SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended June 30, 1998; 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 1-10315
HEALTHSOUTH CORPORATION
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 63-0860407
- - ------------------------------- ----------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
ONE HEALTHSOUTH PARKWAY, BIRMINGHAM, ALABAMA 35243
--------------------------------------------------
(Address of Principal Executive Offices)
(Zip Code)
(205) 967-7116
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
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 and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such Reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at August 10, 1998
- - ----------------------- ------------------------------
COMMON STOCK, PAR VALUE 422,618,280 SHARES
$.01 PER SHARE
<PAGE>
HEALTHSOUTH CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
INDEX
PART 1 -- FINANCIAL INFORMATION
Page
Item 1. Financial Statements
Consolidated Balance Sheets -- June 30, 1998 (Unaudited)
and December 31, 1997 3
Consolidated Statements of Income (Unaudited) -- Three Months
and Six Months Ended June 30, 1998 and 1997 4
Consolidated Statements of Cash Flows (Unaudited) -- Six
Months Ended June 30, 1998 and 1997 5
Notes to Consolidated Financial Statements (Unaudited) --
Three Months and Six Months Ended June 30, 1998 and 1997 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II -- OTHER INFORMATION
Item 2. Changes in Securities 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 6. Exhibits and Reports on Form 8-K 17
2
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HEALTHSOUTH CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
--------------- --------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 200,290 $ 148,073
Other marketable securities 4,256 4,326
Accounts receivable 891,391 745,994
Inventories, prepaid expenses, and
other current assets 251,667 184,805
----------- -----------
TOTAL CURRENT ASSETS 1,347,604 1,083,198
OTHER ASSETS 249,068 223,718
PROPERTY, PLANT AND EQUIPMENT--NET 2,154,342 1,850,765
INTANGIBLE ASSETS--NET 2,361,764 2,243,372
----------- -----------
TOTAL ASSETS $ 6,112,778 $ 5,401,053
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 41,638 $ 124,058
Salaries and wages payable 118,975 121,768
Income taxes payable 8,848 92,507
Deferred income taxes 18,302 34,119
Accrued interest payable and other liabilities 65,743 97,506
Current portion of long-term debt 47,600 46,489
----------- -----------
TOTAL CURRENT LIABILITIES 301,106 516,447
LONG-TERM DEBT 2,190,706 1,555,335
DEFERRED INCOME TAXES 47,062 76,613
DEFERRED REVENUE AND OTHER LONG-TERM LIABILITIES 1,165 1,538
MINORITY INTERESTS--LIMITED PARTNERSHIPS 98,910 93,692
STOCKHOLDERS' EQUITY:
Preferred Stock, $.10 par value--1,500,000
shares authorized; issued and outstanding--
none 0 0
Common Stock, $.01 par value--600,000,000
shares authorized; 401,817,000 and 395,233,000
shares issued at June 30, 1998 and
December 31, 1997, respectively 4,018 3,952
Additional paid-in capital 2,406,903 2,317,821
Retained earnings 1,078,580 853,641
Treasury stock (323) (323)
Receivable from Employee Stock Ownership Plan (10,169) (12,247)
Notes receivable from stockholders (5,180) (5,416)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 3,473,829 3,157,428
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,112,778 $ 5,401,053
=========== ===========
</TABLE>
See accompanying notes.
3
<PAGE>
HEALTHSOUTH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED - IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------ ------------------------------
1998 1997 1998 1997
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 942,482 $ 723,017 $ 1,850,145 $ 1,414,648
Operating unit expenses 578,637 451,650 1,140,128 889,939
Corporate general and administrative expenses 26,257 18,509 52,681 36,358
Provision for doubtful accounts 21,970 18,075 43,723 32,788
Depreciation and amortization 80,331 60,145 153,713 117,516
Merger costs 0 0 0 15,875
Interest expense 28,582 27,742 56,918 53,415
Interest income (2,881) (1,284) (4,522) (2,322)
----------- ----------- ----------- -----------
732,896 574,837 1,442,641 1,143,569
----------- ----------- ----------- -----------
Income before income taxes and
minority interests 209,586 148,180 407,504 271,079
Provision for income taxes 75,265 50,054 145,484 92,465
----------- ----------- ----------- -----------
Income before minority interests 134,321 98,126 262,020 178,614
Minority interests (17,093) (16,807) (35,424) (32,715)
----------- ----------- ----------- -----------
Net income $ 117,228 $ 81,319 $ 226,596 $ 145,899
=========== =========== =========== ===========
Weighted average common shares outstanding 400,628 340,045 399,540 334,233
=========== =========== =========== ===========
Net income per common share $ 0.29 $ 0.24 $ 0.57 $ 0.44
=========== =========== =========== ===========
Weighted average common shares
outstanding -- assuming dilution 428,216 354,982 420,248 355,340
=========== =========== =========== ===========
Net income per common share --
assuming dilution $ 0.28 $ 0.23 $ 0.55 $ 0.41
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
4
<PAGE>
HEALTHSOUTH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------------------
1998 1997
---------------- ---------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 226,596 $ 145,899
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 153,713 117,516
Provision for doubtful accounts 43,723 32,788
Income applicable to minority interests of
limited partnerships 35,424 32,715
Merger costs 0 15,875
Provision for deferred income taxes 8,730 6,036
Provision for deferred revenue 0 171
Changes in operating assets and liabilities,
net of effects of acquisitions:
Accounts receivable (180,481) (109,810)
Inventories, prepaid expenses and other current
assets (66,512) (21,226)
Accounts payable and accrued expenses 1,734 (66,796)
----------- -----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 222,927 153,168
INVESTING ACTIVITIES
Purchases of property, plant and equipment (292,318) (219,209)
Additions to intangible assets, net of effects of
acquisitions (25,920) (57,579)
Assets obtained through acquisitions, net of liabilities
assumed (170,721) (56,241)
Payments on purchase accounting accruals related to 1997 acquisitions
and dispositions (274,507) 0
Changes in other assets (22,176) (17,007)
Proceeds received on sale of other marketable
securities 70 60
Investments in other marketable securities 0 (139)
----------- -----------
NET CASH USED IN
INVESTING ACTIVITIES (785,572) (350,115)
FINANCING ACTIVITIES
Proceeds from borrowings 1,676,348 339,666
Principal payments on long-term debt (1,083,727) (109,856)
Proceeds from exercise of options 51,790 18,948
Reduction in receivable from Employee Stock
Ownership Plan 2,078 1,901
Decrease in loans to stockholders 236 50
Proceeds from investment by minority interests 1,662 548
Payment of cash distributions to limited partners (33,525) (28,550)
----------- -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 614,862 222,707
----------- -----------
INCREASE IN CASH AND
CASH EQUIVALENTS 52,217 25,760
Cash and cash equivalents at beginning of period 148,073 150,071
----------- -----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 200,290 $ 175,831
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the year for:
Interest $ 62,322 $ 53,454
Income taxes 261,612 86,888
</TABLE>
5
<PAGE>
HEALTHSOUTH CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED - IN THOUSANDS)
Non-cash investing activities:
During 1998, the Company issued 699,000 shares of its common stock with a
market value of $19,397,000 as consideration for acquisitions accounted for
as purchases.
Non-cash financing activities:
The holders of the Company's $115,000,000 in aggregate principal amount of
5% Convertible Subordinated Debentures due 2001 surrendered the Debentures
for conversion into approximately 12,226,000 shares of the Company's Common
Stock at various dates during 1997.
During 1997, the Company had a two-for-one stock split on its common stock,
which was effected in the form of a 100% stock dividend.
The Company received a tax benefit from the disqualifying disposition of
incentive stock options of $17,961,000 for the six months ended June 30,
1998.
See accompanying notes.
6
<PAGE>
HEALTHSOUTH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
NOTE 1 -- The accompanying consolidated financial statements include the
accounts of HEALTHSOUTH Corporation (the "Company") and its
subsidiaries. This information should be read in conjunction with
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997. It is management's opinion that the accompanying
consolidated financial statements reflect all adjustments (which are
normal recurring adjustments, except as otherwise indicated)
necessary for a fair presentation of the results for the interim
period and the comparable period presented.
NOTE 2 -- The Company has a $1,750,000,000 revolving credit facility with
NationsBank, N.A. ("NationsBank") and other participating banks (the
"1998 Credit Agreement"). The 1998 Credit Agreement replaced a
previous $1,250,000,000 revolving credit agreement, also with
NationsBank, consisting of a $350,000,000 two-year amortizing term
note maturing on December 31, 1999, and a $900,000,000 revolving
credit facility. In conjunction with the 1998 Credit Agreement, the
Company also canceled its $350,000,000 364-day interim revolving
credit facility with NationsBank. Interest on the 1998 Credit
Agreement is paid based on LIBOR plus a predetermined margin, a base
rate, or competitively bid rates from the participating banks. The
Company is required to pay a fee based on the unused portion of the
revolving credit facility ranging from 0.09% to 0.25%, depending on
certain defined ratios. The principal amount is payable in full on
June 22, 2003. The Company has provided a negative pledge on all
assets under the 1998 Credit Agreement.
On March 24, 1994, the Company issued $250,000,000 principal amount
of 9.5% Senior Subordinated Notes due 2001 (the "Notes"). Interest
is payable on April 1 and October 1. The Notes are senior
subordinated obligations of the Company and, as such, are
subordinated to all existing and future senior indebtedness of the
Company. The net proceeds from the issuance of the Notes were used
by the Company to pay down indebtedness outstanding under its
existing credit facilities.
On March 20, 1998, the Company issued $500,000,000 in 3.25%
Convertible Subordinated Debentures due 2003 (the "3.25% Convertible
Debentures") in a private placement. An additional $67,750,000
principal amount of the 3.25% Convertible Debentures was issued on
March 31, 1998 to cover underwriters' overallotments. Interest is
payable on April 1 and October 1. The 3.25% Convertible Debentures
are convertible into Common Stock of the Company at the option of
the holder at a conversion price of $36.625 per share, subject to
adjustment upon the occurrence of certain events. The net proceeds
from the issuance of the 3.25% Convertible Debentures were used by
the Company to pay down indebtedness outstanding under its existing
credit facilities.
On June 22, 1998, the Company issued $250,000,000 in 6.875% Senior
Notes due 2005 and $250,000,000 in 7.0% Senior Notes due 2008
(collectively, the "Senior Notes"). Interest is payable on June 15
and December 15 of each year, commencing on December 15, 1998. The
Senior Notes are unsecured, unsubordinated obligations of the
Company. The net proceeds from the issuance of the Senior Notes were
used by the Company to pay down indebtedness outstanding under its
existing credit facilities.
7
<PAGE>
At June 30, 1998, and December 31, 1997, long-term debt consisted of the
following:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
----------------- -----------------
(in thousands)
<S> <C> <C>
Advances under the 1998 Credit Agreement $ 750,000 $ 1,175,000
9.5% Senior Subordinated Notes due 2001 250,000 250,000
3.25% Convertible Subordinated Debentures
due 2003 567,750 0
6.875% Senior Notes due 2005 250,000 0
7.0% Senior Notes due 2008 250,000 0
Other long-term debt 170,556 176,824
----------------- -----------------
2,238,306 1,601,824
Less amounts due within one year 47,600 46,489
----------------- -----------------
$2,190,706 $1,555,335
================= =================
</TABLE>
NOTE 3 -- During the first six months of 1998, the Company acquired 73
outpatient rehabilitation facilities, three outpatient surgery
centers and 11 diagnostic imaging centers. The total purchase price
of the acquired facilities was approximately $190,118,000. The
Company also entered into non-compete agreements totaling
approximately $15,946,000 in connection with these transactions. The
cost in excess of the acquired facilities' net asset value was
approximately $110,957,000. The results of operations (not material
individually or in the aggregate) of these acquisitions are included
in the consolidated financial statements from their respective
acquisition dates.
Effective July 1, 1998, the Company acquired Columbia/HCA Healthcare
Corporation's interests in 33 ambulatory surgery centers in a
transaction to be accounted for as a purchase. Effective July 31,
1998, the Company entered into certain other arrangements to acquire
substantially all of the economic benefit of Columbia/HCA's
interests in one additional ambulatory surgery center. The
transaction was valued at approximately $550,000,000.
On July 22, 1998, the Company consummated the acquisition of
National Surgery Centers, Inc. ("NSC") in a transaction to be
accounted for as a pooling of interests. A total of 20,426,261
shares of the Company's Common Stock were issued in the transaction,
representing a value of approximately $567,779,000 at the time of
the acquisition. NSC operates 40 outpatient surgery centers in 14
states.
NOTE 4 -- During the first six months of 1998, the Company granted incentive
and nonqualified stock options to certain Directors, employees and
others for 465,000 shares of Common Stock at exercise prices ranging
from $26.94 to $28.06 per share.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company provides outpatient and rehabilitative healthcare services
through its inpatient and outpatient rehabilitation facilities, surgery centers,
diagnostic centers and medical centers. The Company has expanded its operations
through the acquisition or opening of new facilities and satellite locations and
by enhancing its existing operations. As of June 30, 1998, the Company had over
1,900 locations in 50 states, the United Kingdom and Australia, including
approximately 1,240 outpatient rehabilitation locations, 132 inpatient
rehabilitation facilities, four medical centers, 176 surgery centers, 119
diagnostic centers and approximately 239 locations providing other patient care
services.
The Company's revenues include net patient service revenues and other
operating revenues. Net patient service revenues are reported at estimated net
realizable amounts from patients, insurance companies, third-party payors
(primarily Medicare and Medicaid) and others for services rendered. Revenues
from third-party payors also include estimated retroactive adjustments under
reimbursement agreements which are subject to final review and settlement by
appropriate authorities. Management determines allowances for doubtful accounts
and contractual adjustments based on historical experience and the terms of
payor contracts. Net accounts receivable include only those amounts estimated by
management to be collectible.
The Company determines the amortization period of the cost in excess of net
asset value of purchased facilities based on an evaluation of the facts and
circumstances of each individual purchase transaction. The evaluation includes
an analysis of historic and projected financial performance, an evaluation of
the estimated useful life of the buildings and fixed assets acquired, the
indefinite useful life of Certificates of Need and licenses acquired, the
competition within local markets, lease terms where applicable, and the legal
terms of partnerships where applicable. The Company utilizes independent
appraisers and relies on its own management expertise in evaluating each of the
factors noted above. With respect to the carrying value of the excess of cost
over net asset value of purchased facilities and other intangible assets, the
Company determines on a quarterly basis whether an impairment event has occurred
by considering factors such as the market value of the asset, a significant
adverse change in legal factors or in the business climate, adverse action by
regulators, a history of operating losses or cash flow losses, or a projection
of continuing losses associated with an operating entity. The carrying value of
excess cost over net asset value of purchased facilities and other intangible
assets will be evaluated if the facts and circumstances suggest that it has been
impaired. If this evaluation indicates that the value of the asset will not be
recoverable, as determined based on the undiscounted cash flows of the entity
acquired over the remaining amortization period, the Company's carrying value of
the asset will be reduced by the estimated shortfall of cash flows to the
estimated fair market value.
The Company, in many cases, operates more than one site within a market. In
such markets, there is customarily an outpatient center or inpatient facility
with associated satellite outpatient locations. For purposes of the following
discussion and analysis, same store operations are measured on locations within
markets in which similar operations existed at the end of the period and include
the operations of additional locations opened within the same market. New store
operations are measured on locations within new markets. The Company may, from
time to time, close or consolidate similar locations in multi-site markets to
obtain efficiencies and respond to changes in demand.
9
<PAGE>
RESULTS OF OPERATIONS -- THREE MONTHS ENDED JUNE 30, 1998
The Company operated approximately 1,240 outpatient locations (which
includes base facilities and satellites) at June 30, 1998, compared to
approximately 830 outpatient locations at June 30, 1997. In addition, the
Company operated 132 inpatient rehabilitation facilities, four medical centers,
176 surgery centers, and 119 diagnostic centers at June 30, 1998, compared with
99 inpatient facilities, four medical centers, 142 surgery centers and 77
diagnostic centers at June 30, 1997.
The Company's operations generated revenues of $942,482,000 for the quarter
ended June 30, 1998, an increase of $219,465,000, or 30.4%, as compared to the
same period in 1997. The increase in revenues is primarily attributable to
increases in patient volume and the addition of new outpatient, inpatient,
diagnostic and surgery centers. Same store revenues for the quarter ended June
30, 1998, were $797,900,000, an increase of $74,883,000, or 10.4%, as compared
to the same period in 1997. New store revenues were $144,582,000. Revenues
generated from patients under Medicare and Medicaid plans respectively accounted
for 36.1% and 2.6% of revenue for the second quarter of 1998, compared to 38.0%
and 2.3% for the same period in 1997. Revenues from any other single third-party
payor were not significant in relation to the Company's revenues. During the
second quarter of 1998, same store outpatient visits, inpatient days, surgical
cases and diagnostic cases increased 16.9%, 10.1%, 6.8% and 10.5%, respectively.
Revenue per outpatient visit, inpatient day, surgical case and diagnostic case
for same store operations increased (decreased) by 0.6%, 0.4%, (0.7)% and 0.3%,
respectively.
Operating expenses, at the operating unit level, were $578,637,000, or
61.4% of revenues, for the quarter ended June 30, 1998, compared to 62.5% of
revenues for the second quarter of 1997. The decrease in operating expenses as a
percentage of revenues is primarily attributable to the 10.4% increase in same
store revenues noted above. In same store operations, the incremental costs
associated with increased revenues are significantly less as a percentage of
those increased revenues. Same store operating expenses were $487,960,000, or
61.2% of comparable revenue. New store operating expenses were $90,677,000, or
62.7% of comparable revenue. Corporate general and administrative expenses
increased from $18,509,000 during the 1997 quarter to $26,257,000 during the
1998 quarter. As a percentage of revenue, corporate general and administrative
expenses increased from 2.6% in the 1997 quarter to 2.8% in the 1998 quarter.
The provision for doubtful accounts was $21,970,000, or 2.3% of revenues, for
the second quarter of 1998, compared to $18,075,000, or 2.5% of revenues, for
the same period in 1997. Management believes that this provision is adequate to
cover any uncollectible revenues.
Depreciation and amortization expense was $80,331,000 for the quarter ended
June 30, 1998, compared to $60,145,000 for the same period in 1997. The increase
represents the investment in additional assets by the Company. Interest expense
was $28,582,000 for the quarter ended June 30, 1998, compared to $27,742,000 for
the quarter ended June 30, 1997. For the second quarter of 1998, interest income
was $2,881,000, compared to $1,284,000 for the second quarter of 1997.
Income before minority interests and income taxes for the second quarter of
1998 was $209,586,000, compared to $148,180,000 for the same period in 1997.
Minority interests decreased income before income taxes by $17,093,000 for the
quarter ended June 30, 1998, compared to decreasing income before income taxes
by $16,807,000 for the second quarter of 1997. The provision for income taxes
for the second quarter of 1998 was $75,265,000, compared to $50,054,000 for the
same period in 1997, resulting in effective tax rates of 39.1% and 38.1%,
respectively. Net income for the second quarter of 1998 was $117,228,000,
compared to $81,319,000 for the second quarter of 1997.
10
<PAGE>
RESULTS OF OPERATIONS -- SIX MONTHS ENDED JUNE 30, 1998
Revenues for the six months ended June 30, 1998, were $1,850,145,000, an
increase of $435,497,000, or 30.8%, over the six months ended June 30, 1997.
Same store revenues were $1,561,114,000, an increase of $146,466,000, or 10.4%,
as compared to the same period in 1997. New store revenues were $289,031,000.
Revenues generated from patients under Medicare and Medicaid plans respectively
accounted for 35.8% and 2.6% of revenue for the first six months of 1998,
compared to 37.9% and 2.4% for the same period in 1997. Revenues from any other
single third-party payor were not significant in relation to the Company's
revenues. During the first six months of 1998, same store outpatient visits,
inpatient days, surgical cases and diagnostic cases increased 17.8%, 10.1%, 7.2%
and 11.0%, respectively. Revenue per outpatient visit, inpatient day, surgical
case and diagnostic case for same store operations increased (decreased) by
1.1%, 0.4%, (0.9)% and (0.5)%, respectively.
Operating expenses, at the operating unit level, were $1,140,128,000, or
61.6% of revenues, for the six months ended June 30, 1998, as compared to
$889,939,000, or 62.9% of revenues, for the first six months of 1997. Same store
operating expenses were $956,594,000, or 61.3% of comparable revenue. New store
operating expenses were $183,534,000, or 63.5% of comparable revenue. As a
result of its acquisition of Health Images, Inc., the Company recognized
$15,875,000, primarily representing accounting, legal and financial advisory
services, in merger costs during the first quarter of 1997. Net income for the
six months ended June 30, 1998, was $226,596,000, compared to $145,899,000 for
the same period in 1997.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1998, the Company had working capital of $1,046,498,000,
including cash and marketable securities of $204,546,000. Working capital at
December 31, 1997, was $566,751,000, including cash and marketable securities of
$152,399,000. For the first six months of 1998, cash provided by operations was
$222,927,000, compared to $153,168,000 for the same period in 1997. Additions to
property, plant, and equipment and acquisitions accounted for $292,318,000 and
$170,721,000, respectively, during the first six months of 1998. Those same
investing activities accounted for $219,209,000 and $56,241,000, respectively,
in the same period in 1997. Financing activities provided $614,862,000 and
$222,707,000 during the first six months of 1998 and 1997, respectively. Net
borrowing proceeds (borrowing less principal reductions) for the first six
months of 1998 and 1997 were $592,621,000 and $229,810,000, respectively.
Accounts receivable were $891,391,000 at June 30, 1998, compared to
$745,994,000 at December 31, 1997. The number of days of average revenues in
average receivables at June 30, 1998, was 76.5, compared to 75.7 days of average
revenues in average receivables at December 31, 1997. The concentration of net
accounts receivable from patients, third-party payors, insurance companies and
others at June 30, 1998, is consistent with the related concentration of
revenues for the period then ended.
The Company has a $1,750,000,000 revolving credit facility with
NationsBank, N.A. ("NationsBank") and other participating banks (the "1998
Credit Agreement"). The 1998 Credit Agreement replaced a previous $1,250,000,000
revolving credit agreement, also with NationsBank, consisting of a $350,000,000
two-year amortizing term note maturing on December 31, 1999, and a $900,000,000
revolving credit facility. In conjunction with the 1998 Credit Agreement, the
Company also canceled its $350,000,000 364-day interim revolving credit facility
with NationsBank. Interest on the 1998 Credit Agreement is paid based on LIBOR
plus a predetermined margin, a base rate, or competitively bid rates from the
participating banks. The Company is required to pay a fee based on the unused
portion of the revolving credit facility ranging from 0.09% to 0.25%, depending
on certain defined ratios. The principal amount is payable in full on June 22,
2003. The Company has provided a negative pledge on all assets under the 1998
Credit Agreement. The effective interest rate on the average outstanding balance
under the 1998 Credit Agreement was 5.8% for the six months ended June 30, 1998,
compared to the average prime rate of 8.5% during the same period. At June 30,
1998, the Company had drawn $750,000,000 under the 1998 Credit Agreement.
11
<PAGE>
On March 20, 1998, the Company issued $500,000,000 in 3.25% Convertible
Subordinated Debentures due 2003 (the "3.25% Convertible Debentures") in a
private placement. An additional $67,750,000 principal amount of the 3.25%
Convertible Debentures was issued on March 31, 1998 to cover underwriters'
overallotments. Interest is payable on April 1 and October 1 of each year,
commencing on October 1, 1998. The Convertible Debentures are convertible into
Common Stock of the Company at the option of the holder at a conversion price of
$36.625 per share, subject to the adjustment upon the occurrence of certain
events. The net proceeds from the issuance of the Convertible Debentures were
used by the Company to pay down indebtedness outstanding under its other
existing credit facilities.
On June 22, 1998, the Company issued $250,000,000 in 6.875% Senior Notes
due 2005 and $250,000,000 in 7.0% Senior Notes due 2008 (collectively, the
"Senior Notes"). Interest is payable on June 15 and December 15 of each year,
commencing on December 15, 1998. The Senior Notes are unsecured, unsubordinated
obligations of the Company. The net proceeds from the issuance of the Senior
Notes were used by the Company to pay down indebtedness outstanding under its
existing credit facilities.
Effective July 1, 1998, the Company acquired Columbia/HCA Healthcare
Corporation's interests in 33 ambulatory surgery centers in a transaction to be
accounted for as a purchase. Effective July 31, 1998, the Company entered into
certain other arrangements to acquire substantially all of the economic benefit
of Columbia/HCA's interests in one additional ambulatory surgery center. The
transaction was valued at approximately $550,000,000.
On July 22, 1998, the Company consummated the acquisition of National
Surgery Centers, Inc. ("NSC") in a transaction to be accounted for as a pooling
of interests. A total of 20,426,261 shares of the Company's Common Stock were
issued in the transaction, representing a value of approximately $567,779,000 at
the time of the acquisition. NSC operates 40 outpatient surgery centers in 14
states.
The Company intends to pursue the acquisition or development of additional
healthcare operations, including comprehensive outpatient rehabilitation
facilities, ambulatory surgery centers, inpatient rehabilitation facilities and
companies engaged in the provision of outpatient surgery and
rehabilitation-related services, and to expand certain of its existing
facilities. While it is not possible to estimate precisely the amounts which
will actually be expended in the foregoing areas, the Company anticipates that
over the next twelve months, it will spend approximately $150,000,000 on
maintenance and expansion of its existing facilities and approximately
$300,000,000 on development of the Integrated Service Model, pursuant to which
the Company plans to utilize its services in particular markets to provide an
integrated continuum of coordinated care.
Although the Company is continually considering and evaluating acquisitions
and opportunities for future growth, the Company has not entered into any
agreements with respect to material future acquisitions. The Company believes
that existing cash, cash flow from operations, and borrowings under the 1998
Credit Agreement will be sufficient to satisfy the Company's estimated cash
requirements for the next twelve months and for the reasonably foreseeable
future.
Inflation in recent years has not had a significant effect on the Company's
business, and is not expected to adversely affect the Company in the future
unless it increases significantly.
EXPOSURES TO MARKET RISK
The Company is exposed to market risk related to changes in interest rates.
Because of its favorable borrowing arrangements and current market conditions,
the Company currently does not use derivatives, such as swaps or caps, to alter
the interest characteristics of its debt instruments and investment securities.
The impact on earnings and value of market risk-sensitive financial instruments
(principally marketable security investments and long-term debt) is subject to
change as a result of movements in market rates and prices. The Company uses
sensitivity analysis models to evaluate these impacts.
12
<PAGE>
The Company's investment in marketable securities was $4,256,000 at June
30, 1998, which represents less than 0.1% of total assets at that date. These
securities are generally short-term, highly-liquid instruments and, accordingly,
their fair value approximates cost. Earnings on investments in marketable
securities are not significant to the Company's results of operations, and
therefore any changes in interest rates would have a minimal impact on future
pre-tax earnings.
With respect to the Company's interest-bearing liabilities, approximately
$750,000,000 in long-term debt at June 30, 1998 is subject to variable rates of
interest, while the remaining balance in long-term debt of $1,488,306,000 is
subject to fixed rates of interest (see Note 2 of "Notes to Consolidated
Financial Statements" for further description). The fair value of the Company's
total long-term debt, based on discounted cash flow analyses, approximates its
carrying value at June 30, 1998. Based on a hypothetical 1% increase in interest
rates, the potential losses in future annual pre-tax earnings would be
approximately $7,500,000. The impact of such a change on the carrying value of
long-term debt would not be significant. These amounts are determined
considering the impact of the hypothetical interest rates on the Company's
borrowing cost and long-term debt balances. These analyses do not consider the
effects, if any, of the potential changes in the overall level of economic
activity that could exist in such an environment. Further, in the event of a
change of significant magnitude, management would expect to take actions
intended to further mitigate its exposure to such change.
Foreign operations, and the related market risks associated with foreign
currency, are currently insignificant to the Company's results of operations and
financial position.
COMPUTER TECHNOLOGIES AND YEAR 2000 COMPLIANCE
The Company is aware of the issues associated with the programming code in
existing computer systems as the year 2000 approaches. Many existing computer
programs use only two digits to identify a year in the date field. The issue is
whether such code exists in the Company's mission-critical applications and if
that code will produce accurate information to date-sensitive calculations after
the turn of the century.
The Company is involved in an extensive, ongoing program to identify and
correct problems arising from the year 2000 issues. The program is broken down
into the following categories: (1) mission-critical computer applications which
are internally maintained by the Company's information technology department;
(2) mission-critical computer applications which are maintained by third-party
vendors; (3) non-mission-critical applications, whether internally or externally
maintained; (4) hardware; (5) embedded applications which control certain
medical and other equipment; (6) computer applications of its significant
suppliers; and (7) computer applications of its significant payors.
Mission-critical computer applications are those which are integral to the
Company's business mission, which have no reasonable manual alternative for
producing the same information and results, and the failure of which to produce
accurate information and results would have a significant adverse impact on the
Company. Such applications include the Company's general business systems and
its patient billing systems. Most of the Company's clinical applications are not
considered mission-critical, because reasonable manual alternatives are
available to produce the same information and results for as long as necessary.
The Company's review of its internally maintained mission-critical
applications revealed that such applications contained very few date-sensitive
calculations. The revisions to these applications are scheduled to be completed
by October 31, 1998, tested during November and December, 1998 and implemented
during the first quarter of 1999. The budget for this project is approximately
$150,000. The project is currently on schedule, with coding approximately 25%
complete at the end of July 1998.
The Company's general business applications are all licensed from and
maintained by the same vendor. All such applications are already year 2000
compliant. The Company has received written confirmation from the vendors of its
other externally maintained mission-critical applications that such
13
<PAGE>
applications are currently year 2000 compliant or will be made year 2000
compliant by the end of 1998. The cost to be incurred by the Company related to
externally maintained applications is not currently expected to be material.
The Company has reviewed all of its non-mission-critical applications and
determined that some of these applications are not year 2000 compliant and will
not be made to be compliant. In such cases, the Company has developed manual
alternatives to produce the information that such systems currently produce. The
incremental cost of the manual systems is not currently estimated to be
material. The Company plans to evaluate the effectiveness of the manual systems
before any decisions are made on the replacement of the non-compliant
applications.
The Company has engaged a consultant to test all of its computer hardware
for year 2000 compliance at a cost of approximately $800,000. The results of
these tests are expected to be available by November 30, 1998. The Company has
regularly upgraded its significant servers and hardware platforms. Therefore, it
is expected that the consultant's tests will only reveal that the Company's
older personal computers are not year 2000 compliant. Once the results of the
tests are available, the Company will determine which hardware components are
necessary to replace and will develop a plan to do so. The cost of such
replacements cannot be estimated until the plan is developed.
The Company has not completed its review of embedded applications which
control certain medical and other equipment. The Company expects to complete
this review during the third quarter of 1998. The nature of the Company's
business is such that any failure of these type applications is not expected to
have a material adverse effect on its business.
The Company has sent inquiries to its significant suppliers of equipment
and medical supplies concerning the year 2000 compliance of their significant
computer applications. Responses have been received from over 50% of those
suppliers, and no significant problems have been identified. Second requests
have been mailed to all non-respondents.
The Company has also sent inquires to its significant third-party payors.
Responses have been received from payors representing over 35% of the Company's
revenues. Such responses indicate that these payors' systems will be year 2000
compliant. Second requests will be mailed to all non-respondents during October
1998. The Company will continue to evaluate year 2000 risks with respect to such
payors as additional responses are received. In that connection, it should be
noted that substantially all of the Company's revenues are derived from
reimbursement by governmental and private third-party payors, and that the
Company is dependent upon such payors' evaluation of their year 2000 compliance
status to assess such risks. If such payors are incorrect in their evaluation of
their own year 2000 compliance status, this could result in delays or errors in
reimbursement to the Company by such payors, the effects of which could be
material to the Company.
Based on the information currently available, the Company believes that its
risk associated with problems arising from year 2000 issues is not significant.
However, because of the many uncertainties associated with year 2000 compliance
issues, and because the Company's assessment is necessarily based on information
from third-party vendors, payors and suppliers, there can be no assurance that
the Company's assessment is correct or as to the materiality or effect of any
failure of such assessment to be correct. The Company will continue with its
assessment process as described above and, to the extent that changes in such
assessment require it, will attempt to develop alternatives or modifications to
its compliance plan described above. There can, however, be no assurance that
such compliance plan, as it may be changed, augmented or modified from time to
time, will be successful.
FORWARD-LOOKING STATEMENTS
Statements contained in this Quarterly Report on Form 10-Q which are
not historical facts are forward-looking statements. In addition, the Company,
through its senior management, from time to time makes forward-looking public
statements concerning its expected future operations and performance and
14
<PAGE>
other developments. Such forward-looking statements are necessarily estimates
reflecting the Company's best judgment based upon current information and
involve a number of risks and uncertainties, and there can be no assurance that
other factors will not affect the accuracy of such forward-looking statements.
While it is impossible to identify all such factors, factors which could cause
actual results to differ materially from those estimated by the Company include,
but are not limited to, changes in the regulation of the healthcare industry at
either or both of the federal and state levels, changes in reimbursement for the
Company's services by governmental or private payors, competitive pressures in
the healthcare industry and the Company's response thereto, the Company's
ability to obtain and retain favorable arrangements with third-party payors,
unanticipated delays in the Company's implementation of its Integrated Service
Model, general conditions in the economy and capital markets, and other factors
which may be identified from time to time in the Company's Securities and
Exchange Commission filings and other public announcements.
15
<PAGE>
PART II -- OTHER INFORMATION
Item 2. CHANGES IN SECURITIES.
(c) Recent Sales of Unregistered Securities
There were no sales of equity securities in transactions not registered
under the Securities Act of 1933, as amended, during the period covered by
this Quarterly Report on Form 10-Q.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On May 21, 1998, the Annual Meeting of Stockholders of the Company was
held, at which shares of Common Stock represented at the Annual Meeting were
voted in favor of the election of Directors as follows:
<TABLE>
<CAPTION>
FOR WITHHOLD
------------ -----------
<S> <C> <C>
1. Richard M. Scrushy 352,177,679 3,686,982
2. Phillip C. Watkins, M.D. 352,338,619 3,526,042
3. George H. Strong 352,292,782 3,571,879
4. C. Sage Givens 352,302,167 3,562,494
5. Charles W. Newhall III 352,335,893 3,528,768
6. John S. Chamberlin 352,304,810 3,559,851
7. Michael D. Martin 352,331,517 3,533,144
8. James P. Bennett 352,318,788 3,545,873
9. Edwin M. Crawford 352,313,632 3,551,029
10. Anthony J. Tanner 352,329,725 3,534,936
11. P. Daryl Brown 352,326,846 3,537,815
12. Joel C. Gordon 352,303,732 3,560,929
</TABLE>
In addition, shares of Common Stock represented at the Annual Meeting were
voted in favor of the approval and adoption of an amendment to the Company's
Restated Certificate of Incorporation to increase the number of authorized
shares of Common Stock of the Company to 600,000,000 as follows:
<TABLE>
<CAPTION>
Number of Shares
Voting For Against Abstain
---------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
355,864,328 350,560,742 4,448,004 815,582
</TABLE>
In addition, shares of Common Stock represented at the Annual Meeting were
voted in favor of the approval and adoption of the Company's 1998 Restricted
Stock Plan as follows:
<TABLE>
<CAPTION>
Number of Shares
Voting For Against Abstain
---------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
355,864,393 276,630,088 78,002,741 1,231,564
</TABLE>
Finally, shares of Common Stock represented at the Annual Meeting were
voted against a stockholder proposal relating to the composition of the Audit
and Compensation Committee of the Board of Directors as follows:
<TABLE>
<CAPTION>
Number of Shares
Voting For Against Abstain
---------------------- ---------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
318,520,192 63,302,163 252,507,432 2,710,597
</TABLE>
16
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
4-1. Indenture, dated June 22, 1998, between HEALTHSOUTH Corporation
and PNC Bank, National Association, as Trustee.
4-2. Officer's Certificate pursuant to Sections 2.3 and 11.5 of the
Indenture, dated June 22, 1998, between HEATLHSOUTH Corporation
and PNC Bank, National Association, as Trustee, relating to the
Company's 6.875% Senior Notes due 2005 and 7.0% Senior Notes due
2008.
4-3. Registration Rights Agreement, dated June 22, 1998, among
HEALTHSOUTH Corporation and Salomon Brothers Inc, Goldman, Sachs
& Co., J.P. Morgan Securities Inc., Merrill Lynch, Pierce, Fenner
& Smith Incorporated, Morgan Stanley & Co. Incorporated,
NationsBanc Montgomery Securities LLC, Bear, Stearns & Co. Inc.,
Credit Suisse First Boston Corporation, Deutsche Bank Securities
Inc., Paine Webber Incorporated and Scotia Capital Markets (USA)
Inc. relating to the Company's 6.875% Senior Notes due 2005 and
7.0% Senior Notes due 2008.
10. Credit Agreement, dated June 23, 1998, by and among HEALTHSOUTH
Corporation, NationsBank, National Association, J.P. Morgan
Securities Inc., Deutsche Bank AG, ScotiaBanc, Inc. and the
Lenders party thereto from time to time.
11. Computation of Income Per Share (unaudited)
27. Financial Data Schedule
(b) Reports on Form 8-K
During the three months ended June 20, 1998, the Company filed (a) a
Current Report on Form 8-K filed April 3, 1998, reporting under Item 9
the issuance and sale of $567,750,000 aggregate principal amount of
3.25% Convertible Subordinated Debentures due 2003, and (b) a Current
Report on Form 8-K filed May 28, 1998, reporting under Item 5 the
filing of the Company's latest Restated Certificate of Incorporation
and its adoption of amended and restated By-Laws.
