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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
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 0-29816
Triad Hospitals, Inc.
(Exact name of registrant as specified in its charter)
Delaware 75-2816101
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
13455 Noel Road, Suite 2000
Dallas, Texas 75240
(Address of principal executive offices) (Zip Code)
(972) 701-2200
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
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, and (2) has been subject to such filing
requirements for the past 90 days.
YES NO X
___ ___
Indicate the number of shares outstanding of each of the issuer's classes
of common stock of the latest practical date.
29,898,688
----------
(As of May 11, 1999)
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Part I: Financial Information
Item 1: Financial Statements
TRIAD HOSPITALS, INC
CONDENSED COMBINED STATEMENTS OF INCOME
For the quarters ended March 31, 1999 and 1998
Unaudited
(Dollars in millions, except per share amounts)
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Revenues........................................................................... $ 367.6 $ 414.0
Salaries and benefits.............................................................. 156.9 178.1
Supplies........................................................................... 54.1 64.0
Other operating expenses........................................................... 81.3 87.0
Provision for doubtful accounts.................................................... 34.5 36.9
Depreciation and amortization...................................................... 28.0 26.2
Interest expense allocated from Columbia/HCA....................................... 18.2 16.1
Management fees allocated from Columbia/HCA........................................ 6.8 7.6
Impairment of long-lived assets.................................................... 33.9 --
----------- -----------
Total operating expenses........................................................... 413.7 415.9
----------- -----------
Loss from continuing operations before minority
interest and income tax benefit................................................. (46.1) (1.9)
Minority interests in earnings of consolidated entities............................ (2.2) (4.0)
Income tax benefit................................................................. 12.4 1.8
----------- -----------
Loss from continuing operations.................................................... (35.9) (4.1)
Loss from operations of discontinued businesses,
net of income tax benefit of $0.6 in 1998......................................... -- (0.4)
----------- -----------
Net loss........................................................................... $ (35.9) $ (4.5)
=========== ===========
Loss per common share:
Loss from continuing operations................................................... $ (1.20) $ (0.14)
Loss from operations of discontinued business..................................... -- (0.01)
----------- -----------
Net loss........................................................................... $ (1.20) $ (0.15)
=========== ===========
Pro forma shares used in loss per share calculations............................... 29,898,688 29,898,688
</TABLE>
See notes to the condensed combined financial statements.
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TRIAD HOSPITALS, INC.
CONDENSED COMBINED BALANCE SHEETS
Unaudited
(Dollars in millions)
<TABLE>
<CAPTION>
Pro Forma
Liabilities
and Equity
March 31, March 31, December 31,
1999 1999 1998
-------------- ------------ --------------
<S> <C> <C> <C>
ASSETS
Current assets
Accounts receivable, less allowance for doubtful accounts
of $159.1 at March 31, 1999 and $155.9 at December 31, 1998.................... $ 190.4 $ 199.3
Inventories...................................................................... 39.3 44.8
Income taxes..................................................................... 41.4 37.9
Other............................................................................ 16.7 23.9
----------- ------------
Total current assets................................................................ 287.8 305.9
Property and equipment, at cost:
Land............................................................................. 83.4 82.0
Buildings........................................................................ 571.3 604.9
Equipment........................................................................ 725.8 712.0
Construction in progress......................................................... 63.6 63.7
----------- ------------
1,444.1 1,462.6
Accumulated depreciation......................................................... (724.1) (703.1)
----------- ------------
720.0 759.5
Intangible assets, net of accumulated amortization of $52.2 at
March 31, 1999 and $50.2 at December 31, 1998.................................... 273.7 272.9
Investment in equity of affiliates.................................................. 25.4 24.3
Other............................................................................... 5.7 8.7
----------- ------------
Total assets........................................................................ $ 1,312.6 $ 1,371.3
=========== ============
LIABILITIES AND EQUITY
Current liabilities
Accounts payable................................................ $ 48.1 $ 48.1 $ 47.5
Accrued salaries................................................ 31.0 31.0 34.8
Other current liabilities....................................... 140.2 43.2 38.7
------------ ----------- ------------
Total current liabilities.......................................... 219.3 122.3 121.0
Intercompany balances payable to Columbia/HCA...................... -- 613.1 613.7
Long-term debt..................................................... 578.0 7.3 13.4
Deferred taxes and other liabilities............................... 53.6 53.6 62.5
Minority interests in equity of consolidated entities.............. 51.5 51.5 60.0
Equity, investments by Columbia/HCA................................ 410.2 464.8 500.7
------------ ----------- ------------
Total liabilities and equity....................................... $ 1,312.6 $ 1,312.6 $ 1,371.3
============ =========== ============
</TABLE>
See notes to the condensed combined financial statements
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TRIAD HOSPITALS, INC.
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
For the quarters ended March 31, 1999 and 1998
Unaudited
(Dollars in millions)
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Cash flows from operating activities
Net loss.................................................................. $ (35.9) $ (4.5)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Provision for doubtful accounts...................................... 34.5 36.9
Depreciation and amortization........................................ 28.0 26.2
Deferred income tax benefit.......................................... (12.4) (1.8)
Impairment of long-lived assets...................................... 33.9 --
Loss from discontinued operations.................................... -- 0.4
Increase (decrease) in cash from operating assets and liabilities
Accounts receivable.............................................. (25.6) (42.2)
Inventories and other assets..................................... 9.3 (4.2)
Accounts payable and other current liabilities................... 1.2 (11.6)
Other................................................................ (8.5) (11.7)
--------- ---------
Net cash provided by (used in) operating activities.................. 24.5 (12.5)
Cash flows from investing activities
Purchases of property and equipment....................................... (19.8) (28.0)
Investment in and advances to affiliates.................................. (1.1) (2.2)
Other..................................................................... 3.1 8.8
--------- ---------
Net cash used in investing activities................................ (17.8) (21.4)
Cash flows from financing activities
Payments of long-term debt................................................ (6.1) (0.5)
Increase (decrease) in intercompany balances with Columbia/HCA, net....... (0.6) 34.4
--------- ---------
Net cash provided by (used in) financing activities................... (6.7) 33.9
--------- ---------
Change in cash and cash equivalents........................................... $ -- $ --
========= =========
Interest payments............................................................. $ 18.3 $ 16.1
Income tax payments........................................................... $ -- $ --
</TABLE>
See notes to the condensed combined financial statements
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TRIAD HOSPITALS, INC.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
Unaudited
NOTE 1--BASIS OF PRESENTATION
The accompanying unaudited condensed combined financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements of Triad Hospitals, Inc. (the "Company"). In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included. Interim results are not necessarily indicative
of the results that may be expected for the year. The condensed combined
financial statements should be read in conjunction with the combined financial
statements and notes thereto for the year ended December 31, 1998 included in
the Company's Registration Statement on Form 10.
The balance sheet at December 31, 1998 has been derived from the
audited financial statements at that date but does not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements.
Certain prior year amounts have been reclassified to conform to the
current year presentation.
NOTE 2--SPIN-OFF OF TRIAD HOSPITALS, INC.
On May 11, 1999, Columbia/HCA Healthcare Corporation ("Columbia/HCA")
completed the spin-off of the Company to its shareholders (the "Spin-off") by a
pro rata distribution of 29,898,688 shares of common stock. The accompanying
financial statements were prepared on the push down basis of the historical cost
to Columbia/HCA and represent the combined financial position, results of
operations and cash flows of the Company.
Loss per common share information has been presented as if the
29,898,688 shares referenced above had been outstanding for all periods
presented.
In connection with the Spin-off, all intercompany amounts payable by
the Company to Columbia/HCA were eliminated, and the Company has assumed certain
indebtedness from Columbia/HCA. The pro forma combined balance sheet as of March
31, 1999 includes adjustments to reflect the elimination of intercompany
balances payable to Columbia/HCA and the assumption of $675.0 million in debt
financing in connection with the Spin-off (see NOTE 6). In addition, the Company
has entered into various agreements with Columbia/HCA which are intended to
facilitate orderly changes for both companies in a way which will be minimally
disruptive to each entity (see NOTE 9).
The combined financial statements included herein precede the date of
the Spin-off and may not necessarily be indicative of the results of operations,
financial position and cash flows of the Company in the future or had it
operated as a separate, independent company during the periods presented. The
combined financial statements included herein do not reflect any changes that
have occurred or may occur in the financing and operations of the Company as a
result of the Spin-off.
On May 11, 1999, Columbia/HCA also completed the spin-off of a
separate, independent company, LifePoint Hospitals, Inc. ("LifePoint").
Information regarding Columbia/HCA included in this Report on
Form 10-Q is derived from reports and other information filed by
Columbia/HCA with the Securities and Exchange Commission.
NOTE 3--CONTINGENCIES
Columbia/HCA Investigations
Columbia/HCA is currently the subject of several Federal
investigations into certain of its business practices, as well as governmental
investigations by various states. Columbia/HCA is cooperating in these
investigations and understands that it is a target in these investigations.
Given the breadth of the ongoing investigations, Columbia/HCA expects additional
subpoenas and other investigative and prosecutorial activity to occur in these
and other jurisdictions in the future. Columbia/HCA is a defendant in several
qui tam actions brought by private parties on behalf of the United States of
America, which have been unsealed and
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TRIAD HOSPITALS, INC.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
Unaudited
(Continued)
NOTE 3--CONTINGENCIES (Continued)
served on Columbia/HCA. The actions allege, in general, that Columbia/HCA and
certain subsidiaries and/or affiliated partnerships violated the False Claims
Act for improper claims submitted to the government for reimbursement. The
lawsuits seek damages of three times the amount of all Medicare or Medicaid
claims (involving false claims) presented by the defendants to the Federal
government, civil penalties of not less than $5,000 nor more than $10,000 for
each such Medicare or Medicaid claim, attorneys' fees and costs. To the
Company's knowledge, the government has intervened in three qui tam actions
against Columbia/HCA. Columbia/HCA is aware of additional qui tam actions that
remain under seal and believes that there are other sealed qui tam cases of
which it is unaware.
Columbia/HCA is a defendant in a number of other suits, which allege,
in general, improper and fraudulent billing, overcharging, coding and physician
referrals, as well as other violations of law. Certain of the suits have been
conditionally certified as class actions.
It is too early to predict the effect of outcome of any of the ongoing
investigations or qui tam and other actions, or whether any additional
investigations or litigations will be commenced. If Columbia/HCA is found to
have violated Federal or state laws relating to Medicare, Medicaid or similar
programs, Columbia/HCA could be subject to substantial monetary fines, civil and
criminal penalties, and exclusion from participation in the Medicare and
Medicaid programs. Similarly, the amounts claimed in the qui tam and other
actions may be substantial, and Columbia/HCA could be subject to substantial
costs resulting from an adverse outcome of one or more of such actions.
In connection with the Spin-off, Columbia/HCA has agreed to indemnify
the Company in respect of any losses which it may incur as a result of the
proceedings described above (see the description of the distribution agreement
in NOTE 9 for a description of such indemnification arrangement). If any of such
indemnified matters were successfully asserted against the Company, or any of
its facilities, and Columbia/HCA failed to meet its indemnification obligations,
then such losses could have a material adverse effect on the business, financial
position, results of operations or prospects of the Company. Columbia/HCA will
not indemnify the Company for losses relating to any acts, practices and
omissions engaged in by the Company after the date of the Spin-off, whether or
not the Company is indemnified for similar acts, practices and omissions
occurring prior to the date of the Spin-off.
General Liability Claims
The Company is subject to claims and suits arising in the ordinary
course of business, including claims for personal injuries or wrongful
restriction of, or interference with, physicians' staff privileges. In certain
of these actions the claimants may seek punitive damages against the Company,
which are usually not covered by insurance. It is management's opinion that the
ultimate resolution of these pending claims and legal proceedings will not have
a material adverse effect on the Company's results of operations or financial
position.
NOTE 4--COMPANY OPERATIONS
As of January 1, 1999, the Company owned or operated 39 hospitals
(including two facilities the Company is leasing from others and an investment
in one hospital that is accounted for using the equity method), 19 free-standing
ambulatory surgery centers (including two investments in ambulatory surgery
centers that are accounted for using the equity method) and related health care
entities located in eleven western, southwestern and southeastern states. During
the quarter ended March 31, 1999, the Company sold one hospital, the proceeds of
which were retained by Columbia/HCA, and ceased operations of one hospital.
Also, on January 1, 1999, the Company transferred two acute care hospitals and
three ambulatory surgery centers located in Kansas City, Missouri to an
unaffiliated third party pursuant to a long-term lease which provides for
payment to the Company of rental amounts approximating $16.0 million per year.
Subsequent to the quarter ended March 31, 1999 but prior to the date of the
Spin-off, the Company opened one hospital that is accounted for using the equity
method.
NOTE 5--IMPAIRMENT OF LONG-LIVED ASSETS
The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 121, Accounting of the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed of ("SFAS 121"). SFAS 121 addresses
accounting for the impairment of long-lived assets and long-lived assets to be
disposed of, certain identifiable intangibles and goodwill related to those
assets, and provides guidance for recognizing and measuring impairment losses.
The statement requires that the carrying amount of impaired assets be reduced to
fair value.
As discussed above, during the quarter ended March 31, 1999, the Company
sold one hospital and ceased to operate another hospital. At March 31, 1999, the
Company intended to sell five additional facilities (4 general, acute care
hospitals and one psychiatric hospital) that were identified as not compatible
with the Company's operating plans, based upon management's review of all
facilities, and giving consideration to current and expected competition in each
market, expected population trends in each
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TRIAD HOSPITALS, INC.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
Unaudited
(Continued)
NOTE 5--IMPAIRMENT OF LONG-LIVED ASSETS (Continued)
market and the current and expected capital needs in each market. Subsequent to
the date of the Spin-off, management completed its review of all facilities and
the Company decided to sell four additional general, acute care hospitals that
met the criteria described above. In the quarter ended March 31, 1999, the
carrying value of the long-lived assets relating to the eleven facilities was
approximately $133.6 million. For the quarters ended March 31, 1999 and 1998,
these facilities contributed net revenues of $77.0 million and $93.6 million and
losses before impairment charges and income tax benefit of $7.4 million and $9.4
million, respectively. The Company expects to complete the sales of the
remaining nine facilities which are held for sale over the next twelve months.
The Company is required to use sales proceeds on the nine remaining facilities
to retire outstanding indebtedness (see NOTE 6).
In the quarter ended March 31, 1999, the carrying value of the long-
lived assets related to certain of these facilities (3 hospital facilities), of
approximately $50.6 million, was reduced to fair value, based on estimates of
selling values, for a total non-cash charge of $30.8 million. For the quarter
ended March 31, 1999 and 1998, respectively, these three facilities had net
revenues of approximately $25.0 million and $24.9 million and incurred losses
from continuing operations before income tax benefit and the asset impairment
charge of approximately $3.8 million and $4.3 million.
During the quarter ended March 31, 1999, the Company recorded further
impairment losses of $3.1 million related to one hospital facility where the
recorded asset values were not deemed to be fully recoverable based upon the
operating results, trends and projected future cash flows. These assets will
continue to be used and are now recorded at estimated fair value, based upon
discounted, estimated future cash flows.
The impairment charges, totaling $33.9 million, did not have a
significant impact on the Company's cash flows and are not expected to
significantly impact cash flows for future periods. As a result of the write-
downs, depreciation and amortization expense related to these assets will
decrease in future periods. In the aggregate, the net effect of the change in
depreciation and amortization expense is not expected to have material effect on
operating results for future periods.
NOTE 6--LONG-TERM DEBT
In connection with the Spin-off, the Company assumed approximately
$675.0 million of debt financing from Columbia/HCA. The debt consists of a $75.0
million asset sale bridge loan bearing interest at LIBOR plus 3.25% (8.15% per
annum at May 31,1999) due December 31, 1999, a $65.0 million Tranche A term loan
bearing interest at LIBOR plus 3.25% (8.15% per annum at May 31, 1999) with
principal amounts due beginning in 1999 through 2004, a $200.0 million Tranche B
term loan bearing interest at LIBOR plus 4% (8.9% per annum at May 31, 1999)
with principal amounts due beginning in 1999 through 2005, and $325.0 million
senior subordinated notes bearing interest at 11% due in 2009 with interest
payments due quarterly. The Company also assumed various indebtedness of
Columbia/HCA related to specific hospitals in the aggregate amount of
approximately $10.0 million with interest rates averaging 5.7% maturing over
five years.
The Company's bank debt is secured by a pledge of substantially all of
its assets. The debt agreements require that the Company comply with various
financial ratios and tests and have restrictions on new indebtedness, asset
sales, capital expenditures and dividends.
The Company also assumed a $125.0 million revolving line of credit
bearing interest at LIBOR plus 3.25% due in 2004. No amounts were outstanding as
of May 31, 1999.
A five-year maturity schedule is as follows (in millions):
1999 $ 97.9
2000 14.0
2001 13.4
2002 20.9
2003 57.9
Thereafter 470.9
------
$675.0
======
As part of the assumption of the above reference debt financing, the
Company also assumed approximately $15.0 million in debt issue costs, which will
be amortized over the lives of the loans.
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TRIAD HOSPITALS, INC.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
Unaudited
(Continued)
NOTE 7--STOCK BENEFIT PLANS
In connection with the Spin-off, the Company adopted the 1999 Long-
Term Incentive Plan, for which 5,350,000 shares of the Company's common stock
have been reserved for issuance. The 1999 Long-Term Incentive Plan authorizes
the grant of stock options, stock appreciation rights and other stock based
awards to officers and employees of the Company. As of May 31, 1999, 581,040
stock options have been granted under this plan, at varying prices, in respect
of pre-existing Columbia/HCA options and 3,020,126 stock options have been
granted under this plan, to be effective on June 10, 1999, with the exercise
price of such options to be determined based on the closing price of the
Company's stock on the next preceding day. In addition, options have been
granted under this plan by the Committee to participants in the Executive Stock
Purchase Plan, as described below.
The Company has also adopted the Executive Stock Purchase Plan,
for which 1,000,000 shares of the Company's common stock have been reserved for
issuance. The Executive Stock Purchase Plan grants to specified
executives of the Company a right to purchase shares of common stock from the
Company. The Company will loan each participant in the plan 100% of the purchase
price of the Company's common stock, on a full recourse basis, to the extent the
participant does not elect to pay the purchase price in cash. The principal and
interest of the loans will mature on the fifth anniversary following the
purchase of the shares, termination of the participants' employment or
bankruptcy of the participant. In addition, the Committee has granted to such
executives stock options equal to three-quarters of a share for each share
purchased. The exercise price of these stock options is to equal the purchase
price of the shares. As of May 31, 1999, 950,000 shares have been purchased by
participants in the plan and options to purchase an additional 712,500 shares at
exercise prices ranging from $9.375 to $9.4375 have been issued in connection
with such purchased shares. As of May 31, 1999, the total amount which has been
loaned to participants to purchase shares under the plan is $8.9 million.
Also, the Company adopted various other plans for which 500,000 shares
of the Company's common stock have been reserved for issuance. As of May 31,
1999, 120,000 options have been granted under such plans to non-employee
directors, to be effective on June 10, 1999, with the exercise price of such
options to be determined based on the closing price of the Company's stock on
the next preceding day.
In connection with the Spin-off, the Company will establish an
Employee Stock Ownership Plan ("ESOP") which will purchase from the Company at
fair market value approximately 9% of the Company's common stock (3.0 million
shares). The purchase will be financed by the ESOP by issuing a promissory note
to the Company. The loan will be amortized over a 10-year period. As of May 31,
1999, the purchase price and the final terms of the note had not been
determined.
NOTE 8--DISCONTINUED OPERATIONS
During the first quarter of 1998, the Company recorded a loss from
discontinued operations related to the divestiture of home health business of
$0.4 million (net of income tax benefit). Revenues for the home health
businesses disposed of were approximately $14.8 million in the first quarter of
1998. Columbia/HCA and the Company completed the divestiture and received
proceeds of approximately $3.9 million, which approximated the carrying value of
the net assets of discontinued operations during the fourth quarter of 1998. The
combined financial statements reflect the results of operations and net assets
of the home health businesses as discontinued operations.
NOTE 9--AGREEMENTS WITH COLUMBIA/HCA
As described below, the Company has entered into several agreements
with Columbia/HCA to facilitate an orderly change after the Spin-off.
Columbia/HCA, the Company and LifePoint have entered into a
distribution agreement providing for certain arrangements among Columbia/HCA,
the Company and LifePoint subsequent to the date of the Spin-off. The
distribution agreement generally provides that the Company will be financially
responsible for liabilities arising out of or in connection with the assets and
entities that constitute the Company. The distribution agreement provides,
however, that Columbia/HCA will indemnify the Company for any losses which it
incurs arising from the pending governmental investigations of certain of
Columbia/HCA's business practices. The distribution agreement further provides
that Columbia/HCA will indemnify the Company for any losses which it may incur
arising from stockholder actions and other legal proceedings related to the
governmental investigations which are currently pending against Columbia/HCA,
and from proceedings which may be commenced by governmental authorities or by
private parties in the future that arise from acts, practices or omissions
engaged in prior to the date of the Spin-off and related to such proceedings.
Columbia/HCA has also agreed that, in the event that any hospital owned by the
Company as of the date of the Spin-off is permanently excluded from
participation in the Medicare and Medicaid programs as a result of the
proceedings described above, then Columbia/HCA will make a cash payment to the
Company in an amount (if positive) equal to five times the excluded hospital's
1998 income from continuing operations before depreciation and amortization,
interest expense, management fees, impairment of long-lived assets, minority
interests and income taxes less the net proceeds of the sale or other
disposition of the excluded hospital. The Company agreed that, in connection
with the pending governmental investigations, it will participate with
-8-
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TRIAD HOSPITALS, INC.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
Unaudited
(Continued)
NOTE 9--AGREEMENTS WITH COLUMBIA/HCA (CONTINUED)
Columbia/HCA in negotiating one or more compliance agreements setting forth each
of their agreements to comply with applicable laws and regulations.
Columbia/HCA will not indemnify the Company for losses relating to any acts,
practices and omissions engaged in by the Company after the date of the Spin-
off, whether or not the Company is indemnified for similar acts, practices and
omissions occurring prior to the date of the Spin-off.
In connection with the Spin-off, Columbia/HCA also agreed to indemnify
the Company for any payments which it is required to make in respect of
Medicare, Medicaid and Blue Cross cost reports relating to periods ending on or
prior to the date of the Spin-off, and the Company agreed to indemnify
Columbia/HCA for and pay to Columbia/HCA any payments received by it relating to
such cost reports relating to periods ending on or prior to the date of the
Spin-off. The Company will be responsible for the filing of these cost reports
and any terminating cost reports. These cost report payables are approximately
$40 million at March 31, 1999.
Columbia/HCA, the Company and LifePoint entered into a tax sharing and
indemnification agreement, which allocates tax liabilities among Columbia/HCA,
the Company and LifePoint, and addresses certain other tax matters such as
responsibility for filing tax returns, control of and cooperation in tax
litigation and qualification of the Spin-off as a tax-free transaction.
Generally, Columbia/HCA will be responsible for taxes that are allocable to
periods prior to the Spin-off, and Columbia/HCA, the Company and LifePoint will
each be responsible for its own tax liabilities (including its allocable share
of taxes shown on any consolidated, combined or other tax return filed by
Columbia/HCA) for periods after the Spin-off. The tax sharing and
indemnification agreement prohibits the Company from taking actions that could
jeopardize the tax treatment of either the Spin-off or the internal
restructuring of Columbia/HCA that preceded the Spin-off, and requires the
Company to indemnify Columbia/HCA for any taxes or other losses that result from
any such actions.
Prior to the date of the Spin-off, Columbia/HCA maintained various
insurance policies for the benefit of the Company and LifePoint. In connection
with the Spin-off, Columbia/HCA, the Company and LifePoint entered into an
agreement relating to insurance matters which provides that any claims against
insurers outstanding at the Spin-off will be for the benefit of the party who
will own the asset which is the basis for the claim, or, in the case of
liability claim, which is the owner of the facility at which the activity which
is the subject of the claim occurred. Columbia/HCA will pay the Company any
portion of such a claim that is unpaid by an insurer to satisfy deductible, co-
insurance or self-insurance amounts (unless such amounts were paid to or
accounted for by the affected entity prior to the Spin-off). Columbia/HCA and
the Company have ensured that all of the insurance policies in effect after the
Spin-off provide the same coverage to the Company that were available prior to
the Spin-off. The Company has purchased continuous coverage under extensions or
renewals of existing, or new, policies issued by Health Care Indemnity, Inc., a
subsidiary of Columbia/HCA. Any retroactive rate adjustments for periods ending
on or before the Spin-off, in respect of such insurance policies, will be paid
or received by Columbia/HCA.
Columbia/HCA's wholly owned subsidiary Columbia Information Services,
Inc. ("CIS"), entered into a computer and data processing services agreement
with the Company. Pursuant to this agreement, CIS will provide computer
installation, support, training, maintenance, data processing and other related
services to the Company. The initial term of the agreement is seven years, which
will be followed by a wind-down period of up to one year. CIS will charge the
Company approximately $19.0 million per year for services provided under this
agreement. In the event the agreement is terminated by the Company, it will be
required to pay a termination fee equal to the first month's billed fees,
multiplied by the remaining number of months in the agreement. CIS does not
warrant that the software and hardware used by CIS in providing services to the
Company will be Year 2000 ready, although CIS is currently making efforts in a
professional, timely and workmanlike manner that it deems reasonable to address
Year 2000 issues with respect to the software licensed to the Company under the
computer and data processing services agreements.
Columbia/HCA, the Company and LifePoint entered into an agreement
relating to benefit and employment matters which allocates responsibilities for
employment compensation, benefits, labor, benefit plan administration and
certain other employment matters on and after the date of the Spin-off. The
agreement generally provides that the Company will assume responsibility for its
employees from and after the date of the Spin-off, and that Columbia/HCA will
retain the liabilities with respect to former employees associated with the
facilities and operations of the Company who terminated employment on or prior
to the date of the Spin-off. Benefit plans established by the Company generally
recognize past service with Columbia/HCA.
Columbia/HCA also entered into an agreement with the Company, pursuant
to which the Company will sub-lease from Columbia/HCA its principal executive
offices (at the same price per square foot as is payable under the existing
Columbia/HCA lease). The Company's sub-lease will terminate on January 31, 2003.
Columbia/HCA also entered into a transitional service agreement with
the Company pursuant to which Columbia/HCA will continue to furnish various
administrative services to the Company. These services will include support in
various aspects of payroll processing and tax reporting for employees of the
Company, real estate design and construction management, legal, human resources,
insurance and accounting matters. Columbia/HCA and the Company also will
continue an ongoing program of inspecting medical
-9-
<PAGE>
TRIAD HOSPITALS, INC.
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
Unaudited
(Continued)
NOTE 9--AGREEMENTS WITH COLUMBIA/HCA (Continued)
equipment at each of the Company's hospitals to assure Year 2000 compliance.
Each agreement will terminate on December 31, 2000, but may be terminated by the
Company as to specific services before December 31, 2000. The Company will pay
fees to Columbia/HCA For services provided in amounts equal to Columbia/HCA's
costs incurred in providing such services.
Columbia/HCA entered into an agreement with the Company whereby
Columbia/HCA will share telecommunications services with the Company under
Columbia/HCA's agreements with its telecommunications services provider and
whereby Columbia/HCA will make certain account collection services available to
the Company. The Company also participates, along with Columbia/HCA and
LifePoint, in a group purchasing organization which makes certain national
supply and equipment contracts available to their respective facilities.
NOTE 10--DERIVATIVES
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"), which was required to be
adopted in years beginning after June 15, 1999. In May 1999, the effective date
of SFAS 133 was deferred until year beginning after June 15, 2000. Because of
the Company's minimal use of derivatives, management does not anticipate that
the adoption of the new statement will have a significant effect on the results
of operations or the financial position of the Company.
-10-
<PAGE>
Part I: Financial Information
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company owns and operates the health care service business which
comprised the Pacific Group of Columbia/HCA until the distribution by
Columbia/HCA to its shareholders of all of the shares of outstanding common
stock of the Company (the "Spin-off"). The Spin-off, which occurred on May 11,
1999, marks the beginning of the Company's operations as an independent,
publicly traded company. As such, the historical financial statements of the
Company may not necessarily be indicative of the Company's future performance,
nor do they necessarily reflect what the financial position and results of
operations of the Company would have been if it had operated as a separate,
stand-alone entity during the periods covered.
As of January 1, 1999 the Company owned or operated 39 hospitals
(including two facilities the Company is leasing from others and an investment
in one hospital that is accounted for using the equity method), 19 free-standing
ambulatory surgery centers (including two investments in ambulatory surgery
centers that are accounted for using the equity method) and related health care
entities located in eleven western, southwestern and southeastern states. During
the quarter ended March 31, 1999, the Company sold one hospital, the proceeds of
which were retained by Columbia/HCA, and ceased operations of one hospital.
Also, on January 1, 1999, the Company transferred two acute care hospitals and
three ambulatory surgery centers located in Kansas City, Missouri to an
unaffiliated third party pursuant to a long-term lease which provides for
payment to the Company of rental amounts approximating $16.0 million per year.
Subsequent to the quarter ended March 31, 1999, the Company opened one hospital,
which is accounted for using the equity method.
Information regarding Columbia/HCA included in this Report on
Form 10-Q is derived from reports and other information filed by
Columbia/HCA with the Securities and Commission.
FORWARD LOOKING STATEMENTS
This "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contains disclosures which are "forward-looking
statements." Forward-looking statements include all statements that do not
relate solely to historical or current facts, and can be identified by the use
of words such as "may", "believe", "will", "expect", "project", "estimate",
"anticipate", "plan" or "continue". These forward-looking statements are based
on the current plans and expectations of the Company and are subject to a number
of uncertainties and risks that could significantly affect current plans and
expectations and the future financial condition and results of the Company.
These factors include, but are not limited to, (i) the highly competitive nature
of the health care business, (ii) the efforts of insurers, health care providers
and others to contain health care costs, (iii) possible changes in the Medicare
and Medicaid programs that may further limit reimbursements to health care
providers and insurers, (iv) changes in Federal, state or local regulation
affecting the health care industry, (v) the possible enactment of Federal or
state health care reform, (vi) the ability to attract and retain qualified
management and personnel, including physicians, (vii) claims and legal actions
relating to professional liabilities and other matters, (viii) fluctuations in
the market value of the Company's common stock, (ix) the departure of key
executive officers from the Company, (x) changes in accounting practices, (xi)
changes in general economic conditions, (xii) future divestitures which may
result in additional charges, (xiii) the complexity of integrated computer
systems and the success and expense of the remediation efforts of the Company
and relevant third parties in achieving Year 2000 readiness, (xiv) the ability
to enter into managed care provider arrangements on acceptable terms, (xv) the
availability and terms of capital to fund the expansion of the Company's
business, (xvi) changes in business strategy or development plans, (xvii)
timeliness of reimbursement payments received under government programs and
(xviii) other risk factors. As a consequence, current plans, anticipated actions
and future financial condition and results may differ from those expressed in
any forward-looking statements made by or on behalf of the Company. You are
cautioned not to unduly rely on such forward-looking statements when evaluating
the information presented in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
RESULTS OF OPERATIONS
Revenue/Volume Trends
During the quarter ended March 31, 1999, the Company experienced declines in
revenue and volumes. Management believes six factors have contributed to the
declines in revenue: the impact of reductions in Medicare payments mandated by
the Federal Balanced Budget Act of 1997 (the "Balanced Budget Act"), the
announced divestitures of hospitals in certain markets, the disposition of one
acute care hospital and cessation of operations of one acute care hospital, the
transfer pursuant to a long-
-11-
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
term lease to an unaffiliated third party of two acute care hospitals and three
ambulatory surgery centers, the continuing trend toward the conversion of more
services to an outpatient basis and the impact of the governmental
investigations of Columbia/HCA. Typically, in the healthcare industry, revenues
and volumes tend to be higher in the first quarter of each year compared to the
other quarters. Management expects these trends to be similar for the Company,
therefore first quarter results are not necessarily indicative of results that
may be expected for the year.
The Company's revenues continue to be affected by an increasing
proportion of revenue being derived from fixed payment, higher discount sources,
including Medicare, Medicaid and managed care plans. In addition, insurance
companies, government programs (other than Medicare) and employers purchasing
health care services for their employees are also negotiating discounted amounts
that they will pay health care providers rather than paying standard prices. The
Company expects patient volumes from Medicare and Medicaid to continue to
increase due to the general aging of the population and expansion of state
Medicaid programs. However, under the Balanced Budget Act, the Company's
reimbursement from Medicare and Medicaid programs was reduced in 1999 and 1998
and will be further reduced as reductions in reimbursement levels are phased in
over the next two years. The Balanced Budget Act has accelerated a shift, by
certain Medicare beneficiaries, from traditional Medicare coverage to medical
coverage that is provided under managed care plans. The Company generally
receives lower payments per patient under managed care plans than under
traditional indemnity insurance plans. With an increasing proportion of services
being reimbursed based upon fixed payment amounts (where the payment is based
upon the diagnosis, regardless of the cost incurred or level of service
provided), revenues, earnings and cash flows are being significantly reduced.
Net patient revenues related to Medicare and Medicaid patients were 46.2% of
total net patient revenues each quarter ended March 31, 1999 and 1998 and net
patient revenues related to managed care plan patients were 29.1% and 25.6% of
total net patient revenues for the quarters ended March 31, 1999 and 1998,
respectively. Net patient revenues from capitation arrangement (prepaid health
service agreements) are less than 1% of net patient revenues.
Management of the Company has focused on streamlining the Company's
portfolio of facilities to eliminate those with poor financial performance, weak
competitive market positions or locations in certain urban markets. As a result,
management determined that eleven of the facilities (10 general, acute care
hospitals and one psychiatric hospital) which were part of the Columbia/HCA
Pacific Group as of January 1, 1999, did not meet the Company's strategic plan
and decided to divest these facilities. During the first quarter of 1999,
Columbia/HCA sold one hospital and ceased operations of one hospital, which had
net revenues of $4.9 million and $8.2 million and losses before impairment
charges and income tax benefit of $4.5 million and $2.6 million for the quarters
ended March 31, 1999 and 1998, respectively. The sale of the remaining nine
facilities is expected to be completed over the next twelve months. For the
quarters ending March 31, 1999 and 1998, the eleven facilities divested or to be
divested contributed net revenues of $77.0 million and $93.6 million and losses
before impairment charges and income tax benefit of $7.4 million and $9.4
million, respectively. On January 1, 1999, the Company transferred two acute
care hospitals and three ambulatory surgery centers located in Kansas City,
Missouri to an unaffiliated third party pursuant to a long-term lease which
provides for payment to the Company of rental amounts approximating $16.0
million per year. For the quarters ending March 31, 1999 and 1998, these leased
facilities contributed net revenues, exclusive of the $4.0 million lease
payments, of $(1.5) million and $50.0 million and losses before impairment
charges and income tax benefit of $8.5 million and $0.1 million, respectively.
These leased hospitals, along with the facilities divested and to be divested,
accounted for a majority of the decrease in revenue and volume for the Company.
The Company's revenues also continue to be affected by the trend
toward certain services being performed more frequently on an outpatient basis.
Growth in outpatient services is expected to continue in the health care
industry as procedures performed on an inpatient basis are converted to
outpatient procedures through continuing advances in pharmaceutical and medical
technologies. The redirection of certain procedures to an outpatient basis is
also influenced by pressures from payers to perform certain procedures as
outpatient care rather than inpatient care. Outpatient revenues grew to 45.5% of
net patient revenues for the quarter ended March 31, 1999 compared to 44.9% for
the quarter ended March 31, 1998.
Management believes that the impact of the ongoing governmental
investigations of certain Columbia/HCA business practices and the related media
coverage may have created uncertainties with physicians, patients and payers in
certain of the Company's markets.
Reductions in the rate of increase in Medicare and Medicaid
reimbursement, increasing percentages of patient volume being related to
patients participating in managed care plans and continuing trends toward more
services being performed on an outpatient basis are expected to present ongoing
challenges. The challenges presented by these trends are magnified by the
Company's inability to control these trends and the associated risks. To
maintain and improve its operating margins in future periods, the Company must
increase patient volumes while controlling the costs of providing services. If
the Company is not able to achieve reductions in the cost of providing services
through increased operational efficiencies, and the trend toward declining
reimbursements and payments continues, results of operations and cash flows will
deteriorate.
Management believes that the proper response to these challenges
includes the delivery of a broad range of quality health care services to
physicians and patients with operating decisions being primarily made by the
local management teams and local physicians.
-12-
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
In connection with the Spin-off, Columbia/HCA agreed to indemnify the
Company for any payments which it is required to make in respect of Medicare,
Medicaid and Blue Cross cost reports relating to periods ending on or prior to
the date of the Spin-off, and the Company agreed to indemnify Columbia/HCA for
and pay to Columbia/HCA any payments received by it relating to such cost
reports relating to periods ending on or prior to the date of the Spin-off. The
Company will be responsible for the filing of these cost reports and any
terminating cost reports. These cost report payables are approximately $40
million at March 31, 1999.
Operating Results Summary
The following is a summary of results from continuing operations for the
quarters ended March 31, 1999 and 1998 (dollars in millions, except per share
amounts and ratios):
<TABLE>
<CAPTION>
1999 1998
--------------------- -----------------------
Amount Percentage Amount Percentage
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues................................................... $ 367.6 100.0 $ 414.0 100.0
Salaries and benefits...................................... 156.9 42.7 178.1 43.0
Supplies................................................... 54.1 14.7 64.0 15.5
Other operating expenses................................... 81.3 22.1 87.0 21.0
Provision for doubtful accounts............................ 34.5 9.4 36.9 8.9
Depreciation and amortization.............................. 28.0 7.6 26.2 6.3
Interest expense allocated from Columbia/HCA............... 18.2 5.0 16.1 3.9
Management fees allocated from Columbia/HCA................ 6.8 1.8 7.6 1.8
Impairment of long-lived assets............................ 33.9 9.2 -- --
-------- ----- -------- --------
413.7 112.5 415.9 100.4
-------- ----- -------- --------
Loss from continuing operations before minority interests
and income tax benefit.................................... (46.1) (12.5) (1.9) (0.4)
Minority interests in earnings of consolidated entities.... (2.2) (0.6) (4.0) (1.0)
-------- ----- -------- --------
Loss from continuing operations before income tax benefit.. (48.3) (13.1) (5.9) (1.4)
Income tax benefit......................................... 12.4 3.4 1.8 0.4
-------- ----- -------- --------
Loss from continuing operations............................ $ (35.9) (9.7) $ (4.1) (1.0)
======== ===== ======== ========
Loss per common share from continuing operations........... $ (1.20) $ (0.14)
EBITDA (a)................................................. $ 40.8 $ 48.0
Number of hospitals at end of period....................... 37 39
Licensed beds at end of period (b)......................... 5,015 5,928
Available beds at end of period (c)........................ 4,608 5,242
Admissions (d)............................................. 42,573 45,479
Adjusted admissions (e).................................... 67,819 72,498
Patient days (f)........................................... 198,557 229,410
Adjusted patient days (g).................................. 316,301 365,702
Average length of stay (h)................................. 4.7 5.0
Average daily census (i)................................... 2,206 2,549
Occupancy rate (j)......................................... 47.9% 48.6%
Net revenue per adjusted patient day....................... $ 1,162 $ 1,132
Gross inpatient revenue.................................... $ 508.2 $ 564.9
Gross outpatient revenue................................... $ 301.4 $ 314.8
Gross outpatient revenue percentage........................ 37.2% 35.8%
Net inpatient revenue...................................... $ 194.0 $ 224.5
Net outpatient revenue..................................... $ 162.2 $ 183.3
Net outpatient revenue percentage.......................... 45.5% 44.9%
</TABLE>
(a) EBITDA is defined as income from continuing operations before depreciation
and amortization, interest expense, management fees, impairment of long-
lived assets, minority interests in earnings of consolidated entities and
income tax benefit. EBITDA is commonly used as an analytical indicator
within the health care industry, and also serves as a measure of leverage
capacity and debt service ability. EBITDA should not be considered as a
measure of financial performance under generally accepted accounting
principles, and the items excluded from EBITDA are significant components
in understanding and assessing financial performance. EBITDA should not be
considered in isolation or as an alternative to net income, cash flows
generated by operating, investing or financing activities or other
financial statement data presented in
-13-
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
the combined financial statements as an indicator of financial performance
or liquidity. Because EBITDA is not a measurement determined in accordance
with generally accepted accounting principles and is thus susceptible to
varying calculations, EBITDA as presented may not be comparable to other
similarly titled measures of other companies.
(b) Licensed beds are those beds for which a facility has been granted approval
to operate from the applicable state licensing agency.
(c) Available beds are those beds a facility actually has in use.
(d) Represents the total number of patients admitted (in the facility for a
period in excess of 23 hours) to the Company's facilities and is used by
management and certain investors as a general measure of inpatient volume.
(e) Adjusted admissions is used by management and certain investors as a
general measure of combined inpatient and outpatient volume. Adjusted
admissions are computed by multiplying admissions (inpatient volume) by the
sum of gross inpatient revenue and gross outpatient revenue and then
dividing the resulting amount by gross inpatient revenue. The adjusted
admissions computation "equates" outpatient revenue to the volume measure
(admissions) used to measure inpatient volume resulting in a general
measure of combined inpatient and outpatient volume.
(f) Represents the total number of days each patient stays in the Company's
hospitals.
(g) Adjusted patient days is used by management and certain investors as a
general measure of combined inpatient and outpatient volume. Adjusted
patient days are computed by multiplying patient days (inpatient volume) by
the sum of gross inpatient revenue and gross outpatient revenue and then
dividing the resulting amount by gross inpatient revenue. The adjusted
patient days computation "equates" outpatient revenue to the volume measure
(patient days) used to measure inpatient volume resulting in a general
measure of combined inpatient and outpatient volume.
(h) Represents the average number of days an admitted patient stays in the
Company's hospitals. Average length of stay has declined due to the
continuing pressures from managed care and other payers to restrict
admissions and reduce the number of days that are covered by the payers for
certain procedures, and by technological and pharmaceutical improvements.
(i) Represents the average number of patients in the Company's hospital beds
each day.
(j) Represents the percentage of hospital available beds occupied by patients.
Both average daily census and occupancy rate provide measures of the
utilization of inpatient rooms. The declining occupancy rate is primarily
attributed to the trend toward more services, that were previously
performed in an inpatient setting, being performed on an outpatient basis
and the decline in average length of stay per admission.
Quarters Ended March 31, 1999 and 1998
Losses from continuing operations before income tax benefit increased
to $48.3 million in the first quarter of 1999 from $5.9 million in the first
quarter of 1998. The increase in pretax loss was primarily attributable to
impairment charges of $33.9 million recorded in the first quarter of 1999 due to
the management reassessment of the facilities that would not be part of the
Company's core markets. Other increases in pretax loss were attributable to $1.9
million of additional losses on the facilities that were either sold or
operations ceased during the first quarter of 1999, a $4.0 million adjustment at
one facility to reflect deterioration in accounts receivable, and certain write-
offs and adjustments relating to the leased facilities in Kansas City, Missouri
of $8.9 million. Management continues to evaluate the ultimate collectibility of
outstanding, aging, accounts receivable associated with the leased facilities.
While additional gross amounts of up to $5.0 million may be required to be
written off, management believes adequate reserves and subsequent collections
exist to substantially offset this amount. These were partially offset by $4.0
million of lease income from the leased facilities in the first quarter of 1999
and improvement in the operations of facilities that will remain after the
planned divestitures.
Revenues decreased 11.2% to $367.6 million in the first quarter of
1999 compared to $414.0 million in the first quarter of 1998. Inpatient
admissions decreased 6.4% and adjusted admissions (adjusted to reflect combined
inpatient and outpatient volume) decreased 6.5% in the first quarter of 1999
compared to the first quarter of 1998. Revenues, admissions and adjusted
admissions declined primarily as a result of the facilities that were leased in
January 1999. In the first quarter of 1998, these facilities had revenues of
$50.0 million, admissions of 4,743 and adjusted admissions of 7,315. Other
factors contributing to the reduction of revenues include a $3.3 million
reduction relating to the sale of one hospital and cessation of operations of
one hospital in the first quarter of 1999 compared to the first quarter of 1998
and a $2.0 million adjustment at one facility during the first quarter of 1999
to reflect additional discounts relating to deterioration in accounts
receivable. These were partially offset by $4.0 million of lease income from the
leased facilities in the first quarter of 1999 and improvement in the operations
of facilities that will remain after the planned divestitures.
Revenues have been decreasing over the past several years due to
several factors. These factors include decreases in Medicare rates of
reimbursement mandated by the Balanced Budget Act which became effective October
1, 1997 (lowering first quarter 1999 revenues by approximately $3.0 million
compared to $1.4 million during the first quarter of 1998) and continued
increases in discounts from the growing number of managed care payers (managed
care as a percent of net revenues increased to 29.1% in the first quarter of
1999 compared to 25.6% during the first quarter of 1998).
Salaries and benefits, as a percentage of revenues, decreased to 42.7%
in the first quarter of 1999 from 43.0% in the first quarter of 1998. The
decrease was primarily attributable to the leased facilities, which had a higher
percentage of salaries and benefits to net revenue.
-14-
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Supply costs decreased as a percentage of revenues to 14.7% in the first
quarter of 1999 from 15.5% in the first quarter of 1998 due to the leased
facilities having a higher percentage of supply costs to net revenue.
Other operating expenses (primarily consisting of contract services,
professional fees, repairs and maintenance, rents and leases, utilities,
insurance and non-income taxes), as a percentage of revenues, increased to 22.1%
in the first quarter of 1999 from 21.0% in the first quarter of 1998 due
primarily to the collection fees relating to collection efforts on the remaining
accounts receivables of the leased facilities in 1999.
Provision for doubtful accounts, as a percentage of revenues, increased to
9.4% in the first quarter of 1999 from 8.9% in the first quarter of 1998 due to
$3.6 million of certain write offs and adjustments relating to the leased
facilities in the first quarter of 1999 and a $2.0 million adjustment that was
made at one facility in the first quarter of 1999 to reflect deterioration in
accounts receivable. Additionally, the uncertain status of the held for sale
facilities contributed to the increase.
Depreciation and amortization increased as a percentage of revenues to 7.6%
in the first quarter of 1999 from 6.3% in the first quarter of 1998, primarily
due to the increased capital expenditures and to the decrease in net revenues
from the leased facilities.
Interest expense, which is primarily represented by interest incurred on
the net intercompany balance with Columbia/HCA, increased to $18.2 million in
the first quarter of 1999 compared to $16.1 million in the first quarter of 1998
primarily as a result of an increase in average balance of the advances from
Columbia/HCA during the first quarter of 1999 compared to the first quarter of
1998.
Management fees allocated from Columbia/HCA remained unchanged as a
percentage of net revenues during the first quarter of 1999 compared to the
first quarter of 1998.
Impairments on long-lived assets were $33.9 million during the first
quarter of 1999 due to the management reassessment of certain facilities that
would not be part of the core markets that the Company would go forward with
after the Spin-off. Management determined that the potential sales prices of
these facilities would not cover the book value of the facilities and a write
down would be necessary.
Minority interests, which are primarily related to one ambulatory surgery
center joint venture in Arizona, decreased slightly as a percentage of revenues
to 0.6% in the first quarter of 1999 from 1.0% in the first quarter of 1998.
PRO FORMA OPERATING RESULTS SUMMARY
The following is a summary of pro forma results from continuing operations
for the quarters ended March 31, 1999 and 1998 (dollars in millions, except per
share amounts and ratios). The pro forma operating results from continuing
operations reflect the following adjustments at the beginning of each quarter:
(1) To reflect the following completed divestiture and cessation of operations
and planned divestitures in 1999:
(a) elimination of the first quarter of 1999 and first quarter of 1998
results of operations of one acute care hospital which was sold during
the first quarter of 1999 (the proceeds of such sale were retained by
Columbia/HCA);
(b) elimination of the first quarter of 1999 and the first quarter of 1998
results of operation of eight acute care hospitals and one psychiatric
hospital for which the Company's management believes dispositions over
the next twelve months are probable; and
(c) elimination of the first quarter 1999 and 1998 results of operations
of one acute care hospital which the Company ceased to operate on
April 1, 1999.
(2) To reflect the long term lease payment of $16.0 million per year and
elimination of operations in the first quarters of 1999 and 1998 of two
acute care hospitals and three ambulatory surgery centers in Kansas City,
Missouri in January 1999 as though such lease had commenced at the
beginning of each period.
(3) To adjust to the estimated, incremental general and administrative costs of
$5.6 million in the first quarters of 1999 and 1998 (in addition to $2.3
million in the first quarter of 1999 and $1.8 million in first quarter of
1998 in costs already included in the historical combined statement of
operations) that would have been incurred if the Company had managed
comparable general and administrative functions and to eliminate the
management fee allocated from Columbia/HCA.
(4) To adjust historical retirement plan expenses recorded as a component of
salaries and wages and record the estimated annual Triad Hospitals, Inc.
Retirement Savings Plan (the "ESOP") expense. The Company's ESOP will be
established in connection with the Spin-off and the ESOP will purchase
newly issued shares of the Company's common stock equal to 9.0% of the
outstanding shares of the Company. The ESOP shares will be released from a
suspense account and allocated to the Company's participating employees
over a 10-year period. The non-cash ESOP expense will be recognized as the
shares are released and allocated to the participants and will be based
upon the fair value of the shares released.
(5) To adjust interest expense to $17.4 million for the quarters ended March
31, 1999 and 1998. The interest expense adjustment is based on the
elimination of all intercompany amounts payable to Columbia/HCA and the
assumption of
-15-
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
PRO FORMA OPERATING RESULTS SUMMARY (Continued)
certain indebtedness from Columbia/HCA in the aggregate amount of
approximately $675.0 million at an assumed average interest rate of 9.83%
and approximately $1.5 million in amortization of the estimated loan
issuance costs.
(6) To adjust provision for income taxes for the estimated impact of the pro
forma adjustments.
(7) Pro forma income (loss) per share was computed using the 29.9 million
shares issued to the stockholders of Columbia/HCA on the date of the Spin-
off.
<TABLE>
<CAPTION>
1999 1998
---------------------- ---------------------
Amount Percentage Amount Percentage
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Revenues...................................................... $ 292.1 100.0 $ 274.4 100.0
Salaries and benefits......................................... 116.0 39.7 109.7 40.0
Supplies...................................................... 42.8 14.6 39.6 14.4
Other operating expenses...................................... 61.4 21.0 58.6 21.4
Provision for doubtful accounts............................... 23.3 8.0 25.0 9.1
Depreciation and amortization................................. 21.1 7.2 19.7 7.2
Interest expense.............................................. 17.4 6.0 17.4 6.3
ESOP expense.................................................. 1.1 0.4 1.1 0.4
-------- ----- -------- -----
283.1 96.9 271.1 98.8
-------- ----- -------- -----
Income from continuing operations before minority interests
and income taxes............................................. 9.0 3.1 3.3 1.2
Minority interests in earnings of consolidated entities....... (2.2) (0.8) (3.6) (1.3)
-------- ----- -------- -----
Income (loss) from continuing operations before income taxes.. 6.8 2.3 (0.3) (0.1)
Provision for income taxes.................................... (3.4) (1.2) (0.6) (0.2)
-------- ----- -------- -----
Income (loss) from continuing operations...................... $ 3.4 1.1 $ (0.9) (0.3)
======== ===== ======== =====
Income (loss) per common share from continuing operations..... $ 0.11 $ (0.03)
Pro forma EBITDA (a).......................................... $ 48.6 $ 41.5
Number of hospitals........................................... 29 29
Licensed beds at end of period (b)............................ 3,128 3,527
Available beds at end of period (c)........................... 2,716 2,906
Admissions (d)................................................ 32,666 30,026
Adjusted admissions (e)....................................... 54,572 49,157
Patient days (f).............................................. 149,049 144,464
Adjusted patient days (g)..................................... 249,001 236,510
Average length of stay (h).................................... 4.6 4.8
Average daily census (i)...................................... 1,656 1,605
Occupancy rate (j)............................................ 61.0% 55.2%
Net revenue per adjusted patient day.......................... $ 1,173 $ 1,160
Gross inpatient revenue....................................... $ 367.6 $ 333.2
Gross outpatient revenue...................................... $ 243.2 $ 212.3
Gross outpatient revenue percentage........................... 39.8% 38.9%
Net inpatient revenue......................................... $ 138.3 $ 131.2
Net outpatient revenue........................................ $ 144.7 $ 134.2
Net outpatient revenue percentage............................. 51.1% 50.6%
</TABLE>
(a) Pro forma EBITDA is EBITDA, as defined previously, adjusted (i) as if the
Spin-off and the divestitures of certain facilities that the Company
intends to divest or cease to operate during 1999 had occurred at the
beginning of 1998, (ii) as if the long term lease of the Kansas City
facilities in January 1999 had occurred at the beginning of each period,
(iii) to exclude non-cash ESOP expense and (iv) to include the Company's
management's estimated corporate overhead costs of $22.4 million on an
annual basis that are recorded in the Pro Forma Operating Results Summary
to replace the management fees allocated by Columbia/HCA. Pro forma EBITDA
is commonly used as an analytical indicator of leverage capacity and debt
service ability. Pro forma EBITDA should not be considered as a measure of
financial performance under generally accepted accounting principles, and
the items excluded from pro forma EBITDA are significant components in
understanding and assessing financial performance. Pro forma EBITDA should
not be considered in isolation or as an alternative to net income, cash
flows generated by operating, investing or financing activities or other
financial statement data presented in the combined financial statements as
an indicator of financial performance or liquidity. Because pro forma
EBITDA is not a measurement determined in accordance with generally
accepted accounting principles and is thus susceptible to varying
calculations, pro forma EBITDA as presented may not be comparable to other
similarly titled measures of the companies.
-16-
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
PRO FORMA OPERATING RESULTS SUMMARY (CONTINUED)
(b) Licensed beds are those beds for which a facility has been granted approval
to operate from the applicable state licensing agency.
(c) Available beds are those beds a facility actually has in use.
(d) Represents the total number of patients admitted (in the facility for a
period in excess of 23 hours) to the Company's facilities and is used by
management and certain investors as a general measure of inpatient volume.
(e) Adjusted admissions is used by management and certain investors as a
general measure of combined inpatient and outpatient volume. Adjusted
admissions are computed by multiplying admissions (inpatient volume) by the
sum of gross inpatient revenue and gross outpatient revenue and then
dividing the resulting amount by gross inpatient revenue. The adjusted
admissions computation "equates" outpatient revenue to the volume measure
(admissions) used to measure inpatient volume resulting in a general
measure of combined inpatient and outpatient volume.
(f) Represents the total number of days each patient stays in the Company's
hospitals.
(g) Adjusted patient days is used by management and certain investors as a
general measure of combined inpatient and outpatient volume. Adjusted
patient days are computed by multiplying patient days (inpatient volume) by
the sum of gross inpatient revenue and gross outpatient revenue and then
dividing the resulting amount by gross inpatient revenue. The adjusted
patient days computation "equates" outpatient revenue to the volume measure
(patient days) used to measure inpatient volume resulting in a general
measure of combined inpatient and outpatient volume.
(h) Represents the average number of days an admitted patient stays in the
Company's hospitals. Average length of stay has declined due to the
continuing pressures from managed care and other payers to restrict
admissions and reduce the number of days that are covered by the payers for
certain procedures, and by technological and pharmaceutical improvements.
(i) Represents the average number of patients in the Company's hospital beds
each day.
(j) Represents the percentage of hospital available beds occupied by patients.
Both average daily census and occupancy rate provide measures of the
utilization of inpatient rooms. The declining occupancy rate is primarily
attributed to the trend toward more services, that were previously
performed in an inpatient setting, being performed on an outpatient basis
and the decline in average length of stay per admission.
Pro Forma Comparisons of Quarters Ended March 31, 1999 and 1998
The following discussion compares the results of the first quarter of
1999 on a pro forma basis to the results of the first quarter of 1998 on a pro
forma basis, in each case giving effect to the assumptions set forth above the
summary table of pro forma results from continuing operations for the quarters
ended March 31, 1999 and March 31, 1998.
On a pro forma basis, income from continuing operations before income
taxes increased to $6.8 million in the first quarter of 1999 from a loss from
continuing operations before income taxes of $0.3 million in the first quarter
of 1998. The pro forma increase was primarily due to the improved operations of
the facilities that will remain after the planned divestitures.
On a pro forma basis, revenues increased 6.5% to $292.1 million in the
first quarter of 1999 compared to $274.4 million in the first quarter of 1998.
Inpatient admissions increased 8.8% and adjusted admissions increased 11.0% in
the first quarter of 1999 compared to the first quarter of 1998 on a pro forma
basis. The increase in revenues, on a pro forma basis, was due primarily to
increased focus by management on the markets that met the Company's strategic
plan as the Company progressed toward the Spin-off. That increased management
attention decreased the uncertainty in the affected markets as to the eventual
disposition of the facilities.
On a pro forma basis, salaries and benefits, as a percentage of net
revenue, decreased to 39.7% in the first quarter of 1999 from 40.0% in the first
quarter of 1998 due to an improved ability to adjust staffing levels to patient
volumes.
On a pro forma basis, provision for doubtful accounts, as a percentage
of net revenue, decreased to 8.0% in the first quarter of 1999 from 9.1% in the
first quarter of 1998 due to increased focus by management on the core
facilities that will remain with the Company after the planned divestitures.
On a pro forma basis, supplies, other operating expenses, depreciation
and amortization, interest expense and minority interests in earnings of
consolidated entities remained relatively unchanged for the quarters ended March
31, 1999 compared to March 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Prior to the Spin-off, the Company previously relied upon Columbia/HCA
for liquidity and sources of capital to supplement any needs not met by
operations. Subsequent to the Spin-off, as an independent, publicly traded
company, the
-17-
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Company has direct access to the capital markets and the ability to enter into
its own borrowing arrangements. At March 31, 1999, the Company had working
capital of $165.5 million.
Cash provided by continuing operating activities was $24.5 million in the
first quarter of 1999 compared to cash used in operating activities of $12.5
million in the first quarter of 1998. The increase was due to an increase in
accounts payable and other current liabilities, decrease in inventories and
other assets and a smaller increase in accounts receivable in 1999 than 1998.
Cash used in investing activities decreased to $17.8 million in the first
quarter of 1999 from $21.4 million in the first quarter of 1998. This was due
primarily due to a reduction of construction projects in the first quarter of
1999 compared to the first quarter of 1998. The Company expects to expend
approximately $120 million ($90 million for expansion) in capital expenditures
from the date of the Spin-off through the end of 1999 and approximately $90
million ($50 million for expansion) in 2000.
Cash used in financing activities was $6.7 million in the first quarter
of 1999 compared to cash provided by financing activities of $33.9 million in
the first quarter of 1998. This was due primarily to changes in the intercompany
balances with Columbia/HCA.
In connection with the Spin-off, all intercompany accounts payable by the
Company to Columbia/HCA were eliminated and the Company assumed approximately
$675.0 million of debt obligations from Columbia/HCA. The debt consists of a
$75.0 million asset sale bridge loan bearing interest at LIBOR plus 3.25% per
annum due December 31, 1999, a $65.0 million Tranche A loan bearing interest at
LIBOR plus 3.25% with principal amounts due beginning in 1999 through 2004, a
$200.0 million Tranche B loan bearing interest at LIBOR plus 4.00% with
principal amounts due beginning in 1999 through 2005, and a $325.0 million
senior subordinated note bearing interest at 11% due in 2009. The Company also
assumed various indebtedness of Columbia/HCA related to specific hospitals in
the aggregate amount of approximately $10.0 million with interest rates
averaging 5.7% maturing over five years. The Company also assumed a $125.0
million revolving line of credit bearing interest at LIBOR plus 3.25% due in
2004. No amounts were outstanding under the revolving credit facility as of May
31, 1999. The Company's bank debt is secured by a pledge of substantially all
of its assets. The bank debt agreements require that the Company comply with
various financial ratios and tests, including a minimum net worth test, a total
funded debt to EBITDA ratio, a senior funded debt to EBITDA ratio, and a minimum
fixed charge coverage ratio, all as defined in the bank debt agreements. The
bank debt agreements and the indenture relating to the 11% Senior Subordinated
Notes also contain covenants that, among other things, limit the ability of the
Company to incur additional indebtedness, pay dividends on, redeem or purchase
its capital stock, make investments and capital expenditures, engage in
transactions with affiliates, create certain liens, sell assets, and
consolidate, merge or transfer assets.
As previously discussed, based upon a review of all facilities and trends
in each market, management of the Company has determined that 10 acute care
hospitals and one psychiatric hospital are not compatible with the Company's
strategic plans. Of the facilities to be divested, one acute care hospital was
sold during the first quarter of 1999, the proceeds of which were retained by
Columbia/HCA, and the operations of one acute care hospital were ceased. The
Company is required to use sales proceeds on the remaining nine facilities to
retire outstanding indebtedness.
In January 1999, the Company entered into a fifteen year lease with an
unaffiliated party for the operations of two acute care hospitals and three
ambulatory surgery centers located in Kansas City, Missouri. The lease payments
will be approximately $16.0 million per year. In January 2001, the lessee has
an option to purchase the facilities for approximately $130.0 million. As of
March 31, 1999, these facilities assets had a book value of $79.1 million.
On June 1, 1999 the Company completed a swap of its facility in Laredo,
Texas for a facility in Victoria, Texas and $4.5 million in cash which
management expects to have no material impact on operations.
In connection with the Spin-off, the Company will establish an ESOP,
which will purchase from the Company at fair market value approximately 9% of
the Company's common stock, 3.0 million shares. The ESOP will finance the
purchase by issuing a promissory note to the Company, which will be amortized
over 10 years. As of May 31, 1999, the purchase price and the final terms of the
note had not been determined. ESOP expense will be recognized based on the
number of shares to be released based on loan repayments during each year
multiplied by the average share price during that year. Shares outstanding for
the earnings per share calculation will be the average number of shares to be
released.
Although the Company's indebtedness will be more substantial than was
historically the case for its predecessor entities, management expects that
operations and working capital facilities will provide sufficient liquidity for
fiscal 1999.
CONTINGENCIES
Columbia/HCA is currently the subject of several Federal investigations
into certain of its business practices, as well as governmental investigations
by various states. Columbia/HCA is cooperating in these investigations and
understands, through written notice and other means, that it is a target in
these investigations. Given the breadth of the ongoing investigations,
-18-
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Columbia/HCA expects additional subpoenas and other investigative and
prosecutorial activity to occur in these and other jurisdictions in the future.
Management believes that the ongoing governmental investigations and
related media coverage may have had a negative effect on Columbia/HCA's results
of operations (which includes the Company for the periods prior to the Spin-off
which are presented herein). The extent to which the Company may or may not
continue to be affected by the ongoing investigations of Columbia/HCA, the
initiation of additional investigations, if any, and the related media coverage
cannot be predicted.
In connection with the Spin-off, Columbia/HCA has agreed to indemnify the
Company in respect of any losses which it may incur arising from the
governmental investigations described above and from stockholder actions and
other legal proceedings related to the governmental investigations which are
currently pending against Columbia/HCA. Columbia/HCA has also agreed to
indemnify the Company in respect of any losses which it may incur as a result of
proceedings which may be commenced by government authorities or by private
parties in the future that arise from acts, practices or omissions engaged in
prior to the distribution date and related to the proceedings described above.
Columbia/HCA has also agreed that, in the event that any hospital owned by the
Company as of the date of the Spin-off is permanently excluded from
participation in the Medicare and Medicaid programs as a result of the
proceedings described above, then Columbia/HCA will make a cash payment to the
Company in an amount (if positive) equal to five times the excluded hospital's
1998 income from continuing operations before depreciation and amortization,
interest expense, management fees, impairment of long-lived assets, minority
interests and income taxes less the net proceeds of the sale or other
disposition of the excluded hospital. The Company has agreed that, in
connection with the pending governmental investigations of Columbia/HCA, it will
participate with Columbia/HCA in negotiating one or more compliance agreements
setting forth each of their agreements to comply with applicable laws and
regulations. If any such indemnified matters were successfully asserted against
the Company, or any of its facilities, and Columbia/HCA failed to meet its
indemnification obligations, then such losses could have a material adverse
effect on the business, financial position, results of operations or prospects
of the Company. Columbia/HCA will not indemnify the Company for losses relating
to any acts, practices and omissions engaged in by the Company after the Spin-
off date, whether or not the Company is indemnified for similar acts, practices
and omissions occurring prior to the Spin-off date.
The Company is subject to claims and suits arising in the ordinary course
of business, including claims for personal injuries or wrongful restriction of,
or interference with, physicians' staff privileges. In certain of these actions
the claimants may seek punitive damages against the Company, which are usually
not covered by insurance. It is management's opinion that the ultimate
resolution of these pending claims and legal proceedings will not have a
material adverse effect on the Company's results of operations or financial
position.
IMPACT OF YEAR 2000 COMPUTER ISSUES
The Year 2000 problem is the result of two potential malfunctions that
could have an impact on Columbia/HCA's systems, including systems and equipment
on which the Company relies. The first problem arises due to computers being
programmed to use two rather than four digits to define the applicable year.
The second problem arises in embedded chips, where microchips and
microcontrollers have been designed using two rather than four digits to define
the applicable year. Certain of the Company's computer programs, building
infrastructure components (e.g., alarm systems and HVAC systems) and medical
devices that are date sensitive, may recognize a date using "00" as the year
1900 rather than the year 2000. If uncorrected, the problem could result in
computer system and program failures that could result in a disruption of the
Company's business operations or equipment and medical device malfunctions that
could affect patient diagnosis and treatment.
Columbia/HCA and the Company entered into a computer and data processing
services agreement (see NOTE 9 to the Condensed Combined Financial Statements)
with the Company. Pursuant to this agreement, Columbia/HCA will provide
computer installation, support, training, maintenance, data processing and other
related services to the Company. Columbia/HCA does not warrant that the
software and hardware used by Columbia/HCA in providing services to the Company
will be Year 2000 ready, although Columbia/HCA is currently making efforts in a
professional, timely, and workmanlike manner that it deems reasonable to address
Year 2000 issues with respect to the software licensed to the Company under the
computer and data processing services agreements. In connection with its
participation in Columbia/HCA's Year 2000 project, the Company has made and will
continue to make certain expenditures related to software systems and
applications not obtained from Columbia/HCA and non-information technology
systems (e.g., vendor products, medical equipment and other related equipment
with embedded chips) to ensure that they are Year 2000 ready.
Pursuant to the computer and data processing services agreement, the
Company relies upon Columbia/HCA to support virtually all of its computer and
information technology services. Columbia/HCA and the Company also are
continuing an ongoing program to inspect medical equipment at the Company
facilities for Year 2000 readiness. The Company is dependent upon Columbia/HCA
in substantially all respects for the Year 2000 readiness of its information
technology and non-information technology systems and for contingency planning
in respect of Year 2000-related risks. Any failure by Columbia/HCA to adequately
address such matters could have a material adverse effect on the business,
financial condition, results of operations or prospects of the
-19-
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Company.
Columbia/HCA is utilizing both internal and external resources to manage
and implement its Year 2000 program. With the assistance of external resources,
Columbia/HCA has undertaken development of contingency plans in the event that
its Year 2000 efforts, or the Year 2000 efforts of third-parties upon which
Columbia/HCA and the Company rely, are not accurately or timely completed. The
Company management consults regularly with Columbia/HCA personnel for
development of such contingency plans. Columbia/HCA has developed a contingency
planning methodology and will implement contingency plans throughout 1999.
With respect to the information technology ("IT") systems portions of the
Columbia/HCA Year 2000 project, which address the inventory, assessment,
remediation, testing and implementation of internally developed software,
Columbia/HCA has identified various software applications that are being
addressed on separate time lines. Columbia/HCA has begun remediating these
software applications and is testing the software applications where remediation
has been completed. Columbia/HCA has also completed the assessment of mission
critical third party software (i.e., that software which is essential for day-
to-day operations) and has developed testing and implementation plans with
separate time lines. Columbia/HCA has completed and placed into production 95%
of software applications and anticipates completing, in all material respects,
remediation, testing and implementation for internally developed and mission
critical third party software by June 30, 1999. Remediation, testing and
implementation of various software applications will be complete in the fourth
quarter of 1999. These exceptions to the June 1999 IT systems goals should not
have a material effect on Columbia/HCA's readiness and accordingly the
Company's. The IT systems portion of the Columbia/HCA Year 2000 project is
currently on schedule in all material respects.
With respect to the IT infrastructure portion of the Columbia/HCA Year
2000 project, Columbia/HCA has undertaken a program to inventory, assess and
correct, replace or otherwise address impacted, vendor-supplied products
(hardware, systems software, business software, and telecommunication
equipment). Columbia/HCA has implemented a program to contact vendors, analyze
information provided, and to remediate, replace or otherwise address IT products
that pose a material Year 2000 impact. Columbia/HCA anticipates completion, in
all material respects, of the IT infrastructure portion of its program by
September 30, 1999 (revised from an expected completion date of June 30, 1999).
With respect to such revised date, the IT infrastructure portion of the
Columbia/HCA Year 2000 project is currently on schedule in all material
respects.
Columbia/HCA presently believes that with modifications to existing
software or the installation of upgraded software under the IT infrastructure
portion, the Year 2000 will not pose material operational problems for the its
computer systems. However, if such modifications or upgrades are not
accomplished in a timely manner, Year 2000 related failures may present a
material adverse impact on the operations of the Company.
With respect to the non-IT infrastructure portion of Columbia/HCA's Year
2000 project, the Columbia/HCA has undertaken a program to inventory, assess and
correct, replace or otherwise address impacted vendor products, medical
equipment and other related equipment with embedded chips. Columbia/HCA has
implemented a program to contact vendors, analyze information provided, and to
remediate, replace or otherwise address devices or equipment that pose a
material Year 2000 impact. Columbia/HCA anticipates completion, in all material
respects, of the non-IT infrastructure portion of its program by September 30,
1999 (revised from an expected completion date of June 30, 1999). With respect
to such revised date, the non-IT infrastructure portion of Columbia/HCA Year
2000 project is currently on schedule in all material respects.
Columbia/HCA is prioritizing its non-IT infrastructure efforts by
focusing on equipment and medical devices that will have a direct impact on
patient care. Columbia/HCA is directing substantial efforts to repair, replace,
upgrade or otherwise address this equipment and these medical devices in order
to minimize risk to patient safety and health. Columbia/HCA is relying on
information that is being provided to it by equipment and medical device
manufacturers regarding the Year 2000 status of their products. While
Columbia/HCA is attempting to evaluate information provided by its previous and
current vendors, there can be no assurance that in all instances accurate
information is being provided. Columbia/HCA also cannot in all instances
guarantee that the repair, replacement or upgrade of all non-IT infrastructure
systems will occur on a timely basis or that such repairs, replacements or
upgrades will avoid all Year 2000 problems.
Columbia/HCA has initiated communications with the Company's major third
party payers and intermediaries, including government payers and intermediaries.
The Company relies on these entities for accurate and timely reimbursement of
claims, often through the use of electronic data interfaces. Columbia/HCA has
not received assurances that these interfaces will be timely converted. Testing
with payers and intermediaries will not be completed by June 30, 1999 because
the payers and intermediaries are not ready to test with Columbia/HCA systems.
Failure of these third party systems could have a material adverse affect on the
Company's cash flow and results of operations.
Columbia/HCA also has initiated communications with the Company's mission
critical suppliers and vendors (i.e., those suppliers and vendors whose products
and services are essential for day-to-day operations) to verify their ability to
continue to deliver goods and services through the Year 2000. Columbia/HCA has
not received assurances from all mission critical suppliers and vendors that
they will be able to continue to deliver goods and services through the Year
2000, but Columbia/HCA is continuing its efforts to obtain such assurances.
Failure of these third parties could have a material impact on
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<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
operations and/or the ability to provide health care services.
With the assistance of external resources, Columbia/HCA has undertaken
the development of contingency plans in the event that its Year 2000 efforts, or
the efforts of third parties upon which the Company relies, are not accurately
or timely completed. Columbia/HCA has developed a contingency planning
methodology and will implement contingency plans throughout 1999.
While Columbia/HCA is developing contingency plans to address possible
failure scenarios, the Company recognizes that there are "worst case" scenarios
which may develop and are largely outside Columbia/HCA's control. The Company
recognizes the risks associated with extended infrastructure (power, water,
telecommunications) failure, the interruption of insurance payments to the
Company and the failure of equipment or software that could impact patient
safety or health despite the assurances of third parties. Columbia/HCA is
addressing these and other failure scenarios in its contingency planning effort
and is engaging third parties in discussions regarding how to manage common
failure scenarios, but the Company cannot currently estimate the likelihood or
the potential cost of such failures. Currently, the Company does not believe
that any reasonably likely worst case scenario will have a material impact on
the Company's revenues or operations. Those reasonably likely worst case
scenarios include continued expenditures for remediation, continued expenditures
for replacement or upgrade of equipment, continued efforts regarding contingency
planning, increased staffing for the periods immediately preceding and after
January 1, 2000, and possible payment delays from the Company's payers.
The Year 2000 project costs incurred by Columbia/HCA will have an impact
on the computer and data processing services agreement with the Company. The
Company is not currently able to reasonably estimate the ultimate cost to be
incurred by it for the assessment, remediation, upgrade, replacement and testing
of its impact non-information technology systems. The majority of the costs
(except the cost of new equipment) related to the Year 2000 project will be
expensed as incurred and are expected to be funded through operating cash flows.
The estimated completion dates for the Year 2000 modifications are based
on Columbia/HCA's management's best estimates, which were derived utilizing
numerous assumptions of future events, including the continued availability of
certain resources, third party modification plans and other factors. However,
there can be no guarantees that these estimates will be achieved and actual
results could differ materially from those anticipated. Specific factors that
might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area and the ability to
locate and correct all relevant computer codes and all medical equipment.
HEALTH CARE REFORM
In recent years, an increasing number of legislative proposals have been
introduced or proposed to Congress and in some state legislatures that would
significantly affect health care systems in the Company's markets. The cost of
certain proposals would be funded, in significant part, by reduction in payments
by government programs, including Medicare and Medicaid, to health care
providers (similar to the reductions incurred as part of the Balanced Budget Act
as previously discussed). While the Company is unable to predict which, if any,
proposals for health care reform will be adopted, there can be no assurance that
proposals adverse to the business of the Company will not be adopted.
-21-
<PAGE>
Part II: Other Information
Item 5: Other Information.
(a) Operating Results Summary for 1998
The following is a summary of historical results from operations for
each period presented (dollars in millions, except per share amounts and
ratios):
<TABLE>
<CAPTION>
For the year
For the quarters ending ended
------------------------------------------------------------- --------------
March 31, June 30, September 30, December 31, December 31,
1998 1998 1998 1998 1998
----------- ------------ --------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues.................................. $ 414.0 $ 399.8 $ 389.6 $ 385.3 $ 1,588.7
Salaries and benefits..................... 178.1 174.3 170.2 177.9 700.5
Supplies.................................. 64.0 59.0 60.0 58.6 241.6
Other operating expenses.................. 87.0 91.9 86.2 94.1 359.2
Provision for doubtful accounts........... 36.9 35.7 31.2 34.6 138.4
Depreciation and amortization............. 26.2 26.6 27.5 29.3 109.6
Interest expense allocated from
Columbia/HCA............................ 16.1 17.3 17.0 18.5 68.9
Management fees allocated from
Columbia/HCA............................ 7.6 7.4 7.2 7.1 29.3
Impairment of long-lived assets........... -- -- 19.3 35.8 55.1
---------- ---------- ---------- ---------- ----------
415.9 412.2 418.6 455.9 1,702.6
---------- ---------- ---------- ---------- ----------
Loss from continuing operations
before minority interests and
income tax benefit...................... (1.9) (12.4) (29.0) (70.6) (113.9)
Minority interests in earnings of
consolidated entities................... (4.0) (2.5) (1.9) (2.6) (11.0)
---------- ---------- ---------- ---------- ----------
Loss from continuing operations
before income tax benefit............... (5.9) (14.9) (30.9) (73.2) (124.9)
Income tax benefit........................ 1.8 4.4 10.1 23.1 39.4
---------- ---------- ---------- ---------- ----------
Loss from continuing operations........... $ (4.1) $ (10.5) $ (20.8) $ (50.1) $ (85.5)
========== ========== ========== ========== ==========
Loss per common share from
continuing operations................... $ (0.14) $ (0.35) $ (0.70) $ (1.68) $ (2.86)
EBITDA (a)................................ $ 48.0 $ 38.9 $ 42.0 $ 20.1 $ 149.0
Number of hospitals at end of period...... 39 39 39 39 39
Licensed beds at end of period............ 5,928 5,907 5,902 5,902 5,902
Available beds at end of period........... 5,242 5,192 5,202 5,199 5,199
Admissions................................ 45,479 41,822 40,954 41,904 170,159
Adjusted admissions....................... 72.498 69,307 68,456 69,526 277,712
Patient days.............................. 229,410 202,705 195,869 198,209 826,193
Adjusted patient days..................... 365,702 334,611 327,400 328,861 1,348,409
Average length of stay.................... 5.0 4.9 4.8 4.7 4.9
Average daily census...................... 2,549 2,252 2,176 2,202 2,295
Occupancy rate............................ 48.6% 43.4% 41.8% 42.4% 44.1%
Net revenue per adjusted patient day...... $ 1,132 $ 1,195 $ 1,190 $ 1,172 $ 1,178
Gross inpatient revenue................... $ 564.9 $ 506.2 $ 487.1 $ 502.0 $ 2,060.2
Gross outpatient revenue.................. $ 314.8 $ 329.4 $ 327.1 $ 330.9 $ 1,302.2
Gross outpatient revenue percentage....... 35.8% 39.4% 40.2% 39.7% 38.7%
Net inpatient revenue..................... $ 224.5 $ 195.0 $ 182.8 $ 185.8 $ 788.1
Net outpatient revenue.................... $ 183.3 $ 191.7 $ 191.3 $ 189.7 $ 756.0
Net outpatient revenue percentage......... 44.9% 49.6% 51.1% 50.5% 49.0%
</TABLE>
(a) EBITDA is defined as income from continuing operations before depreciation
and amortization, interest expense, management fees, impairment of long-
lived assets, minority interests in earnings of consolidated entities and
income tax benefit. EBITDA is commonly used as an analytical indicator
within the health care industry, and also serves as a measure of leverage
capacity and debt service ability. EBITDA should not be considered as a
measure of financial performance under generally accepted accounting
principles, and the items excluded from EBITDA are significant components
in understanding and assessing financial performance. EBITDA should not be
considered in isolation or as an alternative to net income, cash flows
generated by operating, investing or financing activities or other
financial statement data presented in the combined financial statements as
an indicator of financial performance or liquidity. Because EBITDA is not a
measurement determined in accordance with generally accepted accounting
principles and is thus susceptible to varying calculations, EBITDA as
presented may not be comparable to other similarly titled measures of other
companies.
-22-
<PAGE>
Part II: Other Information
(Continued)
Item 5: Other Information (Continued)
(b) Pro Forma Operating Results Summary for 1998
The following is a summary of pro forma results from continuing
operations for each period presented. The pro forma operating results from
continuing operations reflect the following adjustments at the beginning of
1998:
(1) To reflect the following completed divestiture and cessation of operations
and planned divestitures in 1999:
(a) elimination of the results of operations of one acute care hospital
which was sold during the first quarter of 1999 (the proceeds of such
sale were retained by Columbia/HCA)
(b) elimination of the results of operations of eight acute care hospitals
and one psychiatric hospital for which the Company's management
believes dispositions over the next twelve months are probable; and
(c) elimination of the results of operations of one acute care hospital
which the Company ceased to operate on April 1, 1999.
(2) To reflect the long term lease payment of $16.0 million per year and
elimination of operations of two acute care hospitals and three ambulatory
surgery centers in Kansas City, Missouri in January 1999.
(3) To adjust the estimated, incremental general and administrative costs that
would have been incurred if the Company had managed comparable general and
administrative functions and to eliminate the management fee allocated from
Columbia/HCA.
(4) To adjust historical retirement plan expenses recorded as a component of
salaries and wages and record the estimated annual Triad Hospitals, Inc.
Retirement Savings Plan (the "ESOP") expense. The Company's ESOP will be
established in connection with the Spin-off and the ESOP will purchase
newly issued shares of the Company's common stock equal to 9.0% of the
outstanding shares of the Company. The ESOP shares will be released from a
suspense account and allocated to the Company's participating employees
over a 10-year period. The non-cash ESOP expense will be recognized as the
shares are released and allocated to the participants and will be based
upon the fair value of the shares released.
(5) To adjust interest expense to eliminate of all intercompany amounts payable
to Columbia/HCA and the assumption of certain indebtedness from
Columbia/HCA in the aggregate amount of approximately $675.0 million at an
assumed average interest rate of 9.83% amortization estimated loan issuance
costs.
(6) To adjust provision for income taxes for the estimated impact of the pro
forma adjustments.
(7) Pro forma income (loss) per share was computed using the 29.9 million
shares issued to the stockholders of Columbia/HCA on the date of the Spin-
off.
-23-
<PAGE>
Part II: Other Information
(Continued)
Pro Forma Operating Results Summary (continued)
<TABLE>
<CAPTION>
For the year
For the quarters ending ending
--------------------------------------------------------- ---------------
March 31, June 30, September 30, December 31, December 31,
1998 1998 1998 1998 1998
----------- ---------- --------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues................................. $ 274.4 $ 269.3 $ 267.8 $ 266.7 $ 1,078.2
Salaries and benefits.................... 109.7 109.9 107.5 115.6 442.7
Supplies................................. 39.6 37.3 40.2 39.9 157.0
Other operating expenses................. 58.6 62.9 58.6 65.6 245.7
Provision for doubtful accounts.......... 25.0 23.9 23.4 24.1 96.4
Depreciation and amortization............ 19.7 19.8 20.0 22.6 82.1
Interest expense......................... 17.4 17.4 17.4 17.4 69.6
ESOP expense............................. 1.1 1.1 1.1 1.1 4.4
----------- ---------- ------------ ----------- -----------
271.1 272.3 268.2 286.3 1,097.9
----------- ---------- ------------ ----------- -----------
Income from continuing operations
before minority interests and
income tax benefit..................... 3.3 (3.0) (0.4) (19.6) (19.7)
Minority interests in earnings of
consolidated entities.................. (3.6) (2.2) (1.8) (2.5) (10.1)
----------- ---------- ------------ ----------- -----------
Income (loss) from continuing
operations before income tax
benefit................................ (0.3) (5.2) (2.2) (22.1) (29.8)
(Provision) benefit income taxes......... (0.6) 1.3 0.1 8.0 8.8
----------- ---------- ------------ ----------- -----------
Income (loss) from continuing
operations............................. $ (0.9) $ (3.9) $ (2.1) $ (14.1) $ (21.0)
=========== ========== ============ =========== ===========
Loss per common share from
continuing operations.................. $ (0.03) $ (0.13) $ (0.07) $ (0.47) $ (0.70)
Pro forma EBITDA (a)..................... $ 41.5 $ 35.3 $ 38.1 $ 21.5 $ 136.4
Number of hospitals...................... 29 29 29 29 29
Licensed beds at end of period........... 3,527 3,511 3,506 3,506 3,506
Available beds at end of period.......... 2,906 2,856 2,866 2,863 2,863
Admissions............................... 30,026 27,807 27,666 28,595 114,094
Adjusted admissions...................... 49,157 48,462 48,509 49,410 195,538
Patient days............................. 144,464 127,807 123,436 127,587 523,294
Adjusted patient days.................... 236,510 222,740 216,429 220,463 896,142
Average length of stay................... 4.8 4.6 4.5 4.5 4.6
Average daily census..................... 1,605 1,420 1,372 1,418 1,454
Occupancy rate........................... 55.2% 49.7% 47.9% 49.5% 50.8%
Net revenue per adjusted patient day..... $ 1,160 $ 1,209 $ 1,237 $ 1,210 $ 1,203
Gross inpatient revenue.................. $ 333.2 $ 301.3 $ 296.8 $ 313.9 $ 1,245.2
Gross outpatient revenue................. $ 212.3 $ 223.8 $ 223.6 $ 228.5 $ 888.2
Gross outpatient revenue percentage...... 38.9% 42.6% 43.0% 42.1% 41.6%
Net inpatient revenue.................... $ 131.2 $ 112.7 $ 111.9 $ 119.3 $ 475.1
Net outpatient revenue................... $ 134.2 $ 141.0 $ 139.4 $ 137.8 $ 552.4
Net outpatient revenue percentage........ 50.6% 55.6% 55.5% 53.6% 53.8%
</TABLE>
(a) Pro forma EBITDA is EBITDA, as defined previously, adjusted (i) as if the
Spin-off and the divestitures of certain facilities that the Company
intends to divest or cease to operate during 1999 had occurred at the
beginning of 1998, (ii) as if the long term lease of the Kansas City
facilities in January 1999 had occurred at the beginning of each period,
(iii) to exclude non-cash ESOP expense and (iv) to include the Company's
management's estimated corporate overhead costs of $22.4 million on an
annual basis that are recorded in the Pro Forma Operating Results Summary
to replace the management fees allocated by Columbia/HCA. Pro forma EBITDA
is commonly used as an analytical indicator of leverage capacity and debt
service ability. Pro forma EBITDA should not be considered as a measure of
financial performance under generally accepted accounting principles, and
the items excluded from pro forma EBITDA are significant components in
understanding and assessing financial performance. Pro forma EBITDA should
not be considered in isolation or as an alternative to net income, cash
flows generated by operating, investing or financing activities or other
financial statement data presented in the combined financial statements as
an indicator of financial performance or liquidity. Because pro forma
EBITDA is not a measurement determined in accordance with generally
accepted accounting principles and is thus susceptible to varying
calculations, pro forma EBITDA as presented may not be comparable to other
similarly titled measures of the companies.
-24-
<PAGE>
Part II: Other Information
(Continued)
Item 6: Exhibits and Reports on Form 8-K.
(a) List of Exhibits:
Exhibit Number Description
-------------- -----------
2.1 Distribution Agreement dated May 11, 1999 by and
among Columbia/HCA Healthcare Corporation,
LifePoint Hospitals, Inc. and the Company.
3.1 Certificate of Incorporation of the Company.
3.2 By-Laws of the Company.
4.1 Rights Agreement dated as of May 11, 1999 between
the Company and National City Bank as Rights
Agent.
4.2(a) 11% Senior Subordinated Notes due 2009 Indenture
dated as of May 11, 1999 by and between
Healthtrust, Inc. - The Hospital Company and
Citibank N.A. as Trustee.
4.2(b) Form of Senior Subordinated Note due 2009.
4.3(a) Senior Subordinated Notes due 2009 Purchase
Agreement dated April 30, 1999 by and among
Healthtrust, Inc. - The Hospital Company, Goldman,
Sachs & Co., NationsBanc Montgomery Securities
LLC, Chase Securities Inc., Salomon Smith Barney
Inc., SG Cowen Securities Corporation and the
Purchasers.
4.3(b) Assumption Agreement dated May 11, 1999 by and
between Healthtrust, Inc. - The Hospital Company
and the Company.
4.3(c) Assumption Agreement dated May 11, 1999 by and
between the Company and Triad Hospitals Holdings,
Inc.
4.3(d) Guarantor Assumption Agreement dated May 11, 1999.
4.4(a) Exchange and Registration Rights Agreement dated
May 11, 1999 by and among Healthtrust, Inc. - The
Hospital Company, Goldman, Sachs & Co.,
NationsBanc Montgomery Securities LLC, Chase
Securities Inc., Salomon Smith Barney Inc. and SG
Cowen Securities Corporation.
4.4(b) Assumption Agreement dated May 11, 1999 by and
between Healthtrust, Inc. - The Hospital Company
and the Company.
4.4(c) Assumption Agreement dated May 11, 1999 by and
between the Company and Triad Hospitals Holdings,
Inc.
4.4(d) Guarantor Assumption Agreement dated May 11, 1999.
10.1 Tax Sharing and Indemnification Agreement dated
May 11, 1999 by and among Columbia/HCA Healthcare
Corporation, LifePoint Hospitals, Inc. and the
Company.
10.2 Benefits and Employment Matters Agreement dated
May 11, 1999 by and among Columbia/HCA Healthcare
Corporation, LifePoint Hospitals, Inc. and the
Company.
10.3 Insurance Allocation and Administration Agreement
dated May 11, 1999 by and among
-25-
<PAGE>
Columbia/HCA Healthcare Corporation, LifePoint
Hospitals, Inc. and the Company.
10.4 Transitional Services Agreement dated May 11, 1999
by and between Columbia/HCA Healthcare Corporation
and the Company.
10.5 Computer and Data Processing Services Agreement
dated May 11, 1999 by and between Columbia
Information Systems, Inc. and the Company.
10.6 Agreement to Share Telecommunications Services
dated May 11, 1999 by and between Columbia
Information Systems, Inc. and the Company.
10.7 Year 2000 Professional Services Agreement dated
May 11, 1999 by and between CHCA Management
Services, L.P. and the Company.
10.8 Sub-Lease Agreement dated May 11, 1999 by and
between Med-Point LLC and the Company.
10.9 Sub-Lease Agreement dated May 11, 1999 by and
between Healthtrust, Inc. - The Hospital Company
and the Company.
10.10* Triad Hospitals, Inc. 1999 Long-Term Incentive
Plan.
10.11* Triad Hospitals, Inc. Executive Stock Purchase
Plan.
10.12* Triad Hospitals, Inc. Management Stock Purchase
Plan.
10.13* Triad Hospitals, Inc. Outside Directors Stock and
Incentive Compensation Plan.
10.14 Credit Agreement, dated as of May 11, 1999 among
Healthtrust, Inc. - The Hospital Company and
Certain Subsidiaries from time to time party
thereto, as Borrower, the Several Lenders from
time to time parties thereto, Citicorp USA, Inc.
and The Chase Manhattan Bank as Syndication
Agents, Credit Lyonnais New York Branch and
Societe Generale as Co-Agents, Bank of America
National Trust and Savings Association as
Administrative Agent and NationsBanc Montgomery
Securities, LLC as Lead Arranger and Sole Book
Manager.
10.15 Assumption Agreement dated as of May 11, 1999 by
and between Bank of America National Trust and
Savings Association and the Company.
10.16 Assumption Agreement dated as of May 11, 1999 by
and between Bank of America National Trust and
Savings Association and Triad Hospitals Holdings,
Inc.
27 Financial Data Schedule. (Included in electronic
format only.)
* Compensatory plan or arrangement.
(b) Reports on Form 8-K filed during the quarter ended March 31, 1999:
None
-26-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Triad Hospitals, Inc.
Date: June 11, 1999 By: /s/ Burke W. Whitman
------------------------
Burke W. Whitman
Executive Vice President,
Chief Financial Officer and Treasurer
(Principal Financial Officer)
-27-
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description
-------------- -----------
2.1 Distribution Agreement dated May 11, 1999 by and
among Columbia/HCA Healthcare Corporation,
LifePoint Hospitals, Inc. and the Company.
3.1 Certificate of Incorporation of the Company.
3.2 By-Laws of the Company.
4.1 Rights Agreement dated as of May 11, 1999 between
the Company and National City Bank as Rights
Agent.
4.2(a) 11% Senior Subordinated Notes due 2009 Indenture
dated as of May 11, 1999 by and between
Healthtrust, Inc. - The Hospital Company and
Citibank N.A. as Trustee.
4.2(b) Form of Senior Subordinated Note due 2009.
4.3(a) Senior Subordinated Notes due 2009 Purchase
Agreement dated April 30, 1999 by and among
Healthtrust, Inc. - The Hospital Company, Goldman,
Sachs & Co., NationsBanc Montgomery Securities
LLC, Chase Securities Inc., Salomon Smith Barney
Inc., SG Cowen Securities Corporation and the
Purchasers.
4.3(b) Assumption Agreement dated May 11, 1999 by and
between Healthtrust, Inc. - The Hospital Company
and the Company.
4.3(c) Assumption Agreement dated May 11, 1999 by and
between the Company and Triad Hospitals Holdings,
Inc.
4.3(d) Guarantor Assumption Agreement dated May 11, 1999.
4.4(a) Exchange and Registration Rights Agreement dated
May 11, 1999 by and among Healthtrust, Inc. - The
Hospital Company, Goldman, Sachs & Co.,
NationsBanc Montgomery Securities LLC, Chase
Securities Inc., Salomon Smith Barney Inc. and SG
Cowen Securities Corporation.
4.4(b) Assumption Agreement dated May 11, 1999 by and
between Healthtrust, Inc. - The Hospital Company
and the Company.
4.4(c) Assumption Agreement dated May 11, 1999 by and
between the Company and Triad Hospitals Holdings,
Inc.
4.4(d) Guarantor Assumption Agreement dated May 11, 1999.
10.1 Tax Sharing and Indemnification Agreement dated
May 11, 1999 by and among Columbia/HCA Healthcare
Corporation, LifePoint Hospitals, Inc. and the
Company.
10.2 Benefits and Employment Matters Agreement dated
May 11, 1999 by and among Columbia/HCA Healthcare
Corporation, LifePoint Hospitals, Inc. and the
Company.
10.3 Insurance Allocation and Administration Agreement
dated May 11, 1999 by and among
-28-
<PAGE>
Columbia/HCA Healthcare Corporation, LifePoint
Hospitals, Inc. and the Company.
10.4 Transitional Services Agreement dated May 11, 1999
by and between Columbia/HCA Healthcare Corporation
and the Company.
10.5 Computer and Data Processing Services Agreement
dated May 11, 1999 by and between Columbia
Information Systems, Inc. and the Company.
10.6 Agreement to Share Telecommunications Services
dated May 11, 1999 by and between Columbia
Information Systems, Inc. and the Company.
10.7 Year 2000 Professional Services Agreement dated
May 11, 1999 by and between CHCA Management
Services, L.P. and the Company.
10.8 Sub-Lease Agreement dated May 11, 1999 by and
between Med-Point LLC and the Company.
10.9 Sub-Lease Agreement dated May 11, 1999 by and
between Healthtrust, Inc. - The Hospital Company
and the Company.
10.10* Triad Hospitals, Inc. 1999 Long-Term Incentive
Plan.
10.11* Triad Hospitals, Inc. Executive Stock Purchase
Plan.
10.12* Triad Hospitals, Inc. Management Stock Purchase
Plan.
10.13* Triad Hospitals, Inc. Outside Directors Stock and
Incentive Compensation Plan.
10.14 Credit Agreement, dated as of May 11, 1999 among
Healthtrust, Inc. - The Hospital Company and
Certain Subsidiaries from time to time party
thereto, as Borrower, the Several Lenders from
time to time parties thereto, Citicorp USA, Inc.
and The Chase Manhattan Bank as Syndication
Agents, Credit Lyonnais New York Branch and
Societe Generale as Co-Agents, Bank of America
National Trust and Savings Association as
Administrative Agent and NationsBanc Montgomery
Securities, LLC as Lead Arranger and Sole Book
Manager.
10.15 Assumption Agreement dated as of May 11, 1999 by
and between Bank of America National Trust and
Savings Association and the Company.
10.16 Assumption Agreement dated as of May 11, 1999 by
and between Bank of America National Trust and
Savings Association and Triad Hospitals Holdings,
Inc.
27 Financial Data Schedule. (Included in electronic
format only.)
* Compensatory plan or arrangement.
-29-
<PAGE>
EXHIBIT 2.1
Distribution Agreement
Dated as of May 11, 1999
By and Among
Columbia/HCA Healthcare Corporation,
LifePoint Hospitals, Inc.
and
Triad Hospitals, Inc.
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Article I Definitions........................................................................ 1
Section 1.1. Definitions................................................................... 1
Article II Pre-Distribution Transactions; Certain Covenants................................... 10
Section 2.1. Restructuring Transactions.................................................... 10
Section 2.2. Consents...................................................................... 10
Section 2.3. Transfer and Assignment of Certain Licenses and Permits....................... 11
Section 2.4. Transfer and Assignment of Certain Business Agreements........................ 11
Section 2.5. Transfers Not Effected Prior to the Distribution Date; Transfers Deemed
Effective as of the Distribution Date......................................... 12
Section 2.6. Securities Matters............................................................ 13
Section 2.7. Conduct Prior to the Distribution Date........................................ 13
Section 2.8. Resignations.................................................................. 13
Section 2.9. Election of Officers.......................................................... 14
Section 2.10 Other Agreements.............................................................. 14
Article III The Distribution................................................................... 14
Section 3.1. Conditions Precedent to the Distribution...................................... 14
Section 3.2. No Constraint................................................................. 15
Section 3.3. The Distribution.............................................................. 16
Section 3.4. Fractional Shares............................................................. 16
Article IV Covenants.......................................................................... 17
Section 4.1. Further Assurances............................................................ 17
Section 4.2. Certain Intellectual Property Matters......................................... 17
Section 4.3. Assumption and Satisfaction of Liabilities.................................... 18
Section 4.4. Removal of Certain Guarantees................................................. 18
Section 4.5. No Representations or Warranties; Consents.................................... 19
Section 4.6. Limitation on Solicitation of Employees....................................... 21
Section 4.7. LifePoint Registration Statement.............................................. 21
Section 4.8. Triad Registration Statement.................................................. 23
Section 4.9. Certain Real Estate Matters................................................... 24
Section 4.10. Personal Property............................................................. 25
Article V Indemnification.................................................................... 26
Section 5.1. Indemnification by Columbia/HCA............................................... 26
Section 5.2. Indemnification by LifePoint.................................................. 27
Section 5.3. Indemnification by Triad...................................................... 27
Section 5.4. Limitations on Indemnification Obligations.................................... 28
Section 5.5. Procedures Regarding Indemnification.......................................... 29
Section 5.6. Indemnification Payments...................................................... 31
Section 5.7. Cooperation of the Parties with Respect to Actions and Third Party Claims..... 31
Section 5.8. Contribution.................................................................. 32
Section 5.9. Survival of Indemnities; Exclusive Remedy..................................... 33
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Article VI Ancillary Agreements......................................................................... 33
Section 6.1. Generally............................................................................... 33
Article VII Accounting Matters........................................................................... 33
Section 7.1. Settlement of Intercompany Accounts..................................................... 33
Section 7.2. Allocation of Prepaid Items and Reserves................................................ 34
Section 7.3. Financial Accounting Treatment of Assets Transferred and Liabilities Assumed............ 34
Section 7.4. Other Accounting Matters................................................................ 35
Article VIII Indemnification and Other Matters Relating To Government Programs............................ 35
Section 8.1. Indemnification and Other Matters Relating to Pre-Distribution Period Cost Reports...... 35
Section 8.2. Matters Relating to Post-Distribution Period Cost Reports............................... 38
Section 8.3. Cooperation on Reimbursement Matters.................................................... 38
Section 8.4. Limitation.............................................................................. 39
Article IX Corporate Records and Information............................................................ 39
Section 9.1. Provision, Transfer and Delivery of Applicable Corporate Records........................ 39
Section 9.2. Access to Information................................................................... 40
Section 9.3. Confidentiality......................................................................... 40
Section 9.4. Litigation Cooperation.................................................................. 41
Section 9.5. Retention of Records.................................................................... 42
Section 9.6. Privileged Matters...................................................................... 42
Section 9.7. Certain Matters......................................................................... 44
Article X Interest On Payments......................................................................... 45
Section 10.1. Interest on Payments.................................................................... 45
Article XI Miscellaneous................................................................................ 45
Section 11.1. Allocation of Costs and Expenses........................................................ 45
Section 11.2. Termination; Amendment.................................................................. 46
Section 11.3. Disputes................................................................................ 46
Section 11.4. Consent to Jurisdiction................................................................. 47
Section 11.5. Waiver of Jury Trial.................................................................... 47
Section 11.6. Notices................................................................................. 48
Section 11.7. Entire Agreement........................................................................ 49
Section 11.8. Assignment.............................................................................. 50
Section 11.9. Survival of Agreements and Covenants.................................................... 50
Section 11.10. No Third Party Beneficiaries............................................................ 50
Section 11.11. Waiver.................................................................................. 50
Section 11.12. Severability............................................................................ 50
Section 11.13. Governing Law........................................................................... 50
Section 11.14. Counterparts............................................................................ 51
Section 11.15. Headings................................................................................ 51
</TABLE>
-ii-
<PAGE>
Distribution Agreement
Distribution Agreement (this "Agreement") dated as of May 11, 1999 by
and among Columbia/HCA Healthcare Corporation, a Delaware corporation (together
with its successors and permitted assigns, "Columbia/HCA"), LifePoint Hospitals,
Inc., a Delaware corporation (together with its successors and permitted
assigns, "LifePoint"), and Triad Hospitals, Inc., a Delaware corporation
(together with its successors and permitted assigns, "Triad").
W i t n e s s e t h:
--- - - - - - - - -
Whereas, the Board of Directors of Columbia/HCA has determined that it
is in the best interests of Columbia/HCA and its stockholders (i) to separate
certain of the businesses of Columbia/HCA and its Subsidiaries from the other
businesses conducted by Columbia/HCA and its Subsidiaries by transferring
certain businesses to each of LifePoint and Triad, (ii) to distribute on a pro
rata basis to the holders of Columbia/HCA Common Stock (as hereinafter defined)
all of the outstanding shares of LifePoint Common Stock (as hereinafter defined)
and Triad Common Stock (as hereinafter defined) owned by Columbia/HCA (which, as
of the Distribution Date (as hereinafter defined), will constitute 100% of the
issued and outstanding shares of LifePoint Common Stock and Triad Common Stock),
and (iii) to effect the other transactions contemplated by this Agreement; and
Whereas, the parties have determined that it is necessary and
desirable to set forth in this Agreement the principal corporate transactions
required to effect the Distribution (as hereinafter defined) and to set forth
other agreements that will govern certain other matters following such
Distribution;
Now, Therefore, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, the parties hereto hereby agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used herein, the following terms have
-----------
the following meanings:
"Action" means any action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority or arbitration tribunal,
whether at law or in equity.
"Affiliate" means, with respect to a specified person, any person that
directly or indirectly controls, is controlled by or is under common control
with the
-1-
<PAGE>
specified person. A person shall be deemed to control another person if such
first person has the power to direct or cause the direction of the management
and policies of such other person, whether through ownership of voting
securities, by contract or otherwise.
"Ancillary Agreements" means all of the agreements identified on
Exhibit A hereto.
- ---------
"Assets" means all properties, rights, contracts, leases and claims,
of every kind and description, wherever located, whether tangible or intangible,
and whether real, personal or mixed.
"Benefits Agreement" means the Benefits and Employment Matters
Agreement by and among Columbia/HCA, LifePoint and Triad, entered into on or
before the Distribution Date, as amended from time to time.
"Books and Records" means all books, records, manuals, agreements and
other materials (in any form or medium), including, without limitation, all
mortgages, licenses, indentures, contracts, financial data, customer lists,
marketing materials and studies, advertising materials, price lists,
correspondence, distribution lists, supplier lists, production data, sales and
promotional materials and records, purchasing materials and records, personnel
records, manufacturing and quality control records and procedures, blue prints,
research and development files, records, data and laboratory books, account
records, sales order files, litigation files, computer files, microfiche, tape
recordings, photographs, patient and medical records, and Medicare cost report
files and workpapers.
"Code" means the Internal Revenue Code of 1986, as amended.
"Columbia/HCA Assets" means the Assets of Columbia/HCA and its
Subsidiaries, after giving effect to the Restructuring Transactions and the
Distribution. Any positive recovery which results from resolution of a
proceeding or claim which is an Indemnified Matter shall be deemed to be a
Columbia/HCA Asset.
"Columbia/HCA Common Stock" means the outstanding shares of common
stock, $0.01 par value per share, and nonvoting common stock, $0.01 par value
per share, of Columbia/HCA.
"Columbia/HCA Group" means Columbia/HCA and its Subsidiaries, after
giving effect to the Restructuring Transactions and the Distribution.
"Columbia/HCA Group Business" means the business now or formerly
conducted by Columbia/HCA and its present and former Subsidiaries, but excluding
(i) the LifePoint Group Business and (ii) the Triad Group Business.
"Columbia/HCA Group Records" is defined in Section 9.1(a) below.
--------------
"Columbia/HCA Indemnitees" means (i) Columbia/HCA and, after giving
effect to the Restructuring Transactions and the Distribution, each of its
Affiliates, and (ii) each of the directors, officers, employees and agents of
the entities described in the
-2-
<PAGE>
immediately preceding clause (i) and each of the heirs, executors, successors
and assigns of any of such directors, officers, employees and agents.
"Columbia/HCA Liabilities" means (i) Liabilities, whether arising
before, on or after the Distribution Date, incurred in connection with the
conduct or operation of the Columbia/HCA Group Business, or ownership or use of
the Columbia/HCA Assets; (ii) Liabilities arising from any claim against
LifePoint, Triad, or any of their Affiliates, which claim is based upon facts
and circumstances occurring prior to the Distribution Date and is covered by an
insurance policy maintained by Columbia/HCA and listed on Exhibit H hereto,
---------
without regard to deductible amounts, coinsurance amounts or policy limits, and
(iii) Liabilities arising from any worker's compensation claim against
LifePoint, Triad, or any of their Affiliates if the injury or condition giving
rise to the claim was incurred on or before the Distribution Date.
"Commission" means the Securities and Exchange Commission.
"Compliance Agreement" means an agreement setting forth the agreement
of the party executing such agreement to comply with applicable Laws and to take
specified actions intended to permit such compliance to be monitored.
"Consents" is defined in Section 2.2 below.
-----------
"Conveyancing and Assumption Instruments" shall mean, collectively,
the various agreements, instruments and other documents heretofore entered into
and to be entered into to effect the transfer of Assets and the assumption of
Liabilities in the manner contemplated by this Agreement, or otherwise arising
out of or relating to the transactions contemplated by this Agreement, which
shall be in such form as the parties agree.
"Cost Reports" is defined in Section 8.1(a) below.
--------------
"Disputes" is defined in Section 11.3(a) below.
---------------
"Distribution" means the LifePoint Distribution and the Triad
Distribution, collectively.
"Distribution Agent" means National City Bank, in its capacity as
distribution agent.
"Distribution Date" means the date on which the Distribution shall be
effective, as determined by the Board of Directors of Columbia/HCA.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Hospital" is defined in Section 5.1(d) below.
--------------
-3-
<PAGE>
"Exclusion Order" is defined in Section 5.1(d) below.
--------------
"Facilities" is defined in Section 8.1 below.
-----------
"Funded Debt" means indebtedness for money borrowed.
"Government Investigations" is defined in Section 5.1 below.
-----------
"Governmental Authority" means any federal, state, local, foreign or
international government, agency, bureau, board, commission, court, department,
official, or other regulatory, administrative or governmental authority.
"Group" means any of the Columbia/HCA Group, the LifePoint Group or
the Triad Group, as the context requires.
"HCFA" means the United States Health Care Financing Administration.
"Indemnified Matters" is defined in Section 5.1 below.
-----------
"Indemnifying Party" is defined in Section 5.4(a) below.
--------------
"Indemnitee" is defined in Section 5.4(a) below.
--------------
"Information Statement" means the information statement to be sent in
connection with the Distribution to holders of record of Columbia/HCA Common
Stock at the close of business on the Record Date.
"Insurance Allocation and Administration Agreement" means the
Insurance Allocation and Administration Agreement by and among Columbia/HCA,
LifePoint and Triad, entered into on or before the Distribution Date, as amended
from time to time.
"Insurance Proceeds" means, with respect to any insured party, those
monies, net of any applicable premium adjustment, retrospectively-rated premium,
deductible, retention or cost of reserve paid or held by or for the benefit of
such insured party, which are either: (i) received by an insured party from an
insurance carrier or (ii) paid by an insurance carrier on behalf of an insured
party.
"IRS" means the Internal Revenue Service.
"Law" means all laws, statutes and ordinances and all regulations,
rules and other pronouncements of Governmental Authorities having the effect of
law of the United States, any foreign country or any foreign or domestic state,
province, commonwealth, city, country, municipality, territory, protectorate,
possession or similar instrumentality or any Governmental Authority thereof.
"Liabilities" means any and all claims, debts, liabilities and
obligations, absolute or contingent, matured or not matured, liquidated or
unliquidated, accrued or
-4-
<PAGE>
unaccrued, known or unknown, whenever arising, including all costs and expenses
relating thereto, and including, without limitation, those debts, liabilities
and obligations arising under this Agreement, under any law, rule, regulation,
action, order, injunction or decree of any governmental entity or under any
award of any arbitrator of any kind, and those arising under any contract,
commitment or undertaking.
"Liens" means any mortgages, pledges, liens, security interests,
easements, rights of way, restrictions, covenants, encumbrances, encroachments,
or charges of any kind.
"LifePoint Assets" means all Assets reflected as Assets of LifePoint
on the LifePoint Balance Sheet and all other Assets that are determined by
Columbia/HCA in its sole discretion to be associated primarily or exclusively
with the LifePoint Group Business.
"LifePoint Balance Sheet" means the most recent consolidated balance
sheet of LifePoint included in the LifePoint Form 10.
"LifePoint By-laws" means the By-laws of LifePoint in the form
attached as Exhibit B hereto.
---------
"LifePoint Certificate" means the certificate of incorporation of
LifePoint in the form attached as Exhibit C hereto.
---------
"LifePoint Common Stock" means the outstanding shares of common stock,
$0.01 par value per share, of LifePoint.
"LifePoint Distribution" means the distribution on the Distribution
Date of all outstanding shares of LifePoint Common Stock owned by Columbia/HCA
to the holders of Columbia/HCA Common Stock at the close of business on the
Record Date.
"LifePoint Form 10" means the registration statement filed on Form 10
pursuant to the Exchange Act (File No. 0-29818), which was declared effective by
the Commission on April 27, 1999, as such registration statement was amended
through the effective date.
"LifePoint Group" means LifePoint and its Subsidiaries, as constituted
upon completion of the Restructuring Transactions.
"LifePoint Group Business" means the business conducted at the
hospitals and other healthcare facilities which constitute the operations of
LifePoint and its Subsidiaries as of the Distribution Date, as described in the
LifePoint Form 10, including the business conducted at such hospitals and other
healthcare facilities prior to the Distribution Date.
"LifePoint Group Records" is defined in Section 9.1(b) below.
--------------
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<PAGE>
"LifePoint Indemnitees" means (i) LifePoint and, after giving effect
to the Restructuring Transactions and the Distribution, each of its Affiliates,
and (ii) each of the directors, officers, employees and agents of the entities
described in the immediately preceding clause (i) and each of the heirs,
executors, successors and assigns of any of such directors, officers, employees
and agents.
"LifePoint Liabilities" means (i) Liabilities of LifePoint or, after
giving effect to the Restructuring Transactions and the Distribution, any of its
Subsidiaries, whether arising before, on or after the Distribution Date,
including all Liabilities incurred in connection with the conduct or operation
of any LifePoint Group Business, the ownership or use of any of the LifePoint
Assets, or the establishment or maintenance of, or contributions to, any
employee benefit plan (as defined in Section 3(3) of ERISA) for the benefit of
persons employed by any LifePoint Group Business, (ii) Liabilities arising in
connection with any transfer or attempted transfer of any Asset to the LifePoint
Group, including, without limitation, Liabilities arising in connection with the
failure to obtain any Consent or to comply with any requirement of Law, and
(iii) all Liabilities reflected as liabilities or obligations on the LifePoint
Balance Sheet; provided, however, that the following Liabilities are not
LifePoint Liabilities: (1) Liabilities arising from any claim based upon facts
and circumstances occurring prior to the Distribution Date and covered by an
insurance policy maintained by Columbia/HCA and listed on Exhibit D hereto,
without regard to deductible amounts, coinsurance amounts or policy limits, (2)
Liabilities arising from any worker's compensation claim if the injury or
condition giving rise to the claim was incurred on or before the Distribution
Date, and (3) Liabilities that are Columbia/HCA Liabilities or Triad
Liabilities.
"LifePoint Option" means options to purchase shares of LifePoint
Common Stock granted to certain officers of Columbia/HCA on or prior to the
Distribution Date.
"LifePoint Option Shares" means the shares of LifePoint Common Stock
issuable upon exercise of the LifePoint Option.
"LifePoint Permitted Exceptions" means (1) Liens for taxes, water,
sewer and other service or use charges and fees, and other State, local or
municipal charges and assessments, not yet due and payable as of the
Distribution Date, (2) Liens for any indebtedness shown on the LifePoint Balance
Sheet and Liens for any contractual or other obligation to be retained by any of
the LifePoint Group following the Distribution Date, (3) standard printed
exceptions customarily set forth in ALTA title reports or title policies as in
use in the jurisdiction in which the real property is located, (4) equity, joint
venture or other similar interests of others identified in Exhibit E in any of
---------
the hospitals and related medical facilities and professional office buildings
set forth on Exhibit E, (5) easements, encroachments, covenants, restrictions,
---------
rights of way, defects, irregularities or encumbrances on title which do not
materially impair the use of such real property for the purpose for which it is
used as of the Distribution Date, (6) zoning and other municipal ordinances
which are not violated in any material respect by existing improvements and the
present use made of the premises, (7) any other Liens or title defects or
irregularities
-6-
<PAGE>
which do not, in the aggregate, materially and adversely affect
the LifePoint Group Business (taken as a whole), and (8) Liens identified on
Exhibit E.
- ---------
"LifePoint Real Property" means the real property set forth on Exhibit
-------
E, relating to the hospitals and related medical facilities and professional
- -
office buildings of the LifePoint Group.
"LifePoint Registration Statement" means a registration statement
under the Securities Act, on such form as may be appropriate thereunder, to
effect the registration of the LifePoint Option Shares and the resale thereof.
"Listing" means the listing of the LifePoint Common Stock and the
Triad Common Stock on NASDAQ.
"Losses" means, with respect to any matter for which a person is
entitled to indemnification pursuant to Article V hereof (including any
Indemnified Matter), any and all losses, liabilities, damages, settlements,
claims, fines, penalties, costs and expenses (including reasonable attorneys'
fees, but not including time spent by employees of such person) actually
incurred by such person arising from such matter, but excluding consequential
damages.
"Marks" is defined in Section 4.2(a) below.
--------------
"Monthly Statement" is defined in Section 8.1(f) below.
--------------
"NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.
"OIG" means the Office of Inspector General.
"Post-Distribution Periods" is defined in Section 8.2(a) below.
--------------
"Pre-Distribution Periods" is defined in Section 8.1(a) below.
--------------
"Privilege" is defined in Section 9.6(a) below.
--------------
"Privileged Information" is defined in Section 9.6(c) below.
--------------
"Reconciling Payment" is defined in Section 8.1(f) below.
--------------
"Record Date" means such date as is designated by Columbia/HCA's Board
of Directors as the record date for determining the stockholders of Columbia/HCA
entitled to receive the Distribution.
"Restructuring Transactions" means (i) the series of transactions, the
form and sequence of which shall be directed by Columbia/HCA in its sole
discretion, undertaken for the purpose of (a) assigning, transferring and
conveying to LifePoint (or to the appropriate member of the LifePoint Group)
the LifePoint Assets, (b) effecting the
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<PAGE>
assumption by LifePoint (or by the appropriate member of the LifePoint Group) of
the LifePoint Liabilities, (c) assigning, transferring and conveying to Triad
(or to the appropriate member of the Triad Group) the Triad Assets, and (d)
effecting the assumption by Triad (or by the appropriate member of the Triad
Group) of the Triad Liabilities, and shall also mean (ii) any transaction
undertaken at the direction or with the consent of Columbia/HCA for the purpose
of confirming the right, title and interest of Columbia/HCA to the Columbia/HCA
Assets and the responsibility of Columbia/HCA for the Columbia/HCA Liabilities.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Social Security Act" means the Social Security Act, as amended.
"Subsidiary" means, with respect to any entity, (i) any corporation in
which such entity, directly or indirectly, owns or controls, at the time of
determination, at least a majority in interest of the outstanding voting stock
(having by the terms thereof voting power under ordinary circumstances to elect
a majority of the directors of such corporation, irrespective of whether or not
stock of any other class or classes of such corporation shall have or might have
voting power by reason of the occurrence of a contingency); or (ii) any non-
corporate entity in which such entity either (a) directly or indirectly, at the
time of determination, has at least a majority ownership interest, or (b) at the
date of determination, is a general partner or an entity performing similar
functions (for example, manager of a limited liability company or a trustee of a
trust).
"Tax" has the meaning set forth in the Tax Agreement.
"Tax Agreement" means the Tax Sharing and Indemnification Agreement by
and among Columbia/HCA, LifePoint and Triad, entered into on or before the
Distribution Date, as amended from time to time.
"Third Party Claim" is defined in Section 5.5(a) below.
--------------
"Triad Assets" means all Assets reflected as Assets of Triad on the
Triad Balance Sheet and all other Assets that are determined by Columbia/HCA in
its sole discretion to be associated primarily or exclusively with the Triad
Group Business.
"Triad Balance Sheet" means the most recent consolidated balance sheet
of Triad included in the Triad Form 10.
"Triad By-laws" means the By-laws of Triad in the form attached as
Exhibit F hereto.
- ---------
"Triad Certificate" means the certificate of incorporation of Triad in
the form attached as Exhibit G hereto.
---------
-8-
<PAGE>
"Triad Common Stock" means the outstanding shares of common stock,
$0.01 par value per share, of Triad.
"Triad Distribution" means the distribution on the Distribution Date
of all outstanding shares of Triad Common Stock owned by Columbia/HCA to the
holders of Columbia/HCA Common Stock at the close of business on the Record
Date.
"Triad Form 10" means the registration statement filed on Form 10
pursuant to the Exchange Act (File No. 0-29816), which was declared effective by
the Commission on April 27, 1999, as such registration statement was amended
through the effective date.
"Triad Group" means Triad and its Subsidiaries, as constituted upon
completion of the Restructuring Transactions.
"Triad Group Business" means the business conducted at the hospitals
and other healthcare facilities which constitute the operations of Triad and its
Subsidiaries as of the Distribution Date, as described in the Triad Form 10,
including the business conducted at such hospitals and other healthcare
facilities prior to the Distribution Date.
"Triad Group Records" is defined in Section 9.1(c) below.
--------------
"Triad Indemnitees" means (i) Triad and, after giving effect to the
Restructuring Transactions and the Distribution, each of its Affiliates, and
(ii) each of the directors, officers, employees and agents of the entities
described in the immediately preceding clause (i) and each of the heirs,
executors, successors and assigns of any of such directors, officers, employees
and agents.
"Triad Liabilities" means (i) Liabilities of Triad or, after giving
effect to the Restructuring Transactions and the Distribution, any of its
Subsidiaries, whether arising before, on or after the Distribution Date,
including all Liabilities incurred in connection with the conduct or operation
of any Triad Group Business, the ownership or use of any of the Triad Assets, or
the establishment or maintenance of, or contributions to, any employee benefit
plan (as defined in Section 3(3) of ERISA) for the benefit of persons employed
by any Triad Group Business, (ii) Liabilities arising in connection with any
transfer or attempted transfer of any Asset to the Triad Group, including,
without limitation, Liabilities arising in connection with the failure to obtain
any Consent or to comply with any requirement of Law, and (iii) all Liabilities
reflected as liabilities or obligations on the Triad Balance Sheet; provided,
however, that the following Liabilities are not Triad Liabilities: (1)
Liabilities arising from any claim based upon facts and circumstances occurring
prior to the Distribution Date and covered by an insurance policy maintained by
Columbia/HCA and listed on Exhibit D hereto, without regard to deductible
---------
amounts, coinsurance amounts or policy limits, (2) Liabilities arising from any
worker's compensation claim if the injury or condition giving rise to the claim
was incurred on or before the Distribution Date, and (3) Liabilities that are
Columbia/HCA Liabilities or LifePoint Liabilities.
-9-
<PAGE>
"Triad Option" means options to purchase shares of Triad Common Stock
granted to certain officers of Columbia/HCA on or prior to the Distribution
Date.
"Triad Option Shares" means the shares of Triad Common Stock issuable
upon exercise of the Triad Option.
"Triad Permitted Exceptions" means (1) Liens for taxes, water, sewer
and other service or use charges and fees, and other State, local or municipal
charges and assessments, not yet due and payable as of the Distribution Date,
(2) Liens for any indebtedness shown on the Triad Balance Sheet and Liens for
any contractual or other obligation to be retained by any of the Triad Group
following the Distribution Date, (3) standard printed exceptions customarily set
forth in ALTA title reports or title policies as in use in the jurisdiction in
which the real property is located, (4) equity, joint venture or other similar
interests of others identified in Exhibit H in any of the hospitals and related
medical facilities and professional office buildings set forth on Exhibit H, (5)
---------
easements, encroachments, covenants, restrictions, rights of way, defects,
irregularities or encumbrances on title which do not materially impair the use
of such real property for the purpose for which it is used as of the
Distribution Date, (6) zoning and other municipal ordinances which are not
violated in any material respect by existing improvements and the present use
made of the premises, (7) any other Liens or title defects or irregularities
which do not, in the aggregate, materially and adversely affect the Triad Group
Business (taken as a whole), and (8) Liens identified on Exhibit H.
"Triad Real Property" means the real property set forth on Exhibit H,
---------
relating to the hospitals and related medical facilities and professional office
buildings of the Triad Group.
"Triad Registration Statement" means a registration statement under
the Securities Act, on such form as may be appropriate thereunder, to effect the
registration of the Triad Option Shares and the resale thereof.
ARTICLE II
PRE-DISTRIBUTION TRANSACTIONS; CERTAIN COVENANTS
Section 2.1. Restructuring Transactions. Each of Columbia/HCA,
--------------------------
LifePoint and Triad shall take all necessary action to cause, effect and
consummate the Restructuring Transactions. In connection with the Restructuring
Transactions, the parties shall execute or cause to be executed by the
appropriate entities the Conveyancing and Assumption Instruments. Any transfers
of capital stock shall be effected by means of delivery of stock certificates
and executed stock powers and notation on the stock record books of the
corporation or other legal entities involved and, to the extent required by
applicable law, by notation on public registries.
Section 2.2. Consents. The parties hereto shall cooperate and shall
--------
use their reasonable efforts to obtain any third-party consents or approvals
that are required to
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<PAGE>
consummate the Restructuring Transactions, the Distribution and the other
transactions contemplated hereby (the "Consents").
Section 2.3. Transfer and Assignment of Certain Licenses and Permits.
-------------------------------------------------------
(a) Licenses and Permits Relating to the LifePoint Group
----------------------------------------------------
Business. On or prior to the Distribution Date, or as soon as reasonably
--------
practicable thereafter, each of Columbia/HCA and Triad shall take all
necessary action to duly and validly transfer, or cause to be duly and
validly transferred, to the appropriate member of the LifePoint Group all
transferable licenses, permits and authorizations issued by any
Governmental Authority, if any, that relate primarily or exclusively (as
determined by Columbia/HCA in its sole discretion) to the LifePoint Group
Business but which are held in the name of Columbia/HCA or Triad, or any of
their respective Subsidiaries, employees, officers, directors, stockholders
or agents.
(b) Licenses and Permits Relating to the Triad Group
------------------------------------------------
Business. On or prior to the Distribution Date, or as soon as reasonably
--------
practicable thereafter, each of Columbia/HCA and LifePoint shall take all
necessary action to duly and validly transfer, or cause to be duly and
validly transferred, to the appropriate member of the Triad Group all
transferable licenses, permits and authorizations issued by any
Governmental Authority, if any, that relate primarily or exclusively (as
determined by Columbia/HCA in its sole discretion) to the Triad Group
Business but which are held in the name of Columbia/HCA or LifePoint, or
any of their respective Subsidiaries, employees, officers, directors,
stockholders or agents.
Section 2.4. Transfer and Assignment of Certain Business Agreements.
------------------------------------------------------
(a) Transfer and Assignment of LifePoint Group Business
---------------------------------------------------
Agreements. On or prior to the Distribution Date, or as soon as reasonably
----------
practicable thereafter, and subject to the limitations set forth in this
Section 2.4, each of Columbia/HCA and Triad shall take all necessary action
-----------
to assign, transfer and convey, or cause to be assigned, transferred and
conveyed, to the appropriate member of the LifePoint Group all of its (or
any of its Subsidiaries') right, title and interest in and to any and all
agreements, if any, that relate primarily or exclusively (as determined by
Columbia/HCA in its sole discretion) to the LifePoint Group Business or any
member of the LifePoint Group.
(b) Transfer and Assignment of Triad Group Business
-----------------------------------------------
Agreements. On or prior to the Distribution Date, or as soon as reasonably
----------
practicable thereafter, and subject to the limitations set forth in this
Section 2.4, each of Columbia/HCA and LifePoint shall take all necessary
-----------
action to assign, transfer and convey, or cause to be assigned, transferred
and conveyed, to the appropriate member of the Triad Group all of its (or
any of its Subsidiaries') right, title and interest in and to any and all
agreements, if any, that relate primarily or
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<PAGE>
exclusively (as determined by Columbia/HCA in its sole discretion) to the
Triad Group Business or any member of the Triad Group.
(c) Joint Agreements. Subject to the provisions of this Section
---------------- -------
2.4, any agreement to which any party hereto (or, after giving effect to
---
the Restructuring Transactions and the Distribution, any of such party's
Subsidiaries) is a party that inures to the benefit of more than one of the
Columbia/HCA Group Business, the LifePoint Group Business and the Triad
Group Business shall be assigned in part, on or prior to the Distribution
Date or as soon as reasonably practicable thereafter, as directed by
Columbia/HCA in its sole discretion with the intention that each Group
shall continue to possess the rights and benefits, and be subject to the
obligations, inuring to its business under such agreement.
(d) Obligations of Assignees. The assignee of any agreement
------------------------
assigned, in whole or in part, pursuant to this Section 2.4 shall assume
-----------
and agree to pay, perform and fully discharge all obligations of the
assignor under such agreement (whether such obligations arose or were
incurred prior to, on or subsequent to the Distribution Date and
irrespective of whether such obligations have been asserted as of the
Distribution Date); provided, however, that each assignor shall promptly
upon request from an assignee reimburse such assignee for any payments made
by such assignee pursuant to an assigned agreement which were due prior to
the Distribution Date, but not timely paid by the assignor. In the case of
a partial assignment under Section 2.4(c) above, such assignee shall assume
--------------
and agree to pay, perform and discharge the related portion of such
obligations as determined in accordance with the terms of the relevant
agreement, where determinable on the face thereof, and otherwise as
directed by Columbia/HCA in its sole discretion in connection with such
partial assignment.
Section 2.5. Transfers Not Effected Prior to the Distribution Date;
------------------------------------------------------
Transfers Deemed Effective as of the Distribution Date. To the extent that any
- ------------------------------------------------------
transfers contemplated by this Article II shall not have been consummated on or
----------
prior to the Distribution Date, each party hereto shall cooperate (and shall
cause each of its Subsidiaries to cooperate) to effect such transfers as
promptly following the Distribution Date as shall be practicable. Nothing herein
shall be deemed to require any party to, or constitute an agreement to, transfer
any Assets or assume any Liabilities which would require the Consent of a third
party which Consent had not been obtained or which otherwise by its terms or by
operation of Law cannot be transferred or assumed. If any such transfer of
Assets or Liabilities has not been consummated, or if an attempted transfer of
any Asset would be ineffective or would adversely affect the rights of any party
hereto so that such party would not receive all rights to such Asset, from and
after the Distribution Date the party required to transfer such Asset shall hold
such Asset in trust for the use and benefit of the party entitled thereto (at
the expense of the party entitled thereto) or retain such Liability for the
account of the party by whom such Liability is to be assumed pursuant hereto, as
the case may be, and take such other action as may be reasonably requested by
the party to whom such Asset is to be transferred, or by whom such Liability is
to be assumed, as the case may be, in order to place such party, insofar as is
reasonably possible, in the same position as would have existed had such
-12-
<PAGE>
Asset or Liability been transferred or assumed as contemplated hereby. As and
when any such Asset or Liability becomes transferable or assumable, such
transfer shall be effected forthwith. As of the Distribution Date, each party
hereto (or, as applicable, such Subsidiary of such party) shall be deemed to
have acquired (or, as applicable, retained) complete and sole beneficial
ownership over all the Assets, together with all rights, powers and privileges
incident thereto, and shall be deemed to have assumed in accordance with the
terms of this Agreement all the Liabilities, and all duties, obligations and
responsibilities incident thereto, which such party (or, after giving effect to
the Restructuring Transactions and the Distribution, any Subsidiary of such
party) is entitled to acquire or required to assume pursuant to the terms of
this Agreement.
Section 2.6. Securities Matters. (a) LifePoint shall cooperate with
------------------
Columbia/HCA and Triad to prepare, and Columbia/HCA shall cause to be
mailed to the holders of Columbia/HCA Common Stock at the close of business
on the Record Date, for receipt by such holders prior to the Distribution
Date, the Information Statement. Columbia/HCA and LifePoint shall cooperate
in preparing and filing with the Commission any registration statements
which it is necessary or advisable to file prior to the Distribution Date
in respect of any employee benefit or other plan involving securities of
LifePoint contemplated by the Benefits Agreement.
(b) Triad shall cooperate with Columbia/HCA and LifePoint to
prepare, and Columbia/HCA shall cause to be mailed to the holders of
Columbia/HCA Common Stock at the close of business on the Record Date, for
receipt by such holders prior to the Distribution Date, the Information
Statement. Columbia/HCA and Triad shall cooperate in preparing and filing
with the Commission any registration statements which it is necessary or
advisable to file prior to the Distribution Date in respect of any employee
benefit or other plan involving securities of Triad contemplated by the
Benefits Agreement.
Section 2.7. Conduct Prior to the Distribution Date. Prior to the
--------------------------------------
Distribution Date, the businesses of the LifePoint Group and the Triad Group
shall be operated for the sole benefit of Columbia/HCA.
Section 2.8. Resignations.
------------
(a) Subject to Section 2.8(d) below, Columbia/HCA shall
--------------
cause all of its employees and all of the employees of its Subsidiaries to
resign, effective as of 11:59 p.m. on the Distribution Date, from all
positions as officers or directors of any Subsidiary of LifePoint in which
they serve, and LifePoint shall cause all of its employees and all of the
employees of its Subsidiaries to resign, effective as of 11:59 p.m. on the
Distribution Date, from all positions as officers or directors of any
Subsidiary of Columbia/HCA in which they serve.
(b) Subject to Section 2.8(d) below, Columbia/HCA shall
--------------
cause all of its employees and all of the employees of its Subsidiaries to
resign, effective as of 11:59 p.m. on the Distribution Date, from all
positions as officers
-13-
<PAGE>
or directors of any Subsidiary of Triad in which they serve, and Triad
shall cause all of its employees and all of the employees of its
Subsidiaries to resign, effective as of 11:59 p.m. on the Distribution
Date, from all positions as officers or directors of any Subsidiary of
Columbia/HCA in which they serve.
(c) Subject to Section 2.8(d) below, LifePoint shall cause all
--------------
of its employees and all of the employees of its Subsidiaries to resign,
effective as of 11:59 p.m. on the Distribution Date, from all positions as
officers or directors of any Subsidiary of Triad in which they serve, and
Triad shall cause all of its employees and all of the employees of its
Subsidiaries to resign, effective as of 11:59 p.m. on the Distribution
Date, from all positions as officers or directors of any Subsidiary of
LifePoint in which they serve.
(d) No person shall be required by any party hereto to resign
from any position or office with another party hereto if such person has
been appointed by the Board of Directors of the relevant entity to hold
such position or office following the Distribution.
Section 2.9. Election of Officers. On or prior to the Distribution
--------------------
Date, each of Columbia/HCA, LifePoint and Triad shall, as applicable, take all
actions necessary and desirable so that, as of the Distribution Date, the
executive officers of LifePoint and Triad will be as set forth in the LifePoint
Form 10 or the Triad Form 10, as the case may be.
Section 2.10. Other Agreements. On or prior to the Distribution Date,
----------------
or (in the case of agreements other than the Ancillary Agreements) as soon as
reasonably practicable thereafter, each of Columbia/HCA, LifePoint and Triad
shall take all necessary action to execute and deliver, or cause to be executed
and delivered, (a) the Ancillary Agreements, and (b) any other agreements in
respect of the Restructuring Transactions and the Distribution as are necessary
or appropriate in connection with the transactions contemplated hereby and
thereby.
ARTICLE III
THE DISTRIBUTION
Section 3.1. Conditions Precedent to the Distribution. The
----------------------------------------
Distribution shall be subject to, in the sole discretion of Columbia/HCA, the
fulfillment or waiver of each of the following conditions:
(a) the Board of Directors of Columbia/HCA shall have
declared the Distribution, established the Record Date and the Distribution
Date and any appropriate procedures in connection with the Distribution to
the extent not provided for herein;
(b) any necessary regulatory approvals shall have been
received;
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<PAGE>
(c) the LifePoint Form 10 and the Triad Form 10 each shall
have become effective under the Exchange Act and no stop order shall have
been entered, and no proceeding for that purpose shall have been initiated
or threatened by the Commission with respect thereto;
(d) all necessary permits, registrations and consents
required under the securities or blue sky laws of states or other political
subdivisions of the United States of America in connection with the
transactions contemplated by this Agreement shall have been received or
become effective;
(e) Columbia/HCA shall have elected or caused the election
of the Board of Directors of LifePoint, as named in the LifePoint Form 10,
and the LifePoint Certificate and the LifePoint By-laws shall be in effect;
(f) Columbia/HCA shall have elected or caused the election
of the Board of Directors of Triad, as named in the Triad Form 10, and the
Triad Certificate and the Triad By-laws shall be in effect;
(g) each of the LifePoint Common Stock and the Triad Common
Stock shall have been approved for listing on NASDAQ, subject to official
notice of issuance;
(h) each of the Ancillary Agreements shall have been
executed and delivered by the parties thereto and shall be in full force
and effect;
(i) Columbia/HCA shall have received a private letter
ruling from the IRS (in form and substance satisfactory to Columbia/HCA)
regarding the federal income tax treatment of the Restructuring
Transactions and the Distribution, and in respect of such other matters as
Columbia/HCA shall have deemed appropriate or desirable;
(j) the Restructuring Transactions shall have been
effected; and
(k) consummation of the Distribution and the other
transactions contemplated hereby shall not be prohibited by Law and no
Governmental Authority of competent jurisdiction shall have enacted,
issued, promulgated or entered, or shall have threatened to enact, issue,
promulgate or enter, any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or
permanent) which materially restricts, prevents or prohibits consummation
of such transactions.
Section 3.2. No Constraint. Notwithstanding the provisions of Section
------------- -------
3.1 above, the fulfillment or waiver of any or all of the conditions precedent
- ---
to the Distribution set forth therein shall not:
(a) create any obligation on the part of Columbia/HCA to
effect the Distribution;
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<PAGE>
(b) in any way limit Columbia/HCA's right and power under
Section 11.2 below to terminate this Agreement and to abandon the
------------
Distribution; or
(c) alter the consequences of any such termination under
Section 11.2 below from those specified therein.
------------
Section 3.3. The Distribution. On or before the Distribution Date,
----------------
subject to satisfaction or waiver of the conditions set forth in this Agreement,
Columbia/HCA shall deliver to the Distribution Agent certificates representing
all of the then outstanding shares of LifePoint Common Stock and Triad Common
Stock owned by Columbia/HCA (which, as of the Distribution Date, will constitute
100% of the issued and outstanding shares of LifePoint Common Stock and Triad
Common Stock), endorsed in blank, and shall instruct the Distribution Agent to
distribute to each holder of record of Columbia/HCA Common Stock at the close of
business on the Record Date certificates representing one share of LifePoint
Common Stock and one share of Triad Common Stock for every nineteen shares of
Columbia/HCA Common Stock so held. LifePoint agrees to provide all certificates
for shares of LifePoint Common Stock that the Distribution Agent shall require
to effect the LifePoint Distribution, and Triad agrees to provide all
certificates for shares of Triad Common Stock that the Distribution Agent shall
require in order to effect the Triad Distribution.
Section 3.4. Fractional Shares. Notwithstanding anything herein to
-----------------
the contrary, no fractional shares of LifePoint Common Stock or Triad Common
Stock shall be issued in connection with the Distribution, and any such
fractional share interests to which a stockholder would otherwise be entitled
will not entitle such stockholder to vote or to any rights of a stockholder of
LifePoint or Triad, as the case may be. In lieu of any such fractional shares,
each stockholder who, but for the provisions of this Section 3.4, would be
-----------
entitled to receive a fractional share of LifePoint Common Stock or Triad Common
Stock pursuant to the LifePoint Distribution or the Triad Distribution, or both,
shall be paid cash, without any interest thereon, as hereinafter provided.
Columbia/HCA shall instruct the Distribution Agent to determine the number of
whole shares and fractional shares of LifePoint Common Stock and Triad Common
Stock allocable to each stockholder, to aggregate all such fractional shares
into whole shares, to sell the whole shares obtained thereby in the open market
at the then prevailing prices on behalf of stockholders who otherwise would be
entitled to receive fractional share interests and to distribute to each such
stockholder his, her or its ratable share of the total proceeds of such sale,
after making appropriate deductions of the amount required for federal income
tax withholding purposes and after deducting any applicable transfer taxes. All
brokers' fees and commissions incurred in connection with such sales shall be
paid by Columbia/HCA. Solely for purposes of computing fractional shares
pursuant to this Section 3.4, the beneficial owner of shares of LifePoint Common
-----------
Stock or Triad Common Stock held of record in the name of a nominee will be
treated as the holder of record of such shares.
-16-
<PAGE>
ARTICLE IV
COVENANTS
Section 4.1. Further Assurances. From and after the Distribution
------------------
Date, each of the parties hereto will execute and deliver, and cause its
Subsidiaries to execute and deliver, such further instruments and documents and
take such other actions as any other party hereto may reasonably request in
order to carry out the transactions contemplated by this Agreement or by any of
the Ancillary Agreements. Without limitation of the foregoing, each of the
parties hereto will take, or cause to be taken, all actions, and do, or cause to
be done, all things, reasonably necessary, proper or advisable under applicable
laws, regulations and agreements or otherwise to consummate and make effective
the transactions contemplated by this Agreement or by any of the Ancillary
Agreements, including, without limitation, executing, and causing its
Subsidiaries to execute, such other instruments and documents as may be
reasonably required to assign, transfer, convey and vest in the proper party
ownership of its respective Assets or to effect the assumption by the proper
party of its respective Liabilities, using its reasonable efforts to obtain any
Consents, and making any filings and applications and taking all such further
reasonable actions as shall be necessary or desirable in order to consummate the
transactions contemplated by this Agreement or by the Ancillary Agreements.
Section 4.2. Certain Intellectual Property Matters.
-------------------------------------
(a) Except as otherwise specifically set forth elsewhere
herein, from and after the Distribution Date, no party hereto, directly or
indirectly, shall use (or permit any of its Subsidiaries to use) any name
or any other trademark, service mark or trade name (collectively, the
"Marks") owned and used by any other party hereto (or, after giving effect
to the Restructuring Transactions and the Distribution, any Subsidiary of
any other party hereto) or any trade name, service mark or trademark likely
to cause confusion with any such Mark, except (i) pursuant to a license
agreement entered into in connection with the transactions contemplated
hereby or (ii) for such Marks or portions thereof which, as used, are
descriptive, generic or are not likely to cause confusion.
(b) From and after the Distribution Date, each party hereto
(and each of their respective Subsidiaries) shall have the right to use
existing brochures, packaging, labeling, containers, linens, supplies,
advertising materials and any similar materials bearing any Mark, which
such party (and any such Subsidiary) does not have to right to use pursuant
to Section 4.2 (a) above, until the earlier of (i) one year after the
-----------
Distribution Date and (ii) the date existing stocks of such material are
exhausted. Each party hereto shall (and shall cause each of its
Subsidiaries to) comply with all applicable laws or regulations in any use
of packaging or labeling containing the Marks.
(c) Each party hereto agrees to use its reasonable efforts
to (and to cause each of its Subsidiaries to) cease using the Marks of any
other party (or, after giving effect to the Restructuring Transactions and
the Distribution, any
-17-
<PAGE>
Subsidiary of any other party hereto) on buildings, cars, trucks and other
fixed assets as soon as possible but in any event within a period not to
exceed one year after the Distribution Date.
(d) From and after the Distribution Date, no party hereto shall
represent or permit to be represented to any third person that it (or any
of its Subsidiaries) has a business affiliation with any other party hereto
(or, after giving effect to the Restructuring Transactions and the
Distribution, any Subsidiary of any other party hereto), except as
expressly permitted by this Section 4.2 or by any of the Ancillary
-----------
Agreements.
Section 4.3. Assumption and Satisfaction of Liabilities. Except as
------------------------------------------
otherwise specifically set forth in any Ancillary Agreement, from and after the
Distribution Date:
(a) Columbia/HCA shall take all necessary action to assume,
pay, perform and discharge, or cause to be assumed, paid, performed and
discharged, all Columbia/HCA Liabilities in accordance with their terms,
when determinable, and otherwise as determined in accordance with the
practice of the parties prior to the Distribution;
(b) LifePoint shall take all necessary action to assume, pay,
perform and discharge, or cause to be assumed, paid, performed and
discharged, all LifePoint Liabilities in accordance with their terms, when
determinable, and otherwise as determined in accordance with the practice
of the parties prior to the Distribution; and
(c) Triad shall take all necessary action to assume, pay,
perform and discharge, or cause to be assumed, paid, performed and
discharged, all Triad Liabilities in accordance with their terms, when
determinable, and otherwise as determined in accordance with the practice
of the parties prior to the Distribution.
Section 4.4. Removal of Certain Guarantees.
-----------------------------
(a) Removal of Columbia/HCA as Guarantor of LifePoint
-------------------------------------------------
Liabilities and Triad Liabilities. Except as otherwise contemplated by the
---------------------------------
Restructuring Transactions or as specified in any Ancillary Agreement or on
Exhibit I hereto, each of Columbia/HCA, LifePoint and Triad shall use its
---------
reasonable efforts to have, on or prior to the Distribution Date, or as
soon as practicable thereafter, Columbia/HCA (and, after giving effect to
the Restructuring Transactions and the Distribution, any Subsidiary of
Columbia/HCA) removed as a guarantor of, or obligor under or for, any
LifePoint Group Liability or Triad Group Liability, as the case may be,
including, without limitation, in respect of any agreement (or part
thereof) assigned to LifePoint or Triad (or, after giving effect to the
Restructuring Transactions and the Distribution, any of their respective
Subsidiaries) pursuant to Section 2.4 above.
-----------
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<PAGE>
(b) Removal of LifePoint as Guarantor of Columbia/HCA
-------------------------------------------------
Liabilities and Triad Liabilities. Except as otherwise contemplated by the
---------------------------------
Restructuring Transactions or as specified in any Ancillary Agreement or on
Exhibit I hereto, each of Columbia/HCA, LifePoint and Triad shall use its
---------
reasonable efforts to have, on or prior to the Distribution Date, or as
soon as practicable thereafter, LifePoint (and, after giving effect to the
Restructuring Transactions and the Distribution, any Subsidiary of
LifePoint) removed as a guarantor of, or obligor under or for, any
Columbia/HCA Group Liability or Triad Group Liability, as the case may be,
including, without limitation, in respect of any agreement (or part
thereof) assigned to Columbia/HCA or Triad (or, after giving effect to the
Restructuring Transactions and the Distribution, any of their respective
Subsidiaries) pursuant to Section 2.4 above.
-----------
(c) Removal of Triad as Guarantor of Columbia/HCA Liabilities
---------------------------------------------------------
and LifePoint Liabilities. Except as otherwise contemplated by the
-------------------------
Restructuring Transactions or as specified in any Ancillary Agreement or on
Exhibit I hereto, each of Columbia/HCA, LifePoint and Triad shall use its
---------
reasonable efforts to have, on or prior to the Distribution Date, or as
soon as practicable thereafter, Triad (and, after giving effect to the
Restructuring Transactions and the Distribution, any Subsidiary of Triad)
removed as a guarantor of, or obligor under or for, any Columbia/HCA Group
Liability or LifePoint Group Liability, as the case may be, including,
without limitation, in respect of any agreement (or part thereof) assigned
to Columbia/HCA or LifePoint (or, after giving effect to the Restructuring
Transactions and the Distribution, any of their respective Subsidiaries)
pursuant to Section 2.4 above.
-----------
(d) Indemnification Relating to Guarantees. If (x) Columbia/HCA,
--------------------------------------
LifePoint or Triad, or any of their respective Subsidiaries, as the case
may be, cannot be removed as a guarantor or obligor as set forth in Section
-------
4.4(a), (b) or (c) above or (y) Liabilities arise from and after the
------ - - -
Distribution Date but before a guarantor or obligor with reference to any
such Liability is removed pursuant to Section 4.4(a), (b) or (c) above,
-------------- - -
then such guarantor or obligor shall be indemnified and held harmless for
all Liabilities incurred by it in its capacity as guarantor or obligor by
(i) Columbia/HCA with respect to any Columbia/HCA Liabilities, (ii)
LifePoint with respect to any LifePoint Liabilities, and (iii) Triad with
respect to any Triad Liabilities.
Section 4.5. No Representations or Warranties; Consents.
------------------------------------------
(a) General. Each of the parties hereto understands and agrees
-------
that no party hereto, or to any other agreement or document contemplated by
this Agreement (including the Ancillary Agreements and Conveyancing and
Assumption Instruments, and any agreements or documents contemplated
thereby), is making any representation or warranty whatsoever, including,
without limitation, any representation or warranty:
-19-
<PAGE>
(i) as to the value or freedom from encumbrance of, or any
other matter concerning, any Assets of such party; or
(ii) as to the legal sufficiency to convey title to any
Asset.
Each of the parties hereto confirms that it is not relying on any
representation or warranty made by any other party hereto or any other
person in connection with its execution and delivery of this Agreement.
(b) Disclaimer of Merchantability or Fitness of Assets. Each
--------------------------------------------------
party hereto understands and agrees that there are no warranties, express
or implied, as to the merchantability or fitness of any of the Assets
either transferred to or retained by the Columbia/HCA Group, the LifePoint
Group or the Triad Group, as the case may be, pursuant to the Restructuring
Transactions and the other terms and provisions of this Agreement, any
Ancillary Agreement, any Conveyancing and Assumption Instrument or any
other agreement or document, and all such Assets which are so transferred
will be transferred on an "as is, where is" basis, and the party to which
any such Assets are transferred hereunder, or which retains Assets
hereunder, shall bear the economic and legal risk that any conveyances of
such Assets shall prove to be insufficient or that the title of such party
or any other member of its respective Group to any such Assets shall be
other than good and marketable and free from encumbrances.
(c) Acknowledgment of Disclosure and Waiver. Each of LifePoint
---------------------------------------
and Triad acknowledges, for itself and on behalf of each of its
Subsidiaries, that:
(i) Columbia/HCA has disclosed, and LifePoint and Triad
have knowledge of, all matters pertaining to the Assets to be conveyed
to the LifePoint Group or the Triad Group pursuant to the
Restructuring Transactions or otherwise pursuant to this Agreement to
the same extent that Columbia/HCA or any of its Affiliates has
knowledge of such matters; and
(ii) such knowledge constitutes notice and disclosure of
such matters.
Each of LifePoint and Triad waives, to the fullest extent permitted by Law,
for itself and for each of its Subsidiaries, any and all claims or causes
of action which any of them may have arising out of such matters or the
failure of any Conveyancing and Assumption Instrument to describe or refer
to, or provide notice of, any such matters.
(d) No Representations or Warranties Regarding Consents. Each of
---------------------------------------------------
the parties hereto understands and agrees that no party hereto, or to any
other agreement or document contemplated by this Agreement (including the
Ancillary Agreements and Conveyancing and Assumption Instruments, and any
-20-
<PAGE>
agreement or document contemplated thereby) is making any representation or
warranty whatsoever that the obtaining of any Consents, the execution and
delivery of any amendatory agreements and the making of any filings or
applications contemplated by this Agreement will satisfy the provisions of
any or all applicable agreements or the requirements of any or all
applicable Laws. Each of the parties hereto further agrees and understands
that the party to which any Assets are transferred as contemplated by the
Restructuring Transactions or this Agreement shall bear the economic and
legal risk that any Consents are not obtained or that any requirements of
Laws are not complied with.
Section 4.6. Limitation on Solicitation of Employees. Each of
---------------------------------------
Columbia/HCA, LifePoint and Triad agrees, for itself and, after giving effect to
the Restructuring Transactions and the Distribution, its Subsidiaries and
Affiliates, that it shall not directly or indirectly, or in connection with any
other person, firm or entity approach, counsel, or induce any employee of any
other party hereto or, after giving effect to the Restructuring Transactions and
the Distribution, any of such other party's Subsidiaries or Affiliates, to leave
his or her employment at any time prior to the second anniversary of the
Distribution Date without the prior written consent of such other party.
Section 4.7. LifePoint Registration Statement.
--------------------------------
(a) Registration. Subject to this Section 4.7, LifePoint
------------ -----------
will cause to be filed within 120 days after the Distribution Date the
LifePoint Registration Statement, and LifePoint agrees to effect no later
than 210 days after the Distribution Date (i) the registration and/or
qualification with, or the approval of, any governmental authority under
the Securities Act and any applicable state securities laws of the
LifePoint Option and the LifePoint Option Shares and the resale thereof and
(ii) the listing of the LifePoint Option Shares on NASDAQ, in each case as
may be required to permit the exercise of the LifePoint Option and the sale
or other disposition of the LifePoint Option Shares. LifePoint may, upon
written notice to Columbia/HCA, defer filing the LifePoint Registration
Statement, and may withhold efforts to cause the LifePoint Registration
Statement to become effective, for a reasonable period of time, but not in
excess of 60 days, if LifePoint has made a good faith determination that
such registration would require the disclosure of material information
which LifePoint has a bona fide business purpose for preserving as
confidential or that LifePoint is unable to comply with SEC requirements.
(b) Effectiveness. LifePoint shall keep effective and
-------------
maintain the LifePoint Registration Statement and any other registration,
qualification or listing of the LifePoint Option Shares required pursuant
to this Section 4.7, and shall from time to time amend or supplement the
-----------
LifePoint Registration Statement and the prospectus used in connection
therewith to the extent necessary in order to comply with the Securities
Act and applicable state securities laws, until the date that (i) the
LifePoint Option has been exercised in its entirety and (ii) the LifePoint
Option Shares either (x) have been sold or (y) may be sold without being
registered under Section 5 of the Securities Act or in reliance upon an
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<PAGE>
exemption therefrom. If, after the LifePoint Registration Statement becomes
effective, LifePoint advises the holders of the LifePoint Option and the
LifePoint Option Shares that LifePoint considers it appropriate for the
LifePoint Registration Statement to be amended, such holders shall suspend
any further exercises of the LifePoint Option and any sales of the
LifePoint Option Shares until LifePoint advises them that the LifePoint
Registration Statement has been amended, provided, that LifePoint shall use
file such amendment and cause it to become effective as expeditiously as
possible under the circumstances and in any event within 60 days of the
date that such notice is given to the holders.
(c) Expenses. All expenses incident to the obligations of
--------
LifePoint under Sections 4.7(a) and 4.7(b) hereof (including, without
-------------- ------
limitation, registration fees, printing or document reproduction expenses,
and fees and expenses of its counsel and accountants) shall be borne by
LifePoint, and all other expenses incident to the disposition by each
holder of the LifePoint Option Shares held by him or her (including,
without limitation, fees and expenses of his or her counsel and all
underwriting discounts, if any, brokerage commissions and similar fees)
shall be borne by such holder.
(d) Information. Columbia/HCA agrees to cause each holder of the
-----------
LifePoint Option to furnish to LifePoint such information as LifePoint may
from time to time reasonably request in connection with the LifePoint
Registration Statement and related prospectus, any amendment or supplement
thereto or any other filings required by this Section 4.7, and, for so long
-----------
as the registration, qualification, approval or listing remains effective,
promptly after the sale or any other disposition by him or her of LifePoint
Option Shares, to give LifePoint written notice of same.
(e) Indemnification under this Section 4.7. LifePoint agrees to
--------------------------------------
indemnify and hold harmless, to the extent permitted by law, the holders of
the LifePoint Option and hold them harmless at all times after the date
hereof from and against and in respect of any and all liabilities, losses,
damages, settlements, claims, costs or expenses, including, without
limitation, attorneys' fees, under the Securities Act, state securities
laws, common law or otherwise, arising out of or due to (A) any untrue
statement or alleged untrue statement of a material fact contained in the
LifePoint Registration Statement or related prospectus relating to the
registration or qualification of the LifePoint Option Shares, or (B) any
omission or alleged omission to state in the LifePoint Registration
Statement or related prospectus a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except insofar as
such liabilities, losses, damages, settlements, claims, costs or expenses
arise out of or are due to any untrue statement of a material fact
contained in, or omission of a material fact from, information furnished in
writing to LifePoint by the holders expressly for use in the LifePoint
Registration Statement or related prospectus. If the offering pursuant to
this Section 4.7 is made through underwriters, LifePoint agrees to enter
-----------
into an underwriting agreement in customary form with such underwriters
-22-
<PAGE>
and to indemnify such underwriters to the same extent as provided above
with respect to the indemnification of the holders. The procedures to be
followed in connection with the rights of indemnification provided in this
Section 4.7(e) are set forth in Article V hereof.
-------------- ---------
Section 4.8. Triad Registration Statement.
----------------------------
(a) Registration. Subject to this Section 4.8, Triad
------------ -----------
will cause to be filed within 120 days after the Distribution Date the
Triad Registration Statement, and Triad agrees to effect no later than 210
days after the Distribution Date (i) the registration and/or qualification
with, or the approval of, any governmental authority under the Securities
Act and any applicable state securities laws of the Triad Option and the
Triad Option Shares and the resale thereof and (ii) the listing of the
Triad Option Shares on NASDAQ, in each case as may be required to permit
the exercise of the Triad Option and the sale or other disposition of the
Triad Option Shares. Triad may, upon written notice to Columbia/HCA, defer
filing the Triad Registration Statement, and may withhold efforts to cause
the Triad Registration Statement to become effective, for a reasonable
period of time, but not in excess of 60 days, if Triad has made a good
faith determination that such registration would require the disclosure of
material information which Triad has a bona fide business purpose for
preserving as confidential or that Triad is unable to comply with SEC
requirements.
(b) Effectiveness. Triad shall keep effective and
-------------
maintain the Triad Registration Statement and any other registration,
qualification or listing of the Triad Option Shares required pursuant to
this Section 4.8, and shall from time to time amend or supplement the Triad
-----------
Registration Statement and the prospectus used in connection therewith to
the extent necessary in order to comply with the Securities Act and
applicable state securities laws, until the date that (i) the Triad Option
has been exercised in its entirety and (ii) the Triad Option Shares either
(x) have been sold or (y) may be sold without being registered under
Section 5 of the Securities Act or in reliance upon an exemption therefrom.
---------
If, after the Triad Registration Statement becomes effective, Triad advises
the holders of the Triad Option and the Triad Option Shares that Triad
considers it appropriate for the Triad Registration Statement to be
amended, such holders shall suspend any further exercises of the Triad
Option and any sales of the Triad Option Shares until Triad advises them
that the Triad Registration Statement has been amended, provided, that
Triad shall use file such amendment and cause it to become effective as
expeditiously as possible under the circumstances and in any event within
60 days of the date that such notice is given to the holders.
(c) Expenses. All expenses incident to the obligations
--------
of Triad under Sections 4.8(a) and 4.8(b) hereof (including, without
-------------- ------
limitation, registration fees, printing or document reproduction expenses,
and fees and expenses of its counsel and accountants) shall be borne by
Triad, and all other expenses incident to the disposition by each holder of
the Triad Option Shares held by him or her (including, without limitation,
fees and expenses of his or her counsel and all
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<PAGE>
underwriting discounts, if any, brokerage commissions and similar fees)
shall be borne by such holder.
(d) Information. Columbia/HCA agrees to cause each holder
-----------
of the Triad Option to furnish to Triad such information as Triad may from
time to time reasonably request in connection with the Triad Registration
Statement and related prospectus, any amendment or supplement thereto or
any other filings required by this Section 4.8, and, for so long as the
-----------
registration, qualification, approval or listing remains effective,
promptly after the sale or any other disposition by him or her of Triad
Option Shares, to give Triad written notice of same.
(e) Indemnification under this Section 4.8. Triad agrees to
--------------------------------------
indemnify and hold harmless, to the extent permitted by law, the holders of
the Triad Option and hold them harmless at all times after the date hereof
from and against and in respect of any and all liabilities, losses,
damages, settlements, claims, costs or expenses, including, without
limitation, attorneys' fees, under the Securities Act, state securities
laws, common law or otherwise, arising out of or due to (A) any untrue
statement or alleged untrue statement of a material fact contained in the
Triad Registration Statement or related prospectus relating to the
registration or qualification of the Triad Option Shares, or (B) any
omission or alleged omission to state in the Triad Registration Statement
or related prospectus a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, except insofar as such
liabilities, losses, damages, settlements, claims, costs or expenses arise
out of or are due to any untrue statement of a material fact contained in,
or omission of a material fact from, information furnished in writing to
Triad by the holders expressly for use in the Triad Registration Statement
or related prospectus. If the offering pursuant to this Section 4.8 is made
-----------
through underwriters, Triad agrees to enter into an underwriting agreement
in customary form with such underwriters and to indemnify such underwriters
to the same extent as provided above with respect to the indemnification of
the holders. The procedures to be followed in connection with the rights of
indemnification provided in this Section 4.8(e) are set forth in Article V
---------
hereof.
Section 4.9. Certain Real Estate Matters
---------------------------
Columbia/HCA shall, to the fullest extent permitted by law,
indemnify and hold harmless each of the LifePoint Indemnitees from and
against any and all Losses which are actually incurred by the LifePoint
Indemnitees within one year after the Distribution Date and which Losses
arise from (i) the failure of the LifePoint Group to have, on the
Distribution Date, good indefeasible fee title to, or a valid leasehold
interest in, as applicable, the LifePoint Real Property free and clear of
any and all Liens on and as of the Distribution Date except LifePoint
Permitted Exceptions, (ii) any matter (not constituting a LifePoint
Permitted Exception) that would be reflected on a current survey of the
LifePoint Real Property as of the Distribution Date, which materially and
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<PAGE>
adversely affects the LifePoint Group Business (taken as a whole), and
(iii) an incorrect legal description of the LifePoint Real Property as of
the Distribution Date that materially and adversely affects the LifePoint
Group Business (taken as a whole). Columbia/HCA shall, to the fullest
extent permitted by law, indemnify and hold harmless each of the Triad
Indemnitees from and against any and all Losses which are actually incurred
by the Triad Indemnitees within one year after the Distribution Date and
which Losses arise from (i) the failure of the Triad Group to have, on the
Distribution Date, good indefeasible fee title to, or a valid leasehold
interest in, as applicable, the Triad Real Property free and clear of any
and all Liens on and as of the Distribution Date except Triad Permitted
Exceptions, (ii) any matter (not constituting a Triad Permitted Exception)
that would be reflected on a current survey of the Triad Real Property as
of the Distribtion Date, which materially and adversely affects the Triad
Group Business (taken as a whole), and (iii) an incorrect legal description
of the Triad Real Property as of the Distribution Date that materially and
adversely affects the Triad Group Business (taken as a whole).
Section 4.10. Personal Property.
------------------
Columbia/HCA shall, to the fullest extent permitted by law,
indemnify and hold harmless each of the LifePoint Indemnitees from and
against any and all Losses which are actually incurred by the LifePoint
Indemnitees within one year after the Distribution Date and which Losses
arise from the failure of Columbia/HCA to transfer, or cause to be
transferred, its right, title and interest to the personal property
reflected on the LifePoint Balance Sheet to LifePoint free and clear of any
and all Liens which secure Funded Debt existing on and as of the
Distribution Date except (i) changes in inventory and accounts receivable,
or other personal property disposed of, in the ordinary course of business,
(ii) as disclosed on the LifePoint Balance Sheet (or in the notes thereto)
and (iii) Liens securing Funded Debt which do not, in the aggregate,
constitute a material adverse change from the financial condition of
LifePoint reflected on the LifePoint Balance Sheet. Columbia/HCA shall, to
the fullest extent permitted by law, indemnify and hold harmless each of
the Triad Indemnitees from and against any and all Losses which are
actually incurred by the Triad Indemnitees within one year after the
Distribution Date and which Losses arise from the failure of Columbia/HCA
to transfer, or cause to be transferred, its right, title and interest to
the personal property reflected on the Triad Balance Sheet to Triad free
and clear of any and all Liens which secure Funded Debt existing on and as
of the Distribution Date except (i) changes in inventory and accounts
receivable, or other personal property disposed of, in the ordinary course
of business, (ii) as disclosed on the Triad Balance Sheet (or in the notes
thereto) and (iii) Liens securing Funded Debt which do not, in the
aggregate, constitute a material adverse change from the financial
condition of Triad reflected on the Triad Balance Sheet.
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<PAGE>
ARTICLE V
INDEMNIFICATION
Section 5.1. Indemnification by Columbia/HCA.
-------------------------------
(a) Except as otherwise specifically set forth in any
provision of this Agreement or of any Ancillary Agreement, Columbia/HCA
shall, to the fullest extent permitted by law, indemnify and hold harmless
each of the LifePoint Indemnitees and the Triad Indemnitees from and
against any and all Losses which are actually incurred by the LifePoint
Indemnitees and the Triad Indemnitees, respectively, and which arise from
(i) the Columbia/HCA Liabilities, (ii) the breach by Columbia/HCA or, after
giving effect to the Restructuring Transactions and the Distribution, any
of its Subsidiaries, of any contractual obligation arising under this
Agreement, any of the Ancillary Agreements, or any of the Conveyancing and
Assumption Instruments, or (iii) the Indemnified Matters; provided,
however, that the indemnification provided for in this Section 5.1(a) shall
-------------
exclude, and Columbia/HCA shall have no responsibility for, Losses arising
out of or relating to acts, practices or omissions engaged in after the
Distribution Date by LifePoint or Triad or any of their respective
Subsidiaries or Affiliates.
(b) For purposes of the indemnification specified in Section
-------
5.1(a) hereof, "Indemnified Matters" means (x) proceedings commenced by the
------
United States Department of Justice and other federal and state
governmental authorities (the "Government Investigations") of certain acts,
practices or omissions alleged to have been engaged in by Columbia/HCA and
its Subsidiaries and Affiliates prior to the Distribution Date with respect
to Medicare, Medicaid, Medi-Cal and Champus patients regarding (i)
allegedly improper coding, including, but not limited to, diagnosis related
group ("DRG") coding (commonly referred to as "upcoding") relating to bills
submitted for medical services, (ii) allegedly improper outpatient
laboratory billing (e.g., unbundling of services, medically unnecessary
tests), (iii) inclusion of allegedly improper items in cost reports
submitted as a basis for reimbursement under Medicare, Medicaid, Medi-Cal
and similar government programs for all cost reports relating to periods
ending on or prior to the Distribution Date (it being understood that the
scope of this clause (iii) includes any stub period from the date of filing
of any such cost report to the Distribution Date), (iv) arrangements with
physicians and other parties that allegedly violate certain federal and
state laws governing referral relationships, including fraud and abuse,
anti-kickback and "Stark" laws, (v) allegedly improper acquisitions of home
health care agencies and allegedly excessive billing for home health care
services, and (vi) other allegedly improper billing and coding practices
with respect to government programs; (y) proceedings commenced and claims
asserted by private parties and described in Columbia/HCA's Annual Report
on Form 10-K for the Fiscal Year ended
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<PAGE>
December 31, 1998 (other than proceedings and claims generically described
in such Form 10-K as matters arising in the ordinary course of business,
except to the extent that any such proceeding or claim is covered by an
insurance policy maintained by Columbia/HCA and listed on Exhibit D
hereto), and (z) proceedings commenced and claims asserted, whether before
or after the Distribution Date, by Governmental Authorities and private
parties arising from acts, practices or omissions engaged in prior to the
Distribution Date and relating to the subjects of the proceedings referred
to in clauses (x) and (y) above or otherwise relating to any violation or
alleged violation of a federal or state law which gives rise to a claim of
fraud in the billing for and/or delivery of healthcare services.
(c) It is agreed by the parties hereto that any positive
recovery which results from resolution of a proceeding or claim which is an
Indemnified Matter for the purposes of the indemnification specified in
Section 5.1(a) hereof shall be for the sole benefit of Columbia/HCA.
--------------
(d) Notwithstanding the definition of "Losses" herein, to
the extent that, solely as a result of an Indemnified Matter, any hospital
owned and operated by, or leased and operated by, LifePoint or Triad as of
the date of issuance of an Exclusion Order (as defined herein) is
permanently excluded from participation in the Medicare and Medicaid
programs by a final and nonappealable order issued by HCFA or by the OIG
(an "Exclusion Order"), then Columbia/HCA shall make a cash payment to
LifePoint or Triad, as the case may be, in respect of each hospital so
excluded (each, an "Excluded Hospital") in an amount , if positive, equal
to (x) five multiplied by the Excluded Hospital's 1998 EBITDA as set forth
on Annex A hereto less (y) the net proceeds of the sale or other
disposition of such Excluded Hospital. Such payment shall be made by
Columbia/HCA within 30 days following the date of the sale or other
disposition of the Excluded Hospital.
Section 5.2. Indemnification by LifePoint. Except as otherwise
----------------------------
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, LifePoint shall, to the fullest extent permitted by law, indemnify
and hold harmless the Columbia/HCA Indemnitees and the Triad Indemnitees from
and against any and all Losses of the Columbia/HCA Indemnitees and the Triad
Indemnitees, respectively, arising out of, by reason of or otherwise in
connection with either (a) the LifePoint Liabilities or (b) the breach by
LifePoint or, after giving effect to the Restructuring Transactions and the
Distribution, any of its Subsidiaries, of any contractual obligation arising
under this Agreement, any of the Ancillary Agreements, or any of the
Conveyancing and Assumption Instruments.
Section 5.3. Indemnification by Triad. Except as otherwise
------------------------
specifically set forth in any provision of this Agreement or of any Ancillary
Agreement, Triad shall, to the fullest extent permitted by law, indemnify and
hold harmless the Columbia/HCA Indemnitees and the LifePoint Indemnitees from
and against any and all Losses of the Columbia/HCA Indemnitees and the LifePoint
Indemnitees, respectively, arising out of,
-27-
<PAGE>
by reason of or otherwise in connection with either (a) the Triad Liabilities or
(b) the breach by Triad or, after giving effect to the Restructuring
Transactions and the Distribution, any of its Subsidiaries, of any contractual
obligation arising under this Agreement, any of the Ancillary Agreements, or any
of the Conveyancing and Assumption Instruments.
Section 5.4. Limitations on Indemnification Obligations.
------------------------------------------
(a) Reductions for Insurance Proceeds and Other
-------------------------------------------
Recoveries. The amount that any party (an "Indemnifying Party") is or may
----------
be required to pay to any person (an "Indemnitee") pursuant to Section 5.1,
-----------
Section 5.2 or Section 5.3 above, as applicable, shall be reduced
----------- -----------
(retroactively or prospectively)---by any Insurance Proceeds, other amounts
actually recovered from third parties, or amounts recovered pursuant to any
Ancillary Agreement, by or on behalf of such Indemnitee in respect of the
related Losses. Each of the parties agrees that it shall use its best
efforts to collect any such Insurance Proceeds or other amounts to which it
or any of its Subsidiaries may be entitled. The existence of a claim by an
Indemnitee for insurance or against a third party in respect of any Loss
shall not delay any payment pursuant to the indemnification provisions
contained herein and otherwise determined to be due and owing by an
Indemnifying Party; rather, the Indemnifying Party shall make payment in
full of such amount so determined to be due and owing by it against an
assignment by the Indemnitee to the Indemnifying Party of the entire claim
of the Indemnitee for such insurance or against such third party. No
insurer or any other third party shall be (i) entitled to a benefit it
would not be entitled to receive in the absence of the foregoing
indemnification provisions, (ii) relieved of the responsibility to pay any
claims for which it is obligated, or (iii) entitled to any subrogation
rights with respect to any obligation arising under the foregoing
indemnification provisions. If an Indemnitee shall have received the
payment required by this Agreement from an Indemnifying Party in respect of
any Loss and shall subsequently actually receive Insurance Proceeds or
other amounts in respect of such Loss, then such Indemnitee shall hold such
Insurance Proceeds or other amounts in trust for the benefit of such
Indemnifying Party and promptly shall pay to such Indemnifying Party a sum
equal to the amount of such Insurance Proceeds or other amounts actually
received, up to the aggregate amount of any payments received from such
Indemnifying Party pursuant to this Agreement in respect of such Loss.
(b) Adjustments for Taxes. The amount of any Loss shall
---------------------
be: (i) increased (retroactively or prospectively) to take into account any
net Tax cost actually incurred by an Indemnitee arising from any payments
received from the Indemnifying Party (grossed up for such increase); and
(ii) reduced (retroactively or prospectively) to take into account any net
Tax benefit actually realized by an Indemnitee arising from the incurrence
or payment of any such Loss. In computing the amount of such Tax cost or
Tax benefit, an Indemnitee shall be deemed to recognize all other items of
income, gain, loss, deduction or credit before recognizing any item arising
from the receipt or accrual of any payment with respect to any such Loss or
the incurrence or payment of any such Loss. If
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<PAGE>
an Indemnitee shall have received or accrued the payment required by this
Agreement from an Indemnifying Party and shall subsequently actually
realize any net Tax benefit arising from the incurrence or payment of such
Loss, then such Indemnitee promptly shall pay to such Indemnifying Party a
sum equal to the amount of such net Tax benefit, up to the aggregate amount
of any payments received from such Indemnifying Party pursuant to this
Agreement in respect of such Loss.
(c) Reductions for Subsequent Recoveries or Other
---------------------------------------------
Events. In addition to any adjustments required pursuant to Section 5.4(a)
------ -------------
or Section 5.4(b) above, if the amount of any Loss shall, at any time
-------------
subsequent to any indemnification payment made by an Indemnifying Party
pursuant to this Article V, be reduced by recovery, settlement or
---------
otherwise, the amount of such reduction, less any expenses incurred in
connection therewith, shall promptly be repaid by Indemnitee to the
Indemnifying Party, up to the aggregate amount of any payments received
from such Indemnifying Party pursuant to this Article V in respect of such
---------
Loss.
(d) Assignment of Claims for Contribution and/or
--------------------------------------------
Indemnification. Upon the request of an Indemnifying Party, an Indemnitee
---------------
shall assign to the Indemnifying Party any and all claims of such
Indemnitee for contribution and/or indemnification against any party (other
than another Indemnitee) arising out of the claim for which indemnity is
sought.
Section 5.5. Procedures Regarding Indemnification.
------------------------------------
(a) Notice of Third Party Claims. If a claim or demand is
----------------------------
made against an Indemnitee by any person who is not a party hereto or a
Subsidiary of a party hereto (a "Third Party Claim") as to which such
Indemnitee is entitled to indemnification pursuant to this Agreement, such
Indemnitee shall notify the Indemnifying Party in writing, and in
reasonable detail, of the Third Party Claim promptly (and in any event
within fifteen business days) after receipt by such Indemnitee of written
notice of the Third Party Claim; provided, however, that failure to give
such notification shall not affect the Indemnitee's right to
indemnification hereunder except to the extent the Indemnifying Party shall
have been actually prejudiced as a result of such failure (except that the
Indemnifying Party shall not be liable for any expenses incurred during the
period in which the Indemnitee failed to give such notice). Thereafter, the
Indemnitee shall deliver to the Indemnifying Party, promptly (and in any
event within five business days) after the Indemnitee's receipt thereof,
copies of all notices and documents (including court papers) received by
the Indemnitee relating to the Third Party Claim.
(b) Legal Defense of Third Party Claims. If a Third Party
-----------------------------------
Claim is made against an Indemnitee, the Indemnifying Party shall be
entitled to participate in the defense thereof and, if it so chooses, to
assume the defense thereof with counsel selected by the Indemnifying Party.
Should the
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<PAGE>
Indemnifying Party so elect to assume the defense of a Third Party
Claim, the Indemnifying Party shall, within 30 days of its receipt of
notice of such Third Party Claim from Indemnitee (or sooner if the nature
of the Third Party Claim so requires), notify the Indemnitee of its intent
to do so, and the Indemnifying Party shall thereafter not be liable to the
Indemnitee for legal or other expenses subsequently incurred by the
Indemnitee in connection with the defense thereof; provided, that such
Indemnitee shall have the right to employ counsel to represent such
Indemnitee if, in the judgment of the Indemnifying Party, a conflict of
interest between such Indemnitee and such Indemnifying Party exists in
respect of such claims which would make representation of both such parties
by one counsel inappropriate, and in such event the fees and expenses of
such separate counsel shall be paid by such Indemnifying Party. If the
Indemnifying Party assumes such defense, the Indemnitee shall have the
right to participate in the defense thereof and to employ counsel, subject
to the proviso of the preceding sentence, at its own expense, separate from
the counsel employed by the Indemnifying Party, it being understood that
the Indemnifying Party shall control such defense. The Indemnifying Party
shall be liable for the fees and expenses of counsel employed by the
Indemnitee for any period during which the Indemnifying Party has failed to
assume the defense thereof (other than during any period during which the
Indemnitee shall have failed to have given notice of the Third Party Claim
as required above). If the Indemnifying Party so elects to assume the
defense of any Third Party Claim, the Indemnifying Party shall have the
right to settle such action or claim on such terms as it deems appropriate,
and all of the Indemnitees shall fully and completely cooperate with the
Indemnifying Party in the defense of such action or claim and shall provide
the Indemnifying Party with access (including access to employees of the
Indemnitees) and copying rights during normal business hours to all
records, books, contracts, instruments, computer data and other information
in the possession of the Indemnitees which is reasonably required in
connection with the defense of such action or claim. It is understood and
agreed that wherever in this Section 5. 5 reference is made to the payment
-------------
of fees and expenses of counsel for the Indemnitee by the Indemnifying
Party, the Indemnifying Party shall not, in connection with any Third Party
Claim or any group of separate but substantially similar Third Party Claims
arising out of the same general allegations, be liable for the fees and
expenses of more than one separate firm of attorneys at any time for all
Indemnitees.
(c) Settlement of Third Party Claims. Except as
--------------------------------
otherwise provided in this Section 5.5 or as otherwise specifically
-----------
provided in any Ancillary Agreement, unless and until the Indemnifying
Party has failed to assume the defense of any Third Party Claim within
thirty days of its receipt of notice of such Third Party Claim from
Indemnitee (or sooner if the nature of the Third Party Claim so requires),
then in no event will the Indemnitee admit any liability with respect to,
or settle, compromise or discharge, any Third Party Claim without the
Indemnifying Party's prior written consent; provided, however, that the
Indemnitee shall have the right to settle, compromise or discharge such
Third Party Claim without the consent of the Indemnifying Party if the
Indemnitee releases the Indemnifying Party from its indemnification
obligation hereunder
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<PAGE>
with respect to such Third Party Claim and such settlement, compromise or
discharge would not otherwise adversely affect the Indemnifying Party. If,
upon expiration of 30 days from the date that the Indemnifying Party
receives notice of a Third Party Claim from Indemnitee, the Indemnifying
Party has not notified the Indemnitee of its election to assume the defense
of such Third Party Claim, then in no event shall the Indemnitee settle,
compromise or discharge such Third Party Claim without providing prior
written notice to the Indemnifying Party, and the Indemnifying Party shall
then have the option within fifteen days following receipt of such notice
to:
(A) approve and agree to pay the settlement;
(B) approve the amount of the settlement, reserving the
right to contest the Indemnitee's right to indemnity pursuant to
this Agreement; or
(C) disapprove the settlement and assume in writing all
past and future responsibility for such Third Party Claim
(including all of Indemnitee's prior expenditures in connection
therewith, and the Indemnifying Party shall furnish reasonable
assurance that it will discharge such responsibility).
(d) Other Claims. Any claim on account of a Loss which does not
------------
result from a Third Party Claim shall be asserted by written notice given
by the Indemnitee to the applicable Indemnifying Party. Such Indemnifying
Party shall have a period of fifteen days after the receipt of such notice
within which to respond thereto. If such Indemnifying Party does not
respond within such fifteen-day period, or if such Indemnifying Party
rejects such claim in whole or in part, then such Indemnitee shall be free
to pursue such remedies as may be available to it under this Agreement.
Section 5.6. Indemnification Payments. Amounts for which payment is
------------------------
required to be made by any party pursuant to this Article V shall be reflected
---------
on the Monthly Statements to be prepared by each of LifePoint and Triad pursuant
to Section 8.1(f) hereof, as and when bills are received or loss, liability,
--------------
claim, damage or expense is incurred or recovery is made. Such amounts shall be
adjusted to reflect addition or deduction of any Reconciling Payment required to
be made pursuant to Section 8.1(f) and such payments shall be made at the times
--------------
and in the manner provided in Section 8.1(f).
--------------
Section 5.7. Cooperation of the Parties with Respect to Actions and
------------------------------------------------------
Third Party Claims.
- ------------------
(a) Identification of Party in Interest. Any party to this
-----------------------------------
Agreement that has responsibility for an Action or Third Party Claim shall
identify itself as the true party in interest with respect to such Action
or Third Party Claim and shall use its reasonable efforts to obtain the
dismissal of any other party to this Agreement from such Action or Third
Party Claim.
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<PAGE>
(b) Disputes Regarding Responsibility for Actions and Third
-------------------------------------------------------
Party Claims. If there is uncertainty or disagreement concerning which
------------
party to this Agreement has responsibility for any Action or Third Party
Claim, the following procedure shall be followed in an effort to reach
agreement concerning responsibility for such Action or Third Party Claim:
(i) The parties in disagreement over the responsibility
for an Action or Third Party Claim shall exchange brief written
statements setting forth their position concerning which party has
responsibility for the Action or Third Party Claim in accordance with
the provisions of this Article V. These statements shall be exchanged
---------
within ten days of a party putting another party on written notice
that such other party is or may be responsible for the Action or Third
Party Claim.
(ii) If, within ten days of the exchange of the written
statement of each party's position, agreement is not reached on
responsibility for the Action or Third Party Claim, the General
Counsel for each of the parties in disagreement over responsibility
for the Action or Third Party Claim shall meet (which meeting may be
by telephone or in person) to attempt to reach agreement on
responsibility for the Action or Third Party Claim.
(c) Effect of Failure to Follow Procedure. Failure to follow
-------------------------------------
the procedure set forth in Section 5.7(b) above shall not affect the rights
--------------
and responsibilities of the parties as established by the other provisions
of this Article V.
---------
(d) Exchange of Information. In connection with the handling of
-----------------------
current or future Actions or Third Party Claims, the parties may determine
that it is in their mutual interest to exchange privileged or confidential
information. If so, the parties agree to discuss whether it is in their
mutual interest to enter into a joint defense agreement or information
exchange agreement to maintain the confidentiality of their communications
and to permit them to maintain the confidentiality of proprietary
information or information that is otherwise confidential or subject to an
applicable privilege, including, but not limited to, the attorney-client,
work product, executive, deliberative process, or self-evaluation
privileges.
Section 5.8. Contribution. To the extent that any indemnification
------------
provided for under Section 5.1, Section 5.2 or Section 5.3 above is unavailable
----------- ----------- -----------
to an Indemnitee or is insufficient in respect of any Loss of such Indemnitee,
then the Indemnifying Party under such Section, in lieu of indemnifying such
Indemnitee in respect of such Loss, shall contribute to the amount paid or
payable by such Indemnitee as a result of such Loss (a) in such proportion as is
appropriate to reflect the relative value of the business owned or held by the
Indemnifying Party immediately after giving effect to the Distribution, on the
one hand, and the value of the business owned or held by the Indemnitee
immediately after giving effect to the Distribution, on the other hand, or
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<PAGE>
(b) if the allocation provided by clause (a) above is not permitted by
applicable Law, in such proportion as is appropriate to reflect not only the
relative sizes of the parties referred to in clause (a) above but also the
relative fault of the Indemnifying Party, on the one hand, and of the
Indemnitee, on the other hand, in connection with the action, inaction,
statements or omissions that resulted in such Loss as well as any other relevant
equitable considerations.
Section 5.9. Survival of Indemnities; Exclusive Remedy. The
-----------------------------------------
indemnification obligations of Columbia/HCA, LifePoint and Triad under this
Article V shall survive the sale or other transfer by any of them of any Assets
- ---------
or businesses or the assignment by any of them of any Liabilities, with respect
to any Loss by any Indemnitee related to such Assets, businesses or Liabilities;
provided, however, that the indemnification obligations set forth herein shall
be terminated to the extent that any Indemnitee seeks indemnification in respect
of a matter in which the procedures regarding indemnification set forth in this
Article V (including the provision of Section 5.5 above requiring that an
- --------- -----------
Indemnifying Party be given the opportunity to assume and control the defense of
any Third Party Claim) shall not have been followed. The indemnification
provided for in this Article V shall be the exclusive remedy in any action
---------
seeking damages or any other form of monetary relief brought by any party to
this Agreement against another party.
ARTICLE VI
ANCILLARY AGREEMENTS
Section 6.1. Generally. Except as provided in Section 5.4 above
--------- -----------
relating to adjustment of indemnification amounts for insurance proceeds and net
Tax benefits or detriments, all matters relating to the subject matter of each
Ancillary Agreement shall be governed exclusively by such Ancillary Agreement,
and the provisions of such Ancillary Agreement shall govern in the event of any
inconsistency with this Agreement.
ARTICLE VII
ACCOUNTING MATTERS
Section 7.1. Settlement of Intercompany Accounts.
