Agent in writing by the Company or a Bank. (c) The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with the Loan Documents, (ii) the contents of any certificate, report or other document delivered hereunder or in connection herewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of the Loan Documents or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article V or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent. Notwithstanding anything herein to the contrary, the Administrative Agent shall not be liable for, or be responsible for any liabilities, costs or expenses suffered by the Company, any Subsidiary, any Bank or any Issuing Bank as a result of, any good faith determination of the Revolving Credit Exposure, any of the component amounts thereof or any portion thereof attributable to each Bank or Issuing Bank. SECTION 9.04. Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of an Advance, or the issuance, extension, renewal or increase of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Bank or an Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to such Bank or Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Bank or Issuing Bank prior to the making of such Advance or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Company), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. SECTION 9.05. Indemnification. The Banks agree to indemnify the Administrative Agent (to the extent required but not reimbursed by the Company), ratably according to the respective amounts of their Commitments as most recently in effect, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to or arising out of any Loan Document or any action taken or omitted by the Administrative Agent under any Loan Document; provided that no Bank shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
65 disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and non-appealable judgment. Without limiting the foregoing, each Bank agrees to reimburse the Administrative Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including reasonable and documented counsel fees) incurred by the Administrative Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under any Loan Document, to the extent that the Administrative Agent is not reimbursed for such expenses by the Company. SECTION 9.06. Guaranty Matters. The Banks irrevocably authorize and direct the release of any Guarantor from its obligations under its Guaranty automatically as set forth in Section 7.03(c) and authorize and direct the Administrative Agent to, at the Loan Parties’ expense, execute and deliver to the applicable Loan Party such documents or instruments as such Loan Party may reasonably request to evidence the release of such Guaranty. SECTION 9.07. Resignation of Administrative Agent. (a) The Administrative Agent may at any time give notice of its resignation to the Banks, the Issuing Banks and the Company. Upon receipt of any such notice of resignation, the Majority Banks shall have the right to appoint a successor, which shall be an Eligible Bank with an office in the United States, or an Affiliate of any such Eligible Bank that is also an Eligible Bank with an office in the United States that, in each case, unless an Event of Default pursuant to Section 8.01(a), Section 8.01(c) with respect to a breach of Section 7.02(d) or Section 8.01(e) shall have occurred and then be continuing, is reasonably acceptable to the Company. If no such successor shall have been so appointed by the Majority Banks and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Majority Banks and the Company) (the “Resignation Effective Date”), then the Company or the retiring Administrative Agent may (but shall not be obligated to), on behalf of the Banks and the Issuing Banks, appoint a successor Administrative Agent meeting the qualifications set forth above. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date. (b) If the Person serving as Administrative Agent is a Defaulting Bank pursuant to clause (e) of the definition thereof, the Majority Banks and the Company may, to the extent permitted by applicable law, by notice in writing to such Person remove such Person as Administrative Agent and appoint a successor that is an Eligible Bank and that, unless an Event of Default pursuant to Section 8.01(a), Section 8.01(c) with respect to a breach of Section 7.02(d) or Section 8.01(e) shall have occurred and then be continuing, is reasonably acceptable to the Company. (c) [Reserved]. (d) With effect from the effective date of any resignation or removal of the Administrative Agent (1) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (2) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Bank directly, until such time if any, as the Majority Banks appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring or removed Administrative Agent (other than any rights to indemnity payments or other amounts owed to the retiring or removed Administrative Agent), and the retiring or removed
66 Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents. The fees payable by the Company to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Company and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder or under the other Loan Documents, the provisions of this Article and Section 10.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them (i) while the retiring or removed Administrative Agent was acting as Administrative Agent and (ii) after such resignation or removal for as long as any of them continues to act in any capacity hereunder or under the Loan Documents, including in respect of any actions taken in connection with transferring the agency to any successor Administrative Agent. SECTION 9.08. Non-Reliance on Administrative Agent and Other Banks. Each Bank expressly acknowledges that none of the Administrative Agent nor the Arranger has made any representation or warranty to it, and that no act by the Administrative Agent or the Arranger hereafter, including any consent to, and acceptance of any assignment or review of the affairs of any Loan Party of any Affiliate thereof, shall be deemed to constitute any representation or warranty by the Administrative Agent or the Arranger to any Bank as to any matter, including whether the Administrative Agent or the Arranger have disclosed material information in their (or their Related Parties) possession. Each Bank acknowledges that it has, independently and without reliance upon the Administrative Agent, the Arranger or any other Bank or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis of, appraisal of, and investigation into, the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties and their Subsidiaries, and all applicable bank or other regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Company hereunder. Each Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent, the Arranger or any other Bank or any of their Related Parties, and based on such documents and information as it shall from time to time deem appropriate, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under or based upon this Agreement, any other Loan Document, any related agreement or any document furnished hereunder or thereunder, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Loan Parties. Each Bank acknowledges and agrees that (i) the Loan Documents set forth the terms of a commercial lending facility; (ii) in participating as a Bank, it is engaged in making, acquiring or holding commercial loans in the ordinary course and is entering into this Agreement as a Bank for the purpose of making, acquiring or holding commercial loans and providing other facilities set forth herein as may be applicable to such Bank, and not for the purpose of investing in the general performance or operations of the Company, or for the purpose of purchasing, acquiring or holding any other type of financial instrument such as a security (and each Bank agrees not to assert a claim in contravention of the foregoing, such as a claim under the federal or state securities laws) and (iii) it is sophisticated with respect to decisions to make, acquire and/or hold commercial loans and to provide other facilities set forth herein, as may be applicable to such Bank, and either it, or the Person exercising discretion in making its decision to make, acquire and/or hold such commercial loans or to provide such other facilities, is experienced in making, acquiring or holding such commercial loans or providing such other facilities. SECTION 9.09. No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the bookrunners, arrangers or documentation agents listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement, except in its capacity, as applicable, as the Administrative Agent, a Bank or an Issuing Bank hereunder.
67 SECTION 9.10. Delegation of Duties The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub agents appointed by the Administrative Agent. The Administrative Agent and any such sub agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub agent and to the Related Parties of the Administrative Agent and any such sub agent, and shall apply to their respective activities in connection with the syndication of the credit facility as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and non- appealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub-agents. SECTION 9.11. Certain ERISA Matters. (a) Each Bank (x) represents and warrants, as of the date such Person became a Bank party hereto, to, and (y) covenants, from the date such Person became a Bank party hereto to the date such Person ceases being a Bank party hereto, for the benefit of the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Company, that at least one of the following is and will be true: (i) such Bank is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect to such Bank’s entrance into, participation in, administration of and performance of the Advances, the Letters of Credit, the Commitments or this Agreement, (ii) the transaction exemption set forth in one or more PTEs, such as PTE 84- 14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Bank’s entrance into, participation in, administration of and performance of the Advances, the Commitments, the Letters of Credit and this Agreement, (iii) (A) such Bank is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Bank to enter into, participate in, administer and perform the Advances, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Advances, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Bank, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Bank’s entrance into, participation in, administration of and performance of the Advances, the Letters of Credit, the Commitments and this Agreement, or (iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent and such Bank.