No other items of Part II are applicable to the Registrant for the period
covered by this Quarterly Report on Form 10-Q.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
HEALTHSOUTH CORPORATION
-----------------------
(Registrant)
Date: August 14, 1998 RICHARD M. SCRUSHY
-------------------------------------
Richard M. Scrushy
Chairman of the Board and
Chief Executive Officer
Date: August 14, 1998 MICHAEL D. MARTIN
-------------------------------------
Michael D. Martin
Executive Vice President,
Chief Financial Officer and Treasurer
18
EXHIBIT (4)-1
EXECUTION COPY
- - --------------------------------------------------------------------------------
HEALTHSOUTH CORPORATION
and
PNC BANK, NATIONAL ASSOCIATION, as Trustee
--------------------
INDENTURE
Dated as of June 22, 1998
--------------------
- - --------------------------------------------------------------------------------
<PAGE>
CROSS REFERENCE SHEET*
Between
Provisions of Trust Indenture Act (as defined herein) and Indenture
dated as of June 22, 1998 between HEALTHSOUTH Corporation and PNC Bank, National
Association, Trustee:
SECTION OF THE ACT SECTION OF INDENTURE
310(a)(1) and (2)............................................................6.9
310(a)(3) and (4)...................................................Inapplicable
310(b)..............................................6.8 and 6.10(a), (b) and (d)
310(c)..............................................................Inapplicable
311(a)......................................................................6.14
311(b)......................................................................6.14
311(c)..............................................................Inapplicable
312(a)...............................................................4.1 and 4.2
312(b).......................................................................4.2
312(c).......................................................................4.2
313(a).......................................................................4.3
313(b)(1)...........................................................Inapplicable
313(b)(2)....................................................................4.3
313(c)................................................4.3, 5.11, 6.10, 6.11, 8.2
and 12.2
313(d).......................................................................4.3
314(a)...............................................................3.5 and 4.2
314(b)..............................................................Inapplicable
314(c)(1) and (2)...........................................................11.5
314(c)(3)...........................................................Inapplicable
314(d)..............................................................Inapplicable
314(e)......................................................................11.5
314(f)..............................................................Inapplicable
315(a), (c) and (d)..........................................................6.1
315(b)......................................................................5.11
315(e)......................................................................5.12
316(a)(1)...........................................................5.9 and 5.10
316(a)(2)...........................................................Not required
316(a) (last sentence).......................................................7.4
316(b).......................................................................5.7
317(a).......................................................................5.2
317(b)............................................................3.4(a) and (b)
318(a)......................................................................11.7
*This Cross Reference Sheet is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE 1 DEFINITIONS ..............................................1
SECTION 1.1 Certain Terms Defined ....................................1
"Affiliate" .............................................................2
"Authenticating Agent" ..................................................2
"Authorized Newspaper" ..................................................2
"Board of Directors" ....................................................2
"Board Resolution" ......................................................2
"Business Day" ..........................................................2
"Capital Stock" .........................................................3
"Commission" ............................................................3
"Common Equity" .........................................................3
"Company" ...............................................................3
"Company Order" .........................................................3
"Consolidated Tangible Assets" ..........................................3
"Corporate Trust Office" ................................................3
"Coupon" ................................................................4
"Covenant Defeasance" ...................................................4
"Depositary" ............................................................4
"Dollar" or "$" .........................................................4
"ECU" ...................................................................4
"Event of Default" ......................................................4
"Exchange Act" ..........................................................4
"Fair Value" ............................................................4
"Foreign Currency" ......................................................4
"Holder," "Holder of Securities," "Securityholder" ......................4
"Indenture" .............................................................4
"Indenture" .............................................................5
"IRS" ...................................................................5
"Judgment Currency" .....................................................5
"Maturity" ..............................................................5
"Non-U.S. Person" .......................................................5
"Officer's Certificate" .................................................5
"144A Global Security" ..................................................5
"Opinion of Counsel" ....................................................5
"Original Issue Date" ...................................................5
"Original Issue Discount Security" ......................................5
"Outstanding" ...........................................................6
"Paying Agent" ..........................................................6
"Periodic Offering" .....................................................6
"Person" ................................................................7
"PORTAL Market" .........................................................7
"Predecessor Security" ..................................................7
"principal" .............................................................7
"QIB" or "Qualified Institutional Buyer" ................................7
"Regular Record Date" ...................................................7
"Registered Global Security" ............................................7
"Registered Security" ...................................................7
"Regulation S" ..........................................................7
"Regulation S Global Security" ..........................................7
"Required Currency" .....................................................7
"Responsible Officer" ...................................................7
"Restricted Security" ...................................................8
i
<PAGE>
"Rule 144" ..............................................................8
"Rule 144A" .............................................................8
"Rule 144K" .............................................................8
"Securities Act" ........................................................8
"Significant Subsidiary" ................................................8
"Special Record Date" ...................................................8
"Stated Maturity" .......................................................8
"Subsidiary" ............................................................9
"Transfer Restriction Termination Date" .................................9
"Trustee" ...............................................................9
"Unregistered Security" .................................................9
"U.S. Government Obligations" ...........................................9
"Voting Stock" ......................................................... 9
"Yield to Maturity" .................................................... 9
ARTICLE 2 SECURITIES ................................................ 9
SECTION 2.1 Forms Generally ...........................................10
SECTION 2.2 Form of Trustee's Certificate of Authentication ...........10
SECTION 2.3 Amount Unlimited; Issuable in Series ......................11
SECTION 2.4 Authentication and Delivery of Securities .................14
SECTION 2.5 Execution of Securities ...................................17
SECTION 2.6 Certificate of Authentication .............................18
SECTION 2.7 Denomination and Date of Securities; Payments of Interest..18
SECTION 2.8 Registration, Transfer and Exchange .......................20
SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen Securities .27
SECTION 2.10 Cancellation of Securities; Destruction Thereof ..........28
SECTION 2.11 Temporary Securities .....................................28
ARTICLE 3 COVENANTS OF THE COMPANY ..................................29
SECTION 3.1 Payment of Principal and Interest .........................29
SECTION 3.2 Offices for Payments, Etc .................................30
SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee ........31
SECTION 3.4 Paying Agents .............................................31
SECTION 3.5 Compliance Certificates ...................................32
SECTION 3.6 Corporate Existence .......................................33
SECTION 3.7 Maintenance of Properties .................................33
SECTION 3.8 Payment of Taxes and Other Claims .........................33
SECTION 3.9 Luxembourg Publications ...................................34
SECTION 3.10 Usury Laws ................................................34
ARTICLE 4 SECURITYHOLDER LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.1 Company to Furnish Trustee Information
as to Names and Addresses of Securityholders ..............34
SECTION 4.2 Preservation of Information; Communications to Holders ....35
SECTION 4.3 Reports by Trustee ........................................35
SECTION 4.4 Reports by Company ........................................35
ii
<PAGE>
ARTICLE 5 REMEDIES OF THE TRUSTEE AN
SECURITYHOLDERS ON EVENT OF DEFAULT
SECTION 5.1 Event of Default Defined, Acceleration
of Maturity; Waiver of Default ............................36
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment ........38
SECTION 5.3 Collection of Indebtedness by Trustee;
Trustee May Prove Debt ....................................40
SECTION 5.5 Trustee May Enforce Claims Without
Possession of Securities ..................................42
SECTION 5.6 Application of Proceeds ...................................42
SECTION 5.7 Suits for Enforcement .....................................44
SECTION 5.8 Limitations on Suits by Security Holders ..................44
SECTION 5.9 Unconditional Right of Securityholders
to Institute Certain Suits ................................45
SECTION 5.10 Restoration of Rights on Abandonment of
Proceedings ...............................................45
SECTION 5.11 Powers and Remedies Cumulative; Delay
or Omission Not Waiver of Default .........................45
SECTION 5.12 Delay or Omission Not Waiver ..............................45
SECTION 5.13 Control by Holders of Securities ..........................46
SECTION 5.14 Waiver of Past Defaults ...................................46
SECTION 5.15 Trustee to Give Notice of Default, But
May Withhold in Certain Circumstances .....................47
SECTION 5.16 Right of Court to Require Filing of
Undertaking to Pay Costs ..................................47
SECTION 5.17 Waiver of Stay or Extension Laws ..........................48
ARTICLE 6 CONCERNING THE TRUSTEE ....................................48
SECTION 6.1 Duties and Responsibilities of the
Trustee; During Default; Prior to
Default ...................................................48
SECTION 6.2 Certain Rights of the Trustee .............................50
SECTION 6.3 Trustee Not Responsible for Recitals,
Disposition of Securities or
Application of Proceeds Thereof ...........................51
SECTION 6.4 Trustee and Agents May Hold Securities
or Coupons; Collections, Etc. .............................51
SECTION 6.5 Moneys Held by Trustee ....................................51
SECTION 6.6 Compensation and Indemnification of
Trustee and Its Prior Claim ...............................52
SECTION 6.7 Right of Trustee to Rely on Officer's
Certificate, Etc .... .....................................52
SECTION 6.8 Indentures Not Creating Potential
Conflicting Interests for the Trustee .....................53
SECTION 6.9 Qualification of Trustee: Conflicting Interests ...........53
SECTION 6.10 Persons Eligible for Appointment as Trustee ...............53
SECTION 6.11 Resignation and Removal; Appointment of
Successor Trustee . .......................................53
SECTION 6.12 Acceptance of Appointment by Successor Trustee ............55
SECTION 6.13 Merger, Conversion, Consolidation or
Succession to Business of Trustee .........................57
iii
<PAGE>
SECTION 6.14 Preferential Collection of Claims
Against the Company .......................................57
SECTION 6.15 Appointment of Authenticating Agent .......................57
ARTICLE 7 CONCERNING THE SECURITYHOLDERS ............................59
SECTION 7.1 Evidence of Action Taken by
Securityholders ...........................................59
SECTION 7.2 Proof of Execution of Instruments and
of Holding of Securities ..................................60
SECTION 7.3 Holders to be Treated as Owners ...........................60
SECTION 7.4 Securities Owned by Company Deemed Not Outstanding ........60
SECTION 7.5 Right of Revocation of Action Taken .......................61
ARTICLE 8. SUPPLEMENTAL INDENTURES ...................................62
SECTION 8.1 Supplemental Indentures Without Consent
of Securityholders ........................................62
SECTION 8.2 Supplemental Indentures With Consent of Securityholders ...63
SECTION 8.4 Documents to be Given to Trustee ..........................65
SECTION 8.5 Notation on Securities in Respect of
Supplemental Indentures ...................................66
ARTICLE 9 CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.1 Company May Consolidate, Etc ..............................66
SECTION 9.2 Successor Entity Substituted ..............................67
SECTION 9.3 Opinion of Counsel To Be Given Trustee ....................67
ARTICLE 10 SATISFACTION AND DISCHARGE ................................67
SECTION 10.1 Satisfaction and Discharge of Indenture ..................67
SECTION 10.2 Application by Trustee of Funds
Deposited for Payment of Securities ......................72
SECTION 10.3 Repayment of Moneys Held by Paying Agent .................72
SECTION 10.4 Return of Unclaimed Moneys Held by
Trustee and Paying Agent .................................72
SECTION 10.5 Indemnity for U.S. Government Obligations ................73
ARTICLE 11 MISCELLANEOUS PROVISIONS .................................73
SECTION 11.1 Incorporators, Stockholders, Officers
and Directors of Company Exempt from
Individual Liability .....................................73
SECTION 11.2 Provisions of Indenture for the Sole
Benefit of Parties and Holders of
Securities and Coupons ...................................73
SECTION 11.3 Successors and Assigns of Company Bound by Indenture .....73
SECTION 11.4 Notices and Demands on Company, Trustee
and Holders of Securities and Coupons ....................74
SECTION 11.5 Officer's Certificates and Opinions of
Counsel; Statements to be Contained
Therein ..................................................74
SECTION 11.6 Payments Due on Saturdays, Sundays and Holidays ..........76
iv
<PAGE>
SECTION 11.7 Conflict of Any Provision of Indenture
with Trust Indenture Act .................................76
SECTION 11.8 New York Law to Govern ...................................76
SECTION 11.9 Counterparts .............................................76
SECTION 11.10 Effect of Headings .......................................76
SECTION 11.11 Securities in a Foreign Currency or in ECU ...............76
SECTION 11.12 Judgment Currency ........................................77
ARTICLE 12 REDEMPTION OF SECURITIES SINKING FUNDS ...................78
SECTION 12.1 Applicability of Article .................................78
SECTION 12.2 Notice of Redemption; Partial Redemptions ................78
SECTION 12.3 Payment of Securities Called for Redemption ..............80
SECTION 12.4 Exclusion of Certain Securities from
Eligibility for Selection for Redemption .................81
SECTION 12.5 Mandatory and Optional Sinking Funds .....................81
v
<PAGE>
THIS INDENTURE, dated as of June __, 1998, by and between HEALTHSOUTH
CORPORATION, a Delaware corporation (the "Company"), and PNC BANK, NATIONAL
ASSOCIATION, a national banking association, as trustee (the "Trustee"),
W I T N E S S E T H:
WHEREAS, the Company has duly authorized the issuance, sale, execution and
delivery, from time to time, of its unsecured evidences of unsubordinated
indebtedness (hereinafter referred to as the "Securities"), without limit as to
principal amount, issuable in one or more series, the amount and terms of each
such series to be determined as hereinafter provided; and, to provide the terms
and conditions upon which the Securities are to be issued, authenticated and
delivered, the Company has duly authorized the execution of this Indenture; and
WHEREAS, all acts and things necessary to make the Securities, when
executed by the Company and authenticated and delivered by the Trustee as in
this Indenture provided, the valid, binding and legal obligations of the
Company, and to constitute this Indenture a valid indenture and agreement
according to its terms, have been done and performed, and the execution of this
Indenture and the issuance hereunder of the Securities have in all respects been
duly authorized; and
WHEREAS, all things necessary to make this Indenture a valid indenture and
agreement according to its terms have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the Securities by the
holders thereof, the Company and the Trustee mutually covenant and agree for the
equal and proportionate benefit of the respective holders from time to time of
the Securities and of the coupons, if any, appertaining thereto as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 Certain Terms Defined
The following terms (except as otherwise expressly provided or unless the
context otherwise clearly requires) for all purposes of this Indenture and of
any indenture supplemental hereto shall have the respective meanings specified
in this Section. All other terms used in this Indenture that are defined in the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), or the
definitions of which in the Securities Act of 1933, as amended (the "Securities
Act"), are referred to in the Trust Indenture Act, including terms defined
therein by reference to the Securities Act (except as herein
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otherwise expressly provided or unless the context otherwise requires), shall
have the meaning assigned to such terms in the Trust Indenture Act and in the
Securities Act as in effect from time to time. All accounting terms used herein
and not expressly defined shall have the meanings assigned to such terms in
accordance with generally accepted accounting principles, and the term
"generally accepted accounting principles" means such accounting principles as
are generally accepted at the time of any computation unless a different time
shall be specified with respect to such series of Securities as provided for in
Section 2.3. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision. The terms defined in this Article have
the meanings assigned to them in this Article and include the plural as well as
the singular.
"Affiliate" has the same meaning as given to that term in Rule 405 under
the Securities Act or any successor provision.
"Authenticating Agent" shall have the meaning set forth in Section 6.15.
"Authorized Newspaper" means a newspaper (which, in the case of The City of
New York, will, if practicable, be The Wall Street Journal (Eastern Edition), in
the case of the United Kingdom of Great Britain and Northern Ireland (the
"United Kingdom"), will, if practicable, be The Financial Times (London Edition)
and, in the case of the Grand Duchy of Luxembourg ("Luxembourg"), will, if
practicable, be the Luxemburger Wort) published in an official or common
language of the county of publication customarily published at least once a day
for at least five days in each calendar week and of general circulation in The
City of New York, the United Kingdom or Luxembourg, as applicable. If it shall
be impractical in the opinion of the Trustee to make any publication of any
notice required hereby in an Authorized Newspaper, any publication or other
notice in lieu thereof which is made or given with the approval of the Trustee
shall constitute a sufficient publication of such notice.
"Board of Directors" means either the Board of Directors of the Company or
any committee of such Board duly authorized to act on its behalf.
"Board Resolution" means a copy of one or more resolutions, certified by
the secretary or an assistant secretary of the Company to have been duly adopted
or consented to by the Board of Directors and to be in full force and effect,
and delivered to the Trustee.
"Business Day" means, with respect to any Security, a day other than any
day on which banking institutions in the city (or in any of the cities, if more
than one) in which amounts are payable, as specified in the form of
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such Security, are authorized or required by any applicable law or regulation to
be closed.
"Capital Stock" of any Person means any and all shares, rights to purchase,
warrants or options (whether or not currently exercisable); participation or
other equivalents of or interests in (however designated) the equity (including,
without limitation, common stock, preferred stock and partnership and joint
venture interests) of such Person (excluding any debt securities that are
convertible into, or exchangeable for, such equity).
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution and delivery of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties on such date.
"Common Equity" of any Person means all Capital Stock of such Person that
is generally entitled to (a) vote in the election of directors of such Person or
(b) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control
the management and policies of such Person.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Order" means a written statement, request or order of the Company
signed in its name by the chairman of the Board of Directors, the president, any
vice president or the treasurer of the Company.
"Consolidated Tangible Assets" of any Person as of any date means the total
assets of such Person and its Subsidiaries (excluding any assets that would be
classified as "intangible assets" under generally accepted accounting principles
("GAAP")) on a consolidated basis at such date, as determined in accordance with
GAAP, less all write-ups subsequent to the date of initial issuance of the
Securities in the book value of any asset owned by such Person or any of its
Subsidiaries.
"Corporate Trust Office" means the office of the Trustee at which the
corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, as of the date of this Indenture,
located at 500 West Jefferson Street, Louisville, KY 40202, Attention: Corporate
Trust Administration.
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"Coupon" means any interest coupon appertaining to an Unregistered
Security.
"Covenant Defeasance" shall have the meaning set forth in Section 10.1(C).
"Defaulted Interest" has the meaning specified in Section 2.7.
"Depositary" means, with respect to the Securities of any series issuable
or issued in the form of one or more Registered Global Securities, the Person
designated as Depositary by the Company pursuant to Section 2.3 until a
successor Depositary shall have become such pursuant to the applicable
provisions of this Indenture, and thereafter "Depositary" shall mean or include
each Person who is then a Depositary hereunder, and if at any time there is more
than one such Person, "Depositary" as used with respect to the Securities of any
such series shall mean the Depositary with respect to the Registered Global
Securities of that series.
"Dollar" or "$" means the coin or currency of the United States of America
as at the time of payment is legal tender for the payment of public and private
debts.
"ECU" means the European Currency Unit as defined and revised from time to
time by the European Monetary System of the European Community.
"Event of Default" means any event or condition specified as such in
Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Value" when used with respect to any Voting Stock means the fair
value as determined in good faith by the Board of Directors of the Company.
"Foreign Currency" means a currency issued by the government of a country
other than the United States of America.
"Holder," "Holder of Securities," "Securityholder" or other similar terms
mean (a) in the case of any Registered Security, the person in whose name such
Security is registered in the Security Register kept by the Company for that
purpose in accordance with the terms hereof, and (b) in the case of any
Unregistered Security, the bearer of such Security, or any Coupon appertaining
thereto, as the case may be.
"Indenture" means this instrument as originally executed and delivered or,
if amended or supplemented as herein provided, as so amended or supplemented or
both, and
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shall include the forms and terms of particular series of Securities established
as contemplated hereunder.
"Indenture" means this instrument as originally executed and delivered or,
if amended or supplemented as herein provided, as so amended or supplemented or
both, and shall include the forms and terms of particular series of Securities
established as contemplated hereunder.
"Interest Payment Date," means the Stated Maturity of an installment of
interest on such Security.
"IRS" means the Internal Revenue Service of the United States Department of
the Treasury, or any successor entity.
"Judgment Currency" has the meaning set forth in Section 11.12.
"Maturity", when used with respect to any Security, means the date on which
the principal of such Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.
"Non-U.S. Person" means any person that is not a "U.S. person" as such term
is defined in Rule 902 under the Securities Act.
"Officer's Certificate" means a certificate signed by the chairman of the
Board of Directors, the president or any vice president or the treasurer of the
Company and delivered to the Trustee. Each such certificate shall comply with
Section 314 of the Trust Indenture Act and include the statements provided for
in Section 11.5.
"144A Global Security" has the meaning set forth in Section 2.8(b)(i).
"Opinion of Counsel" means an opinion in writing signed by legal counsel
who may be an employee of the Company or other counsel satisfactory to the
Trustee. Each such opinion shall comply with Section 314 of the Trust Indenture
Act and include the statements provided for in Section 11.5.
"Original Issue Date" of any Security (or portion thereof) means the
earlier of (a) the date of such Security or (b) the date of any Security (or
portion thereof) for which such Security was issued (directly or indirectly) on
registration of transfer, exchange or substitution.
"Original Issue Discount Security" means any Security that provides for an
amount less than the principal amount thereof to be due and
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payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 5.2.
"Outstanding" (except as otherwise provided in Section 7.4), when used with
reference to Securities, means, subject to the provisions of Section 7.4, as of
any particular time, all Securities authenticated and delivered by the Trustee
under this Indenture, except
(a) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or redemption of
which moneys or U.S. Government Obligations (as provided for in Section
10.1) in the necessary amount shall have been deposited in trust with the
Trustee or with any Paying Agent (other than the Company) or shall have
been set aside, segregated and held in trust by the Company for the Holders
of such Securities (if the Company shall act as its own Paying Agent),
provided, that if such Securities, or portions thereof, are to be redeemed
prior to the Maturity thereof, notice of such redemption shall have been
given as herein provided, or provisions satisfactory to the Trustee shall
have been made for giving such notice; and
(c) Securities which shall have been paid or in substitution for which
other Securities shall have been authenticated and delivered pursuant to
the terms of Section 2.9 (except with respect to any such Security as to
which proof satisfactory to the Trustee is presented that such Security is
held by a Person in whose hands such Security is a legal, valid and binding
obligation of the Company).
In determining whether the Holders of the requisite principal amount of
Outstanding Securities of any or all series have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, the principal
amount of an Original Issue Discount Security that shall be deemed to be
Outstanding for such purposes shall be the amount of the principal thereof that
would be due and payable as of the date of such determination upon a declaration
of acceleration of the Maturity thereof pursuant to Section 5.2.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Periodic Offering" means an offering of Securities of a series from time
to time, the specific terms of which Securities, including, without limitation,
the rate or rates of interest, if any, thereon, the Stated Maturity or
Maturities thereof and the redemption provisions, if any, with respect thereto,
are to be determined
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by the Company or its agents upon the issuance of such Securities.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"PORTAL Market" means Private Offerings, Resales and Trading through
Automatic Linkages Market.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 2.4 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"principal" whenever used with reference to the Securities or any Security
or any portion thereof, shall be deemed to include "and premium, if any,"
provided, however, that such inclusion of premium, if any, shall under no
circumstances result in the double counting of such premium for the purpose of
any calculation required hereunder.
"QIB" or "Qualified Institutional Buyer" means "Qualified Institutional
Buyer" as such term is defined in Rule 144A under the Securities Act.
"Regular Record Date" for the interest payable on any Interest Payment Date
on the Securities of any series means the date specified for that purpose as
contemplated in Section 2.3.
"Registered Global Security" means a Security evidencing all or a part of a
series of Registered Securities, issued to the Depositary for such series in
accordance with Section 2.4, and bearing the legend prescribed in Section 2.4
and any other legend required by the Depositary for such series.
"Registered Security" means any Security registered on the Security
Register of the Company.
"Regulation S" means Regulation S under the Securities Act, or any
successor provision.
"Regulation S Global Security" has the meaning set forth in Section 2.8(b).
"Required Currency" shall have the
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meaning set forth in Section 11.12 .
"Responsible Officer" when used with respect to the Trustee means the
chairman of the board of directors, any vice chairman of the board of directors,
the chairman of the trust committee, the chairman of the executive committee,
any vice chairman of the executive committee, the president, any vice president
(whether or not designated by numbers or words added before or after the title
"Vice President"), the cashier, the secretary, the treasurer, any trust officer,
an assistant trust officer, any assistant vice president, any assistant cashier,
any assistant secretary, any assistant treasurer, or any other officer or
assistant officer of the Trustee customarily performing functions similar to
those performed by the persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of his
or her knowledge of and familiarity with the particular subject.
"Restricted Security" has the meaning set forth in Section 2.8(b).
"Rule 144" means Rule 144 under the Securities Act.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144K" means Rule 144(k) under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Security" or "Securities" (except as otherwise provided in Section 7.4)
has the meaning stated in the first recital of this Indenture, or, as the case
may be, Securities that have been authenticated and delivered under this
Indenture.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 2.9.
"Significant Subsidiary" means a Subsidiary of the Company which at the
time of determination either (i) had tangible assets which, as of the Company's
most recent quarterly consolidated balance sheet, constituted at least 5% of
Consolidated Tangible Assets as of such date, or (ii) had revenues for the
12-month period ending on the date of the Company's most recent quarterly
consolidated statement of income which constituted at least 5% of the Company's
total consolidated revenues for such period.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 2.7.
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"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subsidiary" of any Person means (a) any corporation of which Common Equity
having ordinary voting power to elect a majority of the directors of such
corporation is owned by such Person directly or through one or more other
Subsidiaries of such Person and (b) any entity other than a corporation in which
such Person, directly or indirectly, owns at least 50% of the Common Equity of
such entity and has the authority to manage such entity on a day-to-day basis.
"Transfer Restriction Termination Date" means the earlier of the first date
on which (i) the Securities of a series (other than such Securities acquired by
the Company or any Affiliate thereof since the issue date of such Securities)
may be sold pursuant to Rule 144K (or any successor provision) and (ii) all such
Securities have been exchanged or sold pursuant to an effective registration
statement.
"Trustee" means the Person identified as "Trustee" in the first paragraph
hereof and, subject to the provisions of Article 6, shall also include any
successor trustee. "Trustee" shall also mean or include each Person who is then
a trustee hereunder and if at any time there is more than one such Person,
"Trustee" as used with respect to the Securities of any series shall mean the
trustee with respect to the Securities of such series.
"Unregistered Security" means any Security other than a Registered
Security.
"U.S. Government Obligations" shall have the meaning set forth in Section
10.1(A).
"Voting Stock" means stock of any class or classes having general voting
power under ordinary circumstances to elect a majority of the board of
directors, managers or trustees of the corporation in question, provided, that,
for the purposes hereof, stock which carries only the right to vote
conditionally on the happening of an event shall not be considered voting stock
whether or not such event shall have happened.
"Yield to Maturity" means the yield to maturity on a series of securities,
calculated at the time of issuance of such series, or, if applicable, at the
most recent redetermination of interest on such series, and calculated in
accordance with accepted financial practice.
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ARTICLE 2
SECURITIES
SECTION 2.1 Forms Generally
The Securities of each series and the Coupons, if any, to be attached
thereto shall be substantially in such form (not inconsistent with this
Indenture) as shall be established by or pursuant to one or more Board
Resolutions (as set forth in a Board Resolution or, to the extent established
pursuant to but not set forth in a Board Resolution, an Officer's Certificate
detailing such establishment) or in one or more indentures supplemental hereto,
in each case with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture and may have
imprinted or otherwise reproduced thereon such legend or legends or
endorsements, not inconsistent with the provisions of this Indenture, as may be
required to comply with any law or with any rules or regulations pursuant
thereto, or with any rules of any securities exchange or to conform to general
usage, all as may be determined by the officers executing such Securities and
Coupons, if any, as evidenced by their execution of such Securities and Coupons.
The definitive Securities and Coupons, if any, shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Securities and
Coupons, if any, as evidenced by their execution of such Securities and Coupons,
if any.
SECTION 2.2 Form of Trustee's Certificate of Authentication
The Trustee's certificate of authentication on all Securities shall be in
substantially the following form:
"This is one of the Securities referred to in the within-mentioned
Indenture.
PNC BANK, NATIONAL ASSOCIATION
as Trustee
By
----------------------------
Authorized Signatory"
If at any time there shall be an Authenticating Agent appointed with
respect to any series of Securities, then the Trustee's Certificate of
Authentication to be borne by the
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Securities of each such series shall be substantially as follows:
"This is one of the Securities referred to in the within-mentioned
Indenture.
[___________________________]
as Authenticating Agent
By
---------------------------
Authorized Signatory"
SECTION 2.3 Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. With respect to each
such series there shall be established in or pursuant to one or more Board
Resolutions (and to the extent established pursuant to but not set forth in a
Board Resolution, in an Officer's Certificate detailing such establishment) or
established in one or more indentures supplemental hereto, prior to the initial
issuance of Securities of any series,
(1) the designation of the Securities of the series, which shall
distinguish the Securities of the series from the Securities of all other
series, and which may be part of a series of Securities previously issued;
(2) any limit upon the aggregate principal amount of the Securities of
the series that may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 2.8, 2.9, 2.11, 8.5 or 12.3);
(3) if other than Dollars, the coin or currency in which the
Securities of the series are denominated (including, but not limited to,
any Foreign Currency or ECU);
(4) the date or dates on which the principal of the Securities of the
series is payable;
(5) the rate or rates at which the Securities of the series shall bear
interest, if any, the date or dates from which such interest shall accrue,
on which such interest shall be payable and (in the case of
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Registered Securities) on which a record shall be taken for the
determination of Holders to whom interest is payable and/or the method by
which such rate or rates or date or dates shall be determined;
(6) the place or places where the principal of and any interest on
Securities of the series shall be payable, if other than as provided in
Section 3.2;
(7) the right, if any, of the Company to redeem Securities, in whole
or in part, at its option and the period or periods within which, the price
or prices at which and any terms and conditions upon which Securities of
the series may be so redeemed, pursuant to any sinking fund or otherwise;
(8) the obligation, if any, of the Company to redeem, purchase or
repay Securities of the series pursuant to any mandatory redemption,
sinking fund or analogous provisions or at the option of a Holder thereof
and the price or prices at which and the period or periods within which and
any terms and conditions upon which Securities of the series shall be
redeemed, purchased or repaid, in whole or in part, pursuant to such
obligation;
(9) if other than denominations of $1,000 and any integral multiple
thereof in the case of Registered Securities, or $1,000 and $5,000 in the
case of Unregistered Securities, the denominations in which Securities of
the series shall be issuable;
(10) if other than the entire principal amount thereof, the portion of
the principal amount of Securities of the series which shall be payable
upon declaration of acceleration of the Maturity thereof;
(11) if other than the coin or currency in which the Securities of the
series are denominated, the coin or currency in which payment of the
principal of or interest on the Securities of such series shall be payable;
(12) if the principal of or interest on the Securities of the series
are to be payable, at the election of the Company or a Holder thereof, in a
coin or currency other than that in which the Securities are denominated,
the period or periods within which, and the terms and conditions upon
which, such election may be made;
(13) if the amount of payments of principal of and interest on the
Securities of the series may be determined with reference to an index based
on a coin or currency other than that in which the Securities of the series
are denominated, the manner in which such
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amounts shall be determined;
(14) whether the Securities of the series will be issuable as
Registered Securities (and if so, whether all or a portion of such
Securities will be issuable as Registered Global Securities) or
Unregistered Securities (with or without Coupons), or any combination of
the foregoing, any restrictions applicable to the offer, sale or delivery
of Unregistered Securities or the payment of interest thereon and, if other
than as provided in Section 2.8, the terms upon which Unregistered
Securities of any series may be exchanged for Registered Securities of such
series and vice versa;
(15) whether and under what circumstances the Company will pay
additional amounts on the Securities of the series held by a Person who is
not a U.S. person in respect of any tax, assessment or governmental charge
withheld or deducted and, if so, whether the Company will have the option
to redeem the Securities of the series rather than pay such additional
amounts;
(16) if the Securities of the series are to be issuable in definitive
form (whether upon original issue or upon exchange of a temporary Security
of such series) only upon receipt of certain certificates or other
documents or satisfaction of other conditions, the form and terms of such
certificates, documents or conditions;
(17) any trustees, depositaries, authenticating or paying agents,
transfer agents or registrars of any other agents with respect to the
Securities of such series;
(18) any other events of default or covenants with respect to the
Securities of such series;
(19) if the Securities of the series are to be convertible into or
exchangeable for any other security, the terms upon which any such
conversion or exchange may be effected; and
(20) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series and Coupons, if any, appertaining thereto
shall be substantially identical, except in the case of Registered Securities as
to denomination and except as may otherwise be provided by or pursuant to the
Board Resolution or Officer's Certificate referred to above or as set forth in
any indenture supplemental hereto. All Securities of any one series need not be
issued at the same time and may be
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issued from time to time, consistent with the terms of this Indenture, if
so provided by or pursuant to such Board Resolution, such Officer's
Certificate or in any indenture supplemental hereto.
SECTION 2.4 Authentication and Delivery of Securities.
The Company may deliver Securities of any series having attached thereto
appropriate Coupons, if any, executed by the Company to the Trustee for
authentication together with the applicable documents referred to below in this
Section 2.4, and the Trustee shall thereupon authenticate and deliver such
Securities and Coupons, if any, to or upon the order of the Company (contained
in the Company Order referred to below in this Section) or pursuant to such
procedures acceptable to the Trustee and to such recipients as may be specified
from time to time by a Company Order. The maturity date, original issue date,
interest rate and any other terms of the Securities of such series and Coupons,
if any, appertaining thereto shall be determined by or pursuant to such Company
Order and procedures. If provided for in such procedures, such Company Order may
authorize authentication and delivery pursuant to oral or electronic
instructions from the Company or its duly authorized agent or agents, which
instructions, if oral, shall be promptly confirmed in writing. In authenticating
such Securities and accepting the additional responsibilities under this
Indenture in relation to such Securities, the Trustee shall be entitled to
receive (in the case of subparagraphs (2), (3) and (4) below only at or before
the time of the first request of the Company to the Trustee to authenticate
Securities of such series) and (subject to Section 6.1) shall be fully protected
in relying upon, the following enumerated documents unless and until such
documents have been superseded or revoked:
(1) a Company Order requesting such authentication and setting forth
delivery instructions if the Securities and Coupons, if any, are not to be
delivered to the Company, provided that, with respect to Securities of a
series subject to a Periodic Offering, (a) such Company Order may be
delivered by the Company to the Trustee prior to the delivery to the
Trustee of such Securities for authentication and delivery, (b) the Trustee
shall authenticate and deliver Securities of such series for original issue
from time to time, in an aggregate principal amount not exceeding the
aggregate principal amount established for such series, pursuant to a
Company Order or pursuant to procedures acceptable to the Trustee as may be
specified from time to time by a Company Order, (c) the maturity date or
dates, original issue date or dates, interest rate or rates and any other
terms of Securities of such series shall be determined by a Company Order
or pursuant to such procedures and (d) if provided for in such procedures,
such Company Order may authorize authentication and
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delivery pursuant to oral or electronic instructions from the Company or
its duly authorized agent or agents, which instructions, if oral, shall be
promptly confirmed in writing;
(2) any Board Resolution, Officer's Certificate and/or executed
supplemental indenture referred to in Section 2.1 and 2.3 by or pursuant to
which the forms and terms of the Securities and Coupons, if any, were
established;
(3) an Officer's Certificate setting forth the form or forms and terms
of the Securities and Coupons, if any, stating that the form or forms and
terms of the Securities and Coupons, if any, have been established pursuant
to Sections 2.1 and 2.3 and comply with this Indenture, and covering such
other matters as the Trustee may reasonably request; and
(4) At the option of the Company, either one or more Opinions of
Counsel, or a letter addressed to the Trustee permitting it to rely on one
or more Opinions of Counsel, substantially to the effect that:
(a) the form or forms of the Securities and Coupons, if any, have
been duly authorized and established in conformity with the provisions
of this Indenture;
(b) in the case of an underwritten offering, the terms of the
Securities have been duly authorized and established in conformity
with the provisions of this Indenture, and, in the case of an offering
that is not underwritten, certain terms of the Securities have been
established pursuant to a Board Resolution, an Officer's Certificate
or a supplemental indenture in accordance with this Indenture, and
when such other terms as are to be established pursuant t procedures
set forth in a Company Order shall have been established, all such
terms will have been duly authorized by the Company and will have been
established in conformity with the provisions of this Indenture; and
(c) such Securities and Coupons, if any, when executed by the
Company and authenticated by the Trustee in accordance with the
provisions of this Indenture and delivered to and duly paid for by the
purchasers thereof, and subject to any conditions specified in such
Opinion of Counsel, will have been duly issued under this Indenture,
will be entitled to the benefits of this Indenture, and will be valid
and binding obligations of the Company, enforceable in accordance with
their respective terms except as
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the enforceability thereof may be limited by (i) bankruptcy,
insolvency or similar laws affecting creditors' rights generally, (ii)
rights of acceleration, if any, and (iii) the availability of
equitable remedies may be limited by equitable principles of general
applicability and such counsel need express no opinion with regard to
the enforceability of Section 6.6 or of a judgment denominated in a
currency other than Dollars.
In rendering such opinions, any counsel may qualify any opinions as to
enforceability by stating that such enforceability may be limited by bankruptcy,
insolvency, reorganization, liquidation, moratorium, fraudulent transfer and
other similar laws affecting the rights and remedies of creditors and is subject
to general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law). Such counsel may rely upon
opinions of other counsel (copies of which shall be delivered to the Trustee)
reasonably satisfactory to the Trustee, in which case the opinion shall state
that such counsel believes he and the Trustee are entitled so to rely. Such
counsel may also state that, insofar as such opinion involves factual matters,
he has relied, to the extent he deems proper, upon certificates of officers of
the Company and its subsidiaries and certificates of public officials.
The Trustee shall have the right to decline to authenticate and deliver any
Securities under this section if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken by the Company or if the
Trustee in good faith by its board of directors or board of trustees, executive
committee or a trust committee of directors or trustees shall determine that
such action would expose the Trustee to personal liability to existing Holders
or would affect the Trustee' own rights, duties or immunities under the
Securities, this Indenture or otherwise.
If the Company shall establish pursuant to Section 2.3 that all or a
portion of the Securities of a series are to be issued in the form of one or
more Registered Global Securities, then the Company shall execute and the
Trustee shall, in accordance with this Section and the Company Order with
respect to such series, authenticate and deliver one or more Registered Global
Securities that (i) shall represent and shall be denominated in an amount equal
to the aggregate principal amount of al of the Securities of such series issued
in such form and not yet canceled, (ii) shall be registered in the name of the
Depositary for such Registered Global Security or Securities or the nominee of
such Depositary, (iii) shall be delivered by the Trustee to such Depositary or
delivered or held pursuant to such Depositary's instructions and (iv) shall bear
a legend substantially to the following effect: "Unless and until it is
exchanged in whole or in part for Securities in definitive registered form, this
Security may not be transferred except as
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a whole by the Depositary to the nominee of the Depositary or by a nominee of
the Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary."
Each Depositary designated pursuant to Section 2.3 must, at the time of its
designation and at all times while it serves as Depositary, be a clearing agency
registered under the Exchange Act and any other applicable statute or
regulation.
SECTION 2.5 Execution of Securities.
The Securities and each Coupon appertaining thereto, if any, shall be
signed on behalf of the Company by the chairman or vice chairman of its Board of
Directors or its president, or any executive (senior or other), a vice president
or its treasurer, under its corporate seal (except in the case of Coupons) which
may, but need not, be attested. Such signatures may be the manual or facsimile
signatures of the present or any future such officers. The seal of the Company
may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Securities. Typographical and other
minor errors or defects in any such reproduction of the seal or any such
signature shall not affect the validity or enforceability of any Security that
has been duly authenticated and delivered by the Trustee.
In case any officer of the Company who shall have signed any of the
Securities or Coupons, if any, shall cease to be such officer before the
Security or Coupon so signed (or the Security to which the Coupon so signed
appertains) shall be authenticated and delivered by the Trustee or disposed of
by the Company, such Security or Coupon nevertheless may be authenticated and
delivered or disposed of as though the person who signed such Security or Coupon
had not ceased to be such officer of the Company; and any Security or Coupon may
be signed on behalf of the Company by such persons as, at the actual date of the
execution of such Security or Coupon, shall be the proper officers of the
Company, although at the date of the execution and delivery of this Indenture
any such person was not such an officer.
SECTION 2.6 Certificate of Authentication.
Only such Securities as shall bear thereon a certificate of authentication
substantially in the form hereinbefore recited, executed by the Trustee by the
manual signature of one of its authorized officers, shall be entitled to the
benefits of this Indenture or be valid or obligatory for any purpose. No Coupon
shall be entitled to the benefits of this Indenture or shall be valid and
obligatory for any purpose until the certificate of authentication on the
Security to which such Coupon appertains shall have been duly executed by the
Trustee. The execution of such certificate by the Trustee upon
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any Security executed by the Company shall be conclusive evidence that the
Security so authenticated has been duly authenticated and delivered hereunder
and that the Holder is entitled to the benefits of this Indenture.
SECTION 2.7 Denomination and Date of Securities; Payments of Interest.
The Securities of each series shall be issuable as Registered Securities or
Unregistered Securities in denominations established as contemplated by Section
2.3 or, with respect to the Registered Securities of any series, if not so
established, in denominations of $1,000 and any integral multiple thereof. If
denominations of Unregistered Securities of any series are not so established,
such Securities shall be issuable in denominations of $1,000 and $5,000. The
Securities of each series shall be numbered, lettered or otherwise distinguished
in such manner or in accordance with such plan as the officers of the Company
executing the same may determine with the approval of the Trustee, as evidenced
by the execution and authentication thereof.
Each Registered Security shall be dated the date of its authentication.
Each Unregistered Security shall be dated as provided in the Board Resolution
referred to in Section 2.3. The Securities of each series shall bear interest,
if any, from the date, and such interest shall be payable on the dates,
established as contemplated by Section 2.3.
Interest on any Security which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Security (or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest. At the option of
the Company, interest on any Security may be paid by mailing a check to the
address of the Holder thereof as such address appears in the Securities
Register.
Any interest on any Security which is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date (herein called "Defaulted
Interest") shall forthwith cease to be payable to the Holder on the relevant
Regular Record Date by virtue of having been such Holder, and such Defaulted
Interest may be paid by the Company, at its election in each case, as provided
in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each Security and
the date of
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the proposed payment, and a the same time the Company shall deposit with
the Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder at his address as it appears in the Security Register, not
less than 10 days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be paid to the Persons
in whose names the Securities (or their respective Predecessor Securities)
are registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following claus (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.
SECTION 2.8 Registration, Transfer and Exchange.
(a) The Company will keep at each office or agency to be maintained for the
purpose as provided in Section 3.2 for each series of Securities a register or
registers (the register maintained in such office and in any other office or
agency of the Company designated pursuant to Section 3.2 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as the Company
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may prescribe, it will provide for the registration of Registered Securities of
such series and the registration of transfer of Registered Securities of such
series. Such Security Register shall be in written form in the English language
or in any other form capable of being converted into such form within a
reasonable time. At all reasonable times such Security Register or registers
shall be open for inspection by the Trustee.
Upon due presentation for registration of transfer of any Registered
Security of any series at any such office or agency to be maintained for the
purpose as provided in Section 3.2, the Company shall execute and the Trustee
shall authenticate and deliver in the name of the transferee or transferees a
new Registered Security or Registered Securities of the same series, maturity
date, interest rate and original issue date in authorized denominations for a
like aggregate principal amount.
Unregistered Securities (except for any temporary global Unregistered
Securities) and Coupons (except for Coupons attached to any temporary global
Unregistered Securities) shall be transferable by delivery.
At the option of the Holder thereof, Registered Securities of any series
(other than a Registered Global Security, except as set forth below) may be
exchanged for a Registered Security or Registered Securities of such series
having authorized denominations and an equal aggregate principal amount, upon
surrender of such Registered Securities to be exchanged at the agency of the
Company that shall be maintained for such purpose in accordance with Section 3.2
and upon payment, if the Company shall so require, of the charges hereinafter
provided. If the Securities of any series are issued in both registered and
unregistered form, at the option of the Holder thereof, except as otherwise
specified pursuant to Section 2.3, Unregistered Securities of any series may be
exchanged for Registered Securities of such series having authorized
denominations and an equal aggregate principal amount, upon surrender of such
Unregistered Securities to be exchanged at the agency of the Company that shall
be maintained for such purpose in accordance with Section 3.2, with, in the case
of Unregistered Securities that have Coupons attached, all unmatured Coupons and
all matured Coupons in default thereto appertaining, and upon payment, if the
Company shall so require, of the charges hereinafter provided. At the option of
the Holder thereof, if Unregistered Securities of any series, maturity date,
interest rate and original issue date are issued in more than one authorized
denomination, except as otherwise specified pursuant to Section 2.3, such
Unregistered Securities may be exchanged for Unregistered Securities of such
series having authorized denominations and an equal aggregate principal amount,
upon surrender of such Unregistered Securities to be exchanged at the agency of
the Company that shall be maintained for such purpose in accordance with Section
3.2 or as specified pursuant to Section 2.3, with, in the case of Unregistered
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Securities that have Coupons attached, all unmatured Coupons and all matured
Coupons in default thereto appertaining, and upon payment, if the Company shall
so require, of the charges hereinafter provided. Registered Securities of any
series may not be exchanged for Unregistered Securities of such series unless
(1) otherwise specified pursuant to Section 2.3 and (2) the Company has
delivered to the Trustee an Opinion of Counsel that (x) the Company has received
from the IRS a ruling or (y) since the date hereof, there has been a change in
the applicable Federal income tax law, in either case to the effect that the
inclusion of terms permitting Registered Securities to be exchanged for
Unregistered Securities would result in no Federal income tax effect adverse to
the Company or to any Holder. Whenever any Securities are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is entitled to
receive. All Securities and Coupons, if any, surrendered upon any exchange or
transfer provided for in this Indenture shall be promptly canceled and disposed
of by the Trustee, and the Trustee shall deliver a certificate of disposition
thereof to the Company.
All Registered Securities presented for registration of transfer, exchange,
redemption or payment shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company and the Trustee duly executed, by
the Holder or his attorney duly authorized in writing.
The Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any exchange or
registration of transfer of Securities. No service charge shall be made for any
such transaction.
The Company shall not be required to exchange or register a transfer of (a)
any Securities of any series for a period of 15 days preceding the first mailing
of notice of redemption of Securities of such series to be redeemed or (b) any
Securities selected, called or being called for redemption, in whole or in part,
except, in the case of any Security to be redeemed in part, the portion thereof
not so to be redeemed.
Notwithstanding any other provision of this Section 2.8, unless and until
it is exchanged in whole or in part for Securities in definitive registered
form, a Registered Global Security representing all or a portion of the
Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor Depositary for such series or
a nominee of such successor Depositary.
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If at any time the Depositary for any Registered Securities of a series
represented by one or more Registered Global Securities notifies the Company
that it is unwilling or unable to continue as Depositary for such Registered
Securities or if at any time the Depositary for such Registered Securities shall
no longer be eligible under Section 2.4, the Company shall appoint a successor
Depositary eligible under Section 2.4 with respect to such Registered
Securities. If a successor Depositary eligible under Section 2.4 for such
Registered Securities is not appointed by the Company within 90 days after the
Company receives such notice or becomes aware of such ineligibility, the
Company's election pursuant to Section 2.3 that such Registered Securities be
represented by one or more Registered Global Securities shall no longer be
effective and the Company will execute, and the Trustee, upon receipt of an
Officer's Certificate for the authentication and delivery of definitive
Securities of such series, will authenticate and deliver, Securities of such
series in definitive registered form without coupons, in any authorized
denominations, in an aggregate principal amount equal to the principal amount of
the Registered Global Security or Securities representing such Registered
Securities in exchange for such Registered Global Security or Securities.
The Company may at any time and in its sole discretion determine that the
Registered Securities of any series issued in the form of one or more Registered
Global Securities shall no longer be represented by a Registered Global Security
or Securities. In such event the Company will execute, and the Trustee, upon
receipt of any Officer's Certificate for the authentication and delivery of
definitive Securities of such series, will authenticate and deliver, Securities
of such series in definitive registered form without coupons, in any authorized
denominations, in an aggregate principal amount equal to the principal amount of
the Registered Global Security or Securities representing such Registered
Securities, in exchange for such Registered Global Security or Securities.
If specified by the Company pursuant to Section 2.3 with respect to
Securities represented by a Registered Global Security, the Depositary for such
Registered Global Security may surrender such Registered Global Security in
exchange in whole or in part for Securities of the same series in definitive
registered form on such terms as are acceptable to the Company and such
Depositary. Thereupon, the Company shall execute, and the Trustee shall
authenticate and deliver, without service charge,
(i) to the Person specified by such Depositary a new Registered
Security or Securities of the same series, of any authorized denominations
as requested by such Person, in an aggregate principal amount equal to and
in exchange for such Person's beneficial interest in the Registered Global
Security; and
(ii) to such Depositary a new Registered Global
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Security in a denomination equal to the difference, if any, between the
principal amount of the surrendered Registered Global Security and the
aggregate principal amount of Registered Securities authenticated and
delivered pursuant to clause (i) above.
Upon the exchange of a Registered Global Security for Securities in
definitive registered form without coupons, in authorized denominations, such
Registered Global Security shall be canceled by the Trustee or an agent of the
Company or the Trustee. Securities in definitive registered form without coupons
issued in exchange for a Registered Global Security pursuant to this Section 2.8
shall be registered in such names and in such authorized denominations as the
Depositary for such Registered Global Security, pursuant to instructions from
its direct or indirect participants or otherwise, shall instruct the Trustee or
an agent of the Company or the Trustee. The Trustee or such agent shall deliver
such Securities to or as directed by the Persons in whose names such Securities
are so registered.
All Securities issued upon any transfer or exchange of Securities shall be
valid obligations of the Company, evidencing the same debt, and entitled to the
same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.
Notwithstanding anything herein or in the terms of any series of Securities
to the contrary, none of the Company, the Trustee or any agent of the Company or
the Trustee (any of which, other than the Company, shall rely on an Officer's
Certificate and an Opinion of Counsel) shall be required to exchange any
Unregistered Security for a Registered Security if such exchange would result in
Federal income tax consequences adverse to the Company (such as, for example,
the inability of the Company to deduct from its income, as computed for Federal
income tax purposes, the interest payable on the Unregistered Securities) under
then applicable United States Federal income tax laws.
(b)(i) Securities that are distributed to QIBs will be represented by a
global Security (the "144A Global Security"). Securities that are distributed to
Non-U.S. Persons will be represented by a global Security (the "Regulation S
Global Security"). Each of the 144A Global Security and the Regulation S Global
Security shall be referred to herein as a "Global Security." If Global
Securities are issued, transfers of interests in the Securities between the 144A
Global Security and the Regulation S Global Security will be made in accordance
with the standing instructions and procedures of the Depositary and its
participants and the Trustee shall make appropriate endorsements to reflect
increases or decreases in the principal amounts of such Global Securities to
reflect any such transfers.
Except as provided below, beneficial owners of a Security in global form
shall not be entitled to have certificates registered in their names, will not
receive or be
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entitled to receive physical delivery of certificates in definitive form and
will not be considered Holders of such Securities in global form.