-----------------------------------
(a) Settlement of Intercompany Accounts Between LifePoint Group
-----------------------------------------------------------
and Columbia/HCA Group. All intercompany receivables, payables and loans
----------------------
(other than receivables, payables and loans otherwise specifically provided
for in any of the Ancillary Agreements or hereunder), including, without
limitation, in respect of any cash balances, any cash balances representing
deposited checks or drafts for which only a provisional credit has been
allowed or any cash held in any centralized cash management system, between
the LifePoint Group, on the one hand, and the Columbia/HCA Group, on the
other hand, shall,
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<PAGE>
as of the close of business on the Distribution Date, be settled,
capitalized or converted into ordinary trade accounts, in each case as may
be agreed in writing prior to the Distribution Date by duly authorized
representatives of the Columbia/HCA Group and the LifePoint Group.
(b) Settlement of Intercompany Accounts Between Triad Group and
-----------------------------------------------------------
Columbia/HCA Group. All intercompany receivables, payables and loans (other
------------------
than receivables, payables and loans otherwise specifically provided for in
any of the Ancillary Agreements or hereunder), including, without
limitation, in respect of any cash balances, any cash balances representing
deposited checks or drafts for which only a provisional credit has been
allowed or any cash held in any centralized cash management system, between
the Triad Group, on the one hand, and the Columbia/HCA Group, on the other
hand, shall, as of the close of business on the Distribution Date, be
settled, capitalized or converted into ordinary trade accounts, in each
case as may be agreed in writing prior to the Distribution Date by duly
authorized representatives of the Columbia/HCA Group and the Triad Group.
(c) Settlement of Intercompany Accounts Between LifePoint Group
-----------------------------------------------------------
and Triad Group. All intercompany receivables, payables and loans (other
---------------
than receivables, payables and loans otherwise specifically provided for in
any of the Ancillary Agreements or hereunder), including, without
limitation, in respect of any cash balances, any cash balances representing
deposited checks or drafts for which only a provisional credit has been
allowed or any cash held in any centralized cash management system, between
the LifePoint Group, on the one hand, and the Triad Group, on the other
hand, shall, as of the close of business on the Distribution Date, be
settled, capitalized or converted into ordinary trade accounts, in each
case as may be agreed in writing prior to the Distribution Date by duly
authorized representatives of the LifePoint Group and the Triad Group.
Section 7.2. Allocation of Prepaid Items and Reserves. All prepaid
----------------------------------------
items and reserves that have been maintained by Columbia/HCA on a consolidated
basis but that relate in part to Assets or Liabilities of the LifePoint Group or
the Triad Group shall be allocated among the Columbia/HCA Group, the LifePoint
Group and the Triad Group in such manner as shall be determined by Columbia/HCA
in its sole discretion.
Section 7.3. Financial Accounting Treatment of Assets Transferred and
--------------------------------------------------------
Liabilities Assumed. Solely for financial accounting purposes, any transfer of
- -------------------
Assets of the Columbia/HCA Group to the LifePoint Group or the Triad Group
pursuant to this Agreement shall constitute contributions by Columbia/HCA to the
capital of LifePoint or Triad, as the case may be, and any assumption by the
LifePoint Group or the Triad Group of Liabilities of the Columbia/HCA Group
pursuant to this Agreement, net of Assets received, shall be treated as a
distribution by LifePoint or Triad, as the case may be, to Columbia/HCA.
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<PAGE>
Section 7.4. Other Accounting Matters. Exhibit J hereto sets forth
------------------------ ---------
the agreement of Columbia/HCA, LifePoint and Triad as to the payment of and
financial responsibility for certain matters.
ARTICLE VIII
INDEMNIFICATION AND OTHER MATTERS
RELATING TO GOVERNMENT PROGRAMS
Section 8.1. Indemnification and Other Matters Relating to Pre-
--------------------------------------------------
Distribution Period Cost Reports.
- --------------------------------
(a) Each of LifePoint and Triad shall be responsible for filing
Medicare provider, Medicaid provider, Medi-Cal provider, Champus/Tricare
provider, and cost-based Blue Cross provider cost reports ("Cost Reports")
in respect of its respective hospitals and other health care facilities
("Facilities") relating to periods ending on or prior to the Distribution
Date ("Pre-Distribution Periods"). Columbia/HCA shall indemnify and hold
harmless each of LifePoint and Triad for all payments which it or any
member of its Group is required to make in respect of Cost Report payables
relating to Pre-Distribution Periods, and each of LifePoint and Triad shall
indemnify and hold harmless Columbia/HCA for and pay over to Columbia/HCA
any amount received by it or any member of its Group in respect of Cost
Report receivables relating to Pre-Distribution Periods. The first payment
due to be made hereunder to and from Columbia/HCA, on the one hand, and to
and from each of LifePoint and Triad, on the other hand, shall be
determined in respect of the period between the Distribution Date and May
31, 1999, and payments due to be made hereunder shall thereafter be
determined and paid on a monthly basis, all as provided in Section 8.1(f)
--------------
below. Each of LifePoint, Triad and Columbia/HCA will account for the
arrangement provided for in this Section 8.1(a) in a manner intended to
reflect the retention of all operating income statement impacts arising
from Pre-Distribution Cost Reports by Columbia/HCA.
(b) Columbia/HCA shall retain all rights to Medicare, Medicaid,
Medi-Cal, Champus/Tricare, and cost-based Blue Cross reimbursement for all
appeal issues relating to Pre-Distribution Periods. Columbia/HCA shall have
sole discretion to initiate and pursue any individual and group appeal
issue for Cost Reports relating to Pre-Distribution Periods; however,
Columbia/HCA, LifePoint and Triad will cooperate in discussing new appeal
issues. Each of LifePoint and Triad agrees to indemnify and hold harmless
Columbia/HCA for and pay over to Columbia/HCA any payment received by it or
any member of its Group in respect of appeal issues relating to Pre-
Distribution Periods. Such payment over to Columbia/HCA shall be made
within 30 days of the receipt of such payment by LifePoint or Triad, as the
case may be.
(c) Each of LifePoint and Triad shall appoint Columbia/HCA as
the third party representative for all hearings on group and individual
appeal
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<PAGE>
issues relating to Pre-Distribution Periods. Each of LifePoint and Triad
acknowledges that all correspondence (such as audit adjustments, Notices of
Program Reimbursement, etc.) relating to such appeal issues will be
forwarded within seven business days of receipt to the Columbia/HCA
Director of Appeals or to such other representative of Columbia/HCA as may
be specified in writing by Columbia/HCA. Each of LifePoint and Triad
further agrees that if failure to forward such documentation on a timely
basis results in loss of an appeal issue, then LifePoint and/or Triad, as
the case may be, shall indemnify and hold harmless Columbia/HCA for and pay
over to Columbia/HCA an amount reasonably determined by Columbia/HCA to
represent the amount of lost reimbursement resulting from such loss of an
appeal issue.
(d) Prior to the preparation of the Cost Reports relating to
Pre-Distribution Periods, each of LifePoint and Triad shall obtain
information and data from Columbia/HCA on appeal issues that are to be
included in such Cost Reports. Any portion of such Cost Reports relating to
such appeal issues shall be prepared on a basis consistent with directions
from Columbia/HCA. Drafts of all Cost Reports relating to Pre-Distribution
Periods shall be submitted by LifePoint and Triad to Columbia/HCA for
review and approval before such Cost Reports are filed with the Medicare,
Medicaid, Medi-Cal, Champus/Tricare and cost-based Blue Cross fiscal
intermediaries, and no Cost Report relating to a Pre-Distribution Period
shall be filed by LifePoint or Triad prior to approval of such Cost Report
by Columbia/HCA. The parties agree that, with respect to any Cost Report
related to a Pre-Distribution Period which is due to be filed after June
30, 1999, a draft shall be furnished to Columbia/HCA for its review not
less than 30 days prior to the date that such Cost Report is due to be
filed, and Columbia/HCA shall provide its comments on such draft within 14
days of its receipt of the draft. Each of LifePoint and Triad shall be
responsible for the completion of the Columbia/HCA Home Office Workpaper
set applicable to Home Office Cost Statements relating to Pre-Distribution
Periods and shall submit such workpaper set to the Columbia/HCA Assistant
Vice President of Home Office or to such other representative of
Columbia/HCA as may be specified by Columbia/HCA. Each of LifePoint and
Triad agrees that it will not file or cause to be filed any amended Cost
Report relating to a Pre-Distribution Period without the prior written
consent of Columbia/HCA, and further agrees that it will file any amendment
to a Cost Report relating to a Pre-Distribution Period which it is
requested to file by Columbia/HCA. Each of LifePoint and Triad agrees to
provide Columbia/HCA with monthly status reports in a form reasonably
requested by Columbia/HCA setting forth a description of all activity in
respect of Cost Reports relating to Pre-Distribution Periods together with
copies of all related documentation received by it or any of its Facilities
(except to the extent that such documentation has previously been provided
to Columbia/HCA).
(e) Notwithstanding the provisions of Section 9.1 below, all
-----------
information, documents and records relating to Medicare, Medicaid, Medi-
Cal, Champus/Tricare and cost-based Blue Cross receivables and payables
which relate to Pre-Distribution Periods shall be the property of
Columbia/HCA. Each
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<PAGE>
of LifePoint and Triad agrees to take all necessary action, at its expense,
to transfer or cause to be transferred to Columbia/HCA, as soon as
practicable following the Distribution Date, all of such materials in its
possession. Prior to the transfer of such information, documents and
records to Columbia/HCA, each of LifePoint and Triad may make copies of
such materials for its own use, but shall not deliver copies of such
materials to any other party, including, without limitation, any consultant
or any potential buyer of a Facility, without the prior written consent of
Columbia/HCA.
(f) For any period (initially, the period between the
Distribution Date and May 31, 1999, and thereafter, each calendar month) in
which the amount of payments in respect of Cost Reports relating to Pre-
Distribution Periods received by LifePoint or Triad exceeds the aggregate
amount of payments made by it, then LifePoint or Triad shall be obligated
pursuant to Section 8.1(a) above to make a cash payment to Columbia/HCA
--------------
equal to the difference between the aggregate amount of payments received
by it and the aggregate amount of payments made by it, and for any calendar
month in which the amount of payments in respect of Cost Reports relating
to Pre-Distribution Periods made by LifePoint or Triad exceeds the
aggregate amount of payments received by it, then Columbia/HCA shall be
obligated pursuant to Section 8.1(a) above to make a cash payment to
-------
LifePoint or Triad equal to the difference between the aggregate amount of
payments made by LifePoint or Triad and the aggregate amount of payments
received by LifePoint or Triad (in either case, a "Reconciling Payment").
Within 20 days of the end of each calendar month, each of LifePoint and
Triad shall provide to Columbia/HCA a statement (the "Monthly Statement")
summarizing all payments made by it, and all payments received by it,
during such month in respect of Cost Reports relating to Pre-Distribution
Periods, and setting forth the amount of the Reconciling Payment to be made
by it to Columbia/HCA or by Columbia/HCA to it, as the case may be. The
Monthly Statements prepared by LifePoint and Triad shall also reflect any
payments to be made by LifePoint or Triad to Columbia/HCA, or by
Columbia/HCA to LifePoint or Triad, pursuant to the provisions of Article V
hereof. If Columbia/HCA does not provide notice of disagreement within 15
days following its receipt of a Monthly Statement, the Monthly Statement
shall become final and binding, and the party obligated to make the
Reconciling Payment provided for therein, and any other payment provided
for therein, shall make such payment within 10 days of the date that the
Monthly Statement becomes final and binding. A notice of disagreement with
the Monthly Statement shall provide reasonable detail of the nature of the
disagreement. During the 15 day period following receipt of a notice of
disagreement, Columbia/HCA and LifePoint or Triad, as the case may be,
shall attempt to resolve any differences they may have with respect to any
matters specified in the notice of disagreement. If at the end of such 15
day period the parties have reached agreement with respect to the matters
identified in the notice of disagreement, the Monthly Statement (as
adjusted to reflect such agreement) shall be final and binding, and the
party obligated to make the Reconciling Payment provided for therein, and
any other payment provided for therein, shall make such payment within 10
days of the date that the Monthly
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Statement becomes final and binding. If at the end of such 15 day period
the parties have not reached agreement with respect to the matters
identified in the notice of disagreement, then (i) any Reconciling Payment
or other payment (or portion thereof) which would be required to be made by
any party under the Monthly Statement if the disputed matter or matters
were resolved in its favor shall be made and (ii) resolution of the
disputed matter or matters shall be governed by the applicable provisions
of Article XI hereof.
Section 8.2. Matters Relating to Post-Distribution Period Cost
-------------------------------------------------
Reports.
- -------
(a) Each of Columbia/HCA, LifePoint and Triad shall be
responsible for filing Medicare provider, Medicaid provider, Medi-Cal
provider, Champus/Tricare provider, and cost-based Blue Cross provider Cost
Reports in respect of its Facilities relating to periods ending after the
Distribution Date ("Post-Distribution Periods"), and each shall be entitled
to, or be responsible for, any receivables or payables in respect of Cost
Reports relating to Post-Distribution Periods.
(b) Each of Columbia/HCA, LifePoint and Triad shall be
responsible for its own separate and distinct Medicare, Medicaid, Medi-Cal,
Champus/Tricare and cost-based Blue Cross appeal functions (including,
without limitation, the protection of appeal rights and the filing of
appeal requests) relating to any Post-Distribution Period; provided,
however, that if Medicare, Medicaid, Medi-Cal, Champus/Tricare and/or cost-
based Blue Cross group appeal cases can be or are required to be
consolidated for Cost Reports relating to Post-Distribution Periods, each
of Columbia/HCA, LifePoint and Triad agree to share the legal fees and
expert witness fees on a pro rata basis based upon the amount of the
reimbursement in dispute for the appeal cases for each party. Each party
shall bear its own internal costs as related to such appeal. The decision
to consolidate the cases shall be made through the mutual agreement of the
parties affected by the appeal, and where cases are consolidated, such
parties shall mutually agree as to the management of the appeal cases
(including, without limitation, approval of position papers, attorneys to
be used, expert witnesses and venue).
Section 8.3. Cooperation on Reimbursement Matters.
------------------------------------
(a) Each of LifePoint and Triad shall be responsible for
furnishing, in a form reasonably requested by Columbia/HCA, all
documentation required as part of the Medicare, Medicaid, Medi-Cal,
Champus/Tricare and cost-based Blue Cross audits of Cost Reports relating
to Pre-Distribution Periods and each agrees to assist in whatever way
reasonably requested by Columbia/HCA in connection with resolutions of
issues and disputes in connection with Medicare, Medicaid, Medi-Cal,
Champus/Tricare and cost-based Blue Cross programs, including, without
limitation, by providing witnesses and by causing the appropriate hospital
financial officer to attend all exit conferences.
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(b) Each of LifePoint and Triad shall notify Columbia/HCA of all
audits or other proceedings with respect to reimbursement through the
Medicare, Medicaid, Medi-Cal, Champus/Tricare and cost-based Blue Cross
programs for Cost Reports relating to Pre-Distribution Periods. Such notice
shall be given within 48 hours after LifePoint's or Triad's corporate
office is notified of the scheduling of such audit or proceeding.
Columbia/HCA shall also be provided with all correspondence relating to
such proceedings (such as proposed audit adjustments) within seven business
days of receipt. No action shall be taken by LifePoint or Triad with regard
to such audits or other proceedings (except for the provision of requested
documentation at the Facility level) without the prior written consent of
Columbia/HCA.
Section 8.4. Limitation. The obligations of Columbia/HCA pursuant to
----------
Section 8.1(a) above to indemnify LifePoint and Triad for payments which they
- --------------
are required to make in respect of one or more Cost Reports relating to Pre-
Distribution Periods shall be terminated in the event that LifePoint or Triad,
as the case may be, fails to comply in all material respects with the procedures
regarding such Cost Reports, appeal issues, cooperation and related matters set
forth in this Article VIII.
ARTICLE IX
CORPORATE RECORDS AND INFORMATION
Section 9.1. Provision, Transfer and Delivery of Applicable Corporate
-------------------------------------------------------
Records. Except as otherwise provided herein or in any Ancillary Agreement:
- -------
(a) Provision, Transfer and Delivery of Columbia/HCA Group
------------------------------------------------------
Records. Each of LifePoint and Triad shall take all necessary action to
-------
transfer, or cause to be transferred, as soon as practicable following the
Distribution Date (at Columbia/HCA's expense) to Columbia/HCA, the Books
and Records in its or its Subsidiaries' possession that relate primarily to
the Columbia/HCA Group Business or are necessary to operate the
Columbia/HCA Group Business (collectively, the "Columbia/HCA Group
Records"), except to the extent such items are already in the possession of
the Columbia/HCA Group. The Columbia/HCA Group Records shall be the
property of Columbia/HCA, but shall be available pursuant to Section 9.2
-----------
below to each of LifePoint and Triad for review and copying.
(b) Provision, Transfer and Delivery of LifePoint Group Records.
-----------------------------------------------------------
Columbia/HCA and Triad shall take all necessary action to transfer, or
cause to be transferred, as soon as practicable following the Distribution
Date (at LifePoint's expense) to LifePoint, the Books and Records in its or
its Subsidiaries' possession that relate primarily to the LifePoint Group
Business or are necessary to operate the LifePoint Group Business
(collectively, the "LifePoint Group Records"), except to the extent such
items are already in the possession of the LifePoint Group. The LifePoint
Group Records shall be the
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property of LifePoint, but shall be available pursuant to Section 9.2 below
-----------
to each of Columbia/HCA and Triad for review and copying.
(c) Provision, Transfer and Delivery of Triad Group Records.
-------------------------------------------------------
Each of Columbia/HCA and LifePoint shall take all necessary action to
transfer, or cause to be transferred, as soon as practicable following the
Distribution Date (at Triad's expense) to Triad, the Books and Records in
its or its Subsidiaries' possession that relate primarily to the Triad
Group Business or are necessary to operate the Triad Group Business
(collectively, the "Triad Group Records"), except to the extent such items
are already in the possession of the Triad Group. The Triad Group Records
shall be the property of Triad, but shall be available pursuant to Section
-------
9.2 below to each of Columbia/HCA and LifePoint for review and copying.
---
Section 9.2. Access to Information. From and after the Distribution
---------------------
Date, each of Columbia/HCA, LifePoint and Triad shall afford one another
(including each party's accountants, counsel and other designated
representatives) reasonable access (including using reasonable efforts to give
access to persons or firms possessing information) and copying rights during
normal business hours to all records, books, contracts, instruments, computer
data and other data and information in its possession relating to its business
and affairs, insofar as such access is reasonably required, including, without
limitation, for audit, accounting and litigation purposes. Any copying expense
shall be borne by the party requesting such copying. Notwithstanding the
foregoing, no party shall have the right to access any patient information or
medical records to the extent that such access, in the reasonable judgment of
the party requested to provide such access, would not be permitted by applicable
Law or otherwise would violate obligations related to patient confidentiality.
Section 9.3. Confidentiality.
---------------
(a) General Restriction on Disclosure. Each of Columbia/HCA,
---------------------------------
LifePoint and Triad shall take all necessary action to hold, and shall
cause its (and its respective Subsidiaries') consultants, advisors and
other representatives to hold, in strict confidence all information
concerning each other party hereto and such other party's Subsidiaries in
its possession, custody or control to the extent such information either:
(i) relates to the period up to the Distribution Date;
(ii) is obtained pursuant to Section 9.2 above;
-----------
(iii) relates to any Ancillary Agreement; or
(iv) is obtained in the course of performing services for
the other party pursuant to any Ancillary Agreement,
and each party hereto shall (and shall cause each of its respective
Subsidiaries to) refrain from otherwise releasing or disclosing such
information to any other
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person, except for such person's auditors, attorneys, financial advisors,
bankers and other consultants and advisors, without the prior written
consent of the other affected party or parties.
(b) Exceptions to Confidential Treatment. Notwithstanding
------------------------------------
Section 9.3(a) above, no party hereto shall be prohibited from using or
--------------
permitting the use of and no party shall be required to hold in confidence
any information to the extent that (i) such information has been or is in
the public domain through no fault of such party, (ii) such information was
used or held for use in such party's business (and in no other party's
business) prior to the Distribution Date, (iii) such information is, after
the Distribution Date, lawfully acquired by such party from sources other
than a party hereto or a Subsidiary of a party hereto, (iv) this Agreement,
any Ancillary Agreement or any other agreement entered into pursuant hereto
permits the use or disclosure of such information by such party, or (v)
such information is necessary for such party to investigate, evaluate,
defend or prosecute any claim or Action involving any other party hereto.
To the extent that a party hereto (or any of its Subsidiaries or, to the
knowledge of such party or Subsidiary, any current or former employee of
such party or Subsidiary) is requested (by oral questions, interrogatories,
requests for information or documents, subpoena, civil investigative demand
or similar process) to disclose any information required to be kept
confidential pursuant to this Section 9.3, such party agrees to take all
-----------
necessary action to maintain, or cause to be maintained (or in respect of a
current or former employee, to take all reasonable action as is necessary
to cause such employee to maintain), the confidentiality of such
information and to provide prompt notice to any of (i) Columbia/HCA, if
such information relates to the Columbia/HCA Group Business or to the
Columbia/HCA Liabilities or the Indemnified Matters, (ii) LifePoint, if
such information relates to the LifePoint Group Business or to the
LifePoint Liabilities, or (iii) Triad, if such information relates to the
Triad Group Business or to the Triad Liabilities, so that the party or
parties to which the information pertains may seek an appropriate
protective order or waive the notifying party's compliance with this
Section 9.3(b). If, in the absence of a protective order or the receipt of
--------------
a waiver hereunder, the person which has received such a request is,
nonetheless, in the reasonable written opinion of counsel, legally required
to disclose such information, such person may disclose such information,
and no party shall be liable pursuant to this Section 9.3(b); provided,
--------------
that such person furnishes only that portion of the information which such
person is advised by counsel to disclose and exercises its reasonable
efforts to obtain assurance that confidential treatment will be accorded to
the disclosed portion of the information. Notwithstanding the foregoing,
each party will be permitted to disclose confidential information in any
proceeding in which such party is in an adversarial position to any other
party to this Agreement.
Section 9.4. Litigation Cooperation. Each of Columbia/HCA, LifePoint
----------------------
and Triad shall use its best efforts to make available to one another, upon
written request of a party hereto, its Group's officers, directors, employees
and agents as witnesses to the extent that such persons may reasonably be
required in connection with any legal,
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<PAGE>
legislative, administrative or other proceedings arising out of the business of
such requesting party prior to the Distribution Date in which the requesting
party may from time to time be involved. In the event that any party provides
witnesses pursuant to this Section 9.4, it shall be entitled to reimbursement
-----------
from the requesting party for all reasonably incurred out-of-pocket costs and
expenses, but not including internal time charges.
Section 9.5. Retention of Records. Except when a longer period is
--------------------
required by Law or is specifically provided for herein or in any Ancillary
Agreement, each party hereto shall take all necessary action to keep, or cause
to be kept, in its original form, for a period of at least fifteen years
following the Distribution Date, all material information (including, without
limitation, all material Books and Records) relating to such party's Group and
its operations prior to the Distribution Date; provided, however, that any party
hereto may offer in writing to deliver to the other parties all or a portion of
such information as it relates to the offering party's Group and, if such offer
is accepted in writing within 90 days after receipt thereof, the offering party
shall promptly arrange for the delivery of such information (or copies thereof)
to each accepting party (at the expense of such accepting party). If such offer
is not so accepted, the offered information may be destroyed or otherwise
disposed of by the offering party at any time thereafter; provided, however,
that no information shall be destroyed or disposed of prior to the date that
Columbia/HCA shall notify LifePoint and Triad that the Government Investigations
have been concluded. With regard to patient records, each party hereto shall
maintain the patient records held at each of its Facilities (or delivered to it
pursuant hereto) relating to periods prior to the Distribution Date in
accordance with applicable Law (including, if applicable, 42 U.S.C. Section 1395
(V)(I)(i)), and requirements of relevant insurance carriers, and in a manner
consistent with its maintenance of patient records generated at its Facilities
after the Distribution Date. Each party acknowledges that as a result of
operating the Facilities it will gain access to patient and other information
which is subject to rules and regulations regarding confidentiality, and agrees
to abide by such rules and regulations with regard to such confidential
information.
Section 9.6. Privileged Matters.
------------------
(a) Privileged Information. Each of the parties hereto shall
----------------------
reasonable action as is necessary to maintain, preserve, protect and
assert, or cause to be maintained, preserved, protected and asserted, all
privileges, including, without limitation, all privileges arising under or
relating to the attorney-client relationship (including, but not limited
to, the attorney-client and attorney work product privileges), that relate
directly or indirectly to the business of any other Group for any period
prior to the Distribution Date ("Privilege" or "Privileges"). Columbia/HCA
shall be entitled in perpetuity to require the assertion or to decide
whether to consent to the waiver of any and all Privileges which relate
primarily to the Columbia/HCA Liabilities or the Indemnified Matters;
LifePoint shall be entitled in perpetuity to require the assertion or to
decide whether to consent to the waiver of all Privileges which relate
primarily to the LifePoint Liabilities; and Triad shall be entitled in
perpetuity to require the assertion or to decide whether to consent to the
waiver of all Privileges which
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<PAGE>
relate primarily to the Triad Liabilities. Each of the parties hereto shall
use the same degree of care as it would use with respect to its own
Privileges, so as not to waive, or permit to be waived, any such Privilege
that could be asserted under applicable Law without the prior written
consent of the other party or parties having the right to assert or waive
such Privilege pursuant to this Section 9.6(a).
--------------
(b) Shared Privileges.
-----------------
(i) The parties hereto agree that they shall have a
shared Privilege, with equal right to assert or waive, subject to the
restrictions in this Section 9.6(b)(i), with respect to all Privileges
-----------------
not allocated pursuant to the terms of Section 9.6(a) above. All
--------------
Privileges relating to any claims, proceedings, litigation, disputes,
or other matters which involve two or more of Columbia/HCA, LifePoint
or Triad and in respect of which two or more of such parties retain
any responsibility or liability under this Agreement, shall be subject
to a shared Privilege among them.
(ii) No party hereto may waive any Privilege which could
be asserted under any applicable law, and in which any other party
hereto has a shared Privilege, without the consent of the other party,
except to the extent reasonably required in connection with any
litigation with third-parties or as provided in Section 9.6(c) below.
--------------
Consent shall be in writing, or shall be deemed to be granted unless
written objection is made within twenty days after notice upon the
other party requesting such consent.
(iii) If a dispute arises between or among the parties
hereto or their respective Subsidiaries regarding whether a Privilege
should be waived to protect or advance the interest of any party, each
party agrees that it shall negotiate in good faith, shall endeavor to
minimize any prejudice to the rights of the other parties, and shall
not unreasonably withhold consent to any request for waiver by another
party. Each party hereto specifically agrees that it will not withhold
consent to waiver for any purpose except to protect its own legitimate
interests.
(c) Compelled Disclosure. To the extent that a party hereto (or
--------------------
any of its Subsidiaries or, to the knowledge of such party or Subsidiary,
any current or former employee of such party or Subsidiary) is requested
(by oral questions, interrogatories, requests for information or documents,
subpoena, civil investigative demand or similar process) to disclose any
information under circumstances in which any Privilege would be available
("Privileged Information"), such party agrees to take all necessary action
to assert, or cause to be asserted (or in respect of a current or former
employee, to take all reasonable action as is necessary to cause such
employee to assert), such Privilege in good faith and to provide prompt
notice to any of (i) Columbia/HCA, if such Privileged Information relates
to the Columbia/HCA Liabilities or the
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<PAGE>
Indemnified Matters, (ii) LifePoint, if such Privileged Information relates
to the LifePoint Liabilities, or (iii) Triad, if such Privileged
Information relates to the Triad Liabilities, so that the party or parties
to which the Privileged Information pertains may seek an appropriate
protective order or waive the notifying party's compliance with this
Section 9.6(c). If, in the absence of a protective order or the receipt of
--------------
a waiver hereunder, the person which has received such a request is,
nonetheless, in the reasonable written opinion of counsel, legally required
to disclose such Privileged Information or else stand liable for contempt
or suffer other censure or penalty, such person may disclose such
Privileged Information, and no party shall be liable pursuant to this
Section 9.6(c); provided, that such person furnishes only that portion of
--------------
the Privileged Information which such person is advised by counsel to
disclose and (ii) exercises its reasonable efforts to obtain assurance that
confidential treatment will be accorded to the disclosed portion of the
Privileged Information. Notwithstanding the foregoing, each party will be
permitted to disclose Privileged Information in any proceeding in which
such party is in an adversarial position to any other party to this
Agreement.
(d) No Waiver. The parties hereto agree that the transfer of
---------
any Books and Records or other information between the Columbia/HCA Group,
the LifePoint Group, or the Triad Group shall be made in reliance on the
agreements of Columbia/HCA, LifePoint and Triad, as set forth in Section
-------
9.3 above and this Section 9.6, to maintain the confidentiality of
--- -----------
confidential information and to assert and maintain all applicable
Privileges. The Books and Records being transferred pursuant to Section 9.1
-----------
above, the access to information being granted pursuant to Section 9.2
-----------
above, the agreement to provide witnesses and individuals pursuant to
Section 9.4 above and the transfer of Privileged Information to any party
-----------
hereto (or any of its Subsidiaries) pursuant to this Agreement shall not be
deemed a waiver of any Privilege that has been or may be asserted under
this Section 9.6 or otherwise. Nothing in this Agreement shall operate to
-----------
reduce, minimize or condition the rights granted to each party in, or the
obligations imposed upon each party by, this Section 9.6.
-----------
Section 9.7. Certain Matters. Notwithstanding any other provision
---------------
set forth in this Article IX or elsewhere herein, each of LifePoint and Triad
----------
acknowledges the existence of the Government Investigations and of the
proceedings and claims which constitute the Indemnified Matters, and each
acknowledges that Columbia/HCA may need access to information regarding the
LifePoint Group Business and the Triad Group Business for purposes of responding
to the Government Investigations and the Indemnified Matters. Each of LifePoint
and Triad agrees to provide all information which is requested by Columbia/HCA
in connection with the Government Investigations and the Indemnified Matters,
and that such information may be disclosed by Columbia/HCA to the
representatives of the Governmental Authorities who are conducting the
Government Investigations and otherwise may be disclosed as deemed to be
appropriate by Columbia/HCA in connection with the Indemnified Matters. Each of
LifePoint and Triad further agrees to provide representatives of the
Governmental Authorities who are conducting the Government Investigations with
direct, full and complete access to all of the LifePoint Group Records (in the
case of LifePoint) and the
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Triad Group Records (in the case of Triad) as well as the right to make copies
of such records, and to permit representatives of such Governmental Authorities
to remove original records upon reasonable notice and the substitution of copies
for any records to be removed. Each of LifePoint and Triad also agrees to permit
employees to speak with the representatives of such Governmental Authorities.
Each of LifePoint and Triad agrees that, in connection with the Government
Investigations, it will participate with Columbia/HCA in negotiating one or more
Compliance Agreements.
ARTICLE X
INTEREST ON PAYMENTS
Section 10.1. Interest on Payments. Except as otherwise expressly
--------------------
provided in this Agreement, all payments by one party to the other under this
Agreement shall be paid, by wire transfer of immediately available funds to an
account in the United States designated by the recipient, within 30 days after
receipt of an invoice or other written request for payment setting forth the
specific amount due and a description of the basis therefor in reasonable
detail. Any amount remaining unpaid beyond its due date, including disputed
amounts that are ultimately determined to be payable, shall bear interest during
the period that such amount remains unpaid (computed on the basis of a 360-day
year of twelve 30-day months) at a fluctuating rate per annum equal to the prime
commercial lending rate publicly announced by The Chase Manhattan Bank or any
successor thereto at its principal office (or any alternative rate substituted
therefor by such bank).
ARTICLE XI
MISCELLANEOUS
Section 11.1. Allocation of Costs and Expenses. Except as otherwise set
--------------------------------
forth in this Agreement or any Ancillary Agreement, all costs and expenses
incurred on or prior to the Distribution Date (whether or not paid on or prior
to the Distribution Date) in connection with the Restructuring Transactions, the
Distribution and the other transactions contemplated hereby, including, but not
limited to, (i) the preparation, printing and filing of the LifePoint Form 10
and the Triad Form 10, (ii) the Listing of the LifePoint Common Stock and the
Triad Common Stock, (iii) the preparation and negotiation of all of the
documentation related to the Restructuring Transactions, the Distribution and
the other transactions contemplated hereby, (iv) the preparation, printing and
mailing of the Information Statement, (v) the preparation and filing of the
private letter ruling request submission by Columbia/HCA to the IRS, and (vi)
the engagement of Goldman, Sachs & Co. as financial advisor to Columbia/HCA in
connection with Restructuring Transactions, the Distribution and the other
transactions contemplated hereby, shall be charged to and paid by Columbia/HCA;
provided, however, that each of LifePoint and Triad shall be solely responsible
and liable for any fees, costs or other expenses that it separately and directly
incurs in connection with any of the Restructuring Transactions, the
Distribution or any of the other transactions contemplated by this
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Agreement or any of the Ancillary Agreements. Except as otherwise set forth in
this Agreement or any Ancillary Agreement, each party shall bear its own costs
and expenses incurred after the Distribution Date. Any amount or expense to be
paid or reimbursed by any party hereto to any other party hereto shall be so
paid or reimbursed promptly after the existence and amount of such obligation is
determined and demand therefor is made.
Section 11.2. Termination; Amendment. This Agreement may be
----------------------
terminated and the Distribution may be amended, modified or abandoned at any
time prior to the consummation of the Distribution by and in the sole discretion
of Columbia/HCA without the approval of LifePoint or Triad. In the event of such
termination, amendment, modification or abandonment, no party hereto shall have
any Liability of any kind to any other party or any other person. After the
Distribution Date, this Agreement may not be terminated, amended or modified
except by an agreement in writing signed by all of the parties hereto; provided,
however, that only the signatures of Columbia/HCA and LifePoint shall be
required to amend or modify this Agreement in a manner which affects only the
rights and obligations hereunder as between Columbia/HCA and LifePoint, and only
the signatures of Columbia/HCA and Triad shall be required to amend or modify
this Agreement in a manner which affects only the rights and obligations
hereunder as between Columbia/HCA and Triad.
Section 11.3. Disputes.
--------
(a) Resolution of any and all disputes arising from or in
connection with this Agreement, any Ancillary Agreement, any
Conveyancing and Assumption Instrument or any transaction contemplated
hereby or thereby, whether based on contract, tort, statute or
otherwise, including, but not limited to, disputes in connection with
claims by third parties (collectively, "Disputes"), shall be resolved
in accordance with this Section 11.3; provided, however, that a party
------------
may, without prejudice to the provisions of this Section 11.3, file a
------------
complaint for statute of limitations reasons, or to seek a preliminary
injunction or other provisional relief, if in its sole judgment such
action is necessary to avoid irreparable damage or to preserve the
status quo. Despite such action the parties shall continue to
participate in good faith in the procedures specified in this Section
-------
11.3. All applicable statutes of limitations and defenses based upon
----
the passage of time shall be tolled while the procedures set forth in
this Section 11.3 are pending. The parties shall take such action, if
------------
participate in good faith in the procedures specified in this Section
11.3. All applicable statutes of limitations and defenses based upon
the passage of time shall be tolled while the procedures set forth in
this Section 11.3 are pending. The parties shall take such action, if
------------
any, as is required to effectuate such tolling.
(b) The parties shall use all reasonable efforts to amicably
resolve any Dispute through direct discussions, and each party agrees that
its senior management will respond promptly to notice of any such Dispute.
Any party hereto may give another party written notice of any Dispute,
which notice shall include a statement of the position of the party giving
such notice and a summary of arguments supporting that position. Within 30
days after such written notice is received, one or more members of the
senior management of each of the parties involved in the Dispute shall meet
in Nashville, Tennessee to
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attempt in good faith to resolve the Dispute. All reasonable requests for
information made by one party to the other will be honored.
(c) If the Dispute has not been resolved by negotiation pursuant
to Section 11.3(b) above within 90 days of delivery of the first written
---------------
notice, or if the senior management of the parties to the Dispute have
failed to meet within 45 days after the date of delivery of such notice,
then within 15 days thereafter, the chief executive officer of each of the
parties involved in the Dispute shall meet in Nashville, Tennessee to
attempt in good faith to resolve the Dispute.
(d) If the Dispute has not been resolved by negotiation pursuant
to Section 11.3(b) or (c) above within 120 days of delivery of the first
--------------- ---
written notice, or if the chief executive officers of such parties have
failed to meet when required pursuant to Section 11.3(c) above, then each
---------------
party to the Dispute shall retain and thereafter may pursue all rights and
remedies it may have at law or in equity in respect of such Dispute,
including, without limitation, commencing any Action permitted by Law or,
if the parties mutually shall agree, submitting such matter to be settled
by arbitration.
Section 11.4. Consent to Jurisdiction. Columbia/HCA, LifePoint and
-----------------------
Triad each hereby expressly (a) submits and consents in advance to the
jurisdiction of any Tennessee State Court sitting in Nashville, Tennessee or the
United States District Court for the Middle District of Tennessee with respect
to any Actions arising out of or relating to this Agreement, (b) waives any
objection which it may have based upon lack of personal jurisdiction, improper
venue or forum non conveniens, (c) agrees that all claims with respect to such
Actions may be heard and determined in any Tennessee State Court sitting in
Nashville, Tennessee or the United States District Court for the Middle District
of Tennessee, (d) agrees not to commence any Action relating to this Agreement
other than in a Tennessee State Court sitting in Nashville, Tennessee or the
United States District Court for the Middle District of Tennessee, and (e)
agrees that a final judgment in any such Action shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
Section 11.5. Waiver of Jury Trial. EACH OF COLUMBIA/HCA, LIFEPOINT
--------------------
AND TRIAD ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER
THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH
PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A)
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND
HAS
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<PAGE>
CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER
VOLUNTARILY AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.5.
------------
Section 11.6. Notices. All notices or other communications required
-------
or permitted under this Agreement shall be in writing and sufficient if sent by
registered or certified mail, postage prepaid, addressed as provided below; or
delivered personally, by private courier or fax, and followed by such mailing:
If to Columbia/HCA, to
Columbia/HCA Healthcare Corporation
One Park Plaza
Nashville, Tennessee 37203
Telecopy: (615) 344-2015
Attention: Mr. Milton Johnson
Vice President and Controller
with a copy to:
Columbia/HCA Healthcare Corporation
One Park Plaza
Nashville, Tennessee 37203
Telecopy: (615) 344-2075
Attention: Robert A. Waterman, Esq.
Senior Vice President and General Counsel
If to LifePoint, to
LifePoint Hospitals, Inc.
4525 Harding Road
Suite 103
Nashville, Tennessee 37205
Telecopy: (615) 344-6276
Attention: Mr. Scott L. Mercy
Chairman and Chief Executive Officer
with a copy to:
LifePoint Hospitals, Inc.
4525 Harding Road
Suite 103
Nashville, Tennessee 37205
Telecopy: (615) 344-6272
Attention: William F. Carpenter III, Esq.
Senior Vice President and General Counsel
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<PAGE>
If to Triad, to
Triad Hospitals, Inc.
13455 Noel Road
20th Floor
Dallas, Texas 75240
Telecopy: (972) 663-3945
Attention: Mr. James D. Shelton
Chairman and Chief Executive Officer
with a copy to:
Triad Hospitals, Inc.
13455 Noel Road
20th Floor
Dallas, Texas 75240
Telecopy: (972) 701-9604
Attention: Donald P. Fay, Esq.
Executive Vice President and General Counsel
In each case, with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
Telecopy: (212) 259-6333
Attention: Morton A. Pierce, Esq.
Any party may change the person and address to which notices or other
communications are to be sent to it by giving written notice of any such change
in the manner provided herein.
Section 11.7. Entire Agreement. This Agreement, together with the
----------------
Ancillary Agreements and the exhibits and other documents delivered pursuant
hereto, sets forth the entire agreement and understanding of the parties hereto
in respect of the transactions contemplated hereby, and supersedes all prior
agreements, arrangements and understandings relating to the subject matter
hereof. No party hereto has relied upon any oral or written statement,
representation, warranty, covenant, condition, understanding or agreement made
by any other party or any representative, agent or employee thereof, except for
those expressly set forth in this Agreement or in the exhibits or other
documents delivered pursuant hereto. Nothing herein is intended to diminish any
of the rights or obligations of any of the parties pursuant to the Tax
Agreement, the Insurance Allocation and Administration Agreement, the Employee
Benefits Agreement, any of the other Ancillary Agreements or any Conveyancing
and Assumption Instrument.
-49-
<PAGE>
Section 11.8. Assignment. This Agreement shall inure to the benefit
----------
of, and be binding upon, the parties hereto and their respective successors,
heirs, executors, administrators, legal representatives and permitted assigns;
provided, however, that no assignment of any rights or delegation of any
obligations provided for herein shall be made by any party hereto without the
express prior written consent of each other party hereto; provided, further,
that only the signatures of Columbia/HCA and LifePoint shall be required to
effect an assignment in a manner which affects only the rights and obligations
hereunder as between Columbia/HCA and LifePoint, and only the signatures of
Columbia/HCA and Triad shall be required to effect an assignment in a manner
which affects only the rights and obligations hereunder as between Columbia/HCA
and Triad. Notwithstanding the foregoing, the indemnification by Columbia/HCA of
the LifePoint Indemnitees and the Triad Indemnitees in respect of the
Indemnified Matters provided for herein and the indemnification of LifePoint and
Triad in respect of Pre-Distribution Cost Reports shall not be assignable, and
no party shall request that Columbia/HCA consent to any such assignment.
Section 11.9. Survival of Agreements and Covenants. Except as
------------------------------------
otherwise expressly provided herein, all agreements and covenants of the parties
hereto which are contained in this Agreement, together with the exhibits and
other documents delivered pursuant hereto, shall survive the Distribution and
remain operative and in full force and effect, regardless of any investigation
heretofore or hereafter made by or on behalf of any of the parties hereto.
Section 11.10. No Third Party Beneficiaries. Except as provided in
----------------------------
Article V above (relating to Indemnitees), this Agreement is solely for the
- ---------
benefit of the parties hereto, and should not be construed to confer upon any
other person any remedy, claim, liability, right of reimbursement, claim of
action or other right.
Section 11.11. Waiver. No delay or omission by any party hereto to
------
exercise any right or power under this Agreement or pursuant to applicable law
shall impair such right or power or be construed as a waiver thereof. A waiver
by any party hereto of any of the covenants to be performed by any other party
or any breach shall not be construed to be a waiver of any succeeding breach or
of any other covenant. All rights and remedies conferred under this Agreement or
by any other instrument or law shall be cumulative and may be exercised
singularly or concurrently. The failure by either party to enforce any term
shall not be deemed to be a waiver of future enforcement of that or any other
term of this Agreement.
Section 11.12. Severability. In the event that any provision hereof
------------
is prohibited or unenforceable in any jurisdiction, such provision shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 11.13. Governing Law. This Agreement shall be deemed to be
-------------
made in and in all respects shall be interpreted, construed and governed by and
in
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<PAGE>
accordance with the law of the State of Delaware without regard to the conflict
of law principles thereof.
Section 11.14. Counterparts. This Agreement may be executed in any
------------
number of separate counterparts, each of which shall be deemed to be an
original, but which together shall constitute one and the same instrument.
Section 11.15. Headings. The section headings contained in this
--------
Agreement are inserted for convenience of reference only and shall not affect
the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, each party hereto has duly executed this
Agreement, or has caused this Agreement to be duly executed, as of the date
first above written.
Columbia/HCA Healthcare Corporation
By:/s/ Thomas F. Frist, Jr.
-----------------------------------------
Thomas F. Frist, Jr., M.D.
Chairman and Chief Executive Officer
LifePoint Hospitals, Inc.
By:/s/ Scott L. Mercy
----------------------------------------
Scott L. Mercy
Chairman and Chief Executive Officer
Triad Hospitals, Inc.
By:/s/ James D. Shelton
---------------------------------------
James D. Shelton
Chairman and Chief Executive Officer
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<PAGE>
List of Exhibits
Exhibit Description
------- -----------
Exhibit A Ancillary Agreements
Exhibit B LifePoint By-laws
Exhibit C LifePoint Certificate of Incorporation
Exhibit D Columbia/HCA Insurance Coverages
Exhibit E LifePoint Properties
Exhibit F Triad By-laws
Exhibit G Triad Certificate of Incorporation
Exhibit H Triad Properties
Exhibit I Certain Guarantees
Exhibit J Certain Accounting Matters
Annex A 1998 EBITDA by Hospital
A-1
<PAGE>
EXHIBIT 3.1
________________________________________________________________________________
Certificate of Incorporation
of
Triad Hospitals, Inc.
______________
DELAWARE
________________________________________________________________________________
<PAGE>
Certificate of Incorporation
of
Triad Hospitals, Inc.
FIRST: The name of the Corporation is Triad Hospitals, Inc.
SECOND: The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle, Delaware 19801. The name of its registered
agent at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.
FOURTH: The total number of shares of all classes of capital stock which
the Corporation shall have the authority to issue is One Hundred Million
(100,000,000) shares, divided into two classes of which Ten Million (10,000,000)
shares, par value $.01 per share, shall be designated Preferred Stock, and
Ninety Million (90,000,000) shares, par value $.01 per share, shall be
designated Common Stock.
A. Preferred Stock
1. Issuance. The Board of Directors is expressly authorized, subject
--------
to limitations prescribed by law, to provide for the issuance of shares of
Preferred Stock in one or more series, to establish the number of shares to
be included in each such series, and to fix the designations, powers,
preferences, and rights of the shares of each such series, and any
qualifications, limitations or restrictions thereof. The number of
authorized shares of Preferred Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative
vote of the holders of at least 80% of the voting power of all of the then
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class,
without a separate vote of the holders of the Preferred Stock, unless a
vote of any such holders is required pursuant to the terms of any such
series of Preferred Stock.
2. Series A Junior Participating Preferred Stock.
---------------------------------------------
Section 1. Designation and Amount. Ninety Thousand (90,000)
----------------------
shares of the Preferred Stock of the Corporation shall be designated
as "Series A Junior Participating Preferred Stock," par value $.01 per
share (the "Series A Preferred Stock"). The number of shares of such
series of Preferred Stock may be increased or decreased by resolution
of the Board of Directors; provided, however, that no decrease shall
reduce the number of shares of such series of Preferred Stock to a
number less than the number of shares then outstanding plus the number
of shares reserved for issuance upon the exercise of outstanding
options, rights or warrants
-1-
<PAGE>
or upon the conversion of any outstanding securities issued by the
Corporation convertible into Series A Preferred Stock.
Section 2. Dividends and Distributions.
---------------------------
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock (or any similar stock) ranking prior and
superior to the Series A Preferred Stock with respect to dividends,
the holders of shares of Series A Preferred Stock, in preference to
the holders of Common Stock, and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September
and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of (a) $10 or
(b) subject to the provision for adjustment hereinafter set forth,
1,000 times the aggregate per share amount of all cash dividends, and
1,000 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on
the Common Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event the Corporation shall at any
time declare or pay any dividend on the Common Stock payable in shares
of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) of this
Section 2 immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common
Stock); provided, however, that, in the event no dividend or
distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $10 per
share on the Series A Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
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<PAGE>
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date
for the first Quarterly Dividend Payment Date, in which case dividends
on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment
Date or is a date after the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in
either of which events such dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but
unpaid dividends shall not bear interest. Dividends paid on the shares
of Series A Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at
the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Preferred Stock
entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
--------------
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder
thereof to 1,000 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall at
any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the number of votes per share to which
holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in a resolution or
resolutions adopted by the Board of Directors providing for the
issuance of a series of Preferred Stock or any similar stock (a
"Certificate of Designation"), or by law, the holders of shares of
Series A Preferred Stock and the holders of shares of Common Stock and
any other capital stock of the Corporation entitled to vote generally
in the election of directors shall vote together as a single class on
all matters submitted to a vote of stockholders of the Corporation.
(C) Except as otherwise provided herein, or by law, holders of
Series A Preferred Stock shall have no special voting rights and their
consent shall not be
-3-
<PAGE>
required (except to the extent they are entitled to vote with holders
of Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 of paragraph A of this Article Fourth are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A
Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except dividends paid ratably on
the Series A Preferred Stock and all such parity stock on which
dividends are payable or in arrears, in proportion to the total
amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock, provided, however, that the Corporation
may at any time redeem, purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the
Corporation ranking junior (both as to dividends and upon
dissolution, liquidation or winding up) to the Series A Preferred
Stock; or
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any shares
of stock ranking on a parity with the Series A Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could, under
paragraph (A) of this Section 4, purchase or otherwise acquire such
shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred
-----------------
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the
acquisition thereof. All such shares shall upon their cancellation
become authorized but unissued shares of Preferred Stock and may be
reissued as part of a new series of Preferred Stock
-4-
<PAGE>
subject to the conditions and restrictions on issuance set forth
herein or in any Certificate of Designation providing for the issuance
of a series of Preferred Stock or any similar stock or as otherwise
required by law.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
--------------------------------------
liquidation, dissolution or winding up of the Corporation, no
distribution shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall
have received $1,000 per share, plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, provided, however, that the holders of
shares of Series A Preferred Stock shall be entitled to receive an
aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to
the holders of shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the
Series A Preferred Stock and all such parity stock, in proportion to
the total amounts to which the holders of all such shares are entitled
upon such liquidation, dissolution or winding up. In the event the
Corporation shall at any time declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a
dividend in shares of Common Stock) into a greater or lesser number of
shares of Common Stock, then in each such case the aggregate amount to
which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of the
preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation
--------------------------
shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or
changed into other stock or securities, cash and/or any other
property, then in any such case each share of Series A Preferred Stock
shall at the same time be similarly exchanged or changed into an
amount per share, subject to the provision for adjustment hereinafter
set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event the Corporation shall at any time
declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock)
into a greater or lesser number of shares of Common Stock, then in
each such case the amount set forth in the preceding sentence with
respect to the
-5-
<PAGE>
exchange or change of shares of Series A Preferred Stock shall be
adjusted by multiplying such amount by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred
-------------
Stock shall not be redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with
----
respect to the payment of dividends and the distribution of assets,
junior to all series of any other class of the Corporation's Preferred
Stock.
Section 10. Amendment. This Certificate of Incorporation shall
---------
not be amended in any manner which would materially alter or change
the powers, preferences or special rights of the Series A Preferred
Stock so as to affect them adversely without the affirmative vote of
the holders of at least two-thirds of the outstanding shares of Series
A Preferred Stock, voting together as a single class.
B. Common Stock.
Section 1. Dividends. Subject to the preferential rights, if
---------
any, of the holders of any series of Preferred Stock then outstanding,
the holders of the Common Stock shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally
available for the purpose, dividends payable either in cash, in
property or in shares of Common Stock or other securities of the
Corporation.
Section 2. Voting Rights. Subject to the rights, if any, of the
-------------
holders of any series of Preferred Stock then outstanding, and except
as otherwise required by law, the holders of the Common Stock shall
exclusively possess all voting power, and at every annual or special
meeting of stockholders of the Corporation, each holder of Common
Stock shall be entitled to one vote, in person or by proxy, for each
share of Common Stock standing in such holder's name on the books of
the Corporation.
Section 3. Liquidation, Dissolution or Winding Up. Upon any
--------------------------------------
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation, the holders of the Common Stock shall be
entitled to share ratably in all assets of the Corporation available
for distribution to its stockholders, subject to the preferential
rights, if any, of the holders of any series of Preferred Stock then
outstanding.
FIFTH: The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. The Board of Directors may
exercise all such authority and powers of the Corporation and do all such lawful
acts and things as are not by statute or this Certificate of Incorporation
directed or required to be exercised or done by the stockholders.
-6-
<PAGE>
A. Number of Directors. The number of directors of the Corporation
(exclusive of directors to be elected by the holders of one or more series
of the Preferred Stock of the Corporation which may be outstanding, voting
separately as a series or class) shall be fixed from time to time by action
of not less than a majority of the members of the Board of Directors then
in office, but in no event shall such number of directors of the
Corporation be less than three nor more than fifteen.
B. Classes. The directors, other than those who may be elected by
the holders of any series of Preferred Stock under specified circumstances,
shall be divided with respect to the time for which they severally hold
office, into three classes, as nearly equal in number as reasonably
possible, with the term of office of the first class to expire at the 2000
annual meeting of stockholders, the term of office of the second class to
expire at the 2001 annual meeting of stockholders and the term of office of
the third class to expire at the 2002 annual meeting of stockholders. At
each annual meeting of stockholders, commencing with the 2000 annual
meeting, (i) directors shall be elected to succeed those directors whose
terms expire for a term of office to expire at the third succeeding annual
meeting of stockholders after their election, and (ii) if authorized by a
resolution of the Board of Directors, directors may be elected to fill any
vacancy in the Board of Directors, regardless of how such vacancy was
created. Directors need not be stockholders. All directors shall hold
office until the expiration of the term for which elected and until their
successors are elected, except in the case of the death, resignation,
disqualification or removal of any director.
C. Stockholder Nomination of Director Candidates and Introduction of
Business. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting
of the stockholders of the Corporation shall be given in the manner
provided in the By-Laws of the Corporation.
D. Vacancies. Subject to the rights, if any, of the holders of any
series of Preferred Stock then outstanding, and unless the Board of
Directors otherwise determines, newly created directorships resulting from
any increase in the authorized number of directors or any vacancies in the
Board of Directors resulting from death, resignation, disqualification or
removal may be filled only by a majority vote of the directors then in
office, though less than a quorum, and directors so chosen shall hold
office for a term expiring at the annual meeting of stockholders at which
the term of office of the class to which they have been elected expires or,
in the case of newly created directorships, shall hold office until such
time as determined by the directors electing such new director (in a manner
consistent with paragraph B of this Article Fifth). No decrease in the
number of directors constituting the Board of Directors shall shorten the
term of any incumbent director.
E. Removal. Subject to the rights, if any, of the holders of any
series of Preferred Stock then outstanding, any director, or the entire
Board of Directors, may be removed from office at any time, but only for
cause and only by the affirmative vote of the holders of at least 80% of
the voting power of all of the then outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of directors,
voting together as a single class.
-7-
<PAGE>
SIXTH: Subject to the rights, if any, of the holders of any series of
Preferred Stock then outstanding, no action required to be taken or which may be
taken at any annual or special meeting of the stockholders of the Corporation
may be taken without a meeting, and the power of the stockholders to consent in
writing, without a meeting, to the taking of any action, including (without
limitation) the power of stockholders to adopt or amend the By-Laws of the
Corporation by written consent, is hereby specifically denied.
SEVENTH: Subject to the rights, if any, of the holders of any series of
Preferred Stock then outstanding, special meetings of the stockholders of the
Corporation may be called only by (a) the Chairman of the Board of Directors, if
one shall have been elected or (b) the Chief Executive Officer of the
Corporation, and, in addition, a special meeting shall be called by the Chairman
of the Board or the Chief Executive Officer at the request in writing of a
majority of the Board of Directors. The ability of the stockholders to call a
special meeting is hereby specifically denied.
EIGHTH: In furtherance and not in limitation of the powers conferred upon
it by the laws of the State of Delaware, the Board of Directors shall have the
power to adopt, amend, alter or repeal the By-Laws of the Corporation. The
Corporation's By-Laws may also be adopted, amended, altered or repealed by the
stockholders at any annual or special meeting by the affirmative vote of the
holders of at least 80% of the voting power of all shares of the Corporation
entitled to vote generally in the election of directors, voting together as a
single class.
NINTH: Elections of directors need not be by written ballot unless the By-
Laws of the Corporation shall otherwise provide.
TENTH: A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that the foregoing shall not eliminate or
limit the liability of a director (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit. If the Delaware General Corporation Law is hereafter amended to permit
further elimination or limitation of the personal liability of directors, then
the liability of a director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the Delaware General Corporation Law as so
amended. Any repeal or modification of this Article Tenth shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such repeal or modification.
ELEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them or between this Corporation
and its stockholders or any class of them, any court of equitable jurisdiction
within the State of Delaware may, on the application in a summary way of this
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this Corporation under the provisions of
Section 291 of the Delaware General Corporation Law or on
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the application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of the
Delaware General Corporation Law, order a meeting of the creditors or class of
creditors, or of the stockholders or class of stockholders of this Corporation,
as the case may be, to be summoned in such manner as the said court directs. If
a majority in number representing three-fourths in value of the creditors or
class of creditors, or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which said application has been made, be
binding on all the creditors or class of creditors, or on all of the
stockholders or class of stockholders, of this Corporation, as the case maybe,
and also on this Corporation.
TWELFTH:
A. As used in this Article Twelfth, the following terms shall have
the meanings set forth below:
"Business Combination" shall mean (a) any merger or consolidation of
the Corporation or a Subsidiary with a Related Person, (b) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition other than in the
ordinary course of business to or with a Related Person of any assets of
the Corporation or a Subsidiary having an aggregate fair market value of
$25,000,000 or more, (c) the issuance or transfer by the Corporation of any
shares of Voting Stock or securities convertible into or exercisable for
such shares (other than by way of pro rata distribution to all
stockholders) to a Related Person, (d) any recapitalization, merger or
consolidation that would have the effect of increasing the voting power of
a Related Person, (e) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation or a Subsidiary proposed,
directly or indirectly, by or on behalf of a Related Person, (f) any merger
or consolidation of the Corporation with another Person proposed, directly
or indirectly, by or on behalf of a Related Person unless the entity
surviving or resulting from such merger or consolidation has a provision in
its certificate or articles of incorporation, charter or similar governing
instrument which is substantially identical to this Article Twelfth or (g)
any agreement, contract or other arrangement or understanding providing,
directly or indirectly, for any of the transactions described in clauses
(a) through (f) above.
"Related Person" shall mean any individual, partnership, corporation,
trust or other Person which, together with its "affiliates" and
"associates," as defined in Rule 12b-2 under the Exchange Act as in effect
on April 23, 1999, and together with any other individual, partnership,
corporation, trust or other Person with which it or they have any
agreement, contract or other arrangement or understanding with respect to
acquiring, holding, voting or disposing of Voting Stock, "beneficially
owns" (within the meaning of Rule 13d-3 under the Exchange Act on said
date) an aggregate of 10% or more of the outstanding Voting Stock. A
Related Person, its affiliates and associates and all such other
individuals, partnerships, corporations and other Persons with whom it or
they have any such agreement, contract or other arrangement or
understanding, shall be deemed a single Related Person for purposes of this
Article Twelfth; provided, however, that the members of the Board of
Directors of the Corporation shall not be deemed to be
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associates or otherwise to constitute a Related Person solely by reason of
their board membership. A person who is a Related Person as of (i) the time
any definitive agreement relating to a Business Combination is entered
into, (ii) the record date for the determination of stockholders entitled
to notice of and to vote on a Business Combination or (iii) immediately
prior to the consummation of a Business Combination, shall be deemed a
Related Person for purposes of this Article Twelfth.
"Continuing Director" shall mean any member of the Board of Directors
of the Corporation who is not an "affiliate" or "associate" of the Related
Person and was a member of the Board of Directors prior to the time that
such Related Person became a Related Person, and any successor of a
Continuing Director who is unaffiliated with such Related Person and is
recommended to succeed a Continuing Director by a majority of the
Continuing Directors.
"Person" shall mean any individual, firm, corporation or other entity.
"Subsidiary" shall mean with respect to any Person, (i) any
corporation in which such Person, directly or indirectly, owns or controls,
at the time of determination, at least a majority in interest of the
outstanding voting stock (having by the terms thereof voting power under
ordinary circumstances to elect a majority of the directors of such
corporation, irrespective of whether or not stock of any other class or
classes of such corporation shall have or might have voting power by reason
of the occurrence of a contingency); or (ii) any non-corporate entity in
which such Person either (a) directly or indirectly, at the time of
determination, has at least a majority ownership interest, or (b) at the
date of determination, is a general partner or an entity performing similar
functions (for example, manager of a limited liability company or a trustee
of a trust).
"Voting Stock" shall mean any shares of the Corporation entitled to
vote generally in the election of directors.
"Entire Board of Directors" shall mean the total number of directors
which the Corporation would have if there were no vacancies.
"Market Value" shall mean the average of the high- and low-quoted
sales price on the date in question (or, if there is no reported sale on
such date, on the last preceding date on which any reported sale occurred)
of a share on the Composite Tape for the New York Stock Exchange Listed
Stocks, or, if the shares are not listed or admitted to trading on such
exchange, on the principal United States securities exchange registered
under the Exchange Act on which the shares are listed or admitted to
trading, or, if the shares are not listed or admitted to trading on any
such exchange, the mean between the closing high-bid and low-asked
quotations with respect to a share on such date as quoted on the National
Association of Securities Dealers Automated Quotations System, or similar
system then in use, or, if no such quotations are available, the fair
market value on such date of a share as at least 66 2/3% of the Continuing
Directors shall determine.
B. In addition to any other vote required by this Certificate of
Incorporation or the Delaware General Corporation Law, the affirmative vote
of the holders of not less
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than 85% of the outstanding Voting Stock held by stockholders other than a
Related Person by or with whom or on whose behalf, directly or indirectly,
a Business Combination is proposed, voting as a single class, shall be
required for the approval or authorization of such Business Combination;
provided, however, that the 85% voting requirement shall not be applicable
and such Business Combination may be approved by the vote required by law
or by any other provision of this Certificate of Incorporation if either:
1. The Business Combination is approved by the Board of Directors of
the Corporation by the affirmative vote of at least 66 2/3% of the
Continuing Directors, or
2. All of the following conditions are satisfied:
(A) The aggregate amount of cash and the fair market value of
the property, securities or other consideration to be received per
share of capital stock of the Corporation in the Business Combination
by the holders of capital stock of the Corporation, other than the
Related Person involved in the Business Combination, shall not be less
than the highest of (i) the highest per share price (including
brokerage commissions, soliciting dealers' fees, and dealer-management
compensation, and with appropriate adjustments for recapitalizations,
stock splits, stock dividends and like transactions and distributions)
paid by such Related Person in acquiring any of its holdings of such
class or series of capital stock, (ii) the highest per share Market
Value of such class or series of capital stock within the twelve-month
period immediately preceding the date the proposal for such Business
Combination was first publicly announced or (iii) the book value per
share of such class or series of capital stock, determined in
accordance with generally accepted accounting principles, as of the
last day of the month immediately preceding the date the proposal for
such Business Combination was first publicly announced;
(B) The consideration to be received in such Business
Combination by holders of capital stock other than the Related Person
involved shall, except to the extent that a stockholder agrees
otherwise as to all or part of the shares which he or she owns, be in
the same form and of the same kind as the consideration paid by the
Related Person in acquiring capital stock already owned by it,
provided, however, that if the Related Person has paid for capital
stock with varying forms of consideration, the form of consideration
for shares of capital stock acquired in the Business Combination by
the Related Person shall either be cash or the form used to acquire
the largest number of shares of capital stock previously acquired by
it; and
(C) A proxy statement responsive to the requirements of the
Exchange Act and regulations promulgated thereunder, whether or not
the Corporation is then subject to such requirements, shall be mailed
to the stockholders of the Corporation for the purpose of soliciting
stockholder approval of such Business Combination and shall contain at
the front thereof, in a prominent place, (i) any recommendations as to
the advisability (or inadvisability) of the Business Combination which
the Continuing Directors may choose to state and (ii) the
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opinion of a reputable investment banking firm selected by the
Continuing Directors as to the fairness of the terms of such Business
Combination, from a financial point of view, to the stockholders
(other than the Related Person) of the Corporation.
C. A Related Person shall be deemed for purposes of this Article
Twelfth to have acquired a share of the Corporation at the time when such
Related Person became the beneficial owner thereof (as such term is defined
in paragraph A of this Article Twelfth). With respect to shares owned by
affiliates, associates and other Persons whose ownership is attributed to a
Related Person, if the price paid by such Related Person for such shares is
not determinable, the price so paid shall be deemed to be the higher of (i)
the price paid upon acquisition thereof by the affiliate, associate or
other Person or (ii) the Market Value of the shares in question at the time
when the Related Person became the beneficial owner thereof.
For purposes of this Article Twelfth, in the event of a Business
Combination upon consummation of which the Corporation would be the
surviving corporation or would continue to exist (unless it is provided,
contemplated or intended that as part of such Business Combination a plan
of liquidation or dissolution of the Corporation will be effected), the
term "other consideration to be received" in paragraph B.2.(A) of this
Article Twelfth shall include (without limitation) common stock or other
capital stock of the Corporation retained by stockholders of the
Corporation (other than Related Persons who are parties to such Business
Combination).
Nothing contained in this Article Twelfth shall be construed to
relieve any Related Person from any fiduciary obligation imposed by law.
D. Notwithstanding any other provision of this Certificate of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that a lesser percentage may be permitted by law), any amendment,
addition, alteration, change or repeal of this Article Twelfth, or any
other amendment of this Certificate of Incorporation or the By-Laws of the
Corporation inconsistent with or modifying or permitting circumvention of
this Article Twelfth, must first be proposed by the Board of Directors of
the Corporation, upon the affirmative vote of at least 66 2/3% of the
directors then in office at a duly constituted meeting of the Board of
Directors called for such purpose, and thereafter approved by the
affirmative vote of the holders of not less than 85% of the then
outstanding Voting Stock held by stockholders other than a Related Person
by or with whom or on whose behalf, directly or indirectly, a Business
Combination is proposed, voting as a single class; provided, however, that
this paragraph D shall not apply to, and such 85% vote shall not be
required for, any such amendment, addition, alteration, change or repeal
recommended to stockholders of the Corporation by the affirmative vote of
not less than 66 2/3% of the Continuing Directors. For the purposes of this
paragraph D only, if at the time when any such amendment, addition,
alteration, change or repeal is under consideration there is no proposed
Business Combination, the term "Continuing Directors" shall mean the Entire
Board of Directors.
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THIRTEENTH: The Board of Directors, each committee of the Board of
Directors and each individual director, in discharging their respective duties
under applicable law and this Certificate of Incorporation and in determining
what they each believe to be in the best interests of the Corporation and its
stockholders, may consider the effects, both short-term and long-term, of any
action or proposed action taken or to be taken by the Corporation, the Board of
Directors or any committee of the Board of Directors on the interests of (i) the
employees, associates, associated physicians, distributors, patients or other
customers, suppliers or creditors of the Corporation and its subsidiaries and
(ii) the communities in which the Corporation and its subsidiaries own or lease
property or conduct business, all to the extent that the Board of Directors, any
committee of the Board of Directors or any individual director deems pertinent
under the circumstances (including the possibility that the interests of the
Corporation may best be served by the continued independence of the
Corporation); provided, however, that the provisions of this Article Thirteenth
shall not limit in any way the right of the Board of Directors to consider any
other lawful factors in making its determinations, including, without
limitation, the effects, both short-term and long-term, of any action or
proposed action on the Corporation or its stockholders directly; and provided
further, that this Article Thirteenth shall be deemed solely to grant
discretionary authority to the Board of Directors, each committee of the Board
of Directors and each individual director and shall not be deemed to provide to
any specific constituency any right to be considered.
FOURTEENTH: Each person who was or is made a party or is threatened to be
made a party to or is involved (including, without limitation, as a witness) in
an actual or threatened action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of the
fact that he or she is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an "Indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director, officer,
employee or agent or in any other capacity while serving as such a director,
officer, employee or agent, shall be indemnified and held harmless by the
Corporation to the full extent authorized by the Delaware General Corporation
Law, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Corporation
to provide broader indemnification rights than said law permitted the
Corporation to provide prior to such amendment), or by other applicable law as
then in effect, against all expense, liability and loss (including attorneys'
fees, judgments, fines, excise taxes under the Employee Retirement Income
Security Act of 1974, as amended from time to time ("ERISA"), penalties and
amounts to be paid in settlement) actually and reasonably incurred or suffered
by such Indemnitee in connection therewith.
A. Procedure. Any indemnification under this Article Fourteenth
(unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification
of the Indemnitee is proper in the circumstances because he or she has met
the applicable standard of conduct set forth in the Delaware General
Corporation Law, as the same exists or hereafter may be amended (but, in
the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than said
law permitted the
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Corporation to provide prior to such amendment). Such determination shall
be made (a) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding (the "Disinterested Directors"), or (b) if such a quorum of
Disinterested Directors is not obtainable, or, even if obtainable, a quorum
of Disinterested Directors so directs, by independent legal counsel in a
written opinion, or (c) by the stockholders.
B. Advances For Expenses. Costs, charges and expenses (including
attorneys' fees) incurred by a director or officer of the Corporation in
defending a civil or criminal action, suit or proceeding shall be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of the director
or officer to repay all amounts so advanced in the event that it shall
ultimately be determined that such director or officer is not entitled to
be indemnified by the Corporation as authorized in this Article Fourteenth.
Such costs, charges and expenses incurred by other employees and agents may
be so paid upon such terms and conditions, if any, as the majority of the
Disinterested Directors deems appropriate. The majority of the
Disinterested Directors may, in the manner set forth above, and upon
approval of such Indemnitee, authorize the Corporation's counsel to
represent such person, in any action, suit or proceeding, whether or not
the Corporation is a party to such action, suit or proceeding.
C. Procedure for Indemnification. Any indemnification or advance of
costs, charges and expenses under this Article Fourteenth, shall be made
promptly, and in any event within 60 days upon the written request of the
Indemnitee. The right to indemnification or advances as granted by this
Article Fourteenth, shall be enforceable by the Indemnitee in any court of
competent jurisdiction, if the Corporation denies such request, in whole or
in part, or if no disposition thereof is made within 60 days. Such
Indemnitee's costs and expenses incurred in connection with successfully
establishing his or her right to indemnification, in whole or in part, in
any such action shall also be indemnified by the Corporation. It shall be a
defense to any such action (other than an action brought to enforce a claim
for the advance of costs, charges and expenses under this Article
Fourteenth, where the required undertaking, if any, has been received by
the Corporation) that the Indemnitee has not met the standard of conduct
set forth in the Delaware General Corporation Law, as the same exists or
hereafter may be amended (but, in the case of any such amendment, only to
the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide
prior to such amendment), but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including its
Board of Directors, its independent legal counsel and its stockholders) to
have made a determination prior to the commencement of such action that
indemnification of the Indemnitee is proper in the circumstances because he
or she has met the applicable standard of conduct set forth in the Delaware
General Corporation Law, as the same exists or hereafter may be amended
(but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
that said law permitted the Corporation to provide prior to such
amendment), nor the fact that there has been an actual determination by the
Corporation (including its Board of Directors, its independent legal
counsel and its stockholders) that the
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Indemnitee has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the Indemnitee has not
met the applicable standard of conduct.
D. Other Rights; Continuation of Right to Indemnification. The
indemnification and advancement of expenses provided by this Article
Fourteenth shall not be deemed exclusive of any other rights to which a
person seeking indemnification or advancement of expenses may be entitled
under any law, by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his or her official capacity
and as to action in another capacity while holding office or while employed
by or acting as agent for the Corporation, and shall continue as to a
person who has ceased to be a director, officer, employee or agent, and
shall inure to the benefit of the estate, heirs, executors and
administrators of such person. All rights to indemnification under this
Article Fourteenth, shall be deemed to be a contract between the
Corporation and each director, officer, employee or agent of the
Corporation who serves or served in such capacity at any time while this
Article Fourteenth, is in effect. Any repeal or modification of this
Article Fourteenth, or any repeal or modification of relevant provisions of
the Delaware General Corporation Law or any other applicable laws shall not
in any way diminish any rights to indemnification of such director,
officer, employee or agent or the obligations of the Corporation arising
hereunder with respect to any action, suit or proceeding arising out of, or
relating to, any actions, transactions or facts occurring prior to the
final adoption of such modification or repeal. For the purposes of this
Article Fourteenth, references to "the Corporation" include all constituent
corporations absorbed in a consolidation or merger as well as the resulting
or surviving corporation, so that any person who is or was a director,
officer, employee or agent of such a constituent corporation or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise shall stand in the same position under
the provisions of this Article Fourteenth, with respect to the resulting or
surviving corporation, as he would if he or she had served the resulting or
surviving corporation in the same capacity.
E. Insurance. The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was or has agreed to
become a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise against any liability asserted against him or her and
incurred by him or her or on his or her behalf in any such capacity, or
arising out of his or her status as such, whether or not the Corporation
would have the power to indemnify him or her against such liability under
the provisions of this Article Fourteenth; provided, however, that such
insurance is available on acceptable terms, which determination shall be
made by a vote of a majority of the Board of Directors.
F. Savings Clause. If this Article Fourteenth, or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction,
then the Corporation shall nevertheless indemnify each person entitled to
indemnification under paragraph A of this Article Fourteenth, as to all
expense, liability and loss (including attorneys' fees, judgments, fines,
ERISA excise taxes, penalties and amounts to be paid in settlement)
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actually and reasonably incurred or suffered by such person and for which
indemnification is available to such person pursuant to this Article
Fourteenth, to the full extent permitted by any applicable portion of this
Article Fourteenth, that shall not have been invalidated and to the full
extent permitted by applicable law.
FIFTEENTH: In furtherance and not in limitation of the powers conferred by
law or in this Certificate of Incorporation, the Board of Directors (and any
committee of the Board of Directors) is expressly authorized, to the extent
permitted by law, to take such action or actions as the Board of Directors or
such committee may determine to be reasonably necessary or desirable to (A)
encourage any person to enter into negotiations with the Board of Directors and
management of the Corporation with respect to any transaction which may result
in a change in control of the Corporation which is proposed or initiated by such
person or (B) contest or oppose any such transaction which the Board of
Directors or such committee determines to be unfair, abusive or otherwise
undesirable with respect to the Corporation and its business, assets or
properties or the stockholders of the Corporation, including, without
limitation, the adoption of such plans or the issuance of such rights, options,
capital stock, notes, debentures or other evidences of indebtedness or other
securities of the Corporation, which rights, options, capital stock, notes,
debentures, evidences of indebtedness and other securities (i) may be
exchangeable for or convertible into cash or other securities on such terms and
conditions as may be determined by the Board of Directors or such committee and
(ii) may provide for the treatment of any holder or class of holders thereof
designated by the Board of Directors or any such committee in respect of the
terms, conditions, provisions and rights of such securities which is different
from, and unequal to, the terms, conditions, provisions and rights applicable to
all other holders thereof.
SIXTEENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, and to add
or adopt new provisions, in the manner now or hereafter prescribed by statute,
and all rights conferred upon stockholders herein are granted subject to this
reservation. In addition to any affirmative vote required by applicable law or
any other provision of this Certificate of Incorporation or specified in any
agreement, and in addition to any voting rights granted to or held by the
holders of any series of Preferred Stock, the affirmative vote of the holders of
not less than 80% of the voting power of all securities of the Corporation
entitled to vote generally in the election of directors shall be required to
amend, alter, change or repeal, or to add or adopt any provisions inconsistent
with, Articles Fifth, Sixth, Seventh, Eighth, Tenth, Eleventh, Thirteenth,
Fourteenth, Fifteenth and Sixteenth of this Certificate of Incorporation.
SEVENTEENTH: The name and mailing address of the incorporator is Donald P.
Fay, Triad Hospitals, Inc., 13455 Noel Road, 20th Floor, Dallas, Texas 75240.
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IN WITNESS WHEREOF, the undersigned incorporator hereby acknowledges
that the foregoing certificate of incorporation is his act and deed and that the
facts stated therein are true on this 27th day of April, 1999.
By: /s/ Donald P. Fay
---------------------------
Donald P. Fay
Incorporator
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EXHIBIT 3.2
________________________________________________________________________________
BY-LAWS
OF
Triad Hospitals, Inc.
______________
DELAWARE
________________________________________________________________________________
<PAGE>
Article I
Offices
Section 1. Registered Office.
The registered office of the Corporation shall be within the State of
Delaware in the City of Wilmington, County of New Castle.
Section 2. Other Offices.
The Corporation may also have an office or offices other than said
registered office at such place or places, either within or without the State of
Delaware, as the Board of Directors shall from time to time determine or the
business of the Corporation may require.
Article II
Meetings of Stockholders
Section 1. Place of Meetings.
All meetings of the stockholders for the election of directors or for
any other purpose shall be held at any such place, either within or without the
State of Delaware, as shall be designated from time to time by the Board of
Directors and stated in the notice of meeting or in a duly executed waiver
thereof.
Section 2. Annual Meeting.
The annual meeting of stockholders shall be held at such date and time
as shall be designated from time to time by the Board of Directors and stated in
the notice of meeting or in a duly executed waiver thereof. At such annual
meeting, the stockholders shall elect, by a plurality vote, members of a Board
of Directors and transact such other business as may properly be brought before
the meeting.
Section 3. Special Meetings.
Special meetings of the stockholders of the Corporation may be called
only by (a) the Chairman of the Board of Directors, if one shall have been
elected or (b) the Chief Executive Officer of the Corporation, and, in addition,
a special meeting shall be called by the Chairman of the Board or the Chief
Executive Officer at the request in writing of a majority of the Board of
Directors. The ability of the stockholders to call a special meeting is hereby
specifically denied.
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Section 4. Notice of Meetings.
Except as otherwise expressly required by statute, written notice of
each annual and special meeting of stockholders stating the date, place and hour
of the meeting, and, in the case of a special meeting, the purpose or purposes
for which the meeting is called, shall be given to each stockholder of record
entitled to vote thereat not less than ten nor more than sixty days before the
date of the meeting. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice. Notice shall be given
personally or by mail and, if by mail, shall be sent in a postage prepaid
envelope, addressed to the stockholder at the address appearing on the records
of the Corporation. Notice by mail shall be deemed given at the time when the
same shall be deposited in the United States mail, postage prepaid. Notice of
any such meeting need not be given to any person who shall, either before or
after the meeting, submit a signed waiver of notice or who shall attend such
meeting, except when he or she shall attend for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. Neither the business to
be transacted at, nor the purpose of, an annual or special meeting of
stockholders need be specified in any written waiver of notice.
Section 5. List of Stockholders.
The officer who has charge of the stock ledger of the Corporation
shall prepare and make, at least ten days before each meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, showing the address of and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city, town or village where the meeting is to be held,
which place shall be specified in the notice of meeting, or, if not specified,
at the place where the meeting is to be held. The list shall be produced and
kept at the time and place of the meeting during the whole time thereof, and may
be inspected by any stockholder who is present.
Section 6. Quorum.
The holders of a majority of the voting power of the issued and
outstanding stock of the Corporation entitled to vote thereat, present in person
or represented by proxy, shall constitute a quorum for the transaction of
business at all meetings of stockholders, except as otherwise provided by
statute or by the Certificate of Incorporation. If, however, such quorum shall
not be present or represented by proxy at any meeting of stockholders, the
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have the power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present
or represented by proxy. At such adjourned meeting at which a quorum shall be
present or represented by proxy, any business may be transacted which might have
been transacted at the meeting as originally called. If the adjournment is for
more than thirty days, or, if
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after adjournment a new record date is set, a notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote at the meeting.
Section 7. Organization.
At each meeting of stockholders, the Chairman of the Board, if one
shall have been elected, or, in his or her absence or if one shall not have been
elected, the Chief Executive Officer, shall act as chairman of the meeting. The
Secretary or, in his or her absence or inability to act, the person whom the
chairman of the meeting shall appoint secretary of the meeting, shall act as
secretary of the meeting and keep the minutes thereof.
Section 8. Order of Business.
The order of business at all meetings of the stockholders shall be as
determined by the chairman of the meeting.
Section 9. Voting.
Except as otherwise provided by statute or the Certificate of
Incorporation, each stockholder of the Corporation shall be entitled at each
meeting of stockholders to one vote for each share of capital stock of the
Corporation standing in his or her name on the record of stockholders of the
Corporation:
(a) on the date fixed pursuant to the provisions of Section 7 of
Article V of these By-Laws as the record date for the determination of the
stockholders who shall be entitled to notice of and to vote at such
meeting; or
(b) if no such record date shall have been so fixed, then at the
close of business on the day next preceding the day on which notice thereof
shall be given.
Each stockholder entitled to vote at any meeting of stockholders may authorize
another person or persons to act for him or her by a proxy signed by such
stockholder or his or her attorney-in-fact, but no proxy shall be voted after
three years from its date, unless the proxy provides for a longer period. Any
such proxy shall be delivered to the secretary of the meeting at or prior to the
time designated in the order of business for so delivering such proxies. Any
copy, facsimile telecommunication or other reliable reproduction of the writing
or transmission created pursuant to this paragraph may be substituted or used in
lieu of the original writing or transmission for any and all purposes for which
the original writing or transmission could be used, provided that such copy,
facsimile telecommunication or other reproduction shall be a complete
reproduction of the entire original writing or transmission.
When a quorum is present at any meeting, the vote of the holders of a
majority of the voting power of the issued and outstanding stock of the
Corporation entitled to vote thereon, present in person or represented by proxy,
shall decide any question brought before such meeting, unless the question is
one upon which by express provision of statute or of the Certificate of
Incorporation or of these By-Laws, a different
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vote is required, in which case such express provision shall, govern and control
the decision of such question. Unless required by statute, or determined by the
chairman of the meeting to be advisable, the vote on any question need not be by
ballot. On a vote by ballot, each ballot shall be signed by the stockholder
voting, or by his or her proxy, and shall state the number of shares voted.
Section 10. Inspectors.
The Board of Directors shall, in advance of any meeting of
stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof and make a written report thereof. If any of the inspectors
so appointed shall fail to appear or shall be unable to act, the chairman of the
meeting shall appoint one or more inspectors. Each inspector, before entering
upon the discharge of his or her duties, shall take and sign an oath faithfully
to execute the duties of inspector at such meeting with strict impartiality and
according to the best of his or her ability. The inspectors shall ascertain the
number of shares of capital stock of the Corporation outstanding and the voting
power of each, determine the number of shares represented at the meeting and the
validity of proxies and ballots, count all votes and ballots, determine and
retain for a reasonable period a record of the disposition of any challenges
made to any determination by the inspectors and certify their determination of
the number of shares represented at the meeting and their count of all votes and
ballots. The inspectors may appoint or retain other persons or entities to
assist the inspectors in the performance of the duties of the inspectors. No
director or candidate for the office of director shall act as an inspector of an
election of directors, or assist an inspector in the performance of such duties.
Inspectors need not be stockholders.
Section 11. Nominations and Stockholder Business.
Nominations of persons for election to the Board of Directors and the
proposal of business to be transacted by the stockholders may be made at an
annual meeting of stockholders (a) pursuant to the Corporation's notice with
respect to such meeting, (b) by or at the direction of the Board of Directors or
(c) by any stockholder of record of the Corporation who was a stockholder of
record at the time of the giving of the notice provided for in this Section 11
who is entitled to vote at the meeting and who has complied with the notice
procedures set forth in this Section 11.
For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to this Section 11, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation, such business must be a proper matter for stockholder action under
the Delaware General Corporation Law and, if the stockholder, or the beneficial
owner on whose behalf any such proposal or nomination is made, solicits or
participates in the solicitation of proxies in support of such proposal or
nomination, the stockholder must have timely indicated such stockholder's, or
such beneficial owner's, intention to do so as hereinafter provided. To be
timely, a stockholder's notice shall be delivered to the Secretary at the
principal executive offices of the Corporation not less than 90 days prior to
the first anniversary of the preceding year's annual meeting of stockholders;
provided, however, that if the date
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of the annual meeting is advanced more than 30 days prior to or delayed more
than 60 days after such anniversary date, notice by the stockholder to be timely
must be so delivered not later than the close of business on the later of the
90th day prior to such annual meeting or the 10th day following the day on which
public announcement of the date of such meeting is first made. Such
stockholder's notice shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or reelection as a director all information
relating to such person as would be required to be disclosed in solicitations of
proxies for the election of such nominees as directors pursuant to Regulation
14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and such person's written consent to serve as a director if elected; (b) as to
any other business that the stockholder proposes to bring before the meeting, a
brief description of such business, the reasons for conducting such business at
the meeting and any material interest in such business of such stockholder and
the beneficial owner, if any, on whose behalf the proposal is made; (c) as to
the stockholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made (i) the name and address of such
stockholder, as they appear on the Corporation's books, and of such beneficial
owner, (ii) the class and number of shares of the Corporation which are owned
beneficially and of record by such stockholder and such beneficial owner, and
(iii) whether either such stockholder or beneficial owner intends to solicit or
participate in the solicitation of proxies in favor of such proposal or nominee
or nominees.
Notwithstanding anything in this Section 11 to the contrary, in the
event that the number of directors to be elected to the Board of Directors is
increased and there is no public announcement naming all of the nominees for
director or specifying the size of the increased Board of Directors made by the
Corporation at least 100 days prior to the first anniversary of the preceding
year's annual meeting, a stockholder's notice required by this section shall
also be considered timely, but only with respect to nominees for any new
positions created by such increase, if it shall be delivered to the Secretary at
the principal executive offices of the Corporation not later than the close of
business on the 10th day following the day on which such public announcement is
first made by the Corporation.
Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
Board of Directors may be made at a special meeting of stockholders at which
directors are to be elected pursuant to the Corporation's notice of meeting (a)
by or at the direction of the Board of Directors or (b) by any stockholder of
record of the Corporation who is a stockholder of record at the time of giving
of notice provided for in this Section 11 who shall be entitled to vote at the
meeting and who complies with the notice procedures set forth in this Section
11. Nominations by stockholders of persons for election to the Board of
Directors may be made at such a special meeting of stockholders if the
stockholder's notice required by this Section 11 shall be delivered to the
Secretary at the principal executive offices of the Corporation not later than
the close of business on the later of the 90th day prior to such special meeting
or the 10th day following the day on which public announcement is first made of
the date of the special meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting.
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Only persons nominated in accordance with the procedures set forth in
this section shall be eligible to serve as directors and only such business
shall be conducted at a meeting of stockholders as shall have been brought
before the meeting in accordance with the procedures set forth in this Section
11. The officer of the Corporation or other person presiding over the meeting
shall have the power and the duty to determine whether a nomination or any
business proposed to be brought before the meeting has been made in compliance
with the procedures set forth in this Section 11 and, if any proposed nomination
or business is not in compliance with this Section 11, to declare that such
defective proposed business or nomination shall not be presented for stockholder
action at the meeting and shall be disregarded.
For purposes of this section, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or a comparable national news service or in a document publicly filed by
the Corporation with the Securities and Exchange Commission pursuant to Section
13, 14 or 15(d) of the Exchange Act.
Notwithstanding the foregoing provisions of this section, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to matters set forth
in this Section 11. Nothing in this Section 11 shall be deemed to affect any
rights of stockholders to request inclusion of proposals in the Corporation's
proxy statement pursuant to Rule 14a-8 under the Exchange Act.
Section 12. Adjournments.
Any meeting of stockholders may be adjourned from time to time,
whether or not a quorum is present, by the affirmative vote of a majority of the
votes present and entitled to be cast at the meeting, or by the officer of the
Corporation presiding over the meeting, or by the Board of Directors.
Article III
Board Of Directors
Section 1. Place of Meetings.
Meetings of the Board of Directors shall be held at such place or
places, within or without the State of Delaware, as the Board of Directors may
from time to time determine or as shall be specified in the notice of any such
meeting.
Section 2. Annual Meeting.
The Board of Directors shall meet for the purpose of organization, the
election of officers and the transaction of other business, as soon as
practicable after each annual meeting of stockholders, on the same day and at
the same place where such annual meeting shall be held. Notice of such meeting
need not be given. In the event such annual meeting is not so held, the annual
meeting of the Board of Directors may be held
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at such other time or place (within or without the State of Delaware) as shall
be specified in a notice thereof given as hereinafter provided in Section 5 of
this Article III.
Section 3. Regular Meetings.
Regular meetings of the Board of Directors shall be held at such time
and place as the Board of Directors may fix. If any day fixed for a regular
meeting shall be a legal holiday at the place where the meeting is to be held,
then the meeting which would otherwise be held on that day shall be held at the
same hour on the next succeeding business day (unless the Chairman of the Board
determines otherwise). Notice of regular meetings of the Board of Directors need
not be given except as otherwise required by statute or these By-Laws.
Section 4. Special Meetings.
Special meetings of the Board of Directors may be called by the
Chairman of the Board, if one shall have been elected, by two or more directors
of the Corporation or by the Chief Executive Officer.
Section 5. Notice of Meetings.
Notice of each special meeting of the Board of Directors (and of each
regular meeting for which notice shall be required) shall be given by the
Secretary as hereinafter provided in this Section 5, in which notice shall be
stated the time and place of the meeting. Except as otherwise required by these
By-Laws, such notice need not state the purposes of such meeting. Notice of each
such meeting shall be sent to each director, addressed to such director at his
or her residence or usual place of business, by telegraph, cable, telex,
telecopier or other similar means, or be delivered to him or her personally or
be given to him or her by telephone or other similar means, at least two hours
before the time at which such meeting is to be held. Notice of any such meeting
need not be given to any director who shall, either before or after the meeting,
submit a signed waiver of notice or who shall attend such meeting, except when
he or she shall attend for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any such meeting need be specified in any written waiver of notice.
Section 6. Quorum and Manner of Acting.
A majority of the entire Board of Directors shall constitute a quorum
for the transaction of business at any meeting of the Board of Directors, and,
except as otherwise expressly required by statute, the Certificate of
Incorporation or these By-Laws, the act of a majority of the directors present
at any meeting at which a quorum is present shall be the act of the Board of
Directors. In the absence of a quorum at any meeting of the Board of Directors,
a majority of the directors present thereat may adjourn such meeting to another
time and place. Notice of the time and place of any such adjourned meeting shall
be given to all of the directors unless such time and place were announced at
the meeting at which the adjournment was taken, in which case such notice
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shall only be given to the directors who were not present thereat. At any
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally called. The
directors shall act only as a Board and the individual directors shall have no
power as such.
Section 7. Organization.
At each meeting of the Board of Directors, the Chairman of the Board,
if one shall have been elected, or, in the absence of the Chairman of the Board
or if one shall not have been elected, another director chosen by a majority of
the directors present, shall act as chairman of the meeting and preside thereat.
The Secretary or, in his or her absence or if one shall not have been elected,
any person appointed by the chairman of the meeting, shall act as secretary of
the meeting and keep the minutes thereof.
Section 8. Resignations.
Any director of the Corporation may resign at any time by giving
written notice of his or her resignation to the Corporation. Any such
resignation shall take effect at the time specified therein or, if the time when
it shall become effective shall not be specified therein, immediately upon its
receipt by the Corporation. Unless otherwise specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
Section 9. Compensation.
The Board of Directors shall have authority to fix the compensation,
including fees and reimbursement of expenses, of directors for services to the
Corporation in any capacity.
Section 10. Committees.
The Board of Directors may, by resolution passed by a majority of the
entire Board of Directors, designate one or more committees, including an
executive committee, each committee to consist of one or more of the directors
of the Corporation. The Board of Directors may designate one or more directors
as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In addition, in the absence
or disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
she or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absent or
disqualified member.
Except to the extent restricted by statute or the Certificate of
Incorporation, each such committee, to the extent provided in the resolution
creating it, shall have and may exercise all the powers and authority of the
Board of Directors. Each such committee shall serve at the pleasure of the Board
of Directors and have such name as may be determined from time to time by
resolution adopted by the Board of Directors.
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Each committee shall keep regular minutes of its meetings and report the same to
the Board of Directors.
Section 11. Action By Consent.
Unless restricted by the Certificate of Incorporation, any action
required or permitted to be taken by the Board of Directors or any committee
thereof may be taken without a meeting if all members of the Board of Directors
or such committee, as the case may be, consent thereto in writing and the
writing or writings are filed with the minutes of the proceedings of the Board
of Directors or such committee, as the case may be.
Section 12. Telephonic Meetings.
Any one or more members of the Board of Directors or any committee
thereof may participate in a meeting of the Board of Directors or such committee
by means of a conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other.
Participation by such means shall constitute presence in person at a meeting.
Section 13. Mandatory Retirement Policy for Directors.
No person shall be nominated to a term of office on the Board of
Directors who has attained the age of 70 or more before the first day of the
proposed term of office.
Article IV
Officers
Section 1. Number and Qualifications.
The officers of the Corporation shall be elected by the Board of
Directors and shall include the Chairman of the Board, the Chief Executive
Officer (who also shall be the President), one or more Vice Presidents
(including Senior or Executive Vice Presidents or other classifications of Vice
Presidents), the Secretary and the Treasurer. If the Board of Directors wishes,
it may also elect other officers (including one or more Assistant Treasurers and
one or more Assistant Secretaries) as may be necessary or desirable for the
business of the Corporation. Any two or more offices may be held by the same
person, and no officer except the Chairman of the Board need be a director. Each
officer shall hold office until his or her successor shall have been duly
elected and shall have qualified, or until his or her death, or until he or she
shall have resigned or have been removed or disqualified, as hereinafter
provided in these By-Laws.
Section 2. Resignation and Removal.
Any officer of the Corporation may resign at any time by giving
written notice of his or her resignation to the Corporation. Any such
resignation shall take effect at the time specified therein or, if the time when
it shall become effective shall not be specified therein, immediately upon
receipt by the Corporation. Unless otherwise
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specified therein, the acceptance of any such resignation shall not be necessary
to make it effective.
Any officer of the Corporation may be removed, either with or without
cause, at any time, by the Board of Directors at any meeting thereof.
Section 3. Vacancies.
The Board of Directors may fill any vacancy occurring in any office
for any reason and may, in its discretion, leave unfilled for such period as it
may determine any offices other than those of President, Treasurer and
Secretary. Each successor shall hold office for the unexpired term of his
predecessor and until his successor is elected and qualified, or until his
earlier death, resignation or removal.
Section 4. Chairman of the Board.
The Chairman of the Board shall be elected from among the members of
the Board. If present, he or she shall preside at all meetings of the Board of
Directors and stockholders. He or she shall advise and counsel with the Chief
Executive Officer, and in his or her absence with other executives of the
Corporation, and shall perform such other duties as may from time to time be
assigned to him or her by the Board of Directors.
Section 5. Chief Executive Officer.
The Chief Executive Officer also shall serve as the President and,
subject to the Board of Directors, he or she shall have general executive
charge, management, and control of the properties and operations of the
Corporation in the ordinary course of its business, with all such powers with
respect to such properties and operations as may be reasonably incident to such
responsibilities. If the Board of Directors has not elected a Chairman or in the
absence or inability to act of the Chairman of the Board, the Chief Executive
Officer shall exercise all of the powers and discharge all of the duties of the
Chairman of the Board.
Section 6. Vice President.
Each Vice President shall perform all such duties as from time to time
may be assigned to him or her by the Board of Directors, the Chairman of the
Board or the Chief Executive Officer. At the request of the Chief Executive
Officer or in his or her absence or in the event of his or her inability or
refusal to act, the Vice President, or if there shall be more than one, the Vice
Presidents in the order determined by the Board of Directors (or if there be no
such determination, then the Vice Presidents in the order of their election),
shall perform the duties of the Chief Executive Officer, and, when so acting,
shall have the powers of and be subject to the restrictions placed upon the
Chief Executive Officer.
Section 7. Treasurer.
The Treasurer shall:
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(a) have charge and custody of, and be responsible for, all the funds
and securities of the Corporation;
(b) keep full and accurate accounts of receipts and disbursements in
books belonging to the Corporation;
(c) deposit all moneys and other valuables to the credit of the
Corporation in such depositaries as may be designated by the Board of
Directors or pursuant to its direction;
(d) receive, and give receipts for, moneys due and payable to the
Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the
investment of its funds, taking proper vouchers therefor;
(f) render to the Board of Directors, whenever the Board of Directors
may require, an account of the financial condition of the Corporation; and
(g) in general, perform all duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him
or her by the Board of Directors, the Chairman of the Board or the Chief
Executive Officer.
Section 8. Secretary.
The Secretary shall
(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board of Directors, the
committees of the Board of Directors and the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation and
affix and attest the seal to all certificates for shares of the Corporation
(unless the seal of the Corporation on such certificates shall be a
facsimile, as hereinafter provided) and affix and attest the seal to all
other documents to be executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly
kept and filed; and
(e) in general, perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him
or her by the Board of Directors, the Chairman of the Board or the Chief
Executive Officer.
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In the absence of the Secretary at any meeting of the Board of
Directors, a committee of the Board of Directors or the stockholders, the person
presiding at the meeting shall designate a temporary secretary to keep a record
of the meeting.
Section 9. Assistant Treasurer.
The Assistant Treasurer, or if there shall be more than one, the
Assistant Treasurers in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election), shall, in
the absence of the Treasurer or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the Treasurer and shall
perform such other duties as from time to time may be assigned by the Board of
Directors, the Chairman of the Board, the Chief Executive Officer or the
Treasurer.
Section 10. Assistant Secretary.
The Assistant Secretary, or if there shall be more than one, the
Assistant Secretaries in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election), shall, in
the absence of the Secretary or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the Secretary and shall
perform such other duties as from time to time may be assigned by the Board of
Directors, the Chairman of the Board, the Chief Executive Officer or the
Secretary.
Section 11. Officers' Bonds or Other Security.
If required by the Board of Directors, any officer of the Corporation
shall give a bond or other security for the faithful performance of his or her
duties, in such amount and with such surety as the Board of Directors may
require.
Section 12. Compensation.
The compensation of the officers of the Corporation for their services
as such officers shall be fixed from time to time by the Board of Directors. An
officer of the Corporation shall not be prevented from receiving compensation by
reason of the fact that he or she is also a director of the Corporation.
Article V
Stock Certificates and Their Transfer
Section 1. Stock Certificates.
Every holder of stock in the Corporation shall be entitled to have a
certificate signed by, or in the name of the Corporation by, the Chairman of the
Board, the Chief Executive Officer or a Vice President and by the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary of the
Corporation, certifying the number of shares owned by him or her in the
Corporation. If the Corporation shall be
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authorized to issue more than one class of stock or more than one series of any
class, the designations, preferences and relative, participating, optional or
other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences or rights shall
be set forth in full or summarized on the face or back of the certificate which
the Corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided in Section 202 of the Delaware General
Corporation Law, in lieu of the foregoing requirements, there may be set forth
on the face or back of the certificate which the Corporation shall issue to
represent such class or series of stock, a statement that the Corporation will
furnish without charge to each stockholder who so requests the designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences or rights.
Section 2. Facsimile Signatures.
Any or all of the signatures on a certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the Corporation with the same effect as if he, she or it were such
officer, transfer agent or registrar at the date of issue.
Section 3. Lost Certificates.
The Board of Directors may direct a new certificate or certificates to
be issued in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen, or destroyed. When authorizing
such issue of a new certificate or certificates, the Board of Directors may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen, or destroyed certificate or certificates, or his or
her legal representative, to give the Corporation a bond in such sum as it may
direct sufficient to indemnify it against any claim that may be made against the
Corporation on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 4. Transfers of Stock.
Upon surrender to the Corporation or the transfer agent of a
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record a transaction upon its records;
provided, however, that the Corporation shall be entitled to recognize and
enforce any lawful restriction on transfer.
Section 5. Transfer Agents and Registrars.
The Board of Directors may appoint, or authorize any officer or
officers to appoint, one or more transfer agents and one or more registrars.
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Section 6. Regulations.
The Board of Directors may make such additional rules and regulations,
not inconsistent with these By-Laws, as it may deem expedient concerning the
issue, transfer and registration of certificates for shares of stock of the
Corporation.
Section 7. Fixing The Record Date.
In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than sixty nor less than ten days before the date of such meeting,
nor more than sixty days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may, in its discretion, fix a new record date for
the adjourned meeting.
Section 8. Registered Stockholders.
The Corporation shall be entitled to recognize the exclusive right of
a person registered on its records as the owner of shares of stock to receive
dividends and to vote as such owner, shall be entitled to hold liable for calls
and assessments a person registered on its records as the owner of shares of
stock, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares of stock on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
Section 9. Legends.
The Board of Directors shall have the power and authority to provide
that certificates representing shares of stock bear such legends as the Board of
Directors deems appropriate to assure that the Corporation does not become
liable for violations of Federal or state securities laws or other applicable
law.
Article VI
General Provisions
Section 1. Dividends.
Subject to the provisions of applicable law and the Certificate of
Incorporation, dividends upon the shares of capital stock of the Corporation may
be declared by the Board of Directors at any regular or special meeting of the
Board of Directors. Dividends may be paid in cash, in property or in shares of
stock of the Corporation, unless otherwise provided by statute or the
Certificate of Incorporation.
-14-
<PAGE>
Section 2. Reserves.
Before payment of any dividend, there may be set aside out of any
funds of the Corporation available for dividends such sum or sums as the Board
of Directors may, from time to time, in its absolute discretion, think proper as
a reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation or for such other
purpose as the Board of Directors may think conducive to the interests of the
Corporation. The Board of Directors may modify or abolish any such reserve in
the manner in which it was created.
Section 3. Seal.
The seal of the Corporation shall be in such form as shall be approved
by the Board of Directors.
Section 4. Fiscal Year.
The fiscal year of the Corporation shall end on December 31 of each
year; provided, however that such fiscal year may be changed by resolution of
the Board of Directors.
Section 5. Checks, Notes, Drafts, Etc.
All checks, notes, drafts or other orders for the payment of money of
the Corporation shall be signed, endorsed or accepted in the name of the
Corporation by such officer, officers, person or persons as from time to time
may be designated by the Board of Directors or by an officer or officers
authorized by the Board of Directors to make such designation.
Section 6. Execution of Contracts, Deeds, Etc.
The Board of Directors may authorize any officer or officers, agent or
agents, in the name and on behalf of the Corporation to enter into or execute
and deliver all deeds, bonds, mortgages, contracts and other obligations or
instruments, and such authority may be general or confined to specific
instances. The attestation to such execution by the Secretary of the Corporation
shall not be necessary to constitute such deed, bond, mortgage, contract or
other instrument a valid and binding obligation against the Corporation unless
the resolutions, if any, of the Board of Directors authorizing such execution
expressly state that such attestation is necessary.
Section 7. Voting of Stock in Other Corporations.
Unless otherwise provided by resolution of the Board of Directors, the
Chairman of the Board, the Chief Executive Officer or any Vice President, from
time to time may (or may appoint one or more attorneys or agents to) cast the
votes which the Corporation may be entitled to cast as a shareholder or
otherwise in another corporation, any of whose shares or securities may be held
by the Corporation, at meetings of the holders of the shares or other securities
of such other corporation. In the event one or
-15-
<PAGE>
more attorneys or agents are appointed, the Chairman of the Board or the Chief
Executive Officer may instruct the person or persons so appointed as to the
manner of casting such votes or giving such consent. The Chairman of the Board
or the Chief Executive Officer may, or may instruct the attorneys or agents
appointed to, execute or cause to be executed in the name and on behalf of the
Corporation and under its seal or otherwise, such written proxies, consents,
waivers or other instruments as may be necessary or proper in the circumstances.
Section 8. Severability.
Any determination that any provision of these By-Laws is for any
reason inapplicable, illegal or ineffective shall not affect or invalidate any
other provision of these By-Laws.
Section 9. Certificate of Incorporation.
All references in these By-Laws to the Certificate of Incorporation
shall be deemed to refer to the Certificate of Incorporation of the Corporation,
as amended and in effect from time to time.
Article VII
Amendments
Section 1. By the Board of Directors.
If the Certificate of Incorporation so provides, these By-Laws may be
altered, amended or repealed or new By-Laws may be adopted by the affirmative
vote of a majority of the directors present at any regular or special meeting of
the Board of Directors at which a quorum is present.
Section 2. By the Stockholders.
These By-Laws, including this Section 2 of this Article VII, may be
altered, amended or repealed or new By-Laws may be adopted by the affirmative
vote of the holders of at least 80% of the voting power of all shares of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class.
-16-
<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
TRIAD HOSPITALS, INC.
and
NATIONAL CITY BANK,
as Rights Agent
____________
Rights Agreement
Dated as of May 11, 1999
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Section 1 Certain Definitions................................................................................ 1
Section 2 Appointment of Rights Agent........................................................................ 4
Section 3 Issue of Right Certificates........................................................................ 5
Section 4 Form of Right Certificates......................................................................... 6
Section 5 Countersignature and Registration.................................................................. 6
Section 6 Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed,
Lost or Stolen Right Certificates.................................................................. 7
Section 7 Exercise of Rights; Purchase Price; Expiration Date of Rights...................................... 8
Section 8 Cancellation and Destruction of Right Certificates................................................. 8
Section 9 Availability of Preferred Shares................................................................... 9
Section 10 Preferred Shares Record Date....................................................................... 9
Section 11 Adjustment of Purchase Price, Number of Shares or Number of Rights................................. 10
Section 12 Certificate of Adjusted Purchase Price or Number of Shares......................................... 16
Section 13 Consolidation, Merger or Sale or Transfer of Assets or Earning Power............................... 16
Section 14 Fractional Rights and Fractional Shares............................................................ 17
Section 15 Rights of Action................................................................................... 18
Section 16 Agreement of Right Holders......................................................................... 19
Section 17 Right Certificate Holder Not Deemed a Stockholder.................................................. 19
Section 18 Concerning the Rights Agent........................................................................ 19
Section 19 Merger or Consolidation or Change of Name of Rights Agent.......................................... 20
Section 20 Duties of Rights Agent............................................................................. 20
Section 21 Change of Rights Agent............................................................................. 22
Section 22 Issuance of New Right Certificates................................................................. 23
Section 23 Redemption......................................................................................... 23
Section 24 Exchange........................................................................................... 24
Section 25 Notice of Certain Events........................................................................... 25
Section 26 Notices............................................................................................ 26
Section 27 Supplements and Amendments......................................................................... 26
Section 28 Successors......................................................................................... 27
Section 29 Benefits of this Rights Agreement.................................................................. 27
Section 30 Severability....................................................................................... 27
Section 31 Governing Law...................................................................................... 27
Section 32 Counterparts....................................................................................... 27
Section 33 Descriptive Headings............................................................................... 27
</TABLE>
Exhibit A - Form of Right Certificate
Exhibit B - Summary of Rights to Purchase Preferred Shares
<PAGE>
Rights Agreement
Rights Agreement, dated as of May 11, 1999, by and between Triad Hospitals,
Inc., a Delaware corporation (the "Company"), and National City Bank (the
"Rights Agent").
The Board of Directors of the Company has authorized and directed the
issuance of one preferred share purchase right (a "Right") for each Common Share
to be issued in the distribution of Common Shares effective May 11, 1999 (the
"Record Date"), as such distribution is described in the Company's Registration
Statement on Form 10 ( File No. 0-29816 ), dated April 27, 1999 (the "Spin-
Off"). Each Right represents the right to purchase one one-thousandth of a
Preferred Share, upon the terms and subject to the conditions herein set forth.
The Board of Directors of the Company has further authorized and directed the
issuance of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date and the Expiration Date.
Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Rights Agreement,
-------------------
the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the Common Shares then outstanding, but shall not include (i)
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any entity holding Common Shares
for or pursuant to the terms of any such plan, (ii) any Person who or which
becomes the Beneficial Owner of 15% or more of the Common Shares then
outstanding as the result of a reduction in the outstanding Common Shares
resulting from acquisition of Common Shares by the Company approved by the Board
of Directors, unless and until such Person becomes the Beneficial Owner of any
additional Common Shares, other than pursuant to a stock dividend or stock
split, (iii) any Person who or which the Board of Directors of the Company
determines, in good faith, became an Acquiring Person inadvertently, if such
Person divests as promptly as practicable a sufficient number of Common Shares
so that such Person would no longer be an Acquiring Person or (iv) any Person
who or which the Board of Directors of the Company determines, prior to the time
such Person would otherwise be an Acquiring Person, should be exempted from the
definition of Acquiring Person, provided that the Board of Directors may make
such exemption subject to such conditions, if any, which the Board may
determine. Notwithstanding anything in this paragraph (a) to the contrary,
neither Columbia/HCA Healthcare Corporation nor any of its affiliates shall be
deemed to be an Acquiring Person as a result of its ownership of Common Shares
prior to the Spin-Off.
<PAGE>
(b) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 under the Exchange Act.
(c) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "Beneficially Own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion rights, exchange
rights, rights (other than these Rights), warrants or options, or otherwise,
provided, however, that a Person shall not be deemed the Beneficial Owner of, or
to Beneficially Own, securities tendered pursuant to a tender or exchange offer
made by or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase or exchange
or (B) the right to vote pursuant to any agreement, arrangement or
understanding, provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to Beneficially Own, any security if the agreement,
arrangement or understanding to vote such security (1) arises solely from a
revocable proxy or consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations promulgated under the Exchange Act and (2) is not also
then reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members with respect
to a bona fide public offering of securities) for the purpose of acquiring,
holding, voting (except to the extent contemplated by the proviso to Section
1(c)(ii)(B)) or disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to Beneficially Own hereunder.
(d) A determination, approval, consent or other action of the "Board
of Directors" shall require approval or consent of a majority of the Board of
Directors of the Company.
2
<PAGE>
(e) "Business Day" shall mean any day other than a Saturday, a
Sunday, or a day on which banking institutions in New York are authorized or
obligated by law or executive order to close.
(f) "Close of Business" on any given date shall mean 5:00 p.m., New
York City time, on such date, provided, however, that, if such date is not a
Business Day, it shall mean 5:00 p.m., New York City time, on the next
succeeding Business Day.
(g) "Common Shares" shall mean the shares of common stock, par value
$.01 per share, of the Company, except that "Common Shares" when used with
reference to any Person other than the Company shall mean the capital stock (or
equity interest) with the greatest voting power of such other Person or, if such
other Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
(h) "Company" shall have the meaning set forth in the preamble
hereof.
(i) "Current per share market price" shall have the meaning set forth
in Section 11(d) hereof.
(j) "Distribution Date" shall have the meaning set forth in Section
3(a) hereof.
(k) "Equivalent preferred shares" shall have the meaning set forth in
Section 11(b) hereof.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934.
(m) "Exchange Ratio" shall have the meaning set forth in Section
24(a) hereof.
(n) "Expiration Date" shall mean the Close of Business on May 7,
2009.
(o) "NASDAQ" shall mean the National Association of Securities
Dealers, Inc. Automated Quotations System.
(p) "Person" shall mean any individual, firm, corporation,
partnership or other entity, and shall include any successor (by merger or
otherwise) of such entity.
(q) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.01 per share, of the Company having
the rights and preferences set forth in the Company's Certificate of
Incorporation.
3
<PAGE>
(r) "Purchase Price" shall initially be $90 for each one one-
thousandth of a Preferred Share purchasable pursuant to the exercise of a Right,
and shall be subject to adjustment from time to time as provided in Section 11
or 13 hereof.
(s) "Record Date" shall have the meaning set forth in the second
paragraph hereof.
(t) "Redemption Date" shall mean the time at which the Rights are
redeemed as provided in Section 23 hereof.
(u) "Redemption Price" shall have the meaning set forth in Section
23(a) hereof.
(v) "Right" shall have the meaning set forth in the second paragraph
hereof.
(w) "Right Certificate" shall have the meaning set forth in Section
3(a) hereof.
(x) "Rights Agent" shall have the meaning set forth in the preamble
hereof.
(y) "Security" shall have the meaning set forth in Section 11(d)(i)
hereof.
(aa) "Stock Acquisition Date" shall mean the first date of public
announcement (including, without limitation, by a filing under the Exchange Act)
by the Company or an Acquiring Person that an Acquiring Person has become such
or such earlier date as a majority of the Board shall become aware of the
existence of an Acquiring Person.
(bb) "Subsidiary" of any Person shall mean any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned or otherwise controlled, directly or
indirectly, by such Person.
(cc) "Trading Day" shall have the meaning set forth in Section
11(d)(i) hereof.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
---------------------------
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such co-Rights Agents as it may deem necessary or
desirable.
4
<PAGE>
Section 3. Issue of Right Certificates. (a) Until the earlier of the
---------------------------
Close of Business on the tenth day (or such other date as the Board of Directors
of the Company shall determine) after (i) the Stock Acquisition Date or (ii) the
date of the commencement by any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company or any entity holding Common Shares for or pursuant to the terms of
any such plan) of, or of the first public announcement of the intention of any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any entity
holding Common Shares for or pursuant to the terms of any such plan) to
commence, a tender or exchange offer the consummation of which would result in
any Person becoming an Acquiring Person (including any such date which is after
the date of this Rights Agreement and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced (subject to the provisions of Section 3(b) hereof)
by the certificates for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be Right Certificates) and
not by separate Right Certificates and (y) the right to receive Right
Certificates will be transferable only in connection with the transfer of Common
Shares. As soon as practicable after the Distribution Date, the Company will
prepare and execute, the Rights Agent will countersign, and the Company will
send or cause to be sent (and the Rights Agent will, if requested, send) by
first-class, insured, postage-prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit A hereto (a "Right Certificate"), evidencing
one Right for each Common Share so held. As of the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.
(b) The Company will make available, as promptly as practicable
following the Record Date, a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit B hereto, to any holder of Rights who may so
request from time to time prior to the Expiration Date. With respect to
certificates for Common Shares outstanding as of the Record Date, until the
Distribution Date, the Rights will be evidenced by such certificates and the
registered holders of the Common Shares shall also be the registered holders of
the associated Rights. Until the Distribution Date (or the earlier of the
Redemption Date or the Expiration Date), the surrender for transfer of any
certificate for Common Shares in respect of which Rights have been issued shall
also constitute the transfer of the Rights associated with such Common Shares.
(c) Rights shall be issued in respect of all Common Shares which are
issued (whether originally issued or from the Company's treasury) after the
Record Date but prior to the earliest of the Distribution Date, the Redemption
Date or the Expiration Date. Certificates representing such Common Shares shall
bear the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between Triad
Hospitals, Inc. (the "Company") and the Rights Agent thereunder (the
"Rights Agreement"), the terms of which are hereby incorporated herein
by
5
<PAGE>
reference and a copy of which is on file at the principal offices of
the Company. Under certain circumstances, as set forth in the Rights
Agreement, such rights will be evidenced by separate certificates and
will no longer be evidenced by this certificate. The Company will mail
to the holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor. Under
certain circumstances, as set forth in the Rights Agreement, rights
issued to any person who becomes an Acquiring Person (as defined in
the rights agreement), including such rights held by a subsequent
holder, may become null and void.
With respect to such certificates containing the foregoing legend, until
the Distribution Date, the Rights associated with the Common Shares represented
by such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
In the event that the Company purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and the
--------------------------
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be substantially the same as Exhibit A hereto and
may have such marks of identification or designation and such legends, summaries
or endorsements printed thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Rights Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or
automated quotation system on which the Rights may from time to time be listed,
or to conform to usage. Subject to the provisions of Sections 11 and 22 hereof,
the Right Certificates shall entitle the holders thereof to purchase such number
of one one-thousandths of a Preferred Share as shall be set forth therein at the
price per one one-thousandth of a Preferred Share set forth therein, but the
number of one one-thousandths of a Preferred Share and the Purchase Price shall
be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. (a) The Right Certificates
---------------------------------
shall be executed on behalf of the Company by its Chairman of the Board, its
Chief Executive Officer, its President, any of its Vice Presidents or its
Treasurer, either manually or by facsimile signature, shall have affixed thereto
the Company's seal or a facsimile thereof, and shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Right Certificates shall be countersigned by the Rights
Agent, either manually or by facsimile signature, and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such
6
<PAGE>
Right Certificates, nevertheless, may be countersigned by the Rights Agent and
issued and delivered by the Company with the same force and effect as though the
Person who signed such Right Certificates had not ceased to be such officer of
the Company; and any Right Certificate may be signed on behalf of the Company by
any Person who, at the actual date of the execution of such Right Certificate,
shall be a proper officer of the Company to sign such Right Certificate although
at the date of the execution of this Rights Agreement any such Person was not
such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office, books for registration and transfer
of the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right
-----------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
- ---------------------------------------------------------------------
(a) Subject to the provisions of Section 14 hereof, at any time after
the Close of Business on the Distribution Date, and at or prior to the Close of
Business on the earlier of the Redemption Date or the Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates
entitling the registered holder to purchase a like number of one one-thousandths
of a Preferred Share as the Right Certificate or Right Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Right Certificate or Right
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office of the
Rights Agent. Thereupon the Rights Agent shall countersign and deliver to the
Person entitled thereto a Right Certificate or Right Certificates, as the case
may be, as so requested. The Company may require payment of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.
7
<PAGE>
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
-------------------------------------------------------------
(a) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein), in whole or in
part, at any time after the Distribution Date, upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent,
together with payment of the Purchase Price for each one one-thousandth of a
Preferred Share as to which the Rights are exercised, at or prior to the
earliest of (i) the Expiration Date, (ii) the Redemption Date or (iii) the time
at which such Rights are exchanged as provided in Section 24 hereof.
(b) The Purchase Price shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount equal
to any applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check, cashier's
check or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the Preferred
Shares certificates for the number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes any such transfer agent to comply with all
such requests or (B) requisition from the depositary agent depositary receipts
representing such number of one one-thousandths of a Preferred Share as are to
be purchased (in which case certificates for the Preferred Shares represented by
such receipts shall be deposited by the transfer agent of the Preferred Shares
with such depositary agent) and the Company hereby directs such depositary agent
to comply with such request; (ii) when appropriate, requisition from the Company
the amount of cash to be paid in lieu of issuance of fractional shares in
accordance with Section 14 hereof; (iii) promptly after receipt of such
certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder; and (iv) when appropriate,
after receipt, promptly deliver such cash to or upon the order of the registered
holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to
such holder's duly authorized assigns, subject to the provisions of Section 14
hereof.
Section 8. Cancellation and Destruction of Right Certificates. All Right
--------------------------------------------------
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
Certificates shall be issued in lieu thereof except as
8
<PAGE>
expressly permitted by any of the provisions of this Rights Agreement. The
Company shall deliver to the Rights Agent for cancellation and retirement, and
the Rights Agent shall so cancel and retire, any other Right Certificate
purchased or acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all cancelled Right Certificates to the Company,
or shall, at the written request of the Company, destroy such cancelled Right
Certificates, and, in such case, shall deliver a certificate of destruction
thereof to the Company.
Section 9. Availability of Preferred Shares.
--------------------------------
(a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued Preferred Shares
or any Preferred Shares held in its treasury, the number of Preferred Shares
that will be sufficient to permit the exercise in full of all outstanding Rights
in accordance with Section 7. The Company covenants and agrees that it will take
all such action as may be necessary to ensure that all securities delivered upon
exercise of Rights shall, at the time of delivery of the certificates for such
securities (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable.
(b) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of the Right Certificates
or of any Preferred Shares upon the exercise of Rights. The Company shall not,
however, be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any certificates or depositary receipts for Preferred Shares upon the exercise
of any Rights until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Company's reasonable satisfaction that no
such tax is due.
(c) The Company will use its best efforts to ensure that any
securities issued pursuant hereto are issued in compliance with all applicable
laws.
Section 10. Preferred Shares Record Date. Each Person in whose name any
----------------------------
certificate for Preferred Shares is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered and
payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Shares transfer books of the Company are closed, such Person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares transfer books of the Company are open. Prior to the exercise
of the Rights evidenced thereby, the holder of a Right Certificate shall not be
entitled to any
9
<PAGE>
rights of a holder of Preferred Shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of
-----------------------------------------------------------
Rights. The Purchase Price, the number of Preferred Shares covered by each
- ------
Right and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of
this Rights Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record date for such dividend or of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.
(ii) Subject to Section 24 of this Rights Agreement, in the event
any Person becomes an Acquiring Person, each holder of a Right shall thereafter
have a right to receive, upon exercise thereof at a price equal to the then
current Purchase Price multiplied by the number of one one-thousandths of a
Preferred Share for which a Right is then exercisable, in accordance with the
terms of this Rights Agreement and in lieu of Preferred Shares, such number of
Common Shares as shall equal the result obtained by (A) multiplying the then-
current Purchase Price by the number of one one-thousandths of a Preferred Share
for which a Right is then exercisable and dividing that product by (B) 50% of
the then current per share market price of the Company's Common Shares
(determined pursuant to Section 11(d) hereof) on the date of the occurrence of
such event. In the event that any Person shall become an Acquiring Person and
the Rights shall then be outstanding, the Company shall not take any action
which would eliminate or diminish the benefits intended to be afforded by the
Rights.
Notwithstanding anything in this Agreement to the contrary, from and after
the occurrence of such event, any Rights that are or were acquired or
Beneficially Owned by any Acquiring Person (or any Associate or Affiliate of
such Acquiring Person) shall be
10
<PAGE>
void and any holder of such Rights shall thereafter have no right to exercise
such Rights under any provision of this Rights Agreement. No Right Certificate
shall be issued pursuant to Section 3 that represents Rights Beneficially Owned
by an Acquiring Person whose Rights would be void pursuant to the preceding
sentence or any Associate or Affiliate thereof; no Right Certificate shall be
issued at any time upon the transfer of any Rights to an Acquiring Person whose
Rights would be void pursuant to the preceding sentence or any Associate or
Affiliate thereof or to any nominee of such Acquiring Person, Associate or
Affiliate; and any Right Certificate delivered to the Rights Agent for transfer
to an Acquiring Person whose Rights would be void pursuant to the preceding
sentence shall be cancelled.
(iii) If there shall not be sufficient Common Shares issued but
not outstanding or authorized but unissued to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii), the Company shall
take all such action as may be necessary to authorize additional Common Shares
for issuance upon exercise of the Rights. If the Company shall, after good faith
effort, be unable to take all such action as may be necessary to authorize such
additional Common Shares, the Company shall substitute, for each Common Share
that would otherwise be issuable upon exercise of a Right, a number of Preferred
Shares or fraction thereof (or a security with substantially similar rights,
privileges, preferences, voting power and economic rights) such that the current
per share market price of one Preferred Share (or such other security)
multiplied by such number or fraction is equal to the current per share market
price of one Common Share as of the date of issuance of such Preferred Shares or
fraction thereof (or other security).
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Shares (or shares having the same rights,
privileges and preferences as the Preferred Shares ("equivalent preferred
shares")) or securities convertible into Preferred Shares or equivalent
preferred shares at a price per Preferred Share or equivalent preferred share
(or having a conversion price per share, if a security convertible into
Preferred Shares or equivalent preferred shares) less than the then current per
share market price of the Preferred Shares on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of Preferred Shares
outstanding on such record date plus the number of Preferred Shares which the
aggregate offering price of the total number of Preferred Shares and/or
equivalent preferred shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of additional
Preferred Shares and/or equivalent preferred shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible); provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. In case such subscription price may be paid in a
11
<PAGE>
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Preferred Shares owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed;
and in the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription rights or warrants (excluding those referred
to in Section 11(b) hereof), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the then current per share market price of the Preferred Shares on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and holders of the Rights) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the Company
to be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.
(d) (i) For the purpose of any computation hereunder, the "current
per share market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading Days
immediately prior to such date; provided, however, that in the event that the
current per share market price of the Security is determined during a period
following the announcement by the issuer of such Security of (A) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into such shares, or (B) any subdivision, combination or
reclassification of such Security and prior to the expiration of 30 Trading Days
after the ex-dividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification, then, and in each such
case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the
12
<PAGE>
closing bid and asked prices, regular way, in either case, as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Security
is not listed or admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Security is listed or admitted to trading or, if the Security is not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the NASDAQ or such other system then in
use, or, if on any such date the Security is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Security selected by the Board
of Directors of the Company. If on any such date no such market maker is making
a market in the Security, the fair value of the Security on such date as
determined in good faith by the Board of Directors of the Company shall be used.
The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to trading is
open for the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "current
per share market price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Preferred
Shares are not publicly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the current per share market
price of the Common Shares as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one thousand. If
neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, "current per share market price" shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one-millionth of a Preferred
Share or one ten-thousandth of any other share or security as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which requires such adjustment or (ii)
the date of the expiration of the right to exercise any Rights.
(f) If, as a result of an adjustment made pursuant to Section 11(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred Shares,
thereafter the number of such other shares so receivable upon exercise of any
Right shall be subject to
13
<PAGE>
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Preferred Shares contained in
Section 11(a) through (c), inclusive, and the provisions of Sections 7, 9, 10
and 13 with respect to the Preferred Shares shall apply on like terms to any
such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-thousandths of
a Preferred Share (calculated to the nearest one millionth of a Preferred Share)
obtained by (A) multiplying (x) the number of one one-thousandths of a share
covered by a Right immediately prior to this adjustment by (y) the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price and
(B) dividing the product so obtained by the Purchase Price in effect immediately
after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights in substitution for any
adjustment in the number of one one-thousandths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one millionth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing, subject
to Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed
14
<PAGE>
and countersigned in the manner provided for herein and shall be registered in
the names of the holders of record of Right Certificates on the record date
specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-thousandths of a Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-thousandths
of a Preferred Share which were expressed in the initial Right Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-thousandth of the then par value, if any, of
the Preferred Shares issuable upon exercise of the Rights, the Company shall
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable Preferred Shares at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the Company, if
any, issuable upon such exercise over and above the Preferred Shares and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that, it, in its sole discretion, shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Shares, issuance
wholly for cash of any Preferred Shares at less than the current market price,
issuance wholly for cash of Preferred Shares or securities which by their terms
are convertible into or exchangeable for Preferred Shares, dividends on
Preferred Shares payable in Preferred Shares or issuance of rights, options or
warrants referred to hereinabove in Section 11(b), hereafter made by the Company
to holders of its Preferred Shares shall not be taxable to such stockholders.
(n) In the event that at any time after the date of this Rights
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (A) the
number of one one-thousandths of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying
15
<PAGE>
the number of one one-thousandths of a Preferred Share so purchasable
immediately prior to such event by a fraction, the numerator of which is the
number of Common Shares outstanding immediately before such event and the
denominator of which is the number of Common Shares outstanding immediately
after such event, and (B) each Common Share outstanding immediately after such
event shall have issued with respect to it that number of Rights which each
Common Share outstanding immediately prior to such event had issued with respect
to it. The adjustments provided for in this Section 11(n) shall be made
successively whenever such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
----------------------------------------------------------
Whenever an adjustment is made as provided in Sections 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Shares or the
Preferred Shares a copy of such certificate and (c) if a Distribution Date has
occurred, mail a brief summary thereof to each holder of a Right Certificate in
accordance with Section 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
------------------------------------------------------
Earning Power. In the event, directly or indirectly, at any time after a Person
- -------------
has become an Acquiring Person, (a) the Company shall consolidate with, or merge
with and into, any other Person, (b) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash or any
other property or (c) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly owned
Subsidiaries, then, and in each such case, proper provision shall be made so
that
(i) each holder of a Right (except as otherwise provided
herein) shall thereafter have the right to receive, upon the exercise thereof at
a price equal to the then-current Purchase Price multiplied by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable, in
accordance with the terms of this Rights Agreement and in lieu of Preferred
Shares, such number of Common Shares of such other Person (including the Company
as successor thereto or as the surviving corporation) as shall equal the result
obtained by (A) multiplying the then current Purchase Price by the number of one
one-thousandths of a Preferred Share for which a Right is then exercisable and
dividing that product by (B) 50% of the then current per share market price of
the Common Shares of such other Person (determined pursuant to Section 11(d)
hereof) on the date of consummation of such consolidation, merger, sale or
transfer;
16
<PAGE>
(ii) the issuer of such Common Shares shall thereafter be
liable for, and shall assume, by virtue of such consolidation, merger, sale or
transfer, all the obligations and duties of the Company pursuant to this Rights
Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to
such issuer; and
(iv) such issuer shall take such steps (including, but not
limited to, the reservation of a sufficient number of its Common Shares in
accordance with Section 9 hereof) in connection with such consummation as may be
necessary to assure that the provisions hereof shall thereafter be applicable,
as nearly as reasonably may be, in relation to the Common Shares thereafter
deliverable upon the exercise of the Rights.
The Company shall not consummate any such consolidation, merger, sale or
transfer unless prior thereto the Company and such issuer shall have executed
and delivered to the Rights Agent a supplemental agreement so providing. The
Company shall not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements which,
as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights or
to distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case, as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such
17
<PAGE>
date no such market maker is making a market in the Rights, the fair value of
the Rights on such date as determined in good faith by the Board of Directors of
the Company shall be used.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one one-thousandth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions which are
integral multiples of one one-thousandth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-thousandth of a Preferred
Share may, at the election of the Company, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Company and a depositary
selected by it; provided that such agreement shall provide that the holders of
such depositary receipts shall have all the rights, privileges and preferences
to which they are entitled as Beneficial Owners of the Preferred Shares
represented by such depositary receipts. In lieu of fractional Preferred Shares
that are not integral multiples of one one-thousandth of a Preferred Share, the
Company shall pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Preferred Share. For the purposes of
this Section 14(b), the current market value of a Preferred Share shall be the
closing price of a Preferred Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional Common Shares, the Company shall pay to the registered
holder of the Right Certificates at the time such Rights are exercised as herein
provided an amount of cash equal to the same fraction of the current market
value of a whole Common Share. For the purpose of this Section 14(c), the
current market value of a Common Share (as defined pursuant to Section 11(d)(i)
hereof) for the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of the Right expressly
waives such holder's right to receive any fractional Rights or any fractional
shares upon exercise of a Right (except as expressly provided above).
Section 15. Rights of Action. All rights of action in respect of this
----------------
Rights Agreement, except the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in such holder's own behalf and
for such holder's own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company to enforce, or otherwise act in respect
of, such holder's right to exercise the Rights evidenced by such Right
18
<PAGE>
Certificate in the manner provided in such Right Certificate and in this Rights
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Rights Agreement
and will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Rights Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
--------------------------
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office of the Rights Agent, duly endorsed or accompanied by a
proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person in
whose name the Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the associated Common Shares
certificate made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No
-------------------------------------------------
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. (a) The Company agrees to pay
---------------------------
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Rights Agreement and the exercise and performance of its
duties hereunder. The Company also agrees to indemnify the Rights Agent for, and
to hold it harmless against, any loss,
19
<PAGE>
liability or expense incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this Rights
Agreement, including the costs and expenses of defending against any claim of
liability in the premises.
(b) The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its administration of this Rights Agreement in reliance upon any Right
Certificate or certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the stock
transfer or corporate trust powers of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Rights Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto; provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Rights Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of the predecessor Rights Agent and deliver such
Right Certificates so countersigned; and, in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Rights Agreement.
Section 20. Duties of Rights Agent. The Rights Agent undertakes the
----------------------
duties and obligations imposed by this Rights Agreement upon the following terms
and
20
<PAGE>
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Rights Agreement in reliance
upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Rights Agreement or in the
Right Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Rights Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of the
validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including the Rights becoming void pursuant to Section 11(a)(ii)
hereof) or any adjustment in the terms of the Rights (including the manner,
method or amount thereof) provided for in Section 3, 11, 13, 23 or 24, or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Right
Certificates after actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Preferred Shares to be
issued pursuant to this Rights Agreement or any Right Certificate or as to
whether any Preferred Shares will, when issued, be validly authorized and
issued, fully paid and nonassessable.
21
<PAGE>
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered by it in good faith in
accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions.
(h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Rights Agreement. Nothing herein shall preclude the Rights Agent from
acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
Section 21. Change of Rights Agent. The Rights Agent or any successor
----------------------
Rights Agent may resign and be discharged from its duties under this Rights
Agreement upon 30-days' notice in writing mailed to the Company and to each
transfer agent of the Common Shares or Preferred Shares by registered or
certified mail, and to the holders of the Right Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent upon
30-days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Shares or
Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who or which shall, with such notice, submit such holder's Right Certificate
for inspection by the Company), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by
22
<PAGE>
such a court, shall be a corporation organized and doing business under the laws
of the United States or of the State of New York (or of any other state of the
United States so long as such corporation is authorized to do business as a
banking institution in the State of New York, in good standing, having an office
in the State of New York, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Shares
or Preferred Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
----------------------------------
the provisions of this Rights Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Right Certificates evidencing Rights in
such form as may be approved by the Board of Directors of the Company to reflect
any adjustment or change in the Purchase Price and the number or kind or class
of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Rights Agreement.
Section 23. Redemption. (a) The Board of Directors of the Company may,
----------
at its option, at any time prior to the Distribution Date, redeem all but not
less than all the then outstanding Rights at a redemption price of $.01 per
Right, appropriately adjusted to reflect any stock split, stock combination,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being hereinafter referred to as the "Redemption Price"). The
redemption of the Rights by the Board of Directors of the Company may be made
effective at such time, on such basis and with such conditions as the Board of
Directors of the Company, in its sole discretion, may establish. Notwithstanding
anything to the contrary in this Agreement, the Rights shall not be exercisable
after the first occurrence of the event described in Section 11(a)(ii) until
such time as the Company's right of redemption hereunder has expired. The
Company may, at its option, pay the Redemption Price in cash, Common Shares
(based on the current market price at the time of redemption) or any other form
of consideration deemed appropriate by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights pursuant to paragraph (a) of this
Section 23, and without any further action and without any notice, the right to
exercise the Rights
23
<PAGE>
will terminate and the only right thereafter of the holders of Rights shall be
to receive the Redemption Price. The Company shall promptly give public notice
of any such redemption; provided, however, that the failure to give, or any
defect in, any such notice shall not affect the validity of such redemption.
Within 10 days after such action of the Board of Directors of the Company
ordering the redemption of the Rights, the Company shall mail a notice of
redemption to all the holders of the then outstanding Rights at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or in Section 24 hereof, and
other than in connection with the purchase of Common Shares prior to the
Distribution Date.
Section 24. Exchange. (a) The Board of Directors of the Company may, at its
--------
option, at any time after any Person becomes an Acquiring Person, exchange all
or part of the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of Section 11(a)(ii)
hereof) for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any adjustment in the number of Rights
pursuant to Section 11(i) (such exchange ratio being hereinafter referred to as
the "Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors of
the Company shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to paragraph (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange Ratio. The
Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Shares for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have
24
<PAGE>
become void pursuant to the provisions of Section 11(a)(ii) hereof) held by each
holder of Rights.
(c) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the Company shall
take all such action as may be necessary to authorize additional Common Shares
for issuance upon exchange of the Rights. In the event the Company shall, after
good faith effort, be unable to take all such action as may be necessary to
authorize such additional Common Shares, the Company shall substitute, for each
Common Share that would otherwise be issuable upon exchange of a Right, a number
of Preferred Shares or fraction thereof (or a security with substantially
similar rights, privileges, preferences, voting power and economic rights) such
that the current per share market price of one Preferred Share (or other such
security) multiplied by such number or fraction is equal to the current per
share market price of one Common Share as of the date of issuance of such
Preferred Shares or fraction thereof (or other such security).
(d) The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional Common Shares, the Company shall pay to the registered
holders of the Right Certificates with regard to which such fractional Common
Shares would otherwise be issuable an amount in cash equal to the same fraction
of the current market value of a whole Common Share. For the purposes of this
paragraph (d), the current market value of a whole Common Share shall be the
closing price of a Common Share (as determined pursuant to the second sentence
of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.
Section 25. Notice of Certain Events. (a) In case the Company, at any time
------------------------
after the Distribution Date, shall propose (i) to pay any dividend payable in
stock of any class to the holders of its Preferred Shares or to make any other
distribution to the holders of its Preferred Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of its Preferred Shares
rights or warrants to subscribe for or to purchase any additional Preferred
Shares or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) to effect any consolidation or merger into or with, or to effect
any sale or other transfer (or to permit one or more of its Subsidiaries to
effect any sale or other transfer), in one or more transactions, of 50% or more
of the assets or earning power of the Company and its Subsidiaries (taken as a
whole) to, any other Person, (v) to effect the liquidation, dissolution or
winding up of the Company, or (vi) to declare or pay any dividend on the Common
Shares payable in Common Shares or to effect a subdivision, combination or
consolidation of the Common Shares (by reclassification or otherwise than by
payment of dividends in Common Shares), then, in each such case, the Company
shall give to each holder of a Right Certificate, in accordance with Section 26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, or distribution of rights or warrants,
or the date on which such reclassification,
25
<PAGE>
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Common Shares and/or Preferred Shares, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least 10 days prior to the record date for determining holders of the
Preferred Shares for purposes of such action, and in the case of any such other
action, at least 10 days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the Common Shares and/or
Preferred Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof shall
occur, then the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of
the occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) hereof.
Section 26. Notices. Notices or demands authorized by this Rights Agreement
-------
to be given or made by the Rights Agent or by the holder of any Right
Certificate to or on the Company shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed (until another address is filed in
writing with the Rights Agent) as follows:
Triad Hospitals, Inc.
13445 Noel Road, 20/th/ Floor
Dallas, Texas 75240
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Rights Agreement to be given or made by the Company or by the
holder of any Right Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Company) as follows:
National City Bank, Dept. 3116
Corporate Trust Administration
P.O. Box 94915
Cleveland, Ohio 44101-4915
Notices or demands authorized by this Rights Agreement to be given or made
by the Company or the Rights Agent to the holder of any Right Certificate shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
Section 27. Supplements and Amendments. The Board of Directors of the
--------------------------
Company may from time to time supplement or amend this Rights Agreement without
the approval of any holders of Right Certificates in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or to make any other
provisions with
26
<PAGE>
respect to the Rights which the Board of Directors of the Company may deem
necessary or desirable, any such supplement or amendment to be evidenced by a
writing signed by the Company and the Rights Agent, provided, however, after the
Distribution Date, this Rights Agreement shall not be amended in any manner
which would adversely affect the interests of the holders of Rights (other than
an Acquiring Person or Affiliate or Associate thereof).
Section 28. Successors. All the covenants and provisions of this Rights
----------
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
Section 29. Benefits of this Rights Agreement. Nothing in this Rights
---------------------------------
Agreement shall be construed to give to any Person, other than the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Shares) any legal or equitable right, remedy
or claim under this Rights Agreement; but this Rights Agreement shall be for the
sole and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares).
Section 30. Severability. If any term, provision, covenant or restriction
------------
of this Rights Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Rights Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Rights Agreement and each Right Certificate
-------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of New York and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State.
Section 32. Counterparts. This Rights Agreement may be executed in any
------------
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several
--------------------
Sections of this Rights Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
27
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed and attested, all as of the day and year first
above written.
TRIAD HOSPITALS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President,
General Counsel and Secretary
NATIONAL CITY BANK
By: /s/ David B. Davis
-------------------
Name: David B. Davis
Title: Vice President
28
<PAGE>
Exhibit A
---------
Form of Right Certificate
Certificate No. R-
_________ Rights
NOT EXERCISABLE AFTER MAY 7, 2009 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Rights Certificate
Triad Hospitals, Inc.
This certifies that __________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of May 11, 1999 (the "Rights Agreement"), between Triad
Hospitals, Inc., a Delaware corporation (the "Company"), and National City Bank
(the "Rights Agent"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 p.m., New York time, on May 7, 2009 at the principal office of the Rights
Agent, or at the office of its successor as Rights Agent, one one-thousandth of
a fully paid non-assessable share of Series A Junior Participating Preferred
Stock of the Company, par value $.01 per share (the "Preferred Shares"), at a
purchase price of $90 per one one-thousandth of a Preferred Share (the "Purchase
Price"), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase duly executed. The number of Rights evidenced by this
Right Certificate (and the number of one one-thousandths of a Preferred Share
which may be purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of __________, based
on the Preferred Shares as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of one one-thousandths of a
Preferred Share which may be purchased upon the exercise of the Rights evidenced
by this Right Certificate are subject to modification and adjustment upon the
happening of certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the offices of the Rights Agent.
A-1
<PAGE>
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Right Certificate (i) may be redeemed by the Company at a
redemption price of $.01 per Right or (ii) may be exchanged, in whole or in
part, for Preferred Shares or shares of the Company's Common Stock, par value
$.01 per share.
No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a Preferred Share, which may, at the election
of the Company, be evidenced by depositary receipts), but in lieu thereof, a
cash payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
A-2
<PAGE>
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of _______ __, 1999.
TRIAD HOSPITALS, INC.
By:_______________________
Name:
Title:
COUNTERSIGNED:
By_______________________________
Name:
Title:
A-3
<PAGE>
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED ___________________________________________
hereby sells, assigns and transfers unto________________________________________
_______________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated: _______________________
Signature _________________________
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
Certificate
-----------
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement). After due
inquiry and to the best knowledge of the undersigned, the Rights evidenced by
this Right Certificate were not acquired or beneficially owned by an Acquiring
Person or an Affiliate or Associate thereof.
Dated:_____________________________
Signature _________________________
The signature to the foregoing Assignment and Certificate must correspond to the
name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
A-4
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise Rights
represented by the Right Certificate.)
To: _____________________
The undersigned hereby irrevocably elects to exercise ______ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights and requests that certificates for such
Preferred Shares be issued in the name of:
Please insert social security
or other identifying number:_________________________________________________
_________________________________________
(Please print name and address)
__________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:_________________________________________________
__________________________________________
(Please print name and address)
__________________________________________
Dated:_______________________________
Signature_____________________________
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
A-5
<PAGE>
Certificate
-----------
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement). After due
inquiry and to the best knowledge of the undersigned, the Rights evidenced by
this Right Certificate were not acquired or beneficially owned by an Acquiring
Person or an Affiliate or Associate thereof.
Dated:________________________________
Signature_____________________________
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
A-6
<PAGE>
Exhibit B
---------
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
On May 11, 1999, the Board of Directors of Triad Hospitals, Inc. (the
"Company") authorized and declared the issuance of one preferred share purchase
right (a "Right") for each share of common stock, par value $.01 per share (the
"Common Shares"), of the Company to be issued in the distribution of Common
Shares effective May 11, 1999 (the "Record Date"), as such distribution is
described in the Registration Statement on Form 10 (File No. 0-29816) dated
April 27, 1999 (the "Spin-Off"). Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of Series A Junior
Participating Preferred Stock of the Company, par value $.01 per share (the
"Preferred Shares"), at a price of $90 per one one-thousandth of a Preferred
Share (the "Purchase Price"), subject to adjustment. The description and terms
of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and National City Bank as Rights Agent (the "Rights Agent").
Distribution Date; Exercisability
- ---------------------------------
Initially, the Rights will be attached to all Common Share
certificates and no separate Rights certificates will be issued. Separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
earlier to occur of the tenth day (or such other date as the Board of Directors
of the Company shall determine) after (i) a public announcement that a person or
group of affiliated or associated persons (an "Acquiring Person") has acquired
beneficial ownership of 15% or more of the outstanding Common Shares or (ii) the
commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of the outstanding Common Shares
(the earlier of such dates being the "Distribution Date").
The Rights Agreement provides that, until the Distribution Date (or
earlier redemption or expiration of the Rights), (i) the Rights will be
transferred with and only with the Common Shares, (ii) new Common Share
certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any certificates for Common
Shares outstanding as of the Record Date will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate.
The Rights are not exercisable until the Distribution Date. The
Rights will expire on May 7, 2009 (the "Expiration Date"), unless the Expiration
Date is extended or unless the Rights are earlier redeemed or exchanged by the
Company, in each case, as described below.
B-1
<PAGE>
Flip-In
- -------
If a person or group becomes an Acquiring Person, each holder of a Right
will thereafter have the right to receive, upon exercise, Common Shares (or, in
certain circumstances, Preferred Shares or other similar securities of the
Company) having a value equal to two times the exercise price of the Right.
Notwithstanding any of the foregoing, following the existence of an Acquiring
Person, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person will be null
and void.
For example, at an exercise price of $50.00 per Right, each Right not owned
by an Acquiring Person following an event set forth in the preceding paragraph
would entitle its holder to purchase $100.00 worth of Common Shares (or other
consideration, as noted above) for $50.00. Assuming a value of $25.00 per Common
Share at such time, the holder of each valid Right would be entitled to purchase
four Common Shares for $50.00.
Flip-Over
- ---------
In the event that the Company is acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power are sold after a person or group has become an Acquiring Person,
proper provision will be made so that each holder of a Right will thereafter
have the right to receive, upon the exercise thereof at the then current
exercise price of the Right, that number of shares of common stock of the
acquiring company which at the time of such transaction will have a market value
of two times the exercise price of the Right. In the event that any person or
group becomes an Acquiring Person, proper provision shall be made so that each
holder of a Right, other than Rights beneficially owned by the Acquiring Person
(which will thereafter be void), will thereafter have the right to receive upon
exercise that number of Common Shares having a market value of two times the
exercise price of the Right.
Exchange
- --------
At any time after any person or group becomes an Acquiring Person and
prior to the acquisition by such person or group of 50% or more of the
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by such person or group which will have
become void), in whole or in part, at an exchange ratio of one Common Share, or
one one-thousandth of a Preferred Share (or of a share of a class or series of
the Company's preferred stock having equivalent rights, preferences and
privileges), per Right (subject to adjustment).
Redemption
- ----------
At any time prior to the Distribution Date, the Board of Directors of
the Company may redeem the Rights, in whole but not in part, at a price of $.01
per Right (the "Redemption Price"). The redemption of the Rights may be made
effective at such time on such basis with such conditions as the Board of
Directors, in its sole discretion, may establish. Immediately upon any
redemption of the Rights, the right to exercise the Rights will terminate and
the only right of the holders of Rights will be to receive the
B-2
<PAGE>
Redemption Price. The Rights are not exercisable after the first occurrence of
"flip-in" event (described above) until such time as the Company's right of
redemption has expired.
Amendment
- ---------
The terms of the Rights may be amended by the Board of Directors of
the Company without the consent of the holders of the Rights, except that after
the Distribution Date no such amendment may adversely affect the interests of
the holders of the Rights (other than the Acquiring Person).
Adjustment
- ----------
The number of outstanding Rights and the number of one one-thousandths
of a Preferred Share issuable upon exercise of each Right are subject to
adjustment under certain circumstances.
Preferred Stock
- ---------------
Because of the nature of the Preferred Shares' dividend, liquidation
and voting rights, the value of the one one-thousandth interest in a Preferred
Share purchasable upon exercise of each Right should approximate the value of
one Common Share.
Rights of Holders
- -----------------
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
Further Information
- -------------------
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 10 dated
April 27, 1999. A copy of the Rights Agreement is available free of charge from
the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.
B-3
<PAGE>
EXHIBIT 4.2(a)
HEALTHTRUST, INC.--THE
HOSPITAL COMPANY
11% SENIOR SUBORDINATED NOTES DUE 2009
INDENTURE
Dated as of May 11, 1999
CITIBANK N.A.
as Trustee
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
<S> <C>
310 (a)(1)..................................................... 7.1
(a)(2)..................................................... 7.1
(a)(3)..................................................... N.A.
(a)(4)..................................................... N.A.
(a)(5)..................................................... 7.1
(b)(i), (ii)............................................... 7.1
(c)........................................................ N.A.
311 (a)........................................................ 7.11
(b)........................................................ 7.11
(iii)(c)................................................... N.A.
312 (a)........................................................ 2.5
(b)........................................................ 12.3
(c)........................................................ 12.3
313 (a)........................................................ 7.6
(b)(2)..................................................... 7.7
(c)........................................................ 7.6; 12.2
(d)........................................................ 7.6
314 (a)........................................................ 4.3; 12.2
(b)........................................................ N.A.
(c)(1)..................................................... 12.4
(c)(2)..................................................... 12.4
(c)(3)..................................................... N.A.
(d)........................................................ N.A.
(e)........................................................ 12.5
(f)........................................................ N.A.
315 (a)........................................................ 7.1
(b)........................................................ 7.5; 12.2
(c)........................................................ 7.1
(d)........................................................ 7.1
(e)........................................................ 6.11
316 (a)(last sentence)......................................... 2.9
(a)(1)(A).................................................. 6.5
(a)(1)(B).................................................. 6.4
(a)(2)..................................................... N.A.
(b)........................................................ 6.7
(c)........................................................ 2.12
317 (a)(1)..................................................... 6.8
(a)(2)..................................................... 6.9
(b)........................................................ 2.4
318 (a)........................................................ 12.1
(b)........................................................ N.A.
(c)........................................................ 12.1
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE................................ 1
Section 1.1 Definitions................................................ 1
Section 1.2 Other Definitions.......................................... 25
Section 1.3 Terms of TIA............................................... 25
Section 1.4 Rules of Construction...................................... 26
ARTICLE II
THE NOTES................................................................. 26
Section 2.1 Form and Dating............................................ 26
Section 2.2 Execution and Authentication............................... 28
Section 2.3 Registrar and Paying Agent................................. 29
Section 2.4 Paying Agent to Hold Money in Trust........................ 29
Section 2.5 Holder Lists............................................... 29
Section 2.6 Transfer and Exchange...................................... 30
Section 2.7 Replacement Notes.......................................... 40
Section 2.8 Outstanding Notes.......................................... 40
Section 2.9 Treasury Notes............................................. 41
Section 2.10 Temporary Notes............................................ 41
Section 2.11 Cancellation............................................... 41
Section 2.12 Defaulted Interest......................................... 41
Section 2.13 CUSIP Numbers.............................................. 42
ARTICLE III
REDEMPTION................................................................ 42
Section 3.1 Notice of Redemption to Trustee............................ 42
Section 3.2 Selection of Notes to Be Redeemed.......................... 42
Section 3.3 Notice of Redemption to Holders............................ 43
Section 3.4 Effect of Notice of Redemption............................. 43
Section 3.5 Deposit of Redemption Price................................ 43
Section 3.6 Notes Redeemed in Part..................................... 44
Section 3.7 Optional Redemption........................................ 44
Section 3.8 Mandatory Redemption....................................... 45
ARTICLE IV
COVENANTS................................................................. 45
Section 4.1 Payment of Notes........................................... 45
Section 4.2 Maintenance of Office or Agency............................ 46
Section 4.3 Reports.................................................... 46
Section 4.4 Compliance Certificate..................................... 47
Section 4.5 Taxes...................................................... 47
Section 4.6 Stay, Extension and Usury Laws............................. 48
Section 4.7 Limitation on Restricted Payments.......................... 48
Section 4.8 Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.......................... 52
Section 4.9 Limitation on Indebtedness................................. 53
Section 4.10 Limitation on Sale of Assets............................... 54
Section 4.11 Limitation on Transactions with Affiliates................. 56
Section 4.12 Limitation on Liens........................................ 57
Section 4.13 Limitation on Other Senior Subordinated Indebtedness....... 58
Section 4.14 Corporate Existence........................................ 58
Section 4.15 Purchase of Notes upon Change in Control................... 58
Section 4.16 Subsidiary Guarantees...................................... 59
</TABLE>
<PAGE>
1
<TABLE>
<S> <C>
Section 4.17 Limitation on Issuances and Sales of Capital Stock of
Restricted Subsidiaries.................................... 60
Section 4.18 Limitation on Guarantees of Indebtedness by
Restricted Subsidiaries.................................... 61
Section 4.19 Assumption of Indenture by Triad and Holdings.............. 61
Section 4.20 Limitations on Healthtrust................................. 62
Section 4.21 Limitations on Triad....................................... 62
Section 4.22 Transition Agreements...................................... 62
Section 4.23 Further Assurances......................................... 62
ARTICLE V
SUCCESSORS ........................................................... 62
Section 5.1 Consolidation, Merger and Sale of Assets................... 62
Section 5.2 Successor Person Substituted............................... 64
ARTICLE VI
DEFAULTS AND REMEDIES..................................................... 65
Section 6.1 Events of Default.......................................... 65
Section 6.2 Acceleration............................................... 66
Section 6.3 Other Remedies............................................. 67
Section 6.4 Waiver of Past Defaults.................................... 67
Section 6.5 Control by Majority........................................ 68
Section 6.6 Limitation on Suits........................................ 68
Section 6.7 Rights of Holders of Notes to Receive Payment.............. 68
Section 6.8 Collection Suit by Trustee................................. 68
Section 6.9 Trustee May File Proofs of Claim........................... 69
Section 6.10 Priorities................................................. 69
Section 6.11 Undertaking for Costs...................................... 70
ARTICLE VII
TRUSTEE ........................................................... 70
Section 7.1 Duties of Trustee.......................................... 70
Section 7.2 Rights of Trustee.......................................... 71
Section 7.3 Individual Rights of Trustee............................... 72
Section 7.4 Trustee's Disclaimer....................................... 72
Section 7.5 Notice of Defaults......................................... 73
Section 7.6 Reports by Trustee to Holders of the Notes................. 73
Section 7.7 Compensation and Indemnity................................. 73
Section 7.8 Replacement of Trustee..................................... 74
Section 7.9 Successor Trustee by Merger, etc........................... 75
</TABLE>
<PAGE>
2
<TABLE>
<S> <C>
Section 7.10 Eligibility; Disqualification................................. 75
Section 7.11 Preferential Collection of Claims Against Holdings............ 75
Section 7.12 Trustee's Application for Instructions from the Company....... 75
ARTICLE VIII
DEFEASANCE AND COVENANT DEFEASANCE; DISCHARGE................................ 76
Section 8.1 Option to Effect Defeasance or Covenant Defeasance............ 76
Section 8.2 Defeasance and Discharge...................................... 76
Section 8.3 Covenant Defeasance........................................... 77
Section 8.4 Conditions to Defeasance or Covenant Defeasance............... 77
Section 8.5 Deposited Money and U.S. Government Obligations to
Be Held in Trust; Other Miscellaneous Provisions.............. 78
Section 8.6 Repayment to Holdings......................................... 79
Section 8.7 Reinstatement................................................. 79
Section 8.8 Discharge..................................................... 80
ARTICLE IX
AMENDMENT, SUPPLEMENT AND WAIVER............................................. 80
Section 9.1 Without Consent of Holders of Notes........................... 80
Section 9.2 With Consent of Holders of Notes.............................. 81
Section 9.3 Revocation and Effect of Consents............................. 83
Section 9.4 Notation on or Exchange of Notes.............................. 83
Section 9.5 Trustee to Sign Amendments, etc............................... 83
ARTICLE X
SUBORDINATION .............................................................. 84
Section 10.1 Agreement to Subordinate...................................... 84
Section 10.2 Liquidation; Dissolution; Bankruptcy.......................... 84
Section 10.3 Default on Designated Senior Indebtedness..................... 85
Section 10.4 Acceleration of Securities.................................... 86
Section 10.5 When Distribution Must Be Paid Over........................... 86
Section 10.6 Notice by the Company......................................... 86
Section 10.7 Subrogation................................................... 86
Section 10.8 Relative Rights............................................... 87
Section 10.9 Subordination May Not Be Impaired by the Company.............. 87
Section 10.10 Distribution or Notice to Representative.................... 88
Section 10.11 Rights of Trustee and Paying Agent.......................... 88
Section 10.12 Authorization to Effect Subordination....................... 88
Section 10.13 Amendments.................................................. 89
ARTICLE XI
NOTE GUARANTEES.............................................................. 89
Section 11.1 Guarantee..................................................... 89
Section 11.2 Subordination of Note Guarantee............................... 90
Section 11.3 Limitation on Guarantor Liability............................. 90
Section 11.4 Execution and Delivery of Note Guarantee...................... 91
Section 11.5 Releases Following Sale of Assets or Capital Stock............ 91
ARTICLE XII
MISCELLANEOUS................................................................ 92
Section 12.1 Trust Indenture Act Controls.................................. 92
Section 12.2 Notices....................................................... 92
Section 12.3 Communication by Holders of Notes with Other Holders of Notes. 93
Section 12.4 Certificate and Opinion as to Conditions Precedent............ 94
Section 12.5 Statements Required in Certificate or Opinion................. 94
Section 12.6 Rules by Trustee and Agents................................... 94
</TABLE>
<PAGE>
3
<TABLE>
<S> <C>
Section 12.7 No Personal Liability of Directors, Officers, Employees
and Stockholders............................................... 95
Section 12.8 Governing Law.................................................. 95
Section 12.9 No Adverse Interpretation of Other Agreements.................. 95
Section 12.10 Successors..................................................... 95
Section 12.11 Severability................................................... 95
Section 12.12 Counterpart Originals; Acceptance by Trustee................... 95
Section 12.13 Table of Contents, Headings, etc................................ 96
</TABLE>
EXHIBITS:
Exhibit A-1 Form of Note
Exhibit A-2 Form of Regulation S Temporary Global Note
Exhibit B Form of Certificate of Transfer
Exhibit C Form of Certificate of Exchange
Exhibit D Form of Certificate from Acquiring Institutional Accredited
Investor
Exhibit E Form of Note Guarantee
Exhibit F Form of Supplemental Indenture
Exhibit G Form of First Supplemental Indenture
Exhibit H Form of Second Supplemental Indenture
Exhibit I Form of Third Supplemental Indenture
<PAGE>
4
INDENTURE dated as of May 11, 1999 by and between Healthtrust, Inc.--The
Hospital Company, a Delaware corporation (the "Company"), and Citibank N.A., a
national banking association, duly organized and validly existing under the laws
of the United States of America, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each other
and for the equal and ratable benefit of the Holders of the Notes:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1 Definitions.
"144A Global Note" means a global note in the form of Exhibit A-1
hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with or on behalf of, and registered in the name of, the Depositary or
its nominee that will be issued in a denomination equal to the outstanding
principal amount of the Notes sold in reliance on Rule 144A.
"Acquired Indebtedness" means Indebtedness of a Person (a) existing at the
time such Person becomes a Restricted Subsidiary or (b) assumed in connection
with the acquisition of assets constituting substantially all the assets of such
Person, any division or line of business of such Person or any other properties
or assets of such Person other than in the ordinary course of business from such
Person. Acquired Indebtedness shall be deemed to be incurred on the date of the
related acquisition of assets from any Person or the date the acquired Person
becomes a Restricted Subsidiary.
"Additional Interest" means all additional interest, if any, then owing
pursuant to Section 2(c) of the Registration Rights Agreement.
"Affiliate" means, with respect to any specified Person, (a) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person or (b) any other Person that
owns, directly or indirectly, 10% or more of such specified Person's Capital
Stock or (c) any executive officer or director of any such specified Person or
other Person. For the purposes of this definition, "control," when used with
respect to any specified Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Cedel that apply to such transfer or exchange.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition (including, without limitation, by way or merger, consolidation or
sale and leaseback transaction) (collectively, a "transfer"), directly or
indirectly, in one of a series of related transactions, of (a) any Capital Stock
of any Restricted Subsidiary, (b) all or substantially all of the properties and
assets of any division or line of business of Holdings or any Restricted
Subsidiary, or (c) any other properties or assets of Holdings or any Restricted
Subsidiary other than in the ordinary course of business. For the purposes of
this definition, the term "Asset Sale" shall not include any transfer of
properties or assets (i) that is governed by the provisions of Section 5.1, (ii)
between or among Holdings and Restricted Subsidiaries in accordance with the
terms hereof, (iii) a Hospital Swap, (iv) with an aggregate Fair Market Value of
less than $1,000,000, (v) long-term leases, in effect on the Issuance Date, of
Hospitals to another Person, (vi) long-term leases of Hospitals to another
Person; provided that the aggregate book value of the properties subject to such
leases at any one time outstanding does not exceed 15% of the Total Assets of
Holdings at the time any such lease is entered into, (vii) that are obsolete,
damaged or worn out equipment or inventory that is no longer useful in the
conduct of Holdings' or its Subsidiaries' business and that is disposed of in
the ordinary course of business, (viii) that constitutes a sale or other
disposition of accounts receivable in the ordinary course of business (including
for purposes of financing) for cash and in an amount at least equal to the Fair
Market
<PAGE>
5
Value of such accounts receivable, or (ix) that is made the subject of an
Investment consummated in compliance with Section 4.7.
"Attributable Debt" of any Person in respect of a sale and leaseback
transaction means, at the time of determination, the present value of the
obligation of such Person as lessee for net rental payments (excluding all
amounts required to be paid on account of maintenance and repairs, insurance,
taxes, assessments, water, utilities and similar charges to the extent included
in such rental payments) during the remaining term of the lease included in such
sale and leaseback transaction including any period for which such lease has
been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.
"Average Life" means, as of the date of determination with respect to any
Indebtedness, the quotient obtained by dividing (a) the sum of the products of
(i) the number of years from the date of determination to the date or dates of
each successive scheduled principal payment (including, without limitation, any
sinking fund requirements) of such Indebtedness multiplied by (ii) the amount of
each such principal payment by (b) the sum of all such principal payments.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as
amended, or any similar United States federal or state law relating to the
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as such term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire, whether such
right is currently exercisable or is exercisable only upon the occurrence of a
subsequent condition.
"Board of Directors" means, with respect to any Person, the board of
directors of such Person, or any duly authorized committee of such board.
"Broker-Dealer" means any broker or dealer registered with the Commission
under the Exchange Act.
"Business Day" means any day other than a Legal Holiday.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, partnership interests, participation, rights in or other equivalents
(however designated) of such Person's capital stock, and any rights (other than
debt securities convertible into capital stock), warrants or options
exchangeable for or convertible into such capital stock, whether now outstanding
or issued after the date hereof.
"Capitalized Lease Obligation" means, with respect to any Person, any
obligation of such Person under a lease of (or other agreement conveying the
right to use) any property (whether real, personal or mixed) that is required to
be classified and accounted for as a capital lease obligation under GAAP, and,
for the purpose hereof, the amount of such obligation at any date shall be the
capitalized amount thereof at such date, determined in accordance with GAAP.
"Cash Equivalents" means (a) any evidence of Indebtedness with a maturity
of one year or less issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof (provided that
the full faith and credit of the United States of America is pledged in support
thereof); (b) certificates of deposit or acceptances with a maturity of one year
or less of any financial institution that is a member of the Federal Reserve
System having combined capital and surplus and undivided profits of not less
than $500,000,000; and (c) commercial paper with a maturity of one year or less
issued by a corporation that is not an Affiliate of Holdings and is organized
under the laws of any state of the United States or the District of Columbia and
rated at least A-1 by S&P or any successor rating agency or at least P-1 by
Moody's or any successor rating agency; (d) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clauses (a) and (b) above; (e) demand and time deposits with a domestic
commercial bank that is a member of the Federal Reserve System having combined
capital and surplus and undivided profits of not less than $500,000,000; and (f)
investments in funds investing solely in investments of the types described in
clauses (a) through (e) above.
<PAGE>
6
"Cedel" means Cedelbank, societe anonyme.
"Change in Control" means the occurrence of any of the following events:
(a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have "beneficial ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 35% of the total outstanding
Voting Stock of Triad or Holdings; provided that if (i) Triad is the "beneficial
owner" of more than 35% of the total outstanding Voting Stock of Holdings or
(ii) the ESOP is the "beneficial owner" of more than 35% of the total
outstanding Voting Stock of Triad, either of those events by itself shall not
constitute a Change in Control under this clause (a); (b) Triad or Holdings
consolidates with, or merges with or into, another Person or conveys, transfers,
leases or otherwise disposes of all or substantially all of its assets to any
Person, or any Person consolidates with, or merges with or into, Triad or
Holdings, in any such event pursuant to a transaction in which the outstanding
Voting Stock of Triad or Holdings is converted into or exchanged for cash,
securities or other property, other than any such transaction (i) where the
outstanding Voting Stock of Triad or Holdings is not converted or exchanged at
all (except to the extent necessary to reflect a change in the jurisdiction of
incorporation of Triad or Holdings) or is converted into or exchanged for (A)
Voting Stock (other than Redeemable Capital Stock) of the surviving or
transferee corporation and/or (B) cash, securities and other property (other
than Capital Stock of the surviving or transferee corporation) in an amount that
could be paid by Holdings as a Restricted Payment as described under, or is
otherwise not prohibited by, Section 4.7 and (ii) immediately after such
transaction, no "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) is the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have "beneficial ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 35% of the total outstanding
Voting Stock of the surviving or transferee corporation; (c) during any
consecutive two year period, individuals who at the beginning of such period
constituted the Board of Directors of Triad or Holdings (together with any new
directors whose election to such Board of Directors, or whose nomination for
election by the stockholders of Triad or Holdings, was approved by a vote of 66-
2/3% of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of Triad or Holdings then in office; or (d) Triad or Holdings
is liquidated or dissolved or adopts a plan of liquidation or dissolution other
than, in the case of Holdings, in a transaction which complies with the
provisions described under Section 5.1; or (e) for as long as a holding company
ownership structure is maintained over Holdings, Triad or a company 100% of the
Capital Stock of which is owned directly by Triad ceases to own at least a
majority of the total outstanding Voting Stock and Capital Stock of Holdings.
Notwithstanding anything to the contrary in the foregoing, the consummation of
the Spin-Off Distribution shall not be deemed to constitute a Change in Control
within the meaning of this definition.
"Closing" means the original issuance of Notes on the date of this
Indenture.
"Columbia/HCA" means Columbia/HCA Healthcare Corporation, a Delaware
corporation.
"Company" shall have the meaning assigned to such term in the preamble.
"Commission" means the Securities and Exchange Commission.
"Consolidated Adjusted Net Income" means, for any period, the Consolidated
Adjusted Net Income (or loss) of Holdings and all Restricted Subsidiaries for
such period as determined in accordance with GAAP, adjusted by excluding,
without duplication, (a) any net after-tax extraordinary gains or losses (less
all fees and expenses relating thereto), (b) any net after-tax gains or losses
(less all fees and expenses relating thereto) attributable to asset dispositions
other than in the ordinary course of business, (c) the portion of net income (or
loss) of any Person (other than Holdings or a Restricted Subsidiary), including
Unrestricted Subsidiaries, in which Holdings or any Restricted Subsidiary has an
ownership interest, except to the extent of the amount of dividends or other
distributions actually paid to Holdings or any
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7
Restricted Subsidiary in cash dividends or distributions during such period, (d)
for purposes of Section 4.7, the net income (or loss) of any Person combined
with Holdings or any Restricted Subsidiary on a "pooling of interests" basis
attributable to any period prior to the date of combination, (e) the net income
of any Restricted Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such Restricted Subsidiary is not at the
date of determination permitted, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Restricted
Subsidiary or its stockholders, except to the extent of the amount of cash
dividends or other distributions actually paid to Holdings or a Restricted
Subsidiary not subject to such restriction by such Restricted Subsidiary during
such period and (f) for purposes of calculating Consolidated Adjusted Net Income
under Section 4.7 any net income (or loss) from any Restricted Subsidiary while
it was an Unrestricted Subsidiary at any time during such period other than any
amounts actually received from such Restricted Subsidiary during such period.
"Consolidated Fixed Charge Coverage Ratio" of Holdings means, for any
period, the ratio of (a) the sum of Consolidated Adjusted Net Income and, to the
extent deducted in computing Consolidated Adjusted Net Income, Consolidated
Interest Expense, Consolidated Income Tax Expense and Consolidated Non-Cash
Charges, less all non-cash items increasing Consolidated Adjusted Net Income, in
each case, for such period to (b) the sum of (i) Consolidated Interest Expense
and (ii) cash dividend payments on Preferred Stock of Holdings or any Restricted
Subsidiary and non-cash dividends due on Preferred Stock of any Restricted
Subsidiary for such period.
"Consolidated Income Tax Expense" means, for any period, the provision for
federal, state, local and foreign income taxes of Holdings and all Restricted
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP.
"Consolidated Interest Expense" means, for any period, without duplication,
the sum of (a) the interest expense of Holdings and its Restricted Subsidiaries
for such period, including, without limitation, (i) amortization of debt
discount, (ii) the net cost (benefit) of Interest Rate Agreements (including
amortization of discounts), (iii) the interest portion of any deferred payment
obligation, (iv) commissions, discounts, and other fees and charges owed with
respect to letters of credit and bankers acceptance financing and similar
transactions, and (v) amortization of debt issuance costs, plus (b) the interest
component of Capitalized Lease Obligations of Holdings and its Restricted
Subsidiaries during such period, plus (c) the interest of Holdings and its
Restricted Subsidiaries that was capitalized during such period, plus (d)
interest on Indebtedness of another Person that is guaranteed by Holdings or any
Restricted Subsidiary or secured by a Lien on assets of Holdings or a Restricted
Subsidiary, to the extent such interest is actually paid by Holdings or such
Restricted Subsidiary, in each case as determined on a consolidated basis in
accordance with GAAP; provided that (x) the Consolidated Interest Expense
attributable to interest on any Indebtedness computed on a pro forma basis and
bearing a floating interest rate shall be computed as if the rate in effect on
the date of computation had been the applicable rate for the entire period, and
(y) in making such computation, the Consolidated Interest Expense attributable
to interest on any Indebtedness under a revolving credit facility computed on a
pro forma basis shall be computed based upon the average daily balance of such
Indebtedness during the applicable period; provided, further, that,
notwithstanding the foregoing, the interest rate with respect to any
Indebtedness covered by any Interest Rate Agreement shall be deemed to be the
effective interest rate with respect to such Indebtedness after taking into
account such Interest Rate Agreement.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of Holdings and its Restricted Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of Holdings ending prior to the taking of any action for the
purpose of which the determination is being made, as (a) the aggregate paid-in
capital relating to such Capital Stock plus (b) any retained earnings or earned
surplus less (i) any accumulated deficit and (ii) any amounts attributable to
Redeemable Capital Stock.
"Consolidated Non-Cash Charges" means, for any period, the aggregate
depreciation, amortization, depletion and other non-cash expenses of Holdings
and any
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8
Restricted Subsidiary reducing Consolidated Adjusted Net Income for such period,
determined on a consolidated basis in accordance with GAAP (excluding any such
non-cash charge that requires an accrual of or reserve for cash charges for any
future period).
"Currency Agreements" means any spot or forward foreign exchange
agreements and currency swap, currency option or other similar financial
agreements or arrangements entered into by Holdings or any of its Restricted
Subsidiaries in the ordinary course of business and designated to protect
against or manage exposure to fluctuations in foreign currency exchange rates.
"Corporate Trust Office" of the Trustee shall be at the address of the
Trustee specified in Section 12.2 or such other address as to which the Trustee
may give notice to the Company.
"Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"Default" means any event that is, or after notice or the passage of
time or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name of
the Holder thereof and issued in accordance with Section 2.6, in the form of
Exhibit A-1 hereto except that such Note shall not bear the Global Note Legend
and shall not have the "Schedule of Exchanges of Interests in the Global Note"
attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.3 as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Designated Senior Indebtedness" means:
(a) all Senior Indebtedness under the Senior Credit Agreement; and
(b) any other Senior Indebtedness which, at the time of determination,
has an aggregate principal amount outstanding of at least $35,000,000 and
that has been specifically designated in the instrument evidencing such
Senior Indebtedness as "Designated Senior Indebtedness" of Holdings.
"Disinterested Director" means, with respect to any transaction or
series of transactions in respect of which the Board of Directors is required to
deliver a resolution of the Board of Directors under the Indenture, a member of
the Board of Directors who does not have any material direct of indirect
financial interest in or with respect to such transaction or series of
transactions.
"ESOP" means the Triad Hospitals, Inc. Retirement Savings Plan.
"ESOP Loans" means loans to the ESOP by Holdings or guarantees by
Holdings of loans to the ESOP by a third party lender, in either case in
connection with the purchase as promptly as practicable of shares of Triad
common stock by the ESOP.
"Euroclear" means Morgan Guaranty Trust Holdings of New York, Brussels
office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Notes issued in exchange for the Initial
Notes in the Exchange Offer pursuant to Section 2.6(f) hereof or, with respect
to Initial Notes issued under this Indenture subsequent to the date of this
Indenture pursuant to Section 2.2 hereof, the exchange offer contemplated by the
registration rights agreement relating thereto substantially identical to the
Registration Rights Agreement.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Fair Market Value" means, with respect to any asset or property, the
sale value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy. Fair Market Value shall be determined
by the Board of Directors of Holdings in good faith.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied, that
are in effect on the date of determination.
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9
"Global Note Legend" means the legend set forth in Section 2.6(g)(ii)
which is required to be placed on all Global Notes issued under this Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, in the form of
Exhibit A hereto issued in accordance with Section 2.1, 2.6(b)(iv), 2.6(d)(ii)
or 2.6(f).
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"Guarantee" means, as applied to any obligation, (a) a guarantee
(other than by endorsement of negotiable instruments for collection in the
ordinary course of business), direct or indirect, in any manner, of any part or
all of such obligation and (b) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of non-performance) of all or
any part of such obligation, including, without limiting the foregoing, the
payment of amounts drawn by letters of credit.
"Guarantor" means each Restricted Subsidiary that executes and
delivers its supplemental indenture to the Indenture and any Restricted
Subsidiary that incurs a Guarantee; provided that upon the release and discharge
of any Person from its Note Guarantee in accordance with this Indenture, such
Person shall cease to be a Guarantor.
"Guarantor Senior Indebtedness" of a Guarantor means Indebtedness of
such Guarantor consisting of:
(a) a guarantee of any Senior Indebtedness under the Senior Credit
Agreement or any other Senior Indebtedness; and
(b) the principal of, premium, if any, and interest on all other
Indebtedness of such a Guarantor (other than the Note Guarantee issued by
such Guarantor), whether outstanding on the date of this Indenture or
thereafter created, incurred or assumed, unless, in the case of any
particular Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to such Note
Guarantee.
Notwithstanding the foregoing, "Guarantor Senior Indebtedness" of a
Guarantor shall not include:
(i) Indebtedness evidenced by the Note Guarantee of such Guarantor;
(ii) Indebtedness of such Guarantor that is expressly subordinated in
right of payment to any Guarantor Senior Indebtedness of such Guarantor;
(iii) Indebtedness of such Guarantor that by operation of law is
subordinate to any general unsecured obligations of such Guarantor;
(iv) Indebtedness of such Guarantor to the extent incurred in
violation of any covenant of the Indenture;
(v) any liability for federal, state or local taxes or other taxes,
owed or owing by such Guarantor;
(vi) accounts payable or other liabilities owed or owing by such
Guarantor to trade creditors (including guarantees thereof or instruments
evidencing such liabilities);
(vii) amounts owed by such Guarantor for compensation to employees or
for services rendered to such Guarantor;
(viii)Indebtedness of such Guarantor to any Affiliate of Holdings;
(ix) Capital Stock of such Guarantor; and
(x) Indebtedness which when incurred and without respect to any
election under Section 1111(b) of Title 11 of the United States Code is
without recourse to such Guarantor or any Subsidiary.
"Healthtrust" means Healthtrust, Inc.--The Hospital Company, a
Delaware corporation.
"Holder" means a Person in whose name a Note is registered.
"Holdings" means Triad Hospitals Holdings, Inc., a Delaware
corporation, and any and all successors thereto.
"Hospital" means a hospital, outpatient clinic, long-term care
facility, medical office building or other facility or business that is used or
useful in or related to the provision of
<PAGE>
10
healthcare services.
"Hospital Swap" means an exchange of assets and, to the extent
necessary to equalize the value of the assets being exchanged, cash by Holdings
or a Restricted Subsidiary for one or more Hospitals and/or one or more Related
Businesses or for 100% of the Capital Stock of any Person owning or operating
one or more Hospitals and/or one or more Related Businesses, provided that cash
does not exceed 20% of the sum of the amount of the cash and the Fair Market
Value of the Capital Stock or assets received or given by Holdings or a
Restricted Subsidiary in such transaction.
"Indebtedness" means, with respect to any Person, without duplication,
(a) all liabilities of such Person for borrowed money (including overdrafts) or
for the deferred purchase price of property or services, excluding any trade
payables and other accrued current liabilities incurred in the ordinary course
of business, but including, without limitation, all obligations, contingent or
otherwise, of such Person in connection with any letters of credit and
acceptances issued under letter of credit facilities, acceptance facilities or
other similar facilities, (b) all obligations of such Person evidenced by bonds,
notes, debentures or other similar instruments, (c) indebtedness of such Person
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even if the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), but excluding trade
payables arising in the ordinary course of business, (d) all Capitalized Lease
Obligations of such Person, (e) all obligations of such Person under or in
respect of Interest Rate Agreements or Currency Agreements, (f) all indebtedness
referred to in (but not excluded from) the preceding clauses of other Persons
and all dividends of other Persons, the payment of which is secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien or with respect to property (including,
without limitation, accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Indebtedness (the amount of such obligation being deemed to be the lesser of the
value of such property or asset or the amount of the obligation so secured), (g)
all guarantees by such Person of Indebtedness referred to in this definition or
any other Person, (h) all Redeemable Capital Stock of such Person valued at the
greater of its voluntary or involuntary maximum fixed repurchase price plus
accrued and unpaid dividends and (i) all Attributable Debt of such Person. For
purposes hereof, the "maximum fixed repurchase price" of any Redeemable Capital
Stock which does not have a fixed repurchase price shall be calculated in
accordance with the terms of such Redeemable Capital Stock as if such Redeemable
Capital Stock were purchased on any date on which Indebtedness shall be required
to be determined pursuant to the Indenture, and if such price is based upon, or
measured by, the Fair Market Value of such Redeemable Capital Stock, such Fair
Market Value shall be determined in good faith by the board of directors of the
issuer of such Redeemable Capital Stock.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Independent Financial Advisor" means a reputable accounting,
appraisal or investment banking firm that, in the reasonable good faith judgment
of the Board of Directors of Holdings, is qualified to perform the task for
which such firm has been engaged and is independent with respect to Holdings.
"Indirect Participant" means a Person who holds a beneficial interest
in a Global Note through a Participant.
"Initial Notes" means, collectively, (i) the 11% Senior Subordinated
Notes due 2009 of the Company issued on the date of this Indenture and (ii) one
or more series of 11% Senior Subordinated Notes due 2009 that are issued
subsequent to the date of this Indenture pursuant to Section 2.2, in each case
for so long as such securities constitute "restricted securities" as such term
is defined in Rule 144(a)(3) under the Securities Act; provided that the Trustee
shall be entitled to request and conclusively rely on an Opinion of Counsel with
respect to whether any Note constitutes such a restricted security.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act.
"Interest Rate Agreements" means any interest rate protection
agreements and other types of interest rate hedging agreements (including,
without limitation, interest rate swaps,
<PAGE>
11
caps, floors, collars and similar agreements) designed to protect against or
manage exposure to fluctuations in interest rates.
"Investments" means, with respect to any Person, any direct or
indirect advance, loan, guarantee or other extension of credit or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase, acquisition or ownership by such Person of any Capital Stock, bonds,
notes, debentures or other securities or evidences of Indebtedness issued or
owned by, any other Person and all other items that would be classified as
investments on a balance sheet prepared in accordance with GAAP. In addition,
the portion (proportionate to Holdings' or a Restricted Subsidiary's equity
interest in each Subsidiary) of the Fair Market Value of the net assets of any
Restricted Subsidiary at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary shall be deemed to be an "Investment" made by
Holdings in such Unrestricted Subsidiary at such time. Upon a redesignation of
such Subsidiary as a Restricted Subsidiary, Holdings shall be deemed to continue
to have a permanent "Investment" in an Unrestricted Subsidiary equal to an
amount (if positive) equal to (a) Holdings' (or one of its Subsidiaries')
"Investment" in such Subsidiary at the time of such redesignation less (b) the
portion (proportionate to Holdings' (or one of its Subsidiaries) equity interest
in such Subsidiary) of the Fair Market Value of the net assets of such
Subsidiary at the time of such redesignation. "Investment" shall exclude
extensions of trade credit on commercially reasonable terms in accordance with
normal trade practices.
"Issuance Date" means the date on which the Notes are originally
issued under this Indenture after giving effect to the Spin-Off Transactions.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York are authorized by law, regulation or
executive order to remain closed. If a payment date is a Legal Holiday at a
place of payment, payment may be made at that place on the next succeeding day
that is not a Legal Holiday, and no interest shall accrue on such payment for
the intervening period.
"Letter of Transmittal" means the letter of transmittal to be prepared
by Holdings and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), security interest, hypothecation, assignment for security, claim, or
preference of priority or other encumbrance upon or with respect to any property
of any kind, real or personal, movable or immovable, now owned or hereafter
acquired. A Person shall be deemed to own subject to a Lien any property which
such Person has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement having substantially the same economic effect as the foregoing.
"LifePoint" means LifePoint Hospitals, Inc., a Delaware corporation.
"Material Subsidiary" of a Person means any Restricted Subsidiary that
would be a significant subsidiary of such person, as defined in rule 1-02 of
Regulation S-X promulgated by the Commission.
"Maturity" means, with respect to any Note, the date on which any
principal of such Note becomes due and payable provided in such Note or in this
Indenture, whether at the Stated Maturity with respect to such principal or by
declaration of acceleration, call for redemption of purchase or otherwise.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash or Cash Equivalents including payments in
respect of deferred payment obligations when received in the form of, or stock
or other assets when disposed for, cash or Cash Equivalents (except to the
extent that such obligations are financed or sold with recourse to Holdings or
any Restricted Subsidiary), net of (a) brokerage commissions and other fees and
expenses (including, without limitation, fees and expenses of legal counsel and
investment banks, recording fees, transfer fees and appraiser fees) related to
such Asset Sale, (b) provisions for all taxes payable as a result of such Asset
Sale, (c) payments made to retire Indebtedness where payment of such
Indebtedness is secured by the assets or properties which are the subject of
such Asset Sale or where such Indebtedness must by its terms, or as required by
applicable
<PAGE>
12
law, be repaid out of the proceeds of such Asset Sale, (d) amounts required to
be paid to any Person (other than Holdings or any Restricted Subsidiary) owning
a beneficial interest in or having a Lien on the assets subject to the Asset
Sale, (e) all distributions and other payments required to be made to non-
majority interest holders in Subsidiaries or Permitted Joint Ventures as a
result of such Asset Sale and (f) appropriate amounts to be provided by Holdings
or any Restricted Subsidiary, as the case may be, as a reserve required in
accordance with GAAP against any liabilities associated with such Asset Sale and
retained by Holdings or any Restricted Subsidiary, as the case may be, after
such Asset Sale, including, without limitation, pension and other post-
employment benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Asset
Sale, all as reflected in an Officers' Certificate delivered to the Trustee.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Note Guarantee" means any guarantee of the obligations of Holdings under
this Indenture and the Notes by any Restricted Subsidiary in accordance with the
provisions of this Indenture.
"Notes" means, collectively, the Initial Notes and the Unrestricted Notes,
treated as a single class of securities, as amended or supplemented from time to
time in accordance with the terms hereof, that are issued pursuant to the terms
of this Indenture.
"Officer" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, any Executive or Senior Vice President,
the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any
Assistant Treasurer, the Controller, the Secretary or any Vice President of such
Person.