68 (b) In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Bank or (2) a Bank has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such Bank further (x) represents and warrants, as of the date such Person became a Bank party hereto, to, and (y) covenants, from the date such Person became a Bank party hereto to the date such Person ceases being a Bank party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Company or any other Loan Party, that the Administrative Agent is not a fiduciary with respect to the assets of such Bank involved in such Bank’s entrance into, participation in, administration of and performance of the Advances, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto). SECTION 9.12. Acknowledgements of Banks. (a) Each Bank hereby agrees that (x) if the Administrative Agent notifies such Bank that the Administrative Agent has determined in its sole discretion that any funds received by such Bank from the Administrative Agent or any of its Affiliates (whether as a payment, prepayment or repayment of principal, interest, fees or otherwise; individually and collectively, a “Payment”) were erroneously transmitted to such Bank (whether or not known to such Bank), and demands the return of such Payment (or a portion thereof), such Bank shall promptly, but in no event later than one Business Day thereafter (or such later date as the Administrative Agent, may, in its sole discretion, specify in writing), return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together with interest thereon (except to the extent waived in writing by the Administrative Agent) in respect of each day from and including the date such Payment (or portion thereof) was received by such Bank to the date such amount is repaid to the Administrative Agent at the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect, and (y) to the extent permitted by applicable law, such Bank shall not assert, and hereby waives, as to the Administrative Agent, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Payments received, including without limitation any defense based on “discharge for value” or any similar doctrine. A notice of the Administrative Agent to any Bank under this Section 9.12(a) shall be conclusive, absent manifest error. (b) Each Bank hereby further agrees that if it receives a Payment from the Administrative Agent or any of its Affiliates (x) that is in a different amount than, or on a different date from, that specified in a notice of payment sent by the Administrative Agent (or any of its Affiliates) with respect to such Payment (a “Payment Notice”) or (y) that was not preceded or accompanied by a Payment Notice, it shall be on notice, in each such case, that an error has been made with respect to such Payment. Each Bank agrees that, in each such case, or if it otherwise becomes aware a Payment (or portion thereof) may have been sent in error, such Bank shall promptly notify the Administrative Agent of such occurrence and, upon demand from the Administrative Agent, it shall promptly, but in no event later than one Business Day thereafter (or such later date as the Administrative Agent, may, in its sole discretion, specify in writing), return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together with interest thereon (except to the extent waived in writing by the Administrative Agent) in respect of each day from and including the date such Payment (or portion thereof) was received by such Bank to the date such amount is repaid to the Administrative Agent at the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect.
69 (c) The Company and each other Loan Party hereby agree that (x) in the event an erroneous Payment (or portion thereof) is not recovered from any Bank that has received such Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights of such Bank with respect to such amount and (y) an erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Company or any other Loan Party, except, in each case, to the extent such erroneous Payment is, and solely with respect to the amount of such erroneous Payment that is, comprised of funds received by the Administrative Agent from the Company or any other Loan Party for the purpose of making a payment to satisfy certain Obligations and is not otherwise repaid or returned to a Loan Party by the Administrative Agent, a Bank or any of their respective Affiliates whether pursuant to a legal proceeding or otherwise. (d) Each Bank and each Issuing Bank represents and warrants that (1) the Loan Documents set forth the terms of a commercial lending facility, (2) in participating as a Bank or Issuing Bank, as applicable, it is engaged in making, acquiring or holding commercial loans and in providing other facilities set forth herein as may be applicable to such Bank or Issuing Bank, in each case in the ordinary course of business, and not for the purpose of investing in the general performance or operations of the Company, or for the purpose of purchasing, acquiring or holding any other type of financial instrument such as a security (and each Bank and each Issuing Bank agrees not to assert a claim in contravention of the foregoing, such as a claim under the federal or state securities laws), (3) it has, independently and without reliance upon the Administrative Agent, any Arranger, or any other Bank or Issuing Bank, or any of the Related Parties of any of the foregoing, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement as a Bank or Issuing Bank, and to make, acquire or hold Advances hereunder and (4) it is sophisticated with respect to decisions to make, acquire and/or hold commercial loans and to provide other facilities set forth herein, as may be applicable to such Bank or Issuing Bank, and either it, or the Person exercising discretion in making its decision to make, acquire and/or hold such commercial loans or to provide such other facilities, is experienced in making, acquiring or holding such commercial loans or providing such other facilities. Each Bank and each Issuing Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent, any Arranger or any other Bank or Issuing Bank, or any of the Related Parties of any of the foregoing, and based on such documents and information (which may contain material, non-public information within the meaning of the United States securities laws concerning the Company and its Affiliates) as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder. (e) Each Bank, by delivering its signature page to this Agreement on the Effective Date, or delivering its signature page to an Assignment and Assumption or any other Loan Document pursuant to which it shall become a Bank hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Administrative Agent or the Bank on the Effective Date. (f) The Banks and Issuing Banks acknowledge that there may be a constant flow of information (including information which may be subject to confidentiality obligations in favor of the Loan Parties) between the Loan Parties and their Affiliates, on the one hand, and JPMorgan Chase Bank, N.A. and its Affiliates, on the other hand. Without limiting the foregoing, the Loan Parties or their Affiliates may provide information, including updates to previously provided information to JPMorgan Chase Bank, N.A. and/or its Affiliates acting in different capacities, including as Bank, lead bank, arranger or potential securities investor, independent of such entity’s role as administrative agent hereunder. The Banks and Issuing Banks acknowledge that neither JPMorgan Chase Bank, N.A. nor its Affiliates shall be under any