(ii) So long as the Securities are eligible for book-entry settlement, and
to the extent that Securities are held by QIBs or Non-U.S. Persons, as the case
may be, in a Global Security, or unless otherwise required by law, upon any
transfer of a definitive Security to a QIB in accordance with Rule 144A or to a
Non-U.S. Person in accordance with Regulation S, unless otherwise requested by
the transferor, and upon receipt of the definitive Security or Securities being
so transferred, together with a certification from the transferor that the
transfer is being made in compliance with Rule 144A or Regulation S, as the case
may be (or other evidence satisfactory to the Trustee), the Trustee shall make
an endorsement on any 144A Global Security or any Regulation S Global Security,
as the case may be, to reflect an increase in the aggregate principal amount of
the Securities represented by such Global Security, and the Trustee shall cancel
such definitive Security or Securities in accordance with the standing
instructions and procedures of the Depositary, the aggregate principal amount of
Securities represented by such Global Security to be increased accordingly;
provided that no definitive Security, or portion thereof, in respect of which
the Company or an Affiliate of the Company held any beneficial interest shall be
included in such Global Security until such definitive Security is freely
tradable in accordance with Rule 144(k); provided further that the Trustee
shall, at the written request of the Company, issue Securities in definitive
form upon any transfer of a beneficial interest in the Global Security to the
Company or any Affiliate of the Company.
Any Global Security may be endorsed with or have incorporated in the text
thereof such legends or recitals or changes not inconsistent with the provisions
of this Indenture as may be required by the Depositary, by the New York Stock
Exchange or by the National Association of Securities Dealers, Inc. in order for
the Securities to be tradable on the PORTAL Market or as may be required for the
Securities to be tradable on any other market developed for trading of
securities pursuant to Rule 144A or required to comply with any applicable law
or any regulation thereunder or with the rules and regulations of any securities
exchange upon which the Securities may be listed or traded or to conform with
any usage with respect thereto, or to indicate any special limitations or
restrictions to which any particular Securities are subject.
(iii) Each Security that bears or is required to bear the legend set forth
in this Section 2.8(b) (a "Restricted Security") shall be subject to the
restrictions on transfer provided in the legend set forth in this Section
2.8(b), unless such restrictions on transfer shall be waived by the written
consent of the Company, and the Holder of each Restricted Security, by such
Holder's acceptance thereof, agrees to be bound by such restrictions on
transfer. As used in this Section
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2.8(b), the term "transfer" encompasses any sale, pledge, transfer or other
disposition of any Restricted Security.
Prior to the Transfer Restriction Termination Date, any certificate
evidencing a Security shall bear a legend in substantially the following form,
unless otherwise agreed by the Company (with written notice thereof to the
Trustee):
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITE
INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN OFFSHORE
TRANSACTION, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE
HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER
RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL
OR OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY EXCEPT (A) TO
HEALTHSOUTH CORPORATION (THE "COMPANY") OR ANY SUBSIDIARY THEREOF, (B)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
(C) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER
THE SECURITIES ACT, (D) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR
TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE FOR THE SECURITIES A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (E) OUTSIDE THE UNITED
STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (F) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER
OF THE SECURITY EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING
PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE
144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE FOR
THE SECURITIES. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED
INVESTOR OR A PURCHASER WHO IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO
SUCH
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TRANSFER, FURNISH TO THE TRUSTEE FOR THE SECURITIES SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS THE COMPANY OR THE TRUSTEE MAY
REASONABLY REQUIRE, TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED AFTER THE
EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT. AS USED
HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Following the Transfer Restriction Termination Date, any Security or
security issued in exchange or substitution therefor (other than Securities
acquired by the Company or any Affiliate thereof since the issue date of the
Securities) may upon surrender of such Security for exchange to the Security
Registrar in accordance with the provisions of this Section 2.8, be exchanged
for a new Security or Securities, of like tenor and aggregate principal amount,
which shall not bear the restrictiv legend required by this Section 2.8(b).
SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen Securities.
In case any temporary or definitive Security or any Coupon appertaining to
any Security shall be mutilated, defaced, destroyed, lost or stolen, the Company
in its discretion may execute and, upon the written request of any officer of
the Company, the Trustee shall authenticate and deliver, a new Security of the
same series, maturity date, interest rate and original issue date, bearing a
number or other distinguishing symbol not contemporaneously outstanding, in
exchange and substitution for the mutilated or defaced Security, or in lieu of
and in substitution for the Security so destroyed, lost or stolen with Coupons
corresponding to the Coupons appertaining to the Securities so mutilated,
defaced, destroyed, lost or stolen, or in exchange or substitution for the
Security to which such mutilated, defaced, destroyed, lost or stolen Coupon
appertained, with Coupons appertaining thereto corresponding to the Coupons so
mutilated, defaced, destroyed, lost or stolen. In every case the applicant for a
substitute Security or Coupon shall furnish to the Company and to the Trustee
and any agent of the Company or the Trustee such security or indemnity as may be
required by them to indemnify and defend and to save each of them harmless and,
in every case of destruction, loss or theft, evidence to their satisfaction of
the destruction, loss or theft of such Security or Coupon and of the ownership
thereof, and in the case of mutilation or defacement shall surrender the
Security and related Coupons to th Trustee or such agent.
Upon the issuance of any substitute Security or Coupon, the Company may
require the payment of a sum sufficient
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to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee)
or its agent connected therewith. In case any Security or Coupon which has
matured or is about to mature or has been called for redemption in full shall
become mutilated or defaced or be destroyed, lost or stolen, the Company may
instead of issuing a substitute Security, pay or authorize the payment of the
same or the relevant Coupon (without surrender thereof except in the case of a
mutilated or defaced Security or Coupon), if the applicant for such payment
shall furnish to the Company and to the Trustee and any agent of the Company or
the Trustee such security or indemnity as any of them may require to save each
of them harmless, and, in every case of destruction, loss or theft, the
applicant shall also furnish to th Company and the Trustee and any agent of the
Company or the Trustee evidence to their satisfaction of the destruction, loss
or theft of such Security or Coupons and of the ownership thereof.
Every substitute Security or Coupon of any series issued pursuant to the
provisions of this Section by virtue of the fact that any such Security or
Coupon is destroyed, lost or stolen shall constitute an additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security
or Coupon shall be at any time enforceable by anyone and shall be entitled to
all the benefits of (but shall be subject to all the limitations of rights set
forth in) this Indenture equally and proportionately with any and all other
Securities or Coupons of such series duly authenticated and delivered hereunder.
All Securities and Coupons shall be held and owned upon the express condition
that, to the extent permitted by law, the foregoing provisions are exclusive
with respect to the replacement or payment of mutilated, defaced or destroyed,
lost or stolen Securities and Coupons and shall preclude any and all other
rights or remedies notwithstanding any law or statute existing or hereafter
enacted to the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.
SECTION 2.10 Cancellation of Securities; Destruction Thereof.
All Securities and Coupons surrendered for payment, redemption,
registration of transfer or exchange, or for credit against any payment in
respect of a sinking or analogous fund, if any, if surrendered to the Company or
any agent of the Company or the Trustee or any agent of the Trustee, shall be
delivered to the Trustee or its agent for cancellation or, if surrendered to the
Trustee, shall be canceled by it; and no Securities or Coupons shall be issued
in lieu thereof except as expressl permitted by any of the provisions of this
Indenture. The Trustee or its agent shall dispose of canceled Securities and
Coupons held by it and deliver a certificate of disposition to the Company. If
the Company or its agent shall acquire any of the Securities or Coupons, such
acquisition shall not operate
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as a redemption or satisfaction of the indebtedness represented by such
Securities or Coupons unless and until the same are delivered to the Trustee or
its agent for cancellation.
SECTION 2.11 Temporary Securities.
Pending the preparation of definitive Securities for any series, the
Company may execute and the Trustee shall authenticate and deliver temporary
Securities for such series (printed, lithographed, typewritten or otherwise
reproduced, in each case in form satisfactory to the Trustee). Temporary
Securities of any series shall be issuable as Registered Securities without
coupons, or as Unregistered Securities with or without coupons attached thereto,
of any authorized denomination, and substantially in the form of the definitive
Securities of such series but with such omissions, insertions and variations as
may be appropriate for temporary Securities, all as may be determined by the
Company with the concurrence of the Trustee as evidenced by the execution and
authentication thereof. Temporary Securities may contain such references to any
provisions of this Indenture as may be appropriate. Every temporary Security
shall be executed by the Company and be authenticated by the Trustee upon the
same conditions and in substantially the same manner, and with like effect, as
the definitive Securities. Without unreasonable delay the Company shall execute
and shall furnish definitive Securities of such series and thereupon temporary
Registered Securities of such series may be surrendered in exchange therefor
without charge at each office or agency to be maintained by the Company for that
purpose pursuant to Section 3.2 and, in the case of Unregistered Securities, at
any agency maintained by the Company for such purpose as specified pursuant to
Section 2.4, and the Trustee shall authenticate and deliver in exchange for such
temporary Securities of such series an equal aggregate principal amount of
definitive Securities of the same series having authorized denominations and, in
the case of Unregistered Securities, having attached thereto any appropriate
Coupons. Until so exchanged, the temporary Securities of any series shall be
entitled to the same benefits under this Indenture as definitive Securities of
such series, unless otherwise established pursuant to Section 2.3. The
provisions of this Section are subject to any restrictions or limitations on the
issue and delivery of temporary Unregistered Securities of any series that may
be established pursuant to Section 2.4 (including any provision that
Unregistered Securities of such series initially be issued in the form of a
single global Unregistered Security to be delivered to a depositary or agency
located outside the United States and the procedures pursuant to which
definitive or global Unregistered Securities of such series would be issued in
exchange for such temporary global Unregistered Security).
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ARTICLE 3
COVENANTS OF THE COMPANY
SECTION 3.1 Payment of Principal and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay or cause to be paid the
principal of, and interest on, if any, each of the Securities of such series
(together with any additional amounts payable pursuant to the terms of such
Securities) at the place or places, at the respective time or times and in the
manner provided in such Securities and in the Coupons, if any, appertaining
thereto and in this Indenture. The interest on Securities with Coupons attached
(together with any additional amounts payable pursuant to the terms of such
Securities) shall be payable only upon presentation and surrender of the several
Coupons for such interest installments as are evidenced thereby as they
severally mature. If any temporary Unregistered Security provides that interest
thereon may be paid while such Security is in temporary form, the interest on
any such temporary Unregistered Security (together with any additional amounts
payable pursuant to the terms of such Security) shall be paid, as to the
installments of interest evidenced by Coupons attached thereto, if any, only
upon presentation and surrender thereof, and, as to the other installments of
interest, if any, only upon presentation of such Securities for notation thereon
of the payment of such interest, in each case subject to any restrictions that
may be established pursuant to Section 2.4. The interest, if any, on Registered
Securities (together with any additional amounts payable pursuant to the terms
of such Securities) shall be payable only to or upon the written order of the
Holders thereof and, at the option of the Company, may be paid by wire transfer
or by mailing checks for such interest payable to or upon the written order of
such Holders at their last addresses as they appear on the Security Register of
the Company.
SECTION 3.2 Offices for Payments, Etc.
So long as any Registered Securities are authorized for issuance pursuant
to this Indenture or are outstanding hereunder, the Company will maintain in the
Borough of Manhattan, The City of New York, an office or agency where the
Registered Securities of each series may be presented for payment, where the
Securities of each series may be presented for exchange as is provided in this
Indenture and, if applicable, pursuant to Section 2.4 and where the Registered
Securities of each series ma be presented for registration of transfer as in
this Indenture provided.
The Company will maintain one or more offices or agencies in a city or
cities located outside the United States (including any city in which such an
agency is required to be
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maintained under the rules of any stock exchange on which the Securities of such
series are listed) where the Unregistered Securities, if any, of each series and
Coupons, if any, appertaining thereto may be presented for payment. No payment
on any Unregistered Security or Coupon will be made upon presentation of suc
Unregistered Security or Coupon at an agency of the Company within the United
States nor will any payment be made by transfer to an account in, or by mail to
an address in, the United States unless pursuant to applicable United States
laws and regulations then in effect such payment can be made without tax
consequences adverse to the Company. Notwithstanding the foregoing, payments in
Dollars of Unregistered Securities of any series and Coupons appertaining
thereto which are payable in Dollars may be made at an agency of the Company
maintained in the Borough of Manhattan, The City of New York if such payment in
Dollars at each agency maintained by the Company outside the United States for
payment on such Unregistered Securities is illegal or effectively precluded by
exchange controls or other similar restrictions.
The Company will maintain in the Borough of Manhattan, The City of New
York, an office or agency where notices and demands to or upon the Company in
respect of the Securities of any series, the Coupons appertaining thereto or
this Indenture may be served.
The Company will give to the Trustee written notice of the location of each
such office or agency and of any change of location thereof. In case the Company
shall fail to maintain any agency required by this Section to be located in the
Borough of Manhattan, The City of New York, or shall fail to give such notice of
the location or for any change in the location of any of the above agencies,
presentations and demands may be made and notices may be served at the Corporate
Trust Office of the Trustee.
The Company may from time to time designate one or more additional offices
or agencies where the Securities of a series and any Coupons appertaining
thereto may be presented for payment, where the Securities of that series may be
presented for exchange as provided in this Indenture and pursuant to Section 2.4
and where the Registered Securities of that series may be presented for
registration of transfer as in this Indenture provided, and the Company may from
time to time rescind any such designation, as the Company may deem desirable or
expedient; provided, that no such designation or rescission shall in any manner
relieve the Company of its obligations to maintain the agencies provided for in
this Section. The Company shall give to the Trustee prompt written notice of any
such designation or rescission thereof.
SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee.
The Company, whenever necessary to avoid or fill a
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vacancy in the office of Trustee, will appoint, in the manner provided in
Section 6.10, a Trustee, so that there shall at all times be a Trustee with
respect to each series of Securities hereunder.
SECTION 3.4 Paying Agents.
Whenever the Company shall appoint a Paying Agent other than the Trustee
with respect to the Securities of any series, it will cause such Paying Agent to
execute and deliver to the Trustee an instrument in which such agent shall agree
with the Trustee, subject to the provisions of this Section,
(a) that it will hold all sums received by it as such agent for the
payment of the principal of or interest on the Securities of such series
(whether such sums have been paid to it by the Company or by any other
obligor on the Securities of such series) in trust for the benefit of the
Holders of the Securities of such series, or Coupons appertaining thereto,
if any, or of the Trustee;
(b) that it will give the Trustee notice of any failure by the Company
(or by any other obligor on the Securities of such series) to make any
payment of the principal of or interest on the Securities of such series
when the same shall be due and payable; and
(c) that it will pay any such sums so held in trust by it to the
Trustee upon the Trustee's written request at any time during the
continuance of the failure referred to in the foregoing clause (b).
The Company will, on or prior to each due date of the principal of or
interest on the Securities of such series, deposit with the Paying Agent a sum
sufficient to pay such principal or interest so becoming due, and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of any
failure to take such action.
If the Company shall act as its own Paying Agent with respect to the
Securities of any series, it will, on or before each due date of the principal
of or interest on the Securities of such series, set aside, segregate and hold
in trust for the benefit of the Holders of the Securities of such series or the
Coupons appertaining thereto a sum sufficient to pay such principal or interest
so becoming due. The Company will promptly notify the Trustee of any failure to
take such action.
Anything in this Section to the contrary notwithstanding, but subject to
Section 10.1, the Company may at any time, for the purpose of obtaining a
satisfaction and discharge with respect to one or more or all series of
Securities hereunder, or for any other reason, pay or cause to be paid to the
Trustee all sums held in trust for any such series by the Company or any Paying
Agent hereunder, as required by this Section, such sums
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to be held by the Trustee upon the trusts herein contained.
Anything in this Section to the contrary notwithstanding, the agreement to
hold sums in trust as provided in this Section is subject to the provisions of
Sections 10.3 and 10.4.
SECTION 3.5 Compliance Certificates.
The Company will furnish to the Trustee on or before January 31 in each
year (beginning with January 31, 1999) a brief certificate (which need not
comply with Section 11.5) from the principal executive, financial or accounting
officer of the Company stating that in the course of the performance by the
signer of his or her duties as an officer of the Company he or she would
normally have knowledge of any default or non-compliance by the Company in the
performance of any covenants or conditions contained in this Indenture, stating
whether or not he or she has knowledge of any such default or non-compliance
and, if so, describing each such default or non- compliance of which the signer
has knowledge and the nature thereof.
SECTION 3.6 Corporate Existence.
Subject to Article 9, the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate existence
and the rights (charter and statutory), licenses and franchises of the Company
and its Subsidiaries; provided, that the Company shall not be required to
preserve any such right, license or franchise, if, in the judgment of the
Company, the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Subsidiaries taken as a whole and the loss
thereof is not disadvantageous in any material respect to the Securityholders.
SECTION 3.7 Maintenance of Properties.
The Company will cause all properties used in or useful in the conduct of
its business or the business of any Subsidiary to be maintained and kept in good
condition, repair, and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary, so that the business carried on in connection therewith may be
properly and advantageously conducted at all time except to the extent that the
Company may be prevented from so doing by circumstances beyond its control;
provided, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties, or
disposing of any of them, if such discontinuance or disposal is, in the judgment
of the Company desirable in the conduct of the business of the Company or any
Subsidiary and not disadvantageous in any material respect to the
Securityholders.
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SECTION 3.8 Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent: (a) all taxes, assessments and governmental
charges levied or imposed upon the Company or any Subsidiary or upon the income,
profits or property of the Company or any Subsidiary; and (b) all lawful claims
for labor, materials, and supplies, which, if unpaid, might by law become a lien
upon the property of the Company or any Subsidiary; provided, that the Company
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings; and provided further
that the Company shall not be required to cause to be paid or discharged any
such tax, assessment, charge or claim if the Company shall determine that such
payment is not advantageous to the conduct of the business of the Company and
its Subsidiaries taken as a whole and that the failure so to pay or discharge is
not disadvantageous in any material respect to the Securityholders.
SECTION 3.9 Luxembourg Publications.
In the event of the publication of any notice pursuant to Section 5.15,
6.11(a), 6.12, 8.2, 10.4 or 13.2, the party making such publication in the
Borough of Manhattan, The City of New York and London shall also, to the extent
that notice is required to be given to Holders of Securities of any series by
applicable Luxembourg law or stock exchange regulation, as evidenced by an
Officer's Certificate delivered to such party, make a similar publication in
Luxembourg.
SECTION 3.10 Usury Laws.
The Company covenants and agrees: (a) not to insist upon, or plead, or in
any manner whatsoever claim the benefit or the advantage of the usury law of any
jurisdiction against the Trustee or the Holders in connection with any claim,
action or proceeding which may be brought by the Trustee or the Holders in order
to enforce any right or remedy under this Indenture; and (b) to resist any and
all efforts to compel the Company to claim the benefit or the advantage of the
usury law of any jurisdiction against the Trustee or the Holders in connection
with any claim, action or proceeding which may be brought by the Trustee or the
Holders in order to enforce any right or remedy under this Indenture.
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ARTICLE 4
SECURITYHOLDER LISTS AND REPORTS BY THE
COMPANY AND THE TRUSTEE
SECTION 4.1 Company to Furnish Trustee Information as to Names and Addresses of
Securityholders.
If and so long as the Trustee shall not be the Security Registrar for the
Securities of any series, the Company and any other obligor on the Securities
will furnish or cause to be furnished to the Trustee a list in such form as the
Trustee may reasonably require of the names and addresses of the Holders of the
Registered Securities of such series pursuant to Section 312 of the Trust
Indenture Act:
(a) semi-annually not more than 15 days after each Regular Record Date
for the payment of interest on such Registered Securities, as hereinabove
specified, as of such record date and on dates to be determined pursuant to
Section 2.4 for non-interest bearing Registered Securities in each year;
and
(b) at such other times as the Trustee may reasonably request in
writing, within thirty days after receipt by the Company of any such
request as of a date not more than 15 days prior to the time such
information is furnished.
SECTION 4.2 Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 4.1 and the
names and addresses of Holders received by the Trustee in its capacity as
Security Registrar. The Trustee may destroy any list furnished to it as
provided in Section 4.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and
the corresponding rights and duties of the Trustee, shall be as provided by
the Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason
of any disclosure of information as to names
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and addresses of Holders made pursuant to the Trust Indenture Act.
SECTION 4.3 Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant
thereto.
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when the Securities are listed on any stock
exchange.
SECTION 4.4 Reports by Company.
The Company shall file with the Trustee and the Commission, and transmit to
Holders, such information, documents and other reports, and such summaries
thereof, as may be required pursuant to the Trust Indenture Act at the times and
in the manner provided pursuant to such Act; provided that any such information,
documents or reports required to be filed with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act, shall be filed with the Trustee within
15 days after the same is so required to be filed with the Commission.
ARTICLE 5
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.1 Event of Default Defined, Acceleration of Maturity; Waiver of
Default.
"Event of Default" with respect to Securities of any series, wherever used
herein, means each one of the following events which shall have occurred and be
continuing (whatever the reason for such Event of Default and whether it shall
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body):
(a) default in the payment of any installment of interest upon any of
the Securities of such series as and when the same shall become due and
payable, and continuance of such default for a period of 30 days; or
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(b) default in the payment of all or any part of the principal, or any
premium, on any of the Securities of such series as and when the same shall
become due and payable either at Maturity, upon any redemption, by
declaration or otherwise; or
(c) default in the payment of any sinking fund installment as and when
the same shall become due and payable by the terms of the Securities of
such series; or
(d) failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company in the
Securities of such series or contained in this Indenture (other than a
covenant or agreement included in this Indenture solely for the benefit of
a series of Securities other than such series) for a period of 60 days
after the date on which written notice specifying such failure, stating
that such notice is a "Notice of Default" hereunder and demanding that the
Company remedy the same, shall have been given by registered or certified
mail, return receipt requested, 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 Outstanding Securities of the series to which such
covenant or agreement relates; or
(e) default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by the Company or any Subsidiary or under
any mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any indebtedness for money borrowed
by the Company or any Subsidiary, whether such indebtedness now exists or
shall hereafter be created, if (i) such default results in such
indebtedness becoming or being declared due and payable prior to the date
on which it would otherwise become due and payable, (ii) the principal
amount of such indebtedness, together with the principal amount of any
other such indebtedness which has been so accelerated, aggregates
$25,000,000 or more at any one time outstanding and (iii) such indebtedness
is not discharged, or such acceleration is not rescinded or annulled,
within a period of 10 days after there shall have been given to the Company
by the Trustee or to the Company and the Trustee by the Holders of at 25%
in aggregate principal amount of the Securities of each such affected
series then Outstanding hereunder a written notice specifying such default
and requiring the Company to cause such indebtedness to be discharged or
cause such acceleration to be rescinded or annulled; or
(f) a court having jurisdiction in the premises
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shall enter a decree or order for relief in respect of the Company or any
Significant Subsidiary 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 the Company or any Significant
Subsidiary for any substantial part of its or their property or ordering
the winding up or liquidation of its or their affairs, and such decree or
order shall remain unstayed and in effect for a period of 60 consecutive
days; or
(g) the Company or any Significant Subsidiary 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 the Company or
any Significant Subsidiary or for any substantial part of it or their
property, or make any general assignment for the benefit of creditors; or
(h) any other Event of Default provided in the supplemental indenture,
Board Resolution or Officer's Certificate under which such series of
Securities is issued or in the form of Security for such series.
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.
If an Event of Default described in clause (a), (b), (c), (d), (e) or (h)
of Section 5.1 (if the Event of Default under clause (d) or (h), as the case may
be, is with respect to less than all series of Securities then Outstanding)
occurs and is continuing, then, and in each and every such case, except for any
series of Securities the principal of which shall have already become due and
payable, either the Trustee or the Holders of not less than 25% in aggregate
principal amount of the Securities of each such affected series then Outstanding
hereunder (each such series voting as a separate class) by notice in writing to
the Company (and to the Trustee if given by Securityholders), may declare the
entire principal (or, if the Securities of any such affected series are Original
Issue Discount Securities, such portion of the principal amount as may be
specified in the terms of such series) of all Securities of all such affected
series, and the interest accrued thereon, if any, to be due and payable
immediately, and upon any such declaration, the same shall become immediately
due and payable.
If an Event of Default described in clause (d) or (h) of Section 5.1 with
respect to all series of Securities then
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Outstanding, or an Event of Default described in clause (f) or (g) above occurs
and is continuing, then, and in each and every such case, unless the principal
of all of the Securities shall have already become due and payable, either the
Trustee or the Holders of not less than 25% in aggregate principal amount of all
of the Securities then Outstanding hereunder (treated as one class) by notice in
writing to the Company (and to the Trustee if given by Securityholders), may
declare the entire principal (or, if the Securities of any series are Original
Issue Discount Securities, such portion of the principal amount as may be
specified in the terms of such series) of all of the Securities then
Outstanding, and the interest accrued thereon, if any, to be due and payable
immediately, and upon such declaration, the same shall become immediately due
and payable.
The foregoing provisions are subject to the condition that if, at any time
after the principal (or, if the Securities are Original Issue Discount
Securities, such portion of the principal as may be specified in the terms
thereof) of the Securities of any series (or of all the Securities, as the case
may be) shall have been so declared due and payable, and before any judgment or
decree for the payment of the moneys due shall have been obtained or entered as
hereinafter provided,
(A) the Company shall pay or shall deposit with the Trustee a sum
sufficient to pay
(i) all matured installments of interest upon all the Securities
of each such series (or all the Securities, as the case may be); and
(ii) the principal of any and all Securities of each such series
(or of all the Securities, as the case may be) which shall have become
due otherwise than by acceleration; and
(iii) interest upon such principal and, to the extent that
payment of such interest is enforceable under applicable law, on
overdue installments of interest, at the same rate as the rate of
interest or Yield to Maturity (in the case of Original Issue Discount
Securities) specified in the Securities of each such series (or at the
respective rates of interest or Yields to Maturity of all the
Securities, as the case may be) to the date of such payment or
deposit; and
(iv) all amounts payable to the Trustee pursuant to Section 6.6;
and
(B) all Events of Default under the Indenture, other than the
non-payment of the principal of Securities which shall have become due by
acceleration, shall have been cured, waived or otherwise remedied as
provided herein,
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then and in every such case the Holders of a majority in aggregate principal
amount of all the Securities of each such series, each such series voting as a
separate class (or of all the Securities, as the case may be, voting as a single
class), then Outstanding, by written notice to the Company and to the Trustee,
may waive all defaults with respect to each such series (or with respect to all
the Securities, as the case may be) and rescind and annul such declaration and
its consequences, but no such waive or rescission and annulment shall extend to
or shall affect any subsequent default or shall impair any right consequent
thereon.
For all purposes under this Indenture, if a portion of the principal of any
Original Issue Discount Securities shall have been accelerated and declared due
and payable pursuant to the provisions hereof, then, from and after such
declaration, unless such declaration has been rescinded and annulled, the
principal amount of such Original Issue Discount Securities shall be deemed, for
all purposes hereunder, to be such portion of the principal thereof as shall be
due and payable as a result of such acceleration, and payment of such portion of
the principal thereof as shall be due and payable as a result of such
acceleration, together with interest, if any, thereon and all other amounts
owing thereunder, shall constitute payment in full of such Original Issue
Discount Securities.
SECTION 5.3 Collection of Indebtedness by Trustee; Trustee May Prove Debt .
The Company covenants that (a) in case default shall be made in the payment
of any installment of interest on any of the Securities of any series when such
interest shall have become due and payable, and such default shall have
continued for a period of 30 days, or (b) in case default shall be made in the
payment of all or any part of the principal of any of the Securities of any
series when the same shall have become due and payable, whether upon Maturity of
the Securities of such series or upon any redemption or by declaration or
otherwise, then upon demand of the Trustee, the Company will pay to the Trustee
for the benefit of the Holders of the Securities of such series the whole amount
that then shall have become due and payable on all Securities of such series,
and such Coupons, for principal and interest, as the case may be (with interest
to the date of such payment upon the overdue principal and, to the extent that
payment of such interest is enforceable under applicable law, on overdue
installments of interest at the same rate as the rate of interest or Yield to
Maturity (in the case of Original Issue Discount Securities) specified in the
Securities of such series); and in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, and such
other amount due the Trustee under Section 6.6 in respect of Securities of such
series.
Until such demand is made by the Trustee, the Company
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may pay the principal of and interest on the Securities of any series to the
registered Holders, whether or not the Securities of such series be overdue.
SECTION 5.4 Trustee May File Proofs of Claims.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee, in its own name as trustee of an express trust, shall be
entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceedings to judgment or final decree, and may enforce any such
judgment or final decree against the Company or other obligor upon the
Securities and collect in the manner provided by law out of the property of the
Company or other obligor upon the Securities, wherever situated, all the moneys
adjudged or decreed to be payable.
In case there shall be pending proceedings relative to the Company or any
other obligor upon the Securities under Title 11 of the United States Code or
any other applicable Federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Company or its property or such other obligor, or in
case of any other comparable judicial proceedings relative to the Company or
other obligor upon the Securities, or to the creditors or property of the
Company or such other obligor, the Trustee, irrespective of whether the
principal of the Securities shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount of
principal and interest (or, if the Securities of any series are Original
Issue Discount Securities, such portion of the principal amount as may be
specified in the terms of such series) owing and unpaid in respect of the
Securities of any series, and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee
(including any claim for amounts payable to the Trustee under Section 6.6)
and of the Securityholders allowed in any judicial proceedings relative to
the Company or other obligor upon the Securities, or to the creditors or
property of the Company or such other obligor; and
(b) unless prohibited by applicable law and regulations, to vote on
behalf of the holders of the Securities of any series in any election of a
receiver, assignee, trustee or a standby trustee in arrangement,
reorganization, liquidation or other bankruptcy or insolvency proceedings,
custodian or
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other person performing similar functions in respect of any such
proceedings; and
(c) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Securityholders and of the Trustee on their
behalf; and any trustee, receiver, or liquidator, custodian or other
similar official performing similar functions in respect of any such
proceedings is hereby authorized by each of the Securityholders to make
payments to the Trustee, and, in the event that the Trustee shall consent
to the making of payments directly to the Securityholders, to pay to the
Trustee its costs and expenses of collection and all other amounts due to
it pursuant to Section 6.6.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or vote for or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities of any series or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Securityholder in any such proceeding, except as aforesaid in clause (b).
SECTION 5.5 Trustee May Enforce Claims Without Possession of Securities.
All rights of action and of asserting claims under this Indenture, or under
any of the Securities of any series or Coupons appertaining to such Securities,
may be enforced by the Trustee without the possession of any of the Securities
of such series or Coupons appertaining to such Securities or the production
thereof in any trial or other proceedings relative thereto, and any such action
or proceedings instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall be awarded to
the Trustee for ratable distribution to the Holders of the Securities or Coupons
appertaining to such Securities in respect of which such action was taken, after
payment of all sums due to the Trustee under Section 6.6 in respect of such
Securities.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the Holders
of the Securities or Coupons appertaining to such Securities in respect to which
such action was taken, and it shall not be necessary to make any Holders of such
Securities or Coupons appertaining to such Securities parties to any such
proceedings.
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SECTION 5.6 Application of Proceeds.
Any moneys collected by the Trustee pursuant to this Article in respect of
any series shall be applied in the following order at the date or dates fixed by
the Trustee and, in case of the distribution of such moneys on account of
principal or interest, upon presentation of the several Securities and Coupons
appertaining to such Securities in respect of which monies have been collected
and stamping (or otherwise noting) thereon the payment, or issuing Securities of
such series in reduced principal amounts in exchange for the presented
Securities of like series if only partially paid, or upon surrender thereof if
fully paid:
FIRST: To the payment of costs and expenses applicable to such series
of Securities in respect of which monies have been collected, including all
amounts due to the Trustee and each predecessor Trustee pursuant to Section
6.6 in respect to such series of Securities;
SECOND: In case the principal of the Securities of such series in
respect of which moneys have been collected shall not have become and be
then due and payable, to the payment of interest on the Securities of such
series in default in the order of the Maturity of the installments on such
interest, with interest (to the extent that such interest has been
collected by the Trustee and is permitted by applicable law) upon the
overdue installments of interest at the same rate as the rate of interest
or Yield to Maturity (in the case of Original Issue Discount Securities)
specified in such Securities, such payments to be made ratably to the
persons entitled thereto, without discrimination or preference;
THIRD: In case the principal of the Securities of such series in
respect of which moneys have been collected shall have become and shall be
then due and payable, to the payment of the whole amount then owing and
unpaid upon all the Securities of such series for principal and interest,
with interest upon the overdue principal, and (to the extent that such
interest has been collected by the Trustee and is permitted by applicable
law) upon the overdue installments of interest at the same rate as the rate
of interest or Yield to Maturity (in the case of Original Issue Discount
Securities) specified in the Securities of such series; and in case such
moneys shall be insufficient to pay in full the whole amount so due and
unpaid upon the Securities of such series, then to the payment of such
principal and interest or Yield to Maturity, without preference or priority
of principal over interest or Yield to Maturity, or of interest or Yield to
Maturity over principal, or of any
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installment of interest over any other installment of interest or of any
Security of such series over any other Security of such series, ratably to
the aggregate of such principal and accrued and unpaid interest or Yield to
Maturity; and
FOURTH: To the payment of the remainder, if any, to the Company or any
other person lawfully entitled thereto.
SECTION 5.7 Suits for Enforcement.
In case an Event of Default has occurred, has not been waived and is
continuing, the Trustee may in its discretion proceed to protect and enforce the
rights vested in it by this Indenture by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any of such
rights, either at law or in equity or in bankruptcy or otherwise, whether for
the specific enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise o any power granted in this Indenture or to
enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
SECTION 5.8 Limitations on Suits by Security Holders.
No Holder of any Security of any series or of any Coupon appertaining
thereto shall have any right by virtue or by availing of any provision of this
Indenture to institute any action or proceeding at law or in equity or in
bankruptcy or otherwise upon or under or with respect to this Indenture or such
Security, or for the appointment of a trustee, receiver, liquidator, custodian
or other similar official or for any other remedy hereunder or thereunder,
unless (a) such Holder previously shall have given to the Trustee written notice
of an Event of Default with respect to Securities of such series and of the
continuance thereof, as hereinbefore provided, and (b) the Holders of not less
than 25% in aggregate principal amount of the Securities of such affected series
then Outstanding (treated as a single class) shall have made written request
upon the Trustee to institute such action or proceedings in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and (c) the Trustee for 60 days after its receipt
of such notice, request and offer of indemnity shall have failed to institute
any such action or proceeding, and (d) no direction inconsistent with such
written request shall have been given to the Trustee pursuant to Section 5.13;
it being understood and intended, and being expressly covenanted by the taker
and Holder of every Security or Coupon with every other taker and Holder and the
Trustee, that no one or more Holders of Securities of any series or Coupons
appertaining to such Securities shall have any right in any manner whatever by
virtue or by availing of any
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provision of this Indenture or any Security to affect, disturb or prejudice the
rights of any other such taker or Holder of Securities or Coupons appertaining
to such Securities, or to obtain or seek to obtain priority over or preference
to any other such taker or Holder or to enforce any right under this Indenture
or any Security, except in the manner herein provided and for the equal, ratable
and common benefit of all Holders of Securities of the applicable series and
Coupons appertaining to such Securities. For the protection and enforcement of
the provisions of this Section, each and every Securityholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.
SECTION 5.9 Unconditional Right of Securityholders to Institute Certain Suits.
Notwithstanding any other provision in this Indenture and any provision of
any Security, the right of any Holder of any Security or Coupon to receive
payment of the principal of and interest on such Security or Coupon on or after
the respective due dates expressed in such Security or Coupon or the applicable
redemption dates provided for in such Security, to convert such Securities of
any series in accordance with terms that may be established pursuant to Section
2.3, or to institute sui 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 5.10 Restoration of Rights on Abandonment of Proceedings.
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned for any
reason, or shall have been determined adversely to the Trustee, then and in
every such case the Company and the Trustee shall be restored respectively to
their former positions and rights hereunder, and all rights, remedies and powers
of the Company, the Trustee and the Securityholders shall continue as though no
such proceedings had been taken.
SECTION 5.11 Powers and Remedies Cumulative; Delay or Omission Not Waiver of
Default.
Except as provided in Section 5.8, no right or remedy herein conferred upon
or reserved to the Trustee or to the Holders of Securities or Coupons is
intended to be exclusive of any other right or remedy and every right and remedy
shall, to the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall
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not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 5.12 Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of Securities or
Coupons to exercise any right or power accruing upon any Event of Default
occurring and continuing as aforesaid shall impair any such right or power or
shall be construed to be a waiver of any such Event of Default or an
acquiescence therein. Every power and remedy given by this Indenture, any
Security or law to the Trustee or to the Holders of Securities or Coupons may be
exercised from time to time, and as often as shall be deemed expedient, by the
Trustee or, subject to Section 5.8, by the Holders of Securities or Coupons.
SECTION 5.13 Control by Holders of Securities.
The Holders of a majority in aggregate principal amount of the Securities
of each series affected (with each such series voting as a separate class) at
the time Outstanding shall have the right to direct the time, method, and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee with respect to the
Securities of such series by this Indenture; provided, that such direction shall
not be otherwise than in accordance with law and the provisions of this
Indenture and provided, further, that (subject to the provisions of Section 6.1)
the Trustee shall have the right to decline to follow any such direction if (a)
the Trustee, being advised by counsel, shall determine that the action or
proceeding so directed may not lawfully be taken; or (b) if the Trustee by its
board of directors, the executive committee, or a trust committee of directors
or Responsible Officers of the Trustee shall determine in good faith that the
action or proceedings so directed would involve the Trustee in personal
liability; or (c) if the Trustee in good faith shall so determine that the
actions or forbearances specified in or pursuant to such direction would be
unduly prejudicial to the interests of Holders of the Securities of all affected
series not joining in the giving of said direction, it being understood that
(subject to Section 6.1) the Trustee shall have no duty to ascertain whether or
not such actions or forbearances are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Trustee in its
discretion to take any action deemed proper by the Trustee and which is not
inconsistent with such direction or directions by Securityholders.
SECTION 5.14 Waiver of Past Defaults.
Prior to the declaration of acceleration of the
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Maturity of any Securities as provided in Section 5.2, the Holders of a majority
in aggregate principal amount of the Securities of such series (each series
voting as a separate class) at the time Outstanding with respect to which an
Event of Default shall have occurred and be continuing (voting as a single
class) may on behalf of the Holders of all such Securities waive any past
default or Event of Default described in Section 5.1 and its consequences,
except a default in respect of a covenant or provision hereof which cannot be
modified or amended without the consent of the Holder of each Security affected.
In the case of any such waiver, the Company, the Trustee and the Holders of all
such Securities shall be restored to their former positions and rights
hereunder, respectively, and such default shall cease to exist and be deemed to
have been cured and not to have occurred for purposes of this Indenture; but no
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
SECTION 5.15 Trustee to Give Notice of Default, But May Withhold in Certain
Circumstances.
The Trustee shall, within 90 days after the occurrence of a default with
respect to the Securities of any series, give notice of all defaults with
respect to that series known to the Trustee (i) if any Unregistered Securities
of that series are then Outstanding, to the Holders thereof, by publication at
least once in an Authorized Newspaper in the Borough of Manhattan, The City of
New York and at least once in an Authorized Newspaper in London (and, if
required by Section 3.9, at least once in an Authorized Newspaper in Luxembourg)
and (ii) to all Holders of Securities of such series in the manner and to the
extent provided in Section 313(c) of the Trust Indenture Act, unless in each
case such defaults shall have been cured before the mailing or publication of
such notice (the term "default" for the purpose of this Section being hereby
defined to mean any event or condition which is, or with notice or lapse of time
or both would become, an Event of Default); provided, that, except in the case
of default in the payment of the principal of or interest on any of the
Securities of such series, or in the payment of any sinking fund installment on
such series, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee, or a trust committee of
directors or trustees and/or Responsible Officers of the Trustee in good faith
determines that the withholding of such notice is in the interests of the
Securityholders of such series.
SECTION 5.16 Right of Court to Require Filing of Undertaking to Pay Costs.
All parties to this Indenture agree, and each Holder of any Security or
Coupon by his acceptance thereof shall be deemed to have agreed, that any court
may in its discretion
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require, 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, suffered or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Securityholder or group of
Securityholders of any series holding in the aggregate more than 10% in
aggregate principal amount of the Securities of such series, or, in the case of
any suit relating to or arising under clause (d) or (h) of Section 5.1 (if the
suit relates to Securities of more than one but less than all series), 10% in
aggregate principal amount of Securities then Outstanding and affected thereby,
or in the case of any suit relating to or arising under clause (d) or (h) (if
the suit under clause (d) or (h) relates to all the Securities then
Outstanding), (f) or (g) of Section 5.1, 10% in aggregate principal amount of
all Securities then Outstanding, or to any suit instituted by any Securityholder
for the enforcement of the payment of the principal of or interest on any
Security on or after the due date expressed in such Security or any date fixed
for redemption.
SECTION 5.17 Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
ARTICLE 6
CONCERNING THE TRUSTEE
SECTION 6.1 Duties and Responsibilities of the Trustee; During Default; Prior
to Default.
Prior to the occurrence of an Event of Default with respect to the
Securities of a particular series and after the curing or waiving of all Events
of Default which may have occurred with respect to such series, the Trustee
undertakes to perform such duties and only such duties as are specifically set
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forth in this Indenture with respect to such series of Securities. In case an
Event of Default with respect to the Securities of a series has occurred and has
not been cured or waived, the Trustee shall exercise with respect to such series
of Securities such of the rights and powers vested in it by this Indenture with
respect to such series of Securities, and use the same degree of care and skill
in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default with respect to the
Securities of any series and after the curing or waiving of all such Events
of Default with respect to such series which may have occurred:
(i) the duties and obligations of the Trustee with respect to the
Securities of any series shall be determined solely by the express
provisions of this Indenture, and the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Indenture, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
statements, certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in the case of
any such statements, certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining
the pertinent facts; and
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Holders pursuant to Section 5.13 relating to the time, method and
place of conducting any proceeding for any
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remedy available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if there shall be reasonable ground for believing that the
repayment of such funds or adequate indemnity against such liability is not
reasonably assured to it.
The provisions of this Section 6.1 are in furtherance of and subject to
Section 315 of the Trust Indenture Act.
SECTION 6.2 Certain Rights of the Trustee.
In furtherance of and subject to the Trust Indenture Act, and subject to
Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate or any
other certificate, statement, instrument, opinion, report, notice, request,
consent, order, bond, debenture, note, coupon, security or other paper or
document believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officer's Certificate (unless
other evidence in respect thereof is specifically prescribed herein or in
the terms established in respect of any series); and any resolution of the
Board of Directors may be evidenced to the Trustee by a copy thereof
certified by the secretary or an assistant secretary of the Company;
(c) the Trustee may consult with counsel and any written advice or any
Opinion of Counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in reliance thereon in accordance with such
advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred therein or thereby;
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(e) the Trustee shall not be liable for any action taken or omitted by
it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Event of Default hereunder and after
the curing or waiving of all Events of Default, the Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, appraisal, bond, debenture, note,
coupon, security, or other paper or document unless requested in writing so
to do by the Holders of not less than a majority in aggregate principal
amount of the Securities of all series affected then Outstanding; provided,
that, if the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of this Indenture,
the Trustee may require reasonable indemnity against such expenses or
liabilities as a condition to proceeding; the reasonable expenses of every
such investigation shall be paid by the Company or, if paid by the Trustee
or any predecessor trustee, shall be repaid by the Company upon demand; and
(g) 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 not regularly in its employ and the Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent
or attorney appointed with due care by it hereunder.
SECTION 6.3 Trustee Not Responsible for Recitals, Disposition of Securities or
Application of Proceeds Thereof.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for the correctness of the same. The
Trustee makes no representation as to the validity or sufficiency of this
Indenture or of the Securities or Coupons. The Trustee shall not be accountable
for the use or application by the Company of any of the Securities or of the
proceeds thereof.
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SECTION 6.4 Trustee and Agents May Hold Securities or Coupons; Collections,
Etc.
The Trustee or any agent of the Company or of the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Securities
or Coupons with the same rights it would have if it were not the Trustee or such
agent and may otherwise deal with the Company and receive, collect, hold and
retain collections from the Company with the same rights it would have if it
were not the Trustee or such agent.