"Officers' Certificate" means a certificate signed on behalf of the Company
by two Officers of the Company, one of whom must be the Chief Executive Officer,
the Chief Financial Officer or the principal accounting officer of the Company,
that meets the requirements of Section 12.5.
"Opinion of Counsel" means an opinion from legal counsel that meets the
requirements of Section 12.5. The counsel may be an employee of or counsel to
the Company, any Subsidiary of the Company or the Trustee.
"Pari Passu Indebtedness" means (a) with respect to the Notes, Indebtedness
that ranks pari passu in right of payment to the Notes and (b) with respect to
any Note Guarantee, Indebtedness that ranks pari passu in right of payment to
such Note Guarantee.
"Participant" means, with respect to the Depositary, Euroclear or Cedel, a
Person who has an account with the Depositary, Euroclear or Cedel, respectively
(and, with respect to The Depository Trust Company, shall include Euroclear and
Cedel).
"Permitted Indebtedness" means any of the following:
(a) Indebtedness of Holdings or any restricted Subsidiary under the Senior
Credit Agreement in an aggregate principal amount at any one time outstanding
not to exceed $465,000,000 million less, without duplication, (i) the
aggregate amount of all repayments of the principal amount of any term loans
under the Senior Credit Agreement or a permanent reduction of the commitments
with respect to any revolving credit indebtedness under the Senior Credit
Agreement in either case made in accordance with Section 4.10 and (ii) the
aggregate amount of all repayments of the principal amount of any loan in
respect of the asset sale bridge loan facility of the Senior Credit Agreement
in effect on the date of this Indenture.
(b) Indebtedness of Holdings pursuant to the Notes or of any Restricted
Subsidiary pursuant to a Note Guarantee;
(c) Indebtedness (other than Indebtedness referred to in paragraphs (a)
and (b) of this definition) of Holdings or any Restricted Subsidiary
outstanding on the date hereof and immediately following consummation of the
Spin-Off Transactions in an amount not to exceed $11,000,000;
(d) Indebtedness of Holdings owing to any Restricted Subsidiary; provided
that any disposition, pledge or transfer of any such Indebtedness to a Person
(other than a disposition, pledge or transfer to Holdings or another
Restricted Subsidiary) shall be deemed to be an incurrence of such
Indebtedness by Holdings not permitted by this paragraph (d);
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13
(e) Indebtedness of a Restricted Subsidiary owing to Holdings or to
another Restricted Subsidiary; provided that any disposition, pledge or
transfer of any such Indebtedness to a Person (other than a disposition,
pledge or transfer to Holdings or a Restricted Subsidiary) shall be deemed to
be an incurrence of such Indebtedness by such Restricted Subsidiary not
permitted by this paragraph (e);
(f) guarantees of any Restricted Subsidiary made in accordance with the
provisions of Sections 4.13 or 4.18;
(g) obligations of Holdings or any Guarantor entered into in the ordinary
course of business (i) pursuant to Interest Rate Agreements designed to
protect Holdings or any Restricted Subsidiary against fluctuations in interest
rates in respect of Indebtedness of Holdings or any Restricted Subsidiary,
which obligations do not exceed the aggregate principal amount of such
Indebtedness and (ii) pursuant to Currency Agreements entered into by Holdings
or any of its Restricted Subsidiaries in respect of its (x) assets or (y)
obligations, as the case may be, denominated in a foreign currency;
(h) Indebtedness of Holdings or any Guarantor in respect of Purchase Money
Obligations and Capitalized Lease Obligations of Holdings or any Guarantor in
an aggregate amount which does not exceed $20,000,000 at any one time
outstanding;
(i) Indebtedness of Holdings or any Guarantor consisting of guarantees,
indemnities, hold backs or obligations in respect of purchase price
adjustments in connection with the acquisition or disposition of assets,
including, without limitation, shares of Capital Stock of Restricted
Subsidiaries, or contingent payment obligations incurred in connection with
the acquisition of assets which are contingent on the performance of the
assets acquired, other than guarantees of Indebtedness incurred by any Person
acquiring all or any portion of such assets of shares of Capital Stock of such
Restricted Subsidiary for the purpose of financing such acquisition, provided
that the maximum allowable liability in respect of all such Indebtedness shall
at no time exceed the gross proceeds actually received by Holdings and its
Restricted Subsidiaries;
(j) Indebtedness of Holdings or any Guarantor represented by (i) letters
of credit for the account of Holdings or any Restricted Subsidiary or (ii)
other obligations to reimburse third parties pursuant to any surety bond or
other similar arrangements, which letters of credit or other obligations, as
the case may be, are intended to provide security for workers' compensation
claims, payment obligations in connection with self-insurance or other similar
requirements in the ordinary course of business;
(k) any renewals, extensions, substitutions, refinancing or replacements
(each, for purposes of this paragraph, a "refinancing") of any Indebtedness
incurred pursuant to the first paragraph of Section 4.9 or referred to in
paragraphs (a) (ii), (b) or (c) of this definition, including any successive
refinancings, so long as (i) any such new indebtedness shall be in a principal
amount that does not exceed the principal amount so refinanced, plus the
lesser of the amount of any premium required to be paid in connection with
such refinancing pursuant to the terms of the Indebtedness refinanced or the
amount of any premium reasonably determined as necessary to accomplish such
refinancing, (ii) in the case of any refinancing by Holdings of Pari Passu
Indebtedness or Subordinated Indebtedness, such new Indebtedness is made pari
passu with or subordinate to the Notes at least to the same extent as the
Indebtedness being refinanced, (iii) in the case of any refinancing by any
Guarantor of Pari Passu Indebtedness or Subordinated Indebtedness, such new
Indebtedness is made pari passu with or subordinate to the Note Guarantee of
such Guarantor at least to the same extent as the Indebtedness being
refinanced, (iv) such new Indebtedness has an Average Life no shorter than the
Average Life of the Indebtedness being refinanced and final Stated Maturity of
principal no earlier than the final Stated Maturity of principal of the
Indebtedness being refinanced and (v) Indebtedness of Holdings or a Guarantor
may only be refinanced with Indebtedness of Holdings or a Guarantor, as the
case may be;
(l) payments to or by Holdings to fund the payment of or payment by Triad
of dividends, loans, distributions or annual contributions calculated in
accordance with the requirements of Section 415 of the Internal Revenue Code
to the ESOP in amounts equal to amounts expended by Triad or Holdings to
repurchase shares of its Capital Stock from
<PAGE>
14
deceased or retired employees in accordance with the terms of the ESOP as in
effect on the date of the Indenture and from employees whose employment with
Holdings or any of its Subsidiaries has terminated for any reason, in each
case contemplated by this paragraph (l) only to the extent mandatorily
required by the ESOP as in effect on the date of the Indenture, the Internal
Revenue Code or ERISA; and, provided, further, that in each such case Holdings
or Triad has deferred making any cash payments in respect of such repurchase
obligations to the maximum extent possible under the ESOP as in effect on the
date of the Indenture or as modified from time to time to comply with law;
(m) Physician Support Obligations incurred by Holdings or any Restricted
Subsidiary; and
(n) Indebtedness of Holdings or any Guarantor not otherwise permitted by
the foregoing paragraphs (a) through (m) in an aggregate principal amount not
in excess of $40,000,000 at any one time outstanding.
"Permitted Investments" means any of the following:
(a) Investments in Cash Equivalents;
(b) Investments in Holdings or any Restricted Subsidiary;
(c) intercompany Indebtedness to the extent permitted under paragraphs (d)
or (e) of the definition of "Permitted Indebtedness;"
(d) Investments in an amount not to exceed $10,000,000 at any one time
outstanding;
(e) Investments by Holdings or any Restricted Subsidiary in another
Person, if as a result of such investment (i) such other Person becomes a
Restricted Subsidiary or (ii) such other Person is merged or consolidated with
or into, or transfers or conveys all or substantially all of its assets to,
Holdings or a Restricted Subsidiary;
(f) Investments acquired in the Spin-Off Transactions;
(g) bonds, notes, debentures and other securities received as
consideration for Assets Sales to the extent permitted under Section 4.10;
(h) any Investment in a Person engaged principally in a Related Business
prior to such investment if (i) Holdings would, at the time of such Investment
and after giving pro forma effect thereto as if such Investment had been made
at the beginning of the most recently ended four full fiscal quarter periods
for which consolidated financial statements are available immediately
preceding the date of such Investment, have been permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Consolidated Fixed Charge
Coverage Ratio test set forth in the first paragraph under Section 4.9 and
(ii) the aggregate amount (including cash and the book value of property other
than cash, as determined by the Board of Directors of Holdings) of all
Investments made pursuant to this paragraph (h) by Holdings and its Restricted
Subsidiaries (determined as of the time made) does not exceed in the aggregate
15% of the Total Assets of Holdings at the time the investment is made;
provided that Investments of up to $25,000,000 shall be permitted under this
paragraph (h) without regard to the requirement of clause (i) of this
paragraph (h);
(i) Physician Support Obligations made by Holdings or any Restricted
Subsidiary;
(j) in the event Holdings or a Restricted Subsidiary shall establish a
Subsidiary for the purpose of insuring the healthcare businesses or facilities
owned or operated by Holdings, any Subsidiary, any Permitted Joint Venture or
any physician employed by or on the medical staff of any such business or
facility (the "Insurance Subsidiary"), Investments in an amount which do not
exceed the minimum amount of capital required under the laws of the
jurisdiction in which the Insurance Subsidiary is formed, and any Investment
by such Insurance Subsidiary which is a legal investment for an insurance
company under the laws of the jurisdiction in which the Insurance Subsidiary
is formed and made in the ordinary course of business and rated in one of the
four highest rating categories;
(k) Investments made in connection with Hospital Swaps;
(l) Investments in prepaid expenses, negotiable instruments held for
collection and lease, utility and workers' compensation, performance and other
similar deposits made in the ordinary course of business;
<PAGE>
15
(m) loans and advances to officers, directors and employees made in the
ordinary course of business not to exceed $15,000,000 in the aggregate at any
one time outstanding;
(n) Interest Rate Agreements and Currency Agreements permitted under
Section 4.9;
(o) Investments represented by accounts receivable created or acquired in
the ordinary course of business;
(p) Investments existing on the Issuance Date and any renewal or
replacement thereof on terms and conditions no less favorable than that being
renewed or replaced;
(q) any Investment to the extent that the consideration therefor is
Qualified Capital Stock;
(r) shares of Capital Stock or other securities received in settlement of
debts owed to Holdings or any Restricted Subsidiary as a result of
foreclosure, perfection or enforcement of any Lien or indebtedness or in
connection with any good faith settlement of a bankruptcy proceeding; or
(s) the ESOP Loans.
"Permitted Joint Venture" means, with respect to any Person, (a) any
corporation, association, limited liability company or other business entity
(other than a partnership) of which 50% or more of the total voting power of
shares of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
and 50% or more of the total equity interests is at the time of determination
owned or controlled, directly or indirectly, by such Person or one or more of
the Restricted Subsidiaries of that person or a combination thereof and (b) any
partnership of which 50% or more of the general or limited partnership interests
are owned or controlled, directly or indirectly, by such Person or one or more
of the Restricted Subsidiaries of that Person or a combination thereof, and
which in the case of each of clauses (a) and (b) is engaged in a Related
Business.
"Permitted Liens" means (a) Liens existing on the Issue Date; (b) Liens now
or hereafter securing any Interest Rate Agreements of Holdings or any Restricted
Subsidiary; (c) Liens securing any Indebtedness incurred under paragraph (k) of
the definition of "Permitted Indebtedness," the proceeds of which are used to
refinance Indebtedness of Holdings or any Restricted Subsidiary; provided that
such Liens extend to or cover only the assets currently securing the
Indebtedness being refinanced; (d) Liens securing Acquired Indebtedness incurred
by Holdings and any Restricted Subsidiary and permitted under Section 4.9,
provided that such Liens attach solely to the assets acquired; (e) Liens
securing Indebtedness owing to Holdings or a Restricted Subsidiary; (f) Liens
securing Purchase Money Obligations incurred in accordance with the Indenture;
(g) Liens for taxes, assessments or governmental charges or claims either (i)
not delinquent or (ii) contested in good faith by appropriate proceedings and as
to which Holdings or its Restricted Subsidiaries shall have set aside on its
books such reserves as may be required pursuant to GAAP; (h) statutory Liens of
landlords and Liens or carriers, warehousemen, mechanics, suppliers,
materialmen, repairment and other Liens imposed by law incurred in the ordinary
course of business for sums not yet delinquent or being contested in good faith,
if such reserved or other appropriate provision, if any, as shall be required by
GAAP shall have been made in respect thereof; (i) Liens incurred or deposits
made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security, or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, leases, government contracts, performance and return-of-money bonds
and other similar obligations; (j) judgment Liens not giving rise to an Event of
Default so long as such Lien is adequately bonded and any appropriate legal
proceedings which may have been duly initiated for the review of such judgment
shall not have been finally terminated or the period within which such
proceedings may be initiated shall not have expired; (k) easements, rights-of-
way, zoning restrictions and other similar charges or encumbrances in respect of
real property not interfering in any material respect with the conduct of the
business of Holdings or any of its Restricted Subsidiaries; or (l) any interest
or title of a lessor in assets or Property subject to Capitalized Lease
Obligations or an operating lease of Holdings or any Restricted Subsidiary.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or
<PAGE>
16
government or any agency or political subdivision thereof.
"Physician Support Obligation" means a loan to or on behalf of, or a
guarantee of indebtedness of, a physician or healthcare professional providing
service to patients in the service area of a Hospital or other health care
facility operated by Holdings or any of its Restricted Subsidiaries made or
given by Holdings or any Subsidiary of Holdings (a) in the ordinary course of
its business and (b) pursuant to a written agreement having a period not to
exceed four years.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference stock whether now outstanding, or issued after
the Issuance Date, and including, without limitation, all classes and series of
preferred or preference stock of such Person.
"Private Placement Legend" means the legend set forth in Section 2.6(g)(i)
to be placed on all Notes issued under this Indenture except where otherwise
permitted by the provisions of this Indenture.
"Public Equity Offering" means an offer and sale of common stock (which is
Qualified Capital Stock) of Triad or Holdings made on a primary basis by Triad
or Holdings pursuant to a registration statement that has been declared
effective by the Commission pursuant to the Securities Act (other than a
registration statement on Form S-8 or otherwise relating to equity securities
issuable under any employee benefit plan of Triad or Holdings).
"Purchase Money Obligations" means any Indebtedness of Holdings or any
Restricted Subsidiary incurred to finance the acquisition or construction of any
property or business (including Indebtedness incurred within 90 days following
such acquisition or construction), including Indebtedness of a Person existing
at the time such Person becomes a Subsidiary or assumed by Holdings or a
Subsidiary in connection with the acquisition of assets from such person;
provided, however, that any Lien on such Indebtedness shall not extend to any
property other than the property so acquired or constructed.
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock.
"Qualified Equity Offering" means (a) any Public Equity Offering or (b) an
offering of Qualified Capital Stock of Triad or Holdings to non-Affiliates with
gross proceeds to Triad or Holdings in excess of $35,000,000.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Redeemable Capital Stock" means any class of Capital Stock that, either by
its terms, by the terms of any securities into which it is convertible or
exchangeable or by contract or otherwise, is, or upon the happening of an event
or passage of time would be, required to be redeemed (whether by sinking fund or
otherwise) prior to the date that is 91 days after the final Stated Maturity of
the notes or is redeemable at the option of the holder thereof at any time prior
to such date, or is convertible into or exchangeable for debt securities at any
time prior to such date (unless it is convertible or exchangeable solely at the
option of Holdings).
"Registration Rights Agreement" means the Exchange Registration Rights
Agreement, dated as of the date of this Indenture, by and among the Company and
the other parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time, and, with respect to
Initial Notes issued under this Indenture subsequent to the date of this
Indenture pursuant to Section 2.2, the registration rights agreement relating
thereto relating thereto substantially identical to the Registration Rights
Agreement.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note or
Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent Global Note in the
form of Exhibit A-1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Note in the
form of Exhibit A-2 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Notes initially sold in
<PAGE>
17
reliance on Rule 903 of Regulation S.
"Related Business" means a healthcare business affiliated or associated
with a Hospital or any business related or ancillary to the provision of
healthcare services or information or the investment in, or the management,
leasing or operation of, a Hospital.
"Responsible Officer," when used with respect to the Trustee, means any
officer within the global agency and trust services department of the Trustee
(or any successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the Private
Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private Placement
Legend.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" means any Subsidiary other than an Unrestricted
Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"S&P" means Standard and Poor's Ratings Group, a division of McGraw-Hill,
Inc. and its successors.
"Sale and Leaseback Transaction" means any transaction or series of related
transactions pursuant to which Holdings or a Restricted Subsidiary sells or
transfers any property or assets in connection with the leasing of such property
or asset to the seller or transferor.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Agreement" means the credit agreement, dated as of May 11,
1999, among Healthtrust, and certain subsidiaries of Healthtrust which may
become parties thereto, the lenders parties thereto and Bank of America National
Trust and Savings Association, as administrative agent, as such agreement may be
amended, renewed, extended, substituted, refinanced, restructured, replaced,
supplemented or otherwise modified from time to time.
"Senior Indebtedness" means:
(a) all obligations of Holdings, now or hereafter existing, under or in
respect of the Senior Credit Agreement, whether for principal, premium, if
any, interest (including interest accruing after the filing of, or which would
have accrued but for the filing of, a petition by or against Holdings under
Bankruptcy Law, whether or not such interest is allowed as a claim after such
filing in any proceeding under such law) and other amounts due in connection
therewith (including any fees, premiums, expenses and indemnities); and
(b) the principal of, premium, if any, and interest on all other
Indebtedness of Holdings (other than the Notes), whether outstanding on the
date of this Indenture or thereafter created, incurred or assumed, unless, in
the case of any particular Indebtedness, the instrument creating or evidencing
the same or pursuant to which the same is outstanding expressly provides that
such Indebtedness shall not be senior in right of payment to the Notes.
Notwithstanding the foregoing, "Senior Indebtedness" shall not include:
(i) Indebtedness evidenced by the Notes;
(ii) Indebtedness of Holdings that is expressly subordinated in right of
payment to any Senior Indebtedness of Holdings or the Notes;
(iii) Indebtedness of Holdings that by operation of law is subordinate to
any general unsecured obligations of Holdings,
(iv) Indebtedness of Holdings to the extent incurred in violation of any
covenant prohibiting the incurrence of Indebtedness under this Indenture;
(v) any liability for federal, state or local taxes or other taxes, owed
or owing
<PAGE>
18
by Holdings;
(vi) accounts payable or other liabilities owed or owing by Holdings to
trade creditors (including guarantees thereof or instruments evidencing such
liabilities);
(vii) amounts owed by Holdings for compensation to employees or for
services rendered to Holdings;
(viii) Indebtedness of Holdings to any Subsidiary or any other Affiliate
of Holdings;
(ix) Capital Stock of Holdings; and
(x) Indebtedness which when incurred and without respect to any
election under Section 1111(b) of Title 11 of the United States Code is
without recourse to Holdings or any Restricted Subsidiary.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"Spin-Off-Distribution" means the distribution to holders of Columbia/HCA
stock of all of the outstanding shares of Triad.
"Spin-Off Transactions" means the transactions described in the Offering
Circular, dated April 30, 1999, relating to the Notes under the caption "The
Distribution."
"Stated Maturity" means, when used with respect to any note or any
installment of interest thereon, the date specified in such note as the fixed
date on which the principal of such note or such installment of interest is due
and payable, and, when used with respect to any other Indebtedness, means the
date specified in the instrument governing such indebtedness as the fixed date
on which the principal of such indebtedness or any installment of interest
thereon is due and payable.
"Subordinated Indebtedness" means Indebtedness of Holdings or a Guarantor
that is expressly subordinated in right of payment to the Notes or the Note
Guarantee of such Guarantor, as the case may be.
"Subsidiary" means any Person a majority of the equity ownership or Voting
Stock of which is at the time owned, directly or indirectly, by Holdings or by
one or more other Subsidiaries. For purposes of this definition, any directors'
qualifying shares shall be disregarded in determining the ownership of a
Subsidiary.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb)
as in effect on the date on which this Indenture is qualified under the TIA,
except as provided in Section 9.3 hereof.
"Total Assets" of Holdings means the total consolidated assets of Holdings
and its Restricted Subsidiaries as shown on the most recent balance sheet of
Holdings.
"Transition Agreements" means the collective reference to the (a)
distribution agreement among Columbia/HCA, Triad and LifePoint; (b) tax sharing
and indemnification agreement among Columbia/HCA, Triad and LifePoint; (c)
benefits and employment matters agreement among Columbia/HCA, Triad and
LifePoint; (d) insurance allocation and administration agreement among
Columbia/HCA, Triad and LifePoint; (e) computer and data processing services
agreement between Columbia Information Systems, Inc. ("CIS") and Triad; (f)
subleases between certain subsidiaries of Columbia/HCA and Triad relating to
Triad's principal executive offices; (g) transitional services agreement between
Columbia/HCA and Triad; (h) agreement to share telecommunications services
between CIS and Triad; and (i) agreements between Columbia/HCA and Triad
relating to the provision of account collection services and relating to Triad's
participation in a group purchasing organization with Columbia/HCA, in the case
of clauses (a), (b), (c), (d), (e), (f), (g) and (h) above, in substantially the
forms filed with the Commission as exhibits to the Form 10 Registration
Statement of Triad, and in the case of clause (i) above, substantially as
described in the Form 10 Registration Statement of Triad, and in the case of all
agreements listed in clauses (a) through (i) above, as such agreements may be
amended from time to time so long as such amendments are not materially adverse
to the interests of the Holders of the Notes.
"Triad" means Triad Hospitals, Inc., a Delaware corporation.
"Trustee" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
<PAGE>
19
"Unrestricted Global Note" means a permanent Global Note in the form of
Exhibit A-1 attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not and are not required to
bear the Private Placement Legend.
"Unrestricted Definitive Notes" means one or more Definitive Notes that do
not bear and are not required to bear the Private Placement Legend.
"Unrestricted Notes" means one or more Unrestricted Global Notes and/or
Unrestricted Definitive Notes, including, without limitation, the Exchange
Notes.
"Unrestricted Subsidiary" means (a) any Subsidiary that at the time of
determination shall be an Unrestricted Subsidiary (as designated by the Board of
Directors of Holdings, as provided below) and (b) any Subsidiary of any
Unrestricted Subsidiary; provided,however, that in no event shall any Guarantor
be an Unrestricted Subsidiary. The Board of Directors of Holdings may designate
any Subsidiary (including any newly acquired or newly formed Subsidiary) to be
an Unrestricted Subsidiary so long as (i) neither Holdings nor any Restricted
Subsidiary is directly or indirectly liable for any Indebtedness of such
Subsidiary, (ii) no default with respect to any Indebtedness of such Subsidiary
would permit (upon notice, lapse of time or otherwise) any holder of any other
Indebtedness of Holdings or any Restricted Subsidiary, except any nonrecourse
guarantee given solely to support the pledge by Holdings or a Restricted
Subsidiary of the Capital Stock of an Unrestricted Subsidiary, to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity and (iii) any Investment in
such Subsidiary made as a result of designating such Subsidiary an Unrestricted
Subsidiary will not violate the provisions of Section 4.19. Any such designation
by the Board of Directors of Holdings shall be evidenced to the Trustee by
filing a board resolution with the Trustee giving effect to such designation.
The Board of Directors of Holdings may designate any Unrestricted Subsidiary as
a Restricted Subsidiary if immediately after giving effect to such designation,
there would be no Default or Event of Default under this Indenture and Holdings
could incur $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to Section 4.9.
"U.S. Government Obligations" means securities that are (a) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account of the
holder of such depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by such
depository receipt.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any Person (irrespective of whether or not, at the time, stock of
any other class or classes shall have, or might have voting power by reason of
the happening of any contingency).
Section 1.2 Other Definitions.
Term Defined in Section
"Authentication Order"........................................... 2.2
<PAGE>
20
"Change in Control Offer"........................................ 4.15
"Change in Control Payment"...................................... 4.15
"Change in Control Purchase Price"............................... 4.15
"Change in Control Purchase Date"................................ 4.15
"Covenant Defeasance"............................................ 8.3
"Defeasance"..................................................... 8.2
"DTC"............................................................ 2.3
"Event of Default"....................................... ....... 6.1
"Excess Proceeds Offer".......................................... 4.15
"Excess Proceeds Payment" ....................................... 4.15
"Excess Proceeds Payment Date"................................... 4.15
"First Supplemental Indenture"................................... 4.20
"incur" ......................................................... 4.9
"Non-Payment Default" ........................................... 10.3
"Paying Agent"................................................... 2.3
"Payment Blockage Period"........................................ 10.3
"Payment Default" ............................................... 10.3
"Permitted Junior Securities" ................................... 10.2
"Registrar" ..................................................... 2.3
"Replacement Assets"............................................. 4.10
"Restricted Payments" ........................................... 4.7
"Second Supplemental Indenture" ................................. 4.20
"Subsequent Series Notes" ....................................... 2.2
"Surviving Entity"............................................... 5.1
"Third Supplemental Indenture"................................... 4.16
Section 1.3 Terms of TIA.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes and the Note Guarantees means the Company and the
Guarantors, respectively, and any successor obligor upon the Notes and the Note
Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by Commission rule under the TIA
have the meanings so assigned to them.
Section 1.4 Rules of Construction.
Unless the context otherwise requires: (i) a term has the meaning assigned
to it; (ii) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP; (iii) "or" is not exclusive; (iv) words in the
singular include the plural, and in the plural include the singular; (v)
provisions apply to successive events and transactions; (vi) references to
sections of or rules under the Securities Act shall be deemed to include
substitute, replacement of successor sections or rules adopted by the Commission
from time to time; and (vii) unless the context otherwise requires, any
reference to an "Article," a "Section" or an "Exhibit" refers to an Article, a
Section or an Exhibit, as the case may be, of this Indenture.
ARTICLE II
THE NOTES
Section 2.1 Form and Dating.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Notes may have
notations, legends or
<PAGE>
21
endorsements required by law, stock exchange rule or usage. Each Note shall be
dated the date of its authentication. The Notes shall be in denominations of
$1,000 and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture, and the Company, the Guarantors
and the Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby. However, to the
extent any provision of any Note conflicts with the express provisions of this
Indenture, the provisions of this Indenture shall govern and be controlling.
(b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibits A-1 or A-2 attached hereto (including the Global Note
Legend thereon and the "Schedule of Exchanges of Interests in the Global Note"
attached thereto). Notes issued in definitive form shall be substantially in the
form of Exhibit A-1 attached hereto (but without the Global Note Legend thereon
and without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with written
instructions given by the Holder thereof as required by Section 2.6.
(c) Temporary Global Notes. Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of the Regulation S Temporary
Global Note, which shall be deposited on behalf of the purchasers of the Notes
represented thereby with the Trustee, at its Corporate Trust Office, as
custodian for the Depositary, and registered in the name of the Depositary or
the nominee of the Depositary for the accounts of designated agents holding on
behalf of Euroclear or Cedel, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The Restricted Period shall terminate upon
the receipt by the Trustee of (i) a written certificate from the Depositary,
together with copies of certificates from Euroclear and Cedel certifying that
they have received certification of non-United States beneficial ownership of
100% of the aggregate principal amount of the Regulation S Temporary Global Note
(except to the extent of any beneficial owners thereof who acquired an interest
therein during the Restricted Period pursuant to another exemption from
registration under the Securities Act and who will take delivery of a beneficial
ownership interest in a 144A Global Note bearing a Private Placement Legend, all
as contemplated by Section 2.6(a)(ii) hereof), and (ii) an Officers' Certificate
from the Company. Following the termination of the Restricted Period, beneficial
interests in the Regulation S Temporary Global Note shall be exchanged for
beneficial interests in Regulation S Permanent Global Notes pursuant to the
Applicable Procedures. Simultaneously with the authentication of Regulation S
Permanent Global Notes, the Trustee shall cancel the Regulation S Temporary
Global Note. The aggregate principal amount of the Regulation S Temporary Global
Note and the Regulation S Permanent Global Notes may from time to time be
increased or decreased by adjustments made on the records of the Trustee and the
Depositary or its nominee, as the case may be, in connection with transfers of
interest as hereinafter provided.
(d) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedelbank"
and "Customer Handbook" of Cedel shall be applicable to transfers of beneficial
interests in the Regulation S Temporary Global Note and the Regulation S
Permanent Global Notes that are held by Participants through Euroclear or Cedel.
Section 2.2 Execution and Authentication.
An Officer shall sign the Notes for the Company by manual or facsimile
signature. If an Officer whose signature is on a Note no longer holds that
office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid or obligatory until authenticated by the manual
or
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22
facsimile signature of the Trustee. The signature shall be conclusive evidence
that the Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by an Officer
(an "Authentication Order"), authenticate (a) Initial Notes for original issue
up to a maximum aggregate principal amount of $325,000,000, (b) Unrestricted
Notes from time to time only (i) in exchange for a like principal amount of
Initial Notes or (ii) in an aggregate principal amount of not more than the
excess of $325,000,000 over the sum of the aggregate principal amount of (A)
Initial Notes then outstanding and (B) Unrestricted Notes issued in accordance
with (b)(i) above and (c) additional series of Notes which may be offered
subsequent to the Issuance Date (the "Subsequent Series Notes") in aggregate
principal amount not to exceed $100,000,000. The aggregate principal amount of
Notes outstanding at any time may not exceed $425,000,000 except as provided in
Section 2.7. No Subsequent Series Notes may be authenticated in an aggregate
principal amount of less than $25,000,000. All Notes issued on the Issuance date
and all Subsequent Series Notes shall be identical in all respects other than
issue dates, the date from which interest accrues and any changes relating
thereto.
In the event that the Company shall issue and the Trustee shall
authenticate any Subsequent Series Notes pursuant to this Section 2.2, the
Company shall use its reasonable best efforts to obtain the same "CUSIP" number
for such Subsequent Series Notes as is printed on the Notes outstanding at such
time; provided, however, that if any Subsequent Series Notes are determined,
pursuant to an Opinion of Counsel of the Company to be a different class of
security than the Notes outstanding at such time for federal income tax
purposes, the Issuer may obtain a "CUSIP" number for such Notes that is
different than the "CUSIP" number printed on the Subsequent Series Notes then
outstanding. Notwithstanding the foregoing, all Notes issued and outstanding
under this Indenture shall vote and consent together on all matters as one class
and no series of Notes will have the right to vote or consent as a separate
class on any matter.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may not be geographically able to do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with
Holders or an Affiliate of the Company.
Section 2.3 Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be presented
for registration of transfer or for exchange ("Registrar") and an office or
agency where Notes may be presented for payment ("Paying Agent"). The Registrar
shall keep a register of the Notes and of their transfer and exchange. The
Company may appoint one or more co-registrars and one or more additional paying
agents. The term "Registrar" includes any co-registrar and the term "Paying
Agent" includes any additional paying agent. The Company may change any Paying
Agent or Registrar without notice to any Holder. The Company shall promptly
notify the Trustee in writing of the name and address of any Agent not a party
to this Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee and the Trustee accepts its
appointment to act as the Registrar and Paying Agent and to act as Custodian
with respect to the Global Notes.
The Company shall, prior to each interest record date, notify the Paying
Agent of any wire transfer instructions for payments that it receives from
Holders.
Section 2.4 Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent will hold in trust for the benefit of Holders
or the Trustee all money held by the Paying Agent for the payment of principal,
premium or Additional Interest, if any, or interest on the Notes, and will
notify the Trustee of any default by the Company in making any such payment.
While any such default continues, the Trustee may require a Paying Agent to pay
all money held by it to the Trustee. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee. Upon payment over to
the Trustee, the Paying
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23
Agent (if other than the Company or a Subsidiary) shall have no further
liability for the money. If the Company or a Subsidiary acts as Paying Agent, it
shall segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent. Upon any bankruptcy or reorganization
proceedings relating to the Company, the Trustee shall serve as Paying Agent for
the Notes.
Section 2.5 Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA ss. 312(a).
Section 2.6 Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. Global Notes will not be exchanged by
the Company for Definitive Notes unless (i) the Company delivers to the Trustee
in writing notice from the Depositary that it is unwilling or unable to continue
to act as Depositary or that it is no longer a clearing agency registered under
the Exchange Act and, in either case, a successor Depositary is not appointed by
the Company within 120 days after the date of such notice from the Depositary;
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee (provided that in no event shall
the Regulation S Temporary Global Note be exchanged by the Company for
Definitive Notes prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates required pursuant to Rule
903(c)(3)(ii)(B) under the Securities Act and provided, further, there shall be
no continuing Default or Event of Default); or (iii) an Event of Default shall
have occurred and be continuing with respect to the Notes and the Trustee has
received a request from DTC or any Holder to issue Definitive Notes. Upon the
occurrence of any of the preceding events in (i), (ii) or (iii) above,
Definitive Notes shall be issued in such names as the Depositary shall instruct
the Trustee in writing. Global Notes also may be exchanged or replaced, in whole
or in part, as provided in Sections 2.7 and 2.10. Every Note authenticated and
delivered in exchange for, or in lieu of, a Global Note or any portion thereof,
pursuant to this Section 2.6 or Section 2.7 or 2.10, shall be authenticated and
delivered in the form of, and shall be, a Global Note. A Global Note may not be
exchanged for another Note other than as provided in this Section 2.6(a);
however, beneficial interests in a Global Note may be transferred and exchanged
as provided in Section 2.6(b) or (f).
(b) Transfer and Exchange of Beneficial Interests in Global Notes. The
transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in the
same Restricted Global Note in accordance with the transfer restrictions set
forth in the Private Placement Legend; provided, however, that prior to the
expiration of the Restricted Period, transfers of beneficial interests in the
Temporary Regulation S Global Note may not be made to a U.S. Person or for
the account or benefit of a U.S. Person (other than an Initial Purchaser).
Beneficial interests in any Unrestricted
<PAGE>
24
Global Note may be transferred to Persons who take delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note. No written
orders or instructions shall be required to be delivered to the Registrar to
effect the transfers described in this Section 2.6(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests in any Global Note that is not subject to Section 2.6(b)(i) above,
the transferor of such beneficial interest must deliver to the Registrar (1)
a written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in another
Global Note in an amount equal to the beneficial interest to be transferred
or exchanged and (2) instructions given in accordance with the Applicable
Procedures containing information regarding the Participant account to be
credited with such increase. Upon consummation of the Exchange Offer by
Holdings in accordance with Section 2.6(f), the requirements of this Section
2.6(b)(ii) shall be deemed to have been satisfied upon receipt by the
Registrar of the instructions contained in the Letter of Transmittal
delivered by the holder of such beneficial interests in the Restricted Global
Notes. Upon satisfaction of all of the requirements for transfer or exchange
of beneficial interests in Global Notes contained in this Indenture and the
Notes or otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.6(h).
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be transferred
to a Person who takes delivery thereof in the form of a beneficial interest
in another Restricted Global Note if the transfer complies with the
requirements of Section 2.6(b)(ii) and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in a 144A Global Note, then the transferor must deliver
a certificate in the form of Exhibit B, including the certifications in
item (1) thereof; and
(B) if the transferee will take delivery in the form of a
beneficial interest in a Regulation S Global Note, then the transferor must
deliver a certificate in the form of Exhibit B, including the
certifications in item (2) thereof;
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in an Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note if the exchange or
transfer complies with the requirements of Section 2.6(b)(ii) and:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the holder
of the beneficial interest to be transferred, in the case of an exchange,
or the transferee, in the case of a transfer, certifies in the applicable
Letter of Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a Person who
is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the
Shelf Registration Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
beneficial interest in an Unrestricted Global Note, a certificate from
such holder in the form of Exhibit C, including the certifications in
item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a Person
who shall take delivery thereof in the form of a beneficial interest
in an Unrestricted Global Note, a certificate from such holder in the
form of Exhibit B, including the
<PAGE>
25
certifications in item (4) thereof; and, in each such case set forth
in this subparagraph (D), if the Registrar so requests or if the
Applicable Procedures so require, an Opinion of Counsel in form
reasonably acceptable to the Registrar to the effect that such
exchange or transfer is in compliance with the Securities Act and that
the restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and execute and, upon receipt of an Authentication Order in
accordance with Section 2.2, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
aggregate principal amount of beneficial interests transferred pursuant to
subparagraph (B) or (D) above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in the form
of, a beneficial interest in a Restricted Global Note.
(c) Transfer and Exchange of Beneficial Interests in Global Notes for
Definitive Notes. A beneficial interest in a Global Note may not be exchanged
for a Definitive Note except under the circumstances described in Section
2.6(a). A beneficial interest in a Global Note may not be transferred to a
Person who takes delivery thereof in the form of a Definitive Note except under
the circumstances described in Section 2.6(a) hereof.
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests in Global Notes.
(i) Restricted Definitive Notes to Beneficial Interests in
Restricted Global Notes. If any Holder of a Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in a Restricted
Global Note or to transfer such Restricted Definitive Notes to a Person who
takes delivery thereof in the form of a beneficial interest in a Restricted
Global Note, then, upon receipt by the Registrar of the following
documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global
Note, a certificate from such Holder in the form of Exhibit C,
including the certifications in item (2)(a) thereof;
(B) if such Restricted Definitive Note is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B, including the
certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a
NonU.S. Person in an offshore transaction in accordance with Rule 903
or Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B, including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B, including the
certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B, including the certifications,
certificates and Opinion of Counsel required by item (3)(d) thereof,
if applicable;
(F) if such Restricted Definitive Note is being transferred to
the Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B, including the certifications in item (3)(b)
thereof; or
(G) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B, including the
certifications in item (3)(c) thereof,
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26
the Trustee shall cancel the Restricted Definitive Note, and increase or
cause to be increased the aggregate principal amount of, in the case of
clause (A) above, the appropriate Restricted Global Note, and in the case
of clause (B) above, the 144A Global Note, and in the case of clause (C)
above, the Regulation S Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Restricted Definitive Note to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note
only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the Holder,
in the case of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule 144)
of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the
Exchange Registration Statement in accordance with the Registration Rights
Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes proposes
to exchange such Notes for a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder in the form of Exhibit C,
including the certifications in item (1)(b) thereof; or
(2) if the Holder of such Restricted Definitive Notes proposes
to transfer such Notes to a Person who shall take delivery thereof in
the form of a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.6(d)(ii), the Trustee shall cancel the Restricted Definitive
Notes and increase or cause to be increased the aggregate principal amount
of the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Definitive Note to a Person who takes delivery thereof in
the form of a beneficial interest in an Unrestricted Global Note at any time.
Upon receipt of a request for such an exchange or transfer, the Trustee shall
cancel the applicable Unrestricted Definitive Note and increase or cause to
be increased the aggregate principal amount of one of the Unrestricted Global
Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D) or
(iii) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.2, the Trustee shall authenticate one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance with
the provisions of this Section 2.6(e), the Registrar shall register the transfer
or exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the
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27
Registrar the Definitive Notes duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly executed by
such Holder or by its attorney, duly authorized in writing. In addition, the
requesting Holder shall provide any additional certifications, documents and
information, as applicable, required pursuant to the following provisions of
this Section 2.6(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes.
Any Restricted Definitive Note may be transferred to and registered in the
name of Persons who take delivery thereof in the form of a Restricted
Definitive Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B, including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B,
including the certifications, certificates and Opinion of Counsel
required by item (3)(d) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes.
Any Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Broker-Dealer pursuant to
the Exchange Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for `n Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive Note,
a certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or transfer
is in compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are no
longer required in order to maintain compliance with the Securities
Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive
Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Note. Upon receipt of a request to register such a transfer, the Registrar
shall register the Unrestricted Definitive Notes pursuant to the instructions
from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
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28
accordance with the Registration Rights Agreement, the Company shall issue and
execute and, upon receipt of an Authentication Order in accordance with Section
2.2, the Trustee shall authenticate (i) one or more Unrestricted Global Notes in
an aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not broker-
dealers, (y) they are not participating in a distribution of the Exchange Notes
and (z) they are not affiliates (as defined in Rule 144) of the Company, and
accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all
Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global
Note and each Definitive Note (and all Notes issued in exchange
therefor or substitution thereof) shall bear the legend in
substantially the following form:
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"),
AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT (A) (1) TO A PERSON WHO THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT
PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE
TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR RULE
904 OF REGULATION S UNDER THE SECURITIES ACT, (3) TO AN
INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
(4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE
WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES.
(B) Notwithstanding the foregoing, any Global Note or Definitive
Note issued pursuant to subparagraph (b)(iv), (d)(ii), (d)(iii),
(e)(ii), (e)(iii) or (f) of this Section 2.6 (and all Notes issued in
exchange therefor or substitution thereof) shall not bear the Private
Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED
IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN
CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND
IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON
AS MAY BE REQUIRED PURSUANT TO THE INDENTURE, (II) THIS
GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART
PURSUANT TO SECTION 2.6(a) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION
PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS
GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY
WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
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29
(iii) Regulation S Temporary Global Note Legend. The Regulation S
Temporary Global Note shall bear a legend in substantially the following form:
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE
AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).
(h) Cancellation and/or Adjustment of Global Notes. At such time as all
beneficial interests in a particular Global Note have been exchanged for
Definitive Notes or a particular Global Note has been redeemed, repurchased or
canceled in whole and not in part, each such Global Note shall be returned to or
retained and canceled by the Trustee in accordance with Section 2.11. At any
time prior to such cancellation, if any beneficial interest in a Global Note is
exchanged for or transferred to a Person who will take delivery thereof in the
form of a beneficial interest in another Global Note or for Definitive Notes,
the principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note by the Trustee
or by the Depositary at the direction of the Trustee to reflect such reduction;
and if the beneficial interest is being exchanged for or transferred to a Person
who will take delivery thereof in the form of a beneficial interest in another
Global Note, such other Global Note shall be increased accordingly and an
endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge
payable in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections
2.10, 3.6, 4.10, 4.15 and 9.5).
(iii) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive Notes shall
be the legal, valid and binding obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as the
Global Notes or Definitive Notes surrendered upon such registration of
transfer or exchange.
(iv) The Registrar shall not be required (A) to register the
transfer of or to exchange any Notes during a period beginning at the opening
of business 15 days before the day of any mailing of notice of redemption of
Notes for redemption under Section 3.2 and ending at the close of business on
the day of such mailing, (B) to register the transfer of or to exchange any
Note so selected for redemption in whole or in part, except the unredeemed
portion of any Note being redeemed in part or (c) to register the transfer of
or to exchange a Note between a record date and the next succeeding interest
payment date.
(v) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Note is registered as the absolute owner of such Note for
the purpose of receiving payment of principal of and interest on such Notes
and for all other purposes, and none of the Trustee, any Agent or the Company
shall be affected by notice to the contrary.
(vi) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.2.
(vii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section 2.6 to
effect a registration of transfer or exchange may be submitted by facsimile.
(viii) Each Holder of a Note agrees to indemnify the Company and the
Trustee against any liability that may result from the transfer, exchange or
assignment of such Holder's Note in violation of any provision of this
Indenture and/or applicable United States federal or state securities law.
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The Trustee shall have no obligation or duty to monitor, determine or inquire as
to compliance with any restrictions on transfer imposed under this Indenture or
under applicable law with respect to any transfer of any interest in any Note
(including any transfers between or among Depositary Participants or beneficial
owners of interests in any Global Note) other than to require delivery of such
certificates and other documentation or evidence as are expressly required by,
and to do so if and when expressly required by the terms of, this Indenture, and
to examine the same to determine reasonable compliance as to form with the
express requirements hereof, provided that the Trustee shall have no obligation
to investigate or confirm the accuracy or correctness thereof.
Section 2.7 Replacement Notes
If any mutilated Note is surrendered to the Trustee or the Company and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, the Company shall issue and execute and the Trustee, upon receipt
of an Authentication Order, shall authenticate a replacement Note if the
Trustee's requirements are met. An indemnity bond must be supplied by the Holder
that is sufficient in the judgment of the Trustee and the Company to protect The
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company may charge for its
expenses in replacing a Note.
Every replacement Note is an additional and binding obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.
Section 2.8 Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation,
those reductions in the interest in a Global Note effected by the Trustee in
accordance with the provisions hereof and those described in this Section as not
outstanding. Except as set forth in Section 2.9, a Note does not cease to be
outstanding because the Company or an Affiliate of the Company holds the Note;
however, Notes held by the Company or a Subsidiary of the Company shall not be
deemed to be outstanding for purposes of Section 3.7(b).
If a Note is replaced pursuant to Section 2.7, it ceases to be outstanding
unless the Trustee receives proof and indemnification satisfactory to it that
the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.1,
it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary of the Company or
an Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
Section 2.9 Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that a Responsible Officer of the Trustee actually knows are so owned
shall be so disregarded.
Section 2.10 Temporary Notes.
The Company may prepare and execute and the Trustee, upon receipt of an
Authentication Order, shall authenticate temporary Notes. Temporary Notes shall
be substantially in the form of permanent Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. The Company may prepare and execute and the Trustee,
upon receipt of an Authentication Order, shall authenticate permanent Notes in
exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this
Indenture.
Section 2.11 Cancellation.
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The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall dispose of
the Notes in accordance with its customary procedures (subject to the record
retention requirement of the Exchange Act). The Company may not issue new Notes
to replace Notes that it has paid or that have been delivered to the Trustee for
cancellation.
Section 2.12 Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, such
interest shall cease to be payable to the Holders on the relevant record date
and the Company shall instead pay the defaulted interest in any lawful manner
plus, to the extent lawful, interest payable on the defaulted interest, to the
Persons who are Holders on a subsequent special record date, in each case at the
rate provided in the Notes and in Section 4.1. The Company shall notify the
Trustee in writing of the amount of defaulted interest proposed to be paid on
each Note and the date of the proposed payment. The Company shall fix or cause
to be fixed each such special record date and payment date, provided that no
such special record date shall be less than 10 days prior to the related payment
date for such defaulted interest. At least 15 days before the special record
date, the Company (or, upon the written request of the Company, the Trustee in
the name and at the expense of the Company) shall mail or cause to be mailed to
Holders a notice that states the special record date, the related payment date
and the amount of such interest to be paid.
Section 2.13 CUSIP Numbers.
The Company, in issuing the Notes, may use "CUSIP" numbers (if then
generally in use) and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
ARTICLE III
REDEMPTION
Section 3.1 Notice of Redemption to Trustee.
If Holdings elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.7, it shall furnish to the Trustee, at least 30 days but
not more than 90 days before the redemption date, an Officers' Certificate
setting forth (i) the clause of this Indenture pursuant to which the redemption
shall occur, (ii) the redemption date, (iii) the principal amount of Notes to be
redeemed and (iv) the redemption price.
Section 3.2 Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed at any time pursuant to
Section 3.7, the Trustee shall select the Notes to be redeemed among the Holders
of the Notes in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes are
not so listed, on a pro rata basis, by lot or by such method as the Trustee
shall deem appropriate. In the event of partial redemption by lot pursuant to
Section 3.7, the particular Notes to be redeemed shall be selected, unless
otherwise provided herein, not less than 30 nor more than 60 days prior to the
redemption date by the Trustee from the outstanding Notes not previously called
for redemption.
The Trustee shall promptly notify Holdings in writing of the Notes selected
for redemption and, in the case of any Note selected for partial redemption, the
principal amount thereof to be redeemed. Notes and portions of Notes selected
shall be in amounts of $1,000 or whole multiples of $1,000; except that if all
of the Notes of a Holder are to be redeemed, the entire outstanding amount of
Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed.
Except as provided in the preceding sentence, provisions of this Indenture that
apply to Notes called for redemption also apply to portions of Notes called for
redemption.
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Section 3.3 Notice of Redemption to Holders.
If Holdings elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.7, at least 30 days but not more than 60 days before the
redemption date, Holdings shall mail or cause to be mailed, by first class mail,
a notice of redemption to each Holder whose Notes are to be redeemed at its
registered address. The notice shall identify the Notes to be redeemed
(including "CUSIP" number(s)) and shall state: (i) the redemption date; (ii) the
redemption price; (iii) if any Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the redemption
date upon surrender of such Note, a new Note or Notes in principal amount equal
to the unredeemed portion shall be issued upon cancellation of the original
Note; (iv) the name and address of the Paying Agent; (v) that Notes called for
redemption must be surrendered to the Paying Agent to collect the redemption
price; (vi) that, unless Holdings defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date; (vii) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being redeemed;
and (viii) that no representation is made as to the correctness or accuracy of
the "CUSIP" number, if any, listed in such notice or printed on the Notes.
At Holdings' request, the Trustee shall give the notice of redemption in
Holdings' name and at its expense; provided, however, that Holdings shall have
delivered to the Trustee, at least 60 days prior to the redemption date, an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the preceding
paragraph.
Section 3.4 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.3 or 3.8,
Notes called for redemption become irrevocably due and payable on the redemption
date at the redemption price. A notice of redemption may not be conditional.
Section 3.5 Deposit of Redemption Price.
No later than 10:00 a.m., New York City time, on the redemption date, the
Company shall deposit with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Paying Agent shall promptly return to the Company any money deposited
with the Paying Agent by the Company in excess of the amounts necessary to pay
the redemption price of, and accrued interest on, all Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on
and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.1.
Section 3.6 Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, Holdings shall issue and
execute and, upon Holdings' written request, the Trustee shall authenticate for
the Holder at the expense of Holdings a new Note equal in principal amount to
the unredeemed portion of the Note surrendered.
Section 3.7 Optional Redemption.
(a) Except as set forth in paragraph (b) of this Section 3.7, Holdings
shall not have the option to redeem the Notes pursuant to this Section 3.7 prior
to May 15, 2004. On or after May 15, 2004, the Notes will be subject to
redemption at any time at the option of Holdings, in whole or in part, upon not
less than 30 nor more than 60 days' notice, at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and unpaid
interest, if any, and Additional Interest thereon, if any, to the applicable
redemption date, if redeemed during the twelve-month period beginning on May 15,
of the years indicated below (subject to the right of Holders of record on
relevant record dates to receive interest due on an interest
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payment date):
Year Redemption Price
2004 .............................. 105.500%
2005 .............................. 103.667%
2006 .............................. 101.883%
2007 and thereafter................ 100.000%
(b) Notwithstanding the provisions of paragraph (a) of this Section
3.7, at any time and from time to time prior to May 15, 2002, Holdings may on
any one or more occasions redeem up to 35% of the aggregate principal amount of
Notes originally issued hereunder within 60 days of one or more Qualified Equity
Offerings with the net proceeds of such offering at a redemption price of 111%
of the principal amount thereof, plus accrued and unpaid interest and Additional
Interest thereon, if any, to the redemption date (subject to the right of
Holders of record on relevant record dates to receive interest due on an
interest payment date); provided that, after giving effect to any such
redemption, at least 65% of the original aggregate principal amount of the Notes
plus 65% of the aggregate principal amount of any Notes issued pursuant to a
supplemental indenture remains outstanding (excluding Notes held by Holdings and
its Subsidiaries).
(c) Any redemption pursuant to this Section 3.7 shall be made pursuant
to the provisions of Section 3.1 through 3.6.
Section 3.8 Mandatory Redemption.
(a) Except as set forth in Sections 4.10, 4.15 and paragraph (b) of
this Section 3.8, the Company shall not be required to make mandatory redemption
payments with respect to the Notes.
(b) The Notes will be redeemed by the Company, in whole but not in
part, on the date that is five Business Days following the date the Notes are
originally issued, at a redemption price of 101% of the principal amount
thereof, plus accrued and unpaid interest to the redemption date, if (i) the
Spin-Off Transactions have not been consummated and (ii) Holdings has not
executed and delivered a supplemental indenture assuming all the debt issued
under this Indenture, in each case, by the date that is five Business Days
following the date the Notes are originally issued. Notice of the mandatory
redemption will be mailed to each Holder of the Notes not less than one Business
Day prior to the redemption date. Such notice shall identify the Notes to be
redeemed (including "CUSIP" number(s)) and state (i) the redemption date, (ii)
the redemption price, (iii) the name and address of the Paying Agent, (iv) that
Notes called for redemption must be surrendered to the Paying Agent to collect
the redemption price, (v) that, unless the Company defaults in making such
redemption payment, interest on the Notes shall cease to accrue on and after the
redemption date and (vi) the paragraph of the Notes pursuant to which the Notes
are to be redeemed.
ARTICLE IV
COVENANTS
Section 4.1 Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium,
if any, Additional Interest, if any, and interest on the Notes on the dates and
in the manner provided in the Notes. Principal, premium, if any, and interest
shall be considered paid on the date due if the Paying Agent, if other than the
Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due
date money deposited by the Company in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, and
interest then due. At the option of the Company interest may be paid by check
mailed to the address of the Holder as such address appears on the securities
register. The Company shall pay all Additional Interest, if any, in the same
manner on the dates and in the amounts set forth in the Registration Rights
Agreement.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of
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the then applicable interest rate on the Notes to the extent lawful; it shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue installments of interest and Additional Interest
(without regard to any applicable grace period) at the same rate to the extent
lawful.
Section 4.2 Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with Section
2.3.
Section 4.3 Reports.
(a) For as long as the Notes are outstanding, Holdings will file on a
timely basis with the Commission, to the extent such filings are accepted by the
Commission and whether or not Holdings has a class of securities registered
under the Exchange Act, the annual reports, quarterly reports and other
documents that Holdings would be required to file pursuant to Section 13 or
15(d) of the Exchange Act if it were subject thereto. Holdings will also be
required (i) to file with the Trustee, and mail to each Holder of Notes, without
cost to such Holder, copies of such reports and documents within 15 days after
the date on which Holdings files such reports and documents with the Commission
or the date on which Holdings would be required to file such reports and
documents if Holdings were so required, and (ii) if filing such reports and
documents with the Commission is not accepted by the Commission or is prohibited
under the Exchange Act, to supply at Holdings' cost copies of such reports and
documents to any prospective Holder of Notes promptly upon written request.
(b) In addition, for so long as any Restricted Global Notes or
Restricted Definitive Notes remain outstanding, Holdings and the Guarantors
shall furnish to the Holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act.
(c) Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including Holdings' compliance
with any of its covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers' Certificates).
Section 4.4 Compliance Certificate.
(a) The Company and each Guarantor (to the extent that such Guarantor
is so required under the TIA) shall deliver to the Trustee, within 120 days
after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Company has kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred and be
continuing, describing all such
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Defaults or Events of Default of which he or she may have knowledge and what
action the Company is taking or proposes to take with respect thereto) and that
to his or her knowledge no event has occurred and remains in existence by reason
of which payments on account of the principal of or interest, if any, on the
Notes is prohibited or if such event has occurred, a description of the event
and what action the Company is taking or proposes to take with respect thereto.
(b) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee as soon as possible and in any event within ten days,
forthwith upon the Company becoming aware of any Default or Event of Default
that has occurred and is continuing, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto.
Section 4.5 Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate proceedings
or where the failure to effect such payment is not adverse in any material
respect to the Holders of the Notes.
Section 4.6 Stay, Extension and Usury Laws.
The Company and each of the Guarantors covenants (to the extent
permitted by applicable law) that it shall not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Company and each of the Guarantors (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been
enacted.
Section 4.7 Limitation on Restricted Payments.
(a) Holdings will not, and will not permit any Restricted Subsidiary
to, directly or indirectly, take any of the following actions:
(i) declare or pay any dividend on, or make any distribution to
direct or indirect holders of, any shares of the Capital Stock of Holdings,
including, without limitation, any payment in connection with any merger or
consolidation involving Holdings or any Restricted Subsidiary which is not
a wholly owned Restricted Subsidiary (other than dividends or distributions
payable solely in (A) shares of Qualified Capital Stock of Holdings or (B)
options, warrants or other rights to acquire such shares of Qualified
Capital Stock);
(ii) purchase, redeem or otherwise acquire or retire for value,
directly or indirectly, any shares of Capital Stock of Holdings or any
Affiliate of Holdings, including, without limitation, in connection with
any merger or consolidation involving Holdings (other than any Capital
Stock owned by Holdings or any wholly owned Restricted Subsidiary) or any
direct or indirect parent of Holdings or any options, warrants or other
rights to acquire such shares of Capital Stock;
(iii) declare or pay any dividend, or make any distribution to holders
of, any shares of Capital Stock of any Restricted Subsidiary (other than to
Holdings or any of its wholly owned Restricted Subsidiaries or to all
holders of Capital Stock of such Restricted Subsidiary on a pro rata
basis);
(iv) make any principal payment on, or repurchase, redeem, defease or
otherwise acquire or retire for value, prior to any scheduled principal
payment, sinking fund payment or maturity, any Subordinated Indebtedness of
Holdings or any Guarantor or any guarantee of the Notes; or
(v) make any Investment (other than any Permitted Investment) in any
Person (such payments or other actions described in (but not excluded from)
clauses (i) through (v) are collectively referred to as "Restricted Payments"),
unless at the time of, and immediately after giving effect to, the proposed
Restricted Payment (the amount of any such Restricted Payment, if other than
cash, being the Fair Market Value of the asset to be transferred), (1) no
Default or Event of Default shall have occurred and be continuing, (2) after
giving pro forma effect to such
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Restricted Payment as if it had been made at the beginning of the applicable
four-quarter period, Holdings could incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.9 and (3)
the aggregate amount of all Restricted Payments declared or made after the date
of this Indenture shall not exceed the sum of:
(A) 50% of the Consolidated Adjusted Net Income of Holdings (or, if
such Consolidated Adjusted Net Income shall be a loss, less 100% of such
loss) accrued on a cumulative basis during the period beginning on the
first day of Holdings' first fiscal quarter after the date of this
Indenture and ending on the last day of Holdings' last fiscal quarter
ending prior to the date of such proposed Restricted Payment, plus
(B) 100% of the aggregate net cash proceeds received after the date of
this Indenture by Holdings as a contribution to its common equity capital
or from the issuance or sale (other than to any Restricted Subsidiary) of
shares of Qualified Capital Stock of Holdings (including upon the exercise
of options, warrants or rights) or warrants, options or rights to purchase
shares of Qualified Capital Stock of Holdings, plus
(C) the aggregate net cash proceeds received after the date of this
Indenture by Holdings from the issuance or sale (other than to any
Restricted Subsidiary) of debt securities or Redeemable Capital Stock that
have been converted into or exchanged for Qualified Capital Stock of
Holdings, to the extent such securities were originally sold for cash,
together with the aggregate net cash proceeds received by Holdings at the
time of such conversion or exchange, plus
(D) to the extent that any Investment constituting a Restricted
Payment that was made after the date of this Indenture is sold or is
otherwise liquidated or repaid, an amount (to the extent not included in
Consolidated Adjusted Net Income) equal to the lesser of (x) the cash
proceeds with respect to such Investment (less the cost of the disposition
of such Investment and net of taxes) and (y) the initial amount of such
Investment, plus
(E) an amount equal to the sum of (x) the net reduction in Investments
in Unrestricted Subsidiaries resulting from cash dividends, repayments of
loans or advances or other transfers of assets, in each case to Holdings or
any Restricted Subsidiary from Unrestricted Subsidiaries, plus (y) the
portion (proportionate to Holdings' equity interest in such Subsidiary) of
the Fair Market Value of the net assets of an Unrestricted Subsidiary at
the time such Unrestricted Subsidiary is designated a Restricted
Subsidiary, in each case since the first day of Holdings' first fiscal
quarter after the date of this Indenture; provided, however, that the
foregoing sum shall not exceed, in the case of any Unrestricted Subsidiary,
the amount of Investments previously made (and treated as a Restricted
Payment) by Holdings or any Restricted Subsidiary in such Unrestricted
Subsidiary; provided, further, however, that no amount will be included
under this clause (E) to the extent it is already included in Consolidated
Net Income of Holdings in clause (A) above; plus
(F) other Restricted Payments in an aggregate amount not to exceed
$10,000,000.
(b) Notwithstanding paragraph (a) above, Holdings and its
Restricted Subsidiaries may take the following actions so long as (with respect
to clauses (ii), (iii), (iv), (v), (vi) and (xii) below) at the time of and
after giving effect thereto no Default or Event of Default shall have occurred
and be continuing:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration the payment of such
dividend would have complied with the provisions of paragraph (a) above;
(ii) the purchase, redemption or other acquisition or retirement for
value of any shares of Capital Stock of Holdings in exchange for, or out of
the net cash proceeds of a substantially concurrent issuance and sale
(other than to a Restricted Subsidiary) of, shares of Qualified Capital
Stock of Holdings;
(iii) the purchase, redemption, defeasance or other acquisition or
retirement for value of any Subordinated Indebtedness in exchange for, or
out of the net cash proceeds of a substantially concurrent issuance and
sale (other than to a Restricted Subsidiary) of, shares of Qualified
Capital Stock of Holdings;
(iv) the purchase of any Subordinated Indebtedness at a purchase
price no
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greater than 101% of the principal amount thereof in the event of a Change in
Control in accordance with provisions similar to Section 4.15; provided that
prior to such purchase Holdings has made the Change in Control Offer as provided
in Section 4.15 with respect to the Notes and has purchased all Notes validly
tendered for payment in connection with such Change in Control Offer;
(v) the purchase of any Subordinated Indebtedness from Net Cash Proceeds
to the extent permitted by Section 4.10; provided, however, that such purchase
will be excluded in subsequent calculations in the amount of Restricted
Payments;
(vi) the purchase, redemption, defeasance or other acquisition or
retirement for value of any Subordinated Indebtedness (other than Redeemable
Capital Stock) in exchange for, or out of the Net Cash Proceeds of a
substantially concurrent incurrence (other than to a Restricted Subsidiary) of,
new Subordinated Indebtedness so long as (x) the principal amount of such new
Subordinated Indebtedness does not exceed the principal amount (or, if such
Subordinated Indebtedness being refinanced provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration thereof, such lesser amount as of the date of determination) of the
Indebtedness being so purchased, redeemed, defeased, acquired or retired, plus
the lesser of the amount of any premium required to be paid in connection with
such refinancing pursuant to the terms of the Indebtedness as refinanced or the
amount of any premium reasonably determined as necessary to accomplish such
refinancing, plus, in either case, the amount of reasonable expenses of Holdings
incurred in connection with such refinancing, and (y) such new Subordinated
Indebtedness is pari passu or subordinated, as applicable, to the Notes to the
same extent as such Indebtedness so purchased, redeemed, defeased, acquired or
retired and (z) such new Indebtedness has an Average Life longer than the
Average Life of the Notes and a final Stated Maturity of principal later than
the final Stated Maturity of principal of the Notes;
(vii) payments to Triad to pay its operating and administrative expenses
incurred in the ordinary course of business, including, without limitation,
payroll expenses, directors' fees, legal and audit expenses, Commission
compliance expenses and corporate franchise and other taxes, in an amount not to
exceed $3,000,000 in any fiscal year; provided that any such payments permitted
to be made under this clause (vii) shall be treated as expense items in the
consolidated financial statements of Holdings;
(viii) payments to Triad to pay expenses incurred under the corporate
integrity program referenced in the distribution agreement;
(ix) payments to Triad to pay expenses incurred under the Transition
Agreements;
(x) payments by Holdings to Triad or the ESOP, or directly by Holdings,
to be used to repurchase, redeem, acquire or retire for value any Capital Stock
of Triad pursuant to any stockholder's agreement, management equity subscription
plan or agreement, stock option plan or agreement or employee benefit plan as
may be adopted by Triad or Holdings from time to time in an aggregate amount not
to exceed $2,000,000 in any fiscal year; provided that any payments permitted
pursuant to this clause (x) which are not made in any fiscal year may be carried
over and made in the next fiscal year;
(xi) payments to Triad pursuant to the tax sharing agreement between
Triad, Holdings and its Subsidiaries, as the same may be amended from time to
time, to the extent required for Triad to pay any federal, state or local income
taxes, but only to the extent that such income taxes are attributable to the
income of Holdings and its Subsidiaries; and
(xii) the redemption, repurchase, acquisition or retirement of equity
interests in any Restricted Subsidiary or any Permitted Joint Venture of
Holdings or a Restricted Subsidiary; provided that if Holdings or any Restricted
Subsidiary incurs Indebtedness in connection with such redemption, repurchase,
acquisition or retirement, after giving effect to such incurrence and such
redemption, repurchase, acquisition or retirement, Holdings could incur $1.00 of
additional Indebtedness pursuant to the first paragraph of Section 4.9.
The actions described in clauses (i), (ii), (iii), (x) (to the extent not
related to the ESOP)
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38
and (xii) of this paragraph (b) shall be Restricted Payments that shall be
permitted to be taken in accordance with this paragraph (b) but shall reduce the
amount that would otherwise be available for Restricted Payments under clause
(3) of paragraph (a) above and the actions described in all other clauses of
this paragraph (b) (including without limitation clause (x) to the extent
related to the ESOP) shall be Restricted Payments that shall be permitted to be
taken in accordance with this paragraph (b), but shall not reduce the amount
that would otherwise be available for Restricted Payments under clause (3) of
paragraph (a).
The amount of all Restricted Payments (other than cash) shall be the Fair
Market Value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by Holdings or such Restricted Subsidiary,
as the case may be, pursuant to the Restricted Payment. The Fair Market Value of
any non-cash Restricted Payment shall be determined in good faith by the Board
of Directors of Holdings whose determination with respect thereto shall be
conclusive. If Holdings or a Restricted Subsidiary makes a Restricted Payment
which, at the time of the making of such Restricted Payment would in the good
faith determination of Holdings be permitted under the provisions of the
Indenture, such Restricted Payment shall be deemed to have been made in
compliance with the Indenture notwithstanding any subsequent adjustments made in
good faith to Holdings' financial statements affecting Consolidated Adjusted Net
Income of Holdings for any period.
Section 4.8 Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.
Holdings will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise cause to suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any Restricted Subsidiary to (a) pay dividends, in cash or otherwise, or make
any other distributions on or in respect of its Capital Stock or other ownership
interest, or any other interest or participation in or measured by, its profits
to Holdings or any other Restricted Subsidiary, (b) pay any Indebtedness owed to
Holdings or any other Restricted Subsidiary, (c) make loans or advances to
Holdings or any other Restricted Subsidiary, (d) transfer any of its properties
or assets to Holdings or any other Restricted Subsidiary or (e) guarantee any
Indebtedness of Holdings or any other Restricted Subsidiary, except for such
encumbrances or restrictions existing under or by reason of (i) applicable law,
(ii) customary provisions restricting subletting or assignment of any lease or
assignment of any other contract to which Holdings or any Restricted Subsidiary
is a party or to which any of their respective properties or assets are subject,
(iii) any agreement or other instrument of a Person acquired by Holdings or any
Restricted Subsidiary in existence at the time of such acquisition (but not
created in contemplation thereof), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, so long as the
agreement containing such restriction does not violate any other provision of
the Indenture, (iv) encumbrances and restrictions in effect on the Issuance
Date, including, without limitation, pursuant to the Senior Credit Facility and
its related documentation, (v) any encumbrance or restriction contained in
contracts for sales of assets permitted by Section 4.10 with respect to the
assets to be sold pursuant to such contract, (vi) in the case of paragraph (d)
above, restrictions contained in security agreements or mortgages securing
Indebtedness of a Restricted Subsidiary permitted under the Indenture to the
extent such restrictions restrict the transfer of the property subject to such
security agreements or mortgages and (vii) any encumbrance or restriction
existing under any agreement that extends, renews, refinances or replaces the
agreements containing the encumbrances or restrictions in the foregoing clauses
(iii) and (iv); provided that the terms and conditions of any such encumbrances
or restrictions are not materially more restrictive than those under or pursuant
to the agreement so extended, renewed, refinanced or replaced.
Section 4.9 Limitation on Indebtedness.
Holdings will not, and will not permit any Restricted Subsidiary to,
create, issue, assume, guarantee or in any manner become directly or indirectly
liable for the payment of, or otherwise incur (collectively, "incur"), any
Indebtedness (including any Acquired Indebtedness), other than Permitted
Indebtedness; provided, however, that, so long as no Default or Event of Default
has occurred and is continuing, Holdings or any Guarantor may incur Indebtedness
(including Acquired Indebtedness) if at the time of such incurrence the
Consolidated Fixed
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39
Charge Coverage Ratio of Holdings for the four full fiscal quarters immediately
preceding the incurrence of such Indebtedness for which consolidated financial
statements are available, taken as one period (and after giving pro forma effect
to (i) the incurrence of such Indebtedness and (if applicable) the application
of the net proceeds therefrom, including to refinance other Indebtedness, as if
such Indebtedness was incurred, and the application of such proceeds occurred,
on the first day of such four-quarter period, (ii) the incurrence, repayment or
retirement of any other Indebtedness by Holdings and its Restricted Subsidiaries
since the first day of such four-quarter period as if such Indebtedness was
incurred, repaid or retired on the first day of such four-quarter period (except
that, in making such computation, the amount of Indebtedness under any revolving
credit facility shall be computed based upon the average daily balance of such
Indebtedness during such four-quarter period) and (iii) the acquisition (whether
by purchase, merger or otherwise) or disposition (whether by sale, merger or
otherwise) of any company, entity or business (including, without limitation, a
Hospital) acquired or disposed of by Holdings or its Restricted Subsidiaries, as
the case may be, since the first day of such four-quarter period, as if such
acquisition or disposition occurred on the first day of such four-quarter
period), would have been at least equal to 2.25 to 1. Whenever pro forma effect
is to be given to an acquisition or disposition pursuant to clause (iii) above,
such pro forma calculation shall be determined in accordance with Article 11 of
Regulation S-X under the Securities Act.
For purposes of determining compliance with this Section 4.9, in the event
that an item of proposed Indebtedness meets the criteria of more than one of the
categories described in paragraphs (a) through (n) of the definition of
Permitted Indebtedness as of the date of incurrence thereof or is entitled to be
incurred pursuant to the first paragraph of this covenant as of the date of
incurrence thereof, Holdings may, in its sole discretion, classify or reclassify
such item of Indebtedness in any manner that complies with this Section 4.9.
Accrual of interest, the accretion of accreted value and the payment of interest
in the form of additional Indebtedness will not be deemed to be an incurrence of
Indebtedness for purposes of this Section 4.9 and the payment of dividends on
Redeemable Capital Stock in the form of additional shares of the same class of
Redeemable Capital Stock will not be deemed an issuance of Redeemable Capital
Stock.
Section 4.10 Limitation on Sale of Assets.
(a) Holdings will not, and will not permit any Restricted Subsidiary to,
engage in any Asset Sale unless (i) the consideration received by Holdings or
such Restricted Subsidiary at the time of such Asset Sale is not less than the
Fair Market Value of the assets sold and (ii), at least 75% of such
consideration consists of cash or Cash Equivalents or Replacement Assets. The
amount of any (A) Indebtedness (other than Subordinated Indebtedness) of
Holdings or a Restricted Subsidiary that is actually assumed by the transferee
in such Asset Sale and from which Holdings and the Restricted Subsidiaries are
fully released shall be deemed to be cash for purposes of determining the
percentage of cash consideration received by Holdings or the Restricted
Subsidiaries and (B) notes, securities or other similar obligations received by
Holdings or any Restricted Subsidiary from such transferee that are converted,
sold or exchanged within 30 days of the related Asset Sale by Holdings or the
Restricted Subsidiaries into cash shall be deemed to be cash, in an amount equal
to the net cash proceeds realized upon such conversion, sale or exchange, for
purposes of determining the percentage of cash consideration received by
Holdings or the Restricted Subsidiaries. Notwithstanding the foregoing, the 75%
limitation referred to in clause (ii) will not apply to any Asset Sale in which
the cash or Cash Equivalents portion of the consideration received therefrom,
determined in accordance with the foregoing provision, is equal to or greater
than what the after-tax proceeds would have been had such Asset Sale complied
with the aforementioned 75% limitation.
(b) If Holdings or any Restricted Subsidiary engages in an Asset Sale,
Holdings may use the Net Cash Proceeds thereof, within 12 months after such
Asset Sale, to (i) permanently repay or prepay any then outstanding Senior
Indebtedness of Holdings or any Restricted Subsidiary (and to correspondingly
reduce commitments with respect thereto) or (ii) invest (or enter into a legally
binding agreement to invest) in other properties or assets to replace the
properties or assets that were the subject of the Asset Sale or in properties
and assets that will be used in businesses of Holdings or its Restricted
Subsidiaries, as the case may be, existing at the time such assets are sold, or
in any Related Business or in Capital Stock of a Person, the principal portion
of whose assets consist of such property or assets (provided that Holdings or
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40
such Restricted Subsidiary shall acquire at least the same percentage of equity
and voting interest in such Person as Holdings or such Restricted Subsidiary
held with respect to the assets disposed of in such Asset Sale) ("Replacement
Assets"). Pending the final application of any such Net Cash Proceeds, Holdings
may temporarily reduce Senior Indebtedness or otherwise invest such Net Proceeds
in any manner that is not prohibited by this Indenture. If any such legally
binding agreement to invest such Net Cash Proceeds is terminated, then Holdings
may, within 90 days of such termination or within 12 months of such Asset Sale,
whichever is later, invest such Net Cash Proceeds as provided in clause (i) or
(ii) (without regard to the parenthetical contained in such clause (ii) above).
The amount of such Net Cash Proceeds not so used as set forth above in this
paragraph (b) constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds exceeds $10,000,000,
Holdings shall, within 30 Business Days, make an offer to purchase (an "Excess
Proceeds Offer") from all Holders of Notes, on a pro rata basis, in accordance
with the procedures set forth below, the maximum principal amount (expressed as
an integral multiple of $1,000) of Notes that may be purchased with the Excess
Proceeds. The offer price as to each Note shall be payable in cash in an amount
equal to 100% of the principal amount of such Note plus accrued interest, if
any, to the date such Excess Proceeds Offer is consummated ("Excess Proceeds
Payment"). To the extent that the aggregate principal amount of Notes tendered
pursuant to an Excess Proceeds Offer is less than the Excess Proceeds, Holdings
may use such deficiency for any lawful purposes not otherwise prohibited by this
Indenture. If the aggregate principal amount of Notes validly tendered and not
withdrawn by Holders thereof exceeds the Excess Proceeds, Notes to be purchased
will be selected on a pro rata basis. Notwithstanding the foregoing, if Holdings
is required to commence an Excess Proceeds Offer at any time when securities of
Holdings ranking pari passu in right of payment with the Notes are outstanding
and the terms of such securities provide that a similar offer must be made with
respect to such other securities, then the Excess Proceeds Offer for the Notes
shall be made concurrently with such other offers and securities of each issue
will be accepted on a pro rata basis in proportion to the aggregate principal
amount of securities of each issue which the holders thereof elect to have
purchased. Any Excess Proceeds Offer will be made only to the extent permitted
under, and subject to prior compliance with, the terms of agreements governing
Senior Indebtedness. Upon completion of such Excess Proceeds Offer, the amount
of Excess Proceeds shall be reset to zero.
(d) Upon the commencement of an Excess Proceeds Offer, Holdings shall
send, by first class mail, a notice to the Trustee and to each Holder at its
registered address. The notice shall contain all instructions and materials
necessary to enable such Holder to tender Notes pursuant to the Excess Proceeds
Offer. Any Excess Proceeds Offer shall be made to all Holders. The notice, which
shall govern the terms of the Excess Proceeds Offer, shall state: (1) that the
Excess Proceeds Offer is being made pursuant to this Section 4.10; (2) the
Excess Proceeds Offer amount, the Excess Proceeds Payment and the date on which
Notes tendered and accepted for payment shall be purchased, which date shall be
at least 30 days and no later than 60 days from the date such notice is mailed
(the "Excess Proceeds Payment Date"); (3) that any Note not tendered or accepted
for payment shall continue to accrete or accrue interest; (4) that, unless
Holdings defaults in making such payment, any Note accepted for payment pursuant
to the Excess Proceeds Offer shall cease to accrete or accrue interest after the
Excess Proceeds Payment Date; (5) that Holders electing to have a Note purchased
pursuant to the Excess Proceeds Offer may only elect to have all of such Note
purchased and may not elect to have only a portion of such Note purchased; (6)
that Holders electing to have a Note purchased pursuant to any Excess Proceeds
Offer shall be required to surrender the Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note completed, or transfer by
book-entry transfer, to Holdings, a depositary, if appointed by Holdings, or the
Paying Agent at the address specified in the notice at least three days before
the Excess Proceeds Payment Date; (7) that Holders shall be entitled to withdraw
their election if Holdings, the depositary or the Paying Agent, as the case may
be, receives, not later than the Excess Proceeds Payment Date, a notice setting
forth the name of the Holder, the principal amount of the Note the Holder
delivered for purchase and a statement that such Holder is withdrawing his
election to have such Note purchased; (8) that, if the aggregate principal
amount of Notes surrendered by Holders exceeds the Excess Proceeds Offer amount,
Holdings shall select the Notes to be purchased on a pro rata basis (with such
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41
adjustments as may be deemed appropriate by Holdings so that only Notes in
denominations of $1,000, or integral multiples thereof, shall be purchased); and
(9) that Holders whose Notes were purchased only in part shall be issued new
Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer). Holdings shall comply with
the requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of an
Asset Sale.
(e) On the Excess Proceeds Payment Date, Holdings shall, to the extent
lawful: (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Excess Proceeds Offer; (2) deposit with the Paying Agent an
amount equal to the Excess Proceeds Payment in respect of all Notes or portions
thereof so tendered; and (3) deliver or cause to be delivered to the Trustee the
Notes so accepted together with an Officers' Certificate stating the aggregate
principal amount of Notes or portions thereof being repurchased by Holdings.
Holdings shall publicly announce the results of the Excess Proceeds Offer on the
Excess Proceeds Payment Date.
(f) The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Excess Proceeds Payment for such Notes, and the Trustee shall
promptly authenticate pursuant to an Authentication Order and mail (or cause to
be transferred by book entry) to each Holder a new Note equal in principal
amount to any unrepurchased portion of the Notes surrendered, if any; provided
that each such new Note shall be in a principal amount of $1,000 or an integral
multiple thereof. However, if the Excess Proceeds Payment Date is on or after an
interest record date and on or before the related interest payment date, any
accrued and unpaid interest shall be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest shall be payable to Holders who tender Notes pursuant to the Excess
Proceeds Offer.
Section 4.11 Limitation on Transactions with Affiliates.
Holdings will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into or make, amend or permit to exist any
contract, agreement, understanding, loan advance, guarantee or other transaction
or series of related transactions (including, without limitation, the sale,
purchase, exchange or lease of assets, property or services) with, or for the
benefit of, any Affiliate of Holdings or any Restricted Subsidiary (other than
Holdings or a Restricted Subsidiary) (collectively, "Interested Persons"),
unless (i) such transaction or series of transactions are on terms that are no
less favorable to Holdings or such Restricted Subsidiary, as the case may be,
than would have been able to be obtained at the time for a comparable
transaction in arm's-length dealings with third parties that are not Interested
Persons, (ii) with respect to any transaction or series of related transactions
involving aggregate consideration equal to or greater than $2,000,000 in the
aggregate, Holdings has delivered an Officers' Certificate to the Trustee
certifying that such transaction or series of transactions complies with clause
(i) above and such transaction or series of related transactions shall have been
approved by the Board of Directors of Holdings (including a majority of the
Disinterested Directors of Holdings) and (iii) with respect to any transaction
or series of related transactions involving aggregate consideration equal to or
greater than $10,000,000, Holdings has obtained a written opinion from an
Independent Financial Advisor certifying that such transaction or series of
related transactions is fair to Holdings or its Restricted Subsidiary, as the
case may be, from a financial point of view; provided, however, that this
Section 4.11 will not restrict (1) reasonable and customary directors' fees,
indemnification and similar arrangements, consulting fees, employee salaries,
bonuses or employment agreements, compensation or employee benefit arrangements
and incentive arrangements with any officer, director or employee of Holdings or
a Restricted Subsidiary entered into in the ordinary course of business, (2) any
transactions made in compliance with Section 4.7 hereof, (3) loans and advances
to officers, directors and employees of Holdings or any Restricted Subsidiary in
the ordinary course of business in accordance with the past practices of
Holdings or any Restricted Subsidiary not to exceed $15,000,000 in the aggregate
outstanding at any time, (4) the Spin-Off Transactions and (5) any transactions
made in accordance with and pursuant to the Transition Agreements.
Section 4.12 Limitation on Liens.
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(a) Holdings will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, create, incur, assume or suffer to exist any Lien
securing Pari Passu Indebtedness or Subordinated Indebtedness of Holdings on or
with respect to any of its property or assets including any shares of stock or
Indebtedness of any Restricted Subsidiary, whether owned on the date of this
Indenture or thereafter acquired, or any income, profits or proceeds therefrom,
or assign or otherwise convey any right to receive income thereon, other than
Permitted Liens, unless (i) in the case of any Lien securing Pari Passu
Indebtedness of Holdings, the Notes are secured by a Lien on such property,
assets or proceeds that is senior in priority to or pari passu with such Lien
and (ii) in the case of any Lien securing Subordinated Indebtedness of Holdings,
the Notes are secured by a Lien on such property, assets or proceeds that is
senior in priority to such Lien.
(b) Holdings will not permit any Guarantor to, directly or indirectly,
create, incur, assume or suffer to exist any Lien securing Pari Passu
Indebtedness or Subordinated Indebtedness of such Guarantor or with respect to
such Restricted Subsidiary's properties or assets, including any shares of stock
or Indebtedness of any Subsidiary or such Guarantor, whether owned at the date
of this Indenture or thereafter acquired, or any income, profits or proceeds
therefrom, or assign or otherwise convey any right to receive income thereon,
unless (i) in the case of any Lien securing Pari Passu Indebtedness of the
Guarantor, the Note Guarantee of such Guarantor is secured by a Lien or such
property, assets or proceeds that is senior in priority to or pari passu with
such Lien and (ii) in the case of any Lien securing Subordinated Indebtedness of
such Guarantor, the Note Guarantee of such Guarantor is secured by a Lien on
such property, assets or proceeds that is senior in priority to such Lien.
Section 4.13 Limitation on Other Senior Subordinated Indebtedness.
Neither Holdings nor any Guarantor will incur, create, assume, guarantee or
in any other manner become directly or indirectly liable with respect to or
responsible for, or permit to remain outstanding, any Indebtedness, other than
the Notes, that is subordinate or junior in right of payment to any Senior
Indebtedness (or, in the case of any Guarantor, Senior Guarantor Indebtedness)
unless such Indebtedness is also pari passu with, or subordinate in right of
payment to, the Notes or the Note Guarantee of such Guarantor, as applicable,
pursuant to subordination provisions substantially similar to those contained in
this Indenture.
Section 4.14 Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (a) its corporate
existence, and the corporate, partnership or other existence of each of its
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or any such Subsidiary and
(b) the rights (charter and statutory), licenses and franchises of the Company
and its Subsidiaries; provided, however, that the Company shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of its Subsidiaries, if the Board of Directors of the
Company shall determine that the preservation thereof is no longer desirable in
the conduct of the business of the Company and its Subsidiaries, taken as a
whole, and that the loss thereof is not adverse in any material respect to the
Holders of the Notes.
Section 4.15 Purchase of Notes upon Change in Control.
If a Change in Control shall occur at any time, then each Holder of Notes
will have the right to require that Holdings purchase such Holder's Notes, in
whole or in part in integral multiples of $1,000, at a purchase price (the
"Change in Control Purchase Price") in cash in an amount ("Change in Control
Payment") equal to 101% of the principal amount thereof, plus accrued interest,
if any, to the date of purchase (the "Change in Control Purchase Date"),
pursuant to the offer described below (the "Change in Control Offer") and the
other procedures set forth below.
Within 30 days following any Change in Control, Holdings shall notify the
Trustee thereof and give written notice of such Change in Control to each Holder
of Notes by first-class mail, postage prepaid, at the address of such Holder
appearing in the security register, describing the transaction or transactions
that constitute the Change in Control and stating, among other things, (i) the
Change in Control Purchase Price and the Change in Control Purchase Date, which
shall be a Business Day no earlier than 30 days nor more than 60 days
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43
from the case such notice is mailed, or such later date as is necessary to
comply with requirements under the Exchange Act or any applicable securities
laws or regulations; (ii) that any Note not tendered will continue to accrue
interest; (iii) that, unless Holdings defaults in the payment of the Change in
Control Purchase Price, any Notes accepted for payment pursuant to the Change in
Control Offer shall cease to accrue interest after the Change in Control
Purchase Date; and (iv) certain procedures that a Holder of Notes must follow to
accept a Change in Control Offer or to withdraw such acceptance.
On the Change in Control Purchase Date, Holdings will, to the extent
lawful, (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change in Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change in Control Purchase Price in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by
Holdings. The Paying Agent will promptly mail to each Holder of Notes so
tendered the Change in Control Purchase Price for such Notes, and the Trustee
will promptly authenticate and mail (or cause to be transferred by book entry)
to each Holder a new Note equal in principal amount in a principal amount of
$1,000 or an integral multiple thereof. Prior to complying with the provisions
of this Section 4.15, but in any event within 90 days following the Change in
Control, Holdings will either repay all outstanding Senior Indebtedness or
obtain the requisite consents, if any, under all agreements governing Senior
Indebtedness to permit the repurchase of Notes required by this Section 4.15.
Holdings will publicly announce the results of the Change in Control Offer on or
as soon as practicable after the Change of Control Purchase Date. Holdings shall
not be required to make a Change in Control Offer upon a Change in Control if a
third party makes the Change in Control Offer in the manner, at the time and
otherwise in compliance with the requirements applicable to a Change in Control
Offer made by Holdings and purchases all Notes validly tendered and not
withdrawn under such Change in Control Offer.
The Change in Control provisions described above will be applicable whether
or not any other provisions of this Indenture are applicable. Except as
described above with respect to a Change in Control, this Indenture does not
contain provisions that permit the Holders of the Notes to require Holdings to
repurchase or redeem the Notes in the event of a takeover, recapitalization or
similar transaction.
The Paying Agent shall promptly mail to each Holder of Notes so tendered
the Change in Control Payment for such Notes, and the Trustee shall promptly
authenticate pursuant to an Authentication Order and mail (or cause to be
transferred by book entry) to each Holder a new Note equal in principal amount
to any unrepurchased portion of the Notes surrendered, if any; provided that
each such new Note shall be in a principal amount of $1,000 or an integral
multiple thereof. However, if the Change in Control Purchase Date is on or after
an interest record date and on or before the related interest payment date, any
accrued and unpaid interest shall be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest shall be payable to Holders who tender Notes pursuant to the Change in
Control Offer.
Section 4.16 Subsidiary Guarantees.
Subject to the last sentence of this Section 4.16, Holdings shall cause
each of its domestic Restricted Subsidiaries, including any domestic Restricted
Subsidiary which becomes a Restricted Subsidiary after the date that Holdings
becomes an obligor under the Notes and this Indenture, to become a Guarantor
under this Indenture and shall cause each such domestic Restricted Subsidiary to
(a) execute and deliver to the Trustee a supplemental indenture in form
reasonably satisfactory to the Trustee pursuant to which such Restricted
Subsidiary shall unconditionally guarantee all of Holdings' obligations under
the Notes and this Indenture on the terms set forth in this Indenture and (b)
deliver to the Trustee an Opinion of Counsel that such supplemental indenture
has been duly authorized, executed and delivered by such Restricted Subsidiary
and constitutes a legal, valid, binding and enforceable obligation of such
Restricted Subsidiary, subject to normal exceptions. Thereafter, such Restricted
Subsidiary shall be a Guarantor for all purposes of this Indenture.
Notwithstanding the foregoing, following the contribution by Holdings of certain
assets to its direct, wholly-owned subsidiary, Triad Holdings
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II, LLC and the contribution by Triad Holdings II, LLC of certain of its assets
to its direct, wholly-owned subsidiary, Triad Holdings III, Inc. and immediately
prior to the Spin-Off Distribution, Holdings shall cause each of its domestic
Restricted Subsidiaries to become a Guarantor by causing such domestic
Restricted Subsidiaries to execute and deliver the Third Supplemental Indenture
(the "Third Supplemental Indenture") in the form of Exhibit I and shall cause
such Restricted Subsidiaries to execute and deliver a notation of their
respective Note Guarantee substantially in the form of Exhibit E.
Section 4.17 Limitation on Issuances and Sales of Capital Stock of
Restricted Subsidiaries.
Holdings (a) will not permit any Restricted Subsidiary to issue any Capital
Stock (other than to Holdings or a wholly owned Restricted Subsidiary) and (b)
will not permit any Person (other than Holdings or a wholly owned Restricted
Subsidiary) to own any Capital Stock of any Restricted Subsidiary; provided,
however, that this Section 4.17 shall not prohibit (i) the issuance or any sale,
transfer, lease, conveyance, or other disposition of all, but not less than all,
of the issued and outstanding Capital Stock of any Restricted Subsidiary owned
by Holdings or any of its Restricted Subsidiaries in compliance with the other
provisions of this Indenture, so long as the Net Cash Proceeds, if any, from
such sale, transfer. lease, conveyance or other disposition is applied in
accordance with Section 4.10, (ii) the ownership by other Persons of Qualified
Capital Stock issued prior to the time such Restricted Subsidiary became a
Subsidiary of Holdings that was neither issued in contemplation of such
Subsidiary becoming a Subsidiary nor acquired at that time, (iii) the ownership
by directors of director qualifying shares or the ownership by foreign nationals
of Capital Stock of any Restricted Subsidiary, to the extent mandated by
applicable law, (iv) arrangements existing on the Issuance Date, (v) any
issuance, sale or other disposition of Capital Stock (other than Preferred
Stock) of a Restricted Subsidiary if, immediately after giving effect thereto,
such Restricted Subsidiary would remain a Restricted Subsidiary, or (vi) any
issuance, sale or other disposition of Capital Stock of a Restricted Subsidiary
if, immediately after giving effect thereto, such Person would no longer
constitute a Restricted Subsidiary and any Investment in such Person remaining
after giving effect thereto would have been permitted to be made (and shall be
deemed to have been made) under Section 4.7 on the date of such issuance, sale
or other disposition.
Section 4.18 Limitation on Guarantees of Indebtedness by Restricted
Subsidiaries.
(a) Holdings will not permit any Restricted Subsidiary, directly or
indirectly, to guarantee, assume or in any other manner become liable with
respect to any Pari Passu Indebtedness or Subordinated Indebtedness of Holdings
unless, with respect to any guarantee by a Restricted Subsidiary of Pari Passu
Indebtedness of Holdings, any such guarantee shall be pari passu with such
Restricted Subsidiary's Note Guarantee, if any, and with respect to any
guarantee by a Restricted Subsidiary of Subordinated Indebtedness of Holdings,
any such guarantee shall be subordinated to such Restricted Subsidiary's Note
Guarantee at least to the same extent as such guaranteed Indebtedness is
subordinated to the Notes.
(b) Notwithstanding the foregoing, any guarantee of the Notes created
pursuant to the provisions described in the foregoing paragraph (a) will provide
by its terms that it will automatically and unconditionally be released and
discharged upon (i) any sale, exchange or transfer to any Person not an
Affiliate of Holdings of all of Holdings' Capital Stock of such Restricted
Subsidiary (which sale, exchange or transfer is otherwise in compliance with
this Indenture) or (ii) the designation of such Restricted Subsidiary as an
Unrestricted Subsidiary in accordance with the terms of the Indenture.
Section 4.19 Assumption of Indenture by Triad and Holdings.
Upon Healthtrust validly transferring the Pacific Group assets to Triad,
Healthtrust will cause Triad to assume, (a) by a supplemental indenture (the
"First Supplemental Indenture") in the form of Exhibit G, Healthtrust's
obligation for the due and punctual payment of the principal of, premium, if
any, Additional Interest, if any, and interest on all the Notes and the
performance and observance of every covenant of this Indenture on the part of
Healthtrust to be performed or observed and (b) the rights and obligations of
Healthtrust under the Registration Rights Agreement. Upon the Pacific Group
assets being validly transferred to Triad, the execution and delivery of the
First Supplemental Indenture by Healthtrust, Triad and the Trustee
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and the execution and delivery of the Triad Assumption Agreement to the
Registration Rights Agreement by Healthtrust and Triad, Healthtrust will be
fully, unconditionally and irrevocably released from all obligations under this
Indenture and the Registration Rights Agreement. Upon Triad validly transferring
the Pacific Group assets to Holdings, Triad will cause Holdings to assume, (i)
by a supplemental indenture (the "Second Supplemental Indenture") in the form of
Exhibit H, Triad's obligation for the due and punctual payment of the principal
of, premium, if any, Additional Interest, if any, and interest on all the Notes
and the performance and observance of every covenant of this Indenture on the
part of Triad to be performed or observed and (ii) the rights and obligations of
Triad under the Registration Rights Agreement. Upon the Pacific Group assets
being validly transferred to Holdings, the execution and delivery of the Second
Supplemental Indenture by Triad, Holdings and the Trustee and the execution and
delivery of the Holdings Assumption Agreement to the Registration Rights
Agreement by Triad and Holdings, Triad will be fully, unconditionally and
irrevocably released from all obligations under this Indenture and the
Registration Rights Agreement.
Section 4.20 Limitations on Healthtrust.
For so long as Healthtrust is the obligor under the Notes and this
Indenture, Healthtrust will not, and will not permit any of its Subsidiaries to
(a) incur (as defined in Section 4.9) any Indebtedness, (b) make any Restricted
Payments (as used in this Section 4.20, "Restricted Payments" shall be deemed to
be Restricted Payments of Healthtrust and its Subsidiaries), (c) create, incur,
assume or suffer to exist any Liens on any asset of Healthtrust or its
Subsidiaries or (d) transfer (as defined in the definition of "Asset Sale"),
directly or indirectly, any asset of Healthtrust or its Subsidiaries except, in
each case, for the transactions to be consummated in connection with the
distribution of the common stock of Triad and LifePoint to the stockholders of
Columbia/HCA and any related transactions and for transactions which do not
materially impair the ability of Healthtrust to satisfy its payment obligations
under the Notes and this Indenture.
Section 4.21 Limitations on Triad.
For so long as Triad is the obligor under the Notes and this Indenture,
Triad will not, and will not permit any of its Subsidiaries to (a) incur (as
defined in Section 4.9) any Indebtedness, (b) make any Restricted Payments (as
used in this Section 4.21, "Restricted Payments" shall be deemed to be
Restricted Payments of Triad and its Subsidiaries), (c) create, incur, assume or
suffer to exist any Liens on any asset of Triad or its Subsidiaries or (d)
transfer (as defined in the definition of "Asset Sale"), directly or indirectly,
any asset of Triad or its Subsidiaries except, in each case, for the
transactions to be consummated in connection with the distribution of the common
stock of Triad and LifePoint to the stockholders of Columbia/HCA and any related
transactions and for transactions which do not materially impair the ability of
Triad to satisfy its payment obligations under the Notes and this Indenture.
Section 4.22 Transition Agreements.
The Company shall cause the parties to the Distribution Agreement, Tax
Sharing and Indemnification Agreement and Computer and Data Processing Service
Agreement referred to in the definition of "Transition Agreements" in Section
1.1 to execute and deliver such Transition Agreements prior to or as soon as
practicable after the Spin-Off-Distribution.
Section 4.23 Further Assurances.
Upon the request of the Trustee or as otherwise required, the Company and
the Guarantors will execute and deliver such further instruments and undertake
such further reasonable action as may be reasonably required to carry out the
purposes of this Indenture.
ARTICLE V
SUCCESSORS
Section 5.1 Consolidation, Merger and Sale of Assets.
Holdings will not, in a single transaction or through a series of
transactions, consolidate with or merge with or into any other Person or sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially all
of its properties and assets to any other Person or Persons or permit any of its
Restricted Subsidiaries to enter into any such transaction or series of
transactions if such transaction or series of transactions, in the aggregate,
would result in the sale,
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46
assignment, conveyance, transfer, lease or other disposition of all or
substantially all of the properties and assets of Holdings and its Restricted
Subsidiaries on a consolidated basis to any other Person or Persons, unless at
the time and immediately after giving effect thereto (i) either (a) Holdings
will be the continuing corporation or (b) the Person (if other than Holdings)
formed by such consolidation or into which Holdings or such Restricted
Subsidiary is merged or the Person that acquires by sale, assignment,
conveyance, transfer, lease or disposition all or substantially all the
properties and assets of Holdings and its Restricted Subsidiaries on a
consolidated basis (the "Surviving Entity") (1) will be a corporation duly
organized and validly existing under the laws of the United States of America,
any state thereof or the District of Columbia and (2) will expressly assume, by
a supplemental indenture in form reasonably satisfactory to the Trustee,
Holdings' obligation for the due and punctual payment of the principal of,
premium, if any, Additional Interest, if any, and interest on all the notes and
the performance and observance of every covenant of the Indenture on the part of
Holdings to be performed or observed, (ii) immediately before and immediately
after giving effect to such transaction or series of transactions on a pro forma
basis (and treating any obligation of Holdings or any Restricted Subsidiary
incurred in connection with or as a result of such transaction or series of
transactions as having been incurred at the time of such transaction), no
Default or Event of Default will have occurred and be continuing, (iii)
immediately before and immediately after giving effect to such transaction or
series of transactions on a pro forma basis (on the assumption that the
transaction or series of transactions occurred on the first day of the four-
quarter period immediately prior to the consummation of such transaction or
series of transactions with the appropriate adjustments with respect to the
transaction or series of transactions being included in such pro forma
calculation), Holdings (or the Surviving Entity if Holdings is not the
continuing obligor under this Indenture) could incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) under the provisions
of Section 4.9, (iv) immediately after giving effect to such transaction on a
pro forma basis, the Consolidated Net Worth of Holdings (or the Surviving Entity
if Holdings is not the continuing obligor under the Indenture) is equal to or
greater than the Consolidated Net Worth of Holdings immediately prior to such
transaction; and (v) each Guarantor, if any, unless it is the other party to the
transactions described above, shall have by supplemental indenture confirmed
that its Note Guarantee will apply to such Person's obligations under this
Indenture and the Notes.
In connection with any such consolidation, merger, sale, assignment,
conveyance, transfer, lease or other disposition, Holdings or the Surviving
Entity shall have delivered to the Trustee, in form and substance reasonably
satisfactory to the Trustee, an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger, sale, assignment, conveyance,
transfer, lease or other disposition, and if a supplemental indenture is
required in connection with such transaction, such supplemental indenture,
comply with the requirements of this Indenture and that all conditions precedent
herein provided for relating to such transaction have been complied with.
Each Guarantor, if any (other than any Subsidiary whose Note Guarantee is
being released pursuant to the provisions under Section 11.5 or Section 4.18 as
a result of such transaction), shall not, and Holdings will not permit a
Guarantor to, in a single transaction or through a series of related
transactions, merge or consolidate with or into any other corporation or other
entity (other than Holdings or any Guarantor), or sell, assign, convey,
transfer, lease or otherwise dispose of its properties and assets on a
consolidated basis substantially as an entirety to any entity (other than
Holdings or any Guarantor) unless (i) either (a) such Guarantor shall be the
continuing corporation or partnership or (b) the Person (if other than such
Guarantor) formed by such consolidation or into which such Guarantor is merged
or the entity which acquires by sale, assignment, conveyance, transfer, lease or
disposition of all or substantially all of the properties and assets of such
Guarantor, as the case may be, shall be a corporation or partnership organized
and validly existing under the laws of the United States, any state thereof or
the District of Columbia, and shall expressly assume by a supplemental
indenture, executed and delivered to the Trustee, in form satisfactory to the
Trustee, all the obligations of such Guarantor under the Notes and this
Indenture, (ii) immediately before and immediately after giving effect to such
transaction on a pro forma basis, no Default or Event of Default shall have
occurred and be continuing, and (iii) such Guarantor shall have delivered to the
Trustee an Officers' Certificate
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and an Opinion of Counsel, each stating that such consolidation, merger, sale,
assignment, conveyance, transfer, lease or disposition and such supplemental
indenture comply with this Indenture.
Section 5.2 Successor Person Substituted.
Upon any consolidation or merger, or any sale, assignment, conveyance,
transfer, lease or disposition of all or substantially all of the properties and
assets of Holdings or any Guarantor in accordance with Section 5.1, the
successor Person formed by such consolidation or into which Holdings or such
Guarantor, as the case may be, is merged or the successor Person to which such
sale, assignment, conveyance, transfer, lease or disposition is made shall
succeed to, and be substituted for, and may exercise every right and power of,
Holdings or such Guarantor, as the case may be, under this Indenture and/or the
Note Guarantees, as the case may be, with the same effect as if such successor
had been named as Holdings or such Guarantor, as the case may be, herein and/or
in the Note Guarantees, as the case may be. When a successor assumes all the
obligations of its predecessor under this Indenture, the Notes or a Note
Guarantee, as the case may be, the predecessor shall be released from those
obligations; provided that in the case of a transfer by lease, the predecessor
shall not be released from the payment of principal and interest on the Notes or
a Note Guarantee, as the case may be.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.1 Events of Default.
Each of the following is an "Event of Default":
(a) default in the payment of any interest on any Note when it becomes due
and payable and continuance of such default for a period of 30 days;
(b) default in the payment of the principal of, premium, if any, or
Additional Interest, if any, on any Note at its Maturity (upon acceleration,
optional redemption, mandatory redemption, required purchase or otherwise);
(c) default in the performance, or breach, of the provisions described in
Section 5.1, the failure to make or consummate a Change in Control Offer in
accordance with the provisions of Section 4.15 or the failure to make or
consummate an Excess Proceeds Offer in accordance with the provisions of
Section 4.10;
(d) default in the performance, or breach, of any covenant or warranty of
the Company or any Guarantor contained in this Indenture or any Note Guarantee
(other than a default in the performance, or breach, of a covenant or warranty
which is specifically dealt with in clauses (a), (b) or (c) above) and
continuance of such default or breach for a period of 30 days after written
notice shall have been given to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in aggregate principal amount
of the Notes then outstanding;
(e) (i) one or more defaults in the payment of principal of or premium, if
any, on Indebtedness of Holdings or any Restricted Subsidiary aggregating
$10,000,000 or more, when the same becomes due and payable at the Stated
Maturity thereof, and such default or defaults shall have continued after any
applicable grace period and shall not have been cured or waived or (ii)
Indebtedness of Holdings or any Restricted Subsidiary aggregating $10,000,000
or more shall have been accelerated or otherwise declared due and payable, or
required to be prepaid or repurchased (other than by regularly scheduled
required prepayment) prior to the Stated Maturity thereof;
(f) one or more final, non-appealable judgments or orders shall be
rendered against Holdings or any Restricted Subsidiary for the payment of
money, either individually or in an aggregate amount, in excess of $10,000,000
(net of any amounts that are fully covered by insurance) and shall not be
discharged and there shall have been a period of 60 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, was not in effect;
(g) any Note Guarantee of a Material Subsidiary or group of Restricted
Subsidiaries that, taken together, would constitute a Material Subsidiary
ceases to be in full force and effect or is declared null and void or any
Material Subsidiary or group of
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Restricted Subsidiaries that, taken together, would constitute a Material
Subsidiary denies that it has any further liability under any Note Guarantee,
or gives notice to such effect (other than by reason of the termination of
this Indenture or the release of any such Note Guarantee in accordance with
this Indenture);
(h) Holdings or any Material Subsidiary or group of Restricted
Subsidiaries that, taken together, would constitute a Material Subsidiary
pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) shall admit in writing its inability to pay debts generally.
(i) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against Holdings or any Material Subsidiary
or group of Restricted Subsidiaries that, taken together, would constitute
a Material Subsidiary in an involuntary case;
(ii) appoints a custodian of Holdings or any Material
Subsidiary or group of Restricted Subsidiaries that, taken together, would
constitute a Material Subsidiary or for all or substantially all of the
property of Holdings or any Material Subsidiary or group of Restricted
Subsidiaries that, taken together, would constitute a Material Subsidiary;
or
(iii) orders the liquidation of Holdings or any Material
Subsidiary, or group of Restricted Subsidiaries that, taken together, would
constitute a Material Subsidiary; and the order or decree remains unstayed
and in effect for 60 consecutive days.
Section 6.2 Acceleration.
If an Event of Default (other than as specified in paragraphs (h) or (i) of
Section 6.1) shall, occur and be continuing, the Trustee or the Holders of not
less than 25% in aggregate principal amount of the Notes then outstanding, by
written notice to the Company, may, and the Trustee, upon receipt of the written
request and indemnity satisfactory to it from such Holders, shall declare the
principal of, premium, if any, Additional Interest, if any, and accrued interest
on all of the outstanding Notes immediately due and payable. Upon any such
declaration all such amounts payable in respect of the Notes shall become
immediately due and payable. If an Event of Default specified in paragraphs (h)
or (i) of Section 6.1 above occurs and is continuing, then the principal of,
premium, if any, Additional Interest, if any, and accrued interest on all of the
outstanding Notes shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder of
Notes.
At any time after a declaration of acceleration, but before a judgment or
decree for payment of the money due has been obtained by the Trustee, the
Holders of a majority in aggregate principal amount of the outstanding Notes, by
written notice to the Company and the Trustee, may rescind such declaration and
its consequences if (a) the Company has paid or deposited with the Trustee a sum
sufficient to pay (i) all overdue interest and Additional Interest, if any, on
all outstanding Notes, (ii) all unpaid principal of and premium, if any, on any
outstanding Notes that has become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Notes, (iii) to the
extent that payment of such interest is lawful, interest upon overdue interest,
Additional Interest, if any, and overdue principal at the rate borne by the
Notes, (iv) all sums paid or advanced by the Trustee under this Indenture and
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and (b) all Events of Default, other than the
non-payment of amounts of principal of, premium, if any, Additional Interest, if
any, or interest on the Notes that has become due solely by such declaration of
acceleration, have been cured or waived. No such rescission shall affect any
subsequent default or impair any right consequent thereon.
Section 6.3 Other Remedies.
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If an Event of Default occurs and is continuing, the Trustee may, subject
to Article 10, pursue any available remedy to collect the payment of principal,
premium, if any, Additional Interest, if any, and interest on the Notes or to
enforce the performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder of a Note in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 6.4 Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount of
the outstanding Notes may, on behalf of the Holders of all the Notes, waive any
past Defaults, except a Default in the payment of the principal of, premium, if
any, Additional Interest, if any, or interest on any Note, or in respect of a
covenant or provision which under this Indenture cannot be modified or amended
without the consent of the Holder of each Note outstanding. Upon such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
Section 6.5 Control by Majority.
Holders of a majority in principal amount of the then outstanding Notes may
direct the time, method and place of conducting any proceeding for exercising
any remedy available to the Trustee or exercising any trust or power conferred
on it. Holders may not enforce this Indenture or the Notes, however, except as
provided in this Indenture. In addition, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or that the Trustee
determines may be unduly prejudicial to the rights of other Holders of Notes or
that may involve the Trustee in personal liability.
Section 6.6 Limitation on Suits.
No individual Holder of any of the Notes has any right to institute any
proceeding with respect to this Indenture or any remedy hereunder, unless the
Holders of at least 25% in aggregate principal amount of the outstanding Notes
have made written request, and offered reasonable indemnity, to the Trustee to
institute such proceeding as Trustee under the Notes and this Indenture, the
Trustee has failed to institute such proceeding within 60 days after receipt of
such notice and the Trustee, within such 60-day period, has not received
directions inconsistent with such written request by Holders of a majority in
aggregate principal amount of the outstanding Notes.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.7 Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture and subject to
Article 10 and Section 11.2, the right of any Holder of a Note to receive
payment of principal, premium and Additional Interest, if any, and interest on
the Note, on or after the respective due dates expressed in the Note (including
in connection with an offer to purchase), or to bring suit for the enforcement
of any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such Holder.
Section 6.8 Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal of, premium and Additional Interest, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.9 Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the
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50
Trustee, its agents and counsel) and the Holders of the Notes allowed in any
judicial proceedings relative to the Company (or any other obligor upon the
Notes), its creditors or its property and shall be entitled and empowered to
collect, receive and distribute any money or other property payable or
deliverable on any such claims and any custodian in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the Trustee, and in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7. To the
extent that the payment of any such compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.7 out of the estate in any such proceeding, shall be
denied for any reason, payment of the same shall be secured by a Lien on, and
shall be paid out of, any and all distributions, dividends, money, securities
and other properties that the Holders may be entitled to receive in such
proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder, or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
Section 6.10 Priorities.
If the Trustee collects any money pursuant to this Article, it shall,
subject to Article 10, pay out the money in the following order:
First: to the Trustee, its agents and counsel for amounts due under
Section 7.7, including payment of all compensation, expense and liabilities
incurred, and all advances made, by the Trustee and the costs and expenses of
collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium and Additional Interest, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium and Additional Interest, if any
and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in the suit, having due regard to the
merits and good faith of the claims or defenses made by the party litigant. This
Section does not apply to a suit by the Trustee, a suit by a Holder of a Note
pursuant to Section 6.7, or a suit by Holders of more than 10% in principal
amount of the then outstanding Notes.
ARTICLE VII
TRUSTEE
Section 7.1 Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only those
duties that are specifically set forth in this Indenture and no others, and
no implied covenants or obligations shall be read into this Indenture against
the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely,
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as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
reasonably conforming to the requirements of this Indenture. However, in the
case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall
examine the certificates and opinions to determine whether or not they
reasonably conform to the requirements of this Indenture (but need not
confirm or investigate the accuracy of any mathematical calculations or other
facts stated therein).
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section 7.1;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved by a court of
competent jurisdiction that the Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received
by it pursuant to Section 6.5.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to the paragraphs of
this Section.
(e) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with Holdings. Money held in trust
by the Trustee need not be segregated from other funds except to the extent
required by law.
Section 7.2 Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or purportedly presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel of its selection and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from Holdings shall be sufficient if signed by an
Officer of Holdings.
(f) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights or powers under this Indenture at the
request or direction of any of the Holders unless such Holders shall have
offered to the Trustee security or indemnity satisfactory to the Trustee against
any loss, liability or expense that might be incurred by it in compliance with
such request or direction.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any document, but the Trustee, in its judgment, may
make such further inquiry or investigation into such facts or matters as it may
see fit and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of Holdings, personally or by agent or attorney at the sole cost of Holdings,
and shall incur no liability or additional liability of any kind by reason of
such inquiry or investigation.
(h) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
(i) The Trustee shall not be deemed to have notice of any Default or Event
of Default unless a Responsible Officer of the Trustee has actual knowledge
thereof or unless
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written notice of any event which is in fact such a Default is received by the
Trustee at the Corporate Trust Office of the Trustee, and such notice references
the Notes and this Indenture.
(j) The rights, privileges, protections, immunities and benefits given to
the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.
Section 7.3 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with Holdings or any Affiliate of
Holdings with the same rights it would have if it were not Trustee. However, in
the event that the Trustee acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
as trustee or resign. Any Agent may do the same with like rights and duties. The
Trustee is also subject to Sections 7.10 and 7.11.
Section 7.4 Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to Holdings or upon Holdings' direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.5 Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
actually known to a Responsible Officer of the Trustee, the Trustee shall mail
to Holders of Notes as it appears on the Registrar a notice of the Default or
Event of Default within 10 days after it occurs. Except in the case of a Default
or Event of Default relating to the payment of principal or interest on any
Note, the Trustee may withhold the notice if it determines, in good faith, that
withholding the notice is in the interests of the Holders of the Notes.
Section 7.6 Reports by Trustee to Holders of the Notes.
Within 60 days after each April 15 beginning with the April 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA ss. 313(a) (but if no event described in
TIA ss. 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA ss.
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA ss. 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the Commission and each stock
exchange on which the Notes are listed in accordance with TIA ss. 313(d). The
Company shall promptly notify the Trustee when the Notes are listed on any stock
exchange and of any delisting thereof.
Section 7.7 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time compensation for its
acceptance of this Indenture and services as the Company and the Trustee shall
from time to time agree in writing. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. Holdings
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall fully indemnify the Trustee and any predecessor Trustee
against any and all losses, damages, claims, liabilities or expenses incurred by
it including taxes (other than taxes based upon, measured by or determined by
the income of the Trustee) arising out of or in connection with the acceptance
or administration of its duties under this Indenture, including the costs and
expenses of enforcing this Indenture against the Company (including this Section
7.7) and defending itself against any claim (whether asserted by the Company or
any Holder or any other person) or liability in connection with the acceptance,
exercise or performance of any of its powers or duties hereunder, except to the
extent any such loss, damage, claim, liability or expense may be attributable to
its negligence or bad faith. The Trustee shall
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53
notify the Company promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations hereunder, except to the extent that the Company is actually
prejudiced thereby. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the reasonable fees and expenses of such counsel. Holdings need not
pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.
The obligations of the Company under this Section 7.7 shall survive the
satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the Trustee
shall have a Lien prior to the Notes on all money or property held or collected
by the Trustee, except that held in trust to pay principal and interest on
particular Notes. Such Lien shall survive the satisfaction and discharge of this
Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(h) or (i) occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss.__ 313(b)(2) to the
extent applicable.
Section 7.8 Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.8.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of Notes of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if: (a) the Trustee fails to comply with Section 7.10; (b)
the Trustee is adjudged a bankrupt or an insolvent or an order for relief is
entered with respect to the Trustee under any Bankruptcy Law; (c) a custodian or
public officer takes charge of the Trustee or its property; or (d) the Trustee
becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by Holdings.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee, at the expense of the Company.
If the Trustee, after written request by any Holder of a Note who has been
a Holder of a Note for at least six months, fails to comply with Section 7.10,
such Holder of a Note may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders of the Notes. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, provided all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in Section
7.7. Notwithstanding replacement of the Trustee pursuant to this Section 7.8,
the Company's obligations under Section 7.7 shall continue for the benefit of
the retiring Trustee.
Section 7.9 Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or
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substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
Section 7.10 Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $50,000,000
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss. 310(b).
Section 7.11 Preferential Collection of Claims Against Holdings.
The Trustee is subject to TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
Section 7.12 Trustee's Application for Instructions from the Company.
Any application by the Trustee for written instructions from the Company,
may, at the option of the Trustee, set forth in writing any action proposed to
be taken or omitted by the Trustee under this Indenture and the date on and/or
after which such action shall be taken or such omission shall be effective. The
Trustee shall not be liable for any action taken by, or omission of, the Trustee
in accordance with a proposal included in such application on or after the date
specified in such application (which date shall not be less than five Business
Days after the date any officer of the Company actually receives such
application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.
ARTICLE VIII
DEFEASANCE AND COVENANT DEFEASANCE; DISCHARGE
Section 8.1 Option to Effect Defeasance or Covenant Defeasance.
Holdings may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.2 or 8.3 be applied to all outstanding Notes and Notes
Guarantees upon compliance with the conditions set forth below in this Article
8.
Section 8.2 Defeasance and Discharge.
Upon Holdings' exercise under Section 8.1 of the option applicable to this
Section 8.2, Holdings shall, subject to the satisfaction of the conditions set
forth in Section 8.4, be deemed to have been discharged from its obligations
with respect to all outstanding Notes and the related Guarantees on the date the
conditions set forth below are satisfied (hereinafter, "Defeasance"). For this
purpose, Defeasance means that Holdings shall be deemed to have paid and
discharged the entire Indebtedness represented by the outstanding Notes, which
shall thereafter be deemed to be "outstanding" only for the purposes of Section
8.5 and the other Sections of this Indenture referred to in (a) and (b) below,
and to have satisfied all its other obligations under such Notes and this
Indenture (and the Trustee, on demand of and at the expense of Holdings, shall
execute proper instruments acknowledging the same), except for the following
provisions which shall survive until otherwise terminated or discharged
hereunder: (a) the rights of Holders of outstanding Notes to receive, solely
from the trust fund described in Section 8.4, and as more fully set forth in
such Section 8.4, payments in respect of the principal of, premium, if any,
Additional Interest, if any, and interest on such Notes when such payments are
due, (b) Holdings' obligations with respect to such Notes under Article 2 and
Section 4.2, (c) the rights, powers, trusts, duties and immunities of the
Trustee hereunder and Holdings' obligations in connection therewith and (d) this
Article 8. Subject to compliance with this Article 8, Holdings may exercise its
option under this Section 8.2 notwithstanding the prior exercise of its option
under Section 8.3.
Section 8.3 Covenant Defeasance.
Upon Holdings' exercise under Section 8.1 hereof of the option applicable
to this
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Section 8.3, Holdings and each Guarantor shall, subject to the satisfaction of
the conditions set forth in Section 8.4 hereof, be released from their
obligations under the covenants contained in Sections 4.3, 4.4, 4.7, 4.8, 4.9,
4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18 and clauses (ii), (iii) and (iv)
of Section 5.1 hereof with respect to the outstanding Notes on and after the
date the conditions set forth in Section 8.4 are satisfied (hereinafter,
"Covenant Defeasance"), and the Notes shall thereafter be deemed not
"outstanding" for the purposes of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder (it being understood that such Notes shall not be deemed outstanding
for accounting purposes). For this purpose, Covenant Defeasance means that, with
respect to the outstanding Notes, Holdings and each Guarantor may omit to comply
with and shall have no liability in respect of any term, condition or limitation
set forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.1, but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition, upon
Holdings' exercise under Section 8.1 of the option applicable to this Section
8.3, subject to the satisfaction of the conditions set forth in Section 8.4,
Sections 6.1(c) through 6.1(f) shall not constitute Events of Default.
Section 8.4 Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to the application of either Section
8.2 or 8.3 to the outstanding Notes:
(a) Holdings must irrevocably deposit or cause to be deposited with the
Trustee, as trust funds in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of the Notes, money in an
amount, or non-callable U.S. Government Obligations which through the
scheduled payment of principal and interest thereon will provide money in an
amount, or a combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay and discharge the
principal of, premium, if any, Additional Interest, if any, and interest on
the outstanding Notes on the Stated Maturity (or upon redemption, if
applicable) of such principal, premium, if any, Additional Interest, if any,
or installment of interest;
(b) in the case of an election under Section 8.2, Holdings shall have
delivered to the Trustee an Opinion of Counsel stating that Holdings has
received from, or there has been published by, the Internal Revenue Service a
ruling, or since the date of the final offering circular, there has been a
change in applicable federal income tax law, in either case to the effect
that, and based thereon such opinion shall confirm that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Defeasance had not occurred;
(c) in the case of an election under Section 8.3, Holdings shall have
delivered to the Trustee an Opinion of Counsel to the effect that the Holders
of the Notes outstanding will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such Covenant Defeasance had not
occurred;
(d) no Default or Event of Default will have occurred and be continuing on
the date of such deposit or, insofar as an event of bankruptcy under
paragraphs (h) and (i) of Section 6.1 is concerned, at any time during the
period ending on the 91st day after the date of such deposit;
(e) such Defeasance or Covenant Defeasance will not result in a breach or
violation of, or constitute a default under, this Indenture, the Senior Credit
Agreement or any other material agreement or instrument to which Holdings or
any Guarantor is a party or by which it is bound;
(f) Holdings shall have delivered to the Trustee an Opinion of Counsel to
the effect that (i) the trust funds will not be subject to any rights of
holders of Senior
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Indebtedness under the subordination provisions of Article 10 and (ii) after
the 91st day following the deposit or after the date such opinion is
delivered, the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally;
(g) Holdings shall have delivered to the Trustee an Officers' Certificate
stating that the deposit was not made by Holdings with the intent of
preferring the Holders of Notes or any Note Guarantee over the other creditors
of either Holdings or any Guarantor with the intent of hindering, delaying or
defrauding creditors of either Holdings or any Guarantor; and
(h) Holdings shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent provided
for relating to either the Defeasance or the Covenant Defeasance, as the case
may be, have been complied with.
Section 8.5 Deposited Money and U.S. Government Obligations to
Be Held in Trust; Other Miscellaneous Provisions
Subject to Section 8.6, all money and non-callable U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.5, the
"Trustee") pursuant to Section 8.4 in respect of the outstanding Notes shall be
held in trust and applied by the Trustee, in accordance with the provisions of
such Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including Holdings acting as Paying Agent) as the Trustee may
determine, to the Holders of such Notes of all sums due and to become due
thereon in respect of principal, premium, if any, and interest, but such money
need not be segregated from other funds except to the extent required by law.
Holdings shall pay and indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against the cash or non-callable U.S. Government
Obligations deposited pursuant to Section 8.4 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to Holdings from time to time upon the request of Holdings
any money or non-callable U.S. Government Obligations held by it as provided in
Section 8.4 which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee (which may be the opinion delivered under Section 8.4(a)), are in excess
of the amount thereof that would then be required to be deposited to effect an
equivalent Defeasance or Covenant Defeasance.
Section 8.6 Repayment to Holdings.
Any money deposited with the Trustee or any Paying Agent, or then held by
Holdings, in trust for the payment of the principal of, premium, if any,
Additional Interest, if any, or interest on any Note and remaining unclaimed for
two years after such principal, and premium, if any, or interest has become due
and payable shall be paid to Holdings on its request or (if then held by
Holdings) shall be discharged from such trust; and the Holder of such Note shall
thereafter, as a secured creditor, look only to Holdings for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of Holdings as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of Holdings cause to be published
once, in The New York Times and The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then remaining will be
repaid to Holdings.
Section 8.7 Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States dollars
or non-callable U.S. Government Obligations in accordance with Section 8.2 or
8.3, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then Holdings' obligations under this Indenture and the
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57
Notes shall be revived and reinstated as though no deposit had occurred pursuant
to Section 8.2 or 8.3 until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.2 or 8.3, as the
case may be; provided, however, that, if Holdings makes any payment of principal
of, premium, if any, Additional Interest, if any, or interest on any Note
following the reinstatement of its obligations, Holdings shall be subrogated to
the rights of the Holders of such Notes to receive such payment from the money
held by the Trustee or Paying Agent.
Section 8.8 Discharge.
This Indenture will cease to be of further effect (except as to
surviving rights of registration of transfer or exchange of the Notes as
expressly provided for in this Indenture and the compensation and
indemnification provisions relating to the Trustee) and the Trustee, at the
expense of Holdings, will execute proper instruments acknowledging satisfaction
and discharge of this Indenture when (a) either (i) all the Notes theretofore
authenticated and delivered (other than destroyed, lost or stolen Notes which
have been replaced or paid and Notes for whose payment money has been deposited
in trust with the Trustee or any paying agent or segregated and held in trust by
Holdings and thereafter repaid to Holdings or discharged from such trust as
provided for in this Indenture) have been delivered to the Trustee for
cancellation or (ii) all Notes not theretofore delivered to the Trustee for
cancellation (x) have become due and payable, (y) will become due and payable at
Stated Maturity within one year or (z) are to be called for redemption within
one year under arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of Holdings, and
Holdings has irrevocably deposited or caused to be deposited with the Trustee as
trust funds in trust for such purpose an amount sufficient to pay and discharge
the entire Indebtedness on the Notes not theretofore delivered to the Trustee
for cancellation, for principal of, premium, if any, Additional Interest, if
any, and interest on the Notes to the date of such deposit (in the case of Notes
which have become due and payable) or to the Stated Maturity or redemption date,
as the case may be, (b) Holdings has paid or caused to be paid all sums payable
under this Indenture by Holdings, and (c) Holdings has delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided in this Indenture relating to the satisfaction and
discharge of this Indenture have been complied with.
ARTICLE IX
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.1 Without Consent of Holders of Notes.
Notwithstanding Section 9.2, the Company and the Trustee may (subject
to Section 10.14) amend or supplement this Indenture or the Notes without notice
to or the consent of any Holder of a Note: (a) to evidence the succession of
another Person to the Company, a Guarantor or any other obligor on the Notes,
and the assumption by any such successor of the covenants of the Company or such
obligor or Guarantor in this Indenture and in the Notes and in any Note
Guarantee in accordance with Article 5; (b) to add to the covenants of the
Company, any Guarantor or any other obligor upon the Notes for the benefit of
the Holders of the Notes or to surrender any right or power conferred upon the
Company or any other obligor upon the Notes, as applicable, in this Indenture,
in the Notes or in any Note Guarantee; (c) to cure any ambiguity, or to correct
or supplement any provision in this Indenture, the Notes or any Note Guarantee
which may be defective or inconsistent with any other provision in this
Indenture, the Notes or any Note Guarantee or make any other provisions with
respect to matters or questions arising under this Indenture, the Notes or any
Note Guarantee; provided that, in each case, such provisions shall not adversely
affect the interest of the Holders of the Notes; (d) to comply with the
requirements of the Commission in order to effect or maintain the qualification
of this Indenture under the TIA; (e) to add a Guarantor under this Indenture;
(f) to evidence and provide the acceptance of the appointment of a successor
Trustee under this Indenture; (g) to mortgage, pledge, hypothecate or grant a
security interest in favor of the Trustee for the benefit of the Holders of the
Notes as additional security for the payment and performance of the Company's
and any Guarantor's obligations under this Indenture, in any property, or
assets, including any of which are required to be mortgaged, pledged or
hypothecated, or in which a security is required
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58
to be granted to the Trustee pursuant to this Indenture or otherwise; or (h) to
execute the First Supplemental Indenture, the Second Supplemental Indenture and
the Third Supplemental Indenture.
Upon the written request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of any of the documents
requested by it pursuant to Section 7.2(b), the Trustee shall join with the
Company and the Guarantors in the execution of such amended or supplemental
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, unless such amended or supplemental Indenture directly
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its judgment, but shall not be
obligated to, enter into such amended or supplemental Indenture.
Section 9.2 With Consent of Holders of Notes.
Except as provided below in this Section 9.2 and in Section 10.14, the
Company and the Trustee may amend or supplement this Indenture (including
Sections 4.10 and 4.15) or the Notes and/or any Note Guarantees may be amended
or supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding voting as a single class
(including, without limitation, consents obtained in connection with a purchase
of, tender offer or exchange offer for, Notes), and, subject to Sections 6.4 and
6.7, any existing Default or Event of Default (other than a Default or Event of
Default in the payment of the principal of, premium, if any, Additional
Interest, if any, or interest on the Notes, except a payment default resulting
from an acceleration that has been rescinded) or compliance with any provision
of this Indenture, the Notes or the Note Guarantees may be waived with the
consent of the Holders of a majority in principal amount of the then outstanding
Notes (including consents obtained in connection with a purchase of, tender
offer or exchange offer for, Notes). Section 2.8 shall determine which Notes are
considered to be "outstanding" for purposes of this Section 9.2.
Upon the written request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid,
and upon receipt by the Trustee of any document requested by it pursuant to
Section 7.2(b), the Trustee shall join with the Company and the Guarantors in
the execution of such amended or supplemental Indenture and to make any further
appropriate agreements and stipulations that may be therein contained, unless
such amended or supplemental Indenture directly affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.2 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.2
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of Holdings to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental Indenture or waiver. Subject to Sections 6.4 and 6.7, the Holders
of a majority in aggregate principal amount of the Notes then outstanding voting
as a single class may waive compliance in a particular instance by the Company
and/or the Guarantors with any provision of this Indenture, the Notes or the
Notes Guarantees. However, without the consent of each Holder affected, an
amendment or waiver under this Section 9.2 may not (with respect to any Notes
held by a non-consenting Holder):
(a) change the Stated Maturity of the principal of, or any installment
of interest on, any Note, or reduce the principal amount thereof, or
premium, if any, or the rate of interest thereon or change the coin or
currency in which the principal of any Note or any premium or the interest
thereon is payable, or impair the right to institute suit for the
enforcement of any such payment after the Stated Maturity thereof (or, in
the case of redemption, on or after the redemption date);
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(b) following the occurrence of an Asset Sale, amend, change or modify
the obligation of Holdings to make and consummate an Excess Proceeds Offer
with respect to any Asset Sale in accordance with Section 4.10, including
amending, changing or modifying any definition relating thereto in any
manner materially adverse to the Holders of the Notes affected thereby;
(c) following the occurrence of a Change in Control, amend, change or
modify the obligation of Holdings to make and consummate a Change in
Control Offer in the event of a Change in Control in accordance with
Section 4.15, including amending, changing or modifying any definition
relating thereto in any manner materially adverse to the Holders of the
Notes affected thereby;
(d) reduce the percentage in principal amount of outstanding Notes,
the consent of whose Holders is required for any such supplemental
indenture or the consent of whose Holders is required for any waiver of
compliance with certain provisions of this Indenture;
(e) modify any of the provisions relating to supplemental indentures
requiring the consent of Holders or relating to the waiver of past defaults
or relating to the waiver of certain covenants, except to increase the
percentage of outstanding Notes required for such actions or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Note affected thereby; or
(f) amend or modify any of the provisions of this Indenture relating
to any Note Guarantee in any manner adverse to the Holders of the Notes.
In addition, any amendment to, or waiver of, the provisions of Article
10 of this Indenture (including the related definitions) that adversely affects
the rights of the Holders of the Notes will require the consent of the Holders
of at least 66-2/3% in aggregate principal amount of the Notes then outstanding.
Section 9.3 Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.4 Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. Holdings in exchange
for all Notes may issue and the Trustee shall, upon receipt of an Authentication
Order, authenticate new Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.5 Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does not in
the judgment of the Trustee adversely affect the rights, duties, liabilities or
immunities of the Trustee. The Company may not sign an amendment or supplemental
Indenture until its Board of Directors approves it. In executing any amended or
supplemental indenture, the Trustee shall be entitled to receive and (subject to
Section 7.1) shall be fully protected in relying upon, in addition to the
documents required by Section 12.4, an Officers' Certificate and an Opinion of
Counsel stating that the execution of such amended or supplemental Indenture is
authorized or permitted by this Indenture.
ARTICLE X
SUBORDINATION
Section 10.1 Agreement to Subordinate.
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The Company agrees, and each Holder by accepting a Note agrees, that
the Indebtedness, interest and other obligations of any kind evidenced by the
Notes and this Indenture are subordinated in right of payment, to the extent and
in the manner provided in this Article 10, to the prior payment in full in cash
of all Senior Indebtedness (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Indebtedness.
Section 10.2 Liquidation; Dissolution; Bankruptcy.
In the event of any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relating to the Company or to its assets, or
any liquidation, dissolution or other winding-up of the Company, whether
voluntary or involuntary, or any assignment for the benefit of creditors or
other marshaling of assets or liabilities of the Company (except in connection
with the consolidation or merger of the Company or its liquidation or
dissolution following the conveyance, transfer or lease of its properties and
assets substantially as an entirety upon the terms and conditions described in
Article 5), the holders of Senior Indebtedness will be entitled to receive
payment in full in cash or Cash Equivalents of all Senior Indebtedness, or
provision shall be made for such payment in full, before the Holders of Notes
will be entitled to receive any payment or distribution of any kind or character
(other than any payment or distribution in the form of equity securities or
subordinated securities of the Company or any successor obligor that, in the
case of any such subordinated securities, are subordinated in right of payment
to all Senior Indebtedness that may at the time be outstanding to at least the
same extent as the Notes are so subordinated (such equity securities or
subordinated securities hereinafter being "Permitted Junior Securities") and any
payment made pursuant to the provisions described in Article 8 from monies or
U.S. Government Obligations previously deposited with the Trustee) on account of
principal of, or premium, if any, or Additional Interest, if any, or interest on
the Notes; and any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities (other than a payment or
distribution in the form of Permitted Junior Securities and payments made
pursuant to the provisions described in Article 8 from monies or U.S. Government
Obligations previously deposited with the Trustee), by set-off or otherwise, to
which the Holders of the Notes or the Trustee would be entitled but for the
provisions of this Article 10 shall be paid by the liquidating trustee or agent
or other person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly to the
holders of Senior Indebtedness or their representative or representatives
ratably according to the aggregate amounts remaining unpaid on account of the
Senior Indebtedness to the extent necessary to make payment in full of all
Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior Indebtedness.
Section 10.3 Default on Designated Senior Indebtedness.
(a) No payment or distribution of any assets of the Company of any
kind or character, whether in cash, property or securities (other than Permitted
Junior Securities and payments made pursuant to the provisions described in
Article 8 from monies or U.S. Government Obligations previously deposited with
the Trustee), may be made by or on behalf of Holdings on account of principal
of, premium, if any, Additional Interest, if any, or interest on the Notes or on
account of the purchase, redemption or other acquisition of Notes upon the
occurrence of any default in payment (whether at Stated Maturity, upon scheduled
installment, by acceleration or otherwise) of principal of, premium, if any, or
interest on Designated Senior Indebtedness (a "Payment Default") until such
Payment Default shall have been cured or waived in writing or shall have ceased
to exist or such Designated Senior Indebtedness shall have been discharged or
paid in full in cash or Cash Equivalents.
(b) No payment or distribution of any assets of the Company of any
kind or character, whether in cash, property or securities (other than Permitted
Junior Securities and payments made pursuant to the provisions described in
Article 8 from monies or U.S. Government Obligations previously deposited with
the Trustee), may be made by or on behalf of Holdings on account of principal
of, premium, if any, Additional Interest, if any, or interest on the Notes or on
account of the purchase, redemption or other acquisition of Notes for the period
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specified below (a "Payment Blockage Period") upon the occurrence of any default
or event of default with respect to any Designated Senior Indebtedness other
than any Payment Default pursuant to which the maturity thereof may be
accelerated (a "Non-Payment Default") and receipt by the Trustee of written
notice thereof from the trustee or other representative of holders of Designated
Senior Indebtedness.
The Payment Blockage Period will commence upon the date of receipt by
the Trustee of written notice from the trustee or such other representative of
the holders of the Designated Senior Indebtedness in respect of which the Non-
Payment Default exists and shall end on the earliest of:
(i) 179 days thereafter (provided that any Designated Senior
Indebtedness as to which notice was given shall not theretofore have been
accelerated);
(ii) the date on which such Non-Payment Default is cured, waived or
ceases to exist;
(iii) the date on which such Designated Senior Indebtedness is
discharged or paid in full in cash or Cash Equivalents; or
(iv) the date on which such Payment Blockage Period shall have been
terminated by written notice to the Trustee or the Company from the trustee
or such other representative initiating such Payment Blockage Period,
after which the Company will resume making any and all required payments in
respect of the Notes, including any missed payments, unless the holders of the
Designated Senior Indebtedness or their representatives have accelerated the
maturity of such Designated Senior Indebtedness. In any event, not more than one
Payment Blockage Period may be commenced during any period of 360 consecutive
days. No event of default that existed or was continuing on the date of the
commencement of any Payment Blockage Period will be, or can be made, the basis
for the commencement of a subsequent Payment Blockage Period, unless such
default has been cured or waived for a period of not less than 90 consecutive
days subsequent to the commencement of such initial Payment Blockage Period.
Section 10.4 Acceleration of Securities.
If payment of the Notes is accelerated because of an Event of Default,
the Company shall promptly notify holders of Senior Indebtedness of the
acceleration.
Section 10.5 When Distribution Must Be Paid Over.
In the event that, notwithstanding the provisions of Section 10.3, any
payment shall be made to the Trustee (and not paid over to the Holders of the
Notes) which is prohibited by such provisions, then and in such event such
payment shall be paid over and delivered by such Trustee to the trustee or any
other representative of holders of Designated Senior Indebtedness, as their
interest may appear, for application to Designated Senior Indebtedness.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness, and shall not be
liable to any such holders if the Trustee shall pay over or distribute to or on
behalf of Holders or the Company or any other Person money or assets to which
any holders of Senior Indebtedness shall be entitled by virtue of this Article
10, except if such payment is made as a result of the willful misconduct or
gross negligence of the Trustee.
Section 10.6 Notice by the Company.
The Company shall promptly notify the Trustee and the Paying Agent of
any facts known to the Company that would cause a payment of any obligations
with respect to the Notes to violate this Article 10, but failure to give such
notice shall not affect the subordination of the Notes to the Senior
Indebtedness as provided in this Article 10.
Section 10.7 Subrogation.
After all Senior Indebtedness is paid in full in cash and until the
Notes are paid in full, Holders of Notes shall be subrogated (equally and
ratably with all other Indebtedness pari passu with the Notes) to the rights of
holders of Senior Indebtedness to receive distributions applicable to Senior
Indebtedness to the extent that distributions otherwise payable to the Holders
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of Notes have been applied to the payment of Senior Indebtedness. A distribution
made under this Article 10 to holders of Senior Indebtedness that otherwise
would have been made to Holders of Notes is not, as between Holdings and
Holders, a payment by the Company on the Notes.
Section 10.8 Relative Rights.
This Article 10 defines the relative rights of Holders of Notes and
holders of Senior Indebtedness. Nothing in this Indenture shall: (i) impair, as
between the Company and Holders of Notes, the obligation of the Company, which
is absolute and unconditional, to pay principal of and interest on the Notes in
accordance with their terms; (ii) affect the relative rights of Holders of Notes
and creditors of Holdings other than their rights in relation to holders of
Senior Indebtedness; or (iii) prevent the Trustee or any Holder of Notes from
exercising its available remedies upon a Default or Event of Default, subject to
the rights of holders and owners of Senior Indebtedness to receive distributions
and payments otherwise payable to Holders of Notes. If the Company fails because
of this Article 10 to pay principal of or interest on a Note on the due date,
the failure is still a Default or Event of Default.
Section 10.9 Subordination May Not Be Impaired by the Company.
No right of any holder of Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or any Holder or by the failure of the
Company or any Holder to comply with this Indenture.
The Trustee and Holders agree that they will not challenge the
validity, enforceability or perfection of any Senior Indebtedness or the liens,
guarantees and security interests securing the same and that as between the
holders of the Senior Indebtedness on the one hand and the Trustee and Holders
on the other, the terms hereof shall govern even if all or part of the Senior
Indebtedness or such liens and security interests are voided, disallowed,
subordinated, set aside or otherwise invalidated in any judicial proceeding or
otherwise, regardless of the theory upon which such action is premised.
Without in any way limiting the generality of this Section 10.9, the
holders of Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to the Trustee or the Holders, without incurring
responsibility to the Trustee or the Holders and without impairing or releasing
the subordination provided in this Article 10 or the obligations hereunder of
the Holders to the holders of Senior Indebtedness, do any one or more of the
following: (a) change the manner, place or terms of payment or extend the time
of payment of, or renew or alter, Senior Indebtedness, the Senior Credit
Agreement or any instrument evidencing the same or any agreement under which
Senior Indebtedness is outstanding or secured; (b) sell, exchange, release,
foreclose against or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Indebtedness; (c) release any Person liable in any
manner for the collection of Senior Indebtedness; and (d) exercise or refrain
from exercising any rights against the Company, any Subsidiary thereof or any
other Person.
Section 10.10 Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
any Senior Indebtedness, the distribution may be made and the notice given to
their representative.
Upon any payment or distribution of assets of the Company referred to
in this Article 10, the Trustee and the Holders of Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such representative(s) or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of Notes for the purpose of ascertaining the Persons entitled to participate in
such distribution, all holders of the Senior Indebtedness and other Indebtedness
of the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article 10.
Section 10.11 Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless a Responsible Officer of the Trustee shall
have received at its Corporate Trust Office at least three Business Days prior
to the
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date of such payment written notice of facts that would cause the payment of any
obligations with respect to the Notes to violate this Article 10. Only the
Company or a representative may give the notice. Nothing in this Article 10
shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.7.
The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights.
Section 10.12 Authorization to Effect Subordination.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10 and the subordination of the Note Guarantees as provided in Section
11.2, and appoints the Trustee to act as such Holder's attorney-in-fact for any
and all such purposes, including, in the event of any dissolution, winding up,
liquidation or reorganization of Holdings or any Subsidiary (whether in
bankruptcy, insolvency, receivership, reorganization or similar proceedings or
upon an assignment for the benefit of creditors or otherwise), the filing of a
claim for the unpaid balance of its Notes in the form required in those
proceedings. If the Trustee does not file a proper proof of claim or proof of
debt in the form required in any proceeding referred to in Section 6.9 at least
30 days before the expiration of the time to file such claim, the
representatives are hereby authorized to file an appropriate claim for and on
behalf of the Holders of the Notes.
Section 10.13 Amendments.
The provisions of this Article 10 or Section 11.2 (including, without
limitation, any definitions or other sections included by reference or
incorporation or the terms and conditions of the Note Guarantees) shall not be
amended or modified without the written consent of the holders of all Senior
Indebtedness.
ARTICLE XI
NOTE GUARANTEES
Section 11.1 Guarantee.
Subject to this Article 11, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that: (a) the principal
of, premium, if any, Additional Interest, if any, and interest on the Notes will
be promptly paid by the Company in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal of,
premium, if any, Additional Interest, if any, and interest on the Notes, if any,
if lawful, and all other obligations of the Company to the Holders or the
Trustee hereunder or thereunder will be promptly paid by the Company in full or
performed by the Company, all in accordance with the terms hereof and thereof;
and (b) in case of any extension of time of payment or renewal of any Notes or
any of such other obligations, that same will be promptly paid by the Company in
full when due or performed by the Company in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due by the Company of any amount so guaranteed or any
performance so guaranteed which failure continues for three days after demand
therefor is made to the Company for whatever reason, the Guarantors shall be
jointly and severally obligated to pay the same immediately. Each Guarantor
agrees that this is a guarantee of payment and not a guarantee of collection.
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against Holdings, any action to
enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a Guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment (except as specifically
provided in the preceding paragraph),
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filing of claims with a court in the event of insolvency or bankruptcy of
Holdings, any right to require a proceeding first against Holdings, protest,
notice and all demands (except as specifically provided in the preceding
paragraph) whatsoever and covenant that this Note Guarantee shall not be
discharged except by complete performance of the obligations contained in the
Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Note Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6 hereof, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Guarantors
for the purpose of this Note Guarantee, failing payment when due by the Company
which failure continues for three days after demand therefor is made to the
Company. The Guarantors shall have the right to seek contribution from any non-
paying Guarantor so long as the exercise of such right does not impair the
rights of the Holders under the Guarantee.
Section 11.2 Subordination of Note Guarantee.
The Obligations of each Guarantor under its Note Guarantee pursuant to
this Article 11 shall be junior and subordinated to the prior payment in full in
cash of the Senior Indebtedness of such Guarantor on the same basis as the Notes
are junior and subordinated to Senior Indebtedness of Holdings. For the purposes
of the foregoing sentence, the Trustee and the Holders shall have the right to
receive and/or retain payments by any of the Guarantors only at such times as
they may receive and/or retain payments in respect of the Notes pursuant to this
Indenture, including Article 10 hereof.
Section 11.3 Limitation on Guarantor Liability.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Note Guarantee of
such Guarantor not constitute a fraudulent transfer or conveyance for purposes
of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders
and the Guarantors hereby irrevocably agree that the obligations of such
Guarantor under its Note Guarantee and this Article 11 shall be limited to the
maximum amount as will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of such Guarantor that are relevant under such
laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under this Article 11, result
in the obligations of such Guarantor under its Note Guarantee not constituting a
fraudulent transfer or conveyance.
Section 11.4 Execution and Delivery of Note Guarantee.
To evidence the Note Guarantees set forth in Section 11.1, Holdings
hereby agrees to cause a notation of such Note Guarantee substantially in the
form of Exhibit E to be endorsed by manual or facsimile signature by an Officer
of each Guarantor on each Note authenticated and delivered by the Trustee and
that a supplemental indenture shall be executed on behalf of each Guarantor by
its President, Executive or Senior Vice President, Treasurer or one of its Vice
Presidents. Holdings shall cause all future Guarantors to execute a Supplemental
Indenture substantially in the form of Exhibit F (or, in the case of the initial
Guarantors, Exhibit I).
Each Guarantor hereby agrees that its Note Guarantee set forth in
Section 11.1 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on any Supplemental Indenture or on
the Note
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Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Note Guarantee is endorsed, the Note Guarantee shall be valid
and obligatory nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of the Note Guarantee set forth
in this Indenture on behalf of the Guarantors.
In the event that Holdings creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.16 hereof
Holdings shall cause such Subsidiaries to execute supplemental indentures to
this Indenture and Note Guarantees in accordance with Section 4.16 and this
Article 11, to the extent applicable; provided that all Subsidiaries that have
properly been designated as Unrestricted Subsidiaries in accordance with this
Indenture (a) will not be subject to the requirements of Section 4.16 and (b) be
released from all obligations under any Note Guarantee, in each case for so long
as they continue to constitute Unrestricted Subsidiaries.
Section 11.5 Releases Following Sale of Assets or Capital Stock.
The Note Guarantee of a Guarantor will be released:
(a) in connection with any sale or other disposition of all or
substantially all of the assets of such Guarantor (including by way of
merger or consolidation), if Holdings applies the Excess Proceeds of that
sale or other disposition in accordance with the applicable provisions of
this Indenture, including, without limitation, Section 4.10 or Article 10;
or
(b) in connection with any sale of all of the Capital Stock of a
Guarantor to any Person that is not an Affiliate of Holdings, if Holdings
applies the Excess Proceeds of that sale in accordance with the applicable
provisions of this Indenture, including, without limitation, Section 4.10
or Article 10; or
(c) if Holdings designates any Restricted Subsidiary that is a
Guarantor as an Unrestricted Subsidiary in accordance with this Indenture.
The Trustee will provide any written confirmation or evidence of the
termination of such Note Guarantee as reasonably required by the representative.
Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this Indenture
as provided in this Article 11.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA ss. 318(c), the imposed duties shall control.
Section 12.2 Notices.
Any notice or communication by the Company, any Guarantor or the
Trustee to the others is duly given if in writing and delivered in person or
mailed by first class mail (registered or certified, return receipt requested),
or sent by telecopier or overnight courier guaranteeing next day delivery, to
the other's address.
If to the Company and/or any Guarantor:
Triad Hospitals Holdings, Inc.
13455 Noel Road, 20th Floor
Dallas, Texas 75240
Telecopier No.: (972) 663-3945
Attention: Chief Financial Officer
With a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Telecopier No.: (212) 259-6333
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Attention: Morton A. Pierce, Esq.
If to the Trustee:
Citibank N.A.
111 Wall Street, 5th Floor
New York, New York 10043
Telecopier No.: (212) 657-3862
Attention: Global Agency & Trust Services
Re: Triad Hospitals Holdings, Inc.
The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, or by overnight air courier guaranteeing next day delivery to its address
shown on the register kept by the Registrar. Any notice or communication shall
also be so mailed to any Person described in TIA ss. 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
Section 12.3 Communication by Holders of Notes with Other Holders of
Notes.
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA ss.
312(c).
Section 12.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 12.5) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 12.5) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied.
Section 12.5 Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA
ss. 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
Section 12.6 Rules by Trustee and Agents.
<PAGE>
67
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
Section 12.7 No Personal Liability of Directors, Officers, Employees
and Stockholders.
No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or such Guarantor under the Notes, this Indenture, the Note
Guarantees, the Registration Rights Agreement or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of
Notes by accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes.
Section 12.8 Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES.
Section 12.9 No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of Holdings or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 12.10 Successors.
All agreements of the Company in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall bind
its successors.
Section 12.11 Severability.
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 12.12 Counterpart Originals; Acceptance by Trustee.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement. The Trustee hereby accepts the trusts in this Indenture declared or
provided, upon the terms and conditions hereinabove set forth.
Section 12.13 Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
<PAGE>
68
SIGNATURES
Dated as of May 11, 1999
HEALTHTRUST, INC.--THE HOSPITAL
COMPANY
By: /s/ R. Milton Johnson
-------------------------------------
Name: R. Milton Johnson
Title: Vice President
CITIBANK N.A.
as Trustee
By: /s/ Wafaa Orfy
-------------------------------------
Name: Wafaa Orfy
Title: Senior Trust Office
<PAGE>
69
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of May 11, 1999 (this
"First Supplemental Indenture"), is by and among Healthtrust, Inc.--The Hospital
Company, a Delaware corporation (the "Company"), Triad Hospitals, Inc., a
Delaware corporation ("Triad"), and Citibank N.A., as trustee (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company and the Trustee are parties to an indenture dated
as May 11, 1999 (as amended, the "Indenture"), providing for the issuance of an
aggregate principal amount of up to $425,000,000 of 11% Senior Subordinated
Notes due 2009 (the "Notes");
WHEREAS, the Indenture provides that upon the Company transferring the
Pacific Group assets to Triad, the Company will cause Triad to assume, by a
supplemental indenture the Company's obligation for the due and punctual payment
of the principal of, premium, if any, Additional Interest, if any, and interest
on all the Notes and the performance and observance of every covenant of the
Indenture on the part of the Company to be performed or observed; and
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is
authorized to execute and deliver this First Supplemental Indenture.
NOW, THEREFORE, or and in consideration of the foregoing premises, it
is mutually covenanted and agreed, for the equal and proportionate benefit of
all Holders of the Notes, as follows:
1. Capitalized Terms. Capitalized terms used herein without
-----------------
definition shall have the meanings assigned to them in the Indenture.
2. Assumption by Triad. Triad hereby assumes the due and punctual
-------------------
payment of the principal of, premium, if any, Additional Interest, if any, and
interest, on all outstanding Notes issued pursuant to the Indenture and the
performance of every obligation and covenant set forth in the Indenture to be
performed or observed on the part of the Company or Triad. Triad is hereby
substituted for, and may exercise every right and power of, the Company under
the Indenture with the same effect as if Triad had been named as the Company in
the Indenture, and Triad is a successor corporation under the Indenture.
3. Release of the Company. Upon the Pacific Group assets being
----------------------
validly transferred to Triad, the execution and delivery of this First
Supplemental Indenture by the Company, Triad and the Trustee and the execution
and delivery of the Triad Assumption Agreement to the Registration Rights
Agreement by the Company and Triad, the Company will be fully, unconditionally
and irrevocably released from all liabilities, obligations and covenants under
the Indenture and the outstanding Notes.
<PAGE>
70
4. Notation on Notes. Notes authenticated and delivered after the
-----------------
date hereof may bear the following notation, which may be stamped or imprinted
thereon:
"In connection with the transfer by Healthtrust, Inc.--The Hospital Company
(the "Healthtrust") of the Pacific Group assets to Triad Hospitals, Inc.
("Triad") and pursuant to the First Supplemental Indenture dated as of May 11,
1999, Triad has assumed the due and punctual payment of the principal of,
premium, if any, Additional Interest, if any, and interest, on this Note and the
performance of every obligation and covenant of the Indenture on the part of
Healthtrust or Triad to be performed or observed and Healthtrust has been fully,
unconditionally and irrevocably released from all obligations hereunder."
5. Notices. For purposes of Section 12.2 of the Indenture, the
-------
address for notices to Triad shall be:
Triad Hospitals, Inc.
13455 Noel Road, 20th Floor
Dallas, Texas 75240
Attention: General Counsel
6. New York Law to Govern. THE INTERNAL LAW OF THE STATE OF NEW
----------------------
YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS FIRST SUPPLEMENTAL INDENTURE.
7. Counterparts. The parties may sign any number of copies of this
------------
First Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
8. Effect of Headings. The Section headings herein are for
------------------
convenience only and shall not affect the construction hereof.
9. The Trustee. The Trustee shall not be responsible in any manner
-----------
whatsoever for or in respect of the validity or sufficiency of this First
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Company and Triad.
<PAGE>
71
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.
HEALTHTRUST, INC.--THE HOSPITAL COMPANY
By: /s/ R. Milton Johnson
-------------------------------------
Name: R. Milton Johnson
Title: Vice President
TRIAD HOSPITALS, INC.
By: /s/ Donald P. Fay
-------------------------------------
Name: Donald P. Fay
Title: Executive Vice President
CITIBANK N.A.
By: /s/ Wafaa Orfy
-------------------------------------
Name: Wafaa Orfy
Title: Senior Trust Officer
<PAGE>
72
THIS SECOND SUPPLEMENTAL INDENTURE, dated as of May 11, 1999 (this
"Second Supplemental Indenture") is by and among Triad Hospitals, Inc., a
Delaware corporation ("Triad"), Triad Hospitals Holdings, Inc., a Delaware
corporation ("Holdings"), and Citibank N.A., as trustee (the "Trustee").
W I T N E S S E T H
WHEREAS, Healthtrust, Inc.--The Hospital Company, a Delaware
corporation ("Healthtrust"), and the Trustee are parties to an indenture dated
as May 11, 1999 (as amended, the "Indenture"), providing for the issuance of an
aggregate principal amount of up to $425,000,000 of 11% Senior Subordinated
Notes due 2009 (the "Notes");
WHEREAS, pursuant to the First Supplemental Indenture, dated as of May
11, 1999, to the Indenture, Triad assumed all of the obligations of Healthtrust
under the Indenture and the Notes;
WHEREAS, the Indenture provides that upon Triad transferring
substantially all of its assets to Holdings, Triad will cause Holdings to
assume, by a supplemental indenture Triad's obligation for the due and punctual
payment of the principal of, premium, if any, Additional Interest, if any, and
interest on all the Notes and the performance and observance of every covenant
of this Indenture on the part of Triad to be performed or observed; and
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is
authorized to execute and deliver this Second Supplemental Indenture.
NOW, THEREFORE, for and in consideration of the foregoing premises, it
is mutually covenanted and agreed, for the equal and proportionate benefit of
all Holders of the Notes, as follows:
1. Capitalized Terms. Capitalized terms used herein without
-----------------
definition shall have the meanings assigned to them in the Indenture.
2. Assumption by Holdings. Holdings hereby assumes the due and
----------------------
punctual payment of the principal of, premium, if any, Additional Interest, if
any, and interest, on all outstanding Notes issued pursuant to the Indenture and
the performance of every obligation and covenant set forth in the Indenture to
be performed or observed on the part of the Company or Holdings. Holdings is
hereby substituted for, and may exercise every right and power of, the Company
under the Indenture with the same effect as if Holdings had been named as the
Company in the Indenture, and Holdings is a successor corporation under the
Indenture.
3. Release of Triad. Upon the Pacific Group assets being validly
----------------
transferred to Holdings, the execution and delivery of this Second Supplemental
Indenture by Triad, Holdings and the Trustee and the execution and delivery of
the
<PAGE>
73
Holdings Assumption Agreement to the Registration Rights Agreement by Triad and
Holdings, Triad will be fully, unconditionally and irrevocably released from all
liabilities, obligations and covenants under the Indenture and the outstanding
Notes.
4. Notation on Notes. Notes authenticated and delivered after
-----------------
the date hereof may bear the following notation, which may be stamped or
imprinted thereon:
"In connection with the transfer by Triad Hospitals, Inc.
(the "Company") of the Pacific Group assets to Triad Hospitals
Holdings, Inc. ("Holdings") and pursuant to the Second
Supplemental Indenture dated as of May 11, 1999, Holdings has
assumed the due and punctual payment of the principal of,
premium, if any, Additional Interest, if any, and interest, on
this Note and the performance of every obligation and covenant of
the Indenture on the part of the Company or Holdings to be
performed or observed and Triad has been fully, unconditionally
and irrevocably released from all obligations hereunder."
5. Notices. For purposes of Section 12.2 of the Indenture, the
-------
address for notices to Holdings shall be:
Triad Hospitals Holdings, Inc.
13455 Noel Road, 20th Floor
Dallas, Texas 75240
Attention: General Counsel
6. New York Law to Govern. THE INTERNAL LAW OF THE STATE OF NEW
----------------------
YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SECOND SUPPLEMENTAL INDENTURE.
7. Counterparts. The parties may sign any number of copies of
------------
this Second Supplemental Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement.
8. Effect of Headings. The Section headings herein are for
------------------
convenience only and shall not affect the construction hereof.
9. The Trustee. The Trustee shall not be responsible in any
-----------
manner whatsoever for or in respect of the validity, legality or sufficiency of
this Second Supplemental Indenture or for or in respect of the recitals
contained herein, all of which recitals are made solely by the Company and
Holdings.
<PAGE>
74
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.
TRIAD HOSPITALS, INC.
By: /s/ Donald P. Fay
-------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
CITIBANK N.A.
By: /s/ Wafaa Orfy
---------------
Name: Wafaa Orfy
Title: Senior Trust Officer
<PAGE>
75
THIS THIRD SUPPLEMENTAL INDENTURE (this "Third Supplemental
Indenture"), dated as of May 11, 1999, is by and among the parties identified as
a Guarantor on the signature pages hereto (each, a "Guaranteeing Subsidiary" and
collectively, the "Guaranteeing Subsidiaries"), each a subsidiary of Triad
Hospitals Holdings, Inc. (or its permitted successor), a Delaware corporation
("Holdings"), Holdings and Citibank N.A., as trustee under the indenture
referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, Healthtrust, Inc.--The Hospital Company, a Delaware
corporation ("Healthtrust"), has heretofore executed and delivered to the
Trustee the indenture (as amended, the "Indenture"), dated as of May 11, 1999
providing for the issuance of an aggregate principal amount of up to
$425,000,000 of 11% Senior Subordinated Notes due 2009 (the "Notes");
WHEREAS, Triad Hospitals, Inc., a Delaware corporation ("Triad"),
has assumed all of the obligations of Healthtrust under the Indenture and the
Notes pursuant to the First Supplemental Indenture dated as of May 11, 1999;
WHEREAS, Holdings has assumed all of the obligations of Triad
under the Indenture and the Notes pursuant to the Second Supplemental Indenture
dated as of May 11, 1999;
WHEREAS, the Indenture provides that, following the contribution
by Holdings of certain assets to its direct, wholly-owned subsidiary, Triad
Holdings II, LLC and the contribution by Triad Holdings II, LLC of certain of
its assets to its direct, wholly-owned subsidiary, Triad Holdings III, Inc. and
immediately prior to the Spin-Off Distribution, the Guaranteeing Subsidiaries
shall execute and deliver to the Trustee a supplemental indenture pursuant to
which the Guaranteeing Subsidiaries shall unconditionally guarantee all of
Holdings' obligations under the Notes and the Indenture on the terms and
conditions set forth herein (the "Note Guarantee"); and
WHEREAS, pursuant to Section 9.1 of the Indenture, the Trustee is
authorized to execute and deliver this Third Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the Guaranteeing Subsidiaries and the Trustee mutually covenant and agree for
the equal and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without
-----------------
definition shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. Each of the Guaranteeing
----------------------
Subsidiaries hereby agrees as follows:
<PAGE>
76
(a) To jointly and severally Guarantee to each Holder of a
Note authenticated and delivered by the Trustee and to
the Trustee and its successors and assigns,
irrespective of the validity and enforceability of the
Indenture, the Notes or the obligations of Holdings
hereunder or thereunder, that:
(i) the principal of and interest on the Notes will be
promptly paid by the Company in full when due,
whether at maturity, by acceleration, redemption
or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if
lawful, and all other obligations of Holdings to
the Holders or the Trustee hereunder or thereunder
will be promptly paid by the Company in full or
performed by the Company, all in accordance with
the terms hereof and thereof; and
(ii) in case of any extension of time of payment or
renewal of any Notes or any of such other
obligations, that same will be promptly paid by
the Company in full when due or performed by the
Company, in accordance with the terms of the
extension or renewal, whether at stated maturity,
by acceleration or otherwise.
Failing payment when due by the Company of any amount
so guaranteed or any performance so guaranteed which
failure continues for three days after demand therefor
is made to the Company for whatever reason, the
Guarantors shall be jointly and severally obligated to
pay the same immediately.
(b) The obligations hereunder shall be unconditional,
irrespective of the validity, regularity or
enforceability of the Notes or the Indenture, the
absence of any action to enforce the same, any waiver
or consent by any Holder of the Notes with respect to
any provisions hereof or thereof, the recovery of any
judgment against Holdings, any action to enforce the
same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of
a Guarantor.
(c) The following is hereby waived: diligence, presentment,
demand of payment (except as specifically provided in
(a) above), filing of claims with a court in the event
of insolvency or bankruptcy of Holdings, any right to
require a proceeding first against Holdings, protest,
notice and all demands (except as specifically provided
in (a) above) whatsoever.
(d) This Note Guarantee shall not be discharged except (i)
by complete performance of the obligations contained in
the Notes and the Indenture or (ii) as provided in
Section 5 hereof.
<PAGE>
77
(e) If any Holder or the Trustee is required by any court or
otherwise to return to Holdings, the Guarantors, or any
Custodian, Trustee, liquidator or other similar official
acting in relation to either Holdings or the Guarantors, any
amount paid by either to the Trustee or such Holder, this
Note Guarantee, to the extent theretofore discharged, shall
be reinstated in full force and effect.
(f) The Guaranteeing Subsidiaries shall not be entitled to any
right of subrogation in relation to the Holders in respect
of any obligations guaranteed hereby until payment in full
of all obligations guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the Holders
and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided
in Article 6 of the Indenture for the purposes of this Note
Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as provided
in Article 6 of the Indenture, such obligations (whether or
not due and payable) shall forthwith become due and payable
by the Guarantors for the purpose of this Note Guarantee,
failing payment when due by the Company which failure
continues for three days after demand therefor is made to
the Company.
(h) The Guarantors shall have the right to seek contribution
from any non-paying Guarantor so long as the exercise of
such right does not impair the rights of the Holders under
the Note Guarantee.
(i) The obligations hereunder shall be subject to the
subordination provisions set forth in Article 10 of the
Indenture.
3. Execution and Delivery. Each Guaranteeing Subsidiary agrees
----------------------
that the Note Guarantees shall remain in full force and effect notwithstanding
any failure to endorse on each Note a notation of such Note Guarantee.
4. Guaranteeing Subsidiaries May Consolidate, Etc. on Certain
----------------------------------------------------------
Terms. The Guaranteeing Subsidiaries may not sell or otherwise dispose of all or
- -----
substantially all of their assets, or consolidate with or merge with or into
(whether or not such Guarantors are the surviving Person) another corporation,
Person or entity whether or not affiliated with such Guarantors except in
accordance with the provisions set forth in the Indenture, including, without
limitation, Section 5.1 of the Indenture.
5. Releases. The Note Guarantee of the Guaranteeing
--------
Subsidiaries will be released in accordance with the provisions set forth in the
Indenture, including, without limitation, Section 11.5 of the Indenture. The
Trustee will provide any written
<PAGE>
78
confirmation or evidence of the termination of such Note Guarantee as reasonably
required by the Company. Any Guarantor not released from its obligations under
its Note Guarantee shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of any Guarantor under the
Indenture as provided in Article 11 of the Indenture.
6. No Recourse Against Others. No director, officer, employee,
--------------------------
incorporator, stockholder or agent of each Guaranteeing Subsidiary, as such,
shall have any liability for any obligations of Holdings or any Guaranteeing
Subsidiaries under the Notes, the Indenture, any Note Guarantees or this
Supplemental Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder of Notes by accepting a Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws.
7. New York Law to Govern. THE INTERNAL LAW OF THE STATE OF NEW
----------------------
YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE.
8. Counterparts. The parties may sign any number of copies of
------------
this Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
9. Effect of Headings. The Section headings herein are for
------------------
convenience only and shall not affect the construction hereof.
10. The Trustee. The Trustee shall not be responsible in any
manner whatsoever for or in respect of the validity, legality or sufficiency of
this Supplemental Indenture or for or in respect of the recitals contained
herein, all of which recitals are made solely by the Guaranteeing Subsidiary and
Holdings.
<PAGE>
79
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.
Dated: May 11, 1999
ALICE HOSPITAL, LLC, as guarantor
By: APS MEDICAL, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
ALICE SURGEONS, LLC, as guarantor
By: APS MEDICAL, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
THE SURGICAL HOSPITAL OF
AMARILLO, LTD., as guarantor
By: GENERAL PARTNER:
SURGICARE OF AMARILLO, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
APS MEDICAL, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
80
ARIZONA ASC MANAGEMENT, INC.,
as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
ARIZONA MEDCO, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
BEAUCO, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
BEAUMONT MEDICAL CENTER, L.P.,
as guarantor
By: GENERAL PARTNER:
BEAUMONT REGIONAL, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
BEAUMONT REGIONAL, LLC, as guarantor
By: BEAUCO, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
81
BRAZOS MEDCO, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
BRAZOS REGIONAL INTEGRATED DELIVERY
GROUP, as guarantor
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
BRAZOS VALLEY OF TEXAS, L.P., as
guarantor
By: GENERAL PARTNER:
BRAZOS VALLEY SURGICAL CENTER, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
BRAZOS VALLEY SURGICAL CENTER, LLC,
as guarantor
By: BRAZOS MEDCO, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
BROWNWOOD HOSPITAL, L.P., as guarantor
By: GENERAL PARTNER:
BROWNWOOD MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
82
BROWNWOOD MEDICAL CENTER, LLC,
as guarantor
By: SOUTHERN TEXAS MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
BVSC, LLC, as guarantor
By: BRAZOS MEDCO, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
CARLSBAD MEDICAL CENTER, LLC,
as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
CLAREMORE PHYSICIANS, LLC, as guarantor
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
CLAREMORE REGIONAL HOSPITAL, LLC,
as guarantor
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
83
CLINICO, LLC, as guarantor
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
COLLEGE STATION DIAGNOSTIC CLINIC,
as guarantor
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
COLLEGE STATION HOSPITAL, L.P.,
as guarantor
By: GENERAL PARTNER:
COLLEGE STATION MEDICAL CENTER,
LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
COLLEGE STATION MEDICAL CENTER, LLC,
as guarantor
By: COLLEGE STATION MERGER, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
COLLEGE STATION MERGER, LLC,
as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
84
CORONADO HOSPITAL, LLC, as guarantor
By: CORONADO MEDICAL, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
CORONADO MEDICAL, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
CRESTWOOD HEALTHCARE, L.P., as guarantor
By: GENERAL PARTNER:
CRESTWOOD HOSPITAL & NURSING HOME,
INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
CRESTWOOD HOSPITAL & NURSING HOME, INC.,
as guarantor
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
CRESTWOOD HOSPITAL HOLDINGS, INC.,
as guarantor
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
85
CSDS, LLC, as guarantor
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
CSMC, LLC, as guarantor
By: COLLEGE STATION MERGER, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
DALLAS PHY SERVICE, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
DALLAS PHYSICIAN PRACTICE, L.P.,
as guarantor
By: GENERAL PARTNER:
DFW PHYSERV, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
DAY SURGERY, INC., as guarantor
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
86
DEQUEEN HEALTH SERVICES, INC.,
as guarantor
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
DEQUEEN REGIONAL MEDICAL CENTER, LLC,
as guarantor
By: DEQUEEN HEALTH SERVICES, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
DETAR HOSPITAL, LLC, as guarantor
By: VHC MEDICAL, LLC
By: /s/ Donald P. Fay
----------------
Name: Donald P. Fay
Title: Executive Vice President
DFW PHYSERV, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
----------------
Name: Donald P. Fay
Title: Executive Vice President
DOCTORS HOSPITAL OF LAREDO, LIMITED
PARTNERSHIP, as guarantor
By: GENERAL PARTNER:
LAREDO INTEREST, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
87
DOCTORS MEDICAL CENTER, LLC,
as guarantor
By: MID-PLAINS, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
DOCTORS OF LAREDO, LLC, as guarantor
By: MID-PLAINS, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
DOUGLAS MEDICAL CENTER, LLC,
as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
E.D. CLINICS, LLC, as guarantor
By: ARIZONA MEDCO, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
EL DORADO MEDICAL CENTER, LLC,
as guarantor
By: ARIZONA MEDCO, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
88
EYE CARE SURGICARE, LTD., as guarantor
By: GENERAL PARTNER:
SURGICARE OF INDEPENDENCE, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
EYE INSTITUTE OF SOUTHERN ARIZONA, LLC,
as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
GALLAGHER PARK SURGICENTER, LTD.,
as guarantor
By: GENERAL PARTNER:
SURGICARE OF SHERMAN, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
GCMC, LLC, as guarantor
By: WHARTON MEDCO, LLC
By /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
GH TEXAS, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
89
GHC HOSPITAL, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
GHC HUNTINGTON BEACH, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
GULF COAST HOSPITAL, L.P., as guarantor
By: GENERAL PARTNER:
GULF COAST MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
GULF COAST MEDICAL CENTER, LLC,
as guarantor
By: WHARTON MEDCO, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
HDP DEQUEEN, LLC, as guarantor
By: TRIAD HOLDINGS II, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
90
HDP WOODLAND HEIGHTS, L.P., as guarantor
By: GENERAL PARTNER:
HDP WOODLAND PROPERTY, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
HDP WOODLAND PROPERTY, LLC,
as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
HDPWH, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
HEALDSBURG OF CALIFORNIA, LLC,
as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
HOBBS MEDCO, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
91
HOBBS PHYSICIAN PRACTICE, LLC,
as guarantor
By: HOBBS MEDCO, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
HOSPITAL OF BEAUMONT, LLC, as guarantor
By: BEAUCO, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
HUNTINGTON ASSOCIATES, as guarantor
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
HUNTINGTON BEACH AMDECO, LLC,
as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
HUNTINGTON INTERCOMMUNITY HOSPITAL,
as guarantor
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
92
INDEPENDENCE REGIONAL HEALTH CENTER,
LLC, as guarantor
By: TRIAD HOLDINGS II, LLC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
KANSAS CITY SURGICENTER, LTD.,
as guarantor
By: GENERAL PARTNER:
DAY SURGERY, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
KENSINGCARE, LLC, as guarantor
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
LAKE AREA SURGICARE,
A PARTNERSHIP IN COMMENDUM,
A LOUISIANA LIMITED PARTNERSHIP,
as guarantor
By: GENERAL PARTNER:
SURGICARE OUTPATIENT CENTER
OF LAKE CHARLES, INC.
By /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
93
LAREDO HOSPITAL, L.P., as guarantor
By: GENERAL PARTNER:
DOCTORS OF LAREDO, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
LAREDO INTEREST, LLC, as guarantor
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
LEA REGIONAL HOSPITAL, LLC, as guarantor
By: HOBBS MEDCO, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
LONGVIEW MEDICAL CENTER, L.P.,
as guarantor
By: GENERAL PARTNER:
REGIONAL HOSPITAL OF LONGVIEW, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
LONGVIEW MERGER, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
94
LRH, LLC, as guarantor
By: LONGVIEW MERGER, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
LS PSYCHIATRIC, LLC, as guarantor
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
MCI PANHANDLE SURGICAL, L.P.,
as guarantor
By: GENERAL PARTNER:
PANHANDLE PROPERTY, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
MEDICAL CENTER AT TERRELL, LLC,
as guarantor
By: TIRAD-MEDICAL CENTER AT
TERRELL SUBSIDIARY, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
MEDICAL CENTER OF BROWNWOOD, LLC,
as guarantor
By: SOUTHERN TEXAS MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
95
MEDICAL CENTER OF SHERMAN, LLC,
as guarantor
By: TRIAD-MEDICAL CENTER OF
SHERMAN SUBSIDARY, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
MEDICAL HOLDINGS, INC., as guarantor
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
MEDICAL MANAGEMENT, INC., as guarantor
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
MEDICAL PARK HOSPITAL, LLC, as guarantor
By: TRIAD HOLDINGS II, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
MEDICAL PARK MSO, LLC, as guarantor
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
MEMORIAL HOSPITAL, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
96
MID-PLAINS, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
MIDWEST PSYCHIATRIC CENTER, INC.,
as guarantor
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
MISSION BAY MEMORIAL HOSPITAL, LLC,
as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
MISSOURI HEALTHSERV, LLC, as guarantor
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
NAVARRO HOSPITAL, L.P., as guarantor
By: GENERAL PARTNER:
NAVARRO REGIONAL, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
97
NAVARRO REGIONAL, LLC, as guarantor
By: TRIAD-NAVARRO REGIONAL HOSPITAL
SUBSIDIARY, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
NORTH ANAHEIM SURGICENTER, LTD.,
as guarantor
By: GENERAL PARTNER:
SURGICARE OF NORTH ANAHEIM, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
NORTHWEST HOSPITAL, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
NRH, LLC, as guarantor
By: TRIAD-NAVARRO REGIONAL
HOSPITAL SUBSIDIARY, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
ODESSA, LLC, as guarantor
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
98
OREGON HEALTHCORP, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
OSBORN AMBULATORY SURGICAL CENTER, LTD.,
as guarantor
By: GENERAL PARTNER:
SAMARITAN SURGICENTERS OF ARIZONA,
LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
OVERLAND PARK REGIONAL MEDICAL CENTER,
LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
PACIFIC EAST DIVISION OFFICE, L.P.,
` as guarantor
By: GENERAL PARTNER:
TRIAD TEXAS, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
PACIFIC GROUP ASC DIVISION, INC.,
as guarantor
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
99
PACIFIC PHYSICIANS SERVICES, LLC,
as guarantor
By: SPROCKET MEDICAL MANAGEMENT, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
PACIFIC WEST DIVISION OFFICE, LLC,
as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
PALM DRIVE HOSPITAL, L.P., as guarantor
By: GENERAL PARTNER:
PALM DRIVE MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
PALM DRIVE MEDICAL CENTER, LLC,
as guarantor
By: SEBASTOPOL, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
PANHANDLE MEDICAL CENTER, LLC,
as guarantor
TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
100
PANHANDLE SURGICAL HOSPITAL, L.P.,
as guarantor
By: GENERAL PARTNER:
PANHANDLE MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
PAMPA HOSPITAL, L.P., as guarantor
By: GENERAL PARTNER:
PAMPA MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
PAMPA MEDICAL CENTER, LLC, as guarantor
By: CORONADO MEDICAL, LLC
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
PANHANDLE PROPERTY, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
PANHANDLE, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
-----------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
101
PDMC, LLC, as guarantor
By: SEBASTOPOL, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
PECOS VALLEY OF NEW MEXICO, LLC,
as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
PHOENIX AMDECO, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
PHOENIX SURGICAL, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
PHYSICIANS AND SURGEONS
HOSPITAL OF ALICE, L.P., as guarantor
By: GENERAL PARTNER:
ALICE HOSPITAL, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
102
PHYS-MED, LLC, as guarantor
By: TRIAD HOLDINGS II, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
PINEY WOODS HEALTHCARE
SYSTEM, L.P., as guarantor
By: GENERAL PARTNER:
WOODLAND HEIGHTS
MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
PRIMARY MEDICAL, LLC, as guarantor
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
PSYCHIATRIC SERVICES OF
PARADISE VALLEY, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
REGIONAL EMPLOYEE ASSISTANCE
PROGRAM, INC., as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
103
REGIONAL HOSPITAL OF
LONGVIEW, LLC, as guarantor
By: LONGVIEW MERGER, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SACMC, LLC, as guarantor
By: SAN ANGELO MEDICAL, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SAMARITAN SURGICENTERS OF
ARIZONA, LLC, as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SAN ANGELO COMMUNITY
MEDICAL CENTER, LLC, as guarantor
By: SAN ANGELO MEDICAL, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SAN ANGELO HOSPITAL, L.P., as guarantor
By: GENERAL PARTNER:
SAN ANGELO COMMUNITY
MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
104
SAN ANGELO MEDICAL, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SAN DIEGO HOSPITAL, L.P., as guarantor
By: GENERAL PARTNER:
MISSION BAY MEMORIAL
HOSPITAL, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SAN LEANDRO HOSPITAL, L.P., as guarantor
By: GENERAL PARTNER:
SAN LEANDRO MEDICAL
CENTER, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SAN LEANDRO MEDICAL
CENTER, LLC, as guarantor
By: SAN LEANDRO, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SAN LEANDRO, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
105
SDH, LLC, as guarantor
By: SILSBEE TEXAS, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SDH LP, LLC, as guarantor
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SEBASTOPOL, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SHERMAN HOSPITAL, L.P., as guarantor
By: GENERAL PARTNER:
MEDICAL CENTER OF SHERMAN, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SHERMAN MEDICAL CENTER, LLC,
as guarantor
By: TRIAD-MEDICAL CENTER OF
SHERMAN SUBSIDIARY, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
106
SILSBEE DOCTORS HOSPITAL, L.P.,
as guarantor
By: GENERAL PARTNER:
SILSBEE MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SILSBEE MEDICAL CENTER, LLC,
as guarantor
By: SILSBEE TEXAS, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SILSBEE TEXAS, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SLH, LLC, as guarantor
By: SAN LEANDRO, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SOUTH ALABAMA MANAGED CARE
CONTRACTING, INC., as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
107
SOUTH ALABAMA MEDICAL
MANAGEMENT SERVICES, INC., as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SOUTH ALABAMA PHYSICIANS
SERVICE, INC., as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SOUTH ARKANSAS CLINIC, LLC, as guarantor
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SOUTHERN TEXAS MEDICAL
CENTER, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SPROCKET MEDICAL
MANAGEMENT, INC., as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
108
SURGICAL CENTER OF AMARILLO, LLC,
as guarantor
TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICAL CENTER OF SOUTHEAST
TEXAS, LTD., as guarantor
By: GENERAL PARTNER:
SURGICARE OF SOUTHEAST
TEXAS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICARE OF AMARILLO, INC.,
as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICARE OF INDEPENDENCE, INC.,
as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICARE OF NORTH
ANAHEIM, INC., as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICARE OF SAN LEANDRO, INC.,
as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
109
SURGICARE OF SHERMAN, INC., as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICARE OF SOUTHEAST
TEXAS, INC., as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICARE OF VICTORIA, INC.,
as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICARE OF VICTORIA, LTD.,
as guarantor
By: GENERAL PARTNER:
SURGICARE OF VICTORIA, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICARE OUTPATIENT CENTER OF
LAKE CHARLES, INC., as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICENTER OF JOHNSON
COUNTY, INC., as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
110
SURGICENTER OF JOHNSON
COUNTY, LTD., as guarantor
By: GENERAL PARTNER:
SURGICARE OF JOHNSON
COUNTY, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICENTERS OF AMERICA, L.P.,
as guarantor
By: GENERAL PARTNER:
SAMARITAN SURGICENTERS OF
ARIZONA, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICENTERS OF AMERICA, INC.,
as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
TERRELL HOSPITAL, L.P., as guarantor
By: GENERAL PARTNER:
TERRELL MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
111
TERRELL MEDICAL CENTER, LLC,
as guarantor
By: TRIAD-MEDICAL CENTER AT
TERRELL SUBSIDIARY, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD - ARIZONA, INC., as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD - EL DORADO, INC., as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD - SOUTH TULSA HOSPITAL
COMPANY, INC., as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD CSGP, LLC, as guarantor
By: TRIAD HOLDINGS II, LLC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD CSLP, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
112
TRIAD CORPORATE SERVICES,
LIMITED PARTNERSHIP, as guarantor
By: GENERAL PARTNER:
TRIAD CSGP, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD HEALTHCARE SYSTEM OF
PHOENIX, L.P., as guarantor
By: GENERAL PARTNER:
TRIAD OF PHOENIX, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD HOLDINGS II, LLC, as guarantor
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD HOLDINGS III, INC., as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD OF ARIZONA (L.P.), INC.,
as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
113
TRIAD OF PHOENIX, INC., as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD RC, INC., as guarantor
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD TEXAS, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD-MEDICAL CENTER AT
TERRELL SUBSIDIARY, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD-MEDICAL CENTER OF
SHERMAN SUBSIDIARY, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
114
TRIAD-NAVARRO REGIONAL
HOSPITAL SUBSIDIARY, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
TROSCO, LLC, as guarantor
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
TRUFOR PHARMACY, LLC, as guarantor
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
VFARC, LLC, as guarantor
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
VHC HOLDINGS, LLC, as guarantor
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
115
VHC MEDICAL, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
VICTORIA HOSPITAL, LLC, as guarantor
By: VHC MEDICAL, LLC
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
VICTORIA MEDICAL FOUNDATION,
as guarantor
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
VICTORIA OF TEXAS, L.P., as guarantor
By: GENERAL PARTNER:
DETAR HOSPITAL, LLC
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
VMF MEDICAL, LLC, as guarantor
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
116
WAGONER COMMUNITY
HOSPITAL, LLC, as guarantor
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
WAMC, LLC, as guarantor
By: WEST ANAHEIM, LLC
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
WEST ANAHEIM HOSPITAL, L.P., as guarantor
By: GENERAL PARTNER:
WEST ANAHEIM MEDICAL
CENTER, LLC
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
WEST ANAHEIM MEDICAL
CENTER, LLC, as guarantor
By: WEST ANAHEIM, LLC
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
WEST ANAHEIM, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
117
WESTMED, as guarantor
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
WHARTON MEDCO, LLC, as guarantor
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
WHMC, LLC, as guarantor
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
WILLAMETTE VALLEY CLINICS, LLC,
as guarantor
By: OREGON HEALTHCORP, LLC
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
WILLAMETTE VALLEY MEDICAL
CENTER, LLC, as guarantor
By: OREGON HEALTHCORP, LLC
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
WM MEDICAL, LLC, as guarantor
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
118
WOMEN & CHILDREN'S
HOSPITAL, LLC, as guarantor
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
WOODLAND HEIGHTS MEDICAL
CENTER, LLC, as guarantor
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
CITIBANK N.A., as Trustee
By: /s/ Wafaa Orfy
-----------------
Name: Wafaa Orfy
Title: Senior Trust Officer
<PAGE>
TRIAD
EXHIBIT 4.2(b)
FORM OF NOTE
(Face of Note)
CUSIP: 89579VAA3
11% Senior Subordinated Notes due 2009
No.: $
Healthtrust, Inc.--The Hospital Company
promises to pay to
or registered assigns,
the principal sum of
Dollars on May 15, 2009.
Interest Payment Dates: May 15 and November 15, commencing November 15, 1999.
Record Dates: May 1 and November 1.
Dated:
HEALTHTRUST, INC.--THE HOSPITAL
COMPANY
By:_____________________________
Name:____________________________________________
Title:___________________________________________
This is one of the
Notes referred to in the
within-mentioned Indenture:
CITIBANK N.A.,
as Trustee
By:______________________________________________
Authorized Signatory
<PAGE>
(Back of Note)
11% Senior Subordinated Notes due 2009
[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]
Capitalized terms used herein shall have the meanings assigned to them in
the
Indenture referred to below unless otherwise indicated.