70 obligation to provide any of the foregoing information to them. Notwithstanding anything to the contrary set forth herein or in any other Loan Document, except for notices, reports and other documents expressly required to be furnished to the Bank and Issuing Banks by the Administrative Agent herein or in any other Loan Document, the Administrative Agent shall not have any duty or responsibility to provide, and shall not be liable for the failure to provide, any Bank or any Issuing Bank with any credit or other information concerning the Advances, the Banks, the Issuing Banks, the business, prospects, operations, property, financial and other condition or creditworthiness of any of the Loan Parties or any of their respective Affiliates that is communicated to, obtained by, or in the possession of, the Administrative Agent or any of its Affiliates in any capacity, including any information obtained by the Administrative Agent in the course of communications among the Administrative Agent and any Loan Party, any Affiliate thereof or any other Person. Notwithstanding the foregoing, any such information may (but shall not be required to) be shared by the Administrative Agent with one or more Banks, one or more Issuing Bank or any formal or informal committee or ad hoc group of such Banks, including at the direction of a Loan Party. (g) Each party’s obligations under this Section 9.12 shall survive the resignation or replacement of the Administrative Agent or any transfer of rights or obligations by, or the replacement of, a Bank, the termination of the Commitments or the repayment, satisfaction or discharge of all Obligations under any Loan Document. ARTICLE X MISCELLANEOUS SECTION 10.01. Amendments, Etc. (a) Subject to Section 3.07(e), (f) and (h) and Section 10.01(b) below, no amendment or waiver of any provision of this Agreement or any other Loan Document, nor consent to any departure by the Company therefrom, shall in any event be effective unless the same shall be in writing and signed by the Majority Banks and (in the case of an amendment) the Company and acknowledged by the Administrative Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that except as otherwise expressly provided in this Agreement or any other Loan Document, no amendment, waiver or consent shall, (i) unless in writing and signed by all the Banks, (1) waive any of the conditions specified in Section 5.01, (2) change the definition of “Majority Banks” or the number or percentage in interest of Banks which shall be required for the Banks or any of them to take any action hereunder, (3) amend this Section 10.01, (4) change the payment waterfall provisions of Section 2.07(g) or Section 8.02, or (5) release any material guarantor (except as otherwise provided for in the Loan Documents), (ii) unless in writing and signed by each Bank adversely affected thereby, (1) extend or increase the Commitment of any Bank, increase the LC Exposure of any Bank or otherwise subject any Bank to any additional obligations, (2) reduce the amount of, or interest on, any LC Reimbursement Obligation of the Company to any Bank or the principal of, or rate of interest on, any Advance or any fees, commissions or other amounts payable by the Company to any Bank hereunder, (3) postpone the scheduled date for any payment of any LC Reimbursement Obligation (or interest thereon) or any principal of, or interest on, the Advances or any fees, commissions or other amounts payable by the Company to any Bank hereunder, or change the Outside Expiry Date or (4) alter the manner in which payment of LC Reimbursement Obligations (or interest thereon) or of principal of, or interest on, the Advances or any fees, commissions or other amounts is to be applied as among the Banks and (iii) no consent with respect to any amendment, waiver or other modification of any Loan Document shall be required of any Defaulting Bank, except with respect to any amendment, waiver or other modification referred to in subclauses (ii)(1), (ii)(2) and (ii)(3) of this proviso and then only in the event such Defaulting Bank shall be adversely affected by such amendment, waiver or other modification; and provided further that (x) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Banks required above to take such action, affect the
71 rights or duties of the Administrative Agent under any Loan Document, (y) no amendment, waiver or consent shall, unless in writing and signed by each Issuing Bank directly affected thereby in addition to the Banks required above to take such action, affect the rights or duties of the Issuing Banks under this Agreement and (iv) the Company and any Issuing Bank may increase or decrease the Fronting Commitment of such Issuing Bank by an instrument in writing signed by each of them without the consent of any other party hereto. The Loan Documents constitute the entire agreement of the parties with respect to the subject matter hereof. (b) If the Administrative Agent and the Company acting together identify any ambiguity, omission, mistake, typographical error or other defect in any provision of this Agreement or any other Loan Document, then the Administrative Agent and the Company shall be permitted to amend, modify or supplement such provision to cure such ambiguity, omission, mistake, typographical error or other defect, and such amendment shall become effective without any further action or consent of any other party to this Agreement. SECTION 10.02. Notices, Etc. (a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to paragraph (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy or e-mail, as follows: (i) if to the Company or any Guarantor, to it at c/o The Cigna Group, 1601 Chestnut St., #15J, Philadelphia, PA 19192, Attention of Drew Reynolds (Email: and ); (ii) if to the Administrative Agent from the Company, to JPMorgan Chase Bank, N.A., at the address separately provided to the Company; (iii) if to the Administrative Agent from the Banks, to: JPMorgan Chase Bank, N.A. 8181 Communications Pkwy Bldg B, Floor 6, Plano, TX 75024 Attn: Spencer High email: (iv) if to an Issuing Bank, to it at the address separately provided to the Company; and (v) if to any other Bank, to it at its address (or telecopy number) set forth in its Administrative Questionnaire; or, as to the Company or the Administrative Agent, at such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Company and the Administrative Agent. All such notices and communications shall be deemed to have been duly given or made (A) in the case of hand deliveries, when delivered by hand, (B) in the case of mailed notices, upon receipt if sent by certified mail, postage prepaid, and (C) in the case of telecopier or electronic notice, when transmitted and confirmed during normal business hours (or, if delivered after the close of normal business hours, at the beginning of business
72 hours on the next Business Day), except that notices and communications to the Administrative Agent pursuant to Article II, III or V shall not be effective until received by the Administrative Agent. (b) The Company hereby agrees that it will provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to this Agreement, including all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) relates to the payment of any LC Reimbursement Obligation or any principal of any Advance or other amount due under this Agreement prior to the scheduled date therefor, (ii) provides notice of any Default under this Agreement or (iii) is required to be delivered to satisfy any condition precedent to any borrowing (all such non-excluded communications being referred to herein collectively as “Communications”), by transmitting the Communications in an electronic/soft medium in a format reasonably acceptable to the Administrative Agent to . In addition, the Company agrees to continue to provide the Communications to the Administrative Agent in the manner otherwise specified in this Agreement but only to the extent requested by the Administrative Agent. (c) The Company and the Guarantors further agree that the Administrative Agent may make the Communications available to the Banks by posting the Communications on Intralinks or a substantially similar electronic transmission system. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES (COLLECTIVELY, THE “AGENT PARTIES”) HAVE ANY LIABILITY TO THE COMPANY, ANY BANK OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE COMPANY’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL NON- APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH AGENT PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. (d) The Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its e-mail address set forth above shall constitute effective delivery of the Communications to the Administrative Agent for purposes of this Agreement. Each Bank agrees that notice to it (as provided in the next sentence) specifying that the Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Bank for purposes of this Agreement. Each Bank agrees (i) to provide to the Administrative Agent in writing (including by electronic communication), promptly after the date of this Agreement, an e-mail address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such e-mail address. (e) Nothing herein shall prejudice the right of the Administrative Agent or any Bank to give any notice or other communication pursuant to this Agreement in any other manner specified herein.