SECTION 6.5 Moneys Held by Trustee.
Subject to the provisions of Section 10.4 hereof, all moneys received by
the Trustee shall, until used or applied as herein provided, be held in trust
for the purposes for which they were received, but need not be segregated from
other funds except to the extent required by mandatory provisions of law.
Neither the Trustee nor any agent of the Company or the Trustee shall be under
any liability for interest on any moneys received by it hereunder.
SECTION 6.6 Compensation and Indemnification of Trustee and Its Prior Claim.
The Company covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to reasonable compensation (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) and the Company covenants and agrees to pay or reimburse the
Trustee and each predecessor trustee upon its request for all reasonable
expense, disbursements and advances incurred or made by or on behalf of it in
accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all agents and other persons not regularly in its employ) except any such
expense, disbursement or advance as may arise from its negligence or bad faith.
The Company also covenants to indemnify the Trustee and each predecessor trustee
for, and to hold it harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of or in connection
with the acceptance or administration of this Indenture or the trusts hereunder
and its duties hereunder, including the costs and expenses of defending itself
against or investigating any claim of liability in the premises. The obligations
of the Company under this Section to compensate and indemnify the Trustee and
each predecessor trustee and to pay or reimburse the Trustee and each
predecessor trustee for expenses, disbursements and advances shall constitute
additional indebtedness hereunder and shall survive the satisfaction and
discharge of this Indenture. Such additional indebtedness shall be a senior
claim to that of the Securities upon all property
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and funds held or collected by the Trustee as such, except funds held in trust
for the benefit of the Holders of particular Securities or Coupons, and the
Securities are hereby subordinated to such senior claim.
SECTION 6.7 Right of Trustee to Rely on Officer's Certificate, Etc.
Subject to Sections 6.1 and 6.2, whenever in the administration of the
trusts of this Indenture the Trustee shall deem it necessary or desirable that a
matter be proved or established prior to taking or suffering or omitting any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively proved and established
by an Officer's Certificate delivered to the Trustee, and such certificate, in
the absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted by it under the
provisions of this Indenture upon the faith thereof.
SECTION 6.8 Indentures Not Creating Potential Conflicting Interests for the
Trustee.
The following indentures are hereby specifically described for the purposes
of Section 310(b)(1) of the Trust Indenture Act: this Indenture with respect to
the Securities of any other series.
SECTION 6.9 Qualification of Trustee: Conflicting Interests.
The Trustee shall comply with Section 310(b) of the Trust Indenture Act.
SECTION 6.10 Persons Eligible for Appointment as Trustee.
The Trustee for each series of Securities hereunder shall at all times be a
corporation or banking association organized and doing business under the laws
of the United States of America, any State thereof or the District of Columbia,
that has (or, in the case of a corporation or banking association included in a
bank holding company system, whose related bank holding company has) a combined
capital and surplus of at least $50,000,000, and which is authorized under such
laws to exercise corporate trust powers and is subject to supervision or
examination by Federal, state or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the
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purposes of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at an time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 6.11.
The provisions of this Section 6.10 are in furtherance of and subject to
Section 310(a) of the Trust Indenture Act.
SECTION 6.11 Resignation and Removal; Appointment of Successor Trustee.
(a) The Trustee, or any trustee or trustees hereafter appointed, may at any
time resign with respect to one or more or all series of Securities by giving
written notice of resignation to the Company and (i) if any Unregistered
Securities of a series affected are then Outstanding, by giving notice of such
resignation to the Holders thereof, by publication at least once in an
Authorized Newspaper in the Borough of Manhattan, The City of New York, and at
least once in an Authorized Newspaper in London (and, if required by Section
3.9, at least once in an Authorized Newspaper in Luxembourg), (ii) if any
Unregistered Securities of a series affected are then Outstanding, by mailing
notice of such resignation to the Holders thereof who have filed their names and
addresses with the Trustee pursuant to Section 313(c)(2) of the Trust Indenture
Act at such addresses as were so furnished to the Trustee and (iii) by mailing
notice of such resignation to the Holders of then Outstanding Registered
Securities of each series affected at their addresses as they shall appear on
the registry books. Upon receiving such notice of resignation, the Company shall
promptly appoint a successor trustee or trustees with respect to the applicable
series by written instrument in duplicate, executed by authority of the Board of
Directors, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee or trustees. If no successor
trustee shall have been so appointed with respect to any series and have
accepted appointment within 30 days after the mailing of such notice of
resignation, the resigning trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee, or any Securityholder
who has been a bona fide Holder of a Security or Securities of the applicable
series for at least six months may, subject to the provisions of Section 5.12,
on behalf of himself and all others similarly situated, petition any such court
for the appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, appoint a successor
trustee.
(b) In case at any time any of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of
Section 310(b) of the Trust
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Indenture Act with respect to any series of Securities after written
request therefor by the Company or by any Securityholder who has been
a bona fide Holder of a Security or Securities of such series for at
least six months; or
(ii) the Trustee shall cease to be eligible in accordance with
the provisions of Section 6.10 and Section 310(a) of the Trust
Indenture Act and shall fail to resign after written request therefor
by the Company or by any Securityholder; or
(iii) the Trustee shall become incapable of acting with respect
to any series of Securities, or shall be adjudged a bankrupt or
insolvent, or a receiver or liquidator of the Trustee or of its
property shall be appointed, or any public officer shall take charge
or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation;
then, in any such case, the Company may remove the Trustee with respect to the
applicable series of Securities and appoint a successor trustee for such series
by written instrument, in duplicate, executed by order of the Board of Directors
of the Company, one copy of which instrument shall be delivered to the Trustee
so removed and one copy to the successor trustee, or, subject to the provisions
of Section 315(e) of the Trust Indenture Act, any Securityholder who has been a
bona fide Holder of a Security or Securities of such series for at least six
months may on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor trustee with respect to such series. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
remove the Trustee and appoint a successor trustee.
(c) The Holders of a majority in aggregate principal amount of the
Securities of each series at the time outstanding may at any time remove
the Trustee with respect to Securities of such series and appoint a
successor trustee with respect to the Securities of such series by
delivering to the Trustee so removed, to the successor trustee so appointed
and to the Company the evidence provided for in Section 7.1 of the action
in that regard taken by the Securityholders.
(d) Any resignation or removal of the Trustee with respect to any
series and any appointment of a successor trustee with respect to such
series pursuant to any of the provisions of this Section 6.11 shall become
effective upon acceptance of appointment by the successor trustee as
provided in Section 6.12.
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SECTION 6.12 Acceptance of Appointment by Successor Trustee.
Any successor trustee appointed as provided in Section 6.11 shall execute
and deliver to the Company and to its predecessor trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor trustee with respect to all or any applicable series shall
become effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all rights, powers, duties and obligations
with respect to such series of its predecessor hereunder, with like effect as if
originally named as trustee for such series hereunder; but, nevertheless, on the
written request of the Company or of the successor trustee, upon payment of its
charges then unpaid, the trustee ceasing to act shall, subject to Section 10.4,
pay over to the successor trustee all moneys at the time held by it hereunder
and shall execute and deliver an instrument transferring to such successor
trustee all such rights, powers, duties and obligations. Upon request of any
such successor trustee, the Company shall execute any and all instruments in
writing for more fully and certainly vesting in and confirming to such successor
trustee all such rights and powers. Any trustee ceasing to act shall,
nevertheless, retain a prior claim upon all property or funds held or collected
by such trustee to secure any amounts then due it pursuant to the provisions of
Section 6.6.
If a successor trustee is appointed with respect to the Securities of one
or more (but not all) series, the Company, the predecessor trustee and each
successor trustee with respect to the Securities of any applicable series shall
execute and deliver an indenture supplemental hereto which shall contain such
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the predecessor trustee with respect to the
Securities of any series as to which the predecessor trustee is not retiring
shall continue to be vested in the predecessor trustee, and shall add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
trustee, it being understood that nothing herein or in such supplemental
indenture shall constitute such trustees co-trustees of the same trust and that
each such trustee shall be trustee of a trust or trusts under separate
indentures.
No successor trustee with respect to any series of Securities shall accept
appointment as provided in this Section 6.12 unless at the time of such
acceptance such successor trustee shall be qualified under Section 310(b) of the
Trust Indenture Act and eligible under the provisions of Section 6.10.
Upon acceptance of appointment by any successor trustee as provided in this
Section 6.12, the Company shall give
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notice thereof (a) if any Unregistered Securities of a series affected are then
Outstanding, to the Holders thereof, by publication of such notice at least once
in an Authorized Newspaper in the Borough of Manhattan, The City of New York and
at least once in an Authorized Newspaper in London (and, if required by Section
3.9, at least once in an Authorized Newspaper in Luxembourg), (b) if any
Unregistered Securities of a series affected are then Outstanding, to the
Holders thereof who have filed their names and addresses with the Trustee
pursuant to Section 313(c)(2) of the Trust Indenture Act, by mailing such notice
to such Holders at such addresses as were so furnished to the Trustee (and the
Trustee shall make such information available to the Company for such purpose)
and (c) to the Holders of Registered Securities of each series affected, by
mailing such notice to such Holders at their addresses as they shall appear on
the registry books. If the acceptance of appointment is substantially
contemporaneous with the resignation, then the notice called for by the
preceding sentence may be combined with the notice called for by Section 6.11.
If the Company fails to give such notice within ten days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be given at the expense of the Company.
SECTION 6.13 Merger, Conversion, Consolidation or Succession to Business of
Trustee.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the corporate trust business of the Trustee, shall be
the successor of the Trustee hereunder, provided, that such corporation shall be
qualified under Section 310(b) of the Trust Indenture Act and eligible under the
provisions of Section 6.10 without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Securities of any series shall have
been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor trustee and deliver
such Securities so authenticated; and, in case at that time any of the
Securities of any series shall not have been authenticated, any successor to the
Trustee may authenticate such Securities either in the name of any predecessor
hereunder or in the name of the successor Trustee; and in all such cases such
certificate shall have the full force which it is anywhere in the Securities of
such series or in this Indenture provided that the certificate of the Trustee
shall have; provided, that the right to adopt the certificate of authentication
of any predecessor trustee or to authenticate Securities of any series
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in the name of any predecessor trustee shall apply only to its successor o
successors by merger, conversion or consolidation.
SECTION 6.14 Preferential Collection of Claims Against the Company.
If this Indenture is qualified under the Trust Indenture Act, the Trustee
shall comply with Section 311(a) of the Trust Indenture Act, excluding any
creditor relationship listed in Section 311(b) of the Trust Indenture Act. A
Trustee who has resigned or been removed shall be subject to Section 311(a) of
the Trust Indenture Act to the extent indicated.
SECTION 6.15 Appointment of Authenticating Agent.
As long as any Securities of a series remain Outstanding, the Trustee may,
by an instrument in writing, appoint with the approval of the Company an
authenticating agent (the "Authenticating Agent") which shall be authorized to
act on behalf of the Trustee to authenticate Securities, including Securities
issued upon exchange, registration of transfer, partial redemption or pursuant
to Section 2.9. Securities of each such series authenticated by such
Authenticating Agent shall be entitled to the benefits of this Indenture and
shall be valid and obligatory for all purposes as if authenticated by the
Trustee. Whenever reference is made in this Indenture to the authentication and
delivery of Securities of any series by the Trustee or to the Trustee's
Certificate of Authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
for such series and a Certificate of Authentication executed on behalf of the
Trustee by suc Authenticating Agent. Such Authenticating Agent shall at all
times be a corporation organized and doing business under the laws of the United
States of America or of any State, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$45,000,000 (determined as provided in Section 6.10 with respect to the Trustee)
and subject to supervision or examination by Federal or State authority.
Any corporation into which any Authenticating Agent may be merged or
converted, or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency business
of any Authenticating Agent, shall continue to be the authenticating Agent with
respect to all series of Securities for which it served as Authenticating Agent
without the execution or filing of any paper or any further act on the part of
the Trustee or such Authenticating Agent. Any Authenticating Agent may at any
time, and if it shall cease to be eligible shall, resign by giving written
notice of resignation to the Trustee and to the Company.
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Upon receiving such a notice of resignation or upon such a termination, or
in case at any time any Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.15 with respect to one or more
series of Securities, the Trustee shall upon receipt of a Company Order appoint
a successor Authenticating Agent and the Company shall provide notice of such
appointment to all Holders of Securities of such series in the manner and to the
extent provided in Section 11.4. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all rights,
powers, duties and responsibilities of its predecessor hereunder, with like
effect as if originally named as Authenticating Agent. The Company agrees to pay
to the Authenticating Agent for such series from time to time reasonable
compensation. The Authenticating Agent for the Securities of any series shall
have no responsibility or liability for any action taken by it as such at the
direction of the Trustee.
If an appointment is made with respect to one or more series pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities described in the within-mentioned Indenture.
PNC BANK, NATIONAL ASSOCIATION,
As Trustee
By
----------------------------,
As Authenticating Agent
By
-----------------------------
Authorized Officer
Sections 6.2, 6.3, 6.4, 6.6 and 7.3 shall be applicable to any
Authenticating Agent.
ARTICLE 7
CONCERNING THE SECURITYHOLDERS
SECTION 7.1 Evidence of Action Taken by Securityholders.
Any request, demand, authorization, direction, notice,
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consent, waiver or other action provided by this Indenture to be given or taken
by a specified percentage in principal amount of the Securityholders of any or
all series may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such specified percentage of
Securityholders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee. Proof of execution
of any instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Sections 6.1 and 6.2)
conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Article.
SECTION 7.2 Proof of Execution of Instruments and of Holding of Securities.
Subject to Sections 6.1 and 6.2, the execution of any instrument by a
Securityholder or his agent or proxy may be proved in accordance with such
reasonable rules and regulations as may be prescribed by the Trustee or in such
manner as shall be satisfactory to the Trustee. The holding of Securities shall
be proved by the Security Register or by a certificate of the registrar thereof.
SECTION 7.3 Holders to be Treated as Owners.
The Company, the Trustee and any agent of the Company or the Trustee may
deem and treat the person in whose name any Security shall be registered upon
the Security Register for such series as the absolute owner of such Security
(whether or not such Security shall be overdue and notwithstanding any notation
of ownership or other writing thereon) for the purpose of receiving payment of
or on account of the principal of and, subject to the provisions of this
Indenture, interest on such Security and for all other purposes; and neither the
Company nor the Trustee nor any agent of the Company or the Trustee shall be
affected by any notice to the contrary. The Company, the Trustee and any agent
of the Company or the Trustee may treat the Holder of any Unregistered Security
and the Holder of any Coupon as the absolute owner of such Unregistered Security
or Coupon (whether or not such Unregistered Security or Coupon shall be overdue)
for the purpose of receiving payment thereof or on account thereof and for all
other purposes and neither the Company, the Trustee, nor any agent of the
Company or the Trustee shall be affected by any notice to the contrary. All such
payments so made to any such person, or upon his order, shall be valid, and, to
the extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Unregistered Security or Coupon.
If the Securities of any series are issued in the form of one or more
Global Securities, the Depository therefor may grant proxies to Persons having a
beneficial ownership in such Global
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Security or Securities for purposes of voting or otherwise responding to any
request for consent, waiver or other action which the Holder of such Security is
entitled to grant or take under this Indenture and the Trustee shall accept such
proxies for the purposes granted; provided that neither the Trustee nor the
Company shall have any obligation with respect to the grant of or solicitation
by the Depository of such proxies.
SECTION 7.4 Securities Owned by Company Deemed Not Outstanding.
In determining whether the Holders of the requisite aggregate principal
amount of Outstanding Securities of any or all series have concurred in any
request, demand, authorization, direction, notice, consent, waiver or other
action by Securityholders under this Indenture, Securities which are owned by
the Company or any other obligor on the Securities with respect to which such
determination is being made or by any person directly or indirectly controlling
or controlled by or under direct or indirect common control with the Company or
any other obligor on the Securities with respect to which such determination is
being made shall be disregarded and deemed not to be Outstanding for the purpose
of any such determination, except that for the purpose of determining whether
the Trustee shall be protected in relying on any such action only Securities
which the Trustee knows are so owned shall be so disregarded. Securities so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company or any other obligor on the Securities. In case of a
dispute as to such right, the advice of counsel shall be full protection in
respect of any decision made by the Trustee in accordance with such advice. Upon
request of the Trustee, the Company shall furnish to the Trustee promptly an
Officer's Certificate listing and identifying all Securities, if any, known by
the Company to be owned or held by or for the account of any of the
above-described persons; and, subject to Sections 6.1 and 6.2, the Trustee shall
be entitled to accept such Officer's Certificate as conclusive evidence of the
facts therein set forth and of the fact that all Securities not listed therein
are Outstanding for the purpose of any such determination.
SECTION 7.5 Right of Revocation of Action Taken.
At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 7.1, of the taking of any action by the Holders of the
percentage in aggregate principal amount of the Securities of any or all series,
as the case may be, specified in this Indenture in connection with such action,
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any Holder of a Security the serial number of which is shown by the evidence to
be included among the serial numbers of the Securities the Holders of which have
consented to such action may, by filing written notice at the Corporate Trust
Office and upon proof of holding as provided in this Article, revoke such action
so far as concerns such Security. Except as aforesaid any such action taken by
the Holder of any Security shall be conclusive and binding upon such Holder and
upon all future Holders and owners of such Security and of any Securities issued
in exchange or substitution therefor or on registration of transfer thereof,
irrespective of whether or not any notation in regard thereto is made upon any
such Security. Any action taken by the Holders of the percentage in aggregate
principal amount of the Securities of any or all series, as the case may be,
specified in this Indenture in connection with such action shall be conclusively
binding upon the Company, the Trustee and the Holders of all the Securities
affected by such action.
SECTION 8.1 Supplemental Indentures Without Consent of Securityholders.
The Company, when authorized by a resolution of its Board of Directors
(which resolution may provide general terms or parameters for such action and
may provide that the specific terms of such action may be determined in
accordance with or pursuant to an Company Order), and the Trustee may from time
to time and at any time enter into an indenture or indentures supplemental
hereto for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the Trustee as
security for the Securities of one or more series any property or assets;
(b) to evidence the succession of another Person to the Company, or
successive successions, and the assumption by any such successor of the
covenants, agreements and obligations of the Company pursuant to Article 9;
(c) to add to the covenants of the Company such further covenants,
restrictions, conditions or provisions as the Company and the Trustee shall
consider to be for the protection of the Holders of Securities or Coupons,
and to make the occurrence, or the occurrence and continuance, of a default
in any such additional covenants, restrictions, conditions or provisions an
Event of Default permitting the enforcement of all or any of the several
remedies provided in this Indenture as herein set forth; provided, that in
respect of any such additional
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covenant, restriction, condition or provision such supplemental indenture
may provide for a particular period of grace after default (which period
may be shorter or longer than that allowed in the case of other defaults)
or may provide for an immediate enforcement upon such an Event of Default
or may limit the remedies available to the Trustee upon such an Event of
Default or may limit the right of the Holders of a majority in aggregate
principal amount of the Securities of such series to waive such an Event of
Default;
(d) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any
supplemental indenture, or to make any other provisions as the Company may
deem necessary or desirable, provided, that no such action shall adversely
affect the interests of the Holders of the Securities or Coupons;
(e) to establish the forms or terms of Securities of any series or of
the Coupons appertaining to such Securities as permitted by Sections 2.1
and 2.3;
(f) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one trustee, pursuant to the requirements
of Section 6.12; or
(g) to provide for the qualification of the Indenture under the Trust
Indenture Act.
The Trustee is hereby authorized to join with the Company in the execution
of any such supplemental indenture, to make any further appropriate agreements
and stipulations which may be therein contained and to accept the conveyance,
transfer, assignment, mortgage or pledge of any property thereunder, but the
Trustee shall not be obligated to enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section may
be executed without the consent of the Holders of any of the Securities at the
time outstanding, notwithstanding any of the provisions of Section 8.2.
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SECTION 8.2 Supplemental Indentures With Consent of Securityholders.
With the consent (evidenced as provided in Article 7) of the Holders of not
less than a majority in aggregate principal amount of the Securities at the time
Outstanding of all series affected by such supplemental indenture (voting as one
class), the Company, when authorized by a resolution of its Board of Directors
(which resolution may provide general terms or parameters for such action and
may provide that the specific terms of such action may be determined in
accordance with or pursuant to an Company Order), and the Trustee may, from time
to time and at any time, enter into an indenture or indentures supplemental
hereto (which shall conform to the provisions of the Trust Indenture Act as in
force and effect at the date of execution thereof) for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental indenture or of modifying in any manner
the rights of the Holders of the Securities of each such series or of the
Coupons appertaining to such Securities; provided, that no such supplemental
indenture shall (a) extend the final maturity of any Security, or reduce the
principal amount thereof, or reduce the rate or extend the time of payment of
interest thereon or premium thereon, if any, or reduce any amount payable on
redemption thereof, or make the principal thereof (including any amount in
respect of original issue discount), or interest thereon payable in any coin or
currency other than that provided in the Securities and Coupons or in accordance
with the terms thereof, or reduce the amount of the principal of an Original
Issue Discount Security that would be due and payable upon an acceleration of
the maturity thereof pursuant to Section 5.1 or the amount thereof provable in
bankruptcy pursuant to Section 5.2, or alter the provisions of Section 11.11 or
11.12 or impair or affect the right of any Securityholder to institute suit for
the payment thereof when due or, if the Securities provide therefor, any right
of repayment at the option of the Securityholder, in each case without the
consent of the Holder of each Security so affected, or (b) reduce the aforesaid
percentage of Securities of any series, the consent of the Holders of which is
required for any such supplemental indenture, without the consent of the Holders
of each Security so affected.
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of Holders of Securities of such series, or of Coupons appertaining to
such Securities, with respect to such covenant or provision, shall be deemed not
to affect the rights under this Indenture of the Holders of Securities of any
other series or of the Coupons appertaining to such Securities.
Upon the request of the Company, accompanied by a copy of a resolution of
the Board of Directors (which resolution may
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provide general terms or parameters for such action and may provide that the
specific terms of such action may be determined in accordance with or pursuant
to a Company Order) certified by the secretary or an assistant secretary of the
Company authorizing the execution of any such supplemental indenture, and upon
the filing with the Trustee of evidence of the consent of the Holders of the
Securities as aforesaid and other documents, if any, required by Section 7.1,
the Trustee shall join with the Company in the execution of such supplemental
indenture unless such supplemental indenture 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
supplemental indenture.
It shall not be necessary for the consent of the Securityholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance thereof.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall give notice thereof (i) to the Holders of then Outstanding Registered
Securities of each series affected thereby, by mailing a notice thereof by
first-class mail to such Holders at their addresses as they shall appear on the
Security Register, (ii) if any Unregistered Securities of a series affected
thereby are then Outstanding, to the Holders thereof who have filed their names
and addresses with the Trustee pursuant to Section 313(c)(2) of the Trust
Indenture Act, by mailing a notice thereof by first-class mail to such Holders
at such addresses as were so furnished to the Trustee and (iii) if any
Unregistered Securities of a series affected thereby are then Outstanding, to
all Holders thereof, by publication of a notice thereof at least once in an
Authorized Newspaper in the Borough of Manhattan, The City of New York and at
least once in an Authorized Newspaper in London (and, if required by Section
3.9, at least once in an Authorized Newspaper in Luxembourg), and in each case
such notice shall set forth in general terms the substance of such supplemental
indenture. Any failure of the Company to give such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
SECTION 8.3 Effect of Supplemental Indenture.
Upon the execution of any supplemental indenture pursuant to the provisions
hereof, this Indenture shall be and be deemed to be modified and amended in
accordance therewith and the respective rights, limitations of rights,
obligations, duties and immunities under this Indenture of the Trustee, the
Company and the Holders of Securities of each series affected thereby shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
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terms and conditions of this Indenture for any and all purposes.
SECTION 8.4 Documents to be Given to Trustee.
The Trustee, subject to the provisions of Sections 6.1 and 6.2, may receive
an Officer's Certificate and an Opinion of Counsel as conclusive evidence that
any supplemental indenture executed pursuant to this Article 8 complies with the
applicable provisions of this Indenture.
SECTION 8.5 Notation on Securities in Respect of Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to the provisions of this Article may bear a
notation in form approved by the Trustee for such series as to any matter
provided for by such supplemental indenture or as to any action taken by
Securityholders. If the Company or the Trustee shall so determine, new
Securities of any series so modified as to conform, in the opinion of the
Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may be prepared by the Company,
authenticated by the Trustee and delivered in exchange for the Securities of
such series then Outstanding.
ARTICLE 9
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.1 Company May Consolidate, Etc, Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person, or
convey, transfer or lease its properties and assets substantially as an entirety
to any other Person, and the Company shall not permit any other Person to
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless:
(a) either the Company shall be the continuing corporation, or the
successor entity (if other than the Company) formed by such consolidation
or into which the Company is merged or to which the properties and assets
of the Company substantially as an entity are transferred or leased shall
be a corporation, partnership, limited liability company, or trust
organized and existing under the laws of the United States of America, any
State thereof or the District of Columbia and shall expressly assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee,
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all the obligations of the Company under the Securities and this Indenture;
and
(b) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or a Subsidiary
as a result of such transaction as having been incurred by the Company or
such Subsidiary at the time of such transaction, no Event of Default, and
no event which, after notice or lapse of time or both, would become an
Event of Default, shall have happened and be continuing.
SECTION 9.2 Successor Entity Substituted.
The successor entity formed by such consolidation or into which the Company
is merged or to which such conveyance, transfer or lease is made shall succeed
to and be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor entity
had been named as the Company herein, and thereafter (except in the case of a
lease to another Person) the predecessor entity shall be relieved of all
obligations and covenants under th Indenture and the Securities and, in the
event of such conveyance or transfer, any such predecessor entity may be
dissolved and liquidated.
SECTION 9.3 Opinion of Counsel To Be Given Trustee.
The Trustee subject to the provisions of Sections 6.1 and 6.2 may receive
an Opinion of Counsel as conclusive evidence that any such consolidation,
merger, sale or conveyance, and any such assumption complies with the provisions
of this Article 9.
ARTICLE 10
SATISFACTION AND DISCHARGE
SECTION 10.1 Satisfaction and Discharge of Indenture.
(A) If at any time (i) the Company shall have paid or caused to be paid the
principal of and interest on all the Securities of any series Outstanding
hereunder and all unmatured Coupons appertaining thereto (other than Securities
of such series and Coupons appertaining thereto which have been destroyed, lost
or stolen and which have been replaced or paid as provided in Section 2.9) as
and when the same shall have become due and payable, or (ii) the Company shall
have delivered to the Trustee for cancellation all Securities of any series
theretofore authenticated and all unmatured Coupons appertaining thereto (other
than any Securities of such series and Coupons appertaining thereto which shall
have been destroyed, lost or
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stolen and which shall have been replaced or paid as provided in Section 2.9) or
(iii) in the case of any series of Securities where the exact amount (including
the currency of payment) of principal of and interest due on which can be
determined at the time of making the deposit referred to in clause (b) below,
(a) all the Securities of such series and all unmatured Coupons appertaining
thereto not theretofore delivered to the Trustee for cancellation shall have
become due and payable, or are by their terms to become due and payable within
one year or are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption, and (b) the
Company shall have irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust the entire amount in (i) cash (other than moneys
repaid by the Trustee or any Paying Agent to the Company in accordance with
Section 10.4), (ii) in the case of any series of Securities the payments on
which may only be made in Dollars, direct obligations of the United States of
America, backed by its full faith and credit ("U.S. Government Obligations"),
maturing as to principal and interest at such times and in such amounts as will
insure the availability of cash sufficient to pay at such Maturity or upon such
redemption, as the case may be, or (iii) a combination thereof, sufficient, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
(a) the principal and interest on all Securities of such series and Coupons
appertaining thereto on each date that such principal or interest is due and
payable and (b) any mandatory sinking fund payments on the dates on which such
payments are due and payable in accordance with the terms of the Indenture and
the Securities of such series; and if, in any such case, the Company shall also
pay or cause to be paid all other sums payable hereunder by the Company, then
this Indenture shall cease to be of further effect (except as to (i) rights of
registration of transfer and exchange of Securities of such Series and of
Coupons appertaining thereto and the Company's right of optional redemption, if
any, (ii) substitution of mutilated defaced, destroyed, lost or stolen
Securities or Coupons, (iii) rights of holders of Securities and Coupons
appertaining thereto to receive payments of principal thereof and interest
thereon, upon the original stated due dates therefor (but not upon
acceleration), and remaining rights of the Holders to receive mandatory sinking
fund payments, if any, (iv) any optional redemption rights of such series of
Securities to the extent to be exercised to make such call for redemption within
one year, (v) the rights, obligations, duties and immunities of the Trustee
hereunder, including those under Section 6.6, (vi) the rights of the Holders of
securities of such series and Coupons appertaining thereto as beneficiaries
hereof with respect to the property so deposited with the Trustee payable to all
or any of them, and (vii) the obligations of the Company under Section 3.2) and
the Trustee, on demand of the Company accompanied by an Officer's Certificate
and an Opinion of Counsel and at the cost and expense of the Company, shall
execute proper instruments acknowledging such satisfaction of and discharging
this Indenture; provided, that the rights of
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Holders of the Securities and Coupons to receive amounts in respect of principal
of and interest on the Securities and Coupons held by them shall not be delayed
longer than required by then applicable mandatory rules or policies of any
securities exchange upon which the Securities are listed. The Company agrees to
reimburse the Trustee for any costs or expenses thereafter reasonably and
properly incurred and to compensate the Trustee for any services thereafter
reasonably and properly rendered by the Trustee in connection with this
Indenture or the Securities of such series.
(B) The following provisions shall apply to the Securities of each series
unless specifically otherwise provided in a Board Resolution, Officer's
Certificate or indenture supplemental hereto provided pursuant to Section 2.3.
In addition to discharge of the Indenture pursuant to the next preceding
paragraph, in the case of any series of Securities the exact amounts (including
the currency of payment) of principal of and interest due on which can be
determined at the time of making the deposit referred to in clause (a) below,
the Company shall be deemed to have paid and discharged the entire indebtedness
on all the Securities of such a series and the Coupons appertaining thereto on
the date of the deposit referred to in subparagraph (a) below, and the
provisions of this Indenture with respect to the Securities of such series and
Coupons appertaining thereto shall no longer be in effect (except as to (i)
rights of registration of transfer and exchange of Securities of such series and
of Coupons appertaining thereto and the Company's right of optional redemption,
if any, (ii) substitution of mutilated, defaced, destroyed, lost or stolen
Securities or Coupons, (iii) rights of Holders of Securities and Coupons
appertaining thereto to receive payments of principal thereof and interest
thereon, upon the original stated due dates therefor (but not upon
acceleration), and remaining rights of the Holders to receive mandatory sinking
fund payments, if any, (iv) any optional redemption rights of such series of
Securities to the extent to be exercised to make such call for redemption within
one year, (v) the rights, obligations, duties and immunities of the Trustee
hereunder, (vi) the rights of the Holders of Securities of such series and
Coupons appertaining thereto as beneficiaries hereof with respect to the
property so deposited with the Trustee payable to all or any of them and (vii)
the obligations of the Company under Section 3.2) and the Trustee, at the
expense of the Company, shall at the Company's request, execute proper
instruments acknowledging the same, if
(a) with reference to this provision the Company has irrevocably
deposited or caused to be irrevocably 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 Securities of such series and Coupons
appertaining thereto (i) cash in an amount, or (ii) in the case of any
series of Securities the payments on which may only be made in Dollars,
U.S. Government Obligations,
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maturing as to principal and interest at such times and in such amounts as
will insure the availability of cash or (iii) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered
to the Trustee, to pay (a) the principal and interest on all Securities of
such series and Coupons appertaining thereto on each date that such
principal or interest is due and payable and (b) any mandatory sinking fund
payments on the dates on which such payments are due and payable in
accordance with the terms of the Indenture and the Securities of such
series;
(b) such deposit will not result in a breach or violation of, or
constitute a default under, any agreement or instrument to which the
Company is a party or by which it is bound;
(c) the Company has delivered to the Trustee an Opinion of Counsel
based on the fact that (x) the Company has received from, or there has been
published by, the IRS a ruling or (y) since the date hereof, there has been
a change in the applicable Federal income tax law, in either case to the
effect that, and such opinion shall confirm that, the Holders of the
Securities of such series and Coupons appertaining thereto will not
recognize income, gain or loss for United States Federal income tax
purposes as a result of such deposit, defeasance and discharge and will be
subject to United States Federal income tax on the same amount and in the
same manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred; and
(d) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that all conditions precedent
provided for relating to the defeasance contemplated by this provision have
been complied with.
(C) The Company shall be released from its obligations under Sections 3.6
and 9.1 and unless otherwise provided for in the Board Resolution, Officer's
Certificate or Indenture supplemental hereto establishing such series of
Securities, from all covenants and other obligations referred to in Section
2.3(18) or 2.3(19) with respect to such series of Securities, and any Coupons
appertaining thereto, outstanding on and after the date the conditions set forth
below are satisfied (hereinafter, "covenant defeasance"). For this purpose, such
covenant defeasance means that, with respect to the Outstanding Securities of
any series, the Company may omit to comply with and shall have no liability in
respect of any term, condition or limitation set forth in such Section, whether
directly or indirectly by reason of any reference elsewhere herein to such
Section or by reason of any reference in such Section to any
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other provision herein or in any other document and such omission to comply
shall not constitute an Event of Default under Section 5.1, but the remainder of
this Indenture and such Securities and Coupons shall be unaffected thereby. The
following shall be the conditions to application of this subsection C of this
Section 10.1:
(a) The Company has irrevocably deposited or caused to be deposited
with the Trustee as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the holders of the Securities of such series and
coupons appertaining thereto, (i) cash in an amount, or (ii) in the case of
any series of Securities the payments on which may only be made in Dollars,
U.S. Government Obligations maturing as to principal and interest at such
times and in such amounts as will insure the availability of cash or (iii)
a combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay (A) the principal
and interest on all Securities of such series and Coupons appertaining
thereof and (B) any mandatory sinking fund payments on the day on which
such payments are due and payable in accordance with the terms of the
Indenture and the Securities of such series;
(b) No Event of Default or event which with notice or lapse of time or
both would become an Event of Default with respect to the Securities shall
have occurred and be continuing on the date of such deposit;
(c) Such covenant defeasance shall not cause the Trustee to have a
conflicting interest as defined in Section 6.9 and for purposes of the
Trust Indenture Act with respect to any securities of the Company;
(d) Such covenant defeasance shall not result in a breach or violation
of, or constitute a default under, this Indenture or any other agreement or
instrument to which the Company is a party or by which it is bound;
(e) Such covenant defeasance shall not cause any Securities then
listed on any registered national securities exchange under the Exchange
Act to be delisted;
(f) The Company shall have delivered to the Trustee an Officer's
Certificate and Opinion of Counsel to the effect that the Holders of the
Securities of such series and Coupons appertaining thereto will not
recognize income, gain or loss for
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United States Federal income tax purposes as a result of such covenant
defeasance and will be subject to United States 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; and
(g) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to the covenant defeasance contemplated by
this provision have been complied with.
SECTION 10.2 Application by Trustee of Funds Deposited for Payment of
Securities.
Subject to Section 10.4, all moneys deposited with the Trustee (or other
trustee) pursuant to Section 10.1 shall be held in trust and applied by it to
the payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent), to the Holders of the particular Securities of
such series and of Coupons appertaining thereto for the payment or redemption of
which such moneys have been deposited with the Trustee, of all sums due and to
become due thereon fo principal and interest; but such money need not be
segregated from other funds except to the extent required by law.
SECTION 10.3 Repayment of Moneys Held by Paying Agent.
In connection with the satisfaction and discharge of this Indenture with
respect to Securities of any series, all moneys then held by any Paying Agent
under the provisions of this Indenture with respect to such series of Securities
shall, upon demand of the Company, be repaid to it or paid to the Trustee and
thereupon such Paying Agent shall be released from all further liability with
respect to such moneys.
SECTION 10.4 Return of Unclaimed Moneys Held by Trustee and Paying Agent.
Any moneys deposited with or paid to the Trustee or any Paying Agent for
the payment of the principal of and any premium and interest on any Security and
any series of Coupons attached thereto and not so applied but remaining
unclaimed under applicable law shall be transferred by the Trustee to the
appropriate Persons in accordance with applicable laws, and the Holder of such
Security of such series and of any Coupons appertaining thereto shall thereafter
look only to such Persons for an payment which such Holder may be entitled to
collect and all liability of the Trustee and such Paying Agent with respect to
such moneys shall thereupon cease.
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SECTION 10.5 Indemnity for U.S. Government Obligations.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 10.1 or the principal or interest received in
respect of such obligations.
ARTICLE 11
MISCELLANEOUS PROVISIONS
SECTION 11.1 Incorporators, Stockholders, Officers and Directors of Company
Exempt from Individual Liability.
No recourse under or upon any obligation, covenant or agreement contained
in this Indenture, or in any Security, or because of any indebtedness evidenced
thereby, shall be had against any incorporator, as such, or against any past,
present or future stockholder, officer or director, as such, of the Company or
of any successor, either directly or through the Company or any successor, under
any rule of law, statute or constitutional provision or by the enforcement of
any assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance of the
Securities and the Coupons, if any, appertaining thereto by the Holders thereof
and as part of the consideration for the issue of the Securities and the Coupons
appertaining thereto.
SECTION 11.2 Provisions of Indenture for the Sole Benefit of Parties and Holders
of Securities and Coupons.
Nothing in this Indenture, in the Securities or in the Coupons appertaining
thereto, expressed or implied, shall give or be construed to give to any Person
other than the parties thereto and their successors and the Holders of the
Securities or Coupons, if any, any legal or equitable right, remedy or claim
under this Indenture or under any covenant or provision herein contained, all
such covenants and provisions being for the sole benefit of the parties hereto
and their successors and of the Holders of the Securities or Coupons, if any.
SECTION 11.3 Successors and Assigns of Company Bound by Indenture.
All the covenants, stipulations, promises and
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agreements in this Indenture contained by or in behalf of the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 11.4 Notices and Demands on Company, Trustee and Holders of Securities
and Coupons.
Any notice or demand which by any provision of this Indenture is required
or permitted to be given or served by the Trustee or by the Holders of
Securities or Coupons, if any, to or on the Company may be given or served by
being deposited postage prepaid, first-class mail (except as otherwise
specifically provided herein) addressed (until another address of the Company is
filed by the Company with the Trustee) to HEALTHSOUTH Corporation, One
HealthSouth Parkway, Birmingham, Alabama 35243 Attention: Secretary. Any notice,
direction, request or demand by the Company or any Holder of Securities or
Coupons, if any, to or upon the Trustee shall be deemed to have been
sufficiently given or served by being deposited postage prepaid, first-class
mail (except as otherwise specifically provided herein) addressed (until another
address of the Trustee is filed by the Trustee with the Company) to 500 West
Jefferson Street, Louisville, Kentucky 40202, Attention: Corporate Trust
Department.
Where this Indenture provides for notice to Holders of Registered
Securities, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class mail, postage prepaid,
to each Holder entitled thereto, at his last address as it appears in the
Security Register. In any case where notice to such Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in regular mail
service, it shall be impracticable to mail notice to the Company when such
notice is required to the given pursuant to any provision of this Indenture,
then any manner of giving such notice as shall be reasonably satisfactory to the
Trustee shall be deemed to be a sufficient giving of such notice.
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SECTION 11.5 Officer's Certificates and Opinions of Counsel; Statements to be
Contained Therein.
Upon any application or demand by the Company to the Trustee to take any
action under any of the provisions of this Indenture, the Company shall furnish
to the Trustee an Officer's Certificate stating that all conditions precedent
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent have been complied with, except that in
the case of any such application o demand as to which the furnishing of such
documents is specifically required by any provision of this Indenture relating
to such particular application or demand, no additional certificate or opinion
need be furnished.
Each certificate or opinion provided for in this Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided for
in this Indenture 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 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
complied with and (d) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Any certificate, statement or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of
or representations by counsel, unless such officer knows that the certificate or
opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous. Any
certificate, statement or opinion of counsel may be based, insofar as it relates
to factual matters or information with respect to which is in the possession of
the Company, upon the certificate, statement or opinion of or representations by
an officer of officers of the Company, unless such counsel knows that the
certificate, statement or opinion or representations with respect to the matters
upon which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous.
Any certificate, statement or opinion of an officer of the Company or of
counsel may be based, insofar as it relates to accounting matters, upon a
certificate or opinion of or representations by an accountant or firm of
accountants in the
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employ of the Company, unless such officer or counsel, as the case may be, knows
that the certificate or opinion of or representations with respect to the
accounting matters upon which his certificate, statement or opinion may be based
as aforesaid are erroneous, or in the exercise of reasonable care should know
that the same are erroneous.
Any certificate or opinion of any independent firm of public accountants
filed with and directed to the Trustee shall contain a statement that such firm
is independent.
SECTION 11.6 Payments Due on Saturdays, Sundays and Holidays.
If the date of Maturity of interest on or principal of the Securities of
any series or any Coupons appertaining thereto or the date fixed for redemption
or repayment of any such Security or Coupon shall not be a Business Day, then
payment of interest or principal need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made on
the date of Maturity or the date fixed for redemption, and no interest shall
accrue for the period after such date.
SECTION 11.7 Conflict of Any Provision of Indenture with Trust Indenture Act.
If and to the extent that any provision of this Indenture limits, qualifies
or conflicts with duties imposed by, or with another provision (an "incorporated
provision") included in this Indenture by operation of Sections 310 to 318,
inclusive, of the Trust Indenture Act, such imposed duties or incorporated
provision shall control.
SECTION 11.8 New York Law to Govern.
THIS INDENTURE AND EACH SECURITY AND COUPON SHALL BE DEEMED TO BE A
CONTRACT UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE, WITHOUT REGARD TO THE
CONFLICTS OF LAW PRINCIPLES THEREOF.
SECTION 11.9 Counterparts.
This Indenture may be executed in any number of counterparts, each of which
shall be an original; but such counterparts shall together constitute but one
and the same instrument.
SECTION 11.10 Effect of Headings.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the
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construction hereof.
SECTION 11.11 Securities in a Foreign Currency or in ECU.
Unless otherwise specified in an Officer's Certificate delivered pursuant
to Section 2.3 of this Indenture with respect to a particular series of
Securities, whenever for purposes of this Indenture any action may be taken by
the Holders of a specified percentage in aggregate principal amount of
Securities of all series or all series affected by a particular action at the
time Outstanding and, at such time, there are Outstanding Securities of any
series which are denominated in a coin or currency other than Dollars (including
ECUs), then the principal amount of Securities of such series which shall be
deemed to be Outstanding for the purpose of taking such action shall be that
amount of Dollars that could be obtained for such amount at the Market Exchange
Rate. For purposes of this Section 11.11, Market Exchange Rate shall mean the
noon Dollar buying rate in The New York City for cable transfers of that
currency as published by the Federal Reserve Bank of New York; provided, in the
case of ECUs, Market Exchange Rate shall mean the rate of exchange determined by
the Commission of the European Communities (or any successor thereto) as
published in the Official Journal of the European Communities (such publication
or any successor publication, the "Journal"). If such Market Exchange Rate is
not available for any reason with respect to such currency, the Trustee shall
use, in its sole discretion and without liability on its part, such quotation of
the Federal Reserve Bank of New York or, in the case of ECUs, the rate of
exchange as published in the Journal, as of the most recent available date, or
quotations or, in the case of ECUs, rates of exchange from one or more major
banks in The City of New York or in the country of issue of the currency in
question, which for purposes of the ECU shall be Brussels, Belgium, or such
other quotations or, in the case of ECU, rates of exchange as the Trustee shall
deem appropriate. The provisions of this paragraph shall apply in determining
the equivalent principal amount in respect of Securities of a series denominated
in a currency other than Dollars in connection with any action taken by Holders
of Securities pursuant to the terms of this Indenture.
All decisions and determinations of the Trustee regarding the Market
Exchange Rate or any alternative determination provided for in the preceding
paragraph shall be in its sole discretion and shall, in the absence of manifest
error, be conclusive to the extent permitted by law for all purposes and
irrevocably binding upon the Company and all Holders.
SECTION 11.12 Judgment Currency.