1. Obligor. Healthtrust, Inc.--The Hospital Company, a Delaware
corporation ("Healthtrust"), is the initial obligor under this Note. Upon the
execution and delivery of the First Supplemental Indenture by the parties
thereto, Triad Hospitals, Inc., a Delaware corporation ("Triad"), will become
the obligor under this Note. Upon the Pacific Group assets being validly
transferred to Triad, the execution and delivery of the First Supplemental
Indenture by Healthtrust, Triad and the Trustee and the execution and delivery
of the Triad Assumption Agreement to the Registration Rights Agreement by
Healthtrust and Triad, Healthtrust will be fully, unconditionally and
irrevocably released from all obligations hereunder. Upon the execution and
delivery of the Second Supplemental Indenture by the parties thereto, Triad
Hospitals Holdings, Inc., a Delaware corporation ("Holdings"), will become the
obligor under this Note. Upon the Pacific Group assets being validly transferred
to Holdings, the execution and delivery of the Second Supplemental Indenture by
Triad, Holdings and the Trustee and the execution and delivery of the Holdings
Assumption Agreement to the Registration Rights Agreement by Triad, and
Holdings, Triad will be fully, unconditionally and irrevocably released from all
obligations hereunder. For purposes of this Note, the "Company" shall refer to
any of Healthtrust or Triad or Holdings, depending on which such company is then
the obligor underthis Note.
2. Interest. The Company promises to pay interest on the principal amount
of this Note at 11% per annum from May 11, 1999 until maturity and shall pay the
Additional Interest payable pursuant to Section 2(c) of the Registration Rights
Agreement referred to below. Holdings will pay interest and Additional Interest
semi-annually on May 15 and November 15 of each year, or if any such day is not
a Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"). Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of
original issuance; provided that if there is no existing Default in the payment
of interest, and if this Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that
the first Interest Payment Date shall be November 15, 1999. The Company shall
pay interest (including post-petition interest in any proceeding under any
Bankruptcy Law) on overdue principal and premium, if any, from time to time
<PAGE>
on demand to the extent lawful at a rate that is 1% per annum in excess of the
rate then in effect; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Additional Interest (without regard to any applicable grace periods) from time
to time on demand at the same rate to the extent lawful. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
3. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) and Additional Interest to the Persons who are
registered Holders of Notes at the close of business on the May 1 or November 1
next preceding the Interest Payment Date, even if such Notes are canceled after
such record date and on or before such Interest Payment Date, except as provided
in Section 2.12 of the Indenture with respect to defaulted interest. Principal,
premium, if any, and interest and Additional Interest on the Notes will be
payable at the office or agency of the Company maintained for such purpose or,
at the option of the Company, payment of interest and Additional Interest may be
made by check mailed to the Holders of the Notes at their respective addresses
set forth in the register of Holders of Notes.
Until otherwise designated by the Company, the Company's office or agency in New
York will be the office of the Trustee maintained for such purpose. The Notes
will be issued in denominations of $1,000 and integral multiples thereof. Such
payment shall be in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts.
4. Paying Agent and Registrar. Initially, Citibank N.A., the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.
5. Indenture and Subordination. The Company issued the Notes under an
Indenture dated as of May 11, 1999 (as amended, the "Indenture") between the
Company and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code (S)(S) 77aaa-77bbbb) (the
"TIA"). The Notes are subject to all such terms, and Holders are
referred to the Indenture and the TIA for a statement of such terms. To the
extent any provision of this Note conflicts with the express provisions of the
Indenture, the provisions of the Indenture shall govern and be controlling. The
payment of the Notes will, to the extent set forth in the Indenture, be
subordinated in right of payment to the prior payment in full in cash of all
Senior Indebtedness.
6. Optional Redemption. Except as set forth in the following paragraph,
Holdings shall not have the option to redeem prior to May 15, 2004. On or after
May 15, 2004, the Notes will be subject to redemption at any time at the option
of Holdings, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest, if any, and Additional
Interest thereon, if any, to the applicable redemption date, if redeemed during
the twelve-month period beginning May 15 of the years indicated below (subject
to the right of Holders of record on relevant record dates to receive interest
due on an Interest Payment Date):
<PAGE>
Year Percentage
2004 105.500%
2005 103.667%
2006 101.883%
2007 and thereafter 100.000%
Notwithstanding the foregoing, at any time on or prior to May 15, 2002,
Holdings may on any one or more occasions redeem up to 35% of the aggregate
principal amount of Notes originally issued under the Indenture within 60 days
of one or more Qualified Equity Offerings with the net proceeds of such offering
at a redemption price of 111% of the principal amount thereof, plus accrued and
unpaid interest and Additional Interest thereon, if any, to the redemption date
(subject to the right of Holders of record on relevant record dates to receive
interest due on an Interest Payment Date); provided that, after giving effect to
any such redemption, at least 65% of the original aggregate principal amount of
the Notes plus 65% of the aggregate principal amount of any Notes issued
pursuant to a supplemental indenture remains outstanding (excluding Notes held
by Holdings and its Subsidiaries).
7. Mandatory Redemption. (a) Except as set forth in clause (b) and
Paragraph 8, the Company shall not be required to make mandatory redemption
payments with respect to the Notes.
(b) The Notes will be redeemed by the Company, in whole but not in part, on
the date that is five Business Days following the date the Notes are originally
issued, at a redemption price of 101% of the principal amount thereof, plus
accrued and unpaid interest to the redemption date, if (i) the Spin-Off
Transactions have not been consummated and (ii) Holdings has not executed and
delivered a supplemental indenture assuming all the debt issued under the
Indenture, in each case, by the date that is five Business Days following the
date the Notes are originally issued. Notice of the mandatory redemption will be
mailed to each Holder of the Notes not less than one Business Day prior to the
redemption date. Such notice shall identify the Notes to be redeemed (including
"CUSIP" number(s)) and state (i) the redemption date, (ii) the redemption price,
(iii) the name and address of the Paying Agent, (iv) that Notes called for
redemption must be surrendered to the Paying Agent to collect the redemption
price, (v) that, unless the Company defaults in making such redemption payment,
interest on the Notes shall cease to accrue on and after the redemption date and
(vi) the paragraph of the Notes pursuant to which the Notes are to be redeemed.
8. Repurchase at Option of Holder. (a) If a Change in Control shall occur
at any time, then each Holder of Notes will have the right to require that
Holdings purchase such Holder's Notes, in whole or in part in integral multiples
of $1,000, at a purchase price (the "Change in Control Purchase Price") in cash
in an amount ("Change in Control Payment") equal to 101% of the principal amount
thereof, plus accrued interest, if any, to the date of
<PAGE>
purchase (the "Change in Control Purchase Date"), pursuant to the offer
described below (the "Change in Control Offer") and the other procedures set
forth below. Within 30 days following any Change in Control, Holdings shall
notify the Trustee thereof and give written notice of such Change in Control to
each Holder of Notes by first-class mail, postage prepaid, at the address of
such Holder appearing in the security register, describing the transaction or
transactions that constitute the Change in Control and stating, among other
things, (i) the Change in Control Purchase Price and the Change in Control
Purchase Date, which shall be a Business Day no earlier than 30 days nor more
than 60 days from the case such notice is mailed, or such later date as is
necessary to comply with requirements under the Exchange Act or any applicable
securities laws or regulations; (ii) that any Note not tendered will continue to
accrue interest; (iii) that, unless Holdings defaults in the payment of the
Change in Control Purchase Price, any Notes accepted for payment pursuant to the
Change in Control Offer shall cease to accrue interest after the Change in
Control Purchase Date; and (iv) certain procedures that a Holder of Notes must
follow to accept a Change in Control Offer or to withdraw such acceptance.
(b) When the aggregate amount of Excess Proceeds exceeds $10,000,000,
Holdings shall, within 30 Business Days, make an offer to purchase (an "Excess
Proceeds Offer") from all Holders of Notes, on a pro rata basis, in accordance
with the procedures set forth below, the maximum principal amount (expressed as
an integral multiple of $1,000) of Notes that may be purchased with the Excess
Proceeds. The offer price as to each Note shall be payable in cash in an amount
equal to 100% of the principal amount of such Note plus accrued interest, if
any, to the date such Excess Proceeds Offer is consummated ("Excess Proceeds
Payment"). To the extent that the aggregate principal amount of Notes tendered
pursuant to an Excess Proceeds Offer is less than the Excess Proceeds, Holdings
may use such deficiency for any lawful purposes not otherwise prohibited by the
Indenture. If the aggregate principal amount of Notes validly tendered and not
withdrawn by Holders thereof exceeds the Excess Proceeds, Notes to be purchased
will be selected on a pro rata basis. Notwithstanding the foregoing, if Holdings
is required to commence an Excess Proceeds Offer at any time when securities of
Holdings ranking pari passu in right of payment with the Notes are outstanding
and the terms of such securities provide that a similar offer must be made with
respect to such other securities, then the Excess Proceeds Offer for the Notes
shall be made concurrently with such other offers and securities of each issue
will be accepted on a pro rata basis in proportion to the aggregate principal
amount of securities of each issue which the holders thereof elect to have
purchased. Any Excess Proceeds Offer will be made only to the extent permitted
under, and subject to prior compliance with, the terms of agreements governing
Senior Indebtedness. Upon completion of such Excess Proceeds Offer, the amount
of Excess Proceeds shall be reset to zero.
Upon the commencement of an Excess Proceeds Offer, Holdings shall send, by
first class mail, a notice to the Trustee and to each Holder at its registered
address. The notice shall contain all instructions and materials necessary to
enable such Holder to tender Notes pursuant to the Excess Proceeds Offer. Any
Excess Proceeds Offer shall be made to all Holders.
<PAGE>
The notice, which shall govern the terms of the Excess Proceeds Offer, shall
state: (i) that the Excess Proceeds Offer is being made pursuant to Section 4.10
of the Indenture; (ii) the Excess Proceeds Offer amount, the Excess Proceeds
Payment and the date on which Notes tendered and accepted for payment shall be
purchased, which date shall be at least 30 days and no later than 60 days from
the date such notice is mailed (the "Excess Proceeds Payment Date"); (iii) that
any Note not tendered or accepted for payment shall continue to accrete or
accrue interest; (iv) that, unless Holdings defaults in making such payment, any
Note accepted for payment pursuant to the Excess Proceeds Offer shall cease to
accrete or accrue interest after the Excess Proceeds Payment Date; (v) that
Holders electing to have a Note purchased pursuant to the Excess Proceeds Offer
may only elect to have all of such Note purchased and may not elect to have only
a portion of such Note purchased; (vi) that Holders electing to have a Note
purchased pursuant to any Excess Proceeds Offer shall be required to surrender
the Note, with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, or transfer by book-entry transfer, to Holdings,
a depositary, if appointed by Holdings, or the Paying Agent at the address
specified in the notice at least three days before the Excess Proceeds Payment
Date; (vii) that Holders shall be entitled to withdraw their election if
Holdings, the depositary or the Paying Agent, as the case may be, receives, not
later than the Excess Proceeds Payment Date, a notice setting forth the name of
the Holder, the principal amount of the Note the Holder delivered for purchase
and a statement that such Holder is withdrawing his election to have such Note
purchased; (viii) that, if the aggregate principal amount of Notes surrendered
by Holders exceeds the Excess Proceeds Offer amount, Holdings shall select the
Notes to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by Holdings so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and (ix) that Holders whose
Notes were purchased only in part shall be issued new Notes equal in principal
amount to the unpurchased portion of the Notes surrendered (or transferred by
book-entry transfer).
9. Notice of Optional Redemption. Notice of redemption pursuant to
Paragraph 6 of this Note will be mailed by first class mail at least 30 days but
not more than 60 days before the redemption date to each Holder of Notes to be
redeemed at its registered address. Notices of redemption may not be
conditional. Notes in denominations larger than $1,000 may be redeemed in part.
If any Note is to be redeemed in part only, the notice of redemption that
relates to such Note shall state the portion of the principal amount thereof to
be redeemed. A new Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. On and after the redemption date interest ceases to accrue on
Notes or portions thereof called for redemption.
10. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The
<PAGE>
Company or the Registrar is not required to transfer or exchange any Note
selected for redemption. Also, the Company or the Registrar is not required to
transfer or exchange any Notes for a period of 15 days before the mailing of a
notice of redemption of Notes to be redeemed.
11. Persons Deemed Owners. The registered Holder of a Note may be treated
as its owner for all purposes.
12. Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture, the Notes or the Note Guarantees may be amended or supplemented with
the consent of the Holders of at least a majority in principal amount of the
Notes then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Notes) and
any existing default or compliance with any provision of the Indenture or the
Notes may be waived with the consent of the Holders of a majority in principal
amount of the then outstanding Notes (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or exchange offer
for, Notes). Without the consent of any Holder of Notes, the Company and the
Trustee may amend or supplement the Indenture or the Notes: (i) to evidence the
succession of another Person to the Company, a Guarantor or any other obligor on
the Notes, and the assumption by any such successor of the covenants of the
Company or such obligor or Guarantor in the Indenture and in the Notes and in
any Note Guarantee in accordance with Article 5 of the Indenture; (ii) to add to
the covenants of the Company, any Guarantor or any other obligor upon the Notes
for the benefit of the Holders of the Notes or to surrender any right or power
conferred upon the Company or any other obligor upon the Notes, as applicable,
in the Indenture, in the Notes or in any Note Guarantee; (iii) to cure any
ambiguity, or to correct or supplement any provision in the Indenture, the Notes
or any Note Guarantee which may be defective or inconsistent with any other
provision in the Indenture, the Notes or any Note Guarantee or make any other
provisions with respect to matters or questions arising under the Indenture, the
Notes or any Note Guarantee; provided that, in each case, such provisions shall
not adversely affect the interest of the Holders of the Notes; (iv) to comply
with the requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the TIA; (v) to add a Guarantor under the
Indenture; (vi) to evidence and provide the acceptance of the appointment of a
successor Trustee under the Indenture; (vii) to mortgage, pledge, hypothecate or
grant a security interest in favor of the Trustee for the benefit of the Holders
of the Notes as additional security for the payment and performance of the
Company's and any Guarantor's obligations under the Indenture, in any property,
or assets, including any of which are required to be mortgaged, pledged or
hypothecated, or in which a security is required to be granted to the Trustee
pursuant to the Indenture or otherwise; or (viii) to execute the First
Supplemental Indenture, the Second Supplemental Indenture and the Third
Supplemental Indenture.
13. Defaults and Remedies. Each of the following is an "Event of Default":
(i) default in the payment of any interest on any Note when it becomes due and
payable and
<PAGE>
continuance of such default for a period of 30 days; (ii) default in the payment
of the principal of, premium, if any, or Additional Interest, if any, on any
Note at its Maturity (upon acceleration, optional redemption, mandatory
redemption, required purchase or otherwise); (iii) default in the performance,
or breach, of the provisions described in Section 5.1 of the Indenture, the
failure to make or consummate a Change in Control Offer in accordance with the
provisions of Section 4.15 of the Indenture or the failure to make or consummate
an Excess Proceeds Offer in accordance with the provisions of Section 4.10 of
the Indenture; (iv) default in the performance, or breach, of any covenant or
warranty of Holdings or any Guarantor contained in the Indenture or any Note
Guarantee (other than a default in the performance, or breach, of a covenant or
warranty which is specifically dealt with in clauses (i), (ii) or (iii) above)
and continuance of such default or breach for a period of 30 days after written
notice shall have been given to Holdings by the Trustee or to Holdings and the
Trustee by the Holders of at least 25% in aggregate principal amount of the
Notes then outstanding; (v) (A) one or more defaults in the payment of principal
of or premium, if any, on Indebtedness of Holdings or any Restricted Subsidiary
aggregating $10,000,000 or more, when the same becomes due and payable at the
Stated Maturity thereof, and such default or defaults shall have continued after
any applicable grace period and shall not have been cured or waived or (B)
Indebtedness of Holdings or any Restricted Subsidiary aggregating $10,000,000 or
more shall have been accelerated or otherwise declared due and payable, or
required to be prepaid or repurchased (other than by regularly scheduled
required prepayment) prior to the Stated Maturity thereof; (vii) one or more
final, non-appealable judgments or orders shall be rendered against Holdings or
any Restricted Subsidiary for the payment of money, either individually or in an
aggregate amount, in excess of $10,000,000 (net of any amounts that are fully
covered by insurance) and shall not be discharged and there shall have been a
period of 60 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, was not in
effect; (viii) any Note Guarantee of a Material Subsidiary or group of
Restricted Subsidiaries that, taken together, would constitute a Material
Subsidiary ceases to be in full force and effect or is declared null and void or
any Material Subsidiary or group of Restricted Subsidiaries that, taken
together, would constitute a Material Subsidiary denies that it has any further
liability under any Note Guarantee, or gives notice to such effect (other than
by reason of the termination of the Indenture or the release of any such Note
Guarantee in accordance with the Indenture); (ix) Holdings or any Material
Subsidiary or group of Restricted Subsidiaries that, taken together, would
constitute a Material Subsidiary pursuant to or within the meaning of Bankruptcy
Law: (A) commences a voluntary case, (B) consents to the entry of an order for
relief against it in an involuntary case, (C) consents to the appointment of a
custodian of it or for all or substantially all of its property, (D) makes a
general assignment for the benefit of its creditors, or (E) shall admit in
writing its inability to pay debts generally; or (x) a court of competent
jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for
relief against Holdings or any Material Subsidiary or group of Restricted
Subsidiaries that, taken together, would constitute a Material Subsidiary in an
involuntary case; (B) appoints a custodian of Holdings or any Material
Subsidiary or group of Restricted Subsidiaries that, taken together, would
constitute a Material Subsidiary or for all or
<PAGE>
substantially all of the property of Holdings or any Material Subsidiary or
group of Restricted Subsidiaries that, taken together, would constitute a
Material Subsidiary; or (C) orders the liquidation of Holdings or any Material
Subsidiary, or group of Restricted Subsidiaries that, taken together, would
constitute a Material Subsidiary; and the order or decree remains unstayed and
in effect for 60 consecutive days.
If an Event of Default (other than as specified in clauses (ix) or (x)
above) shall, occur and be continuing, the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Notes then outstanding, by written
notice to Holdings, may, and the Trustee, upon the written request of such
Holders, shall declare the principal of, premium, if any, and accrued interest
on all of the outstanding Notes immediately due and payable. Upon any such
declaration all such amounts payable in respect of the Notes shall become
immediately due and payable. If an Event of Default specified in paragraphs (ix)
or (x) above occurs and is continuing, then the principal of, premium, if any,
Additional Interest, if any, and accrued interest on all of the outstanding
Notes shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder of Notes.
At any time after a declaration of acceleration, but before a judgment or
decree for payment of the money due has been obtained by the Trustee, the
Holders of a majority in aggregate principal amount of the outstanding Notes, by
written notice to Holdings and the Trustee, may rescind such declaration and its
consequences if (a) Holdings has paid or deposited with the Trustee a sum
sufficient to pay (i) all overdue interest and Additional Interest, if any, on
all outstanding Notes, (ii) all unpaid principal of and premium, if any, on any
outstanding Notes that has become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Notes, (iii) to the
extent that payment of such interest is lawful, interest upon overdue interest,
Additional Interest, if any, and overdue principal at the rate borne by the
Notes, (iv) all sums paid or advanced by the Trustee under the Indenture and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel; and (b) all Events of Default, other than the non-
payment of amounts of principal of, premium, if any, Additional Interest, if
any, or interest on the Notes that has become due solely by such declaration of
acceleration, have been cured or waived. No such rescission shall affect any
subsequent default or impair any right consequent thereon.
If an Event of Default occurs and is continuing, the Trustee may, subject
to Article 10 of the Indenture, pursue any available remedy to collect the
payment of principal, premium, if any, Additional Interest, if any, and interest
on the Notes or to enforce the performance of any provision of the Notes or the
Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or omission
by the Trustee or any Holder of a Note in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
<PAGE>
14. Trustee Dealings with Holdings. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for Holdings or its Affiliates, and may otherwise deal with Holdings or its
Affiliates, as if it were not the Trustee; however, if it acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the Commission for permission to continue or resign.
15. No Recourse Against Others. A director, officer, employee, incorporator
or stockholder, of the Company or any Guarantor, as such, shall not have any
liability for any obligations of the Company or any Guarantor under the Notes,
the Indenture, the Note - Guarantees, the Registration Rights Agreement or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
16. Guarantees. Assuming certain conditions described in the Indenture have
been satisfied, this Note will be entitled to the benefits of certain Guarantees
made for the benefit of the Holders. Reference is hereby made to the Indenture
for a statement of the respective rights, limitations of rights, duties and
obligations thereunder of the Guarantors, the Trustee and the Holders.
17. Authentication. This Note shall not be valid or obligatory until
authenticated by the manual signature of the Trustee or an authenticating agent.
18. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
19. Additional Rights of Holders of Notes. In addition to the rights
provided to Holders of Notes under the Indenture, Holders of Notes shall have
all the rights set forth in the Exchange and Registration Rights Agreement dated
as of the date of the Indenture, between the Company and the parties named on
the signature pages thereof (the "Registration Rights Agreement").
20. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
21. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN
AND BE USED TO CONSTRUE THIS NOTE.
<PAGE>
Holdings will furnish to any Holder upon written request and without charge
a copy of the Indenture and/or the Registration Rights Agreement. Requests may
be made to: Triad Hospitals Holdings, Inc., 13455 Noel Road, 20th Floor, Dallas,
Texas 75240, Telecopier No.: (972) 663-3945, Attention: Chief Financial Officer.
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
(Insert assignee's soc. sec. or tax I.D. no.)
(Print or type assignee's name, address and zip code)
and irrevocably appoint
to transfer this Note on the books of Holdings. The agent may substitute
another to act for him.
Date:________________________
Your Signature:__________________________________________
(Sign exactly as your name appears on the Note)
SIGNATURE GUARANTEE
Participant in a Recognized Signature
Guarantee Medallion Program
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by Holdings pursuant to
Section 4.10 or 4.15 of the Indenture, check the box below:
Section 4.10 Section 4.15
If you want to elect to have only part of the Note purchased by Holdings
pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you
elect to have purchased:
$_______________________________
Date:___________________________ Your Signature:_________________________
(Sign exactly as your name appears on the Note)
Tax Identification No:_____________________
SIGNATURE GUARANTEE
Participant in a Recognized Signature
Guarantee Medallion Program
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE/1/
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
<TABLE>
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Principal
Amount of Amount of Amount of this Signature of
decrease in increase in Global Note authorized
Principal Principal following such signatory of
Date of Amount of this Amount of this decrease Trustee or
Exchange Global Note Global Note (or increase) Custodian
- -------- ----------- ----------- ------------- ---------
- ------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------
/1/ This should be included only if the Note is issued in global form.
<PAGE>
EXHIBIT 4.3(A)
Healthtrust, Inc. -- The Hospital Company
Senior Subordinated Notes due 2009
____________
Purchase Agreement
- ------------------
April 30, 1999
Goldman, Sachs & Co.
NationsBanc Montgomery Securities LLC
Chase Securities Inc.
Salomon Smith Barney Inc.
SG Cowen Securities Corporation
As representatives of the several Purchasers
named in Schedule I hereto
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Healthtrust, Inc.-The Hospital Company, a Delaware corporation
("Healthtrust"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the Purchasers named in Schedule I hereto (the "Purchasers"),
for whom Goldman, Sachs & Co., NationsBanc Montgomery Securities LLC, Chase
Securities Inc., Salomon Smith Barney Inc. and SG Cowen Securities Corporation
are acting as representatives (in such capacity, the "Representatives"), an
aggregate of $325,000,000 principal amount of the Senior Subordinated Notes of
Healthtrust, specified above (the "Securities"). The Securities are to be issued
pursuant to an indenture dated as of May 11, 1999 (the "Indenture") between
Healthtrust and Citibank N.A., as trustee (the "Trustee"). Securities issued in
book-entry form will be issued to Cede & Co. as nominee of The Depositary Trust
Company ("DTC") pursuant to a letter agreement, to be dated as of the Time of
Delivery (as defined in Section 4(a) hereof) (the "DTC Agreement"), among
Healthtrust, the Trustee and DTC.
Healthtrust has prepared and delivered to each Initial Purchaser copies of
a preliminary offering circular dated April 12, 1999 (the "Preliminary Offering
Circular") and has prepared and will deliver to each Purchaser, on the date
hereof or the next succeeding day, copies
<PAGE>
of a final offering circular dated April 30, 1999 (the "Final Offering
Circular"), each for use by such Purchaser in connection with its solicitation
of purchases of, or offering of, the Securities. "Offering Circular" means, with
respect to any date or time referred to in this Agreement, the most recent
offering circular (whether the Preliminary Offering Circular or the Final
Offering Circular, or any amendment or supplement to either such document),
including annexes and exhibits thereto and any documents incorporated therein by
reference, which has been prepared and delivered by Healthtrust to the
Purchasers in connection with their solicitation of purchases of, or offering
of, the Securities.
For purposes of this Agreement, (a) the term "Business" shall mean the net
assets, business and operations comprising the Pacific Group Division of
Columbia/HCA Healthcare Corporation ("Columbia/HCA") and (b) the term
"Distribution" shall mean (i) the incurrence by Healthtrust of the indebtedness
evidenced by the Securities and by the new credit agreement described in the
Offering Circular (the "New Credit Agreement"), (ii) the transfer of the
Business by Healthtrust to Triad Hospitals, Inc. ("Triad"), a new wholly owned
subsidiary of Healthtrust, and the simultaneous assumption by Triad of the
indebtedness evidenced by the Securities and by the New Credit Agreement, (iii)
the subsequent transfer of the Business by Triad to Triad Hospitals Holdings,
Inc. ("Holdings"), a new wholly owned subsidiary of Triad, and the simultaneous
assumption by Holdings of the indebtedness evidenced by the Securities and the
New Credit Agreement, (iv) the distribution by Healthtrust of all of the common
stock of Triad to Columbia/HCA, and (v) the distribution by Columbia/HCA of all
of the common stock of Triad to the stockholders of Columbia/HCA, in each case,
as set forth in the Offering Circular.
Upon Healthtrust transferring the Business to Triad and the assumption by
Triad of the indebtedness evidenced by the Securities, Healthtrust will cause
Triad to assume all the rights, obligations and liabilities of Healthtrust under
this Agreement pursuant to the Triad Assumption Agreement, the form of which is
attached as Annex VI hereto. Upon Triad transferring the Business to Holdings
and the assumption by Holdings of the indebtedness evidenced by the Securities,
Triad will cause Holdings to assume all rights, obligations and liabilities of
Triad under this Agreement pursuant to the Holdings Assumption Agreement, the
form of which is attached as Annex VII hereto. Following the assumption by
Holdings of the indebtedness evidenced by the Securities, Holdings will
contribute certain assets to its subsidiary, Triad Holdings II, LLC and Triad
Holdings II, LLC will then contribute certain assets to its subsidiary, Triad
Holdings III, Inc. Following these contributions and immediately prior to the
completion of the Distribution, Holdings will cause the Guarantors (as defined
in the Guarantor Assumption Agreement) to execute the Guarantor Assumption
Agreement, the form of which is attached as Annex VIII hereto, pursuant to which
each Guarantor will agree to observe and perform as a "Guarantor" all rights,
obligations and liabilities of such Guarantor under this Agreement. The parties
hereto acknowledge and agree that once (i) the Business has been validly
transferred to Triad and the Triad Assumption Agreement has been executed and
delivered by the parties thereto, Healthtrust shall automatically be fully,
unconditionally and irrevocably released from all rights, obligations and
liabilities under this Agreement and (ii) the
<PAGE>
Business has been validly transferred to Holdings and the Holdings Assumption
Agreement has been executed and delivered by the parties thereto, Triad shall
automatically be fully, unconditionally and irrevocably released from all
rights, obligations and liabilities under this Agreement. For purposes of this
Agreement, the "Company" shall refer to any of Healthtrust or Triad or Holdings,
depending on which such company has then assumed all rights, obligations and
liabilities under this Agreement as discussed in this paragraph. The holders of
the Securities will be entitled to the benefits of the exchange and registration
rights agreement substantially in the form of Annex IX hereto to be dated as of
the Time of Delivery (the "Registration Rights Agreement") among Healthtrust and
the Purchasers, pursuant to which the Company will agree to file as soon as
practicable after the Time of Delivery but in any event within 90 days after the
Time of Delivery, a registration statement with the Securities and Exchange
Commission (the "Commission") registering the Exchange Notes (as defined in the
Registration Rights Agreement) under the United States Securities Act of 1933,
as amended (the "Act").
Healthtrust represents and warrants to, and agrees with, each of the
Purchasers as of the date hereof and as of the Time of Delivery, and agrees with
each Purchaser, that:
(a) Offering Circular. The Offering Circular and any amendments or
supplements thereto do not and will not, as of their respective dates and
as of the Time of Delivery, contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided that this representation, warranty and agreement shall
not apply to any statements or omissions from the Offering Circular made in
reliance upon and in conformity with information furnished to the Company
in writing by any Purchaser through Goldman, Sachs & Co. expressly for use
in the Offering Circular.
(b) Independent Accountants. The accountants who certified the financial
statements and supporting schedules included in the Offering Circular are
independent public accountants with respect to each of Triad and its
subsidiaries and Columbia/HCA and its subsidiaries within the meaning of
Regulation S-X under the Act.
(c) Financial Statements. The historical financial statements relating to
Triad, together with the related schedules and notes, included in the
Offering Circular present fairly, in all material respects, the financial
position of Holdings at the dates indicated and the combined statements of
operations, combined statements of equity and combined statements of cash
flows of Holdings for the periods specified; said financial statements have
been prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved
except as disclosed therein. The selected historical financial data and the
summary financial data
<PAGE>
included in the Offering Circular present fairly, in all material respects,
the information shown therein and have been compiled on a basis consistent
with that of the audited financial statements included in the Offering
Circular. The pro forma financial statements of Triad and the related notes
thereto included in the Offering Circular present fairly in all material
respects the information shown therein, have been prepared in all material
respects in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly compiled
on the bases described therein, and in the Company's opinion the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein. The financial statements relating to
Columbia/HCA, together with the related schedules and notes, included in
the Offering Circular present fairly in all material respects the financial
position of Columbia/HCA at the dates indicated and the consolidated
statements of operations, consolidated statements of stockholders' equity
and consolidated statements of cash flows of Columbia/HCA for the periods
specified; said financial statements have been prepared in conformity with
GAAP applied on a consistent basis throughout the periods involved except
as disclosed therein.
(d) No Material Adverse Change in Business. Since the respective dates as
of which information is given in the Offering Circular, except as otherwise
described in the Offering Circular, (i)-there has been no material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Business whether or not
arising in the ordinary course of business (a "Material Adverse Effect"),
(ii)-there have been no transactions entered into by the Business, Triad or
Holdings or any of the Designated Subsidiaries (as defined in Section 1(f)
hereof), other than those in the ordinary course of business, which are
material with respect to the Business, and (iii) there has been no dividend
or distribution of any kind declared, paid or made by any of Triad or
Holdings on any class of its capital stock. Since the respective dates as
of which information is given in the Offering Circular, except as otherwise
stated therein, there has not been any material increase in the amount of
debt to be assumed by Triad and its subsidiaries in connection with the
Distribution. Since the respective dates as of which information is given
in the Offering Circular, there has been no material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of Healthtrust and its subsidiaries, considered as a
whole, which would materially adversely affect Healthtrust's ability to
redeem the Securities if it were required to do so pursuant to the
mandatory redemption provisions in the Indenture (a "Material Adverse
Effect on the Mandatory Redemption").
(e) Good Standing of Healthtrust, Triad and Holdings. Each of Healthtrust,
Triad and Holdings has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Delaware and
has corporate power and authority to own, lease and operate its properties
and to conduct its business as
<PAGE>
described in the Offering Circular and to enter into and perform its
obligations under this Agreement; and each of Healthtrust, Triad and
Holdings is duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify
or to be in good standing would not result in a Material Adverse Effect.
(f) Good Standing of Designated Subsidiaries. Each subsidiary of
Healthtrust to be contributed to Holdings in connection with the
Distribution (each a "Designated Subsidiary" and, collectively, the
"Designated Subsidiaries") has been duly organized and is validly existing
as a corporation, a limited liability company or a limited partnership in
good standing under the laws of the jurisdiction of its incorporation or
formation, has the requisite power and authority to own, lease and operate
its properties and to conduct its business as described in the Offering
Circular and is duly qualified as a foreign corporation or foreign limited
liability company to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect; except as otherwise disclosed in the Offering
Circular, all of the issued and outstanding capital stock of each
Designated Subsidiary has been duly authorized and validly issued, is fully
paid and non-assessable and, with respect to shares owned by Healthtrust,
such shares are owned by Healthtrust, directly or through subsidiaries,
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity other than those created pursuant to the New
Credit Agreement; none of the outstanding shares of capital stock of the
Designated Subsidiaries was issued in violation of any preemptive or
similar rights of any securityholder of such Designated Subsidiary. Triad
has no direct subsidiaries other than Holdings and Holdings has no
subsidiaries other than Triad Holdings II, LLC and Triad Holdings III, Inc.
(g) Capitalization. The authorized, issued and outstanding capital stock
of Triad, after giving effect to the Distribution, will be as set forth in
the Offering Circular in the column entitled "As Adjusted" under the
caption "Capitalization" (except for subsequent issuances, if any, pursuant
to this Agreement, pursuant to reservations, agreements, employee benefit
plans referred to in the Offering Circular or pursuant to the exercise of
convertible securities or options referred to in the Offering Circular).
The shares of issued and outstanding capital stock of each of Healthtrust,
Triad and Holdings have been duly authorized and validly issued and are
fully paid and non-assessable; none of the outstanding shares of capital
stock of Healthtrust, Triad or Holdings was issued in violation of the
preemptive or other similar rights of any securityholder of Healthtrust,
Triad or Holdings. Healthtrust owns 100% of the capital stock of Triad and
Triad owns 100% of the capital stock of Holdings.
<PAGE>
(h) Authorization of Agreements. This Agreement has been duly authorized,
executed and delivered by Healthtrust. At the Time of Delivery, this
Agreement will have been duly authorized by each of Triad, Holdings and the
Guarantors. Each of the Registration Rights Agreement and the DTC Agreement
have been authorized by Healthtrust and, when executed and delivered by
Healthtrust, will constitute a valid and binding agreement of Healthtrust,
enforceable against Healthtrust in accordance with its terms, except that
(i) the enforcement thereof (A) may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and (B) is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law) and (ii) any rights to indemnity or contribution
thereunder may also be limited by federal and state securities laws and
public policy considerations. At the Time of Delivery, the Registration
Rights Agreement will have been duly authorized by each of Triad and
Holdings and, when Triad and Holdings execute and deliver the Triad
Assumption Agreement and the Holdings Assumption Agreement to the
Registration Rights Agreement, respectively, will constitute a valid and
binding agreement of Triad and Holdings, respectively, enforceable against
Triad and Holdings, respectively, in accordance with its terms, except that
(i) the enforcement thereof (A) may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and (B) is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law) and (ii) any rights to indemnity or contribution
thereunder may also be limited by federal and state securities laws and
public policy considerations. At the Time of Delivery, the Registration
Rights Agreement will have been duly authorized by the Guarantors and, when
such agreement is assumed as a "Guarantor" by the Guarantors, will
constitute a valid and binding agreement of the Guarantors, enforceable
against the Guarantors in accordance with its terms, except that (A) the
enforcement thereof (i) may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and (ii) is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law) and (B) any rights to indemnity or contribution
thereunder may also be limited by federal and state securities laws and
public policy considerations. At the Time of Delivery, the DTC Agreement
will have been duly authorized by Triad and Holdings and, when such
Agreement is assumed by Triad and Holdings, respectively, will constitute a
valid and binding agreement of Triad and Holdings, respectively,
enforceable against Triad and Holdings, respectively, in accordance with
its terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
<PAGE>
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(i) Authorization of the Indenture. The Indenture has been duly authorized
by Healthtrust and, when executed and delivered by Healthtrust and the
Trustee, will constitute a valid and binding agreement of Healthtrust,
enforceable against Healthtrust in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law). At the Time of Delivery,
the Indenture will have been duly authorized by each of Triad and Holdings
and, when the first and second indenture supplements to the Indenture are
executed and delivered by Triad and Holdings, respectively, will constitute
a valid and binding agreement of Triad and Holdings, respectively,
enforceable against Triad and Holdings, respectively, in accordance with
its terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law). At the Time
of Delivery, the Indenture will have been duly authorized by the Guarantors
and, when the third indenture supplement to the Indenture is executed and
delivered by the Guarantors, will constitute a valid and binding agreement
of the Guarantors, enforceable against the Guarantors in accordance with
its terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law). At the Time
of Delivery, the Indenture will conform in all material respects to the
requirements of the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the rules and regulations of the Commission applicable
to an indenture that is qualified thereunder.
(j) Authorization of the Securities. The Securities have been duly
authorized and, at the Time of Delivery, will have been duly executed by
Healthtrust and, when authenticated, issued and delivered in the manner
provided for in the Indenture and delivered against payment of the purchase
price therefor as provided in this Agreement, will constitute valid and
binding obligations of Healthtrust, enforceable against Healthtrust in
accordance with their terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of
<PAGE>
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), and will be substantially
in the form contemplated by, and entitled to the benefits of, the
Indenture. At the Time of Delivery, the Securities will have been
authorized by each of Triad and Holdings and, when the first and second
indenture supplements to the Indenture are executed and delivered by Triad
and Holdings, respectively, will constitute valid and binding obligations
of Triad and Holdings, respectively, enforceable against Triad and
Holdings, respectively, in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law). The Exchange Notes have
been authorized by each of Healthtrust, and, at the Time of Delivery, will
have been authorized by Triad and Holdings and, when executed and issued
and delivered by the Company in exchange for the Securities pursuant to the
Exchange Offer (as defined in the Registration Rights Agreement), will
constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
(k) Description of the Securities, the Indenture and the Registration
Rights Agreement. The Securities, the Exchange Notes, the Indenture and the
Registration Rights Agreement will conform in all material respects to the
descriptions thereof contained in the Offering Circular and will be in
substantially the respective forms previously delivered to the Purchasers.
(l) Absence of Defaults, Violations and Conflicts. None of Triad, Holdings
or any of the Designated Subsidiaries is in violation of its charter,
by-laws or other formation documents or in default in the performance or
observance of any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or other agreement or instrument to which any of them is a
party or by which or any of them may be bound, or to which any of the
property or assets of Triad, Holdings or any of the Designated Subsidiaries
is subject (collectively, the "Agreements and Instruments") or has violated
or is in violation of an applicable law, statute, rule, regulation,
judgment, order, writ or decree (including any "fraud and abuse
legislation" or "anti-kickback law") of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over any
of Triad, Holdings or any of the Designated Subsidiaries or any of
<PAGE>
their assets, properties or operations (including, without limitation, the
Business), except, in each case, for such defaults or violations that would
not result in a Material Adverse Effect; and the execution, delivery and
performance by Triad or Holdings of this Agreement, the Indenture, the
Registration Rights Agreement, the Securities and the Exchange Notes and
any other agreement or instrument entered into or issued or to be entered
into or issued by any of Triad or Holdings in connection with the
transactions contemplated hereby or thereby and the consummation of (i) the
issuance and sale of the Securities and the use of the proceeds from the
sale of the Securities as described in the Offering Circular under the
caption "Use of Proceeds" and (ii) the Distribution and compliance by each
of Triad and Holdings with their respective obligations hereunder have been
duly authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or a Repayment Event
(as defined below) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of Triad, Holdings
or any of the Designated Subsidiaries pursuant to, the Agreements and
Instruments, except for such conflicts, breaches or defaults or liens,
charges, encumbrances or Repayment Events that, singly or in the aggregate,
would not result in a Material Adverse Effect or are disclosed in the
Offering Circular, nor will such action result in any violation of the
provisions of (A) the charter, by-laws or other formation documents of any
of Healthtrust, Triad or Holdings or any of the Designated Subsidiaries or
(B) any applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over any of Triad or Holdings or any of the
Designated Subsidiaries or any of their assets, properties or operations
(including, without limitation, the Business), except, in the case of (B)
above, for such violations that would not result in a Material Adverse
Effect. As used herein, a "Repayment Event" means any event or condition
which gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by any of Triad or Holdings or any of the Designated
Subsidiaries. Healthtrust is not in violation of its Certificate of
Incorporation or by-laws, except for such violations that would not result
in a Material Adverse Effect on the Mandatory Redemption; and the
execution, delivery and performance by Healthtrust of this Agreement, the
Indenture, the Registration Rights Agreement, the Securities and any other
agreement or instrument entered into or issued or to be entered into or
issued by Healthtrust in connection with transactions contemplated hereby
or thereby and the consummation of (x) the issuance and sale of the
Securities and the use of proceeds from the sale of Securities as described
in the Offering Circular under the caption "Use of Proceeds" and (y) the
Distribution and compliance by Healthtrust with its obligations under this
Agreement, the Indenture, the Registration Rights Agreement and the
Securities have been duly authorized by all necessary corporate action and
do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or
default or a Healthtrust Repayment
<PAGE>
Event (as defined below) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of Healthtrust
pursuant to any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or other agreement or instrument to which Healthtrust is a
party or by which it is bound or to which any of its properties or assets
is subject (collectively, the "Healthtrust Agreements and Instruments"),
except for such conflicts, breaches or defaults or liens, charges,
encumbrances or Healthtrust Repayment Events that, singly or in the
aggregate, would not result in a Material Adverse Effect on the Mandatory
Redemption or are disclosed in the Offering Circular, nor will such action
result in any violation of the provisions of (A) the Certificate of
Incorporation or by-laws of Healthtrust or (B) any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic of foreign, having
jurisdiction over Healthtrust or any of its assets, properties or
operations, except in the case of (B) above, for violations that would not
result in a Material Adverse Effect on the Mandatory Redemption. As used
herein, a "Healthtrust Repayment Event" means any event or condition which
gives the holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all of a portion of such
indebtedness by Healthtrust.
(m) Absence of Labor Dispute. No labor dispute with the employees of any of
the Business, Triad or Holdings or any of the Designated Subsidiaries
exists or, to the knowledge of the Company, is imminent, which, would
result in a Material Adverse Effect.
(n) Absence of Proceedings. Except as disclosed in the Offering Circular,
there is no action, suit, proceeding, inquiry or investigation before or
brought by any court or governmental agency or body, domestic or foreign,
now pending, or, to the knowledge of Healthtrust, Triad or Holdings,
threatened, against or affecting any of Healthtrust, Triad or Holdings or
any of the Designated Subsidiaries which would reasonably be expected to
result in a Material Adverse Effect, or which might reasonably be expected
to materially and adversely affect the Business or the consummation of the
transactions contemplated by this Agreement or the Distribution or the
performance by the Company of its obligations hereunder or under the
Securities or the Exchange Notes. The aggregate of all pending legal or
governmental proceedings to which any of Healthtrust, Triad or Holdings or
any of the Designated Subsidiaries is a party or of which any of their
respective property or assets is the subject which are not described in the
Offering Circular, including ordinary routine litigation incidental to the
business, would not result in a Material Adverse Effect.
(o) Possession of Intellectual Property. The Business owns or possesses, or
can acquire on reasonable terms, adequate patents, patent rights, licenses,
<PAGE>
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary to
carry on the Business as currently conducted except as would not result in
a Material Adverse Effect, and none of Healthtrust, Triad, Holdings or any
of their respective subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others
with respect to any Intellectual Property or of any facts or circumstances
which would render any Intellectual Property invalid or inadequate to
protect the interest of the Business therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would result in a
Material Adverse Effect.
(p) Absence of Further Requirements. No filing with, or authorization,
approval, consent, license, order, registration, qualification or decree
of, any court or governmental authority or agency is necessary or required
for the performance by any of Healthtrust, Triad or Holdings of its
obligations hereunder, in connection with (i) the offering, issuance or
sale of the Securities hereunder, (ii) the consummation of the transactions
contemplated by this Agreement, the Registration Rights Agreement and the
Indenture, (iii) the consummation of the Distribution or (iv) for the due
execution, delivery or performance of the Indenture and the Registration
Rights Agreement by any of Healthtrust, Triad or Holdings, except (A) such
as have been already obtained and are in full force and effect, (B) in
connection with the registration of the Exchange Notes pursuant to the
Registration Rights Agreement, (C) any filings under state securities or
Blue Sky laws in connection with the sale of the Securities and the
Exchange Notes, (D) the qualification of the Indenture under the Trust
Indenture Act, in connection with the Exchange Offer and (E) for such
approvals or consents the failure so to obtain with respect to Triad and
Holdings would not have a Material Adverse Effect and would not materially
and adversely affect the consummation of the transactions contemplated by
this Agreement, the Registration Rights Agreement, the Indenture or the
Distribution and, with respect to Healthtrust would not have a Material
Adverse Effect on the Mandatory Redemption.
(q) Possession of Licenses, Permits and Consents. Each of the Business,
Triad, Holdings and the Designated Subsidiaries possess such permits,
licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") which have been issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct
the business now operated by them and to be conducted by them after giving
effect to the Distribution, except as disclosed in the Offering Circular
and except where the
<PAGE>
failure to so possess such Government Licenses would not, singly or in the
aggregate, have a Material Adverse Effect; each of the Business, Triad,
Holdings and the Designated Subsidiaries is in compliance with the terms
and conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, have a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force and
effect, except as disclosed in the Offering Circular and except where the
invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and none of the Business, Triad, Holdings or any
of the Designated Subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental
Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material Adverse
Effect, except as disclosed in the Offering Circular. Each of the Business,
Triad and Holdings possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Authorizations") which are necessary
for Holdings and its subsidiaries to participate, after giving effect to
the Distribution, in managed care programs except as would not result in a
Material Adverse Effect; each of the Business, Triad, Holdings and
Designated Subsidiaries is in compliance with the terms and conditions of
all such Authorizations, except where the failure so to comply would not,
singly or in the aggregate, have a Material Adverse Effect; all such
Authorizations are valid and in full force and effect, except where the
invalidity of such Authorizations or the failure of such Authorizations to
be in full force and effect would not have a Material Adverse Effect; and
none of the Business, Triad, Holdings or any of the Designated Subsidiary
has received any notice of proceedings relating to the revocation or
modification of any such Authorizations which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would result
in a Material Adverse Effect.
(r) Medicare and Medicaid. To the extent described in the Offering
Circular and except as otherwise described in the Offering Circular, all
facilities to be owned, operated or managed as continuing operations by
Holdings and its subsidiaries after giving effect to the Distribution (the
"Company Facilities") (i) are, and after the Distribution, will be
licensed, to the extent necessary, under appropriate state laws to conduct
the business as described in the Offering Circular, except as would not
result in a Material Adverse Effect; (ii) are, and after the Distribution,
will be certified for participation or enrollment in the Medicare and
Medicaid programs; (iii) have, and after the Distribution, will have the
benefit of a current and valid provider contract with the Medicare and
Medicaid programs; and (iv) are, and after the Distribution, will be in
substantial compliance with the terms and conditions of participation in
such programs and have received all approvals or qualifications necessary
for reimbursement, except, in each case, where the failure to be so
licensed or certified, to have such contracts, to be in such compliance or
to have such approvals or qualifications, singly or in the aggregate, would
not have a Material Adverse Effect. To the knowledge of each of
Healthtrust, Triad and Holdings, the amounts established as provisions for
Medicare and Medicaid adjustments and adjustments by any other third party
payors on the financial statements of Triad are sufficient in all material
respects to pay any amounts for which Holdings or any of its subsidiaries
may be liable for such adjustments. Except as described in the Offering
Circular, none of the Business, Triad, Holdings or any of the Designated
<PAGE>
Subsidiaries has received notice from the regulatory authorities which
enforce the statutory or regulatory provisions in respect of the Medicare
or Medicaid programs of any pending or threatened investigations, surveys
(other than routine surveys) or decertification proceedings, and none of
Healthtrust, Triad, Holdings or any of their respective subsidiaries has
any reason to believe that any such investigations, surveys or proceedings
are pending, threatened or imminent, in each case, which notices or
threatened investigations, surveys or proceedings singly or in the
aggregate would have a Material Adverse Effect.
(s) Title to Property. The Business, Triad and Holdings and the Designated
Subsidiaries have good and marketable title to all real property described
in the Offering Circular as owned by each of them and good title to all
other properties described in the Offering Circular as owned by them, in
each case, free and clear of all mortgages, pledges, liens, security
interests, claims, restrictions or encumbrances of any kind except (i) such
as are described in the Offering Circular, (ii) pursuant to the New Credit
Agreement or (iii) such as would not, singly or in the aggregate, have a
Material Adverse Effect; and all of the leases and subleases material to
the business of the Business, Triad, Holdings and the Designated
Subsidiaries and under which any of the Business, Triad, Holdings or any of
the Designated Subsidiaries holds properties described in the Offering
Circular, are in full force and effect, and none of the Business, Triad,
Holdings or any of the Designated Subsidiaries has any notice of any
material claim of any sort that has been asserted by anyone adverse to the
rights of any of the Business, Triad, Holdings or any of the Designated
Subsidiaries under any of the leases or subleases mentioned above, or
affecting or questioning the rights of any of the Business, Triad, Holdings
or any of the Designated Subsidiaries to the continued possession of the
leased or subleased premises under any such lease or sublease except such
as would not, singly or in the aggregate, have a Material Adverse Effect.
(t) Environmental Laws. Except as described in the Offering Circular and
except such matters as would not, singly or in the aggregate, result in a
Material Adverse Effect, (i) none of the Business, Triad, Holdings or any
the Designated Subsidiaries is in violation of any federal, state, local or
foreign statute, law, rule, regulation, ordinance, code, policy or rule of
common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws"), (ii) the
Business, Triad, Holdings and
<PAGE>
the Designated Subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in compliance
with the requirements of such permits, authorizations and approvals, (iii)
none of Healthtrust, Triad, Holding or any of the Designated Subsidiaries
is aware of any pending or threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against any of the Business, Triad, Holdings or any of
the Designated Subsidiaries and (iv) none of Healthtrust, Triad, Holdings
or any of the Designated Subsidiaries is aware of any events or
circumstances that might reasonably be expected to form the basis of an
order for clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting any of
the Business, Triad, Holdings or any of the Designated Subsidiaries
relating to Hazardous Materials or Environmental Laws.
(u) Investment Company Act. None of Healthtrust, Triad, or Holdings is, and
upon the issuance and sale of the Securities as herein contemplated, the
application of the net proceeds therefrom as described in the Offering
Circular and the assumption of the obligations of the Securities by Triad
and Holdings pursuant to the first and second indenture supplements to the
Indenture, will be, an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "Investment Company Act").
(v) Similar Offerings. None of Healthtrust, Triad, Holdings or any of their
respective affiliates, as such term is defined in Rule 501(b) under the Act
(each, an "Affiliate"), has, directly or indirectly, solicited any offer to
buy, sold or offered to sell or otherwise negotiated in respect of, or will
solicit any offer to buy, sell or offer to sell or otherwise negotiate in
respect of, in the United States or to any United States citizen or
resident, any security which is or would be integrated with the sale of the
Securities in a manner that would require the Securities to be registered
under the Act.
(w) Rule 144A Eligibility. Assuming compliance with the representations in
Section 3 hereof, the Securities are eligible for resale pursuant to Rule
144A and will not be, at the Time of Delivery, of the same class as
securities listed on a national securities exchange registered under
Section 6 of the United States Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or quoted in a U.S. automated interdealer quotation
system.
(x) No General Solicitation. None of Healthtrust, Triad, Holdings, its
Affiliates or any person acting on its or any of their behalf (other than
the Purchasers, as to whom Healthtrust, Triad and Holdings make no
representation) has engaged or will engage, in connection with the offering
of the Securities, in any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Act.
<PAGE>
(y) No Registration Required. Subject to compliance by the Purchasers with
the representations and warranties set forth in Section 3 hereof, it is not
necessary in connection with the offer, sale and delivery of the Securities
to the Purchasers and to each subsequent purchaser of the Securities in the
manner contemplated by this Agreement and the Offering Circular to register
the Securities under the Act or to qualify the Indenture under the Trust
Indenture Act.
(z) Reporting Company. After the consummation of the Distribution, Triad
will be subject to the reporting requirements of Section 13 or Section
15(d) of the Exchange Act.
(aa) Accounting Controls. Each of the Business, Triad, Holdings and the
Designated Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization,
(ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain accountability
for assets, (iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(bb) Insurance. Each of the Business, Triad, Holdings and the Designated
Subsidiaries carry or are entitled to, and after-giving effect to the
Distribution, will carry or be entitled to, the benefits of insurance in
such amounts and covering such risks as is generally maintained by
companies of established repute engaged in the same or similar business,
except for failures to carry or be entitled to benefits of insurance which
would not have a Material Adverse Effect.
(cc) Solvency. Healthtrust is, and immediately after the Time of Delivery
will be, Solvent. Each of Triad and Holdings will be Solvent immediately
before and after they assume the obligations under the Securities and the
Indenture as contemplated by the first and second indenture supplements to
the Indenture. As used herein, the term "Solvent" means, with respect to
Healthtrust, Triad and Holdings, as the case may be, on a particular date,
that on such date (i) the fair market value of the assets of Healthtrust,
Triad and Holdings, as the case may be, is greater than the total amount of
liabilities (including contingent liabilities) of Healthtrust, Triad and
Holdings, as the case may be, (ii) the present fair salable value of the
assets of Healthtrust, Triad and Holdings, as the case may be, is greater
than the amount that will be required to pay the probable liabilities of
Healthtrust, Triad and Holdings, as the case may be, on its debts as they
become absolute and matured, (iii) Healthtrust, Triad and Holdings, as the
case may be, able to realize upon its assets and pay its debts and other
liabilities, including contingent
<PAGE>
obligations, as they mature, and (iv) Healthtrust, Triad and Holdings, as
the case may be, does not have unreasonably small capital.
(dd) Stabilization. None of Healthtrust, Triad, Holdings or any of their
respective officers, directors or controlling persons has taken, directly
or indirectly, any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of Healthtrust,
Triad or Holdings to facilitate the sale or resale of the Securities.
(ee) Year 2000 Problem. Each of Healthtrust, Triad and Holdings has
reviewed and is continuing to review the operations of the Business and any
third parties with which the Business has a material relationship to
evaluate the extent to which the Business will be affected by the Year 2000
Problem. As a result of such review, except as described in the Offering
Circular each of Healthtrust, Triad and Holdings has no reason to believe,
and does not believe, that the Year 2000 Problem will have a Material
Adverse Effect. The "Year 2000 Problem" as used herein means any
significant risk that computer hardware or software used in the receipt,
transmission, processing, manipulation, storage, retrieval, retransmission
or other utilization of data or in the operation of mechanical or
electrical systems of any kind will not, in the case of dates or time
periods occurring after December 31, 1999, function at least as effectively
as in the case of dates or time periods occurring prior to January 1, 2000.
(ff) Compliance with the Cuba Act. Each of Healthtrust, Triad and Holdings
has complied with all provisions of Section 517.075, Florida Statutes
(Chapter 92-198, Laws of Florida) relating to doing business with the
Government of Cuba or with any person or affiliate located in Cuba.
(gg) New Credit Agreement. The Company has received commitments from
lenders under the New Credit Agreement for 100% of the commitments under
the New Credit Agreement.
(hh) Regulations T, U and X. None of the transactions contemplated by this
Agreement (including, without limitation, the use of proceeds from the sale
of the Securities) will violate or result in a violation of Section 7 of
the Exchange Act, or any regulation promulgated thereunder, including,
without limitation, Regulations T, U and X of the Board of Governors of the
Federal Reserve System.
(ii) Healthtrust Assets. (i) The only material assets owned by Columbia/HCA
are the capital stock of Healthtrust and intercompany notes in an amount
not to exceed $1,800,000,000 and (ii) other then as described in clause
(i), all other material assets of Columbia/HCA have been validly
transferred to and are owned by Healthtrust. The assets held by Healthtrust
comprise substantially all of the assets of
<PAGE>
Columbia/HCA reflected on its balance sheet dated December 31, 1998
included in the Offering Circular, with the exception of the intercompany
notes referred to in clause (i) of the preceding sentence.
Any certificate signed by any officer of the Company or any of its
subsidiaries delivered to the Representatives or to counsel for the Purchasers
shall be deemed a representation and warranty by the Company to each Purchaser
as to the matters covered thereby.
2. Subject to the terms and conditions herein set forth, Healthtrust agrees to
issue and sell to each of the Purchasers, and each of the Purchasers agrees,
severally and not jointly, to purchase from Healthtrust, at a purchase price of
97% of the principal amount thereof, plus accrued interest, if any, from May 11,
1999 to the Time of Delivery hereunder, the principal amount of Securities set
forth opposite the name of such Purchaser in Schedule I hereto.
3. Upon the authorization by you of the release of the Securities, the several
Purchasers propose to offer the Securities for sale upon the terms and
conditions set forth in this Agreement and the Offering Circular and each
Purchaser hereby represents and warrants to, and agrees with the Company that:
(a) It will offer and sell the Securities only to: (i) persons who it reasonably
believes are "qualified institutional buyers" ("QIBs") within the meaning of
Rule 144A under the Act in transactions meeting the requirements of Rule 144A or
(ii) upon the terms and conditions set forth in Annex I to this Agreement;
(b) It will not offer or sell the Securities by any form of general solicitation
or general advertising, including but not limited to the methods described in
Rule 502(c) under the Act; and
(c) It is an institution that is an "accredited investor" pursuant to Rule
501(1), (2), (3) or (9) of Regulation D under the Act.
4. (a) The Securities to be purchased by each Purchaser hereunder will be
represented by one or more definitive global Securities in book-entry form which
will be deposited by or on behalf of Healthtrust with DTC or its designated
custodian. Healthtrust will deliver the Securities to Goldman, Sachs & Co., for
the account of each Purchaser, against payment by or on behalf of such Purchaser
of the purchase price therefor by wire transfer of immediately available funds
to a bank account designated by Healthtrust, by causing DTC to credit the
Securities to the account of Goldman, Sachs & Co. at DTC. Healthtrust will cause
the certificates representing the Securities to be made available to Goldman,
Sachs & Co. for checking at least twenty-four hours prior to the Time of
Delivery at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be 9:00 a.m., New
York City time, on May 11, 1999 or such other time and date as
<PAGE>
Goldman, Sachs & Co. and the Company may agree upon in writing. Such time and
date are herein called the "Time of Delivery".
(b) The documents to be delivered at the Time of Delivery by or on behalf of the
parties hereto pursuant to Section 7 hereof, including the cross-receipt for the
Securities and any additional documents requested by the Purchasers pursuant to
Section 7(i) hereof, will be delivered at such time and date at the offices of
Dewey Ballantine LLP, 1301 Avenue of the Americas, New York, New York 10019 (the
"Closing Location"), and the Securities will be delivered at the Designated
Office, all at the Time of Delivery. A meeting will be held at the Closing
Location at 4:00 p.m., New York City time, on the New York Business Day next
preceding the Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Purchasers:
(a) To prepare the Offering Circular in a form approved by you; to make no
amendment or any supplement to the Offering Circular which shall be disapproved
by you promptly after reasonable notice thereof; and to furnish you with copies
thereof;
(b) To furnish the Purchasers with copies of the Offering Circular and each
amendment or supplement thereto in such quantities as you may from time to time
reasonably request, and if, at any time prior to the earlier of (i) completion
of the distribution of the Securities (as reasonably determined by the
Representatives) and (ii) the expiration of nine months after the date of the
Offering Circular, any event shall have occurred as a result of which the
Offering Circular as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made when such Offering Circular is delivered, not misleading,
or, if for any other reason it shall be necessary or desirable during such same
period to amend or supplement the Offering Circular, to notify you and upon your
request to prepare and furnish without charge to each Purchaser and to any
dealer in securities as many copies as you may from time to time reasonably
request of an amended Offering Circular or a supplement to the Offering Circular
which will correct such statement or omission or effect such compliance;
(c) Promptly from time to time to take such action as you may reasonably request
to qualify the Securities for offering and sale under the securities laws of
such jurisdictions as you may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such jurisdictions for
as long as may be necessary to complete the distribution of the Securities,
provided that in connection therewith the Company shall not be
<PAGE>
required to qualify as a foreign corporation, to file a general consent to
service of process in any jurisdiction or subject itself to taxation in any such
jurisdiction;
(d) To take all reasonable action necessary to enable Standard & Poor's Ratings
Services, a division of McGraw Hill, Inc. ("S&P"), and Moody's Investors Service
Inc. ("Moody's") to provide their respective credit ratings of the Securities;
(e) To cooperate with the Representatives and use its reasonable best efforts to
permit the Securities to be eligible for clearance and settlement through the
facilities of DTC;
(f) To use the net proceeds received by it from the sale of the Securities
pursuant to this Agreement in substantially the manner specified in the Offering
Circular under the caption "Use of Proceeds";
(g) To use its reasonable best efforts to cause the Securities to be eligible
for the PORTAL trading system of the National Association of Securities Dealers,
Inc.;
(h) Not to be or become, at any time prior to the expiration of two years after
the Time of Delivery, an open-end investment company, unit investment trust,
closed-end investment company or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company Act;
(i) For so long as any of the Securities remain outstanding, at any time when
the Company is not subject to Section 13 or 15(d) of the Exchange Act, the
Company will furnish at its expense, upon request, to any holders of Securities
and any prospective purchasers thereof information (the "Additional Issuer
Information") satisfying the requirements of subsection (d)(4)(i) of Rule 144A
under the Act;
(j) To furnish to the holders of the Securities as soon as practicable with
annual reports, quarterly reports and other documents required to be so
furnished pursuant to Section 4.3 of the Indenture;
(k) During a period of five years from the date of the Offering Circular, to
furnish to you copies of all reports or other communications (financial or
other) furnished to stockholders of the Company, and to deliver to you (i) as
soon as they are available, copies of any reports and financial statements
furnished to or filed with the Commission or any securities exchange on which
the Securities or any class of securities of the Company is listed; and (ii)
such additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission);
<PAGE>
(l) During the period of two years after the Time of Delivery, the Company will
not, and will not permit any of its "affiliates" (as defined in Rule 144 under
the Act) to, resell any of the Securities which constitute "restricted
securities" under Rule 144 that have been reacquired by any of them; and
(m) To file and use its reasonable best efforts to cause to be declared or
become effective under the Securities Act, on or prior to 90 days after the Time
of Delivery, a registration statement on Form S-4 providing for the registration
of the Exchange Notes, and the exchange of the Securities for the Exchange
Notes, all in a manner which will permit persons who acquire the Exchange Notes
to resell the Exchange Notes pursuant to Section 4(1) of the Act, all in
accordance with the provisions of the Registration Rights Agreement.
6. The Company covenants and agrees with the several Purchasers that the Company
will pay or cause to be paid the following: (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the issue
of the Securities and all other expenses in connection with the preparation,
printing and filing of the Preliminary Offering Circular and the Final Offering
Circular and any amendments and supplements thereto and the mailing and
delivering of copies thereof to the Purchasers and dealers; (ii) the cost of
printing or producing any Agreement among Purchasers, this Agreement, the
Indenture, the Registration Rights Agreement, the Blue Sky survey, closing
documents (including any compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the Securities;
(iii) all expenses in connection with the qualification of the Securities for
offering and sale under state securities laws as provided in Section 5(c)
hereof, including the reasonable fees and disbursements of counsel for the
Purchasers in connection with such qualification and in connection with the Blue
Sky and legal investment surveys; (iv) any fees charged by securities rating
services for rating the Securities; (v) the cost of preparing the Securities;
(vi) the fees and expenses of the Trustee and any agent of the Trustee and the
reasonable fees and disbursements of counsel for the Trustee in connection with
the Indenture and the Securities; and (vii) all other costs and expenses
incident to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section. It is understood, however, that,
except as provided in this Section, and Sections 8 and 11 hereof, the Purchasers
will pay all of their own costs and expenses, including the fees of their
counsel, transfer taxes on resale of any of the Securities by them, and any
advertising expenses connected with any offers they may make.
7. The obligations of the Purchasers hereunder shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company herein are, at and as of the Time of Delivery, true
and correct, the condition that the Company shall have performed all of its
obligations hereunder theretofore to be performed, and the following additional
conditions:
(a) Dewey Ballantine LLP, special counsel for the Company, Donald P. Fay, Esq.,
General Counsel to Triad, John M. Franck II, Esq., Senior Counsel to
Healthtrust, and
<PAGE>
Waller Lansden Dortch & Davis, special regulatory counsel for the Company, shall
each have furnished to you their written opinion, dated the Time of Delivery, in
form and substance satisfactory to you, to the effect set forth in Annexes II,
III, IV, and V hereto;
(b) Simpson Thacher & Bartlett, counsel for the Purchasers, shall have furnished
to you such opinion or opinions, dated the Time of Delivery, with respect to
certain matters as you may reasonably request, and such counsel shall have
received such papers and information as they may reasonably request to enable
them to pass upon such matters;
(c) None of the Business, Healthtrust, Triad or Holdings, or any of the
Designated Subsidiaries shall have sustained since the date of the latest
audited financial statements included in the Offering Circular any loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Offering Circular and except for such interference, loss or
damage which would not (i) with respect to Healthtrust, result in a Material
Adverse Effect on the Mandatory Redemption and (ii) with respect to the
Business, Triad or Holdings, result in a Material Adverse Effect;
(d) At the Time of Delivery, there shall not have been, since the date hereof or
since the respective dates as of which information is given in the Offering
Circular, any material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the Business
whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of the President or a Vice
President of Healthtrust and of the chief financial or chief accounting officer
of Healthtrust dated as of the Time of Delivery, to the effect that (i)-there
has been no such material adverse change, (ii)-the representations and
warranties in Section-1 hereof are true and correct with the same force and
effect as though expressly made at and as of the Time of Delivery, and
(iii)-Healthtrust has complied with all agreements and satisfied all conditions
on its part to be performed or satisfied at or prior to the Time of Delivery;
(e) On the date of the Offering Circular prior to the execution of this
Agreement and also at the Time of Delivery, Ernst & Young LLP shall have
furnished to you a letter or letters, dated the respective dates of delivery
thereof, in form and substance satisfactory to you;
(f) At the Time of Delivery, the Securities shall be rated at least B3 by
Moody's and B- by S&P; and on or after the date hereof (i) no downgrading shall
have occurred in the rating accorded the Company's debt securities by any
"nationally recognized statistical rating organization", as that term is defined
by the Commission for purposes of Rule 436(g)(2) under the Act, and (ii) no such
organization shall have publicly announced that it has under
<PAGE>
surveillance or review, with possible negative implications, its rating of any
of the Company's debt securities;
(g) On or after the date hereof there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or on the Nasdaq National Market
System; (ii) a suspension or material limitation in trading in the securities of
any of Columbia/HCA or Triad on the New York Stock Exchange or the Nasdaq
National Market System, respectively; (iii) a general moratorium on commercial
banking activities declared by either Federal or New York State authorities;
(iv) the outbreak or escalation of hostilities involving the United States or
the declaration by the United States of a national emergency or war, if the
effect of any such event specified in this clause (iv) in the judgment of the
Representatives makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Securities on the terms and in the manner
contemplated in the Offering Circular; or (v) the occurrence of any material
adverse change in the existing, financial, political or economic conditions in
the United States or elsewhere which, in the judgment of the Representatives,
would materially and adversely affect the financial markets or the markets for
the Securities and other debt securities;
(h) The Securities have been designated for trading on PORTAL;
(i) At the Time of Delivery, the Representatives shall have received the
Registration Rights Agreement, substantially in the form of Annex VI hereto,
executed by Healthtrust and such agreement shall be in full force and effect;
(j) At the Time of Delivery, counsel for the Purchasers shall have been
furnished with such documents and opinions as they may require for the purpose
of enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by Healthtrust in connection with the issuance and
sale of the Securities and the assumption by Holdings of the obligations under
the Securities, in each case, as herein contemplated shall be satisfactory in
form and substance to the Representatives and counsel for the Purchasers; and
(k) The conditions to closing provided for in the New Credit Agreement shall be
simultaneously satisfied or waived, and Healthtrust shall have received loan
proceeds of not less than $340,000,000 under the New Credit Agreement.
8. (a) The Company and, upon execution of the Guarantor Assumption Agreement,
each guarantor will indemnify and hold harmless each Purchaser against any
losses, claims, damages or liabilities, joint or several, to which such
Purchaser may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of
<PAGE>
a material fact contained in any Preliminary Offering Circular or the Final
Offering Circular, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
necessary to make the statements therein in light of the circumstances under
which they were made not misleading, and will reimburse each Purchaser for any
legal or other expenses reasonably incurred by such Purchaser in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Offering Circular or the Final Offering
Circular or any such amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any
Purchaser through Goldman, Sachs & Co. expressly for use therein. It is
understood and agreed that the only written information furnished by any
Purchaser for inclusion in the Preliminary Offering Circular or the Final
Offering Circular consists of the following information in the Offering
Circular: (i) the stabilization legend on page ii, (ii) the second sentence
under the caption "Risk Factors-You May Not Be Able to Sell Your Notes", (iii)
the last paragraph on the front cover and (iv) the sixth, seventh, eighth and
ninth paragraphs under the caption "Underwriting".
(b) Each Purchaser will indemnify and hold harmless the Company against any
losses, claims, damages or liabilities to which the Company may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Offering Circular or the Final Offering Circular, or any amendment
or supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Offering Circular or the Final Offering
Circular or any such amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by or on behalf of such
Purchaser through Goldman, Sachs & Co. expressly for use therein; and will
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such action or claim
as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a) or (b)
above of notice of the commencement of any action, such indemnified party shall,
if a claim in respect thereof is to be made against the indemnifying party under
such subsection, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party otherwise than
under such subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with
<PAGE>
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to,
or an admission of, fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above in respect of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Purchasers on the other from the offering
of the Securities. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under subsection (c) above, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
the Purchasers on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Purchasers on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Purchasers, in each case
as set forth in the Offering Circular. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the Purchasers
on the other and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Purchasers agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses,
<PAGE>
claims, damages or liabilities (or actions in respect thereof) referred to above
in this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Purchaser shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities
underwritten by it and distributed to investors were offered to investors
exceeds the amount of any damages which such Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. The Purchasers' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in addition to
any liability which the Company may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls any Purchaser
within the meaning of the Act; and the obligations of the Purchasers under this
Section 8 shall be in addition to any liability which the respective Purchasers
may otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company within the meaning of the Act.
9. (a) If any Purchaser shall default in its obligation to purchase the
Securities which it has agreed to purchase hereunder, you may in your discretion
arrange for you or another party or other parties to purchase such Securities on
the terms contained herein. If within twenty-four hours after such default by
any Purchaser you do not arrange for the purchase of such Securities, then the
Company shall be entitled to a further period of twenty-four hours within which
to procure another party or other parties satisfactory to you to purchase such
Securities on such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the purchase of
such Securities, or the Company notifies you that it has so arranged for the
purchase of such Securities, you or the Company shall have the right to postpone
the Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Offering Circular,
or in any other documents or arrangements, and the Company agrees to prepare
promptly any amendments to the Offering Circular which in your opinion may
thereby be made necessary. The term "Purchaser" as used in this Agreement shall
include any person substituted under this Section with like effect as if such
person had originally been a party to this Agreement with respect to such
Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by you and the Company as
provided in subsection (a) above, the aggregate principal amount of such
Securities which remains unpurchased does not exceed one-eleventh of the
aggregate principal amount of all the Securities, then the Company shall have
the right to require each non-defaulting Purchaser to purchase the principal
amount of Securities which such Purchaser agreed to purchase hereunder
<PAGE>
and, in addition, to require each non-defaulting Purchaser to purchase its pro
rata share (based on the principal amount of Securities which such Purchaser
agreed to purchase hereunder) of the Securities of such defaulting Purchaser or
Purchasers for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Purchaser from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Purchaser or Purchasers by you and the Company as
provided in subsection (a) above, the aggregate principal amount of Securities
which remains unpurchased exceeds one-eleventh of the aggregate principal amount
of all the Securities, or if the Company shall not exercise the right described
in subsection (b) above to require non-defaulting Purchasers to purchase
Securities of a defaulting Purchaser or Purchasers, then this Agreement shall
thereupon terminate, without liability on the part of any non-defaulting
Purchaser or the Company, except for the expenses to be borne by the Company and
the Purchasers as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Purchaser from liability for its default.
10. The respective indemnities, agreements, representations, warranties and
other statements of the Company and the several Purchasers, as set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Purchaser or any controlling person of any Purchaser, or the Company, or
any officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Securities. Notwithstanding the foregoing, the
parties hereto acknowledge and agree that the representations and warranties
relating to Healthtrust or Columbia/HCA and their respective subsidiaries (other
than the Business, Triad, Holdings and the Designated Subsidiaries) shall
survive only until the assumption of the indebtedness evidenced by the
Securities by Holdings has occurred and the Distribution has been consummated.
11. If this Agreement shall be terminated pursuant to Section 9 hereof, the
Company shall not then be under any liability to any Purchaser except as
provided in Sections 6 and 8 hereof; but, if for any other reason, the
Securities are not delivered by or on behalf of the Company as provided herein,
the Company will reimburse the Purchasers through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Purchasers in making preparations for the
purchase, sale and delivery of the Securities, but the Company shall then be
under no further liability to any Purchaser except as provided in Sections 6 and
8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or given
by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives.
<PAGE>
All statements, requests, notices and agreements hereunder shall be in writing,
and if to the Purchasers shall be delivered or sent by mail, telex or facsimile
transmission to you as the representatives in care of Goldman, Sachs & Co., 32
Old Slip, 9th Floor, New York, New York 10005, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the Offering
Circular, Attention: Secretary; provided, however, that any notice to a
Purchaser pursuant to Section 8(c) hereof shall be delivered or sent by mail,
telex or facsimile transmission to such Purchaser at its address set forth in
its Purchasers' Questionnaire, or telex constituting such Questionnaire, which
address will be supplied to the Company by you upon request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit of,
the Purchasers, the Company and, to the extent provided in Sections 8 and 10
hereof, the officers and directors of the Company and each person who controls
the Company or any Purchaser, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities from any Purchaser shall be deemed a successor or assign by reason
merely of such purchase.
14. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
15. This Agreement may be executed by any one or more of the parties hereto in
any number of counterparts, each of which shall be deemed to be an original, but
all such respective counterparts shall together constitute one and the same
instrument.
<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return to us one for the Company and each of the Representatives plus one for
each counsel counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Purchasers, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Purchasers and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Purchasers is pursuant to the authority set forth in a form of Agreement among
Purchasers, the form of which shall be submitted to the Company for examination
upon request, but without warranty on your part as to the authority of the
signers thereof.
Very truly yours,
Healthtrust, Inc. -- The Hospital Company
By: /s/ David Anderson
-------------------------------------
Name: David Anderson
Title: Vice President
Accepted as of the date hereof:
Goldman, Sachs & Co.
NationsBanc Montgomery Securities LLC
Chase Securities Inc.
Salomon Smith Barney Inc.
SG Cowen Securities Corporation
By: /s/ Goldman, Sachs & Co.
----------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Purchasers
<PAGE>
Exhibit 4.3(b)
TRIAD ASSUMPTION AGREEMENT
May 11, 1999
Reference is hereby made to the Purchase Agreement, dated April 30, 1999 (the
"Agreement"), between Healthtrust, Inc.-The Hospital Company ("Healthtrust") and
the Purchasers named therein. Unless otherwise defined herein, terms defined in
the Agreement and used herein shall have the meanings given them in the
Agreement.
Triad Hospitals, Inc. ("Triad") hereby unconditionally and irrevocably expressly
assumes, confirms and agrees to perform and observe as the "Company" each and
every of the covenants, agreements, terms, conditions, obligations,
appointments, duties, promises and liabilities of Healthtrust under the
Agreement, and upon the Business being validly transferred to Triad, the
assumption by Triad of the indebtedness evidenced by the Securities and
Healthtrust and Triad executing and delivering this Triad Assumption Agreement,
Healthtrust shall fully, unconditionally and irrevocably be released of all
covenants, agreements, terms, conditions, obligations, appointment, duties,
promises and liabilities under the Agreement.
Each of the undersigned hereby agrees to promptly execute and deliver any and
all further documents and take such further action as the other undersigned
party or the Representatives may reasonably require to effect the purpose of
this Triad Assumption Agreement.
This Triad Assumption Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
HEALTHTRUST, INC.-THE HOSPITAL
COMPANY
By: /s/ R. Milton Johnson
Name: R. Milton Johnson
Title: Vice President
TRIAD HOSPITALS, INC.
By: /s/ Donald P. Fay
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
Exhibit 4.3(c)
HOLDINGS ASSUMPTION AGREEMENT
May 11, 1999
Reference is hereby made to the Purchase Agreement, dated April 30, 1999 (the
"Agreement"), between Healthtrust, Inc.-The Hospital Company ("Healthtrust") and
the Purchasers named therein and the Triad Assumption Agreement, dated May 11,
1999, between Healthtrust and Triad Hospitals, Inc. ("Triad"). Unless otherwise
defined herein, terms defined in the Agreement and used herein shall have the
meanings given them in the Agreement.
Triad Hospitals Holdings, Inc. ("Holdings") hereby unconditionally and
irrevocably expressly assumes, confirms and agrees to perform and observe as the
"Company" each and every of the covenants, agreements, terms, conditions,
obligations, appointments, duties, promises and liabilities of Triad under the
Agreement, and upon the Business being validly transferred to Holdings, the
assumption by Holdings of the indebtedness evidenced by the Securities and Triad
and Holdings executing and delivering this Holdings Assumption Agreement, Triad
shall fully, unconditionally and irrevocably be released of all covenants,
agreements, terms, conditions, obligations, appointment, duties, promises and
liabilities under the Agreement.
Each of the undersigned hereby agrees to promptly execute and deliver any and
all further documents and take such further action as any other undersigned
party or the Representatives may reasonably require to effect the purpose of
this Holdings Assumption Agreement.
This Holdings Assumption Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
TRIAD HOSPITALS, INC.
By: /s/ Donald P. Fay
Name: Donald P. Fay
Title: Executive Vice President
TRIAD HOSPITALS HOLDINGS,
INC.
By: /s/ Donald P. Fay
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
Exhibit 4.3(d)
GUARANTOR ASSUMPTION AGREEMENT
May 11, 1999
Reference is hereby made to the Purchase Agreement, dated April 30, 1999 (the
"Agreement"), between Healthtrust, Inc.-The Hospital Company ("Healthtrust") and
the Purchasers named therein, the Triad Assumption Agreement, dated May 11,
1999, between Healthtrust and Triad Hospitals, Inc. ("Triad") and the Holdings
Assumption Agreement, dated May 11, 1999, between Triad and Triad Hospitals
Holdings, Inc. Unless otherwise defined herein, terms defined in the Agreement
and used herein shall have the meanings given them in the Agreement.
Each of the undersigned parties hereby unconditionally and irrevocably expressly
assumes, confirms and agrees to perform and observe as a "Guarantor" each and
any of the covenants, agreements, terms, conditions, obligations, appointments,
duties, promises and liabilities of the "Guarantors" under the Agreement.
Each of the undersigned hereby agrees to promptly execute and deliver any and
all further documents and take such further action as any other undersigned
party or the Representatives (as defined in the Agreement) may reasonably
require to effect the purpose of this Guarantor Assumption Agreement.
This Guarantor Assumption Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
ALICE HOSPITAL, LLC
By: APS MEDICAL, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
ALICE SURGEONS, LLC
By: APS MEDICAL, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
<PAGE>
THE SURGICAL HOSPITAL OF AMARILLO, LTD.
By: GENERAL PARTNER:
SURGICARE OF AMARILLO, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
APS MEDICAL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
ARIZONA ASC MANAGEMENT, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
ARIZONA MEDCO, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
2
<PAGE>
BEAUCO, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
BEAUMONT MEDICAL CENTER, L.P.
By: GENERAL PARTNER:
BEAUMONT REGIONAL, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
BEAUMONT REGIONAL, LLC
By: BEAUCO, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
BRAZOS MEDCO, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
3
<PAGE>
BRAZOS REGIONAL INTEGRATED
DELIVERY GROUP
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
BRAZOS VALLEY OF TEXAS, L.P.
By: GENERAL PARTNER:
BRAZOS VALLEY SURGICAL
CENTER, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
BRAZOS VALLEY SURGICAL
CENTER, LLC
By: BRAZOS MEDCO, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
4
<PAGE>
BROWNWOOD HOSPITAL, L.P.
By: GENERAL PARTNER:
BROWNWOOD MEDICAL CENTER, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
BROWNWOOD MEDICAL
CENTER, LLC
By: SOUTHERN TEXAS MEDICAL
CENTER, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
BVSC, LLC
By: BRAZOS MEDCO, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
CARLSBAD MEDICAL CENTER, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
5
<PAGE>
CLAREMORE PHYSICIANS, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
CLAREMORE REGIONAL
HOSPITAL, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
CLINICO, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
COLLEGE STATION
DIAGNOSTIC CLINIC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
6
<PAGE>
COLLEGE STATION HOSPITAL, L.P.
By: GENERAL PARTNER:
COLLEGE STATION MEDICAL
CENTER, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
COLLEGE STATION MEDICAL
CENTER, LLC
By: COLLEGE STATION MERGER, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
COLLEGE STATION MERGER, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
CORONADO HOSPITAL, LLC
By: CORONADO MEDICAL, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
7
<PAGE>
CORONADO MEDICAL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
CRESTWOOD HEALTHCARE, L.P.
By: GENERAL PARTNER:
CRESTWOOD HOSPITAL &
NURSING HOME, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
CRESTWOOD HOSPITAL & NURSING
HOME, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
CRESTWOOD HOSPITAL
HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
8
<PAGE>
CSDS, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
CSMC, LLC
By: COLLEGE STATION MERGER, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
DALLAS PHY SERVICE, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
DALLAS PHYSICIAN PRACTICE, L.P.
By: GENERAL PARTNER:
DFW PHYSERV, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
9
<PAGE>
DAY SURGERY, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
DEQUEEN HEALTH SERVICES, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
DEQUEEN REGIONAL MEDICAL
CENTER, LLC
By: DEQUEEN HEALTH SERVICES, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
DETAR HOSPITAL, LLC
By: VHC MEDICAL, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
10
<PAGE>
DFW PHYSERV, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
DOCTORS HOSPITAL OF LAREDO,
LIMITED PARTNERSHIP
By: GENERAL PARTNER:
LAREDO INTEREST, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
DOCTORS MEDICAL CENTER, LLC
By: MID-PLAINS, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
DOCTORS OF LAREDO, LLC
By: MID-PLAINS, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
11
<PAGE>
DOUGLAS MEDICAL CENTER, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
E.D. CLINICS, LLC
By: ARIZONA MEDCO, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
EL DORADO MEDICAL CENTER, LLC
By: ARIZONA MEDCO, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
EYE CARE SURGICARE, LTD.
By: GENERAL PARTNER:
SURGICARE OF INDEPENDENCE, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
12
<PAGE>
EYE INSTITUTE OF SOUTHERN
ARIZONA, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
GALLAGHER PARK
SURGICENTER, LTD.
By: GENERAL PARTNER:
SURGICARE OF SHERMAN, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
GCMC, LLC
By: WHARTON MEDCO, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
GH TEXAS, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
13
<PAGE>
GHC HOSPITAL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
GHC HUNTINGTON BEACH, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
GULF COAST HOSPITAL, L.P.
By: GENERAL PARTNER:
GULF COAST MEDICAL CENTER, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
GULF COAST MEDICAL CENTER, LLC
By: WHARTON MEDCO, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
14
<PAGE>
HDP DEQUEEN, LLC
By: TRIAD HOLDINGS II, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
HDP WOODLAND HEIGHTS, L.P.
By: GENERAL PARTNER:
HDP WOODLAND PROPERTY, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
HDP WOODLAND PROPERTY, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
HDPWH, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
15
<PAGE>
HEALDSBURG OF CALIFORNIA, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
HOBBS MEDCO, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
HOBBS PHYSICIAN PRACTICE, LLC
By: HOBBS MEDCO, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
HOSPITAL OF BEAUMONT, LLC
By: BEAUCO, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
16
<PAGE>
HUNTINGTON ASSOCIATES
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
HUNTINGTON BEACH AMDECO, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
HUNTINGTON INTERCOMMUNITY
HOSPITAL
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
INDEPENDENCE REGIONAL HEALTH
CENTER, LLC
By: TRIAD HOLDINGS II, LLC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
17
<PAGE>
KANSAS CITY SURGICENTER, LTD.
By: GENERAL PARTNER:
DAY SURGERY, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
KENSINGCARE, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
LAKE AREA SURGICARE,
A PARTNERSHIP IN COMMENDUM,
A LOUISIANA LIMITED PARTNERSHIP
By: GENERAL PARTNER:
SURGICARE OUTPATIENT CENTER
OF LAKE CHARLES, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
18
<PAGE>
LAREDO HOSPITAL, L.P.
By: GENERAL PARTNER:
DOCTORS OF LAREDO, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
LAREDO INTEREST, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
LEA REGIONAL HOSPITAL, LLC
By: HOBBS MEDCO, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
LONGVIEW MEDICAL CENTER, L.P.
By: GENERAL PARTNER:
REGIONAL HOSPITAL OF
LONGVIEW, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
19
<PAGE>
LONGVIEW MERGER, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
LRH, LLC
By: LONGVIEW MERGER, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
LS PSYCHIATRIC, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
MCI PANHANDLE SURGICAL, L.P.
By: GENERAL PARTNER:
PANHANDLE PROPERTY, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
20
<PAGE>
MEDICAL CENTER AT TERRELL, LLC
By: TIRAD-MEDICAL CENTER AT
TERRELL SUBSIDIARY, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
MEDICAL CENTER OF
BROWNWOOD, LLC
By: SOUTHERN TEXAS MEDICAL
CENTER, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
MEDICAL CENTER OF SHERMAN, LLC
By: TRIAD-MEDICAL CENTER OF
SHERMAN SUBSIDARY, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
MEDICAL HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
21
<PAGE>
MEDICAL MANAGEMENT, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
MEDICAL PARK HOSPITAL, LLC
By: TRIAD HOLDINGS II, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
MEDICAL PARK MSO, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
MEMORIAL HOSPITAL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
22
<PAGE>
MID-PLAINS, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
MIDWEST PSYCHIATRIC
CENTER, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
MISSION BAY MEMORIAL
HOSPITAL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
MISSOURI HEALTHSERV, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
23
<PAGE>
NAVARRO HOSPITAL, L.P.
By: GENERAL PARTNER:
NAVARRO REGIONAL, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
NAVARRO REGIONAL, LLC
By: TRIAD-NAVARRO REGIONAL
HOSPITAL SUBSIDIARY, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
NORTH ANAHEIM
SURGICENTER, LTD.
By: GENERAL PARTNER:
SURGICARE OF NORTH ANAHEIM, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
24
<PAGE>
NORTHWEST HOSPITAL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
NRH, LLC
By: TRIAD-NAVARRO REGIONAL
HOSPITAL SUBSIDIARY, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
ODESSA, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
OREGON HEALTHCORP, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
25
<PAGE>
OSBORN AMBULATORY SURGICAL
CENTER, LTD.
By: GENERAL PARTNER:
SAMARITAN SURGICENTERS OF
ARIZONA, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
OVERLAND PARK REGIONAL
MEDICAL CENTER, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
PACIFIC EAST DIVISION OFFICE, L.P.
By: GENERAL PARTNER:
TRIAD TEXAS, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
PACIFIC GROUP ASC DIVISION, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
26
<PAGE>
PACIFIC PHYSICIANS SERVICES, LLC
By: SPROCKET MEDICAL
MANAGEMENT, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
PACIFIC WEST DIVISION OFFICE, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
PALM DRIVE HOSPITAL, L.P.
By: GENERAL PARTNER:
PALM DRIVE MEDICAL CENTER, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
PALM DRIVE MEDICAL CENTER, LLC
By: SEBASTOPOL, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
27
<PAGE>
PANHANDLE MEDICAL CENTER, LLC
TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
PANHANDLE SURGICAL HOSPITAL, L.P.
By: GENERAL PARTNER:
PANHANDLE MEDICAL CENTER, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
PAMPA HOSPITAL, L.P.
By: GENERAL PARTNER:
PAMPA MEDICAL CENTER, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
28
<PAGE>
PAMPA MEDICAL CENTER, LLC
By: CORONADO MEDICAL, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
PANHANDLE PROPERTY, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
PANHANDLE, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
PDMC, LLC
By: SEBASTOPOL, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
29
<PAGE>
PECOS VALLEY OF NEW MEXICO, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
PHOENIX AMDECO, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
PHOENIX SURGICAL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
PHYSICIANS AND SURGEONS
HOSPITAL OF ALICE, L.P.
By: GENERAL PARTNER:
ALICE HOSPITAL, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
30
<PAGE>
PHYS-MED, LLC
By: TRIAD HOLDINGS II, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
PINEY WOODS HEALTHCARE
SYSTEM, L.P.
By: GENERAL PARTNER:
WOODLAND HEIGHTS
MEDICAL CENTER, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
PRIMARY MEDICAL, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
31
<PAGE>
PSYCHIATRIC SERVICES OF
PARADISE VALLEY, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
REGIONAL EMPLOYEE ASSISTANCE
PROGRAM, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
REGIONAL HOSPITAL OF
LONGVIEW, LLC
By: LONGVIEW MERGER, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SACMC, LLC
By: SAN ANGELO MEDICAL, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
32
<PAGE>
SAMARITAN SURGICENTERS OF
ARIZONA, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SAN ANGELO COMMUNITY
MEDICAL CENTER, LLC
By: SAN ANGELO MEDICAL, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SAN ANGELO HOSPITAL, L.P.
By: GENERAL PARTNER:
SAN ANGELO COMMUNITY
MEDICAL CENTER, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SAN ANGELO MEDICAL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
33
<PAGE>
SAN DIEGO HOSPITAL, L.P.
By: GENERAL PARTNER:
MISSION BAY MEMORIAL
HOSPITAL, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SAN LEANDRO HOSPITAL, L.P.
By: GENERAL PARTNER:
SAN LEANDRO MEDICAL
CENTER, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SAN LEANDRO MEDICAL
CENTER, LLC
By: SAN LEANDRO, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
34
<PAGE>
SAN LEANDRO, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SDH, LLC
By: SILSBEE TEXAS, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SDH LP, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SEBASTOPOL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
35
<PAGE>
SHERMAN HOSPITAL, L.P.
By: GENERAL PARTNER:
MEDICAL CENTER OF SHERMAN, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SHERMAN MEDICAL CENTER, LLC
By: TRIAD-MEDICAL CENTER OF
SHERMAN SUBSIDIARY, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SILSBEE DOCTORS HOSPITAL, L.P.
By: GENERAL PARTNER:
SILSBEE MEDICAL CENTER, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SILSBEE MEDICAL CENTER, LLC
By: SILSBEE TEXAS, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
36
<PAGE>
SILSBEE TEXAS, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SLH, LLC
By: SAN LEANDRO, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SOUTH ALABAMA MANAGED CARE
CONTRACTING, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SOUTH ALABAMA MEDICAL
MANAGEMENT SERVICES, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
37
<PAGE>
SOUTH ALABAMA PHYSICIANS
SERVICE, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SOUTH ARKANSAS CLINIC, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SOUTHERN TEXAS MEDICAL
CENTER, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SPROCKET MEDICAL
MANAGEMENT, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
38
<PAGE>
SURGICAL CENTER OF AMARILLO, LLC
TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SURGICAL CENTER OF SOUTHEAST
TEXAS, LTD.
By: GENERAL PARTNER:
SURGICARE OF SOUTHEAST
TEXAS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SURGICARE OF AMARILLO, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SURGICARE OF INDEPENDENCE, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
39
<PAGE>
SURGICARE OF NORTH
ANAHEIM, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SURGICARE OF SAN LEANDRO, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SURGICARE OF SHERMAN, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SURGICARE OF SOUTHEAST
TEXAS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SURGICARE OF VICTORIA, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
40
<PAGE>
SURGICARE OF VICTORIA, LTD.
By: GENERAL PARTNER:
SURGICARE OF VICTORIA, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SURGICARE OUTPATIENT CENTER OF
LAKE CHARLES, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SURGICENTER OF JOHNSON
COUNTY, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SURGICENTER OF JOHNSON
COUNTY, LTD.
By: GENERAL PARTNER:
SURGICARE OF JOHNSON
COUNTY, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
41
<PAGE>
SURGICENTERS OF AMERICA, L.P.
By: GENERAL PARTNER:
SAMARITAN SURGICENTERS OF
ARIZONA, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
SURGICENTERS OF AMERICA, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
TERRELL HOSPITAL, L.P.
By: GENERAL PARTNER:
TERRELL MEDICAL CENTER, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
42
<PAGE>
TERRELL MEDICAL CENTER, LLC
By: TRIAD-MEDICAL CENTER AT
TERRELL SUBSIDIARY, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
TRIAD - ARIZONA I, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
TRIAD - EL DORADO, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
TRIAD - SOUTH TULSA HOSPITAL
COMPANY, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
43
<PAGE>
TRIAD CSGP, LLC
By: TRIAD HOLDINGS II, LLC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
TRIAD CSLP, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
TRIAD CORPORATE SERVICES,
LIMITED PARTNERSHIP
By: GENERAL PARTNER:
TRIAD CSGP, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
44
<PAGE>
TRIAD HEALTHCARE SYSTEM OF
PHOENIX, L.P.
By: GENERAL PARTNER:
TRIAD OF PHOENIX, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
TRIAD HOLDINGS II, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
TRIAD HOLDINGS III, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
TRIAD OF ARIZONA (L.P.), INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
45
<PAGE>
TRIAD OF PHOENIX, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
TRIAD RC, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
TRIAD TEXAS, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
TRIAD-MEDICAL CENTER AT
TERRELL SUBSIDIARY, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
46
<PAGE>
TRIAD-MEDICAL CENTER OF
SHERMAN SUBSIDIARY, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
TRIAD-NAVARRO REGIONAL
HOSPITAL SUBSIDIARY, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
TROSCO, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
TRUFOR PHARMACY, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
47
<PAGE>
VFARC, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
VHC HOLDINGS, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
VHC MEDICAL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
VICTORIA HOSPITAL, LLC
By: VHC MEDICAL, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
48
<PAGE>
VICTORIA MEDICAL FOUNDATION
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
VICTORIA OF TEXAS, L.P.
By: GENERAL PARTNER:
DETAR HOSPITAL, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
VMF MEDICAL, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
WAGONER COMMUNITY
HOSPITAL, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
49
<PAGE>
WAMC, LLC
By: WEST ANAHEIM, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
WEST ANAHEIM HOSPITAL, L.P.
By: GENERAL PARTNER:
WEST ANAHEIM MEDICAL
CENTER, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
WEST ANAHEIM MEDICAL
CENTER, LLC
By: WEST ANAHEIM, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
WEST ANAHEIM, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
50
<PAGE>
WESTMED
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
WHARTON MEDCO, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
WHMC, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
WILLAMETTE VALLEY CLINICS, LLC
By: OREGON HEALTHCORP, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
51
<PAGE>
WILLAMETTE VALLEY MEDICAL
CENTER, LLC
By: OREGON HEALTHCORP, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
WM MEDICAL, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
WOMEN & CHILDREN'S
HOSPITAL, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
WOODLAND HEIGHTS MEDICAL
CENTER, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Morton A. Pierce
Name: Morton A. Pierce
Title: Vice President
52
<PAGE>
EXHIBIT 4.4(A)
Healthtrust, Inc.--The Hospital Company
11% Senior Subordinated Notes due 2009
to be unconditionally guaranteed as to the payment of principal,
premium, if any, and interest by certain subsidiaries of
Triad Hospitals Holdings, Inc. following the assumption
of the Securities by Holdings and the asset contributions
described herein
--------------
Exchange and Registration Rights Agreement
May 11, 1999
Goldman, Sachs & Co.
NationsBanc Montgomery Securities LLC
Chase Securities Inc.
Salomon Smith Barney Inc.
SG Cowen Securities Corporation
As representatives of the several Purchasers
named in Schedule I to the Purchase Agreement
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Healthtrust, Inc.--The Hospital Company, a Delaware corporation
("Healthtrust"), proposes to issue and sell to the Purchasers (as defined
herein) upon the terms set forth in the Purchase Agreement (as defined herein)
$325,000,000 aggregate principal amount of its 11% Senior Subordinated Notes due
2009, which are to be unconditionally guaranteed by certain subsidiaries of
Triad Hospitals Holdings, Inc., a Delaware corporation ("Holdings"), following
the assumption of the Securities by Holdings and the asset contributions
described below. Upon Healthtrust transferring the Business (as defined herein)
to Triad Hospitals, Inc., a Delaware corporation ("Triad"), and the assumption
by Triad of the indebtedness evidenced by the Securities, Healthtrust will cause
Triad to assume all the rights, obligations and liabilities of Healthtrust under
this agreement pursuant to the Triad Assumption Agreement, the form of which is
attached as Exhibit C hereto. Upon Triad transferring the Business to Holdings
and the assumption by Holdings of the indebtedness evidenced by the Securities,
Triad will cause Holdings to assume all rights, obligations and liabilities of
Triad under this Agreement pursuant to the Holdings Assumption Agreement, the
form of which is attached as Exhibit D hereto. Following the assumption by
Holdings of the indebtedness evidenced by the Securities, Holdings will
contribute certain assets to its subsidiary, Triad Holdings II, LLC and Triad
Holdings II, LLC will then contribute certain assets to its subsidiary, Triad
Holdings III, Inc. Following these contributions and immediately prior to the
completion of the Distribution, Holdings will cause the Guarantors (as defined
in the Guarantor Assumption Agreement) to execute the Guarantor Assumption
Agreement, the form of which is attached as Exhibit E hereto, pursuant to which
<PAGE>
each Guarantor will agree to observe and perform as a "Guarantor" all rights,
obligations and liabilities of such Guarantor under this Agreement. The parties
hereto acknowledge and agree that once (i) the Business has been validly
transferred to Triad and the Triad Assumption Agreement has been executed and
delivered by the parties thereto, Healthtrust shall automatically be fully,
unconditionally and irrevocably released from all rights, obligations and
liabilities hereunder and (ii) the Business has been validly transferred to
Holdings and the Holdings Assumption Agreement has been executed and delivered
by the parties thereto, Triad shall automatically be fully, unconditionally and
irrevocably released from all rights, obligations and liabilities hereunder. For
purposes of this Agreement, the "Company" shall refer to any of Healthtrust or
Triad or Holdings, depending on which such company has then assumed all rights,
obligations and liabilities under this Agreement as discussed in this paragraph.
As an inducement to the Purchasers to enter into the Purchase Agreement and in
satisfaction of a condition to the obligations of the Purchasers thereunder, the
Company agrees with the Purchasers for the benefit of holders (as defined
herein) from time to time of the Registrable Securities (as defined herein) as
follows:
1. Certain Definitions. For purposes of this Agreement, the following terms
shall have the following respective meanings:
"Additional Interest" shall have the meaning assigned thereto in
Section 2(c) hereof.
"Agreement" shall mean this Exchange and Registration Rights
Agreement, as the same shall be amended from time to time.
"Base Interest" shall mean the interest that would otherwise accrue on
the Securities under the terms thereof and the Indenture, without giving
effect to the provisions of this Agreement.
The term "broker-dealer" shall mean any broker or dealer registered
with the Commission under the Exchange Act.
"Business" shall mean the net assets, business and operations
comprising the Pacific Group Division of Columbia/HCA.
"Closing Date" shall mean the date on which the Securities are
initially issued.
"Columbia/HCA" shall mean Columbia/HCA Healthcare Corporation, a
Delaware corporation.
"Commission" shall mean the United States Securities and Exchange
Commission, or any other federal agency at the time administering the
Exchange Act or the Securities Act, whichever is the relevant statute for
the particular purpose.
<PAGE>
"Distribution" shall mean (i) the incurrence by Healthtrust of the
indebtedness evidenced by the Securities and by the New Credit Agreement,
(ii) the transfer of the Business by Healthtrust to Triad and the
simultaneous assumption by Triad of the indebtedness evidenced by the
Securities and by the New Credit Agreement, (iii) the subsequent transfer
of the Business by Triad to Holdings and the simultaneous assumption by
Holdings of the indebtedness evidenced by the Securities and the New Credit
Agreement, (iv) the distribution by Healthtrust of all of the common stock
of Triad to Columbia/HCA, and (v) the distribution by Columbia/HCA of all
of the common stock of Triad to the stockholders of Columbia/HCA, in each
case, as set forth in the offering circular.
"Effective Time," in the case of (i) an Exchange Registration, shall
mean the time and date as of which the Commission declares the Exchange
Registration Statement effective or as of which the Exchange Registration
Statement otherwise becomes effective and (ii) a Shelf Registration, shall
mean the time and date as of which the Commission declares the Shelf
Registration Statement effective or as of which the Shelf Registration
Statement otherwise becomes effective.
"Electing Holder" shall mean any holder of Registrable Securities that
has returned a completed and signed Notice and Questionnaire to the Company
in accordance with Section 3(d)(ii) or 3(d)(iii) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, or any
successor thereto, as the same shall be amended from time to time.
"Exchange Offer" shall have the meaning assigned thereto in Section
2(a) hereof.
"Exchange Registration" shall have the meaning assigned thereto in
Section 3(c) hereof.
"Exchange Registration Statement" shall have the meaning assigned
thereto in Section 2(a) hereof.
"Exchange Securities" shall have the meaning assigned thereto in
Section 2(a) hereof.
"Guarantors" shall have the meaning assigned thereto in the Indenture.
The term "holder" shall mean each of the Purchasers and other persons
who acquire Registrable Securities from time to time (including any
successors or assigns), in each case for so long as such person owns any
Registrable Securities.
"Indenture" shall mean the Indenture, dated as of May 11, 1999,
between the Company and Citibank N.A., as Trustee, as the same shall be
amended from time to time.
"New Credit Agreement" shall mean the new credit agreement described
in the offering circular.
<PAGE>
"Notice and Questionnaire" means a Notice of Registration Statement
and Selling Securityholder Questionnaire substantially in the form of
Exhibit A hereto.
The term "person" shall mean a corporation, limited liability company,
association, partnership, organization, business, individual, government or
political subdivision thereof or governmental agency.
"Purchase Agreement" shall mean the Purchase Agreement, dated as of
April 30, 1999, between the Purchasers and the Company relating to the
Securities, as the same shall be amended from time to time.
"Purchasers" shall mean the Purchasers named in Schedule I to the
Purchase Agreement.
"Registrable Securities" shall mean the Securities; provided, however,
that a Security shall cease to be a Registrable Security when (i) in the
circumstances contemplated by Section 2(a) hereof, the Security has been
exchanged for an Exchange Security in an Exchange Offer as contemplated in
Section 2(a) hereof (provided that any Exchange Security that, pursuant to
the last two sentences of Section 2(a), is included in a prospectus for use
in connection with resales by broker-dealers shall be deemed to be a
Registrable Security with respect to Sections 5, 6 and 9 until resale of
such Registrable Security has been effected within the 180-day period
referred to in Section 2(a)); (ii) in the circumstances contemplated by
Section 2(b) hereof, a Shelf Registration Statement registering such
Security under the Securities Act has been declared or becomes effective
and such Security has been sold or otherwise transferred by the holder
thereof pursuant to and in a manner contemplated by such effective Shelf
Registration Statement; (iii) such Security is sold pursuant to Rule 144
under circumstances in which any legend borne by such Security relating to
restrictions on transferability thereof, under the Securities Act or
otherwise, is removed by the Company or pursuant to the Indenture; (iv)
such Security is eligible to be sold pursuant to paragraph (k) of Rule 144;
or (v) such Security shall cease to be outstanding.
"Registration Default" shall have the meaning assigned thereto in
Section 2(c) hereof.
"Registration Expenses" shall have the meaning assigned thereto in
Section 4 hereof.
"Resale Period" shall have the meaning assigned thereto in Section
2(a) hereof.
"Restricted Holder" shall mean (i) a holder that is an affiliate of
the Company within the meaning of Rule 405, (ii) a holder who acquires
Exchange Securities outside the ordinary course of such holder's business,
(iii) a holder who has arrangements or understandings with any person to
participate in the Exchange Offer for the purpose of distributing Exchange
Securities and (iv) a holder that is a broker-dealer, but only with respect
to Exchange
<PAGE>
Securities received by such broker-dealer pursuant to an Exchange Offer in
exchange for Registrable Securities acquired by the broker-dealer directly
from the Company.
"Rule 144," "Rule 405" and "Rule 415" shall mean, in each case, such
rule promulgated under the Securities Act (or any successor provision), as
the same shall be amended from time to time.
"Securities" shall mean, collectively, the 11% Senior Subordinated
Notes due 2009 of the Company to be issued and sold to the Purchasers, and
securities issued in exchange therefor or in lieu thereof pursuant to the
Indenture. Each Security will be entitled to the benefit of the guarantees
provided for in the Indenture following the assumption of the Securities by
Holdings and the asset contributions described in the preamble in this
Agreement (the "Guarantees") and, unless the context otherwise requires,
any reference herein to a "Security," an "Exchange Security" or a
"Registrable Security" shall include a reference to the related Guarantees.
"Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.
"Shelf Registration" shall have the meaning assigned thereto in
Section 2(b) hereof.
"Shelf Registration Statement" shall have the meaning assigned thereto
in Section 2(b) hereof.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, or
any successor thereto, and the rules, regulations and forms promulgated
thereunder, all as the same shall be amended from time to time.
Unless the context otherwise requires, any reference herein to a "Section"
or "clause" refers to a Section or clause, as the case may be, of this Exchange
and Registration Rights Agreement, and the words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular Section or other subdivision.
2. Registration Under the Securities Act.
(a) Except as set forth in Section 2(b) below, the Company agrees to use its
reasonable best efforts to file under the Securities Act, as soon as
practicable, but no later than 90 days after the Closing Date, a registration
statement relating to an offer to exchange (such registration statement, the
"Exchange Registration Statement", and such offer, the "Exchange Offer") any and
all of the Securities for a like aggregate principal amount of debt securities
issued by the Company and guaranteed by the Guarantors, which debt securities
and Guarantees are substantially identical to the Securities and the related
Guarantees, respectively (and are entitled to the benefits of a trust indenture
which is substantially identical to the Indenture or is
<PAGE>
the Indenture and which has been qualified under the Trust Indenture Act),
except that they have been registered pursuant to an effective registration
statement under the Securities Act and do not contain provisions for the
Additional Interest contemplated in Section 2(c) below (such new debt securities
hereinafter called "Exchange Securities"). The Company agrees to use its
reasonable best efforts to cause the Exchange Registration Statement to become
effective under the Securities Act as soon as practicable, but no later than 180
days after the Closing Date. The Exchange Offer will be registered under the
Securities Act on the appropriate form and will comply with all applicable
tender offer rules and regulations under the Exchange Act. The Company further
agrees to use its reasonable best efforts to commence the Exchange Offer
promptly, but no later than 5 days after such registration statement has become
effective, hold the Exchange Offer open for at least 30 days and exchange
Exchange Securities for all Registrable Securities that have been properly
tendered and not withdrawn on or prior to the expiration of the Exchange Offer.
The Exchange Offer will be deemed to have been "completed" only if the debt
securities and related Guarantees received by holders other than Restricted
Holders in the Exchange Offer for Registrable Securities are, upon receipt,
transferable by each such holder without restriction under the Securities Act
and the Exchange Act and without material restrictions under the blue sky or
securities laws of a substantial majority of the States of the United States of
America. The Exchange Offer shall be deemed to have been completed upon the
earlier to occur of (i) the Company having exchanged the Exchange Securities for
all outstanding Registrable Securities pursuant to the Exchange Offer and (ii)
the Company having exchanged, pursuant to the Exchange Offer, Exchange
Securities for all Registrable Securities that have been properly tendered and
not withdrawn before the expiration of the Exchange Offer, which shall be on a
date that is at least 30 days following the commencement of the Exchange Offer.
The Company agrees (x) to include in the Exchange Registration Statement a
prospectus for use in any resales by any holder of Exchange Securities that is a
broker-dealer and (y) to keep such Exchange Registration Statement effective for
a period (the "Resale Period") beginning when Exchange Securities are first
issued in the Exchange Offer and ending upon the earlier of the expiration of
the 180th day after the Exchange Offer has been completed or such time as such
broker-dealers no longer own any Registrable Securities. With respect to such
Exchange Registration Statement, such holders shall have the benefit of the
rights of indemnification and contribution set forth in Sections 6(a), (c), (d)
and (e) hereof.
Each holder participating in the Registered Exchange Offer shall be required
to represent to the Company that at the time of the consummation of the
Registered Exchange Offer (i) any Exchange Securities received by such holder
will be acquired in the ordinary course of business, (ii) such holder will have
no arrangements or understanding with any person to participate in the
distribution of the Securities or the Exchange Securities within the meaning of
the Securities Act, (iii) such holder is not an "affiliate," as defined in Rule
405 of the Securities Act, of the Company or if it is an affiliate, such holder
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable, (iv) if such holder is not a
broker-dealer, that it is not engaged in, and does not intend to engage in, the
distribution of the Exchange Securities and (v) if such holder is a
broker-dealer, that it will receive Exchange
<PAGE>
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities and that it
will be required to acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities.
(b) If (i) on or prior to the time the Exchange Offer is completed, existing
Commission interpretations are changed such that the debt securities or the
related Guarantees received by holders other than Restricted Holders in the
Exchange Offer for Registrable Securities are not or would not be, upon receipt,
freely transferable by each such holder without restriction under the Securities
Act, (ii) the Exchange Offer has not been consummated within 220 days following
the Closing Date, (iii) any holder of Securities notifies the Company prior to
the 20th day following the consummation of the Exchange Offer that (a) due to a
change in law or policy it is not eligible to participate in the Exchange Offer,
(b) due to a change in law or policy it may not resell the Exchange Securities
acquired by it in the Exchange Offer to the public without delivering a
prospectus and the prospectus contained in the Exchange Registration Statement
is not appropriate or available for such resales by such holder or (c) it is a
broker-dealer and owns Securities acquired directly from the Company or an
affiliate of the Company, or (iv) the holders of the Securities may not resell
the Exchange Securities acquired by them in the Exchange Offer to the public
without restriction under the Securities Act and without restriction under
applicable blue sky or state securities laws, then each of the Company and the
Guarantors will, in lieu of (or in the case of clause (iii), in addition to)
conducting the Exchange Offer contemplated by Section 2(a), use its reasonable
best efforts to file under the Securities Act as soon as practicable, but no
later than the later of 90 days after the Closing Date or 90 days after the time
such obligation to file arises or in the case of clause (ii), 30 days, a "shelf"
registration statement providing for the registration of, and the sale on a
continuous or delayed basis by the holders of, all of the Registrable
Securities, or, in the case of clause (iii), of the Securities held by the
holders referred to in such clause for resale by such holders, pursuant to Rule
415 or any similar rule that may be adopted by the Commission (such filing, the
"Shelf Registration" and such registration statement, the "Shelf Registration
Statement"). The Company agrees to use its reasonable best efforts (x) to cause
the Shelf Registration Statement to become or be declared effective no later
than 90 days after such Shelf Registration Statement is filed and to keep such
Shelf Registration Statement continuously effective for a period ending on the
earlier of the second anniversary of the Effective Time or such time as there
are no longer any Registrable Securities outstanding, provided, however, that no
holder shall be entitled to be named as a selling securityholder in the Shelf
Registration Statement or to use the prospectus forming a part thereof for
resales of Registrable Securities unless such holder is an Electing Holder, and
(y) after the Effective Time of the Shelf Registration Statement, promptly upon
the request of any holder of Registrable Securities that is not then an Electing
Holder, to take any action reasonably necessary to enable such holder to use the
prospectus forming a part thereof for resales of Registrable Securities,
including, without limitation, any action necessary to identify such holder as a
selling securityholder in the Shelf Registration Statement, provided, however,
that nothing in this clause (y) shall relieve any such holder of the obligation
to return a completed and signed Notice and Questionnaire to the Company in
accordance with Section 3(d)(iii) hereof. No holder of Registrable Securities
shall be entitled to Additional Interest
<PAGE>
pursuant to Section 2(c) hereof unless and until such holder has provided all
such information. The foregoing shall not apply to actions taken (or
contemplated to be taken) by the Company in good faith and for valid business
reasons involving a material undisclosed event (but not including the avoidance
of the Company's obligations hereunder) (a "Suspension Event"), including,
without limitation, the acquisition or divestiture of assets or the offering or
sale of securities, so long as the Company promptly thereafter complies with the
requirements of Section 3(e) hereof, if applicable. Any such period during which
the Company is excused from keeping the Shelf Registration Statement effective
and usable for offers and sale of the Registrable Securities is referred to as a
"Suspension Period;" provided that, such Suspension Period shall not exceed 45
days in any 12-month period (whereafter Additional Interest shall accrue and be
payable); and provided further that the number of days of any actual Suspension
Period shall be added on to the end of the two-year period specified above. A
Suspension Period shall commence on and include the date that the Company gives
notice that the Shelf Registration Statement is no longer effective or the
prospectus included therein is no longer usable for offers and sales of
Registrable Securities and shall end on the earlier to occur of (1) the date on
which each seller of Registrable Securities covered by the Shelf Registration
Statement either receives the copies of the supplemented or amended prospectus
contemplated by Section 3(e) hereof or is advised in writing by the Company that
the use of the prospectus may be resumed and (2) the expiration of 45 days in
any 12-month period during which one or more Suspension Periods has been in
effect. The Company further agrees to supplement or make amendments to the Shelf
Registration Statement, as and when required by the rules, regulations or
instructions applicable to the registration form used by the Company for such
Shelf Registration Statement or by the Securities Act or rules and regulations
thereunder for shelf registration, and the Company agrees to furnish to each
Electing Holder copies of any such supplement or amendment prior to its being
used or promptly following its filing with the Commission.
(c) In the event that (i) the Company has not filed the Exchange Registration
Statement or Shelf Registration Statement on or before the date on which such
registration statement is required to be filed pursuant to Section 2(a) or 2(b),
respectively, or (ii) such Exchange Registration Statement or Shelf Registration
Statement has not become effective or been declared effective by the Commission
on or before the date on which such registration statement is required to become
or be declared effective pursuant to Section 2(a) or 2(b), respectively, or
(iii) the Exchange Offer has not been consummated within 30 business days after
the initial effective date of the Exchange Registration Statement or (iv) any
Exchange Registration Statement or Shelf Registration Statement required by
Section 2(a) or 2(b) hereof is filed and declared effective but shall thereafter
cease to be effective (other than by reason of a Suspension Event) without being
succeeded immediately by an additional registration statement filed and declared
effective (each such event referred to in clauses (i) through (iv), a
"Registration Default" and each period during which a Registration Default has
occurred and is continuing, a "Registration Default Period"), then, as
liquidated damages for such Registration Default, additional interest
("Additional Interest"), in addition to the Base Interest, shall accrue on the
Securities over and above the interest set forth in the title of the Securities,
with respect to
<PAGE>
the first 90-day period (or portion thereof) while a Registration Default or
Defaults is continuing immediately following the occurrence of such Registration
Default or Defaults, by 0.25%, such interest rate increasing by an additional
0.25% at the beginning of each subsequent 90-day period (or portion thereof)
while a Registration Default or Defaults is continuing until all Registration
Defaults have been cured, up to a maximum rate of Additional Interest of 1.0%.
Following the cure of all Registration Defaults, the accrual of Additional
Interest on the Securities will cease and the interest rate will revert to the
original rate. Additional Interest pursuant to this Section 2(c) constitutes
liquidated damages with respect to Registration Defaults and shall be the
exclusive monetary remedy available to the holders of the Securities in respect
of any Registration Default. Additional Interest will not accrue and be payable
as set forth above during any Suspension Period.
All accrued Additional Interest shall be paid to the holders entitled
thereto, in the manner provided for the payment of interest in the Indenture and
the Securities, on each interest payment date, as more fully set forth in the
Indenture and the Securities. The amount of Additional Interest will be
determined by multiplying the applicable Additional Interest rate by the
principal amount of the Securities, as the case may be, multiplied by a
fraction, the numerator of which is the number of days such Additional Interest
rate was applicable during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months), and the denominator of which is 360.
(d) The Company shall take, and shall cause the Guarantors to take, all actions
reasonably necessary or advisable to be taken by it to ensure that the
transactions contemplated herein are effected as so contemplated, including all
actions reasonably necessary or desirable to register the Guarantees under the
registration statement contemplated in Section 2(a) or 2(b) hereof, as
applicable.
(e) Any reference herein to a registration statement as of any time shall be
deemed to include any document incorporated, or deemed to be incorporated,
therein by reference as of such time and any reference herein to any
post-effective amendment to a registration statement as of any time shall be
deemed to include any document incorporated, or deemed to be incorporated,
therein by reference as of such time.
3. Registration Procedures.
If the Company files a registration statement pursuant to Section 2(a) or
Section 2(b), the following provisions shall apply:
(a) At or before the Effective Time of the Exchange Offer or the Shelf
Registration, as the case may be, the Company shall qualify the Indenture under
the Trust Indenture Act.
<PAGE>
(b) In the event that such qualification would require the appointment of a new
trustee under the Indenture, the Company shall appoint a new trustee thereunder
pursuant to the applicable provisions of the Indenture.
(c) In connection with the Company's obligations with respect to the
registration of Exchange Securities as contemplated by Section 2(a) (the
"Exchange Registration"), if applicable, the Company shall, as soon as
practicable (or as otherwise specified):
(i) prepare and file with the Commission, as soon as practicable but no
later than 90 days after the Closing Date, an Exchange Registration
Statement on any form which may be utilized by the Company and which shall
permit the Exchange Offer and resales of Exchange Securities by
broker-dealers during the Resale Period to be effected as contemplated by
Section 2(a), and use its reasonable best efforts to cause such Exchange
Registration Statement to become effective as soon as practicable
thereafter, but no later than 180 days after the Closing Date;
(ii) as soon as practicable prepare and file with the Commission such
amendments and supplements to such Exchange Registration Statement and the
prospectus included therein as may be necessary to effect and maintain the
effectiveness of such Exchange Registration Statement for the periods and
purposes contemplated in Section 2(a) hereof and as may be required by the
applicable rules and regulations of the Commission and the instructions
applicable to the form of such Exchange Registration Statement, and
promptly provide each broker-dealer holding Exchange Securities with such
number of copies of the prospectus included therein (as then amended or
supplemented), in conformity in all material respects with the requirements
of the Securities Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder, as such broker-dealer reasonably
may request prior to the expiration of the Resale Period, for use in
connection with resales of Exchange Securities;
(iii) promptly notify Goldman, Sachs & Co., on behalf of each broker-dealer
that has requested or received copies of the prospectus included in such
registration statement, and, if requested, confirm such advice in writing,
(A) when such Exchange Registration Statement or the prospectus included
therein or any prospectus amendment or supplement or post-effective
amendment has been filed, and, with respect to such Exchange Registration
Statement or any post-effective amendment, when the same has become
effective, (B) of any comments by the Commission and by the blue sky or
securities commissioner or regulator of any state with respect thereto or
any request by the Commission for amendments or supplements to such
Exchange Registration Statement or prospectus or for additional
information, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of such Exchange Registration Statement or the
initiation or threatening of any proceedings for that purpose, (D) if at
any time the representations and warranties of the Company
<PAGE>
contemplated by Section 5 cease to be true and correct in all material
respects, (E) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Exchange Securities
for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, or (F) at any time during the Resale Period
when a prospectus is required to be delivered under the Securities Act,
that such Exchange Registration Statement, prospectus, prospectus amendment
or supplement or post-effective amendment does not conform in all material
respects to the applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission thereunder or
contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing;
(iv) in the event that the Company would be required, pursuant to Section
3(c)(iii)(F) hereof, to notify any broker-dealers holding Exchange
Securities, without delay prepare and furnish to each such holder a
reasonable number of copies of a prospectus supplemented or amended so
that, as thereafter delivered to purchasers of such Exchange Securities
during the Resale Period, such prospectus shall conform in all material
respects to the applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission thereunder
and shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing;
(v) use its reasonable best efforts to obtain the withdrawal of any order
suspending the effectiveness of such Exchange Registration Statement or any
post-effective amendment thereto at the earliest practicable date;
(vi) use its reasonable best efforts to (A) register or qualify the
Exchange Securities under the securities laws or blue sky laws of such
jurisdictions as are contemplated by Section 2(a) no later than the
commencement of the Exchange Offer, (B) keep such registrations or
qualifications in effect and comply with such laws so as to permit the
continuance of offers, sales and dealings therein in such jurisdictions
until the expiration of the Resale Period and (C) take any and all other
actions as may be reasonably necessary or advisable to enable each broker-
dealer holding Exchange Securities to consummate the disposition thereof in
such jurisdictions; provided, however, that neither the Company nor the
Guarantors shall be required for any such purpose to (1) qualify as a
foreign corporation in any jurisdiction wherein it would not otherwise be
required to qualify but for the requirements of this Section 3(c)(vi), (2)
consent to general service of process or become subject to taxation in any
such jurisdiction or (3) make any changes to its certificate of
incorporation or by-laws or any agreement between it and its stockholders;
<PAGE>
(vii) use its reasonable best efforts to obtain the consent or approval of
each governmental agency or authority, whether federal, state or local,
which may be required to effect the Exchange Registration, the Exchange
Offer and the offering and sale of Exchange Securities by broker-dealers
during the Resale Period;
(viii) provide a CUSIP number for all Exchange Securities, not later than
the applicable Effective Time; and
(ix) comply with all applicable rules and regulations of the Commission,
and make generally available to its securityholders as soon as practicable
but no later than eighteen months after the effective date of such Exchange
Registration Statement, an earning statement of the Company and its
subsidiaries complying with Section 11(a) of the Securities Act (including,
at the option of the Company, Rule 158 thereunder).
(d) In connection with the Company's obligations with respect to the Shelf
Registration, if applicable, the Company shall, as soon as practicable (or as
otherwise specified):
(i) prepare and file with the Commission, as soon as practicable but in any
case within the time periods specified in Section 2(b) hereof, a Shelf
Registration Statement on any form which may be utilized by the Company and
which shall register all of the Registrable Securities for resale by the
holders thereof in accordance with such method or methods of disposition as
may be specified by such of the holders as, from time to time, may be
Electing Holders and use its reasonable best efforts to cause such Shelf
Registration Statement to become effective as soon as practicable but in
any case within the time periods specified in Section 2(b) hereof;
(ii) not less than 30 calendar days prior to the Effective Time of the
Shelf Registration Statement, mail the Notice and Questionnaire to the
holders of Registrable Securities; no holder shall be entitled to be named
as a selling securityholder in the Shelf Registration Statement as of the
Effective Time, and no holder shall be entitled to use the prospectus
forming a part thereof for resales of Registrable Securities at any time,
unless such holder has returned a completed and signed Notice and
Questionnaire to the Company by the deadline for response set forth
therein; provided, however, holders of Registrable Securities shall have at
least 21 calendar days from the date on which the Notice and Questionnaire
is first mailed to such holders to return a completed and signed Notice and
Questionnaire to the Company;
(iii) after the Effective Time of the Shelf Registration Statement, upon
the request of any holder of Registrable Securities that is not then an
Electing Holder, promptly send a Notice and Questionnaire to such holder;
provided that the Company shall not be required to take any action to name
such holder as a selling securityholder in the Shelf Registration Statement
or to enable such holder to use the prospectus forming a
<PAGE>
part thereof for resales of Registrable Securities until such holder has
returned a completed and signed Notice and Questionnaire to the Company;
(iv) as soon as reasonably practicable prepare and file with the Commission
such amendments and supplements to such Shelf Registration Statement and
the prospectus included therein as may be necessary to effect and maintain
the effectiveness of such Shelf Registration Statement for the period
specified in Section 2(b) hereof and as may be required by the applicable
rules and regulations of the Commission and the instructions applicable to
the form of such Shelf Registration Statement, and furnish to the Electing
Holders copies of any such supplement or amendment simultaneously with or
prior to its being used or filed with the Commission;
(v) comply with the provisions of the Securities Act with respect to the
disposition of all of the Registrable Securities covered by such Shelf
Registration Statement in accordance with the intended methods of
disposition by the Electing Holders provided for in such Shelf Registration
Statement;
(vi) provide (A) the Electing Holders, (B) the underwriters (which term,
for purposes of this Agreement, shall include a person deemed to be an
underwriter within the meaning of Section 2(a)(11) of the Securities Act),
if any, thereof, (C) any sales or placement agent therefor, (D) counsel for
any such underwriter or agent and (E) not more than one counsel for all the
Electing Holders the opportunity to participate in the preparation of such
Shelf Registration Statement, each prospectus included therein or filed
with the Commission and each amendment or supplement thereto;
(vii) for a reasonable period prior to the filing of such Shelf
Registration Statement, and throughout the period specified in Section 2(b)
hereof, make reasonably available at reasonable times at the Company's
principal place of business or such other reasonable place for inspection
by the persons referred to in Section 3(d)(vi) hereof who shall certify to
the Company that they have a current intention to sell the Registrable
Securities pursuant to the Shelf Registration such relevant financial and
other information and books and pertinent corporate records of the Company,
and cause the officers, employees, counsel and independent certified public
accountants of the Company to supply all relevant information reasonably
requested, as shall be reasonably necessary, in the judgment of the
respective counsel referred to in such Section, to conduct a reasonable
investigation within the meaning of Section 11 of the Securities Act;
provided, however, that each such party shall be required to maintain in
confidence and not to disclose to any other person any information or
records reasonably designated by the Company as being confidential, until
such time as (A) such information becomes a matter of public record
(whether by virtue of its inclusion in such registration statement or
otherwise), or (B) such person shall be required so to disclose such
information pursuant to a subpoena or order of any court or other
governmental agency or body having jurisdiction over the matter (subject to
the requirements of such order, and only
<PAGE>
after such person shall have given the Company prompt prior written notice
of such requirement), or (C) subject to the provisions of Section 2(b)
relating to Suspension Periods, such information is required to be set
forth in such Shelf Registration Statement or the prospectus included
therein or in an amendment to such Shelf Registration Statement or an
amendment or supplement to such prospectus in order that such Shelf
Registration Statement, prospectus, amendment or supplement, as the case
may be, complies with applicable requirements of the federal securities
laws and the rules and regulations of the Commission and does not contain
an untrue statement of a material fact or omit to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing and
provided, further, that the foregoing inspection and information gathering
shall be coordinated on behalf of the purchasers by you and on behalf of
the other parties by one counsel designated by and on behalf of such other
parties as described herein;
(viii) promptly notify each of the Electing Holders, any sales or placement
agent therefor and any underwriter thereof (which notification may be made
through any managing underwriter that is a representative of such
underwriter for such purpose) and, if requested by such holder, confirm
such advice in writing, (A) when such Shelf Registration Statement or the
prospectus included therein or any prospectus amendment or supplement or
post-effective amendment has been filed, and, with respect to such Shelf
Registration Statement or any post-effective amendment, when the same has
become effective, (B) of any comments by the Commission and by the blue sky
or securities commissioner or regulator of any state with respect thereto
or any request by the Commission for amendments or supplements to such
Shelf Registration Statement or prospectus included therein or for
additional information, (C) of the issuance by the Commission of any stop
order suspending the effectiveness of such Shelf Registration Statement or
the initiation or threatening of any proceedings for that purpose, (D) if
at any time the representations and warranties of the Company contemplated
by Section 3(d)(xvii) or Section 5 hereof cease to be true and correct in
all material respects, (E) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, or (F) if at any time when
a prospectus is required to be delivered under the Securities Act, that
such Shelf Registration Statement, prospectus, prospectus amendment or
supplement or post-effective amendment does not conform in all material
respects to the applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission thereunder or
contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing;
(ix) use its reasonable best efforts to obtain the withdrawal of any order
suspending the effectiveness of such registration statement or any
post-effective amendment thereto at the earliest practicable date;
<PAGE>
(x) if requested by any managing underwriter or underwriters, any placement
or sales agent or any Electing Holder, promptly incorporate in a prospectus
supplement or post-effective amendment such information as is required by
the applicable rules and regulations of the Commission and as such managing
underwriter or underwriters, such agent or such Electing Holder specifies
should be included therein relating to the terms of the sale of such
Registrable Securities, including information with respect to the principal
amount of Registrable Securities being sold by such Electing Holder or
agent or to any underwriters, the name and description of such Electing
Holder, agent or underwriter, the offering price of such Registrable
Securities and any discount, commission or other compensation payable in
respect thereof, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the offering of the
Registrable Securities to be sold by such Electing Holder or agent or to
such underwriters; and make all required filings of such prospectus
supplement or post-effective amendment promptly after notification of the
matters to be incorporated in such prospectus supplement or post-effective
amendment;
(xi) furnish to each Electing Holder, each placement or sales agent, if
any, therefor, each underwriter, if any, thereof and the respective counsel
referred to in Section 3(d)(vi) hereof an executed copy (or, in the case of
an Electing Holder, a conformed copy) of such Shelf Registration Statement,
each such amendment and supplement thereto (in each case including all
exhibits thereto (in the case of an Electing Holder of Registrable
Securities, upon request) and documents incorporated by reference therein)
and such number of copies of such Shelf Registration Statement (excluding
exhibits thereto and documents incorporated by reference therein unless
specifically so requested by such Electing Holder, agent or underwriter, as
the case may be) and of the prospectus included in such Shelf Registration
Statement (including each preliminary prospectus and any summary
prospectus), in conformity in all material respects with the applicable
requirements of the Securities Act and the Trust Indenture Act and the
rules and regulations of the Commission thereunder, and such other
documents, as such Electing Holder, agent, if any, and underwriter, if any,
may reasonably request in order to facilitate the offering and disposition
of the Registrable Securities owned by such Electing Holder, offered or
sold by such agent or underwritten by such underwriter and to permit such
Electing Holder, agent and underwriter to satisfy the prospectus delivery
requirements of the Securities Act; and the Company hereby consents,
subject to the provisions of this Agreement, to the use of such prospectus
(including such preliminary and summary prospectus) and any amendment or
supplement thereto by each such Electing Holder and by any such agent and
underwriter, in each case in the form most recently provided to such person
by the Company, in connection with the offering and sale of the Registrable
Securities covered by the prospectus (including such preliminary and
summary prospectus) or any supplement or amendment thereto;
<PAGE>
(xii) use reasonable best efforts to (A) register or qualify the
Registrable Securities to be included in such Shelf Registration Statement
under such securities laws or blue sky laws of such jurisdictions as any
Electing Holder and each placement or sales agent, if any, therefor and
underwriter, if any, thereof shall reasonably request in writing, (B) keep
such registrations or qualifications in effect and comply with such laws so
as to permit the continuance of offers, sales and dealings therein in such
jurisdictions during the period the Shelf Registration is required to
remain effective under Section 2(b) hereof and for so long as may be
necessary to enable any such Electing Holder, agent or underwriter to
complete its distribution of Securities pursuant to such Shelf Registration
Statement and (C) take any and all other actions as may be reasonably
necessary to enable each such Electing Holder, agent, if any, and
underwriter, if any, to consummate the disposition in such jurisdictions of
such Registrable Securities; provided, however, that neither the Company
nor the Guarantors shall be required for any such purpose to (1) qualify as
a foreign corporation in any jurisdiction wherein it would not otherwise be
required to qualify but for the requirements of this Section 3(d)(xii), (2)
consent to general service of process or subject itself to taxation in any
such jurisdiction or (3) make any changes to its certificate of
incorporation or by-laws or any agreement between it and its stockholders;
(xiii) use its reasonable best efforts to obtain the consent or approval of
each governmental agency or authority, whether federal, state or local,
which may be required to effect the Shelf Registration or the offering or
sale in connection therewith;
(xiv) unless any Registrable Securities shall be in book-entry only form,
cooperate with the Electing Holders and the managing underwriters, if any,
to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which certificates, if so
required by any securities exchange upon which any Registrable Securities
are listed, shall be penned, lithographed or engraved, or produced by any
combination of such methods, on steel engraved borders, and which
certificates shall not bear any restrictive legends; and, in the case of an
underwritten offering, enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of the Registrable
Securities;
(xv) provide a CUSIP number for all Registrable Securities, not later than
the applicable Effective Time;
(xvi) enter into one or more underwriting agreements, agency agreements,
"best efforts" underwriting agreements or similar agreements, as
appropriate, including customary provisions relating to indemnification and
contribution, and take such other actions in connection therewith as any
Electing Holders aggregating at least 35% in aggregate principal amount of
the Registrable Securities at the time outstanding
<PAGE>
shall reasonably request in order to expedite or facilitate the disposition
of such Registrable Securities;
(xvii) whether or not an agreement of the type referred to in Section
3(d)(xvi) hereof is entered into and whether or not any portion of the
offering contemplated by the Shelf Registration is an underwritten offering
or is made through a placement or sales agent or any other entity, (A) make
such representations and warranties to the Electing Holders and the
placement or sales agent, if any, therefor and the underwriters, if any,
thereof in form, substance and scope as are customarily made in connection
with an offering of debt securities of the type contemplated hereby
pursuant to any appropriate agreement or to a registration statement filed
on the form applicable to the Shelf Registration; (B) obtain an opinion of
counsel to the Company in customary form and covering such matters, of the
type customarily covered by such an opinion, as the managing underwriters,
if any, or as any Electing Holders of at least 35% in aggregate principal
amount of the Registrable Securities at the time outstanding may reasonably
request, addressed to such Electing Holder or Electing Holders and the
placement or sales agent, if any, therefor and the underwriters, if any,
thereof and dated the effective date of such Shelf Registration Statement
(or if such Shelf Registration Statement contemplates an underwritten
offering of a part or all of the Registrable Securities, dated the date of
the closing under the underwriting agreement relating thereto) (it being
agreed that the matters to be covered by such opinion shall include the due
incorporation and good standing of the Company and its significant
subsidiaries; the qualification of the Company and its significant
subsidiaries to transact business as foreign corporations; the due
authorization, execution and delivery of the relevant agreement of the type
referred to in Section 3(d)(xvi) hereof; the due authorization, execution,
authentication and issuance, and the validity and enforceability, of the
Securities; the absence of material legal or governmental proceedings
involving the Company; the absence of governmental approvals required to be
obtained in connection with the Shelf Registration, the offering and sale
of the Registrable Securities, this Agreement or any agreement of the type
referred to in Section 3(d)(xvi) hereof, except such approvals as may be
required under state securities or blue sky laws and any other customary
exclusions; the material compliance as to form of such Shelf Registration
Statement and any documents incorporated by reference therein and of the
Indenture with the requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission thereunder,
respectively; and, as of the date of the opinion and of the Shelf
Registration Statement or most recent post-effective amendment thereto, as
the case may be, the absence from such Shelf Registration Statement and the
prospectus included therein, as then amended or supplemented, and from the
documents incorporated by reference therein (in each case other than the
financial statements and other financial information contained therein) of
an untrue statement of a material fact or the omission to state therein a
material fact necessary to make the statements therein not misleading (in
the case of such documents, in the light of the circumstances existing at
the time that such documents were filed with the Commission under the
Exchange Act));
<PAGE>
(C) obtain a "cold comfort" letter or letters from the independent
certified public accountants of the Company addressed to the selling
Electing Holders, the placement or sales agent, if any, therefor or the
underwriters, if any, thereof, dated (i) the effective date of such Shelf
Registration Statement and (ii) the effective date of any prospectus
supplement to the prospectus included in such Shelf Registration Statement
or post-effective amendment to such Shelf Registration Statement which
includes unaudited or audited financial statements as of a date or for a
period subsequent to that of the latest such statements included in such
prospectus (and, if such Shelf Registration Statement contemplates an
underwritten offering pursuant to any prospectus supplement to the
prospectus included in such Shelf Registration Statement or post-effective
amendment to such Shelf Registration Statement which includes unaudited or
audited financial statements as of a date or for a period subsequent to
that of the latest such statements included in such prospectus, dated the
date of the closing under the underwriting agreement relating thereto),
such letter or letters to be in customary form and covering such matters of
the type customarily covered by letters of such type; (D) deliver such
documents and certificates, including officers' certificates, as may be
reasonably requested by any Electing Holders of at least 35% in aggregate
principal amount of the Registrable Securities at the time outstanding or
the placement or sales agent, if any, therefor and the managing
underwriters, if any, thereof to evidence the accuracy of the
representations and warranties made pursuant to clause (A) above or those
contained in Section 5(a) hereof and the compliance with or satisfaction of
any agreements or conditions contained in the underwriting agreement or
other agreement entered into by the Company or the Guarantors; and (E)
undertake such obligations relating to expense reimbursement,
indemnification and contribution as are provided in Section 6 hereof;
(xviii) notify in writing each holder of Registrable Securities of any
proposal by the Company to amend or waive any provision of this Exchange
and Registration Rights Agreement pursuant to Section 9(h) hereof and of
any amendment or waiver effected pursuant thereto, each of which notices
shall contain the text of the amendment or waiver proposed or effected, as
the case may be;
(xix) in the event that any broker-dealer registered under the Exchange Act
shall underwrite any Registrable Securities or participate as a member of
an underwriting syndicate or selling group or "assist in the distribution"
(within the meaning of the Conduct Rules (the "Conduct Rules") of the
National Association of Securities Dealers, Inc. ("NASD") or any successor
thereto, as amended from time to time) thereof, whether as a holder of such
Registrable Securities or as an underwriter, a placement or sales agent or
a broker or dealer in respect thereof, or otherwise, assist such broker-
dealer in complying with the requirements of such Conduct Rules, including
by (A) if such Conduct Rules shall so require, engaging a "qualified
independent underwriter" (as defined in such Conduct Rules) to participate
in the preparation of the Shelf Registration Statement relating to such
Registrable Securities, to exercise usual standards of due diligence in
respect thereto and, if any portion of the offering contemplated by such
Shelf Registration Statement is an underwritten offering or is made
<PAGE>
through a placement or sales agent, to recommend the yield of such
Registrable Securities, (B) indemnifying any such qualified independent
underwriter to the extent of the indemnification of underwriters provided
in Section 6 hereof (or to such other customary extent as may be reasonably
requested by such underwriter), and (C) providing such information to such
broker-dealer as may be required in order for such broker-dealer to comply
with the requirements of the Conduct Rules; and
(xx) comply with all applicable rules and regulations of the Commission,
and make generally available to its securityholders (or otherwise provide
in accordance with Section 11(a) of the Securities Act) as soon as
practicable but in any event not later than eighteen months after the
effective date of such Shelf Registration Statement, an earning statement
of the Company and its subsidiaries complying with Section 11(a) of the
Securities Act (including, at the option of the Company, Rule 158
thereunder).
(e) In the event that the Company would be required, pursuant to Section
3(d)(viii)(F) hereof, to notify the Electing Holders, the placement or sales
agent, if any, therefor and the managing underwriters, if any, thereof, the
Company shall without delay prepare and furnish to each of the Electing Holders,
to each placement or sales agent, if any, and to each such underwriter, if any,
a reasonable number of copies of a prospectus supplemented or amended so that,
as thereafter delivered to purchasers of Registrable Securities, such prospectus
shall conform in all material respects to the applicable requirements of the
Securities Act and the Trust Indenture Act and the rules and regulations of the
Commission thereunder and shall not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the circumstances then
existing. Each Electing Holder agrees that upon receipt of any notice from the
Company pursuant to Section 3(d)(viii)(E) hereof, such Electing Holder shall
forthwith discontinue the disposition of Registrable Securities pursuant to the
Shelf Registration Statement applicable to such Registrable Securities until
such Electing Holder shall have received copies of such amended or supplemented
prospectus, and if so directed by the Company, such Electing Holder shall
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such Electing Holder's possession of the
prospectus covering such Registrable Securities at the time of receipt of such
notice.
(f) In the event of a Shelf Registration, in addition to the information
required to be provided by each Electing Holder in its Notice Questionnaire, the
Company may require such Electing Holder to furnish to the Company such
additional information regarding such Electing Holder and such Electing Holder's
intended method of distribution of Registrable Securities as may be required in
order to comply with the Securities Act. Each such Electing Holder agrees to
notify the Company as promptly as practicable of any inaccuracy or change in
information previously furnished by such Electing Holder to the Company or of
the occurrence of any event in either case as a result of which any prospectus
relating to such Shelf Registration contains or would contain an untrue
statement of a material fact regarding such Electing Holder or such Electing
Holder's intended method of disposition of such Registrable Securities or omits
to state
<PAGE>
any material fact regarding such Electing Holder or such Electing Holder's
intended method of disposition of such Registrable Securities required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing, and promptly to furnish to the Company
any additional information required to correct and update any previously
furnished information or required so that such prospectus shall not contain,
with respect to such Electing Holder or the disposition of such Registrable
Securities, an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing.
(g) Until the expiration of two years after the Closing Date, the Company will
not, and will use reasonable best efforts not to permit any of its "affiliates"
(as defined in Rule 144) to, resell any of the Securities that have been
reacquired by any of them except pursuant to an effective registration statement
under the Securities Act.
<PAGE>
4. Registration Expenses.
The Company agrees to bear and to pay or cause to be paid promptly all
expenses incident to the Company's performance of or compliance with this
Exchange and Registration Rights Agreement, including (a) all Commission and any
NASD registration, filing and review fees and expenses including fees and
disbursements of counsel for the placement or sales agent or underwriters in
connection with such registration, filing and review, (b) all fees and expenses
in connection with the qualification of the Securities for offering and sale
under the State securities and blue sky laws referred to in Section 3(d)(xii)
hereof and determination of their eligibility for investment under the laws of
such jurisdictions as any managing underwriters or the Electing Holders may
designate, including any fees and disbursements of counsel for the Electing
Holders or underwriters in connection with such qualification and determination,
(c) all expenses relating to the preparation, printing, production, distribution
and reproduction of each registration statement required to be filed hereunder,
each prospectus included therein or prepared for distribution pursuant hereto,
each amendment or supplement to the foregoing, the expenses of preparing the
Securities for delivery and the expenses of printing or producing any
underwriting agreements, agreements among underwriters, selling agreements and
blue sky or legal investment memoranda and all other documents in connection
with the offering, sale or delivery of Securities to be disposed of (including
certificates representing the Securities), (d) messenger, telephone and delivery
expenses relating to the offering, sale or delivery of Securities and the
preparation of documents referred in clause (c) above, (e) the reasonable fees
and expenses of the Trustee under the Indenture, any agent of the Trustee and
any counsel for the Trustee and of any collateral agent or custodian, (f)
internal expenses (including all salaries and expenses of the Company's officers
and employees performing legal or accounting duties), (g) the reasonable fees,
disbursements and expenses of counsel and independent certified public
accountants of the Company (including the expenses of any opinions or "cold
comfort" letters required by or incident to such performance and compliance),
(h) fees, disbursements and expenses of any "qualified independent underwriter"
engaged pursuant to Section 3(d)(xix) hereof, (i) reasonable fees, disbursements
and expenses of one counsel for the Electing Holders retained in connection with
a Shelf Registration, as selected by the Electing Holders of at least a majority
in aggregate principal amount of the Registrable Securities held by Electing
Holders (which counsel shall be reasonably satisfactory to the Company), (j) any
fees charged by securities rating services for rating the Securities, and (k)
fees, expenses and disbursements of any other persons, including special
experts, retained by the Company in connection with such registration
(collectively, the "Registration Expenses"). To the extent that any Registration
Expenses are incurred, assumed or paid by any holder of Registrable Securities
or any placement or sales agent therefor or underwriter thereof, the Company
shall reimburse such person for the full amount of the Registration Expenses so
incurred, assumed or paid promptly after receipt of a request therefor.
Notwithstanding the foregoing, the holders of the Registrable Securities being
registered shall pay all agency fees and commissions and underwriting discounts
and commissions and transfer taxes, if any, attributable to the sale of such
Registrable Securities and the fees and disbursements of any counsel or other
advisors or experts retained by such holders (severally or jointly), other than
the counsel and experts specifically referred to above.
<PAGE>
5. Representations and Warranties.
The Company represents and warrants to, and agrees with, each Purchaser and
each of the holders from time to time of Registrable Securities that:
(a) Each registration statement covering Registrable Securities and each
prospectus (including any preliminary or summary prospectus) contained
therein or furnished pursuant to Section 3(d) or Section 3(c) hereof and
any further amendments or supplements to any such registration statement or
prospectus, when it becomes effective or is filed with the Commission, as
the case may be, and, in the case of an underwritten offering of
Registrable Securities, at the time of the closing under the underwriting
agreement relating thereto, will conform in all material respects to the
requirements of the Securities Act and the Trust Indenture Act and the
rules and regulations of the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing; and at all
times subsequent to the Effective Time when a prospectus would be required
to be delivered under the Securities Act, other than from (i) such time as
a notice has been given to holders of Registrable Securities pursuant to
Section 3(d)(viii)(F) or Section 3(c)(iii)(F) hereof until (ii) such time
as the Company furnishes an amended or supplemented prospectus pursuant to
Section 3(e) or Section 3(c)(iv) hereof, each such registration statement,
and each prospectus (including any summary prospectus) contained therein or
furnished pursuant to Section 3(d) or Section 3(c) hereof, as then amended
or supplemented, will conform in all material respects to the requirements
of the Securities Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by a holder of Registrable
Securities expressly for use therein.
(b) Any documents incorporated by reference in any prospectus referred to
in Section 5(a) hereof, when they become or became effective or are or were
filed with the Commission, as the case may be, will conform or conformed in
all material respects to the requirements of the Securities Act or the
Exchange Act, as applicable, and none of such documents will contain or
contained an untrue statement of a material fact or will omit or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by a holder of Registrable Securities expressly for
use therein.
<PAGE>
(c) The compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions herein contemplated will
not conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or any
subsidiary of the Company is a party or by which the Company or any
subsidiary of the Company is bound or to which any of the property or
assets of the Company or any subsidiary of the Company is subject, nor will
such action result in any violation of the provisions of the certificate of
incorporation, as amended, or the by-laws of the Company or the Guarantors
or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any
subsidiary of the Company or any of their properties; and no consent,
approval, authorization, order, registration or qualification of or with
any such court or governmental agency or body is required for the
consummation by the Company and the Guarantors of the transactions
contemplated by this Agreement, except the registration under the
Securities Act of the Securities, qualification of the Indenture under the
Trust Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under State securities
or blue sky laws in connection with the offering and distribution of the
Securities, except as would not materially adversely affect the
consummation of the transactions contemplated by this Agreement.
(d) This Agreement has been duly authorized, executed and delivered by the
Company.
6. Indemnification.
(a) Indemnification by the Company and the Guarantors. The Company and the
Guarantors, jointly and severally, will indemnify and hold harmless each of the
holders of Registrable Securities included in an Exchange Registration
Statement, each of the Electing Holders of Registrable Securities included in a
Shelf Registration Statement and each person who participates as an underwriter
in any offering or sale of such Registrable Securities against any losses,
claims, damages or liabilities, joint or several, to which such holder, agent or
underwriter may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Exchange Registration Statement or Shelf
Registration Statement, as the case may be, under which such Registrable
Securities were registered under the Securities Act, or any preliminary, final
or summary prospectus contained therein or furnished by the Company to any such
holder, Electing Holder, agent or underwriter, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein in light of circumstances then existing, not misleading,
and will reimburse such holder, such Electing Holder, such agent and such
underwriter for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided,
<PAGE>
however, that neither the Company nor the Guarantors shall be liable to any such
person in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
or preliminary, final or summary prospectus, or amendment or supplement thereto,
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of such person expressly for use therein.
(b) Indemnification by the Holders and any Agents and Underwriters. The Company
may require, as a condition to including any Registrable Securities in any
registration statement filed pursuant to Section 2(b) hereof and to entering
into any underwriting agreement with respect thereto, that the Company shall
have received an undertaking reasonably satisfactory to it from the Electing
Holder of such Registrable Securities and from each underwriter named in any
such underwriting agreement, severally and not jointly, to (i) indemnify and
hold harmless the Company, the Guarantors, and all other holders of Registrable
Securities, against any losses, claims, damages or liabilities to which the
Company, the Guarantors or such other holders of Registrable Securities may
become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in such registration statement, or any preliminary, final or
summary prospectus contained therein or furnished by the Company to any such
Electing Holder, agent or underwriter, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein in light of circumstances then existing, not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company by such
Electing Holder or underwriter expressly for use therein, and (ii) reimburse the
Company and the Guarantors for any legal or other expenses reasonably incurred
by the Company and the Guarantors in connection with investigating or defending
any such action or claim as such expenses are incurred; provided, however, that
no such Electing Holder shall be required to undertake liability to any person
under this Section 6(b) for any amounts in excess of the dollar amount of the
proceeds to be received by such Electing Holder from the sale of such Electing
Holder's Registrable Securities pursuant to such registration.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified party under
Section 6(a) or 6(b) hereof of written notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party pursuant to the indemnification provisions of or
contemplated by this Section 6, notify such indemnifying party in writing of the
commencement of such action; but the omission so to notify the indemnifying
party shall not relieve it from any liability which it may have to any
indemnified party otherwise than under the indemnification provisions of or
contemplated by Section 6(a) or 6(b) hereof. In case any such action shall be
brought against any indemnified party and it shall notify an indemnifying party
of the commencement thereof, such indemnifying
<PAGE>
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, such indemnifying party shall not be liable to such indemnified party
for any legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the defense
thereof other than reasonable costs of investigation. No indemnifying party
shall, without the written consent of the indemnified party, effect the
settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.
(d) Contribution. If for any reason the indemnification provisions contemplated
by Section 6(a) or Section 6(b) hereof are unavailable to or insufficient to
hold harmless an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such indemnifying party or by such indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contributions pursuant to this Section 6(d) were determined by
pro rata allocation (even if the holders or any agents or underwriters or all of
them were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in this Section 6(d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, or liabilities (or actions in respect
thereof) referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6(d), no holder shall be required to contribute any
amount in excess of the amount by which the dollar amount of the proceeds
received by such holder from the sale of any Registrable Securities (after
deducting any fees, discounts and commissions applicable thereto) exceeds the
amount of any damages which such holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission, and no underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
<PAGE>
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The holders' and any underwriters' obligations in this
Section 6(d) to contribute shall be several in proportion to the principal
amount of Registrable Securities registered or underwritten, as the case may be,
by them and not joint.
(e) The obligations of the Company and the Guarantors under this Section 6 shall
be in addition to any liability which the Company or the Guarantors may
otherwise have and shall extend, upon the same terms and conditions, to each
officer, director and partner of each holder, agent and underwriter and each
person, if any, who controls any holder, agent or underwriter within the meaning
of the Securities Act; and the obligations of the holders and any agents or
underwriters contemplated by this Section 6 shall be in addition to any
liability which the respective holder, agent or underwriter may otherwise have
and shall extend, upon the same terms and conditions, to each officer and
director of the Company or the Guarantors (including any person who, with his
consent, is named in any registration statement as about to become a director of
the Company or the Guarantors) and to each person, if any, who controls the
Company within the meaning of the Securities Act.
7. Underwritten Offerings.
(a) Selection of Underwriters. If any of the Registrable Securities covered by
the Shelf Registration are to be sold pursuant to an underwritten offering, the
managing underwriter or underwriters thereof shall be designated by Electing
Holders holding at least a majority in aggregate principal amount of the
Registrable Securities to be included in such offering, provided that such
designated managing underwriter or underwriters is or are reasonably acceptable
to the Company.
(b) Participation by Holders. Each holder of Registrable Securities hereby
agrees with each other such holder that no such holder may participate in any
underwritten offering hereunder unless such holder (i) agrees to sell such
holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
8. Rule 144.
<PAGE>
The Company covenants to the holders of Registrable Securities that to the
extent it shall be required to do so under the Exchange Act, the Company shall
timely file the reports required to be filed by it under the Exchange Act or the
Securities Act (including the reports under Section 13 and 15(d) of the Exchange
Act referred to in subparagraph (c)(1) of Rule 144 adopted by the Commission
under the Securities Act) and the rules and regulations adopted by the
Commission thereunder, and shall take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitations of the exemption
provided by Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or any similar or successor rule or regulation hereafter adopted
by the Commission. Upon the request of any holder of Registrable Securities in
connection with that holder's sale pursuant to Rule 144, the Company shall
deliver to such holder a written statement as to whether it has complied with
such requirements.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company represents, warrants, covenants and
agrees that it has not granted, and shall not grant, registration rights with
respect to Registrable Securities or any other securities which would be
inconsistent with the terms contained in this Agreement.
(b) Notices. All notices, requests, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand, if delivered personally or by courier, or
three days after being deposited in the mail (registered or certified mail,
postage prepaid, return receipt requested) or when receipt is acknowledged if
telecopied as follows: If to the Company, to it at 13455 Noel Road, 20th Floor,
Dallas, Texas 75240, Attention: Donald P. Fay, with a copy to Dewey Ballantine
LLP, 1301 Avenue of the Americas, New York, New York 10019, Attention: Morton A.
Pierce, Esq., and if to a holder, to the address of such holder set forth in the
security register or other records of the Company, or to such other address as
the Company or any such holder may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.
(c) Parties in Interest. All the terms and provisions of this Agreement shall be
binding upon, shall inure to the benefit of and shall be enforceable by the
parties hereto and the holders from time to time of the Registrable Securities
and the respective successors and assigns of the parties hereto and such
holders. In the event that any transferee of any holder of Registrable
Securities shall acquire Registrable Securities, in any manner, whether by gift,
bequest, purchase, operation of law or otherwise, such transferee shall, without
any further writing or action of any kind, be deemed a beneficiary hereof for
all purposes and such Registrable Securities shall be held subject to all of the
terms of this Agreement, and by taking and holding such Registrable Securities
such transferee shall be entitled to receive the benefits of, and be
conclusively deemed to have agreed to be bound by all of the applicable terms
and
<PAGE>
provisions of this Agreement. If the Company shall so request, any such
successor, assign or transferee shall agree in writing to acquire and hold the
Registrable Securities subject to all of the applicable terms hereof.
(d) Survival. The respective indemnities, agreements, representations,
warranties and each other provision set forth in this Agreement or made pursuant
hereto shall remain in full force and effect regardless of any investigation (or
statement as to the results thereof) made by or on behalf of any holder of
Registrable Securities, any director, officer or partner of such holder, any
agent or underwriter or any director, officer or partner thereof, or any
controlling person of any of the foregoing, and shall survive delivery of and
payment for the Registrable Securities pursuant to the Purchase Agreement and
the transfer and registration of Registrable Securities by such holder and the
consummation of an Exchange Offer.
(e) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(f) Headings. The descriptive headings of the several Sections and paragraphs of
this Agreement are inserted for convenience only, do not constitute a part of
this Agreement and shall not affect in any way the meaning or interpretation of
this Agreement.
(g) Entire Agreement; Amendments. This Agreement and the other writings referred
to herein (including the Indenture and the form of Securities) or delivered
pursuant hereto which form a part hereof contain the entire understanding of the
parties with respect to its subject matter. This Agreement supersedes all prior
agreements and understandings between the parties with respect to its subject
matter. This Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) only by a written instrument duly executed by
the Company and the holders of at least a majority in aggregate principal amount
of the Registrable Securities at the time outstanding. Each holder of any
Registrable Securities at the time or thereafter outstanding shall be bound by
any amendment or waiver effected pursuant to this Section 9(h), whether or not
any notice, writing or marking indicating such amendment or waiver appears on
such Registrable Securities or is delivered to such holder.
(h) Inspection. For so long as this Agreement shall be in effect, this Agreement
and a complete list of the names and addresses of all the holders of Registrable
Securities shall be made available on reasonable prior notice for inspection and
copying on any business day by any holder of Registrable Securities for proper
purposes only (which shall include any purpose related to the rights of the
holders of Registrable Securities under the Securities, the Indenture and this
Agreement) at the offices of the Company at the address thereof set forth in
Section 9(c) hereof and at the office of the Trustee under the Indenture.
<PAGE>
(i) Counterparts. This Agreement may be executed by the parties in counterparts,
each of which shall be deemed to be an original, but all such respective
counterparts shall together constitute one and the same instrument.
<PAGE>
If the foregoing is in accordance with your understanding, please sign and
return to us one for the Company and the Representatives plus one for each
counsel counterparts hereof, and upon the acceptance hereof by you, on behalf of
each of the Purchasers, this letter and such acceptance hereof shall constitute
a binding agreement between each of the Purchasers and the Company. It is
understood that your acceptance of this letter on behalf of each of the
Purchasers is pursuant to the authority set forth in a form of Agreement among
Purchasers, the form of which shall be submitted to the Company for examination
upon request, but without warranty on your part as to the authority of the
signers thereof.
(a)
Very truly yours,
HEALTHTRUST, INC.-THE HOSPITAL
COMPANY
By: /s/ R. Milton Johnson
______________________________
Name: R. Milton Johnson
Title: Vice President
Accepted as of the date hereof:
Goldman, Sachs & Co.
NationsBanc Montgomery Securities LLC
Chase Securities Inc.
Salomon Smith Barney Inc.
SG Cowen Securities Corporation
By: /s/ Goldman, Sachs & Co.
______________________________
(Goldman, Sachs & Co.)
<PAGE>
Exhibit 4.4(b)
TRIAD ASSUMPTION AGREEMENT
May 11, 1999
Reference is hereby made to the Exchange and Registration Rights Agreement,
dated May 11, 1999 (the "Agreement"), between Healthtrust, Inc.-The Hospital
Company ("Healthtrust") and the Purchasers named therein. Unless otherwise
defined herein, terms defined in the Agreement and used herein shall have the
meanings given them in the Agreement.
Triad Hospitals, Inc. ("Triad") hereby unconditionally and irrevocably expressly
assumes, confirms and agrees to perform and observe as the "Company" each and
every of the covenants, agreements, terms, conditions, obligations,
appointments, duties, promises and liabilities of Healthtrust under the
Agreement, and upon the Business being validly transferred to Triad, the
assumption by Triad of the indebtedness evidenced by the Securities and
Healthtrust and Triad executing and delivering this Triad Assumption Agreement,
Healthtrust shall fully, unconditionally and irrevocably be released of all
covenants, agreements, terms, conditions, obligations, appointment, duties,
promises and liabilities under the Agreement.
Each of the undersigned hereby agrees to promptly execute and deliver any and
all further documents and take such further action as the other undersigned
party or the Representatives may reasonably require to effect the purpose of
this Triad Assumption Agreement.
This Triad Assumption Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
HEALTHTRUST, INC.-THE HOSPITAL
COMPANY
By: /s/ R. Milton Johnson
--------------------------------
Name: R. Milton Johnson
Title: Vice President
TRIAD HOSPITALS, INC.
By: /s/ Donald P. Fay
--------------------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
EXHIBIT 4.4(c)
HOLDINGS ASSUMPTION AGREEMENT
May 11, 1999
Reference is hereby made to the Exchange and Registration Rights Agreement,
dated May 11, 1999 (the "Agreement"), between Healthtrust, Inc.-The Hospital
Company ("Healthtrust") and the Purchasers named therein and the Triad
Assumption Agreement, dated May 11, 1999, between Healthtrust and Triad
Hospitals, Inc. ("Triad") Unless otherwise defined herein, terms defined in the
Agreement and used herein shall have the meanings given them in the Agreement.
Triad Hospitals Holdings, Inc. ("Holdings") hereby unconditionally and
irrevocably expressly assumes, confirms and agrees to perform and observe as the
"Company" each and every of the covenants, agreements, terms, conditions,
obligations, appointments, duties, promises and liabilities of Triad under the
Agreement, and upon the Business being validly transferred to Holdings, the
assumption by Holdings of the indebtedness evidenced by the Securities and Triad
and Holdings executing and delivering this Holdings Assumption Agreement, Triad
shall fully, unconditionally and irrevocably be released of all covenants,
agreements, terms, conditions, obligations, appointment, duties, promises and
liabilities under the Agreement.
Each of the undersigned hereby agrees to promptly execute and deliver any and
all further documents and take such further action as any other undersigned
party or the Representatives may reasonably require to effect the purpose of
this Holdings Assumption Agreement.
This Holdings Assumption Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
TRIAD HOSPITALS, INC.
By: /s/Donald P. Fay
---------------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD HOSPITALS HOLDINGS, INC.
By: /s/Donald P. Fay
---------------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
Exhibit 4.4(d)
GUARANTOR ASSUMPTION AGREEMENT
May 11, 1999
Reference is hereby made to the Registration Rights Agreement, dated May 11,
1999 (the "Agreement"), between Healthtrust, Inc.-The Hospital Company
("Healthtrust") and the Initial Purchasers named therein and the Triad
Assumption Agreement, dated May 11, 1999, between Healthtrust and Triad
Hospitals, Inc. ("Triad") and the Holdings Assumption Agreement, dated May 11,
1999, between Triad and Triad Hospitals Holdings, Inc. Unless otherwise defined
herein, terms defined in the Agreement and used herein shall have the meanings
given them in the Agreement.
Each of the undersigned parties hereby unconditionally and irrevocably expressly
assumes, confirms and agrees to perform and observe as a "Guarantor" each and
any of the covenants, agreements, terms, conditions, obligations, appointments,
duties, promises and liabilities of the "Guarantors" under the Agreement.
Each of the undersigned hereby agrees to promptly execute and deliver any and
all further documents and take such further action as any other undersigned
party or the Representative reasonably require to effect the purpose of this
Guarantor Assumption Agreement.
This Guarantor Assumption Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
ALICE HOSPITAL, LLC
By: APS MEDICAL, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
ALICE SURGEONS, LLC
By: APS MEDICAL, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
<PAGE>
THE SURGICAL HOSPITAL OF AMARILLO,
LTD.
By: GENERAL PARTNER:
SURGICARE OF AMARILLO, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
APS MEDICAL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
ARIZONA ASC MANAGEMENT, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
ARIZONA MEDCO, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
2
<PAGE>
BEAUCO, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
BEAUMONT MEDICAL CENTER, L.P.
By: GENERAL PARTNER:
BEAUMONT REGIONAL, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
BEAUMONT REGIONAL, LLC
By: BEAUCO, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
BRAZOS MEDCO, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
3
<PAGE>
BRAZOS REGIONAL INTEGRATED
DELIVERY GROUP
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
BRAZOS VALLEY OF TEXAS, L.P.
By: GENERAL PARTNER:
BRAZOS VALLEY SURGICAL
CENTER, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
BRAZOS VALLEY SURGICAL
CENTER, LLC
By: BRAZOS MEDCO, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
BROWNWOOD HOSPITAL, L.P.
By: GENERAL PARTNER:
BROWNWOOD MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
4
<PAGE>
BROWNWOOD MEDICAL
CENTER, LLC
By: SOUTHERN TEXAS MEDICAL
CENTER, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
BVSC, LLC
By: BRAZOS MEDCO, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
CARLSBAD MEDICAL CENTER, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
CLAREMORE PHYSICIANS, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
5
<PAGE>
CLAREMORE REGIONAL
HOSPITAL, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
CLINICO, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
COLLEGE STATION
DIAGNOSTIC CLINIC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
COLLEGE STATION HOSPITAL, L.P.
By: GENERAL PARTNER:
COLLEGE STATION MEDICAL
CENTER, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
6
<PAGE>
COLLEGE STATION MEDICAL
CENTER, LLC
By: COLLEGE STATION MERGER, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
COLLEGE STATION MERGER, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
CORONADO HOSPITAL, LLC
By: CORONADO MEDICAL, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
CORONADO MEDICAL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
7
<PAGE>
CRESTWOOD HEALTHCARE, L.P.
By: GENERAL PARTNER:
CRESTWOOD HOSPITAL &
NURSING HOME, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
CRESTWOOD HOSPITAL & NURSING
HOME, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
CRESTWOOD HOSPITAL
HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
CSDS, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
8
<PAGE>
CSMC, LLC
By: COLLEGE STATION MERGER, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
DALLAS PHY SERVICE, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
DALLAS PHYSICIAN PRACTICE, L.P.
By: GENERAL PARTNER:
DFW PHYSERV, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
DAY SURGERY, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
DEQUEEN HEALTH SERVICES, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
9
<PAGE>
DEQUEEN REGIONAL MEDICAL
CENTER, LLC
By: DEQUEEN HEALTH SERVICES, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
DETAR HOSPITAL, LLC
By: VHC MEDICAL, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
DFW PHYSERV, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
DOCTORS HOSPITAL OF LAREDO,
LIMITED PARTNERSHIP
By: GENERAL PARTNER:
LAREDO INTEREST, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
10
<PAGE>
DOCTORS MEDICAL CENTER, LLC
By: MID-PLAINS, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
DOCTORS OF LAREDO, LLC
By: MID-PLAINS, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
DOUGLAS MEDICAL CENTER, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
E.D. CLINICS, LLC
By: ARIZONA MEDCO, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
11
<PAGE>
EL DORADO MEDICAL CENTER, LLC
By: ARIZONA MEDCO, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
EYE CARE SURGICARE, LTD.
By: GENERAL PARTNER:
SURGICARE OF INDEPENDENCE, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
EYE INSTITUTE OF SOUTHERN
ARIZONA, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
GALLAGHER PARK
SURGICENTER, LTD.
By: GENERAL PARTNER:
SURGICARE OF SHERMAN, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
12
<PAGE>
GCMC, LLC
By: WHARTON MEDCO, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
GH TEXAS, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
GHC HOSPITAL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
GHC HUNTINGTON BEACH, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
13
<PAGE>
GULF COAST HOSPITAL, L.P.
By: GENERAL PARTNER:
GULF COAST MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
GULF COAST MEDICAL CENTER, LLC
By: WHARTON MEDCO, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
HDP DEQUEEN, LLC
By: TRIAD HOLDINGS II, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
HDP WOODLAND HEIGHTS, L.P.
By: GENERAL PARTNER:
HDP WOODLAND PROPERTY, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
14
<PAGE>
HDP WOODLAND PROPERTY, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
HDPWH, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
HEALDSBURG OF CALIFORNIA, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
HOBBS MEDCO, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
15
<PAGE>
HOBBS PHYSICIAN PRACTICE, LLC
By: HOBBS MEDCO, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
HOSPITAL OF BEAUMONT, LLC
By: BEAUCO, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
HUNTINGTON ASSOCIATES
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
HUNTINGTON BEACH AMDECO, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
HUNTINGTON INTERCOMMUNITY
HOSPITAL
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
16
<PAGE>
INDEPENDENCE REGIONAL HEALTH
CENTER, LLC
By: TRIAD HOLDINGS II, LLC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
KANSAS CITY SURGICENTER, LTD.
By: GENERAL PARTNER:
DAY SURGERY, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
KENSINGCARE, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
17
<PAGE>
LAKE AREA SURGICARE,
A PARTNERSHIP IN COMMENDUM,
A LOUISIANA LIMITED PARTNERSHIP
By: GENERAL PARTNER:
SURGICARE OUTPATIENT CENTER
OF LAKE CHARLES, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
LAREDO HOSPITAL, L.P.
By: GENERAL PARTNER:
DOCTORS OF LAREDO, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
LAREDO INTEREST, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
LEA REGIONAL HOSPITAL, LLC
By: HOBBS MEDCO, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
18
<PAGE>
LONGVIEW MEDICAL CENTER, L.P.
By: GENERAL PARTNER:
REGIONAL HOSPITAL OF
LONGVIEW, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
LONGVIEW MERGER, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
LRH, LLC
By: LONGVIEW MERGER, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
LS PSYCHIATRIC, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
19
<PAGE>
MCI PANHANDLE SURGICAL, L.P.
By: GENERAL PARTNER:
PANHANDLE PROPERTY, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
MEDICAL CENTER AT TERRELL, LLC
By: TIRAD-MEDICAL CENTER AT
TERRELL SUBSIDIARY, LLC
By: /s/ Donald P. Fay
Name: Donald P. Fay
Title: Executive Vice President
MEDICAL CENTER OF
BROWNWOOD, LLC
By: SOUTHERN TEXAS MEDICAL
CENTER, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
MEDICAL CENTER OF SHERMAN, LLC
By: TRIAD-MEDICAL CENTER OF
SHERMAN SUBSIDARY, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
20
<PAGE>
MEDICAL HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
MEDICAL MANAGEMENT, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
MEDICAL PARK HOSPITAL, LLC
By: TRIAD HOLDINGS II, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
MEDICAL PARK MSO, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
MEMORIAL HOSPITAL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
21
<PAGE>
MID-PLAINS, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
MIDWEST PSYCHIATRIC
CENTER, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
MISSION BAY MEMORIAL
HOSPITAL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
MISSOURI HEALTHSERV, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
22
<PAGE>
NAVARRO HOSPITAL, L.P.
By: GENERAL PARTNER:
NAVARRO REGIONAL, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
NAVARRO REGIONAL, LLC
By: TRIAD-NAVARRO REGIONAL
HOSPITAL SUBSIDIARY, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
NORTH ANAHEIM
SURGICENTER, LTD.
By: GENERAL PARTNER:
SURGICARE OF NORTH ANAHEIM, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
NORTHWEST HOSPITAL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
23
<PAGE>
NRH, LLC
By: TRIAD-NAVARRO REGIONAL
HOSPITAL SUBSIDIARY, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
ODESSA, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
OREGON HEALTHCORP, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
OSBORN AMBULATORY SURGICAL
CENTER, LTD.
By: GENERAL PARTNER:
SAMARITAN SURGICENTERS OF
ARIZONA, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
24
<PAGE>
OVERLAND PARK REGIONAL
MEDICAL CENTER, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
PACIFIC EAST DIVISION OFFICE, L.P.
By: GENERAL PARTNER:
TRIAD TEXAS, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
PACIFIC GROUP ASC DIVISION, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
PACIFIC PHYSICIANS SERVICES, LLC
By: SPROCKET MEDICAL
MANAGEMENT, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
25
<PAGE>
PACIFIC WEST DIVISION OFFICE, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
PALM DRIVE HOSPITAL, L.P.
By: GENERAL PARTNER:
PALM DRIVE MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
PALM DRIVE MEDICAL CENTER, LLC
By: SEBASTOPOL, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
PANHANDLE MEDICAL CENTER, LLC
TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
26
<PAGE>
PANHANDLE SURGICAL HOSPITAL, L.P.
By: GENERAL PARTNER:
PANHANDLE MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
PAMPA HOSPITAL, L.P.
By: GENERAL PARTNER:
PAMPA MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
PAMPA MEDICAL CENTER, LLC
By: CORONADO MEDICAL, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
PANHANDLE PROPERTY, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
27
<PAGE>
PANHANDLE, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
PDMC, LLC
By: SEBASTOPOL, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
PECOS VALLEY OF NEW MEXICO, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
PHOENIX AMDECO, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
28
<PAGE>
PHOENIX SURGICAL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
PHYSICIANS AND SURGEONS
HOSPITAL OF ALICE, L.P.
By: GENERAL PARTNER:
ALICE HOSPITAL, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
PHYS-MED, LLC
By: TRIAD HOLDINGS II, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
PINEY WOODS HEALTHCARE
SYSTEM, L.P.
By: GENERAL PARTNER:
WOODLAND HEIGHTS
MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
29
<PAGE>
PRIMARY MEDICAL, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
PSYCHIATRIC SERVICES OF
PARADISE VALLEY, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
REGIONAL EMPLOYEE ASSISTANCE
PROGRAM, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
REGIONAL HOSPITAL OF
LONGVIEW, LLC
By: LONGVIEW MERGER, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
30
<PAGE>
SACMC, LLC
By: SAN ANGELO MEDICAL, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SAMARITAN SURGICENTERS OF
ARIZONA, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SAN ANGELO COMMUNITY
MEDICAL CENTER, LLC
By: SAN ANGELO MEDICAL, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SAN ANGELO HOSPITAL, L.P.
By: GENERAL PARTNER:
SAN ANGELO COMMUNITY
MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
31
<PAGE>
SAN ANGELO MEDICAL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SAN DIEGO HOSPITAL, L.P.
By: GENERAL PARTNER:
MISSION BAY MEMORIAL
HOSPITAL, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SAN LEANDRO HOSPITAL, L.P.
By: GENERAL PARTNER:
SAN LEANDRO MEDICAL
CENTER, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SAN LEANDRO MEDICAL
CENTER, LLC
By: SAN LEANDRO, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
32
<PAGE>
SAN LEANDRO, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SDH, LLC
By: SILSBEE TEXAS, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SDH LP, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SEBASTOPOL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
33
<PAGE>
SHERMAN HOSPITAL, L.P.
By: GENERAL PARTNER:
MEDICAL CENTER OF SHERMAN, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SHERMAN MEDICAL CENTER, LLC
By: TRIAD-MEDICAL CENTER OF
SHERMAN SUBSIDIARY, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SILSBEE DOCTORS HOSPITAL, L.P.
By: GENERAL PARTNER:
SILSBEE MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SILSBEE MEDICAL CENTER, LLC
By: SILSBEE TEXAS, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
34
<PAGE>
SILSBEE TEXAS, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SLH, LLC
By: SAN LEANDRO, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SOUTH ALABAMA MANAGED CARE
CONTRACTING, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SOUTH ALABAMA MEDICAL
MANAGEMENT SERVICES, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SOUTH ALABAMA PHYSICIANS
SERVICE, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
35
<PAGE>
SOUTH ARKANSAS CLINIC, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SOUTHERN TEXAS MEDICAL
CENTER, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SPROCKET MEDICAL
MANAGEMENT, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICAL CENTER OF AMARILLO, LLC
TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
36
<PAGE>
SURGICAL CENTER OF SOUTHEAST
TEXAS, LTD.
By: GENERAL PARTNER:
SURGICARE OF SOUTHEAST
TEXAS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICARE OF AMARILLO, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICARE OF INDEPENDENCE, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICARE OF NORTH
ANAHEIM, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICARE OF SAN LEANDRO, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
37
<PAGE>
SURGICARE OF SHERMAN, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICARE OF SOUTHEAST
TEXAS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICARE OF VICTORIA, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICARE OF VICTORIA, LTD.
By: GENERAL PARTNER:
SURGICARE OF VICTORIA, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICARE OUTPATIENT CENTER OF
LAKE CHARLES, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
38
<PAGE>
SURGICENTER OF JOHNSON
COUNTY, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICENTER OF JOHNSON
COUNTY, LTD.
By: GENERAL PARTNER:
SURGICARE OF JOHNSON
COUNTY, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICENTERS OF AMERICA, L.P.
By: GENERAL PARTNER:
SAMARITAN SURGICENTERS OF
ARIZONA, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
SURGICENTERS OF AMERICA, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
39
<PAGE>
TERRELL HOSPITAL, L.P.
By: GENERAL PARTNER:
TERRELL MEDICAL CENTER, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
TERRELL MEDICAL CENTER, LLC
By: TRIAD-MEDICAL CENTER AT
TERRELL SUBSIDIARY, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD - ARIZONA I, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD - EL DORADO, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD - SOUTH TULSA HOSPITAL
COMPANY, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
40
<PAGE>
TRIAD CSGP, LLC
By: TRIAD HOLDINGS II, LLC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD CSLP, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD CORPORATE SERVICES,
LIMITED PARTNERSHIP
By: GENERAL PARTNER:
TRIAD CSGP, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD HEALTHCARE SYSTEM OF
PHOENIX, L.P.
By: GENERAL PARTNER:
TRIAD OF PHOENIX, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
41
<PAGE>
TRIAD HOLDINGS II, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD OF ARIZONA (L.P.), INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD OF PHOENIX, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD RC, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
42
<PAGE>
TRIAD TEXAS, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice Presid
TRIAD-MEDICAL CENTER AT
TERRELL SUBSIDIARY, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD-MEDICAL CENTER OF
SHERMAN SUBSIDIARY, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
TRIAD-NAVARRO REGIONAL
HOSPITAL SUBSIDIARY, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
43
<PAGE>
TROSCO, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
TRUFOR PHARMACY, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
VFARC, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
VHC HOLDINGS, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
44
<PAGE>
VHC MEDICAL, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
VICTORIA HOSPITAL, LLC
By: VHC MEDICAL, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
VICTORIA MEDICAL FOUNDATION
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
VICTORIA OF TEXAS, L.P.
By: GENERAL PARTNER:
DETAR HOSPITAL, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
45
<PAGE>
VMF MEDICAL, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
WAGONER COMMUNITY
HOSPITAL, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
WAMC, LLC
By: WEST ANAHEIM, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
WEST ANAHEIM HOSPITAL, L.P.
By: GENERAL PARTNER:
WEST ANAHEIM MEDICAL
CENTER, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
46
<PAGE>
WEST ANAHEIM MEDICAL
CENTER, LLC
By: WEST ANAHEIM, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
WEST ANAHEIM, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
WESTMED
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
WHARTON MEDCO, LLC
By: TRIAD HOSPITALS HOLDINGS, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
47
<PAGE>
WHMC, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
WILLAMETTE VALLEY CLINICS, LLC
By: OREGON HEALTHCORP, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
WILLAMETTE VALLEY MEDICAL
CENTER, LLC
By: OREGON HEALTHCORP, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
WM MEDICAL, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
48
<PAGE>
WOMEN & CHILDREN'S
HOSPITAL, LLC
By: TRIAD HOLDINGS II, LLC
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
WOODLAND HEIGHTS MEDICAL
CENTER, LLC
By: TRIAD HOLDINGS III, INC.
By: /s/ Donald P. Fay
---------------------------------
Name: Donald P. Fay
Title: Executive Vice President
49
<PAGE>
EXHIBIT 10.1
TAX SHARING AND INDEMNIFICATION AGREEMENT
PREAMBLE
--------
This Tax Sharing and Indemnification Agreement (this "Agreement"),
dated as of May 11, 1999, is made and entered into by and among Columbia/HCA
Healthcare Corporation, a Delaware corporation ("Columbia/HCA"), LifePoint
Hospitals, Inc., a Delaware corporation ("LifePoint"), and Triad Hospitals,
Inc., a Delaware corporation ("Triad") (collectively, the "Parties").
RECITALS
--------
WHEREAS, the Parties have entered into the Distribution Agreement,
dated as of May 11, 1999 (the "Distribution Agreement"), pursuant to which
Columbia/HCA will distribute to its stockholders all of the issued and
outstanding common stock of LifePoint and Triad (the "Public Distribution");
WHEREAS, in order to consummate the Public Distribution, it is
necessary and desirable for HealthTrust, Inc. - The Hospital Company, a Delaware
corporation that is wholly-owned by Columbia/HCA and that is currently the
direct parent of LifePoint and Triad, to distribute to Columbia/HCA all of the
issued and outstanding common stock of LifePoint and Triad (the "Internal
Distribution") (the Public Distribution and the Internal Distribution together,
the "Distributions");
WHEREAS, the Distributions are intended to qualify as tax-free
distributions under section 355 of the Code (as defined below);
<PAGE>
WHEREAS, in connection with the Distributions, the Parties and certain
of their Affiliates (as defined below) have engaged and will engage in certain
internal restructuring transactions (the "Internal Restructuring") (the
Distributions and the Internal Restructuring, collectively, the
"Reorganization");
WHEREAS, on March 30, 1999, Columbia/HCA received an advance letter
ruling from the Internal Revenue Service setting forth certain United States
federal income tax consequences of the Reorganization;
WHEREAS, the Parties wish to (a) provide for the payment of tax
liabilities and entitlement to refunds thereof, (b) allocate responsibility for
and provide for their cooperation in the filing of tax returns, (c) provide for
certain other matters relating to taxes, and (d) set forth certain covenants and
indemnities relating to the preservation of the tax treatment of the
Reorganization set forth in the Letter Ruling (as defined below);
NOW, THEREFORE, in consideration of their mutual promises, the Parties
hereby agree as follows:
2
<PAGE>
ARTICLE I
DEFINITIONS AND CONSTRUCTION
Section 1.01. Certain Definitions. As used in this Agreement, the following
-------------------
terms shall have the following meanings:
"Affiliate" means, with respect to a specified Person, any other
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with such Person (including any
Person that is a member of the same consolidated group as the specified Person
for Tax purposes).
"Agreement" has the meaning set forth in the Preamble hereof.
"Ancillary Agreements" has the meaning set forth in the Distribution
Agreement.
"Benefited Party" has the meaning set forth in Section 3.04 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor thereto, as in effect for the taxable period in question.
"Columbia/HCA" has the meaning set forth in the Preamble of this
Agreement.
"Columbia/HCA Approval" means the advance, written consent of
Columbia/HCA, which consent may be granted or withheld in its sole and absolute
discretion. Columbia/HCA agrees to use its best efforts to respond to a request
for Columbia/HCA Approval within 30 days of the receipt of a written request for
such consent.
"Columbia/HCA Group" means, with respect to any taxable period or
portion thereof, Columbia/HCA and its Affiliates.
"Columbia/HCA Return" has the meaning set forth in Section 2.02(a) of
this Agreement.
3
<PAGE>
"Detrimented Party" has the meaning set forth in Section 3.04 of this
Agreement.
"Distribution Agreement" has the meaning set forth in the Recitals of
this Agreement.
"Distribution Date" means the date as of which the Public Distribution
will be effected, as determined by the Board of Directors of Columbia/HCA.
"Distributions" has the meaning set forth in the Recitals of this
Agreement.
"Federal Income Tax" means any Tax imposed under Subtitle A of the
Code (including the Taxes imposed by sections 11, 55, 59A, 1201(a) and 1502 of
the Code and the Treasury Regulations promulgated thereunder), and any other
income-based United States federal Tax that is hereinafter imposed, plus any
interest, additions to tax or penalties applicable or related thereto.
"Final Determination" means the final resolution of liability of a
Party or any of its relevant Affiliates for any Tax for a taxable period (i) by
Internal Revenue Service Form 870 or 870-AD (or any successor forms thereto), on
the date of acceptance by or on behalf of the IRS, or by a comparable form under
the laws of other jurisdictions, on the date of acceptance by or on behalf of
the Taxing Authority of such jurisdiction, except that a Form 870 or 870-AD or
comparable form that reserves (whether by its terms or by operation of law) the
right of the taxpayer to file a claim for refund and/or the right of the IRS or
other Taxing Authority to assert a further deficiency shall not constitute a
Final Determination; (ii) by a decision, judgment, decree, or other order by a
court of competent jurisdiction, which has become final and unappealable; (iii)
by a closing agreement or accepted offer in compromise under section 7121 or
7122 of the Code, or comparable agreements under the laws of other
jurisdictions; (iv) by any allowance of a refund or credit in respect of an
overpayment of Tax, but only after the expiration
4
<PAGE>
of all periods during which such refund may be recovered (including by way of
offset) by the jurisdiction imposing the Tax; or (v) by any other final
disposition, including by reason of the expiration of the applicable statute of
limitations.