73 SECTION 10.03. No Waiver; Remedies. No failure on the part of any Bank or the Administrative Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 10.04. Costs, Expenses and Indemnification. (a) The Company agrees to pay and reimburse on demand all reasonable costs and expenses of the Administrative Agent in connection with the preparation, execution, delivery, administration, modification and amendment of the Loan Documents and any related documentation, including (and limited to, in the case of fees, charges and disbursements of legal counsel) reasonable and documented fees, charges and disbursements of one counsel to the Administrative Agent (and, if reasonably necessary, one local counsel in any relevant jurisdiction) and, solely in the case of an actual or potential conflict of interest, of one additional counsel (and, if reasonably necessary, one additional local counsel in any relevant jurisdiction) with respect hereto and with respect to advising the Administrative Agent as to its rights and responsibilities hereunder. The Company further agrees to pay on demand all costs and expenses, if any (including reasonable and documented counsel fees and expenses of the Administrative Agent and each of the Banks), incurred by the Administrative Agent, any Issuing Bank or any Bank in connection with the enforcement (whether through negotiations, legal proceedings or otherwise), collection or protection of its rights in connection with this Agreement and the other Loan Documents including reasonable and documented counsel fees and expenses in connection with the enforcement of rights under this Section 10.04(a). The Company shall not be responsible to reimburse any Bank for the costs of the appointment by such Bank of a Confirming Bank. (b) The Company hereby indemnifies the Administrative Agent, JPMorgan, BofA Securities, Inc., Citibank, N.A., Morgan Stanley Senior Funding, Inc. and Wells Fargo Securities, LLC, as Arrangers, each Bank, each Issuing Bank and each of their respective Affiliates and their respective officers, directors, employees, agents, advisors, partners and representatives (each, an “Indemnified Party”) from and against any and all claims, damages, losses, liabilities and expenses (including all reasonable and documented fees and disbursements of counsel), joint or several, that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or relating to any actual or prospective claim, investigation, litigation, arbitration or proceeding or the preparation of any defense with respect thereto arising out of or in connection with or relating to this Agreement or the transactions contemplated hereby or thereby (including, for the avoidance of doubt, any Letters of Credit and the use of proceeds thereunder), whether or not such claim, investigation, litigation, arbitration or proceeding is brought by the Company or any other Loan Party, any of their respective shareholders or creditors, an Indemnified Party or any other Person, or an Indemnified Party is otherwise a party thereto, and whether or not any of the conditions precedent set forth in Article V are satisfied or the other transactions contemplated by this Agreement are consummated, except to the extent such claim, damage, loss, liability or expense (A) is found by a final, non-appealable judgment of a court of competent jurisdiction to result from the bad faith, willful misconduct or gross negligence of such Indemnified Party or any of its Related Parties, (B) to the extent resulting from any proceeding that does not involve an act or omission of the Company or any of its Affiliates and that is brought by an Indemnified Party solely against another Indemnified Party, other than claims against the Administrative Agent, any Arranger or any Issuing Bank in its capacity in fulfilling its role as an agent or arranger under this Agreement or (C) to the extent resulting from a material breach by such Indemnified Party or any Related Parties thereof of its obligations hereunder as found by a final, non-appealable judgment by a court of competent jurisdiction. The Company’s obligation to reimburse legal expenses pursuant hereto shall be limited to the fees, charges and
74 disbursements of one counsel to all Indemnified Parties (and, if reasonably necessary, one local counsel in any relevant jurisdiction) and, solely in the case of an actual or potential conflict of interest, of one additional counsel (and, if reasonably necessary, one additional local counsel in any relevant jurisdiction). The Company and the Guarantors hereby further agree that none of the Administrative Agent, JPMorgan, BofA Securities, Inc., Citibank, N.A., Morgan Stanley Senior Funding, Inc. and Wells Fargo Securities, LLC, as Arrangers, any Bank nor any of their respective Affiliates or their respective officers, directors, employees, agents, advisors, partners and representatives (each, a “Protected Person”) shall have any liability (whether direct or indirect, in contract, tort or otherwise) to the Company or any Guarantor for or in connection with or relating to this Agreement or the transactions contemplated hereby or thereby, except to the extent such liability is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Protected Person’s gross negligence or willful misconduct; provided that nothing in this paragraph shall be deemed to constitute a waiver of any claim the Company may have, or to exculpate any Person from any liability that such Person may have to the Company, for breach by such Person of its obligations under this Agreement. Neither any Bank, any Issuing Bank nor the Administrative Agent shall in any event be liable for any special, indirect, consequential or punitive damages. No Protected Person shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the transactions contemplated hereby, except to the extent that such damages are found by a final, non-appealable judgment of a court of competent jurisdiction to result primarily from the bad faith, willful misconduct or gross negligence of such Protected Person or any of its Related Parties. (c) If (i) the Company makes any payment of principal of any Term Benchmark Advance on a day other than the last day of an Interest Period with respect thereto, or (ii) the Company fails to make a Borrowing or a prepayment of, or a continuation of or a conversion into, Term Benchmark Advances after having given notice thereof pursuant to this Agreement, the Company shall reimburse each Bank upon demand for any resulting loss, cost or expense incurred by such Bank, including any loss incurred in obtaining, liquidating or employing deposits from third parties, but excluding loss of margin, for the period after such payment, failure to borrow, failure to continue, failure to convert or failure to prepay, following its receipt of a certificate of such Bank in reasonable detail as to the amount of such loss, cost or expense, which certificate shall be conclusive and binding on the Company in the absence of manifest error. (d) All amounts due under this Section 10.04 shall be payable not later than 15 Business Days after written demand therefor providing reasonable detail regarding the amount so demanded. SECTION 10.05. Binding Effect. This Agreement shall become effective on and as of the Effective Date and thereafter shall be binding upon and inure to the benefit of the Company, the Guarantors, if any, the Administrative Agent and each Bank and their respective successors and permitted assigns. SECTION 10.06. Assignments and Participations. (a) Assignments Generally. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) neither the Company nor any Guarantor, if any, may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Bank (and any attempted assignment or transfer by the Company or any Guarantor without such consent shall be null and void) and (ii) no Bank may assign or otherwise transfer its rights or obligations hereunder except in accordance with
75 this Section 10.06. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, participants referred to in paragraph (e) below and the directors, officers, employees, attorneys and agents of each of the Administrative Agent, the Issuing Bank and the Banks) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Assignments by Banks. Subject to the conditions set forth in clause (c) below, any Bank may assign to one or more Eligible Banks (but not to any other Person) all or a portion of its Commitment, its obligations under each Letter of Credit and the Advances owing to it, subject to the following requirements: (i) each of the Company and the Administrative Agent (and, in the case of an assignment of all or a portion of a Commitment or any Bank’s obligations in respect of its LC Exposure with respect to a Letter of Credit, each Issuing Bank) shall have consented thereto in writing, such consent not to be unreasonably withheld or delayed; provided that no such consent of the Company shall be required for an assignment to a Bank or an Affiliate of a Bank (so long as such Affiliate is also an Eligible Bank) or, if an Event of Default under Sections 8.01(a), 8.01(c) (but only as a result of a breach of Section 7.02(d)) or 8.01(e) has occurred and is continuing, any other assignee that is an Eligible Bank; provided, further that no such consent of the Administrative Agent shall be required for an assignment of any Commitment to an assignee that is a Bank with a Commitment immediately prior to giving effect to such assignment, or to an Affiliate of such Bank (so long as such Affiliate is also an Eligible Bank); (ii) such assignment shall be of the same percentage of the assigning Bank’s rights and obligations under this Agreement (other than in respect of its Fronting Commitment, if any) and its liability under or in respect of each Letter of Credit; (iii) except in the case of an assignment by a Bank to one of its Affiliates or to another Bank, the amount of the Commitments of the assigning Bank being assigned (determined as of the date of the Assignment and Assumption with respect to such assignment) shall in no event (unless the Company and the Administrative Agent otherwise consent; provided that no such consent of the Company shall be required if an Event of Default has occurred and is continuing) be less than $10,000,000 or an integral multiple of $1,000,000 in excess thereof; (iv) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Assumption covering such assignment, and the assignee, if it is not a Bank, shall deliver to the Administrative Agent an Administrative Questionnaire; and (v) the parties to each such assignment (other than the Company) shall, prior to the effectiveness of such assignment, deliver to the Administrative Agent a processing and recordation fee of $3,500. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Assumption, (x) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been transferred to it pursuant to such Assignment and Assumption, have the rights and obligations of a Bank hereunder and (y) the Bank assignor thereunder shall, to the extent that rights and obligations hereunder have been transferred by it pursuant to such Assignment and Assumption, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an