The Company agrees, to the fullest extent that it may effectively do so
under applicable law, that (a) if for the purpose of obtaining judgment in any
court it is necessary to convert the sum due in respect of the principal of or
interest
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on the Securities of any series (the "Required Currency") into a currency in
which a judgment will be rendered (the "Judgment Currency"), the rate of
exchange used shall be the rate at which in accordance with normal banking
procedures the Trustee could purchase in The City of New York the Required
Currency with the Judgment Currency on the day on which final unappealable
judgment is entered, unless such day is not a New York Banking Day, then, to the
extent permitted by applicable law, the rate of exchange used shall be the rate
at which in accordance with normal banking procedures the Trustee could purchase
in The City of New York the Required Currency with the Judgment Currency on the
New York Banking Day preceding the day on which final unappealable judgment is
entered and (b) its obligations under this Indenture to make payments in the
Required Currency (i) shall not be discharged or satisfied by any tender, or any
recovery pursuant to any judgment (whether or not entered in accordance with
subsection (a)), in any currency other than the Required Currency, except to the
extent that such tender or recovery shall result in the actual receipt, by the
payee, of the full amount of the Required Currency expressed to be payable in
respect of such payments, (ii) shall be enforceable as an alternative or
additional cause of action for the purpose of recovering in the Required
Currency the amount, if any, by which such actual receipt shall fall short of
the full amount of the Required Currency so expressed to be payable and (iii)
shall not be affected by judgment being obtained for any other sum due under
this Indenture. For purposes of the foregoing, "New York Banking Day" means any
day except a Saturday, Sunday or a legal holiday in The City of New York or day
on which banking institutions in The City of New York are authorized or required
by law or executive order to close.
ARTICLE 12
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 12.1 Applicability of Article.
The provisions of this Article shall be applicable to the Securities of any
series which are redeemable before their Maturity or to any sinking fund for the
retirement of Securities of a series except as otherwise specified as
contemplated by Section 2.3 for Securities of such series.
SECTION 12.2 Notice of Redemption; Partial Redemptions.
Notice of redemption to the Holders of Registered Securities of any series
to be redeemed as a whole or in part at the option of the Company shall be given
by mailing notice of such redemption by first class mail, postage prepaid, at
least 30 days and not more than 60 days prior to the date fixed for redemption
to such Holders of Securities of such series at their last addresses as they
shall appear upon the registry books.
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Notice of redemption to the Holders of Unregistered Securities to be redeemed as
a whole or in part, who have filed their names and addresses with the Trustee
pursuant to Section 313(c)(2) of the Trust Indenture Act shall be given by
mailing notice of such redemption, by first class mail, postage prepaid, at
least 30 days and not more than 60 prior to the date fixed for redemption, to
such Holders at such addresses as were so furnished to the Trustee (and, in the
case of any such notice given by the Company, the Trustee shall make such
information available to the Company for such purpose). Notice of redemption to
all other Holders of Unregistered Securities shall be published in an Authorized
Newspaper in the Borough of Manhattan, The City of New York and in an Authorized
Newspaper in London (and, if required by Section 3.9, in an Authorized Newspaper
in Luxembourg), in each case, once in each of three successive calendar weeks,
the first publication to be not less than 30 nor more than 60 days prior to the
date fixed for redemption. Any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given, whether or not
the Holder receives the notice. Failure to give notice by mail, or any defect in
the notice to the Holder of any Security of a series designated for redemption
as a whole or in part shall not affect the validity of the proceedings for the
redemption of such Security of such series.
The notice of redemption to each such Holder shall specify the principal
amount of each Security of such series held by such Holder to be redeemed, the
date fixed for redemption, the redemption price, the place or places of payment,
that payment will be made upon presentation and surrender of such Securities
and, in the case of Securities with Coupons attached thereto, of all Coupons
appertaining thereto maturing after the date fixed for redemption, that such
redemption is pursuant to th mandatory or optional sinking fund, or both, if
such be the case, that interest accrued to the date fixed for redemption will be
paid as specified in such notice and that on and after said date interest
thereon or on the portions thereof to be redeemed will cease to accrue. In case
any Security of a series is to be redeemed in part only the notice of redemption
shall state the portion of the principal amount thereof to be redeemed and shall
state that on and after the date fixed for redemption, upon surrender of such
Security, a new Security or Securities of such series in principal amount equal
to the unredeemed portion thereof will be issued.
The notice of redemption of Securities of any series to be redeemed at the
option of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company.
On or before the redemption date specified in the notice of redemption
given as provided in this Section, the Company will deposit with the Trustee or
with one or more Paying Agents (or, if the Company is acting as its own Paying
Agent, set aside, segregate and holder in trust as provided in Section 3.4) an
amount of money sufficient to redeem on the redemption
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date all the Securities of such series so called for redemption at the
appropriate redemption price, together with accrued interest to the date fixed
for redemption. The Company will deliver to the Trustee at least 70 days prior
to the date fixed for redemption, or such shorter period as shall be acceptable
to the Trustee, an Officer's Certificate stating the aggregate principal amount
of Securities to be redeemed. In case of a redemption at the election of the
Company prior to the expiration of any restriction on such redemption, the
Company shall deliver to the Trustee, prior to the giving of any notice of
redemption to Holders pursuant to this Section, an Officer's Certificate stating
that such restriction has been complied with.
If less than all the Securities of a series are to be redeemed, the Trustee
shall select, in such manner as it shall deemed appropriate and fair, in its
sole discretion, Securities of such series to be redeemed in whole or in part.
Securities may be redeemed in part in multiples equal to the minimum authorized
denomination for Securities of such series or any multiple thereof. The Trustee
shall promptly notify the Company in writing of the Securities of such series
selected for redemption and, in the case of any Securities of such series
selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Securities of any series shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security which has been or is to be
redeemed.
SECTION 12.3 Payment of Securities Called for Redemption.
If notice of redemption has been given as above provided, the Securities or
portions of Securities specified in such notice shall become due and payable on
the date and at the place stated in such notice at the applicable redemption
price, together with interest accrued to the date fixed for redemption, and on
and after said date (unless the Company shall default in the payment of such
Securities at the redemption price, together with interest accrued to said date)
interest on the Securities or portions of Securities so called for redemption
shall cease to accrue, and the unmatured Coupons, if any, appertaining thereto
shall be void, and, except as provided in Sections 6.5 and 10.4, such Securities
shall cease from and after the date fixed for redemption to be entitled to any
benefit or security under this Indenture, and the Holders thereof shall have no
right in respect of such Securities except the right to receive the redemption
price thereof and unpaid interest to the date fixe for redemption. On
presentation and surrender of such Securities at a place of payment specified in
said notice, together with all Coupons, if any, appertaining thereto maturing
after the date fixed for redemption, said Securities or the specified portions
thereof shall be paid and redeemed by the Company at the applicable redemption
price, together with
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interest accrued thereon to the date fixed for redemption; provided, that
payment of interest becoming due on or prior to the date fixed for redemption
shall be payable in the case of Securities with Coupons attached thereto, to the
Holders of the Coupons for such interest upon surrender thereof, and in the case
of Registered Securities, to the Holder of such Registered Securities registered
as such on the relevant record date, subject to the terms and provisions of
Section 2.3 and 2.7 hereof.
If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid or duly provided for,
bear interest from the date fixed for redemption at the rate of interest or
Yield to Maturity (in the case of an Original Issue Discount Security) borne by
such Security.
If any Security with Coupons attached thereto is surrendered for redemption
and is not accompanied by all appurtenant Coupons maturing after the date fixed
for redemption, the surrender of such missing Coupon or Coupons may be waived by
the Company and the Trustee, if there be furnished to each of them such security
or indemnity as they may require to save each of them harmless.
Upon presentation of any Security redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to or on the order of the
Holder thereof, at the expense of the Company, a new Security or Securities of
such series, of authorized denominations, in principal amount equal to the
unredeemed portion of the Security so presented.
SECTION 12.4 Exclusion of Certain Securities from Eligibility for Selection for
Redemption.
Securities shall be excluded from eligibility for selection for redemption
if they are identified by registration and certificate number in an Officer's
Certificate delivered to the Trustee at least 40 days prior to the last date on
which notice of redemption may be given as being owned of record and
beneficially by, and not pledged or hypothecated by, either (a) the Company or
(b) an entity specifically identified in such written statement as directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company.
SECTION 12.5 Mandatory and Optional Sinking Funds.
The minimum amount of any sinking fund payment provided for by the terms of
the Securities of any series is herein referred to as a "mandatory sinking fund
payment," and any payment in excess of such minimum amount provided for by the
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terms of the Securities of any series is herein referred to as an "optional
sinking fund payment." The date on which a sinking fund payment is to be made is
herein referred to as the "sinking fund payment date."
In lieu of making all or any part of any mandatory sinking fund payment
with respect to any series of Securities in cash, the Company may at its option
(a) deliver to the Trustee Securities of such series theretofore purchased or
otherwise acquired (except upon redemption pursuant to the mandatory sinking
fund) by the Company or receive credit for Securities of such series (not
previously so credited) theretofore purchased or otherwise acquired (except as
aforesaid) by the Company and delivered to the Trustee for cancellation pursuant
to Section 2.10, (b) receive credit for optional sinking fund payments (not
previously so credited) made pursuant to this Section, or (c) receive credit for
Securities of such series (not previously so credited) redeemed by the Company
through any optional redemption provision contained in the terms of such series.
Securities so delivered or credited shall be received or credited by the Trustee
at the sinking fund redemption price specified in such Securities.
On or before the 60th day next preceding each sinking fund payment date for
any series, the Company will deliver to the Trustee an Officer's Certificate
(which need not contain the statements required by Section 11.5) (a) specifying
the portion of the mandatory sinking fund payment to be satisfied by payment of
cash and the portion to be satisfied by credit of Securities of such series and
the basis for such credit, (b) stating that none of the Securities of such
series has theretofore been so credited, (c) stating that no defaults in the
payment of interest or Events of Default with respect to such series have
occurred (which have not been waived or cured) and are continuing and (d)
stating whether or not the Company intends to exercise its right to make an
optional sinking fund payment with respect to such series and, if so, specifying
the amount of such optional sinking fund payment which the Company intends to
pay on or before the next succeeding sinking fund payment date. Any Securities
of such series to be credited and required to be delivered to the Trustee in
order for the Company to be entitled to credit therefor as aforesaid which have
not theretofore been delivered to the Trustee shall be delivered for
cancellation pursuant to Section 2.10 to the Trustee with such Officer's
Certificate (or reasonably promptly thereafter if acceptable to the Trustee).
Such Officer's Certificate shall be irrevocable and upon its receipt by the
Trustee the Company shall become unconditionally obligated to make all the cash
payments or payments therein referred to, if any, on or before the next
succeeding sinking fund payment date. Failure of the Company, on or before any
such 60th day, to deliver such Officer's Certificate and Securities specified in
this paragraph, if any, shall not constitute a default but shall constitute, on
and as of such date, the irrevocable election of the Company (i) that the
mandatory sinking fund payment for such series due on the next succeeding
sinking fund payment date shall be paid entirely
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in cash without the option to deliver or credit Securities of such series in
respect thereof and (ii) that the Company will make no optional sinking fund
payment with respect to such series as provided in this Section.
If the sinking fund payment or payments (mandatory or optional or both) to
be made in cash on the next succeeding sinking fund payment date plus any unused
balance of any preceding sinking fund payments made in cash shall exceed $50,000
(or the equivalent thereof in any Foreign Currency or ECU) or a lesser sum in
Dollars (or the equivalent thereof in any Foreign Currency or ECU) if the
Company shall so request with respect to the Securities of any particular
series, such cash shall be applied on the next succeeding sinking fund payment
date to the redemption of Securities of such series at the sinking fund
redemption price together with accrued interest to the date fixed for
redemption. If such amount shall be $50,000 (or the equivalent thereof in any
Foreign Currency or ECU) or less and the Company makes no such request then it
shall be carried over until a sum in excess of $50,000 (or the equivalent
thereof in any Foreign Currency or ECU) is available. The Trustee shall select,
in the manner provided in Section 12.2, for redemption on such sinking fund
payment date a sufficient principal amount of Securities of such series to
absorb said cash, as nearly as may be, and shall (if requested in writing by the
Company) inform the Company of the serial numbers of the Securities of such
series (or portions thereof) so selected. Securities shall be excluded from
eligibility for redemption under this Section if they are identified by
registration and certificate number in an Officer's Certificate delivered to the
Trustee at least 60 days prior to the sinking fund payment date as being owned
of record and beneficially by, and not pledged or hypothecated by, either (a)
the Company or (b) an entity specifically identified in such Officer's
Certificate as directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company. The Trustee, in the name and
at the expense of the Company (or the Company, if it shall so request the
Trustee in writing) shall cause notice of redemption of the Securities of such
series to be given in substantially the manner provided in Section 12.2 (and
with the effect provided in Section 12.3) for the redemption of Securities of
such series in part at the option of the Company. The amount of any sinking fund
payments not so applied or allocated to the redemption of Securities of such
series shall be added to the next cash sinking fund payment for such series and,
together with such payment, shall be applied in accordance with the provisions
of this Section. Any and all sinking fund moneys held on the Stated Maturity
date of the Securities of any particular series (or earlier, if such maturity is
accelerated), which are not held for the payment or redemption of particular
Securities of such series shall be applied, together with other moneys, if
necessary, sufficient for the purpose, to the payment of the principal of, and
interest on, the Securities of such series at Maturity.
On or before each sinking fund payment date, the
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Company shall pay to the Trustee in cash or shall otherwise provide for the
payment of all interest accrued to the date fixed for redemption on Securities
to be redeemed on the next following sinking fund payment date.
The Trustee shall not redeem or cause to be redeemed any Securities of a
series with sinking fund moneys or give any notice of redemption of Securities
for such series by operation of the sinking fund during the continuance of a
default in payment of interest on such Securities or of any Event of Default
except that, where the giving of notice of redemption of any Securities shall
theretofore have been made, the Trustee shall redeem or cause to be redeemed
such Securities, provided that it shall have received from the Company a sum
sufficient for such redemption. Except as aforesaid, any moneys in the sinking
fund for such series at the time when any such default or Event of Default shall
occur, and any moneys thereafter paid into the sinking fund, shall, during the
continuance of such default or Event of Default be deemed to have been collected
under Article 5 and held for the payment of all such Securities. In case such
Event of Default shall have been waived as provided in Section 5.14 or the
default cured on or before the sixtieth day preceding the sinking fund payment
date in any year, such moneys shall thereafter be applied on the next succeeding
sinking fund payment date in accordance with this Section to the redemption of
such Securities.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed and attested as of the date first written above.
HEALTHSOUTH CORPORATION
By: /s/ MICHAEL D. MARTIN
-------------------------------
Michael D. Martin
Executive Vice President,
Chief Financial Officer and
Treasurer
Attest:
By: /s/ WILLIAM W. HORTON
--------------------------
Assistant Secretary PNC BANK, NATIONAL ASSOCIATION, as
Trustee
By: /s/ DAVID G. METCALF
------------------------------
Name: David G. Metcalf
Title: Vice President
Attest:
By: /s W. MICHAEL HANKS
--------------------------
W. Michael Hanks
Vice President
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STATE OF ALABAMA )
: ss.:
COUNTY OF JEFFERSON )
On the 22nd day of June, 1998, before me personally came Michael D.
Martin, to me known, who, being by me duly sworn, did depose and say that he is
EVP, CFO and Treasurer of HEALTHSOUTH Corporation, one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
[NOTARIAL SEAL] /s/ KATHY P. JONES
-------------------------
Notary Public
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STATE OF KENTUCKY )
: ss.:
COUNTY OF JEFFERSON )
On the 22nd day of June, 1998, before me personally came David G. Metcalf,
to me known, who, being by me duly sworn, did depose and say that he is Vice
President of PNC Bank, National Association, one of the corporations described
in and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
[NOTARIAL SEAL] /s/ W. MICHAEL HANES
-------------------------
Notary Public
86
HEALTHSOUTH CORPORATION
OFFICERS' CERTIFICATE PURSUANT TO
SECTIONS 2.3 AND 11.5 OF THE INDENTURE
Michael D. Martin and William W. Horton do hereby certify that they are the
Executive Vice President, Chief Financial Officer and Treasurer and Senior Vice
President, Corporate Counsel and Assistant Secretary, respectively, of
HEALTHSOUTH Corporation, a Delaware corporation (the "Company") and do further
certify, pursuant to resolutions of the Board of Directors of the Company
adopted on May 21, 1998 and resolutions of the Pricing Committee of said Board
of Directors adopted on June 17, 1998 (collectively, the "Resolutions"), and in
accordance with Sections 2.3 and 11.5 of the Indenture (the Indenture as amended
and supplemented by the Resolutions is herein referred to as the "Indenture")
dated as of June 22, 1998 between the Company and PNC Bank, National
Association, as trustee (the "Trustee"), as follows:
1. Two series of securities to be issued under the Indenture and designated
as the Company's 6.875% Senior Notes due 2005 (the "2005 Notes"), and 7.0%
Senior Notes due 2008 (the "2008 Notes") have been authorized. Each of the 2005
Notes and the 2008 Notes are a separate series of securities under the Indenture
and are referred to herein collectively as the "Securities." Attached hereto as
Annex A is a true and correct copy of a specimen 2005 Note (the "Form of 2005
Note") and attached hereto as Annex B is a true and correct copy of a specimen
2008 Note (the "Form of 2008 Note"). The Form of 2005 Note and the Form of 2008
Note are herein collectively referred to as the "Forms of Securities."
2. The 2005 Notes shall be limited to $250,000,000 in aggregate principal
amount and shall mature on June 15, 2005. The 2005 Notes shall bear interest at
the rate of 6.875% per annum from June 22, 1998, payable semiannually on each
June 15 and December 15 commencing December 15, 1998. The 2005 Notes were issued
at the initial offering price of 99.729% of principal amount. The 2005 Notes
shall be redeemable as provided in the Form of 2005 Note attached hereto as
Annex A.
3. The 2008 Notes shall be limited to $250,000,000 in aggregate principal
amount and shall mature on June 15, 2008. The 2008 Notes shall bear interest at
the rate of 7.0% per annum from June 22, 1998, payable semiannually on each June
15 and December 15 commencing December 15, 1998. The 2008 Notes were issued at
the initial offering price of 99.050% of principal amount. The 2008 Notes shall
be redeemable as provided in the Form of 2008 Note attached hereto as Annex B.
4. The following terms shall apply to each of the Securities:
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(a) The Securities shall be issued initially in minimum denominations
of $1,000 and integral multiples of $1,000;
(b) The Securities shall be issued initially in part as global
securities in registered form in the name of the Depositary (hereinafter
defined) or its nominee in such denominations as shall be specified in a
Company Order delivered in accordance with the Indenture and otherwise as
provided in the Forms of Securities with such changes thereto as may be
required in the process of printing or otherwise producing the Securities
and which will not affect the substance thereof;
(c) The Depositary for the global Securities shall be The Depository
Trust Company;
(d) The global Securities shall be exchangeable for definitive
Securities in registered form substantially the same as the global
Securities in denominations of $1,000 or any integral multiple thereof upon
the terms and in accordance with the provisions of the Indenture;
(e) The Securities shall be payable (as to both principal and
interest) when and as the same shall become due at the office of the
Trustee, PNC Bank, National Association, provided that, as long as any part
of the Securities are in the form of one or more global Securities,
payments of interest with respect thereto may be made by wire transfer, and
provided further that, with respect to Securities issued in definitive
form, the Company may elect to exercise its option to have interest paid by
check mailed to the registered owners' address as they appear on the
Register, as kept by the Trustee on each Record Date; and
(f) The defeasance and covenant defeasance provisions of Article 10 of
the Indenture shall be applicable to the Securities.
5. The Forms of Securities set forth certain of the terms required to be
set forth in this certificate pursuant to Section 2.3 of the Indenture, and said
terms are incorporated herein by reference.
6. In addition to the covenants set forth in Article 3 of the Indenture,
the Securities shall include the following additional covenants:
"Section 3.10 Limitation on Liens.
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The Company shall not, nor will it permit any Subsidiary to, create or
assume any Indebtedness for money borrowed which is secured by a mortgage,
security interest, pledge, charge, lien or other similar encumbrance of any kind
(collectively, a "lien") upon any assets, whether now owned or hereafter
acquired, of the Company or any such Subsidiary without equally and ratably
securing the Securities by a lien ranking ratably with and equally to such
secured Indebtedness, except that the foregoing restriction shall not apply to
(i) liens on assets of any corporation existing at the time such corporation
becomes a Subsidiary; (ii) liens on assets existing at the time of acquisition
thereof, or to secure the payment of the purchase price of such assets, or to
secure indebtedness incurred or guaranteed by the Company or a Subsidiary for
the purpose of financing the purchase price of such assets or improvements or
construction thereon, which indebtedness is incurred or guaranteed prior to, at
the time of or within 360 days after such acquisition (or in the case of real
property, completion of such improvement or construction or commencement of full
operation of such property, whichever is later); (iii) liens securing
indebtedness owed by any Subsidiary to the Company or another wholly-owned
Subsidiary; (iv) liens on any assets of a corporation existing at the time such
corporation is merged into or consolidated with the Company or a Subsidiary or
at the time of a purchase, lease or other acquisition of the assets of a
corporation or firm as an entirety or substantially as an entirety by the
Company or a Subsidiary; (v) liens on any assets of the Company or a Subsidiary
in favor of the United States of America or any state thereof, or in favor of
any other country, or in favor of any political subdivision of any of the
foregoing, to secure certain payments pursuant to any contract or statute or to
secure any indebtedness incurred or guaranteed for the purpose of financing all
or any part of the purchase price (or, in the case of real property, the cost of
construction) of the assets subject to such liens (including but not limited to,
liens incurred in connection with industrial revenue or similar financing
involving a political subdivision, agency or authority thereof); (vi) any
extension, renewal or replacement (or successive extensions, renewals or
replacements) in whole or in part, of any lien referred to in the foregoing
clauses (i) to (v), inclusive; (vii) certain statutory liens or other similar
liens arising in the ordinary course of business of the Company or a Subsidiary,
or certain liens arising out of government contracts; (viii) certain pledges,
deposits or liens made or arising under workers compensation or similar
legislation or in certain other circumstances; (ix) certain liens in connection
with legal proceedings, including certain liens arising out of judgments or
awards; (x) liens for certain taxes or assessments, landlord's liens and liens
and charges incidental to the conduct of the business or the ownership of the
assets of the Company or of a Subsidiary, which were not incurred in connection
with the borrowing of money and which do not, in the opinion of the Company,
materially impair the use of such assets in the operation of the business of the
Company or such Subsidiary or
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<PAGE>
the value of such assets for the purposes thereof or (xi) liens relating to
accounts receivable of the Company or any of its Subsidiaries which have been
sold, assigned or otherwise transferred to another Person in a transaction
classified as a sale of accounts receivable in accordance with generally
accepted accounting principles (to the extent the sale by the Company or the
applicable Subsidiary is deemed to give rise to a lien in favor of the purchaser
thereof in such accounts receivable or the proceeds thereof). Notwithstanding
the above, the Company or any Subsidiary may, without securing the Securities,
create or assume any Indebtedness which is foregoing restrictions, provided that
after giving effect thereto the Exempted Debt then outstanding does not exceed
10% of the total Consolidated Tangible Assets of the Company and its
Subsidiaries at such time.
Section 3.11 Limitations on Sale and Lease-Back Transactions.
The Company shall not, nor shall it permit any of its Subsidiaries to,
enter into any sale and lease-back transaction (except such transactions
involving leases for less than three years) for the sale and leasing back of any
property or asset unless (i) the Company or such Subsidiary would be entitled
pursuant to clauses (i) through (xi) of Section 3.10 to create, incur or permit
to exist a lien on the assets to be leased in an amount at least equal to the
Attributable Debt in respect of such transaction without equally and ratably
securing the Securities, or (ii) the proceeds of the sale of the assets to be
leased are at least equal to their fair market value and the proceeds are
applied to the purchase or acquisition (or, in the case of real property, the
construction) of assets or to the retirement of indebtedness."
7. In addition to the definitions set forth in Article 1 of the Indenture,
the following additional definitions shall apply with respect to the 2005 Notes
and the 2008 Notes and, in the event of a conflict with the definition of terms
in the Indenture, such additional definitions shall control:
"Attributable Debt" means, in connection with a sale and lease-back
transaction, the lesser of (i) the fair value of the assets subject to such
transaction or (ii) the present value of the obligations of the lessee for net
rental payments during the term of any lease discounted at the rate of interest
set forth or implicit in the terms of such lease or, if not practicable to
determine such rate, the weighted average interest rate per annum borne by the
Securities of each series outstanding pursuant to this Indenture and subject to
the limitation on sale and lease-back transactions provisions contained in
Section 3.11, compounded semiannually in either case as determined by the
principal accounting or financial officer of the Company.
"Consolidated Tangible Assets" of any Person as of any date means the total
assets of such Person and its Subsidiaries
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<PAGE>
(excluding any assets that would be classified as "intangible assets" under
GAAP) on a consolidated basis at such date, as determined in accordance with
GAAP, less all write-ups subsequent to the date of initial issuance of the
Securities in the book value of any asset owned by such Person or any of its
Subsidiaries.
"Exempted Debt" means the sum of the following as of the date of
determination: (i) Indebtedness of the Company and its Subsidiaries incurred
after the date of issuance of the Securities and secured by liens not otherwise
permitted by the limitation on liens provisions of the Indenture, and (ii)
Attributable Debt of the Company and its Subsidiaries in respect of every sale
and lease-back transaction entered into after the date of the issuance of the
Securities, other than leases permitted by Section 3.11.
"GAAP" shall mean generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States, as from time to time in effect.
"Indebtedness" shall mean all items classified as indebtedness on the most
recently available consolidated balance sheet of the Company and its
Subsidiaries, in accordance with GAAP.
8. Each of the undersigned is authorized to approve the form, terms and
conditions of the Securities pursuant to the Resolutions.
9. Attached hereto as Annex D is a true and correct copy of the
Resolutions.
10. Attached hereto as Annex E are true and correct copies of the letter
addressed to the Trustee entitling the Trustee to rely on the Opinion of Counsel
attached thereto, which Opinion relates to the Securities and complies with
Section 11.5 of the Indenture.
11. Each of the undersigned has reviewed the provisions of the Indenture,
including the covenants and conditions precedent pertaining to the issuance of
the Securities.
12. In connection with this certificate each of the undersigned has
examined documents, corporate records and certificates and has spoken with other
officers of the Company.
13. Each of the undersigned has made such examination and investigation as
is necessary to enable him to express an
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<PAGE>
informed opinion as to whether or not the covenants and conditions precedent of
the Indenture pertaining to the issuance of the Securities have been satisfied.
14. In our opinion all of the covenants and conditions precedent provided
for in the Indenture for the issuance of the Securities have been satisfied.
15. If and to the extent that any provision of this certificate qualifies
or conflicts with any provision of the Indenture, the provisions of this
certificate shall control.
Capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed thereto in the Indenture or the Securities, as the case may
be.
IN WITNESS WHEREOF, each of the undersigned officers has executed this
certificate this 22nd day of June 1998.
/s/ MICHAEL D. MARTIN
---------------------------
Michael D. Martin
Executive Vice President,
Chief Financial Officer and
Treasurer
/s/ WILLIAM W. HORTON
---------------------------
William W. Horton
Senior Vice President,
Corporate Counsel and
Assistant Secretary
<PAGE>
THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS NOTE IS EXCHANGEABLE FOR NOTES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER
THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN SUCH LIMITED
CIRCUMSTANCES.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
THEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
HEALTHSOUTH CORPORATION
6.875% SENIOR NOTE DUE 2005
No.______ CUSIP NO. 421924-AG-6
$________________
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THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT
OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS AN INSTITUTIONAL AACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1)(2)(3)
OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT
IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN
OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE
HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE
144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR
OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY EXCEPT (A) TO HEALTHSOUTH
CORPORATION (THE "COMPANY") OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (D)
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
TO THE TRUSTEE FOR THE NOTES A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY
EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE),
(E) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES
ACT OR (F) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THE SECURITY EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE FOR THE NOTES. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO
IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
TRUSTEE FOR THE NOTES SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS THE COMPANY OR THE TRUSTEE MAY REASONABLY REQUIRE, TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND
WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES
OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
2
<PAGE>
THE HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, IS DEEMED TO HAVE AGREED TO BE
BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT, DATED AS OF JUNE
22, 1998, BY AND AMONG THE COMPANY, SALOMON BROTHERS INC, GOLDMAN, SACHS & CO.,
J.P. MORGAN SECURITIES INC., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
MORGAN STANLEY & CO. INCORPORATED, NATIONSBANC MONTGOMERY SECURITIES LLC, BEAR,
STEARNS & CO. INC., CREDIT SUISSE FIRST BOSTON CORPORATION, DEUTSCHE BANK
SECURITIES INC., PAINEWEBBER INCORPORATED AND SCOTIA CAPITAL MARKETS (USA) INC.
HEALTHSOUTH CORPORATION, a Delaware corporation (the "Company," which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to Cede & Co., the principal sum of
________________ on June 15, 2005, and to pay interest on said principal sum
from June 22, 1998, or from the most recent interest payment date to which
interest has been paid or duly provided for, semiannually in arrears on June 15
and December 15 (each such date, an "Interest Payment Date") of each year
commencing on December 15, 1998, at the rate of 6.875% per annum until the
principal hereof shall have become due and payable.
The amount of interest payable on any Interest Payment Date shall be
computed on the basis of a 360 day year comprised of twelve 30 day months. The
interest installment so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in the Indenture (as defined below)
be paid to the person in whose name this Note (or one or more predecessor Notes)
is registered at the close of business on the record date for such interest
installment, which shall be the close of business on the immediately preceding
June 1 and December 1 prior to such Interest Payment Date, as applicable. The
principal of, premium, if any, and the interest on this Note will be payable at
the office or agency of the Company maintained for that purpose in the Borough
of Manhattan, The City of New York in any coin or currency of the United States
of America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made at the
option of the Company by check mailed to the person entitled thereto at such
address as shall appear in the registry books of the Company; provided, further
that for so long as this Note is represented by a Registered Global Security,
payment of principal, premium, if any, or interest on this Note may be made by
wire transfer to the account of the Depositary or its nominee. In the event that
any date on which the principal, premium, if any, or interest on this Note is
payable is not a Business Day, then payment of principal, premium, if any, or
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of such
delay).
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee (as defined below) under the Indenture (as defined below),
by the manual signature of one of its authorized officers, this Note shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
Capitalized terms used in this Note which are defined in the Indenture
shall have the respective meanings assigned to them in the Indenture.
Reference is hereby made to the further provisions of this Note hereinafter
set forth, which further provisions shall for all purposes have the same effect
as if set forth at this place.
3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed, manually or in facsimile, and an imprint or facsimile of its corporate
seal to be imprinted hereon.
HEALTHSOUTH Corporation
By
---------------------------
Michael D. Martin
Executive Vice President,
Chief Financial Officer
and Treasurer
ATTEST:
-----------------------------------------
William W. Horton
Senior Vice President,
Corporate Counsel and Assistant Secretary
CERTIFICATE OF AUTHENTICATION This is
one of the Securities referred to in the
within-mentioned Indenture.
PNC BANK, NATIONAL ASSOCIATION,
as Trustee
By
-----------------------------
Authorized Officer
Dated:
------------------------
4
<PAGE>
REVERSE SIDE OF NOTE
This Note is one of a duly authorized series of securities (the
ASecurities") of the Company designated as its 6.875% Senior Notes due 2005
limited in aggregate principal amount to $250,000,000 (the "Notes"). The
Securities are all issued or to be issued under and pursuant to an Indenture,
dated as of June 22, 1998, as supplemented by that certain Officers' Certificate
dated June 22, 1998 (the Indenture as supplemented by the Officers' Certificate
being herein collectively referred to as the "Indenture"), duly executed and
delivered between the Company and PNC Bank, National Association (the "Trustee,"
which term includes any successor Trustee with respect to the Notes under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights thereunder of the
Company, the Trustee and the holders of the Securities and the terms upon which
the Notes are to be authenticated and delivered. The terms of individual series
of Securities may vary with respect to interest rate or interest rate formulas,
issue dates, maturity, redemption, repayment, currency of payment and otherwise.
Reference is hereby made to the Indenture for a description of the terms of
the Notes, to all of the provisions of which Indenture the holder of this Note,
by acceptance hereof, assents and agrees.
Except as set forth below, this Note is not redeemable and is not entitled
to the benefit of a sinking fund or any analogous provision.
This Note is redeemable as a whole or in part, at the option of the
Company, at any time at a redemption price equal to the greater of (i) 100% of
its principal amount and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted to the date of
redemption on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) at the Treasury Yield plus 15 basis points, plus, in each case,
accrued interest to the date of redemption. On and after the redemption date,
interest will cease to accrue on the Notes or any portion thereof called for
redemption. On or before the redemption date, the Company shall deposit with a
paying agent (or the Trustee) money sufficient to pay the redemption price of
and accrued interest on the Notes to be redeemed on such date. If less than all
of the Notes are to be redeemed, the Notes to be redeemed shall be selected by
the Trustee by such method as the Trustee shall deem fair and appropriate. The
Holder of this Note will receive notice thereof by first-class mail at least 30
and not more than 60 days prior to the date fixed for redemption.
5
<PAGE>
"Treasury Yield" means, with respect to any redemption date, the rate per
annum equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date. "Comparable Treasury Issue" means the United States
Treasury security selected by an Independent Investment Banker as having a
maturity comparable to the remaining term of the Note that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Note. "Independent Investment Banker" means Salomon
Brothers Inc and its successor or, if such firm is unwilling or unable to select
the Comparable Treasury Issue, an independent investment banking institution of
national standing appointed by the Trustee. "Comparable Treasury Price" means,
with respect to any redemption date, (i) the average of the bid and asked prices
for the Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) on the third business day preceding such redemption date, as
set forth in the daily statistical release (or any successor release) published
by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m.
Quotations for U.S. Government Securities" or (ii) if such release (or any
successor release) is not published or does not contain such prices on such
business day, (A) the average of the Reference Treasury Dealer Quotations for
such redemption date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than four such
Reference Treasury Dealer Quotations, the average of all such quotations.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices of the Comparable Treasury Issue (expressed
in each case as a percentage of its principal amount) quoted in writing to the
Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third business day
preceding such redemption date. "Reference Treasury Dealer" means a primary U.S.
Government Securities dealer in New York City selected by the Trustee after
consultation with the Company.
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of all the Notes may be declared due and payable in
the manner and with the effect provided in the Indenture.
6
<PAGE>
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the Securities of all series issued under such Indenture
then outstanding and affected (voting as one class) to add any provisions to, or
change in any manner or eliminate any of the provisions of, such Indenture or
modify in any manner the rights of the holders of the Securities of each series
or Coupons so affected; provided that the Company and the Trustee may not,
without the consent of the holder of each Outstanding Note affected thereby, (i)
extend the final maturity of the principal of any Note, or reduce the principal
amount thereof, or premium thereon, if any, or reduce the rate or extend the
time of payment of interest thereon, or reduce any amount payable on redemption
thereof or make the principal thereof (including any amount in respect of
original issue discount), or interest thereon payable in any coin or currency
other than that provided in the Securities or Coupons or in accordance with the
terms thereof, or reduce the amount of principal of an Original Issue Discount
Security that would be due and payable upon an acceleration of the maturity
thereof or the amount thereof provable in bankruptcy or alter certain provisions
of the Indenture relating to Securities not denominated in Dollars or the
Judgment Currency of such Securities or impair or affect the right of any
Securityholder to institute suit for the enforcement of any payment thereof when
due or, if the Securities provide therefor, any right of repayment at the option
of the Securityholder or (ii) reduce the aforesaid percentage in principal
amount of Securities of any series issued under such Indenture, the consent of
the holders of which is required for any such modification. It is also provided
in the Indenture that, with respect to certain defaults or Events of Default
regarding the Securities of any series, the holders of a majority in aggregate
principal amount Outstanding of the Securities of each such series, each such
series voting as a separate class (or, of all Securities, as the case may be,
voting as a single class) may under certain circumstances waive all defaults
with respect to each such series (or with respect to all the Securities, as the
case may be) and rescind and annul a declaration of default and its
consequences, but no such waiver or rescission and annulment shall extend to or
affect any subsequent default or shall impair any right consequent/hereto. The
preceding sentence shall not, however, apply to a default in the payment of the
principal of or interest on any of the Securities.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the time, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note may be registered on the registry books of the
Company, upon surrender of this Note for registration of transfer at the office
or agency of the Company maintained by the Company for such purpose in the
Borough of Manhattan, The City of New York, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the holder hereof or by its attorney duly authorized
in writing, and thereupon one or more new Notes of authorized denominations and
for the same aggregate principal amount will be issued to the designated
transferee or transferees.
The Notes are issuable only in registered form in minimum denominations of
$1,000 and integral multiples of $1,000 in excess thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Notes are
exchangeable for a like aggregate principal amount of Notes as requested by the
holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Indenture contains provisions for defeasance of (i) the entire
indebtedness of the Notes or (ii) certain covenants and Events of Default with
respect to the Notes, in each case upon compliance with certain conditions set
forth therein.
7
<PAGE>
The Indenture contains covenants which impose certain limitations on the
Company's and its Subsidiaries' ability to create or incur certain liens on any
of their respective properties or assets and to enter into certain sale and
lease-back transactions and on the Company's ability to engage in mergers or
consolidations or the conveyance, transfer or lease of all or substantially all
of its properties and assets. These limitations are subject to a number of
important qualifications and exceptions and reference is made to the Indenture
for a description thereof.
If (i) a registration statement with respect to an exchange offer (an
"Exchange Offer") for the Notes (an "Exchange Offer Registration Statement") is
not filed with the Commission by August 21, 1998; or (ii) neither an Exchange
Offer Registration Statement is declared effective by the Commission, nor a
shelf registration statement under the Securities Act with respect to resales of
the Notes (a "Shelf Registration Statement") is filed with the Commission, on or
before November 19, 1998; or (iii) an Exchange Offer registered under the
Securities Act is not consummated and the applicable Shelf Registration
Statement with respect to resales of the Notes is not declared effective on or
before December 19, 1998, then in accordance with the terms of the Registration
Rights Agreement, the Company has agreed to pay Holders of the Notes liquidated
damages over and above the interest rate set forth on the face of this Note
accruing from and including the next day following each of the periods in each
of clauses (i) through (iii) above, in each case at a rate equal to 0.25% per
annum. The aggregate amount of liquidated damages payable pursuant to the above
provisions will in no event exceed 0.25% per annum. Once the Exchange Offer is
consummated or a Shelf Registration Statement is declared effective, the
liquidated damages will cease to accrue. In the event that a Shelf Registration
Statement is declared effective, if, due to certain circumstances, the Company
fails to keep such Shelf Registration Statement continuously (x) effective or
(y) useable for resales for the period required by the Registration Rights
Agreement and such failure continues for more than 60 days (whether or not
consecutive) in any 12-month period (the 61st day being referred to as the
"Default Day"), then from the Default Day until the earlier of (i) the date that
the Shelf Registration Statement is again deemed effective or is useable, (ii)
June 22, 2000 (or, if Rule 144(k) is amended to provide a shorter restrictive
period, the last day of such shorter period) or (iii) the date as of which all
of the applicable Notes are sold pursuant to such Shelf Registration Statement,
the Company, in accordance with the terms of the Registration Rights Agreement,
has agreed to pay holders of the Notes liquidated damages accruing at a rate
equal to 0.25% per annum. The Holder of this Note is entitled to the benefits of
the Registration Rights Agreement.
No recourse shall be had for the payment of the principal of or the
interest on this Note or for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture or any indenture supplemental
thereto against any incorporator, stockholder, officer or director, as such,
past or present or future of the Company or of any successor thereof, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
8
<PAGE>
THE INDENTURE AND THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS
OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SMALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF SUCH STATE, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES
THEREOF.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this Note, shall be construed as though they were written out in full according
to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ______ CUSTODIAN ______
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right
of survivorship and not as (Cust)
tenants in common under Uniform Gifts to Minors Act _______________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
9
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- - --------------------------------------------------------------------------------
(Please print or typewrite name and address including
postal zip code of assignee)
- - --------------------------------------------------------------------------------
this Note and all rights thereunder hereby irrevocably constituting and
appointing
_____________________________________________, Attorney, to transfer this
security on the books of the Trustee, with full power of substitution in the
premises.
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date the Shelf Registration Statement is
declared effective or (ii) the end of the period referred to in Rule 144(k)
under the Securities Act, the undersigned confirms that without utilizing any
general solicitation or general advertising that:
[Check One]
[ ] (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act provided by Rule 144A
thereunder.
or
[ ] (b) this Note is being transferred other than in accordance with (a) above
and documents are being furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.
10
<PAGE>
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Note in the name of any Person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
Dated:
---------------- -------------------------------------------
----------------------------------------
Notice: The signature(s) on this
Assignment must correspond with the
name(s) as written upon the face of this
Note in every particular, without
alteration or enlargement or any change
whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a Aqualified institutional buyer"
within the meaning of Rule 144A under the Securities Act and is aware that the
sale to it is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as the undersigned has requested
pursuant to Rule 144A or has determined not to request such information and that
it is aware that the transferor is relying upon the undersigned's foregoing
representations in order to claim the exemption from registration provided by
Rule 144A.
Dated:
---------------- -------------------------------------------
Notice: To be executed by an executive
officer
11
<PAGE>
SCHEDULE FOR ENDORSEMENTS ON GLOBAL SECURITIES
TO REFLECT CHANGES IN PRINCIPAL AMOUNT
Schedule A
Changes to Principal Amount of Global Securities
<TABLE>
<CAPTION>
- - --------- ------------------------------------------- -------------------------------- -------------------------------
Date Principal Amount Remaining Notation Made By
of Notes Principal
by which this Global Amount of this
Security is to be Global Security
Reduced or Increased,
and Reason for
Reduction or Increase
- - --------- ------------------------------------------- -------------------------------- -------------------------------
- - --------- ------------------------------------------- -------------------------------- -------------------------------
<S> <C> <C> <C>
- - --------- ------------------------------------------- -------------------------------- -------------------------------
- - --------- ------------------------------------------- -------------------------------- -------------------------------
- - --------- ------------------------------------------- -------------------------------- -------------------------------
</TABLE>
<PAGE>
THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS NOTE IS EXCHANGEABLE FOR NOTES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER
THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN SUCH LIMITED
CIRCUMSTANCES.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE COMPANY OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
THEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
HEALTHSOUTH CORPORATION
7.0% SENIOR NOTE DUE 2008
No.______ CUSIP NO. 421924-AK-7
$________________
1
<PAGE>
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT
OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B)
IT IS AN INSTITUTIONAL AACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1)(2)(3)
OR (7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT
IS NOT A U.S. PERSON AND IS ACQUIRING THE SECURITY EVIDENCED HEREBY IN AN
OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE
HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE
144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR
OTHERWISE TRANSFER THE SECURITY EVIDENCED HEREBY EXCEPT (A) TO HEALTHSOUTH
CORPORATION (THE "COMPANY") OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (C) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (D)
TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES
TO THE TRUSTEE FOR THE NOTES A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS
AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE SECURITY
EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE),
(E) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES
ACT OR (F) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE) AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THE SECURITY EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THE SECURITY EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE FOR THE NOTES. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR A PURCHASER WHO
IS NOT A U.S. PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
TRUSTEE FOR THE NOTES SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS THE COMPANY OR THE TRUSTEE MAY REASONABLY REQUIRE, TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND
WILL BE REMOVED AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES
OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
2
<PAGE>
THE HOLDER HEREOF, BY ITS ACCEPTANCE HEREOF, IS DEEMED TO HAVE AGREED TO BE
BOUND BY THE PROVISIONS OF THE REGISTRATION RIGHTS AGREEMENT, DATED AS OF JUNE
22, 1998, BY AND AMONG THE COMPANY, SALOMON BROTHERS INC, GOLDMAN, SACHS & CO.,
J.P. MORGAN SECURITIES INC., MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED,
MORGAN STANLEY & CO. INCORPORATED, NATIONSBANC MONTGOMERY SECURITIES LLC, BEAR,
STEARNS & CO. INC., CREDIT SUISSE FIRST BOSTON CORPORATION, DEUTSCHE BANK
SECURITIES INC., PAINEWEBBER INCORPORATED AND SCOTIA CAPITAL MARKETS (USA) INC.