"Gross Assets" means, when used with respect to a specified Person,
the fair market value of such Person's assets unencumbered by any liabilities.
"Group" means any of the Columbia/HCA Group, the LifePoint Group or
the Triad Group, as the context may require.
"Indemnified Parties" has the meaning set forth in Section 5.02(a) of
this Agreement.
"Indemnifying Parties" has the meaning set forth in Section 5.02(a) of
this Agreement.
"Internal Distribution" has the meaning set forth in the Recitals of
this Agreement.
"Internal Restructuring" has the meaning set forth in the Recitals of
this Agreement.
"IRS" means the Internal Revenue Service.
"Letter Ruling" means the advance letter rulings issued by the IRS to
Columbia/HCA setting forth certain Federal Income Tax consequences of the
Reorganization, and any supplemental or additional letter rulings that may be
issued by the IRS to any of the Parties or their Affiliates with respect to the
Reorganization or any part thereof, provided that any such supplemental or
additional letter ruling is issued in response to a ruling request by
Columbia/HCA or a ruling request that received Columbia/HCA Approval.
"Liability Issue" has the meaning set forth in Section 6.01(b) of this
Agreement.
5
<PAGE>
"LifePoint" has the meaning set forth in the Preamble of this
Agreement.
"LifePoint ESOP" means the employee stock ownership plan to be adopted
by LifePoint, as described in the Ruling Request.
"LifePoint Group" means, with respect to any taxable period or portion
thereof, LifePoint and its Affiliates.
"LifePoint Return" has the meaning set forth in Section 2.02(b) of
this Agreement.
"Non-Qualified Vested Options" means all options to acquire stock of
Columbia/HCA, LifePoint or Triad that are vested at the time of the
Distributions.
"Notifying Party" has the meaning set forth in Section 6.01(b) of this
Agreement.
"Opinion of Counsel" means an opinion of independent tax counsel of
recognized national standing and experienced in the issues to be addressed and
otherwise acceptable to Columbia/HCA, in its sole and absolute discretion, that
is in form and substance satisfactory to Columbia/HCA, in its sole and absolute
discretion.
"Original Ruling Request" means the ruling request submissions
(together with all exhibits and appendices thereto) that were submitted to the
IRS on behalf of Columbia/HCA, dated August 14, 1998, October 16, 1998, November
20, 1998, December 23, 1998, January 13, 1999, February 8, 1999, February 10,
1999, March 2, 1999, March 16, 1999, March 23, 1999, March 26, 1999, March 29,
1999 and March 30, 1999.
"Parties" has the meaning set forth in the Preamble of this Agreement.
"Person" means any natural person, corporation, business trust, joint
venture, association, company, partnership, limited liability company or other
entity (regardless of whether such entity is disregarded as an entity for
Federal Income Tax purposes).
6
<PAGE>
"Post-Distribution Period" means a taxable period that begins after
the Distribution Date.
"Pre-Distribution Period" means a taxable period that ends on or
before the Distribution Date.
"Public Distribution" has the meaning set forth in the Recitals of
this Agreement.
"Reorganization" has the meaning set forth in the Recitals of this
Agreement.
"Representative" means with respect to any Person, any of such
Person's directors, officers, employees, agents, consultants, advisors,
accountants, attorneys, and representatives.
"Restricted Period" means the Distribution Date and the three-year
period following the Distribution Date.
"Ruling Request" means the Original Ruling Request and any
supplemental letter ruling requests submitted to the IRS, pursuant to which the
Letter Ruling is issued.
"Section 475 Adjustment" has the meaning set forth in Section 3.08 of
this Agreement.
"Spinco" means LifePoint or Triad, as the context may require.
"Spinco Group" means the LifePoint Group or the Triad Group, as the
context may require.
"Straddle Period" means a taxable period that begins on or before and
ends after the Distribution Date.
"Subsequent Benefit Decrease Event" has the meaning set forth in
Section 3.07 of this Agreement.
7
<PAGE>
"Subsequent Benefit Increase Event" has the meaning set forth in
Section 3.07 of this Agreement.
"Tainting Act" has the meaning set forth in Section 5.02(a) of this
Agreement.
"Tax" means any form of taxation imposed by a national, municipal,
governmental, administrative, judicial, state, federal, foreign, or other body
(a "Taxing Authority"), regardless of when such form of taxation was or is
created or imposed, including any net income, alternative or add-on minimum,
gross income, sales, use, ad valorem, escheat, gross receipts, value added,
franchise, profits, license, transfer, recording, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, windfall
profit, custom duty, or other tax, government fee or other like assessment or
charge of any kind whatsoever, together with any related interest, penalties, or
other additions to tax, or additional amount imposed by any such Taxing
Authority.
"Tax Benefit" means an amount by which the Tax liability of an
Indemnified Party is reduced (including by deduction, reduction of income by
virtue of increased tax basis or otherwise, or entitlement to a Tax refund,
credit or otherwise).
"Tax Controversy" has the meaning set forth in Section 6.02(a) of this
Agreement.
"Tax Detriment" means an amount by which the Tax liability of an
Indemnified Party is increased (including decreases in Tax refunds and credits).
"Tax Item" means any item of income, gain, loss, deduction, credit,
recapture of credit, or any other item that may have the effect of increasing or
decreasing Taxes paid or payable.
"Tax Practices" has the meaning set forth in Section 2.01 of this
Agreement.
8
<PAGE>
"Tax Return" means any return, filing, questionnaire or other document
required to be filed or that may be filed (including requests for extensions of
time, filings made with estimated Tax payments, claims for refund, elections or
amended returns) for any taxable period with any Taxing Authority in connection
with any Tax (whether or not a payment is required to be made with respect to
such return, filing, questionnaire or other document).
"Taxing Authority" has the meaning set forth in the definition of the
term "Tax" in this Section 1.01.
"Transitional Services Agreements" means the Transitional Services
Agreements entered into by and between Columbia/HCA and each of LifePoint and
Triad dated as of May 11, 1999.
"Treasury Regulations" means the regulations promulgated under the
Code, and any successor provisions thereof, as in effect for the relevant
taxable period.
"Triad" has the meaning set forth in the Preamble of this Agreement.
"Triad ESOP" means the employee stock ownership plan to be adopted by
Triad, as described in the Ruling Request.
"Triad Group" means, with respect to any taxable period or portion
thereof, Triad and its Affiliates.
"Triad Return" has the meaning set forth in Section 2.02(c) of this
Agreement.
Section 1.02. Interpretation and Construction of this Agreement. The
-------------------------------------------------
definitions in Section 1.01, above, shall apply equally to both the singular and
plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine or neuter form. The
words "include," "includes" and "including" when used in this Agreement shall be
deemed to be followed by the phrase "without limitation." The
9
<PAGE>
headings contained in this Agreement are inserted for convenience only and shall
not constitute a part hereof. This Agreement shall be construed in accordance
with its fair meaning and shall not be construed strictly against the drafter.
10
<PAGE>
ARTICLE II
PREPARATION AND FILING OF TAX RETURNS
-------------------------------------
Section 1.01. Manner of Filing. All Tax Returns filed by any Party
----------------
(including any Affiliate of any Party) after the date of this Agreement shall be
prepared on a basis that is consistent with the Letter Ruling and shall be filed
on a timely basis (including extensions) by the Party responsible for such
filing under this Agreement. All Tax Returns for tax periods beginning or ending
during the Restricted Period filed after the date of this Agreement by the
Spincos and their Affiliates shall (except to the extent of a Spinco's receipt
of Columbia/HCA Approval) be prepared in a manner that is consistent with past
practices, elections, accounting methods, conventions, and principles of
Taxation (collectively, "Tax Practices") used by Columbia/HCA and its Affiliates
for the most recent taxable period ending on or before December 31, 1999 for
which Tax Returns involving similar items have been filed by the applicable
member of the Columbia/HCA Group; provided, however, that the Spincos and their
Affiliates may make such new Tax elections or adopt such new methods of
accounting for Post-Distribution Periods as are permitted under applicable Tax
laws, and provided, further, that the Spincos and their Affiliates shall not be
required to follow a Tax Practice that is determined by a Final Determination to
be unlawful.
Section 2.02. Responsibility for Filing. (a) Columbia/HCA shall have the
-------------------------
sole and exclusive responsibility for the preparation and filing of (i) all Tax
Returns for Pre-Distribution Periods and, except as provided to the contrary in
Section 2.02(b) or (c), below, Straddle Periods, and (ii) all Tax Returns for
(or that relate to the businesses, assets or activities of) the Columbia/HCA
Group for Post-Distribution Periods (the Tax Returns described in (i) and (ii),
collectively, the "Columbia/HCA Returns").
11
<PAGE>
(b) LifePoint shall have the sole and exclusive responsibility for
the preparation and filing of all Tax Returns for (or that relate to the
businesses, assets or activities of) the LifePoint Group (i) for Post-
Distribution Periods and (ii) for any Straddle Period, provided that such
Straddle Period Tax Return does not relate to or include any Tax Item
attributable to any business, asset or activity of any member of the
Columbia/HCA Group or Triad Group (as constituted immediately after the
Distributions), and provided, further, that LifePoint shall provide to
Columbia/HCA for its review a copy of any such Straddle Period Tax Return at
least 45 days prior to the due date thereof (including extensions), and
Columbia/HCA shall provide comments to LifePoint within 30 days after its
receipt thereof (the Tax Returns described in (i) and (ii), collectively, the
"LifePoint Returns").
(c) Triad shall have the sole and exclusive responsibility for the
preparation and filing of all Tax Returns for (or that relate to the businesses,
assets or activities of) the Triad Group (i) for Post-Distribution Periods and
(ii) for any Straddle Period, provided that such Straddle Period Tax Return does
not relate to or include any Tax Item attributable to any business, asset or
activity of any member of the Columbia/HCA Group or LifePoint Group (as
constituted immediately after the Distributions), and provided, further, that
Triad shall provide to Columbia/HCA for its review a copy of any such Straddle
Period Tax Return at least 45 days prior to the due date thereof (including
extensions), and Columbia/HCA shall provide comments to Triad within 30 days
after its receipt thereof (the Tax Returns described in (i) and (ii),
collectively, the "Triad Returns").
(d) The preparation and/or filing by Columbia/HCA or one of its
Affiliates of any LifePoint Return or Triad Return under the Transitional
Services Agreements or any other Ancillary Agreement shall not cause such Tax
Return to be characterized as a Columbia/HCA
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Return for purposes of this Agreement, and shall not otherwise affect the
rights, responsibilities, obligations or liabilities of the Parties under this
Agreement.
Section 2.03. Amended Returns and Other Matters Pertaining to Taxes for
---------------------------------------------------------
Pre-Distribution Periods and Straddle Periods. (a) Unless requested by
- ---------------------------------------------
Columbia/HCA (in which event each Spinco shall comply with such request, and
Columbia/HCA shall reimburse such Spinco for reasonable third-party costs and
expenses directly related thereto), neither of the Spincos nor any of their
Affiliates shall file or permit to be filed any amended Tax Return with respect
to any Tax for any Pre-Distribution Period or any portion thereof without
obtaining Columbia/HCA Approval.
(b) Unless requested by Columbia/HCA (in which event each Spinco
shall comply with such request, and Columbia/HCA shall reimburse such Spinco for
reasonable third-party costs and expenses directly related thereto), LifePoint
shall not file or permit to be filed any amended Tax Return with respect to any
Straddle Period, and Triad shall not file or permit to be filed any amended Tax
Return with respect to any Straddle Period, unless LifePoint or Triad, as the
case may be, has obtained the prior written consent of Columbia/HCA, which
consent shall not be unreasonably withheld.
(c) Neither of the Spincos nor any of their Affiliates shall, with
respect to any Tax relating to (i) any Pre-Distribution Period or Straddle
Period or any portion thereof or (ii) any matter that is the subject of this
Agreement, the Distribution Agreement or any of the Ancillary Agreements, take
any position, initiate (or permit to be initiated) any claim or otherwise take
(or fail to take) any action that might adversely affect Columbia/HCA or any of
its Affiliates with respect to Taxes.
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(d) Without limiting the generality of any of the foregoing
provisions of this Section 2.03, neither of the Spincos, nor any of their
Affiliates, shall (unless requested by Columbia/HCA, in which event each Spinco
shall comply with such request and Columbia/HCA shall reimburse such Spinco for
reasonable third-party costs and expenses directly related thereto) take any
action that could affect the assessment, collection or refund (including the
filing of an amended Tax Return or the application of any overpayment of sales
or use tax for a Pre-Distribution Period or Straddle Period to reduce the amount
of sales or use tax owed by a Spinco or any of its Affiliates for any Post-
Distribution Period) of any sales or use tax for Pre-Distribution Periods or
Straddle Periods.
Section 2.04. Treatment of Payments. The Parties agree that any payments
---------------------
made among the Parties pursuant to this Agreement, the Distribution Agreement or
the Ancillary Agreements with respect to periods prior to the Public
Distribution, or as the result of an event or action (or failure to act)
occurring prior to the Public Distribution, shall be treated for all Tax and
financial accounting purposes as nontaxable payments (dividends or capital
contributions, as the case may be) made immediately prior to the Public
Distribution, unless, and then only to the extent, otherwise required by a Final
Determination.
14
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ARTICLE III
ALLOCATION AND PAYMENT OF TAXES
-------------------------------
Section 3.01. In General. The Parties agree to allocate their respective
----------
shares of Taxes as provided in this Agreement. Payments to Taxing Authorities
and among the Parties, as the case may be, shall be made in accordance with such
Tax allocations and/or as provided in this Agreement.
Section 3.02. Allocation and Payment of Taxes, Generally. Except as other-
------------------------------------------
wise provided in this Agreement:
(a) Columbia/HCA shall pay or cause to be paid to the relevant Taxing
Authority, shall indemnify and hold the LifePoint Group and the Triad Group
harmless against, and shall be entitled to all refunds of (i) all Taxes for Pre-
Distribution Periods (including the portion of Taxes that is allocated to Pre-
Distribution Periods pursuant to Section 3.03, below) and (ii) all Taxes for
Post-Distribution Periods (including the portion of Taxes that is allocated to
Post-Distribution Periods pursuant to Section 3.03, below) that are attributable
to the Columbia/HCA Group; provided, however, that LifePoint shall pay or cause
to be paid to the relevant Taxing Authority any Taxes with respect to LifePoint
Returns for Straddle Periods, and Triad shall pay or cause to be paid to the
relevant Taxing Authority any Taxes with respect to Triad Returns for Straddle
Periods;
(b) LifePoint shall pay or cause to be paid to the relevant Taxing
Authority, shall indemnify and hold the Columbia/HCA Group and the Triad Group
harmless against, and shall be entitled to all refunds of all Taxes for Post-
Distribution Periods (including the portion of
15
<PAGE>
Taxes that is allocated to Post-Distribution Periods pursuant to Section 3.03,
below) that is attributable to the LifePoint Group; and
(c) Triad shall pay or cause to be paid to the relevant Taxing
Authority, shall indemnify and hold the Columbia/HCA Group and the LifePoint
Group harmless against, and shall be entitled to all refunds of all Taxes for
Post-Distribution Periods (including the portion of Taxes that is allocated to
Post-Distribution Periods pursuant to Section 3.03, below) that are attributable
to the Triad Group.
Section 3.03. Allocation and Payment of Certain Straddle Period Taxes.
-------------------------------------------------------
(a) For purposes of this Agreement, in the case of periodic Taxes attributable
to a Straddle Period that are not based on income or receipts (e.g., property
taxes), the Straddle Period shall be treated as if it were divided into a Pre-
Distribution Period and a Post-Distribution Period and such periodic Taxes shall
be allocated between such Pre-Distribution Period and such Post-Distribution
Period based upon the ratio of (x) the number of days in the taxable period (i)
before and including the Distribution Date (with respect to the Pre-Distribution
Period) or (ii) following the Distribution Date (with respect to the Post-
Distribution Period) and (y) the number of days in the entire taxable period.
With respect to Taxes that are allocated to a Post-Distribution Period in
accordance with this Section 3.03(a), (i) LifePoint shall pay or cause to be
paid (to Columbia/HCA, with respect to any Columbia/HCA Returns, and to the
relevant Taxing Authority, with respect to any LifePoint Returns for Straddle
Periods), and shall indemnify and hold the Columbia/HCA Group and the Triad
Group harmless against, the amount of Taxes that is attributable to the
LifePoint Group and (ii) Triad shall pay or cause to be paid (to Columbia/HCA,
with respect to any Columbia/HCA Returns, and to the relevant Taxing Authority,
with respect to any Triad Returns for Straddle Periods), and shall indemnify and
hold
16
<PAGE>
the Columbia/HCA Group and the LifePoint Group harmless against, the amount of
Taxes that is attributable to the Triad Group.
(b) For purposes of this Agreement, in the case of Taxes that are
attributable to a Straddle Period and are not described in Section 3.03(a),
above, the Straddle Period shall be treated as if it were divided into a Pre-
Distribution Period and a Post-Distribution Period and such Taxes shall be
allocated between such Pre-Distribution Period and such Post-Distribution Period
by allocating Tax Items between such Pre-Distribution Period and Post-
Distribution Period based upon (i) an actual closing of the books as of the
close of business on April 30, 1999 and (ii) a ratable allocation election as
described in Treasury Regulation section 1.1502-76(b)(2)(iii) with respect to
the month of May 1999; provided, however, that any Tax Items attributable to
transactions or events not in the ordinary course of business occurring on the
Distribution Date prior to or at the time of the Public Distribution will be
allocated to the Pre-Distribution Period, and any Tax Items attributable to
transactions or events not in the ordinary course of business occurring on the
Distribution Date after the Public Distribution shall be allocated to the Post-
Distribution Period, in each case in accordance with the principles of Treasury
Regulation section 1.1502-76(b)(1). With respect to Tax Items that are allocated
to a Pre-Distribution Period in accordance with this Section 3.03(b),
17
<PAGE>
(i) Columbia/HCA shall pay or cause to be paid to LifePoint with respect to
LifePoint Returns for Straddle Periods, and shall indemnify and hold the
LifePoint Group harmless against, the amount of Taxes that is attributable to
those Tax Items, and (ii) Columbia/HCA shall pay or cause to be paid to Triad
with respect to Triad Returns for Straddle Periods, and shall indemnify and hold
the Triad Group harmless against, the amount of Taxes that is attributable to
those Tax Items. With respect to Tax Items that are allocated to a Post-
Distribution Period in accordance with this Section 3.03(b), (i) LifePoint shall
pay or cause to be paid (to Columbia/HCA, with respect to any Columbia/HCA
Returns, and to the relevant Taxing Authority, with respect to any LifePoint
Returns for Straddle Periods), and shall indemnify and hold the Columbia/HCA
Group and the Triad Group harmless against, the amount of Taxes that is
attributable to the LifePoint Group, computed as if the taxable period for
LifePoint and its Affiliates for such Taxes began immediately following the
Distribution Date, and (ii) Triad shall pay or cause to be paid (to
Columbia/HCA, with respect to any Columbia/HCA Returns, and to the relevant
Taxing Authority, with respect to any Triad Returns for Straddle Periods), and
shall indemnify and hold the Columbia/HCA Group and the LifePoint Group harmless
against, the amount of Taxes that is attributable to the Triad Group, computed
as if the taxable period for Triad and its Affiliates for such Taxes began
immediately following the Distribution Date.
Section 3.04. Adjustments. If any adjustment is made to any Tax Return
-----------
relating to a Party or any of its Affiliates (whether such adjustment is the
result of or in settlement of any audit, other administrative proceeding or
judicial proceeding or the filing of an amended return to reflect the
consequences of any determination made in connection with any such audit or
proceeding or otherwise) and there is a correlative adjustment applicable to
another Party or any of its Affiliates for any taxable period (or portion
thereof) ending after the Distribution Date, the Party whose adjustment is
favorable (i.e., the Party to which there inures, directly or indirectly, a net
----
Tax benefit as a result of any adjustment) (the "Benefited Party") shall pay to
the Party whose adjustment is unfavorable (i.e., the Party which suffers,
directly or indirectly, a net Tax detriment as a result of any adjustment (the
"Detrimented Party") the amount of such net Tax benefit, at such time or times
as and to the extent that such benefit is realized through a refund of Tax or
actual reduction in the amount of Tax that the Benefited Party otherwise would
have paid if such
18
<PAGE>
adjustment had not been made; provided, that the Benefited Party shall not be
obligated to make any payment pursuant to this Section 3.04 in respect of a net
Tax benefit to the extent that the amount of such payment would exceed (a) the
aggregate amount of all prior net Tax detriments suffered by the Detrimented
Party with respect to adjustments that are the subject of this Section 3.04 less
(b) the aggregate amount of all prior payments made by the Benefited Party under
this Section 3.04.
Upon notice from any Party hereto regarding any event (including the filing
of an amended Return or the occurrence of an audit or other proceeding) that
could give rise to a Tax detriment to such Party, a Party having a potential Tax
benefit with respect to the same underlying adjustment shall take all actions as
may be necessary to maximize any correlative adjustment that might ultimately
reduce payments hereunder, and shall coordinate with, the Party with the
potential Tax detriment with respect to the taking of such actions.
Section 3.05 Manner of Payment. Except as otherwise provided in this
-----------------
Agreement, any payment required to be made among the Parties pursuant to this
Article III with respect to any Tax Return shall be made by the Party obligated
to make such payment (i) in the case of a refund of Tax, within 30 business days
after receipt (whether by way of payment, credit, or offset against any payments
due or otherwise) of such refund, (ii) in the case of the payment of Tax with
respect to any Tax Return other than a Straddle Period Tax Return, within 30
days after the later of such payment of Tax to the relevant Taxing Authority
(including a deemed payment through the use of a Tax loss, credit, deduction or
other allowance) and the delivery of written demand for the payment hereunder to
the Party obligated to make such payment and (iii) in the case of the payment of
Tax with respect to any Straddle Period Tax Return, the later of the date such
Straddle Period Tax Return is filed or 15 days following the delivery of written
demand for
19
<PAGE>
the payment hereunder to the Party obligated to make such payment. Any payment
described in clause (i), above, and any demand for payment described in clause
(ii) or (iii), above, shall be accompanied by a calculation setting forth the
basis for the amount paid or demanded. Any payment that is required under this
Agreement that is not made within the prescribed time period shall thereafter
bear interest at a fluctuating rate per annum equal to the prime commercial
lending rate publicly announced by The Chase Manhattan Bank or any successor
thereto at its principal office (or any alternative rate substituted therefor by
such bank).
Section 3.06. Carrybacks. A Spinco shall be entitled to any refund for
----------
any Tax obtained by the Columbia/HCA Group (or any member of the Columbia/HCA
Group) as a result of the carryback of losses or credits of any member of such
Spinco's Group from any taxable period beginning on or after the Distribution
Date to any taxable period ending on or before the Distribution Date, provided
that the Spinco has received Columbia/HCA Approval with respect to such
carryback. Such refund shall be limited to the net amount received by the
Columbia/HCA Group (by refund, offset against other Taxes or otherwise), net of
any net Tax cost and other expenses incurred by the Columbia/HCA Group with
respect to such refund, and shall be paid within 30 days after payment is
received (or deemed received by reason of the reduction of Taxes otherwise
payable) by Columbia/HCA from a Taxing Authority. The application of any such
carrybacks by a Spinco and/or any Affiliate of a Spinco shall be in accordance
with the Code and the consolidated return regulations promulgated thereunder or
other applicable Tax laws. The Spinco shall indemnify Columbia/HCA for any costs
(including any interest, fines and penalties) resulting from the carryback of
any item under this paragraph. Notwithstanding this Section 3.06, each Spinco
and any member of a Spinco Group shall have the right, in its sole discretion,
to make any election regarding any such carrybacks, including the
20
<PAGE>
election under section 172(b)(3) of the Code, that would eliminate or limit the
carryback of any loss or credit to any taxable period ending before or including
the Distribution Date.
Section 3.07. Deductions Attributable to Non-Qualified Vested Options.
-------------------------------------------------------
Each Spinco agrees to pay to Columbia/HCA any benefit received by its Spinco
Group that is attributable to any transaction or items relating to the Non-
Qualified Vested Options. The benefit payable by a Spinco to Columbia/HCA under
this Section 3.07 with respect to any taxable period shall equal the excess of
(i) the amount of Taxes that such Spinco Group would have paid in the absence of
any transactions or items under the Non-Qualified Vested Options over (ii) the
amount of Taxes actually payable by such Spinco Group. Payment of such benefit
shall be made within 30 days after the filing of the Spinco Group's Federal
Income Tax Return for any taxable period in which a benefit is realized
(including through the use of a net operating loss that is created or increased
by any transaction or item under the Non-Qualified Vested Options). If
subsequent to the Spinco's payment of any such amount, there is (A) a Final
Determination under applicable law to the effect that all or part of the
deduction giving rise to such payment was not allowable or available, or (B) a
reduction in the amount of the benefit the Spinco realizes as a result of a
Final Determination increasing the amount of income or gain associated with
those transactions, Columbia/HCA shall repay to the Spinco within 30 days of any
event described in (A) or (B) (a "Subsequent Benefit Decrease Event") any amount
that would have not been payable to Columbia/HCA pursuant to this Section 3.07
had the amount of the benefit been initially determined in light of the
Subsequent Benefit Decrease Events, together with the amount of any interest and
penalties payable to any Taxing Authority with respect to those amounts. If
subsequent to the Spinco's payment of any amount under this Section 3.07, there
is (A) a Final Determination under applicable law to the effect that a deduction
giving rise to such payment
21
<PAGE>
exceeded the amount claimed or (B) an increase in the amount of the benefit the
Spinco realizes as a result of a Final Determination decreasing the amount of
income or gain associated with those transactions, the Spinco shall pay to
Columbia/HCA within 30 days of any event described in (A) or (B) (a "Subsequent
Benefit Increase Event") any additional amount that would have been payable to
Columbia/HCA pursuant to this Section 3.07 had the amount of the benefit been
initially determined in light of the Subsequent Benefit Increase Events. Each
Spinco shall take all actions as shall be necessary to maximize the amounts
payable by the Spinco to Columbia/HCA under this Section 3.07 and shall
coordinate with, and follow the instruction of, Columbia/HCA with respect to the
taking of such actions.
Section 3.08. Section 475 Adjustments. Columbia/HCA shall pay to each
-----------------------
Spinco an amount equal to each Spinco Group's net increase in Taxes that is
attributable to an adjustment under Code section 481(a) pursuant to section
7003(c)(2) of the Internal Revenue Service Restructuring and Reform Act of 1998
(P.L. 105-206) (a "Section 475 Adjustment"). The amount payable by Columbia/HCA
to a Spinco under this Section 3.08 with respect to any taxable period shall
equal the excess of (i) the amount of Taxes actually payable by such Spinco
Group for such taxable period over (ii) the amount of Taxes that would have been
payable by such Spinco Group for such taxable period in the absence of the
Section 475 Adjustment.
Section 3.09. Certain Disputes Regarding Tax Liabilities. In the event of
------------------------------------------
a dispute regarding (i) the allocation of liability pursuant to the provisions
of this Article III, (ii) a payment for the use of losses or credits
attributable to a Spinco Group pursuant to Section 3.06, above, (iii) a payment
pursuant to Section 3.07, above, attributable to a deduction arising from a
transaction or item relating to the Non-Qualified Vested Options, or (iv) a
payment pursuant to Section 3.08, above, attributable to a Section 475
Adjustment, the parties to the dispute shall
22
<PAGE>
employ (and equally share the expense of) a mutually acceptable and jointly
engaged nationally recognized public accounting firm to determine the proper
allocation of such liability or amount of such payment. In the event the Parties
are unable to agree to a mutually acceptable nationally recognized accounting
firm within 10 days, the parties shall each select a nationally recognized
accounting firm, which accounting firms shall select a third nationally
recognized accounting firm, which third nationally recognized accounting firm
shall be jointly engaged by the parties to determine the proper allocation of
such liability or amount of such payment.
23
<PAGE>
ARTICLE IV
REPRESENTATIONS AND COVENANTS
-----------------------------
Section 4.01. LifePoint Representations. (a) LifePoint has reviewed the
-------------------------
Ruling Request and the Letter Ruling and, to the best of LifePoint's knowledge,
these materials, including any representations and statements concerning
LifePoint, its business operations, capital structure and/or organization, are
complete and accurate in all material respects. LifePoint shall, and shall cause
each member of the LifePoint Group to, comply in all material respects with each
such representation and statement concerning LifePoint and the LifePoint Group
made in the Ruling Request and in the Letter Ruling, including statements
relating to actions intended to facilitate (i) LifePoint's adoption of the
LifePoint ESOP and other line-of-sight compensation and (ii) LifePoint's
improvement of operations and management focus with respect to its facilities.
Without limiting the generality of the foregoing, with respect to any
representation or statement made by, on behalf of, or with respect to LifePoint
or the LifePoint Group in connection with the Ruling Request or the Letter
Ruling, and to the extent such representation or statement relates to future
actions or events under their control, neither LifePoint nor any member of the
LifePoint Group will take (or fail to take) any action during the Restricted
Period that would have caused such representation or statement to be untrue if
LifePoint or any member of the LifePoint Group had planned or intended to take
(or fail to take) such action at the time such representation or statement was
made by or on behalf of LifePoint or the LifePoint Group.
(b) LifePoint hereby represents and warrants that it has no intention
to undertake any of the transactions set forth in Section 4.02(a)(ii), below,
nor does LifePoint or any member of the LifePoint Group have any intention to
cease to engage in the active conduct of its trade or business (within the
meaning of section 355(b)(2) of the Code), including the
24
<PAGE>
ownership and operation of the following hospitals and the assets associated
therewith: Castleview Hospital (located in Price, Utah), Ashley Valley Medical
Center (located in Vernal, Utah) and Riverton Memorial Hospital (located in
Riverton, Wyoming).
Section 4.02. LifePoint Covenants. (a) LifePoint covenants and agrees on
-------------------
behalf of itself and each other member of the LifePoint Group that during the
Restricted Period:
(i) LifePoint and the members of the LifePoint Group will continue to
engage in the business of owning and operating hospitals and related health
care facilities and will continue to maintain a substantial portion of
their respective assets and business operations as they existed immediately
prior to the Distributions.
(ii) Except as provided in Section 4.02(d), below, neither LifePoint nor
any of its Affiliates nor any of its or their respective Representatives
will undertake, authorize, approve, recommend, permit, facilitate, or enter
into any contract, or consummate any transaction with respect to:
(1) the issuance of stock of LifePoint or any Affiliate thereof
or instrument that could constitute equity for Federal Income Tax
purposes (or any instrument or contract with respect thereto,
including options, warrants, rights or securities exercisable for,
or convertible into, stock of LifePoint or an Affiliate of
LifePoint) in a single transaction or in a series of related or
unrelated transactions other than (A) options and stock issued
pursuant to option and other equity plans as approved by the Board
of Directors of Columbia/HCA on April 15, 1999 (without regard to
subsequent amendments thereto), in an amount not to exceed 6,850,000
shares of LifePoint common stock, (B) stock sold to the LifePoint
ESOP, as described in the Ruling Request and (C) options pledged to
a private foundation
25
<PAGE>
to be established by LifePoint (and the issuance of stock pursuant
to the exercise of such options), as described in the Ruling
Request, in an amount not to exceed 100,000 shares of LifePoint
common stock;
(2) any transaction or series of related or unrelated
transactions with respect to the capital stock of, or other equity
interest in, LifePoint or any of its Affiliates, including any
redemptions, repurchases, stock acquisitions or stock dispositions
or the dissolution, merger, consolidation or complete or partial
liquidation of LifePoint or any of its Affiliates (or any
announcement of any such action), other than (A) transactions
pursuant to the "Odd-Lot Programs" described in the Ruling Request,
(B) stock acquisitions described in Section 4.02(a)(ii)(1)(A) and
(B), above, and (C) normal market trading;
(3) the transfer of assets to any Person in which LifePoint or
any of its Affiliates holds, directly or indirectly, any stock,
option, debt or other interest;
(4) any disposition of assets (other than assets that were
identified as "Held For Sale Assets" or "Potential Held For Sale
Assets" in the Ruling Request submission dated March 2, 1999, to the
extent that such assets are disposed in a manner that was described
in the Original Ruling Request with respect to Held For Sale Assets)
that (A) is outside the ordinary course of business or (B) is of
assets that are held, directly or indirectly, by LifePoint of
Kentucky, LLC;
(5) the effectuation of any recapitalization of LifePoint or any
of its Affiliates, including any stock split, reverse stock split,
stock dividend or other change in capital structure (other than the
repayment of any indebtedness outstanding immediately after the
Distributions);
26
<PAGE>
(6) the making of any election under Treasury Regulations
promulgated under Code Section 7701, or any successor regulation or
provision.
(iii) LifePoint will take the actions related to the LifePoint ESOP detailed
in the Ruling Request within the time period specified in the Letter Ruling.
(b) LifePoint covenants and agrees, on behalf of itself and each
other member of the LifePoint Group, that neither LifePoint nor any other member
of the LifePoint Group will take any position (on a Tax Return, in a Tax
proceeding or audit, or otherwise) that is inconsistent with the Letter Ruling
or the Ruling Request.
(c) In addition to the other representations, warranties, covenants
and agreements set forth in this Agreement, LifePoint and each member of the
LifePoint Group will take, or refrain from taking, as the case may be, such
actions as Columbia/HCA may require as necessary to ensure that the
Reorganization qualifies for the intended Tax treatment, including such actions
as Columbia/HCA determines may be necessary to preserve the Tax treatment set
forth in the Letter Ruling. Without limiting the generality of the foregoing,
LifePoint and the LifePoint Group shall cooperate with Columbia/HCA if
Columbia/HCA determines to obtain additional IRS rulings with respect to the
Reorganization or any portion thereof, including rulings pertaining to whether
any actual or proposed change in facts and circumstances affects the Tax
treatment of the Reorganization or any portion thereof, and Columbia/HCA shall
reimburse LifePoint for reasonable third-party costs and expenses directly
related to requests for additional IRS rulings that are initiated by
Columbia/HCA.
(d) Following the Distribution Date, LifePoint and its Affiliates may
take any action or engage in conduct otherwise prohibited by this Section 4.02
so long as prior to such action or conduct, as the case may be, LifePoint
obtains Columbia/HCA Approval and, if
27
<PAGE>
Columbia/HCA so requires, Columbia/HCA or LifePoint receives (A) a ruling from
the IRS in form and substance satisfactory to Columbia/HCA, in its sole and
absolute discretion, and upon which Columbia/HCA can rely, to the effect that
the proposed action or conduct, as the case may be, will not cause the
Reorganization or any portion thereof to fail to qualify for the Tax treatment
stated in the Letter Ruling, or (B) an Opinion of Counsel that is satisfactory
to Columbia/HCA in its sole and absolute discretion, and upon which Columbia/HCA
can rely (which ruling or Opinion of Counsel, as the case may be, shall be
obtained at the sole cost and expense of the LifePoint), to the effect that the
proposed action or conduct, as the case may be, will not cause the
Reorganization or any portion thereof to fail to qualify for the Tax treatment
stated in the Letter Ruling.
(e) LifePoint covenants, on behalf of itself and each other member of
the LifePoint Group, that neither LifePoint nor any member of the LifePoint
Group will apply for any additional IRS ruling pertaining to the Reorganization
or any portion thereof without Columbia/HCA Approval. Columbia/HCA shall be
entitled to review and approve any request for, or document relating to, any
such ruling prior to its submission to the IRS.
(f) LifePoint covenants that it will make sufficient contributions to
the LifePoint ESOP to enable the LifePoint ESOP to repay, over a period of not
more than 10 years, the promissory note issued by it to LifePoint, in accordance
with the terms of such promissory note. LifePoint covenants that it will not
take any action to cause the disposition of unallocated stock held by the
LifePoint ESOP prior to the full repayment of the loan incurred by the LifePoint
ESOP and the full allocation of all shares acquired in connection with such
loan.
Section 4.03. Triad Representations. (a) Triad has reviewed the Ruling
---------------------
Request and the Letter Ruling and, to the best of Triad's knowledge, these
materials, including any
28
<PAGE>
representations and statements concerning Triad, its business operations,
capital structure and/or organization, are complete and accurate in all material
respects. Triad shall, and shall cause each member of the Triad Group to, comply
in all material respects with each such representation and statement concerning
Triad and the Triad Group made in the Ruling Request and in the Letter Ruling,
including statements relating to actions intended to facilitate (i) Triad's
adoption of the Triad ESOP and other line-of-sight compensation and (ii) Triad's
improvement of operations and management focus with respect to its facilities.
Without limiting the generality of the foregoing, with respect to any
representation or statement made by, or on behalf of, Triad or the Triad Group
in connection with the Ruling Request or the Letter Ruling, and to the extent
such representation or statement relates to future actions or events under their
control, neither Triad nor any member of the Triad Group will take (or fail to
take) any action during the Restricted Period that would have caused such
representation or statement to be untrue if Triad or any member of the Triad
Group had planned or intended to take (or fail to take) such action at the time
such representation or statement was made by or on behalf of Triad or the Triad
Group.
(b) Triad hereby represents and warrants that it has no intention to
undertake any of the transactions set forth in Section 4.04(a)(ii), below, nor
does Triad or any member of the Triad Group have any intention to cease to
engage in the active conduct of its trade or business (within the meaning of
section 355(b)(2) of the Code), including the ownership and operation of the
following hospitals and the assets associated therewith: Northwest Hospital
(located in Tucson, Arizona), San Leandro Hospital (located in San Leandro,
California) and Williamette Valley Medical Center (located in McMinnville,
Oregon).
Section 4.04. Triad Covenants. (a) Triad covenants and agrees on behalf of
---------------
itself and each other member of the Triad Group that during the Restricted
Period:
29
<PAGE>
(i) Triad and the members of the Triad Group will continue to engage in
the business of owning and operating hospitals and related health care
facilities and will continue to maintain a substantial portion of their
respective assets and business operations as they existed immediately prior
to the Distributions;
(ii) Except as provided in Section 4.04(d), below, neither Triad nor any
of its Affiliates nor any of its or their respective Representatives will
undertake, authorize, approve, recommend, permit, facilitate, or enter into
any contract, or consummate any transaction with respect to:
(1) the issuance of stock of Triad or any Affiliate thereof or
instrument that could constitute equity for Federal Income Tax
purposes (or any instrument or contract with respect thereto,
including options, warrants, rights or securities exercisable for,
or convertible into, stock of Triad or an Affiliate of Triad) in a
single transaction or in a series of related or unrelated
transactions other than (A) options and stock issued pursuant to
option and other equity plans as approved by the Board of Directors
of Columbia/HCA on April 15, 1999 (without regard to subsequent
amendments thereto), in an amount not to exceed 6,850,000 shares of
Triad common stock, (B) stock sold to the Triad ESOP, as described
in the Ruling Request and (C) options pledged to a private
foundation to be established by Triad (and the issuance of stock
pursuant to the exercise of such options), as described in the
Ruling Request, in an amount not to exceed 100,000 shares of Triad
common stock;
(2) any transaction or series of related or unrelated
transactions with respect to the capital stock of, or other equity
interest in, Triad or any of its Affiliates,
30
<PAGE>
including any redemptions, repurchases, stock acquisitions or stock
dispositions or the dissolution, merger, consolidation or complete
or partial liquidation of Triad or any of its Affiliates (or any
announcement of any such action), other than (A) transactions
pursuant to the "Odd-Lot Programs" described in the Ruling Request,
(B) stock acquisitions described in Section 4.04(a)(ii)(1)(A) and
(B), above, and (C) normal market trading;
(3) the transfer of assets to any Person in which Triad or any
of its Affiliates holds, directly or indirectly, any stock, option,
debt or other interest;
(4) any disposition of assets (other than assets that were
identified as "Held for Sale Assets" or "Potential Held for Sale
Assets" in the Ruling Request submission dated March 2, 1999, to the
extent that such assets are disposed in a manner that was described
in the Original Ruling Request with respect to Held For Sale Assets)
that is outside the ordinary course of business;
(5) the effectuation of any recapitalization of Triad or any of
its Affiliates, including any stock split, reverse stock split,
stock dividend or other change in capital structure (other than the
repayment of any indebtedness outstanding immediately after the
Distributions);
(6) the making of any election under Treasury Regulations
promulgated under Code Section 7701, or any successor regulation or
provision.
(iii) Triad will take the actions related to the Triad ESOP detailed in
the Ruling Request within the time period specified in the Letter Ruling.
(b) Triad covenants and agrees, on behalf of itself and each
other member of the Triad Group, that neither Triad nor any other member of the
Triad Group will take any
31
<PAGE>
position (on a Tax Return, in a Tax proceeding or audit, or otherwise) that is
inconsistent with the Letter Ruling or the Ruling Request.
(c) In addition to the other representations, warranties, covenants
and agreements set forth in this Agreement, Triad and each member of the Triad
Group will take, or refrain from taking, as the case may be, such actions as
Columbia/HCA may require as necessary to ensure that the Reorganization
qualifies for the intended Tax treatment, including such actions as Columbia/HCA
determines may be necessary to preserve the Tax treatment set forth in the
Letter Ruling. Without limiting the generality of the foregoing, Triad and the
Triad Group shall cooperate with Columbia/HCA if Columbia/HCA determines to
obtain additional IRS rulings with respect to the Reorganization or any portion
thereof, including rulings pertaining to whether any actual or proposed change
in facts and circumstances affects the Tax treatment of the Reorganization or
any portion thereof, and Columbia/HCA shall reimburse Triad for reasonable
third-party costs and expenses directly related to requests for additional IRS
rulings that are initiated by Columbia/HCA.
(d) Following the Distribution Date, Triad and its Affiliates may
take any action or engage in conduct otherwise prohibited by this Section 4.04
so long as prior to such action or conduct, as the case may be, Triad obtains
Columbia/HCA Approval and, if Columbia/HCA so requires, Columbia/HCA or Triad
receives (A) a ruling from the IRS in form and substance satisfactory to
Columbia/HCA, in its sole and absolute discretion, and upon which Columbia/HCA
can rely, to the effect that the proposed action or conduct, as the case may be,
will not cause the Reorganization or any portion thereof to fail to qualify for
the Tax treatment stated in the Letter Ruling, or (B) an Opinion of Counsel that
is satisfactory to Columbia/HCA in its sole and absolute discretion, and upon
which Columbia/HCA can rely (which ruling or
32
<PAGE>
Opinion of Counsel, as the case may be, shall be obtained at the sole cost and
expense of Triad), to the effect that the proposed action or conduct, as the
case may be, will not cause the Reorganization or any portion thereof to fail to
qualify for the Tax treatment stated in the Letter Ruling.
(e) Triad covenants, on behalf of itself and each other member of the
Triad Group, that neither Triad nor any member of the Triad Group will apply for
any additional IRS ruling pertaining to the Reorganization or any portion
thereof without Columbia/HCA Approval. Columbia/HCA shall be entitled to review
and approve any request for, or document relating to, any such ruling prior to
its submission to the IRS.
(f) Triad covenants that it will make sufficient contributions to the
Triad ESOP to enable the Triad ESOP to repay, over a period of not more than 10
years, the promissory note issued by it to Triad, in accordance with the terms
of such promissory note. Triad covenants that it will not take any action to
cause the disposition of unallocated stock held by the Triad ESOP prior to the
full repayment of the loan incurred by the Triad ESOP and the full allocation of
all shares acquired in connection with such loan.
33
<PAGE>
ARTICLE V
INDEMNITY OBLIGATIONS
---------------------
Section 5.01. Breach. Columbia/HCA, LifePoint and Triad shall each
------
indemnify and hold harmless the other Parties and their Affiliates from and
against any payment required to be made under this Agreement as a result of the
breach by a member of the Columbia/HCA Group, LifePoint Group or Triad Group, as
the case may be, of any obligation under this Agreement.
Section 5.02. Tax Indemnification. Notwithstanding any other provision of
-------------------
this Agreement to the contrary:
(a) If any Party or any of its Affiliates (collectively, jointly and
severally, the "Indemnifying Parties") takes any action prohibited by Article
IV, above, or violates a representation or covenant contained in Article IV,
above, or takes or fails to take any other action (any such action, failure to
act or violation, a "Tainting Act") and the Reorganization or any portion
thereof fails to qualify for the Tax treatment stated in the Letter Ruling in
whole or in part as a result of such Tainting Act, then the Indemnifying Parties
shall (jointly and severally) indemnify and hold harmless each of the other
Parties and their Affiliates (collectively, the "Indemnified Parties") against
any and all Taxes and any other costs and liabilities imposed upon or incurred
by the Indemnified Parties as a result of the Tainting Act, including any
liability of the Indemnified Parties arising from Taxes imposed on shareholders
of a Party to the extent any shareholder or the IRS or other Taxing Authority
successfully seeks recourse against the Indemnified Parties on account of any
such Tainting Act, or any liability for such Taxes or other costs or liabilities
that the Indemnified Parties may assume or otherwise incur;
(b) Each Spinco and its Affiliates shall (jointly and severally)
indemnify and hold harmless Columbia/HCA and its Affiliates for any Tax imposed
upon or incurred by
34
<PAGE>
Columbia/HCA and its Affiliates as a direct or indirect result of any action
taken after the Distributions by such Spinco or any of its Affiliates.
Section 5.03. Gross-Up. Any payment under this Agreement shall be (i)
--------
increased to take account of any Tax Detriment incurred from the receipt or
accrual of payments hereunder (i.e., grossed-up for any Tax incurred on such
payment, accrual and/or increase) and (ii) reduced to take account of any Tax
Benefit attributable to the items to which such payments relate.
Section 5.04. Tender Offer Or Purchase Offer. Notwithstanding anything to
------------------------------
the contrary set forth in this Agreement, if, during the Restricted Period, any
Person or group of Persons acquires beneficial ownership of LifePoint or Triad
common stock (or any other class of outstanding LifePoint or Triad stock) or
commences a tender or other purchase offer for the capital stock of LifePoint or
Triad or initiates any other form of transaction to acquire directly or
indirectly LifePoint or Triad capital stock, upon consummation of which such
Person or group of Persons would acquire beneficial ownership of LifePoint or
Triad common stock (or any other class of outstanding LifePoint or Triad stock)
such that the Reorganization or any portion thereof shall fail to qualify for
the Tax treatment stated in the Letter Ruling as a result of such acquisition,
tender or other purchase offer, or other form of transaction, then the
Indemnifying Parties shall indemnify and hold harmless the Indemnified Parties
against any and all Taxes and any other costs and liabilities imposed upon or
incurred by the Indemnified Parties and/or their shareholders as a result of the
failure of the Reorganization or any portion thereof to so qualify.
Section 5.05. Tax Indemnity Payments. An Indemnifying Party shall make
----------------------
any payment or indemnity required by this Article V no later than 30 days after
receipt of written notice from the Indemnified Parties of such payment or
indemnity obligation, which notice shall be accompanied by a computation of the
amounts due.
35
<PAGE>
Section 5.06. Effect Of Sections 4.02(d) and 4.04(d) of This Agreement.
--------------------------------------------------------
The Indemnified Parties shall be indemnified and held harmless under this
Article V without regard to the fact that any Indemnifying Party or Indemnified
Party may have received Columbia/HCA Approval, a ruling from the IRS or an
Opinion of Counsel, as contemplated by Sections 4.02(d) and 4.04(d), above, or
otherwise. The Indemnified Parties shall be indemnified and held harmless under
Section 5.04, above, without regard to whether an acquisition of beneficial
ownership results from a transaction that is not prohibited under Article IV,
above.
36
<PAGE>
ARTICLE VI
COOPERATION AND EXCHANGE OF INFORMATION
---------------------------------------
Section 6.01. Cooperation (a) Each Party shall cooperate (and shall
-----------
cause its Affiliates to cooperate) fully at such time and to the extent
reasonably requested by any other Party in connection with the preparation and
filing of any Tax Return or the conduct of any audit, dispute, proceeding, suit
or action concerning any issues or any other matter contemplated hereunder. Such
cooperation shall include (1) the retention and provision on demand of books,
records, documentation, other information, or copies thereof relating to any Tax
Return until the later of (x) a Final Determination regarding liability for
Taxes to which such Tax Return relates and (y) in the event any claim has been
made under this Agreement for which such information is relevant, a final
resolution with respect to such claim; (2) the provision of additional
information with respect to an explanation of Tax Practices and material
provided under clause (1) of this Section 6.01(a); (3) the execution of any
document (including powers of attorney) that may be necessary or reasonably
helpful in connection with the filing of any Tax Return by any member of the
Columbia/HCA Group or a Spinco Group, or in connection with any audit, dispute,
proceeding, suit or action addressed in the preceding sentence; (4) the use of
the Party's reasonable best efforts to obtain any documentation from a
governmental authority or a third party that may be necessary or helpful in
connection with the foregoing; (5) the completion of such tax packages and other
work papers as requested, and within the reasonable time specified, by the
requesting party (including the provision of such information in electronic
format, if so specified by the requesting party); and (6) the satisfaction of
applicable withholding requirements. Each Party shall make its employees and
facilities available on a mutually convenient basis to facilitate such
cooperation.
37
<PAGE>
(b) Each Party (a "Notifying Party") shall use reasonable efforts to
keep each other Party advised as to the status of Tax audits and litigation
involving any issue (a "Liability Issue") that (i) relates to a Tax of the other
Party (or its Affiliates), or (ii) could give rise to the liability of the other
Party (or its Affiliates) under this Agreement. The Notifying Party shall
promptly furnish such other Party or Parties copies of any inquiries or requests
for information from any Taxing Authority concerning any Liability Issue. If
applicable under Section 6.02, below, the other Party or Parties shall have the
right to consult with the Notifying Party regarding any responses to such
requests and the Notifying Party shall provide such other Party or Parties with
copies of any such written responses before such responses are given to any
Taxing Authority. Without limiting the generality of the foregoing, each Party
shall promptly furnish to the other Party or Parties, upon receipt, a copy of
any revenue agent's report or similar report, notice of proposed adjustment or
notice of deficiency received by such Party or any of its Affiliates, as the
case may be, relating to any Liability Issue or any adjustment referred to in
Section 6.01(c), below.
(c) Columbia/HCA shall advise and consult with each of the Spincos
with respect to any proposed Tax adjustments relating to the Columbia/HCA Group
that are the subject of an audit or investigation of a Taxing Authority or are
the subject of litigation and that may affect any Tax Item of any member of such
Spinco's Group after the Distribution Date.
Section 6.02. Contest Provisions (a) Subject to the cooperation
------------------
provisions in Section 6.01, above, Columbia/HCA shall have the full
responsibility and control over the handling of any Tax controversy, including
an audit, a protest to the Appeals Division of the IRS, litigation in the Tax
Court or any other court of competent jurisdiction, and any other federal,
state, local or foreign hearing or administrative proceeding, (a "Tax
Controversy"), involving (i) any
38
<PAGE>
Columbia/HCA Return or (ii) the Reorganization or any portion thereof. Upon
request by a Spinco, however, and subject to Columbia/HCA Approval and the
cooperation provisions in Section 6.01, above, the Spinco shall, at the Spinco's
expense, be allowed to participate in the handling of any Tax Controversy with
respect to any item that would give rise to a payment of Tax for which such
Spinco would be liable, or a refund of Tax for which such Spinco would be
entitled to receive payment, under this Agreement.
(b) Subject to the cooperation provisions in Section 6.01, above,
LifePoint shall have the full responsibility and control over the handling of
any Tax Controversy involving any LifePoint Return; provided, however, that
Columbia/HCA shall, at Columbia/HCA's expense and in its sole discretion, be
allowed to participate in or assume full responsibility and control over the
handling of any Tax Controversy with respect to any item that would give rise to
a payment of Tax for which Columbia/HCA would be liable, or a refund of Tax for
which Columbia/HCA would be entitled to receive payment, under this Agreement.
(c) Subject to the cooperation provisions in Section 6.01, above,
Triad shall have the full responsibility and control over the handling of any
Tax Controversy involving any Triad Return; provided, however, that Columbia/HCA
shall, at Columbia/HCA's expense and in its sole discretion, be allowed to
participate in or assume full responsibility and control over the handling of
any Tax Controversy with respect to any item that would give rise to a payment
of Tax for which Columbia/HCA would be liable, or a refund of Tax for which
Columbia/HCA would be entitled to receive payment, under this Agreement.
(d) Each Party shall promptly notify the other Parties of any
inquiries by any Taxing Authority that relate to any Tax that may be imposed on
the other Parties or any of their
39
<PAGE>
Affiliates or that might give rise to any liability on any of the part of any of
the other Parties or any of their Affiliates under this Agreement.
Section 6.03. Notices. Any notice, demand, claim or other communication
-------
under this Agreement shall be in writing and shall be deemed given upon delivery
if delivered personally, upon mailing if sent by certified mail, return receipt
requested, postage prepaid, or upon completion of transmission if sent by
telecopy or facsimile, to the Parties at the following address:
To Columbia/HCA or any member of the Columbia/HCA Group:
Columbia/HCA Healthcare Corporation
One Park Plaza
P.O. Box 550
Nashville, Tennessee 37202
Attention: Ronald Lee Grubbs, Jr.
Vice President/Tax
To LifePoint or any member of the LifePoint Group:
LifePoint Hospitals, Inc.
4525 Harding Road
Nashville, Tennessee 37205
Attention: Elizabeth N. Alexander
Director of Tax
To Triad or any member of the Triad Group:
Triad Hospitals, Inc.
13455 Noel Road, 20th Floor
Dallas, Texas 75240
Attention: Robert P. Frutiger
Director of Tax
In each case, with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
Attention: Gordon E. Warnke, Esq.
40
<PAGE>
Section 6.04. Complete Agreement. This Agreement, together with the
------------------
Distribution Agreement, constitutes the entire agreement of the Parties
concerning the subject matter hereof, and supersedes all other agreements,
whether or not written, in respect of any Tax between or among any member or
members of the Columbia/HCA Group, LifePoint Group and Triad Group. In the
event and to the extent there is a conflict between the provisions of this
Agreement and Distribution Agreement, the provisions of this Agreement shall
control. This Agreement may not be amended except by an agreement in writing,
signed by the Parties.
Section 6.05. Disputes. Except as otherwise provided in Section 3.09,
--------
above, resolution of any and all disputes arising from or in connection with
this Agreement shall be in accordance with the provisions of Section 11.3 of the
Distribution Agreement.
Section 6.06. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the state of Delaware.
Section 6.07. Parties in Interest, Successors and Assigns. This Agreement
-------------------------------------------
is being entered into by Columbia/HCA, LifePoint and Triad on behalf of
themselves and their respective Affiliates immediately following the
Distributions. This Agreement shall constitute a direct obligation of each such
Person and shall be deemed to have been readopted and affirmed on behalf of any
Person that becomes a member of the Columbia/HCA Group, LifePoint Group or Triad
Group in the future. All of the provisions of this Agreement shall be binding
upon and inure to the benefit of the Parties and their Affiliates and their
respective successors and permitted assigns. A Party's rights and obligations
under this Agreement may not be assigned without the prior written consent of
the other Parties.
Section 6.08. No Third-Party Beneficiaries. This Agreement is solely for
----------------------------
the benefit of the Parties and their respective Affiliates and should not be
deemed to confer upon third parties
41
<PAGE>
any remedy, claim, liability, reimbursement, claim of action or other right in
excess of those existing without this Agreement.
Section 6.09. Legal Enforceability. Any provision of this Agreement that
--------------------
is prohibited or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions. Any prohibition
or unenforceability of any provision of this Agreement in any jurisdiction shall
not invalidate or render unenforceable the provision in any other jurisdiction.
Section 6.10. Expenses. Unless otherwise expressly provided in this
--------
Agreement or in the Distribution Agreement, each Party shall bear any and all
expenses that arise from its respective obligations under this Agreement.
Section 6.11. Confidentiality. Except as required by law or with the prior
---------------
written consent of the other Parties, all Tax Returns, documents, schedules,
work papers and similar items and all information contained therein, which Tax
Returns and other materials are within the scope of this Agreement, and any
other information that is obtained by a Party or any of its Affiliates pursuant
to this Agreement, shall be kept confidential by such Party and its Affiliates
and Representatives, shall not be disclosed to any other Person and shall be
used only for the purposes provided herein. If a Party or any of its Affiliates
is required by law to disclose any such information, such Party shall give
written notice to the other Parties prior to making such disclosure.
Section 6.12. Privileged Matters. Except as otherwise provided in this
------------------
Agreement, matters of privilege that arise under or in connection with this
Agreement or the matters addressed herein shall be governed by Section 9.6 of
the Distribution Agreement.
42
<PAGE>
Section 6.13. Counterparts. This Agreement may be signed in any number of
------------
counterparts, each of which shall be an original, with the same effect as if the
signature thereto and hereto were upon the same instrument.
* * *
43
<PAGE>
IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of
the date first above written.
COLUMBIA/HCA HEALTHCARE CORPORATION
By: /s/ Ronald Lee Grubbs, Jr.
------------------------------
Name: Ronald Lee Grubbs, Jr.
Title: Vice President of Tax
LIFEPOINT HOSPITALS, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President, General Counsel and
Secretary
TRIAD HOSPITALS, INC.
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President, General Counsel and
Secretary
44
<PAGE>
EXHIBIT 10.2
BENEFITS AND EMPLOYMENT MATTERS
AGREEMENT
by and among
COLUMBIA/HCA HEALTHCARE CORPORATION,
and
TRIAD HOSPITALS, INC.
and
LIFEPOINT HOSPITALS, INC.
dated as of May 11, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
<S> <C>
BENEFITS AND EMPLOYMENT MATTERS AGREEMENT............................ 1
RECITALS............................................................. 1
Article I. DEFINITIONS............................................... 1
Section 1.1 Definitions........................................... 1
Section 1.2 Other Terms........................................... 5
Section 1.3 Certain Constructions................................. 5
Section 1.4 Sections.............................................. 5
Section 1.5 Survival.............................................. 5
Article II. EMPLOYEE BENEFITS........................................ 6
Section 2.1 General............................................... 6
Section 2.2 Tax-Qualified Plans................................... 7
Section 2.3 Stock Option Plans.................................... 10
Section 2.4 Welfare Benefit Plans................................. 14
Section 2.5 Services to be Provided by Columbia/HCA and Mutuality. 16
Section 2.6 Preservation of Right To Amend or Terminate Plans..... 18
Section 2.7 Reimbursement......................................... 18
Section 2.8 Payroll Reporting and Withholding..................... 19
Article III. LABOR AND EMPLOYMENT MATTERS............................ 20
Section 3.1 Independent Employers................................. 20
Section 3.2 Employment Policies and Practices..................... 20
Section 3.3 Notice of Claims...................................... 20
Section 3.4 Assumption of Unemployment Tax Rates.................. 20
Section 3.5 No Third-Party Beneficiary Rights..................... 21
Article IV. DEFAULT.................................................. 21
Section 4.1 Default............................................... 21
Section 4.2 Force Majeure......................................... 21
Article V. MISCELLANEOUS............................................. 22
Section 5.1 Access Information; Cooperation...................... 22
Section 5.2 Assignment............................................ 22
Section 5.3 Headings.............................................. 22
Section 5.4 Attorney-Client Privilege............................. 22
Section 5.5 Severability.......................................... 22
Section 5.6 Parties Bound......................................... 22
Section 5.7 Notices............................................... 22
Section 5.8 Further Action........................................ 23
Section 5.9 Waiver................................................ 23
Section 5.10 Governing Law......................................... 24
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 5.11 Consent to Jurisdiction............................... 24
Section 5.12 Waiver of Jury Trial.................................. 24
Section 5.13 Entire Agreement...................................... 24
Section 5.14 Counterparts.......................................... 25
</TABLE>
ii
<PAGE>
BENEFITS AND EMPLOYMENT MATTERS AGREEMENT
THIS BENEFITS AND EMPLOYMENT MATTERS AGREEMENT (this "Agreement") is made
this 11th day of May 1999 by and among Columbia/HCA Healthcare Corporation, a
Delaware corporation ("Columbia/HCA"), Triad Hospitals, Inc., a Delaware
corporation and wholly owned subsidiary of Columbia/HCA ("Triad"), and LifePoint
Hospitals, Inc., a Delaware corporation and wholly owned subsidiary of
Columbia/HCA ("LifePoint") (each, singly, a "Party" and, collectively, the
"Parties"). Capitalized terms used in this Agreement are defined in Article I
and Section 2.3.
RECITALS
--------
WHEREAS, Columbia/HCA, directly and through its subsidiaries, owns and
operates health care facilities and related assets;
WHEREAS, the Board of Directors of Columbia/HCA has determined that it is
in the best interests of Columbia/HCA and its shareholders to distribute all of
the shares of Triad Stock and LifePoint Stock to the holders of Columbia/HCA
Stock (the "Distributions");
WHEREAS, in connection with the Distributions, Columbia/HCA, Triad and
LifePoint have set forth in a certain distribution agreement (the "Distribution
Agreement") the corporate transactions required to effect the Distributions and
the agreements that will govern certain matters following the Distributions; and
WHEREAS, as contemplated by the Distribution Agreement, Columbia/HCA, Triad
and LifePoint have agreed to enter into this agreement allocating
responsibilities with respect to employee compensation, benefits, labor, plan
administration and certain other employment matters pursuant to the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, the following terms
-----------
shall have the meanings indicated below:
Affiliate: any entity required to be aggregated with Columbia/HCA,
---------
Triad or LifePoint, as appropriate, pursuant to Code sections 414(b), 414(c),
414(m) or 414(o).
COBRA: Code section 4980B and ERISA Sections 601 through 608,
-----
establishing employer requirements for continuation of health care benefits for
certain current and former employees or dependents thereof.
<PAGE>
Code: the Internal Revenue Code of 1986, as amended, or any successor
----
legislation.
Columbia/HCA Defined Benefit Plan: any Defined Benefit Plan sponsored
---------------------------------
by a Subsidiary of Columbia/HCA prior to the Distribution Date.
Columbia/HCA Employee: any Employee of Columbia/HCA or an Affiliate
---------------------
thereof immediately prior to the Distributions, excluding Triad Employees and
LifePoint Employees.
Columbia/HCA Plans: the Columbia/HCA Retirement Plans and the
------------------
Columbia/HCA Welfare Plans, collectively.
Columbia/HCA Retirement Plans: the Columbia/HCA Healthcare
-----------------------------
Corporation Money Purchase Pension, Stock Bonus and Salary Deferral Plans.
Columbia/HCA Stock: the Class A Common Stock, par value $.01 per
------------------
share, of Columbia/HCA.
Columbia/HCA Terminee: any individual who (i) is no longer employed
---------------------
by Columbia/HCA or any Affiliate thereof immediately prior to the Distribution
Date and (ii) is not a LifePoint Terminee or a Triad Terminee.
Columbia/HCA Welfare Plans: the Columbia Medical Plan, the Columbia
--------------------------
Dental Plan, the Columbia Flexible Benefits Plan, the Columbia Life, Accidental
Death & Dismemberment Plan, the Columbia Long-Term Disability Plan and the
Columbia Flexible Spending Account Plan.
Defined Benefit Plan: a tax-qualified retirement Plan (under Code
--------------------
section 401(a)) that is not a Defined Contribution Plan.
Defined Contribution Plan: a tax-qualified retirement Plan (under
-------------------------
Code section 401(a)) defined in Code section 414(i).
Distribution Date: the date on which the Distributions occur.
-----------------
Distribution Year: the calendar year which includes the Distribution
-----------------
Date.
Employee: with respect to any entity, an individual who is
--------
considered, according to the payroll and other records of such entity, to be
employed by such entity, regardless of whether such individual is, at the
relevant time, actively at work or on leave of absence (including vacation,
holiday, sick leave, family and medical leave, disability leave, military leave,
jury duty, layoff with rights of recall, and any other leave of absence or
similar interruption of active employment that is not considered, according to
the policies or practices of such entity, to have resulted in a permanent
termination of such individual's employment).
EPIC Plan: the EPIC Healthcare Group, Inc. Profit Sharing Plan.
---------
2
<PAGE>
ERISA: the Employee Retirement Income Security Act of 1974, as
-----
amended, or any successor legislation.
ESOP: an employee stock ownership plan, as defined in Code section
----
4975.
HMO: any health maintenance organization organized under 42 U.S.C.
---
(S) 300e-9, or a state health maintenance organization statute that provides
medical services for Columbia/HCA Employees, Triad Employees or LifePoint
Employees under any Plan.
HealthTrust Plan: the HealthTrust, Inc.--The Hospital Company 401(k)
----------------
Retirement Program.
IRS: the Internal Revenue Service.
---
LifePoint Business: any business conducted by LifePoint, or a
------------------
LifePoint Subsidiary, on the Distribution Date.
LifePoint Employee: an Employee of LifePoint, or any direct or
------------------
indirect Subsidiary of LifePoint that is an Affiliate thereof, on the
Distribution Date.
LifePoint Retirement Plan: a Defined Contribution Plan to be
-------------------------
established by LifePoint pursuant to Plan Spin-offs from the Columbia/HCA
Retirement Plans in accordance with Section 2.2(a).
LifePoint Stock: the Common Stock, par value $.01 per share, of
---------------
LifePoint.
LifePoint Terminee: any individual who is no longer employed by
------------------
Columbia/HCA or any Affiliate thereof immediately prior to the Distribution
Date, but who was employed by a LifePoint Business immediately prior to his
termination of employment from Columbia/HCA and its Affiliates.
LifePoint Welfare Plans: the Welfare Benefit Plans to be established
-----------------------
by LifePoint pursuant to Plan Spin-offs in accordance with Section 2.4(a).
Plan: any plan, policy, arrangement, contract or agreement providing
----
compensation or benefits for any group of Employees or former Employees or
individual Employee or former Employee, or the dependents or beneficiaries of
any such Employee or former Employee, whether formal or informal or written or
unwritten, and including, without limitation, any means, whether or not legally
required, pursuant to which any benefit is provided by an employer to any
Employee or former Employee or the beneficiaries of any such Employee or former
Employee, adopted or entered into by a Party prior to, upon or after the
Distribution, regardless of whether such plan, policy, arrangement, contract or
agreement is governed by ERISA. The term "Plan" as used in this Agreement does
not include any contract, agreement or understanding entered into by
Columbia/HCA prior to the Distributions, or any contract, agreement or
understanding entered into by Columbia/HCA, Triad or LifePoint after the
Distributions, relating to settlement of actual or potential employee-related
litigation claims.
3
<PAGE>
Plan Spin-off: a procedure whereby accrued benefits and/or rights and
-------------
elections of a particular group of participants or employees in a Plan are
transferred to a new Plan.
Qualified Beneficiary: an individual (or dependent thereof) who
---------------------
either (a) experiences (or has experienced) a "qualifying event" (as that term
is defined in Code section 4980B(f)(3) and ERISA Section 603) while a
participant in any medical, dental or flexible spending account plan, or (b)
becomes (or previously became) a "qualified beneficiary" (as that term is
defined in Code section 4980B(g)(1) and ERISA Section 607(3)) under any medical,
dental or flexible spending account plan, and who is included in any one of the
following categories:
(i) LifePoint Qualified Beneficiary: any LifePoint Employee or
-------------------------------
LifePoint Terminee (or dependent thereof) who, on the Distribution Date, is
a Qualified Beneficiary under any Columbia/HCA medical, dental or flexible
spending account plan; or
(ii) Columbia/HCA Qualified Beneficiary: any Columbia/HCA Employee
----------------------------------
or Columbia/HCA Terminee (or dependent thereof) who, on the Distribution
Date, is a Qualified Beneficiary under any Columbia/HCA medical, dental or
flexible spending account plan; or
(iii) Triad Qualified Beneficiary: any Triad Employee or Triad
---------------------------
Terminee (or dependent thereof) who, on the Distribution Date, is a Qualified
Beneficiary under any Columbia/HCA medical, dental or flexible spending account
plan.
Service Credit: the period taken into account under any Plan in
--------------
determining length of service or plan participation for purposes of eligibility,
exercisability, vesting, benefit accrual or similar requirements under such
Plan.
Small Defined Contribution Plan: any Defined Contribution Plan, other
-------------------------------
than the HealthTrust Plan and the EPIC Plan, sponsored by a Subsidiary of
Columbia/HCA prior to the Distribution Date.
Small Welfare Benefit Plans: any Welfare Benefit Plan sponsored by a
---------------------------
Subsidiary of Columbia/HCA prior to the Distribution Date.
Spinco: either of Triad or LifePoint.
------
Spinco Employee: an individual who is an Employee of LifePoint or
---------------
Triad on the Distribution Date.
Spinco Retirement Plan: the LifePoint Retirement Plan or the Triad
----------------------
Retirement Plan (collectively, the Spinco Retirement Plans).
Spinco Welfare Benefit Plans or Spinco Welfare Plans: the LifePoint
----------------------------------------------------
Welfare Plans and the Triad Welfare Plans, collectively.
Subsidiary: With respect to any entity, (i) any corporation in which
----------
such entity, directly or indirectly, owns or controls, at the time of
determination, at least a majority in interest
4
<PAGE>
of the outstanding voting stock (having by the terms thereof voting power under
ordinary circumstances to elect a majority of the directors of such corporation,
irrespective of whether or not stock of any other class or classes of such
corporation shall have or might have voting power by reason of the occurrence of
a contingency); or (ii) any non-corporate entity in which such entity either (a)
directly or indirectly, at the time of determination, has at least a majority
ownership interest, or (b) on the date of determination, is a general partner or
an entity performing similar functions (for example, manager of a limited
liability company or a trustee of a trust).
Triad Business: any business conducted by Triad, or a Triad
--------------
Subsidiary, on the Distribution Date.
Triad Employee: an Employee of Triad, or any direct or indirect
--------------
Subsidiary of Triad that is an Affiliate thereof, on the Distribution Date.
Triad Retirement Plan: a Defined Contribution Plan to be established
---------------------
by Triad pursuant to Plan Spin-offs from the Columbia/HCA Retirement Plans, in
accordance with Section 2.2(a).
Triad Stock: the Common Stock, par value $.01 per share, of Triad.
-----------
Triad Terminee: any individual who is no longer employed by
--------------
Columbia/HCA or any Affiliate thereof immediately prior to the Distribution Date
but was employed by a Triad Business immediately prior to his termination of
employment from Columbia/HCA and its Affiliates.
Triad Welfare Plans: the Welfare Benefit Plans to be established by
-------------------
Triad pursuant to Plan Spin-offs in accordance with Section 2.4(a).
Welfare Benefit Plan or Welfare Plan: an employee welfare benefit
------------------------------------
plan or welfare plan, as defined in ERISA Section 3(1).
Section 1.2 Other Terms. Any capitalized terms used herein but not
-----------
defined herein shall have the meaning set forth in the Distribution Agreement.
Section 1.3 Certain Constructions. References to the singular in this
---------------------
Agreement shall refer to the plural and vice-versa and references to the
masculine shall refer to the feminine and vice-versa.
Section 1.4 Sections. References to a "Section" are, unless otherwise
--------
specified, to one of the Sections of this Agreement.
Section 1.5 Survival. Obligations described in this Agreement shall
--------
remain in full force and effect and shall survive the Distribution Date.
5
<PAGE>
ARTICLE II.
EMPLOYEE BENEFITS
Section 2.1 General.
-------
(a) Allocation of Responsibilities on the Distribution Date. Except
-------------------------------------------------------
to the extent retained or assumed by Columbia/HCA, as the case may be, under
this Agreement, on the Distribution Date (i) Triad or a Subsidiary thereof shall
retain or assume responsibility as employer for the Triad Employees, and (ii)
LifePoint or a Subsidiary thereof shall retain or assume responsibility as
employer for the LifePoint Employees. On the Distribution Date, Columbia/HCA or
a Subsidiary thereof shall retain or assume responsibility as employer for the
Columbia/HCA Employees, except to the extent such responsibility is retained or
assumed by Triad or LifePoint, as the case may be, under this Agreement. Except
to the extent provided in this Agreement, Columbia/HCA or a Subsidiary thereof
shall retain or assume liability with respect to LifePoint Terminees and Triad
Terminees. The assumption or retention of responsibility as employer by
Columbia/HCA, Triad or LifePoint, as the case may be, described in this Section
2.1 shall not, in itself, constitute a severance or a termination of employment
under any Plan of severance maintained by Columbia/HCA, nor shall it constitute
a change of control of Columbia/HCA for purposes of any Plan.
(b) Service Credits. Except to the extent provided in this
---------------
Agreement, for purposes of determining service credit under any Plan, the
Parties shall credit each of their respective Employees with such Employee's
Service Credit as reflected for comparable purposes in the Columbia/HCA payroll
system records as of the Distribution Date (regardless of whether, or the
capacity in which, the individual is employed by any of the Parties on the
Distribution Date), subject to generally applicable break-in-service rules under
the provisions of the Columbia/HCA Plans (as to periods the individual is not
employed by any of the Parties or their Affiliates). In addition, service credit
shall be granted for tax-qualified plan purposes as provided in Section 2.2(k),
and for Welfare Plan purposes as provided in Section 2.4(g), subject to
generally applicable break-in-service rules under the provisions of the
Columbia/HCA Plans (as to periods the individual is not employed by any of the
Parties or their Affiliates).
(c) Correction of Employee Classification. Notwithstanding anything
-------------------------------------
elsewhere in the Agreement, if at any time the Parties determine that any one or
more individuals were identified as Columbia/HCA Terminees in error and should
have been identified as Triad Terminees or LifePoint Terminees, and the Parties
agree to correct such error, such individuals shall be considered Triad
Terminees or LifePoint Terminees, as appropriate, and the parties shall use
their reasonable best efforts to implement the terms of this Agreement as they
apply to such individuals as if such individuals had been correctly identified
as of the Distribution Date.
(d) Employee Stock Purchase Plan. Columbia/HCA agrees to assist
----------------------------
Triad in developing an employee stock purchase plan that is similar to the
employee stock purchase plan provided by Columbia/HCA to its employees as has
been contemplated by Triad's benefits design parameters since the inception of
benefits planning for Triad by: (i) providing its plan document and supporting
written materials as models, (ii) assisting with designing enrollment
6
<PAGE>
procedures and (iii) consulting with Triad with respect to otherwise
establishing the employee stock purchase plan and its necessary relationships.
Section 2.2 Tax-Qualified Plans.
-------------------
(a) General. On or before the Distribution Date (as decided by
-------
Columbia/HCA in its sole discretion), each of Triad and LifePoint shall take, or
cause to be taken, all action specified by Columbia/HCA as necessary and
appropriate to establish a Triad Retirement Plan and a LifePoint Retirement Plan
and related trusts, respectively, that will accept plan-to-plan transfers,
following the Distribution Date, pursuant to Plan Spin-offs, as described in
Section 2.2(d), of participant account balances (and related assets) under the
Columbia/HCA Retirement Plans which are attributable to (1) Triad Employees and
Triad Terminees and (2) LifePoint Employees and LifePoint Terminees,
respectively, who are participants in the Columbia/HCA Retirement Plans
immediately prior to the Distribution Date. Such plans, being the Triad
Retirement Plan and the LifePoint Retirement Plan, respectively, may be combined
with the ESOPs described in Section 2.2(j).
(b) Columbia/HCA Retirement Plans. Except as provided in Section
-----------------------------
2.2(a), following the respective Plan Spin-offs, Columbia/HCA shall retain sole
responsibility for all liabilities and obligations under the Columbia/HCA
Retirement Plans, and Triad and LifePoint shall have no liability or obligation
with respect thereto.
(c) Spinco Retirement Plans. Subject to Section 2.6, Triad shall
-----------------------
provide benefits under the Triad Retirement Plan after the Plan Spin-offs
described in Section 2.2(a) for all Triad Employees and Triad Terminees (and
Employees of Triad admitted to participation in such Plan after the Plan Spin-
off), subject to the terms and provisions of such Plans as in effect from time
to time. Subject to Section 2.6, LifePoint shall provide benefits under the
LifePoint Retirement Plan after the Plan Spin-offs described in Section 2.2(a)
for all LifePoint Employees and LifePoint Terminees (and Employees of LifePoint
admitted to participation in such Plan after the Plan Spin-off), subject to the
terms and provisions of such Plans as in effect from time to time.
(d) Transfer of Account Balances. As soon as practicable following
----------------------------
the Distribution Date, Columbia/HCA shall cause the trustees of the Columbia/HCA
Retirement Plans to effect transfers, in kind, to the trustees of the Triad
Retirement Plan and the LifePoint Retirement Plan, respectively, of the assets
allocable to the accounts of (1) all Triad Employees and Triad Terminees and (2)
all LifePoint Employees and LifePoint Terminees, respectively, and appropriate
account balances for such individuals shall be established under the Triad
Retirement Plan and the LifePoint Retirement Plan, respectively. Each such
transfer shall comply with section 414(l) of the Code and the requirements of
ERISA and the regulations promulgated thereunder. Each of Triad and LifePoint
shall cause the trustees of the respective Spinco Retirement Plans to accept the
plan-to-plan transfers from the trustees of the respective Columbia/HCA
Retirement Plans, and to credit the accounts of such Triad Employees and Triad
Terminees, and LifePoint Employees and LifePoint Terminees, under the Triad
Retirement Plan and the LifePoint Retirement Plan, as appropriate, with the
assets transferred on their behalf. In addition, if any Columbia/HCA Employee
shall transfer employment to Triad or LifePoint
7
<PAGE>
within the Distribution Year, a transfer shall be made in the year 2000 from the
Columbia/HCA Retirement Plans to the appropriate Spinco Retirement Plan (in the
manner described in this Section 2.2(d)) of the assets allocable to the accounts
of such Columbia/HCA Employee. Upon the transfers of account balances in
accordance with this Section 2.2(d) to the appropriate Spinco Retirement Plan,
such Plan shall assume all liabilities with respect to the individuals for whom
accounts are transferred and the Columbia/HCA Retirement Plans shall have no
further liability with respect to such individuals. The potential buyback
liabilities of the Columbia/HCA Retirement Plans under Section 204(e) of ERISA
with respect to LifePoint Terminees and Triad Terminees whose non-vested accrued
benefits were forfeited upon an earlier distribution shall be transferred to the
LifePoint Retirement Plan and the Triad Retirement Plan, respectively. In
addition, accounts of Employees who work for both Columbia/HCA and a Spinco on
the Distribution Date may transfer to the respective Spinco Retirement Plan, as
provided in Section 2.2(k).
(e) Regulatory Filings. Columbia/HCA, Triad and LifePoint shall, in
------------------
connection with the Plan Spin-offs described in Section 2.2(d), cooperate in
making any and all appropriate filings required by the Securities and Exchange
Commission or the IRS, or required under the Code or ERISA or any applicable
securities laws and the regulations thereunder, and take all such action as may
be necessary or appropriate to cause such plan-to-plan transfers to take place
as soon as practicable after the Distribution Date or as otherwise required by
law. Triad and LifePoint shall each seek (or Columbia/HCA shall seek, on their
behalf) a favorable IRS determination letter that the Triad Retirement Plan and
the LifePoint Retirement Plan, respectively, satisfy all qualification
requirements under section 401(a) of the Code. Notwithstanding the foregoing,
such plan-to-plan transfers shall take place pending issuance of such favorable
determination letters, but shall be subject to IRS approval. The Parties shall
each make any necessary amendments on a retroactive basis to the Triad
Retirement Plan, LifePoint Retirement Plan or Columbia/HCA Retirement Plans,
respectively, as required by the IRS to issue the favorable determination
letters described above.
(f) HealthTrust and EPIC Plans. The preceding provisions of this
--------------------------
Section 2.2 shall also apply to the HealthTrust Plan and the EPIC Plan. However,
the assets which are disputed in the HealthTrust v. Usher lawsuit shall not be
transferred to any Plans established by LifePoint or Triad, but rather shall
remain in the HealthTrust Plan (or any successor thereto), subject to its terms.
(g) Merger of Plans. Should any of the Columbia/HCA Retirement
---------------
Plans, the HealthTrust Plan or the EPIC Plan be merged together prior to the
Distribution Date, then the preceding provisions of this Section 2.2 shall apply
to such merged plan(s).
(h) Small Defined Contribution Plans. Spin-off Plans shall not be
--------------------------------
established with respect to any Small Defined Contribution Plans. Rather, the
Plan sponsor of each Small Defined Contribution Plan immediately before the
Distribution Date shall remain that respective Plan's sponsor immediately after
the Distribution Date. Thus, if a Small Defined Contribution Plan is maintained
by a Spinco or a Subsidiary thereof immediately before the Distribution Date,
then such Plan shall continue to be maintained by the Spinco or its Subsidiary
immediately after the Distribution Date.
8
<PAGE>
(i) Defined Benefit Plans. Spin-off Plans shall not be established
---------------------
with respect to any Columbia/HCA Defined Benefit Plan. Rather, the Plan sponsor
of each Columbia/HCA Defined Benefit Plan immediately before the Distribution
Date shall remain that respective Plan's sponsor immediately after the
Distribution Date. Thus, if a Defined Benefit Plan is maintained by a Spinco or
a Subsidiary thereof immediately before the Distribution Date, then such Plan
shall continue to be maintained by that Spinco or its Subsidiary immediately
after the Distribution Date.
(j) Spinco ESOPs. Prior to, contemporaneous with, or following the
------------
Distribution Date (as specified by Columbia/HCA), LifePoint and Triad shall each
adopt an ESOP. The terms of the respective ESOPs shall be subject to the review
and approval of Columbia/HCA. Subject to applicable law, LifePoint and Triad
shall take all steps necessary to cause the following to occur in connection
with their respective ESOPs:
(i) As promptly as practicable after the Distributions, the
LifePoint ESOP shall purchase, at fair market value, stock constituting
approximately 8.3% of the outstanding shares of LifePoint Stock; and as
promptly as practicable after the Distributions, the Triad ESOP shall
purchase, at fair market value, stock constituting approximately 9% of the
outstanding shares of Triad Stock.
(ii) Each purchase will be financed by (a) issuing a promissory note
to LifePoint in the case of the LifePoint ESOP or by issuing a promissory
note to Triad in the case of the Triad ESOP or (b) borrowing from a third
party lender (which loan will be guaranteed by LifePoint in the case of the
LifePoint ESOP or Triad in the case of the Triad ESOP). Such loans shall
provide for repayment in level annual (or more frequent) installments over
not more than a ten-year period. LifePoint and Triad shall make any
contribution commitments necessary in this connection.
Notwithstanding any provision of this agreement to the contrary and
consistent with Section 2.2(a), the ESOPs described in this Section may be part
of a tax-qualified plan which includes other features, including elective
deferrals and matching contributions.
(k) Pension Service Credit and 1999 Special Rules. The Parties shall
---------------------------------------------
amend their tax-qualified plans as provided in this Subsection, and shall
administer such Plans accordingly. Consistent with the terms of the Columbia/HCA
Plans, with respect to the accounts which transfer to the respective Spinco
Retirement Plans pursuant to Subsection (d) of this Section, Service Credit
shall be transferred for all years of service with Columbia/HCA and all
Columbia/HCA hours of service during 1999 performed prior to the transfer for
purposes of both participation and vesting. Subject to applicable law, each
Spinco shall grant compensation credit for compensation earned from Columbia/HCA
during 1999 prior to the Distribution Date. With respect to any individual who
is an Employee of any Party on the Distribution Date and who changes employers
to another Party during 1999 after the Distribution Date, Service Credit (i.e.,
----
hours of service) and compensation credit shall be granted by the new employer
under its tax-qualified retirement plans for purposes of eligibility, vesting
and benefit accrual for service performed for any prior employer Party during
1999. Any Spinco Employee who separates from service with Spinco during 1999
after the Distribution Date and is hired by Columbia/HCA during 1999 shall be
treated as a rehired Employee under the Columbia/HCA Plans, and all of
9
<PAGE>
his Service Credit under the Columbia/HCA Plans which is transferred to the
respective Spinco Retirement Plan pursuant to the second sentence of this
Subsection shall apply equally under the Columbia/HCA Plans. In addition, any
Spinco Employee who separates from service after the Distribution Date in 1999
and is hired by the other Spinco at any time during 1999 shall be treated as a
rehired Employee under the new employer's Spinco Retirement Plan, and all of his
Service Credit under the prior employer's tax-qualified plan shall apply equally
under the new employer's tax-qualified plan. With respect to any Employee who
works for both Columbia/HCA and a Spinco on the Distribution Date, the
Employee's accounts in the Columbia/HCA Plans shall be transferred only if the
Spinco is his primary employer (as determined by Columbia/HCA), and all Service
Credit under the Columbia/HCA Plans on the Distribution Date (including 1999
hours of service) and all compensation earned from Columbia/HCA in 1999 prior to
the Distribution Date shall apply equally to the Columbia/HCA Plans and the
Spinco Retirement Plan. Notwithstanding the foregoing provisions of this
Subsection, in no event shall any period of service (including hours of service)
or any compensation be counted more than once under any tax-qualified plan.
Section 2.3 Stock Option Plans.
------------------
(a) Establishment of Spinco Option Plans.
------------------------------------
(i) Triad Option Plan. The Board of Directors of Columbia/HCA has
-----------------
taken all action necessary and appropriate to establish a new stock option
plan (the "Triad Option Plan") and the Compensation Committee has taken all
action necessary or appropriate to provide certain options on Triad Stock
("Triad Options") thereunder. Triad hereby assumes all liabilities and
obligations under the Triad Option Plan and under the Triad Options.
(ii) LifePoint Option Plan. The Board of Directors of Columbia/HCA
---------------------
has taken all action necessary and appropriate to establish a new stock
option plan (the "LifePoint Option Plan") and the Compensation Committee
has taken all action necessary or appropriate to provide certain options on
LifePoint Stock ("LifePoint Options") thereunder. LifePoint hereby assumes
all liabilities and obligations under the LifePoint Option Plan and under
the LifePoint Options.
(b) Columbia/HCA Option Plans. Effective as of the Distribution
-------------------------
Date, except with respect to stock options (or any portion thereof) replaced by
Triad Options or LifePoint Options as described in Section 2.3(c), Columbia/HCA
is to retain sole responsibility for all liabilities and obligations under the
Columbia/HCA Option Plans, and neither Triad nor LifePoint is to have any
liability or obligation with respect thereto.
(c) Adjustment and Replacement of Existing Columbia/HCA Options.
-----------------------------------------------------------
(i) Vested Non-Qualified Options other than De Minimis Options.
----------------------------------------------------------
The treatment described in this paragraph (i) is to apply with respect to
each Columbia/HCA Non-Qualified Option that is a Vested Option that is not
De Minimis. Pursuant to action taken by the Compensation Committee, each
such option is to continue to cover the
10
<PAGE>
Original Number of Shares but the per share exercise price is to be
adjusted as described below. In addition, pursuant to action taken by the
Compensation Committee under the LifePoint Option Plan, each holder of such
an option is to be entitled to a LifePoint Option which covers a number of
shares of LifePoint Stock equal to the Original Number of Shares multiplied
by the LifePoint Share Multiple and which has a per share exercise price
calculated as described below. Pursuant to action taken by the Compensation
Committee under the Triad Option Plan, each such option holder is to also
be entitled to a Triad Option which covers a number of shares of Triad
Stock equal to the Original Number of Shares multiplied by the Triad Share
Multiple and which has a per share exercise price calculated as described
below. The per share exercise prices under the adjusted options described
above are to be equal to the per share exercise price of the original
Columbia/HCA Non-Qualified Option multiplied by (1) the LifePoint Ratio, in
the case of such LifePoint Option, (2) the Triad Ratio, in the case of such
Triad Option and (3) the Columbia/HCA Ratio, in the case of such Columbia
Option.
(ii) Vested Non-Qualified Options that are De Minimis Options.
--------------------------------------------------------
The treatment described in this paragraph (ii) is to apply with respect to
each Columbia/HCA Non-Qualified Option that is De Minimis. Pursuant to
action taken by the Compensation Committee, each such option shall be
adjusted so that (a) the per share exercise price shall equal the original
per share exercise price multiplied by the Columbia/HCA Ratio, and (b) the
number of shares of Columbia/HCA stock covered shall equal the Original
Number of Shares divided by the Columbia/HCA Ratio.
(iii) ISOs. The treatment described in this paragraph (iii) is to
----
apply to each Columbia/HCA ISO. Pursuant to action taken by the Compensation
Committee under the LifePoint Option Plan, each such Columbia/HCA Option that is
held by a LifePoint Employee, or by a LifePoint Terminee (or his estate), is to
be replaced by a LifePoint Option which (1) covers a number of shares of
LifePoint Stock equal to the Original Number of Shares divided by the LifePoint
Ratio and (2) has a per share exercise price equal to the original per share
exercise price multiplied by the LifePoint Ratio. Pursuant to action taken by
the Compensation Committee under the Triad Option Plan, each such option that is
held by a Triad Employee, or by a Triad Terminee (or his estate), is to be
replaced by a Triad Option which (1) covers a number of shares of Triad Stock
equal to the Original Number of Shares divided by the Triad Ratio and (2) has a
per share exercise price equal to the original per share exercise price
multiplied by the Triad Ratio. Pursuant to action taken by the Compensation
Committee, each such option that is not covered by the foregoing is to continue
as a Columbia/HCA Option but is to be adjusted so that (1) the per share
exercise price shall equal the original per share exercise price multiplied by
the Columbia/HCA Ratio and (2) the number of shares of Columbia/HCA Stock
covered shall equal the Original Number of Shares divided by the Columbia/HCA
Ratio. The substitution or adjustment provided for herein is to be made in
accordance with section 424 of the Code, so as not to result in a modification
of the option.
(iv) Rounding. In making the adjustments described in paragraphs
--------
(i), (ii) and (iii) above, any resulting per share exercise price which is
not equal to a whole multiple of a cent is to be rounded up to the next
whole cent and any resulting number of shares
11
<PAGE>
covered by an option which is not equal to a whole multiple of a share is
to be rounded down to the next whole share.
(v) General Terms and Conditions. The terms and conditions of each
----------------------------
adjusted Columbia/HCA Option and/or substituted Triad Option or LifePoint
Option described in paragraphs (i), (ii) and (iii) hereof in respect of a
Columbia/HCA Option are to be substantially the same as those of the
applicable Columbia/HCA Option prior to such adjustment and/or
substitution, except as otherwise specifically described in this Section
2.3 and except that:
(1) Pursuant to action taken by the Compensation Committee, in the
case of any Triad Option or LifePoint Option described in
paragraphs (i), (ii) or (iii) hereof, any period of prior
employment with Columbia/HCA or a Subsidiary thereof is to be
credited as covered employment for purposes of determining the
vesting and exercisability of such option (to the same extent
such period was credited for such purposes under the related
original Columbia/HCA Option).
(2) Pursuant to action taken by the Compensation Committee, in the
case of any Triad Option or LifePoint Option that is described in
paragraph (i) or (ii) hereof, the optionee is to be considered to
be employed by the issuer of the option so long as he is employed
by Columbia/HCA, Triad or LifePoint (or a Subsidiary thereof),
for purposes of determining when the option will cease to be
exercisable on account of termination of employment. At such time
as the optionee ceases to be employed by Columbia/HCA, Triad or
LifePoint (or a Subsidiary thereof), such cessation of employment
shall be treated as though it were a cessation of employment with
the issuer under comparable circumstances .
(3) Pursuant to action taken by the Compensation Committee, in the
case of any Columbia/HCA Option that is described in paragraph
(i) or (ii) hereof, the optionee is to be considered to be
employed by Columbia/HCA so long as he is employed by Triad or
LifePoint (or a Subsidiary thereof), for purposes of determining
when the option will cease to be exercisable on account of
termination of employment, if he is employed by LifePoint or
Triad on the Distribution Date or transfers, at the request of
Columbia/HCA, to employment with LifePoint or Triad (or a
Subsidiary thereof) by the first anniversary of the Distribution
Date. At such time as the optionee ceases to be employed by Triad
or LifePoint (or a Subsidiary thereof), such cessation of
employment shall be treated as though it were a cessation of
employment with Columbia/HCA under comparable circumstances.
(vi) Directors' Options. The foregoing provisions of this
------------------
Section 2.3(c), as applied to Columbia/HCA Employees, are to be applied in
a comparable manner with respect to any Columbia/HCA Options held by a
member (or former member) of the Board of Directors of Columbia/HCA, except
that any reference to employment shall be deemed to mean service as a
member of such Board.
12
<PAGE>
(vii) Discretionary LifePoint Options and Triad Options to
----------------------------------------------------
Columbia/HCA Executives. Pursuant to action taken by the Compensation
-----------------------
Committee, certain executives of Columbia/HCA have been granted
discretionary LifePoint Options and Triad Options. Under such options, the
optionee is to be considered to be employed by the issuer of the option for
all purposes so long as he is employed by Columbia/HCA, Triad or LifePoint
(or a Subsidiary thereof). At such time as the optionee ceases to be
employed by Columbia/HCA, Triad or LifePoint (or a Subsidiary thereof),
such cessation of employment shall be treated as though it were a cessation
of employment with the issuer under comparable circumstances.
(d) Definitions. For purposes hereof, the following definitions
-----------
shall apply:
(i) "Columbia/HCA ISO" shall mean any option outstanding under a
Columbia/HCA Option Plan on the Distribution Date that is intended to
qualify as an "Incentive Stock Option" under section 422 of the Code.
(ii) "Columbia/HCA Non-Qualified Option" shall mean any stock option
outstanding under a Columbia/HCA Option Plan on the Distribution Date that
is not a Columbia/HCA ISO. Any such option shall be considered a "Vested
Option" to the extent that it is exercisable on the date in question and
shall be considered a "Non-Vested Option" to the extent that it is not yet
exercisable on such date.
(iii) "Columbia/HCA Option" shall mean a Columbia/HCA ISO or
Columbia/HCA Non-Qualified Option, as the context shall indicate.
(iv) "Columbia/HCA Option Plan" shall mean any Plan maintained by
Columbia/HCA under which there are stock options outstanding on the
Distribution Date.
(v) "Columbia/HCA Ratio" shall mean a fraction whose numerator is
an amount equal to (1) the closing price of the Columbia/HCA Stock on the
trading date immediately preceding the Ex-Dividend Date minus (2) the
closing price of the LifePoint Stock on such trading date immediately
preceding the Ex-Dividend Date multiplied by the number of shares of
LifePoint Stock to be distributed per share of Columbia/HCA Stock on the
Distribution Date and minus (3) the closing price of the Triad Stock on
such trading date immediately preceding the Ex-Dividend Date multiplied by
the number of shares of Triad Stock to be distributed per share of
Columbia/HCA Stock on the Distribution Date, and whose denominator is the
closing price of the Columbia/HCA Stock on such trading date immediately
preceding the Ex-Dividend Date.
(vi) "Compensation Committee" shall mean the Compensation Committee
of the Board of Directors of Columbia/HCA, including the 162(m)
Compensation Sub-Committee.
(vii) "De Minimis" shall mean, as to any Columbia/HCA Option, an
option covering 1000 or fewer shares of Columbia/HCA Stock.
13
<PAGE>
(viii) "Ex-Dividend Date" shall mean the first trading date on which
the Columbia/HCA stock shall trade on an ex-dividend basis with respect to
the distribution of the LifePoint and Triad stock.
(ix) "LifePoint Ratio" shall mean a fraction whose numerator is the
closing price of the LifePoint Stock on the trading date immediately
preceding the Ex-Dividend Date and whose denominator is the closing price
of the Columbia/HCA Stock on the trading date immediately preceding the Ex-
Dividend Date.
(x) "LifePoint Share Multiple" shall mean the number of shares of
LifePoint Stock to be distributed per share of Columbia/HCA Stock on the
Distribution Date.
(xi) "Original Number of Shares" shall mean, as to any Columbia/HCA
Option, the number of shares of Columbia/HCA Stock covered by such Option
immediately prior to the application of Section 2.3(c).
(xii) "Triad Ratio" shall mean a fraction whose numerator is the
closing price of the Triad Stock on the trading date immediately preceding
the Ex-Dividend Date and whose denominator is the closing price of the
Columbia/HCA Stock on the trading date immediately preceding the Ex-
Dividend Date.
(xiii) "Triad Share Multiple" shall mean the number of shares of Triad
Stock to be distributed per share of Columbia/HCA Stock on the Distribution
Date.
Section 2.4 Welfare Benefit Plans.
---------------------
(a) Spinco Welfare Benefit Plans. Prior to the Distribution Date
----------------------------
(in a time and manner specified by Columbia/HCA), LifePoint and Triad shall each
establish welfare benefit plans that mirror (i.e., are identical to) the
----
Columbia/HCA Welfare Plans. Pursuant to Plan Spin-offs, effective on the
Distribution Date, all LifePoint Employees and Triad Employees then
participating in the Columbia/HCA Welfare Plans shall cease to be participants
in such Plans, effective immediately prior to the Distributions, and shall
thereupon become participants in the LifePoint Welfare Plans and Triad Welfare
Plans, respectively. All claims experience (e.g., with respect to deductibles
----
and stop-loss limitations) under the Columbia/HCA Welfare Plans for the
Distribution Year shall be carried over to the appropriate Spinco Welfare
Benefit Plans, as if such claims experience had occurred under such Spinco
Welfare Benefit Plans for such year.
(b) Liability for Claims. Columbia/HCA shall be responsible for,
--------------------
or cause its applicable insurance carriers or HMOs to be responsible for, all
liabilities and obligations related to claims incurred or premiums owed or due
under any Columbia/HCA Welfare Plans with respect to periods prior to the
Distribution Date. Beginning on the Distribution Date, Triad and LifePoint shall
be responsible for, or cause their applicable insurance carriers or HMOs to be
responsible for, all liabilities and obligations related to claims incurred or
premiums owed or due under the Triad Welfare Plans and the LifePoint Welfare
Plans, respectively, for periods thereafter and Columbia/HCA shall have no
liability with respect thereto. For these purposes, (1) medical and dental
claims shall be considered to be incurred at the time the services are
performed; (2) death and dismemberment claims shall be deemed to be incurred on
the date that
14
<PAGE>
death or dismemberment (as the case may be) occurs; and (3) disability claims
shall be considered to be incurred on the date the disability occurs.
(c) Continuation Coverage Administration. Columbia/HCA shall
------------------------------------
continue to be responsible after the Distribution Date for providing and
administering the continuation coverage required by COBRA as it relates to any
Columbia/HCA Qualified Beneficiary. On and after the Distribution Date,
LifePoint shall be responsible for providing and administering the continuation
coverage required by COBRA to any LifePoint Qualified Beneficiary, and Triad
shall be responsible for providing and administering the continuation coverage
required by COBRA to any Triad Qualified Beneficiary.
(d) Small Welfare Benefit Plans. The Plan sponsor of each Small
---------------------------
Welfare Benefit Plan shall remain that Plan's sponsor after the Distribution
Date. If a Small Welfare Benefit Plan is maintained by a Spinco or a Subsidiary
thereof before the Distribution Date, then such Plan shall continue to be
maintained by that Spinco or its Subsidiary after the Distribution Date.
(e) FSA Plan Coordination. The flexible spending account ("FSA")
---------------------
plans which are established by LifePoint and Triad pursuant to the Welfare
Benefit Plans that they establish under Section 2.4(a) and the cafeteria plans
established pursuant to Section 2.4(a) shall carry over all elections made under
the Columbia/HCA FSA Plan for the year of the Distributions. The remaining FSA
benefit amounts available to the respective participants for such year shall be
available under the FSA Plans established by LifePoint and Triad, respectively.
LifePoint and Triad shall each establish voluntary employee benefits
associations (VEBAs) to collect FSA premiums, pay FSA claims and pay medical and
dental self-insured benefits. The portions of any Columbia/HCA VEBA surplus in
existence on December 31, 1998 (adjusted to reflect investment returns,
administrative expenses and claims payment experience) attributable to LifePoint
Employees and Triad Employees, respectively, shall be transferred to the
LifePoint VEBA and the Triad VEBA, respectively, in 1999 or 2000. In addition,
any 1999 FSA premiums collected which exceed claims expenditures and
administrative expenses for benefits for 1999 claims prior to the Distribution
Date attributable to LifePoint Employees and Triad Employees, respectively,
shall be transferred to the respective LifePoint and Triad VEBAs in 1999 or
2000.
(f) HealthTrust Premium Holiday. Pursuant to an agreement with the
---------------------------
U.S. Department of Labor ("DOL"), a premium holiday was created in 1997 for
certain former HealthTrust employees. In the event that such holiday has not
expired prior to the Distribution Date, LifePoint and Triad each agree to
establish an identical holiday to that agreed upon by Columbia/HCA and the DOL
for the benefit of their respective former HealthTrust employees. Columbia/HCA
shall determine the portion of any remaining holiday amount as of the
Distribution Date attributable to LifePoint and Triad, respectively (and the
amount of any related funds, which shall be made available to LifePoint and
Triad for this purpose). However, in the event that the surplus in existence as
of the Distribution Date is de minimis, as agreed upon by the parties, then no
such holiday shall be created by Triad or LifePoint. In such case, the remaining
surplus shall be utilized by Columbia/HCA to benefit former HealthTrust
employees in accordance with the settlement agreement with the DOL.
15
<PAGE>
(g) Special Rules for 1999. The Parties shall administer their
----------------------
Welfare Plans pursuant to this Subsection (g). With respect to any Employee who
separates from service with one Party after the Distribution Date in 1999, and
begins service with another Party on or prior to the earlier of ninety (90) days
after separation or December 31, 1999, all service with the prior Party shall
carry over for purposes of eligibility under the new employer's Welfare Plan(s).
Regardless of whether service carries over pursuant to the preceding sentence,
if the new employer is LifePoint or Triad, new elections will need to be made
with respect to all Welfare Plans of the new employer. However, if the new
employer is Columbia/HCA, then the elections made in 1998 (to apply to 1999)
shall apply. These rules shall also apply to any other fringe benefits which do
not qualify as Welfare Plan benefits such as vacation pay, extended illness
banks, etc.
Section 2.5 Services to be Provided by Columbia/HCA and Mutuality.
-----------------------------------------------------
(a) Services to be Rendered to Triad.
--------------------------------
(1) Pension. No administrative or investment services, whether
-------
ministerial or fiduciary in nature, shall be provided to Triad by Columbia/HCA
with respect to any pension plans of Triad on and after the Distribution Date.
All such services performed by Columbia/HCA shall cease on the Distribution
Date, and Triad shall supply all such services on and after the Distribution
Date, other than as provided herein. Notwithstanding the two preceding
sentences, in the event that services are performed or costs are incurred for
the MCA 401(k) Plan that are chargeable to the plan sponsor, and Triad Employees
participate in such Plan, then Triad shall pay its pro rata share of such costs,
with proration based on relative participant numbers. In the event any other
pension services are performed for Triad by Columbia/HCA at the request of
Triad, Triad shall pay Columbia/HCA $30.00 for each hour worked by any Employee
of Columbia/HCA. All charges not paid within thirty (30) days of written
request shall bear simple interest, at a rate of ten percent (10%) per annum.
Triad shall also reimburse any direct costs of vendors.
(2) Welfare. For the remainder of the Distribution Year (i.e., services
------- ----
to cease on December 31, 1999), Columbia/HCA and possibly its agents, as chosen
by Columbia/HCA, shall provide ministerial administrative services, but no
fiduciary services, to Triad with respect to the Triad Welfare Plans. For this
purpose, ministerial administrative services shall include all ministerial
services incident to administering, satisfying all reporting requirements with
respect to, and maintaining the Triad Welfare Plans. Triad shall provide
specific guidelines for Columbia/HCA to follow in performing ministerial
functions. Triad shall perform the fiduciary administrative and all investment
services incident to the Triad Welfare Plans. Triad shall indemnify and hold
harmless Columbia/HCA, its Employees, directors, officers and its agents with
respect to any and all liability, losses, claims, damages and expenses
(including, but not limited to, attorneys' fees) incurred in connection with
providing such services, even if functions which were designated ministerial are
determined to be fiduciary in nature, provided that Columbia/HCA and its agents
have acted, or failed to act, in good faith. Triad shall fully cooperate with
Columbia/HCA in its fulfillment of the provisions of this Section 2.5(a). All
services of Columbia/HCA shall cease on the last day of the Distribution Year.
In consideration for the services to be performed by Columbia/HCA, Triad shall
compensate Columbia/HCA beginning on the Distribution Date at a rate of $30.00
per hour worked by an employee of
16
<PAGE>
Columbia/HCA. All charges not paid within thirty (30) days of written request
shall bear simple interest, at a rate of ten percent (10%) per annum. Triad
shall also reimburse any direct costs of vendors.
(3) General Indemnification. In the event of a finding that Welfare Plan
-----------------------
services have been performed for Triad after the last day of the Distribution
Year, or pension services have been performed for Triad after the Distribution
Date, and Columbia/HCA or any Employee, officer, director or agent thereof
incurs any liability or costs incident thereto, Triad shall indemnify and hold
harmless Columbia/HCA and any of its Employees, officers, directors or agents
with respect to any liabilities or costs incurred attributable to services
relating to Triad's plans, provided that Columbia/HCA and its Employees,
officers, directors or agents acted, or omitted to act, in good faith.
(b) Services to be Rendered to LifePoint.
------------------------------------
(1) Pension. No administrative or investment services, whether
-------
ministerial or fiduciary in nature, shall be provided to LifePoint by
Columbia/HCA with respect to any pension plans of LifePoint on and after the
Distribution Date. All such services performed by Columbia/HCA shall cease on
the Distribution Date, and LifePoint shall supply all such services on and after
the Distribution Date, other than as provided herein. Notwithstanding the two
preceding sentences, in the event that services are performed or costs are
incurred for the MCA 401(k) Plan that are chargeable to the plan sponsor, and
LifePoint Employees participate in such Plan, then LifePoint shall pay its pro
---
rata share of such costs, with proration based on relative participant numbers.
- ----
In the event any other pension services are performed for LifePoint by
Columbia/HCA at the request of LifePoint, LifePoint shall pay Columbia/HCA
$30.00 for each hour worked by any employee of Columbia/HCA. All charges not
paid within thirty (30) days of written request shall bear simple interest at a
rate of ten percent (10%) per annum. LifePoint shall also reimburse any direct
costs of vendors.
(2) Welfare. Subject to the following provisions of this paragraph,
-------
Columbia/HCA shall perform Welfare Benefit Plan services for LifePoint through
May 31, 1999 which are identical to the services to be performed for Triad
through the remainder of the Distribution Year pursuant to the provisions of
Section 2.5(a)(2). All terms and conditions relating to Triad with respect to
its Welfare Plan under Section 2.5(a)(2), including compensation (at the rate of
$30 per hour for any Columbia/HCA Employee providing services), shall apply to
LifePoint with respect to such services. In the event that such services shall
extend beyond May 31, 1999 or end prior thereto pursuant to a written agreement
between Columbia/HCA and LifePoint, then such Triad terms and conditions shall
apply for such longer or shorter period, as the case may be.
(3) General Indemnification. In the event of a finding that Welfare Plan
-----------------------
services have been performed for LifePoint beyond the time specified in Section
2.5(b)(2), or that pension services have been performed for LifePoint after the
Distribution Date, and Columbia/HCA or any Employee, officer, director or agent
thereof incurs any liability or costs incident thereto, LifePoint shall
indemnify and hold harmless Columbia/HCA and any of its Employees, officers,
directors or agents with respect to any liabilities or costs incurred
attributable to services relating to LifePoint's plans, provided that
Columbia/HCA and its Employees, officers, directors or agents acted, or omitted
to act, in good faith.
17
<PAGE>
(c) Insurance and HMO Shopping. For the remainder of the Distribution
--------------------------
Year, LifePoint and Triad specifically agree that Columbia/HCA may negotiate
contracts with insurance companies, HMOs, third-party administrators and other
service providers that consider the employees of LifePoint and Triad, in
addition to the employees of Columbia/HCA, for purposes of negotiating to
receive the lowest rates or costs possible. LifePoint and Triad agree to fully
cooperate with Columbia/HCA in this regard. LifePoint and Triad agree to
utilize whatever providers are chosen by Columbia/HCA for the Distribution Year,
regardless of whether Columbia/HCA is or is not successful in achieving group
rates that consider Columbia/HCA, Triad and/or LifePoint Employees.
Notwithstanding the preceding sentence, LifePoint or Triad may terminate any
provider with the prior written consent of Columbia/HCA.
(d) Preferred Provider Mutuality. For the remainder of the
----------------------------
Distribution Year, Columbia/HCA, LifePoint and Triad shall treat each facility
maintained by Columbia/HCA, LifePoint or Triad as their own facility for the
entire Distribution Year for purposes of managed care discounts, preferred
provider discounts and any similar discounts or cost reductions available to
participants under their respective welfare benefit plans.
(e) Spinco Welfare Plans for the Distribution Year. As a condition
----------------------------------------------
of the arrangement, Triad and LifePoint agree that the Spinco Welfare Plans
shall continue to be maintained by Triad and LifePoint, respectively, for the
remainder of the Distribution Year. Triad and LifePoint agree that they shall
not amend the Spinco Welfare plans without the prior written consent of
Columbia/HCA for the remainder of such year. At the request of Columbia/HCA,
Triad and LifePoint shall amend such Spinco Welfare Plans as necessary for such
Plans to be identical to the Columbia/HCA Welfare Plans with respect to the
Distribution Year. In the event of a failure of LifePoint and/or Triad to
comply with any of the preceding sentences of this subsection, Columbia/HCA
shall be authorized to take whatever action it deems appropriate under the
circumstances, including cessation of services, and the party failing to comply
shall pay Columbia/HCA all costs it or its agents incurs as a result of such
failure to comply.
Section 2.6 Preservation of Right To Amend or Terminate Plans. Except
-------------------------------------------------
as otherwise expressly provided herein, no provisions of this Agreement shall be
construed as a limitation on the right of Columbia/HCA, Triad or LifePoint to
amend any Plan or terminate its participation therein which Columbia/HCA, Triad
or LifePoint would otherwise have under the terms of such Plan or otherwise;
provided, however, that no Party shall amend any Plan to the extent that such
- -------- -------
amendment would have the effect of increasing the liabilities of any other Party
under any Plan of such other Party, without such Party's written consent. No
provision of this Agreement shall be construed to create a right in any Employee
or former Employee of Columbia/HCA, Triad or LifePoint or dependent or
beneficiary of such Employee or former Employee under a Plan which such person
would not otherwise have under the terms of the Plan itself.
Section 2.7 Reimbursement. The Parties acknowledge that any Party may
-------------
mistakenly incur costs and expenses directly related to benefits, including, but
not limited to, contributions to Plans and the payment of insurance premiums
arising from or related to any of the Plans which are, under this Agreement, the
responsibility of another Party hereto.
18
<PAGE>
Accordingly, each Party shall reimburse any applicable other Party, as soon as
practicable, but in any event within thirty (30) days of receipt of appropriate
verification, for all such costs and expenses. However, there will be no
reimbursement by Columbia/HCA to either Spinco with respect to contributions for
1999 under the Spinco Retirement Plans. Subject to Section 2.5, beginning on the
Distribution Date, all parties shall bear and be responsible for their
respective plan establishment and administrative expenses.
Section 2.8 Payroll Reporting and Withholding.
---------------------------------
(a) Form W-2 Reporting. The Parties hereby agree, to the extent
------------------
applicable, to each adopt the "alternative procedure" for preparing and filing
IRS Forms W-2 (Wage and Tax Statements), as described in section 5 of Revenue
Procedure 96-60, 1996-2 IRS Cumulative Bulletin 399 ("Rev. Proc. 96-60"). Under
this procedure, each of Triad and LifePoint, as a successor employer, shall
provide all required forms W-2 to Triad Employees and LifePoint Employees,
respectively, reflecting all wages paid and taxes withheld by both Columbia/HCA
as the predecessor employer and Triad or LifePoint (as applicable) as the
successor employer for the entire year during which the Distribution takes
place. Columbia/HCA shall provide all required Forms W-2 to all Columbia/HCA
Employees reflecting all wages and taxes paid and withheld by Columbia/HCA.
In connection with the aforesaid agreement under Rev. Proc. 96-60,
each business unit or business operation of Columbia/HCA shall be assigned to
either Columbia/HCA, Triad or LifePoint, depending upon whether it is a business
retained by Columbia/HCA following the Distributions, a Triad Business or a
LifePoint Business, and each Columbia/HCA Employee, Triad Employee or LifePoint
Employee associated with such business unit or business operation shall be
assigned for payroll reporting purposes to Columbia/HCA, Triad or LifePoint, as
the case may be. Each of Columbia/HCA, Triad or LifePoint shall be responsible
for filing IRS Forms 941 and all other payroll returns for their respective
Employees.
(b) Forms W-4 and W-5. The Parties agree, to the extent applicable,
-----------------
to each adopt the alternative procedure of Rev. Proc. 96-60 with respect to IRS
Forms W-4 (Employee's Withholding Allowance Certificate) and W-5 (Earned Income
Credit Advance Payment Certificate). Under this procedure, Columbia/HCA shall
provide to Triad or LifePoint, as the respective successor employers, all IRS
Forms W-4 and W-5 on file with respect to each Triad Employee or LifePoint
Employee, and each of Triad and LifePoint will honor these forms until such
time, if any, as any such Triad Employee or LifePoint Employee, as the case may
be, submits a revised form.
(c) Garnishments, Tax Levies, Child Support Orders, and Wage
--------------------------------------------------------
Assignments. With respect to Employees with garnishments, tax levies, child
- -----------
support orders, and wage assignments in effect with Columbia/HCA on the
Distribution Date, each of Triad and LifePoint as the successor employers with
respect to Triad Employees or LifePoint Employees, respectively, shall honor
such payroll deduction authorizations and shall continue to make payroll
deductions and payments to the authorized payee, as specified by the court or
governmental order which was filed with Columbia/HCA.
19
<PAGE>
(d) Authorizations for Payroll Deductions. Unless otherwise
-------------------------------------
prohibited by this or another agreement entered into in connection with the
Distributions, or by a Plan document, with respect to Triad Employees or
LifePoint Employees with authorizations for payroll deductions in effect with
Columbia/HCA on the Distribution Date, Triad and LifePoint as the respective
successor employers will honor such payroll deduction authorizations relating to
each such Triad Employee or LifePoint Employee, respectively, and shall not
require that such Triad Employee or LifePoint Employee, as the case may be,
submit a new authorization to the extent that the type of deduction by Triad and
LifePoint does not differ from that made by Columbia/HCA. The Triad Retirement
Plan and the LifePoint Retirement Plan shall, respectively, provide that any
elective deferral or other elections under the Columbia/HCA Retirement Plans in
existence immediately prior to the Distribution Date shall carry over to the
Spinco Retirement Plans upon the Distribution Date. All elections under any
Columbia/HCA Welfare Plans shall similarly carry over to the Spinco Welfare
Benefit Plans.
(e) Subsidiaries. With respect to individuals who are employed after
------------
the Distribution Date by a Subsidiary of Triad or LifePoint, all references in
this Section 2.8 to Triad or LifePoint shall be deemed to refer to the
appropriate Subsidiaries thereof, and Triad and LifePoint, respectively, shall
take such actions as are necessary to assure that the appropriate Subsidiary
thereof takes any actions required hereunder.
ARTICLE III.
LABOR AND EMPLOYMENT MATTERS
Notwithstanding any other provision of this Agreement or any other
Agreement between Columbia/HCA and Triad or LifePoint to the contrary,
Columbia/HCA, Triad and LifePoint understand and agree to the matters provided
for in this Article:
Section 3.1 Independent Employers. On and after the Distribution Date,
----------------------
each of Columbia/HCA, Triad and LifePoint will be separate and independent
employers.
Section 3.2 Employment Policies and Practices. Except as limited by
---------------------------------
applicable law (including, without limitation, ERISA) or as otherwise provided
in this Agreement, each of Columbia/HCA, Triad and LifePoint may adopt,
continue, modify or terminate such employment policies, compensation practices,
retirement plans, welfare benefit plans, and other employee benefit plans of any
kind or description, as each may determine, in its sole discretion, are
necessary and/or appropriate.
Section 3.3 Notice of Claims. Each Party will notify in writing and
----------------
consult with any other applicable Party prior to making any settlement of an
employee claim which may reasonably result in liability to such other Party.
Section 3.4 Assumption of Unemployment Tax Rates. Changes in state
------------------------------------
unemployment tax experience from that of Columbia/HCA as of the Distribution
Date shall be handled as follows. In the event an option exists to allocate
state unemployment tax experience of Columbia/HCA, the Columbia/HCA experience
shall be transferred to Triad or LifePoint, if this results in the lowest
aggregate unemployment tax costs for each of Columbia/HCA and
20
<PAGE>
Triad or LifePoint, as the case may be, combined, and the Columbia/HCA
experience shall be retained by Columbia/HCA if this results in the lowest
aggregate unemployment tax costs for each of Columbia/HCA and Triad or
LifePoint, as the case may be, combined.
Section 3.5 No Third-Party Beneficiary Rights.
---------------------------------
(a) This Agreement is not intended to, nor does it, create any third-
party contractual or other common law rights. No person (including any Employee,
any beneficiary or dependent thereof) shall be deemed a third-party beneficiary
of this Agreement.
(b) Nothing contained in this Agreement shall confer upon any
Employee any right with respect to continuance of employment by any Party, nor
shall anything herein interfere with the right of any Party to terminate the
employment of any Employee at any time, with or without cause, or restrict any
Party in the exercise of its independent business judgment in modifying any of
the terms and conditions of the employment of an Employee, except as provided by
applicable law.
ARTICLE IV.
DEFAULT
Section 4.1 Default. If any Party or Parties defaults hereunder, the
-------
non-defaulting Party or Parties shall be entitled to all remedies provided by
law or equity (including reasonable attorneys' fees and costs of suit incurred),
and shall be entitled to recover all legal and other costs incurred in pursuing
the defaulting Party at law or otherwise .
Section 4.2 Force Majeure. Columbia/HCA shall not be liable to
-------------
LifePoint or Triad, as appropriate, for a delay or failure to comply with the
terms of this Agreement if such delay or failure results from causes beyond its
reasonable control. Such causes may include, without limitation, acts of God,
fires or other catastrophes, telecommunication failures, equipment failures,
power failures, labor disputes, strikes, delays in transportation, riots, war,
governmental regulations, non-performance by Columbia/HCA suppliers and vendors,
or problems experienced by Columbia/HCA as a result of its own or any third
party's computer software or hardware not being Year 2000 compliant (an "Event
of Force Majeure"). Columbia/HCA shall give LifePoint or Triad, as appropriate,
prompt notice of any Event of Force Majeure that may cause delay or non-
performance hereunder. For so long as such Event of Force Majeure shall
continue, LifePoint or Triad, as appropriate, may elect to have the services
affected by the Event of Force Majeure performed by other means without such
election being deemed to be a termination or breach of this Agreement, provided
--------
that LifePoint or Triad, as appropriate, provides prompt notice of such election
to Columbia/HCA after having received notice of the Event of Force Majeure.
21
<PAGE>
ARTICLE V.
MISCELLANEOUS
Section 5.1 Access Information; Cooperation. LifePoint and Triad shall
-------------------------------
maintain all Employee and participant records and data (including records and
data relating to any Plans of Columbia/HCA) for a period of ten (10) years
following the Closing Date. The Parties and their authorized agents shall be
given reasonable access to and may take copies of all information relating to
the subjects of this Agreement or any other employment or employee benefit
matters (to the extent permitted by federal and state confidentiality laws) in
the custody of any other Party, including any agent, contractor, subcontractor,
or any other person or entity under the contract of such Party. The Parties
shall provide one another with such information as is reasonably necessary to
administer each Party's Plans. The Parties shall cooperate with each other to
minimize the disruption caused by any such access and providing of information.
The Parties shall cooperate with each other with respect to Plan administrative
matters for 1999 and thereafter.
Section 5.2 Assignment. No Party shall, without the prior written
----------
consent of the other, have the right to assign any rights or delegate any
obligations under this Agreement.
Section 5.3 Headings. The section headings contained in this Agreement
--------
are inserted for convenience of reference only and shall not affect the meaning
or interpretation of this Agreement.
Section 5.4 Attorney-Client Privilege. Any provisions herein requiring
-------------------------
the Parties to this Agreement to cooperate shall not be deemed to be a waiver of
the attorney-client privilege for any Party nor shall it require any Party to
waive its attorney-client privilege.
Section 5.5 Severability. In the event that any provision hereof is
------------
prohibited or unenforceable in any jurisdiction, such provision shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 5.6 Parties Bound. This Agreement shall inure to the benefit of
-------------
and be binding upon the Parties hereto and their respective successors and
permitted assigns. Nothing herein, expressed or implied, shall be construed to
give any other person any legal or equitable rights hereunder.
Section 5.7 Notices. All notices or other communications required or
-------
permitted under this Agreement shall be in writing and sufficient if sent by
registered or certified mail, postage prepaid, addressed as provided below; or
delivered personally, by private courier or fax, and followed by such mailing:
22
<PAGE>
If to Columbia/HCA, to
Columbia/HCA Healthcare Corporation
One Park Plaza
Nashville, Tennessee 37203
Telecopy: (615) 344-2075
Attention: Robert A. Waterman, Esq.
Senior Vice President and General Counsel
If to LifePoint, to
LifePoint Hospitals, Inc.
4525 Harding Road
Suite 103
Nashville, Tennessee 37205
Telecopy: (615) 344-6276
Attention: Mr. Scott L. Mercy
Chairman and Chief Executive Officer
If to Triad, to
Triad Hospitals, Inc.
13455 Noel Road
20th Floor
Dallas, Texas 75240
Telecopy: (972) 663-3945
Attention: Mr. James D. Shelton
Chairman, President and Chief Executive Officer
In each case, with a copy to
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
Telecopy: (212) 259-6333
Attention: Morton A. Pierce, Esq.
Any Party may change the person and address to which notices or other
communications are to be sent to it by giving written notice of any such change
in the manner provided herein.
Section 5.8 Further Action. The Parties shall cooperate in good faith
--------------
and take such steps and execute such papers as may be reasonably requested by
another Party to implement the terms and provisions of this Agreement
Section 5.9 Waiver. The Parties agree that the waiver of any default
------
under any term or condition of this Agreement shall not constitute a waiver of
any subsequent default or nullify the effectiveness of that term or condition.
23
<PAGE>
Section 5.10 Governing Law. This Agreement shall be deemed to be made
-------------
in and in all respects shall be interpreted, construed and governed by and in
accordance with the law of the State of Tennessee without regard to the conflict
of law principles thereof.
Section 5.11 Consent to Jurisdiction. Columbia/HCA, LifePoint and Triad
-----------------------
each hereby expressly (a) submits and consents in advance to the jurisdiction of
any Tennessee State Court sitting in Nashville, Tennessee or in the United
States District Court for the Middle District of Tennessee with respect to any
actions or proceedings arising out of or relating to this Agreement, (b) waives
any objection which it may have based upon lack of personal jurisdiction,
improper venue or forum non conveniens, (c) agrees that all claims with respect
to such actions or proceedings may be heard and determined in any Tennessee
State Court sitting in Nashville, Tennessee or the United States District Court
for the Middle District of Tennessee, (d) agrees not to commence any action or
proceeding relating to this Agreement other than in a Tennessee State Court
sitting in Nashville, Tennessee or in the United States District Court for the
Middle District of Tennessee and (e) agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Section 5.12 Waiver of Jury Trial. EACH PARTY HERETO ACKNOWLEDGES AND
--------------------
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS
WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 5.12.
Section 5.13 Entire Agreement. This Agreement and the Distribution
----------------
Agreement constitute the entire understanding between the Parties hereto with
respect to the subject matter hereof, and supersede all prior written or oral
communications relating to such subject matter. No amendment, modification,
extension or failure to enforce any condition of this Agreement by any Party
shall be deemed a waiver of any of its rights herein. This Agreement shall not
be amended except by a writing executed by the Parties. In the event a matter
arises relating to employee benefits which is not covered by this Agreement, the
parties shall act in good faith to resolve such matter to correspond to the
intents and purposes of this Agreement to the fullest extent possible.
24
<PAGE>
Section 5.14 Counterparts. This Agreement may be executed in any number
------------
of separate counterparts, each of which shall be deemed to be an original, but
which together shall constitute one and the same instrument.
25
<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the date first above written.
COLUMBIA/HCA HEALTHCARE CORPORATION,
a Delaware corporation
By: /s/ Ronald Lee Grubbs, Jr.
------------------------------------------
Name: Ronald Lee Grubbs, Jr.
Title: Vice President of Tax
TRIAD HOSPITALS, INC.,
a Delaware corporation
By: /s/ Donald P. Fay
------------------------------------------
Name: Donald P. Fay
Title: Executive Vice President, General
Counsel and Secretary
LIFEPOINT HOSPITALS, INC.,
a Delaware corporation
By: /s/ William F. Carpenter III
------------------------------------------
Name: William F. Carpenter III
Title: Senior Vice President, General
Counsel and Secretary
26
<PAGE>
EXHIBIT 10.3
INSURANCE ALLOCATION AND ADMINISTRATION AGREEMENT
by and among
COLUMBIA/HCA HEALTHCARE CORPORATION,
and
TRIAD HOSPITALS, INC.
and
LIFEPOINT HOSPITALS, INC.
dated as of May 11, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Section 1. Allocation of Existing Coverages and Liabilities............... 2
Section 2. Cooperation and Joint Insurance................................ 3
Section 3. Administrative Services........................................ 4
Section 4. Amendment of Policies.......................................... 4
Section 5. Access to Records and Other Information........................ 5
Section 6. Successors and Assigns......................................... 5
Section 7. Counterparts................................................... 5
Section 8. Governing Law.................................................. 5
Section 9. No Impairments of Other Rights................................. 5
Section 10 Subrogation.................................................... 5
Section 11. Subsidiaries................................................... 6
Section 12. No Third Party Beneficiaries................................... 6
Section 13. Construction................................................... 6
Section 14. Entire Agreement; Amendment.................................... 6
Section 15. Waivers........................................................ 6
Section 16. Confidentiality................................................ 7
Section 17. Notices........................................................ 7
Section 18. Legal Enforceability........................................... 9
Section 19. Survival of Agreements......................................... 9
</TABLE>
<PAGE>
This Insurance Allocation and Administration Agreement (the
"Agreement") is made and entered into as of this 11th day of May, 1999 by and
---------
among Columbia/HCA Healthcare Corporation, a Delaware corporation
("Columbia/HCA"), LifePoint Hospitals, Inc., a Delaware corporation (together
------------
with its successors and permitted assigns, "LifePoint"), and Triad Hospitals,
---------
Inc., a Delaware corporation (together with its successors and permitted
assigns, "Triad").
-----
WHEREAS, Columbia/HCA, LifePoint and Triad have entered into that
certain Distribution Agreement, dated as of May 11, 1999 (the "Distribution
------------
Agreement"), pursuant to which (a) Columbia/HCA and its Subsidiaries shall cause
- ---------
to be consummated certain corporate transactions in order to divide and separate
their existing businesses and assets so that (i) the Columbia/HCA Business shall
be owned, controlled, and operated, directly and indirectly, by Columbia/HCA,
(ii) the America Group Business shall be owned, controlled, and operated,
directly and indirectly, by LifePoint and (iii) the Pacific Group Business shall
be owned, controlled, and operated, directly and indirectly, by Triad, and (b)
Columbia/HCA shall distribute to the holders of Columbia/HCA's outstanding
shares of common stock, the outstanding shares of America common stock and the
outstanding shares of Pacific common stock owned by Columbia/HCA (such
distributions being collectively referred to as the "Distributions"), upon the
-------------
terms and subject to the conditions set forth in the Distribution Agreement;
WHEREAS, Columbia/HCA, its Subsidiaries and their respective
predecessors have historically maintained various insurance policies (the
"Policies") for the benefit or protection of one or more of Columbia/HCA and its
- ---------
Subsidiaries, some of which are professional liability policies purchased from
Health Care Indemnity, Inc. (the "HCI Policies");
------------
WHEREAS, in connection with the transactions contemplated by the
Distribution Agreement, Columbia/HCA, LifePoint and Triad have determined that
it is necessary and desirable to provide for the respective continuing rights
and obligations in respect of the Policies from and after the Distribution Date
and the administration of claims thereunder as well as interim administration by
Columbia/HCA of new policies entered into by LifePoint and Triad on and after
the Distribution Date;
WHEREAS, under the Distribution Agreement, Columbia/HCA has agreed to
indemnify LifePoint and Triad for losses in excess of any insurance proceeds
with respect to activities prior to the Distribution Date;
WHEREAS, the parties desire to enter into this Agreement in order to
define the relationship between the parties regarding insurance of their
respective properties and liabilities and the exercise of certain rights,
remedies and options by the respective parties hereto under the Policies; and
<PAGE>
WHEREAS, pursuant to the Distribution Agreement the parties hereto
have agreed to enter into this Agreement;
NOW THEREFORE, in consideration of the mutual agreements, provisions,
and covenants contained in this Agreement and the Distribution Agreement, the
parties hereto hereby agree as follows:
Unless otherwise defined herein or unless the context otherwise
requires, all capitalized terms shall have the meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined)
attributed to them in the Distribution Agreement.
Section 1. Allocation of Existing Coverages and Liabilities.
------------------------------------------------
1.01 Claims in Process. Any claims made against insurers under the
-----------------
Policies prior to the Distribution Date and unpaid as of such date shall be for
the account of the party (i) whose asset after the Distribution Date is the
basis for the claim, or (ii) in the case of a liability claim, which is the
owner after the Distribution Date of the facility at which the activity which is
the subject of the claim occurred or is alleged to have occurred. If the
proceeds of the claim are received by a party other than the party entitled to
receive such proceeds pursuant to this Section 1.01, such receiving party shall
pay over such proceeds to such other party. In respect of claims under Policies
for the account of LifePoint or Triad, in the event that any deductible, co-
insurance or self-insured retention in respect of such claim has not been paid
or accounted for prior to the Distribution Date, or if the Policy under which
the claim was made provides for any aggregate deductible, co-insurance or self-
insured retention or if the claim is not fully covered because the aggregate
policy limits have been exhausted, such amounts shall be paid to such party by
Columbia/HCA pursuant to the indemnification provided for in the Distribution
Agreement.
1.02 Retroactive Rate Adjustments. Retroactive adjustments in
----------------------------
respect of any Policies for periods ended on or prior to the Distribution Date
shall be paid or received by Columbia/HCA, and LifePoint and Triad shall have no
liability or receive no refund therefor regardless of the reason for the
adjustment.
1.03 Incurred But Not Reported Claims. (a) The parties shall do all
--------------------------------
things necessary to assure that all Policies which provide coverage remain
applicable to LifePoint and Triad and their respective Subsidiaries and assets
after the Distribution Date, to the extent they were applicable prior to the
Distribution Date with respect to losses incurred prior to the Distribution
Date.
(b) The parties shall do all commercially reasonable things necessary
to assure continued coverage for incurred but not reported claims and incidents
which have not been filed with insurers which would have been covered under
Policies which provide coverage on a claims made basis had they been made and
reported prior to the Distribution Date including the purchase of tail coverage
by Columbia/HCA with respect to claims made policies if the replacement policies
acquired by LifePoint or Triad do not have retroactive dates which provide
coverage for all occurrences which would have been covered by the Policies had
they remained in effect after the Distribution Date.
2
<PAGE>
(c) Indemnity payments under Policies which are on an occurrence
basis in respect of claims made after the Distribution Date arising out of
occurrences prior to the Distribution Date shall be for the account of the party
(i) whose asset after the Distribution Date was the basis for the claim or (ii)
in the case of liability claims, which is the owner after the Distribution Date
of the facility at which the activity which is the subject of the claim occurred
or is alleged to have occurred; provided, however, that, in respect of claims
-------- -------
under Policies for the account of LifePoint or Triad, if the Policy under which
the claim was made provides for any deductible, co-insurance or self-insured
retention or if the claim is not fully covered because the policy limits have
been exhausted, such amounts shall be paid to such party by Columbia/HCA
pursuant to the indemnification provided for in the Distribution Agreement.
Section 2. Cooperation and Joint Insurance.
-------------------------------
2.01 Cooperation in Acquiring Insurance. Columbia/HCA, LifePoint and
----------------------------------
Triad shall cooperate with each other in the purchase of insurance coverage for
periods commencing after the Distribution Date with the aim of obtaining
appropriate insurance coverage on the best available terms and conditions and at
the most reasonable rates, always taking into account the quality of the
insurers with which coverage is being placed. The parties anticipate that
LifePoint and Triad will purchase continuous coverage under extensions or
renewals of the HCI Policies, or separate policies issued by Health Care
Indemnity, Inc. which provide continuous coverage. Each party shall be entitled
to purchase its own separate coverage in the event it believes that, after a
good faith attempt to obtain appropriate joint coverage (which shall include an
attempt to agree upon allocation of premium on an other than pro rata basis in
--- ----
the event the insurer views one party as a higher risk than the other), its own
interests dictate that course of action. In situations in which the parties are
required by law to maintain separate coverage or to make changes in existing
joint coverage, they shall cooperate in so doing.
Columbia/HCA, LifePoint and Triad agree that there are certain
situations in which existing coverage must be retained as a result of state law
or regulation. In these situations the parties will cooperate to maintain such
coverage and appropriate financial accommodation will be made so that LifePoint
or Triad, as the case may be, will pay or receive value so that it will be in
the same financial position as it would have been had it obtained coverage
independently. In this regard the current participation of hospitals in the
patient compensation fund in the state of Kansas will be continued in order to
maintain the retroactive date on claims made coverage. In consideration
therefore, the value of a tail policy will be transferred. In addition, in
respect of Triad in the state of Texas the hospitals have opted out of the
workers compensation program and will maintain a benefit program in lieu
thereof. Reserves will be continued on the books of the participating hospitals
in order to permit the program to continue.
2.02 Joint Liability and Claims. (a) In the event that a claim by a
--------------------------
third party is made against two or more of the parties (or a Subsidiary of a
party and another party or a Subsidiary thereof) (a "Joint Claim"), and
-----------
indemnification under the Distribution Agreement is provided by Columbia/HCA,
Columbia/HCA shall defend the Joint Claim at its expense and the other party or
parties shall cooperate in such defense. In the event that no indemnification is
provided for under the Distribution Agreement and there is no other existing
agreement or indemnification with respect to such Joint Claim, the parties to
the Joint Claim agree to handle
3
<PAGE>
such Joint Claim in accordance with this Section 2.02. Such parties shall
jointly defend such Joint Claim and shall attempt to agree upon the appropriate
allocation of any liability or expenses. In the event that such parties cannot
agree upon an appropriate allocation, the issue shall be referred to arbitration
in accordance with the procedures described in subsection (b) below, but only
after a final determination of liability (through final court judgment,
settlement or otherwise) has been made. None of the parties, nor any Subsidiary
of any of them, shall institute any court proceedings against the other
involving a Joint Claim.
In the event that any of the parties purchases separate liability
coverage, each of them shall make known to its insurer this Agreement and in
particular the provisions of this Section 2.02.
(b) Any and all disputes arising from or in connection with this
Agreement shall be resolved in accordance with the procedures set forth in
Article XI of the Distribution Agreement (including, without limitation,
provisions set forth therein regarding attempts to amicably resolve any dispute
through discussions among members of senior management, consent to jurisdiction
and waiver of jury trial).
Section 3. Administrative Services.
-----------------------
3.01 Engagement. LifePoint and Triad each authorizes Columbia/HCA to
----------
perform and provide the technical and administrative service, assistance and
support functions described in Schedule 3.01 attached hereto (the "Services").
--------
Columbia/HCA hereby accepts such appointment. Compensation for such services
shall be as provided for in Schedule 3.01.
3.02 General Description of the Services. The purpose of this
-----------------------------------
Agreement is to set forth the terms upon which Columbia/HCA shall provide to
LifePoint and Triad the Services (i) in connection with the Policies and (ii) on
an interim basis in respect of post-Distribution Date insurance, in order to
permit LifePoint and Triad the opportunity to obtain alternative sources of
supply of the Services. In general, the Services shall be consistent with the
comparable services provided by Columbia/HCA with respect to the Policies
immediately prior to the Distribution Date.
3.03 Performance by Affiliates. The Parties recognize that the
-------------------------
Services may include services which, by their nature, are more effectively to be
provided by Affiliates of Columbia/HCA. Subject to the next sentence of this
Section 3.03, Columbia/HCA shall, to the extent required in order for its
Affiliates to provide such Services, cause its Affiliates to provide such
Services hereunder as if such Affiliates were themselves parties hereto. In
connection with the provision of such Services, Columbia/HCA's Affiliates shall
be entitled, as if such Affiliates were themselves parties hereto, to the
benefits of (i) the limitations on liability set forth herein and (ii) the
limitations on the obligation to provide Services set forth herein.
Section 4. Amendment of Policies.
---------------------
So long as LifePoint or Triad is covered by any Policy, Columbia/HCA
will not enter into any material amendment, change or modification of any such
Policy which would materially adversely affect LifePoint's or Triad's rights
under such Policy without the express
4
<PAGE>
prior written consent to such amendment, change or modification by LifePoint or
Triad, unless all reasonably anticipated claims thereunder are covered by the
indemnification under the Distribution Agreement after taking into account the
amendment, change or modification.
Section 5. Access to Records and Other Information.
---------------------------------------
In order to enable it to prosecute any claim or determine coverage
thereunder, either party, at its expense, may at any reasonable time examine or
copy any letter, account, or other documentation or information in the
possession or control of the other party or any affiliate of such party relating
to or connected with any Policy with respect to a policy period during which
such party or an affiliate was covered thereby and relating to prior losses
which are the subject of this Agreement. The other party shall, at the request
and expense of the requesting party, take reasonable steps to obtain for the
requesting party any information or documents in the possession of any third
party relating to or in connection with the Documents and identified by the
requesting party.
Section 6. Successors and Assigns.
----------------------
This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Neither party hereto may assign its rights or delegate its
obligations under this Agreement without the prior written consent of the other
party.
Section 7. Counterparts.
------------
This Agreement may be executed in several counterparts, each of which
shall be deemed an original, but such counterparts shall together constitute one
and the same instrument.
Section 8. Governing Law.
-------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
Section 9. No Impairments of Other Rights.
------------------------------
Nothing in this Agreement is intended or shall be construed to impair,
diminish or otherwise adversely affect any other rights under the Policies or
otherwise either party may have or may obtain against any person other than the
other party to this Agreement.
Section 10. Subrogation.
-----------
Each party agrees that the other party shall be subrogated to such
party's rights and remedies under the Documents to the extent of the portion of
any amounts recoverable thereunder determined in accordance with the terms of
this Agreement regarding allocation of liabilities, losses, claims and expenses.
Each party further agrees to cooperate with the other party in connection with
the other party's enforcement of any such rights and remedies and agrees not to
take any actions that would prejudice the exercise of such right of subrogation.
5
<PAGE>
This Section is not intended to result in any reallocation of amounts
recoverable under this Agreement. It is intended to avoid any waiver of
subrogation.
Section 11. Subsidiaries.
------------
Each of the parties hereto shall cause to be performed, and hereby
guarantees the performance of, all actions, agreements and obligations set forth
herein to be performed by any Subsidiary of such party which is contemplated to
be a Subsidiary of such party on and after the Distribution Date; provided,
--------
however, that this Section 1 shall not apply to any obligation of Health Care
- -------
Indemnity, Inc. pursuant to any Policy under which it is an insurer.
Section 12. No Third Party Beneficiaries.
----------------------------
This Agreement is solely for the benefit of the parties hereto and
their respective Subsidiaries and Affiliates and should not be deemed to confer
upon third parties any remedy, claim, liability, reimbursement, claim of action
or other right in excess of those existing without reference to this Agreement.
Section 13. Construction. In this Agreement,
------------
(i) unless the context otherwise requires, the terms
"herein," "hereof," "hereto," and "hereunder" refer to this Agreement;
and
(ii) the headings of the sections and subsections
hereof and the table of contents hereof are inserted for convenience
only and do not constitute a part of this Agreement.
Section 14. Entire Agreement; Amendment.
---------------------------
This Agreement including the Schedule hereto, which is an integral
part hereof, the Distribution Agreement and the other agreements referred to
herein or therein or entered into in connection herewith or therewith set forth
the entire agreement and understanding of the parties with respect to the
transactions contemplated hereby and supersede all prior agreements,
arrangements and understandings relating to the subject matter hereof. No
representation, promise, inducement or statement of intention has been made by
either party hereto which is not embodied in this Agreement or such other
agreements, the Schedules or Exhibits or thereto, or the written statements or
other documents delivered pursuant hereto and thereto, and neither party hereto
shall be bound by or liable for any alleged representation, promise, inducement
or statement of intention not so set forth. This Agreement may be amended or
modified only by a written instrument executed by both parties hereto or by
their successors and permitted assigns.
Section 15. Waivers.
-------
No failure or delay on the part of any party in exercising any power
or right hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. No
modification or waiver of any provision of this Agreement nor consent to any
departure by any
6
<PAGE>
party therefrom shall in any event be effective unless the same shall be in
writing, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given.
Section 16. Confidentiality.
---------------
Subject to any contrary requirement of law and the right of each party
to enforce its rights hereunder in any legal action, each party shall keep
strictly confidential, and shall cause its employees and agents to keep strictly
confidential, any information of or concerning the other party which it or any
of its agents or employees may acquire pursuant to, or in the course of
performing its obligations under, any provision of this Agreement; provided,
--------
however, that such obligation to maintain confidentiality shall not apply to
- -------
information which (i) at the time of disclosure was in the public domain, (ii)
after disclosure enters the public domain not as a result of acts by the
receiving party, (iii) was already independently in the possession of the
receiving party at the time of disclosure or (iv) is received by the receiving
party from a third party who did not receive such information from the
disclosing party under an obligation of confidentiality.
Section 17. Notices.
-------
All notices, consents, requests, instructions, approvals and other
communications hereunder shall be in writing and shall be deemed to have been
duly given, if delivered in person or by courier, telegraphed, telexed or by
facsimile transmission or mailed, by, certified or registered mail, postage
prepaid at the following address (or at such other address provided by one party
to the other in writing):
If to Columbia/HCA:
Columbia/HCA Healthcare Corporation
One Park Plaza
Nashville, Tennessee 37203
Telecopy: (615) 344-2075
Attention: Robert A. Waterman, Esq.
Senior Vice President & General Counsel
with a copy to:
James D. Hinton
Vice President of Risk and Insurance
Columbia/HCA HealthCare Corporation
One Park Plaza
Nashville, TN 37203
7
<PAGE>
If to LifePoint, to
LifePoint Hospitals, Inc.
4525 Harding Road
Suite 103
Nashville, Tennessee 37205
Telecopy: (615) 344-6276
Attention: Mr. Scott L. Mercy
Chairman and Chief Executive Officer
with a copy to:
LifePoint Hospitals, Inc.
4525 Harding Road
Suite 103
Nashville, Tennessee 37205
Telecopy: (615) 344-6272
Attention: William F. Carpenter III, Esq.
Senior Vice President and General Counsel
If to Triad, to
Triad Hospitals, Inc.
13455 Noel Road
20th Floor
Dallas, Texas 75240
Telecopy: (972)663-3945
Attention: Mr. James D. Shelton
President and Chief Executive Officer
with a copy to:
Triad Hospitals, Inc.
13455 Noel Road
20th Floor
Dallas, Texas 75240
Telecopy: (972)701-9604
Attention: Donald P. Fay, Esq.
Executive Vice President
and General Counsel
8
<PAGE>
In each case, with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
Telecopy: (212) 259-6333
Attention: Morton A. Pierce, Esq.
William W. Rosenblatt, Esq.
Section 18. Legal Enforceability.
--------------------
Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision or remedies
otherwise available to any party hereto. Without prejudice to any rights or
remedies otherwise available to any party hereto, each party hereto acknowledges
that damages would be an inadequate remedy for any breach of the provisions of
this Agreement and agrees that the obligations of the parties hereunder shall be
specifically enforceable.
Section 19. Survival of Agreements.
----------------------
Except as otherwise contemplated by this Agreement, all covenants and
agreements of the parties contained in this Agreement shall survive the
Distribution Date.
9
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
COLUMBIA/HCA HEALTHCARE CORPORATION
By: /s/ Ronald Lee Grubbs, Jr.
-------------------------------
Name: Ronald Lee Grubbs, Jr.
Title: Vice President of Tax
LIFEPOINT HOSPITALS, INC.
By: /s/ William F. Carpenter III
-------------------------------
Name: William F. Carpenter III
Title: Senior Vice President, General Counsel and
Secretary
TRIAD HOSPITALS, INC.
By: /s/ Donald P. Fay
-------------------------------
Name: Donald P. Fay
Title: Executive Vice President, General Counsel and
Secretary
10
<PAGE>
Schedule 3.01(c)
[To be agreed.]
11
<PAGE>
EXHIBIT 10.4
TRANSITIONAL SERVICES AGREEMENT
TRANSITIONAL SERVICES AGREEMENT, dated as of May 11, 1999, by and
between COLUMBIA/HCA HEALTHCARE CORPORATION, a Delaware corporation
("Columbia/HCA"), and TRIAD HOSPITALS, INC., a Delaware corporation (together
with its successors and assigns, "Triad").
W I T N E S S E T H:
-------------------
WHEREAS, Columbia/HCA has determined to distribute to its
stockholders, on a pro rata basis, all of the issued and outstanding shares of
common stock of Triad owned by Columbia/HCA (the "Distribution"), all as set
forth in that certain Distribution Agreement by and among Columbia/HCA, Triad
and LifePoint Hospitals, Inc., a Delaware corporation, dated as of May 11, 1999
(the "Distribution Agreement"), the Distribution to be effective on the
Distribution Date (as defined in the Distribution Agreement); and
WHEREAS, Columbia/HCA currently furnishes certain services to the
hospitals and other healthcare facilities which, as of the Distribution Date,
will be owned by Triad (the "Triad Facilities"), such as services relating to
treasury, payroll, accounting, real estate project management, legal, human
resources, sales and marketing, and quality assurance and accreditation matters;
and
WHEREAS, Triad desires that Columbia/HCA shall continue to provide,
and Columbia/HCA is willing to continue to provide, such services for a
transitional period following the Distribution Date on the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, Columbia/HCA and Triad hereby
agree as follows:
1. Services.
--------
(a) Basic Services. Columbia/HCA shall furnish, or cause to be
--------------
furnished, to Triad and to the Triad Facilities those services which are
currently furnished by Columbia/HCA to the Triad Facilities (the "Basic
Services"), upon the reasonable direction of Triad, including without limitation
those services that are described on Exhibit A hereto. The Basic Services shall
be performed throughout the Term of this Agreement (as hereinafter defined),
except to the extent that (i) Triad requests earlier discontinuation of all or a
portion of the Basic Services pursuant to Section 5 hereof or (ii) a different
time period for the performance of a particular basic service is set forth on
Exhibit A hereto.
(b) Additional Services. Columbia/HCA and Triad hereby agree
-------------------
that Columbia/HCA may also provide such other services to Triad and to the Triad
Facilities (the "Additional Services") as Columbia/HCA and Triad may agree.
(c) Excluded Services. This Agreement is not intended to
-----------------
address matters involving computer services, employee benefits, tax, aviation,
insurance, telecommunications,
<PAGE>
Year 2000, intellectual property, purchasing or any other matters addressed in
the Distribution Agreement or in any of the Ancillary Agreements (as defined in
the Distribution Agreement), which matters shall be governed exclusively by the
provisions of the applicable agreement.
2. Term of Agreement. The term of this Agreement shall commence as
-----------------
of the Distribution Date and shall continue until December 31, 2000 (the
"Term").
3. Charges for Services.
--------------------
(a) Costs. Columbia/HCA's costs associated with performing the
-----
Basic Services (the "Costs") shall be comprised of (i) the portion of all
Columbia/HCA employee compensation and benefits (calculated at 20% of salary)
incurred in connection with or allocable directly to the performance of the
Basic Services hereunder ("Compensation Costs"); and (ii) all out-of-pocket
expenses incurred by Columbia/HCA, including without limitation expenses
resulting from travel, photocopying, delivery and long distance telephone
services, and professional fees and expenses of Columbia/HCA's outside
accountants, legal counsel and other consultants incurred by Columbia/HCA and
allocable to performance of the Basic Services hereunder (collectively, the
"Reimbursable Expenses"). Employees of Columbia/HCA and outside accountants and
legal counsel shall maintain specific timesheets to record time spent in
performing the Basic Services hereunder for purposes of calculating the
Compensation Costs and Reimbursable Expenses.
(b) Charges for Basic Services. Except where a different charge
--------------------------
is set forth on Exhibit A with regard to a particular Basic Service, Triad shall
pay all Costs incurred by Columbia/HCA in connection with Columbia/HCA's
performance of the Basic Services during the period that such Basic Services are
performed.
(c) Charges for Additional Services. In the event that Triad
-------------------------------
requests Columbia/HCA to perform, and Columbia/HCA agrees to perform, Additional
Services as provided in Section 1(b) hereof, the parties shall agree in writing
on reasonable charges to be paid by Triad to Columbia/HCA for any such
Additional Services, which charges shall include reimbursement of Columbia/HCA
for all out-of-pocket expenses incurred by Columbia/HCA, as described in clause
(ii) of Section 3(a) above, and allocable to performance of the Additional
Services.
4. Payment by Triad.
----------------
(a) Payment of Charges. Columbia/HCA shall invoice Triad on a
------------------
monthly basis for the charges relating to the Basic Services and Additional
Services which have been performed hereunder and for reimbursement of any
invoices paid by Columbia/HCA on Triad's behalf. Columbia/HCA's invoice shall
specifically identify charges for Basic Services and Additional Services and the
amounts of any such reimbursements. Triad shall pay to Columbia/HCA all amounts
invoiced by Columbia/HCA within thirty (30) days after delivery of such invoice.
Any amount remaining unpaid when due, including disputed amounts that are
ultimately determined to be payable, shall bear interest during the period that
such amount remains unpaid (computed on the basis of a 360-day year of twelve
30-day months) at a fluctuating rate per annum equal to the prime commercial
lending rate publicly announced by
2
<PAGE>
The Chase Manhattan Bank or any successor thereto at its principal office (or
any alternative rate substituted therefor by such bank).
(b) Disputed Charges. In the event that Triad disputes any
----------------
charges invoiced by Columbia/HCA, Triad shall deliver a written statement
describing the dispute to Columbia/HCA within fifteen (15) days following
receipt of Columbia/HCA's invoice. The statement shall provide a sufficiently
detailed description of the disputed items to permit Columbia/HCA to research
and resolve the dispute. Charges not so disputed shall be deemed accepted. If
Columbia/HCA finds the disputed charge to be inconsistent with the terms of this
Agreement, the disputed amount shall be credited against any invoice issued by
Columbia/HCA following the resolution of such dispute, or, if no further invoice
is issued within sixty (60) days following such resolution, Columbia/HCA shall
refund the disputed amount to Triad.
5. Triad's Request to Discontinue Basic Services. At any time
---------------------------------------------
during the Term of this Agreement, Triad may request Columbia/HCA to discontinue
performing all or a portion of the Basic Services, provided that Triad shall
give Columbia/HCA at least thirty (30) days' prior written notice, and provided
further that the requested discontinuance of services is reasonably feasible and
shall not prevent Columbia/HCA from providing the remaining Basic Services.
6. Limited Warranty and Limitation of Liability.
--------------------------------------------
(a) Standard of Care. Columbia/HCA will provide the Basic
----------------
Services and the Additional Services hereunder (collectively, the "Services") in
good faith and with due care consistent with the care that it exercises in
performing such Services for itself. Triad acknowledges and agrees that
Columbia/HCA does not regularly provide Services to third parties as part of its
business, and, except as specifically stated elsewhere herein, Columbia/HCA does
not otherwise warrant or assume any responsibility for its performance of the
Services.
(b) Limitation of Liability. In addition to the obligations set
-----------------------
forth in Section 6(a) above, Columbia/HCA shall be responsible for any direct
compensatory damages suffered by Triad in the event of a breach by Columbia/HCA
of its obligations set forth herein which breach results from Columbia/HCA's
intentional misconduct or gross negligence. Except for the limited warranties
provided hereunder, Columbia/HCA shall have no liability to Triad under this
Agreement and Triad's remedies under this Section 6 shall constitute its sole
and exclusive remedies under this Agreement; provided that Triad shall be
entitled to preliminary and other injunctive relief against any willful breach
by Columbia/HCA of this Agreement. Under no circumstances shall Columbia/HCA be
liable for any indirect, consequential, incidental or punitive damages, whether
arising under contract, in tort, at law, or in equity, of Triad or any other
person. Triad hereby acknowledges that Columbia/HCA does not regularly provide
Services to third parties as part of its business and that Columbia/HCA has
agreed to provide the Services under this Agreement only to assist Triad in its
transition to operation as an independent public company.
(c) Warranty. The warranties stated in subsection (a) above are
--------
in lieu of any and exclusive of all other representations and warranties of any
kind whatsoever.
3
<PAGE>
7. Indemnification. Triad shall, to the fullest extent permitted by
---------------
law, defend, indemnify and hold harmless Columbia/HCA and its directors,
officers, employees, agents and affiliates from and against any and all losses,
liabilities, claims and costs, including, but not limited to, attorneys' fees
and legal costs arising from any lawsuits, administrative agency or other
actions by third parties (collectively, "Losses") to which Columbia/HCA is
subjected arising out of or attributed, directly or indirectly, to the
performance or non-performance of any of the Services under this Agreement.
Notwithstanding the foregoing, Triad shall not be required to defend, indemnify
and hold harmless Columbia/HCA and its directors, officers, employees, agents
and affiliates in respect of any such Losses that are determined by a judgment
of a court that is binding, final and not subject to review on appeal to have
resulted from Columbia/HCA's intentional misconduct or gross negligence.
8. Employees. Neither party hereto shall have authority to employ
---------
persons on behalf of the other party, and no employees of one party shall be
deemed to be employees or agents of the other party, except with the prior
written consent of the parties hereto. Each party hereto shall have the sole
and exclusive control over its labor and employee relations policy and policies
relating to wages, hours, working conditions and terms of employment.
9. Confidential Information.
------------------------
(a) In order for Columbia/HCA to perform the Services under this
Agreement, each party may make available to the other party certain information
and/or data in connection with its past, current or potential operations and/or
business strategies (hereinafter collectively referred to as "Confidential
Information"). Confidential Information may be oral, written, recorded or
otherwise captured in any medium.
(b) Each party shall hold, and shall cause its consultants and
advisors to hold, in strict confidence all Confidential Information of the other
party. Each party agrees not to make use of the Confidential Information of the
other party for its own benefit and to use the Confidential Information only in
connection with the Basic Services and the Additional Services to be performed
pursuant to this Agreement. Each party agrees that it will refrain from
releasing or disclosing any Confidential Information to any other person, except
that Confidential Information may be disclosed by each party to its consultants
and advisors. Each party agrees that all Confidential Information of the other
party shall at all times remain the sole property of the other party and shall
be returned to such other party immediately upon the termination of this
Agreement. The provisions of this Section 9 shall survive any termination of
this Agreement.
(c) Notwithstanding the foregoing provisions of this Section 9,
no party hereto shall be prohibited from using or permitting the use of, and no
party shall be required to hold in confidence, any Confidential Information to
the extent that the information constituting such Confidential Information (i)
has been or is in the public domain through no fault of such party, or (ii) is,
after the Distribution Date, lawfully acquired by such party from sources other
than a party hereto. To the extent that a party hereto (or, to the knowledge of
such party, any current or former employee of such party) is requested (by oral
questions, interrogatories, requests for information or documents, subpoena,
civil investigative demand or similar process) to disclose any information
required to be kept confidential pursuant to this Section 9, such party agrees
to (or in respect of a current or former employee, agrees to use its reasonable
efforts to
4
<PAGE>
cause such employee to) maintain the confidentiality of such Confidential
Information and to provide prompt notice to the party to which such Confidential
Information pertains, so that such party may seek an appropriate protective
order or waive the notifying party's compliance with this Section 9. If, in the
absence of a protective order or the receipt of a waiver hereunder, the party
which has received such a request is, nonetheless, in the reasonable written
opinion of counsel, legally required to disclose such Confidential Information,
such person may disclose such Confidential Information and shall not be liable
pursuant to this Section 9; provided, that such person furnishes only that
portion of the Confidential Information which such person is advised by counsel
to disclose and exercises its reasonable efforts to obtain assurance that
confidential treatment will be accorded to the disclosed portion of the
Confidential Information. Notwithstanding the foregoing, each party will be
permitted to disclose Confidential Information in any proceeding in which such
party is in an adversarial position to any other party to this Agreement.
10. Termination for Cause. Either party may terminate this Agreement
---------------------
in the event the other party files a proceeding under any federal or state
bankruptcy laws now or hereafter in effect, or in the event that a proceeding is
instituted against the other party under any federal or state bankruptcy laws
now or hereafter in effect which proceeding is not dismissed within thirty (30)
days, by the giving of written notice, which termination shall be effective
immediately upon the giving of such notice. In addition, in the event of a
breach of any obligation or covenant under this Agreement by either party, the
party not in breach may give the party in breach written notice of the specifics
of the breach and the party in breach shall then have thirty (30) days (the
"Cure Period") in which to cure such breach or cause the breach to be cured. If
the breach is not cured, or waived by the non-breaching party, within the Cure
Period, then the non-breaching party shall be entitled to pursue any remedies it
may have by reason of such breach, including without limitation terminating this
Agreement with cause. Failure to terminate this Agreement shall not serve to
waive any breach hereof. If either party commences legal action alleging any
breach of this Agreement, the non-prevailing party shall pay all costs and
reasonable attorneys' fees incurred by the prevailing party in connection
therewith.
11. Force Majeure. Columbia/HCA shall not be liable to Triad for a
-------------
delay or failure to comply with the terms of this Agreement if such delay or
failure results from causes beyond its reasonable control. Such causes may
include, without limitation, acts of God, fires or other catastrophes,
telecommunications failures, equipment failures, power failures, labor disputes,
strikes, delays in transportation, riots, war, governmental regulations, non-
performance by Columbia/HCA suppliers and vendors, or problems experienced by
Columbia/HCA as a result of its own or any third party's computer software or
hardware not being Year 2000 compliant (an "Event of Force Majeure").
Columbia/HCA shall give Triad prompt notice of any Event of Force Majeure that
may cause delay or non-performance hereunder. For so long as such Event of
Force Majeure shall continue, Triad may elect to have such Services performed by
other means without such election being deemed to be a termination or breach of
this Agreement, provided that Triad provides prompt notice of such election to
Columbia/HCA after having received notice of the Event of Force Majeure.
12. Assignment. Neither this Agreement, nor any of the rights,
----------
licenses or duties set forth herein, may be assigned by Triad without the prior
written consent of Columbia/HCA.
5
<PAGE>
This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by the parties hereto and their respective successors and permitted
assigns.
13. Access to Books and Records. Upon written request of the
---------------------------
Secretary of Health and Human Services or the Comptroller General or any of
their duly authorized representatives, Columbia/HCA shall make available to the
requesting party those contracts, books, documents and records necessary to
verify the nature and extent of the cost of providing the Services hereunder.
Columbia/HCA shall cause such materials to be available for inspection for at
least four (4) years after the rendering of such Services. If Columbia/HCA
carries out any of the duties of this Agreement with a value of $10,000 or more
over a twelve (12) month period through a subcontract with a related individual
organization, Columbia/HCA shall include this requirement in all such
subcontracts. The parties agree that any attorney-client, accountant/client or
any other legal privilege shall not be deemed waived by virtue of the provisions
of this Section 13.
14. Taxes. The fees for Services specified to be payable by Triad
-----
hereunder do not include any sales, use, excise, value added, utility or other
similar tax or charge which may be or hereafter become applicable to the
Services provided hereunder. Consequently, in addition to such fees, the amount
of any such taxes or charges which may be or hereafter become applicable shall
also be payable by Triad to Columbia/HCA, except that Triad shall have no
responsibility for payment of taxes on Columbia/HCA's income or for payment of
franchise taxes related to authorization of Columbia/HCA to conduct business in
any state. In lieu of paying any such taxes that may otherwise be due, Triad
may provide Columbia/HCA with a tax exemption certificate acceptable to the
taxing authorities. Triad shall be given prompt written notice of any tax
assessment against Columbia/HCA for which Triad is liable hereunder, and Triad
shall have the right, at its own expense, to contest any such assessment prior
to its payment by Columbia/HCA. In the event Triad exercises such right, it
shall indemnify and hold harmless Columbia/HCA from liability for all interest
and penalties relating to such contest. Triad shall control any such contest
and Columbia/HCA shall provide information and assistance in connection with
such contest to the extent reasonably requested by and at the expense of Triad.
15. Relationship of Parties. In performing the Services under this
-----------------------
Agreement, Columbia/HCA is acting as an independent contractor and not as an
agent or employee of Triad.
16. Limitation on Solicitation of Employees. Neither party shall
---------------------------------------
directly or indirectly approach, counsel or induce any employee of the other
party to leave his or her employment during the term of this Agreement without
the prior written consent of such other party.
17. Governing Law. This Agreement shall be deemed to be made in and
-------------
in all respects shall be interpreted, construed and governed by and in
accordance with the laws of the State of Tennessee without regard to the
conflict of law principles thereof.
18. Consent to Jurisdiction. Columbia/HCA and Triad each hereby
-----------------------
expressly (a) submits and consents in advance to the jurisdiction of any
Tennessee State Court sitting in Nashville, Tennessee or the United States
District Court for the Middle District of Tennessee with respect to any legal
proceedings arising out of or relating to this Agreement, (b) waives any
6
<PAGE>
objection which it may have based upon lack of personal jurisdiction, improper
venue or forum non conveniens, (c) agrees that all claims with respect to such
legal proceedings may be heard and determined in any Tennessee State Court
sitting in Nashville, Tennessee or the United States District Court for the
Middle District of Tennessee, (d) agrees not to commence any legal proceeding
relating to this Agreement other than in a Tennessee State Court sitting in
Nashville, Tennessee or the United States District Court for the Middle District
of Tennessee, and (e) agrees that a final judgment in any such legal proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
19. Waiver of Jury Trial. COLUMBIA/HCA AND TRIAD EACH HEREBY
--------------------
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS
AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE
EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (B) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS
OF THIS WAIVER, (C) EACH PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH PARTY
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 19.
20. Notices. All notices or other communications required or
-------
permitted under this Agreement shall be in writing and sufficient if sent by
registered or certified mail, postage prepaid, addressed as provided below; or
delivered personally, by private courier or fax, and followed by such mailing:
If to Columbia/HCA, to
Columbia/HCA Healthcare Corporation
One Park Plaza
Nashville, Tennessee 37203
Telecopy: (615) 344-2075
Attention: Robert A. Waterman, Esq.
Senior Vice President and General Counsel
If to Triad, to:
Triad Hospitals, Inc.
13455 Noel Road
20/th/ Floor
Dallas, Texas 75240
Telecopy: (972) 663-3945
7
<PAGE>
Attention: Mr. James D. Shelton
Chairman, President and Chief Executive Officer
In each case, with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
Telecopy: (212) 259-6333
Attention: Morton A. Pierce, Esq.
Any party may change the person and address to which notices or other
communications are to be sent to it by giving written notice of any such change
in the manner provided herein.
21. Entire Agreement; Amendment. This Agreement, together with the
---------------------------
exhibits hereto, sets forth the entire agreement and understanding of the
parties hereto in respect of the matters addressed herein, and supersedes all
prior agreements, arrangements and understandings relating to the subject matter
hereof. No party hereto has relied upon any oral or written statement,
representation, warranty, covenant, condition, understanding or agreement made
by any other party or any representative, agent or employee thereof, except for
those expressly set forth in this Agreement or in the exhibits or other
documents delivered pursuant hereto. This Agreement may be amended, modified,
superseded or supplemented only by an instrument in writing executed and
delivered by Columbia/HCA and Triad. Nothing herein is intended to diminish any
of the rights or obligations of either party pursuant to the Distribution
Agreement or pursuant to any of the Ancillary Agreements (as defined in the
Distribution Agreement).
22. No Third Party Beneficiaries. This Agreement is solely for the
----------------------------
benefit of the parties hereto, and should not be construed to confer upon any
other person any remedy, claim, liability, right of reimbursement, claim of
action or other right.
23. Headings. The section headings contained in this Agreement are
--------
inserted for convenience of reference only and shall not affect the meaning or
interpretation of this Agreement.
24. Waiver. No delay or omission by either party to exercise any
------
right or power under this Agreement or pursuant to applicable law shall impair
such right or power or be construed as a waiver thereof. A waiver by either
party of any of the covenants to be performed by the other or any breach shall
not be construed to be a waiver of any succeeding breach or of any other
covenant. All rights and remedies conferred under this Agreement or by any
other instrument or law shall be cumulative and may be exercised singularly or
concurrently. The failure by either party to enforce any term shall not be
deemed to be a waiver of future enforcement of that or any other term of this
Agreement.
25. Counterparts. This Agreement may be executed in any number of
------------
separate counterparts, each of which shall be deemed to be an original, but
which together shall constitute one and the same instrument.
8
<PAGE>
26. Severability. In the event that any provision hereof is
------------
prohibited or unenforceable in any jurisdiction, such provision shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Transitional Services
Agreement to be executed by their duly authorized representatives as of the day
and date first referenced above.
COLUMBIA/HCA HEALTHCARE
CORPORATION
By: /s/ Ronald Lee Grubbs, Jr.
-----------------------------
Name: Ronald Lee Grubbs, Jr.
Title: Vice President of Tax
TRIAD HOSPITALS, INC.
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President, General
Counsel and Secretary
9
<PAGE>
EXHIBIT A
TRANSITION SERVICES
-------------------
The Basic Services shall include, without limitation, the following:
(a) Treasury. Columbia/HCA will provide Triad with support in
--------
treasury management.
(b) Payroll. Columbia/HCA will provide Triad with historical
-------
information relating to payroll records, wage verification and miscellaneous tax
reporting for employees of the Triad Facilities and will provide such assistance
as Triad may request in connection with payroll processing.
(c) Accounting. Columbia/HCA will provide Triad with historical
----------
financial information and 1999 year-to-date information for each of the Triad
Facilities, including general ledger and operating reports, to the extent in the
possession of Columbia/HCA and not presently on file at the subject Triad
Facility. Columbia/HCA will provide Triad with support in accounting matters.
(d) Real Estate Project Management. Columbia/HCA will provide
------------------------------
Triad with support in construction design and management services, including
construction accounting. For a period not to extend past October 31,1999,
Columbia/HCA will pay invoices related to Triad construction projects which are
currently in progress on Triad's behalf, and Triad will reimburse Columbia/HCA
for any such amounts paid on Triad's behalf. Any such reimbursements will be
invoiced to Triad and paid by Triad in accordance with the provisions of Section
4 of the Agreement.
(e) Legal. Columbia/HCA will provide Triad with support in
-----
connection with legal matters, including pending and threatened litigation.
(f) Human Resources. Columbia/HCA will provide Triad with
---------------
support in connection with human resources matters.
(g) Sales and Marketing. Columbia/HCA will provide Triad with
-------------------
support in connection with sales and marketing matters.
(h) Quality Assurance and Accreditation Matters. Columbia/HCA
-------------------------------------------
will provide Triad with support in quality assurance and accreditation matters.
<PAGE>
(i) Early Out Collection Services. For a period not to extend
-----------------------------
past July 15, 1999, Columbia Patient Account Services, Inc., a Texas corporation
("CPAS"), will provide Triad with "early-out" collection services for collection
of third party insurance accounts that, at the 45th day after the date of the
bill, have an unpaid balance between $10 and $5,000, and patient due accounts
that, at the 25th day after the date of the bill, have an unpaid balance greater
than $10. Triad will pay to CPAS a fee equal to 2.7% of all amounts received by
CPAS, Triad or any Triad facilities on all such accounts placed for collection
with CPAS.
D-2
<PAGE>
EXHIBIT 10.5
COMPUTER AND DATA PROCESSING
SERVICES AGREEMENT
This COMPUTER AND DATA PROCESSING SERVICES AGREEMENT, dated as of May 11,
1999, (the "Effective Date") is by and between COLUMBIA INFORMATION SYSTEMS,
INC., a Tennessee corporation ("CIS") which is a wholly owned subsidiary of
Columbia/HCA Healthcare Corporation, a Delaware corporation ("Columbia/HCA"),
and TRIAD HOSPITALS, INC., a Delaware corporation (together with its successors
and permitted assigns, hereinafter sometimes referred to as "Customer").
W I T N E S S E T H:
WHEREAS, CIS is in the business of providing certain computer and data
processing services as more fully set forth herein; and
WHEREAS, Customer desires to purchase from CIS the services described in
this Agreement, and CIS is willing to provide such services to Customer, all on
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and obligations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are acknowledged, CIS and Customer agree as
follows:
1. Definitions. The following terms shall have the meanings set forth
-----------
below:
(a) APD or Adjusted Patient Days. An amount equal to a particular
----------------------------
hospital's patient days times the dividend of the total patient revenue divided
by inpatient revenue.
(b) Affiliate. CIS as well as those entities, businesses, facilities,
---------
and enterprises (however and in whatever manner conducted) that are controlled
by, controlling, or under common control with it, including, without limitation,
all parent corporations and their respective subsidiaries and affiliates, joint
ventures, partnerships, limited liability companies and partnerships, hospitals,
free-standing centers, home health agencies, surgery centers, physician
practices, syndications, medical laboratories, medical records processing
facilities, medical supply sellers, pharmacies, insurance providers, health care
providers, and managed care entities, together with any and all entities and
businesses to which CIS or any of the above described entities provide
management services, information processing services or purchasing services
(c) CIS Software. The software listed in Exhibit B hereto and
------------
identified as being owned by CIS, including Enhancements, upgrades and custom
development.
(d) Communication Lines. The telephone communication and diagnostic
-------------------
lines for data transmission with the Data Center and/or CIS, whether dedicated
or not.
(e) Consumer Price Index. The Medical component of the United States
---------------------
Consumer Price Index published by the United States Department of Labor, All
Cities Average (1986=100) or such other successor index the parties shall
designate.
(f) Customer Data. Any data owned or held in custody by Customer,
-------------
including without limitation, financial data, patient medical record data or
patient identification data used or
<PAGE>
transmitted to the Data Center by Customer in connection with its purchase of
the Services under this Agreement.
(g) Data Center. The CIS Data Center(s) located in Nashville,
-----------
Tennessee and/or any of CIS's Regional Data Centers containing computer
processing equipment and the Software used by CIS to provide the Services, or
such other facilities as CIS may establish from time to time.
(h) Equipment. The computer hardware located at the Facility or
---------
Facilities.
(i) Facility/Facilities. The hospitals and other healthcare providers
-------------------
owned by Customer and listed in Exhibit A hereto.
(j) Hospital Resource Guide. This term is defined in Section 5(a).
-----------------------
(k) Initial Term. The seven (7) year period commencing on the
------------
Effective Date.
(l) Koala System. The proprietary intranet network currently provided
------------
by CIS for use by affiliated facilities to obtain information relevant to day-
to-day operations.
(m) Monthly Processing Fees. The fees for monthly service under this
-----------------------
Agreement as more fully set forth in Section 2 and Exhibit B.
(n) Parties. Collectively the individual entities which execute this
-------
Agreement.
(o) Software. The computer software identified in Exhibit B hereto as
--------
either CIS Software or Third Party Software which is used by CIS in providing
the Services to Customer, including Enhancements, upgrades and custom
development.
(p) Services. The installation, support, training, maintenance, data
--------
processing and other services provided to Customer by CIS pursuant to this
Agreement, as set forth in Exhibit C hereto.
(q) Systems. The Equipment and Software functioning together,
-------
located at one or more Facilities.
(r) Third-Party Software. The software indicated in Exhibit B hereto
--------------------
as being licensed to CIS by a third-party provider.
(s) Wide Area Network. The proprietary wide area network currently
-----------------
provided by CIS for use by affiliated facilities to deliver CIS products and/or
services (for example, e-mail, host application access, file transmission, Koala
System access).
2. Services, Systems, Data, Payment.
--------------------------------
(a) CIS shall provide, and Customer shall purchase from CIS, the
Services and/or licenses to the Software described in the exhibits hereto, upon
the terms and subject to the conditions of this Agreement, for the benefit of
the Facility or Facilities.
(b) CIS shall designate certain coding and naming conventions for the
form of Customer Data and shall provide to Customer the coding requirements for
transmitting Customer Data to the Data Center and the treatment given to
different account and processing codes used by
<PAGE>
CIS. CIS reserves the right to make changes in operating procedures, coding and
naming conventions, hardware and network configurations and applications and
systems programming. CIS shall provide Customer with thirty (30) days notice of
such changes. Customer shall be responsible for, and bear the cost of, (i)
coding and transmitting Customer Data to the Data Center, (ii) supervising the
conversion of its financial data into a form that can be processed by CIS, (iii)
determining whether it has complied with applicable accounting practices, (iv)
determining whether it has complied with applicable state and federal
regulations governing financial reporting obligations, (v) verifying the
accuracy of Customer Data generated by it and/or CIS and (vi) maintaining
prudent internal controls of reports and Customer Data.
(c) If Customer requests that CIS correct or reprocess data files
because of erroneous input data or output records, CIS will use its reasonable
best efforts to perform such correction and reprocessing. If possible, Customer
shall request any correction or reprocessing within seventy-two (72) hours after
production of the reports. If correction or reprocessing is requested because
of an error attributable to CIS or the negligence of CIS, there shall be no
charge for such rerun, provided that the request for reprocessing is made within
seventy-two (72) hours after production of the erroneous report. In the event
that the error is attributable to Customer's erroneous input data or output
records, or Customer requests reprocessing after such seventy-two (72) hour
period, CIS will determine whether it can perform the reprocessing and, if it
can perform the reprocessing, will provide a cost estimate to Customer for such
reprocessing services. Following mutual agreement on the cost, CIS will perform
the reprocessing services. If the parties are unable to agree on the cost for
the reprocessing services, CIS shall not perform such services.
(d) Customer shall pay CIS on behalf of the Facilities for the
Services rendered and licenses granted in accordance with the terms and subject
to the conditions contained herein and in the Exhibits hereto. Prices are
subject to change as set forth herein and in the Exhibits hereto.
(e) In the event that Customer makes a written request for the
performance of on-site Services by CIS, Customer shall pay the reasonable and
customary travel expenses of CIS personnel performing such Services for
Customer, in accordance with CIS's standard business travel policies.
(f) Unless otherwise provided herein, payment is due within thirty
(30) days of the date of receipt of an invoice. Without limiting CIS's rights
hereunder, any amounts not paid within thirty (30) days of the due date shall be
subject to a late charge equal to the lesser of twelve percent (12%) per annum
or the maximum amount allowed by applicable law; provided, however, that no late
charge shall apply with respect to amounts reasonably disputed by Customer if
written notice of such dispute is given to CIS within fourteen (14) days of
receipt of invoice; provided, however, that the interest on any disputed charges
that are ultimately resolved against Customer shall accrue from the date payment
would have otherwise been due. Disputes under this Section will be resolved
pursuant to the procedure set forth in Section 12(f).
(g) Customer's Monthly Processing Fees are indicated in Exhibit B.
The Monthly Processing Fee is due and payable within thirty (30) days of receipt
of an invoice. Monthly Processing Fees shall be calculated as set forth in
Exhibit B.
(h) On each anniversary date of this Agreement, CIS shall review and,
if necessary, adjust the Monthly Processing Fees of the Customer for the prior
twelve months as follows:
<PAGE>
1) If, during the prior twelve month period, the actual total
system fees charged to Customer under this Agreement fall
below an amount equal to seventy-five percent (75%) of the
total system fees set forth in Exhibit E, CIS may charge
Customer the difference in fees actually charged and such
seventy five percent (75%) figure.
2) Added/Divested Facilities - The parties acknowledge that
Customer may add or divest Facilities from time to time
during the term of this Agreement. CIS shall provide
professional services in connection with added and divested
Facilities as described and for the fees set forth in
Exhibits C and D. For divested Facilities Customer's Monthly
Processing Fees shall be reduced beginning on the date of
such Facility's last use of the System. For added
facilities, Monthly Processing Fees shall be increased
beginning on the date of such Facility's first use of the
System.
(i) No more than once annually, CIS may increase any fees in this
Agreement or the Exhibits by an amount equal to the percentage increase in the
Consumer Price Index plus up to three percent (3%). In addition, CIS may at any
time pass through to Customer any fee increases actually charged to CIS for
Third Party Software.
(j) At each anniversary date of the Agreement, if the total fees paid
by Customer are more than one hundred and fifty percent (150%) of the fees paid
in the previous year, Customer shall be entitled to a credit on CIS's next
annual period fees equal to fifteen percent (15%) of such increase. For
purposes of this calculation, the first year shall be compared to the fees set
forth in Exhibit E.
3. New Services and Systems; Updates.
---------------------------------
(a) From time to time, CIS will offer new Services or Systems which
are offered to its own facilities to Customer, which Customer may purchase in
its discretion. Certain new Services and/or Systems may require Customer to pay
additional fees, purchase additional Equipment or Communications Lines or
license additional software.
(b) From time to time CIS may update the Software or provide Updates
received from the licensor for Third Party Software. As used herein, the term
"Update" means any fix, change or modification which affects the operating
performance or efficiency of the Software, but does not alter the basic
functions that it performs. At the request of CIS, Customer will discontinue
use of the then-current version of the Software and, within sixty (60) days of
its receipt of the updated version (including receipt of all documentation
relating thereto), substitute therefor the updated version of the Software in
accordance with the Hospital Resource Guide. In the event that Customer fails
to update the Software, CIS shall not be required to maintain or support such
Software.
(c) From time to time CIS may enhance the Software System or provide
Enhancements received by it for Third Party Software. As used herein, the term
"Enhancement" means any new feature or function which improves the operating
performance or efficiency of the Software and/or new Equipment or infrastructure
standards. At CIS's option, fees for Enhancements may be charged to Customer.
<PAGE>
(d) CIS may, in its sole discretion, migrate to a new System(s) which
shall be offered to Customer by CIS at a price to be determined by CIS at the
time of such offering. If the Customer elects not to purchase such System(s),
CIS shall continue to support the current system utilized by Customer at prices
to be determined by CIS. The Customer shall make such election within 60 days
after CIS provides an offer describing such System(s) and specifying the pricing
for same.
4. Software and Wide Area Network; Prohibited Uses.
-----------------------------------------------
(a) The use of the CIS Wide Area Network is expressly restricted to
accessing the Software, Customer Data and Services provided by CIS in the manner
described in user documentation and in CIS policy and standards manuals.
Customer acknowledges that the Wide Area Network provided by CIS to support
Customer's operation is proprietary. The Customer shall comply with the Hospital
Resource Guide, which describes the responsibilities and duties of CIS and the
Customer in respect of the Network. Customer shall not reverse engineer the
Wide Area Network in order to obtain access to proprietary data or for any other
purpose not specifically authorized herein.
Customer shall not perform any of the following activities or any other
activities not conforming to the stated use of the Wide Area Network and agrees
to provide reasonable notification to employees at the Facilities that they
shall not:
. Place any equipment on the Wide Area Network for the purpose of
recording CIS electronic communications or deciphering the content and
structure of CIS electronic communications;
. Access any piece or segment of the CIS Wide Area Network of computing
infrastructure via any telecommunications utility, for example,
without limitation, Telnet and TCP/IP, other than as specified in CIS
documentation and in a manner consistent with the documented access
policy and procedures for CIS Application Software and Services; or
. Take any other action which would have the effect of impeding or
prohibiting normal operation of the Wide Area Network.
In addition to the foregoing, Customer will obtain approval from CIS prior to
adding any additional equipment or connections to the Wide Area Network, which
approval will not be unreasonably withheld.
. Customer acknowledges and agrees that access to the CIS Wide Area
Network may be temporarily terminated at CIS's sole discretion (with
notice to Customer) under the following circumstances:
. Customer engages in unauthorized use of the Wide Area Network as
indicated in this Agreement;
. A Customer site generates a condition that interferes with the normal
operation of the Wide Area Network, for example, without limitation, a
hardware problem generating excessive network traffic or conflicting
IP addresses are added to the network; or
<PAGE>
. A non-Customer site generates a condition that interferes with the
normal operation of the Wide Area Network and a Customer site is taken
down as part of the process of identifying and remediating the
problem.
With respect to any event caused other than by a malicious act of Customer or by
the unauthorized use of the Wide Area Network, CIS will use its reasonable best
efforts to ensure that access to the Wide Area Network is restored in a timely
manner. With respect to any event caused by a malicious act or the unauthorized
use of the Wide Area Network, access will be restored when CIS has received
reasonable assurance from Customer that repeat acts or unauthorized use will not
occur. CIS will determine reasonable assurance in its sole discretion.
(b) Subject to the terms in each of the licenses for Third-Party
Software granted to CIS and as set forth below, CIS grants to Customer, for the
Initial Term and any renewal term of this Agreement, a non-transferable, non-
exclusive license to use the Software as contemplated in this Agreement. In
this context, "use" includes use by Customer and medical service providers
accessing directly or remotely the Software in the manner permitted by such
Software and CIS policy and standards.
(c) Customer shall have no rights to the Software or to information
obtained from the Wide Area Network or the Koala System not expressly granted
under this Agreement. Without limiting the generality of the foregoing,
Customer shall have no right to (i) alter the Software, (ii) create derivative
works, (iii) distribute or sublicense the Software copies to third parties, (iv)
incorporate additional software into the Software at the operating system or any
other level, (v) incorporate the Software into any publicly available data base
or (vi) reproduce the Software without CIS's prior written consent, which
consent will not be unreasonably withheld.
(d) Nothing herein shall be deemed to grant to Customer any ownership
interest in the Software.
(e) Customer shall not use the Software for any purpose other than as
specifically permitted by this Agreement. Customer shall not alter or delete
any copyright or other proprietary notices in the Software.
(f) Customer shall have the right to copy documentation to support
use of the Software.