76 Assignment and Assumption covering all or the remaining portion of an assigning Bank’s rights and obligations under this Agreement, such Bank shall cease to be a party hereto). (c) By executing and delivering an Assignment and Assumption, the Bank assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Assumption, such assigning Bank makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any related agreement, instrument or document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such assigning Bank makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Company or the performance or observance by the Company of any of its obligations under this Agreement or any related agreement, instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 6.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Assumption; (iv) such assignee will, independently and without reliance upon the Administrative Agent, such assigning Bank or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee confirms that it is an Eligible Bank; (vi) such assignee irrevocably appoints and authorizes the Administrative Agent to take such action as administrative agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Bank. (d) The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Company, shall maintain at its offices a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Banks, and the Commitments and Fronting Commitments, if any, of, and principal amount (and stated interest) of the Advances and LC Disbursements owing to, each Bank pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Company, the Administrative Agent, the Issuing Banks and the Banks shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Bank hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Company, the Issuing Banks and any Bank, at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of an Assignment and Assumption executed by an assigning Bank and an assignee representing that it is an Eligible Bank, subject to such assignment, the Administrative Agent shall, if such Assignment and Assumption has been completed (and the Company, the Beneficiaries and the Administrative Agent shall have consented to the relevant assignment) and is in substantially the form of Exhibit D hereto, (i) accept such Assignment and Assumption, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Company. (f) (i) Each Bank may sell participations to one or more banks or other entities (other than (x) a natural Person, or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of a natural Person, (y) a Defaulting Bank or (z) any Loan Party or any Affiliate of a Loan Party) in or to all or a portion of its rights and/or obligations under this Agreement (including all or a portion of its Commitments and the Advances owing to it); provided that (i) such Bank’s obligations under this Agreement (including its Commitment) and the Letters of Credit shall remain unchanged, (ii)
77 such Bank shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the Company, the Administrative Agent, the Issuing Banks and the other Banks shall continue to deal solely and directly with such Bank in connection with such Bank’s rights and obligations under this Agreement, (iv) in any proceeding under the United States Bankruptcy Code in respect of the Company, such Bank shall remain and be, to the fullest extent permitted by law, the sole representative with respect to the rights and obligations held in the name of such Bank (whether such rights or obligations are for such Bank’s own account or for the account of any participant) and (v) no participant under any such participation agreement shall have any right to approve any amendment or waiver of any provision of this Agreement or the Letters of Credit, or to consent to any departure by the Company therefrom, except to the extent that such amendment, waiver or consent would reduce the LC Reimbursement Obligations or principal of, or interest on, the Advances or any fees, commissions or other amounts payable hereunder, in each case to the extent subject to such participation, or postpone any date fixed for any payment of the LC Reimbursement Obligations or of the principal of, or interest on, the Advances or any fees or other amounts payable hereunder, in each case to the extent subject to such participation. No sale by a Bank of any participation shall alter the obligations of such Bank under any Letter of Credit. (i) Each Bank that sells a participation, acting solely for this purpose as a non- fiduciary agent of the Company, shall maintain a register on which it enters the name and address of each participant and the principal amounts (and stated interest) of each participant’s interest in the Advances or other obligations under this Agreement (the “Participant Register”); provided that no Bank shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any participant or any information relating to a participant’s interest in any Commitments, Advances, Letters of Credit or its other obligations under this Agreement) except to the extent that such disclosure is necessary to establish that such Commitment, Advance, Letter of Credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations or Section 1.163-5(b) of the United States Proposed Treasury Regulations (or, in each case, any amended or successor version). The entries in the Participant Register shall be conclusive absent manifest error, and such Bank, the Company and the Administrative Agent shall treat each Person whose name is recorded in the Participant Register pursuant to the terms hereof as the owner of such participation for all purposes of this Agreement, notwithstanding notice to the contrary. The Company agrees that each participant shall be entitled to the benefits of Sections 4.02 and 4.05 (subject to the requirements and limitations therein, including the requirements under Section 4.05(e) (it being understood that the documentation required under Section 4.05(e) shall be delivered to the participating Bank)) to the same extent as if it were a Bank and had acquired its interest by assignment pursuant to this Section; provided that such participant shall not be entitled to receive any greater payment under Sections 4.02 and 4.05, with respect to any participation, than its participating Bank would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the participant acquired the applicable participation. (g) Any Bank may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 10.06, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Company or any of its Subsidiaries furnished to such Bank by or on behalf of the Company; provided that, prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree to preserve the confidentiality of any information relating to the Company or any of its Subsidiaries received by it from such Bank as more fully set forth in Section 10.13.
78 (h) Notwithstanding any other provision set forth in this Agreement, any Bank may at any time, without the consent of the Company, create a security interest in all or any portion of its rights under this Agreement, including in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the Federal Reserve System or other central bank. (i) Notwithstanding any other provision set forth in this Agreement, any Bank may at any time, without the consent of the Company, any Beneficiary or the Administrative Agent but with notice to the Company and the Administrative Agent, assign to an Affiliate (so long as such Affiliate is an Eligible Bank) of such Bank all or any portion of its rights (but not its obligations) under this Agreement. (j) An Issuing Bank may assign any or all of its Fronting Commitment to an Eligible Bank only with the prior written consent of the Company (not to be unreasonably withheld or delayed); provided, that no such consent shall be required if an Event of Default has occurred and is continuing or the entity serving as Issuing Bank (and its Affiliates) otherwise have no Commitment. SECTION 10.07. Governing Law; Submission to Jurisdiction. (a) Jurisdiction. This Agreement and the other Loan Documents and any claims, controversy, dispute, or cause of action (whether in contract, tort, or otherwise and whether at law or in equity) based upon, arising out of, or relating to this Agreement and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the law of the State of New York. Each party hereto irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether at law or in equity, whether in contract or in tort or otherwise, against any other party hereto, or any Related Party thereof, in any way relating to this Agreement or the transactions relating hereto or thereto, in any forum other than the courts of the State of New York sitting in New York County and of the United States District Court for the Southern District of New York sitting in New York County and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. (b) Waiver of Venue. Each party hereto irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (c) Service of Process. Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 10.02. Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable law. SECTION 10.08. Severability. In case any provision in this Agreement shall be held to be invalid, illegal or unenforceable, such provision shall be severable from the rest of this Agreement, and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