HEALTHSOUTH CORPORATION, a Delaware corporation (the "Company," which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to Cede & Co., the principal sum of
________________ on June 15, 2005, and to pay interest on said principal sum
from June 22, 1998, or from the most recent interest payment date to which
interest has been paid or duly provided for, semiannually in arrears on June 15
and December 15 (each such date, an "Interest Payment Date") of each year
commencing on December 15, 1998, at the rate of 7.0% per annum until the
principal hereof shall have become due and payable.
The amount of interest payable on any Interest Payment Date shall be
computed on the basis of a 360 day year comprised of twelve 30 day months. The
interest installment so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in the Indenture (as defined below)
be paid to the person in whose name this Note (or one or more predecessor Notes)
is registered at the close of business on the record date for such interest
installment, which shall be the close of business on the immediately preceding
June 1 and December 1 prior to such Interest Payment Date, as applicable. The
principal of, premium, if any, and the interest on this Note will be payable at
the office or agency of the Company maintained for that purpose in the Borough
of Manhattan, The City of New York in any coin or currency of the United States
of America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made at the
option of the Company by check mailed to the person entitled thereto at such
address as shall appear in the registry books of the Company; provided, further
that for so long as this Note is represented by a Registered Global Security,
payment of principal, premium, if any, or interest on this Note may be made by
wire transfer to the account of the Depositary or its nominee. In the event that
any date on which the principal, premium, if any, or interest on this Note is
payable is not a Business Day, then payment of principal, premium, if any, or
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of such
delay).
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee (as defined below) under the Indenture (as defined below),
by the manual signature of one of its authorized officers, this Note shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
Capitalized terms used in this Note which are defined in the Indenture
shall have the respective meanings assigned to them in the Indenture.
Reference is hereby made to the further provisions of this Note hereinafter
set forth, which further provisions shall for all purposes have the same effect
as if set forth at this place.
3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed, manually or in facsimile, and an imprint or facsimile of its corporate
seal to be imprinted hereon.
HEALTHSOUTH Corporation
By
---------------------------
Michael D. Martin
Executive Vice President,
Chief Financial Officer
and Treasurer
ATTEST:
-----------------------------------------
William W. Horton
Senior Vice President,
Corporate Counsel and Assistant Secretary
CERTIFICATE OF AUTHENTICATION This is
one of the Securities referred to in the
within-mentioned Indenture.
PNC BANK, NATIONAL ASSOCIATION,
as Trustee
By
-----------------------------
Authorized Officer
Dated:
------------------------
4
<PAGE>
REVERSE SIDE OF NOTE
This Note is one of a duly authorized series of securities (the
ASecurities") of the Company designated as its 7.0% Senior Notes due 2008
limited in aggregate principal amount to $250,000,000 (the "Notes"). The
Securities are all issued or to be issued under and pursuant to an Indenture,
dated as of June 22, 1998, as supplemented by that certain Officers' Certificate
dated June 22, 1998 (the Indenture as supplemented by the Officers' Certificate
being herein collectively referred to as the "Indenture"), duly executed and
delivered between the Company and PNC Bank, National Association (the "Trustee,"
which term includes any successor Trustee with respect to the Notes under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights thereunder of the
Company, the Trustee and the holders of the Securities and the terms upon which
the Notes are to be authenticated and delivered. The terms of individual series
of Securities may vary with respect to interest rate or interest rate formulas,
issue dates, maturity, redemption, repayment, currency of payment and otherwise.
Reference is hereby made to the Indenture for a description of the terms of
the Notes, to all of the provisions of which Indenture the holder of this Note,
by acceptance hereof, assents and agrees.
Except as set forth below, this Note is not redeemable and is not entitled
to the benefit of a sinking fund or any analogous provision.
This Note is redeemable as a whole or in part, at the option of the
Company, at any time at a redemption price equal to the greater of (i) 100% of
its principal amount and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon discounted to the date of
redemption on a semi-annual basis (assuming a 360-day year consisting of twelve
30-day months) at the Treasury Yield plus 20 basis points, plus, in each case,
accrued interest to the date of redemption. On and after the redemption date,
interest will cease to accrue on the Notes or any portion thereof called for
redemption. On or before the redemption date, the Company shall deposit with a
paying agent (or the Trustee) money sufficient to pay the redemption price of
and accrued interest on the Notes to be redeemed on such date. If less than all
of the Notes are to be redeemed, the Notes to be redeemed shall be selected by
the Trustee by such method as the Trustee shall deem fair and appropriate. The
Holder of this Note will receive notice thereof by first-class mail at least 30
and not more than 60 days prior to the date fixed for redemption.
5
<PAGE>
"Treasury Yield" means, with respect to any redemption date, the rate per
annum equal to the semi-annual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date. "Comparable Treasury Issue" means the United States
Treasury security selected by an Independent Investment Banker as having a
maturity comparable to the remaining term of the Note that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Note. "Independent Investment Banker" means Salomon
Brothers Inc and its successor or, if such firm is unwilling or unable to select
the Comparable Treasury Issue, an independent investment banking institution of
national standing appointed by the Trustee. "Comparable Treasury Price" means,
with respect to any redemption date, (i) the average of the bid and asked prices
for the Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) on the third business day preceding such redemption date, as
set forth in the daily statistical release (or any successor release) published
by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m.
Quotations for U.S. Government Securities" or (ii) if such release (or any
successor release) is not published or does not contain such prices on such
business day, (A) the average of the Reference Treasury Dealer Quotations for
such redemption date, after excluding the highest and lowest such Reference
Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than four such
Reference Treasury Dealer Quotations, the average of all such quotations.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices of the Comparable Treasury Issue (expressed
in each case as a percentage of its principal amount) quoted in writing to the
Trustee by such Reference Treasury Dealer at 5:00 p.m. on the third business day
preceding such redemption date. "Reference Treasury Dealer" means a primary U.S.
Government Securities dealer in New York City selected by the Trustee after
consultation with the Company.
If an Event of Default with respect to the Notes shall occur and be
continuing, the principal of all the Notes may be declared due and payable in
the manner and with the effect provided in the Indenture.
6
<PAGE>
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the Securities of all series issued under such Indenture
then outstanding and affected (voting as one class) to add any provisions to, or
change in any manner or eliminate any of the provisions of, such Indenture or
modify in any manner the rights of the holders of the Securities of each series
or Coupons so affected; provided that the Company and the Trustee may not,
without the consent of the holder of each Outstanding Note affected thereby, (i)
extend the final maturity of the principal of any Note, or reduce the principal
amount thereof, or premium thereon, if any, or reduce the rate or extend the
time of payment of interest thereon, or reduce any amount payable on redemption
thereof or make the principal thereof (including any amount in respect of
original issue discount), or interest thereon payable in any coin or currency
other than that provided in the Securities or Coupons or in accordance with the
terms thereof, or reduce the amount of principal of an Original Issue Discount
Security that would be due and payable upon an acceleration of the maturity
thereof or the amount thereof provable in bankruptcy or alter certain provisions
of the Indenture relating to Securities not denominated in Dollars or the
Judgment Currency of such Securities or impair or affect the right of any
Securityholder to institute suit for the enforcement of any payment thereof when
due or, if the Securities provide therefor, any right of repayment at the option
of the Securityholder or (ii) reduce the aforesaid percentage in principal
amount of Securities of any series issued under such Indenture, the consent of
the holders of which is required for any such modification. It is also provided
in the Indenture that, with respect to certain defaults or Events of Default
regarding the Securities of any series, the holders of a majority in aggregate
principal amount Outstanding of the Securities of each such series, each such
series voting as a separate class (or, of all Securities, as the case may be,
voting as a single class) may under certain circumstances waive all defaults
with respect to each such series (or with respect to all the Securities, as the
case may be) and rescind and annul a declaration of default and its
consequences, but no such waiver or rescission and annulment shall extend to or
affect any subsequent default or shall impair any right consequent/hereto. The
preceding sentence shall not, however, apply to a default in the payment of the
principal of or interest on any of the Securities.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the time, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note may be registered on the registry books of the
Company, upon surrender of this Note for registration of transfer at the office
or agency of the Company maintained by the Company for such purpose in the
Borough of Manhattan, The City of New York, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the holder hereof or by its attorney duly authorized
in writing, and thereupon one or more new Notes of authorized denominations and
for the same aggregate principal amount will be issued to the designated
transferee or transferees.
The Notes are issuable only in registered form in minimum denominations of
$1,000 and integral multiples of $1,000 in excess thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Notes are
exchangeable for a like aggregate principal amount of Notes as requested by the
holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Indenture contains provisions for defeasance of (i) the entire
indebtedness of the Notes or (ii) certain covenants and Events of Default with
respect to the Notes, in each case upon compliance with certain conditions set
forth therein.
7
<PAGE>
The Indenture contains covenants which impose certain limitations on the
Company's and its Subsidiaries' ability to create or incur certain liens on any
of their respective properties or assets and to enter into certain sale and
lease-back transactions and on the Company's ability to engage in mergers or
consolidations or the conveyance, transfer or lease of all or substantially all
of its properties and assets. These limitations are subject to a number of
important qualifications and exceptions and reference is made to the Indenture
for a description thereof.
If (i) a registration statement with respect to an exchange offer (an
"Exchange Offer") for the Notes (an "Exchange Offer Registration Statement") is
not filed with the Commission by August 21, 1998; or (ii) neither an Exchange
Offer Registration Statement is declared effective by the Commission, nor a
shelf registration statement under the Securities Act with respect to resales of
the Notes (a "Shelf Registration Statement") is filed with the Commission, on or
before November 19, 1998; or (iii) an Exchange Offer registered under the
Securities Act is not consummated and the applicable Shelf Registration
Statement with respect to resales of the Notes is not declared effective on or
before December 19, 1998, then in accordance with the terms of the Registration
Rights Agreement, the Company has agreed to pay Holders of the Notes liquidated
damages over and above the interest rate set forth on the face of this Note
accruing from and including the next day following each of the periods in each
of clauses (i) through (iii) above, in each case at a rate equal to 0.25% per
annum. The aggregate amount of liquidated damages payable pursuant to the above
provisions will in no event exceed 0.25% per annum. Once the Exchange Offer is
consummated or a Shelf Registration Statement is declared effective, the
liquidated damages will cease to accrue. In the event that a Shelf Registration
Statement is declared effective, if, due to certain circumstances, the Company
fails to keep such Shelf Registration Statement continuously (x) effective or
(y) useable for resales for the period required by the Registration Rights
Agreement and such failure continues for more than 60 days (whether or not
consecutive) in any 12-month period (the 61st day being referred to as the
"Default Day"), then from the Default Day until the earlier of (i) the date that
the Shelf Registration Statement is again deemed effective or is useable, (ii)
June 22, 2000 (or, if Rule 144(k) is amended to provide a shorter restrictive
period, the last day of such shorter period) or (iii) the date as of which all
of the applicable Notes are sold pursuant to such Shelf Registration Statement,
the Company, in accordance with the terms of the Registration Rights Agreement,
has agreed to pay holders of the Notes liquidated damages accruing at a rate
equal to 0.25% per annum. The Holder of this Note is entitled to the benefits of
the Registration Rights Agreement.
No recourse shall be had for the payment of the principal of or the
interest on this Note or for any claim based hereon, or otherwise in respect
hereof, or based on or in respect of the Indenture or any indenture supplemental
thereto against any incorporator, stockholder, officer or director, as such,
past or present or future of the Company or of any successor thereof, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.
8
<PAGE>
THE INDENTURE AND THIS NOTE SHALL BE DEEMED TO BE A CONTRACT UNDER THE LAWS
OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SMALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF SUCH STATE, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES
THEREOF.
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this Note, shall be construed as though they were written out in full according
to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ______ CUSTODIAN ______
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right
of survivorship and not as (Cust)
tenants in common under Uniform Gifts to Minors Act _______________
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
9
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- - --------------------------------------------------------------------------------
(Please print or typewrite name and address including
postal zip code of assignee)
- - --------------------------------------------------------------------------------
this Note and all rights thereunder hereby irrevocably constituting and
appointing
_____________________________________________, Attorney, to transfer this
security on the books of the Trustee, with full power of substitution in the
premises.
In connection with any transfer of this Note occurring prior to the date
which is the earlier of (i) the date the Shelf Registration Statement is
declared effective or (ii) the end of the period referred to in Rule 144(k)
under the Securities Act, the undersigned confirms that without utilizing any
general solicitation or general advertising that:
[Check One]
[ ] (a) this Note is being transferred in compliance with the exemption from
registration under the Securities Act provided by Rule 144A
thereunder.
or
[ ] (b) this Note is being transferred other than in accordance with (a) above
and documents are being furnished which comply with the conditions of
transfer set forth in this Note and the Indenture.
10
<PAGE>
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Note in the name of any Person other
than the Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.08 of the Indenture shall have
been satisfied.
Dated:
---------------- -------------------------------------------
----------------------------------------
Notice: The signature(s) on this
Assignment must correspond with the
name(s) as written upon the face of this
Note in every particular, without
alteration or enlargement or any change
whatsoever.
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Note for
its own account or an account with respect to which it exercises sole investment
discretion and that it and any such account is a Aqualified institutional buyer"
within the meaning of Rule 144A under the Securities Act and is aware that the
sale to it is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Company as the undersigned has requested
pursuant to Rule 144A or has determined not to request such information and that
it is aware that the transferor is relying upon the undersigned's foregoing
representations in order to claim the exemption from registration provided by
Rule 144A.
Dated:
---------------- -------------------------------------------
Notice: To be executed by an executive
officer
11
<PAGE>
SCHEDULE FOR ENDORSEMENTS ON GLOBAL SECURITIES
TO REFLECT CHANGES IN PRINCIPAL AMOUNT
Schedule A
Changes to Principal Amount of Global Securities
<TABLE>
<CAPTION>
- - --------- ------------------------------------------- -------------------------------- -------------------------------
Date Principal Amount Remaining Notation Made By
of Notes Principal
by which this Global Amount of this
Security is to be Global Security
Reduced or Increased,
and Reason for
Reduction or Increase
- - --------- ------------------------------------------- -------------------------------- -------------------------------
- - --------- ------------------------------------------- -------------------------------- -------------------------------
<S> <C> <C> <C>
- - --------- ------------------------------------------- -------------------------------- -------------------------------
- - --------- ------------------------------------------- -------------------------------- -------------------------------
- - --------- ------------------------------------------- -------------------------------- -------------------------------
</TABLE>
HEALTHSOUTH CORPORATION
$250,000,000 6.875% Notes due 2005
$250,000,000 7.0% Notes due 2008
REGISTRATION RIGHTS AGREEMENT
New York, New York
June 22, 1998
Salomon Brothers Inc
Goldman, Sachs & Co.
J.P. Morgan Securities Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Morgan Stanley & Co. Incorporated
NationsBanc Montgomery Securities LLC
Bear, Stearns & Co. Inc.
Credit Suisse First Boston Corporation
Deutsche Bank Securities Inc.
PaineWebber Incorporated
Scotia Capital Markets (USA) Inc.
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Dear Sirs:
HEALTHSOUTH Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to certain purchasers (the "Purchasers"), upon the
terms set forth in a purchase agreement of even date herewith (the "Purchase
Agreement"), $250,000,000 of the Company's 6.875% Notes due 2005 and
$250,000,000 of the Company's 7.0% Notes due 2008 (each, a "Series of
Securities" and, collectively, the "Securities") (the "Initial Placement"). As
an inducement to the Purchasers to enter into the Purchase Agreement and in
satisfaction of a condition to your obligations thereunder, the Company agrees
with you (i) for your benefit and the benefit of the other Purchasers and (ii)
for the benefit of the holders from time to time of the Securities (including
you and the other Purchasers) (each of the foregoing a "Holder" and together the
"Holders"), as follows:
1. Definitions. Capitalized terms used herein without definition shall
have their respective meanings set forth in the Purchase Agreement. As used in
this Agreement, the following capitalized defined terms shall have the following
meanings:
<PAGE>
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified person. For purposes of this definition, control of
a person means the power, direct or indirect, to direct or cause the direction
of the management and policies of such person whether by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Closing Date" has the meaning set forth in the Purchase Agreement.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Exchange Offer Registration Period" means the 180-day period following
the consummation of the Registered Exchange Offer, exclusive of any period
during which any stop order shall be in effect suspending the effectiveness of
the Exchange Offer Registration Statement.
"Exchange Offer Registration Statement" means a registration statement
of the Company on an appropriate form under the Act with respect to the
Registered Exchange Offer, all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Exchanging Dealer" means any Holder (which may include the Purchasers)
which is a broker-dealer, electing to exchange Securities acquired for its own
account as a result of marketmaking activities or other trading activities, for
New Securities.
"Final Memorandum" has the meaning set forth in the Purchase Agreement.
"Holder" has the meaning set forth in the preamble hereto.
"Indenture" means the Indenture dated as of June 22, 1998, as
supplemented by that certain Officers' Certificate dated June 22, 1998, relating
to the Securities, between the Company and PNC Bank, National Association, as
trustee, as the same may be amended or further supplemented from time to time in
accordance with the terms thereof.
"Initial Placement" has the meaning set forth in the preamble hereto.
-2-
<PAGE>
"Liquidated Damages" has the meaning set forth in Section 7(a) hereof.
"Majority Holders" means the Holders of a majority of the aggregate
principal amount of securities registered under a Registration Statement.
"Managing Underwriters" means the investment banker or investment
bankers and manager or managers that shall administer an underwritten offering.
"New Securities" means debt securities of the Company identical in all
material respects to the Securities to be issued under the Indenture.
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Securities or the New Securities, covered by such
Registration Statement, and all amendments and supplements to the Prospectus,
including post-effective amendments.
"Registered Exchange Offer" means the proposed offer to the Holders to
issue and deliver to such Holders, with respect to each Series of Securities, a
like principal amount of the corresponding series of New Securities.
"Registration Statement" means any Exchange Offer Registration
Statement or Shelf Registration Statement that covers any of the Securities or
the New Securities pursuant to the provisions of this Agreement, amendments and
supplements to such registration statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"Securities" has the meaning set forth in the preamble hereto.
"Series of Securities" has the meaning set forth in the preamble
hereto.
"Shelf Registration" means a registration effected pursuant to Section
3 hereof.
"Shelf Registration Period" has the meaning set forth in Section 3(b)
hereof.
"Shelf Registration Statement" means a "shelf" registration statement
of the Company pursuant to the provisions of Section 3 hereof which covers some
or all of the Securities or New Securities, as applicable, on an appropriate
form under Rule 415
-3-
<PAGE>
under the Act, or any similar rule that may be adopted by the Commission,
amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and al material incorporated by reference therein.
"Trustee" means the trustee with respect to the Securities under the
Indenture.
"underwriter" means any underwriter of Securities in connection with an
offering thereof under a Shelf Registration Statement.
2. Registered Exchange Offer; Resales of New Securities by Exchanging
Dealers' Private Exchange. (a) The Company shall prepare and file with the
Commission the Exchange Offer Registration Statement with respect to the
Registered Exchange Offer not later than 60 days following the Closing Date. The
Company shall use its reasonable best efforts to cause the Exchange Offer
Registration Statement to become effective under the Act within 150 days of the
Closing Date.
(b) Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange Offer, it
being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Securities for New Securities (assuming that such Holder is
not an Affiliate of the Company within the meaning of the Act, acquires the New
Securities in the ordinary course of such Holder's business and has no
arrangements with any person to participate i the distribution (within the
meaning of the Act) of the New Securities) to transfer such New Securities from
and after their receipt without any limitations or restrictions under the Act
and without material restrictions under the securities laws of a substantial
proportion of the several states of the United States.
(c) In connection with the Registered Exchange Offer, the Company
shall:
(i) mail to each Holder a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for not less than 30
calendar days and not more than 45 calendar days after the date notice
thereof is mailed to the Holders (or longer if required by applicable
law);
(iii) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City of
New York; and
(iv) comply in all respects with all applicable
-4-
<PAGE>
laws.
(d) As soon as practicable after the close of the Registered Exchange
Offer, the Company shall:
(i) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer;
(ii) deliver to the Trustee for cancellation all Securities so
accepted for exchange; and
(iii) cause the Trustee promptly to authenticate and deliver to
each Holder of Securities New Securities of the appropriate series
equal in principal amount to the Securities of such Holder so accepted
for exchange.
(e) The Purchasers and the Company acknowledge that, pursuant to
interpretations by the Commission's staff of Section 5 of the Act, and in the
absence of an applicable exemption therefrom, each Exchanging Dealer is required
to deliver a Prospectus in connection with a sale of any New Securities received
by such Exchanging Dealer pursuant to the Registered Exchange Offer in exchange
for Securities acquired for its own account as a result of market-making
activities or other trading activities. Accordingly, the Company shall:
(i) include the information set forth in Annex A hereto on the
cover of the Exchange Offer Registration Statement, in Annex B hereto
in the forepart of the Exchange Offer Registration Statement in a
section setting forth details of the Registered Exchange Offer, and in
Annex C hereto in the underwriting or plan of distribution section of
the Prospectus forming a part of the Exchange Offer Registration
Statement, and include the information set forth in Annex D hereto in
the Letter of Transmittal delivered pursuant to the Registered Exchange
Offer; and
(ii) use its reasonable best efforts to keep the Exchange Offer
Registration Statement continuously effective under the Act during the
Exchange Offer Registration Period for delivery of the Prospectus
forming a part thereof by Exchanging Dealers in connection with sales
of New Securities received pursuant to the Registered Exchange Offer,
as contemplated by Section 4(h) below.
(f) In the event that any Purchaser determines that it is not eligible
to participate in the Registered Exchange Offer with respect to the exchange of
Securities constituting any portion of an unsold allotment, at the request of
such Purchaser, the Company shall issue and deliver to such Purchaser or the
party purchasing New Securities registered under a Shelf Registration Statement
as contemplated by Section 3 hereof from such Purchaser, in exchange for such
Securities, a like principal
-5-
<PAGE>
amount of New Securities. The Company shall seek to cause the CUSIP Service
Bureau to issue the same CUSIP number(s) for such New Securities as for the
corresponding series of New Securities issued pursuant to the Registered
Exchange Offer.
3. Shelf Registration. If (i) because of any change in law or
applicable interpretations thereof by the Commission's staff, the Company
determines upon advice of its counsel that it is not permitted to effect the
Registered Exchange Offer as contemplated by section 2 hereof, or (ii) if for
any other reason the Registered Exchange Offer is not consummated within 180
days of the Closing Date, or (iii) if any Holder is not eligible to participate
in the Registered Exchange Offer or (iv) in th case of any Holder that
participates in the Registered Exchange Offer or acquires New Securities
pursuant to Section 2(f) hereof, such Holder does not receive freely tradable
New Securities in exchange for Securities constituting any portion of an unsold
allotment (it being understood that, for purposes of this Section 3, (x) the
requirement that a Purchaser deliver a Prospectus containing the information
required by items 507 and/or 508 of Regulation S-K under the Act in connection
with sales of New Securities acquired in exchange for such Securities shall
result in such New Securities being not "freely tradable" but (y) the
requirement that an Exchanging Dealer deliver a Prospectus in connection with
sales of New Securities acquired in the Registered Exchange Offer in exchange
for Securities acquired as a result of market-making activities or other trading
activities shall not result in such New Securities being not "freely tradable"),
the following provisions shall apply:
(a) The Company shall, as promptly as practicable (but in no event more
than 30 days after so required or requested pursuant to this Section 3), file
with the Commission and thereafter shall use its reasonable best efforts to
cause to be declared effective under the Act a Shelf Registration Statement
relating to the offer and sale of the Securities or the New Securities, as
applicable, by the Holders from time to time in accordance with the methods of
distribution elected by such Holders and set forth in such Shelf Registration
Statement; provided, that with respect to New Securities received by a Purchaser
in exchange for Securities constituting any portion of an unsold allotment, the
Company may, if permitted by current interpretations by the Commission's staff,
file a post-effective amendment to the Exchange Offer Registration Statement
containing the information required by Regulation S-K Items 507 and/or 508, as
applicable, in satisfaction of its obligations under this paragraph (a) with
respect thereto, and any such Exchange Offer Registration Statement, as so
amended, shall be referred to herein as, and governed by the provisions herein
applicable to, a Shelf Registration Statement.
(b) The Company shall use its reasonable best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the Prospectus
forming part thereof to be usable by Holders for a period of two years from the
date the Shelf Registration Statement is declared effective by the Commission or
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such shorter period that will terminate when all the Securities or New
Securities, as applicable, covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement (in any such case, such period
being called the "Shelf Registration Period"). The Company shall be deemed not
to have used its reasonable best efforts to keep the Shelf Registration
Statement effective during the requisite period if it voluntarily takes any
action that would result in Holders of Securities covered thereby not being able
to offer and sell such Securities during that period, unless (i) such action is
required by applicable law, or (ii) such action is taken by the Company in good
faith and for valid business reasons (not including avoidance of the Company's
obligations hereunder), including the acquisition or divestiture of assets, so
long as the Company promptly thereafter complies with the requirements of
Section 4(k) hereof, if applicable.
4. Registration Procedures. In connection with any Shelf Registration
Statement and, to the extent applicable, any Exchange Offer Registration
Statement, the following provisions shall apply:
(a) The Company shall furnish to you, prior to the filing thereof with
the Commission, a copy of any Shelf Registration Statement and any Exchange
Offer Registration Statement, and each amendment thereof and each amendment or
supplement, if any, to the Prospectus included therein and shall use its best
efforts to reflect in each such document, when so filed with the Commission,
such comments as you reasonably may propose.
(b) The Company shall ensure that (i) any Registration Statement and
any amendment thereto and any Prospectus forming a part thereof and any
amendment or supplement thereto complies in material respects with the Act and
the rules and regulations thereunder, (ii) any Registration Statement and any
amendment thereto does not, when it becomes effective, 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 and
(iii) any Prospectus forming part of any Registration Statement, and any
amendment or supplement to such Prospectus, does not include an untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements, in the light of the circumstances under which they were made,
not misleading.
(c) (1) The Company shall advise you and, in the case of a Shelf
Registration Statement, the Holders of Securities covered thereby, and, if
requested by you or any such Holder, confirm such advice in writing:
(i) when a Registration Statement and any amendment thereto has
been filed with the Commission and when the Registration Statement or
any post-effective amendment thereto has become effective; and
(ii) of any request by the Commission for
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amendments or supplements to the Registration Statement or the
Prospectus included therein or for additional information.
(2) The Company shall advise you and, in the case of a Shelf
Registration Statement, the Holders of Securities covered thereby, and, in the
case of an Exchange Offer Registration Statement, any Exchanging Dealer which
has provided in writing to the Company a telephone or facsimile number and
address for notices, and, if requested by you or any such Holder or Exchanging
Dealer, confirm such advice in writing:
(i) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose;
(ii) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities
included therein for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(iii) of the happening of any event that requires the making of
any changes in the Registration Statement or the Prospectus so that, as
of such date, the statements therein are not misleading and do not omit
to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light of
the circumstances under which they were made) not misleading (which
advice shall be accompanied by an instruction to suspend the us of the
Prospectus until the requisite changes have been made).
(d) The Company shall use its best efforts to prevent the issuance or
obtain the withdrawal of any order suspending the effectiveness of any
Registration Statement at the earliest possible time.
(e) The Company shall furnish to each Holder of Securities included
within the coverage of any Shelf Registration Statement, without charge, at
least one copy of such Shelf Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, and, if the
Holder so requests in writing, all exhibits (including those incorporated by
reference).
(f) The Company shall, during the Shelf Registration Period, deliver to
each Holder of Securities included within the coverage of any Shelf Registration
Statement, without charge, as many copies of the Prospectus (including each
preliminary Prospectus) included in such Shelf Registration Statement and any
amendment or supplement thereto as such Holder may reasonably request; and the
Company consents to the use of the Prospectus or any amendment or supplement
thereto by each of the selling
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Holder of Securities in connection with the offering and sale of the Securities
covered by the Prospectus or any amendment or supplement thereto.
(g) The Company shall furnish to each Exchanging Dealer which so
requests, without charge, at least one copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules, any documents incorporated by reference therein, and,
if the Exchanging Dealer so requests in writing, all exhibits (including those
incorporated by reference).
(h) The Company shall, during the Exchange Offer Registration Period,
promptly deliver to each Exchanging Dealer, without charge, as many copies of
the Prospectus included in such Exchange Offer Registration Statement and any
amendment or supplement thereto as such Exchanging Dealer may reasonably request
for delivery by such Exchanging Dealer in connection with a sale of New
Securities received by it pursuant to the Registered Exchange Offer; and the
Company consents to the use of the Prospectu or any amendment or supplement
thereto by any such Exchanging Dealer, as aforesaid.
(i) Prior to the Registered Exchange Offer or any other offering of
Securities pursuant to any Registration Statement, the Company shall register or
qualify or cooperate with the Holders of Securities included therein and their
respective counsel in connection with the registration or qualification of such
Securities for offer and sale under the securities or blue sky laws of such
jurisdictions as any such Holders reasonably request in writing and do any and
all other acts or things necessary or advisable to enable the offer and sale in
such jurisdictions of the Securities covered by such Registration Statement;
provided, however, that the Company will not be required to qualify generally to
do business in any jurisdiction where it is not then so qualified or to take any
action which would subject it to general service of process or to taxation in
any such jurisdiction where it is not then so subject.
(j) Unless the applicable Securities shall be in book-entry only form,
the Company shall cooperate with the Holders of Securities to facilitate the
timely preparation and delivery of certificates representing Securities to be
sold pursuant to any Registration Statement free of any restrictive legends and
in such denominations and registered in such names as Holders may request prior
to sales of Securities pursuant to such Registration Statement.
(k) Upon the occurrence of any event contemplated by paragraphs
(c)(1)(ii), (c)(2)(i) or (c)(2)(iii) above, the Company agrees to notify the
Purchasers, and in the case of a Shelf Registration Statement, the Holders of
Securities covered thereby, to suspend use of the Prospectus and the Company
shall promptly prepare a post-effective amendment to any Registration Statement
or an amendment or supplement to the related Prospectus or file any other
required document so that, as thereafter
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delivered to purchasers of the Securities included therein, the Prospectus will
not include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(l) The Company shall use its reasonable efforts to cause The
Depository Trust Company ("DTC") on the first business day following the
effective date of any Shelf Registration Statement hereunder or as soon as
possible thereafter to remove (i) from any existing CUSIP number assigned to any
Series of Securities, any designation indicating that such Securities are
"restricted securities," which efforts shall include delivery to DTC of a letter
executed by the Company substantially in the form of Annex E hereto and (ii) any
other stop or restriction on DTC's system with respect to such Securities. In
the event the Company is unable to cause DTC to take the actions described in
the immediately preceding sentence, the Company shall take such actions as
Salomon Brothers may reasonably request to provide, as soon as practicable, a
CUSIP number for each Series of Securities registered under such Registration
Statement and to cause such CUSIP numbers to be assigned to such Securities (or
to the maximum aggregate principal amount of such Securities to which such
number(s) may be assigned). Upon compliance with the foregoing requirements of
this Section 4(1), the Company shall provide the Trustee with printed
certificates for each Series of Securities, in a form eligible for deposit with
DTC.
(m) The Company shall use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission and shall make generally
available to its security holders as soon as practicable after the effective
date of the applicable Registration Statement an earnings statement satisfying
the provisions of Section 11(a) of the Act.
(n) The Company shall cause the Indenture to be qualified under the
Trust Indenture Act in a timely manner.
(o) The Company may require each Holder of Securities to be sold
pursuant to any Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of such Securities as the
Company may from time to time reasonably require for inclusion in such
Registration Statement.
(p) The Company shall, if requested, promptly incorporate in a
Prospectus supplement or post-effective amendment to a Shelf Registration
Statement, such information as the Managing Underwriters and Majority Holders
reasonably agree should be included therein and shall make all required filings
of such Prospectus supplement or post-effective amendment as soon as notified of
the matters to be incorporated in such Prospectus supplement or post-effective
amendment.
(q) In the case of any Shelf Registration Statement, the Company shall
enter into such agreements (including underwriting
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agreements) and take all other appropriate actions in order to expedite or
facilitate the registration or the disposition of the Securities, and in
connection therewith, if an underwriting agreement is entered into, cause the
same to contain indemnification provisions and procedures no less favorable than
those set forth in Section 6 (or such other provisions and procedures acceptable
to the Majority Holders and the Managing Underwriters, if any) with respect to
all parties to be indemnified pursuant to Section 6.
(r) In the case of any Shelf Registration Statement, the Company shall
(i) make reasonably available for inspection by the Holders of Securities to be
registered thereunder, any underwriter participating in any disposition pursuant
to such Registration Statement, and any attorney, accountant or other agent
retained by the Holders or any such underwriter all relevant financial and other
records, pertinent corporate documents and properties of the Company and its
subsidiaries; (ii) cause the Company's officers, directors and employees to
supply all relevant information reasonably requested by the Holders or any such
underwriter, attorney, accountant or agent in connection with any such
Registration Statement as is customary for similar due diligence examinations;
provided, however, that any information that is designated in writing by the
Company, in good faith, as confidential at the time of delivery of such
information shall be kept confidential by the Holders or any such underwriter,
attorney, accountant or agent, unless such disclosure is made in connection with
a court proceeding or required by law, or such information becomes available to
the public generally or through a third party without an accompanying obligation
of confidentiality; (iii) make such representations and warranties to the
Holders of Securities registered thereunder and the underwriters, if any, in
form, substance and scope as are customarily made by issuers to underwriters in
primary underwritten offerings and covering matters including, but not limited
to, those set forth in the Purchase Agreement; (iv) obtain opinions of counsel
to the Company and updates thereof (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to the Managing Underwriters, if
any) addressed to each selling Holder and the underwriters, if any, covering
such matters as are customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by such Holders
and underwriters; (v) obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if necessary, any
other independent certified public accountants of any subsidiary of the Company
or of any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed to each selling Holder of Securities registered thereunder
and the underwriters, if any, in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with primary
underwritten offerings; and (vi) deliver such documents and certificates as may
be reasonably requested by the Majority Holders and the Managing Underwriters,
if any, including those to
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<PAGE>
evidence compliance with Section 4(k) and with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Company. The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of
this Section 4(r) shall be performed at (A) the effectiveness of such
Registration Statement and each post-effective amendment thereto and (B) each
closing under any underwriting or similar agreement as and to the extent
required thereunder.
(s) In the case of any Exchange Offer Registration Statement, the
Company shall (i) make reasonably available for inspection by each Purchaser,
and any attorney, accountant or other agent retained by such Purchaser, all
relevant financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries; (ii) cause the Company's
officers, directors and employees to supply all relevant information reasonably
requested by such Purchaser or any such attorney, accountant or agent in
connection with any such Registration Statement as is customary for similar due
diligence examinations; provided, however,that any information that is
designated in writing by the Company, in good faith, as confidential at the time
of delivery of such information shall be kept confidential by such Purchaser or
any such attorney, accountant or agent, unless such disclosure is made in
connection with a court proceeding or required by law, or such information
becomes available to the public generally or through a third party without an
accompanying obligation of confidentiality; (iii) make such representations and
warranties to such Purchaser, in form, substance and scope as are customarily
made by issuers to underwriters in primary underwritten offerings and covering
matters including, but not limited to, those set forth in the Purchase
Agreement; (iv) obtain opinions of counsel to the Company and updates thereof
(which counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to such Purchaser and its counsel) addressed to such Purchaser,
covering such matters as are customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
such Purchaser or its counsel; (v) obtain "cold comfort" letters and updates
thereof from the independent certified public accountants of the Company (and,
if necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for which
financial statements and financial data are, or are required to be, included in
the Registration Statement), addressed to such Purchaser, in customary form and
covering matters of the type customarily covered in "cold comfort" letters in
connection with primary underwritten offerings; and (v) deliver such documents
and certificates as may be reasonably requested by such Purchaser or its
counsel, including those to evidence compliance with Section 4(k) and with
conditions customarily contained in underwriting agreements. The foregoing
actions set forth in clauses (iii), (iv), (v), and (vi) of this Section 4(s)
shall be performed at the close of the Registered Exchange Offer and the
effective date of any post-effective amendment to the Exchange Offer
Registration Statement.
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<PAGE>
5. Registration Expenses. The Company shall bear all expenses incurred
in connection with the performance of its obligations under Sections 2, 3 and 4
hereof and, in the event of any Shelf Registration Statement, will reimburse the
Holders for the reasonable fees and disbursements of one firm of counsel
designated by the Majority Holders to act as counsel for the Holders in
connection therewith, and, in the case of any Exchange Offer Registration
Statement, will reimburse the Purchasers fo the reasonable fees and
disbursements of counsel acting in connection therewith.
6. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Holder of Securities (including each Purchaser
and, with respect to any Prospectus delivery as contemplated in Section 4(h)
hereof, each Exchanging Dealer), the directors, officers, employees and agents
of each such Holder and each person who controls any such Holder within the
meaning of either the Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement as originally filed or in any
amendment thereof, or in any preliminary Prospectus or Prospectus; or in any
amendment thereof 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 not misleading, and
agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable i any case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any such Holder specifically for inclusion
therein. This indemnity agreement will be in addition to any liability which the
Company may otherwise have.
The Company also agrees to indemnify or contribute to Losses of, as
provided in Section 6(d), any underwriters of Securities registered under a
Shelf Registration Statement, their officers and directors and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Purchaser and the selling Holders provided in this
Section 6(a) and shall, if requested by any Holder, enter into an underwriting
agreement reflecting such agreement, as provided in Section 4(q) hereof.
(b) Each Holder of Securities covered by a Registration Statement
(including each Purchaser and, with respect to any
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Prospectus delivery as contemplated in Section 4(h) hereof, each Exchanging
Dealer) severally agrees to indemnify and hold harmless (i) the Company, (ii)
each of its directors, (iii) each of its officers and (iv) each person who
controls the Company within the meaning of either the Act or the Exchange Act to
the same extent as the foregoing indemnity from the Company to each such Holder,
but only with reference to written information relating to such Holder furnished
to the Company by or on behalf of such Holder specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 6
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 6, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), an the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel (and local counsel) if (i) the use of
counsel chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified party
to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action,
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suit or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 6 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have a joint and several obligation
to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Initial Placement and the
Registration Statement which resulted in such Losses; provided, however, that in
no case shall any Purchaser or any subsequent Holder of any Security or New
Security be responsible, in the aggregate, for any amount in excess of the
purchase discount or commission applicable to such Security, or in the case of a
New Security, applicable to the Security which was exchangeable into such New
Security, as set forth on the cover page of the Final Memorandum, nor shall any
underwriter be responsible for any amount in excess of the underwriting discount
or commission applicable to the Securities purchased by such underwriter under
the Registration Statement which resulted in such Losses. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the indemnifying party and the indemnified party shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the sum of (x) the total net proceeds from the Initial Placement (before
deducting expenses) as set forth on the cover page of the Final Memorandum and
(y) the total amount of additional interest which the Company was not required
to pay as a result of registering the Securities covered by the Registration
Statement which resulted in such Losses. Benefits received by the Purchasers
shall be deemed to be equal to the total purchase discounts and commissions as
set forth on the cover page of the Final Memorandum, and benefits received by
any other Holders shall be deemed to be equal to the value of receiving
Securities or New Securities, as applicable, registered under the Act. Benefits
received by any underwriter shall be deemed to be equal to the total
underwriting discounts and commissions, as set forth on the cover page of the
Prospectus forming a part of the Registration Statement which resulted in such
Losses. Relative fault shall be determined by reference to whether any alleged
untrue statement or omission relates to
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information provided by the indemnifying party, on the one hand, or by the
indemnified party, on the other hand. The Holders' respective obligations to
contribute pursuant to this paragraph are several in proportion to the
respective number of Securities they have sold pursuant to a Registration
Statement, and not joint. The parties agree that it would not be just and
equitable if contribution were determined by pro rata allocation or any other
method of allocation which does not tak account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph (d), no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 6,
each person who controls a Holder within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of such Holder shall
have the same rights to contribution as such Holder, and each person who
controls the Company within the meaning of either the Act or the Exchange Act,
each officer of the Company who shall have signed the Registration Statement and
each director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (d).
(e) The provisions of this Section 6 will remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder or
the Company or any of the officers, directors or controlling persons referred to
in Section 6 hereof, and will survive the sale by a Holder of Securities.
7. Liquidated Damages Under Certain Circumstances. (a) Liquidated
damages ("Liquidated Damages") shall become payable in respect of the Securities
as follows if any of the following events occur (each such event in clauses (i)
through (iv) below, a "Registration Default"):
(i) the Company is permitted under the law and currently
prevailing interpretations of the Commission's staff to effect the
Registered Exchange Offer and the Exchange Offer Registration Statement
is not filed with the Commission on or prior to the 60th day following
the Closing Date;
(ii) the Company is permitted under the law and currently
prevailing interpretations of the Commission's staff to effect the
Registered Exchange Offer and the Exchange Offer Registration Statement
is not declared effective on or prior to the 150th day following the
Closing Date;
(iii) the Registered Exchange Offer is not consummated and the
applicable Shelf Registration Statement is not declared effective on or
prior to the 180th day following the Closing Date; or
(iv) after a Shelf Registration Statement is declared
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effective, (A) such Shelf Registration Statement ceases to be effective
prior to the end of the Shelf Registration Period; or (B) such Shelf
Registration Statement or the related Prospectus ceases to be useable
in connection with resales of Securities or New Securities, as the case
may be, covered by such Shelf Registration Statement prior to the end
of the Shelf Registration Period because (1) the Company determines
that an event occurs as a result of which the related Prospectus
forming part of such Shelf Registration Statement would include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, (2) the
Company determines that it shall be necessary to amend such Shelf
Registration Statement, or supplement the related Prospectus, to comply
with the Act or the Exchange Act or the rules thereunder, or (3) the
Company determines that it is advisable to suspend use of the
Prospectus for a discrete period of time due to pending material
corporate developments or similar material events that have not yet
been publicly disclosed and as to which the Company believes public
disclosure will be prejudicial to the Company.
Liquidated Damages shall accrue on the applicable Securities or the
applicable New Securities, as the case may be, over and above the interest rate
set forth in the title to the applicable Securities or the applicable New
Securities, as the case may be, following the occurrence of each Registration
Default set forth in clauses (i), (ii) and (iii) above from and including the
next day following each such Registration Default, in each case at a rate equal
to 0.25% per annum; provided, however, that in any case, if one or more
Registration Defaults referred to in Section 7(a)(iv) occurs and continues for
more than 60 days (whether or not consecutive) in any twelve month period (the
61st day being referred to as the "Default Day") then from the Default Day until
the earlier of (i) the date such Shelf Registration Statement is again deemed
effective or is useable, (ii) the date that is the second anniversary of the
Closing Date (or, if Rule 144(k) of the Act is amended to provide a shorte
restrictive period, such shorter period) or (iii) the date on which all the
Securities are sold pursuant to such Shelf Registration Statement, Liquidated
Damages shall accrue at a rate of 0.25% per annum; provided, further, that the
aggregate amount of Liquidated Damages payable pursuant to this Section 7 will
in no event exceed 0.25% per annum. The Liquidated Damages attributable to each
Registration Default shall cease to accrue from the date such Registration
Default is cured.
(b) Any amounts of Liquidated Damages due pursuant to the foregoing
paragraphs will be payable in cash on June 15 and December 15 of each year to
the holders of record on the preceding June 1 and December 1, respectively.
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8. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not, as of the date
hereof, entered into, nor shall it, on or after the date hereof, enter into, any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders herein or otherwise conflicts with the provisions hereof.
(b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of the
Holders of at least a majority of the then outstanding aggregate principal
amount of each Series of Securities (or, after the consummation of any Exchange
Offer in accordance with Section 2 hereof, of each Series of New Securities);
provided that, with respect to any matter that directly or indirectly affects
the rights of any Purchaser hereunder, the Company shall obtain the written
consent of each such Purchaser against which such amendment, qualification,
supplement, waiver or consent is to be effective. Notwithstanding the foregoing
(except the foregoing proviso), a waiver or consent to departure from the
provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose Securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect the rights of other
Holders may be given by the Majority Holders, determined on the basis of
Securities being sold rather than registered under such Registration Statement.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such
holder to the Company in accordance with the provisions of this Section
8(c), which address initially is, with respect to each Holder, the
address of such Holder maintained by the Registrar under the Indenture,
with a copy in like manner to Salomon Brothers Inc;
(2) if to you, initially at the respective addresses set forth in
the Purchase Agreement; and
(3) if to the Company, initially at its address set forth in the
Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given when received.