5. Equipment, Installation.
-----------------------
(a) If Customer purchases and installs Equipment and Communication
Lines (other than Equipment and Communication Lines currently installed at each
Facility as of the date hereof), then Customer shall comply with the parameters
set forth below and the installation guidelines in the Hospital Resource
Guidelines distributed by CIS from time to time (the "Hospital Resource Guide").
The Hospital Resource Guide describes the responsibilities and duties of CIS and
Customer with respect to Communication Lines. Selection of the most appropriate
installation site for any additional Equipment and Communication Lines within
the Facility is Customer's responsibility. At Customer's request, CIS will
assist Customer in identifying installation sites, provided that in giving such
assistance, CIS makes no representation that any installation site is the
appropriate site for Equipment. Proper installation may require the removal of
walls or other alterations to the premises. Customer shall be responsible for
any costs incurred in modifying the premises to accommodate the installation of
any Equipment or Communication Lines. Any damage
<PAGE>
to Customer's Equipment and Software resulting from inadequate or incomplete
site preparation may not be covered by applicable maintenance agreements.
(b) With respect to any purchases and installations of new Equipment
and Communication Lines, Customer shall perform the following to ensure adequate
site preparation:
(1) When required by CIS, provide the CIS representative with
appropriate drawings indicating:
i. the location and lay-out of the installation site;
ii. the location of existing and proposed site wiring
(power and communications) and the paths and lengths thereof; and
iii. the location of other equipment capable of generating
electrical noise, electromagnetic interference, heat, etc.;
(2) Make alterations to the premises necessary to meet wiring
and other site requirements;
(3) Provide and install all communication cables, wall jacks,
special connectors and associated hardware;
(4) Install all necessary power distribution boxes, conduits,
grounds, lightening protection and associated hardware;
(5) Install all required auxiliary power protection and air
conditioning;
(6) Provide required storage or service areas;
(7) Ensure the environmental requirements of the Equipment are
met;
(8) Provide floor coverings and environmental systems that
control static electricity build-up and discharge; and
(9) Comply with all applicable federal, state and municipal
laws, codes and regulations (including, without limitation,
electrical, building, safety and health laws).
Clauses (1) through (9) above set forth only the minimum standards,
are not intended to be comprehensive and do not modify the obligations of
Customer described in the Hospital Resource Guide or the obligation of Customer
to follow the instructions and recommendations of CIS relating to the use of the
Software and the Systems.
6. Maintenance and Support Services.
--------------------------------
(a) CIS shall provide maintenance services for the Equipment through
CIS's third-party maintenance providers and the CIS Depot Maintenance as set
forth in Exhibit B. Customer shall have the right to use an alternative
Equipment maintenance provider, provided that at least sixty (60) days' prior
written notice is given to CIS and CIS, in its reasonable discretion, approves
such proposed alternative Equipment maintenance provider. In such cases,
responsibility
<PAGE>
for vendor performance and system availability delivered via this Equipment will
transfer solely to Customer.
(b) Subject to availability, CIS will provide additional on-site
installation support to Customer at CIS's hourly rates then in effect. In
exchange for the software maintenance fees set forth in Exhibit B hereto, CIS
will provide customer assistance through its customer support center in a manner
consistent with that provided to a Facility prior to the Distribution Date.
(c) CIS shall not be required to provide maintenance or support
Services to any portion of the Software that has been altered by Customer
(without the prior written approval of CIS) if such alteration adversely affects
CIS's ability to provide such Services, as determined by CIS in its reasonable
discretion.
(d) Customer may utilize other vendors of computer systems requiring
interface with the Systems provided hereunder and, upon prior written notice to
and approval by CIS (which approval will not be unreasonably withheld), CIS
shall cooperate with such vendors or Customer in the development and maintenance
of necessary interfaces with the Systems, provided that nothing herein shall
require CIS to provide programming support in respect of such interfaces. CIS
will work with a third party vendor selected by Customer to supply, implement
and test any CIS existing interface transactions on a time and materials basis.
CIS will also adapt existing interfaces to add existing accessible data elements
to transactions on a time and materials basis. CIS will review data elements
that do not exist on CIS systems for potential additions on a time and materials
basis but retains the right to reject such additions in its sole discretion.
All costs and expenses incurred by CIS pursuant to this paragraph shall be
reimbursed by Customer at the then-current CIS billing rates for time and
materials. Except as provided in this paragraph, CIS shall have no obligation
to provide Services for systems provided by a person other than CIS or a vendor
preferred by CIS. All such Services shall be Customer's responsibility and at
Customer's cost.
(e) The provision of Services may result in the disclosure to CIS of
third-party confidential or proprietary information in possession of Customer
and in which CIS has no rights. Customer shall indemnify and hold harmless CIS
from the failure of Customer to obtain any third-party consents that may be
required so that CIS may provide the Services.
(f) In the event Customer requires services beyond those provided in
this Agreement, or as a result of Customer's use of Software or Systems other
than in conformity with applicable specifications, then to the extent that CIS
agrees to provide additional services, the services shall be provided at the
then-current CIS billing rates for time and materials.
(g) CIS agrees to make its Wide Area Network available to Customer
for access and use only at Facilities listed in Exhibit A hereto as amended from
time to time as acquired by Customer. CIS agrees to make the Information Systems
portion of Koala System available to Customer for access by Facilities in a
manner consistent with the use prior to the Distribution Date. Customer agrees
that any information obtained by a Facility from the Koala System, to the extent
such information is not otherwise publicly available, will not be disclosed to
third parties or used other than as required in the operation of the Facility.
(h) CIS shall maintain Disaster Recovery Plans for critical systems
and a names disaster recovery administrator to manage the plan. The purpose of
the disaster recovery plans will be to provide a cost-effective means to reduce
the amount of time required to restore system functionality in the event of a
catastrophic failure at a single data center versus completely
<PAGE>
rebuilding the computer infrastructure at a single data center. These plans will
be periodically tested and the results made available to Customer.
7. Customer Linkage. The CIS Director of Information Systems ("DIS")
-----------------
will continue to support the Customer locally and provide account management in
a manner consistent with that used to support facilities owned by CIS's
corporate parent. The DIS and Customer will conduct a joint effort to define
overall Customer objectives and develop an information technology plan whereby
CIS can assist in meeting these objectives. This process will allow for long-
range planning and budgeting for system growth, system requirements and resource
planning to meet stated objectives. Customer shall be entitled to make a one-
time designation of either its CEO or COO to participate in the Information
Systems Steering Committee (ISSC) and shall be entitled to designate one
Facility representative to participate in each of the User Review Groups (URGs)
designed to assist CIS in identifying and ranking system updates and
enhancements. There is no fee involved in participating in the URGs. Expenses
involved in participating in the URGs shall be borne by Customer.
CIS and Customer have defined non-binding Service Level Objectives ("SLOs")
to serve as a benchmark for CIS and Customer to periodically assess together the
functioning and satisfaction level derived from the outsourcing relationship.
SLOs are defined in Exhibit F. It is understood that the definition of the SLOs
may be changed over time as mutually agreed by the parties. Customer and CIS
agree to comply with their respective responsibilities as set forth in Exhibit
G.
8. Confidentiality; Proprietary Rights.
-----------------------------------
(a) Data and materials of Customer stored by CIS shall remain the
property of Customer. CIS shall provide such data and materials to Customer
within thirty (30) days of the receipt of Customer's request for such data or
materials. Notwithstanding the foregoing, CIS shall maintain copies of Customer
Data for such periods of time as are required under this Agreement and for such
other periods of time as CIS, in its sole discretion, shall deem to be
advisable.
(b) CIS warrants that it will retain all information belonging to
Customer in confidence and will neither use it nor disclose it to anyone without
the prior written consent of Customer. Notwithstanding the foregoing, to the
extent that CIS is requested (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar
process) to disclose any information required to be kept confidential pursuant
to this Section 8, CIS agrees to maintain the confidentiality of such
information and to provide prompt notice to Customer, so that Customer may seek
an appropriate protective order or waive compliance by CIS with this Section 8.
If, in the absence of a protective order or the receipt of a waiver by Customer
hereunder, CIS is, nonetheless, in the reasonable written opinion of counsel,
legally required to disclose such information, CIS may disclose such
information, and CIS shall not be liable pursuant to this Section 8; provided,
that (i) CIS shall furnish only that portion of the information which it is
advised by counsel to disclose and (ii) CIS shall exercise its reasonable
efforts to obtain assurance that confidential treatment will be accorded to the
disclosed portion of the information. Moreover, nothing in this Agreement shall
prevent CIS from disclosing confidential information in any proceeding in which
it is in an adversarial position to Customer.
(c) CIS will provide, and Customer agrees to comply with, reasonable
security measures and procedures designed to (i) limit access to the Software
and Customer Data to authorized personnel and (ii) minimize the possibility of
unauthorized access. CIS reserves the right to issue and change security
procedures from time to time with notice to Customer, including
<PAGE>
passwords and user identification numbers, which may require acquisition and
installation of additional applications, tools and/or equipment at Customer
cost. Customer shall be responsible for safeguarding and controlling the use of
passwords and user identification numbers assigned by CIS.
(d) During the term of this Agreement and thereafter, Customer shall
keep confidential all information pertaining to the use or operation of the
Software, disclosing such information only to those persons who need to have
such information in order to utilize the Systems. Each party shall immediately
inform the other of any suit or action instituted against it based upon a claim
that the Software or any portion thereof infringes a patent, copyright, trade
secret or other proprietary right of a third party.
(e) The Software may include proprietary and copyrighted data or
programs of third parties. Such data and programs are supplied to Customer
pursuant to express authority of such third parties, subject to (i) the terms
and conditions of the rights granted to CIS and (ii) CIS obtaining required
consents from licensors of Third-Party Software, and may be subject to
revocation. In the event of revocation, CIS shall use its reasonable best
efforts to provide software with similar functionality as soon as reasonably
possible, it being understood that if additional cost is incurred, such
additional costs shall be paid by Customer. Neither Customer, Facility, CIS nor
such licensor shall be liable to the other for damages, indirect, consequential
or special, that may result from the use of the Software by Customer or any
employee or agent thereof.
9. Warranties. Subject to the limitations of this section and Section 10
----------
hereof and subject to such limitations as are expressly provided elsewhere in
this Agreement, CIS warrants that the Services provided by it hereunder shall be
performed, in all material respects, in a professional, timely and workmanlike
manner and shall be as described in this Agreement and the exhibits hereto. In
addition, CIS warrants that, to the best of its knowledge, it has the legal
right to license or sublicense to Customer the Software and to perform the
Services. CIS makes no warranties of any kind in connection with the
Communication Lines or services provided by any telephone company. CIS makes no
warranties of any kind with respect to the Equipment. Customer must look solely
to the manufacturer of such Equipment for any warranties relating thereto.
(a) Ownership and Quiet Enjoyment. CIS hereby warrants and represents
-----------------------------
to Customer that CIS owns all right, title and interest in and to the Software,
Documentation and other proprietary material provided under this Agreement, or
otherwise has the right to grant to Customer the license to use same as set
forth in this Agreement without violating or infringing upon any rights of any
third party and without breach of any third-party license to CIS, and to the
knowledge of CIS there is currently no actual or threatened suit by any third
party based on an alleged violation, infringement or breach by CIS. CIS shall
not interfere with use of the Software and the Documentation in accordance with
this Agreement shall not be disturbed or interfered with during the continuation
of the license granted hereunder.
(b) Software Operation. The Software shall perform in accordance with
------------------
the Documentation; provided, however, if a Customer makes an unauthorized
modification to the Software, then this warranty shall terminate.
(c) Performance Standards. Each of CIS's employees, agents or
---------------------
representatives assigned to perform services hereunder shall have the proper
skill, training and background so as to be able to perform in a competent and
professional manner and all work will be so performed in a manner compatible
with Customer's business operations at its premises.
<PAGE>
(d) Virus. CIS warrants and represents that the Software provided
-----
under this Agreement, at the time it is supplied, is completely free of any
virus, rouge program, time bomb, turn off instruction, or any other device
however characterized that is potentially damaging to the materials provided,
other programs, data, computer hardware, computer software, telecommunications
equipment or any other material or device in any manner whatsoever.
(e) Alpha/Beta Site. CIS warrants and represents that Customer is not
---------------
an alpha or a beta site for the Software and will not be for any new services
unless the consent of Customer's Chief Information Officer or Chief Executive
Officer is obtained.
(f) Regulatory Updates. CIS shall use commercially reasonable efforts
------------------
to develop modifications to the System to comply with changes in United States
federal regulatory requirements. Such federal regulatory modifications will be
developed at no charge so long as Customer is covered under the terms of this
Agreement. At Customer's request, CIS shall use all commercially reasonable
efforts to modify the System to comply with state and local regulatory
modifications on a "Fair Share Basis". As used herein "Fair Share Basis" means
charges will be incurred on a time and material basis with costs divided by the
total number of CIS Customers affected by a given modification).
THE FOREGOING WARRANTIES ARE THE EXCLUSIVE WARRANTIES UNDER THIS AGREEMENT
AND ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS, IMPLIED OR STATUTORY,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. CUSTOMER EXPRESSLY WAIVES AND SHALL NOT MAKE ANY CLAIM OF
ANY KIND AGAINST CIS ARISING OUT OF THE FAILURE OF PERFORMANCE OF ANY PIECE OF
EQUIPMENT, OF CIS SOFTWARE OR THIRD-PARTY SOFTWARE, OR OF THE COMMUNICATION
LINES, OR OUT OF THE BREACH OF ANY WARRANTY PROVIDED BY THE MANUFACTURER OF SAID
EQUIPMENT OR BY THE TELEPHONE COMPANY. CIS SHALL PASS THROUGH TO CUSTOMER THE
BENEFITS OF ANY EXPRESS WARRANTIES RELATING TO THE EQUIPMENT, AND SHALL ASSIST
CUSTOMER WITH ANY SUCH WARRANTY CLAIMS.
CIS makes no warranty or guaranty, and hereby expressly disclaims all
warranties, expressed or implied, as to the Equipment and/or Systems at the
Facilities being Year 2000 compliant. CIS, however, acknowledges the need for
all Software to be Year 2000 compliant and is currently making efforts in a
professional, timely and workmanlike manner that it deems reasonable to address
the Year 2000 compliance issues with the Software. Addressing specific Year 2000
compliance issues may result in software product replacement, or termination of
the software product, service and support per the provisions of this Agreement.
How to address Year 2000 issues will be determined by CIS in its sole
discretion.
CUSTOMER ACKNOWLEDGES THAT IT IS CUSTOMER'S SOLE OBLIGATION TO ENSURE THAT
ALL EQUIPMENT AND SYSTEMS AT THE FACILITIES USED TO PROCESS CUSTOMER DATA IS
YEAR 2000 COMPLIANT AND THAT TO THE EXTENT ANY ASSISTANCE IS PROVIDED BY CIS TO
OBTAIN YEAR 2000 COMPLIANCE, SUCH SERVICE IS PROVIDED WITHOUT ANY WARRANTY
WHATSOEVER. CUSTOMER AGREES TO RELEASE CIS FROM ANY CLAIMS OR ACTIONS IT MAY
HAVE NOW OR IN THE FUTURE AGAINST CIS RELATING TO YEAR 2000 COMPLIANCE WITH
RESPECT TO SUCH EQUIPMENT OR SYSTEMS OR ANY COMPUTER SOFTWARE OR HARDWARE USED
BY CUSTOMER, AND CUSTOMER AGREES TO DEFEND,
<PAGE>
INDEMNIFY AND HOLD CIS AND ITS AFFILIATES HARMLESS FROM ANY CLAIM OR ACTION
BASED ON ANY INJURY OR DAMAGES SUFFERED BY CUSTOMER OR ANY THIRD PARTY AS A
RESULT OF ANY COMPUTER SOFTWARE OR HARDWARE USED BY CUSTOMER NOT BEING YEAR 2000
COMPLIANT. A product is Year 2000 compliant/ready when it can accurately and
unambiguously process (including, without limitation, compare, calculate,
manipulate, sequence, display and exchange data with other systems) data
containing time and/or dates prior to, at and after the Year 2000 without error
or interruption, and the product operates properly and in conformance with
applicable specifications, without any detrimental effect on patient care,
continuously, before, at and after the Year 2000.
10. Limitation of Liability.
-----------------------
(a) Neither party shall be liable to the other for any failure or
delay in the performance of its obligations under this Agreement if such failure
or delay arises out of a cause beyond the reasonable control of such party.
Such causes may include, without limitation, acts of God, a public enemy, civil
or military authority, fires or other catastrophes, strikes, delays in
transportation, riots or war. Failure to comply with the terms of this
Agreement or the Hospital Resource Guide may result in serious damage to
Customer's Equipment, Software and Facilities. CIS shall have no liability for
damage resulting from Customer's failure to comply with the terms of this
Agreement, any Hospital Resource Guide or any other instructions provided by CIS
to Customer. Should the Software be made the subject of any claim alleging
infringement of any patent, copyright, trade secret, trademark or other
intellectual property rights of any third person, CIS's sole liability shall be,
at its option, to procure the right to use the Software free of such liability
or to replace or modify the Software to make it non-infringing while maintaining
equivalent functionality. No person providing data or programs in the Software
shall be deemed thereby to be engaging in the practice of medicine or dispensing
medical services.
IN THE EVENT OF DELAYS, ERRORS OR OMISSIONS IN PROCESSING OR IN PROVIDING
OR FAILING TO PROVIDE ANY OTHER SERVICES PROVIDED BY CIS HEREUNDER, CIS SHALL
USE ITS REASONABLE BEST EFFORTS TO CORRECT SUCH ERRORS OR OMISSIONS, TO MAKE
SUCH SERVICES AVAILABLE AND/OR RESUME PERFORMING SUCH SERVICES AS PROMPTLY AS
REASONABLY PRACTICABLE AND AT NO ADDITIONAL CHARGE, PROVIDED THAT NOTICE OF SUCH
ERROR OR OMISSION IS GIVEN WITHIN SEVENTY TWO (72) HOURS AFTER PRODUCTION OF ANY
REPORT. OTHERWISE, CIS SHALL HAVE NO OTHER OBLIGATIONS OR LIABILITY FOR SUCH
ERRORS, DELAYS OR OMISSIONS. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER FOR INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL
DAMAGES OF ANY KIND ARISING OUT OF THE PERFORMANCE OR BREACH OF THIS AGREEMENT,
INCLUDING, WITHOUT LIMITATION, LOST PROFITS, LOSS OF DATA OR BUSINESS
INTERRUPTION. FURTHERMORE, EACH PARTY'S LIABILITY TO THE OTHER FOR ANY OTHER
DAMAGES CAUSED BY OR RESULTING FROM THE PERFORMANCE OR BREACH OF THIS AGREEMENT,
WHETHER IN TORT, CONTRACT OR OTHERWISE, SHALL BE LIMITED IN EACH CASE TO $50,000
PER FACILITY AND $100,000 IN THE AGGREGATE, WHICH SUMS SHALL BE APPLIED AS A
CREDIT AGAINST FEES.
(b) Notwithstanding the foregoing, the limitations of liability shall
not apply to (i) the indemnification obligations set forth in this Section 10 or
(ii) breach of the confidentiality provisions set forth in Section 8 hereof.
<PAGE>
(c) Customer shall indemnify and hold harmless CIS from and against
any loss, damage or liabilities (including, without limitation, attorneys' fees)
resulting from claims, actions or lawsuits ("Losses") asserted by or on behalf
of third parties or which result from governmental action or are otherwise
asserted against CIS only to the extent that such Losses are determined by a
judgment of a court that is binding, final and not subject to review on appeal
to have resulted primarily from Customer's fraud, willful misconduct, negligence
or breach of the confidentiality provisions set forth in Section 8 hereof. CIS
will indemnify and hold harmless Customer from and against any Losses asserted
by or on behalf of third parties or which result from governmental action or are
otherwise asserted against Customer only to the extent that such Losses are
determined by a judgment of a court that is binding, final and not subject to
review on appeal to have resulted primarily from CIS's fraud, willful
misconduct, negligence or breach of the confidentiality provisions set forth in
Section 8 hereof.
11. Term; Termination; Breach.
-------------------------
(a) This Agreement shall become effective as of the Effective Date
and shall continue during the Initial Term, unless earlier terminated pursuant
to the provisions of this Section 11, in which event this Agreement shall
terminate upon the effective date of termination, as described in paragraph (b)
below.
(b) This Agreement, and the Services and Systems provided hereunder,
may be terminated prior to the expiration of the Initial Term only as follows:
(1) with cause (as described in paragraph (c) below), by the
giving of written notice by either party, in which event such
termination shall be effective sixty (60) days after the giving of
such notice; or
(2) in the event either party files a proceeding, or has an
order for relief entered with respect to it, under any federal or
state bankruptcy laws now or hereafter in effect, by the giving of
written notice by the other party, in which event such termination
shall be effective sixty (60) days after the giving of such notice.
(c) In the event of a breach of any obligation or covenant under this
Agreement by Customer or CIS, other than the obligation to pay money (other than
payments disputed by Customer or CIS in good faith), the party not in breach may
give the party in breach written notice of the specifics of the breach and the
party in breach shall have thirty (30) days (the "Cure Period") in which to cure
such breach or cause the breach to be cured. If the breach is not cured, or
waived by the non-breaching party, within the Cure Period, then the non-
breaching party shall be entitled to pursue any remedies it may have by reason
of such breach. The non-breaching party's remedy with respect to any breach
which is not cured or waived within the Cure Period shall include, without
limitation, terminating this Agreement with cause or commencing legal action
against the other party for damages related to such breach. Failure to
terminate this Agreement shall not serve to waive any breach hereof. If either
party commences legal action alleging any breach of this Agreement, the non-
prevailing party shall pay all costs and reasonable attorneys' fees incurred by
the prevailing party in connection therewith.
(d) This Agreement shall automatically renew for successive
additional twelve (12) month terms, unless Customer notifies CIS of its
intention not to renew at least one hundred and eighty (180) days prior to the
expiration of the Initial Term or any renewal term or unless CIS notifies
Customer of its intention not to renew at least twelve (12) months prior to the
expiration of
<PAGE>
the Initial Term or any renewal term. Such renewals shall be for the fees and
prices then in effect for CIS's services or such other amounts as the parties
may negotiate, but in no event less than the total fees charged by CIS to
Customer during the preceding twelve (12) months. If Customer elects not to
continue receiving services, Customer shall specify in writing within thirty
(30) days thereafter, the period of time Customer estimates will be necessary to
complete the de-installation of the Services and Systems (such period not to
extend beyond eighteen (18) months after the expiration of the Initial Term or
the then current term). For purposes of this Section 11, the period commencing
after the expiration of the Initial Term or any renewal term and ending on the
date determined above shall be the "Wind-Down Period." If Customer fails to
specify the Wind-Down Period as provided herein, the Wind-Down Period shall be
eighteen (18) months, unless otherwise agreed.
(e) During the Wind-Down Period, the parties will establish and
implement a mutually acceptable de-installation plan, having due regard for the
cost and quantity of Services provided by CIS during the Wind-Down Period.
During the Wind-Down Period, the remaining provisions of this Agreement shall
continue in effect, except as follows:
(i) CIS shall not be required to offer any Services or
Systems to Customer beyond those already purchased by Customer at
expiration of the Initial Term or any renewal term;
(ii) During any remaining portion of the Initial Term or
any renewal term, fees shall be charged as stated in this
Agreement, thereafter, all fees and other charges shall be
increased automatically by 25%; and
(iii) During the Wind-Down Period specified by Customer,
Customer shall also pay the greater of its actual monthly fees
incurred or a Minimum Monthly Processing Fees equal to one-
twelfth of seventy-five percent (75%) of the prior year's total
fees.
(f) In the event that this Agreement is terminated by Customer
without cause before the end of the Initial Term, Customer shall pay to CIS a
Termination Fee equal to the first month's total bill under the terms of this
Agreement, multiplied by the number of months remaining in the Initial Term.
(g) Following termination of this Agreement and upon CIS's request,
Customer shall deliver to CIS all Software and related documentation (including
copies thereof) or, at CIS's option, shall deliver to CIS a sworn statement
certifying that all Software and related documentation have been destroyed.
12. Miscellaneous
-------------
(a) Assignment. Except as set forth herein, neither this Agreement,
----------
nor any of the rights, licenses or duties set forth herein, may be assigned by
Customer without the prior written consent of CIS. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by the parties hereto
and their respective successors and permitted assigns.
(b) Access to Books and Records. Upon written request of the
---------------------------
Secretary of Health and Human Services or the Comptroller General or any of
their duly authorized representatives, CIS shall make available to the
requesting party those contracts, books, documents and records necessary to
verify the nature and extent of the cost of providing its services. CIS shall
<PAGE>
cause such materials to be available for inspection for at least four (4) years
after the rendering of such Services and Systems. If CIS carries out any of the
duties of this Agreement with a value of $10,000 or more over a twelve (12)
month period through a subcontract with a related individual organization, CIS
shall include this requirement in all such subcontracts. The parties agree that
any attorney-client, accountant/client or any other legal privilege shall not be
deemed waived by virtue of the provisions of this Section 12.
(c) Taxes. The prices and amounts specified to be payable by Customer
-----
hereunder do not, unless otherwise noted, include any sales, use, excise, value
added, utility or other similar tax or charge which may be or hereafter become
applicable to the Services and Systems provided hereunder. Consequently, in
addition to such prices and amounts, the amount of any such taxes or charges
which may be or hereafter become applicable shall also be payable by Customer to
CIS, except that Customer shall have no responsibility for payment of taxes on
CIS's income or for payment of franchise taxes related to authorization of CIS
to conduct business in any state. In lieu of paying any such taxes that may
otherwise be due, Customer may provide CIS with a tax exemption certificate
acceptable to the taxing authorities. Customer shall be given prompt written
notice of any tax assessment against CIS for which Customer is liable hereunder,
and Customer shall have the right, at its own expense, to contest any such
assessment prior to its payment by CIS. In the event Customer exercises such
right, it shall indemnify and hold harmless CIS from liability for all interest
and penalties relating to such contest. Customer shall control any such contest
and CIS shall provide information and assistance in connection with such contest
to the extent reasonably requested by and at the expense of Customer.
(d) Divestiture of Facility. In the event that, during the term of
-----------------------
this Agreement, Customer divests any Facility receiving any Systems or Services
hereunder, then in such event, such Facility's rights and obligations under this
Agreement may be assigned to the purchaser of such Facility, provided that:
(1) The purchaser assumes in writing the obligations of Customer
hereunder with respect to such Facility; and
(2) No such assignment shall relieve Customer of its obligations
hereunder in respect of such Facility.
(3) In lieu of assigning this Agreement, CIS, Customer and the
purchaser may agree that CIS and the purchaser shall execute a new agreement for
the provision of Services and Systems, at which time this Agreement shall
terminate in respect to such Divested Facility.
(4) Any legal or other expenses reasonably incurred by CIS in
connection with actions taken in relation to Customer's divestiture of a
Facility shall be paid by Customer.
(e) Hiring. During the term of this Agreement neither party shall
------
recruit, hire, offer employment to or refer for employment any of the agents or
employees of the other party, without such party's prior written permission.
(f) Disputes. In the event that a dispute arises between CIS and
--------
Customer which cannot be resolved in the normal course, the following dispute
resolution procedure shall be followed: (i) within ten (10) business days of a
written request by either party, that Facility's chief information officer (or
equivalent) and CIS' Director of Information Services shall meet and resolve the
issue; if these parties cannot resolve the issue within ten (10) business days
of the meeting, then
<PAGE>
(ii) the issue shall be submitted to Customer's CFO or designee and CIS' Vice
President for Client Services; if these parties cannot resolve the issue within
fifteen (15) business days of submission to them, then (iii) the issue shall be
submitted to Customer's CEO and CIS's President for resolution. If, after
fifteen (15) business days, Customer's CEO and CIS's President cannot resolve
the matter, the parties may seek whatever other remedies are available.
(g) Governing Law. This Agreement shall be governed by, and construed
-------------
in accordance with, the laws of the State of Tennessee without regard to its
conflict of laws provisions. Any dispute hereunder shall be resolved in the
state or federal courts having jurisdiction located in Nashville, Tennessee.
CIS and Customer each hereby expressly submits and consents in advance the
jurisdiction of the United States District Court for the Middle District of
Tennessee and each hereby waives any objection which it may have based upon lack
of personal jurisdiction, improper venue or forum non conveniens.
13. Notices. All notices or other communications required or
-------
permitted under this Agreement shall be in writing and sufficient if sent by
nationally recognized overnight courier (for next business day delivery),
facsimile transfer device or certified mail, return receipt requested, to CIS or
Customer at the following addresses:
Columbia Information Systems, Inc.
2555 Park Plaza
P. O. Box 270
Nashville, Tennessee 37202
Facsimile: (615) 344-6777
ATTN: Data Center Contract Administrator
<PAGE>
and
Triad Hospitals, Inc.
13445 Noel Road, 20th Floor
Dallas, Texas 75240
Facsimile: (972) 663-3945
ATTN: Mr. James D. Shelton
Chairman, President and Chief Executive Officer
Any party may change the person and address to which notices or other
communications are to be sent to it by giving written notice of any such change
in the manner provided herein.
14. Entire Agreement; Amendment. This Agreement, together with the
---------------------------
exhibits hereto, sets forth the entire agreement and understanding of the
parties hereto in respect of the transactions contemplated hereby, and
supersedes all prior agreements, arrangements and understandings relating to the
subject matter hereof. No party hereto has relied upon any oral or written
statement, representation, warranty, covenant, condition, understanding or
agreement made by any other party or any representative, agent or employee
thereof, except for those expressly set forth in this Agreement or in the
exhibits or other documents delivered pursuant hereto. This Agreement may be
amended, modified, superseded or supplemented only by an instrument in writing
executed and delivered by CIS and Customer.
15. Headings. The section headings contained in this Agreement are
--------
inserted for convenience of reference only and shall not affect the meaning or
interpretation of this Agreement.
16. Rights Cumulative; Waiver. All rights and remedies conferred under
-------------------------
this Agreement or by any other instrument or law shall be cumulative and may be
exercised singularly or concurrently. The failure by either party to enforce
any term shall not be deemed to be a waiver of future enforcement of that or any
other term of this Agreement.
17. Counterparts. This Agreement may be executed in any number of
------------
separate counterparts, each of which shall be deemed to constitute an original,
but which together shall constitute one and the same instrument.
18. Severability. In the event that any provision hereof is prohibited or
------------
unenforceable in any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or unenforceability of such provision in any other
jurisdiction.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Computer and Data
Processing Transition Services Agreement to be executed by their duly authorized
representatives as of the day and date first referenced above.
COLUMBIA INFORMATION SYSTEMS, INC.
By: /s/ Ronald Lee Grubbs, Jr.
-----------------------------
Name: Ronald Lee Grubbs, Jr.
Title: Vice President of Tax
TRIAD HOSPITALS, INC.
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President, General Counsel and Secretary
<PAGE>
EXHIBIT 10.6
AGREEMENT TO SHARE TELECOMMUNICATIONS SERVICES
AGREEMENT TO SHARE TELECOMMUNICATIONS SERVICES, dated as of May 11,
1999, by and between COLUMBIA INFORMATION SERVICES, INC., a Tennessee
corporation ("CIS"), which is a wholly-owned subsidiary of Columbia/HCA
Healthcare Corporation, a Delaware corporation ("Columbia/HCA") and TRIAD
HOSPITALS, INC., a Delaware corporation ("Triad" or "User").
W I T N E S S E T H:
--------------------
WHEREAS, Columbia/HCA has determined to distribute to its stockholders, on
a pro rata basis, all of the issued and outstanding shares of common stock of
Triad owned by Columbia/HCA (the "Distribution"), all as set forth in that
certain Distribution Agreement by and among Columbia/HCA, Triad and LifePoint
Hospitals, Inc., a Delaware corporation ("LifePoint") dated as of May 11, 1999
(the "Distribution Agreement"); and
WHEREAS, CIS has entered into an arrangement with AT&T Corp. ("AT&T")
under which CIS purchases Virtual Telecommunications Network Services ("VTNS"),
as that term is defined in Tariff F.C.C. No. 12, as defined below (the "VTNS
Agreement"); and
WHEREAS, under the VTNS Agreement, CIS may designate unaffiliated entities
as authorized users of VTNS on a shared-use basis at the rates and charges set
forth in Tariff F.C.C. No. 12; and
WHEREAS, CIS desires to designate User as an authorized user under the
VTNS Agreement at all of User's locations identified in Exhibit A hereto (the
"Locations"), and User desires to be so designated, all on the terms and
conditions set forth herein; and
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and obligations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are acknowledged, CIS and User agree as
follows:
1. Definitions.
-----------
(a) Unless otherwise defined in this Agreement, all terms used herein shall
have the meanings ascribed to them in Tariff F.C.C. No. 12.
(b) "Tariff F.C.C. No. 12" means the General Regulations and Option 162 of
AT&T's Tariff F.C.C. No. 12. A copy of the current version of Option 162 is
attached hereto as Exhibit B. CIS will make a copy of the General Regulations
available to User on request.
(c) "Annual Commitment" for each Contract Year shall have the meaning set forth
in Section 4(b) below.
1
<PAGE>
(d) "Contract Year" means a twelve (12) month period during the term of this
Agreement. The first Contract Year will begin immediately following execution of
this Agreement by both parties. Each subsequent Contract Year will begin on the
first day after the end of the prior Contract Year.
(e) "MAC" means the Minimum Annual Charge applicable to CIS's use of VTNS under
Option 162.
(f) The defined terms include the plural as well as the singular. Unless
otherwise expressly stated, the words "herein," "hereof" and "hereunder" and
similar words refer to this Agreement as a whole and not to any particular
section or subsection. The words "include" and "including" shall not be
construed as terms of limitation. The words "day," "month" and "year" mean,
respectively, calendar day, calendar month and calendar year unless otherwise
stated.
2. Initial Order and Management of Relationship.
--------------------------------------------
(a) User hereby orders and CIS hereby agrees to direct AT&T to provide VTNS to
User, at all of the Locations, subject to the terms and conditions of Tariff
F.C.C. No. 12 and this Agreement. User may modify the list of Locations by
providing written notice to the AT&T personnel referred to in Section 2(b) below
and to CIS in accordance with Section 17 below.
(b) Pursuant to the VTNS Agreement, AT&T will provide provisioning, maintenance
and customer care services to User at each Location on the terms and subject to
the conditions of the VTNS Agreement. Within thirty (30) days of the date of
this Agreement, CIS shall provide User with contact information for the AT&T
personnel who will perform such support services for User.
(c) The names of those representatives of User who are authorized to contact
AT&T with respect to VTNS are set forth in Exhibit C hereto. User may modify the
list of such representatives by providing written notice to the AT&T personnel
referred to in Section 2(b) above and to CIS in accordance with Section 17
below. User's representatives are not authorized to place orders, or otherwise
act as agents, for CIS in any matters relating to VTNS.
(d) User acknowledges that AT&T may deny or restrict CIS's and/or User's access
to VTNS in the event that User does not comply with one or more of the
requirements of Tariff F.C.C. No. 12, including, without limitation,
requirements relating to the payment of charges.
(e) User acknowledges that CIS with AT&T may review and revise Option 162,
and that in the event of a revision of Option 162, the rates and provisions in
such revisions will apply.
2
<PAGE>
3. Billing and Invoices.
--------------------
(a) Rates and Charges.
-----------------
(i) As consideration for CIS's designation of User as an authorized user under
Tariff F.C.C. No. 12, User agrees to pay AT&T for VTNS in accordance with the
rates and charges set forth in (A) Tariff F.C.C. No. 12, as it may be amended by
AT&T from time to time as permitted by law, or (B) in the event that Tariff
F.C.C. No. 12 is withdrawn or canceled, the successor documents governing AT&T's
provision of VTNS to CIS. (ii) User's share of the Basic Charge under Option
162 shall be calculated based upon the Service Elements installed at User's
Locations priced according to the rates set forth in Section 7.164.2.B of Tariff
F.C.C. No. 12. User acknowledges that the net effective rates for VTNS will be
based upon the aggregate monthly usage of VTNS by CIS, its affiliates and other
authorized users. User further acknowledges that, as a result of AT&T's
dependence upon aggregate usage by such parties, certain rates billed to User
may vary from month to month and that AT&T may occasionally assess a charge to
true-up the rates so that they reflect actual usage during any month. User
agrees to pay its share of any such true-up charge.
(b) Discounts, Waivers and Credits.
------------------------------
(i) User shall be entitled to participate in the Domestic Volume Pricing Plan
set forth in Section 7.164.2.G of Tariff F.C.C. No. 12 (subject to User's
acknowledgment in Section 3(a)(ii) above regarding possible fluctuations in the
applicable discount levels) and in the waivers set forth in Section 7.164.2.E, H
and L of Tariff F.C.C. No. 12.
(c) Taxes and Surcharges. User acknowledges that the rates set forth in Tariff
--------------------
F.C.C. No. 12 are exclusive of taxes and surcharges. User agrees to pay all
taxes and surcharges (including presubscribed interchange carrier charges and
universal service fund assessments) billed to User by AT&T pursuant to Tariff
F.C.C. No. 12.
(d) Billing and Payment. User will be billed for its use of VTNS by AT&T each
-------------------
month at the address set forth in Section 17 below (or at such other address as
User may designate pursuant to that section). Such invoices will be in AT&T's
standard format for VTNS billing. User shall pay all charges on each AT&T
invoice within thirty (30) days of User's receipt thereof.
(e) Billing Disputes. User shall attempt in good faith to resolve any billing
----------------
disputes with AT&T promptly and shall attempt in good faith to keep CIS fully
informed of its efforts to resolve such disputes. At CIS's request, User shall
permit CIS to intervene in any such dispute. Such intervention may include, at
CIS's sole discretion, the right to pay some or all of the disputed amounts to
AT&T, in which event User shall reimburse CIS for such amounts in full within
ten (10) days of User's receipt of CIS's written request therefor.
3
<PAGE>
4. User's Commitment.
-----------------
(a) User agrees that the Locations will use VTNS through this Agreement and the
VTNS Agreement exclusively for all services offered covered by VTNS Option 162
throughout the term of this Agreement.
(b) User's Annual Commitment during each Contract Year (prior to the
application of taxes, fees, surcharges or any one-time credits) shall be
$706,172 and will be based upon the average of the first two months of 1999 for
Users Locations as billed by AT&T, details included in Exhibit D.
(c) In the event that (i) User's Combined Charges for VTNS (as that term
is defined in Option 162) during any Contract Year fall short of its Annual
Commitment for such period, (ii) CIS's Combined Charges also fall short of its
MAC for any annual measurement period under Option 162 that includes a Contract
Year in which such a shortfall hereunder occurs, and (iii) CIS is required to
pay a charge to AT&T as a result of its failure to meet its MAC, then User shall
pay to CIS an amount equal to the difference between User's Annual Commitment
for such period and the actual combined charges paid by User for VTNS (exclusive
of taxes, fees, surcharges or any one-time credits) for such period.
(d) The parties agree that, if User experiences a business downturn or divests
itself of a subsidiary or affiliate, and, 1) AT&T agrees to reduce CIS's MAC as
consequence of such downturn or divestiture by User, then User's Annual
Commitment for the remainder of the term of this Agreement will be reduced by
the same amount as CIS's MAC is reduced; provided, however, that nothing herein
shall be deemed to require CIS to agree to any changes in its arrangements with
AT&T in order to secure AT&T's agreement to reduce the MAC, or 2) if User
divested subsidiary(s) or affiliate(s) executes a similar shared services
agreement with CIS, CIS agrees to reduce, through an amendment, User's Annual
Commitment for the remainder of the term of this agreement, using the most
recently available annual billing for that subsidiary(s) or affiliate(s) to
calculate the reduction in Annual Commitment for the remainder of the term of
this agreement.
5. Access to User Location. User shall provide AT&T with such access to the
-----------------------
Locations as is necessary for AT&T to provide VTNS to User at each such
Location. User may require any AT&T personnel seeking such access to abide by
User's reasonable security requirements at each such Location.
6. Unauthorized Use.
----------------
(a) User shall use its best efforts to prevent any unauthorized use of VTNS by
its employees, affiliates and third parties. In any event, User shall be solely
responsible for and shall indemnify CIS for and hold CIS harmless from all
expenses, charges and costs arising out of any such unauthorized use.
4
<PAGE>
(b) User shall promptly notify AT&T of any suspected abusive or unauthorized
use of VTNS, including, without limitation, notifying AT&T that a calling card
has been lost, stolen or compromised or is being used fraudulently or without
authorization. User shall require the surrender of a calling card upon the
termination or other departure of any calling card holder or upon the revocation
of calling card holder status. All notifications to AT&T shall be made as
directed by CIS.
(c) User shall make a contact available at each Location seven (7) days a week,
twenty-four (24) hours a day for receipt of notification from AT&T of suspected
unauthorized use of VTNS. User shall notify AT&T in writing of that contact,
including the phone, fax and pager numbers of such contact and may from time to
time designate another person to act as the contact or change a phone, fax or
pager number of a contact, by providing written notice to AT&T.
7. Term. The term of this Agreement shall begin on the date hereof and shall
----
continue through January 9, 2002, unless earlier terminated pursuant to Section
8 of this Agreement, in which event this Agreement shall terminate upon the
effective date of termination, as described in Section 8, or extended by mutual
agreement of the parties. This agreement will automatically renew for
consecutive three-year terms unless notice of non-renewal is provided 12 months
prior to expiration of initial term or renewal term.
8. Default and Termination.
-----------------------
(a) Subject to the notice and cure provisions set out below, User may terminate
this Agreement without liability in the event of a default by either CIS or
AT&T. CIS shall be in default of this Agreement if (i) CIS fails to perform or
comply with or violates any material term, condition or obligation of this
Agreement or (ii) any material representation, warranty or statement made by CIS
in this Agreement shall have been false or misleading in any material respect
when made. User's right to terminate the Agreement under this Section 8(a) shall
apply only on thirty (30) days' advance written notice to CIS and only if CIS
has failed to cure the default within such notice period.
(b) In the event that (i) User terminates this Agreement other than for CIS's
default under Subsection (a), (ii) CIS's Combined Charges fall short of its MAC
for any annual measurement period under Option 162 during which such termination
occurs, and (iii) CIS is required to pay a charge to AT&T as a result of its
failure to meet its MAC, then User shall pay to CIS an amount (which User agrees
is reasonable) equal to the unpaid portion of its remaining Annual Commitment(s)
as of the effective date of termination (the "Early Termination Charge").
(c) Subject to the notice and cure provisions set out below, CIS may terminate
this Agreement without liability and require AT&T to discontinue the VTNS
provided to User in the event of a default by User under this Agreement or the
termination for any reason of the VTNS Agreement between CIS and AT&T. User
shall be in default of this Agreement if (i) User fails to perform or comply
with or violates any material term, condition or obligation of this Agreement;
(ii) any material representation, warranty or statement made by User in this
Agreement shall have been false or misleading in any material respect when made;
(iii) User's
5
<PAGE>
payment of any AT&T invoice is past due (in whole or in part); or (iv) AT&T
asserts that CIS is in breach of the VTNS Agreement because of an act or
omission of User in connection with User's receipt or use of VTNS. CIS's rights
to terminate pursuant to clauses (i), (ii) and (iii) above shall apply only on
thirty (30) days' advance written notice and only if User has failed to cure the
default within such notice period; provided, however, that in the event of a
default under clause (iii) above, only two notices shall be required during the
term of this Agreement and following two occurrences of an event of default
described in clause (iii) and the giving of notices in each of those instances,
it shall thereafter be an event of default immediately upon occurrence of the
event described in clause (iii) above and no notice or cure period shall apply.
The notice and cure period applicable to any default under clause (iv) above
shall be as specified in Tariff F.C.C. No. 12, and any cure by User must be
satisfactory to AT&T. In the event that CIS terminates this Agreement as a
result of User's default as described in clause (i), (ii), (iii) or (iv) of the
preceding sentence, User shall pay CIS the Early Termination Charge.
9. Limitation of Liability.
-----------------------
(a) User agrees that CIS's sole responsibility under this Agreement is to
require AT&T to bill User in accordance with the terms and conditions of this
Agreement for VTNS, which services will be provided to User by AT&T and not by
CIS. User acknowledges that CIS has no responsibility to User and agrees that
CIS shall not be in default of this Agreement if AT&T ceases to provide VTNS to
User or if AT&T provides VTNS in a manner that is not acceptable to User.
(b) User further agrees that CIS shall have no liability whatsoever for delayed
installation or repair of VTNS or for interruptions in VTNS. Notwithstanding the
foregoing, CIS will instruct AT&T to apply to User's invoices any delay or
interruption credits to which CIS is entitled under Option 162 for delays,
service outages or other problems experienced by User at User's installation
sites.
(c) CIS shall not be liable for any lost profits or incidental, special or
consequential damages, or any other similar damages arising out of any claim of
breach of this Agreement. User agrees that in no event shall CIS's liability
under this Agreement exceed an amount equal to one (1) month's payments by User
for VTNS, based upon the average of the monthly payments made by User for VTNS
during the six (6) months preceding the month in which the event that gave rise
to such claim of breach occurred.
10. Acknowledgements, Representations and Warrants.
----------------------------------------------
(a) Each of CIS and User represents and warrants that it has the requisite
authority to enter into this Agreement.
(b) Each of CIS and User represents and warrants that it is in compliance with
and will, for the duration of this Agreement, continue to comply with all
foreign and domestic laws, statutes, ordinances, rules, regulations and orders
applicable and material to the sharing and use of VTNS.
6
<PAGE>
(c) User acknowledges that its execution of this Agreement in no way affects
any obligations that User may have to AT&T under any other contracts, and User
represents and warrants that it will fulfill its contractual obligations (if
any) to AT&T under any such other contracts.
11. Disclaimer of Warranties. EXCEPT AS SET FORTH HEREIN, THERE ARE NO
------------------------
WARRANTIES, ORAL OR WRITTEN, EXPRESS OR IMPLIED, WITH RESPECT TO ANY GOODS OR
SERVICES PROVIDED HEREUNDER, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
12. Confidentiality Obligations.
---------------------------
(a) During the term of this Agreement and for a period of three (3) years from
the date of the expiration or termination of the VTNS Agreement (including all
extensions thereto), each party agrees to maintain in strict confidence all
Confidential Information (as defined below) of the other party, including,
without limitation, preventing the disclosure of such Confidential Information
to any competitor of the other party (known to be such after reasonable
inquiry). No party shall, without obtaining the prior written consent of the
other party hereto, use such other party's Confidential Information for any
purpose other than for performance of its duties and obligations under this
Agreement and the provision of other services to such party. User agrees to
protect any Confidential Information of AT&T to which it may gain access in the
course of receiving VTNS under this Agreement.
(b) For purposes of this Section 12, "Confidential Information" means all
nonpublic information (i) with respect to the business, service or equipment of
CIS, AT&T, or any third party that may be doing business with either CIS or
AT&T, that may be obtained by User from any source in the course of receiving
VTNS under this Agreement ("CIS Confidential Information") and (ii) with respect
to the business, service or equipment of User, or any third party that may be
doing business with User, that may be obtained by CIS in connection with
directing AT&T to provide VTNS to User under this Agreement ("User Confidential
Information"). The terms of this Agreement and discussions, negotiations and
proposals related directly thereto shall be both CIS Confidential Information
and User Confidential Information.
(c) "Confidential Information" shall not include information that (i) is
already known by the receiving party at the time it is obtained by such party,
free from any obligation to keep such information confidential, (ii) is or
becomes publicly known through no wrongful act of the receiving party, (iii) is
rightfully received by the receiving party from a third party without
restriction and without breach of this Agreement or (iv) is independently
developed by the receiving party without using any Confidential Information of
the other party.
(d) The parties agree that, upon the request of a party having proprietary
rights to Confidential Information, the party in possession of such information
shall promptly return it (including any copies, extracts, descriptions and
summaries thereof) to the requesting party or, with the requesting party's prior
written consent, shall promptly destroy it (and any copies,
7
<PAGE>
extracts, descriptions and summaries thereof) and shall further provide the
requesting party with written certification of same.
13. Indemnification.
---------------
(a) User shall indemnify, defend and hold harmless CIS against, and shall
promptly reimburse CIS from and against, any and all Losses (as defined
below) associated with any of the following:
(i) a claim or action against CIS, AT&T or any director, officer, employee or
assignee of either CIS or AT&T for the actual or alleged infringement of any
patent, copyright, trademark, trade secret or similar intellectual property
right that arises from (A) User's unauthorized modification or use of VTNS; (B)
User's combination or use of VTNS with services, software or equipment where
AT&T did not provide, authorize, require or direct such combination or use or
where AT&T did not certify the compatibility of such service, equipment or
software with VTNS; (C) the reproduction, distribution or transmission of User-
supplied information or other content, except to the extent that the Loss arises
from negligence on the part of AT&T or CIS or (D) AT&T's compliance with User's
specifications, designs or instructions unless AT&T knew that such compliance
could result in a claim or action. CIS and User shall give each other prompt
written notice of any such claim;
(ii) (A) any material inaccuracy in any representation or warranty of User
contained in this Agreement; (B) any damage to tangible real or tangible
personal property (including damage to the property of CIS or User) or the
environment or (C) any injury to or death of any person (including, without
limitation, injury to or death of CIS's or User's respective subcontractors or
employees) associated with the services provided pursuant to this Agreement; and
(iii) any claim or action against CIS for breach of the VTNS Agreement or
Tariff F.C.C. No. 12.
(b) For purposes of this Section 13, "Losses" means all liabilities
(including royalties and license fees), losses, damages, costs and expenses
(including, without limitation, reasonable attorneys' fees and related expenses)
arising or resulting from any of the events set forth in Section 13(a) above to
the extent that such Loss was proximately caused by any act or omission by User,
its affiliate, agent, employee or subcontractor in connection with the use of
VTNS.
14. Advertising and Publicity. User shall not make public reference to the
-------------------------
existence or terms of this Agreement without the prior written approval of CIS.
This prohibition includes use of CIS's name, trademarks, service marks, logos or
any other reference to CIS, directly or indirectly, in any advertising, sales
presentation, news release, release to any professional or trade publication or
for any other purpose.
15. Detariffing. If, during the term of this Agreement, AT&T cancels or
-----------
withdraws any portion of Tariff F.C.C. No. 12 applicable to AT&T's provision of
VTNS to CIS as authorized or required by any statute, rule, regulation or order
of a governmental body of competent
8
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jurisdiction, then all references herein to Tariff F.C.C. No. 12 shall mean the
successor document or documents governing the provision of VTNS to CIS.
16. Governing Law. This Agreement shall be deemed to be made in and in all
-------------
respects shall be interpreted, construed and governed by and in accordance with
the law of the State of Tennessee without regard to the conflict of law
principles thereof.
17. Notices. All notices or other communications required or permitted under
-------
this Agreement shall be in writing and sufficient if sent by nationally
recognized overnight courier (for next business day delivery), facsimile
transfer device or certified mail, return receipt requested, to the following
addresses:
if to CIS, to:
Columbia Information Systems, Inc.
2555 Park Plaza
P.O. Box 270
Nashville, TN 37203
Phone: (615) 344-9551
ATTN: Vice President - IT Operations
& Communications
if to User, to:
Triad Hospitals, Inc.
13445 Noel Road, 20/th/ Floor
Dallas, Texas 75240
Telecopy: (972) 663-3945
Attention: Mr. James D. Shelton
Chairman, President and Chief
Executive Officer
in each case, with a copy to:
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019-6092
Telecopy: (212) 259-6333
Attention: Morton A. Pierce, Esq.
Any party may change the person and address to which notices or other
communications are to be sent to it by giving written notice of any such change
in the manner provided herein.
18. Entire Agreement; Amendment. This Agreement, together with the exhibits
---------------------------
hereto, sets forth the entire agreement and understanding of the parties hereto
in respect of the matters addressed herein, and supersedes all prior agreements,
arrangements and understandings relating to the subject matter hereof. No party
hereto has relied upon any oral or written statement, representation, warranty,
covenant, condition, understanding or agreement made by any other
9
<PAGE>
party or any representative, agent or employee thereof, except for those
expressly set forth in this Agreement or in the exhibits or other documents
delivered pursuant hereto. This Agreement may be amended, modified, superseded
or supplemented only by an instrument in writing executed and delivered by CIS
and User. Nothing herein is intended to diminish any of the rights or
obligations of either party pursuant to the Distribution Agreement or pursuant
to any of the Ancillary Agreements (as defined in the Distribution Agreement).
19. Consent to Jurisdiction. CIS and User each hereby expressly (a) submits
-----------------------
and consents in advance to the jurisdiction of any Tennessee State Court sitting
in Nashville, Tennessee or the United States District Court for the Middle
District of Tennessee with respect to any actions or proceedings arising out of
or relating to this Agreement, (b) waives any objection which it may have based
upon lack of personal jurisdiction, improper venue or forum non conveniens, (c)
agrees that all claims with respect to such actions or proceedings may be heard
and determined in any Tennessee State Court sitting in Nashville, Tennessee or
the United States District Court for the Middle District of Tennessee, (d)
agrees not to commence any action or proceeding relating to this Agreement other
than in a Tennessee State Court sitting in Nashville, Tennessee or the United
States District Court for the Middle District of Tennessee and (e) agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
20. Waiver of Jury Trial. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY
--------------------
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH
PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH
PARTY MAKES THIS WAIVER VOLUNTARILY AND (D) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 20.
21. Headings. The section headings contained in this Agreement are inserted
--------
for convenience of reference only and shall not affect the meaning or
interpretation of this Agreement.
22. Rights Cumulative; Waiver. All rights and remedies conferred under this
-------------------------
Agreement or by any other instrument or law shall be cumulative and may be
exercised singularly or concurrently. The failure by either party to enforce
any term shall not be deemed to be a waiver of future enforcement of that or any
other term of this Agreement.
10
<PAGE>
23. Counterparts. This Agreement may be executed in any number of separate
------------
counterparts, each of which shall be deemed to constitute an original, but which
together shall constitute one and the same instrument.
24. Severability. In the event that any provision hereof is prohibited or
------------
unenforceable in any jurisdiction, such provision shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or unenforceability of such provision in any other
jurisdiction.
25. Assignment. Neither this Agreement nor any of the rights, licenses, or
----------
duties set forth herein, of User hereunder may be assigned by User without the
prior written consent of CIS. This Agreement shall be binding upon, insure to
the benefit of, and be enforceable by the parties hereto and their respective
successors and permitted assigns.
IN WITNESS WHEREOF, the parties have caused this Agreement to Share
Telecommunications Services to be executed by their duly authorized
representatives as of the day and date first referenced above.
COLUMBIA INFORMATION SYSTEMS, INC.
By: /s/ Noel Williams
--------------------
Name: Noel Williams
Title: President
TRIAD HOSPITALS, INC.
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President, General Counsel and
Secretary
11
<PAGE>
EXHIBIT 10.7
YEAR 2000
PROFESSIONAL SERVICES AGREEMENT
This Professional Services Agreement (the "Agreement") is made and entered into
as of the 11/th/ day of May, 1999 (the "Effective Date"), by and between CHCA
Management Services, L.P. a Delaware corporation with its principal place of
business located at One Park Plaza, Nashville, Tennessee, 37203 ("Provider"),
and Triad Hospitals Holdings, Inc, a Delaware corporation having its principal
place of business at 13455 Noel Road, Dallas TX 75240 ("Customer").
WHEREAS, Customer, prior to the date of this Agreement was owned by an affiliate
of Columbia/HCA Healthcare Corporation ("C/HCA"), parent corporation of
Provider;
WHEREAS, on May 11, 1999 Customer was spun-off from C/HCA as a separate legal
entity not owned or controlled by C/HCA;
WHEREAS, prior to the date hereof, Provider furnished certain year 2000
professional services related to "non-information technology" and "non-
information infrastructure technology subject matter" areas for C/HCA affiliated
healthcare provider entities, including those that are now owned by Customer;
WHEREAS, to assist it in the development and implementation of its own Y2K
Program, Customer desires to have Provider to continue to perform such year 2000
services on its behalf on the terms more fully set forth below, with Customer
obtaining year 2000 services for information technology and information
technology infrastructure subject matters pursuant to its Computer and Data
Processing Services Agreement with Columbia Information Systems, Inc., an
affiliate of Provider, dated May 11, 1999.
NOW, THEREFORE, in consideration of the mutual promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:
1. Definitions
-----------
1.1. "Y2K Services" shall be defined to mean the same services as
those year 2000 professional services that Provider provides to
healthcare provider entities owned or controlled by C/HCA or its
affiliates, including, but not limited to, the providing of year 2000
compliance information, advice, guidance and recommendations
(including the Y2K Hotlines) concerning medical equipment, facility
and physical plant equipment year 2000, suppliers and service
providers, A/R vendors and payors and, related subjects. Y2K services
shall also include payors, organizational and training information on
implementing a year 2000 program at a facility level, contingency
planning relating to potential failures due
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to year 2000 compliance inadequacies, and other year 2000 related
information and instructions provided by Provider. Y2K Services shall
not include travel to any office or facility of Customer.
1.2. "Y2K Information" shall be defined to mean any data,
specifications, recommendations, communications instructions, and
other information provided by Provider to Customer as a result of
performing Y2K Services or Supplemental Y2K Services.
1.3. "Supplemental Y2K Services" shall be defined to mean those
specific year 2000 services Provider agrees to perform for Customer in
a separate work order which are over and above Y2K Services.
1.4. "Services" shall mean Y2K Services and/or Supplemental Y2K
Services, as the context requires.
1.5. "Year 2000" or "Y2K" as used herein refers to the proper
processing of date sensitive data and information containing prior to,
at and for a reasonable period of time after January 1, 2000.
1.6. "Y2K Program" shall be defined as Customer's internal program for
addressing Year 2000 issues with respect to its equipment and systems.
1.7. "Y2K A/R Vendor and Payor Track" shall be defined as the Y2K
program related to Accounts Receivable Vendors and Payors.
2. Professional Services.
----------------------
2.1 Provider agrees to provide Y2K Services to Customer during the
term of this Agreement for the fees listed in Section 5, for Customer
and the facilities owned or controlled by Customer as of the date of
this Agreement. Any additional facilities acquired by Customer shall
be eligible to receive Y2K Services hereunder upon written approval of
Provider and subject to the additional fees of paragraph 5.1.
2.2 Upon request from Customer from time to time, Provider may
provide to Customer Supplemental Y2K Services if specifically agreed
to by the parties. Supplemental Y2K Services may include (if agreed to
by Provider),project planning, data processing, software evaluation,
software installation, computer programming, training and/or similar
professional services relating to Year 2000 issues. Supplemental Y2K
Services shall be provided at the discretion of Provider under the
terms, conditions and fees set forth in this Agreement, and any
schedule or exhibit hereto, and pursuant to any work order executed
hereunder which has been signed by Don Workman or his successor or
superior, with respect to any Y2K Services other than those related to
A/R Vendors and Payor Track services; with respect to A/R Vendor and
Payor Track related Y2K Services Work Orders, such shall be required
to be signed by Lisa Cobb or her successor or superior.
2.3 Staffing for Provider's furnishing of Services shall be
determined in Provider's sole discretion. Provider may engage other
subcontractors, or discontinue the use of any subcontractor, in its
reasonable discretion, for the performance of Services.
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2.4 Customer shall reimburse Provider for its direct out-of-pocket
expenses specifically incurred in connection with Provider's
performance of Y2K Services and Supplement Y2K Services to Customer
hereunder, including without limitation consultant fees, long-distance
toll charges, overnight courier charges, fax charges, legal expenses
and postage. If Provider (or its agents, consultants or
subcontractors) travels to Customer's site to perform Services, then
Customer shall reimburse Provider for Provider's reasonable and
necessary travel expenses (including air, travel, rental car
reimbursement, mileage, meals, and hotel).
2.5 The Supplemental Y2K Services furnished by Provider will be
limited to those specifically described in any work order hereunder
and will include only Year 2000 services regarding computer hardware,
software issues, medical equipment, or other services related to that
listed in the definition of Y2K Services. No representative, agent,
employee, consultant or subcontractor of Provider shall be authorized
to commit Provider to provide services outside the scope of those
Services described herein and in any Work Order hereunder, unless
approved in writing by Don Workman or his successor or superior , with
respect to any Y2K Services other than those related to A/R Vendors
and Payor Track services; with respect to A/R Vendor and Payor Track
related Y2K Services Work Orders, such shall be required to be signed
by Lisa Cobb or her successor or superior.
2.6 Responsibility for achieving the objectives of the Customer's Y2K
Program will at all times remain with Customer. The sole basis upon
which Provider is willing to undertake the provision of the Services
under this Agreement is the express understanding and agreement that
the risk of adverse consequences in connection with Customer's Year
2000 Program and date processing issues (including liability,
noncompliance, "contamination" after implementation of recommended
solutions, failure of Customer's Year 2000 program in any respect, and
untimely completion) is and will remain at all times with Customer and
will not shift to Provider in whole or in any part by reason of
Provider's entering into this Agreement or performance of the Services
under this Agreement or any Work Order.
2.7 In providing Services, Provider will be entitled to rely, without
audit, review or verification, on representations and other
information from OEMs and other vendors concerning the Year 2000 and
other date handling characteristics of their equipment, hardware,
software, devices, parts, and services, and their compliance/non-
compliance or manner of compliance/non-compliance with date processing
requirements and standards. Provider will not be responsible for the
failure of any software, hardware, peripherals or parts furnished by
any such vendors to perform as required by Customer.
2.8 Customer's executive management shall be responsible for
determining the proper use of the Y2K Information, and the overall
direction of the Y2K Supplemental Services, determining whether the
Services to be performed will satisfy Customer's needs, providing
active sponsorship of Y2K Program throughout the Customer's
organization, properly staffing its Y2K Program,
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<PAGE>
establishing priorities as may be necessary and consistent with the
Services and evaluating the findings resulting from performance of the
Services.
2.9 Provider and Provider's vendors or subcontractors (with respect
to proprietary property provided by such vendors or subcontractors)
will have and retain all right, title and interest, including
ownership of copyrights, patents, trade secrets and other intellectual
property rights in and to all tools, methodologies or other
intellectual property (including intellectual property embodied in
software) that is supplied or used by Provider or such third parties
in the performance of the Services, including any enhancements,
improvements or other derivative works thereof developed in the course
of Provider's or its subcontractors' performance under this Agreement.
Provider and any of its subcontractors retain the right to use their
knowledge, experience, and know-how, including processes, ideas,
concepts and techniques developed in the course of performing the
Services hereunder, internally and in the course of providing
consulting services to other clients.
3. Limitations of Liability.
------------------------
3.1 Provider shall have no liability for the Services and Y2K
Information provided hereunder, including, but not limited to,
consequential, incidental, indirect, direct, punitive or special
damages (including loss of profits, loss or reconstruction of data,
loss of business opportunities, business or goodwill), regardless of
whether such liability is based on breach of contract, tort, strict
liability, breach of warranties, failure of essential purpose or
otherwise, and even if advised of the likelihood of such damages.
3.2 Provider's total liability to Customer for any claim, regardless
of whether such liability is based on breach of contract (such as non-
performance of Services), tort (such as negligence), strict liability,
breach of warranties, failure of essential purpose or otherwise, under
this Agreement or with respect to the Services, shall be limited to
the total amount of fees paid pursuant to paragraph 5.1.
4. Confidentiality.
----------------
4.1 "Confidential Information" is defined to include the identity of
patients, the content of medical records, financial and tax
information, information regarding Medicare, Medicaid, and any other
claims submission and reimbursements, the object and source codes and
documentation for proprietary software, Year 2000 compliance
information (including that in Provider's Knowledgebase System), and
such other information to be disclosed by either party that is
confidential or proprietary business information and delivered or
disclosed pursuant to this Agreement.
4.2 The party receiving the Confidential Information (the "Receiving
Party") from the party who owns or holds in confidence such
Confidential Information
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<PAGE>
(the "Owning Party") may only use the Confidential Information solely
for the purpose of performing its obligations or enforcing its rights
under this Agreement, or utilizing the information for remediating its
equipment and systems.
4.3 Each party shall take appropriate action, by instruction to or
agreement with its employees, agents and subcontractors, to identify,
label, and otherwise maintain the confidentiality of the Confidential
Information. Either party may disclose any Confidential Information on
an as-needed basis to its non-employee fiduciaries, including without
limitation attorneys, accountants, auditors, controlling persons,
officers, directors or trustees, without Provider's prior consent. The
Receiving Party shall promptly notify the Owning Party in the event
that the Receiving Party learns of unauthorized release of
Confidential Information.
4.4 The Receiving Party shall have no obligation with respect to:
(a) Confidential Information made available to
the general public without restriction by the Owning Party
or by an authorized third party;
(b) Confidential Information rightfully known to
the Receiving Party independently of disclosure by the
Owning Party prior to this Agreement or under this
Agreement;
(c) Confidential Information independently
developed by the Receiving Party; or
(d) Confidential Information that the Receiving
Party may be required to disclose pursuant to subpoena or
other lawful process; provided, however, that the Receiving
Party notifies the Owning Party in a timely manner to allow
the Owning Party to appear and protect its interests.
4.5 Upon the termination or expiration of this Agreement, each party
shall (i) immediately cease to use the other party's Confidential
Information, (ii) return to the other party such Confidential
Information and all copies thereof within ten (10) days of the
termination, and (iii) upon request, certify in writing to the other
party that it has complied with its obligations set forth in this
Section 4, unless otherwise provided in this Agreement.
4.6 Each party agrees to provide reasonable assistance and
cooperation upon the reasonable request of the other party in
connection with any litigation against third parties to protect the
requesting party's Confidential Information, provided that the party
seeking such assistance and cooperation shall reimburse the other
party for its reasonable out-of-pocket expenses.
5. Fees and Compensation.
----------------------
5.1 As compensation for providing Y2K Services, Customer agrees to
pay Provider fees of $80,818 per month for Y2K Services other than A/R
Vendor and Payor Track Services, plus $9,200 per month for A/R Vendor
and Payor Track Services, from the Effective Date of this Agreement
through December
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31, 1999. The fee for the month of May, 1999 shall be prorated based
on the actual Effective Date of this Agreement. For the balance of the
term of this Agreement after December 31, 1999, the total monthly fees
shall be eight percent (8%) of the amounts Provider estimates as its
total costs for providing Y2K Services to Columbia/HCA affiliated
facilities, LifePoint affiliated facilities and Triad affiliated
facilities. If Customer sells or divests any affiliated hospitals, or
acquires any new hospitals, which Provider agrees to add to this
Agreement, upon receipt of written notice of such by Provider, the
fees stated in this paragraph shall be reduced or increased on a
prorata hospital to hospital basis (e.g., if the number of hospitals
is originally 10 and 2 hospitals are sold, then the fees shall be
reduced 20%).
5.2 Provider shall invoice Customer monthly, in arrears, for Services
rendered and expenses incurred under this Agreement. Customer shall
submit payment to Provider within thirty (30) days of the date of each
invoice from Provider. Customer will pay to Provider amounts equal to
any taxes, however designated or levied, based upon the charges
payable by Customer hereunder, or upon this Agreement or the Services
or materials provided hereunder, or their use, including state and
local sales, use, privilege or excise taxes, and any taxes paid or
payable by Provider in respect of the foregoing, but excluding any
taxes based on the income of Provider. Provider shall have the right
to assess a fee equal to the lesser of 1.8% per month or the maximum
permitted by law or any amounts more than 30 days past due.
5.3 Without prejudice to Provider's right to terminate this Agreement
for breach or any other rights and remedies, Provider shall have the
right to cease performing Services and/or terminate this Agreement if
Customer's failure to pay any amounts owed to Provider hereunder
extends beyond a period of 30 days; provided, however, that following
such 30 day period, Provider shall give at least 10 days' prior
written notice to Customer of its intent to cease performing the
Services starting on the date specified in said notice. Customer
shall have the right to cure such defaults by paying all amounts owed
prior to the end of such ten day period. In the event of termination
of this Agreement for any reason, the Customer shall pay Provider all
accrued fees payable to Provider in accordance with this Agreement for
any and all Services rendered, and all expenses related thereto, up to
the effective date of the termination.
6. Warranties/Disclaimers.
-----------------------
6.1 The parties acknowledge that there may be certain inadequacies
and deficiencies in Customer's equipment, assets, hardware, software
and systems, with respect to Year 2000 and other date processing
requirements , which may have the potential to cause adverse
consequences to Customer in the form of business losses, claims,
damages or liability to third parties. Provider is willing to provide
the requested assistance described in this Agreement only if the risk
of adverse consequences relating to or arising out of Year 2000 and
other date processing requirements remains at all times with Customer,
and will not shift
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to Provider in whole or in any part by reason of Provider's entering
into this Agreement or performance of services under this Agreement.
Therefore, except as may be otherwise expressly specified in this
Agreement, Customer has agreed that Provider will disclaim any and all
warranties with respect to the Services provided under this Agreement,
that Provider's liabilities under this Agreement will be limited, as
provided hereunder, and that Provider will be indemnified by Customer
for any loss or liability arising out of this Agreement or the
Services provided.
6.2 PROVIDER DISCLAIMS ALL WARRANTIES AND MAKES NO REPRESENTATIONS OF
ANY KIND OR NATURE WITH RESPECT TO THE SERVICES OR ANY OBLIGATION,
LIABILITY, PERFORMANCE, NONPERFORMANCE, OR ANY OTHER MATTER IN
CONNECTION WITH THIS AGREEMENT, WHETHER EXPRESSED OR IMPLIED, AND
EXPRESSLY DISCLAIMS ANY IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR
PURPOSE, MERCHANTABILITY, NON-INFRINGEMENT, TITLE OR OTHERWISE.
PROVIDER DOES NOT WARRANT OR REPRESENT THAT ITS PERFORMANCE OF
SERVICES HEREUNDER WILL BE ERROR-FREE, FREE OF UNINTENDED
CONSEQUENCES, TIMELY, OR FULLY COMPREHENSIVE. PROVIDER WILL NOT BE
RESPONSIBLE FOR ANY ERRORS, DEFECTS, OR DELAYS IN THE SERVICES OR THE
UNTIMELY PERFORMANCE THEREOF.
6.3 The parties acknowledge and agree that the disclaimers of
warranties, the limitations of liability, and the indemnities provided
for herein represent the agreed and bargained for understanding of the
parties, and that Provider's compensation hereunder reflects such
allocations of risk. Customer specifically acknowledges and agrees
that Provider would not be willing to enter into this Agreement or
undertake the provision of the Services described in this Agreement in
the absence of such provisions.
6.4 All statements and information provided by Provider hereunder,
including Y2K Information, is hereby designated as a "Year 2000
Readiness Disclosure" under the Year 2000 Information and Readiness
Disclosure Act (Public Law 105-271).
7. Books, Records, and Compliance.
-------------------------------
7.1 Pursuant to the requirements of 42 CFR 420.300 et seq., Provider
agrees to make available to the Secretary of Health and Human Services
("HHS"), the Comptroller General of the Government Accounting Office
("GAO") or their authorized representatives, all contracts, books,
documents and records relating to the nature and extent of costs
hereunder for a period of four (4) years after the furnishing of
services hereunder for any and all services furnished under this
Agreement. In addition, Provider hereby agrees to require by contract
that each subcontractor make available to the HHS and GAO, or their
authorized representative, all contracts, books, documents and records
relating to the nature
-7-
<PAGE>
and extent of the costs thereunder for a period of four (4) years
after the furnishing of services thereunder.
7.2 Provider agrees to comply at all times with the regulations
issued by the Department of Health and Human Services, published at 42
CFR 1001, and which relate to Provider's obligation to report and
disclose discounts, rebates and other reductions to Customer for
products purchased by Customer under this Agreement.
7.3 If Provider carries out the duties of this Agreement through a
subcontract worth $10,000 or more over a twelve month period with a
related organization, the subcontract will also contain a clause
substantially identical to the Sections 7.1 and 7.2 to permit access
by the Secretary, the United States Comptroller General and their
representatives to the related organization's book and records.
7.4 Customer's rights under this Section 7 shall survive for a period
of four (4) years after termination or expiration of this Agreement.
8. Customer Additional Responsibilities.
-------------------------------------
8.1 During the term of this Agreement, Customer agrees to do the
following at no charge to Provider:
(a) provide to Provider, unrestricted rights and
licenses to all the Customer's applications and, if
necessary and to the extent possible, sublicenses under
third party licenses that are necessary or desirable to
permit Provider to provide the Services as contemplated
herein;
(b) provide Provider with all data, information,
access to the Customer's facilities (or make other
arrangements as necessary to such effect) and other
resources and support as may be appropriate to enable
Provider to perform the Services in a timely manner and
otherwise fully cooperate with Provider in connection
therewith;
(c) timely participate in meetings and make its
personnel readily available for such meetings;
(d) assign personnel with relevant training and
experience to work as part of a project team with Provider
or in consultation with Provider's personnel, at corporate,
facility, and other appropriate levels within Customer.
9. Assignment. Customer shall not, directly or indirectly, by assignment or
-----------
change of control or otherwise, transfer this Agreement or any of its rights or
obligations hereunder without the prior written consent of the Provider, which
consent can be withheld at the sole discretion of Provider . This Agreement
shall inure to the benefit of and bind permitted successors and assigns of
Provider and Customer. Any assignment
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that is not in accordance with that stated in this Paragraph shall be void and
have no effect.
10. Indemnification.
----------------
10.1 Customer shall indemnify and hold harmless Provider and its
affiliates, directors, officers, employees, attorneys, predecessors,
successors, agents and assigns (collectively, the "Indemnitee") from
and against any and all claims, demands, obligations, losses,
liabilities, judgments, awards and costs (including legal fees and
expenses) arising out of or related to any claim for loss, breach of
contract, personal injury, bodily injury, property damage or other
claims for relief, whether know or unknown, including any damages
finally awarded attributable to such claim and any reasonable expense
incurred by Indemnitee in assisting Customer in defending against such
claim, that arises out of or is related to this Agreement, Provider's
furnishing of Services under this Agreement or the Year 2000
Information . In the event Customer elects not to defend any such
claim, then Indemnitee shall have the option but not the duty to
reasonably defend or settle the claim and Customer shall indemnify
Indemnitee for such settlement or any damages finally awarded against
Indemnitee attributable to such claim, reasonable costs and expenses
(including attorneys' fees), and interest on such recoverable funds
advanced.
10.2 Customer shall indemnify, defend and hold harmless Provider from
and against all claims (from all causes of action of any kind,
including contract, tort or otherwise) related to or arising out of
this Agreement or the Services provided hereunder, and any losses,
liabilities, damages and expenses that are incurred as a result of any
such claims.
11. Work Environment. When Provider's employees or agents are physically
-----------------
assigned to work on Customer's premises (which will only occur upon mutual
agreement of the Parties), Customer shall provide (free of charge) to Provider's
employees and/or agents a work environment suit for performance of Services,
including space and environment that is not less favorable than the work
environment provided to Customer's employees, including reasonable work space,
furniture, supplies and equipment, to enable Provider to perform its obligations
under this Agreement and any work order executed hereunder.
12. Insurance. As of the Effective Date of this Agreement, Customer shall have
----------
in force the following coverage with limits of liability of $10 million for each
and every occurrence:
. Healthcare Professional Liability
. Comprehensive General Liability
Customer will keep all such policies in effect (during the term of this
Agreement and for six (6) years thereafter) with at least such limit of
liability for covered claims arising out of events, errors, omission , or other
covered items which took place during the term of
-9-
<PAGE>
this Agreement, at the expense of Customer. Customer will use its best efforts
to notify Provider in writing within five (5) days of Customer's receipt of any
notice of cancellation of, or any material change in, the policy. Customer will
cause Provider to be named as additional insureds under each such policy with
respect to the Services. Customer waives all rights of recovery against Provider
and its employees for property damage, bodily injury, personal injury and/or
other damages allegedly caused by Provider's performance of services hereunder
or otherwise, to the extent covered by Customer's insurance. All such coverage
must be maintained with an insurer reasonably acceptable to Provider. To the
extent Customer is required to maintain uninterrupted insurance as set forth
herein for covered claims arising out of events, errors, omissions, or other
covered prior acts endorsement, or an unlimited reporting endorsement when
applicable, upon request by Provider, Customer will provide Provider with
certificates of insurance or other adequate proof of such coverage and the
satisfaction of all requirements of this Section, and, upon request, Customer
agrees to furnish Provider with updated certificates of insurance upon the
renewal of such coverages.
13. Termination and Survival.
-------------------------
13.1 The term of this Agreement commences on the Effective Date and
continues through June 30, 2000. The term may be extended upon written
agreement of both parties, with signature by Don Workman, his
successor or superior required to bind Provider.
13.2 This Agreement may be terminated by either party upon the other
party's failure to cure a material breach of this Agreement, within
thirty (30) days of receipt of written notice describing the nature of
the alleged material breach. Termination for non-payment shall be
pursuant to paragraph 2.6.
13.3 Either party may terminate without cause upon 45 days prior
written notice.
13.4 Any provision of this Agreement related to confidentiality,
publicity and indemnification or which by its terms provides for
survival shall survive the termination of this Agreement.
14. Notice. All notice required or permitted under this Agreement shall be in
-------
writing and delivered via fax (with answer-back confirmation), overnight or
express mail or certified mail (return receipt requested), or in person to the
other Party at its address set forth below, or to such other address as either
Party may designate subsequently in writing.
If to Provider:
CHCA Management Services, L.P.
One Park Plaza
Nashville, TN 37203
Attention: VP, Operations Support
-10-
<PAGE>
With a copy to:
CHCA Management Services, L.P.
Legal Department
One Park Plaza
Nashville, TN 37203
Attention: General Counsel
If to Customer:
Triad Hospitals Holdings, Inc.
13455 Noel Road
Dallas, TX 75240
Attention:
With a copy to:
Triad Hospitals Holdings, Inc.
13455 Noel Road
Dallas, TX
Attention: General Counsel
15. Governing Law. This Agreement shall be governed by and construed in all
--------------
respects in accordance with the laws of the State of Tennessee without regard to
that state's choice of law provisions. Any dispute hereunder shall be resolved
in the state or federal courts having jurisdiction located in Nashville,
Tennessee.
16. Severability. All agreements, clauses and covenants contained herein are
-------------
severable, and in the event any of them shall be held to be unconstitutional,
invalid, illegal, or unenforceable, the remainder of this Agreement shall be
interpreted as if such unconstitutional, invalid, illegal or unenforceable
agreements, clauses or covenants, were not contained herein. IT IS EXPRESSLY
UNDERSTOOD AND AGREED THAT EACH AND EVERY PROVISION OF THIS AGREEMENT THAT
PROVIDES FOR A LIMITATION OF LIABILITY, DISCLAIMER OF WARRANTIES OR EXCLUSION OF
DAMAGES IS INTENDED BY THE PARTIES TO BE SEVERABLE AND INDEPENDENT OF ANY OTHER
PROVISION AND TO BE ENFORCED AS SUCH. FURTHER, IT IS EXPRESSLY UNDERSTOOD AND
AGREED THAT IN THE EVENT THAT ANY REMEDY HEREUNDER IS DETERMINED TO HAVE FAILED
OF ITS ESSENTIAL PURPOSE, ALL LIMITATIONS OF LIABILITY AND EXCLUSIONS OF DAMAGES
SET FORTH HEREIN SHALL REMAIN IN EFFECT.
17. Waiver; Modification. The failure by either party to exercise any right
---------------------
provided hereunder shall not be deemed a waiver of such right. This Agreement
may be amended,
-11-
<PAGE>
modified or supplemented only by a writing signed by the parties to this
Agreement, by Don Workman, his successor or superior required to bind Provider.
Such amendments, modifications or supplements shall be deemed as much a part of
this Agreement as if so incorporated herein.
18. Integration. The parties hereto acknowledge that they have read this
------------
Agreement in its entirety and understand and agree to be bound by all of its
terms and conditions, and further agree that this Agreement and any Work Order
executed hereunder and any exhibits or schedules hereto or thereto constitute a
complete and exclusive statement of the understanding between the parties with
respect to delivery of Services by Provider, which supersede any and all other
communications between the parties relating to the Services, whether written or
oral. Any prior agreements, promises, negotiations or representations related
to the delivery of the Services by Provider not expressly set forth in this
Agreement or in a Work Order executed hereunder, are of no force and effect.
19. Independent Contractor. Provider, in performance of this Agreement, is
-----------------------
acting as an independent contractor and shall have the exclusive control of the
manner and means of performing the work contracted for hereunder. Personnel
supplied by Provider hereunder, whether or not located on Customer's premises,
are not Customer's employees or agents. Nothing contained in this Agreement
shall be construed to create a joint venture or partnership between the parties.
20. Force Majeure. Neither party hereto shall be liable for any failure or
--------------
delay in performance of its obligations hereunder by reason of any event or
circumstance beyond its reasonable control, including without limitation acts of
God, war, riot, strike, labor disturbance, fire, explosion, flood, utility
outages, or shortage or failure of suppliers
21. Alternative Dispute Resolution; Attorneys Fees. In the event of a dispute
-----------------------------------------------
between the parties that cannot be resolved between them, the parties shall
submit their dispute to non-binding mediation prior to initiating litigation.
Each party shall bear their own costs and expenses of participating in the
mediation (including without limitation, attorneys' fees) and each party shall
bear one-half (1/2) of the costs and expenses of the mediator. The matters
discussed or revealed in the mediation session shall not be revealed in any
subsequent litigation, except as expressly provided in this Section. In the
event the matter is not resolved in the mediation, suit may be brought. In
addition to recovering any damages or other relief awarded by the court, the
prevailing party may recover attorneys' fees, provided, however, any award of
attorneys' fees shall be limited as follows: (a) the award shall not exceed the
amount of monetary damages awarded to the prevailing party by the court, and (b)
no award shall be made if, within 30 days following the filing of an answer to a
complaint, the party made an offer to settle the dispute and the amount of
monetary damages awarded in the court proceeding was less than or equal to the
settlement offer. Nothing in this Section shall be deemed to limit a party's
access to the court system to pursue a remedy which is limited to injunctive
relief.
-12-
<PAGE>
22. No Third Party Rights. This Agreement is entered solely by and between,
----------------------
and may be enforced only by, Provider, Customer, and their permitted assigns.
This Agreement shall not be deemed to create any rights in third parties,
including, without limitation, suppliers, customers, patients and affiliates of
either party, including without limitation Customer and its affiliates, or to
create any obligations of a party to any such third parties.
23. Counterparts. This Agreement may be executed in one or more counterparts,
-------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same document. In making proof of this Agreement, it
shall not be necessary to produce or account for more than one such counterpart
executed by the party against whom enforcement of this Agreement is sought.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their authorized representatives as of the date first set forth above.
CHCA Management Services, L.P. Triad Hospitals Holdings, Inc.
By its General Partner,
CMS GP, LLC
By: /s/ Ronald Lee Grubbs, Jr. By: /s/ Donald P. Fay
----------------------------- --------------------
Name: Ronald Lee Grubbs, Jr. Name: Donald P. Fay
Title: Manager Title: Executive Vice President,
General Counsel and
Secretary
Date: May 11, 1999 Date: May 11, 1999
-13-
<PAGE>
EXHIBIT 10.8
SUBLEASE AGREEMENT
THIS SUBLEASE is made as of the 11th day of May, 1999 by and between
MED-POINT, LLC, a Delaware limited liability company, successor by merger to
Medical Care International, Inc., a Delaware corporation ("Sublessor"), and
TRIAD HOSPITALS, INC., a Delaware corporation ("SubTenant"), under the following
circumstances:
A. Pursuant to a certain Lease Agreement, dated August 18, 1993, as
amended by First Amendment to Lease Agreement, dated January 20, 1995 and Second
Amendment to Lease Agreement, dated January, 1996, (collectively, the "Prime
Lease"), a copy of which is attached hereto as Exhibit A, Two Galleria Tower
Limited, a Texas limited partnership ("Prime Lessor") has leased to Sublessor
the premises described therein (the "Premises").
B. Sublessee desires to lease a portion of the premises leased under
the Prime Lease from Sublessor and Sublessor desires to lease the same to
Sublessee, on the terms and conditions set forth in this Sublease, and
NOW, THEREFORE, in consideration of the covenants and agreements of
the parties hereinafter set forth and other good and valuable consideration,
receipt of which is hereby acknowledged by the parties, Sublessor and Sublessee
hereby agree as follows:
1. Subleased Premises. Sublessor hereby subleases to the Sublessee a
------------------
portion of the premises described in the Prime Lease (hereinafter the "Subleased
Premises") consisting of approximately 22,537 square feet of Net Rentable Area
located on Floor 19 of the building known as Two Galleria Tower.
2. Term. The term of this Sublease shall commence on May 11, 1999
----
and terminate on January 31, 2003 (the "Term").
3. Rent. Sublessee shall pay to Sublessor rent for the Subleased
----
Premises equal to all Rent (as defined in the Prime Lease) payable by Sublessor
under the Prime Lease for the Subleased Premises. (See Amendment to Prime Lease
dated January, 1996 for 19th floor rent.)
4. Assignment/Further Subletting. Sublessee shall not, either
-----------------------------
voluntarily or by operation of law, directly or indirectly sell, hypothecate,
assign or transfer this Sublease, in whole or in part, or further sublet all or
any part of the Subleased Premises, or permit the Subleased Premises to be
occupied by any other person, without the prior written consent of Sublessor and
Prime Lessor in each instance.
Any sale, assignment, mortgage, transfer or subletting of this
Sublease, which is not in compliance with the provisions of this Paragraph 4
shall be void and at the option of Sublessor, Sublessor may terminate this
Sublease. Each such assignment, transfer or further subletting of the Subleased
Premises, if consented to by Sublessor and Prime Lessor shall be subject and
subordinate to the Prime Lease and this Sublease and each such assignee or
sublessee shall be bound to perform, observe and comply with all of the
covenants, agreements and terms and conditions of this Sublease, all of which
shall be specifically assumed in writing by such assignee or sublessee. Upon the
consummation of any such transfer, assignment or sublease,
<PAGE>
Sublessee shall deliver to Sublessor promptly thereafter, a copy of the fully
executed assignment, sublease or other instrument of transfer. The consent of
Sublessor or Prime Lessor to any one assignment or sublease shall not relieve
Sublessee or its assignee or subtenants from obtaining the prior written consent
of Prime Lessor and Sublessor to any further assignment or subletting and shall
not release Sublessee from any liability or obligation hereunder, whether or not
then accrued.
5. Prime Lease. Sublessor represents that a true and complete copy
-----------
of the Prime Lease, as amended, supplemented and modified, is attached hereto as
Exhibit A and Sublessee acknowledges receipt thereof. Sublessor represents and
warrants that the Prime Lease is in full force and effect and Sublessor has no
knowledge of any defaults under the Prime Lease. This Sublease is subject and
subordinate to the Prime Lease, all of the terms and conditions thereof and the
performance by Prime Lessor of all of its obligations thereunder, and to the
extent approved by Sublessee, which approval will not be unreasonably withheld,
all amendments and supplements hereafter entered into. All terms contained in
this Sublease shall have the same meanings and definitions ascribed to them in
the Prime Lease, unless any such term is expressly defined in this Sublease or
the context requires otherwise. Sublessee shall not commit or permit to be
committed on the Subleased Premises any act or omission which violates any term
or condition of the Prime Lease. In the event of the termination of the
Sublessor's interest as Sublessee under the Prime Lease for any reason other
than a default by Sublessor under the Prime Lease which occurs for any reason
other than a breach or a default by Sublessee under this Sublease, then this
Sublease shall terminate coincidentally therewith without any liability of
Sublessor to Sublessee. Sublessee shall only have such rights with respect to
the Leased Premises which Sublessor has pursuant to the Prime Lease. Except as
specifically exempted as provided below in this Paragraph 5, Sublessee shall
assume, perform and observe all of the obligations of Sublessor as Tenant under
the Prime Lease, to the extent that such terms and conditions are applicable to
the Subleased Premises, including without limitation thereto payment (or in the
case of payment in the first instance by Sublessor, reimbursement of Sublessor
for payment) of all rent which becomes due under the Prime Lease with respect to
the Subleased Premises only. Sublessee's performance and observance of all such
obligations shall be effected so that, whenever time periods are specified in
the Prime Lease for Sublessor's compliance as Tenant thereunder, Sublessee shall
have so complied on or prior to such date, unless otherwise specifically
provided herein. Except as otherwise provided in this Sublease, all of the terms
and conditions contained in the Prime Lease, except for the provisions of 2.3,
3.3, 5.4, 6.17, 7.1, 7.2, 7.3, and 7.4 are incorporated herein as terms and
conditions of this Sublease (with each reference in the Prime Lease to
"Landlord" being deemed to refer to Sublessor and Prime Lessor, with each
reference to "Tenant" therein being deemed to refer to Sublessee and with each
reference to the Premises being deemed to refer to the Subleased Premises); and
all such provisions along with all of the provisions specifically set forth in
this Sublease, shall be the complete terms and conditions of this Sublease.
If Prime Lessor shall be in default of any of its obligations under
the Prime Lease, Sublessee shall be entitled to all rights and remedies against
Prime Lessor which Sublessor would otherwise be entitled to under the Prime
Lease as a result of such default; subject, however, to the following provisions
and procedures: Insofar as Prime Lessor is or may be
2
<PAGE>
obligated to construct or make any alterations or improvements to the Subleased
Premises, to furnish any services to the Leased Premises, to repair or rebuild
the same, to insure the Subleased Premises, to perform any other act whatsoever
with respect to the Premises or the Subleased Premises or to perform any
obligation or satisfy any condition under the Prime Lease, Sublessee expressly
acknowledges that notwithstanding anything to the contrary provided in this
Paragraph 5, Sublessor does not undertake the performance or observance of such
obligations, but is only obligated to use reasonable efforts to obtain Prime
Lessor's performance for Sublessee's benefit and without obligating itself to
institute legal action or incur any out of pocket expense. If after receipt of
written request from Sublessee, Sublessor fails or refuses to take appropriate
action for the enforcement of Sublessor's rights against Prime Lessor with
respect to the Leased Premises, Sublessee shall have the right to take such
action in Sublessee's own name and for that purpose and only to such extent,
Sublessor's rights under the Prime Lease shall be and hereby are conferred upon
and assigned to Sublessee. Sublessee shall be subrogated to such rights to the
extent that the same shall apply to the Subleased Premises. If any such action
against Prime Lessor in Sublessee's name shall be barred by reason of lack of
privity, nonassignability or otherwise, Sublessor shall permit Sublessee to take
such action in Sublessor's name; provided, however, that Sublessee shall
indemnify, defend and hold Sublessor harmless from and against all liability,
expense, loss or damage which Sublessor may incur or suffer by reason of any
such action, and that copies of all papers, and notices of all proceedings,
shall be given to Sublessor.
6. Defaults and Remedies. The following events of default and
---------------------
remedies shall govern this Sublease:
(a) Defaults. The following events shall constitute a material
--------
default under this Sublease:
(i) The failure by Sublessee to make any payment of rent or
any other payment required to be made by Sublessee hereunder, as and when due,
where such failure shall continue for a period of 10 days after written notice
thereof from Sublessor or Prime Lessor.
(ii) The failure by Sublessee to observe or perform any of
the covenants, conditions or provisions of this Sublease to be observed or
performed by Sublessee other than those described in Section (i) above, where
such failure shall continue for a period of 30 days after written notice thereof
from Sublessor or Prime Lessor, provided that if the cure of such breach shall
reasonably require more than 30 days, then Sublessee shall not be in default if
Sublessee commenced such cure within said 30 day period and thereafter
diligently prosecutes such cure to completion.
(iii) The making by Sublessee of any general assignment, or
general arrangement for the benefit of creditors; the filing by or against
Sublessee of a petition to have Sublessee adjudged a bankrupt or a petition for
reorganization or arrangement under any bankruptcy law (unless the petition
filed against Sublessee is dismissed within 90 days); the appointment of a
trustee or receiver to take possession of substantially all of Sublessee's
assets located at the Subleased Premises or of Sublessee's interest in this
Sublease, where possession is not restored to Sublessee within 30 days; or the
attachment, execution or other judicial seizure of
3
<PAGE>
substantially all of Sublessee's assets located at the Subleased Premises or of
Sublessee's interest in this Sublease, where such seizure is not discharged
within 60 days.
(b) Remedies. In the event of any such material default,
--------
Sublessor may at any time thereafter, and without limiting Sublessee in the
exercise of any right or remedy which Sublessor may have by reason of such
default:
(i) Terminate Sublessee's right to possession of the
Subleased Premises by any lawful means, in which case this Sublease shall
terminate and Sublessee shall immediately surrender possession of the Subleased
Premises to Sublessor. In which event Sublessor shall be entitled to recover
from Sublessee all damages incurred by Sublessor by reason of Sublessee's
default including, but not limited to, the cost of recovering possession of the
Subleased Premises; expenses of reletting, including renovation and alteration
of the Subleased Premises, reasonable attorney's fees, and any real estate
commissions actually paid; the worth at the time of award of the amount by which
the unpaid rent for the balance of the term after the time of such award exceeds
the amount of such rental loss for the same period that Sublessee proves could
be reasonably avoided; and that portion of any leasing commission paid by
Sublessor applicable to the unexpired term of this Sublease. Unpaid installments
of Rent or other sums shall bear interest from the date due at the "prime rate"
of interest as announced from time to time in the Wall Street Journal plus 5%,
but in no event more than the maximum interest allowed by law (which rate is
hereinafter referred to as the "Interest Rate"). If Sublessee abandons the
Subleased Premises, Sublessor shall have the option of retaking possession of
the Subleased Premises and recovering from Sublessee the amount as specified in
this paragraph.
(ii) Maintain Sublessee's right to possession in which case
this Sublease shall continue in effect whether or not Sublessee shall have
abandoned the Subleased Premises. In such event, Sublessor shall be entitled to
enforce all of Sublessor's rights and remedies under this Sublease, including
the right to recover the rent as it becomes due hereunder.
(iii) Sublessor may remove any or all items of Sublessee's
property from the Subleased Premises and dispose of them in any commercially
reasonable manner, and Sublessee shall pay upon demand to Sublessor the actual
expense of such removal and disposition together with interest at the Interest
Rate, but in no event more than the maximum interest allowed by law, from the
date of payment by Sublessor until repayment by Sublessee.
(iv) Pursue any other remedy now or hereafter available to
Sublessor under the laws or judicial decisions of the State of Texas.
7. Notices. Any notice or other communication required or permitted
-------
to be given under this Sublease shall be in writing and shall be deemed to have
been effectively given if delivered personally or if mailed certified mail,
postage prepaid, return receipt requested, or sent by nationally recognized
overnight carrier as follows:
4
<PAGE>
If to Sublessor:
Med-Point, LLC
c/o Columbia/HCA Healthcare Corporation
One Park Plaza
Building 2, 5th Floor
Nashville, TN 37203
Attn. Real Estate Department
If to Sublessee:
Triad Hospitals, Inc.
2000 Two Galleria Tower
13455 Noel Road
Dallas, Texas 75240
Any party may change the address to which notices and other
communications are to be directed to it by giving notice of such change to the
other party in the manner provided in this section.
8. Parking. Sublessee shall be entitled to Parking Permits for
-------
the following number and type of parking spaces in the Garage and shall pay the
following parking fees:
No. of Spaces Monthly Fee
------------- -----------
General Parking Area: 47 -0-
Executive Parking Area: 25 -0-
VIP Parking Area: 6 -0-
9. Headings. The use of headings, captions and numbers in this
--------
Sublease is solely for the convenience of identifying and indexing the various
paragraphs, and shall in no event be considered otherwise in construing or
interpreting any provision of this Sublease.
10. Severability. If any term, covenant, conditions or provision of
------------
this Sublease, or the application thereof to any person or circumstance shall
ever be held to be invalid or unenforceable, then, in each such event, the
remainder of this Sublease or the application of such term, covenant, condition
or provision to any other person or any other circumstances (other than those as
to which it shall be invalid or unenforceable) shall not be thereby affected,
and each term, covenant, condition and provision hereof shall remain valid and
enforceable to the fullest extent provided by law.
5
<PAGE>
11. Entire Agreement. This Sublease (including the Exhibits, the
----------------
Prime Lease and all supplementary agreements provided for herein, if any)
contains the entire agreement of the Sublessor and the Sublessee and no
representations, warranties, inducements, promises or agreements, oral or
otherwise, between the parties not described in this Sublease shall be of any
force or effect.
12. Modifications. This Sublease shall not be modified or amended in
-------------
any respect except by a written agreement executed by the Sublessor and the
Sublessee in the same manner as this Sublease is executed.
IN WITNESS WHEREOF, Sublessor and Sublessee have executed this
instrument as of the day and year first written above.
SUBLESSOR:
MED-POINT, LLC, a Delaware limited liability
company, successor by merger to Medical Care
International, Inc.
By: /s/ John Franck
------------------
Name: John Franck
Title: Manager
SUBLESSEE:
TRIAD HOSPITALS, INC.
By: /s/ Donald P. Fay
--------------------
Title: Executive Vice President, General Counsel
and Secretary
<PAGE>
EXHIBIT 10.9
SUBLEASE AGREEMENT
THIS SUBLEASE is made as of the 11/th/ day of May, 1999 by and between
HEALTHTRUST, INC. - THE HOSPITAL COMPANY, a Delaware corporation, successor by
merger to Medical Care America, Inc., a Delaware corporation ("Sublessor"), and
TRIAD HOSPITALS, INC., a Delaware corporation ("SubTenant"), under the following
circumstances:
A. Pursuant to a certain Lease Agreement, dated November 12, 1992, as
amended by First Amendment to Lease Agreement, dated November 30, 1993, Second
Amendment to Lease Agreement, dated June 21, 1994, and Third Amendment to Lease
Agreement, dated January 20, 1995 (collectively, the "Prime Lease"), a copy of
which is attached hereto as Exhibit A, Two Galleria Tower Limited, a Texas
limited partnership ("Prime Lessor") has leased to Sublessor the premises
described therein (the "Premises").
B. Sublessee desires to lease the premises leased under the Prime
Lease from Sublessor and Sublessor desires to lease the same to Sublessee, on
the terms and conditions set forth in this Sublease, and
NOW, THEREFORE, in consideration of the covenants and agreements of
the parties hereinafter set forth and other good and valuable consideration,
receipt of which is hereby acknowledged by the parties, Sublessor and Sublessee
hereby agree as follows:
1. Subleased Premises. Sublessor hereby subleases to the Sublessee of
------------------
the premises described in the Prime Lease (hereinafter the "Subleased Premises")
consisting of approximately 22,248 square feet of Net Rentable Area located on
Floor 20 of the building known as Two Galleria Tower.
2. Term. The term of this Sublease shall commence on May 11, 1999 and
----
terminate on January 31, 2003 (the "Term").
3. Rent. Sublessee shall pay to Sublessor rent for the Subleased
----
Premises equal to all Rent (as defined in the Prime Lease) payable by Sublessor
under the Prime Lease.
4. Assignment/Further Subletting. Sublessee shall not, either
-----------------------------
voluntarily or by operation of law, directly or indirectly sell, hypothecate,
assign or transfer this Sublease, in whole or in part, or further sublet all or
any part of the Subleased Premises, or permit the Subleased Premises to be
occupied by any other person, without the prior written consent of Sublessor and
Prime Lessor in each instance.
Any sale, assignment, mortgage, transfer or subletting of this
Sublease, which is not in compliance with the provisions of this Paragraph 4
shall be void and at the option of Sublessor, Sublessor may terminate this
Sublease. Each such assignment, transfer or further subletting of the Subleased
Premises, if consented to by Sublessor and Prime Lessor shall be subject and
subordinate to the Prime Lease and this Sublease and each such assignee or
sublessee shall be bound to perform, observe and comply with all of the
covenants, agreements and terms and conditions of this Sublease, all of which
shall be specifically assumed in writing by such assignee or sublessee. Upon the
consummation of any such transfer, assignment or sublease, Sublessee shall
deliver to Sublessor promptly thereafter, a copy of the fully executed
assignment, sublease or other instrument of transfer. The consent of Sublessor
or Prime Lessor to any one
<PAGE>
assignment or sublease shall not relieve Sublessee or its assignee or subtenants
from obtaining the prior written consent of Prime Lessor and Sublessor to any
further assignment or subletting and shall not release Sublessee from any
liability or obligation hereunder, whether or not then accrued.
5. Prime Lease. Sublessor represents that a true and complete copy of
-----------
the Prime Lease, as amended, supplemented and modified, is attached hereto as
Exhibit A and Sublessee acknowledges receipt thereof. Sublessor represents and
warrants that the Prime Lease is in full force and effect and Sublessor has no
knowledge of any defaults under the Prime Lease. This Sublease is subject and
subordinate to the Prime Lease, all of the terms and conditions thereof and the
performance by Prime Lessor of all of its obligations thereunder, and to the
extent approved by Sublessee, which approval will not be unreasonably withheld,
all amendments and supplements hereafter entered into. All terms contained in
this Sublease shall have the same meanings and definitions ascribed to them in
the Prime Lease, unless any such term is expressly defined in this Sublease or
the context requires otherwise. Sublessee shall not commit or permit to be
committed on the Subleased Premises any act or omission which violates any term
or condition of the Prime Lease. In the event of the termination of the
Sublessor's interest as Sublessee under the Prime Lease for any reason other
than a default by Sublessor under the Prime Lease which occurs for any reason
other than a breach or a default by Sublessee under this Sublease, then this
Sublease shall terminate coincidentally therewith without any liability of
Sublessor to Sublessee. Sublessee shall only have such rights with respect to
the Leased Premises which Sublessor has pursuant to the Prime Lease. Except as
specifically exempted as provided below in this Paragraph 5, Sublessee shall
assume, perform and observe all of the obligations of Sublessor as Tenant under
the Prime Lease, to the extent that such terms and conditions are applicable to
the Subleased Premises, including without limitation thereto payment (or in the
case of payment in the first instance by Sublessor, reimbursement of Sublessor
for payment) of all rent which becomes due under the Prime Lease. Sublessee's
performance and observance of all such obligations shall be effected so that,
whenever time periods are specified in the Prime Lease for Sublessor's
compliance as Lessee thereunder, Sublessee shall have so complied on or prior to
such date, unless otherwise specifically provided herein. Except as otherwise
provided in this Sublease, all of the terms and conditions contained in the
Prime Lease, except for the provisions of 2.3, 3.3, 5.4, 6.17, 7.1, 7.2, 7.3,
and 7.4 are incorporated herein as terms and conditions of this Sublease (with
each reference in the Prime Lease to "Landlord" being deemed to refer to
Sublessor and Prime Lessor, with each reference to "Tenant" therein being deemed
to refer to Sublessee and with each reference to the Premises being deemed to
refer to the Subleased Premises); and all such provisions along with all of the
provisions specifically set forth in this Sublease, shall be the complete terms
and conditions of this Sublease.
If Prime Lessor shall be in default of any of its obligations under
the Prime Lease, Sublessee shall be entitled to all rights and remedies against
Prime Lessor which Sublessor would otherwise be entitled to under the Prime
Lease as a result of such default; subject, however, to the following provisions
and procedures: Insofar as Prime Lessor is or may be obligated to construct or
make any alterations or improvements to the Subleased Premises, to furnish any
services to the Leased Premises, to repair or rebuild the same, to insure the
Subleased
2
<PAGE>
Premises, to perform any other act whatsoever with respect to the Premises or
the Subleased Premises or to perform any obligation or satisfy any condition
under the Prime Lease, Sublessee expressly acknowledges that notwithstanding
anything to the contrary provided in this Paragraph 5, Sublessor does not
undertake the performance or observance of such obligations, but is only
obligated to use reasonable efforts to obtain Prime Lessor's performance for
Sublessee's benefit and without obligating itself to institute legal action or
incur any out of pocket expense. If after receipt of written request from
Sublessee, Sublessor fails or refuses to take appropriate action for the
enforcement of Sublessor's rights against Prime Lessor with respect to the
Leased Premises, Sublessee shall have the right to take such action in
Sublessee's own name and for that purpose and only to such extent, Sublessor's
rights under the Prime Lease shall be and hereby are conferred upon and assigned
to Sublessee. Sublessee shall be subrogated to such rights to the extent that
the same shall apply to the Subleased Premises. If any such action against Prime
Lessor in Sublessee's name shall be barred by reason of lack of privity,
nonassignability or otherwise, Sublessor shall permit Sublessee to take such
action in Sublessor's name; provided, however, that Sublessee shall indemnify,
defend and hold Sublessor harmless from and against all liability, expense, loss
or damage which Sublessor may incur or suffer by reason of any such action, and
that copies of all papers, and notices of all proceedings, shall be given to
Sublessor.
6. Defaults and Remedies. The following events of default and remedies
---------------------
shall govern this Sublease:
(a) Defaults. The following events shall constitute a material
--------
default under this Sublease:
(i) The failure by Sublessee to make any payment of rent or
any other payment required to be made by Sublessee hereunder, as and when due,
where such failure shall continue for a period of 10 days after written notice
thereof from Sublessor or Prime Lessor.
(ii) The failure by Sublessee to observe or perform any of the
covenants, conditions or provisions of this Sublease to be observed or performed
by Sublessee other than those described in Section (i) above, where such failure
shall continue for a period of 30 days after written notice thereof from
Sublessor or Prime Lessor, provided that if the cure of such breach shall
reasonably require more than 30 days, then Sublessee shall not be in default if
Sublessee commenced such cure within said 30 day period and thereafter
diligently prosecutes such cure to completion.
(iii) The making by Sublessee of any general assignment, or
general arrangement for the benefit of creditors; the filing by or against
Sublessee of a petition to have Sublessee adjudged a bankrupt or a petition for
reorganization or arrangement under any bankruptcy law (unless the petition
filed against Sublessee is dismissed within 90 days); the appointment of a
trustee or receiver to take possession of substantially all of Sublessee's
assets located at the Subleased Premises or of Sublessee's interest in this
Sublease, where possession is not restored to Sublessee within 30 days; or the
attachment, execution or other judicial seizure of substantially all of
Sublessee's assets located at the Subleased Premises or of Sublessee's interest
in this Sublease, where such seizure is not discharged within 60 days.
3
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(b) Remedies. In the event of any such material default, Sublessor may
--------
at any time thereafter, and without limiting Sublessee in the exercise of any
right or remedy which Sublessor may have by reason of such default:
(i) Terminate Sublessee's right to possession of the Subleased
Premises by any lawful means, in which case this Sublease shall terminate and
Sublessee shall immediately surrender possession of the Subleased Premises to
Sublessor. In which event Sublessor shall be entitled to recover from Sublessee
all damages incurred by Sublessor by reason of Sublessee's default including,
but not limited to, the cost of recovering possession of the Subleased Premises;
expenses of reletting, including renovation and alteration of the Subleased
Premises, reasonable attorney's fees, and any real estate commissions actually
paid; the worth at the time of award of the amount by which the unpaid rent for
the balance of the term after the time of such award exceeds the amount of such
rental loss for the same period that Sublessee proves could be reasonably
avoided; and that portion of any leasing commission paid by Sublessor applicable
to the unexpired term of this Sublease. Unpaid installments of Rent or other
sums shall bear interest from the date due at the "prime rate" of interest as
announced from time to time in the Wall Street Journal plus 5%, but in no event
more than the maximum interest allowed by law (which rate is hereinafter
referred to as the "Interest Rate"). If Sublessee abandons the Subleased
Premises, Sublessor shall have the option of retaking possession of the
Subleased Premises and recovering from Sublessee the amount as specified in this
paragraph.
(ii) Maintain Sublessee's right to possession in which case
this Sublease shall continue in effect whether or not Sublessee shall have
abandoned the Subleased Premises. In such event, Sublessor shall be entitled to
enforce all of Sublessor's rights and remedies under this Sublease, including
the right to recover the rent as it becomes due hereunder.
(iii) Sublessor may remove any or all items of Sublessee's
property from the Subleased Premises and dispose of them in any commercially
reasonable manner, and Sublessee shall pay upon demand to Sublessor the actual
expense of such removal and disposition together with interest at the Interest
Rate, but in no event more than the maximum interest allowed by law, from the
date of payment by Sublessor until repayment by Sublessee.
(iv) Pursue any other remedy now or hereafter available to
Sublessor under the laws or judicial decisions of the State of Texas.
7. Notices. Any notice or other communication required or permitted
-------
to be given under this Sublease shall be in writing and shall be deemed to have
been effectively given if delivered personally or if mailed certified mail,
postage prepaid, return receipt requested, or sent by nationally recognized
overnight carrier as follows:
If to Sublessor:
Healthtrust, Inc. - The Hospital Company
One Park Plaza
Building 2, 5th Floor
Nashville, TN 37203
4
<PAGE>
Attn. Real Estate Department
If to Sublessee:
Triad Hospitals, Inc.
2000 Two Galleria Tower
13455 Noel Road
Dallas, Texas 75240
Any party may change the address to which notices and other
communications are to be directed to it by giving notice of such change to the
other party in the manner provided in this section.
8. Parking. Sublessee shall be entitled to Parking Permits for
-------
the following number and type of parking spaces in the Garage and shall pay the
following parking fees:
No. of Spaces Monthly Fee
------------- -----------
General Parking Area: 24 -0-
Executive Parking Area: 40 -0-
VIP Parking Area: 12 -0-
9. Headings. The use of headings, captions and numbers in this
--------
Sublease is solely for the convenience of identifying and indexing the various
paragraphs, and shall in no event be considered otherwise in construing or
interpreting any provision of this Sublease.
10. Severability. If any term, covenant, conditions or provision
------------
of this Sublease, or the application thereof to any person or circumstance shall
ever be held to be invalid or unenforceable, then, in each such event, the
remainder of this Sublease or the application of such term, covenant, condition
or provision to any other person or any other circumstances (other than those as
to which it shall be invalid or unenforceable) shall not be thereby affected,
and each term, covenant, condition and provision hereof shall remain valid and
enforceable to the fullest extent provided by law.
11. Entire Agreement. This Sublease (including the Exhibits, the
----------------
Prime Lease and all supplementary agreements provided for herein, if any)
contains the entire agreement of the Sublessor and the Sublessee and no
representations, warranties, inducements, promises or agreements, oral or
otherwise, between the parties not described in this Sublease shall be of any
force or effect.
5
<PAGE>
12. Modifications. This Sublease shall not be modified or amended in
-------------
any respect except by a written agreement executed by the Sublessor and the
Sublessee in the same manner as this Sublease is executed.
6
<PAGE>
IN WITNESS WHEREOF, Sublessor and Sublessee have executed this
instrument as of the day and year first written above.
SUBLESSOR:
HEALTHTURST, INC. - THE HOSPITAL COMPANY, a
Delaware corporation, successor by merger to
Medical Care America, Inc.
By: /s/ Howard Patterson
-----------------------
Title: Vice President
SUBLESSEE:
TRIAD HOSPITALS, INC.
By: /s/ Donald P. Fay
--------------------
Title: Executive Vice President, General Counsel
and Secretary
<PAGE>
EXHIBIT 10.10
TRIAD HOSPITALS, INC.
1999 LONG-TERM INCENTIVE PLAN
<PAGE>
TRIAD HOSPITALS, INC.
1999 LONG-TERM INCENTIVE PLAN
Table of Contents
<TABLE>
<CAPTION>
<S> <C>
1. Purpose of the Plan.................................................................................. 1
2. Definitions.......................................................................................... 1
(a) Award....................................................................................... 1
(b) Award Agreement............................................................................. 1
(c) Board....................................................................................... 1
(d) Change in Control........................................................................... 1
(e) Code........................................................................................ 1
(f) Columbia/HCA................................................................................ 1
(g) Committee................................................................................... 1
(h) Common Stock................................................................................ 2
(i) Corporation................................................................................. 2
(j) Date of Grant............................................................................... 2
(k) Dividend Equivalent Award................................................................... 2
(l) Effective Date.............................................................................. 2
(m) Eligible Person............................................................................. 2
(n) Employee.................................................................................... 2
(o) Fair Market Value........................................................................... 2
(p) Incentive Stock Option...................................................................... 2
(q) Non-qualified Stock Option.................................................................. 2
(r) Option...................................................................................... 2
(s) Participant................................................................................. 3
(t) Phantom Stock Award......................................................................... 3
(u) Plan........................................................................................ 3
(v) Performance Award........................................................................... 3
(w) Restricted Stock Award...................................................................... 3
(x) Section 162(m).............................................................................. 3
(y) Section 162(m) Award........................................................................ 3
(z) Stock Appreciation Right.................................................................... 3
(aa) Subsidiary.................................................................................. 3
3. Shares of Common Stock Subject to the Plan........................................................... 3
3.1. Number of Shares............................................................................ 3
3.2. Adjustments................................................................................. 4
4. Administration of the Plan........................................................................... 4
4.1. Committee Members........................................................................... 4
4.2. Discretionary Authority..................................................................... 4
4.3. Changes to Awards........................................................................... 4
5. Eligibility and Awards............................................................................... 5
6. Stock Options........................................................................................ 5
6.1. Grant of Option............................................................................. 5
</TABLE>
i
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<TABLE>
<S> <C>
6.2. Exercise Price............................................................................ 5
6.3. Vesting; Term of Option................................................................... 5
6.4. Option Exercise; Withholding.............................................................. 5
6.5. Limited Transferability of Non-qualified Options.......................................... 6
6.6. Additional Rules for Incentive Stock Options.............................................. 6
(a) Annual Limits.................................................................... 6
(b) Termination of Employment........................................................ 6
(c) Other Terms and Conditions; Nontransferability................................... 6
(d) Disqualifying Dispositions....................................................... 7
6.7. Restrictions on Transfer of Stock......................................................... 7
7. Stock Appreciation Rights.......................................................................... 7
7.1. Grant of SARs............................................................................. 7
7.2. Tandem SARs............................................................................... 7
7.3. Freestanding SARs......................................................................... 8
7.4. Payment of SARs........................................................................... 8
8. Restricted Stock Award............................................................................. 8
8.1. Grant of Restricted Stock Awards.......................................................... 8
8.2. Vesting Requirements...................................................................... 8
8.3. Restrictions.............................................................................. 8
8.4. Rights as Shareholder..................................................................... 9
8.5. Section 83(b) Election.................................................................... 9
9. Performance Awards................................................................................. 9
9.1. Grant of Performance Awards............................................................... 9
9.2. Payment of Performance Awards............................................................. 9
9.3. Performance Criteria...................................................................... 9
9.4. Section 162(m) Requirements............................................................... 10
10. Phantom Stock Award................................................................................ 10
10.1. Grant of Phantom Stock Awards............................................................. 10
10.2. Payment of a Phantom Stock Awards......................................................... 10
11. Dividend Equivalent Award.......................................................................... 11
11.1. Grant of a Dividend Equivalent Awards..................................................... 11
11.2. Payment of Dividend Equivalent Awards..................................................... 11
12. Change in Control.................................................................................. 11
12.1. Effect of Change in Control............................................................... 11
12.2. Definition of Change in Control........................................................... 11
13. Award Agreements................................................................................... 13
13.1. Form of Agreement......................................................................... 13
13.2. Forfeiture Events......................................................................... 13
14. General Provisions................................................................................. 14
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
14.1. No Assignment or Transfer; Beneficiaries................................................ 14
14.2. Deferrals of Payment..................................................................... 14
14.3. Rights as Shareholder.................................................................... 14
14.4. Employment or Service.................................................................... 14
14.5. Securities Laws.......................................................................... 14
14.6. Tax Withholding.......................................................................... 14
14.7. Unfunded Plan............................................................................ 15
14.8. Other Compensation and Benefit Plans..................................................... 15
14.9. Plan Binding on Transferees.............................................................. 15
14.10. Construction and Interpretation.......................................................... 15
14.11. Severability............................................................................. 15
14.12. Governing Law............................................................................ 15
15. Effective Date, Termination and Amendment......................................................... 15
15.1. Establishment of the Plan................................................................ 15
15.2. Effective Date; Shareholder Approval..................................................... 16
15.3. Termination.............................................................................. 16
15.4. Amendment................................................................................ 16
</TABLE>
iii
<PAGE>
TRIAD HOSPITALS, INC.
1999 LONG-TERM INCENTIVE PLAN
1. Purpose of the Plan
The purpose of the Triad Hospitals, Inc. 1999 Long-Term Incentive Plan is
to promote the interests of the Corporation and its shareholders by
strengthening the Corporation's ability to attract, motivate, and retain
personnel upon whose judgment, initiative, and efforts the financial success and
growth of the business of the Corporation largely depend, to offer such
personnel additional incentives to put forth maximum efforts for the success of
the business, and to afford them an opportunity to acquire a proprietary
interest in the Corporation through stock ownership and other rights.
2. Definitions
Wherever the following capitalized terms are used in this Plan, they shall
have the meanings specified below:
(a) "Award" means an award of an Option, Restricted Stock Award, Stock
Appreciation Right, Performance Award, Phantom Stock Award or Dividend
Equivalent Award granted under the Plan.
(b) "Award Agreement" means an agreement entered into between the
Corporation and a Participant setting forth the terms and conditions of an Award
granted to a Participant.
(c) "Board" means the Board of Directors of the Corporation; provided,
--------
however, that with regard to any action to be taken prior to the first meeting
- -------
of the Board of Directors of the Corporation, Board shall mean the Board of
Directors of Columbia/HCA.
(d) "Change in Control" shall have the meaning specified in Section 12
hereof.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Columbia/HCA" means the Columbia/HCA Healthcare Corporation, a
Delaware corporation.
(g) "Committee" means the committee appointed to administer the Plan and
shall consist of two or more directors of the Corporation (i) none of whom shall
be officers or employees of the Corporation, and (ii) all of whom, to the extent
deemed necessary or appropriate by the Board, shall satisfy the requirements for
an "outside director" under Section 162(m) and a "non-employee director" within
the meaning of Rule 16b-3 of the Securities Exchange Act of 1934. The members of
the Committee shall be appointed by and serve at the pleasure of the Board.
Notwithstanding the foregoing, prior to the date Columbia/HCA distributes all of
its shares of the Corporation to the shareholders of Columbia/HCA, Committee
shall mean a committee of two or more Directors of Columbia/HCA appointed to
administer the plan (i) none of whom shall be officers or employees of
Columbia/HCA, and (ii) all of whom, to the extent deemed necessary or
appropriate by the Board of Columbia/HCA, shall satisfy the requirements for an
"outside
1
<PAGE>
director" under Section 162(m) and a "non-employee director" within the meaning
of Rule 16b-3 of the Securities Exchange Act of 1934. If the applicable Board
shall so direct, designated members of the applicable Committee shall act as a
separate subcommittee, which shall administer the Plan as to all Section 162(m)
Awards. In such event, all references herein to the applicable Committee
relating to Section 162(m) Awards shall be considered to refer only to the
applicable separate subcommittee.
(h) "Common Stock" means the common stock of the Corporation.
(i) "Corporation" means Triad Hospitals, Inc., a Delaware corporation.
(j) "Date of Grant" means the date on which an Award under the Plan is made
by the Committee, or such later date as the Committee may specify to be the
effective date of the Award.
(k) "Dividend Equivalent Award" means an Award under Section 11 hereof
entitling the Participant to receive payments with respect to dividends declared
on the Common Stock.
(l) "Effective Date" means the Effective Date of this Plan, as defined in
Section 15.2 hereof.
(m) "Eligible Person" means any person who is an Employee of the
Corporation or any of its Subsidiaries and, in the case of Awards other than
Incentive Stock Options, any consultant or other independent contractor (not
including any non-employee outside director) providing services to the
Corporation or a Subsidiary.
(n) "Employee" means any person who is employed as a common-law employee.
(o) "Fair Market Value" of a share of Common Stock as of a given date shall
mean the closing sales price of the Common Stock on the Nasdaq Stock Market on
the trading day immediately preceding the date as of which the Fair Market Value
is to be determined, or, in the absence of any reported sales of Shares on such
date, on the first preceding date on which any such sale shall have been
reported (in either case, as reported in the Two Star Edition of The Wall Street
Journal). If the Common Stock is not listed on the Nasdaq Stock Market on the
date as of which Fair Market Value is to be determined, the Committee shall in
good faith determine the Fair Market Value in whatever manner it considers
appropriate.
(p) "Incentive Stock Option" means an option to purchase Common Stock that
is intended to qualify as an incentive stock option under section 422 of the
Code and the Treasury Regulations thereunder.
(q) "Non-qualified Stock Option" means an option to purchase Common Stock
that is not an Incentive Stock Option.
(r) "Option" means an Incentive Stock Option or a Non-qualified Stock
Option granted under Section 6 hereof.
2
<PAGE>
(s) "Participant" means any Eligible Person who holds an outstanding Award
under the Plan.
(t) "Phantom Stock Award" means an Award under Section 10 hereof entitling
a Participant to a payment at the end of a vesting period of a unit value based
on the Fair Market Value of a share of Common Stock.
(u) "Plan" means the Triad Hospitals, Inc. 1999 Long-Term Incentive Plan
as set forth herein, as it may be amended from time to time.
(v) "Performance Award" means an Award under Section 9 hereof entitling a
Participant to a payment based on the Fair Market Value of a share of Common
Stock (a "Performance Share") or based on specified dollar units (a "Performance
Unit") at the end of a performance period, if certain conditions established by
the Committee are satisfied.
(w) "Restricted Stock Award" means an Award under Section 8 hereof
entitling a Participant to shares of Common Stock that are nontransferable and
subject to forfeiture until specific conditions established by the Committee are
satisfied.
(x) "Section 162(m)" means section 162(m) of the Code and the Treasury
Regulations thereunder.
(y) "Section 162(m) Award" means any Award that is intended to qualify for
the performance-based compensation exemption under Section 162(m).
(z) "Stock Appreciation Right" or "SAR" means an Award under Section 7
hereof entitling a Participant to receive an amount representing the difference
between the base price per share of the right and the Fair Market Value of a
share of Common Stock on the date of exercise.
(aa) "Subsidiary" means an entity (whether or not a corporation) that is
wholly or majority owned or controlled, directly or indirectly, by the
Corporation, or any other affiliate of the Corporation that is so designated,
from time to time, by the Committee; provided, however, that with respect to
-------- -------
Incentive Stock Options, the term "Subsidiary" shall include only an entity that
qualifies under section 424(f) of the Code as a "subsidiary corporation" with
respect to the Corporation.
3. Shares of Common Stock Subject to the Plan
3.1. Number of Shares. Subject to the following provisions of this Section
----------------
3, the aggregate number of shares of Common Stock that may be issued pursuant to
all Awards under the Plan is 5,350,000 shares of Common Stock. The shares of
Common Stock to be delivered under the Plan will be made available from
authorized but unissued shares of Common Stock or issued shares that have been
reacquired by the Corporation. To the extent that any Award payable in Common
Stock is forfeited, cancelled, returned to the Corporation for failure to
satisfy vesting requirements or upon the occurrence of other forfeiture events,
or otherwise terminates without payment being made thereunder, shares of Common
Stock covered thereby
3
<PAGE>
will no longer be charged against the foregoing maximum share limitations and
may again be made subject to Awards under the Plan pursuant to such limitations.
3.2. Adjustments. If there shall occur any recapitalization,
-----------
reclassification, stock dividend, stock split, reverse stock split, or other
distribution with respect to the shares of Common Stock, or other change in
corporate structure affecting the Common Stock, the Committee may, in the manner
and to the extent that it deems appropriate and equitable to the Participants
and consistent with the terms of this Plan, cause an adjustment to be made in
(i) the maximum number and kind of shares provided in Section 3.1 hereof, (ii)
the maximum number and kind of shares set forth in Sections 6.1, 7.1, 8.1 and
9.4 hereof, (iii) the number and kind of shares of Common Stock, share units, or
other rights subject to then outstanding Awards, (iv) the price for each share
or unit or other right subject to then outstanding Awards, (v) the performance
targets or goals applicable to any outstanding Performance Awards (subject to
such limitations as are considered appropriate for Section 162(m) Awards), or
(vi) any other terms of an Award that are affected by the event. Notwithstanding
the foregoing, in the case of Incentive Stock Options, any such adjustments
shall be made in a manner consistent with the requirements of section 424(a) of
the Code and, to the extent considered advisable by the Committee, in a manner
consistent with the requirements of Section 162(m).
4. Administration of the Plan
4.1. Committee Members. The Plan shall be administered by the Committee.
-----------------
The Committee shall have such powers and authority as may be necessary or
appropriate for the Committee to carry out its functions as described in the
Plan. No member of the Committee shall be liable for any action or determination
made in good faith by the Committee with respect to the Plan or any Award
thereunder.
4.2. Discretionary Authority. Subject to the express limitations of the
-----------------------
Plan, the Committee shall have authority in its discretion to determine the
Eligible Persons to whom, and the time or times at which, Awards may be granted,
the number of shares, units or other rights subject to each Award, the exercise,
base or purchase price of an Award (if any), the time or times at which an Award
will become vested, exercisable or payable, the performance criteria,
performance goals and other conditions of an Award, the duration of the Award,
and all other terms of the Award. The Committee shall also have discretionary
authority to interpret the Plan, to make all factual determinations under the
Plan, and to make all other determinations necessary or advisable for Plan
administration. The Committee may prescribe, amend, and rescind rules and
regulations relating to the Plan. All interpretations, determinations, and
actions by the Committee shall be final, conclusive, and binding upon all
parties.
4.3. Changes to Awards. The Committee shall have the authority to effect,
-----------------
at any time and from time to time, (i) the cancellation of any or all
outstanding Awards and the grant in substitution therefor of new Awards covering
the same or different numbers of shares of Common Stock and having an exercise
or base price which may be the same as or different than the exercise or base
price of the cancelled Awards, or (ii) the amendment of the terms of any and all
outstanding Awards; provided, however, that no such action by the Committee may
-------- ------
adversely impair the rights of a Participant (or any permitted transferee) under
any outstanding Award without the consent of the Participant (or transferee).
The Committee may in its discretion
4
<PAGE>
accelerate the vesting or exercisability of an Award at any time or on the basis
of any specified event.
5. Eligibility and Awards
All Eligible Persons are eligible to be designated by the Committee to
receive an Award under the Plan. The Committee has authority, in its sole
discretion, to determine and designate from time to time those Eligible Persons
who are to be granted Awards, the types of Awards to be granted and the number
of shares or units subject to the Awards that are granted under the Plan. Each
Award will be evidenced by an Award Agreement between the Corporation and the
Participant that shall include such terms and conditions (consistent with the
Plan) as the Committee may determine; provided, however, that failure to issue
-------- -------
an Award Agreement shall not invalidate an Award.
6. Stock Options
6.1. Grant of Option. An Option may be granted to any Eligible Person
---------------
selected by the Committee; provided, however, that only Employees of the
-------- -------
Corporation or a Subsidiary shall be eligible to receive Incentive Stock
Options. Subject to the applicable provisions of section 422 of the Code, each
Option shall be designated, in the discretion of the Committee, as an Incentive
Stock Option or a Non-qualified Stock Option. The maximum number of shares of
Common Stock that may be granted under Options to any Participant during any
calendar year shall be limited to 700,000 shares (subject to adjustment as
provided in Section 3.2 hereof).
6.2. Exercise Price. The exercise price under any Option shall be
--------------
determined by the Committee; provided, however, that the exercise price per
-------- -------
share under an Option shall not be less than 100 percent of the Fair Market
Value per share of the Common Stock on the Date of Grant.
6.3. Vesting; Term of Option. The Committee, in its sole discretion, shall
-----------------------
prescribe the time or times at which, or the conditions upon which, an Option or
portion thereof shall become vested and exercisable, and may accelerate the
exercisability of any Option at any time. The period during which a vested
Option may be exercised shall be ten years from the Date of Grant, unless a
shorter exercise period is specified by the Committee in an Award, subject to
such limitations as may apply under an Award relating to the termination of a
Participant's employment or other service with the Corporation or any
Subsidiary.
6.4. Option Exercise; Withholding. Subject to such terms and conditions as
----------------------------
shall be specified in an Award, an Option may be exercised in whole or in part
at any time during the term thereof by written notice to the Corporation,
together with payment of the aggregate exercise price therefor. Payment of the
exercise price shall be made (i) in cash or by cash equivalent, (ii) at the
discretion of the Committee, in shares of Common Stock acceptable to the
Committee, valued at the Fair Market Value of such shares on the date of
exercise, (iii) at the discretion of the Committee, by a delivery of a notice
that the Participant has placed a market sell order (or similar instruction)
with a broker with respect to shares of Common Stock then issuable upon exercise
of the Option, and that the broker has been directed to pay a sufficient portion
of the net proceeds of the sale to the Corporation in satisfaction of the Option
exercise price (conditioned upon the payment of such net proceeds), (iv) at the
discretion of the Committee, by
5
<PAGE>
a combination of the methods described above, or (v) by such other method as may
be approved by the Committee and set forth in the Award. In addition to and at
the time of payment of the exercise price, the Participant shall pay to the
Corporation the full amount of any and all applicable income tax and employment
tax amounts required to be withheld in connection with such exercise, payable
under such of the methods described above for the payment of the exercise price
of the Options as may be approved by the Committee.
6.5. Limited Transferability of Non-qualified Options. All Options shall
------------------------------------------------
be nontransferable except (i) upon the Participant's death, by the Participant's
will or the laws of descent and distribution or (ii) in the case Non-qualified
Stock Options only, on a case-by-case basis as may be approved by the Committee
in its discretion, in accordance with the terms provided below. An Award
Agreement for a Non-qualified Stock Option may provide that the Participant
shall be permitted to, during his or her lifetime and subject to the prior
approval of the Committee at the time of proposed transfer, transfer all or part
of the Option to the Participant's family member (as defined in the Award
Agreement in a manner consistent with the requirements for the Form S-8
registration statement, if applicable). Any such transfer shall be subject to
the condition that it is made by the Participant for estate planning, tax
planning, donative purposes or pursuant to a domestic relations order, and no
consideration (other than nominal consideration) is received by the Participant
therefor. The transfer of a Non-qualified Stock Option may be subject to such
other terms and conditions as the Committee may in its discretion impose from
time to time, including a condition that the portion of the Option to be
transferred be vested and exercisable by the Participant at the time of the
transfer. Subsequent transfers of an Option shall be prohibited other than by
will or the laws of descent and distribution upon the death of the transferee.
6.6. Additional Rules for Incentive Stock Options.
--------------------------------------------
(a) Annual Limits. No Incentive Stock Option shall be granted to a
-------------
Participant as a result of which the aggregate Fair Market Value (determined as
of the Date of Grant) of the stock with respect to which Incentive Stock Options
are exercisable for the first time in any calendar year under the Plan and any
other stock option plans of the Corporation, any Subsidiary, or any parent
corporation, would exceed the maximum amount permitted under section 422(d) of
the Code. This limitation shall be applied by taking Options into account in the
order in which granted.
(b) Termination of Employment. An Award of an Incentive Stock Option may
-------------------------
provide that such Option may be exercised not later than 3 months following
termination of employment of the Participant with the Corporation and all
Subsidiaries, subject to special rules relating to death and disability, as and
to the extent determined by the Committee to be appropriate with regard to the
requirements of section 422 of the Code and Treasury Regulations thereunder.
(c) Other Terms and Conditions; Nontransferability. Any Incentive Stock
----------------------------------------------
Option granted hereunder shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as are deemed necessary or desirable
by the Committee, which terms, together with the terms of this Plan, shall be
intended and interpreted to cause such Incentive Stock Option to qualify as an
"incentive stock option" under section 422 of the Code. Such terms shall
include, if applicable, limitations on Incentive Stock Options granted to ten-
percent owners of the Corporation. An Award Agreement for an Incentive Stock
Option may provide that such Option
6
<PAGE>
shall be treated as a Non-qualified Stock Option to the extent that certain
requirements applicable to "incentive stock options" under the Code shall not be
satisfied. An Incentive Stock Option shall by its terms be nontransferable
otherwise than by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of a Participant only by such Participant.
(d) Disqualifying Dispositions. If shares of Common Stock acquired by
--------------------------
exercise of an Incentive Stock Option are disposed of within two years following
the Date of Grant or one year following the transfer of such shares to the
Participant upon exercise, the Participant shall, promptly following such
disposition, notify the Corporation in writing of the date and terms of such
disposition and provide such other information regarding the disposition as the
Committee may reasonably require.
6.7. Restrictions on Transfer of Stock. The Committee may, in its sole
---------------------------------
discretion, impose in any Award of an Option restrictions on the transferability
of the shares of Common Stock issued upon exercise of such Option. If any such
restrictions are imposed, the Committee may require the Participant to enter
into an escrow agreement providing that the certificates representing the shares
subject to such transfer restrictions will remain in the physical custody of an
escrow holder until such restrictions are removed or have expired. The Committee
may require that certificates representing the shares subject to such
restrictions bear a legend making appropriate reference to the restrictions
imposed. Subject to any restrictions imposed in accordance with this Section
6.7, the Participant will have all rights of a shareholder with respect to any
such shares acquired upon an Option exercise, including the right to vote the
shares and receive all dividends and other distributions paid or made with
respect thereto.
7. Stock Appreciation Rights
7.1. Grant of SARs. A Stock Appreciation Right granted to a Participant is
-------------
an Award in the form of a right to receive, upon surrender of the right but
without other payment, an amount based on appreciation in the Fair Market Value
of the Common Stock over a base price established for the Award, exercisable at
such time or times and upon conditions as may be approved by the Committee. The
maximum number of shares of Common Stock that may be subject to SARs granted to
any Participant during any calendar year shall be limited to 700,000 shares
(subject to adjustment as provided in Section 3.2 hereof).
7.2. Tandem SARs. A Stock Appreciation Right may be granted in connection
-----------
with an Option, either at the time of grant or at any time thereafter during the
term of the Option. An SAR granted in connection with an Option will entitle the
holder, upon exercise, to surrender such Option or any portion thereof to the
extent unexercised, with respect to the number of shares as to which such SAR is
exercised, and to receive payment of an amount computed as described in Section
7.4 hereof. Such Option will, to the extent and when surrendered, cease to be
exercisable. An SAR granted in connection with an Option hereunder will have a
base price per share equal to the per share exercise price of the Option, will
be exercisable at such time or times, and only to the extent, that a related
Option is exercisable, and will expire no later than the related Option expires.
7
<PAGE>
7.3. Freestanding SARs. A Stock Appreciation Right may be granted without
-----------------
any related Option, and in such case, will be exercisable as determined by the
Committee, but in no event after 10 years from the Date of Grant. The base price
of an SAR granted without any related Option shall be determined by the
Committee in its sole discretion; provided, however, that the base price per
-------- -------
share of any such freestanding SAR shall not be less than 100 percent of the
Fair Market Value of the Common Stock on the Date of Grant.
7.4. Payment of SARs. An SAR will entitle the holder, upon exercise of the
---------------
SAR, to receive payment of an amount determined by multiplying: (i) the excess
of the Fair Market Value of a share of Common Stock on the date of exercise of
the SAR over the base price of such SAR, by (ii) the number of shares as to
which such SAR is exercised. Payment of the amount determined under the
foregoing may be made, in the discretion of the Committee, in cash, in shares of
Common Stock valued at their Fair Market Value on the date of exercise, or in a
combination of cash and shares of Common Stock.
8. Restricted Stock Award
8.1. Grant of Restricted Stock Awards. An Award of Restricted Stock to a
--------------------------------
Participant represents shares of Common Stock that are issued subject to such
restrictions on transfer and other incidents of ownership and such forfeiture
conditions as the Committee may determine. The Committee may, in connection with
any Restricted Stock Award, require the payment of a specified purchase price.
The Committee may grant a Restricted Stock Award that is a Section 162(m) Award
(as described in Section 8.2 below), as well as Restricted Stock Awards that are
not Section 162(m) Awards; provided, however, that the maximum number of shares
-------- -------
of Common Stock that may be subject to a Restricted Stock Award granted to a
Participant during any one calendar year shall be separately limited to 280,000
shares (subject to adjustment as provided in Section 3.2 hereof).
8.2. Vesting Requirements. The restrictions imposed on shares granted under
--------------------
a Restricted Stock Award shall lapse in accordance with the vesting requirements
specified by the Committee in the Award Agreement. Such vesting requirements may
be based on the continued employment of the Participant with the Corporation or
its Subsidiaries for a specified time period or periods, provided that any such
restriction shall not be scheduled to lapse in its entirety earlier than the
first anniversary of the Date of Grant. Such vesting requirements may also be
based on the attainment of specified business goals or measures established by
the Committee in its sole discretion. In the case of any Restricted Stock Award
that is a Section 162(m) Award, any such performance-based vesting requirements
shall be based upon the performance criteria identified in Section 9.3 below,
and the terms of the Award shall otherwise comply with the Section 162(m)
requirements described in Section 9.4 hereof.
8.3. Restrictions. Shares granted under any Restricted Stock Award may not
------------
be transferred, assigned or subject to any encumbrance, pledge, or charge until
all applicable restrictions are removed or have expired, unless otherwise
allowed by the Committee. The Committee may require the Participant to enter
into an escrow agreement providing that the certificates representing the shares
granted or sold under a Restricted Stock Award will remain in the physical
custody of an escrow holder until all restrictions are removed or have expired.
Failure to satisfy any applicable restrictions shall result in the subject
shares of the Restricted
8
<PAGE>
Stock Award being forfeited and returned to the Corporation, with any purchase
price paid by the Participant to be refunded, unless otherwise provided by the
Committee. The Committee may require that certificates representing the shares
granted under a Restricted Stock Award bear a legend making appropriate
reference to the restrictions imposed.
8.4. Rights as Shareholder. Subject to the foregoing provisions of this
---------------------
Section 8 and the applicable Award Agreement, the Participant will have all
rights of a shareholder with respect to the shares granted to him under a
Restricted Stock Award, including the right to vote the shares and receive all
dividends and other distributions paid or made with respect thereto, unless the
Committee determines otherwise at the time the Restricted Stock Award is
granted.
8.5. Section 83(b) Election. The Committee may provide in an Award
----------------------
Agreement that the Restricted Stock Award is conditioned upon the Participant's
refraining from making an election with respect to the Award under section 83(b)
of the Code. Irrespective of whether an Award is so conditioned, if a
Participant makes an election pursuant to section 83(b) of the Code with respect
to a Restricted Stock Award, the Participant shall be required to promptly file
a copy of such election with the Corporation.
9. Performance Awards
9.1. Grant of Performance Awards. The Committee may grant Performance
---------------------------
Awards under the Plan, which shall be represented by units denominated on the
Date of Grant either in shares of Common Stock (Performance Shares) or in
dollars (Performance Units). The Committee may grant Performance Awards that are
Section 162(m) Awards, as well as Performance Awards that are not Section 162(m)
Awards. At the time a Performance Award is granted, the Committee shall
determine, in its sole discretion, one or more performance periods and
performance goals to be achieved during the applicable performance periods, as
well as such other restrictions and conditions as the Committee deems
appropriate. In the case of Performance Units, the Committee shall also
determine a target unit value or a range of unit values for each Award. No
performance period shall exceed ten years from the Date of Grant. The
performance goals applicable to a Performance Award grant may be subject to such
later revisions as the Committee shall deem appropriate to reflect significant
unforeseen events, such as changes in law, accounting practices or unusual or
nonrecurring items or occurrences. The Committee's authority to make such
adjustments shall be subject to such limitations as the Committee deems
appropriate in the case of a Performance Award that is a Section 162(m) Award.
9.2. Payment of Performance Awards. At the end of the performance period,
-----------------------------
the Committee shall determine the extent to which performance goals have been
attained, or a degree of achievement between minimum and maximum levels, in
order to establish the level of payment to be made, if any, and shall determine
if payment is to be made in the form of cash or shares of Common Stock (valued
at their Fair Market Value at the time of payment) or a combination of cash and
shares of Common Stock. Payments of Performance Awards shall generally be made
as soon as practicable following the end of the performance period.
9.3. Performance Criteria. The performance criteria upon which the payment
--------------------
or vesting of a Performance Award that is a Section 162(m) Award may be based
shall be limited to
9
<PAGE>
one or more of the following business measures, which may be applied with
respect to the Corporation, any Subsidiary or any business unit, and which may
be measured on an absolute or relative to peer-group basis: (i) total
shareholder return, (ii) stock price increase, (iii) return on equity, (iv)
return on capital, (v) earnings per share, (vi) EBIT (earnings before interest
and taxes), and (vii) cash flow (including operating cash flow, free cash flow,
discounted cash flow return on investment, and cash flow in excess of costs of
capital). In the case of Performance Awards that are not Section 162(m) Awards,
the Committee shall designate performance criteria from among the foregoing or
such other business criteria as it shall determine in its sole discretion.
9.4. Section 162(m) Requirements. In the case of a Performance Award that
---------------------------
is a Section 162(m) Award, the Committee shall make all determinations necessary
to establish the terms of the Award within 90 days of the beginning of the
performance period (or such other time period as is required under Section
162(m)), including, without limitation, the designation of the Participant to
whom the Performance Award is to be made, the performance criteria or criterion
applicable to the Award and the performance goals that relate to such criteria,
and the dollar amounts or number of shares of Common Stock payable upon
achieving the applicable performance goals. As and to the extent required by
Section 162(m), the terms of a Performance Award that is a Section 162(m) Award
must state, in terms of an objective formula or standard, the method of
computing the amount of compensation payable under the Award, and must preclude
discretion to increase the amount of compensation payable under the terms of the
Award (but may give the Committee discretion to decrease the amount of
compensation payable). The maximum amount of compensation that may be payable to
a Participant during any one calendar year under a Performance Unit Award shall
be $4.2 million. The maximum number of Common Stock units that may be subject to
a Performance Share Award granted to a Participant during any one calendar year
shall be 280,000 share units (subject to adjustment as provided in Section 3.2
hereof).
10. Phantom Stock Award
10.1. Grant of Phantom Stock Awards. A Phantom Stock Award is an Award to a
-----------------------------
Participant of a number of hypothetical share units with respect to shares of
Common Stock, with an initial value based on the Fair Market Value of the Common
Stock on the Date of Grant. A Phantom Stock Award shall be subject to such
restrictions and conditions as the Committee shall determine. On the Date of
Grant, the Committee shall determine, in its sole discretion, the installment or
other vesting period of the Phantom Stock Award and the maximum value of the
Phantom Stock Award, if any. No vesting period shall exceed 10 years from the
Date of Grant. A Phantom Stock Award may be granted, at the discretion of the
Committee, together with a Dividend Equivalent Award covering the same number of
shares.
10.2. Payment of a Phantom Stock Awards. Upon the vesting date or dates
---------------------------------
applicable to the Phantom Stock Award granted to a Participant, an amount equal
to the Fair Market Value of one share of Common Stock upon such vesting dates
(subject to any applicable maximum value) shall be paid with respect to each
Phantom Stock Award unit granted to the Participant. Payment may be made, at the
discretion of the Committee, in cash or in shares of Common Stock valued at
their Fair Market Value on the applicable vesting dates, or in a combination
thereof.
10
<PAGE>
11. Dividend Equivalent Award
11.1. Grant of a Dividend Equivalent Awards. A Dividend Equivalent Award
-------------------------------------
granted to a Participant is an Award in the form of a right to receive cash
payments determined by reference to dividends declared on the Common Stock from
time to time during the term of the Award, which shall not exceed 10 years from
the Date of Grant. Dividend Equivalent Awards may be granted on a stand-alone
basis or in tandem with other Awards. Dividend Equivalent Awards granted on a
tandem basis shall expire at the time the underlying Award is exercised or
otherwise becomes payable to the Participant, or expires.
11.2. Payment of Dividend Equivalent Awards. Dividend Equivalent Awards
-------------------------------------
shall be payable in cash or in shares of Common Stock, valued at their Fair
Market Value on either the date the related dividends are declared or the date
the Dividend Equivalent Awards are paid to a Participant, as determined by the
Committee. Dividend Equivalent Awards shall be payable to a Participant as soon
as practicable following the time dividends are declared and paid with respect
to the Common Stock, or at such later date as the Committee shall specify in the
Award Agreement. Dividend Equivalent Awards granted with respect to Options
intended to qualify as a Section 162(m) Award shall be payable regardless of
whether the Option is exercised.
12. Change in Control
12.1 Effect of Change in Control. The Committee may, in an Award
---------------------------
Agreement, provide for the effect of a Change in Control on an Award. Such
provisions may include any one or more of the following: (i) the acceleration or
extension of time periods for purposes of exercising, vesting in, or realizing
gain from any Award, (ii) the elimination or modification of performance or
other conditions related to the payment or other rights under an Award, (iii)
provision for the cash settlement of an Award for an equivalent cash value, as
determined by the Committee, or (iv) such other modification or adjustment to an
Award as the Committee deems appropriate to maintain and protect the rights and
interests of Participants upon or following a Change in Control.
12.2. Definition of Change in Control. For purposes hereof, a "Change in
-------------------------------
Control" shall be deemed to have occurred upon the occurrence of any of the
following after the date on which the Corporation becomes a publicly-held
Corporation:
(i) An acquisition (other than directly from the Corporation) of
any voting securities of the Corporation (the "Voting Securities") by any
"Person" (as the term Person is used for purposes of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended (the "1934 Act"))
immediately after which such Person has "Beneficial Ownership" (within the
meaning of Rule 13d-3 promulgated under the 1934 Act) of twenty percent
(20%) or more of the combined voting power of the then outstanding Voting
Securities; provided, however, that in determining whether a Change in
-------- -------
Control has occurred, Voting Securities which are acquired in a "Non-
Control Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition by (i) an employee benefit plan (or
a trust forming a part thereof) maintained by (A) the Corporation or (B)
any corporation or other Person of which a majority of the voting power or
the equity
11
<PAGE>
securities or equity interests is owned directly or indirectly by the
Corporation (a "Control Subsidiary"), or (ii) the Corporation or any
Control Subsidiary.
(ii) The individuals who, as of the date the Corporation issues any
class of equity securities required to be registered under Section 12 of
the 1934 Act, are members of the Board (the "Incumbent Board"), cease for
any reason to constitute at least two-thirds of the Board; provided,
--------
however, that if the election or nomination for election by the
-------
Corporation's stockholders of any new director was approved by a vote of at
least two-thirds of the Incumbent Board, such new director shall, for
purposes of this Agreement, be considered as a member of the Incumbent
Board; provided, further, however, that no individual shall be considered a
-------- ------- -------
member of the Incumbent Board if (1) such individual initially assumed
office as a result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the 1934 Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board (a "Proxy Contest") including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy Contest
or (2) such individual was designated by a Person who has entered into an
agreement with the Corporation to effect a transaction described in clause
(i) or (iii) of this Section 12.2; or
(iii) Consummation, after approval by stockholders of the Corporation,
of:
(1) A merger, consolidation or reorganization involving the
Corporation, unless,
(A) The stockholders of the Corporation, immediately before
such merger, consolidation or reorganization, own, directly
or indirectly immediately following such merger,
consolidation or reorganization, at least seventy-five
percent (75%) of the combined voting power of the
outstanding Voting Securities of the corporation resulting
from such merger or consolidation or reorganization or its
parent corporation (the "Surviving Corporation") in
substantially the same proportion as their ownership of the
Voting Securities immediately before such merger,
consolidation or reorganization;
(B) The individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization
constitute at least two-thirds of the members of the board
of directors of the Surviving Corporation; and
(C) No Person (other than the Corporation, any Control
Subsidiary, any employee benefit plan (or any trust forming
a part thereof) maintained by the Corporation, the
Surviving Corporation or any Control Subsidiary, or any
Person who, immediately prior to such merger, consolidation
or reorganization, had Beneficial Ownership of twenty
percent (20%) or more of the then
12
<PAGE>
outstanding Voting Securities) has Beneficial Ownership of
twenty percent (20%) or more of the combined voting power of
the Surviving Corporation's then outstanding Voting
Securities.
(2) A complete liquidation or dissolution of the Corporation; or
(3) The sale or other disposition of all or substantially all of
the assets of the Corporation to any Person (other than a
transfer to a Control Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by the
Corporation which, by reducing the number of Voting Securities outstanding,
increased the proportional number of shares Beneficially Owned by the Subject
Person, provided that if a Change in Control would occur (but for the operation
of this sentence) as a result of the acquisition of Voting Securities by the
Corporation, and after such share acquisition by the Corporation, the Subject
Person becomes the Beneficial Owner of any additional Voting Securities which
increases the percentage of the then outstanding Voting Securities Beneficially
Owned by the Subject Person, then a Change in Control shall occur.
13. Award Agreements
13.1. Form of Agreement. Each Award under this Plan shall be evidenced by
-----------------
an Award Agreement in a form approved by the Committee setting forth the number
of shares of Common Stock, units or other rights (as applicable) subject to the
Award, the exercise, base, or purchase price (if any) of the Award, the time or
times at which an Award will become vested, exercisable or payable, the duration
of the Award, and in the case of Performance Awards, the applicable performance
criteria and goals. The Award Agreement shall also set forth other material
terms and conditions applicable to the Award as determined by the Committee
consistent with the limitations of this Plan. Award Agreements evidencing Awards
that are Section 162(m) Awards shall contain such terms and conditions as may be
necessary to meet the applicable requirements of Section 162(m). Award
Agreements evidencing Incentive Stock Options shall contain such terms and
conditions as may be necessary to meet the applicable provisions of section 422
of the Code.
13.2. Forfeiture Events. The Committee may specify in an Award that the
-----------------
Participant's rights, payments and benefits with respect to an Award shall be
subject to reduction, cancellation, forfeiture or recoupment upon the occurrence
of certain specified events, in addition to any otherwise applicable vesting or
performance conditions of an Award. Such events shall include, but shall not be
limited to, termination of employment for cause, violation of material
Corporation or Subsidiary policies, breach of noncompetition, confidentiality or
other restrictive covenants that may apply to the Participant, or other conduct
by the Participant that is detrimental to the business or reputation of the
Corporation or any Subsidiary.
13
<PAGE>
14. General Provisions
14.1. No Assignment or Transfer; Beneficiaries. Except as provided in
----------------------------------------
Section 6.5 hereof, Awards under the Plan shall not be assignable or
transferable, except by will or by the laws of descent and distribution, and
during the lifetime of a Participant, the Award shall be exercised only by such
Participant or by his guardian or legal representative. Notwithstanding the
foregoing, the Committee may provide in the terms of an Award Agreement that the
Participant shall have the right to designate a beneficiary or beneficiaries who
shall be entitled to any rights, payments or other specified under an Award
following the Participant's death.
14.2. Deferrals of Payment. Notwithstanding any other provisions of the
--------------------
Plan, the Committee may permit a Participant to defer the receipt of payment of
cash or delivery of shares of Common Stock that would otherwise be due to the
Participant by virtue of the exercise of a right or the satisfaction of vesting
or other conditions with respect to an Award. If any such deferral is to be
permitted by the Committee, the Committee shall establish the rules and
procedures relating to such deferral, including, without limitation, the period
of time in advance of payment when an election to defer may be made, the time
period of the deferral and the events that would result in payment of the
deferred amount, the interest or other earnings attributable to the deferral and
the method of funding, if any, attributable to the deferred amount.
14.3. Rights as Shareholder. A Participant shall have no rights as a holder
---------------------
of Common Stock with respect to any unissued securities covered by an Award
until the date the Participant becomes the holder of record of such securities.
Except as provided in Section 3.2 hereof, no adjustment or other provision shall
be made for dividends or other shareholder rights, except to the extent that the
Award Agreement is a Dividend Equivalent Award, or otherwise provides for
dividend payments or similar economic benefits.
14.4. Employment or Service. Nothing in the Plan, in the grant of any Award
---------------------
or in any Award Agreement shall confer upon any Eligible Person the right to
continue in the capacity in which he is employed by, or otherwise serves, the
Corporation or any Subsidiary.
14.5. Securities Laws. No shares of Common Stock will be issued or
---------------
transferred pursuant to an Award unless and until all then applicable
requirements imposed by federal and state securities and other laws, rules and
regulations and by any regulatory agencies having jurisdiction, and by any stock
exchanges upon which the Common Stock may be listed, have been fully met. As a
condition precedent to the issuance of shares pursuant to the grant or exercise
of an Award, the Corporation may require the Participant to take any reasonable
action to meet such requirements. The Committee may impose such conditions on
any shares of Common Stock issuable under the Plan as it may deem advisable,
including, without limitation, restrictions under the Securities Act of 1933, as
amended, under the requirements of any stock exchange upon which such shares of
the same class are then listed, and under any blue sky or other securities laws
applicable to such shares.
14.6. Tax Withholding. The Participant shall be responsible for payment of
---------------
any taxes or similar charges required by law to be withheld from an Award or an
amount paid in satisfaction of an Award, which shall be paid by the Participant
on or prior to the payment or other event that results in taxable income in
respect of an Award. The Award Agreement shall
14
<PAGE>
specify the manner in which the withholding obligation shall be satisfied with
respect to the particular type of Award.
14.7. Unfunded Plan. The adoption of this Plan and any setting aside of
-------------
cash amounts or shares of Common Stock by the Corporation with which to
discharge its obligations hereunder shall not be deemed to create a trust or
other funded arrangement. The benefits provided under this Plan shall be a
general, unsecured obligation of the Corporation payable solely from the general
assets of the Corporation, and neither a Participant nor the Participant's
permitted transferees or estate shall have any interest in any assets of the
Corporation by virtue of this Plan, except as a general unsecured creditor of
the Corporation. Notwithstanding the foregoing, the Corporation shall have the
right to implement or set aside funds in a grantor trust, subject to the claims
of the Corporation's creditors, to discharge its obligations under the Plan.
14.8. Other Compensation and Benefit Plans. The adoption of the Plan shall
------------------------------------
not affect any other stock incentive or other compensation plans in effect for
the Corporation or any Subsidiary, nor shall the Plan preclude the Corporation
from establishing any other forms of stock incentive or other compensation for
employees of the Corporation or any Subsidiary. The amount of any compensation
deemed to be received by a Participant pursuant to an Award shall not constitute
compensation with respect to which any other employee benefits of such
Participant are determined, including, without limitation, benefits under any
bonus, pension, profit sharing, life insurance or salary continuation plan,
except as otherwise specifically provided by the terms of such plan.
14.9. Plan Binding on Transferees. The Plan shall be binding upon the
---------------------------
Corporation, its transferees and assigns, and the Participant, his executor,
administrator and permitted transferees and beneficiaries.
14.10. Construction and Interpretation. Whenever used herein, nouns in the
-------------------------------
singular shall include the plural, and the masculine pronoun shall include the
feminine gender. Headings of Articles and Sections hereof are inserted for
convenience and reference and constitute no part of the Plan.
14.11. Severability. If any provision of the Plan or any Award Agreement
------------
shall be determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.
14.12. Governing Law. The validity and construction of this Plan and of the
-------------
Award Agreements shall be governed by the laws of the State of Texas.
15. Effective Date, Termination and Amendment
15.1. Establishment of the Plan. This Plan is being adopted by the Board
-------------------------
in connection with the anticipated formation of the Corporation as a Subsidiary
of Columbia/HCA and the distribution shortly thereafter by Columbia/HCA of all
of its shares of the Corporation to the shareholders of Columbia/HCA.
15
<PAGE>
15.2. Effective Date; Shareholder Approval. The Effective Date of the Plan
------------------------------------
shall be the date the Corporation's Common Stock is distributed to Columbia/HCA
Healthcare Corporation stockholders; provided, however, that no amounts may be
-------- -------
paid or shares issued under any Award granted on or after the first meeting of
the shareholders of the Corporation that shall occur more than twelve months
after the date on which the Corporation becomes a publicly held corporation,
unless the shareholders of the Corporation shall have approved the Plan. At the
sole discretion of the Board, in order to comply with the requirements of
Section 162(m) for certain types of Awards under the Plan, the performance
criteria set forth in Section 9.3 shall be reapproved by the shareholders of the
Corporation no later than the first shareholder meeting that occurs in the fifth
calendar year following the calendar year of the initial shareholder approval of
such performance criteria.
15.3. Termination. The Plan shall terminate on the date immediately
-----------
preceding the tenth anniversary of the date the Plan is adopted by the Board.
The Board may, in its sole discretion and at any earlier date, terminate the
Plan. Notwithstanding the foregoing, no termination of the Plan shall adversely
affect any Award theretofore granted without the consent of the Participant or
the permitted transferee of the Award.
15.4. Amendment. The Board may at any time and from time to time and in any
---------
respect, amend or modify the Plan; provided, however, that no amendment or
-------- -------
modification of the Plan shall be effective without the consent of the
Corporation's shareholders that would (i) change the class of Eligible Persons
under the Plan, (ii) increase the number of shares of Common Stock reserved for
issuance under the Plan in accordance with Section 3.1 hereof, or (iii) allow
the grant of Options at an exercise price below Fair Market Value. In addition,
the Board may seek the approval of any amendment or modification by the
Corporation's shareholders to the extent it deems necessary or advisable in its
sole discretion for purposes of compliance with Section 162(m) or section 422 of
the Code, the listing requirements of the Nasdaq Stock Market or for any other
purpose. No amendment or modification of the Plan shall adversely affect any
Award theretofore granted without the consent of the Participant or the
permitted transferee of the Award.
16
<PAGE>
Appendix A
----------
Notwithstanding anything elsewhere in the Plan to the contrary, the
following rules shall apply in connection with the distribution of Common Stock
to Columbia/HCA stockholders (the "Spin-off").
(i) In the case of each Columbia/HCA Non-Qualified Option that is a
vested option and covers more than 1000 shares, the Committee may
grant an option which covers a number of shares of Common Stock
equal to the Original Number of Shares multiplied by the Triad Share
Multiple and which has a per share exercise price equal to the per
share exercise price of the original Columbia/HCA Non-Qualified
Option multiplied by the Triad Ratio.
(ii) In the case of each Columbia/HCA ISO that is held by a Triad
Employee or Triad Terminee (or his estate), the Committee may grant
an option which covers a number of shares of Common Stock equal to
the Original Number of Shares divided by the Triad Ratio and (2) has
a per share exercise price equal to the original per share exercise
price multiplied by the Triad Ratio.
(iii) In the case of any options granted by the Committee pursuant to this
Appendix, any resulting per share exercise price which is not equal
to a whole multiple of a cent shall be rounded up to the next whole
cent and any resulting number of shares covered by an option which
is not equal to a whole multiple of a share shall be rounded down to
the next whole share.
(iv) The Committee may provide that the terms of any option granted under
this Appendix are to be substantially the same as those of the
related Columbia/HCA Option, subject to such exceptions as the
Committee may provide. Any such option may, in the discretion of the
Committee, also provide that (a) any period of prior employment or
service with Columbia/HCA or any related entity is to be credited as
covered employment or service for purposes of determining the
vesting and exercisability of such option (to the same extent as
such period was credited for such purposes under the related
original Columbia/HCA Option), and (b) in the case of any
Columbia/HCA Non-Qualified Option, the optionee is to be considered
to be employed by or providing services to the Corporation so long
as he is employed by or providing services to Columbia/HCA or
LifePoint Hospitals, Inc. ("LifePoint") (or any Subsidiary thereof),
for purposes of determining when the option will cease to be
exercisable on account of termination of employment or service, and
at such time as the optionee ceases to be employed by or provide
services to Columbia/HCA or LifePoint (or any Subsidiary thereof),
such cessation of employment or service shall be treated as though
it were a cessation of employment or service with the Corporation
under comparable circumstances.
(v) For purposes hereof, the following definitions shall apply:
(a) "Affiliate" shall mean any entity required to be aggregated
with Columbia/HCA, LifePoint or Triad as appropriate, pursuant
to Code sections 414(b), 414(c), 414(m) or 414(o).
(b) "Columbia/HCA ISO" shall mean any option outstanding under a
17
<PAGE>
Columbia/HCA Option Plan on the date of the Spin-off that is
intended to qualify as an "Incentive Stock Option" under
section 422 of the Code.
(c) "Columbia/HCA Non-Qualified Option" shall mean any stock
option outstanding under a Columbia/HCA Option Plan on the
date of the Spin-off that is not a Columbia/HCA ISO. Any such
option shall be considered a "vested option" to the extent
that it is exercisable on the date in question and shall be
considered a "non-vested option" to the extent that it is not
yet exercisable on such date.
(d) "Columbia/HCA Option" shall mean a Columbia/HCA ISO or
Columbia/HCA Non-Qualified Option, as the context shall
indicate.
(e) "Columbia/HCA Option Plan" shall mean any plan maintained by
Columbia/HCA under which there are stock options outstanding
on the date of the Spin-off.
(f) "Ex-Dividend Date" shall mean the first trading date on which
the Columbia/HCA stock shall trade on an ex-dividend basis
with respect to the distribution of the Corporation's Common
Stock and LifePoint's stock.
(g) "Original Number of Shares" shall mean, as to any Columbia/HCA
Option, the number of shares of Columbia/HCA stock covered by
such option immediately prior to the Spin-off.
(h) "Triad Business" shall mean any business conducted by Triad,
or its Subsidiaries, on the date of the Spin-off.
(i) "Triad Employee" shall mean an employee of the Corporation,
or any direct or indirect Subsidiary of the Corporation that
is an Affiliate thereof, on the date of the Spin-off.
(j) "Triad Ratio" shall mean a fraction whose numerator is the
closing price of the Common Stock on the trading date
immediately preceding the Ex-Dividend Date and whose
denominator is the closing price of the Columbia/HCA stock on
such trading date immediately preceding the Ex-Dividend Date.
(k) "Triad Share Multiple" shall mean the number of shares of
Common Stock to be distributed per share of Columbia/HCA stock
on the date of the Spin-off.
(l) "Triad Terminee" shall mean any individual who is no longer
employed by Columbia/HCA or any Affiliate thereof immediately
prior to the Spin-off but was employed by a Triad Business
immediately prior to his termination of employment from
Columbia/HCA and its Affiliates.
Notwithstanding anything elsewhere in the Plan to the contrary, the
Committee may grant Non-qualified Stock Options, effective as of the twenty-
first trading date for the Common Stock, at an exercise price equal to the Fair
Market Value of the Common Stock on such date, in accordance with the attached
Schedule and in accordance with such other terms as shall be established by the
Committee.
18
<PAGE>
EXHIBIT 10.11
TRIAD HOSPITALS, INC.
EXECUTIVE STOCK PURCHASE PLAN
<PAGE>
TRIAD HOSPITALS, INC.
EXECUTIVE STOCK PURCHASE PLAN
Table of Contents
-----------------
<TABLE>
<S> <C>
1. Purpose of the Plan.................................................................................. 1
2. Definitions.......................................................................................... 1
(a) Accrued Interest............................................................................ 1
(b) Board....................................................................................... 1
(c) Cause....................................................................................... 1
(d) Change in Control........................................................................... 2
(e) Code........................................................................................ 4
(f) Committee................................................................................... 4
(g) Corporation................................................................................. 4
(h) Disability.................................................................................. 4
(i) Duties...................................................................................... 5
(j) Eligible Person............................................................................. 5
(k) Employee.................................................................................... 5
(l) Fair Market Value........................................................................... 5
(m) Good Reason................................................................................. 5
(n) Loan Date................................................................................... 5
(o) Participant................................................................................. 5
(p) Plan........................................................................................ 6
(q) Purchased Shares............................................................................ 6
(r) Right....................................................................................... 6
(s) Share....................................................................................... 6
(t) Share Purchase Date......................................................................... 6
(u) Share Purchase Loan......................................................................... 6
(v) Share Purchase Price........................................................................ 6
(w) Stock Purchase Agreement.................................................................... 6
(x) Subsidiary.................................................................................. 6
3. Shares Subject to the Plan........................................................................... 6
3.1. Number of Shares............................................................................ 6
3.2. Adjustments................................................................................. 7
4. Administration of the Plan........................................................................... 7
4.1. Committee Members........................................................................... 7
4.2. Discretionary Authority..................................................................... 7
4.3. Changes to Rights........................................................................... 7
5. Grant and Exercise of Rights......................................................................... 7
5.1. Grant of Rights............................................................................. 7
5.2. Exercise of Rights.......................................................................... 8
6. Share Purchase Loan.................................................................................. 8
6.1. Loan Amount................................................................................. 8
6.2. Interest Rate............................................................................... 8
6.3. Maturity and Repayment...................................................................... 8
(a) Repayment at Maturity.................................................................. 9
(b) Payment of Additional Interest......................................................... 9
6.4. Prepayments................................................................................. 9
(a) Mandatory Prepayments................................................................. 9
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
(b) Voluntary Prepayments................................................................. 9
7. Shareholder Rights................................................................................. 10
7.1. Security Interest.......................................................................... 10
7.2. Transfer Restrictions...................................................................... 10
7.3. Section 83(b) Election..................................................................... 10
7.4. Death or Disability Benefit................................................................ 10
8. General Provisions................................................................................. 11
8.1. No Assignment or Transfer.................................................................. 11
8.2. Rights as Shareholder...................................................................... 11
8.3. Employment or Service...................................................................... 11
8.4. Securities Laws............................................................................ 11
8.5. Unfunded Plan.............................................................................. 11
8.6. Compensation and Benefit Plans............................................................. 11
8.7. Plan Binding on Transferees................................................................ 12
8.8. Construction and Interpretation............................................................ 12
8.9. Severability............................................................................... 12
8.10. Governing Law.............................................................................. 12
9. Effective Date; Shareholder Approval; Termination; Amendment....................................... 12
9.1. Effective Date............................................................................. 12
9.2. Shareholder Approval....................................................................... 12
9.3. Termination................................................................................ 12
9.4. Amendment.................................................................................. 12
</TABLE>
ii
<PAGE>
TRIAD HOSPITALS, INC.
EXECUTIVE STOCK PURCHASE PLAN
1. Purpose of the Plan
The purpose of the Triad Hospitals, Inc. Executive Stock Purchase Plan is
to promote the interests of the Corporation and its shareholders by
strengthening the Corporation's ability to attract, motivate, and retain key
executives upon whose judgment, initiative, and efforts the financial success
and growth of the business of the Corporation largely depend, to offer such
personnel additional incentives to put forth maximum efforts for the success of
the business, and to afford them an opportunity to acquire a proprietary
interest in the Corporation through stock ownership.
2. Definitions
Wherever the following capitalized terms are used in this Plan, they shall
have the meanings specified below:
(a) "Accrued Interest" means, with respect to any Share Purchase Loan, the
accrued interest on the unpaid balance thereof for the period from the Share
Purchase Date to the Repayment Date (as defined in Section 6.3), determined
using an interest rate equal to the applicable Federal rate in effect, under
section 1274(d) of the Code, as of the date upon which the Share Purchase Loan
is made, compounded semi-annually.
(b) "Board" means the Board of Directors of the Corporation.
(c) "Cause" means (i) the conviction of the Participant of a felony under
the laws of the United States or any state thereof, whether or not appeal is
taken, as determined by the Board in good faith; (ii) the conviction of the
Participant for a violation of criminal law involving the Corporation and its
business that materially damages the Corporation as determined by the Board in
good faith; (iii) the willful misconduct of the Participant, or the willful or
continued failure by the Participant (except in the case of a Disability) to
substantially perform his duties hereunder, in either case which has a material
adverse effect on the Corporation as determined by the Board in good faith; (iv)
the willful fraud or material dishonesty of the Participant in connection with
his performance of his duties to the Corporation and involving the finances of
the Corporation as determined by the Board in good faith; (v) Participant's
repeated use of alcohol in a manner which in the opinion of the Board materially
impairs the ability of the Participant to effectively perform the Participant's
duties and obligations owed to the Corporation, or the illegal use, possession,
or sale of, or impaired performance due to the illegal use of, controlled
substances; or (vi) a violation of the Corporation's policies on sexual or other
illegal harassment of a Corporation employee by the Participant as determined by
the Board in good faith; provided, however, in no event shall the Participant's
-------- -------
employment be considered to have been terminated
1
<PAGE>
for "Cause" unless and until the Participant receives written notice from the
Corporation stating the acts or omissions constituting Cause and the Participant
has the opportunity to cure to the Corporation's satisfaction any such acts or
omissions (in the case of (iii), (v) or (vi) above) within 30 days of the
Participant's receipt of such notice.
(d) "Change in Control" means any of the following events following the
date on which the Corporation becomes a publicly-held Corporation:
(i) An acquisition (other than directly from the Corporation) of
any voting securities of the Corporation (the "Voting
Securities") by any "Person" (as the term Person is used for
purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"))
immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated
under the 1934 Act) of twenty percent (20%) or more of the
combined voting power of the then outstanding Voting
Securities; provided, however, that in determining whether a
-------- -------
Change in Control has occurred, Voting Securities which are
acquired in a "Non-Control Acquisition" (as hereinafter
defined) shall not constitute an acquisition which would
cause a Change in Control. A "Non-Control Acquisition"
shall mean an acquisition by (i) an employee benefit plan
(or a trust forming a part thereof) maintained by (A) the
Corporation or (B) any Corporation or other Person of which
a majority of the voting power or the equity securities or
equity interests is owned directly or indirectly by the
Corporation (a "Control Subsidiary"), or (ii) the
Corporation or any Control Subsidiary.
(ii) The individuals who, as of the date the Corporation issues
any class of equity securities required to be registered
under Section 12 of the 1934 Act, are members of the Board
(the "Incumbent Board"), cease for any reason to constitute
at least two-thirds of the Board; provided, however, that if
-------- -------
the election or nomination for election by the Corporation's
stockholders of any new director was approved by a vote of
at least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Stock Purchase
Agreement, be considered as a member of the Incumbent Board;
provided, further, however, that no individual shall be
-------- ------- -------
considered a member of the Incumbent Board if (1) such
individual initially assumed office as a result of either an
actual or threatened "Election Contest" (as described in
Rule 14a-11 promulgated under the
2
<PAGE>
934 Act) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than
the Board (a "Proxy Contest") including by reason of any
Stock Purchase Agreement intended to avoid or settle any
Election Contest or Proxy Contest or (2) such individual was
designated by a Person who has entered into an Stock
Purchase Agreement with the Corporation to effect a
transaction described in clause (i) or (iii) of this Section
2(d); or
(iii) Consummation, after approval by stockholders of the
Corporation, of:
(1) A merger, consolidation or reorganization involving the
Corporation, unless,
(A) The stockholders of the Corporation, immediately
before such merger, consolidation or reorganization,
own, directly or indirectly immediately following such
merger, consolidation or reorganization, at least
seventy-five percent (75%) of the combined voting power
of the outstanding Voting Securities of the Corporation
resulting from such merger or consolidation or
reorganization or its parent Corporation (the
"Surviving Corporation") in substantially the same
proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or
reorganization;
(B) The individuals who were members of the Incumbent
Board immediately prior to the execution of the Stock
Purchase Agreement providing for such merger,
consolidation or reorganization constitute at least
two-thirds of the members of the board of directors of
the Surviving Corporation; and
(C) No Person (other than the Corporation, any Control
Subsidiary, any employee benefit plan (or any trust
forming a part thereof) maintained by the Corporation,
the Surviving Corporation or any Control Subsidiary, or
any Person who, immediately prior to such merger,
consolidation or reorganization, had Beneficial
Ownership of twenty percent (20%) or more of the then
outstanding Voting Securities) has Beneficial Ownership
of twenty
3
<PAGE>
percent (20%) or more of the combined voting power of
the Surviving Corporation's then outstanding Voting
Securities.
(2) A complete liquidation or dissolution of the
Corporation; or
(3) The sale or other disposition of all or substantially
all of the assets of the Corporation to any Person
(other than a transfer to a Control Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting Securities
as a result of the acquisition of Voting Securities by the Corporation which, by
reducing the number of Voting Securities outstanding, increased the proportional
number of shares Beneficially Owned by the Subject Person, provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Corporation, and after
such share acquisition by the Corporation, the Subject Person becomes the
Beneficial Owner of any additional Voting Securities which increases the
percentage of the then outstanding Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Committee" means the compensation committee appointed to administer
the Plan and shall consist of two or more directors of the Corporation, (i) none
of whom shall be officers or employees of the Corporation, and (ii) all of whom,
to the extent deemed necessary or appropriate by the Board, shall satisfy the
requirements of a "non-employee director" within the meaning of Rule 16b-3 of
the Securities Exchange Act of 1934. The members of the Committee shall be
appointed by, and serve at the pleasure of, the Board.
(g) "Corporation" means Triad Hospitals, Inc., a Delaware corporation.
(h) "Disability" means the inability of the Participant, after reasonable
accommodation, to perform the duties required hereunder for a period equal to or
in excess of the waiting period under the Corporation's long term disability
insurance policy, as determined in good faith by the Board.
4
<PAGE>
(i) "Duties" means, as to any Participant, his duties as an Employee with
respect to the Corporation and its Subsidiaries (including his duties under any
employment agreement between him and the Corporation or a Subsidiary).
(j) "Eligible Person" means any person who is an Employee of the
Corporation or any of its Subsidiaries and is employed in an executive position.
(k) "Employee" means any person who is employed as a common-law employee.
(l) "Fair Market Value" of a Share as of a given date means the closing
sales price of the common stock of the Corporation on the Nasdaq Stock Market on
the trading day immediately preceding the date as of which the Fair Market Value
is to be determined, or, in the absence of any reported sales of Shares on such
date, on the first preceding date on which any such sale shall have been
reported (in either case, as reported in the Two Star Edition of The Wall Street
Journal). If the Shares are not listed on the Nasdaq Stock Market on the date as
of which Fair Market Value is to be determined, the Committee shall in good
faith determine the Fair Market Value in whatever manner it considers
appropriate.
(m) "Good Reason" means, as to any Share Purchase Loan, (1) the assignment
to the Participant of any duties inconsistent with the Participant's position
(including status, offices, titles or reporting relationships), authority,
duties or responsibilities on the Loan Date, any adverse change in the
Participant's reporting responsibilities, or any action by the Corporation or a
Subsidiary that results in a diminution in such position, authority, duties or
responsibilities, but excluding for these purposes an isolated and insubstantial
action not taken in bad faith and which is remedied by the Corporation or
Subsidiary (as the case may be) promptly after receipt of written notice thereof
by the Participant, (2) the relocation, without the consent of the Participant,
of the Corporation's principal executive offices or the office of the
Participant to a location more than 40 miles from the applicable location on the
Loan Date, (3) any diminution in the Participant's total compensation or
diminution in Participant's stock purchase rights in violation of any employment
agreement in effect between the Participant and the Corporation, or (4) a
termination of Participant's employment for any reason (other than his death)
within twelve months after a Change in Control.
(n) "Loan Date" means, as to any Share Purchase Loan, the date such loan
is made.
(o) "Participant" means any Eligible Person who has been granted a Right
(that has not yet been fully exercised or otherwise terminated) under the Plan.
5
<PAGE>
(p) "Plan" means this Triad Hospitals, Inc. Executive Stock Purchase Plan
as set forth herein, as it may be amended from time to time.
(q) "Purchased Shares" means Shares purchased by a Participant pursuant to
a Right granted under the Plan.
(r) "Right" means a right to purchase Shares under the Plan at their Fair
Market Value on the Share Purchase Date.
(s) "Share" means a share of common stock of the Corporation.
(t) "Share Purchase Date" means, as to any Purchased Shares, the date on
which the purchase of such Shares occurs.
(u) "Share Purchase Loan" means any loan made by the Corporation to a
Participant for the purchase of Shares pursuant to a Right.
(v) "Share Purchase Price" means the aggregate purchase price for
Purchased Shares acquired at any time.
(w) "Stock Purchase Agreement" means an agreement entered into between the
Corporation and a Participant setting forth the terms and conditions under which
the Participant may purchase Shares pursuant to a Right granted to him,
including but not limited to, the terms of the related Share Purchase Loan.
(x) "Subsidiary" means an entity (whether or not a corporation) that is
wholly or majority owned or controlled, directly or indirectly, by the
Corporation, and any other affiliate of the Corporation that is so designated,
from time to time, by the Committee.
3. Shares Subject to the Plan
3.1. Number of Shares. Subject to the following provisions of this
----------------
Section, the aggregate number of Shares that may be purchased pursuant to all
Rights granted under the Plan is 1,000,000 Shares. The Shares to be delivered
under the Plan shall be made available from authorized but unissued Shares or
issued Shares that have been reacquired by the Corporation. To the extent that
any Right is forfeited, cancelled, or otherwise terminated without the issuance
of all Shares covered thereunder, such Shares shall no longer be charged against
the foregoing maximum Share limitation and may again be made subject to Rights
under the Plan pursuant to such limitation.
6
<PAGE>
3.2. Adjustments. If there shall occur any recapitalization,
-----------
reclassification, stock dividend, stock split, reverse stock split, or other
distribution with respect to Shares, or other change in corporate structure
affecting the Shares, the Committee may, in the manner and to the extent that it
deems appropriate and equitable to the Participants and consistent with the
terms of this Plan, cause an adjustment to be made in: (i) the maximum number
and kind of Shares provided in Section 3.1 hereof, (ii) the number and kind of
Shares subject to then outstanding Rights, or (iii) any other terms of a Right
that are affected by the event.
4. Administration of the Plan
4.1. Committee Members. The Plan shall be administered by the
-----------------
Committee. The Committee shall have such powers and authority as may be
necessary or appropriate for the Committee to carry out its functions as
described in the Plan. No member of the Committee shall be liable for any action
or determination made in good faith by the Committee with respect to the Plan or
any Right thereunder.
4.2. Discretionary Authority. Subject to the express provisions of
-----------------------
the Plan, including the provisions of Section 5.1, the Committee shall have
authority in its discretion to determine the Eligible Persons to whom, and the
time or times at which, Rights are granted, the number of Shares that may be
purchased under a Right, the date or period during which a Right may be
exercised and all other terms of a Right. The Committee shall also have
discretionary authority to interpret the Plan, to make all factual
determinations under the Plan, and to make all other determinations necessary or
advisable for Plan administration. The Committee may prescribe, amend, and
rescind rules and regulations relating to the Plan. All interpretations,
determinations, and actions by the Committee shall be final, conclusive, and
binding upon all parties.
4.3. Changes to Rights. The Committee shall have the authority to
-----------------
effect, at any time and from time to time, (i) the cancellation of any or all
outstanding Rights and the grant in substitution therefor of new Rights covering
the same or different numbers of Shares, or (ii) the amendment of the terms of
any and all outstanding Rights; provided, however, that no such action by the
-------- -------
Committee may adversely impair the rights of a Participant under any outstanding
Right without the consent of the Participant.
5. Grant and Exercise of Rights
5.1. Grant of Rights. Any Eligible Person may be designated by the
---------------
Committee, in its sole discretion, to receive a Right under the Plan.
Notwithstanding the foregoing, the initial Eligible Persons shall be as listed
in Appendix A and each such individual's Right shall cover the number of whole
Shares that can be purchased with the dollar amount listed for the individual on
7
<PAGE>
Appendix A (based on the Fair Market Value of a Share on the Share Purchase
Date); provided, however, that such number of Shares shall in no event exceed
-------- -------
the number of Shares that could be purchased with such dollar amount if the
applicable Fair Market Value of a Share were $12.50; and, provided, further,
-------- -------
that no person may be granted more than one Right under the Plan, except that if
the Right of any initial Eligible Person to purchase Shares shall be limited
under the next preceding proviso (because the Fair Market Value of a Share is
below $12.50) and Shares remain available for issuance under the Plan at the
close of the exercise period for initial Eligible Persons under Section 5.2, the
Committee may, in its discretion, issue an additional Right to any such initial
Eligible Person thus affected by the next preceding proviso. Each Right shall be
evidenced by a Stock Purchase Agreement between the Corporation and the
Participant.
5.2. Exercise of Rights. A Right granted to a Participant may be exercised,
------------------
in whole or in part, by written notice to the Corporation on or prior to (a) the
exercise date selected in the notice in accordance with the terms of such Right,
or (b) the date specified in the related Stock Purchase Agreement as the
permissible exercise date; provided, however, that if a Right shall be thus
-------- -------
exercised by a Participant as to only a portion of the Shares covered thereby,
such Right shall thereupon terminate and shall not be exercisable with respect
to any additional Shares; and provided, further, that a Right may be exercised
-------- -------
by a Participant only if he is an Employee of the Corporation or a Subsidiary on
the exercise date and shall terminate in its entirety upon a Participant's
termination of employment. Notwithstanding the foregoing, in the case of an
initial Eligible Person receiving a Right in accordance with Appendix A, such
Right may be exercised on the date elected by such Participant during the period
which starts on the date the Corporation's Shares are distributed to
Columbia/HCA Healthcare Corporation stockholders and ends on the twenty-first
trading day for the Corporation's Shares. Any Participant giving such a notice
of exercise shall be considered to have agreed to pay the full Share Purchase
Price through a Share Purchase Loan, except to the extent the notice is
accompanied by a cash payment.
6. Share Purchase Loan
6.1. Loan Amount. The Corporation shall loan each Participant 100% of the
-----------
Share Purchase Price of any Purchased Shares acquired by the Participant, on a
full recourse basis, to the extent the Participant shall not elect to pay such
Share Purchase Price in cash and contingent upon the Participant's executing
such promissory note and pledge documents relating to the security interest
described in Section 7.1 below as the Corporation shall reasonably require.
6.2. Interest Rate. Accrued Interest under any Share Purchase Loan will be
-------------
payable only upon maturity or upon prepayment of such Share Purchase Loan.
6.3. Maturity and Repayment.
----------------------
8
<PAGE>
(a) Repayment at Maturity. A Share Purchase Loan will mature upon the
earlier of (i) the fifth anniversary of such Share Purchase Loan's Share
Purchase Date, (ii) termination of the Participant's employment for any reason,
or (iii) bankruptcy of the Participant (the "Repayment Date"). Within 120 days
following the Repayment Date, the Participant shall be required to pay the
Corporation the full amount remaining due on such Share Purchase Loan, including
all unpaid Accrued Interest.
(b) Payment of Additional Interest. In the event a Participant's
employment terminates for Cause or the Participant voluntarily terminates
employment (other than for Good Reason) prior to the third anniversary of a
Share Purchase Loan's Share Purchase Date, or if earlier, the date of a Change
in Control, in addition to any amounts due in repayment of the amount of such
Share Purchase Loan and Accrued Interest, the Participant shall pay the
Corporation an amount equal to the additional interest that would have been
payable in respect of such Share Purchase Loan, if the regular interest rate on
such loan had been the prime rate (as reported in the Two Star Edition of The
Wall St. Journal in effect on the Share Purchase Date), and interest on such
additional interest at such rate to the actual date of payment.