79 SECTION 10.09. Counterparts; Integration; Effectiveness; Electronic Execution. (a) This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. This Agreement and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 5.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. (b) Delivery of an executed counterpart of a signature page of (x) this Agreement, (y) any other Loan Document and/or (z) any document, amendment, approval, consent, information, notice (including, for the avoidance of doubt, any notice delivered pursuant to Section 10.01), certificate, request, statement, disclosure or authorization related to this Agreement, any other Loan Document and/or the transactions contemplated hereby and/or thereby (each an “Ancillary Document”) that is an Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page shall be effective as delivery of a manually executed counterpart of this Agreement, such other Loan Document or such Ancillary Document, as applicable. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Agreement, any other Loan Document and/or any Ancillary Document shall be deemed to include Electronic Signatures, deliveries or the keeping of records in any electronic form (including deliveries by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page), each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be; provided that nothing herein shall require the Administrative Agent to accept Electronic Signatures in any form or format without its prior written consent and pursuant to procedures approved by it; provided, further, without limiting the foregoing, (i) to the extent the Administrative Agent has agreed to accept any Electronic Signature, the Administrative Agent and each of the Banks shall be entitled to rely on such Electronic Signature purportedly given by or on behalf of the Company or any other Loan Party without further verification thereof and without any obligation to review the appearance or form of any such Electronic Signature and (ii) upon the request of the Administrative Agent or any Banks, any Electronic Signature shall be promptly followed by a manually executed counterpart. Without limiting the generality of the foregoing, the Company hereby (i) agrees that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among the Administrative Agent, the Banks and the Company, Electronic Signatures transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page and/or any electronic images of this Agreement, any other Loan Document and/or any Ancillary Document shall have the same legal effect, validity and enforceability as any paper original, (ii) the Administrative Agent and each of the Banks may, at its option, create one or more copies of this Agreement, any other Loan Document and/or any Ancillary Document in the form of an imaged electronic record in any format, which shall be deemed created in the ordinary course of such Person’s business, and destroy the original paper document (and all such electronic records shall be considered an original for all purposes and shall have the same legal effect, validity and enforceability as a paper record), (iii) waives any argument, defense or right to contest the legal effect, validity or enforceability of this Agreement, any other Loan Document and/or any Ancillary Document based solely on the lack of paper original copies of this Agreement, such other Loan Document and/or such Ancillary Document, respectively, including with respect to any signature pages thereto and (iv) waives any claim against the Administrative Agent, any Arranger, any Bank and any Related Party of any of the foregoing
80 Persons for any losses, claims (including intraparty claims), demands, damages or liabilities of any kind arising solely from the Administrative Agent’s and/or any Bank’s reliance on or use of Electronic Signatures and/or transmissions by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page, including any losses, claims (including intraparty claims), demands, damages or liabilities of any kind arising as a result of the failure of the Company to use any available security measures in connection with the execution, delivery or transmission of any Electronic Signature. SECTION 10.10. Survival. The obligations of the Company under Sections 2.02(a), 4.02, 4.05, and 10.04, and the obligations of the Banks under Section 9.05, shall survive the repayment of the LC Reimbursement Obligations, the expiration or termination of the Letters of Credit, the termination of the Commitments and the payment in full of principal, interest and all other amounts payable hereunder. In addition, each representation and warranty made, or deemed to be made by any Notice of Borrowing, Notice of Issuance or Notice of Increase herein or pursuant hereto shall survive the making of such representation and warranty, and no Bank shall be deemed to have waived, by issuing a Letter of Credit or making an Advance, any Default that may arise by reason of such representation or warranty proving to have been false or misleading, notwithstanding that such Bank, any Issuing Bank or the Administrative Agent may have had notice or knowledge or reason to believe that such representation or warranty was false or misleading at the time such extension of credit was made. SECTION 10.11. Sharing of Set-Offs, Etc. (a) Without limiting any of the rights or obligations of the Administrative Agent or the Banks or the rights or obligations of the Company hereunder, if the Company shall fail to pay when due (whether at stated maturity, by acceleration or otherwise) any amount payable by it hereunder, each Bank is hereby authorized at any time and from time to time, to the fullest extent permitted by law, without prior notice to the Company (which notice is expressly waived by the Company to the fullest extent permitted by applicable law), to set off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final, in any currency, matured or unmatured) and any other obligations at any time held or owing by such Bank or any Subsidiary, Affiliate, branch or agency thereof to or for the credit or account of the Company or any Guarantor, if any. Such Bank shall promptly provide notice to the Company of such set-off; provided that failure by such Bank to provide such notice to the Company shall not give the Company or any Guarantor any cause of action or right to damages or affect the validity of such set-off and application. The rights of each Bank under this Section are in addition to any other rights and remedies (including any other rights of set-off) that such Bank may have. (b) Each Bank agrees that if it shall, by exercising any right of set-off or counterclaim or otherwise, receive payment of a proportion of the aggregate LC Reimbursement Obligations or the Advances or interest due with respect thereto in excess of its pro rata share thereof the Bank receiving such proportionately greater payment shall purchase such participations from the other Banks, and/or such other adjustments shall be made, as may be required so that all such payments shall be shared by the Banks pro rata as provided in this Agreement; provided that nothing in this Section shall impair the right of any Bank to exercise any right of set-off or counterclaim it may have and to apply the amount thereof to the payment of indebtedness of the Company other than its indebtedness under this Agreement. Each of the Company and the Guarantors, if any, agrees, to the fullest extent it may effectively do so under applicable law, that any holder of a participation under this clause may exercise rights of set-off or counterclaim and other rights with respect to such participation as fully as if such holder of a participation were a direct creditor of the Company and such Guarantor in the amount of such participation.
81 SECTION 10.12. Waiver of Jury Trial. EACH OF THE COMPANY, EACH GUARANTOR, IF ANY, THE ADMINISTRATIVE AGENT, THE ISSUING BANKS AND EACH BANK HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY) EACH PARTY HERETO AND EACH GUARANTOR, IF ANY, (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.12. SECTION 10.13. Confidentiality. Neither the Administrative Agent nor any Bank shall disclose any Confidential Information to any Person without the consent of the Company, other than (a) to the Administrative Agent’s or such Bank’s Affiliates and their officers, directors, employees, agents, insurance brokers, insurers, reinsurers and advisors (including accountants and lawyers) and to actual or prospective assignees and participants, and then only on a confidential basis (it being understood that any failure of such Persons to comply with this Section 10.13 shall constitute a breach of this Agreement by the Administrative Agent or the relevant Bank, as applicable), (b) to the extent required by any applicable law, rule or regulation or judicial process, (c) to any rating agency when required by it on a confidential basis, (d) to any other party hereto, (e) if necessary in connection with the exercise of any remedies hereunder, (f) subject to an agreement containing provisions substantially the same as those of this paragraph (i) to any assignee of or participant in, or any prospective assignee of or participant in, any of its rights or obligations under this Agreement or (ii) to any counterparty under a swap, derivative, insurance or other transaction under which payments are to be made by reference to the Company and its obligations under this Agreement and (g) as requested or required by any state, federal or foreign authority or examiner or self-regulatory body regulating banks or banking; provided that, (i) in the case of the foregoing clauses (b), (e) and (g) unless specifically prohibited by applicable law or court order, and to the extent reasonably practicable, each Bank and the Administrative Agent shall notify the Company of any request by any governmental agency or representative thereof (other than any such request in connection with an examination of the financial condition of such Bank by such governmental agency or other routine examinations of such Bank by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information and (ii) in the case of clause (e) only, each Bank and the Administrative Agent shall use its reasonable best efforts to ensure that such information is kept confidential in connection with the exercise of such remedies. In addition, the Administrative Agent and the Banks may disclose the existence of this Agreement and information about this Agreement (solely with respect to information about the Agreement and the transactions contemplated herein of the type customarily provided to such entities) to market data collectors, similar service providers to the lending industry and service providers to the Administrative Agent and the Banks in connection with the administration of this Agreement and the Commitments. For the avoidance of doubt, nothing in this Section 10.13 shall prohibit any Person from voluntarily disclosing or providing any Confidential Information within the scope of this confidentiality provision to any governmental, regulatory or self-regulatory organization (any such entity, a “Regulatory Authority”) to the extent that any such prohibition on disclosure set forth in this Section 10.13 shall be prohibited by the laws or regulations applicable to such Regulatory Authority; provided that, unless specifically prohibited by applicable law or court order, and to the extent reasonably practicable, each Bank and the