The Purchasers or the Company by notice to the other may designate
additional or different addresses for subsequent notices or communications.
-18-
<PAGE>
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including, without the need for an express assignment or any consent by the
Company thereto, subsequent Holders of Securities and/or New Securities. The
Company hereby agrees to extend the benefits of this Agreement to any Holder of
Securities and/or New Securities and any such Holder may specifically enforce
the provisions of this Agreement as if an original party hereto.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE.
(h) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.
(i) Securities Held by the Company, etc. Whenever the consent or
approval of Holders of a specified percentage of principal amount of Securities
or New Securities is required hereunder, Securities or New Securities, as
applicable, held by the Company or its Affiliates (other than subsequent Holders
of Securities or New Securities if such subsequent Holders are deemed to be
Affiliates solely by reason of their holdings of such Securities or New
Securities) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.
-19-
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
HEALTHSOUTH CORPORATION
By /s/ MICHAEL D. MARTIN
------------------------------
Michael D. Martin
Executive Vice President,
Chief Financial Officer and
Treasurer
Accepted in New York, New York
June 22, 1998
SALOMON BROTHERS INC
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
NATIONSBANC MONTGOMERY SECURITIES LLC
BEAR, STEARNS & CO. INC.
CREDIT SUISSE FIRST BOSTON CORPORATION
DEUTSCHE BANK SECURITIES INC.
PAINEWEBBER INCORPORATED
SCOTIA CAPITAL MARKETS (USA) INC.
By: SALOMON BROTHERS INC
By: /s/ BENJAMIN D. LORELLO
------------------------------------
Name:
Title:
-20-
<PAGE>
Annex A
-------
Each broker-dealer that receives New Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Securities. Each Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Securities received in exchange for Securities where such
Securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that, ending on
the close of business on the 180th day following the Expiration Date (as defined
herein), it will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
<PAGE>
Annex B
Each broker-dealer that receives New Securities for its own account in
exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Securities. See "Plan of Distribution."
<PAGE>
Annex C
-------
PLAN OF DISTRIBUTION
--------------------
Each broker-dealer that receives New Securities for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Securities received in
exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, starting on the Expiration Date and ending on the close of business on the
180th day following such Expiration Date, it will make this Prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale.
The Company will not receive any proceeds from any sale of New
Securities by broker-dealers. New Securities received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or at negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such New
Securities. Any broker-dealer that resells New Securities that were received by
it for its own account pursuant to the Exchange Offer and any broker or dealer
that participates in a distribution of such New Securities may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit of any
such resale of New Securities and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. Each Letter of Transmittal states that by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the applicable Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer (including the expenses of one counsel
for the holders of the Securities) other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the Securities (including
any broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
<PAGE>
[If applicable, add information required by Regulation S-K Items 507
and/or 508.]
<PAGE>
Annex D
-------
Rider A
-------
CHECK HERE IF YOU ARE A BROKER-DEALER AND
WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE
PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
PROSPECTUS THERETO.
Name:
-------------------------------------------------------
Address:
----------------------------------------------------
----------------------------------------------------
Rider B
-------
If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
New Securities. If the undersigned is a broker-dealer that will receive New
Securities for its own account in exchange for Securities, it represents that
the Securities to be exchanged for New Securities were acquired by it as a
result of market-making activities or other trading activities and acknowledges
that it will deliver a prospectus in connection with any resale of such New
Securities; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
<PAGE>
Annex E
-------
FORM OF LETTER TO BE PROVIDED BY ISSUER TO
THE DEPOSITORY TRUST COMPANY
HEALTHSOUTH Corporation
One HealthSouth Parkway
Birmingham, AL 35243
__________________, 1998
The Depository Trust Company
55 Water Street, 49th Floor
New York, NY 10041
Attn: General Counsel's Office
Ladies and Gentlemen:
We refer to the Letter of Representations, dated June __, 1998 (the
"Letter of Representations"), from HEALTHSOUTH Corporation (the "Issuer") and
PNC Bank, National Association, as trustee (the "Trustee") to the Depository
Trust Company ("DTC") regarding the Issuer's __% Senior Notes due 2005 and __%
Senior Notes due 2008 (the "Old Securities"). The CUSIP numbers of the Old
Securities are __________ and __________, respectively, for qualified
institutional buyers, __________ and __________, respectively, for buyers who
were sold Old Securities in compliance with Regulation S under the Securities
Act of 1933, as amended, and __________ and __________, respectively, for
institutional accredited investors. The Issuer and the Trustee hereby agree and
notify DTC that as of __________ __, 1998, the Securities and Exchange
Commission declared effective a Registration Statement (File No. ) with respect
to an offering of the Issuer's __% Exchange Notes due 2005 and __% Exchange
Notes due 2008 (the "New Securities") (CUSIP Nos. __________ and __________,
respectively) in exchange for the Old Securities. Following the consummation of
the exchange offer and the cancellation of the global securities representing
the Old Securities, the Issuer and the Trustee agree that, with the exception of
the Representations for Rule 144A Securities attached thereto, the Letter of
Representations and any applicable riders thereto shall remain in full force and
effect with respect to the New Securities.
Very truly yours,
HEALTHSOUTH CORPORATION
By:
--------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION
<PAGE>
By:
--------------------------------
Name:
Title:
Received and Accepted:
THE DEPOSITORY TRUST COMPANY
By:
------------------------------
Name:
Title:
- - --------------------------------------------------------------------------------
CREDIT AGREEMENT
by and among
HEALTHSOUTH CORPORATION,
as Borrower,
NATIONSBANK, NATIONAL ASSOCIATION,
as Administrative Agent and Arranger
J.P. MORGAN SECURITIES INC.,
DEUTSCHE BANK AG and
SCOTIABANC, INC.,
as Syndication Agents and Co-Arrangers
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
June 23, 1998
- - --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Terms
1.1. Definitions..........................................................2
1.2. Rules of Interpretation.............................................26
1.3. Classes and Types of Loans..........................................27
ARTICLE II
The Loans
2.1. Revolving Loans......................................................28
2.2. Competitive Bid Loans................................................30
2.3. Payment of Interest..................................................34
2.4. Payment of Principal.................................................34
2.5. Non-Conforming Payments..............................................35
2.6. Notes................................................................35
2.7. Pro Rata Payments....................................................36
2.8. Reductions...........................................................36
2.9. Conversions and Elections of Subsequent Interest Periods.............37
2.10. Unused Fees..........................................................37
2.11. Deficiency Advances..................................................37
2.12. Use of Proceeds......................................................38
2.13. Increase and Decrease in Amounts.....................................38
ARTICLE III
Letters of Credit
3.1. Letters of Credit....................................................39
3.2. Reimbursement........................................................39
3.3. Letter of Credit Facility Fees.......................................42
3.4. Administrative Fees..................................................43
ARTICLE IV
Change in Circumstances
4.1. Increased Cost and Reduced Return. ..................................44
4.2. Limitation on Types of Loans.........................................45
<PAGE>
4.3. Illegality...........................................................45
4.4. Treatment of Affected Loans..........................................46
4.5. Compensation.........................................................46
4.6. Taxes................................................................47
ARTICLE V
Conditions to Making Loans and Issuing Letters of Credit
5.1. Conditions of Initial Advance........................................49
5.2. Conditions of Loans and Letters of Credit............................50
ARTICLE VI
Representations and Warranties
6.1. Organization and Authority...........................................52
6.2. Loan Documents.......................................................52
6.3. Solvency.............................................................53
6.4. Subsidiaries.........................................................53
6.5. Ownership Interests..................................................53
6.6. Financial Condition..................................................53
6.7. Title to Properties..................................................54
6.8. Taxes................................................................54
6.9. Other Agreements.....................................................54
6.10. Litigation...........................................................55
6.11. Margin Stock.........................................................55
6.12. Investment Company...................................................55
6.13. Patents, Etc.........................................................55
6.14. No Untrue Statement..................................................55
6.15. No Consents, Etc.....................................................56
6.16. ERISA Requirement....................................................56
6.17. No Default...........................................................56
6.18. Hazardous Materials..................................................56
6.19. Employment Matters...................................................56
6.20. RICO.................................................................57
6.21. Reimbursement from Third Party Payors................................57
6.22. Year 2000 Compliance.................................................57
ARTICLE VII
Affirmative Covenants
7.1. Financial Statements, Reports, Etc...................................58
7.2. Maintain Properties..................................................59
ii
<PAGE>
7.3. Existence, Qualification, Etc........................................59
7.4. Regulations and Taxes................................................60
7.5. Insurance............................................................60
7.6. True Books...........................................................60
7.7. Right of Inspection..................................................60
7.8. Observe all Laws.....................................................60
7.9. Governmental Licenses................................................60
7.10. Covenants Extending to Other Persons.................................61
7.11. Officer's Knowledge of Default.......................................61
7.12. Suits or Other Proceedings...........................................61
7.13. Notice of Discharge of Hazardous Material or Environmental Complaint.61
7.14. Environmental Compliance.............................................61
7.15. Continuation of Current Business.....................................62
7.16. Management Contracts.................................................62
7.17. Year 2000 Compliance.................................................62
ARTICLE VIII
Negative Covenants
8.1. Financial Covenants..................................................63
8.2. Investments and Loans................................................63
8.3. Indebtedness.........................................................63
8.4. Disposition of Assets................................................64
8.5. Consolidation or Merger..............................................64
8.6. Liens................................................................64
8.7. Dividends and Distributions..........................................64
8.8. Acquisitions.........................................................64
8.9. Restricted Payments..................................................64
8.10. Compliance with ERISA................................................64
8.11. Fiscal Year..........................................................65
8.12. Dissolution, etc.....................................................65
8.13. [Reserved]...........................................................65
8.14. Transactions with Affiliates.........................................65
ARTICLE IX
Events of Default and Acceleration
9.1. Events of Default....................................................67
9.2. Agent to Act.........................................................69
9.3. Cumulative Rights....................................................69
9.4. No Waiver............................................................70
9.5. Allocation of Proceeds...............................................70
iii
<PAGE>
ARTICLE X
The Agent
10.1. Appointment, Powers, and Immunities..................................71
10.2. Reliance by Agent....................................................71
10.3. Defaults.............................................................71
10.4. Rights as Lender.....................................................72
10.5. Indemnification......................................................72
10.6. Non-Reliance on Agent and Other Lenders..............................72
10.7. Resignation of Agent.................................................73
10.8. Fees.................................................................73
ARTICLE XI
Miscellaneous
11.1. Assignments and Participations.......................................74
11.2. Notices..............................................................75
11.3. No Waiver............................................................76
11.4. Rights of Setoff; Adjustments........................................76
11.5. Survival.............................................................77
11.6. Expenses.............................................................77
11.7. Amendments and Waivers...............................................78
11.8. Counterparts.........................................................78
11.9. Waivers by Borrower..................................................78
11.10. Termination..........................................................79
11.11. Governing Law........................................................79
11.12. Indemnification......................................................79
11.13. Agreement Controls...................................................80
11.14. Integration..........................................................80
11.15. Successors and Assigns...............................................80
11.16. Severability.........................................................80
11.17. Usury Savings Clause.................................................80
EXHIBIT A Applicable Commitment Percentages..................................A-1
EXHIBIT B Form of Assignment and Acceptance..................................B-1
EXHIBIT C Notice of Appointment (or Revocation) of Authorized Representative.C-1
EXHIBIT D Form of Borrowing Notice...........................................D-1
EXHIBIT E Form of Interest Rate Selection Notice.............................E-1
EXHIBIT F Form of Note.......................................................F-1
EXHIBIT G Investments........................................................G-1
EXHIBIT H Form of Opinion of Borrower's Counsel..............................H-1
EXHIBIT I Compliance Certificate.............................................I-1
EXHIBIT J Executive Officers.................................................J-1
iv
<PAGE>
EXHIBIT K Form of Competitive Bid Quote Request..............................K-1
EXHIBIT L Form of Competitive Bid Quote......................................L-1
EXHIBIT M Form of Competitive Bid Note.......................................M-1
Schedule 1.1 Existing Letters of Credit
Schedule 6.4 Subsidiaries
Schedule 6.13 Patent Issue
Schedule 6.19 Employment Matters
Schedule 8.3 Existing Subsidiary Indebtedness
v
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of June 23, 1998 (this "Agreement") is
entered into by and among HEALTHSOUTH CORPORATION, a Delaware corporation (the
"Borrower"), the Lenders signatories hereto (the "Lenders") and NATIONSBANK,
N.A., a national banking association, as agent for the Lenders (the "Agent").
RECITAL:
The Borrower has heretofore entered into a Third Amended and Restated
Credit Agreement dated April 18, 1996 (the "Prior Agreement") pursuant to which
the lenders party thereto have made loans to the Borrower (the "Prior Loans")
and issued letters of credit for the benefit of the Borrower. The Borrower has
requested that the Lenders make a revolving credit facility of up to
$1,750,000,000, including a $75,000,000 sublimit for the issuance of standby
letters of credit, to the Borrower, the proceeds of which shall be used as set
forth in Section 2.12 and the Lenders have agreed to make such revolving credit
facility available to the Borrower on the following terms and conditions:
<PAGE>
ARTICLE I
Definitions and Terms
1.1. Definitions. For the purposes of this Agreement, in addition to the
definitions set forth above, the following terms shall have the respective
meanings set forth below:
"Absolute Rate" shall have the meaning assigned to such term in
Section 2.2(c)(ii)(D).
"Absolute Rate Auction" shall mean a solicitation of Competitive Bid
Quotes setting forth Absolute Rates pursuant to Section 2.2.
"Absolute Rate Loans" shall mean the Competitive Bid Loans the
interest rates on which are determined on the basis of Absolute Rates set
at Absolute Rate Auctions.
"Acquisition" means the acquisition, whether with cash, property,
stock or promise to pay, of all or a portion of a Person or a Facility or
Facilities of a Person, permitted under Section 8.8; provided such Person
or Facilities is in substantially the same line of business engaged in by
Borrower or its Consolidated Entities.
"Actual/360 Basis" shall mean a method of computing interest or other
charges hereunder on the basis of an assumed year of 360 days for actual
number of days elapsed, meaning that interest or other charges accrued for
each day will be computed by multiplying the rate applicable on that day by
the unpaid principal balance (or other relevant sum) on that day and
dividing the result by 360.
"Advance" means a borrowing under the Revolving Credit Facility
consisting of the aggregate principal amount of a Syndicated Loan or a
Competitive Bid Loan.
"Affiliate" of any specified Person means any other Person (i) which
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person; or
(ii) which beneficially owns or holds 5% or more of any class of the
outstanding voting stock (or in the case of a Person which is not a
corporation, 5% or more of the equity interest) of such specified Person;
or 5% or more of any class of the outstanding voting stock (or in the case
of a Person which is not a corporation, 5% or more of the equity interest)
of which is beneficially owned or held by such specified Person. The term
"control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting stock, by contract or otherwise.
"Applicable Commitment Percentage" means, with respect to each Lender,
that portion of the Total Revolving Credit Commitment allocable to such
Lender (a) with respect to Lenders as of the Closing Date, as set forth on
Exhibit A, and (b) with respect to any Person who becomes a Lender
thereafter, as reflected in each Assignment and
2
<PAGE>
Acceptance to which such Lender is a party assignee; provided that the
Applicable Commitment Percentage of each Lender shall be increased or
decreased to reflect any assignments to or by such Lender effected in
accordance with Section 11.1.
"Applicable Lending Office" means, for each Lender and for each Type
of Loan, the "Lending Office" of such Lender (or an affiliate of such
Lender) designated for such Type of Loan on the signature pages hereof or
such other office of such Lender (or an affiliate of such Lender) as such
Lender may from time to time specify to the Agent and the Borrower by
written notice in accordance with the terms hereof as the office by which
its Loans of such Type are to be made and maintained.
"Applicable Margin" means that number of basis points per annum set
forth below determined based upon the more favorable to the Borrower of
either (i) the highest Rating of outstanding senior unsecured Indebtedness
of the Borrower from time to time as specified in Table I below (provided
that in the event of a Rating split between Tiers, then the Tier next above
the Tier corresponding to the lower Rating shall apply) or (ii) the ratio
of Consolidated Indebtedness at the date of determination to Consolidated
EBITDA for the Four-Quarter Period most recently ended as specified in
Table II below:
- - --------------------------------------------------------------------------------
TABLE I
- - --------------------------------------------------------------------------------
Tier Rating Applicable Margin
S&P or Moody's
- - --------------------------------------------------------------------------------
I A- A3 25 b.p.
- - --------------------------------------------------------------------------------
II BBB+ Baa1 30
- - --------------------------------------------------------------------------------
III BBB Baa2 35
- - --------------------------------------------------------------------------------
IV BBB- Baa3 45
- - --------------------------------------------------------------------------------
V BB+ Ba1 65
- - --------------------------------------------------------------------------------
VI BB Ba2 100
or lower or lower
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
TABLE II
- - --------------------------------------------------------------------------------
Tier Ratio of Consolidated Indebtedness to Applicable Margin
Consolidated EBITDA
- - --------------------------------------------------------------------------------
I Less than 1.50 to 1.00 30 b.p.
- - --------------------------------------------------------------------------------
II Equal to or greater than 1.50 to 1.00 35
but less than 2.00 to 1.00
- - --------------------------------------------------------------------------------
3
<PAGE>
- - --------------------------------------------------------------------------------
III Equal to or greater than 2.00 to 1.00 45
but less than 2.50 to 1.00
- - --------------------------------------------------------------------------------
IV Equal to or greater than 2.50 to 1.00 65
but less than 3.00 to 1.00
- - --------------------------------------------------------------------------------
V Equal to or greater than 3.00 to 1.00 100
- - --------------------------------------------------------------------------------
; provided, however, that any time during which the sum of Revolving Credit
Outstandings, outstanding Competitive Bid Loans and Letter of Credit
Outstandings exceed $875,000,000, five (5) basis points shall automatically
be added to the Applicable Margin set forth in Tables I and II above.
The Applicable Margin shall be established in the case of a Rating from
time to time based upon the Rating then in effect and, in the case of the
ratio, at the end of each fiscal quarter of the Borrower (the "Ratio
Determination Date"). Any change in the Applicable Margin following each
Ratio Determination Date shall be determined based upon the computations
set forth in the Compliance Certificate, subject to review and approval of
such computations by the Agent, and shall be effective commencing on the
date following the date such certificate is received until the date
following the date on which a new Compliance Certificate is delivered or is
required to be delivered, whichever shall first occur; provided however, if
the Borrower shall fail to deliver any such certificate within the time
period required by Section 7.1, then the Applicable Margin shall be 2%
until the appropriate certificate is so delivered. From the Closing Date to
the first Ratio Determination Date, the Applicable Margin shall be 35 basis
points (subject to the proviso in the first sentence of this definition).
"Applicable Unused Fee" means that number of basis points per annum
set forth below determined based upon the more favorable to the Borrower of
either (i) the highest Rating of outstanding senior unsecured Indebtedness
of the Borrower from time to time as specified in Table III below (provided
that in the event of a Rating split between Tiers, then the Tier next above
the Tier corresponding to the lower Rating shall apply) or (ii) the ratio
of Consolidated Indebtedness at the date of determination to Consolidated
EBITDA for the Four-Quarter Period most recently ended as specified in
Table IV below:
- - --------------------------------------------------------------------------------
TABLE III
- - --------------------------------------------------------------------------------
Tier Rating Applicable Unused
S&P or Moody's Fee
- - --------------------------------------------------------------------------------
I A- A3 9.0 b.p.
- - --------------------------------------------------------------------------------
II BBB+ Baa1 10.0
- - --------------------------------------------------------------------------------
III BBB Baa2 12.5
4
<PAGE>
- - --------------------------------------------------------------------------------
IV BBB- Baa3 15.0
- - --------------------------------------------------------------------------------
V BB+ Ba1 20.0
- - --------------------------------------------------------------------------------
VI BB Ba2 25.0
or lower or lower
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
TABLE IV
- - --------------------------------------------------------------------------------
Tier Ratio of Consolidated Indebtedness to Applicable Unused
Consolidated EBITDA Fee
- - --------------------------------------------------------------------------------
I Less than 1.50 to 1.00 10.0 b.p.
- - --------------------------------------------------------------------------------
II Equal to or greater than 1.50 to 1.00 12.5
but less than 2.00 to 1.00
- - --------------------------------------------------------------------------------
III Equal to or greater than 2.00 to 1.00 15.0
but less than 2.50 to 1.00
- - --------------------------------------------------------------------------------
IV Equal to or greater than 2.50 to 1.00 20.0
but less than 3.00 to 1.00
- - --------------------------------------------------------------------------------
V Equal to or greater than 3.00 to 1.00 25.0
- - --------------------------------------------------------------------------------
The Applicable Unused Fee shall be established in the case of a Rating from
time to time based upon the Rating then in effect, and in the case of the
ratio, at the end of each fiscal quarter of the Borrower (the "Ratio
Determination Date"). Any change in the Applicable Unused Fee following
each Ratio Determination Date shall be determined based upon the
computations set forth in the Compliance Certificate, subject to review and
approval of such computations by the Agent and shall be effective
commencing on the date following the date such certificate is received
until the date following the date on which a new Compliance Certificate is
delivered or is required to be delivered, whichever shall first occur;
provided however, if the Borrower shall fail to deliver any such
certificate within the time period required by Section 7.1, then the
Applicable Unused Fee shall be 2%. From the Closing Date to the first Ratio
Determination Date, the Applicable Unused Fee shall be 12.5 basis points.
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit, or
similar documentation, executed by the Borrower from time to time and
delivered to the Issuing Bank to support the issuance of Letters of Credit.
"Assignment and Acceptance" shall mean an Assignment and Acceptance in
the form of Exhibit B (with blanks appropriately filled in) delivered to
the Agent in
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connection with an assignment of a Lender's interest under this Agreement
pursuant to Section 11.1.
"Authorized Representative" means any of the Executive Officers of the
Borrower or, with respect to financial matters, the Treasurer or the Chief
Financial Officer of the Borrower, or any other Person expressly designated
by the Board of Directors of the Borrower (or the appropriate committee
thereof) as an Authorized Representative of the Borrower, as set forth from
time to time in a certificate in the form of Exhibit C.
"Base Rate" means, for any day, the rate per annum equal to the higher
of (i) the Prime Rate for such day or (ii) the Federal Funds Rate for such
day plus one-half of one percent (1/2%). Any change in the Base Rate due to
a change in the Prime Rate or the Federal Funds Rate shall be effective on
the effective date of such change in the Prime Rate or Federal Funds Rate.
"Base Rate Loan" means a Loan for which the rate of interest is
determined by reference to the Base Rate.
"Base Rate Refunding Loan" means an Advance under the Revolving Credit
Facility which bears interest at a Base Rate made to satisfy Reimbursement
Obligations arising from a drawing under a Letter of Credit.
"Board" means the Board of Governors of the Federal Reserve System (or
any successor body).
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under the Revolving Credit
Facility, in the form of Exhibit D.
"Business Day" means, (i) except in the case of a Eurodollar Rate
Loan, any day which is not a Saturday, Sunday or a day on which banks in
the States of New York and North Carolina are authorized or obligated by
law, executive order or governmental decree to be closed and, (ii) with
respect to any Eurodollar Rate Loan, any day which is a Business Day, as
described above, and on which the relevant international financial markets
are open for the transaction of business contemplated by this Agreement in
London, England, New York, New York and Charlotte, North Carolina.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time
including Statement No. 13 of the Financial Accounting Standards Board and
any successor thereof.
"Capital Stock" of any Person means any and all shares, rights to
purchase, warrants or options (whether or not currently exercisable),
participation or other equivalents of or interest in (however designated)
the equity (including without limitation
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common stock, preferred stock and partnership and joint venture interests)
of such Person (excluding any debt securities that are convertible into, or
exchangeable for, such equity).
"Change of Control" means, at any time:
(i) any "person" or "group" (each as used in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act), who are not as of the Closing Date
owners of one percent (1%) or more of the Voting Stock of the
Borrower, either (A) becomes the "beneficial owner" (as defined in
Rule 13d-3 of the Exchange Act), directly or indirectly, of Voting
Stock of the Borrower (or securities convertible into or exchangeable
for such Voting Stock) representing 15% or more of the combined voting
power of all Voting Stock of the Borrower (on a fully diluted basis)
or (B) otherwise has the ability, directly or indirectly, to elect a
majority of the board of directors of the Borrower;
(ii) during any period of up to 24 consecutive months, commencing
on the Closing Date, individuals who at the beginning of such period
were directors of the Borrower shall cease for any reason (other than
the death, disability or retirement of an officer of the Borrower that
is serving as a director at such time so long as another officer of
the Borrower replaces such Person as a director) to constitute a
majority of the board of directors of the Borrower; or
(iii) any Person or two or more Persons acting in concert shall
have acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation thereof, will result
in its or their acquisition, of the power to exercise, directly or
indirectly, a controlling influence on the management or policies of
the Borrower.
"Closing Date" means the date as of which this Agreement is executed
by the Borrower, the Lenders and the Agent and on which the conditions set
forth in Section 5.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
"Common Stock" means the common stock, par value $.01 per share, of
the Borrower.
"Competitive Bid Borrowing" shall have the meaning assigned to such
term in Section 2.2(b).
"Competitive Bid Loans" shall mean the Loans provided for by Section
2.2.
"Competitive Bid Notes" shall mean the promissory notes provided for
by Section 2.6(c) substantially in the form of Exhibit M and all promissory
notes delivered in
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substitution or exchange therefor, in each case as the same shall be
modified and supplemented and in effect from time to time.
"Competitive Bid Quote" shall mean an offer in accordance with Section
2.2(c) by a Lender to make a Competitive Bid Loan with one single specified
interest rate.
"Competitive Bid Quote Request" shall have the meaning assigned to
such term in Section 2.2(b).
"Compliance Certificate" shall have the meaning attributed to that
term in Section 7.1(c).
"Consistent Basis" in reference to the application of GAAP means the
accounting principles observed in the period referred to are comparable in
all material respects to those applied in the preparation of the audited
financial statements of the Borrower referred to in Section 6.6(a).
"Consolidated Amortization Expense" of the Borrower for any period
means the amortization expense of the Borrower and its Consolidated
Entities for such period (to the extent included in the computation of
Consolidated Net Income), determined on a consolidated basis in accordance
with GAAP.
"Consolidated Depreciation Expense" of the Borrower means the
depreciation expense of the Borrower and its Consolidated Entities for such
period (to the extent included in the computation of Consolidated Net
Income of the Borrower), determined on a consolidated basis in accordance
with GAAP.
"Consolidated EBITDA" means, with respect to the Borrower and its
Consolidated Entities for any Four-Quarter Period ending on the date of
computation thereof, the sum of, without duplication, (i) Consolidated Net
Income, (ii) Consolidated Interest Expense, (iii) Consolidated Income Tax
Expense, (iv) Consolidated Amortization Expense, (v) Consolidated
Depreciation Expense and (vi) the minority interest of any Person or
Persons in the income of Consolidated Entities for such period, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Entity" shall mean any Person whose financial statements
are appropriately consolidated with the Borrower's financial statements
under GAAP.
"Consolidated Indebtedness" means all Indebtedness of the Borrower and
its Consolidated Entities, all determined on a consolidated basis.
"Consolidated Interest Expense" means, with respect to any
Four-Quarter Period ending on the date of computation thereof, the gross
interest expense of the Borrower and its Consolidated Entities, including
without limitation (i) the current amortized portion of debt discounts to
the extent included in gross interest expense, (ii) the current amortized
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portion of all fees (including fees payable in respect of any Rate Hedging
Obligation) payable in connection with the incurrence of Indebtedness to
the extent included in gross interest expense, (iii) the portion of any
payments made in connection with Capital Leases allocable to interest
expense, and (iv) lease payments, other than the Headquarters Obligations,
made pursuant to the Headquarters Lease, all determined on a consolidated
basis in accordance with GAAP applied on a Consistent Basis.
"Consolidated Net Income" of the Borrower for any period means the net
income (or loss) of the Borrower and its Consolidated Entities for such
period determined on a consolidated basis in accordance with GAAP, without
giving effect to dividends on any series of preferred stock of any
Consolidated Entity, whether or not in cash, to the extent such
consolidated net income was reduced thereby; provided that there shall be
excluded from such net income (for all purposes, other than compliance with
Section 8.1(a), to the extent otherwise included therein), without
duplication, (i) the net income of any Person (other than a Consolidated
Entity) to the extent that any such income has not actually been received
by the Borrower or a Consolidated Entity in the form of dividends or
similar distributions during such period, but including, in any event, net
income of any Person who becomes a Consolidated Entity whose Acquisition is
accounted for on a "pooling of interests" basis; (ii) except to the extent
includable in the consolidated net income of the Borrower or a Consolidated
Entity pursuant to the foregoing clause (i), the net income of any Person
that accrued prior to the date that (a) such Person becomes a Consolidated
Entity or is merged into or consolidated with a Consolidated Entity or (b)
the assets of such Person are acquired by the Borrower or a Consolidated
Entity; (iii) the net income of any Consolidated Entity to the extent that
the declaration or payment of dividends or similar distributions by such
Consolidated Entity of that income is not permitted by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Consolidated
Entity during such period; (iv) any gain (or loss), together with any
related provisions for taxes on any such gain, realized during such period
by the Borrower or its Consolidated Entities upon (a) the acquisition of
any securities, or the extinguishment of any Indebtedness, of the Borrower
or its Consolidated Entities or (b) any asset sale by the referent person
or any of its Subsidiaries; (v) any extraordinary gain (or extraordinary
loss), together with any related provision for taxes or tax benefit
resulting from any such extraordinary gain or loss, realized by the
Borrower or its Consolidated Entities during such period; and (vi) in the
case of a successor to any Person by consolidation, merger or transfer of
its assets, any earnings of the successor prior to such merger,
consolidation or transfer of assets; provided, further, however, that there
shall be added back to net income non-recurring, non-cash expenses and cash
transaction costs relating to professional fees arising in conjunction with
an Acquisition provided such expenses do not exceed 10% of the Cost of
Acquisition.
"Consolidated Net Worth" of the Borrower as of any date means the
Consolidated Stockholders' Equity (including any preferred stock that is
classified as equity under GAAP, other than Disqualified Stock) of the
Borrower and its Consolidated Entities (excluding any equity adjustment for
foreign currency translation for any period
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subsequent to the Closing Date) on a consolidated basis at such date, as
determined in accordance with GAAP, less all write-ups subsequent to the
Closing Date in the book value of any asset owned by the Borrower or any of
its Consolidated Entities.
"Consolidated Stockholders' Equity" shall mean at any time as at which
the amount thereof is to be determined, the sum of the following amounts in
respect of the Borrower and the Consolidated Entities: (i) the par or
stated value of all Capital Stock of the Borrower, (ii) retained earnings,
(iii) additional paid in capital, (iv) capital surplus and (v) earned
surplus minus treasury stock.
"Consolidated Tangible Net Worth" means, as of any date on which the
amount thereof is to be determined, Consolidated Stockholders' Equity minus
(without duplication of deductions in respect of items already deducted in
arriving at surplus and retained earnings) (i) all reserves (other than
contingency reserves not allocated to any particular purpose), including
without limitation reserves for depreciation, depletion, amortization,
obsolescence, deferred income taxes, insurance and inventory valuation and
(ii) the net book value of all assets which would be treated as intangible
assets, such as (without limitation) goodwill (whether representing the
excess of cost over book value of assets acquired or otherwise),
capitalized expenses, unamortized debt discount and expense, consignment
inventory rights, patents, trademarks, trade names, copyrights, franchises
and licenses, all as determined on a consolidated basis in accordance with
GAAP applied on a Consistent Basis.
"Consolidated Total Assets" means, as of any date on which the amount
thereof is to be determined, the net book value of all assets of the
Borrower and its Consolidated Entities as determined on a consolidated
basis in accordance with GAAP applied on a Consistent Basis.
"Consolidated Total Capital" means, as of any date on which the amount
thereof is to be determined, the sum of Consolidated Indebtedness plus
Consolidated Stockholders' Equity of the Borrower and its Consolidated
Entities.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 2.9 hereof of a Eurodollar Rate Loan of
one Type as a Eurodollar Rate Loan of the same Type from one Interest
Period to the next Interest Period.
"Convert", "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 2.9 or Article IV of one Type of Loan into another Type
of Loan.
"Contract Provider" means any Person who provides professional health
care services under or pursuant to any contract with the Borrower or any
Subsidiary.
"Controlled Partnership" shall mean a general partnership of which the
Borrower or a Subsidiary is a general partner (but not including Alabama
World Football), or a limited partnership whose general partners include
the Borrower or a Subsidiary (but not
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including Vanderbilt), or a limited liability company whose members include
the Borrower or a Subsidiary or another Controlled Partnership, which
partnership, whether general or limited, or limited liability company has
assets with a value in excess of $2,000.00, and with respect to which
partnership or limited liability company the Borrower or a Subsidiary is
entitled to receive not less than 50% of any distributions of cash made to
the partners or members thereof, other than any preferred cash distribution
arrangement in existence at the Closing Date or approved by the Required
Lenders in writing, or which is otherwise a Consolidated Entity.
"Cost of Acquisition" means, in respect of any Acquisition, the sum of
(i) the amount of cash paid by the Borrower and its Consolidated Entities
in connection with such Acquisition, (ii) the Fair Market Value of all
Capital Stock or other ownership interests of the Borrower or any
Consolidated Entity issued or given in connection with such Acquisition,
(iii) the amount (determined by using the face amount or the amount payable
at maturity, whichever is greater) of all Indebtedness incurred, assumed or
acquired in connection with such Acquisition, (iv) all additional purchase
price amounts in the form of earnouts and other contingent obligations that
should be recorded on the financial statements of the Borrower and its
Consolidated Entities in connection with Generally Accepted Accounting
Principles, (v) all amounts paid in respect of covenants not to compete,
consulting agreements and other affiliated contracts in connection with
such Acquisition and (vi) the aggregate fair market value of all other
consideration given by the Borrower and its Consolidated Entities in
connection with such Acquisition.
"Default" means any event or condition which, with the giving or
receipt of notice or lapse of time or both, would constitute an Event of
Default.
"Default Rate" means (i) with respect to each Fixed Rate Loan, until
the end of the Interest Period applicable thereto, a rate of two percent
(2%) plus the Fixed Rate applicable to such Loan, and thereafter at a rate
of interest per annum which shall be two percent (2%) plus the Base Rate,
(ii) with respect to Base Rate Loans, at a rate of interest per annum which
shall be two percent (2%) plus the Base Rate and (iii) in any case, the
maximum rate permitted by applicable law, if lower.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the option of the holder thereof, in whole or in part,
on or prior to the Revolving Credit Termination Date.
"Dollars" and the symbol "$" mean dollars constituting legal tender
for the payment of public and private debts in the United States of
America.
"Eligible Assignee" means (i) a Lender, (ii) an affiliate of a Lender,
and (iii) any other Person approved by the Agent and, unless an Event of
Default has occurred and is continuing at the time any assignment is
effected in accordance with Section 11.1, the
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Borrower, such approval not to be unreasonably withheld or delayed by the
Borrower or the Agent and such approval to be deemed given by the Borrower
if no objection is received by the assigning Lender and the Agent from the
Borrower within two Business Days after written 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.
"Employee Benefit Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (i) is maintained for employees of
the Borrower or any of its ERISA Affiliates or is assumed by the Borrower
or any of its ERISA Affiliates in connection with any Acquisition or (ii)
has at any time been maintained for the employees of the Borrower or any
current or former ERISA Affiliate.
"Environmental Laws" means any federal, state or local statute, law,
ordinance, code, rule, regulation, order, decree, permit or license
regulating, relating to, or imposing liability or standards of conduct
concerning any environmental matters or conditions, environmental
protection or conservation, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended;
the Superfund Amendments and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act, as amended; the Toxic Substances Control
Act, as amended; the Clean Air Act, as amended; the Clean Water Act, as
amended; together with all regulations promulgated thereunder, and any
other "Superfund" or "Superlien" law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute and all rules and
regulations promulgated thereunder.
"ERISA Affiliate", as applied to the Borrower, means any Person or
trade or business which is a member of a group which is under common
control with the Borrower, who together with the Borrower, is treated as a
single employer within the meaning of Section 414(b) and (c) of the Code.
"Eurodollar Auction" shall mean a solicitation of Competitive Bid
Quotes setting forth Eurodollar Margins based on the Interbank Offered Rate
pursuant to Section 2.2.
"Eurodollar Margin" shall have the meaning assigned to such term in
Section 2.2(c)(ii)(C).
"Eurodollar Market Loans" shall mean Competitive Bid Loans interest
rates on which are determined on the basis of the Interbank Offered Rate
pursuant to a Eurodollar Auction.
"Eurodollar Market Rate" means the interest rate per annum calculated
according to the following formula:
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Eurodollar = Interbank Offered Rate + Eurodollar
--------------------------- -
Market Rate 1- Reserve Requirement Margin
"Eurodollar Rate" means the interest rate per annum calculated
according to the following formula:
Eurodollar = Interbank Offered Rate + Applicable
---------------------------
Rate 1- Reserve Requirement Margin
"Eurodollar Rate Loan" means a Loan for which the rate of interest is
determined by reference to the Eurodollar Rate.
"Event of Default" means any of the occurrences set forth as such in
Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the regulations promulgated thereunder.
"Executive Officer" means any Person who from time to time holds the
offices with Borrower listed on Exhibit J.
"Existing Letters of Credit" means those Letters of Credit described
on Schedule 1.1 previously issued by the Issuing Bank under the Prior
Agreement.
"Facility" shall mean an inpatient or outpatient rehabilitation
facility, certified outpatient rehabilitation facility, skilled nursing
facility, specialty medical center, specialty orthopedic hospital or acute
care hospital, subacute inpatient facility, transitional living center,
medical office building, outpatient surgery center or outpatient diagnostic
center with all buildings and improvements associated therewith, that is
owned or leased, in whole or part, by the Borrower or a Subsidiary or any
Controlled Partnership.
"Fair Market Value" shall mean, with respect to any capital stock or
other ownership interests issued or given by the Borrower or any
Consolidated Entity in connection with an Acquisition, (i) in the case of
capital stock that is Common Stock and such Common Stock is then designated
as a national market system security by the National Association of
Securities Dealers, Inc. ("NASD") or is listed on a national securities
exchange, the average of the last reported bid and ask quotations or prices
reported thereon for Common Stock or such other value as may be ascribed to
the Common Stock in a definitive merger or acquisition agreement provided
such value is determined according to customary methods for like
transactions and is approved (to the extent required by Borrower's charter
or bylaws) by the Borrower's Board of Directors or (ii) in the case of
capital stock that is not Common Stock or in the event that Common Stock is
not so designated by NASD or listed on such national exchange, or in the
case of any other ownership interests, the determination of the fair market
value thereof in good faith by a majority of disinterested members of the
board of directors of the Borrower or such Consolidated Entity, in each
case effective as of the close of business on the Business Day immediately
preceding the closing date of such Acquisition.
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"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100th 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 Agent (in its individual capacity)
on such day on such transaction as determined by the Agent.
"Fiscal Year" means, with respect to the Borrower, the twelve month
fiscal period of the Borrower commencing on January 1 of each calendar year
and ending on December 31 of each calendar year.
"Fixed Rate" shall mean the Absolute Rate or the Eurodollar Market
Rate or the Eurodollar Rate, as the case may be.
"Fixed Rate Loan" means a Loan for which the rate of interest is
determined by reference to the Fixed Rate.
"Four-Quarter Period" means a period of four full consecutive fiscal
quarters of the Borrower and its Subsidiaries, taken together as one
accounting period.
"GAAP" or "Generally Accepted Accounting Principles" means generally
accepted accounting principles, being those principles of accounting set
forth in pronouncements of the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants or which have other
substantial authoritative support and are applicable in the circumstances
as of the date of a report.
"Governmental Authority" shall mean any Federal, state, municipal,
national or other governmental department, commission, board, bureau,
court, agency or instrumentality or political subdivision thereof or any
entity or officer exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to any government or any
court, in each case whether associated with a state of the United States,
the United States, or a foreign entity or government.
"Guaranteed Obligations" of any Person shall mean all guaranties
(including guaranties of guaranties and guaranties of dividends and other
monetary obligations), endorsements, assumptions and other contingent
obligations with respect to, or to purchase or to otherwise pay or acquire,
Indebtedness of others; provided, however, that such term shall not include
obligations under leases and other contracts initially incurred directly by
another Person and subsequently directly assumed by the Person in question,
but such term shall include obligations that, if the same had been
initially incurred directly by the Person in question, would have
constituted Guaranteed Obligations.
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"Hazardous Material" means and includes any pollutant, contaminant, or
hazardous, toxic or dangerous waste, substance or material (including
without limitation petroleum products, asbestos-containing materials, and
lead), the generation, handling, storage, disposal, treatment or emission
of which is subject to any Environmental Law.
"HCFA" means the United States Health Care Financing Administration
and any successor thereto.
"Headquarters Lease" means the Lease Agreement between HEALTHSOUTH
Holdings, Inc., as Lessee, and First Security Bank of Utah, N.A., as
Lessor, dated as of November 16, 1995 providing for the lease to
HEALTHSOUTH Holdings, Inc. of the land and improvements thereon located on
the property described therein, as such Lease Agreement may be amended,
modified, supplemented or restated in its entirety from time to time.
"Headquarters Obligations" means all of the Holder Advances and Loans,
as each such term is defined in the Participation Agreement.
"Indebtedness" of any Person at any date means, without duplication:
(i) all indebtedness of such Person for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only
to a portion thereof); (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments; (iii) all
obligations (contingent or otherwise) of such Person in respect of letters
of credit or other similar instruments (or reimbursement obligations with
respect thereto); (iv) all obligations of such Person with respect to Rate
Hedging Obligations (other than those that fix the interest rate on
variable rate indebtedness otherwise permitted hereunder or that protect
the Borrower and or its Consolidated Entities against changes in foreign
exchange rates); (v) obligations of such Person to pay the deferred and
unpaid purchase price of property or services, except trade payables and
accrued expenses incurred in the ordinary course of business; (vi) all
Capitalized Lease Obligations of such Person; (vii) all indebtedness of
others secured by a Lien on any assets of such Person, whether or not such
indebtedness is assumed by such Person; (viii) all Guaranteed Obligations;
(ix) the Headquarters Obligations; and (x) all obligations of a like nature
to those described in clauses (i) through (ix) above of a partnership of
which such Person is a general partner or of a limited liability company of
which such Person is a member. The amount of Indebtedness of any Person at
any date shall be the outstanding balance at such date of all unconditional
obligations as described above, the maximum liability of such Person for
any such contingent obligations at such date and, in the case of clause
(vii), the amount of the Indebtedness secured.
"Interbank Offered Rate" means, for any Eurodollar Rate Loan or
Eurodollar Market Loan for the Interest Period applicable thereto, the rate
per annum (rounded upwards, if necessary, to the nearest one-one hundredth
(1/100) of one percent) appearing on Dow Jones 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
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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
Rate Loan or Eurodollar Market Loan for the Interest Period applicable
thereto, 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 Period" shall mean:
(i) with respect to any Eurodollar Rate Loan, each period commencing
on the date such Eurodollar Rate Loan is made or Converted from a Loan of
another Type or the last day of the next preceding Interest Period for such
Loan and ending on the numerically corresponding day in the first, second,
third or sixth calendar month thereafter, as the Borrower may select as
provided in Section 2.3, except that each Interest Period that commences on
the last Business Day of a calendar month (or on any day for which there is
no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Business Day of the appropriate subsequent
calendar month;
(ii) with respect to any Absolute Rate Loan, the period commencing on
the date such Absolute Rate Loan is made and ending on any Business Day up
to 180 days thereafter, as the Borrower may select as provided in Section
2.2(b); and
(iii) with respect to any Eurodollar Market Loan, the period
commencing on the date such Eurodollar Market Loan is made and ending on
the numerically corresponding day in the first, second, third or sixth
calendar month thereafter, as the Borrower may select as provided in
Section 2.2(b), except that each Interest Period that commences on the last
Business Day of a calendar month (or any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar
month.