6.4. Prepayments.
-----------
(a) Mandatory Prepayments. Any cash dividends received on Purchased Shares
prior to payment of the full amount due on a Share Purchase Loan (including
Accrued Interest), net of assumed Federal, State and Local income taxes (as
reasonably determined by the Participant based upon the highest marginal tax
rates then applicable income tax laws to which the Participant is subject),
shall be used to prepay such Share Purchase Loan. Prepayments shall be applied
first to Accrued Interest, then to principal.
(b) Voluntary Prepayments. A Share Purchase Loan may be prepaid, in whole
or in part, at any time. Prepayments shall be applied first to Accrued Interest,
then to principal. Notwithstanding the provisions of Section 7.2, at any time
following the earlier of (i) the second anniversary of a Share Purchase Loan's
Share Purchase Date, or (ii) upon a Change in Control, the Purchased Shares may,
at the Participant's election, be sold to prepay the loan, in whole or in part,
in addition to any transaction costs incurred by the Participant' to effect such
sale and all taxes resulting with respect to such sale (as reasonably determined
by the Participant based upon the highest marginal tax rates then applicable
income tax laws to which the Participant is subject).
9
<PAGE>
7. Shareholder Rights.
7.1. Security Interest. A Share Purchase Loan shall be secured by the
-----------------
related Purchased Shares. At the time the Participant purchases Purchased Shares
hereunder, a certificate representing such Purchased Shares shall be registered
in the name of the Participant. Such certificate shall be held by the
Corporation (or any custodian appointed by the Corporation) for the account of
the Participant, subject to the terms and conditions hereof, and shall bear a
legend setting forth the restrictions imposed thereon hereunder, in such form as
the Corporation, in its discretion, may determine.
7.2. Transfer Restrictions. The Participant shall have all rights of a
---------------------
stockholder with respect to Purchased Shares, including the right to receive
dividends (subject to the provisions of Section 6.4(a)) and the right to vote
such Purchased Shares, except that the Participant shall not be entitled to
delivery of the stock certificates representing Purchased Shares and no
Purchased Shares may be sold, assigned, transferred, pledged, hypothecated or
otherwise encumbered or disposed of (except by will or the applicable laws of
descent and distribution) until the later of (i) full repayment of the Share
Purchase Price for such Purchased Shares and any related Accrued Interest (and
any additional amount due under Section 6.3 ), and (ii) the earliest of (1) the
third anniversary of the Share Purchase Date for such Purchased Shares, (2) the
Participant's termination of employment or bankruptcy and (3) a Change in
Control. Notwithstanding the foregoing, Purchased Shares may be sold to pay the
related Share Purchase Loan (including Accrued Interest) at maturity or (to the
extent provided in Section 6.4(b)) to voluntarily prepay such Share Purchase
Loan (including Accrued Interest). Any Shares, any other securities of the
Corporation and any other property (except cash dividends) distributed with
respect to Purchased Shares shall be subject to the same restrictions, terms and
conditions as such Purchased Shares.
7.3. Section 83(b) Election. The Committee may provide in a Stock Purchase
----------------------
Agreement that the Participant's rights with respect to the Purchased Shares are
conditioned upon the Participant's refraining from making an election with
respect to the related Right under section 83(b) of the Code. If a Right is not
so conditioned and a Participant makes an election pursuant to section 83(b) of
the Code with respect to the Purchased Shares, the Participant shall be required
to promptly file a copy of such election with the Corporation.
7.4. Death or Disability Benefit. In the event a Participant terminates
---------------------------
employment because of death or Disability, if the amount remaining due on a
Share Purchase Loan (including Accrued Interest) is greater than the Fair Market
Value of the related Purchased Shares as of the date of such death or
Disability, the Corporation shall pay a death or Disability benefit equal to
10
<PAGE>
(1) the amount of such payment remaining due over (2) such Purchased Shares'
Fair Market Value as of the date of such death or Disability.
8. General Provisions
8.1. No Assignment or Transfer. Rights under the Plan shall not be
-------------------------
assignable or transferable and shall be exercised only by the Participant.
8.2. Rights as Shareholder. A Participant shall have no rights as a
---------------------
holder of Shares, with respect to any unissued Shares covered by a Right, until
the date the Participant becomes the holder of record of such Shares.
8.3. Employment or Service. Nothing in the Plan, in the grant of any
---------------------
Right or in any Stock Purchase Agreement shall confer upon any Eligible Person
the right to continue in the capacity in which he is employed by, or otherwise
serves, the Corporation or any Subsidiary.
8.4. Securities Laws. No Shares shall be issued or transferred
---------------
pursuant to a Right unless and until all then-applicable requirements imposed by
federal and state securities and other laws, rules and regulations and by any
regulatory agencies having jurisdiction, and by any stock exchanges upon which
the Shares may be listed, have been fully met. As a condition precedent to the
issuance of Shares pursuant to the exercise of a Right, the Corporation may
require the Participant to take any reasonable action to meet such requirements.
The Committee may impose such conditions on any Shares issuable under the Plan
as it may deem advisable, including, without limitation, restrictions designed
to satisfy the requirements of the Securities Act of 1933, as amended, the
requirements of any stock exchange upon which such Shares of the same class are
then listed, and the requirements of any blue sky or other securities laws
applicable to such Shares.
8.5. Unfunded Plan. The adoption of this Plan and any setting aside
-------------
of cash amounts or Shares by the Corporation with which to discharge its
obligations hereunder shall not be deemed to create a trust or other funded
arrangement. The Corporation's obligations under this Plan shall represent
general, unsecured obligations of the Corporation payable solely from the
general assets of the Corporation, and a Participant shall have no interest in
any assets of the Corporation by virtue of this Plan, except as a general
unsecured creditor of the Corporation.
8.6. Compensation and Benefit Plans. The adoption of the Plan shall
------------------------------
not affect any stock incentive or other compensation plans in effect for the
Corporation or any Subsidiary, nor shall the Plan preclude the Corporation from
establishing any form of stock incentive or other compensation for employees of
the Corporation or any Subsidiary.
11
<PAGE>
8.7. Plan Binding on Transferees. The Plan shall be binding upon the
---------------------------
Corporation, its transferees and assigns, and each Participant, his executor or
administrator and beneficiaries. In the event a Participant's legal
representative or legatee succeeds to his interests under the Plan, all
references to the Participant shall be considered to refer to the applicable
successor in interest (unless the context clearly indicates otherwise).
8.8. Construction and Interpretation. Whenever used herein, nouns in
-------------------------------
the singular shall include the plural, and the masculine pronoun shall include
the feminine gender. Headings of Articles and Sections hereof are inserted for
convenience and reference and constitute no part of the Plan.
8.9. Severability. If any provision of the Plan or any Stock Purchase
------------
Agreement shall be determined to be illegal or unenforceable by any court of law
in any jurisdiction, the remaining provisions hereof and thereof shall be
severable and enforceable in accordance with their terms, and all provisions
shall remain enforceable in any other jurisdiction.
8.10. Governing Law. The validity and construction of this Plan and of
-------------
the Stock Purchase Agreements shall be governed by the laws of the State of
Texas.
9. Effective Date; Shareholder Approval; Termination; Amendment
9.1. Effective Date. The Effective Date of the Plan shall be the date
--------------
the Corporation's common stock is distributed to Columbia/HCA Healthcare
Corporation stockholders.
9.2. Shareholder Approval. The Plan shall be approved by the
--------------------
shareholders* of the Corporation within twelve (12) months before or after
the Plan is adopted.
9.3. Termination. The Plan shall terminate on the date immediately
-----------
preceding the tenth anniversary of the date the Plan is adopted by the Board.
The Board may, in its sole discretion and at any earlier date, terminate the
Plan. Notwithstanding the foregoing, no termination of the Plan shall adversely
affect any Right theretofore granted, without the consent of the Participant.
9.4. Amendment. The Board may at any time and from time to time, and
---------
in any respect, amend or modify the Plan; provided, however, that no amendment
-------- -------
or modification of the Plan shall adversely affect any Right theretofore granted
without the consent of the Participant.
____________________
* Note: After the Corporation is established but prior to the stock
----
distribution, Columbia/HCA should approve the Plan as the Corporation's sole
shareholder.
12
<PAGE>
_____________________________________
TRIAD HOSPITALS, INC.
13
<PAGE>
Appendix A
Initial Eligible Persons
<TABLE>
<CAPTION>
--------------------------------------------------------------------
Eligible Person Aggregate Share Purchase Price
<S> <C>
--------------------------------------------------------------------
Denny Shelton $5,000,000
--------------------------------------------------------------------
Burke Whitman $2,000,000
--------------------------------------------------------------------
Mike Parsons $1,000,000
--------------------------------------------------------------------
Don Fay $ 500,000
--------------------------------------------------------------------
Chris Holden $ 500,000
--------------------------------------------------------------------
Nick Marzocco $ 500,000
--------------------------------------------------------------------
Wayne McCallister $ 500,000
--------------------------------------------------------------------
Bill Huston $ 500,000
--------------------------------------------------------------------
Tom Frazier $ 500,000
--------------------------------------------------------------------
Jim Shannon $ 500,000
--------------------------------------------------------------------
Joy Case $ 500,000
--------------------------------------------------------------------
Steve Love $ 500,000
--------------------------------------------------------------------
</TABLE>
A-1
<PAGE>
EXHIBIT 10.12
Triad Hospitals, Inc.
Management Stock Purchase Plan
<PAGE>
Triad Hospitals, Inc.
Management Stock Purchase Plan
Table of Contents
-----------------
<TABLE>
<S> <C>
1. Introduction...................................... 1
2. Definitions....................................... 1
(a) Agreement......................................... 1
(b) Average Market Value.............................. 1
(c) Base Salary....................................... 1
(d) Board............................................. 1
(e) Cause............................................. 1
(f) Code.............................................. 2
(g) Committee......................................... 2
(h) Company........................................... 2
(i) Disability........................................ 2
(j) Exchange Act...................................... 2
(k) Fair Market Value................................. 2
(l) Participant....................................... 2
(m) Plan.............................................. 3
(n) Restricted Period................................. 3
(o) Restricted Share or Restricted Shares............. 3
(p) Restricted Share Unit or Restricted Share Units... 3
(q) Rule 16b-3 ....................................... 3
(r) Section 16 Person................................. 3
(s) Shares............................................ 3
(t) Subsidiary........................................ 3
3. Administration of the Plan........................ 3
4. Stock Subject to Plan............................. 3
5. Eligibility....................................... 4
6. Restricted Shares................................. 4
(a) Number of Shares.................................. 4
(b) Restricted Period................................. 4
(c) Ownership and Restrictions........................ 5
(d) Termination of Restrictions....................... 5
(e) Restricted Share Units............................ 5
7. Termination of Employment......................... 6
(a) Termination of Employment During Restricted Period 6
(b) Accelerated Lapse of Restrictions................. 6
(c) Retirement of Participant......................... 6
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
8. Change in Control................................. 7
9. Dilution and Other Adjustments.................... 9
10. Payment of Withholding and Payroll Taxes.......... 9
11. No Rights to Employment........................... 9
12. Amendment and Termination of the Plan............. 9
13. Term of the Plan.................................. 10
14. Governing Law..................................... 10
</TABLE>
ii
<PAGE>
Triad Hospitals, Inc.
Management Stock Purchase Plan
1. Introduction.
------------
The purposes of the Triad Hospitals, Inc. Management Stock Purchase Plan
are to attract and retain highly-qualified executives, to align executive and
stockholder long-term interests by creating a direct link between executive
compensation and stockholder return, to enable executives to develop and
maintain a substantial equity-based interest in Triad Hospitals, Inc., and to
provide incentives to such executives to contribute to the success of the
Company's business. The provisions of the Plan are intended to satisfy the
requirements of Section 16(b) of the Securities Exchange Act of 1934, as amended
from time to time, and shall be interpreted in a manner consistent with the
requirements thereof, as now or hereafter construed, interpreted and applied by
regulation, rulings and cases.
The terms of the Plan shall be as set forth below, effective as of the date
the Company's common stock is distributed to Columbia/HCA Healthcare Corporation
stockholders.
2. Definitions.
-----------
As used in this Plan, the following words and phrases shall have the
meanings indicated:
(a) "Agreement" shall mean an agreement entered into between the Company
and a Participant in connection with a grant under the Plan.
(b) "Average Market Value" of a Share on any grant date shall mean the
average of the closing prices on the Nasdaq Stock Market (or its
equivalent if the Shares are not traded on the Nasdaq Stock Market) of
a Share for all trading days (including the grant date, if a trading
day) after the next preceding grant date.
(c) "Base Salary" shall mean the base salary of the Participant without
taking into account any bonuses or other special compensation
received.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Cause" shall mean (i) the conviction of the Participant of a felony
under the laws of the United States or any state thereof, whether or
not appeal is taken, (ii) the conviction of the Participant for a
violation of criminal law involving the Company or a Subsidiary and
its business, (iii) the willful misconduct of the Participant, or the
willful or continued failure by the Participant (except on account of
death or Disability) to substantially perform his employment duties,
which in either case has a material adverse effect on the Company,
(iv) the willful fraud or material dishonesty of the Participant in
connection with his performance of his employment duties, (v) the use
of alcohol in a manner which in the opinion
1
<PAGE>
of the Company materially impairs the ability of the Participant to
effectively perform his employment duties, or the use, possession, or
sale of, or impaired performance due to, controlled substances or (vi)
sexual or other illegal harassment of a Company or Subsidiary employee
by the Participant; provided, however, in no event shall the
-------- -------
Participant's employment be considered to have been terminated for
"Cause" unless and until the Participant receives written notice from
the Company stating the acts or omissions constituting Cause and the
Participant has the opportunity to cure to the Company's satisfaction
any such acts or omissions (in the case of (iii) or (v) above) within
15 days of the Participant's receipt of such notice.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(g) "Committee" shall mean the compensation committee appointed to
administer the Plan and shall consist of two or more directors of the
Company, (i) none of whom shall be officers or employees of the
Company, and (ii) all of whom, to the extent deemed necessary or
appropriate by the Board, shall satisfy the requirements of a "non-
employee director" within the meaning of Rule 16b-3 of the Securities
Exchange Act of 1934. The members of the Committee shall be appointed
by, and serve at the pleasure of, the Board.
(h) "Company" shall mean Triad Hospitals, Inc., a Delaware corporation.
(i) "Disability" shall mean a Participant's total and permanent inability
to perform his or her duties with the Company or any Subsidiary by
reason of any medically determinable physical or mental impairment,
within the meaning of Code section 22(e)(3).
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time and as now or hereafter construed,
interpreted and applied by regulations, rulings and cases.
(k) "Fair Market Value" of a Share, Restricted Share or Restricted Share
Unit as of a given date as of a given date shall mean the closing
sales price of the common stock on the Nasdaq Stock Market on the
trading day immediately preceding the date as of which the Fair Market
Value is to be determined, or, in the absence of any reported sales of
Shares on such date, on the first preceding date on which any such
sale shall have been reported (in either case, as reported in the Two
Star Edition of The Wall Street Journal). If the Shares are not listed
on the Nasdaq Stock Market on the date as of which Fair Market Value
is to be determined, the Committee shall in good faith determine the
Fair Market Value in whatever manner it considers appropriate.
(l) "Participant" shall mean a person who receives a grant of Restricted
Shares under the Plan.
2
<PAGE>
(m) "Plan" shall mean the Triad Hospitals, Inc. Management Stock Purchase
Plan, as in effect from time to time.
(n) "Restricted Period" shall have the meaning given in Section 6(b)
hereof.
(o) "Restricted Share" or "Restricted Shares" shall mean the common stock
purchased hereunder subject to restrictions.
(p) "Restricted Share Unit" or "Restricted Share Units" shall have the
meaning given in Section 6(f) hereof.
(q) "Rule 16b-3" shall mean Rule 16b-3, as in effect from time to time,
promulgated by the Securities and Exchange Commission under Section 16
of the Exchange Act, including any successor to such Rule.
(r) "Section 16 Person" shall mean a Participant who is subject to the
reporting and short-swing liability provisions of Section 16 of the
Exchange Act.
(s) "Shares" shall mean the common stock of the Company.
(t) "Subsidiary" shall have the meaning set forth in Section 8.
3. Administration of the Plan.
--------------------------
The Plan shall be administered by the Committee. The Committee shall have
plenary authority in its discretion, but subject to the express provisions of
the Plan, to administer the Plan and to exercise all the powers and authorities
either specifically granted to it under the Plan or necessary or advisable in
the administration of the Plan, including, without limitation, to interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to the
Plan, to determine the terms and provisions of the Agreements (which need not be
identical) and to make all other determinations deemed necessary or advisable
for the administration of the Plan. The Committee's determinations on the
foregoing matters shall be final and conclusive.
No member of the Board or the Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or any grant
hereunder.
4. Stock Subject to Plan.
---------------------
The maximum number of Shares which shall be distributed as Restricted
Shares or in respect of Restricted Share Units under the Plan shall be 260,000
Shares, which number shall be subject to adjustment as provided in Section 9
hereof. Such Shares may be either authorized but unissued Shares or Shares that
shall have been or may be reacquired by the Company.
If any outstanding Restricted Shares or Restricted Share Units under the
Plan shall be forfeited, the related Shares shall (unless the Plan shall have
been terminated) again be available for use under the Plan.
3
<PAGE>
5. Eligibility.
-----------
All employees or groups of employees designated by the Committee in its
discretion shall be eligible to become Participants in the Plan.
Each Participant may elect, in writing, to reduce his Base Salary by a
specified percentage thereof up to a maximum percentage established by the
Committee with respect to his employment classification, as set forth in
Appendix A, and, in lieu of receiving such salary, receive a number of
Restricted Shares equal to the amount of such salary reduction divided by a
dollar amount equal to 75% of the Average Market Value of a Share on the date on
which such Restricted Shares are granted. Any such election shall be effective
beginning with the first pay period that ends after January 1 of the calendar
year next following the calendar year in which such election is made (and shall
become irrevocable on December 31 of the calendar year in which it is made);
provided, however, that any such election filed by June 15, 1999 shall be
- -------- -------
effective for the period beginning with the first pay period that ends after
July 1, 1999 and ending with the last pay period that ends in 1999. Any
cancellation of, or other change in, any such salary reduction election shall
become effective as of the first pay period ending after January 1 of the
calendar year next following the calendar year in which notice of such
cancellation or change is filed (and any such notice shall become irrevocable on
December 31 of the calendar year in which it is filed).
Any salary reduction hereunder shall apply ratably to the Participant's
salary for each pay period covered by such election. Restricted Shares shall be
granted in respect of such salary reductions on June 30 and December 31 of each
calendar year. The number of Restricted Shares granted on each such grant date
shall be based upon the aggregate salary reduction for pay periods ending since
the next preceding grant date (or, for 1999, since July 1, 1999) and 75% of the
Average Market Value of a Share on the grant date in question.
In the event that a Participant who has elected salary reductions hereunder
shall terminate employment before Restricted Shares are granted in respect of
all such salary reductions, any salary reduction amounts in respect of which
Restricted Shares have not been granted by the date of Participant's termination
of employment shall be paid to the Participant promptly in cash.
6. Restricted Shares.
-----------------
Each grant of Restricted Shares under the Plan shall be evidenced by a
written Agreement between the Company and Participant, which shall be in such
form as the Committee shall from time to time approve and shall comply with the
following terms and conditions (and with such other terms and conditions not
inconsistent with such terms as the Committee, in its discretion, may
establish):
(a) Number of Shares. Each Agreement shall state the number of Restricted
Shares to be granted thereunder.
(b) Restricted Period. Subject to such exceptions as may be determined by
the Committee in its discretion, the Restricted Period for Restricted
Shares granted under the Plan shall be three years from the date of
grant.
4
<PAGE>
(c) Ownership and Restrictions. At the time of grant of Restricted Shares,
a certificate representing the number of Restricted Shares granted
shall be registered in the name of the Participant. Such certificate
shall be held by the Company or any custodian appointed by the Company
for the account of the Participant subject to the terms and conditions
of the Plan, and shall bear such legend setting forth the restrictions
imposed thereon as the Committee, in its discretion, may determine.
The Participant shall have all rights of a stockholder with respect to
such Restricted Shares, including the right to receive dividends and
the right to vote such Restricted Shares, subject to the following
restrictions: (i) the Participant shall not be entitled to delivery of
the stock certificate until the expiration of the Restricted Period
and the fulfillment of any other restrictive conditions set forth in
this Plan or the Agreement with respect to such Restricted Shares;
(ii) none of the Restricted Shares may be sold, assigned, transferred,
pledged, hypothecated or otherwise encumbered or disposed of (except
by will or the applicable laws of descent and distribution) during
such Restricted Period or until after the fulfillment of any such
other restrictive conditions; and (iii) except as otherwise determined
by the Committee, all of the Restricted Shares shall be forfeited and
all rights of the Participant to such Restricted Shares shall
terminate, without further obligation on the part of the Company,
unless the Participant remains in the continuous employment of the
Company for the entire Restricted Period and unless any other
restrictive conditions relating to the Restricted Shares are met. Any
common stock, any other securities of the Company and any other
property (except cash dividends) distributed with respect to the
Restricted Shares shall be subject to the same restrictions, terms and
conditions as such Restricted Shares (and shall be similarly taken
into account in determining the amount of any cash payment to a
Participant upon termination of employment).
(d) Termination of Restrictions. At the end of the Restricted Period and
provided that any other restrictive conditions of the Restricted
Shares are met, or at such earlier time as shall be determined by the
Committee, all restrictions set forth in the Agreement relating to the
Restricted Shares or in the Plan shall lapse as to the Restricted
Shares subject thereto, and a stock certificate for the appropriate
number of Shares, free of the restrictions and restrictive stock
legend (other than as required under the Securities Act of 1933 or
otherwise), shall be delivered to the Participant or his or her
beneficiary or estate, as the case may be.
(e) Restricted Share Units. Notwithstanding anything elsewhere in the Plan
to the contrary, if during the Restricted Period relating to a
Participant's Restricted Shares the Committee shall determine that the
Company may lose its Federal income tax deduction in connection with
the future lapsing of the restrictions on such Restricted Shares
because of the deductibility cap of section 162(m) of the Code, the
Committee, in its discretion, may convert some or all of such
Restricted Shares into an equal number of Restricted Share Units, as
to which payment will be postponed until such time as the Company will
not lose its Federal income tax deduction for such payment under
section 162(m). Until payment of the Restricted Share Units is made,
the Participant will be credited with dividend equivalents on the
Restricted Share Units, which dividend equivalents will be
5
<PAGE>
converted into additional Restricted Share Units. When payment of any
Restricted Share Units is made, it will be in the same form as would
apply if the Participant were then holding Restricted Shares instead
of Restricted Share Units.
7. Termination of Employment
-------------------------
The following rules shall apply, in the event of a Participant's
termination of employment with the Company and its Subsidiaries, with respect
to Restricted Shares held by the Participant at the time of such termination:
(a) Termination of Employment During Restricted Period. Except as provided
herein, if during the Restricted Period for any Restricted Shares held
by a Participant the Participant's employment is terminated either (i)
for Cause by the Company or a Subsidiary or (ii) for any reason by the
Participant, the Participant shall forfeit all rights with respect to
such Restricted Shares, which shall automatically be considered to be
cancelled, and shall have only an unfunded right to receive from the
Company's general assets a cash payment equal to the lesser of (i) the
Fair Market Value of such Restricted Shares on the Participant's last
day of employment or (ii) the aggregate Base Salary foregone by the
Participant as a condition of receiving such Restricted Shares.
Except as otherwise provided herein, if a Participant's employment is
terminated by the Company or a Subsidiary without Cause during the
Restricted Period for any Restricted Shares held by the Participant,
the Participant shall forfeit all rights with respect to such
Restricted Shares, which shall automatically be considered to be
cancelled, and shall have only an unfunded right to receive from the
Company's general assets a cash payment equal to either (i) the Fair
Market Value of such Restricted Shares on the Participant's last day
of employment or (ii) the aggregate Base Salary foregone by the
Participant as a condition of receiving such Restricted Shares, with
the Committee to have the sole discretion as to which of such amounts
shall be payable.
If the employment of a Participant holding Restricted Share Units
terminates during the Restricted Period relating to such Restricted
Share Units, they shall be treated in a manner substantially
equivalent to the treatment of Restricted Shares.
(b) Accelerated Lapse of Restrictions. Upon a termination of employment
which results from a Participant's death or Disability, all
restrictions then outstanding with respect to Restricted Shares held
by such Participant shall automatically expire and be of no further
force and effect.
(c) Retirement of Participant. Upon the retirement of a Participant, the
Committee shall determine, in its discretion, whether all restrictions
then outstanding with respect to Restricted Shares held by the
Participant shall expire or whether the Participant shall instead be
treated as though the Participant's employment had been terminated by
the Company without Cause, as described above.
6
<PAGE>
8. Change in Control.
-----------------
Upon the occurrence of a "change in control" of the Company (as defined
below), the Restricted Period shall automatically terminate as to all Restricted
Shares awarded under the Plan (as to which such Restricted Period has not
previously terminated). For purposes hereof, "change in control" of the Company
shall be deemed to have occurred upon the occurrence of any of the following
after the date on which the Corporation becomes a publicly-held Corporation:
(a) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any
"Person" (as the term Person is used for purposes of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended
(the "1934 Act")) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of twenty percent (20%) or more
of the combined voting power of the then outstanding Voting
Securities; provided, however, that in determining whether a
-------- -------
change in control has occurred, Voting Securities which are
acquired in a "Non-Control Acquisition" (as hereinafter defined)
shall not constitute an acquisition which would cause a change in
control. A "Non-Control Acquisition" shall mean an acquisition by
(i) an employee benefit plan (or a trust forming a part thereof)
maintained by (A) the Company or (B) any corporation or other
Person of which a majority of its voting power or its equity
securities or equity interest is owned directly or indirectly by
the Company (a "Subsidiary") or (ii) the Company or any
Subsidiary.
(b) The individuals who, as of the date the Company issues any class
of equity securities required to be registered under Section 12
of the 1934 Act, are members of the Board (the "Incumbent
Board"), cease for any reason to constitute at least two-thirds
of the Board; provided, however, that if the election, or
-------- -------
nomination for election, by the Company's stockholders of any new
director was approved by a vote of at least two-thirds of the
Incumbent Board, such new director shall, for purposes of this
Agreement, be considered as a member of the Incumbent Board;
provided, further, however, that no individual shall be
-------- ------- -------
considered a member of the Incumbent Board if (1) such individual
initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11
promulgated under the 1934 Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board (a "Proxy Contest") including by reason of
any agreement intended to avoid or settle any Election Contest or
Proxy Contest or (2) such individual was designated by a Person
who has entered into an agreement with the Company to effect a
transaction described in clause (a) or (c) of this Section 8; or
(c) Consummation, after approval by stockholders of the Company, of:
7
<PAGE>
(1) A merger, consolidation or reorganization involving the
Company, unless,
(A) The stockholders of the Company, immediately before
such merger, consolidation or reorganization, own,
directly or indirectly immediately following such merger,
consolidation or reorganization, at least seventy-five
percent (75%) of the combined voting power of the
outstanding Voting Securities of the corporation
resulting from such merger or consolidation or
reorganization or its parent corporation (the "Surviving
Corporation") in substantially the same proportion as
their ownership of the Voting Securities immediately
before such merger, consolidation or reorganization;
(B) The individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement
providing for such merger, consolidation or
reorganization constitute at least two-thirds of the
members of the board of directors of the Surviving
Corporation; and
(C) No Person (other than the Company, any Subsidiary, any
employee benefit plan (or any trust forming a part
thereof) maintained by the Company, the Surviving
Corporation or any Subsidiary, or any Person who,
immediately prior to such merger, consolidation or
reorganization, had Beneficial Ownership of twenty
percent (20%) or more of the then outstanding Voting
Securities) has Beneficial Ownership of twenty percent
(20%) or more of the combined voting power of the
Surviving Corporation's then outstanding Voting
Securities.
(2) A complete liquidation or dissolution of the Company; or
(3) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person
(other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a change in control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting Securities
as a result of the acquisition of Voting Securities by the Company which, by
reducing the number of Voting Securities outstanding, increased the proportional
number of shares Beneficially Owned by the Subject Person, provided that if a
change in control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
share acquisition by the Company, the Subject Person becomes the Beneficial
Owner of any additional Voting Securities which increases the percentage of the
then outstanding Voting Securities Beneficially Owned by the Subject Person,
then a change in control shall occur.
8
<PAGE>
9. Dilution and Other Adjustments.
------------------------------
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, or other change in corporate
structure affecting the Shares, such substitution or adjustment shall be made in
the aggregate number of Shares that may be distributed as Restricted Shares or
in respect of Restricted Share Units under the Plan, and the number of
Restricted Shares and/or Restricted Share Units outstanding under the Plan, as
may be determined to be appropriate by the Committee in its sole discretion;
provided, however, that the number of Shares thus subject to the Plan shall
- -------- -------
always be a whole number.
In addition, in the event of any such change in corporate structure, the
calculation of the Average Market Value of a Share for the grant date coincident
with or next following such event may be adjusted by the Committee in such
manner as it considers to be appropriate.
10. Payment of Withholding and Payroll Taxes.
----------------------------------------
Subject to the requirements of Section 16(b) of the Exchange Act, the
Committee shall have discretion to permit or require a Participant, on such
terms and conditions as it determines, to pay all or a portion of any taxes
arising in connection with a grant of Restricted Shares hereunder, or the lapse
of restrictions with respect thereto, by having the Company withhold Shares or
by the Participant's delivering other Shares having a then-current Fair Market
Value equal to the amount of taxes to be withheld. In the absence of such
withholding or delivery of Shares, the Company shall otherwise withhold from any
payment under the Plan all amounts required by law to be withheld.
11. No Rights to Employment.
-----------------------
Nothing in the Plan or in any grant made or Agreement entered into pursuant
hereto shall confer upon any Participant the right to continue in the employ of
the Company or any Subsidiary or to be entitled to any remuneration or benefits
not set forth in the Plan or such Agreement, or interfere with, or limit in any
way, the right of the Company or any Subsidiary to terminate such Participant's
employment. Grants made under the Plan shall not be affected by any change in
duties or position of a Participant as long as such Participant continues to be
employed by the Company or a Subsidiary.
12. Amendment and Termination of the Plan.
-------------------------------------
The Board, at any time and from time to time, may suspend, terminate,
modify or amend the Plan; provided, however, that an amendment which requires
-------- -------
stockholder approval for the Plan to continue to comply with any law, regulation
or stock exchange requirement shall not be effective unless approved by the
requisite vote of stockholders. No suspension, termination, modification or
amendment of the Plan may adversely affect any grants previously made, unless
the written consent of the Participant is obtained.
9
<PAGE>
13. Term of the Plan.
----------------
The Plan shall terminate ten years from the date that the Plan was approved
by the Board. No other grants may be made after such termination, but
termination of the Plan shall not, without the consent of any Participant who
then holds Restricted Shares or to whom Restricted Share Units are then
credited, alter or impair any rights or obligations in respect of such
Restricted Shares or Restricted Share Units.
14. Governing Law.
-------------
The Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of Texas
without giving effect to the choice of law principles thereof, except to the
extent that such laws are preempted by Federal law.
***
_____________________________
TRIAD HOSPITALS, INC.
10
<PAGE>
APPENDIX A
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Employee Classification Maximum Salary Percentage
- --------------------------------------------------------------------------------
<S> <C>
Senior Vice Presidents and above 25%
- --------------------------------------------------------------------------------
Corporate Vice Presidents 10%
- --------------------------------------------------------------------------------
Hospital CEOs 10%
- --------------------------------------------------------------------------------
</TABLE>
A-i
<PAGE>
EXHIBIT 10.13
TRIAD HOSPITALS, INC.
OUTSIDE DIRECTORS STOCK AND INCENTIVE COMPENSATION PLAN
<PAGE>
TRIAD HOSPITALS, INC.
OUTSIDE DIRECTORS STOCK AND INCENTIVE COMPENSATION PLAN
Table of Contents
-----------------
<TABLE>
<CAPTION>
<S> <C>
1. Introduction................................... 1
2. Definitions.................................... 1
(a) Agreement.................................... 1
(b) Annual Option................................ 1
(c) Annual Retainer.............................. 1
(d) Black-Scholes Evaluation Method.............. 1
(e) Board........................................ 1
(f) Board Term................................... 2
(g) Code......................................... 2
(h) Common Stock................................. 2
(i) Company...................................... 2
(j) Deferred Stock Unit.......................... 2
(k) Deferred Stock Unit Account.................. 2
(l) Deferred Stock Unit Award.................... 2
(m) Disability................................... 2
(n) Discretionary Option......................... 2
(o) Election Notice.............................. 2
(p) Exchange Act................................. 2
(q) Fair Market Value............................ 2
(r) Initial Option............................... 3
(s) Option....................................... 3
(t) Option Price................................. 3
(u) Outside Director............................. 3
(v) Participant.................................. 3
(w) Realization Date............................. 3
(x) Shares....................................... 3
(y) Stock Election............................... 3
(z) Subsidiary................................... 3
3. Administration of the Plan..................... 3
3.1 General Authority.......................... 3
4. Stock Subject to Plan.......................... 4
4.1 Number of Shares........................... 4
4.2 Reuse of Shares............................ 4
5. Options........................................ 4
5.1 Grant of Annual Options.................... 4
5.2 Grant of Initial Options................... 4
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
5.3 Discretionary Options...................... 4
5.4 Option Price............................... 5
5.5 Term....................................... 5
5.6 Option Exercise............................ 5
5.7 Limited Transferability of Options......... 5
5.8 Death of Optionee.......................... 6
5.9 Disability................................. 7
5.10 Other Termination of Service............... 7
6. Deferred Stock Unit Awards...................... 7
6.1 Stock Elections............................ 7
6.2 Deferred Stock Unit Awards................. 7
6.3 Award Terms................................ 7
7. Change in Control............................... 8
7.1 Effect of Change in Control................ 8
7.2 Definition................................. 8
8. Antidilution Adjustments........................ 10
9. Conditions of Issuance of Stock Certificates.... 11
9.1 Applicable Conditions....................... 11
9.2 Legends..................................... 11
10. No Rights to Continued Service.................. 11
11. No Rights to Assets of the Company.............. 12
12. Amendment and Termination of the Plan........... 12
13. Term of the Plan................................ 12
14. Governing Law................................... 12
</TABLE>
ii
<PAGE>
TRIAD HOSPITALS, INC.
OUTSIDE DIRECTORS STOCK AND INCENTIVE COMPENSATION PLAN
1. Introduction.
------------
This Plan shall be known as the "Triad Hospitals, Inc. Outside
Directors Stock and Incentive Compensation Plan" and is hereinafter
referred to as the "Plan." The purposes of the Plan are to encourage
ownership of stock in the Company by Outside Directors, through the
granting of non-qualified stock options and deferred stock unit awards, to
provide an incentive to such directors to continue to serve the Company and
to aid the Company in attracting qualified director candidates in the
future. Options granted under the Plan will not be incentive stock options
within the meaning of section 422 of the Code.
The provisions of the Plan are intended to satisfy any applicable
requirements of Section 16(b) of the Exchange Act, and shall be interpreted
in a manner consistent with any such requirements thereof, as now or
hereafter construed, interpreted and applied by regulation, rulings and
cases.
The terms of the Plan shall be as set forth below, effective as of the
date the Company's Common Stock is distributed to Columbia/HCA Healthcare
Corporation stockholders.
2. Definitions.
-----------
As used in the Plan, the following words and phrases shall have the
meanings indicated:
(a) "Agreement" shall mean a written agreement entered into between the
Company and a Participant in connection with an Option granted under
the Plan .
(b) "Annual Option" shall mean an Option granted pursuant to Section 5.1
hereof.
(c) "Annual Retainer" shall mean the annual fee earned by the Participant
for his service on the Board.
(d) "Black-Scholes Evaluation Method" shall mean the generally accepted
option pricing model based on the Black-Scholes valuation model as
adapted for use in valuing stock options and using such assumptions as
are determined and adopted from time to time by the Board .
(e) "Board" shall mean the Board of Directors of the Company.
<PAGE>
(f) "Board Term" shall mean each Board year beginning on the date of an
annual meeting of the Company's shareholders and ending on the date
immediately preceding the next annual meeting of the Company's
shareholders .
(g) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time .
(h) "Common Stock" shall mean the common stock of the Company.
(i) "Company" shall mean Triad Hospitals, Inc., a Delaware corporation, or
any successor corporation .
(j) "Deferred Stock Unit" shall mean a bookkeeping unit entitling a
Participant to a Share on the Realization Date applicable under the
Plan (and shall include fractional units) .
(k) "Deferred Stock Unit Account" shall mean a bookkeeping account
maintained by the Company reflecting the number of Deferred Stock
Units credited to a Participant pursuant to Section 6.2 hereof as a
result of the Participant's Stock Election .
(l) "Deferred Stock Unit Award" shall mean an award under Section 6.2
hereof of Deferred Stock Units as a result of a Participant's Stock
Election for a Board Term .
(m) "Disability" shall mean a Participant's total and permanent inability
to perform his or her duties with the Company or any Subsidiary by
reason of any medically determinable physical or mental impairment,
within the meaning of Code section 22(e)(3) .
(n) "Discretionary Option" shall mean an Option granted pursuant to
Section 5.3.
(o) "Election Notice" shall mean a written election, in such form as the
Board shall prescribe, submitted by a Participant to the Company in
connection with a Stock Election under the Plan.
(p) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time and as now or hereafter construed,
interpreted and applied by regulations, rulings and cases.
( q) "Fair Market Value" per Share or per Deferred Stock Unit as of a given
date shall mean the closing sales price of the Common Stock on the
Nasdaq Stock Market on the trading day immediately preceding the date
as of which the Fair Market Value is to be determined, or, in the
absence of any reported sales of Shares on such date, on the first
preceding date on which any such sale shall have been reported (in
either case, as reported in the Two Star Edition of The Wall Street
Journal). If the Shares are not listed on the Nasdaq Stock Market on
the date as of
2
<PAGE>
which Fair Market Value is to be determined, the Committee shall in
good faith determine the Fair Market Value in whatever manner it
considers appropriate.
(r) "Initial Option" shall mean an Option granted pursuant to Section 5.2
hereof.
(s) "Option" shall mean an Annual Option, Initial Option or Discretionary
Option, as the case may be.
(t) "Option Price" shall mean the price at which each Share subject to an
Option may be purchased, determined in accordance with Section 5.4
hereof.
(u) "Outside Director" shall mean any member of the Board who is not also
an employee of the Company (or any Subsidiary thereof).
(v) "Participant" shall mean any Outside Director who has received an
Option or other award (or credit) hereunder that has not yet
terminated.
(w) "Realization Date" shall mean, as elected by the Participant, with
respect to any Deferred Stock Unit allocated to a Participant's
Deferred Stock Unit Account, the first business day following (i) the
second anniversary of the date such Deferred Stock Unit is credited to
the Participant's Deferred Stock Unit Account, or (ii) the date the
Participant ceases to be a member of the Board.
(x) "Shares" shall mean shares of Common Stock of the Company.
(y) "Stock Election" shall mean an election of the Participant to receive,
in lieu of all or part (in multiples of 25%) of his Annual Retainer, a
Deferred Stock Unit Award pursuant to Section 6.2 hereof. (z) "Subs
idiary" shall have the meaning set forth in Section 7.2.
3. Administration of the Plan.
--------------------------
3.1 General Authority.
-----------------
The Plan shall be administered by the Board. The Board shall have
plenary authority in its discretion, but subject to the express provisions
of the Plan, to administer the Plan and to exercise all the powers and
authorities either specifically granted to it under the Plan or necessary
or advisable in the administration of the Plan, including, without
limitation, to interpret the Plan, to prescribe, amend and rescind rules
and regulations relating to the Plan, to determine the details and
provisions of the Election Notices and Agreements and to make all other
determinations deemed necessary or advisable for the administration of the
Plan. The Board's determinations on the foregoing matters shall be final
and conclusive. No member of the Board shall be liable for any action taken
or determination made in good faith with respect to the Plan or any grant
hereunder.
3
<PAGE>
4. Stock Subject to Plan.
---------------------
4.1 Number of Shares.
----------------
The maximum number of Shares which may be issued pursuant to Options
and other awards under the Plan shall be 240,000 Shares, which number shall
be subject to adjustment as provided in Section 8 hereof. Such Shares may
be either authorized but unissued Shares, or Shares that shall have been or
may be reacquired by the Company.
4.2 Reuse of Shares.
---------------
If an Option or a Deferred Stock Unit Award under the Plan is
canceled, terminates, expires unexercised or is exchanged for a different
award without the issuance of Shares, the covered Shares shall, to the
extent of such termination or non-use, again be available for awards
thereafter granted during the term of the Plan.
5. Options.
-------
5.1 Grant of Annual Options.
-----------------------
Each person who is an Outside Director on the first business day of
any Board Term shall be granted an Annual Option on such date as shall be
selected by the Board which shall cover a number of Shares determined by
the Board. Such Annual Option shall become exercisable in four cumulative
installments, each of which shall relate to 25% of the Shares covered by
the Annual Option, beginning on the first anniversary of the date of grant
and the three next succeeding anniversary dates thereof, respectively.
5.2 Grant of Initial Options.
------------------------
In addition to Annual Options granted under Section 5.1, upon
commencement of service as an Outside Director, each Outside Director shall
be granted an Initial Option, as of such date as shall be selected by the
Board, which shall cover a number of shares determined by the Board. Such
Initial Option shall become exercisable in four cumulative installments,
each of which shall relate to 25% of the Shares covered by the Initial
Option, beginning on the first anniversary of the date of grant and the
three next succeeding anniversary dates thereof, respectively.
5.3 Discretionary Options.
---------------------
The Board may, from time to time, in its sole discretion, designate
Outside Directors who are to be granted Discretionary Options and determine
the number of shares subject to such Discretionary Options. The Board, in
its sole discretion, shall prescribe the time or times at which, or the
conditions upon which, a Discretionary Option or portion thereof shall
become vested and exercisable, and may accelerate the exercisability of any
Discretionary Option at any time.
4
<PAGE>
5.4 Option Price.
------------
The Option Price of each Share subject to an Annual Option or Initial
Option shall be 100 percent of the Fair Market Value of a Share on the date
of grant. The Option Price of each Share under a Discretionary Option
shall be determined by the Board; provided, however, that the Option Price
-------- -------
of each Share under such Discretionary Option shall not be less than 100
percent of the Fair Market Value of a Share on the date of grant.
5.5 Term.
----
The term of any Option issued pursuant to the Plan shall be ten years
from the date of grant and may extend beyond the date of termination of the
Plan; provided, however, that the Board may, in the case of a Discretionary
-------- -------
Option, provide for a shorter exercise period in the Agreement.
5.6 Option Exercise.
---------------
An Option may be exercised in whole or in part at any time, with
respect to whole Shares only, within the period permitted thereunder for
the exercise thereof, and shall be exercised by written notice of intent to
exercise the Option with respect to a specified number of Shares, delivered
to the Company at its principal office, and payment in full to the Company
at said office of the amount of the Option Price for the number of Shares
with respect to which the Option is then being exercised. Payment of the
Option Price shall be made (i) in cash or cash equivalents, (ii) in whole
Shares valued at the closing sales price of the Common Stock on the Nasdaq
Stock Market on the date of exercise (or next succeeding trading date, if
the date of exercise is not a trading date, in which case the exercise date
shall instead be considered to be such next trading date) or (iii) by a
combination of such cash (or cash equivalents) and such Stock; provided,
--------
however, that the optionee shall not be entitled to tender Shares pursuant
-------
to successive, substantially simultaneous exercises of an Option or any
other stock option of the Company. Subject to applicable securities laws,
an Option may also be exercised by delivering a notice of exercise of the
Option and simultaneously selling the Shares thereby acquired pursuant to a
brokerage or similar agreement approved in advance by proper officers of
the Company, using the proceeds of such sale as payment of the exercise
price. Subject to the provisions of Section 9 hereof, the Company shall
issue a stock certificate for the Shares purchased by exercise of an
Option, in the name of the optionee (or other person exercising the Option
in accordance with the provisions of the Plan), as soon as practicable
after due exercise and payment of the aggregate Option Price for such
Shares.
5.7 Limited Transferability of Options.
----------------------------------
All Options shall be nontransferable except (i) upon the optionee's
death, by the optionee's will or the laws of descent and distribution or
(ii) on a case-by-case basis, as may be approved by the Board in its
discretion, in accordance with the terms provided below. Each Agreement
shall provide that the optionee may, during his or her lifetime and subject
to the prior approval of the Board at the time of proposed transfer,
transfer all
5
<PAGE>
or part of the Option to a Family Member (as defined below), provided that
such transfer is made for estate planning, tax planning, donative purposes
or pursuant to a domestic relations order, and no consideration (other than
nominal consideration) is received by the Optionee. The transfer of an
Option shall be subject to such other terms and conditions as the Board may
in its discretion impose from time to time, including (without limitation)
a condition that the portion of the Option to be transferred be vested and
exercisable by the optionee at the time of the transfer and a requirement
that the terms of such transfer be documented in a written agreement (in
such form as the Board may prescribe). Subsequent transfers of an Option
transferred under this Section 5.7 shall be prohibited, other than by will
or the laws of descent and distribution upon the death of the transferee.
For purposes hereof, a "family member" shall mean any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former
spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, any person sharing the employee's household (other than a
tenant or employee), a trust in which these persons have more than fifty
percent of the beneficial interest, a foundation in which these persons (or
the employee) control the management of assets, and any other entity in
which these persons (or the employee) own more than fifty percent of the
voting interests.
No transfer of an Option by the optionee by will or by laws of descent
and distribution shall be effective to bind the Company unless the Company
shall have been furnished with written notice thereof and an authenticated
copy of the will and/or such other evidence as the Board may deem necessary
to establish the validity of the transfer. During the lifetime of an
optionee, except as provided above, the Option shall be exercisable only by
the optionee, except that, in the case of an optionee who is legally
incapacitated, the Option shall be exercisable by the optionee's guardian
or legal representative. In the event of any transfer of an Option to a
Family Member in accordance with the provisions of this Section 5.7, such
Family Member shall thereafter have all rights that would otherwise be held
by such optionee (or by such optionee's guardian, legal representative or
beneficiary), except as otherwise provided herein. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of the
Option contrary to the provisions hereof, and the levy of any execution,
attachment or similar process upon the Option, shall be null and void and
without effect.
5.8 Death of Optionee.
-----------------
If an optionee dies while he is an Outside Director, the executor or
administrator of the estate of the decedent (or the person or persons to
whom an Option shall have been validly transferred in accordance with
Section 5.7) shall have the right, during the period ending six months
after the date of the optionee's death (subject to the provisions of
Section 5.5 hereof concerning the maximum term of an Option), to exercise
the Option to the extent that it was exercisable at the date of such
optionee's death and shall not have been previously exercised.
6
<PAGE>
5.9 Disability.
----------
If an optionee's service as an Outside Director shall be terminated as
a result of Disability, the optionee (or in the case of an optionee who is
legally incapacitated, his guardian or legal representative) shall have the
right, during a period ending six months after the date of his disability
(subject to the provisions of Section 5.5 hereof concerning the maximum
term of an Option), to exercise the Option to the extent that it was
exercisable at the date of such optionee's Disability and shall not have
been previously exercised.
5.10 Other Termination of Service.
----------------------------
If an optionee's service as an Outside Director shall be terminated
for any reason other than death or Disability, the optionee shall have the
right, during the period ending ninety days after such termination (subject
to the provisions of Section 5.5 hereof concerning the maximum term of an
Option), to exercise the Option to the extent that it was exercisable on
the date of such termination of service and shall not have been previously
exercised.
6. Deferred Stock Unit Awards.
--------------------------
6.1 Stock Elections.
---------------
For each Board Term during which the Plan is in effect, a Participant
may elect to receive, in lieu of all or any portion (in multiples of 25%)
of his Annual Retainer payable for such Board Term, a Deferred Stock Unit
Award pursuant to Section 6.2 hereof. Such an election shall be made for a
Board Term by filing an Election Notice with the Company, in accordance
with procedures adopted by the Board, prior to the commencement of the
Board Term for which such Annual Retainer is to be paid; provided, however,
-------- -------
that in the case of the Board Term beginning in 1999, such Election Notice
must be filed on or before May 31, 1999.
6.2 Deferred Stock Unit Awards.
--------------------------
A Participant shall receive a Deferred Stock Unit Award for each Board
Term in respect of which he makes a Stock Election. Such Deferred Stock
Unit Award shall be granted as of the first business day of the Board Term
(except that in the case of the Board Term beginning in 1999, such grant
date shall be the twenty-first (21) trading date of the Company's Common
Stock) and shall be for a number of Deferred Stock Units determined by
dividing (A) the additional Annual Retainer amount that would have been
payable to the Participant in cash in the absence of his Stock Election, by
(B) the Fair Market Value of a Share on the date of grant.
6.3 Award Terms.
-----------
Each Deferred Stock Unit Award granted under the Plan shall have the
following terms:
7
<PAGE>
(a) Vesting. All Deferred Stock Units credited to a Participant's
Deferred Stock Unit Account shall immediately be 100% vested.
(b) Dividend Equivalents. A Participant shall be credited with
dividend equivalents on all Deferred Stock Units credited to his
Deferred Stock Unit Account at the time of any payment of
dividends on Shares to stockholders. The amount of any such
dividend equivalents shall equal the amount that would have been
payable to the Participant as a stockholder in respect of a
number of Shares equal to the number of Deferred Stock Units then
credited to him. Any such dividend equivalent shall be credited
to the Participant's Deferred Stock Unit Account as of the date
on which such dividend would have been payable and shall be
converted into additional Deferred Stock Units (which shall be
immediately vested) based upon the Fair Market Value of a Share
on the date of such crediting.
(c) Payment of Awards. A Participant shall be entitled to payment, in
respect of Deferred Stock Units credited to him, on the
Realization Date for such Deferred Stock Units indicated by
Participant in the applicable Election Notice. Subject to the
provisions of Section 9, such payment in respect of any Deferred
Stock Units shall be made through the issuance to the Participant
of a stock certificate for a number of Shares equal to the number
of such Deferred Stock Units.
7. Change in Control.
-----------------
7.1 Effect of Change in Control.
---------------------------
Upon a "change in control" of the Company (as defined below), each
outstanding Option, to the extent that it shall not otherwise have become
exercisable, shall become fully and immediately exercisable (without regard
to the otherwise applicable provisions of Sections 5.1, 5.2 and 5.3 hereof
concerning exercisability).
7.2 Definition.
----------
For purposes of Section 7.1 hereof, "change in control" of the Company
shall be deemed to have occurred upon the occurrence of any of the
following after the date on which the Corporation becomes a publicly-held
Corporation:
(a) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any
"Person" (as the term Person is used for purposes of Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended
(the "1934 Act")) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of twenty percent (20%) or more
of the combined voting power of the then outstanding Voting
Securities; provided, however, that in determining whether a
-------- -------
change in control has occurred, Voting Securities which are
acquired in a "Non-Control
8
<PAGE>
Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a change in control. A "Non-Control
Acquisition" shall mean an acquisition by (i) an employee benefit plan
(or a trust forming a part thereof) maintained by (A) the Company or
(B) any corporation or other Person of which a majority of its voting
power or its equity securities or equity interest is owned directly or
indirectly by the Company (a "Subsidiary") or (ii) the Company or any
Subsidiary.
(b) The individuals who, as of the date the Company issues any class of
equity securities required to be registered under Section 12 of the
1934 Act, are members of the Board (the "Incumbent Board"), cease for
any reason to constitute at least two-thirds of the Board; provided,
--------
however, that if the election, or nomination for election, by the
-------
Company's stockholders of any new director was approved by a vote of
at least two-thirds of the Incumbent Board, such new director shall,
for purposes of this Agreement, be considered as a member of the
Incumbent Board; provided, further, however, that no individual shall
-------- ------- -------
be considered a member of the Incumbent Board if (1) such individual
initially assumed office as a result of either an actual or threatened
"Election Contest" (as described in Rule 14a-11 promulgated under the
1934 Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board (a "Proxy
Contest") including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest or (2) such individual
was designated by a Person who has entered into an agreement with the
Company to effect a transaction described in clause (a) or (c) of this
Section 7.2; or
(c) Consummation, after approval by stockholders of the Company, of:
(1) A merger, consolidation or reorganization involving the Company,
unless,
(A) The stockholders of the Company, immediately before such
merger, consolidation or reorganization, own, directly or
indirectly immediately following such merger, consolidation or
reorganization, at least seventy-five percent (75%) of the
combined voting power of the outstanding Voting Securities of
the corporation resulting from such merger or consolidation or
reorganization or its parent corporation (the "Surviving
Corporation") in substantially the same proportion as their
ownership of the Voting Securities immediately before such
merger, consolidation or reorganization;
(B) The individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing
for such merger, consolidation or reorganization
9
<PAGE>
constitute at least two-thirds of the members of the board of
directors of the Surviving Corporation; and
(C) No Person (other than the Company, any Subsidiary, any
employee benefit plan (or any trust forming a part thereof)
maintained by the Company, the Surviving Corporation or any
Subsidiary, or any Person who, immediately prior to such
merger, consolidation or reorganization, had Beneficial
Ownership of twenty percent (20%) or more of the then
outstanding Voting Securities) has Beneficial Ownership of
twenty percent (20%) or more of the combined voting power of
the Surviving Corporation's then outstanding Voting Securities.
(2) A complete liquidation or dissolution of the Company; or
(3) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person
(other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a change in control shall not be deemed to
occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding
Voting Securities as a result of the acquisition of Voting Securities by
the Company which, by reducing the number of Voting Securities
outstanding, increased the proportional number of shares Beneficially
Owned by the Subject Person, provided that if a change in control would
occur (but for the operation of this sentence) as a result of the
acquisition of Voting Securities by the Company, and after such share
acquisition by the Company, the Subject Person becomes the Beneficial
Owner of any additional Voting Securities which increases the percentage
of the then outstanding Voting Securities Beneficially Owned by the
Subject Person, then a change in control shall occur.
8. Antidilution Adjustments.
------------------------
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger or consolidation, or the sale,
conveyance, lease or other transfer by the Company of all or substantially
all of its property, or any other change in the corporate structure or
shares of the Company, pursuant to any of which events the then outstanding
Shares are split up or combined, or are changed into, become exchangeable at
the holder's election for, or entitle the holder thereof to, other shares of
stock, or in the case of any other transaction described in section 424(a)
of the Code, the Board may make such adjustment or substitution (including
by substitution of shares of another corporation) as it may determine to be
appropriate, in its sole discretion, in (i) the aggregate number and kind of
shares that may be distributed in respect of Option exercises and/or awards
under the Plan, (ii) the number and kind of shares subject to
10
<PAGE>
outstanding Options and/or the Option Price of such shares and (iii) the
number and kind of shares represented by Deferred Stock Units outstanding
under the Plan.
9. Conditions of Issuance of Stock Certificates.
--------------------------------------------
9.1 Applicable Conditions.
---------------------
The Company shall not be required to issue or deliver any certificate
for Shares under the Plan prior to fulfillment of all of the following
conditions:
(a) the completion of any registration or other qualification of such
Shares, under any federal or state law, or under the rulings or
regulations of the Securities and Exchange Commission or any
other governmental regulatory body, that the Board shall, in its
sole discretion, deem necessary or advisable;
(b) the obtaining of any approval or other clearance from any federal
or state governmental agency that the Board shall, in its sole
discretion, determine to be necessary or advisable;
(c) the lapse of such reasonable period of time following the event
triggering the obligation to distribute shares as the Board from
time to time may establish for reasons of administrative
convenience; and
(d) if required by the Board, in its sole discretion, the receipt by
the Company from a Participant of (i) a representation in writing
that the Shares received pursuant to the Plan are being acquired
for investment and not with a view to distribution and (ii) such
other representations and warranties as are deemed necessary by
counsel to the Company.
9.2 Legends.
-------
The Company reserves the right to legend any certificate for Shares,
conditioning sales of such shares upon compliance with applicable federal
and state securities laws and regulations.
10. No Rights to Continued Service.
------------------------------
Nothing in the Plan, in any grant made, or in any Election Notice or
Agreement entered into pursuant hereto shall confer upon any Participant
the right to continue service as a member of the Board or to be entitled to
any remuneration or benefits not set forth in the Plan, Election Notice or
Agreement.
11
<PAGE>
11. No Rights to Assets of the Company.
----------------------------------
Nothing in the Plan, in any grant made, or in any Election Notice or
Agreement entered into pursuant hereto shall confer upon any Participant
any right to any particular assets of the Company. A Participant's rights
under the Plan are limited to those rights of an unsecured creditor except
to the extent Shares are actually issued to such Participant.
12. Amendment and Termination of the Plan.
-------------------------------------
The Board, at any time and from time to time, may suspend, terminate,
modify or amend the Plan; provided, however, that an amendment which
-------- -------
requires stockholder approval for the Plan to continue to comply with any
law, regulation or stock exchange requirement shall not be effective unless
approved by the requisite vote of stockholders. No suspension, termination,
modification or amendment of the Plan shall adversely affect any grants
previously made, unless the written consent of the Participant is obtained.
13. Term of the Plan.
----------------
The Plan shall have a term of ten years. No grants or awards may be
made after such termination, but termination of the Plan shall not, without
the consent of any Participant who then holds Options or Deferred Stock
Units, alter or impair any rights or obligations in respect of such Options
or Deferred Stock Units.
14. Governing Law.
-------------
The Plan and the rights of all persons claiming hereunder shall be
construed and determined in accordance with the laws of the State of Texas
without giving effect to the choice of law principles thereof, except to
the extent that such laws are preempted by Federal law.
***
___________________________________
TRIAD HOSPITALS, INC.
12
<PAGE>
EXHIBIT 10.14
CREDIT AGREEMENT
Dated as of May 11, 1999
among
HEALTHTRUST, INC. - THE HOSPITAL COMPANY
and
CERTAIN SUBSIDIARIES
FROM TIME TO TIME PARTY HERETO,
as Borrower,
THE SEVERAL LENDERS
FROM TIME TO TIME PARTY HERETO
AND
CITICORP USA, INC.
and
THE CHASE MANHATTAN BANK,
as Syndication Agents
CREDIT LYONNAIS NEW YORK BRANCH
and
SOCIETE GENERALE,
as Co-Agents
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Administrative Agent
NATIONSBANC MONTGOMERY SECURITIES, LLC,
as Lead Arranger and Sole Book Manager
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
SECTION 1 DEFINITIONS................................................... 1
1.1 Definitions..................................................... 1
1.2 Computation of Time Periods..................................... 1
1.3 Accounting Terms................................................ 31
SECTION 2 CREDIT FACILITIES............................................. 32
2.1 Commitments..................................................... 32
2.2 Method of Borrowing............................................. 33
2.3 Interest........................................................ 35
2.4 Repayment....................................................... 35
2.5 Notes........................................................... 37
2.6 Additional Provisions relating to Letters of Credit............. 37
2.7 Additional Provisions relating to Swingline Loans............... 41
SECTION 3 OTHER PROVISIONS RELATING TO CREDIT FACILITIES................ 42
3.1 Default Rate.................................................... 42
3.2 Continuation and Conversion..................................... 42
3.3 Prepayments..................................................... 43
3.4 Reduction and Termination of Revolving Commitments.............. 46
3.5 Fees............................................................ 46
3.6 Capital Adequacy................................................ 47
3.7 Limitation on Eurodollar Loans.................................. 47
3.8 Illegality...................................................... 48
3.9 Requirements of Law............................................. 48
3.10 Treatment of Affected Loans.................................... 49
3.11 Taxes.......................................................... 50
3.12 Compensation................................................... 51
3.13 Pro Rata Treatment............................................. 52
3.14 Sharing of Payments............................................ 53
3.15 Payments, Computations, Etc.................................... 54
3.16 Evidence of Debt............................................... 56
SECTION 4 [INTENTIONALLY OMITTED]....................................... 56
SECTION 5 CONDITIONS.................................................... 57
5.1 Closing Conditions.............................................. 57
5.2 Conditions to all Extensions of Credit.......................... 59
5.3 Conditions to Release of HTI from Credit Agreement.............. 60
5.4 Conditions to Release of Holdings from the Credit Agreement..... 62
5.5 Conditions to Release of HTI from HTI Guaranty Agreement........ 63
SECTION 6 REPRESENTATIONS AND COVENANTS OF HTI.......................... 68
6.1 Financial Condition and Financial Reporting..................... 68
6.2 Notices......................................................... 69
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
6.3 Existence and Authority......................................... 69
6.4 Compliance with Requirements of Law............................. 69
6.5 Governmental Regulations, Etc................................... 70
6.6 Legal Proceedings............................................... 70
6.7 No Defaults..................................................... 70
6.8 Purpose of Extensions of Credit................................. 70
6.9 No Material Misstatements....................................... 70
6.10 Indebtedness................................................... 71
6.11 Ownership of Property; Liens................................... 71
6.12 Mergers; Acquisitions and Asset Sales.......................... 71
6.13 Investments.................................................... 72
6.14 Restricted Payments............................................ 72
6.15 Transactions with Affiliates................................... 72
SECTION 7 REPRESENTATIONS AND WARRANTIES................................ 72
7.1 Financial Condition............................................. 72
7.2 No Changes or Restricted Payments............................... 73
7.3 Organization; Existence; Compliance with Law.................... 73
7.4 Power; Authorization; Enforceable Obligations................... 74
7.5 No Legal Bar.................................................... 74
7.6 No Material Litigation and Disputes............................. 74
7.7 No Defaults..................................................... 75
7.8 Ownership and Operation of Property............................. 75
7.9 Intellectual Property........................................... 75
7.10 No Burdensome Restrictions..................................... 75
7.11 Taxes.......................................................... 76
7.12 ERISA.......................................................... 76
7.13 Governmental Regulations, Etc.................................. 77
7.14 Subsidiaries................................................... 78
7.15 Purpose of Extensions of Credit................................ 78
7.16 Environmental Matters.......................................... 78
7.17 Year 2000 Compliance........................................... 79
7.18 No Material Misstatements...................................... 80
7.19 Labor Matters.................................................. 80
7.20 Security Documents............................................. 80
7.21 Location of Real Property and Leased Premises.................. 82
7.22 Solvency....................................................... 82
7.23 Distribution Agreement......................................... 82
SECTION 8 AFFIRMATIVE COVENANTS......................................... 83
8.1 Information Covenants........................................... 83
8.2 Preservation of Existence and Franchises........................ 87
8.3 Books and Records............................................... 87
8.4 Compliance with Law............................................. 87
8.5 Payment of Taxes and Other Indebtedness......................... 87
8.6 Insurance....................................................... 87
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
8.7 Maintenance of Property........................................ 88
8.8 Performance of Obligations..................................... 88
8.9 Use of Proceeds................................................ 88
8.10 Audits/Inspections............................................ 88
8.11 Financial Covenants........................................... 89
8.12 Additional Guarantors......................................... 90
8.13 Pledged Assets................................................ 91
8.14 Year 2000 Compliance.......................................... 92
SECTION 9 NEGATIVE COVENANTS........................................... 92
9.1 Indebtedness................................................... 92
9.2 Liens.......................................................... 93
9.3 Nature of Business............................................. 93
9.4 Merger and Consolidation, Dissolution and Acquisitions......... 94
9.5 Asset Dispositions............................................. 95
9.6 Investments.................................................... 96
9.7 Restricted Payments............................................ 96
9.8 Modifications and Payments in respect of Funded Debt........... 96
9.9 Transactions with Affiliates................................... 96
9.10 Fiscal Year; Organizational Documents......................... 97
9.11 Limitation on Restricted Actions.............................. 97
9.12 Ownership of Subsidiaries; Limitations on Parent.............. 97
9.13 Sale Leasebacks............................................... 98
9.14 No Further Negative Pledges................................... 98
9.15 Operating Lease Obligations................................... 98
SECTION 10 EVENTS OF DEFAULT............................................ 98
10.1 Events of Default............................................. 98
10.2 Acceleration; Remedies........................................ 101
SECTION 11 AGENCY PROVISIONS............................................ 102
11.1 Appointment, Powers and Immunities............................ 102
11.2 Reliance by Administrative Agent.............................. 103
11.3 Defaults...................................................... 103
11.4 Rights as a Lender............................................ 104
11.5 Indemnification............................................... 104
11.6 Non-Reliance on Administrative Agent and Other Lenders........ 105
11.7 Successor Administrative Agent................................ 105
SECTION 12 MISCELLANEOUS................................................ 105
12.1 Notices....................................................... 105
12.2 Right of Set-Off; Adjustments................................. 107
12.3 Benefit of Agreement.......................................... 107
12.4 No Waiver; Remedies Cumulative................................ 109
12.5 Expenses; Indemnification..................................... 109
12.6 Amendments, Waivers and Consents............................. 110
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
12.7 Counterparts.................................................. 112
12.8 Headings...................................................... 113
12.9 Survival...................................................... 113
12.10 Governing Law; Submission to Jurisdiction; Venue............. 113
12.11 Severability................................................. 114
12.12 Entirety..................................................... 114
12.13 Binding Effect; Termination.................................. 114
12.14 Confidentiality.............................................. 114
12.15 Source of Funds.............................................. 115
12.16 Conflict..................................................... 116
</TABLE>
iv
<PAGE>
SCHEDULES
---------
Schedule 2.1 Lenders and Commitments
Schedule 2.2(a)(i) Form of Notice of Borrowing
Schedule 2.2(a)(ii) Form of Notice of Request of Letter of Credit
Schedule 2.5-1 Form of Revolving Note
Schedule 2.5-2 Form of Bridge Note
Schedule 2.5-3 Form of Tranche A Term Note
Schedule 2.5-4 Form of Tranche B Term Note
Schedule 2.6(b) Existing Letters of Credit
Schedule 3.2 Form of Notice of Extension/Conversion
Schedule 3.3(b) Approved Asset Dispositions
Schedule 5.3(a) Form of Assumption Agreement
Schedule 5.3(b) Form of Release of Borrower
Schedule 5.5 Form of Release of Guaranty
Schedule 7.6 Litigation
Schedule 7.8 Liens
Schedule 7.9 Intellectual Property
Schedule 7.14 Subsidiaries
Schedule 7.19 Labor Matters
Schedule 7.21(a) Mortgaged Properties
Schedule 7.21(b) Locations of Collateral
Schedule 7.21(c) Chief Executive Offices/Principal Places
of Business
Schedule 8.1(c) Form of Officer's Compliance Certificate
Schedule 8.6 Insurance
Schedule 8.13 Excluded Property
Schedule 9.1 Indebtedness
Schedule 9.6 Investments
Schedule 12. 1 Lenders' Addresses
Schedule 12.3(b) Form of Assignment and Acceptance
v
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of May 11, 1999 (as amended, modified,
restated or supplemented from time to time, the "Credit Agreement"), is by and
----------------
among HEALTHTRUST, INC. - THE HOSPITAL COMPANY, a Delaware corporation ("HTI"),
---
and certain Subsidiaries of HTI which may hereafter become the Borrower in
accordance with the provisions hereof (the "Borrower"), the Lenders (as defined
--------
herein), CITICORP USA, INC. and THE CHASE MANHATTAN BANK, as Syndication Agents,
CREDIT LYONNAIS NEW YORK BRANCH and SOCIETE GENERALE, as Co-Agents, and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Administrative Agent for the
Lenders (in such capacity, the "Administrative Agent").
--------------------
W I T N E S S E T H
WHEREAS, HTI has requested that the Lenders provide $465 million in credit
facilities for the purposes hereinafter set forth; and
WHEREAS, the Lenders have agreed to make the requested credit facilities
available to the Borrower on the terms and conditions hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS
-----------
1.1 Definitions.
-----------
As used in this Credit Agreement, the following terms shall have the
meanings specified below unless the context otherwise requires:
"Acquisition", by any Person, means the acquisition by such Person of
-----------
(i) assets, property and/or operations of another Person or (ii) the
Capital Stock of another Person, if such Person would be a Subsidiary after
giving effect to such acquisition, in each case whether or not involving a
merger or consolidation with such other Person.
"Administrative Agent" shall have the meaning assigned to such term in
--------------------
the heading hereof, together with any successors or assigns.
"Administrative Agent's Fee Letter" means that certain letter
---------------------------------
agreement, dated as of April 6, 1999, between the Administrative Agent and
HTI, as amended, modified, restated or supplemented from time to time.
<PAGE>
"Affiliate" means, with respect to any Person, any other Person (i)
---------
directly or indirectly controlling or controlled by or under direct or
indirect common control with such Person or (ii) directly or indirectly
owning or holding five percent (5%) or more of the Capital Stock in such
Person. For purposes of this definition, "control" when used with respect
to any Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agency Services Address" means the notice address for the
-----------------------
Administrative Agent set forth in Section 12.1 or such other address as may
be identified by written notice from the Administrative Agent to the
Borrower.
"Aggregate Revolving Committed Amount" means the aggregate amount of
------------------------------------
Revolving Commitments in effect from time to time, as referenced in Section
2.1(a), being initially ONE HUNDRED TWENTY-FIVE MILLION DOLLARS
($125,000,000).
"Applicable Lending Office" means, for each Lender, the office of such
-------------------------
Lender (or of an Affiliate of such Lender) as such Lender may from time to
time specify to the Administrative Agent and the Borrower by written notice
as the office by which its Eurodollar Loans are made and maintained.
"Applicable Percentage" means for any day, the rate per annum set
---------------------
forth below opposite the applicable Consolidated Total Leverage Ratio then
in effect, it being understood that the Applicable Percentage for (i) Base
Rate Loans shall be the percentage set forth under the column "Base Rate
Loans", (ii) Eurodollar Loans shall be the percentage set forth under the
column "Eurodollar Loans", and (iii) the Commitment Fee shall be the
percentage set forth under the column "Commitment Fee".
<TABLE>
<CAPTION>
Revolving Loans,
Tranche A Term Loan and Bridge Loan Tranche B Term Loan
----------------------------------- -------------------
Consolidated
Total Leverage Eurodollar Base Rate Commitment Eurodollar Base Rate
Ratio Loans Loans Fee Loans Loans
----- ----- ----- --- ----- -----
<S> <C> <C> <C> <C> <C>
*4.25:1.0 3.25% 2.25% 0.625% 4.00% 3.00%
*3.75:1.0 but less than 4.25:1.0 3.00% 2.00% 0.625% 4.00% 3.00%
*3.25:1.0 but less than 3.75:1.0 2.75% 1.75% 0.500% 4.00% 3.00%
*2.75:1.0 but less than 3.25:1.0 2.25% 1.25% 0.500% 4.00% 3.00%
less than 2.75:1.0 1.75% 0.75% 0.500% 4.00% 3.00%
</TABLE>
The Applicable Percentage shall be determined and adjusted quarterly on the
date (each a "Rate Determination Date") five (5) Business Days after the
-----------------------
date by which the annual and quarterly compliance certificates and related
financial statements and information are required in accordance with the
provisions of Sections 8.1(a), (b) and (c) (the "Required Financial
------------------
Information"), as appropriate; provided that:
----------- --------
* More than and equal to
2
<PAGE>
(a) the initial Applicable Percentages shall be (i) with
respect to Revolving Loans, the Bridge Loan and the Tranche A Term
Loan, (A) in the case of Eurodollar Loans, 3.25%, (B) in the case of
Base Rate Loans, 2.25% and (C) in the case of the Commitment Fee,
0.625%, and (ii) with respect to the Tranche B Term Loan, (A) in the
case of Eurodollar Loans, 4.00% and (B) in the case of Base Rate
Loans, 3.00%, and such initial Applicable Percentages shall remain in
effect for a period of six months following the Closing Date,
whereupon the pricing level shall be adjusted on the basis of the most
recent quarterly compliance certificate and related annual or
quarterly financial statements and information as are then available
and shall remain in effect until the next Rate Determination Date, and
(b) notwithstanding the foregoing, in the event an annual
or quarterly compliance certificate and related financial statements
and information are not delivered timely to the Agency Services
Address by the date required by Sections 8.1(a), (b) and (c), as
appropriate, the Applicable Percentages shall be based on the highest
(most expensive) pricing level until such time as an appropriate
compliance certificate and related financial statements and
information are delivered, whereupon the applicable pricing level
shall be adjusted based on the information contained in such
compliance certificate and related financial statements and
information.
Subject to the qualifications set forth above, each Applicable Percentage
shall be effective from a Rate Determination Date until the next such Rate
Determination Date. The Administrative Agent shall determine the
appropriate Applicable Percentages in the pricing matrix promptly upon
receipt of the quarterly or annual compliance certificate and related
financial information and shall promptly notify the Borrower and the
Lenders of any change thereof. Such determinations by the Administrative
Agent shall be conclusive absent manifest error. Adjustments in the
Applicable Percentages shall be effective as to existing Extensions of
Credit as well as new Extensions of Credit made thereafter.
"Approved Asset Disposition" shall mean and include (i) the sale or
--------------------------
other disposition by any member of the Consolidated Group of the property
described on Schedule 3.3(b) and (ii) receipt by any member of the
Consolidated Group of any cash insurance proceeds or condemnation award
payable by reason of loss, physical destruction or damage, taking or
similar event with respect to any of the property described on Schedule
--------
3.3(b).
------
"Asset Disposition" shall mean and include (i) the sale, lease or
other disposition of any property or asset by a member of the Consolidated
Group (including the Capital Stock of a Subsidiary), and (ii) receipt by
any member of the Consolidated Group of any cash insurance proceeds or
condemnation award payable by reason of theft, loss, physical destruction
or damage, taking or similar event with respect to any of their property or
assets; but for purposes hereof shall not include, in any event, (A) the
sale of inventory in the ordinary course of business, (B) the sale, lease
or other disposition of machinery and
3
<PAGE>
equipment which is no longer used or useful in the conduct of business or
which is worn-out, (C) a sale or disposition which would constitute an
Equity Transaction hereunder, (D) a sale, lease, transfer or disposition of
property or assets to a Domestic Credit Party other than Holdings, (E) use
or operating agreements or short-term operating leases entered into by a
Credit Party as owner or lessor with respect to personal property in the
ordinary course of business and on market terms, (F) the existing leases of
Overland Park Regional Medical Center and Independence Regional Health
Center and the related ambulatory surgical centers (provided that any
exercise of a put or call option (or other purchase option) thereunder
shall be deemed an "Asset Disposition"), (G) operating leases of office
space in the ordinary course of business and on market terms, (H) operating
leases of real property (other than Principal Property) in the ordinary
course of business and on market terms, (I) operating leases of equipment
and machinery deemed in good faith by a Credit Party to be temporarily
surplus and on market terms and (J) for purposes of Section 9.5, but not
for purposes of Section 3.3, any sale, lease or other disposition (or any
series or relates sales, leases or other dispositions) of any Property
which has an aggregate fair market value of less than $100,000.
"Assumption Agreement" means an Assumption Agreement substantially in
--------------------
the form of Schedule 5.3(a) hereto, executed and delivered by Holdings in
---------------
accordance with Section 5.3(a) or Triad in accordance with Section 5.4(a).
"Bank of America" means Bank of America National Trust and Savings
---------------
Association and its successors.
"Bankruptcy Code" means the Bankruptcy Code in Title 11 of the United
---------------
States Code, as amended, modified, succeeded or replaced from time to time.
"Bankruptcy Event" means, with respect to any Person, the occurrence
----------------
of any of the following with respect to such Person: (i) a court or
governmental agency having jurisdiction in the premises shall enter a
decree or order for relief in respect of such Person in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or
for any substantial part of its Property or ordering the winding up or
liquidation of its affairs; or (ii) there shall be commenced against such
Person an involuntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or any case, proceeding or
other action for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of such Person or
for any substantial part of its Property or for the winding up or
liquidation of its affairs, and such involuntary case or other case,
proceeding or other action shall remain undismissed, undischarged or
unbonded for a period of sixty (60) consecutive days; or (iii) such Person
shall commence a voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or consent to the entry of
an order for relief in an involuntary case under any such law, or consent
to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of such
Person or for any substantial part of its Property or make any general
assignment for the benefit of creditors; or (iv) such Person shall be
unable to, or shall admit in writing its inability to, pay its debts
generally as they become due.
4
<PAGE>
"Base Rate" means, for any day, the rate per annum equal to the higher
---------
of (a) the Federal Funds Rate for such day plus one-half of one percent
(0.5%) and (b) the rate of interest publicly announced from time to time by
Bank of America in San Francisco, California as its reference rate (the
"Reference Rate") for such day. The Reference Rate is a rate set by Bank of
--------------
America based upon various factors including Bank of America's costs and
desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at, above,
or below such announced rate. Any change in the Base Rate due to a change
in the Reference Rate or the Federal Funds Rate shall be effective on the
effective date of such change in the Reference Rate or Federal Funds Rate.
"Base Rate Loan" means any Loan bearing interest at a rate determined
--------------
by reference to the Base Rate.
"Borrower" means (a) prior to the Holdings Group Joinder Event, HTI,
--------
(b) after the Holdings Group Joinder Event (but prior to the Triad Group
Joinder Event), Holdings and (c) after the Triad Group Joinder Event,
Triad.
"Borrower Pledge Agreement" means the pledge agreement given by Triad
-------------------------
to the Administrative Agent to secure the obligations of Triad under the
Credit Documents, as amended and modified.
"Borrower Security Agreement" means the security agreement given by
---------------------------
Triad to the Administrative Agent to secure the obligations of Triad under
the Credit Documents, as amended and modified.
"Bridge Lenders" means Lenders holding Bridge Loan Commitments, as
--------------
identified on Schedule 2.1, and their successors and assigns.
------------
"Bridge Loan" shall have the meaning assigned to such term in Section
-----------
2.1(d).
"Bridge Loan Commitment" means, with respect to each Bridge Lender,
----------------------
the commitment of such Lender to make Bridge Loan advances in an aggregate
principal amount up to such Bridge Lender's Bridge Loan Committed Amount
(and for purposes of making determinations of Required Lenders and for
purposes of calculations referred to in Section 12.6(b), the principal
amount outstanding on the Bridge Loan).
"Bridge Loan Commitment Percentage" means, for each Bridge Lender, a
---------------------------------
fraction (expressed as a percentage) the numerator of which is the amount
of the Bridge Loan Commitment of such Lender at such time and the
denominator of which is the aggregate amount of the Bridge Loan Commitment
at such time. The initial Bridge Loan Commitment Percentages are set out
on Schedule 2.1.
------------
"Bridge Loan Committed Amount" means, collectively, the aggregate
----------------------------
amount of all of the Bridge Loan Commitments and, individually, the amount
of each Bridge Lender's
5
<PAGE>
Bridge Loan Commitment as specified on Schedule 2.1, as such amounts may be
------------
reduced from time to time in accordance with the provisions hereof.
"Bridge Loan Maturity Date" means (a) if the Reorganization and the
-------------------------
HTI Release have not occurred by such date, the date two (2) days following
the Closing Date (or, if not a Business Day, the next succeeding Business
Day), and (b) if the Reorganization and the HTI Release Event have occurred
by the date two (2) days following the Closing Date, May 11, 2000.
"Bridge Note" or "Bridge Notes" means the promissory notes of the
----------- ------------
Borrower in favor of each of the Bridge Lenders (or nominees thereof)
evidencing the Bridge Loan in substantially the form attached as Schedule
--------
2.5-2, individually or collectively, as appropriate, as such promissory
-----
notes may be amended, modified, supplemented, extended or renewed from time
to time.
"Business Day" means a day other than a Saturday, Sunday or other day
------------
on which commercial banks in Charlotte, North Carolina, San Francisco,
California or New York, New York are authorized or required by law to
close, except that, when used in connection with a Eurodollar Loan, such
------ ----
day shall also be a day on which dealings between banks are carried on in
Dollar deposits in London, England.
"Capital Lease" means, as applied to any Person, any lease of any
-------------
Property (whether real, personal or mixed) by that Person as lessee which,
in accordance with GAAP, is or should be accounted for as a capital lease
on the balance sheet of that Person.
"Capital Stock" means (i) in the case of a corporation, capital stock,
-------------
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated)
of capital stock, (iii) in the case of a partnership, partnership interests
(whether general or limited), (iv) in the case of a limited liability
company, membership interests and (v) any other interest or participation
that confers on a Person the right to receive a share of the profits and
losses of, or distributions of assets of, the issuing Person.
"Cash Equivalents" means (a) securities issued or directly and fully
----------------
guaranteed or insured by the United States or any agency or instrumentality
thereof (provided that the full faith and credit of the United States is
pledged in support thereof) having maturities of not more than twelve
months from the date of acquisition, (b) Dollar denominated time deposits
and certificates of deposit of (i) any Lender, (ii) any domestic commercial
bank of recognized standing having capital and surplus in excess of
$500,000,000 or (iii) any bank whose short-term commercial paper rating
from S&P is at least A-1 or the equivalent thereof or from Moody's is at
least P-1 or the equivalent thereof (any such bank being an "Approved
--------
Bank"), in each case with maturities of not more than 270 days from the
----
date of acquisition, (c) commercial paper and variable or fixed rate notes
issued by any Approved Bank (or by the parent company thereof) or any
variable rate notes issued by, or guaranteed by, any domestic corporation
rated A-1 (or the equivalent thereof) or better by S&P or P-1 (or the
equivalent thereof) or better by Moody's and maturing within six months of
the date of acquisition, (d) repurchase agreements entered into by any
Person with a bank or trust
6
<PAGE>
company (including any of the Lenders) or recognized securities dealer
having capital and surplus in excess of $500,000,000 for direct obligations
issued by or fully guaranteed by the United States in which such Person
shall have a perfected first priority security interest (subject to no
other Liens) and having, on the date of purchase thereof, a fair market
value of at least 100% of the amount of the repurchase obligations and (e)
Investments, classified in accordance with GAAP as current assets, in money
market investment programs registered under the Investment Company Act of
1940, as amended, which are administered by reputable financial
institutions having capital of at least $500,000,000 and the portfolios of
which are limited to Investments of the character described in the
foregoing subdivisions (a) through (d).
"Change of Control" means any of the following events: (a) Holdings
-----------------
shall fail to own directly 100% of the outstanding Capital Stock of Triad,
(b) any Person or two or more Persons acting in concert shall have acquired
beneficial ownership, directly or indirectly, of, or shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement
that, upon consummation, will result in its or their acquisition of or
control over, Voting Stock of Holdings (or other securities convertible
into such Voting Stock) representing 30% or more of the combined voting
power of all Voting Stock of Holdings, or (c) during any period of up to 24
consecutive months, commencing after the Closing Date, individuals who at
the beginning of such 24 month period were directors of Holdings (together
with any new director whose election by Holdings' Board of Directors or
whose nomination for election by Holdings' shareholders was approved by a
vote of at least two-thirds of the directors then still in office who
either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the directors of Holdings then in office. As used
herein, "beneficial ownership" shall have the meaning provided in Rule 13d-
3 of the Securities and Exchange Commission under the Securities Exchange
Act.
"Closing Date" means the date hereof.
------------
"Code" means the Internal Revenue Code of 1986, as amended, and any
----
successor statute thereto, as interpreted by the rules and regulations
issued thereunder, in each case as in effect from time to time. References
to sections of the Code shall be construed also to refer to any successor
sections.
"Collateral" means a collective reference to the collateral which is
----------
identified in, and at any time will be covered by, the Collateral
Documents.
"Collateral Documents" means a collective reference to the Security
--------------------
Agreements, the Pledge Agreements, the Mortgage Instruments and such other
documents executed and delivered in connection with the attachment and
perfection of the Administrative Agent's security interests and liens
arising thereunder, including without limitation, UCC financing statements
and patent and trademark filings.
"Columbia/HCA" means Columbia/HCA Healthcare Corporation, a Delaware
------------
corporation, and its successors and assigns.
"Columbia/HCA Debt" means the intercompany indebtedness owing to
-----------------
Columbia/HCA in the principal amount of up to $1,800,000,000.
7
<PAGE>
"Columbia/HCA Side Letter" means the side letter provided by
------------------------
Columbia/HCA pursuant to Section 5.1(d).
"Commitment Fee" shall have the meaning assigned to such term in
--------------
Section 3.5(a).
"Commitments" means any of the Revolving Commitments, the LOC
-----------
Commitments, the Swingline Commitments, the Bridge Loan Commitments and/or
the Term Loan Commitments.
"Commitment Period" means the period from and including the Closing
-----------------
Date to but not including the earlier of (i) the Revolving Commitment
Termination Date, or (ii) the date on which the Revolving Commitments
terminate in accordance with the provisions of this Credit Agreement.
"Committed Amount" means any of the Revolving Committed Amount, the
----------------
LOC Committed Amount, the Swingline Committed Amount, the Bridge Loan
Committed Amount and/or the Term Loan Committed Amounts.
"Consolidated Capital Expenditures" means, for any period, without
---------------------------------
duplication, all expenditures (whether paid in cash or other consideration)
during such period that, in accordance with GAAP, are or should be included
in additions to property, plant and equipment or similar items reflected in
the consolidated statement of cash flows for such period; provided, that
--------
Consolidated Capital Expenditures shall not include, for purposes hereof,
expenditures of proceeds of insurance settlements, condemnation awards and
other settlements in respect of lost, destroyed, damaged or condemned
assets, equipment or other property to the extent such expenditures are
made to replace or repair such lost, destroyed, damaged or condemned
assets, equipment or other property or otherwise to acquire assets or
properties useful in the business of the members of the Consolidated Group.
"Consolidated EBITDA" means, for any period for the Consolidated
-------------------
Group, the sum of (i) Consolidated Net Income plus (ii), to the extent
----
deducted in determining net income, (A) Consolidated Interest Expense, (B)
taxes, (C) depreciation and amortization, (D) ESOP expense, (E) non-
recurring, non-cash charges and adjustments for impairment of long-lived
assets (including the effect of the conversion of the Kansas City leases
and the prior period adjustment at Paradise Valley), (F) minority interests
and (G) other non-cash extraordinary items, in each case on a consolidated
basis determined in accordance with GAAP. Notwithstanding any provision to
the contrary contained herein, for purposes of calculating the Consolidated
Total Leverage Ratio and the Consolidated Senior Leverage Ratio (i) for the
Borrower's fiscal quarter ending June 30, 1999, Consolidated EBITDA shall
be the result obtained by multiplying the actual Consolidated EBITDA for
the period of two fiscal quarters ending June 30, 1999 by two (2); (ii) for
the Borrower's fiscal quarter ending September 30, 1999, Consolidated
EBITDA shall be the
8
<PAGE>
result obtained by multiplying the actual Consolidated EBITDA for the
period of three fiscal quarters ending September 30, 1999 by one and one-
third (1) and (iii) for the Borrower's fiscal quarter ending December 31,
1999 and each fiscal quarter thereafter, Consolidated EBITDA shall be the
actual Consolidated EBITDA for the period of four consecutive fiscal
quarters ending as of the date of determination.
"Consolidated Fixed Charge Coverage Ratio" means, for any period, the
----------------------------------------
ratio of Consolidated Net Income Available for Fixed Charges to
Consolidated Fixed Charges.
"Consolidated Fixed Charges" means, for any period for the
--------------------------
Consolidated Group, the sum of (i) the cash portion of Consolidated
Interest Expense for such period, (ii) cash taxes paid for such period, and
(iii) scheduled current maturities of Consolidated Total Funded Debt
(including, for purposes hereof, mandatory commitment reductions, sinking
fund payments, payments in respect of the principal component under Capital
Leases and the like relating thereto, but excluding, for purposes hereof,
the scheduled maturity of the Bridge Loan) for the period of four
consecutive fiscal quarters beginning the day after the date of
determination, in each case on a consolidated basis determined in
accordance with GAAP, subject, however, to adjustment to give effect on a
Pro Forma Basis to any Permitted Acquisitions and any Asset Dispositions
consummated during such period as provided in Section 1.3. Except as
otherwise expressly provided, the applicable period shall be for the four
consecutive fiscal quarters ending as of the date of determination.
"Consolidated Group" means (a) prior to the HTI Release Event, HTI and
------------------
its Subsidiaries and (b) after the HTI Release Event, Holdings and its
Subsidiaries (including Triad).
"Consolidated Interest Expense" means, for any period for the
-----------------------------
Consolidated Group, all interest expense (net of credits under Hedging
Agreements), including the amortization of debt discount and premium, the
interest component under Capital Leases and the implied interest component
under Securitization Transactions, in each case on a consolidated basis
determined in accordance with GAAP. Except as expressly provided otherwise,
the applicable period shall be for the four consecutive fiscal quarters
ending as of the date of determination.
"Consolidated Net Income" means, for any period for the Consolidated
-----------------------
Group, net income (or loss) determined on a consolidated basis in
accordance with GAAP. Except as otherwise expressly provided, the
applicable period shall be for the four consecutive fiscal quarters ending
as of the date of determination.
"Consolidated Net Income Available for Fixed Charges" means, for any
---------------------------------------------------
period for the Consolidated Group, the sum of (i) Consolidated EBITDA minus
(ii) beginning with the fiscal quarter ending December 31, 2000,
Consolidated Capital Expenditures, in each case on a consolidated basis
determined in accordance with GAAP, subject, however, to adjustment to give
effect on a Pro Forma Basis to any Permitted Acquisitions and any Asset
Dispositions consummated during such period as provided in Section 1.3.
Except as otherwise expressly provided, the applicable period shall be for
the four consecutive fiscal quarters ending as of the date of
determination.
9
<PAGE>
"Consolidated Net Worth" means, as of any date for the Consolidated
----------------------
Group, consolidated shareholder's equity or net worth as determined
accordance with GAAP.
"Consolidated Senior Funded Debt" means Consolidated Total Funded Debt
-------------------------------
other than Consolidated Subordinated Debt.
"Consolidated Senior Leverage Ratio" means, as of the last day of each
----------------------------------
fiscal quarter, the ratio of Consolidated Senior Funded Debt on such day to
Consolidated EBITDA for the period of four consecutive fiscal quarters
ending as of such day.
"Consolidated Subordinated Debt" means Subordinated Debt of the
------------------------------
Consolidated Group determined on a consolidated basis in accordance with
GAAP.
"Consolidated Tangible Net Worth" means, as of any date for the
-------------------------------
Consolidated Group, Consolidated Net Worth minus intangible assets as
-----
determined in accordance with GAAP.
"Consolidated Total Funded Debt" means Funded Debt of the Consolidated
------------------------------
Group determined on a consolidated basis in accordance with GAAP.
"Consolidated Total Leverage Ratio" means, as of the last day of each
---------------------------------
fiscal quarter, the ratio of Consolidated Total Funded Debt on such day to
Consolidated EBITDA for the period of four consecutive fiscal quarters
ending as of such day.
"Continue", "Continuation", and "Continued" shall refer to the
-------- ------------ ---------
continuation pursuant to Section 3.2 hereof of a Eurodollar Loan from one
Interest Period to the next Interest Period.
"Contractual Obligation" means, as to any Person, any provision of any
----------------------
security issued or guaranteed by such Person or of any material agreement,
instrument or undertaking to which such Person is a party or by which it or
any of its property is bound.
"Convert", "Conversion", and "Converted" shall refer to a conversion
------- ---------- ---------
pursuant to Section 3.2 or Sections 3.7 through 3.12, inclusive, of a Base
Rate Loan into a Eurodollar Loan.
"Credit Documents" means a collective reference to this Credit
----------------
Agreement, the Notes, the Guaranty Agreement, the HTI Guaranty Agreement,
the LOC Documents, each Assumption Agreement, each Guaranty Joinder
Agreement, the Administrative Agent's Fee Letter, the Columbia/HCA Side
Letter, the Collateral Documents and all other related agreements and
documents issued or delivered hereunder or thereunder or pursuant hereto or
thereto (in each case as the same may be amended, modified, restated,
supplemented, extended, renewed or replaced from time to time), and "Credit
Document" means any one of them.
10
<PAGE>
"Credit Parties" means a collective reference to the Borrower and the
--------------
Guarantors, and "Credit Party" means any one of them.
------------
"Debt Transaction" means, with respect to any member of the
----------------
Consolidated Group, any sale, issuance, placement, guaranty, assumption or
collateralization of Funded Debt, whether or not evidenced by promissory
note or other written evidence of indebtedness, except for Funded Debt
permitted to be incurred pursuant to Section 9.1(a) through (g).
"Default" means any event, act or condition which with notice or lapse
-------
of time, or both, would constitute an Event of Default.
"Defaulting Lender" means, at any time, any Lender that (a) has failed
-----------------
to make a Loan or purchase a Participation Interest required pursuant to
the terms of this Credit Agreement within one Business Day of when due, (b)
other than as set forth in (a) above, has failed to pay to the
Administrative Agent or any Lender an amount owed by such Lender pursuant
to the terms of this Credit Agreement within one Business Day of when due,
unless such amount is subject to a good faith dispute or (c) has been
deemed insolvent or has become subject to a bankruptcy or insolvency
proceeding or with respect to which (or with respect to any of the assets
of which) a receiver, trustee or similar official has been appointed.
"Distribution Agreement" means that certain Distribution Agreement
----------------------
dated as of May 11, 1999 by and among Columbia/HCA, LifePoint Hospitals,
Inc., a Delaware corporation, and Holdings.
"Dollars" and "$" means dollars in lawful currency of the United
------- -
States.
"Domestic Credit Party" means any Credit Party which is incorporated
---------------------
or organized under the laws of any State of the United States or the
District of Columbia.
"Domestic Subsidiary" means any Subsidiary which is incorporated or
-------------------
organized under the laws of any State of the United States or the District
of Columbia.
"Eligible Assignee" means (i) a Lender; (ii) an Affiliate of a Lender
-----------------
or any fund that invests in bank loans and is managed by an investment
advisor (or an Affiliate of an investment advisor) to a Lender; and (iii)
any other Person approved by the Administrative Agent and, unless an Event
of Default has occurred and is continuing at the time any assignment is
effected in accordance with Section 12.3, the Borrower (such approval by
the Administrative Agent or the Borrower not to be unreasonably withheld or
delayed and such approval to be deemed given by the Borrower if no
objection is received by the assigning Lender and the Administrative Agent
from the Borrower within two Business Days after notice of such proposed
assignment has been provided by the assigning Lender to the Borrower);
provided, however, that neither the Borrower nor an Affiliate of the
-------- -------
Borrower shall qualify as an Eligible Assignee.
11
<PAGE>
"Eligible Real Property" means, with respect to any member of the
----------------------
Consolidated Group, including any Person that becomes a member of the
Consolidated Group after the Closing Date as contemplated by Section 8.12,
any real property which (i) is located in the United States or (to the
extent deemed material by the Administrative Agent or the Required Lenders
in its or their sole reasonable discretion) located outside of the United
States, (ii) is owned or (to the extent deemed material by the
Administrative Agent or the Required Lenders in its or their sole
reasonable discretion) leased by such member of the Consolidated Group and
(iii) is not Excluded Property.
"Environmental Laws" means any and all applicable federal, state,
------------------
local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders, decrees, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to the
environment or to emissions, discharges, releases or threatened releases of
Materials of Environmental Concern into the environment including, without
limitation, ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of Materials of Environmental
Concern.
"Equity Transaction" means, with respect to any member of the
------------------
Consolidated Group, any issuance or sale of shares of its capital stock or
other equity interest, other than an issuance (i) in connection with a
conversion of debt securities to equity and (ii) in connection with
exercise by a present or former employee, officer or director under a stock
incentive plan, stock option plan or other equity-based compensation plan
or arrangement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and any successor statute thereto, as interpreted by the rules and
regulations thereunder, all as the same may be in effect from time to time.
References to sections of ERISA shall be construed also to refer to any
successor sections.
"ERISA Affiliate" means an entity which, at the relevant time, is
---------------
under common control with any member of the Consolidated Group within the
meaning of Section 4001(a)(14) of ERISA, or is a member of a group which
includes any member of the Consolidated Group and which is treated as a
single employer under Sections 414(b) or (c) of the Code.
"ERISA Event" means (i) with respect to any Single Employer Plan or
-----------
Multiple Employer Plan, the occurrence of a Reportable Event or the
substantial cessation of operations (within the meaning of Section 4062(e)
of ERISA); (ii) the withdrawal by any member of the Consolidated Group or
any ERISA Affiliate from a Multiple Employer Plan during a plan year in
which it was a substantial employer (as such term is defined in Section
4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan; (iii)
the distribution of a notice of intent to terminate or the actual
termination of a Plan pursuant to Section 4041(a)(2) or 4041A of ERISA;
(iv) the institution of proceedings to terminate or the actual termination
of a Plan by the PBGC under Section 4042 of ERISA; (v) any event or
condition which could reasonably constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Plan; (vi) the complete or
12
<PAGE>
partial withdrawal of any member of the Consolidated Group or any ERISA
Affiliate from a Multiemployer Plan; (vii) the conditions for imposition of
a lien under Section 302(f) of ERISA exist with respect to any Single
Employer Plan or Multiple Employer Plan; or (viii) the adoption of an
amendment to any Plan requiring the provision of security to such Plan
pursuant to Section 307 of ERISA.
"ESOP" means the employee stock ownership plan of Holdings.
----
"Eurodollar Loan" means any Loan that bears interest at a rate based
---------------
upon the Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest
---------------
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by the Administrative Agent to be equal to
the quotient obtained by dividing (a) the Interbank Offered Rate for such
Eurodollar Loan for such Interest Period by (b) 1 minus the Eurodollar
Reserve Requirement for such Eurodollar Loan for such Interest Period.
"Eurodollar Reserve Requirement" means, at any time, the maximum rate
------------------------------
at which reserves (including, without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be maintained under
regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) by member banks of the Federal
Reserve System against "Eurocurrency liabilities" (as such term is used in
Regulation D). Without limiting the effect of the foregoing, the Eurodollar
Reserve Requirement shall reflect any other reserves required to be
maintained by such member banks with respect to (i) any category of
liabilities which includes deposits by reference to which the Eurodollar
Rate is to be determined, or (ii) any category of extensions of credit or
other assets which include Eurodollar Loans. The Eurodollar Rate shall be
adjusted automatically on and as of the effective date of any change in the
Eurodollar Reserve Requirement.
"Event of Default" shall have the meaning assigned to such term in
----------------
Section 10.1.
"Excess Proceeds" shall have the meaning assigned to such term in
---------------
Section 8.6(b).
"Excluded Property" means, with respect to any member of the
-----------------
Consolidated Group, including any Person that becomes a member of the
Consolidated Group after the Closing Date as contemplated by Section 8.12,
any Property of such member of the Consolidated Group (i) which, subject to
the terms of Section 9.11 and Section 9.15, is subject to a Lien of the
type described in clause (viii) of the definition of "Permitted Liens"
pursuant to documents which prohibit such member of the Consolidated Group
from granting any other Liens in such Property, (ii) which is listed on
Schedule 8.13 or (iii) which has a fair market value of less than
-------------
$1,000,000.
"Executive Officer" of any Person means any of the chief executive
-----------------
officer, chief operating officer, president, vice president, chief
financial officer or treasurer of such Person.
13
<PAGE>
"Existing Letters of Credit" means those Letters of Credit outstanding
--------------------------
on the Closing Date and identified on Schedule 2.6(b).
---------------
"Extension of Credit" means, as to any Lender, the making of, or
-------------------
participation in, a Loan by such Lender (including Continuations and
Conversions thereof other than a Conversion of a Eurodollar Loan into a
Base Rate Loan) or the issuance or extension of, or participation in, a
Letter of Credit.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day; provided that (a) if such day is not a
--------
Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on the
next succeeding Business Day, and (b) if no such rate is so published on
such next succeeding Business Day, the Federal Funds Rate for such day
shall be the average rate charged to the Administrative Agent (in its
individual capacity) on such day on such transactions as determined by the
Administrative Agent.
"Fees" means all fees payable pursuant to Section 3.5.
----
"Foreign Credit Party" means a Credit Party which is not a Domestic
--------------------
Credit Party.
"Foreign Subsidiary" means a Subsidiary which is not a Domestic
------------------
Subsidiary.
"Funded Debt" means, with respect to any Person, without duplication,
-----------
(i) all obligations of such Person for borrowed money, (ii) all obligations
of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made, (iii)
all purchase money Indebtedness (including for purposes hereof,
indebtedness and obligations in respect of conditional sale or title
retention arrangements described in clause (c) of the definition of
"Indebtedness" and obligations in respect of the deferred purchase price of
property or services described in clause (d) of the definition of
"Indebtedness") of such Person, including without limitation the principal
portion of all obligations of such Person under Capital Leases, (iv) all
Guaranty Obligations of such Person with respect to Funded Debt of another
Person, (v) the maximum available amount of all standby letters of credit
or acceptances issued or created for the account of such Person, (vi) all
Funded Debt of another Person secured by a Lien on any Property of such
Person, whether or not such Funded Debt has been assumed, provided that for
--------
purposes hereof the amount of such Funded Debt shall be limited to the
amount of such Funded Debt as to which there is recourse to such Person or
the fair market value of the property which is subject to the Lien, if
less, (vii) the outstanding attributed principal amount under any
Securitization Transaction, and (viii) the principal balance outstanding
under Synthetic Leases. The Funded Debt of any Person shall include the
Funded Debt of any partnership or joint venture in which such Person is a
general partner or joint venturer, but only to the extent to which there is
recourse to such Person for the payment of such Funded Debt.
14
<PAGE>
"GAAP" means generally accepted accounting principles in the United
----
States applied on a consistent basis and subject to the terms of Section
1.3.
"Governmental Authority" means any Federal, state, local or foreign
----------------------
court or governmental agency, authority, instrumentality or regulatory
body.
"Guarantor Pledge Agreement" means the pledge agreement given by
--------------------------
Holdings and the other pledgors identified therein to the Administrative
Agent to secure the obligations of the Guarantors under the Credit
Documents, as amended and modified.
"Guarantor Security Agreement" means the security agreement given by
----------------------------
Holdings and the other Guarantors to the Administrative Agent to secure the
obligations of the Guarantors under the Credit Documents, as amended and
modified.
"Guarantors" means (a) after the Holdings Group Joinder Event (but
----------
before the HTI Release Event), HTI and (b) after the HTI Release Event,
Holdings and each other Person which provides a guaranty of the obligations
of the Borrower under the Credit Documents, in each case together with
their successors and permitted assigns, and "Guarantor " means any one of
---------
them.
"Guaranty Agreement" means the guaranty agreement given by Holdings
------------------
and the other Guarantors to the Administrative Agent with respect to the
obligations of the Borrower under the Credit Documents, as amended and
modified.
"Guaranty Joinder Agreement" means a Guaranty Joinder Agreement
--------------------------
substantially in the form of Schedule 1 to the Guaranty Agreement, executed
----------
and delivered by a new Guarantor in accordance with the provisions of
Section 8.12.
"Guaranty Obligations" means, with respect to any Person, without
--------------------
duplication, any obligations of such Person (other than endorsements in the
ordinary course of business of negotiable instruments for deposit or
collection) guaranteeing or intended to guarantee any Indebtedness of any
other Person in any manner, whether direct or indirect, and including
without limitation any obligation, whether or not contingent, (i) to
purchase any such Indebtedness or any Property constituting security
therefor, (ii) to advance or provide funds or other support for the payment
or purchase of any such Indebtedness or to maintain working capital,
solvency or other balance sheet condition of such other Person (including
without limitation keep well agreements, maintenance agreements, comfort
letters or similar agreements or arrangements) for the benefit of any
holder of Indebtedness of such other Person, (iii) to lease or purchase
Property, securities or services primarily for the purpose of assuring the
holder of such Indebtedness, or (iv) to otherwise assure or hold harmless
the holder of such Indebtedness against loss in respect thereof. The
amount of any Guaranty Obligation hereunder shall (subject to any
limitations set forth therein) be deemed to be an amount equal to the
outstanding principal amount (or maximum principal amount, if larger) of
the Indebtedness in respect of which such Guaranty Obligation is made.
15
<PAGE>
"HTI" means Healthtrust, Inc. - The Hospital Company, a Delaware
---
corporation, and its successors and permitted assigns.
"HTI Guaranty Agreement" means the Guaranty Agreement given by HTI to
---
the Administrative Agent with respect to the obligations of Holdings under
the Credit Documents, as amended and modified.
"HTI Release Event" shall have occurred upon the satisfaction or
-----------------
waiver of each of the conditions set forth in Section 5.5.
"Hedging Agreements" means any interest rate protection agreement or
------------------
foreign currency exchange agreement.
"Holdings" means Triad Hospitals, Inc., a Delaware corporation, and
--------
its successors and permitted assigns.
"Holdings Group Joinder Event" shall have occurred upon the
----------------------------
satisfaction or waiver of each of the conditions set forth in Section 5.3.
"Indebtedness" means, with respect to any Person, without duplication,
------------
(a) all obligations of such Person for borrowed money, (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to Property purchased by such Person (other than
customary reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business), (d) all
obligations of such Person issued or assumed as the deferred purchase price
of Property or services purchased by such Person (other than trade debt
incurred in the ordinary course of business and due within six months of
the incurrence thereof) which would appear as liabilities on a balance
sheet of such Person, (e) all obligations of such Person under take-or-pay
or similar arrangements or under commodities agreements, (f) all
Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on, or payable out of the proceeds of production from,
Property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (g) all Guaranty Obligations of such
Person with respect to Indebtedness of another Person, (h) the principal
portion of all obligations of such Person under Capital Leases, (i) all
obligations of such Person under Hedging Agreements, (j) the maximum amount
of all standby letters of credit issued or bankers' acceptances facilities
created for the account of such Person and, without duplication, all drafts
drawn thereunder (to the extent unreimbursed), (k) all preferred Capital
Stock issued by such Person and which by the terms thereof could be (at the
request of the holders thereof or otherwise) subject to mandatory sinking
fund payments, repurchase, redemption or other acceleration (other than as
a result of a Change of Control or an Asset Disposition that does not in
fact result in a redemption of such preferred Capital Stock) at any time
during the term of the Credit Agreement, (l) the principal portion of all
obligations of such Person under Synthetic Leases, (m) the Indebtedness of
any partnership or unincorporated joint venture in which such Person is a
general partner or a joint venturer
16
<PAGE>
and (n) with respect to any member of the Consolidated Group, the
outstanding attributed principal amount under any Securitization
Transaction.
"Interbank Offered Rate" means, for any Eurodollar Loan for any
----------------------
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or
any successor page) as the London interbank offered rate for deposits in
Dollars at approximately 11:00 A.M. (London time) two Business Days prior
to the first day of such Interest Period for a term comparable to such
Interest Period. If for any reason such rate is not available, the term
"Interbank Offered Rate" shall mean, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO
Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 A.M. (London time) two Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period;
provided, however, if more than one rate is specified on Reuters Screen
-------- -------
LIBO Page, the applicable rate shall be the arithmetic mean of all such
rates (rounded upwards, if necessary, to the nearest 1/100 of 1%).
"Interest Payment Date" means (i) as to any Base Rate Loan, the last
---------------------
day of each March, June, September and December and the Revolving
Commitment Termination Date, the Bridge Loan Maturity Date, and the date of
the final principal amortization installment on each Term Loan, as
applicable, and (ii) as to any Eurodollar Loan and Swingline Loan, the last
day of each Interest Period for such Loan, the date of repayment of
principal of such Loan and on the Revolving Commitment Termination Date,
the Bridge Loan Maturity Date, and the date of the final principal
amortization installment on each Term Loan, as applicable, and in addition
where the applicable Interest Period is more than three months, then also
on the date three months from the beginning of the Interest Period, and
each three months thereafter. If an Interest Payment Date falls on a date
which is not a Business Day, such Interest Payment Date shall be deemed to
be the next succeeding Business Day.
"Interest Period" means (i) as to any Eurodollar Loan, a period of
---------------
one, two, three, six or, if available to all Lenders, nine months'
duration, as the Borrower may elect, commencing in each case on the date of
the borrowing (including Conversions, extensions and renewals) and (ii) as
to any Swingline Loan, a period of such duration as the Borrower may
request and the Swingline Lender may agree in accordance with the
provisions of Section 2.2(a)(iii), commencing in each case, on the date of
borrowing; provided, however, (A) if any Interest Period would end on a day
-------- -------
which is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day (except that in the case of Eurodollar Loans
where the next succeeding Business Day falls in the next succeeding
calendar month, then on the next preceding Business Day), (B)(i) in the
case of Loans comprising Revolving Loans, no Interest Period shall extend
beyond the Revolving Commitment Termination Date, (ii) in the case of Loans
comprising the Bridge Loan, no Interest Period shall extend beyond the
Bridge Loan Maturity Date and (iii) in the case of Loans comprising the
Term Loans, no Interest Period shall extend beyond any principal
amortization payment date unless, and to the extent that, the portion of
the applicable Term Loan comprised of Eurodollar Loans expiring prior to
the applicable principal amortization payment date plus the portion of the
applicable Term Loan comprised of Base Rate Loans equals or exceeds the
principal amortization payment then
17
<PAGE>
due, and (C) in the case of Eurodollar Loans, where an Interest Period
begins on a day for which there is no numerically corresponding day in the
calendar month in which the Interest Period is to end, such Interest Period
shall end on the last day of such calendar month.
"Investment" in any Person means (a) the acquisition (whether for
----------
cash, property, services, assumption of Indebtedness, securities or
otherwise) of Capital Stock, bonds, notes, debentures, partnership, joint
ventures or other ownership interests or other securities of such other
Person or (b) any deposit with, or advance, loan or other extension of
credit to, such Person (other than deposits made in connection with the
purchase of equipment or other assets in the ordinary course of business)
or (c) any other capital contribution to or investment in such Person,
including, without limitation, any Guaranty Obligations (including any
support for a letter of credit issued on behalf of such Person) incurred
for the benefit of such Person, but excluding any Restricted Payment to
such Person.
"Involuntary Disposition" shall have the meaning assigned to such term
-----------------------
in Section 8.6(b).
"Issuing Lender" means Bank of America.
--------------
"Issuing Lender Fees" shall have the meaning assigned to such term in
-------------------
Section 3.5(c)(ii).
"Lenders" means each of the Persons identified as a "lender" on the
-------
signature pages hereto, and their successors and assigns.
"Letter of Credit" means any Existing Letter of Credit and any letter
----------------
of credit issued by the Issuing Lender for the account of the Borrower in
accordance with the terms of Section 2.1(b).
"Letter of Credit Fee" shall have the meaning assigned to such term in
--------------------
Section 3.5(b)(i).
"Licenses" means all licenses, permits and other grants of authority
--------
obtained or required to be obtained from any Governmental Authorities in
connection with the management or operation of the business, or the
ownership, lease, license or use of any Property, of any member of the
Consolidated Group.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, security interest, encumbrance, lien (statutory or otherwise),
preference, priority or charge of any kind (including any agreement to give
any of the foregoing, any conditional sale or other title retention
agreement, any financing or similar statement or notice filed under the
Uniform Commercial Code as adopted and in effect in the relevant
jurisdiction or other similar recording or notice statute, and any lease in
the nature thereof).
"Loan" or "Loans" means the Revolving Loans, the Swingline Loans, the
---- -----
Bridge Loan and/or the Term Loans, and the Base Rate Loans, Eurodollar
Loans and Quoted Rate Swingline Loans comprising such Loans.
18
<PAGE>
"LOC Commitment" means the commitment of the Issuing Lender to issue
--------------
Letters of Credit in an aggregate face amount at any time outstanding
(together with the amounts of any unreimbursed drawings thereon) of up to
the LOC Committed Amount.
"LOC Committed Amount" shall have the meaning assigned to such term in
--------------------
Section 2.1(b).
"LOC Documents" means, with respect to any Letter of Credit, such
-------------
Letter of Credit, any amendments thereto, any documents delivered in
connection therewith, any application therefor, and any agreements,
instruments, guarantees or other documents (whether general in application
or applicable only to such Letter of Credit) governing or providing for (i)
the rights and obligations of the parties concerned or at risk or (ii) any
collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (i) the maximum
---------------
amount which is, or at any time thereafter may become, available to be
drawn under Letters of Credit then outstanding, assuming compliance with
all requirements for drawings referred to in such Letters of Credit plus
----
(ii) the aggregate amount of all drawings under Letters of Credit honored
by the Issuing Lender but not theretofore reimbursed.
"Material Adverse Effect" means a material adverse effect on (i) the
-----------------------
condition (financial or otherwise), operations, business, assets,
liabilities or prospects of the Consolidated Group taken as a whole, (ii)
the ability of any member of the Consolidated Group to perform any material
obligation under the Credit Documents to which it is a party or (iii) the
material rights and remedies of the Administrative Agent and the Lenders
under the Credit Documents.
"Materials of Environmental Concern" means any gasoline or petroleum
----------------------------------
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Laws, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Moody's" means Moody's Investors Service, Inc., or any successor or
-------
assignee of the business of such company in the business of rating
securities.
"Mortgage Instruments" shall have the meaning assigned such term in
--------------------
Section 5.5(g).
"Mortgage Policies" shall have the meaning assigned such term in
-----------------
Section 5.5(g).
"Mortgaged Properties" shall have the meaning assigned such term in
--------------------
Section 5.5(g).
"Multiemployer Plan" means a Plan which is a "multiemployer plan" as
------------------
defined in Sections 3(37) or 4001(a)(3) of ERISA.
19
<PAGE>
"Multiple Employer Plan" means a Plan (other than a Multiemployer
----------------------
Plan) which any member of the Consolidated Group or any ERISA Affiliate and
at least one employer other than the members of the Consolidated Group or
any ERISA Affiliate are contributing sponsors.
"Net Proceeds" means gross cash proceeds (including any cash received
------------
by way of deferred payment pursuant to a promissory note, receivable or
otherwise, but only as and when received) received in connection with an
Asset Disposition, Equity Transaction or Debt Transaction, net of (i)
reasonable transaction costs, including in the case of an Equity
Transaction or a Debt Transaction, underwriting discounts and commissions
and in the case of an Asset Disposition occurring in connection with a
claim under an insurance policy, costs incurred in connection with
adjustment and settlement of the claim, (ii) estimated taxes payable in
connection therewith, (iii) in the case of an Asset Disposition or Debt
Transaction, any amounts payable in respect of Funded Debt, including
without limitation principal, interest, premiums and penalties, which is
secured by, or otherwise related to, any property or asset which is the
subject thereof to the extent that such Funded Debt and any payments in
respect thereof are paid with a portion of the proceeds therefrom and (iv)
in the case of an Asset Disposition, the amount of any reserves necessary
for post-closing adjustments (including indemnification payments), as
determined by the Borrower in its reasonable discretion, provided that to
--------
the extent such reserves are not applied to, and in the Borrower's
reasonable discretion are no longer necessary with respect to, such post-
closing adjustments, such reserves shall thereupon become Net Proceeds.
"Note" or "Notes" means any of the Revolving Notes, the Bridge Notes
---- -----
and/or the Term Notes.
"Notice of Borrowing" means a written notice of borrowing in
-------------------
substantially the form of Schedule 2.2(a)(i), as required by Section
2.2(a)(i), Section 2.2(a)(iii), Section 2.2(a)(iv) or Section 2.2(a)(v).
"Notice of Continuation/Conversion" means the written notice of
---------------------------------
Continuation or Conversion in substantially the form of Schedule 3.2, as
------------
required by Section 3.2.
"Obligations" means, collectively, the Revolving Loans, the Swingline
-----------
Loans, the LOC Obligations, the Bridge Loan and the Term Loans.
"Operating Lease" means, as applied to any Person, any lease
---------------
(including, without limitation, leases which may be terminated by the
lessee at any time) of any Property (whether real, personal or mixed) which
is not a Capital Lease other than any such lease in which that Person is
the lessor.
"Other Taxes" shall have the meaning assigned to such term in Section
-----------
3.11.
20
<PAGE>
"Participation Interest" means the purchase by a Lender of a
----------------------
participation in LOC Obligations as provided in Section 2.6(c), in
Swingline Loans as provided in Section 2.7 and in Loans as provided in
Section 3.14.
"PBGC" means the Pension Benefit Guaranty Corporation established
----
pursuant to Subtitle A of Title IV of ERISA and any successor thereof.
"Permitted Acquisition" means any Acquisition by a member of the
---------------------
Consolidated Group, provided that (i) consideration paid is not greater
than the fair market value thereof, (ii) the party or property which is the
subject of such Acquisition shall be in the same or similar line of
business as the members of the Consolidated Group which are parties
thereto, (iii) in the case of a merger or consolidation, and in other cases
where appropriate, the board of directors or other governing body of the
other party which is the subject of the transaction of merger or
consolidation shall have approved the Acquisition, (iv) the Borrower shall
have delivered to the Administrative Agent a Pro Forma Compliance
Certificate demonstrating that, upon giving effect to such Acquisition on a
Pro Forma Basis, the Borrower shall be in compliance with all of the
covenants set forth in Section 8.11, (v) if the Acquisition involves an
interest in a partnership and a requirement that a member of the
Consolidated Group be a general partner, the general partner shall be a
newly formed special purpose Subsidiary of the Borrower, (vi) after giving
effect to the Acquisition, there shall be at least $50 million of
availability under the Revolving Commitments hereunder, (vii) the aggregate
consideration paid in connection with all such Acquisitions (including cash
consideration and the fair value of any non-cash consideration and
indebtedness assumed) shall not exceed $40 million in any fiscal year and
(viii) in the case of an asset swap, the Borrower shall have delivered to
the Administrative Agent a certificate of an Executive Officer, in detail
reasonably satisfactory to the Administrative Agent, demonstrating that,
upon giving effect to such asset swap on a Pro Forma Basis, Consolidated
Funded Debt will not be greater than, and Consolidated EBITDA will not be
less than, prior to the asset swap.
"Permitted Investments" means Investments which are (i) cash and Cash
---------------------
Equivalents; (ii) accounts receivable created, acquired or made in the
ordinary course of business and payable or dischargeable in accordance with
customary trade terms; (iii) Investments consisting of Capital Stock,
obligations, securities or other property received in settlement of
accounts receivable (created in the ordinary course of business) from
bankrupt obligors; (iv) Investments existing as of the Closing Date and set
forth in Schedule 9.6; (v) advances or loans to directors, officers and
------------
employees that do not exceed $1,000,000 in the aggregate at any one time
outstanding; (vi) advances or loans to customers and suppliers in the
ordinary course of business that do not exceed $1,000,000 in the aggregate
at any one time outstanding; (vii) Investments by members of the
Consolidated Group in their Subsidiaries and Affiliates existing on the
Closing Date, (viii) Investments by members of the Consolidated Group in
and to Domestic Credit Parties, (ix) Investments which constitute Permitted
Acquisitions, (x) loans made in connection with the purchase of common
stock of Holdings pursuant to any Plan (including ESOP) and loans of up to
$15,000,000 in the aggregate at any time outstanding made in connection
with the purchase of common stock of Holdings pursuant to Holdings
executive stock purchase plan, and (xi) Investments of a nature not
contemplated in the foregoing subsections in an
21
<PAGE>
amount not to exceed at any time ten percent (10%) of Consolidated Tangible
Net Worth at such time.
"Permitted Liens" means:
---------------
(i) Liens in favor of the Administrative Agent to secure the
obligations of the Credit Parties under the Credit Documents;
(ii) Liens in favor of a Lender or an Affiliate of a Lender pursuant
to a Hedging Agreement permitted hereunder, but only (A) to the extent such
Liens secure obligations under such agreements permitted under Section 9.1,
(B) to the extent such Liens are on the same collateral as to which the
Lenders hereunder also have a Lien, and (C) so long as the obligations
under such Hedging Agreement and the loans and obligations hereunder and
under the other Credit Documents shall share pari passu in the collateral
subject to such Liens;
(iii) Liens (other than Liens created or imposed under ERISA) for
taxes, assessments or governmental charges or levies not yet due or Liens
for taxes being contested in good faith by appropriate proceedings for
which adequate reserves determined in accordance with GAAP have been
established (and as to which the Property subject to any such Lien is not
yet subject to foreclosure, sale or loss on account thereof);
(iv) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and suppliers and other Liens imposed
by law or pursuant to customary reservations or retentions of title arising
in the ordinary course of business, provided that such Liens secure only
--------
amounts not yet due and payable or, if due and payable, are unfiled and no
other action has been taken to enforce the same or are being contested in
good faith by appropriate proceedings for which adequate reserves
determined in accordance with GAAP have been established (and as to which
the Property subject to any such Lien is not yet subject to foreclosure,
sale or loss on account thereof);
(v) Liens (other than Liens created or imposed under ERISA)
incurred or deposits made by any member of the Consolidated Group in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(vi) Liens in connection with attachments or judgments (including
judgment or appeal bonds) provided that the judgments secured shall, within
--------
30 days after the entry thereof, have been discharged or execution thereof
stayed pending appeal, or shall have been discharged within 30 days after
the expiration of any such stay;
(vii) easements, rights-of-way, covenants, restrictions (including
zoning restrictions), defects or irregularities in title and other similar
charges or encumbrances not, in any material respect, impairing the use of
the encumbered Property for its intended purposes;
22
<PAGE>
(viii) Liens on Property of any Person securing purchase money and
sale/leaseback Indebtedness (including Capital Leases and Synthetic Leases)
of such Person to the extent permitted under Section 9.1(c), provided that
--------
any such Lien attaches only to the Property financed or leased and such
Lien attaches concurrently with or within 90 days after the acquisition or
construction thereof;
(ix) leases or subleases granted to others not interfering in any
material respect with the business of any member of the Consolidated Group;
(x) any interest or title of a lessor under, and Liens arising from
UCC financing statements (or equivalent filings, registrations or
agreements in foreign jurisdictions) relating to, leases permitted by this
Credit Agreement;
(xi) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(xii) Liens created or deemed to exist in connection with a
Securitization Transaction permitted hereunder (including any related
filings of any UCC financing statements), but only to the extent that any
such Lien relates to the applicable Securitization Receivables actually
sold, contributed, financed or otherwise conveyed or pledged pursuant to
such transaction;
(xiii) Liens deemed to exist in connection with Investments in
repurchase agreements which constitute Permitted Investments;
(xiv) normal and customary rights of setoff upon deposits of cash in
favor of banks or other depository institutions;
(xv) Liens of a collection bank arising under Section 4-210 of the
Uniform Commercial Code on items in the course of collection; and
(xvi) Liens existing as of the Closing Date and set forth on Schedule
--------
7.8; provided that (a) no such Lien shall at any time be extended to or
--- --------
cover any Property other than the Property subject thereto on the Closing
Date and (b) the principal amount of the Indebtedness secured by such Liens
shall not be extended, renewed, refunded or refinanced.
"Person" means any individual, partnership, joint venture, firm,
------
corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated) or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in Section 3(3) of
----
ERISA) which is covered by ERISA and with respect to which any member of
the Consolidated Group or any ERISA Affiliate is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to be)
an "employer" within the meaning of Section 3(5) of ERISA.
23
<PAGE>
"Pledge Agreements" means a collective reference to the Borrower
-----------------
Pledge Agreement and the Guarantor Pledge Agreement.
"Pro Forma Basis" means, for purposes of calculating (utilizing the
---------------
principles set forth in the second paragraph of Section 1.3) the applicable
pricing level under the definition of "Applicable Percentage" and
determining compliance with each of the financial covenants set forth in
Section 8.11, that the referenced transaction shall be deemed to have
occurred as of the first day of the four fiscal-quarter period ending as of
the most recent fiscal quarter end preceding the date of such transaction
with respect to which the Administrative Agent has received the Required
Financial Information. As used herein, "transaction" shall mean (i) any
-----------
merger or consolidation permitted under Section 9.4, (ii) any Asset
Disposition permitted under Section 9.5 or (iii) any Acquisition permitted
under the definition of "Permitted Acquisition". In connection with any
---------------------
calculation of the financial covenants set forth in Section 8.11 upon
giving effect to a transaction on a Pro Forma Basis:
(A) for purposes of any such calculation in respect of any Asset
Disposition permitted under Section 9.5, (1) income statement items
(whether positive or negative) attributable to the Property disposed
of in such Asset Disposition shall be excluded and (2) any
Indebtedness which is retired in connection with such Asset
Disposition shall be excluded and deemed to have been retired as of
the first day of the applicable period; and
(B) for purposes of any such calculation in respect of any
merger or consolidation permitted under Section 9.4 or any Acquisition
permitted under the definition of "Permitted Acquisition", (1) any
---------------------
Indebtedness incurred by any member of the Consolidated Group in
connection with such transaction (x) shall be deemed to have been
incurred as of the first day of the applicable period and (y) if such
Indebtedness has a floating or formula rate, shall have an implied
rate of interest for the applicable period for purposes of this
definition determined by utilizing the rate which is or would be in
effect with respect to such Indebtedness as at the relevant date of
determination, and (2) income statement items (whether positive or
negative) attributable to the Property acquired in such transaction or
pursuant to the Acquisition comprising such transaction, as
applicable, shall be included beginning as of the first day of the
applicable period.
"Pro Forma Compliance Certificate" means a certificate of an Executive
--------------------------------
Officer of the Borrower delivered to the Administrative Agent in connection
with (i) any incurrence, assumption or retirement of Indebtedness permitted
under Section 9.1(i), (ii) any merger or consolidation permitted under
Section 9.4, (iii) any Asset Disposition permitted under Section 9.5 or
(iv) any Acquisition permitted under the definition of "Permitted
---------
Acquisition", as applicable, and containing reasonably detailed
-----------
calculations, upon giving effect to the applicable transaction on a Pro
Forma Basis, of the Consolidated Fixed Charge Coverage Ratio, the
Consolidated Total Leverage Ratio, the Consolidated Senior Leverage Ratio
and Consolidated Net Worth as of the most recent fiscal quarter end
preceding the date of the applicable transaction with respect to which the
Administrative Agent shall have received the Required Financial
Information.
24
<PAGE>
"Property" means any interest in any kind of property or asset,
--------
whether real, personal or mixed, or tangible or intangible.
"Quoted Rate" means, with respect to a Quoted Rate Swingline Loan, the
-----------
fixed or floating percentage rate per annum, if any, offered by the
Swingline Lender and accepted by the Borrower.
"Quoted Rate Swingline Loan" means a Swingline Loan bearing interest
--------------------------
at the Quoted Rate.
"Rate Determination Date" shall have the meaning assigned to such term
-----------------------
in the definition of "Applicable Percentage".
"Register" shall have the meaning assigned to such term in Section
--------
12.3(c).
"Regulation D, T, U, or X" means Regulation D, T, U or X,
------------------------
respectively, of the Board of Governors of the Federal Reserve System as
from time to time in effect and any successor to all or a portion thereof.
"Release of Borrower" means a Release of Borrower substantially in the
-------------------
form of Schedule 5.4 hereto, executed and delivered by the Administrative
------------
Agent, on behalf of the Lenders, in accordance with Section 5.3 relating to
the obligations of HTI under this Credit Agreement and the Notes or Section
5.4 relating to the obligations of Holdings under this Credit Agreement and
the Notes.
"Release of Guaranty" means a Release of Guaranty substantially in the
-------------------
form of Schedule 5.5 hereto, executed and delivered by the Administrative
------------
Agent, on behalf of the Lenders, in accordance with Section 5.5 relating to
the obligations of HTI under the HTI Guaranty Agreement.
"Reorganization" means the plan of reorganization and transactions
--------------
contemplated in the Ruling Letter issued to Columbia/HCA by the Internal
Revenue Service dated March 30, 1999 or in the Distribution Agreement.
"Reportable Event" means any of the events set forth in Section
----------------
4043(c) of ERISA, other than those events as to which the notice
requirement has been waived by regulation.
"Required Financial Information" means the annual and quarterly
------------------------------
compliance certificates and related financial statements and information
required by the provisions of Sections 8.1(a), (b) and (c), as referenced
in the definition of "Applicable Percentage".
"Required Lenders" means, at any time, Lenders having more than sixty-
----------------
six and two-thirds percent (66%) of the aggregate Commitments, or if the
Commitments have been terminated, Lenders having more than sixty-six and
two-thirds percent (66%) of the aggregate principal amount of the
Obligations outstanding (taking into account in each case Participation
Interests or obligation to participate therein); provided that the
--------
25
<PAGE>
Commitments of, and outstanding principal amount of Obligations (taking
into account Participation Interests therein) owing to, a Defaulting Lender
shall be excluded for purposes hereof in making a determination of Required
Lenders.
"Requirement of Law" means, as to any Person, the certificate of
------------------
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule, regulation or ordinance (including,
without limitation, Environmental Laws) or determination of an arbitrator
or a court or other Governmental Authority, in each case applicable to or
binding upon such Person or to which any of its material Property is
subject.
"Restricted Payment" means (i) any dividend or other payment or
------------------
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of any member of the Consolidated Group, now or hereafter
outstanding (including without limitation any payment in connection with
any dissolution, merger, consolidation or disposition involving any member
of the Consolidated Group), or to the holders, in their capacity as such,
of any shares of any class of Capital Stock of any member of the
Consolidated Group, now or hereafter outstanding (other than dividends or
distributions payable in the same class of Capital Stock of the applicable
Person or to any Credit Party (directly or indirectly through
Subsidiaries)), (ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or indirect, of
any shares of any class of Capital Stock of any member of the Consolidated
Group, now or hereafter outstanding, and (iii) any payment made to retire,
or to obtain the surrender of, any outstanding warrants, options or other
rights to acquire shares of any class of Capital Stock of any member of the
Consolidated Group, now or hereafter outstanding.
"Revolving Commitment" means, with respect to each Revolving Lender,
--------------------
the commitment of such Revolving Lender to make Revolving Loans in an
aggregate principal amount at any time outstanding of up to such Revolving
Lender's Revolving Committed Amount, as such amount may be reduced from
time to time in accordance with the provisions hereof.
"Revolving Commitment Percentage" means, for each Revolving Lender, a
-------------------------------
fraction (expressed as a percentage) the numerator of which is the
Revolving Commitment of such Revolving Lender at such time and the
denominator of which is the Aggregate Revolving Committed Amount at such
time. The initial Revolving Commitment Percentages are set out on Schedule
--------
2.1.
---
"Revolving Commitment Termination Date" means (a) if the
-------------------------------------
Reorganization and the HTI Release Event have not occurred by such date,
the date two (2) days following the Closing Date (or, if not a Business
Day, the next succeeding Business Day), and (b) if the Reorganization and
the HTI Release Event have occurred by the date two (2) days following the
Closing Date, May 11, 2005.
"Revolving Committed Amount" means, collectively, the aggregate amount
--------------------------
of all of the Revolving Commitments and, individually, the amount of each
Revolving Lender's Revolving Commitment as specified in Schedule 2.1.
------------
26
<PAGE>
"Revolving Lenders" means Lenders holding Revolving Commitments, as
-----------------
identified on Schedule 2.1, and their successors and assigns.
------------
"Revolving Loans" shall have the meaning assigned to such term in
---------------
Section 2.1(a).
"Revolving Note" or "Revolving Notes" means the promissory notes of
-------------- ---------------
the Borrower in favor of each of the Revolving Lenders (or nominees
thereof) evidencing the Revolving Loans and Swingline Loans in
substantially the form attached as Schedule 2.5-1, individually or
--------------
collectively, as appropriate, as such promissory notes may be amended,
modified, supplemented, extended, renewed or replaced from time to time.
"Revolving Obligations" means, collectively, the Revolving Loans,
---------------------
Swingline Loans and LOC Obligations.
"S&P" means Standard & Poor's Ratings Group, a division of The McGraw
---
Hill Companies, Inc., or any successor or assignee of the business of such
division in the business of rating securities.
"Sale and Leaseback Transaction" means any arrangement pursuant to
------------------------------
which any member of the Consolidated Group, directly or indirectly, becomes
liable as lessee, guarantor or other surety with respect to any lease,
whether an Operating Lease or a Capital Lease, of any Property (a) which
such member of the Consolidated Group has sold or transferred (or is to
sell or transfer) to, or arranged the purchase by, a Person which is not a
member of the Consolidated Group or (b) which such member of the
Consolidated Group intends to use for substantially the same purpose as any
other Property which has been sold or transferred (or is to be sold or
transferred) by such member of the Consolidated Group to another Person
which is not a member of the Consolidated Group in connection with such
lease.
"Securities Exchange Act" means the Securities Exchange Act of 1934.
-----------------------
"Securitization Transaction" means any financing transaction or series
--------------------------
of financing transactions that have been or may be entered into by a member
of the Consolidated Group pursuant to which such member of the Consolidated
Group may sell, convey or otherwise transfer to (i) a Subsidiary or
affiliate (a "Securitization Subsidiary"), or (ii) any other Person, or may
-------------------------
grant a security interest in, any accounts receivable, notes receivable,
rights to future lease payments or residuals or other similar rights to
payment (the "Securitization Receivables") (whether such Securitization
--------------------------
Receivables are then existing or arising in the future) of such member of
the Consolidated Group, and any assets related thereto, including without
limitation, all security interests in merchandise or services financed
thereby, the proceeds of such Securitization Receivables, and other assets
which are customarily sold or in respect of which security interests are
customarily granted in connection with securitization transactions
involving such assets.
27
<PAGE>
"Security Agreements" means a collective reference to the Borrower
-------------------
Security Agreement and the Guarantor Security Agreement.
"Senior Subordinated Notes" means those 11% Senior Subordinated Notes
-------------------------
of HTI due 2009 issued pursuant to the terms of that Indenture dated as of
May 11, 1999 with Citibank, N.A., as Trustee, in each case as amended and
modified.
"Single Employer Plan" means any Plan which is covered by Title IV of
--------------------
ERISA, but which is not a Multiemployer Plan or a Multiple Employer Plan.
"Subordinated Debt" means (i) the Senior Subordinated Notes and (ii)
-----------------
any other Indebtedness of a member of the Consolidated Group which by its
terms is expressly subordinated in right of payment to the prior payment of
the loans and obligations under the Credit Agreement and the other Credit
Documents on the terms and conditions and evidenced by documentation
satisfactory to the Administrative Agent and the Required Lenders.
"Subsidiary" means, as to any Person at any time, (a) any corporation
----------
more than 50% of whose Capital Stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of
such corporation (irrespective of whether or not at such time, any class or
classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at such time owned by such Person
directly or indirectly through Subsidiaries, and (b) any partnership,
association, joint venture or other entity of which such Person directly or
indirectly through Subsidiaries owns at such time more than 50% of the
Capital Stock; provided that no Plan (including ESOP) shall be considered a
Subsidiary of Holdings or Triad.
"Swingline Commitment" means the commitment of the Swingline Lender to
--------------------
make Swingline Loans in an aggregate principal amount at any time
outstanding up to the Swingline Committed Amount and the commitment of the
Revolving Lenders to purchase participation interests in the Swingline
Loans up to their respective Revolving Commitment Percentage as provided in
Section 2.1(c), as such amounts may be reduced from time to time in
accordance with the provisions hereof.
"Swingline Committed Amount" means the amount of the Swingline
--------------------------
Lender's Commitment as specified in Section 2.1(c).
"Swingline Lender" means Bank of America.
----------------
"Swingline Loan" means a swingline revolving loan made by the
--------------
Swingline Lender pursuant to the provisions of Section 2.1(c).
"Synthetic Lease" means any synthetic lease, tax retention operating
---------------
lease, off-balance sheet loan or similar off-balance sheet financing
product where such transaction is considered borrowed money indebtedness
for tax purposes but is classified as an Operating Lease under GAAP.
28
<PAGE>
"Tax Sharing Agreement" means the Tax Sharing and Indemnification
---------------------
Agreement, dated on or about the date hereof, by and among Columbia/HCA,
Holdings and LifePoint Hospitals, Inc.
"Taxes" shall have the meaning assigned to such term in Section 3.11.
-----
"Term Lenders" means Lenders holding Term Loan Commitments, as
------------
identified on Schedule 2.1, and their successors and assigns.
"Term Loans" means the Tranche A Term Loan and/or the Tranche B Term
----------
Loan.
"Term Loan Commitments" means the Tranche A Term Loan Commitments
---------------------
and/or the Tranche B Term Loan Commitments.
"Term Loan Commitment Percentage" means the Tranche A Term Loan
-------------------------------
Commitment Percentage and/or the Tranche B Term Loan Commitment Percentage,
as appropriate.
"Term Loan Committed Amounts" means the Tranche A Term Loan Committed
---------------------------
Amount and/or the Tranche B Term Loan Committed Amount.
"Tranche A Term Lenders" means Lenders holding Tranche A Term Loan
----------------------
Commitments, as identified on Schedule 2.1, and their successors and
------------
assigns.
"Tranche A Term Loan" shall have the meaning assigned to such term in
-------------------
Section 2.1(e).
"Tranche A Term Loan Commitment" means, with respect to each Tranche A
------------------------------
Term Lender, the commitment of such Tranche A Term Lender to make a Tranche
A Term Loan advance equal to such Tranche A Term Lender's Tranche A Term
Loan Committed Amount (and for purposes of making determinations of
Required Lenders and for purposes of calculations referred to in Section
12.6(b), the principal amount outstanding on the Tranche A Term Loan).
"Tranche A Term Loan Commitment Percentage" means, for each Tranche A
-----------------------------------------
Term Lender, a fraction (expressed as a percentage) the numerator of which
is the amount of the Tranche A Term Loan Commitment of such Lender at such
time and the denominator of which is the aggregate amount of the Tranche A
Term Loan Commitment at such time. The initial Tranche A Term Loan
Commitment Percentages are set out on Schedule 2.1.
------------
"Tranche A Term Loan Committed Amount" means, collectively, the
------------------------------------
aggregate amount of all of the Tranche A Term Loan Commitments and,
individually, the amount of each Tranche A Term Lender's Tranche A Term
Loan Commitment as specified on Schedule 2.1, as such amounts may be
------------
reduced from time to time in accordance with the provisions hereof.
29
<PAGE>
"Tranche A Term Note" or "Tranche A Term Notes" means the promissory
------------------- --------------------
notes of the Borrower in favor of each of the Tranche A Term Lenders (or
nominees thereof) evidencing the Tranche A Term Loan in substantially the
form attached as Schedule 2.5-3, individually or collectively, as
--------------
appropriate, as such promissory notes may be amended, modified,
supplemented, extended or renewed from time to time.
"Tranche B Term Lenders" means Lenders holding Tranche B Term Loan
----------------------
Commitments, as identified on Schedule 2.1, and their successors and
------------
assigns.
"Tranche B Term Loan" shall have the meaning assigned to such term in
-------------------
Section 2.1(f).
"Tranche B Term Loan Commitment" means, with respect to each Tranche B
------------------------------
Term Lender, the commitment of such Tranche B Term Lender to make a Tranche
B Term Loan advance equal to such Tranche B Term Lender's Tranche B Term
Loan Committed Amount (and for purposes of making determinations of
Required Lenders hereunder after the Closing Date and for purposes of
making calculations referred to in Section 12.6(b), the aggregate principal
amount of the Tranche B Term Loan).
"Tranche B Term Loan Commitment Percentage" means, for each Tranche B
-----------------------------------------
Term Lender, a fraction (expressed as a percentage) the numerator of which
is the amount of the Tranche B Term Loan Commitment of such Lender at such
time and the denominator of which is the aggregate amount of the Tranche B
Term Loan Commitment at such time. The initial Tranche B Term Loan
Commitment Percentages are set out on Schedule 2.1.
------------
"Tranche B Term Loan Committed Amount" means, collectively, the
------------------------------------
aggregate amount of all of the Tranche B Term Loan Commitments and,
individually, the amount of each Tranche B Term Lender's Tranche B Term
Loan Commitment as specified on Schedule 2.1, as such amounts may be
------------
reduced from time to time in accordance with the provisions hereof.
"Tranche B Term Note" or "Tranche B Term Notes" means the promissory
------------------- --------------------
notes of the Borrower in favor of each of the Tranche B Term Lenders (or
nominees thereof) evidencing the Tranche B Term Loan in substantially the
form attached as Schedule 2.5-3, individually or collectively, as
--------------
appropriate, as such promissory notes may be amended, modified,
supplemented, extended or renewed from time to time.
"Triad" means Triad Hospitals Holdings, Inc., a Delaware corporation,
-----
and its successors and permitted assigns.
"Triad Group Joinder Event" shall have occurred upon the satisfaction
-------------------------
or waiver of each of the conditions set forth in Section 5.4.
"Voting Stock" means, with respect to any Person, Capital Stock issued
------------
by such Person 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 such Person, even though the right so to
vote has been suspended by the happening of such a contingency.
30
<PAGE>
"Wholly Owned Subsidiary" of any Person means any Subsidiary 100% of
-----------------------
whose Voting Stock is at the time owned by such Person directly or
indirectly through other Wholly Owned Subsidiaries.
"Year 2000 Compliant" shall have the meaning assigned to such term in
-------------------
Section 7.17.
1.2 Computation of Time Periods.
---------------------------
For purposes of computation of periods of time hereunder, the word "from"
means "from and including" and the words "to" and "until" each mean "to but
excluding."
1.3 Accounting Terms.
----------------
Except as otherwise expressly provided herein, all accounting terms used
herein shall be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the Lenders
hereunder shall be prepared, in accordance with GAAP applied on a consistent
basis. All calculations made for the purposes of determining compliance with
this Credit Agreement shall (except as otherwise expressly provided herein) be
made by application of GAAP applied on a basis consistent with the most recent
annual or quarterly financial statements delivered pursuant to Section 8.1 (or,
prior to the delivery of the first financial statements pursuant to Section 8.1,
consistent with the annual audited financial statements referenced in Section
7.1(i) hereof); provided, however, if (a) the Borrower shall object to
-------- -------
determining such compliance on such basis at the time of delivery of such
financial statements due to any change in GAAP or the rules promulgated with
respect thereto after the Closing Date or (b) the Administrative Agent or the
Required Lenders shall so object, in either case in writing within 60 days after
delivery of such financial statements, then such calculations shall be made on a
basis consistent with the most recent financial statements delivered by the
Borrower to the Lenders as to which no such objection shall have been made.
Notwithstanding the above, the parties hereto acknowledge and agree that, for
purposes of all calculations made under the financial covenants set forth in
Section 8.11 (including without limitation for purposes of the definitions of
"Applicable Percentage" and "Pro Forma Basis" hereunder), (i) in connection with
any Asset Disposition permitted under Section 9.5, (A) income statement items
(whether positive or negative) attributable to the Property disposed of shall be
excluded to the extent relating to any period occurring prior to the date of
such transaction and (B) Indebtedness which is retired shall be excluded and
deemed to have been retired as of the first day of the applicable period and
(ii) in connection with any merger or consolidation permitted under Section 9.4
or any Acquisition referred to in the definition of "Permitted Acquisition",
---------------------
income statement items (whether positive or negative) attributable to any Person
or Property acquired in any Permitted Acquisition shall, to the extent not
otherwise included in such income statements items for the members of the
Consolidated Group in accordance with GAAP or in accordance with any defined
terms set forth herein, be included to the extent relating to any period
applicable in such calculations.
31
<PAGE>
SECTION 2
CREDIT FACILITIES
2.1 Commitments.
-----------
(a) Revolving Commitment. During the Commitment Period, subject to the
--------------------
terms and conditions hereof, each Revolving Lender severally agrees to make
revolving loans (the "Revolving Loans") to the Borrower in the amount of such
---------------
Revolving Lender's Revolving Commitment Percentage of such Revolving Loans for
the purposes hereinafter set forth; provided that (i) with regard to the
--------
Revolving Lenders collectively, the aggregate principal amount of Revolving
Obligations at any time shall not exceed ONE HUNDRED TWENTY-FIVE MILLION DOLLARS
($125,000,000) (the "Aggregate Revolving Committed Amount") and (ii) with regard
------------------------------------
to each Revolving Lender individually, such Revolving Lender's Revolving
Commitment Percentage of Revolving Obligations at any time shall not exceed such
Revolving Lender's Revolving Committed Amount. Revolving Loans may consist of
Base Rate Loans or Eurodollar Loans, or a combination thereof, as the Borrower
may request, and may be repaid and reborrowed in accordance with the provisions
hereof.
(b) Letter of Credit Sublimit Commitment. During the Commitment Period,
------------------------------------
subject to the terms and conditions hereof and of the LOC Documents, if any, and
such other terms and conditions which the Issuing Lender may reasonably require,
the Issuing Lender shall issue, and the Revolving Lenders shall participate
severally in, such standby Letters of Credit as the Borrower may request, in
form acceptable to the Issuing Lender, for the purposes hereinafter set forth;
provided that (i) the aggregate amount of LOC Obligations shall not exceed
- --------
TWENTY-FIVE MILLION DOLLARS ($25,000,000) at any time (the "LOC Committed
-------------
Amount"), (ii) with regard to the Revolving Lenders collectively, the aggregate
- ------
principal amount of Revolving Obligations at any time shall not exceed the
Aggregate Revolving Committed Amount and (iii) with regard to each Revolving
Lender individually, such Revolving Lender's Revolving Commitment Percentage of
Revolving Obligations at any time shall not exceed such Revolving Lender's
Revolving Committed Amount. Letters of Credit issued hereunder shall have an
expiry date not more than one year from the date of issuance or extension, and
may not extend beyond the date five (5) Business Days prior to the Revolving
Commitment Termination Date.
(c) Swingline Sublimit Commitment. During the Commitment Period, subject
-----------------------------
to the terms and conditions hereof, the Swingline Lender agrees to make certain
revolving loans (the "Swingline Loans") to the Borrower; provided that (i) the
--------------- --------
aggregate principal amount of Swingline Loans shall not exceed TEN MILLION
DOLLARS ($10,000,000) (the "Swingline Committed Amount"), (ii) with regard to
--------------------------
the Revolving Lenders collectively, the aggregate principal amount of Revolving
Obligations at any time shall not exceed the Aggregate Revolving Committed
Amount and (iii) with regard to each Revolving Lender individually, such
Revolving Lender's Revolving Commitment Percentage of Revolving Obligations at
any time shall not exceed such Revolving Lender's Revolving Committed Amount.
Swingline Loans may consist of Base Rate Loans or Quoted Rate Swingline Loans,
or a combination thereof, as the Borrower may request, and may be repaid and
reborrowed in accordance with the provisions hereof.
32
<PAGE>
(d) Bridge Term Loan Commitment. On the Closing Date, subject to the terms
---------------------------
and conditions hereof, each Bridge Lender severally agrees to make its Bridge
Loan Commitment Percentage of a bridge loan (the "Bridge Loan") in the aggregate
-----------
principal amount of SEVENTY-FIVE MILLION DOLLARS ($75,000,000) to the Borrower
for the purposes hereinafter set forth. The Bridge Loan may be comprised of Base
Rate Loans or Eurodollar Loans, or a combination thereof, as the Borrower may
request. Amounts repaid on the Bridge Loan may not be reborrowed.
(e) Tranche A Term Loan Commitment. On the Closing Date, subject to the
------------------------------
terms and conditions hereof, each Tranche A Term Lender severally agrees to make
its Tranche A Term Loan Commitment Percentage of a term loan (the "Tranche A
---------
Term Loan") in the aggregate principal amount of SIXTY-FIVE MILLION DOLLARS
- ---------
($65,000,000) to the Borrower for the purposes hereinafter set forth. The
Tranche A Term Loan may be comprised of Base Rate Loans or Eurodollar Loans, or
a combination thereof, as the Borrower may request. Amounts repaid on the
Tranche A Term Loan may not be reborrowed.
(f) Tranche B Term Loan Commitment. On the Closing Date, subject to the
------------------------------
terms and conditions hereof, each Tranche B Term Lender severally agrees to make
its Tranche B Term Loan Commitment Percentage of a term loan (the "Tranche B
---------
Term Loan") in the aggregate principal amount of TWO HUNDRED MILLION DOLLARS
- ---------
($200,000,000) to the Borrower for the purposes hereinafter set forth. The
Tranche B Term Loan may be comprised of Base Rate Loans or Eurodollar Loans, or
a combination thereof, as the Borrower may request. Amounts repaid on the
Tranche B Term Loan may not be reborrowed.
2.2 Method of Borrowing.
-------------------
(a) Notice of Request for Extensions of Credit. The Borrower shall request
------------------------------------------
an Extension of Credit hereunder by written notice (or telephone notice
promptly confirmed in writing) as follows:
(i) Revolving Loans. In the case of Revolving Loans, to the
---------------
Administrative Agent not later than 9:00 A.M. (San Francisco, California
time) on the Business Day prior to the date of the requested borrowing in
the case of Base Rate Loans, and on the third Business Day prior to the
date of the requested borrowing in the case of Eurodollar Loans. Each such
request for borrowing shall be irrevocable and shall specify (A) that a
Revolving Loan is requested, (B) the date of the requested borrowing (which
shall be a Business Day), (C) the aggregate principal amount to be
borrowed, and (D) whether the borrowing shall be comprised of Base Rate
Loans, Eurodollar Loans or a combination thereof, and if Eurodollar Loans
are requested, the Interest Period(s) therefor. A form of Notice of
Borrowing is attached as Schedule 2.2(a)(i). The Administrative Agent shall
------------------
give notice to each Revolving Lender promptly upon receipt of each Notice
of Borrowing pursuant to this Section 2.2(a)(i), the contents thereof and
each such Revolving Lender's share of any borrowing to be made pursuant
thereto.
(ii) Letters of Credit. In the case of Letters of Credit, to the
-----------------
Issuing Lender with a copy to the Administrative Agent not later than
9:00 A.M. (San Francisco, California time) on the third Business Day
prior to the date of the requested issuance or
33
<PAGE>
extension (or such shorter period as may be agreed by the Issuing Lender).
Each such request for issuance or extension of a Letter of Credit shall be
irrevocable and shall specify, among other things, (A) that a Letter of
Credit is requested, (B) the date of the requested issuance or extension,
(C) the type, amount, expiry date and terms on which the Letter of Credit
is to be issued or extended, and (D) the beneficiary. A form of Notice of
Request for Letter of Credit is attached as Schedule 2.2(a)(ii).
------------------
(iii) Swingline Loans. In the case of Swingline Loans, to the
---------------
Swingline Lender not later than 9:00 A.M. (San Francisco, California time)
on the Business Day of the requested borrowing. Each such request for
borrowing shall be irrevocable and shall specify (A) that a Swingline Loan
is requested, (B) the date of the requested borrowing (which shall be a
Business Day), (C) the aggregate principal amount to be borrowed, and (D)
the interest rate option and maturity requested therefor. A form of Notice
of Borrowing is attached as Schedule 2.2(a)(i). Each Swingline Loan shall
------------------
have a maturity date as the Borrower may request and the Swingline Lender
may agree.
(iv) Bridge Loan. In the case of the Bridge Loan, to the
-----------
Administrative Agent not later than 9:00 A.M. (San Francisco, California
time) on the Business Day prior to the Closing Date in the case of Base
Rate Loans, and on the third Business Day prior to the Closing Date in the
case of Eurodollar Loans. Each such request for borrowing shall be
irrevocable and shall specify (A) that the Bridge Loan is requested, (B)
the aggregate principal amount to be borrowed, and (C) whether the
borrowing shall be comprised of Base Rate Loans, Eurodollar Loans or a
combination thereof, and if Eurodollar Loans are requested, the Interest
Period(s) therefor. A form of Notice of Borrowing is attached as Schedule
--------
2.2(a)(i). The Administrative Agent shall give notice to each Bridge Lender
---------
promptly upon receipt of each Notice of Borrowing pursuant to this Section
2.1(a)(iv), the contents thereof and each such Bridge Lender's share of any
borrowing to be made pursuant thereto.
(v) Term Loans. In the case of the Term Loans, to the
----------
Administrative Agent not later than 9:00 A.M. (San Francisco, California
time) on the Business Day prior to the Closing Date in the case of Base
Rate Loans, and on the third Business Day prior to the Closing Date in the
case of Eurodollar Loans. Each such request for borrowing shall be
irrevocable and shall specify (A) that a Term Loan is requested and the
respective Tranche thereof, (B) the aggregate principal amount to be
borrowed, and (C) whether the borrowing shall be comprised of Base Rate
Loans, Eurodollar Loans or a combination thereof, and if Eurodollar Loans
are requested, the Interest Period(s) therefor. A form of Notice of
Borrowing is attached as Schedule 2.2(a)(i). The Administrative Agent shall
------------------
give notice to each Term Lender promptly upon receipt of each Notice of
Borrowing pursuant to this Section 2.1(a)(v), the contents thereof and each
such Term Lender's share of any borrowing to be made pursuant thereto.
(b) Minimum Amounts. Each Loan advance shall be in a minimum principal
---------------
amount of $5,000,000, in the case of Eurodollar Loans, or $1,000,000 (or the
remaining Committed Amount, if less), in the case of Base Rate Loans, and
integral multiples of $250,000 in excess thereof. Each Swingline Loan advance
shall be in a minimum principal amount of $1,000,000 and integral multiples of
$100,000 in excess thereof.
34
<PAGE>
(c) Information Not Provided. If in connection with any such request for
------------------------
an Extension of Credit, the Borrower shall fail to specify (i) an applicable
Interest Period in the case of a Eurodollar Loan, the Borrower shall be deemed
to have requested an Interest Period of one month, or (ii) the type of loan
requested in the case of Revolving Loans, the Term Loan or the Swingline Loan,
the Borrower shall be deemed to have requested a Base Rate Loan.
(e) Maximum Number of Eurodollar Loans. In connection with any request
----------------------------------
for an Extension of Credit, (i) the Revolving Loans may be comprised of no more
than five (5) Eurodollar Loans outstanding at any time, (ii) the Bridge Loan may
be comprised of no more than five (5) Eurodollar Loans outstanding at any time,
(iii) the Tranche A Term Loan may be comprised of no more than five (5)
Eurodollar Loans outstanding at any time and (iv) the Tranche B Term Loan may be
comprised of no more than five (5) Eurodollar Loans outstanding at any time. For
purposes hereof, Eurodollar Loans with separate or different Interest Periods
will be considered as separate Eurodollar Loans even if their Interest Periods
expire on the same date.
2.3 Interest.
--------
Subject to Section 3.1, the Loans hereunder shall bear interest at a per
annum rate, payable in arrears on each applicable Interest Payment Date (or at
such other times as may be specified herein), as follows:
(a) Base Rate Loans. During such periods as the Loans shall be comprised
---------------
of Base Rate Loans, the sum of the Base Rate plus the Applicable Percentage;
(b) Eurodollar Loans. During such periods as the Loans shall be comprised
----------------
of Eurodollar Loans, the sum of the Eurodollar Rate plus the Applicable
Percentage; and
(c) Quoted Rate Swingline Loans. During such periods as the Swingline
---------------------------
Loans shall be comprised of Quoted Rate Swingline Loans, the Quoted Rate.
2.4 Repayment.
---------
(a) Revolving Loans. The principal amount of all Revolving Loans shall be
---------------
due and payable in full on the Revolving Commitment Termination Date.
(b) Swingline Loans. The principal amount of all Swingline Loans shall be
---------------
due and payable on the earlier of (A) the maturity date agreed to by the
Swingline Lender and the Borrower with respect to such Loan, or (B) the
Revolving Commitment Termination Date.
(c) Bridge Loan. The principal amount of the Bridge Loan shall be due and
-----------
payable in full on the Bridge Loan Maturity Date.
(d) Tranche A Term Loan. The principal amount of the Tranche A Term Loan
-------------------
shall be due and payable (i) if the Reorganization and the HTI Release Event
have not occurred by such date, in full on the date two (2) days following the
Closing Date (or, if not a Business Day, the next
35
<PAGE>
succeeding Business Day), and (ii) if the Reorganization and the HTI Release
Event have occurred by the date two (2) days following the Closing Date, in
twenty (20) consecutive quarterly installments, as follows:
<TABLE>
<CAPTION>
Principal Principal
Amortization Amortization
Date Payment Date Payment
---- ------- ---- -------
<S> <C> <C> <C>
August 11, 1999 $5,000,000 February 11, 2002 $ 2,500,000
November 11, 1999 $5,000,000 May 11, 2002 $ 2,500,000
February 11, 2000 $5,000,000 August 11, 2002 $ 4,375,000
May 11, 2000 $5,000,000 November 11, 2002 $ 4,375,000
August 11, 2000 $2,500,000 February 11, 2003 $ 4,375,000
November 11, 2000 $2,500,000 May 11, 2003 $ 4,375,000
February 11, 2001 $2,500,000 August 11, 2003 $ 1,875,000
May 11, 2001 $2,500,000 November 11, 2003 $ 1,875,000
August 11, 2001 $2,500,000 February 11, 2004 $ 1,875,000
November 11, 2001 $2,500,000 May 11, 2004 $ 1,875,000
-----------
Total $65,000,000
</TABLE>
(d) Tranche B Term Loan. The principal amount of the Tranche B Term Loan
-------------------
shall be due and payable (i) if the Reorganization and the HTI Release Event
have not occurred by such date, in full on the date two (2) days following the
Closing Date (or, if not a Business Day, the next succeeding Business Day) and
(ii) if the Reorganization and the HTI Release Event have occurred by the date
two (2) days following the Closing Date, in twenty-six (26) consecutive
quarterly installments, as follows:
<TABLE>
<CAPTION>
Principal Principal
Amortization Amortization
Date Payment Date Payment
---- ------- ---- -------
<S> <C> <C> <C>
August 11, 1999 $500,000 November 11, 2002 $ 500,000
November 11, 1999 $500,000 February 11, 2003 $ 500,000
February 11, 2000 $500,000 May 11, 2003 $ 500,000
May 11, 2000 $500,000 August 11, 2003 $ 1,000,000
August 11, 2000 $500,000 November 11, 2003 $ 1,000,000
November 11, 2000 $500,000 February 11, 2004 $ 23,750,000
February 11, 2001 $500,000 May 11, 2004 $ 23,750,000
May 11, 2001 $500,000 August 11, 2004 $ 23,750,000
August 11, 2001 $500,000 November 11, 2004 $ 23,750,000
November 11, 2001 $500,000 February 11, 2005 $ 23,750,000
February 11, 2002 $500,000 May 11, 2005 $ 23,750,000
May 11, 2002 $500,000 August 11, 2005 $ 23,750,000
August 11, 2002 $500,000 November 11, 2005 $ 23,750,000
------------
Total $200,000,000
</TABLE>
36
<PAGE>
2.5 Notes.
-----
The Revolving Loans and Swingline Loans shall be evidenced by the Revolving
Notes. The Bridge Loan shall be evidenced by the Bridge Notes. The Term Loans
shall be evidenced by the Term Notes.
2.6 Additional Provisions relating to Letters of Credit.
---------------------------------------------------
(a) Reports. The Issuing Lender will provide to the Administrative Agent
-------
at least monthly, and more frequently upon request, a detailed summary report on
its Letters of Credit and the activity thereon, in form and substance acceptable
to the Administrative Agent. In addition, the Issuing Lender will provide to
the Administrative Agent for dissemination to the Revolving Lenders at least
quarterly, and more frequently upon request, a detailed summary report on its
Letters of Credit and the activity thereon, including, among other things, the
Credit Party for whose account the Letter of Credit is issued, the beneficiary,
the face amount, and the expiry date. The Issuing Lender will provide copies of
the Letters of Credit to the Administrative Agent and the Revolving Lenders
promptly upon request.
(b) Participation. Each Revolving Lender, with respect to the Existing
-------------
Letters of Credit, hereby purchases a participation interest in such Existing
Letters of Credit, and with respect to Letters of Credit issued on or after the
Closing Date, upon issuance of a Letter of Credit, shall be deemed to have
purchased without recourse a risk participation from the Issuing Lender in such
Letter of Credit and the obligations arising thereunder, in each case in an
amount equal to its pro rata share of the obligations under such Letter of
Credit (based on the respective Revolving Commitment Percentages of the
Revolving Lenders) and shall absolutely, unconditionally and irrevocably assume,
as primary obligor and not as surety, and be obligated to pay to the Issuing
Lender therefor and discharge when due, its pro rata share of the obligations
arising under such Letter of Credit. Without limiting the scope and nature of
each Revolving Lender's participation in any Letter of Credit, to the extent
that the Issuing Lender has not been reimbursed as required hereunder or under
any such Letter of Credit, each Revolving Lender shall pay to the Issuing Lender
its pro rata share of such unreimbursed drawing in same day funds on the day of
notification by the Issuing Lender of an unreimbursed drawing pursuant to the
provisions of subsection (d) hereof. The obligation of each Revolving Lender to
so reimburse the Issuing Lender shall be absolute and unconditional and shall
not be affected by the occurrence of a Default, an Event of Default or any other
occurrence or event. Any such reimbursement shall not relieve or otherwise
impair the obligation of the Borrower to reimburse the Issuing Lender under any
Letter of Credit, together with interest as hereinafter provided.
(c) Reimbursement. In the event of any drawing under any Letter of
-------------
Credit, the Issuing Lender will promptly notify the Borrower. Unless the
Borrower shall immediately notify the Issuing Lender that the Borrower intends
to otherwise reimburse the Issuing Lender for such drawing, the Borrower shall
be deemed to have requested that the Revolving Lenders make a Revolving Loan in
the amount of the drawing as provided in subsection (d) hereof on the related
Letter of Credit, the proceeds of which will be used to satisfy the related
reimbursement obligations. The Borrower promises to reimburse the Issuing Lender
on the day of drawing under any Letter of Credit (either with the proceeds of a
Revolving Loan obtained hereunder or otherwise) in same day funds. If the
Borrower shall fail to reimburse the Issuing Lender as provided
37
<PAGE>
hereinabove, the unreimbursed amount of such drawing shall bear interest at a
per annum rate equal to the Base Rate plus the sum of (i) the Applicable
Percentage and (ii) two percent (2%). The Borrower's reimbursement obligations
hereunder shall be absolute and unconditional under all circumstances
irrespective of any rights of setoff, counterclaim or defense to payment the
Borrower may claim or have against the Issuing Lender, the Administrative Agent,
the Lenders, the beneficiary of the Letter of Credit drawn upon or any other
Person, including without limitation any defense based on any failure of the
Borrower or any other Credit Party to receive consideration or the legality,
validity, regularity or unenforceability of the Letter of Credit. The Issuing
Lender will promptly notify the other Revolving Lenders of the amount of any
unreimbursed drawing and each Revolving Lender shall promptly pay to the
Administrative Agent for the account of the Issuing Lender in Dollars and in
immediately available funds, the amount of such Revolving Lender's Revolving
Commitment Percentage of such unreimbursed drawing. Such payment shall be made
on the day such notice is received by such Revolving Lender from the Issuing
Lender if such notice is received at or before 12:00 Noon (San Francisco,
California time) otherwise such payment shall be made at or before 11:00 A.M.
(San Francisco, California time) on the Business Day next succeeding the day
such notice is received. If such Revolving Lender does not pay such amount to
the Issuing Lender in full upon such request, such Revolving Lender shall, on
demand, pay to the Administrative Agent for the account of the Issuing Lender
interest on the unpaid amount during the period from the date of such drawing
until such Revolving Lender pays such amount to the Issuing Lender in full at a
rate per annum equal to, if paid within two (2) Business Days of the date that
such Revolving Lender is required to make payments of such amount pursuant to
the preceding sentence, the Federal Funds Rate and thereafter at a rate equal to
the Base Rate. Each Revolving Lender's obligation to make such payment to the
Issuing Lender, and the right of the Issuing Lender to receive the same, shall
be absolute and unconditional, shall not be affected by any circumstance
whatsoever and without regard to the termination of this Credit Agreement or the
Commitments hereunder, the existence of a Default or Event of Default or the
acceleration of the obligations of the Borrower hereunder and shall be made
without any offset, abatement, withholding or reduction whatsoever.
Simultaneously with the making of each such payment by a Revolving Lender to the
Issuing Lender, such Revolving Lender shall, automatically and without any
further action on the part of the Issuing Lender or such Revolving Lender,
acquire a participation in an amount equal to such payment (excluding the
portion of such payment constituting interest owing to the Issuing Lender) in
the related unreimbursed drawing portion of the LOC Obligation and in the
interest thereon and in the related LOC Documents, and shall have a claim
against the Borrower with respect thereto.
(d) Repayment with Revolving Loans. On any day on which the Borrower
------------------------------
shall have requested, or been deemed to have requested, a Revolving Loan advance
to reimburse a drawing under a Letter of Credit, the Administrative Agent shall
give notice to the Revolving Lenders that a Revolving Loan has been requested or
deemed requested by the Borrower to be made in connection with a drawing under a
Letter of Credit, in which case a Revolving Loan advance comprised of Base Rate
Loans (or Eurodollar Loans to the extent the Borrower has complied with the
procedures of Section 2.2(a)(i) with respect thereto) shall be immediately made
to the Borrower by all Revolving Lenders (notwithstanding any termination of the
Commitments pursuant to Section 10.2) pro rata based on the respective Revolving
--------
Commitment Percentages of the Revolving Lenders (determined before giving effect
to any termination of the Commitments pursuant to Section 10.2) and the proceeds
thereof shall be paid directly to the Issuing Lender for application to the
respective LOC Obligations. Each such Revolving Lender hereby irrevocably
agrees to make
38
<PAGE>
its pro rata share of each such Revolving Loan immediately upon any such request
or deemed request in the amount, in the manner and on the date specified in the
preceding sentence notwithstanding (i) the amount of such borrowing may not
---------------
comply with the minimum amount for advances of Revolving Loans otherwise
required hereunder, (ii) whether any conditions specified in Section 5.2 are
then satisfied, (iii) whether a Default or an Event of Default then exists, (iv)
failure for any such request or deemed request for Revolving Loan to be made by
the time otherwise required hereunder, (v) whether the date of such borrowing is
a date on which Revolving Loans are otherwise permitted to be made hereunder or
(vi) any termination of the Commitments relating thereto immediately prior to or
contemporaneously with such borrowing. In the event that any Revolving Loan
cannot for any reason be made on the date otherwise required above (including,
without limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower or any Credit Party), then each
such Revolving Lender hereby agrees that it shall forthwith purchase (as of the
date such borrowing would otherwise have occurred, but adjusted for any payments
received from the Borrower on or after such date and prior to such purchase)
from the Issuing Lender such participation in the outstanding LOC Obligations as
shall be necessary to cause each such Revolving Lender to share in such LOC
Obligations ratably (based upon the respective Commitment Percentages of the
Revolving Lenders (determined before giving effect to any termination of the
Commitments pursuant to Section 10.2)), provided that in the event such payment
--------
is not made on the day of drawing, such Revolving Lender shall pay in addition
to the Issuing Lender interest on the amount of its unfunded Participation
Interest at a rate equal to, if paid within two (2) Business Days of the date of
drawing, the Federal Funds Rate, and thereafter at the Base Rate.
(e) Designation of other Credit Parties as Account Parties.
------------------------------------------------------
Notwithstanding anything to the contrary set forth in this Credit Agreement,
including without limitation Section 2.2(a)(ii) hereof, a Letter of Credit
issued hereunder may contain a statement to the effect that such Letter of
Credit is issued for the account of a Credit Party, provided that
notwithstanding such statement, the Borrower shall be the actual account party
for all purposes of this Credit Agreement for such Letter of Credit and such
statement shall not affect the Borrower's reimbursement obligations hereunder
with respect to such Letter of Credit.
(f) Renewal, Extension. The renewal or extension of any Letter of Credit
------------------
shall, for purposes hereof, be treated in all respects the same as the issuance
of a new Letter of Credit hereunder.
(g) Uniform Customs and Practices. The Issuing Lender may have the
-----------------------------
Letters of Credit be subject to The Uniform Customs and Practice for Documentary
Credits, as published as of the date of issue by the International Chamber of
Commerce (the "UCP"), in which case the UCP may be incorporated therein and
deemed in all respects to be a part thereof.
(h) Indemnification; Nature of Issuing Lender's Duties.
--------------------------------------------------
(i) In addition to its other obligations under this Section 2.6,
the Borrower hereby agrees to protect, indemnify, pay and save the Issuing
Lender harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable
attorneys' fees) that the Issuing Lender may incur or be
39
<PAGE>
subject to as a consequence, direct or indirect, of (A) the issuance of any
Letter of Credit or (B) the failure of the Issuing Lender to honor a
drawing under a Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions, herein
called "Government Acts").
----------------
(ii) As between the Borrower and the Issuing Lender, the Borrower
shall assume all risks of the acts, omissions or misuse of any Letter of
Credit by the beneficiary thereof. The Issuing Lender shall not be
responsible: (A) for the form, validity, sufficiency, accuracy, genuineness
or legal effect of any document submitted by any party in connection with
the application for and issuance of any Letter of Credit, even if it should
in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (B) for the validity or sufficiency of
any instrument transferring or assigning or purporting to transfer or
assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (C) for errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in cipher; (D) for
any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under a Letter of Credit or of the proceeds
thereof; and (E) for any consequences arising from causes beyond the
control of the Issuing Lender, including, without limitation, any
Government Acts. None of the above shall affect, impair, or prevent the
vesting of the Issuing Lender's rights or powers hereunder.
(iii) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by
the Issuing Lender, under or in connection with any Letter of Credit or the
related certificates, if taken or omitted in good faith, shall not put such
Issuing Lender under any resulting liability to the Borrower or any other
Credit Party. It is the intention of the parties that this Credit Agreement
shall be construed and applied to protect and indemnify the Issuing Lender
against any and all risks involved in the issuance of the Letters of
Credit, all of which risks are hereby assumed by the Borrower (on behalf of
itself and each of the other Credit Parties), including, without
limitation, any and all Government Acts. The Issuing Lender shall not, in
any way, be liable for any failure by the Issuing Lender or anyone else to
pay any drawing under any Letter of Credit as a result of any Government
Acts or any other cause beyond the control of the Issuing Lender.
(iv) Nothing in this subsection (h) is intended to limit the
reimbursement obligations of the Borrower contained in subsection (d)
above. The obligations of the Borrower under this subsection (h) shall
survive the termination of this Credit Agreement. No act or omissions of
any current or prior beneficiary of a Letter of Credit shall in any way
affect or impair the rights of the Issuing Lender to enforce any right,
power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary contained in this
subsection (h), the Borrower shall have no obligation to indemnify the
Issuing Lender in respect of any liability incurred by the Issuing Lender
(A) arising solely out of the gross negligence or willful misconduct of the
Issuing Lender, as determined by a court of competent
40
<PAGE>
jurisdiction, or (B) caused by the Issuing Lender's failure to pay under
any Letter of Credit after presentation to it of a request strictly
complying with the terms and conditions of such Letter of Credit, as
determined by a court of competent jurisdiction, unless such payment is
prohibited by any law, regulation, court order or decree.
(i) Responsibility of Issuing Lender.It is expressly understood and agreed
--------------------------------
that the obligations of the Issuing Lender hereunder to the Lenders are only
those expressly set forth in this Credit Agreement and that the Issuing Lender
shall be entitled to assume that the conditions precedent set forth in Section
5.2 have been satisfied unless it shall have acquired actual knowledge that any
such condition precedent has not been satisfied; provided, however, that nothing
-------- -------
set forth in this Section 2.6 shall be deemed to prejudice the right of any
Lender to recover from the Issuing Lender any amounts made available by such
Lender to the Issuing Lender pursuant to this Section 2.6 in the event that it
is determined by a court of competent jurisdiction that the payment with respect
to a Letter of Credit constituted gross negligence or willful misconduct on the
part of the Issuing Lender.
(j) Conflict with LOC Documents. Solely as among the parties hereto, in
---------------------------
the event of any conflict between this Credit Agreement and any LOC Document
(including any letter of credit application), this Credit Agreement shall
control.
2.7 Additional Provisions relating to Swingline Loans.
-------------------------------------------------
The Swingline Lender may, at any time, in its sole discretion, by written
notice to the Borrower and the Revolving Lenders, demand repayment of its
Swingline Loans by way of a Revolving Loan advance, in which case the Borrower
shall be deemed to have requested a Revolving Loan advance comprised solely of
Base Rate Loans in the amount of such Swingline Loans; provided, however, that
-------- -------
any such demand shall be deemed to have been given one Business Day prior to the
Revolving Commitment Termination Date and on the date of the occurrence of any
Event of Default described in Section 10.1 and upon acceleration of the
indebtedness hereunder and the exercise of remedies in accordance with the
provisions of Section 10.2. Each Revolving Lender hereby irrevocably agrees to
make its Revolving Commitment Percentage of each such Revolving Loan in the
amount, in the manner and on the date specified in the preceding sentence
notwithstanding (I) the amount of such borrowing may not comply with the minimum
- ---------------
amount for advances of Revolving Loans otherwise required hereunder, (II)
whether any conditions specified in Section 5.2 are then satisfied, (III)
whether a Default or an Event of Default then exists, (IV) failure of any such
request or deemed request for Revolving Loan to be made by the time otherwise
required hereunder, (V) whether the date of such borrowing is a date on which
Revolving Loans are otherwise permitted to be made hereunder or (VI) any
termination of the Commitments relating thereto immediately prior to or
contemporaneously with such borrowing. In the event that any Revolving Loan
cannot for any reason be made on the date otherwise required above (including,
without limitation, as a result of the commencement of a proceeding under the
Bankruptcy Code with respect to the Borrower or any other Credit Party), then
each Revolving Lender hereby agrees that it shall forthwith purchase (as of the
date such borrowing would otherwise have occurred, but adjusted for any payments
received from the Borrower on or after such date and prior to such purchase)
from the Swingline Lender such Participation Interests in the outstanding
Swingline Loans as shall be necessary to cause each such Revolving Lender to
share in such Swingline Loans ratably based upon its Revolving Commitment
Percentage of the Revolving Committed Amount
41
<PAGE>
(determined before giving effect to any termination of the Commitments pursuant
to Section 3.4), provided that (A) all interest payable on the Swingline Loans
--------
shall be for the account of the Swingline Lender until the date as of which the
respective Participation Interest is funded and (B) at the time any purchase of
Participation Interests pursuant to this sentence is actually made, the
purchasing Revolving Lender shall be required to pay to the Swingline Lender, to
the extent not paid to the Swingline Lender by the Borrower in accordance with
the terms of Section 2.4(b), interest on the principal amount of Participation
Interests purchased for each day from and including the day upon which such
borrowing would otherwise have occurred to but excluding the date of payment for
such Participation Interests, at the rate equal to the Federal Funds Rate.
SECTION 3
OTHER PROVISIONS RELATING TO CREDIT FACILITIES
----------------------------------------------
3.1 Default Rate.
------------
Upon the occurrence, and during the continuance, of an Event of Default,
(i) the principal of and, to the extent permitted by law, interest on the Loans
and any other amounts owing hereunder or under the other Credit Documents shall
bear interest, payable on demand, at a per annum rate 2% greater than the rate
which would otherwise be applicable (or if no rate is applicable, whether in
respect of interest, fees or other amounts, then the Base Rate plus 2%) and (ii)
----
Letter of Credit Fee shall accrue at a per annum rate 2% greater than the rate
which would otherwise be applicable.
3.2 Continuation and Conversion.
---------------------------
The Borrower shall have the option, on any Business Day, to extend existing
Loans into a subsequent permissible Interest Period or to convert Loans into
Loans of another interest rate type; provided, however, that (i) except as
-------- -------
provided in Section 3.8, Eurodollar Loans may be converted into Base Rate Loans
or extended as Eurodollar Loans for new Interest Periods only on the last day of
the Interest Period applicable thereto, (ii) without the consent of the Required
Lenders, Eurodollar Loans may be extended, and Base Rate Loans may be converted
into Eurodollar Loans, only if the conditions precedent set forth in Section 5.2
are satisfied on the date of Continuation or Conversion, (iii) Loans extended
as, or converted into, Eurodollar Loans shall be subject to the terms of the
definition of "Interest Period" and shall be in such minimum amounts as provided
---------------
in Section 2.2(b), (iv) no more than five (5) Eurodollar Loans which comprise
Revolving Loans, no more than five (5) Eurodollar Loans which comprise the
Bridge Loan, no more than five (5) Eurodollar Loans which comprise the Tranche A
Term Loan and no more than five (5) Eurodollar Loans which comprise the Tranche
B Term Loan shall be outstanding hereunder at any time (it being understood
that, for purposes hereof, Eurodollar Loans with different Interest Periods
shall be considered as separate Eurodollar Loans, even if they begin on the same
date, although borrowings, Continuations and Conversions may, in accordance with
the provisions hereof, be combined at the end of existing Interest Periods to
constitute a new Eurodollar Loan with a single Interest Period) and (v) any
request for Continuation or Conversion of a Eurodollar Loan which shall fail to
specify an Interest Period shall be deemed to be a request for an Interest
Period of one month. Each such Continuation or Conversion shall be effected by
the Borrower by giving a Notice of Extension/Conversion (or telephonic notice
promptly confirmed in writing) to the office of the
42
<PAGE>
Administrative Agent specified in Schedule 2.1, or at such other office as the
-------------
Administrative Agent may designate in writing, prior to 9:00 A.M. (San
Francisco, California time) on the Business Day of, in the case of the
Conversion of a Eurodollar Loan into a Base Rate Loan, and on the third Business
Day prior to, in the case of the Continuation of a Eurodollar Loan as, or
Conversion of a Base Rate Loan into, a Eurodollar Loan, the date of the proposed
Continuation or Conversion, specifying the date of the proposed Continuation or
Conversion, the Loans to be so Continued or Converted, the types of Loans into
which such Loans are to be Converted and, if appropriate, the applicable
Interest Periods with respect thereto. Each request for Continuation or
Conversion shall be irrevocable and shall constitute a representation and
warranty by the Borrower of the matters specified in subsections (a), (b), (c),
(d) and (e) of Section 5.2. In the event the Borrower fails to request
Continuation or Conversion of any Eurodollar Loan in accordance with this
Section, or any such Conversion or Continuation is not permitted or required by
this Section, then such Eurodollar Loan shall be automatically Converted into a
Base Rate Loan at the end of the Interest Period applicable thereto. The
Administrative Agent shall give each Lender notice as promptly as practicable of
any such proposed extension or conversion affecting any Loan.
3.3 Prepayments.
-----------
(a) Voluntary Prepayments. The Loans may be repaid in whole or in
---------------------
part without premium or penalty (other than as provided in Section 3.3(d));
provided that (i) Eurodollar Loans may be prepaid only upon three (3) Business
- --------
Days' prior written notice to the Administrative Agent and must be accompanied
by payment of any amounts owing under Section 3.12, and (ii) partial prepayments
shall be minimum principal amounts of $1,000,000, in the case of Eurodollar
Loans, and $1,000,000, in the case of Base Rate Loans, and in integral multiples
of $1,000,000 in excess thereof.
(b) Mandatory Prepayments.
---------------------
(i) Revolving Committed Amount. If at any time, (A) the
--------------------------
aggregate principal amount of Revolving Obligations shall exceed the
Aggregate Revolving Committed Amount, (B) the aggregate amount of LOC
Obligations shall exceed the LOC Committed Amount or (C) the aggregate
principal amount of Swingline Loans shall exceed the Swingline Committed
Amount, the Borrower shall immediately make payment on the Revolving Loans,
on the Swingline Loans and/or to a cash collateral account in respect of
the LOC Obligations, in an amount sufficient to eliminate the excess.
(ii) Asset Dispositions.
------------------
(A) Approved Asset Dispositions. The Loans shall be prepaid
---------------------------
as hereafter provided in an amount equal to the Net Proceeds received from
any Approved Asset Disposition in an amount equal to (i) one hundred
percent (100%) of such Net Proceeds until the Bridge Loan is paid in full
and (ii) after the Bridge Loan has been paid in full, (x) if the
Consolidated Total Leverage Ratio is greater than or equal to 3.25:1.0 (as
of the end of the fiscal quarter immediately preceding the date of such
Approved Asset Disposition), fifty percent (50%) of such Net Proceeds, and
(y) if the Consolidated Total Leverage Ratio is less than 3.25:1.0 (as of
the end of the fiscal quarter
43
<PAGE>
immediately preceding the date of such Approved Asset Disposition), zero
percent (0%) of such Net Proceeds; provided that payment of such Net
--------
Proceeds need not be made until such time as the aggregate amount payable
hereunder shall be at least $1,000,000 at any time.
(B) Other Asset Dispositions. The Loans shall be prepaid as
------------------------
hereafter provided in an amount equal to one hundred percent (100%) of the
Net Proceeds received from any Asset Disposition other than Approved Asset
Dispositions to the extent (A) such Net Proceeds are not reinvested in the
same or similar property or assets within twelve (12) months of the date of
such Asset Disposition, and (B) the aggregate amount of such Net Proceeds
not reinvested in accordance with the foregoing clause (A) shall exceed
$5,000,000 in any fiscal year; provided that payment of the Net Proceeds
--------
which exceed the foregoing threshold amount need not be made until such
time as the aggregate amount payable in excess of such threshold shall be
at least $1,000,000 at any time.
(iii) Debt Transactions. The Loans shall be prepaid as
-----------------
hereafter provided in an amount equal to one hundred percent (100%) of the
Net Proceeds received from any Debt Transaction.
(iv) Equity Transactions. The Loans shall be prepaid as
-------------------
hereafter provided in an amount equal to one hundred percent (100%) of the
Net Proceeds received from any Equity Transaction.
(c) Application.
-----------
(i) Voluntary Prepayments. Voluntary prepayments on the
---------------------
Revolving Obligations shall be applied as specified by the Borrower.
Voluntary prepayments on the Bridge Loan or the Term Loans shall be applied
first to the Bridge Loan until paid in full, and thereafter, ratably to the
Tranche A Term Loan and the Tranche B Term Loan (in each case ratably to
the remaining principal amortization installments thereof) until paid in
full, and thereafter, to the Revolving Obligations (with a corresponding
reduction in the Revolving Committed Amount in an amount equal to all
amounts applied to the Revolving Obligations pursuant to this Section
3.3(c)(i)). Within the parameters of the applications set forth above,
voluntary prepayments shall be applied first to Base Rate Loans and then to
Eurodollar Loans and Quoted Rate Swingline Loans in direct order of
Interest Period maturities.
(ii) Mandatory Prepayments.