82 Administrative Agent shall notify the Company of any such disclosure of any non-public information prior to disclosure of such information (other than any disclosure in connection with an examination of the financial conditions of such Bank by such governmental agency or other routine examination of such Bank by such governmental agency). SECTION 10.14. USA PATRIOT Act. Each Bank hereby notifies the Company that pursuant to the requirements of the Patriot Act and the requirements of the Beneficial Ownership Regulation, it and its respective affiliates are required to obtain, verify and record information that identifies the Loan Parties which information includes the name, address, tax identification number and other information regarding the Loan Parties that will allow such Bank to identify the Loan Parties in accordance with the Patriot Act and the Beneficial Ownership Regulation. This notice is given in accordance with the requirements of the Patriot Act and is effective for each of the Banks and each of their respective affiliates. SECTION 10.15. No Advisory or Fiduciary Relationship. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Company and each other Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that: (i) (A) the arranging and other services regarding this Agreement provided by the Administrative Agent, the Arranger, and the Banks are arm’s-length commercial transactions between the Company, each other Loan Party and their respective Affiliates, on the one hand, and the Administrative Agent, the Arranger and the Banks, on the other hand, (B) each of the Company and the other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (C) the Company and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) the Administrative Agent, the Arranger, and each Bank is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Company, any other Loan Party or any of their respective Affiliates, or any other Person and (B) neither the Administrative Agent, the Arranger, nor any Bank has any obligation to the Company, any other Loan Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative Agent, the Arranger and the Banks and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Company, the other Loan Parties and their respective Affiliates, and neither the Administrative Agent, the Arranger nor any Bank has any obligation to disclose any of such interests to the Company, any other Loan Party or any of their respective Affiliates. The Company and each other Loan Party agrees that it will not assert any claim against the Administrative Agent, any Arranger or any Bank based on an alleged breach of fiduciary duty by the Administrative Agent, such Arranger or such Bank, as applicable, in connection with this Agreement and the transactions contemplated hereby. SECTION 10.16. Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by: (a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder that may be payable to it by any party hereto that is an Affected Financial Institution; and
83 (b) the effects of any Bail-In Action on any such liability, including, if applicable: (i) a reduction in full or in part or cancellation of any such liability; (ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or (iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority. ARTICLE XI GUARANTEES SECTION 11.01. The Guarantees. To induce the Banks to provide the credits described herein and in consideration of benefits expected to accrue to the Company by reason of the Commitments, the Advances and the Letters of Credit and for other good and valuable consideration, receipt of which is hereby acknowledged, each Guarantor party hereto (including any such Subsidiary executing an Additional Guarantor Supplement in substantially the form attached hereto as Exhibit E or such other form reasonably acceptable to the Administrative Agent) hereby unconditionally and irrevocably guarantees jointly and severally to the Administrative Agent, for the ratable benefit of the Administrative Agent and the Banks, the due and punctual payment of all present and future Obligations of the Company, in each case as and when the same shall become due and payable, whether at stated maturity, by acceleration, or otherwise, according to the terms hereof or any other applicable Loan Document (including all interest, costs, fees, and charges after the entry of an order for relief against the Company or such other obligor in a case under the United States Bankruptcy Code or any similar proceeding, whether or not such interest, costs, fees and charges would be an allowed claim against the Company or any such obligor in any such proceeding). In case of failure by the Company punctually to pay any Obligations guaranteed hereby, each Guarantor of the Company’s Obligations under this Section 11.01 hereby unconditionally agrees to make such payment or to cause such payment to be made punctually as and when the same shall become due and payable, whether at stated maturity, by acceleration, or otherwise, and as if such payment were made by the Company. SECTION 11.02. Guarantee Unconditional. The obligations of each Guarantor under this Article XI shall be unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged, or otherwise affected by: (a) any extension, renewal, settlement, compromise, waiver, or release in respect of any obligation of the Company or other obligor or of any other guarantor under this Agreement or any other Loan Document or by operation of law or otherwise; (b) any modification or amendment of or supplement to this Agreement or any other Loan Document; (c) any change in the corporate existence, structure, or ownership of, or any insolvency, bankruptcy, reorganization, or other similar proceeding affecting, the Company or other obligor, any other guarantor, or any of their respective assets, or any resulting release or discharge of any obligation of the Company or other obligor or of any other guarantor contained in any Loan Document;
84 (d) the existence of any claim, set-off, or other rights which the Company or other obligor or any other guarantor may have at any time against the Administrative Agent, any Bank or any other Person, whether or not arising in connection herewith; (e) any failure to assert, or any assertion of, any claim or demand or any exercise of, or failure to exercise, any rights or remedies against the Company or other obligor, any other guarantor, or any other Person or property such Person; (f) any application of any sums by whomsoever paid or howsoever realized to any obligation of the Company or other obligor, regardless of what obligations of the Company or other obligor remain unpaid; (g) any invalidity or unenforceability relating to or against the Company or other obligor or any other guarantor for any reason of this Agreement or of any other Loan Document or any provision of applicable law or regulation purporting to prohibit the payment by the Company or other obligor or any other guarantor of the principal of or interest on any Advance or Letter of Credit or any other amount payable under the Loan Documents; or (h) any other act or omission to act or delay of any kind by the Administrative Agent, any Bank or any other Person or any other circumstance whatsoever that might, but for the provisions of this paragraph, constitute a legal or equitable discharge of the obligations of any Guarantor under this Article XI. Each Guaranty hereunder shall be a guaranty of payment and not of collection. SECTION 11.03. Discharge Only upon Payment in Full; Reinstatement in Certain Circumstances. Except as set forth in Section 7.03(c) or Section 9.06, each Guarantor’s obligations under this Article XI shall remain in full force and effect until the Commitments are terminated and the principal of and interest on the Advances and LC Reimbursement Obligations and all other amounts payable by the Company and Guarantors under this Agreement and all other Loan Documents (other than contingent obligations for which no claim has been made) have been paid in full in cash. If at any time any payment of the principal of or interest on any Advance or LC Reimbursement Obligation or any other amount payable by the Company or other obligor or any Guarantor under the Loan Documents is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy, or reorganization of the Company or other obligor or of any guarantor, or otherwise, each Guarantor’s obligations under this Article XI with respect to such payment shall be reinstated at such time as though such payment had become due but had not been made at such time. SECTION 11.04. Subrogation. Each Guarantor agrees it will not exercise any rights which it may acquire by way of subrogation by any payment made hereunder, or otherwise, until all the Obligations shall have been paid in full subsequent to the termination of all the Commitments. If any amount shall be paid to a Guarantor on account of such subrogation rights at any time prior to the payment in full of the Obligations and all other amounts payable by the Company hereunder and the other Loan Documents (other than contingent obligations for which no claim has been made) and the termination of the Commitments, such amount shall be held in trust for the benefit of the Administrative Agent and the Banks and shall forthwith be paid to the Administrative Agent for the benefit of the Banks or be credited and applied upon the Obligations, whether matured or unmatured, in accordance with the terms of this Agreement.