---------------------
(A) Prepayments in respect of Asset Dispositions. Mandatory
--------------------------------------------
prepayments made under subsection (b)(ii)(A) in respect of Approved Asset
Dispositions shall be applied first to the Bridge Loan until paid in full,
and thereafter, ratably to the Tranche A Term Loan and the Tranche B Term
Loan (in each case ratably to the remaining principal amortization
installments thereof) until paid in full, and thereafter, to the Revolving
Obligations (with a corresponding permanent reduction in the Revolving
Committed Amount in an amount equal to all amounts applied to the Revolving
Obligations
44
<PAGE>
pursuant to this Section 3.3(c)(ii)(A)). Mandatory prepayments made under
subsection (b)(ii)(B) in respect of other asset dispositions shall be
applied first to the Bridge Loan until paid in full, then the next $150
million in Net Proceeds shall be applied ratably to the Tranche A Term Loan
and the Tranche B Term Loan (in each case ratably to the remaining
principal amortization installments thereof), or until paid in full, and
thereafter ratably to the remaining Obligations hereunder (based, in the
case of the Revolving Obligations, on the Revolving Commitments, and with a
corresponding permanent reduction in the Revolving Committed Amount in an
amount equal to all such amounts applied to the Revolving Obligations
pursuant to this Section 3.3(c)(ii)(A)). Within the parameters of the
applications set forth above, mandatory prepayments shall be applied first
to Base Rate Loans and then to Eurodollar Loans and Quoted Rate Swingline
Loans in direct order of Interest Period maturities
(B) Prepayments in respect of Debt Transactions or Equity
-----------------------------------------------------
Transactions. Mandatory prepayments made under subsection (b)(iii) in
------------
respect of Debt Transactions or under subsection (b)(iv) in respect of
Equity Transactions shall be applied first to the Bridge Loan until paid in
full, and thereafter, ratably to the Tranche A Term Loan and the Tranche B
Term Loan (in each case ratably to the remaining principal amortization
installments thereof) until paid in full, and thereafter, to the Revolving
Obligations (with a corresponding permanent reduction in the Revolving
Committed Amount in an amount equal to all amounts applied to the Revolving
Obligations pursuant to this Section 3.3(c)(ii)(B)). Within the parameters
of the applications set forth above, mandatory prepayments shall be applied
first to Base Rate Loans and then to Eurodollar Loans and Quoted Rate
Swingline Loans in direct order of Interest Period maturities.
(iii) Availability. Amounts prepaid on the Revolving Obligations
------------
may, subject to the terms and conditions hereof, be reborrowed. Amounts
prepaid on the Bridge Loan and the Term Loans may not be reborrowed.
(iv) Declined Prepayments. One or more holders of the Tranche B
--------------------
Term Loans may decline to accept a voluntary prepayment under Section
3.3(a) or a mandatory prepayment under Section 3.3(b) to the extent the
outstanding principal amount of the Bridge Loan and the Tranche A Term Loan
is sufficient to be paid with such prepayment, in which case such declined
prepayments shall be applied first to the Bridge Loan, if not then paid in
full, and thereafter, to the Tranche A Term Loan.
(d) Prepayment Penalty. In the event the Borrower voluntarily elects
------------------
to prepay in whole or in part the Tranche B Term Loan between the Closing
Date and May 11, 2000 as permitted by Section 3.3(a), the Borrower shall be
obligated to pay a prepayment penalty equal to two percent (2.0%) of the
principal amount prepaid, and in the event the Borrower voluntarily elects
to prepay in whole or in part the Tranche B Term Loan between May 11, 2000
and May 11, 2001 as permitted by Section 3.3(a), the Borrower shall be
obligated to pay a prepayment penalty equal to one percent (1.0%) of the
principal amount prepaid. After two years from the Closing Date, the
Borrower may prepay the Tranche B Term Loan without a prepayment penalty or
fee.
45
<PAGE>
3.4 Reduction and Termination of Revolving Commitments.
--------------------------------------------------
(a) Voluntary Reduction of Revolving Commitments. The Revolving
--------------------------------------------
Commitments may be terminated or permanently reduced in whole or in part upon
three (3) Business Days' prior written notice to the Administrative Agent,
provided that (i) after giving effect to any voluntary reduction the aggregate
- --------
amount of Revolving Obligations shall not exceed the Aggregate Revolving
Committed Amount, as reduced, and (ii) partial reductions shall be in a minimum
principal amount of $5,000,000, and in integral multiples of $1,000,000 in
excess thereof.
(b) Mandatory Reduction of Revolving Commitments. On any date that
--------------------------------------------
the Revolving Obligations are required to be prepaid pursuant to the terms of
Section 3.3(b), the Revolving Commitments automatically shall be permanently
reduced by the amount of such required prepayment.
(c) Termination of Revolving Commitments. The Revolving Commitments
------------------------------------
hereunder shall terminate on the Revolving Commitment Termination Date.
3.5 Fees.
----
(a) Commitment Fee. In consideration of the Revolving
--------------
Commitments hereunder, the Borrower agrees to pay to the Administrative
Agent for the ratable benefit of the Revolving Lenders a commitment fee
(the "Commitment Fee") for the period from the Closing Date to the
--------------
Revolving Commitment Termination Date equal to the Applicable Percentage
per annum on the actual daily unused amount of the Revolving Committed
Amount for the applicable period. The Commitment Fee shall be payable
quarterly in arrears on the 15th day following the last day of each
calendar quarter for the immediately preceding quarter (or portion thereof)
beginning with the first such date to occur after the Closing Date and on
the Revolving Commitment Termination Date. For purposes of computation of
the Commitment Fee, Swingline Loans shall not be counted toward or
considered usage under the Revolving Committed Amount.
(b) Letter of Credit Fees.
---------------------
(i) Letter of Credit Issuance Fee. In consideration of the
-----------------------------
issuance of standby Letters of Credit hereunder, the Borrower promises
to pay to the Administrative Agent for the account of each Revolving
Lender a fee (the "Letter of Credit Fee") on such Revolving Lender's
--------------------
Revolving Commitment Percentage of the actual daily maximum amount
available to be drawn under each such standby Letter of Credit
computed at a per annum rate for each day from the date of issuance to
the date of expiration equal to the Applicable Percentage for
Revolving Loans which are Eurodollar Loans. The Letter of Credit Fee
shall be payable quarterly in arrears on the 15th day following the
last day of each calendar quarter for the immediately preceding
quarter (or portion thereof) beginning with the first such date to
occur after the Closing Date and on the Revolving Commitment
Termination Date.
46
<PAGE>
(ii) Issuing Lender Fees. In addition to the Letter of Credit Fee
-------------------
payable pursuant to clause (i) above, the Borrower promises to pay to
the Issuing Lender without sharing by the other Lenders (i) a letter
of credit fronting fee of one-fourth of one percent (0.25%) on the
actual daily maximum amount available to be drawn under each Letter of
Credit computed at a per annum rate for each day from the date of
issuance to the date of expiration and (ii) the customary charges from
time to time of the Issuing Lender with respect to the issuance,
amendment, transfer, administration, cancellation and conversion of,
and drawings under, such Letters of Credit (collectively, the "Issuing
-------
Lender Fees").
------------
(c) Administrative Fees. The Borrower agrees to pay to the
-------------------
Administrative Agent, for its own account, the fees referred to in the
Administrative Agent's Fee Letter.
3.6 Capital Adequacy.
----------------
If any Lender has determined that, after the date hereof, the adoption or
the becoming effective of, or any change in, or any change by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof in the interpretation or administration of, any law, rule
or regulation regarding capital adequacy applicable to such Lender (or its
parent holding company or its Applicable Lending Office), or compliance by such
Lender (or its parent holding company or its Applicable Lending Office) with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such Governmental Authority, central bank or comparable agency,
has or would have the effect of reducing the rate of return on such Lender's
capital or assets as a consequence of its commitments or obligations hereunder
to a level below that which such Lender could have achieved but for such
adoption, effectiveness, change or compliance (taking into consideration such
Lender's policies with respect to capital adequacy), then, upon notice from such
Lender to the Borrower, the Borrower shall be obligated to pay to such Lender
such additional amount or amounts as will compensate such Lender for such
reduction. Each determination by any such Lender of amounts owing under this
Section shall, absent manifest error, be conclusive and binding on the parties
hereto.
3.7 Limitation on Eurodollar Loans.
------------------------------
If on or prior to the first day of any Interest Period for any Eurodollar
Loan:
(a) the Administrative Agent determines (which determination shall be
conclusive) that by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the Eurodollar
Rate for such Interest Period; or
(b) the Required Lenders determine (which determination shall be
conclusive) and notify the Administrative Agent that the Eurodollar Rate
will not adequately and fairly reflect the cost to the Lenders of funding
Eurodollar Loans for such Interest Period;
then the Administrative Agent shall give the Borrower prompt notice thereof, and
so long as such condition remains in effect, the Lenders shall be under no
obligation to make additional Eurodollar Loans, Continue Eurodollar Loans, or to
Convert Base Rate Loans into Eurodollar Loans, and the
47
<PAGE>
Borrower shall, on the last day(s) of the then current Interest Period(s) for
the outstanding Eurodollar Loans, either prepay such Eurodollar Loans or Convert
such Eurodollar Loans into Base Rate Loans in accordance with the terms of this
Credit Agreement.
3.8 Illegality.
----------
Notwithstanding any other provision of this Credit Agreement, in the event
that it becomes unlawful for any Lender (or its Applicable Lending Office) to
make, maintain, or fund Eurodollar Loans hereunder, then such Lender shall
promptly notify the Borrower thereof and such Lender's obligation to make or
Continue Eurodollar Loans and to Convert Base Rate Loans into Eurodollar Loans
shall be suspended until such time as such Lender may again make, maintain, and
fund Eurodollar Loans (in which case the provisions of Section 3.10 shall be
applicable).
3.9 Requirements of Law.
-------------------
If, after the date hereof, the adoption of any applicable law, rule, or
regulation, or any change in any applicable law, rule, or regulation, or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank, or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or its Applicable Lending
Office) with any request or directive (whether or not having the force of law)
of any such Governmental Authority, central bank, or comparable agency:
(i) shall subject such Lender (or its Applicable Lending
Office) to any tax, duty, or other charge with respect to any
Eurodollar Loans, its Notes, or its obligation to make Eurodollar
Loans, or change the basis of taxation of any amounts payable to such
Lender (or its Applicable Lending Office) under this Credit Agreement
or its Notes in respect of any Eurodollar Loans (other than franchise
taxes and taxes imposed on the overall net income of such Lender by
the jurisdiction in which such Lender has its principal office or such
Applicable Lending Office);
(ii) shall impose, modify, or deem applicable any reserve,
special deposit, assessment, or similar requirement (other than the
Eurodollar Reserve Requirement utilized in the determination of the
Adjusted Eurodollar Rate) relating to any extensions of credit or
other assets of, or any deposits with or other liabilities or
commitments of, such Lender (or its Applicable Lending Office),
including the Commitment of such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending
Office) or the London interbank market any other condition affecting
this Credit Agreement or its Notes or any of such extensions of credit
or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Loans or to reduce any sum received or receivable by
such Lender (or its Applicable Lending Office) under this Credit Agreement or
its Notes with respect to any Eurodollar Loans, then the Borrower shall pay to
such Lender on demand such amount or amounts as will compensate such Lender for
such increased cost or reduction. If any Lender requests compensation by the
Borrower under this
48
<PAGE>
Section 3.9, the Borrower may, by notice to such Lender (with a copy to the
Administrative Agent), suspend the obligation of such Lender to make or Continue
Eurodollar Loans, or to Convert Base Rate Loans into Eurodollar Loans, until the
event or condition giving rise to such request ceases to be in effect (in which
case the provisions of Section 3.10 shall be applicable); provided that such
suspension shall not affect the right of such Lender to receive the compensation
so requested. Each Lender shall promptly notify the Borrower and the
Administrative Agent of any event of which it has knowledge, occurring after the
date hereof, which will entitle such Lender to compensation pursuant to this
Section 3.9 and will designate a different Applicable Lending Office if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the sole judgment of such Lender, be otherwise disadvantageous
to it. Any Lender claiming compensation under this Section 3.9 shall furnish to
the Borrower and the Administrative Agent a statement setting forth the
additional amount or amounts to be paid to it hereunder which shall be
conclusive in the absence of manifest error. In determining such amount, such
Lender may use any reasonable averaging and attribution methods. Notwithstanding
the foregoing, the coming into effect of the Treasury regulations issued on
October 6, 1997 (as revised prior to the date hereof) with respect to new
withholding forms shall not constitute a change in applicable law, rule or
regulation under this Section 3.9.
3.10 Treatment of Affected Loans.
---------------------------
If the obligation of any Lender to make any Eurodollar Loan or to Continue,
or to Convert Base Rate Loans into, Eurodollar Loans shall be suspended pursuant
to Section 3.8 or 3.9 hereof, such Lender's Eurodollar Loans shall be
automatically Converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for such Eurodollar Loans (or, in the case of a
Conversion required by Section 3.8 hereof, on such earlier date as such Lender
may specify to the Borrower with a copy to the Administrative Agent) and, unless
and until such Lender gives notice as provided below that the circumstances
specified in Section 3.8 or 3.9 hereof that gave rise to such Conversion no
longer exist:
(a) to the extent that such Lender's Eurodollar Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Eurodollar Loans shall be applied instead to
its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by such
Lender as Eurodollar Loans shall be made or Continued instead as Base Rate
Loans, and all Base Rate Loans of such Lender that would otherwise be
Converted into Eurodollar Loans shall remain as Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Administrative
Agent) that the circumstances specified in Section 3.8 or 3.9 hereof that gave
rise to the Conversion of such Lender's Eurodollar Loans pursuant to this
Section 3.10 no longer exist (which such Lender agrees to do promptly upon such
circumstances ceasing to exist) at a time when Eurodollar Loans made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Eurodollar Loans, to the extent necessary so that, after giving
effect thereto, all Loans held by the Lenders holding Eurodollar Loans and by
such Lender are held pro rata (as to principal amounts, interest rate basis, and
Interest Periods) in accordance with their respective Commitments.
49
<PAGE>
3.11 Taxes.
-----
(a) Any and all payments by the Borrower to or for the account of
any Lender or the Administrative Agent hereunder or under any other Credit
Document shall be made free and clear of and without deduction for any and
all present or future taxes, duties, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto, excluding, in
---------
the case of each Lender and the Administrative Agent, taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction under the
laws of which such Lender (or its Applicable Lending Office) or the
Administrative Agent (as the case may be) is organized or maintained or any
political subdivision thereof (all such non-excluded taxes, duties, levies,
imposts, deductions, charges, withholdings, and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall be required by
-----
law to deduct or withhold any Taxes from or in respect of any sum payable
under this Credit Agreement or any other Credit Document to any Lender or
the Administrative Agent, (i) the sum payable shall be increased as
necessary so that after making all required deductions or withholdings
(including deductions or withholdings applicable to additional sums payable
under this Section 3.11) such Lender or the Administrative Agent receives
an amount equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions or withholdings,
(iii) the Borrower shall pay the full amount deducted or withheld to the
relevant taxation authority or other Governmental Authority in accordance
with applicable law, and (iv) within thirty (30) days after the date of any
payment of Taxes, the Borrower shall furnish to the Administrative Agent,
at its address referred to in Section 12.1, the original or a certified
copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under this
Credit Agreement or any other Credit Document or from the execution or
delivery of, or otherwise with respect to, this Credit Agreement or any
other Credit Document (hereinafter referred to as "Other Taxes").
-----------
(c) The Borrower agrees to indemnify each Lender and the
Administrative Agent for the full amount of Taxes and Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed or
asserted by any jurisdiction on amounts payable under this Section 3.11)
paid by such Lender or the Administrative Agent (as the case may be) and
any liability (including penalties, interest, and expenses) arising
therefrom or with respect thereto.
(d) Each Lender that is not a United States person under Section
7701(a)(30) of the Code, on or prior to the date of its execution and
delivery of this Credit Agreement in the case of each Lender listed on the
signature pages hereof and on or prior to the date on which it becomes a
Lender in the case of each other Lender, and from time to time thereafter
if requested in writing by the Borrower or the Administrative Agent (but
only so long as such Lender remains lawfully able to do so), shall provide
the Borrower and the Administrative Agent with (i) Internal Revenue Service
Form 1001 or 4224, as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Lender is entitled to
benefits under an income tax treaty to which the United States is a
50
<PAGE>
party which eliminates the rate of withholding tax on payments of interest
or certifying that the income receivable pursuant to this Credit Agreement
is effectively connected with the conduct of a trade or business in the
United States, (ii) Internal Revenue Service Form W-8 or W-9, as
appropriate, or any successor form prescribed by the Internal Revenue
Service, and/or (iii) any other form or certificate required by any taxing
authority (including any certificate required by Sections 871(h) and 881(c)
of the Internal Revenue Code), certifying that such Lender is entitled to
an exemption from or a reduced rate of tax on payments pursuant to this
Credit Agreement or any of the other Credit Documents.
(e) For any period with respect to which a Lender has failed to
provide the Borrower and the Administrative Agent with the appropriate form
pursuant to Section 3.11(d) (unless such failure is due to a change in
treaty, law, or regulation enacted or promulgated subsequent to the date on
which a form with respect to such Lender originally was required to be
provided), such Lender shall not be entitled to indemnification under
Section 3.11(a) or 3.11(b) with respect to Taxes imposed by the United
States; provided, however, that should a Lender, which is otherwise exempt
-------- -------
from or subject to a reduced rate of withholding tax, become subject to
Taxes because of its failure to deliver a form required hereunder, the
Borrower shall take such steps as such Lender shall reasonably request to
assist such Lender, at such Lender's expense, to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for
the account of any Lender pursuant to this Section 3.11, then such Lender
will agree to use reasonable efforts to change the jurisdiction of its
Applicable Lending Office so as to eliminate or reduce any such additional
payment which may thereafter accrue if such change, in the sole judgment of
such Lender, is not otherwise materially disadvantageous to such Lender.
(g) If any Lender determines that it has recovered or used as a
credit any amount withheld on its account pursuant to Section 3.9 or
Section 3.11, it shall reimburse (without any interest) the Borrower to the
extent of such amount so determined to have been recovered (to the extent
of any tax benefit actually received) or used as a credit, provided that
nothing in this paragraph (g) shall require any Lender to make available
its tax returns (or any other information relating to its taxes which it
deems to be confidential).
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 3.11 shall survive the repayment of the Loans,
LOC Obligations and other obligations under the Credit Documents and the
termination of the Commitments hereunder.
3.12 Compensation.
------------
Upon the request of any Lender, the Borrower shall pay to such Lender such
amount or amounts as shall be sufficient (in the reasonable opinion of such
Lender) to compensate it for any loss, cost, or expense (excluding loss of
anticipated profits) incurred by it as a result of:
51
<PAGE>
(a) any payment, prepayment, or Conversion of a Eurodollar Loan for
any reason (including, without limitation, (i) in connection with any
assignment pursuant to Section 12.3(b) as part of the primary syndication
of the Loans during the 90-day period immediately following the Closing
Date and (ii) the acceleration of the Loans pursuant to Section 10.2) on a
date other than the last day of the Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including, without
limitation, the failure of any condition precedent specified in Section 5
to be satisfied) to borrow, Convert, Continue, or prepay a Eurodollar Loan
on the date for such borrowing, Conversion, Continuation, or prepayment
specified in the relevant notice of borrowing, prepayment, Continuation, or
Conversion under this Credit Agreement.
With respect to Eurodollar Loans, such indemnification may include an amount
equal to the excess, if any, of (a) the amount of interest which would have
accrued on the amount so prepaid, or not so borrowed, Converted or Continued,
for the period from the date of such prepayment or of such failure to borrow,
Convert or Continue to the last day of the applicable Interest Period (or, in
the case of a failure to borrow, Convert or Continue, the Interest Period that
would have commenced on the date of such failure) in each case at the applicable
rate of interest for such Eurodollar Loans provided for herein (excluding,
however, the Applicable Percentage included therein, if any) over (b) the amount
of interest (as reasonably determined by such Lender) which would have accrued
to such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank Eurodollar market. Without prejudice
to the survival of any other agreement of the Borrower hereunder, the covenants
of the Borrower set forth in this Section 3.12 shall survive the repayment of
the Loans, LOC Obligations and other obligations under the Credit Documents and
the termination of the Commitments hereunder.
3.13 Pro Rata Treatment.
------------------
Except to the extent otherwise provided herein:
(a) Loans. Each Revolving Loan advance, each payment or prepayment
-----
of principal of any Revolving Loan (other than Swingline Loans) or
reimbursement obligations arising from drawings under Letters of Credit,
each payment of interest on the Revolving Loans or reimbursement
obligations arising from drawings under Letters of Credit, each payment of
Commitment Fees, each payment of the Letter of Credit Fee, each reduction
of the Revolving Committed Amount and each conversion or extension of any
Revolving Loan (other than Swingline Loans), shall be allocated pro rata
among the Revolving Lenders in accordance with the respective Revolving
Commitment Percentages. Each Bridge Loan advance, each payment or
prepayment of principal on the Bridge Loan, each payment of interest on the
Bridge Loan and each conversion or extension of any Loan comprising the
Bridge Loan, shall be allocated pro rata among the Bridge Lenders in
accordance with the respective principal amounts of their respective Bridge
Loan Commitment Percentages. Each Tranche A Term Loan advance, each payment
or prepayment of principal on the Tranche A Term Loan, each payment of
interest on the Tranche A Term Loan and each conversion or extension of
any Loan comprising the Tranche A Term Loan, shall be allocated pro rata
among the Tranche A Term Lenders in accordance with the respective
principal amounts of their respective Tranche A Term Loan
52
<PAGE>
Commitment Percentages. Each Tranche B Term Loan advance, each payment or
prepayment of principal on the Tranche B Term Loan, each payment of
interest on the Tranche B Term Loan and each conversion or extension of any
Loan comprising the Tranche B Term Loan, shall be allocated pro rata among
the Tranche B Term Lenders in accordance with the respective principal
amounts of their respective Tranche B Term Loan Commitment Percentages.
(b) Advances. No Lender shall be responsible for the failure or delay
--------
by any other Lender in its obligation to make its ratable share of a
borrowing hereunder; provided, however, that the failure of any Lender to
-------- -------
fulfill its obligations hereunder shall not relieve any other Lender of its
obligations hereunder. Unless the Administrative Agent shall have been
notified by any Lender prior to the date of any requested borrowing that
such Lender does not intend to make available to the Administrative Agent
its ratable share of such borrowing to be made on such date, the
Administrative Agent may assume that such Lender has made such amount
available to the Administrative Agent on the date of such borrowing, and
the Administrative Agent in reliance upon such assumption, may (in its sole
discretion but without any obligation to do so) make available to the
Borrower a corresponding amount. If such corresponding amount is not in
fact made available to the Administrative Agent, the Administrative Agent
shall be able to recover such corresponding amount from such Lender. If
such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent will
promptly notify the Borrower, and the Borrower shall immediately pay such
corresponding amount to the Administrative Agent. The Administrative Agent
shall also be entitled to recover from the Lender or the Borrower, as the
case may be, interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by the
Administrative Agent to the Borrower to the date such corresponding amount
is recovered by the Administrative Agent at a per annum rate equal to (i)
from the Borrower at the applicable rate for the applicable borrowing
pursuant to the Notice of Borrowing and (ii) from a Lender at the Federal
Funds Rate.
3.14 Sharing of Payments.
-------------------
The Lenders agree among themselves that, in the event that any Lender shall
obtain payment in respect of any Loan, LOC Obligations or any other obligation
owing to such Lender under this Credit Agreement through the exercise of a right
of setoff, banker's lien or counterclaim, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or interest
arising from, or in lieu of, such secured claim, received by such Lender under
any applicable bankruptcy, insolvency or other similar law or otherwise, or by
any other means, in excess of its pro rata share of such payment as provided for
in this Credit Agreement, such Lender shall promptly purchase from the other
Lenders a Participation Interest in such Loans, LOC Obligations and other
obligations in such amounts, and make such other adjustments from time to time,
as shall be equitable to the end that all Lenders share such payment in
accordance with their respective ratable shares as provided for in this Credit
Agreement. The Lenders further agree among themselves that if payment to a
Lender obtained by such Lender through the exercise of a right of setoff,
banker's lien, counterclaim or other event as aforesaid shall be rescinded or
must otherwise be restored, each Lender which shall have shared the benefit of
such payment shall, by repurchase of a Participation Interest theretofore sold,
return its share of that benefit (together with
53
<PAGE>
its share of any accrued interest payable with respect thereto) to each Lender
whose payment shall have been rescinded or otherwise restored. The Borrower
agrees that any Lender so purchasing such a Participation Interest may, to the
fullest extent permitted by law, exercise all rights of payment, including
setoff, banker's lien or counterclaim, with respect to such Participation
Interest as fully as if such Lender were a holder of such Loan, LOC Obligations
or other obligation in the amount of such Participation Interest. Except as
otherwise expressly provided in this Credit Agreement, if any Lender or the
Administrative Agent shall fail to remit to the Administrative Agent or any
other Lender an amount payable by such Lender or the Administrative Agent to the
Administrative Agent or such other Lender pursuant to this Credit Agreement on
the date when such amount is due, such payments shall be made together with
interest thereon for each date from the date such amount is due until the date
such amount is paid to the Administrative Agent or such other Lender at a rate
per annum equal to the Federal Funds Rate. If under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a setoff to which this Section 3.14 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders under this Section 3.14 to share in
the benefits of any recovery on such secured claim.
3.15 Payments, Computations, Etc.
---------------------------
(a) Generally. Except as otherwise specifically provided herein, all
---------
payments hereunder shall be made to the Administrative Agent in Dollars in
immediately available funds, without setoff, deduction, counterclaim or
withholding of any kind, at the Administrative Agent's office specified in
Schedule 2.1 not later than 11:00 A.M. (San Francisco, California time) on
------------
the date when due. Payments received after such time shall be deemed to
have been received on the next succeeding Business Day. The Administrative
Agent may (but shall not be obligated to) debit the amount of any such
payment which is not made by such time to any ordinary deposit account of
the Borrower maintained with the Administrative Agent (with notice to the
Borrower). The Borrower shall, at the time it makes any payment under this
Credit Agreement, specify to the Administrative Agent the Loans, LOC
Obligations, Fees, interest or other amounts payable by the Borrower
hereunder to which such payment is to be applied (and in the event that it
fails so to specify, or if such application would be inconsistent with the
terms hereof, the Administrative Agent shall distribute such payment to the
Lenders in such manner as the Administrative Agent may determine to be
appropriate in respect of obligations owing by the Borrower hereunder,
subject to the terms of Section 3.13(a)). The Administrative Agent will
distribute such payments to such Lenders, if any such payment is received
prior to 11:00 A.M. (San Francisco, California time) on a Business Day in
like funds as received prior to the end of such Business Day and otherwise
the Administrative Agent will distribute such payment to such Lenders on
the next succeeding Business Day. Whenever any payment hereunder shall be
stated to be due on a day which is not a Business Day, the due date thereof
shall be extended to the next succeeding Business Day (subject to accrual
of interest and Fees for the period of such extension), except that in the
case of Eurodollar Loans, if the extension would cause the payment to be
made in the next following calendar month, then such payment shall instead
be made on the next preceding Business Day. Except as expressly provided
otherwise herein, all computations of interest and fees shall be made on
the basis of actual number of days elapsed over a year of 360 days, except
with respect to computation of interest on Base Rate Loans which shall be
calculated based on a year of
54
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365 or 366 days, as appropriate. Interest shall accrue from and include the
date of borrowing, but exclude the date of payment.
(b) Allocation of Payments After Event of Default. Notwithstanding
---------------------------------------------
any other provisions of this Credit Agreement to the contrary, after the
occurrence and during the continuance of an Event of Default, all amounts
collected or received on or in respect of the Obligations (or other amounts
owing under the Credit Documents in connection therewith) shall be paid
over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of
the collateral agent incurred in connection with the execution of its
duties as collateral agent in exercising or attempting to exercise
rights and remedies in respect of the collateral and all protective
advances made with respect thereto;
SECOND, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation reasonable attorneys' fees) of
the Administrative Agent in connection with enforcing the rights and
remedies of the Lenders under the Credit Documents and any protective
advances made with respect thereto;
THIRD, to payment of any fees owed to the Administrative Agent;
FOURTH, to the payment of all reasonable out-of-pocket costs and
expenses (including without limitation, reasonable attorneys' fees) of
each of the Lenders hereunder in connection with enforcing its rights
under the Credit Documents or otherwise with respect to the
Obligations owing to such Lender;
FIFTH, to the payment of all accrued interest and fees on or in
respect of the Obligations;
SIXTH, to the payment of the outstanding principal amount of the
Obligations hereunder (including the payment or cash collateralization
of the outstanding LOC Obligations);
SEVENTH, to all other Obligations hereunder and other obligations
which shall have become due and payable under the Credit Documents
otherwise and not repaid pursuant to clauses "FIRST" through "SIXTH"
above; and
EIGHTH, to the payment of the surplus, if any, to whoever may be
lawfully entitled to receive such surplus.
In carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) except as otherwise provided, the Lenders
shall receive amounts ratably in accordance with their respective pro rata
share (based on the proportion that the then outstanding Obligations held
by such Lenders bears to the aggregate amount of Obligations then
outstanding) of amounts
55
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available to be applied pursuant to clauses "FOURTH", "FIFTH", "SIXTH" and
"SEVENTH" above; and (iii) to the extent that any amounts available for
distribution pursuant to clause "SIXTH" above are attributable to the
issued but undrawn amount of outstanding Letters of Credit, such amounts
shall be held by the Administrative Agent in a cash collateral account and
applied (A) first, to reimburse the Issuing Lender for any drawings under
such Letters of Credit and (B) then, following the expiration of all
Letters of Credit, to all other obligations of the types described in
clauses "FIFTH" and "SIXTH" above in the manner provided in this Section
3.15(b).
3.16 Evidence of Debt.
----------------
(a) Each Lender shall maintain an account or accounts evidencing each
Loan made by such Lender to the Borrower from time to time, including the
amounts of principal and interest payable and paid to such Lender from time
to time under this Credit Agreement. Each Lender will make reasonable
efforts to maintain the accuracy of its account or accounts and to promptly
update its account or accounts from time to time, as necessary.
(b) The Administrative Agent shall maintain the Register pursuant to
Section 12.3(c), and a subaccount for each Lender, in which Register and
subaccounts (taken together) shall be recorded (i) the amount, type and
Interest Period of each such Loan hereunder, (ii) the amount of any
principal or interest due and payable or to become due and payable to each
Lender hereunder and (iii) the amount of any sum received by the
Administrative Agent hereunder from or for the account of the Borrower and
each Lender's share thereof. The Administrative Agent will make reasonable
efforts to maintain the accuracy of the subaccounts referred to in the
preceding sentence and to promptly update such subaccounts from time to
time, as necessary.
(c) The entries made in the accounts, Register and subaccounts
maintained pursuant to subsection (b) of this Section 3.16 (and, if
consistent with the entries of the Administrative Agent, subsection (a))
shall be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
-------- -------
failure of any Lender or the Administrative Agent to maintain any such
account, such Register or such subaccount, as applicable, or any error
therein, shall not in any manner affect the obligation of the Borrower to
repay the Loans and other obligations owing to such Lender.
SECTION 4
[INTENTIONALLY OMITTED]
56
<PAGE>
SECTION 5
CONDITIONS
----------
5.1 Closing Conditions.
------------------
The obligation of the Lenders to enter into this Credit Agreement and to
make the initial Loans or the Issuing Lender to issue the initial Letter of
Credit, whichever shall occur first, shall be subject to satisfaction of the
following conditions (in form and substance acceptable to the Lenders):
(a) Executed Credit Documents. Receipt by the Administrative Agent of
-------------------------
multiple counterparts of: (i) this Credit Agreement and (ii) the Notes,
each duly executed by an appropriate officer of the parties thereto.
(b) Financial Information. Receipt of such financial information
---------------------
regarding HTI, Holdings, Triad and their respective Subsidiaries as may be
requested by, and in each case in form and substance satisfactory to, the
Administrative Agent and the Lenders.
(c) Senior Subordinated Notes. Receipt by the Administrative Agent of
-------------------------
evidence that HTI shall have received gross proceeds from the sale of the
Senior Subordinated Notes in an aggregate principal amount of at least
$325,000,000. The Administrative Agent shall have received a copy,
certified by an Executive Officer of HTI as true and complete, of the
indenture or other governing instrument relating thereto, as originally
executed and delivered, together with all exhibits and schedules thereto.
The indenture or other governing instrument relating to the Senior
Subordinated Notes shall be in form and substance satisfactory to the
Administrative Agent.
(d) Columbia/HCA Side Letter. Receipt by the Administrative Agent of
------------------------
a side letter dated as of the Closing Date provided by Columbia/HCA in
which Columbia/HCA represents and warrants that (i) the only material
assets owned by Columbia/HCA are the capital stock of HTI and the
Columbia/HCA Debt, (ii) other than as described in clause (i), all other
assets of Columbia/HCA have been transferred to and owned by HTI and its
Subsidiaries and (iii) the Columbia/HCA Debt shall be subordinated in right
of payment to all of the indebtedness, liabilities and obligations of the
Credit Parties under the Credit Documents.
(e) Corporate Documents. Receipt by the Administrative Agent of the
-------------------
following:
(i) Charter Documents. Copies of the articles or certificates
-----------------
of incorporation or other charter documents of HTI certified to be
true and complete as of a recent date by the appropriate Governmental
Authority of the state or other jurisdiction of its incorporation and
certified by a secretary or assistant secretary of HTI to be true and
correct as of the Closing Date.
57
<PAGE>
(ii) Bylaws. A copy of the bylaws of HTI certified by a
------
secretary or assistant secretary of HTI to be true and correct as of
the Closing Date.
(iii) Resolutions. Copies of resolutions of the Board of
-----------
Directors of HTI approving and adopting the Credit Documents to which
it is a party, the transactions contemplated therein and authorizing
execution and delivery thereof, certified by a secretary or assistant
secretary of HTI to be true and correct and in force and effect as of
the Closing Date.
(iv) Good Standing. Copies of (A) certificates of good standing,
-------------
existence or its equivalent with respect to HTI certified as of a
recent date by the appropriate Governmental Authorities of the state
or other jurisdiction of incorporation and each other jurisdiction in
which the failure to so qualify and be in good standing could
reasonably be expected to have a Material Adverse Effect and (B) to
the extent available, a certificate indicating payment of all
corporate or comparable franchise taxes certified as of a recent date
by the appropriate governmental taxing authorities.
(v) Incumbency. An incumbency certificate of HTI certified by a
----------
secretary or assistant secretary to be true and correct as of the
Closing Date.
(f) Opinions of Counsel. The Administrative Agent shall have
-------------------
received opinions of counsel in form and substance satisfactory to the
Required Lenders.
(g) Corporate Structure. Receipt by the Administrative Agent of the
-------------------
corporate capital and ownership structure of the members of the
Consolidated Group (prior to the Reorganization).
(h) Material Adverse Effect. No material adverse change shall have
-----------------------
occurred since December 31, 1998 in the condition (financial or otherwise),
business, management or prospects of HTI and its Subsidiaries taken as a
whole, Holdings and its Subsidiaries taken as a whole or Triad and its
Subsidiaries taken as a whole.
(i) Litigation. There shall not exist (i) any order, decree,
----------
judgment, ruling or injunction which restrains, or seeks to restrain or to
obtain damages as a result of, the consummation of the Reorganization in
the manner contemplated by the Distribution Agreement or (ii) any pending
or threatened action, suit, investigation or proceeding against a HTI,
Holdings, Triad or any of their respective Subsidiaries that could
reasonably be expected to have a Material Adverse Effect.
(j) Distribution Agreement. The Administrative Agent shall have
----------------------
received copies, each certified by an Executive Officer of Triad as true
and complete and in full force and effect, of the Distribution Agreement,
the Tax Sharing Agreement and all other material documents relating to the
Reorganization, each as originally executed and delivered, together with
all exhibits and schedules. The Distribution Agreement, the Tax Sharing
Agreement and all other material documents relating to the Reorganization
shall be in form and substance satisfactory to the Administrative Agent
including, without limitation, the
58
<PAGE>
indemnification provisions (including title indemnity covering the assets
involved in the Reorganization) contained in the Distribution Agreement.
(k) Fees and Expenses. Payment by the Credit Parties of all fees and
-----------------
expenses owed by them to the Lenders and the Administrative Agent,
including, without limitation, payment to the Administrative Agent of the
fees set forth in the Administrative Agent's Fee Letter.
(l) Other. Receipt by the Lenders of such other documents,
-----
instruments, agreements or information as reasonably requested by any
Lender, including, but not limited to, information regarding litigation,
tax, accounting, labor, insurance, pension liabilities (actual or
contingent), real estate leases, material contracts, debt agreements,
property ownership, environmental matters, contingent liabilities,
corporate structure and management of HTI, Holdings, Triad and their
respective Subsidiaries, which information may include, if requested by the
Lenders, (a) asset appraisal reports with respect to all real and personal
property owned by HTI, Holdings, Triad and their respective Subsidiaries
and (b) a written audit of the accounts receivable, inventory, payables,
controls and systems of HTI, Holdings, Triad and their respective
Subsidiaries.
5.2 Conditions to all Extensions of Credit.
--------------------------------------
The obligation of each Lender to make any Extension of Credit hereunder
(including the initial Extension of Credit to be made hereunder) is subject to
the satisfaction of the following conditions precedent on the date of making
such Extension of Credit:
(a) Representations and Warranties. The representations and
------------------------------
warranties made by the Borrower herein (other than, after the HTI Release Event,
the representations and warranties made in Section 6 herein) or by the Credit
Parties in any other Credit Documents or which are contained in any certificate
furnished at any time under or in connection herewith shall be true and correct
in all material respects on and as of the date of such Extension of Credit as if
made on and as of such date (except for those which expressly relate to an
earlier date).
(b) No Default or Event of Default. No Default or Event of Default
------------------------------
shall have occurred and be continuing on such date or after giving effect to the
Extension of Credit to be made on such date and the application of the proceeds
thereof unless such Default or Event of Default shall have been waived in
accordance with this Credit Agreement.
(c) Involuntary Bankruptcy or Insolvency. There shall not have been
------------------------------------
commenced against any of the Credit Parties an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or any case, proceeding or other action for the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of such Person or for any substantial part of its Property or for the
winding up or liquidation of its affairs, and shall remain undismissed,
undischarged or unbonded.
59
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(d) No Material Adverse Effect. No circumstances, events or
--------------------------
conditions shall have occurred since December 31, 1998 which could reasonably be
expected to have a Material Adverse Effect.
(e) Triad Group Joinder Event. With respect to each Extension of
-------------------------
Credit other than the initial borrowing by HTI, the Triad Group Joinder Event
shall have occurred.
(f) Additional Conditions to Revolving Loans. If a Revolving Loan is
----------------------------------------
requested pursuant to Sections 2.1 and 2.2, all conditions set forth therein
shall have been satisfied.
(g) Additional Conditions to Letters of Credit. If the issuance of a
------------------------------------------
Letter of Credit is requested pursuant to Sections 2.1 and 2.2, all conditions
set forth therein shall have been satisfied.
(h) Additional Conditions to Swingline Loans. If a Swingline Loan is
----------------------------------------
requested pursuant to Sections 2.1 and 2.2, all conditions set forth therein
shall have been satisfied.
(i) Additional Conditions to Bridge Loan Advance. If a Bridge Loan
--------------------------------------------
advance is requested pursuant to Sections 2.1 and 2.2, all conditions set forth
therein shall have been satisfied.
(j) Additional Conditions to Term Loan Advance. If a Term Loan
------------------------------------------
advance is requested pursuant to Sections 2.1 and 2.2, all conditions set forth
therein shall have been satisfied.
Each request for an Extension of Credit (including extensions and
conversions) and each acceptance by the Borrower of an Extension of Credit
(including extensions and conversions) shall be deemed to constitute a
representation and warranty by the Borrower as of the date of such Extension of
Credit that the applicable conditions in paragraphs (a), (b), (c) and (d), and
in (e), (f), (g), (h) or (i) of this subsection have been satisfied.
5.3 Conditions to Release of HTI from Credit Agreement.
--------------------------------------------------
Upon the satisfaction of each of the following conditions (in form and
substance acceptable to the Required Lenders), the Administrative Agent, on
behalf of itself and each of the Lenders, shall execute and deliver (and each of
the Lenders hereby authorized the Administrative Agent to execute and deliver) a
Release of Borrower in favor of HTI:
(a) Section 5 Conditions. Each of the conditions set forth in Section
--------------------
5.1 shall have been satisfied.
(b) Holdings Group Joinder Documents. Receipt by the Administrative
--------------------------------
Agent of multiple counterparts of: (i) an Assumption Agreement duly
executed by Holdings, (ii) the HTI Guaranty Agreement and (iii) replacement
Notes duly executed by Holdings, each duly executed by an appropriate
officer of the parties thereto.
60
<PAGE>
(c) Corporate Documents. Receipt by the Administrative Agent of the
-------------------
following:
(i) Charter Documents. Copies of the articles or certificates of
-----------------
incorporation or other charter documents of Holdings certified to be
true and complete as of a recent date by the appropriate Governmental
Authority of the state or other jurisdiction of its incorporation and
certified by a secretary or assistant secretary of Holdings to be true
and correct as of the Closing Date.
(ii) Bylaws. A copy of the bylaws of Holdings certified by a
------
secretary or assistant secretary of Holdings to be true and correct as
of the Closing Date.
(iii) Resolutions. Copies of resolutions of the Board of
-----------
Directors of Holdings approving and adopting the Credit Documents to
which it is a party, the transactions contemplated therein and
authorizing execution and delivery thereof, certified by a secretary
or assistant secretary of Holdings to be true and correct and in force
and effect as of the Closing Date.
(iv) Good Standing. Copies of (A) certificates of good standing,
-------------
existence or its equivalent with respect to Holdings certified as of a
recent date by the appropriate Governmental Authorities of the state
or other jurisdiction of incorporation and each other jurisdiction in
which the failure to so qualify and be in good standing could
reasonably be expected to have a Material Adverse Effect and (B) to
the extent available, a certificate indicating payment of all
corporate or comparable franchise taxes certified as of a recent date
by the appropriate governmental taxing authorities.
(v) Incumbency. An incumbency certificate of Holdings certified
----------
by a secretary or assistant secretary to be true and correct as of the
Closing Date.
(d) Opinions of Counsel. The Administrative Agent shall have received
-------------------
opinions of counsel in form and substance satisfactory to the Required
Lenders.
(e) Distribution Agreement. The dropdown of indebtedness and assets to
----------------------
Holdings contemplated in the Distribution Agreement shall have been
consummated substantially in accordance with the terms and conditions of
the Distribution Agreement and in compliance with all applicable laws and
regulatory approvals, and all conditions precedent to the obligations of
the parties thereunder shall have been satisfied. There shall not have been
any material modification, amendment, supplement or waiver to the
Distribution Agreement, the Tax Sharing Agreement or any other material
documents relating to the Reorganization without the prior written consent
of the Administrative Agent, including, but not limited to, any
modification, amendment, supplement or waiver relating to all disclosure
schedules and exhibits.
(f) Litigation. There shall not exist (i) any order, decree,
----------
judgment, ruling or injunction which restrains, or seeks to restrain or to
obtain damages as a result of, the
61
<PAGE>
consummation of the Reorganization in the manner contemplated by the
Distribution Agreement or (ii) any pending or threatened action, suit,
investigation or proceeding against HTI, Holdings, Triad or any of their
respective Subsidiaries that could reasonably be expected to have a
Material Adverse Effect.
5.4 Conditions to Release of Holdings from the Credit Agreement.
-----------------------------------------------------------
Upon the satisfaction in order of each of the following conditions (in form
and substance acceptable to the Required Lenders), the Administrative Agent, on
behalf of itself and each of the Lenders, shall execute and deliver (and each of
the Lenders hereby authorized the Administrative Agent to execute and deliver) a
Release of Borrower in favor of Holdings:
(a) Section 5 Conditions. Each of the conditions set forth in Section
--------------------
5.1 and Section 5.3 shall have been satisfied.
(b) Triad Group Joinder Documents. Receipt by the Administrative
-----------------------------
Agent of multiple counterparts of: (i) an Assumption Agreement duly
executed by Triad, (ii) the Guaranty Agreement duly executed by Holdings
and (iii) replacement Notes duly executed by Triad, each duly executed by
an appropriate officer of the parties thereto.
(c) Corporate Documents. Receipt by the Administrative Agent of the
-------------------
following:
(i) Charter Documents. Copies of the articles or certificates of
-----------------
incorporation or other charter documents of Triad certified to be true
and complete as of a recent date by the appropriate Governmental
Authority of the state or other jurisdiction of its incorporation and
certified by a secretary or assistant secretary of Triad to be true
and correct as of the Closing Date.
(ii) Bylaws. A copy of the bylaws of Triad certified by a
------
secretary or assistant secretary of Triad to be true and correct as of
the Closing Date.
(iii) Resolutions. Copies of resolutions of the Board of
-----------
Directors of Triad approving and adopting the Credit Documents to
which it is a party, the transactions contemplated therein and
authorizing execution and delivery thereof, certified by a secretary
or assistant secretary of Triad to be true and correct and in force
and effect as of the Closing Date.
(iv) Good Standing. Copies of (A) certificates of good standing,
-------------
existence or its equivalent with respect to Triad certified as of a
recent date by the appropriate Governmental Authorities of the state
or other jurisdiction of incorporation and each other jurisdiction in
which the failure to so qualify and be in good standing could
reasonably be expected to have a Material Adverse Effect and (B) to
the extent available, a certificate indicating payment of all
corporate or comparable franchise taxes certified as of a recent date
by the appropriate governmental taxing authorities.
62
<PAGE>
(v) Incumbency. An incumbency certificate of Triad certified by a
----------
secretary or assistant secretary to be true and correct as of the Closing
Date.
(d) Opinions of Counsel. The Administrative Agent shall have received
-------------------
opinions of counsel in form and substance satisfactory to the Required
Lenders.
(e) Distribution Agreement. The dropdown of indebtedness and assets to
----------------------
Triad contemplated in the Distribution Agreement shall have been
consummated substantially in accordance with the terms and conditions of
the Distribution Agreement and in compliance with all applicable laws and
regulatory approvals, and all conditions precedent to the obligations of
the parties thereunder shall have been satisfied. There shall not have been
any material modification, amendment, supplement or waiver to the
Distribution Agreement, the Tax Sharing Agreement or any other material
documents relating to the Reorganization without the prior written consent
of the Administrative Agent, including, but not limited to, any
modification, amendment, supplement or waiver relating to all disclosure
schedules and exhibits.
(f) Litigation. There shall not exist (i) any order, decree,
----------
judgment, ruling or injunction which restrains, or seeks to restrain or to
obtain damages as a result of, the consummation of the Reorganization in
the manner contemplated by the Distribution Agreement or (ii) any pending
or threatened action, suit, investigation or proceeding against HTI,
Holdings, Triad or any of their respective Subsidiaries that could
reasonably be expected to have a Material Adverse Effect.
5.5 Conditions to Release of HTI from HTI Guaranty Agreement.
--------------------------------------------------------
Upon the satisfaction in order of each of the following conditions (in form
and substance acceptable to the Required Lenders), the Administrative Agent, on
behalf of itself and each of the Lenders, shall execute and deliver (and each of
the Lenders hereby authorized the Administrative Agent to execute and deliver) a
release of Guaranty in favor of HTI:
(a) Section 5 Conditions. Each of the conditions set forth in Section
--------------------
5.1, Section 5.3 and Section 5.4 shall have been satisfied.
(b) Guaranty Joinder Agreement. Receipt by the Administrative Agent
--------------------------
of a multiple counterparts of the Guaranty Joinder Agreement executed by
all of Holdings Domestic Subsidiaries (other than Triad), duly executed by
an appropriate officer of the parties thereto.
(c) Collateral Documents. Receipt by the Administrative Agent of
--------------------
multiple counterparts of the Collateral Documents, each duly executed by an
appropriate officer of the parties thereto.
(d) Triad Post-Closing Letter. Receipt by the Administrative Agent of
-------------------------
a side letter from Triad relating to certain post-closing conditions which
must be satisfied by Triad within a certain number of days from the Closing
Date, which letter shall be in form and substance satisfactory to the
Administrative Agent.
63
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(e) Distribution Agreement. There shall not have been any material
----------------------
modification, amendment, supplement or waiver to the Distribution
Agreement, the Tax Sharing Agreement or any other material documents
relating to the Reorganization without the prior written consent of the
Administrative Agent, including, but not limited to, any modification,
amendment, supplement or waiver relating to all disclosure schedules and
exhibits.
(f) Corporate Documents. Receipt by the Administrative Agent of the
-------------------
following:
(i) Charter Documents. Copies of the articles or certificates of
-----------------
incorporation or other charter documents of each Domestic Subsidiary
of Holdings (other than Triad) certified to be true and complete as of
a recent date by the appropriate Governmental Authority of the state
or other jurisdiction of its incorporation and certified by a
secretary or assistant secretary of such Subsidiary to be true and
correct as of the Closing Date.
(ii) Bylaws. A copy of the bylaws of each Domestic Subsidiary of
------
Holdings (other than Triad) certified by a secretary or assistant
secretary of such Subsidiary to be true and correct as of the Closing
Date.
(iii) Resolutions. Copies of resolutions of the Board of
-----------
Directors of each Domestic Subsidiary of Holdings (other than Triad)
approving and adopting the Credit Documents to which it is a party,
the transactions contemplated therein and authorizing execution and
delivery thereof, certified by a secretary or assistant secretary of
such Subsidiary to be true and correct and in force and effect as of
the Closing Date.
(iv) Good Standing. Copies of (A) certificates of good standing,
-------------
existence or its equivalent with respect to each Domestic Subsidiary
of Holdings (other than Triad) certified as of a recent date by the
appropriate Governmental Authorities of the state or other
jurisdiction of incorporation and each other jurisdiction in which the
failure to so qualify and be in good standing could reasonably be
expected to have a Material Adverse Effect and (B) to the extent
available, a certificate indicating payment of all corporate or
comparable franchise taxes certified as of a recent date by the
appropriate governmental taxing authorities.
(v) Incumbency. An incumbency certificate of each Domestic
----------
Subsidiary of Holdings (other than Triad) certified by a secretary or
assistant secretary to be true and correct as of the Closing Date.
(g) Opinions of Counsel. The Administrative Agent shall have received
-------------------
opinions of counsel in form and substance satisfactory to the Required
Lenders.
64
<PAGE>
(h) Personal Property Collateral. The Administrative Agent shall
----------------------------
have received:
(i) searches of Uniform Commercial Code filings in the
jurisdiction of the chief executive office of Holdings and Triad and
each jurisdiction where any Collateral is located or where a filing
would need to be made in order to perfect the Administrative Agent's
security interest in the Collateral, copies of the financing
statements on file in such jurisdictions and evidence that no Liens
exist other than Permitted Liens;
(ii) duly executed UCC financing statements for each
appropriate jurisdiction as is necessary, in the Administrative
Agent's sole discretion, to perfect the Administrative Agent's
security interest in the Collateral;
(iii) searches of ownership of, and Liens on, intellectual
property of Triad and each Guarantor in the appropriate governmental
offices;
(iv) all certificates evidencing any certificated Capital Stock
pledged to the Administrative Agent pursuant to the Pledge Agreements,
together with duly executed in blank, undated stock powers attached
thereto;
(v) such patent/trademark/copyright filings as requested by
the Administrative Agent in order to perfect the Administrative
Agent's security interest in the Collateral;
(vi) all instruments and chattel paper in the possession of any
of Triad or the Guarantors, together with allonges or assignments as
may be necessary or appropriate to perfect the Administrative Agent's
security interest in the Collateral;
(vii) duly executed consents as are necessary, in the
Administrative Agent's sole discretion, to perfect the Administrative
Agent's security interest in the Collateral; and
(viii) in the case of any personal property Collateral located at
a premises leased by Triad or a Guarantor, such estoppel letters,
consents and waivers from the landlords on such real property as may
be required by the Administrative Agent.
(i) Real Property Collateral. The Administrative Agent shall have
------------------------
received, in form and substance reasonably satisfactory to the
Administrative Agent:
(i) fully executed and notarized mortgages or deeds of trust
(each, as the same may be amended, modified, restated or supplemented
from time to time, a "Mortgage Instrument" and collectively the
-------------------
"Mortgage Instruments") encumbering the fee interest and/or leasehold
--------------------
interest of Triad or any Guarantor in each real property asset
designated in Schedule 7.21(a) (each a "Mortgaged Property" and
---------------- ------------------
collectively the "Mortgaged Properties");
--------------------
65
<PAGE>
(ii) a title report obtained by Triad and the Guarantors in
respect of each of the Mortgaged Properties;
(iii) ALTA mortgagee title insurance policies (or similar form
policies approved by the Administrative Agent) issued by Chicago Title
Insurance Company (the "Mortgage Policies"), in amounts not less than
-----------------
the respective amounts designated in Schedule 7.20(a) with respect to
----------------
any particular Mortgaged Property, assuring the Administrative Agent
that each of the Mortgage Instruments creates a valid first priority
mortgage lien on the applicable Mortgaged Property, free and clear of
all defects and encumbrances except Permitted Liens, which Mortgage
Policies shall be in form and substance reasonably satisfactory to the
Administrative Agent and shall provide for affirmative insurance and
such reinsurance as the Administrative Agent may reasonably request,
all of the foregoing in form and substance reasonably satisfactory to
the Administrative Agent;
(iv) evidence reasonably satisfactory to the Administrative
Agent as to (A) whether any Mortgaged Property is in an area
designated by the Federal Emergency Management Agency as having
special flood or mud slide hazards (a "Flood Hazard Property") and (B)
---------------------
if any Mortgaged Property is a Flood Hazard Property, (1) whether the
community in which such Mortgaged Property is located is participating
in the National Flood Insurance Program, (2) the applicable Credit
Party's written acknowledgment of receipt of written notification from
the Administrative Agent (a) as to the fact that such Mortgaged
Property is a Flood Hazard Property and (b) as to whether the
community in which each such Flood Hazard Property is located is
participating in the National Flood Insurance Program and (3) copies
of insurance policies or certificates of insurance of the members of
the Consolidated Group evidencing flood insurance satisfactory to the
Administrative Agent and naming the Administrative Agent as sole loss
payee on behalf of the Lenders; and
(j) Evidence of Insurance. Receipt by the Administrative Agent of
---------------------
copies of insurance policies or certificates of insurance of the members of
the Consolidated Group evidencing liability and casualty insurance meeting
the requirements set forth in the Credit Documents, including, but not
limited to, naming the Administrative Agent as additional insured (in the
case of liability insurance) or sole loss payee (in the case of hazard
insurance) on behalf of the Lenders.
(k) Corporate Structure. Receipt by the Administrative Agent of the
-------------------
corporate capital and ownership structure of the members of the
Consolidated Group (after giving effect to the Reorganization).
(l) Consolidated Total Leverage Ratio. Receipt by the Administrative
---------------------------------
Agent of a certificate of an Executive Officer of Triad, dated as of the
date of the HTI Release Event, demonstrating that upon giving effect to the
Reorganization and the Triad Joinder
66
<PAGE>
Event, the Consolidated Total Leverage Ratio shall not be greater than
4.80:1.0 on a Pro Forma Basis.
(m) Officer's Certificates. The Administrative Agent shall have
----------------------
received a certificate or certificates executed by an Executive Officer of
Triad, in form and substance satisfactory to the Administrative Agent,
stating that (A) each Credit Party is in compliance with all existing
financial obligations, (B) all governmental, shareholder and material third
party consents and approvals, if any, with respect to the Credit Documents
and the transactions contemplated thereby have been obtained, (C) no
action, suit, investigation or proceeding is pending or threatened in any
court or before any arbitrator or governmental instrumentality that
purports to affect any Credit Party or any transaction contemplated by the
Credit Documents, if, after giving effect to any applicable insurance and
the obligations of Columbia/HCA under the Distribution Agreement and the
Tax Sharing Agreement, such action, suit, investigation or proceeding could
reasonably be expected to have a Material Adverse Effect, (D) the
Reorganization has been consummated substantially in accordance with the
terms of the Distribution Agreement, and (E) immediately after giving
effect to the Reorganization, (1) no Default or Event of Default exists,
(2) all representations and warranties contained herein and in the other
Credit Documents are true and correct in all material respects and (3) the
Credit Parties are in compliance with each of the financial covenants set
forth in Section 8.11.
(n) Solvency Opinion. The Administrative Agent and the Lenders shall
----------------
have received an opinion from an independent auditor or appraiser
acceptable to the Administrative Agent in usual and customary form as to
the financial condition, solvency and related matters of Holdings, Triad
and Triad's Domestic Subsidiaries, in each case after giving effect to the
Reorganization, the Credit Agreement and the initial borrowings hereunder.
(o) Year 2000 Problem. The Administrative Agent shall be satisfied
-----------------
that (i) the Credit Parties and their Subsidiaries are taking all necessary
and appropriate steps to ascertain the extent of, and to quantify and
successfully address, business and financial risks facing the Credit
Parties and Subsidiaries as a result of what is commonly referred to as the
"Year 2000 Problem" (i.e., the inability of certain computer applications
to recognize correctly and perform date-sensitive functions involving
certain dates prior to and after December 31, 1999) and (ii) the Credit
Parties' and their Subsidiaries' material computer applications will, on a
timely basis, adequately address the Year 2000 Problem in all material
respects.
(p) Priority of Liens. The Administrative Agent shall have received
-----------------
satisfactory evidence that (i) upon filing of all UCC-1 financing
statements and the Mortgage Instruments, the Administrative Agent, on
behalf of the Lenders, will hold a perfected, first priority Lien on all
Collateral and (ii) none of the Collateral is subject to any other Liens
other than Permitted Liens.
(q) Other Indebtedness. Receipt by the Administrative Agent of
------------------
evidence that, after giving effect to the Reorganization, the Consolidated
Group shall have no Funded Debt other than (i) the Funded Debt under the
Credit Documents, (ii) the Senior
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Subordinated Notes and (iii) Funded Debt assumed in connection with the
Reorganization in an aggregate principal amount of up to $9,500,000.
(r) Government Consent. Receipt by the Administrative Agent of
------------------
evidence that (i) all governmental, shareholder and material third party
consents (including Hart-Scott-Rodino clearance) and approvals necessary or
desirable in connection with the Reorganization have been obtained and (ii)
all applicable waiting periods have expired without any action being taken
by any authority that could restrain, prevent or impose any material
adverse conditions on the Reorganization or that could seek or threaten any
of the foregoing, and no law or regulation shall be applicable which in the
judgment of the Administrative Agent could have such effect.
(s) Litigation. There shall not exist (i) any order, decree,
----------
judgment, ruling or injunction which restrains, or seeks to restrain or to
obtain damages as a result of, the consummation of the Reorganization in
the manner contemplated by the Distribution Agreement or (ii) any pending
or threatened action, suit, investigation or proceeding against HTI,
Holdings, Triad or any of their respective Subsidiaries that could
reasonably be expected to have a Material Adverse Effect.
SECTION 6
REPRESENTATIONS AND COVENANTS OF HTI
------------------------------------
To induce the Lenders to enter into this Credit Agreement and to make Loans
hereunder to HTI, HTI hereby represents and warrants and covenants to the
Administrative Agent and to each Lender as follows:
6.1 Financial Condition and Financial Reporting.
-------------------------------------------
(a) The financial statements described below (copies of which have
heretofore been provided to the Administrative Agent for distribution to the
Lenders) have been prepared in accordance with GAAP consistently applied
throughout the periods covered thereby, are complete and correct in all material
respects and present fairly the financial condition (including disclosure of all
material liabilities, contingent and otherwise) and results of operations of the
Persons and for the periods specified, subject in the case of interim company-
prepared statements to normal year-end adjustment and the absence of footnotes:
(i) audited consolidated balance sheets for Columbia/HCA and its
consolidated subsidiaries dated as of December 31, 1996, December 31, 1997
and December 31, 1998, together with related audited consolidated
statements of income and cash flows for the fiscal years then ending,
certified by Ernst & Young LLP, certified public accountants; and
(ii) company-prepared consolidated balance sheets for
Columbia/HCA and its consolidated subsidiaries dated as of March 31, 1999,
together with related consolidated statements of income and cash flows for
the fiscal quarter then ending.
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(b) Unless and until released from its obligations as a Credit Party
hereunder, HTI will furnish, or cause to be furnished, to the Administrative
Agent and each of the Lenders, promptly upon request by the Administrative
Agent, any other financial information reasonably requested by the
Administrative Agent.
6.2 Notices.
-------
Unless and until released from its obligations as a Credit Party hereunder,
HTI will furnish, or cause to be furnished, to the Administrative Agent (i)
notice of the occurrence of any event or condition which would constitute a
Default or Event of Default immediately upon discovery, and (ii) notice of the
pendency, commencement or material development in any investigation, assertion
of liability, litigation, arbitral, governmental or other legal proceedings
which could reasonably be expected to have a Material Adverse Effect.
6.3 Existence and Authority.
-----------------------
HTI is duly organized, validly existing in good standing under the laws of
the jurisdiction of its incorporation, has the corporate power and authority to
own and operate its property and conduct its business as currently conducted and
to authorize the execution, delivery and performance of this Credit Agreement
and the other Credit Documents to which it is or will be a party, is duly
qualified as a foreign entity in each jurisdiction where failure to so qualify
could reasonably be expected to have a Material Adverse Effect. No consent or
authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with (i)
acceptance of Loans by HTI or with the execution, delivery or performance of any
Credit Documents by HTI (other than those which have been obtained, such filings
as are required by the SEC and to fulfill other reporting requirements with
Governmental Authorities), other than those the failure to obtain could not
reasonably be expected to have a Material Adverse Effect, or (ii) with the
validity or enforceability of any Credit Document against HTI. HTI has duly
authorized, executed and delivered this Credit Agreement and the other Credit
Documents to which it is a party, and this Credit Agreement and the other Credit
Documents to which it is a party constitute the legal, valid and binding
obligations of the HTI enforceable against it in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law). Unless and until
released from its obligations as a Credit Party hereunder, HTI will take action
as necessary to maintain its existence and qualifications in force and effect
6.4 Compliance with Requirements of Law.
-----------------------------------
Except as disclosed in Columbia/HCA's Annual Report for the fiscal year
ended December 31, 1998 and any Current Reports on Form 8-K filed with the
Securities and Exchange Commission prior to the date hereof, HTI is, and unless
and until released from its obligations as a Credit Party hereunder, will
continue to be, in compliance with all Requirements of Law, except to the extent
that failure to be in compliance therewith could not reasonably be expected to
have a material adverse effect on the ability of HTI to perform its obligations
under the Credit
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Documents to which it is a party or the material rights and remedies of the
Administrative Agent and the Lenders under the Credit Documents against HTI.
Neither the execution, delivery or performance by HTI of its obligations under
the Credit Documents, will violate any Requirement of Law or Contractual
Obligation applicable to HTI or its Subsidiaries. The Extensions of Credit
hereunder will not be used, directly or indirectly, for the purpose of
purchasing or carrying "margin stock" in violation of the requirements of
Regulation U.
6.5 Governmental Regulations, Etc.
-----------------------------
HTI is not subject to regulation under the Public Utility Holdings Company
Act of 1935, the Federal Power Act or the Investment Company Act of 1940, each
as amended. In addition, HTI is not (i) an "investment company" registered or
required to be registered under the Investment Company Act of 1940, as amended,
and is not controlled by such a company, or (ii) a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary" of a "holding company", within the meaning of the
Public Utility Holdings Company Act of 1935, as amended.
6.6 Legal Proceedings.
-----------------
Except as disclosed in Columbia/HCA's Annual Report for the fiscal year
ended December 31, 1998 and any Current Reports on Form 8-K filed with the
Securities and Exchange Commission prior to the date hereof, no unsealed
litigation or, to the best knowledge of HTI, investigation, assertion of
liability, sealed litigation, arbitral, governmental or other legal proceedings
is pending, or to the best knowledge of HTI, threatened by or against HTI or its
Subsidiaries, or their properties or operations, which (i) relate to the Credit
Documents or the transactions contemplated herein, or (ii) could reasonably be
expected to have a material adverse effect on the ability of HTI to perform its
obligations under the Credit Documents to which it is a party or the material
rights and remedies of the Administrative Agent and the Lenders under the Credit
Documents against HTI.
6.7 No Defaults.
-----------
No Default or Event of Default has occurred and is continuing hereunder.
6.8 Purpose of Extensions of Credit.
-------------------------------
The Loans to HTI hereunder will be used exclusively to repay, directly or
indirectly, the Columbia/HCA Debt, to pay for costs and expenses incurred in
connection with the transactions contemplated hereby and by the Reorganization,
and for no other purposes.
6.9 No Material Misstatements.
-------------------------
None of the information contained in any of the information, reports,
financial statements, exhibit or schedules, taken as a whole, furnished by or on
behalf of HTI or its Subsidiaries to the Administrative Agent or the Lenders in
connection with the negotiation of the Credit Documents or included therein or
delivered pursuant thereto contains any material misstatement fact or omits any
material fact necessary to make the statements therein, in light of
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the circumstances under which they were made, not materially misleading,
provided that in the case of forecasts and projections, HTI represents only that
it acted in good faith using reasonable assumptions and due care in the
preparation of such information, report, financial statement, exhibit or
schedule.
6.10 Indebtedness.
------------
Unless and until released from its obligations as a Credit Party hereunder,
HTI will not contract, create, incur, assume or permit to exist, nor will it
permit any of its Subsidiaries to contract, create, incur, assume or permit to
exist, any Indebtedness, except
(i) Indebtedness existing or arising under this Credit Agreement
and the other Credit Documents;
(ii) the Senior Subordinated Notes;
(iii) Indebtedness of up to $360 million under the Credit Agreement
dated as of May 11, 1999 by and among Healthtrust, Inc. - The Hospital
Company, a Delaware corporation, the lenders party thereto, Fleet National
Bank, as Administrative Agent, Arranger and Co-Arranger, Deutsche Bank AG,
New York and/or Cayman Islands Branch, as Co-Arranger and Syndication
Agent, ScotiaBanc Inc., as Co-Arranger and Documentation Agent and Suntrust
Bank, Nashville, N.A., as Co-Agent; and
(iv) Indebtedness existing as of the Closing Date and not created or
incurred in anticipation or contemplation of this Credit Agreement, as
fully described in the financial statements referenced in Section 6.1 and
as described on Schedule 9.1.
------------
6.11 Ownership of Property; Liens.
----------------------------
(a) HTI has good title to, or a valid leasehold interest in, all its
material real property, and good title to, or a valid leasehold interest in, all
its other material Property, and none of such Property is subject to any Lien
other than those existing as of the Closing Date (and not created or incurred in
anticipation or contemplation of this Credit Agreement) which would not, in the
aggregate, make the information described in the financial statements referenced
in Section 6.1 misleading in any material respect.
(b) Unless and until released from its obligations as a Credit Party
hereunder, HTI will not contract, create, incur, assume or permit to exist any
Lien, nor will it permit Holdings or any of Holdings' Subsidiaries to contract,
create, incur, assume or permit to exist, any Liens other than those existing as
of the Closing Date (and not created or incurred in anticipation or
contemplation of this Credit Agreement) which would not, in the aggregate, make
the information described in the financial statements referenced in Section 6.1
misleading in any material respect.
6.12 Mergers; Acquisitions and Asset Sales.
-------------------------------------
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Unless and until released from its obligations as a Credit Party hereunder,
except in connection with the Reorganization, HTI will not, nor will it permit
Holdings or any of Holdings' Subsidiaries to, (i) enter into any transaction of
merger, consolidation or combination, (ii) dissolve, liquidate or wind-up its
affairs, (iii) acquire the Capital Stock of any other Person or acquire any
assets, property or operations from any other Person other than in the ordinary
course of business, or (iv) make any sale, lease or other disposition of assets
or property other than in the ordinary course of business.
6.13 Investments.
-----------
Unless and until released from its obligations as a Credit Party hereunder,
except in connection with the Reorganization, HTI will not, nor will it permit
any of its Subsidiaries to, make or permit to exist any Investment other than
(i) cash and Cash Equivalents, (ii) Investments of the types described in
clauses (ii) and (iii) of the definition of "Permitted Investments", (iii)
Investments existing as of the Closing Date and not created or incurred in
anticipation or contemplation of this Credit Agreement, as fully described in
the financial statements referenced in Section 6.1, and (iv) other Investments
consistent with normal practices in the ordinary course of business.
6.14 Restricted Payments.
-------------------
Unless and until released from its obligations as a Credit Party hereunder,
HTI will not, nor will it permit any of its Subsidiaries to, make or permit, any
Restricted Payment other than the payment, directly or indirectly, of up to $900
million on the Columbia/HCA Debt and restricted payments by HTI to its
Subsidiaries.
6.15 Transactions with Affiliates.
----------------------------
Unless and until released from its obligations as a Credit Party hereunder,
except in connection with the Reorganization, HTI will not, nor will it permit
any of its Subsidiaries to, have any dealings with any officer, director,
shareholder, Subsidiary or Affiliate, unless and to the extent that such
dealings are made on terms as would be obtainable in a comparable transaction
made with an unrelated third party on an arms' length basis.
SECTION 7
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Lenders to make the Extensions of Credit hereunder to Triad,
Triad, by execution and delivery of an Assumption Agreement, hereby represents
and warrants to the Administrative Agent and to each Lender that:
7.1 Financial Condition.
-------------------
Each of the financial statements described below (copies of which have
heretofore been provided to the Administrative Agent for distribution to the
Lenders) have been prepared in
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accordance with GAAP consistently applied throughout the periods covered
thereby, are complete and correct in all material respects and present fairly
the financial condition (including disclosure of all material liabilities,
contingent or otherwise) and results of operations of the Persons and for the
periods specified, subject in the case of interim company-prepared statements to
normal year-end adjustments and the absence of footnotes:
(i) audited combined balance sheets for the net assets and
operations contributed to Holdings and its consolidated subsidiaries dated
as of December 31, 1996, December 31, 1997, and December 31, 1998, together
with related audited statements of income and cash flows certified by Ernst
& Young LLP, certified public accountants;
(ii) company-prepared consolidated balance sheets for Holdings and
its consolidated subsidiaries and Triad and its consolidated subsidiaries,
in each case dated as of March 31, 1999, together with related consolidated
statements of income and cash flows; and
(iii) after the Closing Date, the annual and quarterly financial
statements provided in accordance with Sections 8.1(a) and (b).
7.2 No Changes or Restricted Payments.
---------------------------------
Since the date of the most-recent annual audited financial statements
referenced in Section 7.1(i) hereof,
(i) for the period to the Closing Date, except as previously
disclosed in writing to the Administrative Agent and the Lenders, (A) there
have been no material sales, transfers or other dispositions of any
material part of the business or property of the members of the
Consolidated Group, nor have there been any material purchases or other
acquisitions of any business or property (including the capital stock of
any other person) by the members of the Consolidated Group, which are not
reflected in the company-prepared quarterly financial statements referenced
in Section 7.1(ii), and (B) no Restricted Payments have been declared or
paid by members of the Consolidated Group; and
(ii) there has been no circumstance, development or event which has
had or could reasonably be expected to have a Material Adverse Effect.
7.3 Organization; Existence; Compliance with Law.
--------------------------------------------
Each of the members of the Consolidated Group (a) is duly organized,
validly existing in good standing under the laws of the jurisdiction of its
incorporation or organization, (b) has the corporate or other necessary
organizational power and authority, and the legal right to own and operate its
Property, to lease the Property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
entity and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of Property or the conduct of its business
requires such qualification, other than in such jurisdictions where the failure
to be so qualified and in good standing has not had and could not have a
Material Adverse Effect, and (d) is
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in compliance with all Requirements of Law, except to the extent that the
failure to comply therewith has not had and could not be reasonably expected to
have a Material Adverse Effect.
7.4 Power; Authorization; Enforceable Obligations.
---------------------------------------------
Each of the Credit Parties has the corporate or other necessary
organizational power and authority, and the legal right, to make, deliver and
perform the Credit Documents to which it is a party and has taken all necessary
corporate or other action to authorize the execution, delivery and performance
by it of the Credit Documents to which it is a party. No consent or
authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with
acceptance of Extensions of Credit or the making of the guaranties hereunder or
with the execution, delivery or performance of any Credit Documents by the
Credit Parties (other than those which have been obtained, such filings as are
required by the SEC and to fulfill other reporting requirements with
Governmental Authorities) or with the validity or enforceability of any Credit
Document against the Credit Parties (except such filings as are necessary in
connection with the perfection of the Liens created by such Credit Documents).
Each Credit Document to which it is a party constitutes a legal, valid and
binding obligation of such Credit Party enforceable against such Credit Party in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
7.5 No Legal Bar.
------------
The execution, delivery and performance of the Credit Documents, the
borrowings hereunder and the use of the Extensions of Credit will not violate
any Requirement of Law or any Contractual Obligation of any member of the
Consolidated Group (except those as to which waivers or consents have been
obtained), and will not result in, or require, the creation or imposition of any
Lien on any of its respective properties or revenues pursuant to any Requirement
of Law or Contractual Obligation other than the Liens arising under or
contemplated in connection with the Credit Documents. No member of the
Consolidated Group is in default under or with respect to any of its Contractual
Obligations in any respect which has had or could reasonably be expected to have
a Material Adverse Effect.
7.6 No Material Litigation and Disputes.
-----------------------------------
(a) No unsealed litigation or, to the best knowledge of the Credit
Parties, claims, investigation, sealed litigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the best knowledge of the
Credit Parties, threatened by or against, any members of the Consolidated Group
or against any of their respective properties or revenues which (a) relate to
the Credit Documents or any of the transactions contemplated hereby or thereby
or (b) if adversely determined, could, after giving effect to any applicable
insurance and the obligations of Columbia/HCA under the Distribution Agreement
and the Tax Sharing Agreement, reasonably be expected to have a Material Adverse
Effect. Set forth on Schedule 7.6
------------
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is a summary of all claims, litigation, investigations and proceedings pending
or threatened by or against the members of the Consolidated Group or against any
of their respective properties or revenues known to the Credit Parties, and none
of such actions, individually or in the aggregate, have had or could reasonably
be expected to have a Material Adverse Effect.
(b) No default exists, nor, to the best knowledge of the Credit Parties,
is any such default asserted under any Contractual Obligations to which any
members of the Consolidated Group are party which individually or in the
aggregate has had or could reasonably be expected to have a Material Adverse
Effect.
7.7 No Defaults.
-----------
No Default or Event of Default has occurred and is continuing.
7.8 Ownership and Operation of Property.
-----------------------------------
Each of the members of the Consolidated Group (i) has good title to, or a
valid leasehold interest in, all its material real property, and good title to,
or a valid leasehold interest in, all its other material Property, and none of
such Property is subject to any Lien, except for Permitted Liens, and (ii) has
obtained all material licenses, permits, franchises or other certifications,
consents, approvals and authorizations, governmental or private, necessary to
the ownership of its Property and to the conduct of its business, which are
material to the Consolidated Group taken as a whole.
7.9 Intellectual Property.
---------------------
Each of the members of the Consolidated Group owns, or has the legal right
to use, all United States trademarks, tradenames, copyrights, patents,
technology, know-how, processes and other intellectual property, if any,
necessary for each of them to conduct its business as currently conducted (the
"Intellectual Property") except for those the failure to own or have such legal
---------------------
right to use have not had and could not be reasonably expected to have a
Material Adverse Effect. Set forth on Schedule 7.9 is a list of Intellectual
------------
Property owned or used by members of the Consolidated Group. Except as provided
on the foregoing Schedule, no claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does any
Credit Party know of any such claim, and the use of such Intellectual Property
by the members of the Consolidated Group does not infringe on the rights of any
Person, except for such claims and infringements that, in the aggregate, have
not had and could not be reasonably expected to have a Material Adverse Effect.
7.10 No Burdensome Restrictions.
--------------------------
No Requirement of Law or Contractual Obligation of the members of the
Consolidated Group has had or could be reasonably expected to have a Material
Adverse Effect.
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7.11 Taxes.
-----
Each of the members of the Consolidated Group has filed or caused to be
filed all income tax returns (federal, state, local and foreign) and all other
material tax returns which are required to be filed and has paid (i) all amounts
shown therein to be due (including interest and penalties) and (ii) all other
taxes, fees, assessments and other governmental charges (including mortgage
recording taxes, documentary stamp taxes and intangibles taxes) owing, except
for such taxes which are not yet delinquent or as are being contested in good
faith by proper proceedings and against which adequate reserves are being
maintained in accordance with GAAP. No tax claim or assessment has been asserted
against members of the Consolidated Group which has had or, if adversely
determined, could reasonably be expected to have a Material Adverse Effect .
7.12 ERISA
-----
Except as has not had and could not reasonably be expected to have a
Material Adverse Effect:
(a) During the five-year period prior to the date on which this
representation is made or deemed made: (i) no ERISA Event has occurred, and, to
the best knowledge of the Credit Parties, no event or condition has occurred or
exists as a result of which any ERISA Event could reasonably be expected to
occur, with respect to any Plan; (ii) no "accumulated funding deficiency," as
such term is defined in Section 302 of ERISA and Section 412 of the Internal
Revenue Code, whether or not waived, has occurred with respect to any Plan;
(iii) each Plan has been maintained, operated, and funded in compliance with its
own terms and in material compliance with the provisions of ERISA, the Internal
Revenue Code, and any other applicable federal or state laws; and (iv) no lien
in favor of the PBGC or a Plan has arisen or is reasonably likely to arise on
account of any Plan.
(b) The actuarial present value of all "benefit liabilities" (as defined
in Section 4001(a)(16) of ERISA), whether or not vested, under each Single
Employer Plan, as of the last annual valuation date prior to the date on which
this representation is made or deemed made (determined, in each case, in
accordance with Financial Accounting Standards Board Statement 87, utilizing the
actuarial assumptions used in such Plan's most recent actuarial valuation
report), did not exceed as of such valuation date the fair market value of the
assets of such Plan.
(c) No member of the Consolidated Group nor any ERISA Affiliate has
incurred, or, to the best knowledge of the Credit Parties, could be reasonably
expected to incur, any withdrawal liability under ERISA to any Multiemployer
Plan or Multiple Employer Plan. No member of the Consolidated Group nor any
ERISA Affiliate would become subject to any withdrawal liability under ERISA if
any member of the Consolidated Group or any ERISA Affiliate were to withdraw
completely from all Multiemployer Plans and Multiple Employer Plans as of the
valuation date most closely preceding the date on which this representation is
made or deemed made. No member of the Consolidated Group nor any ERISA Affiliate
has received any notification that any Multiemployer Plan is in reorganization
(within the meaning of Section 4241 of ERISA), is insolvent (within the meaning
of Section 4245 of ERISA), or has been terminated (within the meaning of Title
IV of ERISA), and no Multiemployer Plan is, to the best knowledge of the Credit
Parties, reasonably expected to be in reorganization, insolvent, or terminated.
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(d) No prohibited transaction (within the meaning of Section 406 of ERISA
or Section 4975 of the Internal Revenue Code) or breach of fiduciary
responsibility has occurred with respect to a Plan which has subjected or may
subject any member of the Consolidated Group or any ERISA Affiliate to any
liability under Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of
the Internal Revenue Code, or under any agreement or other instrument pursuant
to which any member of the Consolidated Group or any ERISA Affiliate has agreed
or is required to indemnify any person against any such liability.
(e) No member of the Consolidated Group nor any ERISA Affiliates has any
liability with respect to "expected post-retirement benefit obligations" within
the meaning of the Financial Accounting Standards Board Statement 106. Each Plan
which is a welfare plan (as defined in Section 3(1) of ERISA) to which Sections
601-609 of ERISA and Section 4980B of the Internal Revenue Code apply has been
administered in compliance in all material respects of such sections.
(f) Neither the execution and delivery of this Credit Agreement nor the
consummation of the financing transactions contemplated thereunder will involve
any transaction which is subject to the prohibitions of Sections 404, 406 or 407
of ERISA or in connection with which a tax could be imposed pursuant to Section
4975 of the Code. The representation by the Credit Parties in the preceding
sentence is made in reliance upon and subject to the accuracy of the Lenders'
representation in Section 12.15 with respect to their source of funds and is
subject, in the event that the source of the funds used by the Lenders in
connection with this transaction is an insurance company's general asset
account, to the application of Prohibited Transaction Class Exemption 95-60, 60
Fed. Reg. 35,925 (1995), compliance with the regulations issued under Section
401(c)(1)(A) of ERISA, or the issuance of any other prohibited transaction
exemption or similar relief, to the effect that assets in an insurance company's
general asset account do not constitute assets of an "employee benefit plan"
within the meaning of Section 3(3) of ERISA of a "plan" within the meaning of
Section 4975(e)(1) of the Code.
7.13 Governmental Regulations, Etc.
-----------------------------
(a) No part of the proceeds of the Extensions of Credit hereunder will be
used, directly or indirectly, for the purpose of purchasing or carrying any
"margin stock" within the meaning of Regulation U, or for the purpose of
purchasing or carrying or trading in any other securities. If requested by any
Lender or the Administrative Agent, the Borrower will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 referred to in said Regulation
U. No indebtedness being reduced or retired out of the proceeds of the
Extensions of Credit hereunder was or will be incurred for the purpose of
purchasing or carrying any margin stock within the meaning of Regulation U or
any "margin security" within the meaning of Regulation T. "Margin stock" within
the meanings of Regulation U does not constitute more than 25% of the value of
the consolidated assets of the Borrower and its Subsidiaries. None of the
transactions contemplated by this Credit Agreement (including, without
limitation, the direct or indirect use of the proceeds of the Loans) will
violate or result in a violation of the Securities Act of 1933, as amended, or
the Securities Exchange Act, as amended, or regulations issued pursuant thereto,
or Regulation T, U or X.
(b) None of the members of the Consolidated Group is subject to
regulation under the Public Utility Holdings Company Act of 1935, the Federal
Power Act or the Investment Company
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Act of 1940, each as amended. In addition, none of the members of the
Consolidated Group is (i) an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended, and is not
controlled by such a company, or (ii) a "holding company", or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company" or of
a "subsidiary" of a "holding company", within the meaning of the Public Utility
Holdings Company Act of 1935, as amended.
(c) No director, executive officer or principal shareholder of any member
of the Consolidated Group is a director, executive officer or principal
shareholder of any Lender. For the purposes hereof the terms "director",
"executive officer" and "principal shareholder" (when used with reference to any
Lender) have the respective meanings assigned thereto in Regulation O issued by
the Board of Governors of the Federal Reserve System.
7.14 Subsidiaries.
------------
Set forth on Schedule 7.14 are all the Subsidiaries of Holdings, including
-------------
the jurisdiction of organization, classes of Capital Stock or other equity
interests (including options, warrants, rights of subscription, conversion and
exchangeability and other similar rights) and ownership and ownership
percentages thereof. The outstanding shares of Capital Stock shown have been
validly issued, fully paid and are non-assessable and owned free of Liens other
than Permitted Liens. The foregoing shares of Capital Stock and equity interests
are not the subject of buy-sell, voting trust or other shareholder agreement
except as identified on Schedule 7.14.
-------------
7.15 Purpose of Extensions of Credit.
-------------------------------
The Loans will be used solely to (i) finance working capital, capital
expenditures and other corporate purposes (including transaction costs
associated with the Reorganization) and (ii) to repay existing Indebtedness of
HTI and its Subsidiaries including the Columbia/HCA Debt up to $900 million.
The Letters of Credit shall be used only for or in connection with appeal bonds,
reimbursement obligations arising in connection with surety and reclamation
bonds, reinsurance, domestic or international trade transactions and obligations
not otherwise aforementioned relating to transactions entered into by the
applicable account party in the ordinary course of business.
7.16 Environmental Matters.
---------------------
Except as has not had and could not reasonably be expected to result in a
Material Adverse Effect, to the knowledge of the Consolidated Group:
(a) All of the facilities and properties owned, leased or operated by any
member of the Consolidated Group (the "Subject Properties") and all of the
------------------
Consolidated Group's respective operations at the Subject Properties (the
"Businesses") are in compliance with all applicable Environmental Laws, and
----------
there is no violation of any Environmental Law with respect to the Subject
Properties or the Businesses.
(b) None of the Subject Properties contains any Materials of
Environmental Concern at, on or under the Subject Properties in amounts or
concentrations that constitute a violation of, or could give rise to liability
under, Environmental Laws.
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(c) Materials of Environmental Concern have not been generated, treated,
stored or disposed of at, on or under any of the Subject Properties or any other
location, or transported from the Subject Properties to or disposed of at any
other location, by or on behalf of any members of the Consolidated Group in
violation of any Environmental Law.
(d) No member of the Consolidated Group has (i) received any written
notice of any judicial proceeding or administrative action that is pending or
threatened under any Environmental Law with respect to any member of the
Consolidated Group, the Subject Properties or the Businesses; (ii) entered into
or been subject to any consent decrees or other decrees, consent orders,
administrative orders or compliance orders, or other administrative or judicial
requirements that remain outstanding under any Environmental Law; or (iii) been
subject to any governmental enforcement action under any Environmental Laws with
respect to the Subject Properties or any off-site waste disposal site .
(e) There has been no release of Materials of Environmental Concern at or
from the Subject Properties, or arising from or related to the operations of any
member of the Consolidated Group in connection with the Subject Properties or
the Businesses.
7.17 Year 2000 Compliance.
--------------------
The Borrower has (i) initiated a review and assessment of all areas within
its and each of its Subsidiaries' business and operations (including those
affected by suppliers, vendors and customers) that could be adversely affected
by the "Year 2000 Problem" (that is, the risk that computer applications used by
-----------------
the Borrower or any of its Subsidiaries (or suppliers, vendors and customers)
may be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31, 1999), (ii)
developed a plan and timeline for addressing the Year 2000 Problem on a timely
basis, and (iii) to date, implemented that plan in accordance with that
timetable. Based on the foregoing, the Borrower believes that all computer
applications (including those of its suppliers, vendors and customers (other
than any Governmental Authority or any Lender)) that are material to its or any
of its Subsidiaries' business and operations are reasonably expected on a timely
basis to be able to perform properly date-sensitive functions for all dates
before and after January 1, 2000 (that is, be "Year 2000 Compliant"), except to
-------------------
the extent that a failure to do so could not reasonably be expected to have a
Material Adverse Effect.
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7.18 No Material Misstatements.
-------------------------
None of (i) the information contained in the confidential information
memorandum, or (ii) any other information, reports, financial statements,
exhibits or schedules, taken as a whole, furnished by or on behalf of any member
of the Consolidated Group to the Administrative Agent or any Lender in
connection with the negotiation of the Credit Documents or included therein or
delivered pursuant thereto contained, contains or will contain any material
misstatement of fact or omitted, omits or will omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were, are or will be made, not materially misleading, provided that
--------
to the extent any such information, report, financial statement, exhibit or
schedule was based upon or constitutes a forecast or projection, Triad
represents only that it acted in good faith and utilized reasonable assumptions
and due care in the preparation of such information, report, financial
statement, exhibit or schedule.
7.19 Labor Matters.
-------------
Except as set forth in Schedule 7.19,
-------------
(i) There are no strikes or lockouts against any members of the
Consolidated Group pending or, to the best knowledge of the Credit Parties,
threatened;
(ii) the hours worked by and payments made to employees of the
Consolidated Group have not been in violation of the Fair Labor Standards
Act or any other applicable federal, state, local or foreign law dealing
with such matters in any case where a Material Adverse Effect has occurred
or could reasonably be expected to occur as a result of the violation
thereof;
(iii) all payments due from members of the Consolidated Group, or for
which any claim may be made against a member of the Consolidated Group, on
account of wages and employee health and welfare insurance and other
benefits, have been paid or accrued as a liability on the books of the
respective members of the Consolidated Group; and
(iv) none of the members of the Consolidated Group is party to a
collective bargaining agreement.
7.20 Security Documents.
------------------
After the HTI Release Event:
(a) Borrower Security Agreement. The Borrower Security Agreement is
---------------------------
effective to create in favor of the Administrative Agent, for the ratable
benefit of the holders of the Secured Obligations (as defined in the Borrower
Security Agreement), a legal valid and enforceable security interest in the
Collateral (as defined in the Borrower Security Agreement) owned by the Borrower
and, when financing statements in appropriate form are filed in the offices for
the locations in Schedule 2 and Schedule 3 to the Borrower Security Agreement,
the Borrower Security Agreement shall create a fully perfected Lien on, and
security interest in, all right, title
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and interest of the Borrower in such Collateral that may be perfected by filing,
recording or registering a financing statement under the Uniform Commercial Code
as in effect, in each case prior and superior in right to any other Lien on any
Collateral other than Permitted Liens.
(b) Guarantor Security Agreement. The Guarantor Security Agreement is
----------------------------
effective to create in favor of the Administrative Agent, for the ratable
benefit of the holders of the Secured Obligations (as defined in the Guarantor
Security Agreement), a legal valid and enforceable security interest in the
Collateral (as defined in the Guarantor Security Agreement) owned by the
Guarantors and, when financing statements in appropriate form are filed in the
offices for the locations in Schedule 2 and Schedule 3, the Guarantor Security
Agreement shall create a fully perfected Lien on, and security interest in, all
right, title and interest of the Guarantors in such Collateral that may be
perfected by filing, recording or registering a financing statement under the
Uniform Commercial Code as in effect, in each case prior and superior in right
to any other Lien on any Collateral other than Permitted Liens.
(c) Borrower Pledge Agreement. The Borrower Pledge Agreement is effective
-------------------------
to create in favor of the Administrative Agent, for the ratable benefit of the
holders of the Secured Obligations (as defined in the Borrower Pledge
Agreement), a legal valid and enforceable security interest in the Collateral
(as defined in the Borrower Pledge Agreement) and, when such Collateral is
delivered to the Administrative Agent, the Borrower Pledge Agreement shall
constitute a fully perfected first priority Lien on, and security interest in,
all right, title and interest of the Borrower in such Collateral, in each case
prior and superior in right to any other Lien.
(d) Guarantor Pledge Agreement. The Guarantor Pledge Agreement is
--------------------------
effective to create in favor of the Administrative Agent, for the ratable
benefit of the holders of the Secured Obligations (as defined in the Guarantor
Pledge Agreement), a legal valid and enforceable security interest in the
Collateral (as defined in the Guarantor Pledge Agreement) and, when such
Collateral is delivered to the Administrative Agent, the Guarantor Pledge
Agreement shall constitute a fully perfected first priority Lien on, and
security interest in, all right, title and interest of the pledgors thereunder
in such Collateral, in each case prior and superior in right to any other Lien.
(e) Intellectual Property.
---------------------
(i) The Borrower Security Agreement together with the Notice of Grant
of Security Interest in Trademarks and the Notice of Grant of Security
Interest in Patents when filed with the United States Patent and Trademark
Office, and the Notice of Grant of Security Interest in Copyrights filed
with the United States Copyright Office will create a fully perfected Lien
on, and security interest in, all right, title and interest of the Borrower
in all Patents and Patent Licenses, Trademarks and Trademark Licenses and
Copyrights and Copyright Licenses (each as defined in the Borrower Security
Agreement) and in which a security interest may be perfected by filing,
recording or registration of a Notice in the United States Patent and
Trademark Office and the United States Copyright Office, in each case prior
and superior in right to any other person other than Permitted Liens; and
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(ii) The Guarantor Security Agreement together with the Notice of
Grant of Security Interest in Trademarks and the Notice of Grant of
Security Interest in Patents when filed with the United States Patent and
Trademark Office, and the Notice of Grant of Security Interest in
Copyrights filed with the United States Copyright Office will create a
fully perfected Lien on, and security interest in, all right, title and
interest of the Guarantors in all Patents and Patent Licenses, Trademarks
and Trademark Licenses and Copyrights and Copyright Licenses (each as
defined in the Guarantor Security Agreement) and in which a security
interest may be perfected by filing, recording or registration of a Notice
in the United States Patent and Trademark Office and the United States
Copyright Office, in each case prior and superior in right to any other
person other than Permitted Liens.
(f) Mortgages. The Mortgages are effective to create in favor of the
---------
Administrative Agent, for the ratable benefit of the holders of the Secured
Obligations identified therein, a legal, valid and enforceable Lien on all of
the respective grantors' right, title and interest in and to the Mortgaged
Properties thereunder and the proceeds thereof, and when the Mortgages are
recorded in the appropriate offices and the proper amount of mortgage recording
or similar taxes (if any) are paid and when the financing statements are duly
filed in the appropriate public records, the Mortgages shall constitute a fully
perfected Lien on, and security interest in, all right, title and interest of
the grantors in such Mortgaged Properties and the proceeds thereof, in each case
prior and superior to the right of any other Lien other than Permitted Liens.
7.21 Location of Real Property and Leased Premises.
---------------------------------------------
Set forth on Schedule 7.21(a) is a complete and correct list of all of the
----------------
Mortgaged Properties. Set forth on Schedule 7.21(b) is a list of all locations
----------------
where any tangible personal property of any member of the Consolidated Group is
located, including street address and state where located. Set forth on Schedule
--------
7.21(c) is the chief executive office and principal place of business of each
- -------
member of the Consolidated Group.
7.22 Solvency.
--------
Immediately after giving effect to the Reorganization and the initial
Extensions of Credit hereunder, (i) the fair value of the assets of each Credit
Party will exceed its debts and liabilities, subordinated, contingent or
otherwise; (ii) the present fair saleable value of the property of each Credit
Party will be greater than the amount that will be required to pay the probable
liability of its debts and other liabilities, subordinated, contingent or
otherwise, as such debts and other liabilities become absolute and mature; and
(iii) each Credit Party will not have unreasonably small capital with which to
conduct the business in which it is engaged as such business is now conducted
and is proposed to be conducted following the Closing Date.
7.23 Distribution Agreement.
----------------------
The Distribution Agreement has been duly authorized, executed and delivered
by Holdings and Triad, and to the best of such parties' knowledge, the other
parties thereto, and is a legal, valid and binding obligation of Holdings and
Triad and, to the best of such parties' knowledge, the other parties thereto
except as may be limited by applicable bankruptcy, insolvency, reorganization,
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moratorium or similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law). The Distribution Agreement has not been
amended or modified, nor have any material provisions been the subject of any
waiver, except as disclosed to the Administrative Agent and the Lenders.
SECTION 8
AFFIRMATIVE COVENANTS
---------------------
Triad, by execution and delivery of an Assumption Agreement, hereby
covenants and agrees that, after the Triad Group Joinder Event, so long as this
Credit Agreement is in effect or any amounts payable hereunder or under any
other Credit Document shall remain outstanding or any Letter of Credit is
outstanding, and until all of the Commitments hereunder shall have terminated:
8.1 Information Covenants.
---------------------
The members of the Consolidated Group will furnish, or cause to be
furnished, to the Administrative Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as available, and in any
---------------------------
event within 90 days after the close of each fiscal year of the
Consolidated Group, a consolidated balance sheet and income statement of
the members of the Consolidated Group as of the end of such fiscal year,
together with related consolidated statements of operations and retained
earnings and of cash flows for such fiscal year, in each case setting forth
in comparative form consolidated figures for the preceding fiscal year, all
such financial information described above to be in reasonable form and
detail and audited by independent certified public accountants of
recognized national standing reasonably acceptable to the Administrative
Agent and whose opinion shall be to the effect that such financial
statements have been prepared in accordance with GAAP (except for changes
with which such accountants concur) and shall not be limited as to the
scope of the audit or qualified as to the status of the members of the
Consolidated Group as a going concern or any other material qualifications
or exceptions.
(b) Quarterly Financial Statements. As soon as available, and in any
------------------------------
event within 45 days after the close of each fiscal quarter of the
Consolidated Group (other than the fourth fiscal quarter, in which case 90
days after the end thereof) a consolidated balance sheet and income
statement of the members of the Consolidated Group as of the end of such
fiscal quarter, together with related consolidated statements of operations
and retained earnings and of cash flows for such fiscal quarter, in each
case setting forth in comparative form consolidated figures for the
corresponding period of the preceding fiscal year, all such financial
information described above to be in reasonable form and detail and
reasonably acceptable to the Administrative Agent, and accompanied by a
certificate of an Executive Officer of the Borrower to the effect that such
quarterly financial statements fairly present in all material respects the
financial condition of the members of the Consolidated Group and have been
prepared in accordance with GAAP, subject to changes resulting from audit
and normal year-end audit adjustments.
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(c) Monthly Financial Statements. As soon as available, and in any
----------------------------
event within 30 days after the close of each fiscal month of the
Consolidated Group, a summary of operating statistics, including revenues,
EBITDA and net income, on a hospital-by-hospital basis certified by an
Executive Officer of the Borrower to be true and correct in all material
respects to the best of his knowledge.
(d) Officer's Certificate. At the time of delivery of the financial
---------------------
statements provided for in Sections 8.1(a) and 8.1(b) above, a certificate
of an Executive Officer of the Borrower substantially in the form of
Schedule 8.1(c), (i) demonstrating compliance with the financial covenants
---------------
contained in Section 8.11 by calculation thereof as of the end of each such
fiscal period and (ii) stating that no Default or Event of Default exists,
or if any Default or Event of Default does exist, specifying the nature and
extent thereof and what action the Credit Parties propose to take with
respect thereto.
(e) Annual Business Plan and Budgets. At least 30 days prior to the
--------------------------------
end of each fiscal year of the Borrower, beginning with the fiscal year
ending December 31, 1999, an annual business plan and budget of the members
of the Consolidated Group containing, among other things, pro forma
financial statements for the next fiscal year.
(f) Compliance With Certain Provisions of the Credit Agreement.
----------------------------------------------------------
Within 90 days after the end of each fiscal year of the Credit Parties, a
certificate containing information regarding the amount of all Asset
Dispositions, Debt Transactions and Equity Transactions that were made
during the prior fiscal year.
(g) Accountant's Certificate. Within the period for delivery of the
------------------------
annual financial statements provided in Section 8.1(a), a certificate of
the accountants conducting the annual audit stating that they have reviewed
this Credit Agreement and stating further whether, in the course of their
audit, they have become aware of any Default or Event of Default and, if
any such Default or Event of Default exists, specifying the nature and
extent thereof.
(h) Auditor's Reports. Promptly upon receipt thereof, a copy of any
-----------------
other report or "management letter" submitted by independent accountants to
any member of the Consolidated Group in connection with any annual, interim
or special audit of the books of such Person.
(i) Reports. Promptly upon transmission or receipt thereof, (i)
-------
copies of any filings and registrations with, and reports to or from, the
Securities and Exchange Commission, or any successor agency, and copies of
all financial statements, proxy statements, notices and reports as any
member of the Consolidated Group shall send to its shareholders or to a
holder of any Indebtedness owed by any member of the Consolidated Group in
its capacity as such a holder and (ii) upon the request of the
Administrative Agent, all reports and written information to and from the
United States Environmental Protection Agency, or any state or local agency
responsible for environmental matters, the United States Occupational
Health and Safety Administration, or any state or local agency
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responsible for health and safety matters, or any successor agencies or
authorities concerning environmental, health or safety matters.
(j) Notices. Upon any Executive Officer of a Credit Party obtaining
--------
knowledge thereof, the Credit Parties will give written notice to the
Administrative Agent immediately of (i) the occurrence of a Default or
Event of Default, specifying the nature and existence thereof and what
action the Credit Parties propose to take with respect thereto, and (ii)
the occurrence of any of the following with respect to any member of the
Consolidated Group (A) the pendency or commencement of any litigation,
arbitral or governmental proceeding against such Person which if adversely
determined is likely to have a Material Adverse Effect or (B) the
institution of any proceedings against such Person with respect to, or the
receipt of notice by such Person of potential liability or responsibility
for violation, or alleged violation of any federal, state or local law,
rule or regulation, including but not limited to, Environmental Laws, the
violation of which could have a Material Adverse Effect.
(k) ERISA. Upon any Executive Officer of a Credit Party obtaining
-----
knowledge thereof, the Credit Parties will give written notice to the
Administrative Agent promptly (and in any event within five Business Days)
of: (i) any event or condition, including, but not limited to, any
Reportable Event, that constitutes, or might reasonably lead to, an ERISA
Event; (ii) with respect to any Multiemployer Plan, the receipt of notice
as prescribed in ERISA or otherwise of any withdrawal liability assessed
against the Credit Parties or any ERISA Affiliates, or of a determination
that any Multiemployer Plan is in reorganization or insolvent (both within
the meaning of Title IV of ERISA); (iii) the failure to make full payment
on or before the due date (including extensions) thereof of all amounts
which any member of the Consolidated Group or any ERISA Affiliate is
required to contribute to each Plan pursuant to its terms and as required
to meet the minimum funding standard set forth in ERISA and the Code with
respect thereto; or (iv) any change in the funding status of any Plan that
could have a Material Adverse Effect, together with a description of any
such event or condition or a copy of any such notice and a statement by an
Executive Officer of the Borrower briefly setting forth the details
regarding such event, condition, or notice, and the action, if any, which
has been or is being taken or is proposed to be taken by the Credit Parties
with respect thereto. Promptly upon request, the Credit Parties shall
furnish the Administrative Agent and the Lenders with such additional
information concerning any Plan as may be reasonably requested, including,
but not limited to, copies of each annual report/return (Form 5500 series),
as well as all schedules and attachments thereto required to be filed with
the Department of Labor and/or the Internal Revenue Service pursuant to
ERISA and the Code, respectively, for each "plan year" (within the meaning
of Section 3(39) of ERISA).
(l) Environmental.
-------------
(i) Upon the reasonable written request of the Administrative
Agent following the occurrence of any event or the discovery of any
condition which the Administrative Agent or the Required Lenders
reasonably believe has caused (or could be reasonably expected to
cause) the representations and warranties set forth in Section 7.16 to
be untrue, the Credit Parties will furnish or cause to be furnished
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to the Administrative Agent, at the Credit Parties' expense, a report
of an environmental assessment of reasonable scope, form and depth,
(including, where appropriate, soil or groundwater sampling) by a
consultant possessing relevant qualifications and skills to undertake
such an environmental assessment of the nature and extent of the
presence of any Materials of Environmental Concern on any Subject
Properties (as defined in Section 7.16) and as to the compliance by
any member of the Consolidated Group with Environmental Laws at such
Subject Properties. If the Credit Parties fail to deliver such an
environmental report within seventy-five (75) days after receipt of
such written request then the Administrative Agent may arrange for
same, and the members of the Consolidated Group hereby grant to the
Administrative Agent and their representatives access to the Subject
Properties to reasonably undertake such an assessment (including,
where appropriate, soil or groundwater sampling). The reasonable cost
of any assessment arranged for by the Administrative Agent pursuant to
this provision will be payable by the Credit Parties on demand and
added to the obligations secured by the Collateral Documents.
(ii) The members of the Consolidated Group will conduct and
complete all investigations, studies, sampling, and testing and all
remedial, removal, and other actions necessary to address all
Materials of Environmental Concern on any of the Subject Properties to
the extent required to comply with all Environmental Laws and with the
orders and directives of all Governmental Authorities issued
thereunder to the extent that any failure to comply could reasonably
be expected to result in a Material Adverse Effect. However, nothing
in this Credit Agreement shall limit any rights of the members of the
Consolidated Group under any Environmental Laws or other Requirements
of Law to seek to require third parties to conduct, complete, or pay
for any investigations, studies, sampling, testing, or remedial,
removal, or other actions necessary to address Materials of
Environmental Concern on, from or affecting any of the Subject
Properties to the extent necessary to comply with all applicable
Environmental Laws.
(iii) Notwithstanding this paragraph 8.1(l), nothing in this
Credit Agreement shall prevent the members of the Consolidated Group
from exercising any rights to contest or appeal any order or directive
issued under Environmental Laws by a Governmental Authority prior to
undertaking any investigations, studies, sampling, testing, or
remedial, removal, or other actions required thereunder.
(m) Additional Patents and Trademarks. At the time of delivery of the
---------------------------------
financial statements and reports provided for in Section 8.1(a), a report
signed by an Executive Officer of the Borrower setting forth (i) a list of
registration numbers for all patents, trademarks, service marks, tradenames
and copyrights awarded to any member of the Consolidated Group since the
last day of the immediately preceding fiscal year and (ii) a list of all
patent applications, trademark applications, service mark applications,
trade name applications and copyright applications submitted by any member
of the Consolidated Group since the last day of the immediately preceding
fiscal year and the status of each such application, all in such form as
shall be reasonably satisfactory to the Administrative Agent.
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(n) Other Information. With reasonable promptness upon any such
-----------------
request, such other information regarding the business, properties or
financial condition of any member of the Consolidated Group as the
Administrative Agent or the Required Lenders may reasonably request.
8.2 Preservation of Existence and Franchises.
----------------------------------------
Except as a result of or in connection with a dissolution, merger or
disposition of a Subsidiary permitted under Section 9.4 or Section 9.5, each
member of the Consolidated Group will do all things necessary to preserve and
keep in full force and effect its existence, rights, franchises and authority.
8.3 Books and Records.
-----------------
Each member of the Consolidated Group will keep complete and accurate books
and records of its transactions in accordance with good accounting practices on
the basis of GAAP (including the establishment and maintenance of appropriate
reserves).
8.4 Compliance with Law.
-------------------
Each member of the Consolidated Group will comply with all laws, rules,
regulations and orders, and all applicable restrictions imposed by all
Governmental Authorities, applicable to it and its Property if noncompliance
with any such law, rule, regulation, order or restriction could have a Material
Adverse Effect.
8.5 Payment of Taxes and Other Indebtedness.
---------------------------------------
Each member of the Consolidated Group will pay and discharge (a) all taxes,
assessments and governmental charges or levies imposed upon it, or upon its
income or profits, or upon any of its Properties, before they shall become
delinquent, (b) all lawful claims (including claims for labor, materials and
supplies) which, if unpaid, might give rise to a Lien upon any of its
properties, and (c) except as prohibited hereunder, all of its other
Indebtedness as it shall become due; provided, however, that no member of the
-------- -------
Consolidated Group shall be required to pay any such tax, assessment, charge,
levy, claim or Indebtedness (i) which is being contested in good faith by
appropriate proceedings and as to which adequate reserves therefor have been
established in accordance with GAAP or (ii) if the failure to make any such
payment (A) would not give rise to an immediate right to foreclose on a Lien
securing such amounts and (B) could not have a Material Adverse Effect.
8.6 Insurance.
---------
(a) Each member of the Consolidated Group will at all times maintain
in full force and effect insurance (including worker's compensation
insurance, liability insurance, casualty insurance and business
interruption insurance) in such amounts, covering such risks and
liabilities and with such deductibles or self-insurance retentions as are
in accordance with normal industry practice (or as otherwise required by
the Collateral Documents). The Administrative Agent, for the ratable
benefit of the Lenders, shall be
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named as loss payee or mortgagee, as its interest may appear, and/or
additional insured with respect to any such insurance providing coverage in
respect of any Collateral, and each provider of any such insurance shall
agree, by endorsement upon the policy or policies issued by it or by
independent instruments furnished to the Administrative Agent, that it will
give the Administrative Agent thirty (30) days prior written notice before
any such policy or policies shall be altered or canceled, and that no act
or default of any member of the Consolidated Group or any other Person
shall affect the rights of the Administrative Agent or the Lenders under
such policy or policies. The present insurance coverage of the members of
the Consolidated Group is outlined as to carrier, policy number, expiration
date, type and amount on Schedule 8.6.
------------
(b) The proceeds from insurance may be held by the Administrative
Agent in a collateral account or delivered over to the applicable member of
the Consolidated Group, in the discretion of the Administrative Agent.
Amounts held in a collateral account will be disbursed to the applicable
member of the Consolidated Group on evidence of repair, replacement or
reinvestment in the same or similar property. The members of the
Consolidated Group will account for amounts delivered over to them and the
uses to which the proceeds are put and make payments as may be required
hereunder by Section 3.3(b)(ii) or otherwise.
8.7 Maintenance of Property.
-----------------------
Each member of the Consolidated Group will maintain and preserve its
properties and equipment material to the conduct of its business in good repair,
working order and condition, normal wear and tear, obsolescence and casualty and
condemnation excepted, and will make, or cause to be made, in such properties
and equipment from time to time all repairs, renewals, replacements, extensions,
additions, betterments and improvements thereto as may be needed or proper, to
the extent and in the manner customary for companies in similar businesses.
8.8 Performance of Obligations.
--------------------------
Each member of the Consolidated Group will perform in all material respects
all of its obligations under the terms of all material agreements, indentures,
mortgages, security agreements and other debt instruments to which it is a party
or by which it is bound.
8.9 Use of Proceeds.
---------------
The Borrower will use the proceeds of Extensions of Credit solely for the
purposes set forth in Section 7.15.
8.10 Audits/Inspections.
------------------
Upon reasonable notice and during normal business hours, each member of the
Consolidated Group will permit representatives appointed by the Administrative
Agent, including, without limitation, independent accountants, agents,
attorneys, and appraisers to visit and inspect such member's property, including
its books and records, its accounts receivable and inventory, its facilities and
its other business assets, and to make photocopies or photographs thereof and to
write
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down and record any information such representative obtains and shall permit the
Administrative Agent or its representatives to investigate and verify the
accuracy of information provided to the Administrative Agent or the Lenders and
to discuss all such matters with the officers, employees and, subject to the
right of the representatives of the Consolidated Group to be present,
representatives of such Person (in each case excluding patient medical records
and any other material which is confidential pursuant to any Requirement of
Law). The Credit Parties agree that the Administrative Agent, and its
representatives, may conduct an annual audit of the Collateral, at the expense
of the Borrower.
8.11 Financial Covenants.
-------------------
(a) Consolidated Net Worth. At all times, Consolidated Net Worth shall be
----------------------
not less than the sum of (i) $375 million plus (ii) as of the end of each fiscal
----
quarter to occur after the Closing Date, an amount equal to ninety percent (90%)
of Consolidated Net Income (but not less than zero) for such fiscal quarter,
such increases to be cumulative, plus (iii) an amount equal to one hundred
----
percent (100%) of net proceeds from Equity Transactions occurring after the
Closing Date .
(b) Consolidated Senior Leverage Ratio. As of the end of each fiscal
----------------------------------
quarter set forth below, the Consolidated Senior Leverage Ratio shall be not
greater than:
Fiscal Quarter Ending
---------------------
June 30, 1999 2.75:1.0
September 30, 1999 2.75:1.0
December 31, 1999 2.75:1.0
March 31, 2000 2.25:1.0
June 30, 2000 2.00:1.0
September 30, 2000 2.00:1.0
December 31, 2000 2.00:1.0
March 31, 2001 and thereafter 1.75:1.0
(c) Consolidated Total Leverage Ratio. As of the end of each fiscal
---------------------------------
quarter set forth below, the Consolidated Total Leverage Ratio shall be not
greater than:
Fiscal Quarter Ending
---------------------
June 30, 1999 4.95:1.0
September 30, 1999 4.95:1.0
December 31, 1999 4.50:1.0
March 31, 2000 4.25:1.0
June 30, 2000 4.00:1.0
September 30, 2000 4.00:1.0
December 31, 2000 4.00:1.0
March 31, 2001 and thereafter 3.50:1.0
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(d) Consolidated Fixed Charge Coverage Ratio. As of the end of each
----------------------------------------
fiscal quarter, the Consolidated Fixed Charge Coverage Ratio shall be not less
than:
Fiscal Quarter Ending
---------------------
June 30, 1999 N/A
September 30, 1999 N/A
December 31, 1999 1.75:1.0
March 31, 2000 1.75:1.0
June 30, 2000 1.75:1.0
September 30, 2000 1.75:1.0
December 31, 2000 0.85:1.0
March 31, 2001 1.00:1.0
June 30, 2001 1.00:1.0
September 30, 2001 and thereafter 1.15:1.0
(e) Capital Expenditures. Consolidated Capital Expenditures for each
--------------------
fiscal year set forth below shall not exceed:
Fiscal year 1999 $120,000,000
Fiscal year 2000 $ 92,000,000
Fiscal year 2001 $ 94,000,000
Fiscal year 2002 $ 96,300,000
Fiscal year 2003 $ 98,600,000
Fiscal year 2004 $102,500,000
Fiscal year 2005 $106,800,000
plus (a) the unused amount available for Consolidated Capital Expenditures under
this Section 8.11 for the immediately preceding fiscal year (excluding any carry
forward available from any prior fiscal year), (b) the amount of any Net
Proceeds from Approved Asset Dispositions permitted to be retained by the
Borrower pursuant to Section 3.3(b)(ii)(A) to the extent that the Borrower
applies such amount to Consolidated Capital Expenditures within twelve (12)
months of the date of such Approved Asset Disposition and (c) the amount of any
Consolidated Capital Expenditures which constitute Permitted Acquisitions
hereunder.
8.12 Additional Guarantors.
---------------------
As soon as practicable and in any event within 30 days after any Person
becomes a direct or indirect Subsidiary of Holdings, the Borrower shall provide
the Administrative Agent with written notice thereof setting forth information
in reasonable detail describing all of the Property of such Person and shall (a)
if such Person is a Domestic Subsidiary, cause such Person to execute a Guaranty
Joinder Agreement in substantially the same form as Schedule 1 to the Guaranty
Agreement, (b) if such Person is a Domestic Subsidiary, cause 100% of the issued
and outstanding Capital Stock of such Person owned by any Credit Party to be
delivered to the Administrative Agent (together with undated stock powers signed
in blank) and pledged to the Administrative Agent pursuant to an appropriate
pledge agreement(s) in substantially the form of the Guarantor Pledge Agreement
and otherwise in form acceptable to the Administrative Agent,
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(c) if such Person is a direct Foreign Subsidiary of a Credit Party, cause 65%
(or such greater percentage which would not result in material adverse tax
consequences) of the issued and outstanding Capital Stock entitled to vote
(within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the issued
and outstanding Capital Stock not entitled to vote (within the meaning of Treas.
Reg. Section 1.956-2(c)(2)) of such Person to be delivered to the Administrative
Agent (together with undated stock powers signed in blank (unless, with respect
to a Foreign Subsidiary, such stock powers are deemed unnecessary by the
Administrative Agent in its reasonable discretion under the law of the
jurisdiction of incorporation of such Person)) and pledged to the Administrative
Agent pursuant to an appropriate pledge agreement(s) in substantially the form
of the Guarantor Pledge Agreement and otherwise in form acceptable to the
Administrative Agent and (d) cause such Person to (i) if such Person is a
Domestic Subsidiary which has any Eligible Real Property, deliver to the
Administrative Agent, with respect to such Eligible Real Property, documents,
instruments and other items of the types required to be delivered pursuant to
Section 5.5(g) all in form, content and scope reasonably satisfactory to the
Administrative Agent and (ii) deliver such other documentation as the
Administrative Agent may reasonably request in connection with the foregoing,
including, without limitation, appropriate UCC-1 financing statements, real
estate title insurance policies, environmental reports, landlord's waivers,
certified resolutions and other organizational and authorizing documents of such
Person, favorable opinions of counsel to such Person (which shall cover, among
other things, the legality, validity, binding effect and enforceability of the
documentation referred to above and the perfection of the Administrative Agent's
liens thereunder) and other items of the types required to be delivered pursuant
to Section 5.5 (e), (f), (g), (h) and (i), all in form, content and scope
reasonably satisfactory to the Administrative Agent.
8.13 Pledged Assets.
--------------
Each Credit Party will cause (i) all of its owned personal property located
in the United States, (ii) all of its owned real property located in the United
States other than Excluded Property and (iii) to the extent deemed to be
material by the Administrative Agent or the Required Lenders, (A) all of its
owned real property located outside of the United States other than Excluded
Property and (B) all of its leased real property (wherever located) other than
Excluded Property, to be subject at all times to first priority, perfected and,
in the case of real property (whether leased or owned), title insured Liens in
favor of the Administrative Agent to secure such party's obligations under the
Credit Documents pursuant to the terms and conditions of the Collateral
Documents or, with respect to any such property acquired subsequent to the
Closing Date, such other additional security documents as the Administrative
Agent shall reasonably request, subject in any case to Permitted Liens. With
respect to any real property acquired by any Credit Party subsequent to the
Closing Date and required by this Section 8.13 to be pledged to the
Administrative Agent, such Person will cause to be delivered to the
Administrative Agent with respect to such real property documents, instruments
and other items of the types required to be delivered pursuant to Section 5.5(g)
in form acceptable to the Administrative Agent. Without limiting the generality
of the above, the Credit Parties will cause (i) 100% of the issued and
outstanding Capital Stock of the Borrower, (ii) 100% of the issued and
outstanding Capital Stock of each Domestic Subsidiary and (iii) 65% (or such
greater percentage which would not result in material adverse tax consequences)
of the issued and outstanding Capital Stock entitled to vote (within the meaning
of Treas. Reg. Section 1.956-2(c)(2)) and 100% of the
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issued and outstanding Capital Stock not entitled to vote (within the meaning of
Treas. Reg. Section 1.956-2(c)(2)) of each Foreign Subsidiary directly owned by
Holdings or any Domestic Subsidiary to be subject at all times to a first
priority, perfected Lien in favor of the Administrative Agent pursuant to the
terms and conditions of the Collateral Documents or such other security
documents as the Administrative Agent shall reasonably request.
If, subsequent to the Closing Date, a Credit Party shall (a) acquire any
intellectual property, securities, instruments, chattel paper or other personal
property required to be pledged to the Administrative Agent as Collateral
hereunder or under any of the Collateral Documents or (b) acquire or lease any
real property, the Credit Parties shall promptly notify the Administrative Agent
of same. Each Credit Party shall, and shall cause each of its Subsidiaries to,
take such action (including but not limited to the actions set forth in Sections
5.3(e) and (f)) at its own expense as requested by the Administrative Agent to
ensure that the Administrative Agent has a first priority perfected Lien to
secure such party's obligations under the Credit Documents in (i) all owned real
property and personal property of the Credit Parties located in the United
States, (ii) to the extent deemed to be material by the Administrative Agent or
the Required Lenders in its or their sole reasonable discretion, all other owned
real and personal property of the Credit Parties and (iii) all leased real
property located in the United States, subject in each case only to Permitted
Liens. Each Credit Party shall, and shall cause each of its Subsidiaries to,
adhere to the covenants regarding the location of personal property as set forth
in the Security Agreements.
8.14 Year 2000 Compliance.
--------------------
Each member of the Consolidated Group will promptly notify the
Administrative Agent in the event any member of the Consolidated Group discovers
or determines that any computer application (including those of its suppliers,
vendors and customers) that is material to its or any of its Subsidiaries'
business and operations will not be Year 2000 Compliant, except to the extent
that such failure could not reasonably be expected to have a Material Adverse
Effect.
SECTION 9
NEGATIVE COVENANTS
------------------
Triad, by execution and delivery of an Assumption Agreement, hereby
covenants and agrees that, after the Triad Group Joinder Event, so long as this
Credit Agreement is in effect or any amounts payable hereunder or under any
other Credit Document shall remain outstanding or any Letter of Credit is
outstanding, and until all of the Commitments hereunder shall have terminated:
9.1 Indebtedness.
------------
No member of the Consolidated Group will contract, create, incur, assume or
permit to exist any Indebtedness, except:
(a) Indebtedness existing or arising under this Credit Agreement or
the other Credit Documents;
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(b) Indebtedness set forth on Schedule 9.1, and renewals, refinancings
------------
and extensions thereof on terms and conditions no less favorable to the
members of the Consolidated Group than for such existing Indebtedness;
(c) Capital Lease Obligations and Indebtedness incurred, in each case,
to provide all or a portion of the purchase price or costs of construction
of fixed assets, or in the case of a Sale and Leaseback Transaction, to
finance the value of such asset owned by a member of the Consolidated
Group, and renewals, refinancings and extensions thereof; provided that (i)
--------
such Indebtedness when incurred shall not exceed the purchase price or cost
of construction of such asset or, in the case of a Sale and Leaseback
Transaction or refinancing transaction, the fair market value of such
asset, (ii) no such Indebtedness shall be refinanced for a principal amount
in excess of the principal balance outstanding thereon at the time of such
refinancing, and (iii) the total aggregate outstanding principal amount of
all such Indebtedness shall not exceed $5,000,000 at any one time
outstanding;
(d) Indebtedness owing under interest rate, commodities and foreign
currency exchange protection agreements entered into in the ordinary course
of business to manage existing or anticipated risks and not for speculative
purposes;
(e) unsecured intercompany Indebtedness owing by a member of the
Consolidated Group to another member of the Consolidated Group (subject,
however, to the limitations of Section 9.6 and Permitted Investments
thereunder, in the case of the member of the Consolidated Group extending
the loan, advance or credit);
(f) the Senior Subordinated Notes in an aggregate principal amount up
to $325 million;
(g) other unsecured Funded Debt in an aggregate outstanding principal
amount of up to $5,000,000 at any time;
(h) Guaranty Obligations of Indebtedness permitted hereunder (which
guaranty obligations in respect of Subordinated Debt shall be similarly
subordinated).
9.2 Liens.
-----
No member of the Consolidated Group will contract, create, incur, assume or
permit to exist any Lien with respect to any of its Property, whether now owned
or after acquired, except for Permitted Liens.
9.3 Nature of Business.
------------------
No member of the Consolidated Group will substantively alter the character
or conduct of the business conducted by such Person as of the date of the Triad
Group Joinder Event.
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9.4 Merger and Consolidation, Dissolution and Acquisitions.
------------------------------------------------------
(a) No member of the Consolidated Group will enter into any transaction of
merger or consolidation, other than the Reorganization, except that
(i) a Domestic Credit Party other than Holdings may be party to a
transaction of merger or consolidation with another Domestic Credit Party
other than Holdings, provided that if the Borrower is a party to such
--------
transaction, it shall be the surviving entity;
(ii) a Foreign Subsidiary may be party to a transaction of merger or
consolidation with a Subsidiary of the Borrower, provided that (A) if a
--------
Domestic Subsidiary is a party thereto, it shall be the surviving entity
and if such Domestic Subsidiary is not already a Credit Party, it shall
execute and deliver such joinder and pledge agreements as may be necessary
for compliance with the provisions of Sections 8.12 and 8.13, and (B) if a
Foreign Subsidiary is the other party thereto, the surviving entity shall
be a Foreign Subsidiary and the Borrower and its Subsidiaries shall be in
compliance with the pledge requirements of Sections 8.12 and 8.13;
(iii) a Domestic Subsidiary of the Borrower may be a party to a
transaction of merger or consolidation with a person other than Holdings,
the Borrower or their Subsidiaries, provided that (A) the surviving entity
--------
shall be a Domestic Subsidiary of the Borrower and shall execute and
deliver such joinder and pledge agreements as may be necessary for
compliance with the provisions of Sections 8.12 and 8.13, (B) no Default or
Event of Default shall exist immediately after giving effect thereto, and
(C) the transaction shall otherwise constitute a Permitted Acquisition;
(iv) a Subsidiary of the Borrower may enter into a transaction of
merger or consolidation in connection with an Asset Disposition permitted
under Section 9.5.
(b) No member of the Consolidated Group, other than a wholly-owned
Subsidiary of the Borrower (and then only if no Material Adverse Effect shall
result on account thereof), may dissolve, liquidate or wind up its affairs.
(c) No member of the Consolidated Group shall purchase or otherwise
acquire the Capital Stock of a Person which is not a member of the Consolidated
Group, nor shall any member of the Consolidated Group purchase or otherwise
acquire the assets, property and/or operations of a Person which is not a member
of the Consolidated Group, unless:
(i) in the case of an acquisition of Capital Stock, after giving
effect to such acquisition,
(A) if the acquisition is not of a controlling interest in the
subject Person such that after giving effect thereto the subject
Person will not be a Subsidiary, then the acquisition shall constitute
a Permitted Investment hereunder; and
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(B) if the acquisition is of a controlling interest in the
subject Person such that after giving effect thereto the subject
Person will be a Subsidiary, then (I) it shall be a Subsidiary of the
Borrower, (II) it shall execute and deliver such joinder and pledge
agreements as may be necessary for compliance with the provisions of
Sections 8.12 and 8.13, (III) no Default or Event of Default shall
exist immediately after giving effect thereto, and (IV) it shall
otherwise constitute a Permitted Acquisition.
(ii) in the case of an acquisition of assets, property and/or
operations, after giving effect to such acquisition (A) such joinder and
pledge agreements shall be executed, and other actions taken, as may be
necessary to perfect the security interests therein in accordance with the
provisions of Section 8.13, and (B) no Default or Event of Default shall
exist immediately after giving effect thereto, and (C) the acquisition
shall otherwise constitute a Permitted Acquisition.
9.5 Asset Dispositions.
------------------
No member of the Consolidated Group will make any Asset Disposition
(including, without limitation, any Sale and Leaseback Transaction), other than
the Reorganization and the Approved Asset Dispositions, unless
(i) the sale, lease or other disposition is to a Domestic Credit
Party;
(ii) the sale, transfer or disposition is in connection with an
asset swap which otherwise constitutes a Permitted Acquisition; or
(iii) it is the disposition of Overland Park Regional Medical Center
or Independence Regional Health Center in accordance with the terms of the
existing leases relating thereto;
(iv) in all other cases, (A) the consideration paid therefor shall
consist solely of cash and Cash Equivalents, (B) if the subject transaction
is a Sale and Leaseback Transaction, such transaction shall be permitted by
Section 9.13, (C) if the subject transaction involves Capital Stock of a
Subsidiary, the subject transaction is of a controlling interest in such
Subsidiary, (D) the aggregate net book value of all assets sold, leased or
otherwise disposed of shall not exceed $10,000,000 in any fiscal year, (E)
no Default or Event of Default shall exist immediately after giving effect
thereto, (F) the Borrower shall have demonstrated compliance with the
financial covenants hereunder on a Pro Forma Basis after giving effect to
the disposition and shall have delivered to the Administrative Agent a Pro
Forma Compliance Certificate (including reaffirmation of the
representations and warranties hereunder as of such date before and after
giving effect to such transaction) in connection therewith, and (G) the
Borrower shall have given written notice to the Administrative Agent at
least 15 days in advance of the prospective disposition, and the terms
thereof, in sufficient detail as to the book value and consideration to be
paid, terms of disposition, and net proceeds expected therefrom and
intended application thereof.
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The Administrative Agent will promptly deliver to the Borrower upon
request, at the Borrower's expense, such release documentation (including
delivery of applicable stock certificates) as may be reasonably requested to
give effect to the release of subject assets from the security interests
securing the obligations hereunder in connection with Asset Dispositions
permitted hereunder.
9.6 Investments.
-----------
No member of the Consolidated Group will make or permit to exist
Investments in or to any Person, except for Permitted Investments.
9.7 Restricted Payments.
-------------------
No member of the Consolidated Group will make any Restricted Payment.
9.8 Modifications and Payments in respect of Funded Debt.
----------------------------------------------------
No member of the Consolidated Group will
(a) After the issuance thereof, amend or modify (or permit the amendment
or modification of) the terms of any Indebtedness (including Subordinated Debt)
in a manner adverse to the interests of the Lenders (including specifically
shortening any maturity or average life to maturity or requiring any payment
sooner than previously scheduled or increasing the interest rate or fees
applicable thereto);
(b) Amend or modify, or permit or acquiesce to the amendment or
modification (including waivers) of, any subordination provisions relating to
any Subordinated Debt;
(c) Make any payment in contravention of the terms of any Subordinated
Debt; or
(d) Make any prepayment, redemption, defeasance or acquisition for value
of (including without limitation, by way of depositing money or securities with
the trustee with respect thereto before due for the purpose of paying when due),
or refund, refinance or exchange of any Funded Debt (other than the Indebtedness
under the Credit Documents and intercompany Indebtedness permitted hereunder)
other than regularly scheduled payments of principal and interest on such Funded
Debt.
9.9 Transactions with Affiliates.
----------------------------
No member of the Consolidated Group will enter into or permit to exist any
transaction or series of transactions with any officer, director, shareholder,
Subsidiary or Affiliate of such Person other than (a) advances of working
capital to any Credit Party other than Holdings, (b) transfers of cash and
assets to any Credit Party other than Holdings, (c) transactions permitted by
Section 9.1, Section 9.4, Section 9.5, Section 9.6, or Section 9.7, (d) normal
compensation and reimbursement of expenses of officers and directors and (e)
except as otherwise specifically limited in this Credit Agreement, other
transactions which are entered into in the ordinary course of such Person's
business on terms and conditions substantially as favorable to such Person as
would be obtainable
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by it in a comparable arms-length transaction with a Person other than an
officer, director, shareholder, Subsidiary or Affiliate.
9.10 Fiscal Year; Organizational Documents.
-------------------------------------
No member of the Consolidated Group will change its fiscal year or amend,
modify or change its articles of incorporation (or corporate charter or other
similar organizational document) or bylaws (or other similar document).
9.11 Limitation on Restricted Actions.
--------------------------------
No member of the Consolidated Group will, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such Person to (a) pay dividends or make any
other distributions on its Capital Stock or with respect to any other interest
or participation in, or measured by, its profits, (b) pay any Indebtedness or
other obligation, (c) make loans, advances or capital contributions, (d) sell,
lease or otherwise transfer any of its properties or assets, or (e) act as a
guarantor or pledge its assets, except for such encumbrances or restrictions
existing under or by reason of (i) this Credit Agreement and the other Credit
Documents, (ii) pursuant to the terms of the Senior Subordinated Notes, or (iii)
Permitted Liens.
9.12 Ownership of Subsidiaries; Limitations on Parent.
------------------------------------------------
Notwithstanding any other provisions of this Credit Agreement to the
contrary:
(a) No member of the Consolidated Group will (i) permit any Person
(other than the Borrower or any Wholly-Owned Subsidiary of the Borrower) to
own any Capital Stock of any Subsidiary of the Borrower, except (A) to
qualify directors where required by applicable law or to satisfy other
requirements of applicable law with respect to the ownership of Capital
Stock of Foreign Subsidiaries or (B) as a result of or in connection with a
dissolution, merger, consolidation or disposition of a Subsidiary permitted
under Section 9.4 or Section 9.5, (ii) permit any Subsidiary of the
Borrower to issue any shares of preferred Capital Stock or (iii) permit,
create, incur, assume or suffer to exist any Lien on any Capital Stock of
any Subsidiary of the Borrower, except for Permitted Liens.
(b) Holdings shall not (i) hold any assets other than the Capital
Stock of the Borrower, (ii) have any liabilities other than (A) the
liabilities under the Credit Documents, (B) tax liabilities in the ordinary
course of business, (C) loans and advances permitted under Section 9.9 and
(D) corporate, administrative and operating expenses in the ordinary course
of business or (iii) engage in any business other than (A) owning the
Capital Stock of the Borrower and activities incidental or related thereto
and (B) acting as a Guarantor hereunder and pledging its assets to the
Administrative Agent, for the benefit of the Lenders, pursuant to the
Collateral Documents to which it is a party.
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9.13 Sale Leasebacks.
---------------
No member of the Consolidated Group will enter into any Sale and Leaseback
Transaction unless such Sale and Leaseback Transaction constitutes purchase
money indebtedness permitted by Section 9.1(c).
9.14 No Further Negative Pledges.
---------------------------
No member of the Consolidated Group will enter into, assume or become
subject to any agreement prohibiting or otherwise restricting the creation or
assumption of any Lien upon its properties or assets, whether now owned or
hereafter acquired, or requiring the grant of any security for any obligation if
security is given for any other obligation, except (a) pursuant to this Credit
Agreement and the other Credit Documents, (b) pursuant to the terms of any
Subordinated Debt permitted by Section 9.1(f), and (c) pursuant to the terms of
any purchase money indebtedness or capital lease obligations permitted by
Section 9.1(c) to the extent such limitations relate only to the property which
is the subject of such financing.
9.15 Operating Lease Obligations.
---------------------------
No member of the Consolidated Group will enter into, assume or permit to
exist any obligations for the payment of rental under Operating Leases which in
the aggregate for all such Persons would exceed $35 million in any fiscal year.
SECTION 10
EVENTS OF DEFAULT
-----------------
10.1 Events of Default.
-----------------
An Event of Default shall exist upon the occurrence of any of the following
specified events (each an "Event of Default"):
----------------
(a) Payment. There shall occur a
-------
(i) default in the payment when due of any principal of any of
the Loans or of any reimbursement obligations arising from drawings
under Letters of Credit, or
(ii) default, and such default shall continue for three (3) or
more Business Days, in the payment when due of any interest on the
Loans or on any reimbursement obligations arising from drawings under
Letters of Credit, or of any Fees or other amounts owing hereunder,
under any of the other Credit Documents or in connection herewith or
therewith; or
(b) Representations. Any representation, warranty or statement made
---------------
or deemed to be made by (i) the Borrower herein or any Credit Party in any
of the other Credit
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Documents or in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto or (ii) Columbia/HCA in the
Columbia/HCA Side Letter, shall prove untrue in any material respect on the
date as of which it was made or deemed to have been made; or
(c) Covenants. There shall occur a
---------
(i) default in the due performance or observance of any term,
covenant or agreement contained in Sections 6.1 through 6.15, 8.2,
8.9, 8.11, 8.12, 8.13 or 9.1 through 9.15, inclusive;
(ii) default in the due performance or observance of any term,
covenant or agreement contained in Sections 8.1(a), (b) (c), (d) or
(j) and such default shall continue unremedied for a period of at
least 5 days after the earlier of an Executive Officer of a Credit
Party becoming aware of such default or notice thereof by the
Administrative Agent; or
(iii) default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in
subsections (a), (b), (c)(i) or (c)(ii) of this Section 10.1)
contained in this Credit Agreement or any other Credit Document and
such default shall continue unremedied for a period of at least 30
days after the earlier of an Executive Officer of a Credit Party
becoming aware of such default or notice thereof by the Administrative
Agent; or
(d) Other Credit Documents. Except as a result of or in connection
----------------------
with a dissolution, merger or disposition of a Subsidiary permitted under
Section 9.4 or Section 9.5, any Credit Document shall fail to be in full
force and effect or to give the Administrative Agent and/or the Lenders the
Liens, rights, powers and privileges purported to be created thereby, or
any Credit Party shall so state in writing; or
(e) Guaranties. Except as the result of or in connection with a
----------
dissolution, merger or disposition of a Subsidiary permitted under Section
9.4 or Section 9.5, the guaranty given by any Guarantor (including any
Person which becomes a Guarantor after the Closing Date in accordance with
Section 8.12) or any provision of the Guaranty Agreement shall cease to be
in full force and effect, or any Guarantor (including any Person which
becomes a Guarantor after the Closing Date in accordance with Section 8.12)
or any Person acting by or on behalf of such Guarantor shall deny or
disaffirm such Guarantor's obligations under the Guaranty Agreement or any
Guarantor shall default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed pursuant to
the Guaranty Agreement; or
(f) Bankruptcy, etc. Any Bankruptcy Event shall occur with respect to
----------
any member of the Consolidated Group; or
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(g) Defaults under Other Agreements.
-------------------------------
(i) the occurrence of an Event of Default under the Senior
Subordinated Notes or the indenture or other governing instrument
relating thereto;
(ii) Any member of the Consolidated Group shall default in the
performance or observance (beyond the applicable grace period with
respect thereto, if any) of any material obligation or condition of
any contract or lease material to the members of the Consolidated
Group taken as a whole; or
(iii) With respect to any Indebtedness (other than Indebtedness
outstanding under this Credit Agreement) in excess of $1,000,000 in
the aggregate for the members of the Consolidated Group taken as a
whole, (A) any member of the Consolidated Group shall (1) default in
any payment (beyond the applicable grace period with respect thereto,
if any) with respect to any such Indebtedness, or (2) the occurrence
and continuance of a default in the observance or performance relating
to such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event or
condition shall occur or condition exist, the effect of which default
or other event or condition is to cause, or to permit, the holder or
holders of such Indebtedness (or trustee or agent on behalf of such
holders) to cause (determined without regard to whether any notice or
lapse of time is required), any such Indebtedness to become due prior
to its stated maturity; or (B) any such Indebtedness shall be declared
due and payable, or required to be prepaid other than by a regularly
scheduled required prepayment, prior to the stated maturity thereof;
or
(h) Judgments. One or more judgments or decrees shall be entered
---------
against one or more of the members of the Consolidated Group involving a
liability of $1,000,000 or more in the aggregate (to the extent not paid or
fully covered by insurance provided by a carrier who has acknowledged
coverage and has the ability to perform) and any such judgments or decrees
shall not have been vacated, discharged or stayed or bonded pending appeal
within 30 days from the entry thereof; or
(i) ERISA. Any of the following events or conditions, if such event or
-----
condition could reasonably be expected to involve possible taxes,
penalties, and other liabilities against one or more members of the
Consolidated Group in an aggregate amount in excess of $1,000,000: (i) any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA and Section 412 of the Code, whether or not waived, shall exist with
respect to any Plan, or any lien shall arise on the assets of any member of
the Consolidated Group or any ERISA Affiliate in favor of the PBGC or a
Plan; (ii) an ERISA Event shall occur with respect to a Single Employer
Plan, which is, in the reasonable opinion of the Administrative Agent,
likely to result in the termination of such Plan for purposes of Title IV
of ERISA; (iii) an ERISA Event shall occur with respect to a Multiemployer
Plan or Multiple Employer Plan, which is, in the reasonable opinion of the
Administrative Agent, likely to result in (A) the termination of such Plan
for purposes of Title IV of ERISA, or (B) any member of the Consolidated
Group or any ERISA Affiliate incurring any liability in connection with a
withdrawal from, reorganization of (within the
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meaning of Section 4241 of ERISA), or insolvency (within the meaning of
Section 4245 of ERISA) of such Plan; or (iv) any prohibited transaction
(within the meaning of Section 406 of ERISA or Section 4975 of the Code) or
breach of fiduciary responsibility shall occur which may subject any member
of the Consolidated Group or any ERISA Affiliate to any liability under
Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of the Code,
or under any agreement or other instrument pursuant to which any member of
the Consolidated Group or any ERISA Affiliate has agreed or is required to
indemnify any person against any such liability; or
(j) Ownership. There shall occur a Change of Control.
---------
10.2 Acceleration; Remedies.
----------------------
Upon the occurrence of an Event of Default, and at any time thereafter
unless and until such Event of Default has been waived by the requisite Lenders
(pursuant to the voting requirements of Section 12.6) or cured to the
satisfaction of the requisite Lenders (pursuant to the voting procedures in
Section 12.6), the Administrative Agent may, and upon the request and direction
of the Required Lenders shall, by written notice to the Borrower take any of the
following actions:
(a) Termination of Commitments. Declare the Commitments terminated
--------------------------
whereupon the Commitments shall be immediately terminated.
(b) Acceleration. Declare the unpaid principal of and any accrued
------------
interest in respect of all Loans, any reimbursement obligations arising
from drawings under Letters of Credit and any and all other indebtedness or
obligations of any and every kind owing by the Borrower to the
Administrative Agent and/or any of the Lenders hereunder to be due
whereupon the same shall be immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower. Amounts received after termination of the
Commitments and acceleration of the maturity of the Loans and Obligations
hereunder, shall be shared ratably among the Revolving Loans based on the
outstanding principal amount of Revolving Obligations, the Bridge Lenders
based on the outstanding principal amount of the Bridge Loan, the Tranche A
Term Lenders based on the outstanding principal amount of the Tranche A
Term Loan and the Tranche B Term Lenders based on the outstanding principal
amount of the Tranche B Term Loan.
(c) Cash Collateral. Direct the Borrower to pay (and the Borrower
---------------
agrees that upon receipt of such notice, or upon the occurrence of an Event
of Default under Section 10.1(f), it will immediately pay) to the
Administrative Agent additional cash, to be held by the Administrative
Agent, for the benefit of the Revolving Lenders, in a cash collateral
account as additional security for the LOC Obligations in respect of
subsequent drawings under all then outstanding Letters of Credit in an
amount equal to the maximum aggregate amount which may be drawn under all
Letters of Credits then outstanding.
(d) Enforcement of Rights. Enforce any and all rights and interests
---------------------
created and existing under the Credit Documents including, without
limitation, all rights and remedies existing under the Collateral
Documents, all rights and remedies against a Guarantor and all rights of
set-off.
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Notwithstanding the foregoing, if an Event of Default specified in Section
10.1(f) shall occur with respect to any member of the Consolidated Group, then
the Commitments shall automatically terminate and all Loans, all reimbursement
obligations arising from drawings under Letters of Credit, all accrued interest
in respect thereof, all accrued and unpaid Fees and other indebtedness or
obligations owing to the Administrative Agent and/or any of the Lenders
hereunder by the Borrower automatically shall immediately become due and payable
without the giving of any notice or other action by the Administrative Agent or
the Lenders.
Notwithstanding anything contained in this Section 10.2, if at any time
within sixty (60) days after an acceleration of the Loans pursuant to this
Section 10.2, the Borrower shall pay all arrears of interest and all payments on
account of principal which shall have become due otherwise than by acceleration
(with interest on principal and, to the extent permitted by law, on overdue
interest, at the rates specified in this Credit Agreement) and all Events of
Default and Defaults (other than non-payment of the principal of and accrued
interest on the Loans, in each case which is due and payable solely by virtue of
acceleration) shall be waived pursuant to Section 12.6, the Required Lenders, by
written notice to the Borrower, may at their option rescind and annul the
acceleration and its consequences; but such action shall not affect any
subsequent Event of Default or Default or impair any right consequent thereon.
The provisions of this paragraph are intended merely to bind the Lenders to a
decision which may be made at the election of the Required Lenders and are not
intended to benefit the Borrower and do not grant the Borrower the right to
require the Lenders to rescind or annual any acceleration hereunder, even if the
conditions set forth herein are met.
SECTION 11
AGENCY PROVISIONS
-----------------
11.1 Appointment, Powers and Immunities.
----------------------------------
Each Lender hereby irrevocably appoints and authorizes the Administrative
Agent to act as its agent under this Credit Agreement and the other Credit
Documents with such powers and discretion as are specifically delegated to the
Administrative Agent by the terms of this Credit Agreement and the other Credit
Documents, together with such other powers as are reasonably incidental thereto.
Each Lender further authorizes and directs the Administrative Agent to execute
and deliver releases (or similar agreements) to give effect to the provisions of
this Credit Agreement and the other Credit Documents, including specifically,
without limitation, the provisions of Section 9.5 hereof. The Administrative
Agent (which term as used in this sentence and in Section 11.5 and the first
sentence of Section 11.6 hereof shall include its Affiliates and its own and its
Affiliates' officers, directors, employees, and agents): (a) shall not have any
duties or responsibilities except those expressly set forth in this Credit
Agreement and shall not be a trustee or fiduciary for any Lender; (b) shall not
be responsible to the Lenders for any recital, statement, representation, or
warranty (whether written or oral) made by a member of the Consolidated Group or
other Lender in or in connection with any Credit Document or any certificate or
other document referred to or provided for in, or received by any of them under,
any Credit Document, or for the value, validity, effectiveness, genuineness,
enforceability, or
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sufficiency of any Credit Document, or any other document referred to or
provided for therein or for any failure by any Credit Party or any other Person
to perform any of its obligations thereunder; (c) shall not be responsible for
or have any duty to ascertain, inquire into, or verify the performance or
observance of any covenants or agreements by any Credit Party or the
satisfaction of any condition or to inspect the property (including the books
and records) of any Credit Party or any of its Subsidiaries or Affiliates; (d)
shall not be required to initiate or conduct any litigation or collection
proceedings under any Credit Document, except as expressly provided under the
Credit Documents; and (e) shall not be responsible for any action taken or
omitted to be taken by it under or in connection with any Credit Document,
except for its own gross negligence or willful misconduct. The Administrative
Agent may employ agents and attorneys-in-fact and shall not be responsible for
the negligence or misconduct of any such agents or attorneys-in-fact selected by
it with reasonable care. Each of the Syndication Agents and the Co-Agents, in
its capacity as such, shall not have any duties or responsibilities under this
Credit Agreement.
11.2 Reliance by Administrative Agent.
--------------------------------
The Administrative Agent shall be entitled to rely upon any certification,
notice, instrument, writing, or other communication (including, without
limitation, any thereof by telephone or telecopy) believed by it to be genuine
and correct and to have been signed, sent or made by or on behalf of the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel for any Credit Party), independent accountants, and other experts
selected by the Administrative Agent. The Administrative Agent may deem and
treat the payee of any Note as the holder thereof for all purposes hereof unless
and until the Administrative Agent receives and accepts an Assignment and
Acceptance executed in accordance with Section 12.3(b) hereof. As to any
matters not expressly provided for by this Credit Agreement, the Administrative
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of the Required
Lenders, and such instructions shall be binding on all of the Lenders; provided,
--------
however, that the Administrative Agent shall not be required to take any action
- -------
that exposes the Administrative Agent to personal liability or that is contrary
to any Credit Document or applicable law or unless it shall first be indemnified
to its satisfaction by the Lenders against any and all liability and expense
which may be incurred by it by reason of taking any such action.
11.3 Defaults.
--------
The Administrative Agent shall not be deemed to have knowledge or notice of
the occurrence of a Default or Event of Default unless the Administrative Agent
has received written notice from a Lender or a Credit Party specifying such
Default or Event of Default and stating that such notice is a "Notice of
Default". In the event that the Administrative Agent receives such a notice of
the occurrence of a Default or Event of Default, the Administrative Agent shall
give prompt notice thereof to the Lenders. The Administrative Agent shall
(subject to Section 11.2 hereof) take such action with respect to such Default
or Event of Default as shall reasonably be directed by the Required Lenders (or
such other Lenders as required by Section 12.6), provided that, unless and until
-------- ----
the Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking
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such action, with respect to such Default or Event of Default as it shall deem
advisable in the best interest of the Lenders.
11.4 Rights as a Lender.
------------------
With respect to its Commitment and the Loans made by it, Bank of America
(and any successor acting as Administrative Agent) in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting as the Administrative
Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include the Administrative Agent in its individual capacity. Bank of
America (and any successor acting as Administrative Agent) and its Affiliates
may (without having to account therefor to any Lender) accept deposits from,
lend money to, make investments in, provide services to, and generally engage in
any kind of lending, trust, or other business with any Credit Party or any of
its Subsidiaries or Affiliates as if it were not acting as Administrative Agent,
and Bank of America (and any successor acting as Administrative Agent) and its
Affiliates may accept fees and other consideration from any Credit Party or any
of its Subsidiaries or Affiliates for services in connection with this Credit
Agreement or otherwise without having to account for the same to the Lenders.
11.5 Indemnification.
---------------
The Lenders agree to indemnify the Administrative Agent (to the extent not
reimbursed under Section 12.5 hereof, but without limiting the obligations of
the Borrower under Section 12.5) ratably (in accordance with their respective
(i) Revolving Commitments (or, if the Revolving Commitments have been
terminated, the outstanding Revolving Loans, Swingline Loans and Participation
Interests in Letters of Credit and Swingline Loan (including the Participation
Interests of the Issuing Lender in Letters of Credit and the Participation
Interests of the Swingline Lender in Swingline Loans)), (ii) outstanding Bridge
Loans (and Participation Interests therein), (iii) outstanding Tranche A Term
Loans (and Participation Interests therein) and (iv) outstanding Tranche B Term
Loans (and Participation Interests therein)) for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including reasonable attorneys' fees), or disbursements of any kind
and nature whatsoever that may be imposed on, incurred by or asserted against
the Administrative Agent in such capacity (including by any Lender) in any way
relating to or arising out of any Credit Document or the transactions
contemplated thereby or any action taken or omitted by the Administrative Agent
under any Credit Document; provided that no Lender shall be liable for any of
--------
the foregoing to the extent they arise from the gross negligence or willful
misconduct of the Person to be indemnified. Without limitation of the
foregoing, each Lender agrees to reimburse the Administrative Agent promptly
upon demand for its ratable share of any costs or expenses payable by the
Borrower under Section 12.5, to the extent that the Administrative Agent is not
promptly reimbursed for such costs and expenses by the Borrower. The agreements
in this Section 11.5 shall survive the repayment of the Loans, LOC Obligations
and other obligations under the Credit Documents and the termination of the
Commitments hereunder.
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11.6 Non-Reliance on Administrative Agent and Other Lenders.
------------------------------------------------------
Each Lender agrees that it has, independently and without reliance on the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of the
Credit Parties and their Subsidiaries and decision to enter into this Credit
Agreement and that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under the Credit
Documents. Except for notices, reports, and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, the Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the affairs,
financial condition, or business of any Credit Party or any of its Subsidiaries
or Affiliates that may come into the possession of the Administrative Agent or
any of its Affiliates.
11.7 Successor Administrative Agent.
------------------------------
The Administrative Agent may resign at any time by giving notice thereof to
the Lenders and the Credit Parties. Upon any such resignation, the Required
Lenders shall have the right to appoint a successor Administrative Agent. If no
successor Administrative Agent shall have been so appointed by the Required
Lenders and shall have accepted such appointment within thirty (30) days after
the retiring Administrative Agent's giving of notice of resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be a commercial bank organized under the laws
of the United States having combined capital and surplus of at least
$100,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor, such successor shall thereupon succeed to and become
vested with all the rights, powers, discretion, privileges, and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Administrative Agent's resignation hereunder as Administrative Agent, the
provisions of this Section 11 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
Administrative Agent.
SECTION 12
MISCELLANEOUS
-------------
12.1 Notices.
-------
Except as otherwise expressly provided herein, all notices and other
communications shall have been duly given and shall be effective (a) when
delivered, (b) when transmitted via telecopy (or other facsimile device) to the
number set out below, (c) the Business Day following the day on which the same
has been delivered prepaid to a reputable national overnight air courier
service, or (d) the third Business Day following the day on which the same is
sent by certified or registered mail, postage prepaid, in each case to the
respective parties at the address, in the case of the Borrower and the
Administrative Agent, set forth below, and, in the case of the Lenders, set
forth
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on Schedule 12.1, or at such other address as such party may specify by
-------------
written notice to the other parties hereto:
if to the Borrower:
Triad Hospitals Holdings, Inc.
13455 Noel Road
Dallas, Texas 75240
Attn: Burke W. Whitman
Chief Financial Officer
Telephone: 972-701-2202
Telecopy: 972-663-3945
with a copy to:
Triad Hospitals Holdings, Inc.
13455 Noel Road
Dallas, Texas 75240
Attn: Donald P. Fay
General Counsel
Telephone: 972-789-2732
Telecopy: 972-701-9604
if to the Administrative Agent:
Bank of America National Trust and Savings Association
Agency Administration
Unit # 5596
1850 Gateway Boulevard, 5th Floor
Concord, California 94520
Attn: Aaron Tamburello
Telephone: 925-675-8446
Telecopy: 925-675-8500
with a copy to:
Bank of America National Trust and Savings Association
555 S. Flower Street, 10th Floor
Los Angeles, CA 90071-2385
Attn: Vanessa Meyer
Telephone: 213-228-9737
Telecopy: 213-228-3061
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12.2 Right of Set-Off; Adjustments.
-----------------------------
Upon the occurrence and during the continuance of any Event of Default,
each Lender (and each of its Affiliates) is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, with the consent of
the Administrative Agent (which consent shall not be unreasonably withheld or
delayed), to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender (or any of its Affiliates) to or for the credit or the
account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under this Credit Agreement, under the Notes, under
any other Credit Document or otherwise, irrespective of whether such Lender
shall have made any demand under hereunder or thereunder and although such
obligations may be unmatured. Each Lender agrees promptly to notify the
Borrower after any such set-off and application made by such Lender; provided,
--------
however, that the failure to give such notice shall not affect the validity of
- -------
such set-off and application. The rights of each Lender under this Section 12.2
are in addition to other rights and remedies (including, without limitation,
other rights of set-off) that such Lender may have.
12.3 Benefit of Agreement.
--------------------
(a) This Credit Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of
the parties hereto; provided that the Borrower may not assign or transfer
--------
any of its interests and obligations without prior written consent of each
of the Lenders; provided further that the rights of each Lender to
-------- -------
transfer, assign or grant participations in its rights and/or obligations
hereunder shall be limited as set forth in this Section 12.3.
(b) Each Lender may assign to one or more Eligible Assignees all or
a portion of its rights and obligations under this Credit Agreement
(including, without limitation, all or a portion of its Loans, its Notes,
and its Commitment); provided, however, that
-------- -------
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to an existing
Lender, an Affiliate of an existing Lender or any fund that invests in
bank loans and is advised or managed by an investment advisor (or any
Affiliate to an investment advisor) to an existing Lender or an
assignment of all of a Lender's rights and obligations under this
Credit Agreement, any such partial assignment shall be in an amount at
least equal to $1,000,000 (or, if less, the remaining amount of the
Commitment being assigned by such Lender);
(iii) any such assignment shall be of a constant, not varying,
percentage of all of the Obligations and Commitments hereunder (other
than the Tranche B Term Loan); and
(iii) the parties to such assignment shall execute and deliver
to the Administrative Agent for its acceptance an Assignment and
Acceptance in the
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form of Schedule 12.3(b) hereto, together with any Note subject
----------------
to such assignment and a processing fee of $3,500.
Upon execution, delivery, and acceptance of such Assignment and Acceptance,
the assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender
hereunder and the assigning Lender shall, to the extent of such assignment,
relinquish its rights and be released from its obligations under this
Credit Agreement. Upon the consummation of any assignment pursuant to this
Section 12.3(b), the assignor, the Administrative Agent and the Borrower
shall make appropriate arrangements so that, if required, new Notes are
issued to the assignor and the assignee. If the assignee is not a United
States person under Section 7701(a)(30) of the Code, it shall deliver to
the Borrower, the Guarantors and the Administrative Agent certification as
to exemption from deduction or withholding of Taxes in accordance with
Section 3.11.
(c) The Administrative Agent shall, on behalf of the Borrower,
maintain at its address referred to in Section 12.1 a copy of each
Assignment and Acceptance delivered to and accepted by it and a register
for the recordation of the names and addresses of the Lenders and the
Commitment of, and principal amount of the Loans owing to, each Lender from
time to time (the "Register"). The entries in the Register shall be
--------
conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Administrative Agent and the Lenders may treat each Person
whose name is recorded in the Register as a Lender hereunder for all
purposes of this Credit Agreement. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from
time to time upon reasonable prior notice. Any assignment of any Loan or
other obligations shall be effective only upon an entry with respect
thereto being made in the Register.
(d) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such assignment and
payment of the processing fee, the Administrative Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the
form of Schedule 12.3(b) hereto, (i) accept such Assignment and Acceptance,
----------------
(ii) record the information contained therein in the Register and (iii)
give prompt notice thereof to the parties thereto.
(e) Each Lender may sell participations to one or more Persons in
all or a portion of its rights, obligations or rights and obligations under
this Credit Agreement (including all or a portion of its Commitment or its
Loans); provided, however, that (i) such Lender's obligations under this
-------- -------
Credit Agreement shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) the participant shall be entitled to the benefit of the
yield protection provisions contained in Sections 3.7 through 3.12,
inclusive, and the right of set-off contained in Section 12.2, and (iv) the
Credit Parties shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under this Credit
Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Credit Parties relating to the Loans and other
obligations owing to such Lender and to approve any amendment,
modification, or waiver of any provision of this
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Credit Agreement (other than amendments, modifications, or waivers (i)
decreasing the amount of principal of or the rate at which interest is
payable on such Loans or Notes, (ii) extending any scheduled principal
payment date or date fixed for the payment of interest on such Loans or
Notes, (iii) extending its Commitment, (iv) except as the result of or in
connection with an Asset Disposition permitted by Section 9.5, release all
or substantially all of the Collateral, or (v)except as the result of or in
connection with a dissolution, merger or disposition of a member of the
Consolidated Group permitted under Section 9.4, release the Borrower or
substantially all of the other Credit Parties from its or their obligations
under the Credit Documents).
(f) Notwithstanding any other provision set forth in this Credit
Agreement, any Lender may at any time assign and pledge all or any portion
of its Loans and its Notes (i) to any Federal Reserve Bank as collateral
security pursuant to Regulation A and any Operating Circular issued by such
Federal Reserve Bank or (ii) in the case of any Lender which has made
Tranche B Term Loans hereunder and is an investment fund, to the trustee
under the indenture to which such fund is a party in support of its
obligations to such trustee for the benefit of the applicable trust
beneficiaries. No such assignment shall release the assigning Lender from
its obligations hereunder.
(g) Any Lender may furnish any information concerning the members
of the Consolidated Group in the possession of such Lender from time to
time to assignees and participants (including prospective assignees and
participants), subject, however, to the provisions of Section 12.14 hereof.
(h) Notwithstanding any other provisions set forth in this Credit
Agreement, the obligations of any Credit Party to any participant shall be
no greater than they would be in the absence of such transfer.
12.4 No Waiver; Remedies Cumulative.
------------------------------
No failure or delay on the part of the Administrative Agent or any Lender
in exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Administrative Agent or any Lender
and any of the Credit Parties shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder or under
any other Credit Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder or thereunder. The
rights and remedies provided herein are cumulative and not exclusive of any
rights or remedies which the Administrative Agent or any Lender would otherwise
have. No notice to or demand on any Credit Party in any case shall entitle the
Credit Parties to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Administrative Agent
or the Lenders to any other or further action in any circumstances without
notice or demand.
12.5 Expenses; Indemnification.
-------------------------
(a) The Borrower agrees to pay on demand all costs and expenses of
the Administrative Agent in connection with the syndication, preparation,
execution, delivery, administration, modification, and amendment of this
Credit Agreement, the
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other Credit Documents, and the other documents to be delivered hereunder,
including, without limitation, the reasonable fees and expenses of counsel
for the Administrative Agent (including the cost of internal counsel) with
respect thereto and with respect to advising the Administrative Agent as to
its rights and responsibilities under the Credit Documents. The Borrower
further agrees to pay on demand all costs and expenses of the
Administrative Agent and the Lenders, if any (including, without
limitation, reasonable attorneys' fees and expenses and the cost of
internal counsel), in connection with the enforcement (whether through
negotiations, legal proceedings, or otherwise) of the Credit Documents and
the other documents to be delivered thereunder.
(b) The Borrower agrees to indemnify and hold harmless the
Administrative Agent and each Lender and each of their Affiliates and their
respective officers, directors, employees, agents, and advisors (each, an
"Indemnified Party") from and against any and all claims, damages, losses,
-----------------
liabilities, costs, and expenses (including, without limitation, reasonable
attorneys' fees) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any
investigation, litigation, or proceeding or preparation of defense in
connection therewith) the Credit Documents, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of the
Loans, except to the extent such claim, damage, loss, liability, cost, or
expense is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct. In the case of an investigation,
litigation or other proceeding to which the indemnity in this Section 12.5
applies, such indemnity shall be effective whether or not such
investigation, litigation or proceeding is brought by any of the Credit
Parties, their respective directors, shareholders or creditors or an
Indemnified Party or any other Person or any Indemnified Party is otherwise
a party thereto and whether or not the transactions contemplated hereby are
consummated. The Borrower agrees not to assert any claim against the
Administrative Agent, any Lender, any of their Affiliates, or any of their
respective directors, officers, employees, attorneys, agents, and advisors,
on any theory of liability, for special, indirect, consequential, or
punitive damages arising out of or otherwise relating to the Credit
Documents, any of the transactions contemplated herein or the actual or
proposed use of the proceeds of the Loans.
(c) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 12.5 shall survive the repayment of the Loans,
LOC Obligations and other obligations under the Credit Documents and the
termination of the Commitments hereunder.
12.6 Amendments, Waivers and Consents.
--------------------------------
Neither this Credit Agreement nor any other Credit Document nor any of the
terms hereof or thereof may be amended, changed, waived, discharged or
terminated unless such amendment, change, waiver, discharge or termination is in
writing entered into by, or approved in writing by, the Required Lenders and the
Borrower, provided, however, that:
-------- -------
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(a) without the consent of each Lender affected thereby, neither this
Credit Agreement nor any other Credit Document may be amended to
(i) extend the final maturity of any Loan or of any
reimbursement obligation, or any portion thereof, arising from
drawings under Letters of Credit, or extend or waive any principal
amortization payment of the Bridge Loan, the Tranche A Term Loan or
the Tranche B Term Loan, or any portion thereof,
(ii) reduce the rate or extend the time of payment of interest
(other than as a result of waiving the applicability of any post-
default increase in interest rates) thereon or Fees hereunder,
(iii) reduce or waive the principal amount of any Loan or of any
reimbursement obligation, or any portion thereof, arising from
drawings under Letters of Credit,
(iv) increase the Commitment of a Lender over the amount
thereof in effect (it being understood and agreed that a waiver of any
Default or Event of Default or mandatory reduction in the Commitments
shall not constitute a change in the terms of any Commitment of any
Lender),
(v) except as the result of or in connection with an Asset
Disposition permitted by Section 9.5, release all or substantially all
of the Collateral,
(vi) except as the result of or in connection with a
dissolution, merger or disposition of a member of the Consolidated
Group permitted under Section 9.4, release the Borrower or
substantially all of the other Credit Parties from its or their
obligations under the Credit Documents,
(vii) amend, modify or waive any provision of this Section 12.6
or Section 3.6, 3.7, 3.8, 3.9, 3.10, 3.11, 3.12, 3.13, 3.14, 3.15,
10.1(a), 12.2, 12.3, 12.5 or 12.9,
(viii) reduce any percentage specified in, or otherwise modify,
the definition of Required Lenders, or
(ix) consent to the assignment or transfer by the Borrower or
all or substantially all of the other Credit Parties of any of its or
their rights and obligations under (or in respect of) the Credit
Documents except as permitted thereby;
(b) (i) without the consent of the Revolving Lenders holding more
than 50% of the Revolving Commitments, or if the Revolving Commitments have
been terminated, Lenders having more than 50% of the aggregate principal
amount of the Revolving Obligations outstanding (taking into account in
each case Participation Interests or obligation to participate therein),
extend the time for, or reduce the amount, or otherwise alter the manner of
application of proceeds in respect of the Revolving
111
<PAGE>
Obligations on account of the mandatory prepayment provisions of clauses
(ii) through (iv), inclusive, of Section 3.3(b) or the application
provisions of Section 3.3(c).
(ii) without the consent of the Tranche A Term Lenders holding
more than 50% of the Tranche A Term Loan Commitments, extend the time for,
or reduce the amount, or otherwise alter the manner of application of
proceeds in respect of the Tranche A Term Loan on account of the mandatory
prepayment provisions of clauses (ii) through (iv), inclusive, of Section
3.3(b) or the application provisions of Section 3.3(c).
(iii) without the consent of the Tranche B Term Lenders holding
more than 50% of the Tranche B Term Loan Commitments, extend the time for,
or reduce the amount, or otherwise alter the manner of application of
proceeds in respect of the Tranche B Term Loan on account of the mandatory
prepayment provisions of clauses (ii) through (iv), inclusive, of Section
3.3(b) or the application provisions of Section 3.3(c).
(iv) without the consent of the Bridge Lenders holding more
than 50% of the Bridge Loan Commitments, extend the time for, or reduce the
amount, or otherwise alter the manner of application of proceeds in respect
of the Bridge Loan on account of the mandatory prepayment provisions of
clause (ii) of Section 3.3(b) or the application provisions of Section
3.3(c).
(c) without the consent of the Administrative Agent, no provision of
Section 11 may be amended; and
(d) without the consent of the Issuing Lender, no provision of
Section 2.2 may be amended.
Notwithstanding the fact that the consent of all the Lenders is required in
certain circumstances as set forth above, (x) each Lender is entitled to
vote as such Lender sees fit on any bankruptcy reorganization plan that
affects the Loans, and each Lender acknowledges that the provisions of
Section 1126(c) of the Bankruptcy Code supersedes the unanimous consent
provisions set forth herein and (y) the Required Lenders may consent to
allow a Credit Party to use cash collateral in the context of a bankruptcy
or insolvency proceeding.
12.7 Counterparts.
------------
This Credit Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall constitute one and the same instrument. It shall not be necessary in
making proof of this Credit Agreement to produce or account for more than one
such counterpart for each of the parties hereto. Delivery by facsimile by any
of the parties hereto of an executed counterpart of this Credit Agreement shall
be as effective as an original executed counterpart hereof and shall be deemed a
representation that an original executed counterpart hereof will be delivered.
112
<PAGE>
12.8 Headings.
--------
The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Credit Agreement.
12.9 Survival.
--------
All indemnities set forth herein, including, without limitation, in Section
2.2(i), 3.11, 3.12, 11.5 or 12.5 shall survive the execution and delivery of
this Credit Agreement, the making of the Loans, the issuance of the Letters of
Credit, the repayment of the Loans, LOC Obligations and other obligations under
the Credit Documents and the termination of the Commitments hereunder, and all
representations and warranties made by the Borrower herein shall survive
delivery of the Notes and the making of the Loans hereunder.
12.10 Governing Law; Submission to Jurisdiction; Venue.
------------------------------------------------
(a) THIS CREDIT AGREEMENT AND, UNLESS OTHERWISE EXPRESSLY PROVIDED
THEREIN, THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Any legal
action or proceeding with respect to this Credit Agreement or any other
Credit Document may be brought in the courts of the State of New York in
New York County, or of the United States for the Southern District of New
York, and, by execution and delivery of this Credit Agreement, the Borrower
hereby irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the nonexclusive jurisdiction of such
courts. The Borrower further irrevocably consents to the service of process
out of any of the aforementioned courts in any such action or proceeding by
the mailing of copies thereof by registered or certified mail, postage
prepaid, to it at the address set out for notices pursuant to Section 12.1,
such service to become effective three (3) days after such mailing. Nothing
herein shall affect the right of the Administrative Agent or any Lender to
serve process in any other manner permitted by law or to commence legal
proceedings or to otherwise proceed against any Credit Party in any other
jurisdiction.
(b) The Borrower hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Credit
Agreement or any other Credit Document brought in the courts referred to in
subsection (a) above and hereby further irrevocably waives and agrees not
to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum.
(c) TO THE EXTENT PERMITTED BY LAW, EACH OF THE ADMINISTRATIVE
AGENT, THE LENDERS AND THE BORROWER HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
113
<PAGE>
12.11 Severability.
------------
If any provision of any of the Credit Documents is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.
12.12 Entirety.
--------
This Credit Agreement together with the other Credit Documents represent
the entire agreement of the parties hereto and thereto, and supersede all prior
agreements and understandings, oral or written, if any, including any commitment
letters or correspondence relating to the Credit Documents or the transactions
contemplated herein and therein.
12.13 Binding Effect; Termination.
---------------------------
(a) This Credit Agreement shall become effective at such time on or
after the Closing Date when it shall have been executed by the Borrower and
the Administrative Agent, and the Administrative Agent shall have received
copies hereof (telefaxed or otherwise) which, when taken together, bear the
signatures of each Lender, and thereafter this Credit Agreement shall be
binding upon and inure to the benefit of the Borrower, the Administrative
Agent and each Lender and their respective successors and assigns.
(b) The term of this Credit Agreement shall be until no Loans, LOC
Obligations or any other amounts payable hereunder or under any of the
other Credit Documents shall remain outstanding, no Letters of Credit shall
be outstanding, no Hedging Agreement between the Borrower and a Lender or
an Affiliate of a Lender shall remain outstanding and all of the
Commitments hereunder shall have expired or been terminated.
12.14 Confidentiality.
---------------
The Administrative Agent and each Lender (each, a "Lending Party") agrees
-------------
to keep (and to cause its affiliates and its and their respective officers,
directors, employees, agents and advisors to keep) confidential any information
furnished or made available to it by the Credit Parties pursuant to this Credit
Agreement that is marked confidential; provided that nothing herein shall
--------
prevent any Lending Party from disclosing such information (a) to any other
Lending Party or any Affiliate of any Lending Party, or any officer, director,
employee, agent, or advisor of any Lending Party or Affiliate of any Lending
Party, (b) to any other Person if reasonably incidental to the administration of
the credit facility provided herein, (c) as required by any law, rule, or
regulation, (d) upon the order of any court or administrative agency or pursuant
to subpoena or other legal process, (e) upon the request or demand of any
regulatory agency or authority, (f) that is or becomes available to the public
or that is or becomes available to any Lending Party other than as a result of a
disclosure prohibited by this Credit Agreement, (g) in connection with any
litigation to which such Lending Party or any of its Affiliates may be a party,
(h) to the extent necessary in connection with the exercise of any remedy under
this Credit Agreement or any other Credit Document, (i) to the National
Association of Insurance
114
<PAGE>
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender's investment portfolio
in connection with ratings issued with respect to such Lender, (j) to any direct
or indirect contractual counterparty in swap agreements or such contractual
counterparty's professional advisor (so long as such contractual counterparty or
professional advisor to such contractual counterparty (i) has been approved in
writing by the Borrower and (ii) agrees in a writing enforceable by the Borrower
to be bound by the provisions of this Section 12.14) and (k) subject to
provisions the same as those contained in this Section 12.14, to any actual or
proposed participant or assignee.
12.15 Source of Funds.
---------------
Each of the Lenders hereby represents and warrants to the Borrower that at
least one of the following statements is an accurate representation as to the
source of funds to be used by such Lender in connection with the financing
hereunder:
(a) no part of such funds constitutes assets allocated to any
separate account maintained by such Lender in which any employee benefit
plan (or its related trust) has any interest;
(b) to the extent that any part of such funds constitutes assets
allocated to any separate account maintained by such Lender, such Lender
has disclosed to the Borrower the name of each employee benefit plan whose
assets in such account exceed 10% of the total assets of such account as of
the date of such purchase (and, for purposes of this subsection (b), all
employee benefit plans maintained by the same employer or employee
organization are deemed to be a single plan);
(c) to the extent that any part of such funds constitutes assets of
an insurance company's general account, such insurance company has complied
with all of the requirements of the regulations issued under Section
401(c)(1)(A) of ERISA;
(d) such funds constitute assets of one or more specific benefit
plans which such Lender has identified in writing to the Borrower; or
(e) such funds are from a fund managed by a "Qualified Professional
Asset Manager" ("QPAM") within the meaning of Part I of Prohibited
----
Transaction Exemption PTCE 84-14 issued by the United States Department of
Labor, and such QPAM made the investment decision on behalf of such Lender
to enter into this Credit Agreement and such transaction satisfies the
requirements of subsections (a) through (g) of Part I of PTCE 84-14.
As used in this Section 12.15, the terms "employee benefit plan" and "separate
account" shall have the respective meanings assigned to such terms in Section 3
of ERISA.
115
<PAGE>
12.16 Conflict.
--------
To the extent that there is a conflict or inconsistency between any
provision hereof, on the one hand, and any provision of any Credit Document, on
the other hand, this Credit Agreement shall control.
[Signature Page to Follow]
116
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWER: HEALTHTRUST, INC. - THE HOSPITAL COMPANY,
- --------
a Delaware corporation
By: /s/ R. Milton Johnson
--------------------------------
Name: R. Milton Johnson
Title: Vice President and Chief
Financial Officer
[Signature Pages Continue]
<PAGE>
ADMINISTRATIVE AGENT: BANK OF AMERICA NATIONAL TRUST
- --------------------
AND SAVINGS ASSOCIATION,
in its capacity as Administrative Agent
By: /s/ Gina Meador
----------------------------------
Name: Gina Meador
Title: Vice President
LENDERS: BANK OF AMERICA NATIONAL TRUST
- -------
AND SAVINGS ASSOCIATION,
individually in its capacity as a Lender
By: /s/ Vanessa Meyrs
----------------------------------
Name: Vanessa Meyrs
Title:
GOLDMAN SACHS
By:
----------------------------------
Name:
Title:
FOOTHILL INCOME TRUST, L.P.,
a Delaware Corporation
By: FIT G.P., LLC, its General Partner
By: /s/ M.E. Stearns
----------------------------------
Name: M.E. Stearns
Title: Managing Member
OAK HILL SECURITIES FUND, L.P.,
By: Oak Hill Securities GenPar, L.P.;
its General Partner
By: Oak Hill Securities MGP, Inc.,
its General Partner
By: /s/ Scott D. Krase
----------------------------------
Name: Scott D. Krase
Title Vice President
[Signature Pages Continue]
<PAGE>
O'SULLIVAN GRAEV & KARABELL, LLP
By:
--------------------------------
Name:
Title:
SCOTIABANC INC.
By: /s/ Dana Maloney
--------------------------------
Name: Dana Maloney
Title: Relationship Manager
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ Martin Golden
--------------------------------
Name: Martin Golden
Title: Vice President
GREEN TREE FINANCIAL SERVICING
CORPORATION
By: /s/ C.A. Gouskos
--------------------------------
Name: C.A. Gouskos
Title: Sr. Vice President
CITICORP USA, INC.
By: /s/ Stuart G. Miller
--------------------------------
Name: Stuart G. Miller
Title: Attorney-in-Fact
THE CHASE MANHATTAN BANK
By: /s/ Stephen P. Rochford
--------------------------------
Name: Stephen P. Rochford
Title: Vice President
OFFITBANK INVESTMENT FUND, INC.
By: /s/ Wallace Mathai-Davis
--------------------------------
Name: Wallace Mathai-Davis
Title: Secretary/Treasurer
[Signature Pages Continue]
<PAGE>
ALLIANCE CAPITAL MANAGEMENT CORP.
By:_____________________________
Name:
Title
MACKAY SHIELDS FINANCIAL CORPORATION
By:_____________________________
Name:
Title
BERLACK, ISRAEL, LIBERMAN LLP
By:_____________________________
Name:
Title
THE OCTAGON CREDIT INVESTORS
By:_____________________________
Name:
Title
SOCIETE GENERALE
By: /s/ J. Staley Stewart
-------------------------------
Name: J. Staley Stewart
Title Director
KZH STERLING LLC
By:_____________________________
Name:
Title
[Signature Pages Continue]
<PAGE>
UNION BANK OF CALIFORNIA, N.A.
By: /s/ James L. Leahy
-------------------------------
Name: James L. Leahy
Title Senior Vice President
UNION BANK OF SWITZERLAND
By:_____________________________
Name:
Title
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ William E. Magee
-------------------------------
Name: William E. Magee
Title Duly Authorized Signatory
BANK OF OKLAHOMA, N.A.
By: /s/ Bridget E. Leenstra
-------------------------------
Name: Bridget E. Leenstra
Title Vice President
<PAGE>
EXHIBIT 10.15
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT, dated as of May 11, 1999 (the "Agreement"), is
---------
made and entered into by and among TRIAD HOSPITALS, INC., a Delaware corporation
"Holdings"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, in its
--------
capacity as Administrative Agent under the Credit Agreement (hereinafter
defined). Terms capitalized herein but not otherwise defined shall have the
meanings set forth in the Credit Agreement.
WITNESSETH
WHEREAS, pursuant to that certain Credit Agreement dated as of May 11, 1999
(as amended, modified, extended, renewed or replaced from time to time, the
"Credit Agreement"), among Healthtrust, Inc. - The Hospital Company, a Delaware
----------------
corporation ("HTI"), the Lenders party thereto and Bank of America National
---
Trust and Savings Association, as Administrative Agent, the Lenders agreed to
provide HTI with a $465,000,000 credit facility;
WHEREAS, in connection with the Reorganization, all of the right, title and
interest of HTI in and to certain assets owned by HTI prior to the
Reorganization have vested in Holdings; and
WHEREAS, Holdings now desires to assume all of the rights, obligations,
duties and responsibilities of HTI under the Credit Agreement and the Notes;
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Assumption. Effective as of the date hereof, Holdings hereby
----------
(i) assumes all of the rights, duties and obligations of HTI under the Credit
Agreement and the Notes, (ii) irrevocably and unconditionally agrees with the
Administrative Agent and the Lenders to be bound by all of the terms and
conditions of the Credit Agreement and the Notes and to perform all of the
obligations and discharge all of the liabilities of HTI existing at or accrued
prior to the date hereof or hereafter arising under the Credit Agreement and the
Notes and (iii) without limiting any of the foregoing, ratifies, and agrees to
be bound by, (A) the representations and warranties set forth in Section 7 of
the Credit Agreement and (B) all of the affirmative and negative covenants set
forth in Sections 8 and 9 of the Credit Agreement. Without limiting the
generality of the foregoing terms of this Section 1, Holdings hereby promises to
pay to each Lender the principal balance of, and accrued interest on, each Loan
made under the Credit Documents.
SECTION 2. References in the Credit Documents. From and after the
----------------------------------
execution and delivery of this Agreement, (a) Holdings shall have succeeded HTI
as the "Borrower" under the Credit Documents, and all references to the
"Borrower" in the Credit Documents shall refer to Holdings and not to HTI and
(b) all references to the "Credit Agreement" in any Credit Documents shall refer
to the Credit Agreement, as modified by this Agreement. Except as expressly
modified by this Agreement, all of the terms and provisions of the Credit
Agreement shall remain in full force and effect.
<PAGE>
SECTION 3. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
-------------
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 4. Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT
--------------------
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 5. Severability. If any provision of this Agreement is determined
------------
to be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be
construed in without giving effect to the illegal, invalid or unenforceable
provisions.
SECTION 6. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
TRIAD HOSPITALS, INC.,
a Delaware corporation
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
ACKNOWLEDGED AND AGREED:
ADMINISTRATIVE AGENT: BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
By: /s/ Gina Meador
------------------
Name: Gina Meador
Title: Vice President
HTI: HEALTHTRUST, INC. - THE HOSPITAL
COMPANY, a Delaware corporation
By: /s/ R. Milton Johnson
------------------------
Name: R. Milton Johnson
Title: Vice President
<PAGE>
EXHIBIT 10.16
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT, dated as of May 11, 1999 (the "Agreement"), is
---------
made and entered into by and among TRIAD HOSPITALS HOLDINGS, INC., a Delaware
corporation ("Triad"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
-----
ASSOCIATION, in its capacity as Administrative Agent under the Credit Agreement
(hereinafter defined). Terms capitalized herein but not otherwise defined shall
have the meanings set forth in the Credit Agreement.
WITNESSETH
WHEREAS, pursuant to that certain Credit Agreement dated as of May 11, 1999
(as amended, modified, extended, renewed or replaced from time to time, the
"Credit Agreement"), among Healthtrust, Inc. - The Hospital Company, a Delaware
- -----------------
corporation ("HTI"), the Lenders party thereto and Bank of America National
---
Trust and Savings Association, as Administrative Agent, the Lenders agreed to
provide HTI with a $465,000,000 credit facility;
WHEREAS, in connection with the Reorganization (a) all of the right, title
and interest of HTI in and to certain assets owned by HTI prior to the
Reorganization vested in Triad Hospitals, Inc., a Delaware corporation
("Holdings"), and (b) Holdings assumed all of the rights, obligations, duties
- ----------
and responsibilities of HTI under the Credit Agreement and the Notes pursuant to
that certain Assumption Agreement dated as of May 11, 1999 between Holdings and
the Administrative Agent;
WHEREAS, in connection with the Reorganization all of the right, title and
interest of Holdings in and to all of the assets acquired by Holdings from HTI
in connection with the Reorganization have vested in Triad; and
WHEREAS, Triad now desires to assume all of the rights, obligations, duties
and responsibilities of Holdings under the Credit Agreement and the Notes;
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Assumption. Effective as of the date hereof, Triad hereby (i)
----------
assumes all of the rights, duties and obligations of Holdings under the Credit
Agreement and the Notes, (ii) irrevocably and unconditionally agrees with the
Administrative Agent and the Lenders to be bound by all of the terms and
conditions of the Credit Agreement and the Notes and to perform all of the
obligations and discharge all of the liabilities of Holdings existing at or
accrued prior to the date hereof or hereafter arising under the Credit Agreement
and the Notes and (iii) without limiting any of the foregoing, ratifies, and
agrees to be bound by, (A) the representations and warranties set forth in
Section 7 of
<PAGE>
the Credit Agreement and (B) all of the affirmative and negative covenants set
forth in Sections 8 and 9 of the Credit Agreement. Without limiting the
generality of the foregoing terms of this Section 1, Triad hereby promises to
pay to each Lender the principal balance of, and accrued interest on, each Loan
made under the Credit Documents.
SECTION 2. References in the Credit Documents. From and after the
----------------------------------
execution and delivery of this Agreement, (a) Triad shall have succeeded
Holdings as the "Borrower" under the Credit Documents, and all references to the
"Borrower" in the Credit Documents shall refer to Triad and not to Holdings and
(b) all references to the "Credit Agreement" in any Credit Documents shall refer
to the Credit Agreement, as modified by this Agreement. Except as expressly
modified by this Agreement, all of the terms and provisions of the Credit
Agreement shall remain in full force and effect.
SECTION 3. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
-------------
OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 4. Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT
--------------------
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 5. Severability. If any provision of this Agreement is determined
------------
to be illegal, invalid or unenforceable, such provision shall be fully severable
and the remaining provisions shall remain in full force and effect and shall be
construed in without giving effect to the illegal, invalid or unenforceable
provisions.
SECTION 6. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
TRIAD HOSPITALS HOLDINGS, INC.,
a Delaware corporation
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
ACKNOWLEDGED AND AGREED:
ADMINISTRATIVE AGENT: BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
By: /s/ Gina Meador
-----------------
Name: Gina Meador
Title: Vice President
HOLDINGS: TRIAD HOSPITALS, INC.,
a Delaware corporation
By: /s/ Donald P. Fay
--------------------
Name: Donald P. Fay
Title: Executive Vice President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF INCOME AND BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 350
<ALLOWANCES> 159
<INVENTORY> 39
<CURRENT-ASSETS> 288
<PP&E> 1,444
<DEPRECIATION> 724
<TOTAL-ASSETS> 1,313
<CURRENT-LIABILITIES> 122
<BONDS> 7
0
0
<COMMON> 0
<OTHER-SE> 1,078
<TOTAL-LIABILITY-AND-EQUITY> 1,313
<SALES> 0
<TOTAL-REVENUES> 368
<CGS> 0
<TOTAL-COSTS> 211
<OTHER-EXPENSES> 81
<LOSS-PROVISION> 35
<INTEREST-EXPENSE> 18
<INCOME-PRETAX> (48)
<INCOME-TAX> 12
<INCOME-CONTINUING> (36)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (36)
<EPS-BASIC> (1.20)
<EPS-DILUTED> (1.20)
</TABLE>