85 SECTION 11.05. Waivers. Each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest, and any notice not provided for herein, as well as any requirement that at any time any action be taken by the Administrative Agent, any Bank or any other Person against the Company or other obligor, another guarantor, or any other Person. SECTION 11.06. Limit on Liability. The obligations of each Guarantor under this Article XI shall be limited to an aggregate amount equal to the largest amount that would not render such Guaranty subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provisions of applicable law. SECTION 11.07. Stay of Acceleration. If acceleration of the time for payment of any amount payable by the Company or other obligor under this Agreement or any other Loan Document is stayed upon the insolvency, bankruptcy or reorganization of the Company or such obligor, all such amounts otherwise subject to acceleration under the terms of this Agreement or the other Loan Documents shall nonetheless be payable by the Guarantors hereunder forthwith on demand by the Administrative Agent made at the request of the Majority Banks. SECTION 11.08. Benefit to Guarantors. The Company and the Guarantors are engaged in related businesses and integrated to such an extent that the financial strength and flexibility of the Company has a direct impact on the success of each Guarantor. Each Guarantor will derive substantial direct and indirect benefit from the extensions of credit hereunder. SECTION 11.09. Guarantor Covenants. Each Guarantor shall take such action as the Company is required by this Agreement to cause such Guarantor to take, and shall refrain from taking such action as the Company is required by this Agreement to prohibit such Guarantor from taking. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[Signature Page to Cigna Revolving Credit and Letter of Credit Agreement (2025)] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. THE CIGNA GROUP By: /s/ Drew Reynolds Name: Drew Reynolds Title: Vice President and Treasurer
[Signature Page to Cigna Revolving Credit and Letter of Credit Agreement (2025)] JPMORGAN CHASE BANK, N.A., as Administrative Agent By: /s/ Gregory T. Martin Name: Gregory T. Martin Title: Executive Director
[Signature Page to Cigna Revolving Credit and Letter of Credit Agreement (2025)] Banks JPMORGAN CHASE BANK, N.A. By: /s/ Gregory T. Martin Name: Gregory T. Martin Title: Executive Director
[Signature Page to Cigna Revolving Credit and Letter of Credit Agreement (2025)] BANK OF AMERICA, N.A. By: /s/ Tyler Morgan Name: Tyler Morgan Title: Director CITIBANK, N.A. By: /s/ Maureen Maroney Name: Maureen Maroney Title: Vice President Morgan Stanley Bank, N.A. By: /s/ Michael King Name: Michael King Title: Authorized Signatory WELLS FARGO BANK, NATIONAL ASSOCIATION By: /s/ Darin Mullis Name: Darin Mullis Title: Managing Director DEUTSCHE BANK AG NEW YORK BRANCH By: /s/ Ming K. Chu Name: Ming K. Chu Title: Director By: /s/ Marko Lukin Name: Marko Lukin Title: Vice President GOLDMAN SACHS BANK USA By: /s/ Nicholas Merino Name: Nicholas Merino Title: Authorized Signatory
[Signature Page to Cigna Revolving Credit and Letter of Credit Agreement (2025)] HSBC Bank USA, National Association By: /s/ David Filipczak Name: David Filipczak Title: Director, Healthcare Coverage MUFG BANK, LTD. By: /s/ Rajiv Ranjan Name: Rajiv Ranjan Title: Director U.S. BANK NATIONAL ASSOCIATION By: /s/ Maria A. Massimino Name: Maria A. Massimino Title: Senior Vice President CRÉDIT AGRICOLE CORPORATE AND INVESTMENT BANK By: /s/ Michael Ubriaco Name: Michael Ubriaco Title: Director By: /s/ Jill Wong Name: Jill Wong Title: Director MIZUHO BANK, LTD. By: /s/ Tracy Rahn Name: Tracy Rahn Title: Managing Director PNC Bank, National Association By: /s/ Amanda Faloon Name: Amanda Faloon Title: Vice President
[Signature Page to Cigna Revolving Credit and Letter of Credit Agreement (2025)] TRUIST BANK By: /s/ Tim Conway Name: Tim Conway Title: Vice President FIFTH THIRD BANK, NATIONAL ASSOCIATION By: /s/ Thomas Avery Name: Thomas Avery Title: Managing Director The Huntington National Bank By: /s/ Joseph A. Miller Name: Joseph A. Miller Title: Managing Director Regions Bank By: /s/ Jay Gorman Name: Jay Gorman Title: Managing Director Royal Bank of Canada By: /s/ Danai Shirihuru Name: Danai Shirihuru Title: Vice President – Corporate Client Group Sumitomo Mitsui Banking Corporation By: /s/ Cindy Hwee Name: Cindy Hwee Title: Director THE BANK OF NEW YORK MELLON By: /s/ Luke Daly Name: Luke Daly Title: Vice President
[Signature Page to Cigna Revolving Credit and Letter of Credit Agreement (2025)] THE BANK OF NOVA SCOTIA By: /s/ Robb Gass Name: Robb Gass Title: Managing Director THE TORONTO-DOMINION BANK, NEW YORK BRANCH By: /s/ Mike Tkach Name: Mike Tkach Title: Authorized Signatory
Document
Exhibit 31.1
CERTIFICATION
I, DAVID M. CORDANI, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of The Cigna Group;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: July 31, 2025 | /s/ David M. Cordani |
|---|---|
| Chairman and Chief Executive Officer of The Cigna Group |
Document
Exhibit 31.2
CERTIFICATION
I, ANN M. DENNISON, certify that:
1.I have reviewed this Quarterly Report on Form 10-Q of The Cigna Group;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| Date: July 31, 2025 | /s/ Ann M. Dennison |
|---|---|
| Executive Vice President and Chief Financial Officer |
Document
Exhibit 32.1
Certification of Chief Executive Officer of
The Cigna Group pursuant to 18 U.S.C. Section 1350
I certify that, to the best of my knowledge and belief, the Quarterly Report on Form 10-Q of The Cigna Group for the fiscal period ending June 30, 2025 (the “Report”):
(1)complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of The Cigna Group.
| /s/ David M. Cordani |
|---|
| David M. Cordani |
| Chairman and Chief Executive Officer of The Cigna Group |
| July 31, 2025 |
Document
Exhibit 32.2
Certification of Chief Financial Officer of
The Cigna Group pursuant to 18 U.S.C. Section 1350
I certify that, to the best of my knowledge and belief, the Quarterly Report on Form 10-Q of The Cigna Group for the fiscal period ending June 30, 2025 (the “Report”):
(1)complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of The Cigna Group.
| /s/ Ann M. Dennison |
|---|
| Ann M. Dennison |
| Executive Vice President and Chief Financial Officer |
| July 31, 2025 |