Notwithstanding the foregoing: (i) if any Interest Period for any
Competitive Bid Loan would otherwise end after the Revolving Credit
Termination Date, such Interest Period shall end on the Revolving Credit
Termination Date; (ii) if any Interest Period for any Eurodollar Rate Loan
would otherwise end after the Revolving Credit Termination Date, such
Interest Period shall end on the Revolving Credit Termination Date; (iii)
each Interest Period that would otherwise end on a day which is not a
Business Day shall end on the next succeeding Business Day (or, in the case
of an Interest Period for a Eurodollar Rate Loan or a Eurodollar Market
Loan, if such next succeeding Business Day falls in the next succeeding
calendar month, on the next preceding Business Day); and (iv)
notwithstanding clauses (i), (ii) and (iii) above, no Interest Period for
any Loan (other than an Absolute Rate Loan) shall have a duration of less
than one month (in the case of
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a Eurodollar Rate Loan or a Eurodollar Market Loan) and, if the Interest
Period for any Eurodollar Rate Loan or Eurodollar Market Loan would
otherwise be a shorter period, such Loan shall not be available hereunder
for such period.
"Interest Rate Selection Notice" means the written notice delivered by
an Authorized Representative in connection with the election of a
subsequent Interest Period for any Eurodollar Rate Loan or the Conversion
of any Eurodollar Rate Loan into a Base Rate Loan or the Conversion of any
Base Rate Loan into a Eurodollar Rate Loan, in the form of Exhibit E.
"Issuing Bank" means NationsBank as issuer of Letters of Credit under
Article III.
"LC Account Agreement" means the LC Account Agreement dated as of the
date hereof between the Borrower and the Issuing Bank, as amended, modified
or supplemented from time to time.
"Letter of Credit" means a standby letter of credit issued by the
Issuing Bank pursuant to Article III for the account of the Borrower in
favor of a Person advancing credit or securing an obligation on behalf of
the Borrower, including the Existing Letters of Credit.
"Letter of Credit Commitment" means, with respect to each Lender, the
obligation of such Lender to acquire Participations in respect of Letters
of Credit and Reimbursement Obligations up to an aggregate amount at any
one time outstanding equal to such Lender's Applicable Commitment
Percentage of the Total Letter of Credit Commitment as the same may be
increased or decreased from time to time pursuant to this Agreement.
"Letter of Credit Facility" means the facility described in Article
III providing for the issuance by the Issuing Bank for the account of the
Borrower of Letters of Credit in an aggregate stated amount at any time
outstanding not exceeding, together with all Reimbursement Obligations, the
Total Letter of Credit Commitment.
"Letter of Credit Outstandings" means, as of any date of
determination, the aggregate amount remaining undrawn under all Letters of
Credit plus Reimbursement Obligations then outstanding.
"Lien" means any interest in property securing any obligation owed to,
or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including but
not limited to the lien or security interest arising from a mortgage,
encumbrance, pledge, security agreement, conditional sale or trust receipt
or a lease, consignment or bailment for security purposes. For the purposes
of this Agreement, the Borrower and any Subsidiary shall be deemed to be
the owner of any property which it has acquired or holds subject to a
conditional sale agreement, financing lease, or other arrangement pursuant
to which title to the property has been retained by or vested in some other
Person for security purposes.
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"Loan" or "Loans" means any Syndicated Loans, Competitive Bid Loans,
Reimbursement Obligations and Letter of Credit Outstandings and all
extensions and renewals thereof.
"Loan Documents" means this Agreement, the Notes, the LC Account
Agreement, the Applications and Agreements for Letter of Credit and all
other instruments and documents heretofore or hereafter executed or
delivered to or in favor of any Lender or the Agent in connection with the
Loans made, Letters of Credit issued and transactions contemplated under
this Agreement, as the same may be amended, supplemented or replaced from
time to time.
"Material Adverse Effect" means a material adverse effect on (i) the
business, properties, operations or condition, financial or otherwise, of
the Borrower and its Consolidated Entities, taken as a whole, (ii) the
ability of the Borrower to pay or perform its obligations, liabilities and
indebtedness under the Loan Documents as such payment or performance
becomes due in accordance with the terms thereof, or (iii) the rights,
powers and remedies of the Agent or any Lender under any Loan Document or
the validity, legality or enforceability thereof (including for purposes of
clauses (ii) and (iii) the imposition of burdensome conditions thereon).
"Material Group" shall mean, at any time, any group, whether one or
more, or combination of Consolidated Entities (a) whose assets, in the
aggregate, constitute 5% or more of the assets of the Borrower and the
Consolidated Entities on a consolidated basis or (b) whose net revenues, in
the aggregate, constitute 5% or more of the net revenues of the Borrower
and the Consolidated Entities on a consolidated basis.
"Medicaid Certification" means certification by HCFA or a state agency
or entity under contract with HCFA that a health care operation is in
compliance with all the conditions of participation set forth in the
Medicaid Regulations.
"Medicaid Provider Agreement" means an agreement entered into between
a state agency or other entity administering the Medicaid program and a
health care operation under which the health care operation agrees to
provide services for Medicaid patients in accordance with the terms of the
agreement and Medicaid Regulations.
"Medicaid Regulations" means, collectively, (i) all federal statutes
(whether set forth in Title XIX of the Social Security Act or elsewhere)
affecting the medical assistance program established by Title XIX of the
Social Security Act and any statutes succeeding thereto; (ii) all
applicable provisions of all federal rules, regulations, manuals and orders
of all Governmental Authorities promulgated pursuant to or in connection
with the statutes described in clause (i) above and all federal
administrative, reimbursement and other guidelines of all Governmental
Authorities having the force of law promulgated pursuant to or in
connection with the statutes described in clause (i) above; (iii) all state
statutes and plans for medical assistance enacted in connection with the
statutes and provisions described in clauses (i) and (ii) above; and (iv)
all applicable provisions of all
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rules, regulations, manuals and orders of all Governmental Authorities
promulgated pursuant to or in connection with the statutes described in
clause (iii) above and all state administrative, reimbursement and other
guidelines of all Governmental Authorities having the force of law
promulgated pursuant to or in connection with the statutes described in
clause (ii) above, in each case as may be amended, supplemented or
otherwise modified from time to time.
"Medicare Certification" means certification by HCFA or a state agency
or entity under contract with HCFA that a health care operation is in
compliance with all the conditions of participation set forth in the
Medicare Regulations.
"Medicare Provider Agreement" means an agreement entered into between
a state agency or other entity administering the Medicare program and a
health care operation under which the health care operation agrees to
provide services for Medicare patients in accordance with the terms of the
agreement and Medicare Regulations.
"Medicare Regulations" means, collectively, all federal statutes
(whether set forth in Title XVIII of the Social Security Act or elsewhere)
affecting the health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act and any statutes
succeeding thereto; together with all applicable provisions of all rules,
regulations, manuals and orders and administrative, reimbursement and other
guidelines having the force of law of all Governmental Authorities
(including without limitation, Health and Human Services ("HHS"), HCFA, the
Office of the Inspector General for HHS, or any Person succeeding to the
functions of any of the foregoing) promulgated pursuant to or in connection
with any of the foregoing having the force of law, as each may be amended,
supplemented or otherwise modified from time to time.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making, or is accruing an obligation to make, contributions or has made, or
been obligated to make, contributions within the preceding six (6) Fiscal
Years.
"NationsBank" means NationsBank, National Association.
"1997 10-K" means the Borrower's Annual Report on Form 10-K for the
Fiscal Year Ended December 31, 1997;
"Notes" means, collectively, the Revolving Notes and the Competitive
Bid Notes.
"Obligations" means the obligations, liabilities and Indebtedness of
the Borrower with respect to (i) the principal and interest on the Loans as
evidenced by the Notes, (ii) the Reimbursement Obligations and otherwise in
respect of the Letters of Credit, (iii) all liabilities of the Borrower to
any Lender which arise under a Swap Agreement, and (iv)
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the payment and performance of all other obligations, liabilities and
Indebtedness of the Borrower to the Lenders or the Agent hereunder, under
any one or more of the other Loan Documents or with respect to the Loans.
"Participation" means, with respect to any Lender (other than the
Issuing Bank) and a Letter of Credit, the extension of credit represented
by the participation of such Lender hereunder in the liability of the
Issuing Bank in respect of a Letter of Credit issued by the Issuing Bank in
accordance with the terms hereof.
"Participation Agreement" means the Participation Agreement dated
November 16, 1995 among HEALTHSOUTH Corporation, as Construction Agent,
HEALTHSOUTH Holdings, Inc., as Lessee, First Security Bank of Utah, N.A.,
as Trustee, the Holders identified therein, the Lenders identified therein,
and NationsBank, National Association, as Agent, as such Participation
Agreement may be amended, modified, supplemented or restated in its
entirety from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" means any employee pension benefit plan within the
meaning of Section 3(2) of ERISA, other than a Multiemployer Plan, which is
subject to the provisions of Title IV of ERISA or Section 412 of the Code
and which (i) is maintained for employees of the Borrower or any of its
ERISA Affiliates or is assumed by the Borrower or any of its ERISA
Affiliates in connection with any Acquisition or (ii) has at any time been
maintained for the employees of the Borrower or any current or former ERISA
Affiliate.
"Permitted Encumbrances" shall mean:
(1) liens for taxes, assessments and other governmental charges
that are not delinquent or that are being contested in good faith by
appropriate proceedings duly pursued;
(2) mechanic's, materialmen's, contractor's, landlord's or other
similar liens arising in the ordinary course of business, securing
obligations that are not delinquent or that are being contested in
good faith by appropriate proceedings duly pursued;
(3) restrictions, exceptions, reservations, easements,
conditions, limitations and other matters of record that do not
materially adversely affect the value or utility of the affected
property;
(4) Liens on assets securing Indebtedness the proceeds of which
are used to acquire such assets;
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(5) Liens and other matters approved in writing by the Required
Lenders; and
(6) Liens in favor of landlords, the amount secured by which
landlords' Liens, in the aggregate, would not materially adversely
affect the Borrower or a Material Group.
"Permitted Investments" shall mean:
(1) direct obligations of, or obligations the payment of which is
guaranteed by, the United States of America or an interest in any
trust or fund that invests solely in such obligations or repurchase
agreements, properly secured, with respect to such obligations.
(2) direct obligations of agencies or instrumentalities of the
United States of America having a rating of A or higher by S&P or A2
or higher by Moody's;
(3) a certificate of deposit issued by, or other interest-bearing
deposits with, a bank which is a Lender or an affiliate of a Lender,
or a bank having its principal place of business in the United States
of America and having equity capital of not less than $250,000,000;
(4) a certificate of deposit issued by, or other interest-bearing
deposits with, any other bank organized under the laws of the United
States of America or any state thereof, provided that such deposit is
either (i) insured by the Federal Deposit Insurance Corporation or
(ii) properly secured by such bank by pledging direct obligations of
the United States of America having a market value not less than the
face amount of such deposits;
(5) the capital stock of and partnership interests in, and loans
made by the Borrower to, Controlled Partnerships and Subsidiaries;
(6) prime commercial paper maturing within 270 days of the
acquisition thereof and, at the time of acquisition, having a rating
of A-1 or higher by S&P, or P-1 or higher by Moody's;
(7) eligible banker's acceptances, repurchase agreements and
tax-exempt municipal bonds having a maturity of less than one year, in
each case having a rating, or that is the full recourse obligation of
a person whose senior debt is rated, A or higher by S&P or A2 or
higher by Moody's;
(8) loans made by the Borrower or a Consolidated Entity in an
aggregate amount of $2,000,000 or less to employees of the Borrower or
of a Consolidated Entity;
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(9) loans made by the Borrower or a Controlled Partnership in an
aggregate amount of $1,000,000 or less to limited partners (or
potential limited partners) of Controlled Partnerships for the purpose
of enabling such limited partners to acquire limited partnership
interests in Controlled Partnerships, to operate their practices or to
restructure partnership interests;
(10) loans in an aggregate amount of up to $20,000,000 made by
the Borrower to the HEALTHSOUTH Employee Stock Benefit Plan;
(11) scholarship loans made by the Borrower in an aggregate
amount not exceeding $1,000,000 to individuals who meet certain
eligibility requirements as established by the Borrower from time to
time;
(12) up to 100% of the outstanding shares of stock of Caretenders
Healthcorp (formerly known as Senior Services, Inc.) provided that
aggregate costs incurred to purchase such shares shall not exceed
$12,000,000;
(13) other investments of less than $5,000,000 in the aggregate
expressly approved in writing by the Agent and investments of
$5,000,000 or greater expressly approved in writing by the Required
Lenders;
(14) any other investment having a rating of A or higher or A-1
or higher by S&P or A2 or higher or P-1 or higher by Moody's;
(15) loans to health care practitioners and other persons not to
exceed in the aggregate $5,000,000;
(16) investments in Acacia Venture Partners, HEALTHSMART,
MedPartners and Austin Medical Office Building which in the aggregate
do not exceed $5,000,000; and
(17) additional investments existing on the Closing Date and
described in Exhibit G.
"Person" means an individual, partnership, corporation, limited
liability company, trust, unincorporated organization, association, joint
venture or a government or agency or political subdivision thereof.
"Prime Rate" means the per annum rate of interest established from
time to time by NationsBank as its prime rate, which rate may not be the
lowest rate of interest charged by NationsBank to its Customers.
"Principal Office" means the office of the Agent at NationsBank,
National Association, Independence Center, 15th Floor, NC1 001-15-04,
Charlotte, North Carolina
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28255, Attention: Agency Services, or such other office and address as the
Agent may from time to time designate.
"Rate Hedging Obligations" means any and all obligations of the
Borrower or any Consolidated Entity, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired (including
all renewals, extensions and modifications thereof and substitutions
therefor), under (i) any and all agreements, devices or arrangements
designed to protect the Borrower or such Consolidated Entity from the
fluctuations of interest rates, exchange rates or forward rates applicable
to such party's assets, liabilities or exchange transactions, including,
but not limited to, Dollar- denominated or cross-currency interest rate
exchange agreements, forward currency exchange agreements, interest rate
cap or collar protection agreements, forward rate currency or interest rate
options, puts, warrants and those commonly known as interest rate "swap"
agreements; and (ii) any and all cancellations, buybacks, reversals,
terminations or assignments of any of the foregoing.
"Rating" means the rating of senior unsecured Indebtedness of the
Borrower in effect at any time which rating is made by either of Moody's or
S&P.
"Regulation D" means Regulation D of the Board as the same may be
amended or supplemented from time to time.
"Reimbursement Obligation" shall mean, at any time, the obligation of
the Borrower with respect to any Letter of Credit to reimburse the Issuing
Bank and the Lenders to the extent of their respective Participations
(including by the receipt by the Issuing Bank of proceeds of Loans pursuant
to Section 3.2) for amounts theretofore paid by the Issuing Bank pursuant
to a drawing under such Letter of Credit.
"Required Lenders" means, as of any date, Lenders on such date having
Credit Exposures (as defined below) aggregating at least 51% of the
aggregate Credit Exposures of all the Lenders on such date. For purposes of
the preceding sentence, the amount of the "Credit Exposure" of each Lender
shall be equal to the aggregate principal amount of the Loans without
regard to any Competitive Bid Loan, so long as there exists no Event of
Default, owing to such Lender plus the aggregate unutilized amounts of such
Lender's Revolving Credit Commitment plus the amount of such Lender's
Applicable Commitment Percentage of Letter of Credit Outstandings; provided
that, if any Lender shall have failed to pay to the Issuing Bank its
Applicable Commitment Percentage of any drawing under any Letter of Credit
resulting in an outstanding Reimbursement Obligation, such Lender's Credit
Exposure attributable to Letters of Credit and Reimbursement Obligations
shall be deemed to be held by the Issuing Bank for purposes of this
definition.
"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 by member banks of the
Federal Reserve System (or any successor) by member banks of the
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Federal Reserve System against "Eurocurrency liabilities" (as such term is
used in Regulation D). Without limiting the effect of the foregoing, the
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 Rate Loans. The Eurodollar Rate shall
be adjusted automatically on and as of the effective date of any change in
the Reserve Requirement.
"Restricted Payment" means (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of
Borrower or any of its Consolidated Entities (other than those payable or
distributable solely to the Borrower) now or hereafter outstanding, except
a dividend payable solely in shares of a class of stock to the holders of
that class; (b) any redemption, conversion, exchange, retirement or similar
payment, purchase or other acquisition for value, direct or indirect, of
any shares of any class of stock of the Borrower or any of its Consolidated
Entities (other than those payable or distributable solely to the Borrower)
now or hereafter outstanding; (c) any payment made to retire, or to obtain
the surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of stock of the Borrower or any of its
Consolidated Entities now or hereafter outstanding; and (d) any issuance
and sale of capital stock of any Consolidated Entity of the Borrower (or
any option, warrant or right to acquire such stock) other than to the
Borrower.
"Revolving Credit Commitment" means, with respect to each Lender, the
obligation of such Lender to make Syndicated Loans to the Borrower up to an
aggregate principal amount at any one time outstanding equal to such
Lender's Applicable Commitment Percentage of the Total Revolving Credit
Commitment.
"Revolving Credit Facility" means the facility described in Article II
providing for Loans to the Borrower by the Lenders in the aggregate
principal amount of the Total Revolving Credit Commitment.
"Revolving Credit Outstandings" means, as of any date of
determination, the aggregate principal amount of all Syndicated Loans then
outstanding.
"Revolving Credit Termination Date" means (i) the Stated Termination
Date or (ii) such earlier date of termination of Lenders' Obligations as
may be determined pursuant to Section 9.1 upon the occurrence of an Event
of Default, or (iii) such date as the Borrower may voluntarily and
permanently terminate the Revolving Credit Facility by payment in full of
all Revolving Credit Outstandings, Competitive Bid Loans and all Letter of
Credit Outstandings and cancellation of all Letters of Credit, together
with all accrued and unpaid interest and fees thereon.
"Revolving Notes" means, collectively, the promissory notes of the
Borrower evidencing Syndicated Loans executed and delivered to the Lenders
as provided in Section
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2.5, substantially in the form of Exhibit F, with appropriate insertions as
to amounts, dates and names of Lenders.
"S&P" means Standard & Poor's Rating Group, a division of The McGraw
Hill Companies.
"Single Employer Plan" means any employee pension benefit plan covered
by Title IV of ERISA in respect of which the Borrower or any Subsidiary is
an "employer" as described in Section 4001(b) of ERISA and which is not a
Multiemployer Plan.
"Solvent" means, when used with respect to any Person, that at the
time of determination:
(i) the fair value of its assets (both at fair valuation and at
present fair saleable value on an orderly basis) is in excess of the
total amount of its liabilities, including contingent obligations; and
(ii) it is then able and expects to be able to pay its debts as
they mature; and
(iii) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
"Stated Termination Date" means June 22, 2003.
"Subordinated Debt" means any unsecured Indebtedness of the Borrower
or any Consolidated Entity (other than inter-company Indebtedness) which is
subordinated in right of payment in all respects to the Obligations in a
manner reasonably acceptable to the Agent.
"Subsidiary" means any corporation or other entity in which more than
50% of its outstanding voting stock or more than 50% of all equity
interests is owned directly or indirectly by the Borrower and/or by one or
more of the Borrower's Subsidiaries.
"Swap Agreement" means one or more agreements between the Borrower and
any Person with respect to Indebtedness evidenced by any or all of the
Notes, on terms mutually acceptable to Borrower and such Person and
approved by each of the Lenders, which agreements create Rate Hedging
Obligations; provided, however, that no such approval of the Lenders shall
be required to the extent such agreements are entered into between the
Borrower and any Lender.
"Syndicated Loans" shall mean any borrowing pursuant to an Advance
provided for by Section 2.1, which may be Base Rate Loans or Eurodollar
Rate Loans.
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"Termination Event" means: (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder (unless the
notice requirement has been waived by applicable regulation); or (ii) the
withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan
during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA or was deemed such under Section 4062(e) of
ERISA; or (iii) the termination of a Pension Plan, the filing of a notice
of intent to terminate a Pension Plan or the treatment of a Pension Plan
amendment as a termination under Section 4041 of ERISA; or (iv) the
institution of proceedings to terminate a Pension Plan by the PBGC; or (v)
any other event or condition which would constitute grounds under Section
4042(a) of ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan; or (vi) the partial or complete withdrawal of
the Borrower or any ERISA Affiliate from a Multiemployer Plan; or (vii) the
imposition of a Lien pursuant to Section 412 of the Code or Section 302 of
ERISA; or (viii) any event or condition which results in the reorganization
or insolvency of a Multiemployer Plan under Section 4241 or Section 4245 of
ERISA, respectively; or (ix) any event or condition which results in the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by the PBGC of proceedings to terminate a Multiemployer Plan
under Section 4042 of ERISA.
"Total Letter of Credit Commitment" means an amount not to exceed
$75,000,000.
"Total Revolving Credit Commitment" means a principal amount equal to
$1,750,000,000, as reduced from time to time in accordance with Section
2.1(a) and Section 2.8.
"Unused Amount" shall mean with respect to each Lender, (a) the
Revolving Credit Commitment of such Lender less (b) such Lender's pro rata
share of outstanding Syndicated Loans and Letter of Credit Outstandings
less (c) the outstanding principal amount of all Competitive Bid Loans then
held by such Lender; provided that in no event shall such amount be a
negative number.
"Vanderbilt" shall mean Vanderbilt Stallworth Rehabilitation Hospital,
L.P., the partners of which are the Borrower, Vanderbilt University and
Vanderbilt Health Services.
"Voting Stock" means shares of Capital Stock issued by a corporation,
or equivalent interests in any other 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 if the right so to vote has been suspended by the happening of
such a contingency.
1.2. Rules of Interpretation.
(a) All accounting terms not specifically defined herein shall have
the meanings assigned to such terms and shall be interpreted in accordance
with GAAP applied on a Consistent Basis.
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(b) The headings, subheadings and table of contents used herein or in
any other Loan Document are solely for convenience of reference and shall
not constitute a part of any such document or affect the meaning,
construction or effect of any provision thereof.
(c) Except as otherwise expressly provided, references herein to
articles, sections, paragraphs, clauses, annexes, appendices, exhibits and
schedules are references to articles, sections, paragraphs, clauses,
annexes, appendices, exhibits and schedules in or to this Agreement.
(d) All definitions set forth herein or in any other Loan Document
shall apply to the singular as well as the plural form of such defined
term, and all references to the masculine gender shall include reference to
the feminine or neuter gender, and vice versa, as the context may require.
(e) When used herein or in any other Loan Document, words such as
"hereunder", "hereto", "hereof" and "herein" and other words of like import
shall, unless the context clearly indicates to the contrary, refer to the
whole of the applicable document and not to any particular article,
section, subsection, paragraph or clause thereof.
(f) References to "including" means including without limiting the
generality of any description preceding such term, and for purposes hereof
the rule of ejusdem generis shall not be applicable to limit a general
statement, followed by or referable to an enumeration of specific matters,
to matters similar to those specifically mentioned.
(g) All dates and times of day specified herein shall refer to such
dates and times at Charlotte, North Carolina.
(h) Each of the parties to the Loan Documents and their counsel have
reviewed and revised, or requested (or had the opportunity to request)
revisions to, the Loan Documents, and any rule of construction that
ambiguities are to be resolved against the drafting party shall be
inapplicable in the construing and interpretation of the Loan Documents and
all exhibits, schedules and appendices thereto.
(i) Any reference to an officer of the Borrower or any other Person by
reference to the title of such officer shall be deemed to refer to each
other officer of such Person, however titled, exercising the same or
substantially similar functions.
(j) All references to any agreement or document as amended, modified
or supplemented, or words of similar effect, shall mean such document or
agreement, as the case may be, as amended, modified or supplemented from
time to time only as and to the extent permitted therein and in the Loan
Documents.
1.3. Classes and Types of Loans. Loans hereunder are distinguished by
"Class" and by "Type". The "Class" of a Loan refers to whether such Loan is a
Competitive Bid Loan or a Syndicated Loan, each of which constitutes a Class.
The "Type" of a Loan refers to whether
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such Loan is a Base Rate Loan, a Eurodollar Rate Loan, an Absolute Rate Loan, or
a Eurodollar Market Loan, each of which constitutes a Type. Loans may be
identified by both Class and Type.
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ARTICLE II
The Loans
2.1. Syndicated Loans.
(a) Commitment. Subject to the terms and conditions of this Agreement,
each Lender severally agrees to make Advances to the Borrower under the
Revolving Credit Facility from time to time from the Closing Date until the
Revolving Credit Termination Date on a pro rata basis as to the total borrowing
requested by the Borrower on any day determined by such Lender's Applicable
Commitment Percentage up to but not exceeding the Revolving Credit Commitment of
such Lender, provided, however, that the Lenders will not be required and shall
have no obligation to make any such Advance (i) so long as a Default or an Event
of Default has occurred and is continuing or (ii) if the maturity of any of the
Notes has been accelerated as a result of an Event of Default; provided further,
however, that immediately after giving effect to each such Advance, the
principal amount of Revolving Credit Outstandings plus Letters of Credit
Outstandings plus outstanding Competitive Bid Loans shall not exceed the Total
Revolving Credit Commitment. Within such limits, the Borrower may borrow, repay
and reborrow under the Revolving Credit Facility on a Business Day from the
Closing Date until, but (as to borrowings and reborrowings) not including, the
Revolving Credit Termination Date; provided, however, that (y) no Loan that is a
Eurodollar Rate Loan shall be made which has an Interest Period that extends
beyond the Revolving Credit Termination Date and (z) each Loan that is a
Eurodollar Rate Loan may, subject to the provisions of Section 2.4, be repaid
only on the last day of the Interest Period with respect thereto unless such
payment is accompanied by the additional payment, if any, required by Section
4.5.
(b) Amounts. The aggregate unpaid principal amount of the Revolving
Credit Outstandings plus Letter of Credit Outstandings plus outstanding
Competitive Bid Loans shall not exceed the Total Revolving Credit Commitment
and, in the event there shall be outstanding any such excess, the Borrower shall
immediately make such payments and prepayments as shall be necessary to comply
with this restriction. Each Syndicated Loan hereunder, other than Base Rate
Refunding Loans, and each Conversion under Section 2.9, shall be in an amount of
at least $5,000,000, and, if greater than $5,000,000, an integral multiple of
$1,000,000.
(c) Advances. (i) An Authorized Representative shall give the Agent
(1) at least three (3) Business Days' irrevocable written notice by
telefacsimile transmission of a Borrowing Notice or Interest Rate Selection
Notice (as applicable) with appropriate insertions, effective upon receipt, of
each Syndicated Loan that is a Eurodollar Rate Loan (whether representing an
additional borrowing hereunder or the Conversion of a borrowing hereunder from
Base Rate Loans to Eurodollar Rate Loans) prior to 10:30 A.M. and (2)
irrevocable written notice by telefacsimile transmission of a Borrowing Notice
or Interest Rate Selection Notice (as applicable) with appropriate insertions,
effective upon receipt, of each Syndicated Loan (other than Base Rate Refunding
Loans to the extent the same are effected without notice pursuant to Section
2.1(c)(iv)) that is a Base Rate Loan (whether representing an additional
borrowing hereunder or the Conversion of borrowing hereunder from Eurodollar
Rate Loans to Base Rate
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Loans) prior to 10:30 A.M. on the day of such proposed Syndicated Loan. Each
such notice shall specify the amount of the borrowing, the Type of Loan (Base
Rate or Eurodollar Rate), the date of borrowing and, if a Eurodollar Rate Loan,
the Interest Period to be used in the computation of interest. Notice of receipt
of such Borrowing Notice or Interest Rate Selection Notice, as the case may be,
together with the amount of each Lender's portion of an Advance requested
thereunder, shall be provided by the Agent to each Lender by telefacsimile
transmission with reasonable promptness, but (provided the Agent shall have
received such notice by 10:30 A.M.) not later than 1:00 P.M. on the same day as
the Agent's receipt of such notice.
(ii) Not later than 2:00 P.M. on the date specified for each borrowing
under this Section 2.1, each Lender shall, pursuant to the terms and subject to
the conditions of this Agreement, make the amount of the Loan or Loans to be
made by it on such day available by wire transfer to the Agent in the amount of
its pro rata share, determined according to such Lender's Applicable Commitment
Percentage of the Syndicated Loan or Syndicated Loans to be made on such day.
Such wire transfer shall be directed to the Agent at the Principal Office and
shall be in the form of Dollars constituting immediately available funds. The
amount so received by the Agent shall, subject to the terms and conditions of
this Agreement, be made available to the Borrower by delivery of the proceeds
thereof as shall be directed in the applicable Borrowing Notice by the
Authorized Representative and reasonably acceptable to the Agent.
(iii) The Borrower shall have the option to elect the duration of the
initial and any subsequent Interest Periods and to Convert the Syndicated Loans
in accordance with Section 2.9. Eurodollar Rate Loans and Base Rate Loans may be
outstanding at the same time, provided, however, there shall not be outstanding
at any one time Loans (whether Syndicated Loans or Competitive Bid Loans) having
more than eight (8) different Interest Periods. If the Agent does not receive a
Borrowing Notice or an Interest Rate Selection Notice giving notice of election
of the duration of an Interest Period or of Conversion of any Loan to or
Continuation of a Loan as a Eurodollar Rate Loan by the time prescribed by
Section 2.1(c) or 2.9, the Borrower shall be deemed to have elected to Convert
such Loan to (or Continue such Loan as) a Base Rate Loan until the Borrower
notifies the Agent in accordance with Section 2.9.
(iv) Notwithstanding the foregoing, if a drawing is made under any Letter
of Credit, such drawing is honored by the Issuing Bank prior to the Revolving
Credit Termination Date, and the Borrower shall not immediately fully reimburse
the Issuing Bank in respect of such drawing, (A) provided that the conditions to
making a Syndicated Loan as herein provided shall then be satisfied, the
Reimbursement Obligation arising from such drawing shall be paid to the Issuing
Bank by the Agent without the requirement of notice to or from the Borrower from
immediately available funds which shall be advanced as a Base Rate Refunding
Loan by each Lender under the Revolving Credit Facility in an amount equal to
such Lender's Applicable Commitment Percentage of such Reimbursement Obligation,
and (B) if the conditions to making a Loan as herein provided shall not then be
satisfied, each of the Lenders shall fund by payment to the Agent (for the
benefit of the Issuing Bank) in immediately available funds the purchase from
the Issuing Bank of their respective Participations in the related Reimbursement
Obligation based on their respective Applicable Commitment Percentages. If a
drawing is presented under any Letter of Credit in accordance with the terms
thereof and the Borrower shall not immediately reimburse
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the Issuing Bank in respect thereof, then notice of such drawing or payment
shall be provided promptly by the Issuing Bank to the Agent and the Agent shall
provide notice to each Lender by telephone or telefacsimile transmission. If
notice to the Lenders of a drawing under any Letter of Credit is given by the
Agent at or before 12:00 noon on any Business Day, each Lender shall, pursuant
to the conditions specified in this Section 2.1(c)(iv), either make a Base Rate
Refunding Loan or fund the purchase of its Participation in the amount of such
Lender's Applicable Commitment Percentage of such drawing or payment and shall
pay such amount to the Agent for the account of the Issuing Bank at the
Principal Office in Dollars and in immediately available funds before 2:30 P.M.
on the same Business Day. If notice to the Lenders of a drawing under a Letter
of Credit is given by the Agent after 12:00 noon on any Business Day, each
Lender shall, pursuant to the conditions specified in this Section 2.1(c)(iv),
either make a Base Rate Refunding Loan or fund the purchase of its Participation
in the amount of such Lender's Applicable Commitment Percentage of such drawing
or payment and shall pay such amount to the Agent for the account of the Issuing
Bank at the Principal Office in Dollars and in immediately available funds
before 12:00 noon on the next following Business Day. Any such Base Rate
Refunding Loan shall be advanced as, and shall Continue as, a Base Rate Loan
unless and until the Borrower Converts such Base Rate Loan in accordance with
the terms of Section 2.9.
2.2. Competitive Bid Loans.
(a) In addition to borrowings of Syndicated Loans, at any time prior
to the Revolving Credit Termination Date, the Borrower may, as set forth in
this Section 2.2, request the Lenders to make offers to make Competitive
Bid Loans to the Borrower in Dollars. The Lenders may, but shall have no
obligation to, make such offers and the Borrower may, but shall have no
obligation to, accept any such offers in the manner set forth in this
Section 2.2. Competitive Bid Loans may be Eurodollar Market Loans or
Absolute Rate Loans (each a "Type" of Competitive Bid Loan), provided that:
(i) the aggregate amount of outstanding Competitive Bid Loans
shall not exceed the Total Revolving Credit Commitment less the sum of
the principal amount of Revolving Credit Outstandings and Letter of
Credit Outstandings;
(ii) there may be no more than eight (8) different Interest
Periods for both Syndicated Loans and Competitive Bid Loans
outstanding at the same time (for which purpose Interest Periods
described in different lettered clauses of the definition of the term
"Interest Period" shall be deemed to be different periods even if they
are coterminous);
(iii) the aggregate amount of outstanding Competitive Bid Loans
of a Lender shall not exceed at any time an amount equal to such
Lender's Revolving Credit Commitment;
(iv) the aggregate principal amount of all Competitive Bid Loans,
together with the sum of (1) Revolving Credit Outstandings and (2)
Letter of
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Credit Outstandings shall not exceed the Total Revolving Credit
Commitment at such time; and
(v) no Competitive Bid Loan shall have a maturity date subsequent
to the Revolving Credit Termination Date.
(b) When the Borrower wishes to request offers to make Competitive Bid
Loans, it shall give the Agent (which shall promptly notify the Lenders)
notice (a "Competitive Bid Quote Request") to be received no later than
11:00 a.m. on (x) the fourth Business Day prior to the date of borrowing
proposed therein, in the case of a Eurodollar Auction or (y) the Business
Day next preceding the date of borrowing proposed therein, in the case of
an Absolute Rate Auction (or, in any such case, such other time and date as
the Borrower and the Agent, with the consent of the Required Lenders, may
agree). The Borrower may request offers to make Competitive Bid Loans for
up to three (3) different Interest Periods in a single notice (for which
purpose Interest Periods in different lettered clauses of the definition of
the term "Interest Period" shall be deemed to be different Interest Periods
even if they are coterminous); provided that the request for each separate
Interest Period shall be deemed to be a separate Competitive Bid Quote
Request for a separate borrowing (a "Competitive Bid Borrowing") and there
shall not be outstanding at any one time more than four (4) Competitive Bid
Borrowings. Each such Competitive Bid Quote Request shall be substantially
in the form of Exhibit K and shall specify as to each Competitive Bid
Borrowing:
(i) the proposed date of such Competitive Bid Borrowing, which
shall be a Business Day;
(ii) the aggregate amount of such Competitive Bid Borrowing,
which shall be at least $10,000,000 (or a larger integral multiple of
$1,000,000) but shall not cause the limits specified in Section 2.2(a)
to be violated;
(iii) the duration of the Interest Period applicable thereto;
(iv) whether the Competitive Bid Quotes requested for a
particular Interest Period are seeking quotes for Eurodollar Market
Loans or Absolute Rate Loans; and
(v) if the Competitive Bid Quotes requested are seeking Absolute
Rate Loans, the date on which the Competitive Bid Quotes are to be
submitted if it is before the proposed date of Borrowing (the date on
which such Competitive Bid Quotes are to be submitted is called the
"Quotation Date").
Except as otherwise provided in this Section 2.2(b), no Competitive Bid
Quote Request shall be given within five (5) Business Days (or such other
number of days as the Borrower and the Agent, with the consent of the
Required Lenders, may agree) of any other Competitive Bid Quote Request.
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(c) (i) Each Lender may submit one or more Competitive Bid
Quotes, each containing an offer to make a Competitive Bid Loan in
response to any Competitive Bid Quote Request; provided that, if the
Borrower's request under Section 2.2(b) specified more than one
Interest Period, such Lender may make a single submission containing
one or more Competitive Bid Quotes for each such Interest Period. Each
Competitive Bid Quote must be submitted to the Agent not later than
(x) 2:00 p.m. on the fourth Business Day prior to the proposed date of
borrowing, in the case of a Eurodollar Auction or (y) 10:00 a.m. on
the Quotation Date, in the case of an Absolute Rate Auction (or, in
any such case, such other time and date as the Borrower and the Agent,
with the consent of the Required Lenders, may agree); provided that
any Competitive Bid Quote may be submitted by NationsBank (or its
Applicable Lending Office) only if NationsBank (or such Applicable
Lending Office) notifies the Borrower of the terms of the offer
contained therein not later than (x) 1:00 p.m. on the fourth Business
Day prior to the proposed date of borrowing, in the case of a
Eurodollar Auction or (y) 9:45 a.m. on the Quotation Date, in the case
of an Absolute Rate Action. Subject to Article IV, Article VI and
Article IX, any Competitive Bid Quote so made shall be irrevocable
except with the consent of the Agent given on the instructions of the
Borrower.
(ii) Each Competitive Bid Quote shall be substantially in the
form of Exhibit L and shall specify:
(A) the proposed date of borrowing and the Interest Period
therefor;
(B) the principal amount of the Competitive Bid Loan for
which each such Competitive Bid Quote is being made, which
principal amount shall be at least $5,000,000 (or a larger
integral multiple of $1,000,000); provided that the aggregate
principal amount of all Competitive Bid Loans for which a Lender
submits Competitive Bid Quotes (x) may not exceed the Revolving
Credit Commitment of such Lender and (y) may not exceed the
principal amount of the Competitive Bid Borrowing for a
particular Interest Period for which offers were requested;
(C) in the case of a Eurodollar Auction, the margin above or
below the applicable Interbank Offered Rate adjusted for any
Reserve Requirement (the "Eurodollar Margin") offered for each
such Competitive Bid Loan, expressed as a percentage (rounded
upwards, if necessary, to the nearest 1/10,000th of 1%) to be
added to or subtracted from the applicable Interbank Offered Rate
as so adjusted;
(D) in the case of an Absolute Rate Auction, the rate of
interest per annum (rounded upwards, if necessary, to the nearest
1/10,000th of 1%) offered for each such Competitive Bid Loan (the
"Absolute Rate"); and
(E) the identity of the quoting Lender.
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Unless otherwise agreed by the Agent and the Borrower, no Competitive Bid
Quote shall contain qualifying, conditional or similar language or propose
terms other than or in addition to those set forth in the applicable
Competitive Bid Quote Request and, in particular, no Competitive Bid Quote
may be conditioned upon acceptance by the Borrower of all (or some
specified minimum) of the principal amount of the Competitive Bid Loan for
which such Competitive Bid Quote is being made.
(d) The Agent shall (x) in the case of a Eurodollar Auction, by 4:00
p.m. on the day a Competitive Bid Quote is submitted or (y) in the case of
an Absolute Rate Auction, as promptly as practicable after the Competitive
Bid Quote is submitted (but in any event not later than 10:30 a.m. on the
Quotation Date), notify the Borrower of the terms (i) of any Competitive
Bid Quote submitted by a Lender that is in accordance with Section 2.2(c)
and (ii) of any Competitive Bid Quote that amends, modifies or is otherwise
inconsistent with a previous Competitive Bid Quote submitted by such Lender
with respect to the same Competitive Bid Quote Request. Any such subsequent
Competitive Bid Quote shall be disregarded by the Agent unless such
subsequent Competitive Bid Quote is submitted solely to correct a manifest
error in such former Competitive Bid Quote. The Agent's notice to the
Borrower shall specify (A) the aggregate principal amount of the
Competitive Bid Borrowing for which Competitive bid Quotes have been
received and (B) the respective principal amounts and Eurodollar Margins or
Absolute Rates, as the case may be, so offered by each Lender (identifying
the Lender that made such Competitive Bid Quote).
(e) Not later than 11:00 a.m. on (x) the third Business Day prior to
the proposed date of borrowing, in the case of a Eurodollar Auction or (y)
the Quotation Date, in the case of an Absolute Rate Auction (or, in any
such case, such other time and date as the Borrower and the Agent, with the
consent of the Required Lenders, may agree), the Borrower shall notify the
Agent of its acceptance or nonacceptance of the offers so notified to it
pursuant to Section 2.2(d) (and the failure of the Borrower to give such
notice by such time shall constitute nonacceptance) and the Agent shall
promptly notify each affected Lender. In the case of acceptance, such
notice shall specify the aggregate principal amount of offers for each
Interest Period that are accepted. The Borrower may accept any Competitive
Bid Quote in whole or in part (provided that any Competitive Bid Quote
accepted in part shall be at least $5,000,000 or a larger integral multiple
of $1,000,000); provided that:
(i) the aggregate principal amount of each Competitive Bid
Borrowing may not exceed the applicable amount set forth in the
related Competitive Bid Request;
(ii) the aggregate principal amount of each Competitive Bid
Borrowing shall be at least $10,000,000 (or a larger integral multiple
of $1,000,000) but shall not cause the limits specified in Section
2.2(a) to be violated;
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(iii) acceptance of offers may be made only in ascending order of
Eurodollar Margins or Absolute Rates, as the case may be, in each case
beginning with the lowest rate so offered; provided, however, that the
Borrower, in its sole discretion, may accept other than the lowest
rate where acceptance of the lowest rate will result in (x) the
outstanding Loans of a Lender or Lenders offering the lowest rate
exceeding such Lender's Revolving Credit Commitment and (y) an
increase in the Applicable Unused Fee payable by the Borrower under
Section 2.10.
(iv) the Borrower may not accept any offer where the Agent has
correctly advised the Borrower that such offer fails to comply with
Section 2.2(c)(ii) or otherwise fails to comply with the requirements
of this Agreement (including, without limitation, Section 2.2(a)).
If offers are made by two or more Lenders with the same Eurodollar Margins
or Absolute Rates, as the case may be, for a greater aggregate principal
amount than the amount in respect of which offers are permitted to be
accepted for the related Interest Period after the acceptance of all
offers, if any, of all lower Eurodollar Margins or Absolute Rates, as the
case may be, offered by any Lender for such related Interest Period, the
principal amount of Competitive Bid Loans in respect of which such offers
are accepted shall be allocated by the Borrower among such Lenders as
nearly as possible (in amounts of at least $5,000,000 or larger integral
multiples of $1,000,000) in proportion to the aggregate principal amount of
such offers. Determinations by the Borrower of the amounts of Competitive
Bid Loans and the lowest bid after adjustment as provided in Section
2.2(e)(iii) shall be conclusive in the absence of manifest error.
(f) Any Lender whose offer to make any Competitive Bid Loan has been
accepted shall, not later than 1:00 p.m. on the date specified for the
making of such Loan, make the amount of such Loan available to the Agent at
the Principal Office in Dollars and in immediately available funds, for
account of the Borrower. The amount so received by the Agent shall, subject
to the terms and conditions of this Agreement, be made available to the
Borrower on such date by depositing the same, in Dollars and in immediately
available funds, in an account of the Borrower maintained at the Principal
Office.
2.3. Payment of Interest. (a) The Borrower shall pay interest to the Agent
for the account of each Lender on the outstanding and unpaid principal amount of
each Loan made by such Lender for the period commencing on the date of such Loan
until such Loan shall be due at the then applicable Base Rate for Base Rate
Loans or applicable Fixed Rate for Fixed Rate Loans, as designated by the
Authorized Representative pursuant to Section 2.1 or 2.2; provided, however,
that if any amount payable under this Agreement shall not be paid when due (at
maturity, by acceleration or otherwise, subject to the provisions of Section
9.1(a)), all amounts outstanding hereunder shall bear interest thereafter at the
Default Rate.
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(b) Interest on each Loan shall be computed on an Actual/360 Basis.
Interest on each Loan shall be paid (i) quarterly in arrears on the last
Business Day of each March, June, September and December, commencing September
30, 1998, for each Base Rate Loan, (ii) on the last day of the applicable
Interest Period for each Fixed Rate Loan and, if such Interest Period extends
for more than three (3) months, at intervals of three (3) months after the first
day of such Interest Period, and (iii) upon the Revolving Credit Termination
Date. Interest payable at the Default Rate shall be payable on demand.
2.4. Payment of Principal. The principal amount of each Syndicated Loan
shall be due and payable to the Agent for the benefit of each Lender in full on
the Stated Termination Date, or earlier as specifically provided herein. The
principal amount of each Competitive Bid Loan shall be due and payable to the
Agent for the benefit of the applicable Lender in full on the last day of the
Interest Period applicable thereto, or earlier as specifically provided herein.
The principal amount of any Base Rate Loan may be prepaid in whole or in part at
any time. The principal amount of any Fixed Rate Loan may be prepaid only at the
end of the applicable Interest Period unless the Borrower shall pay to the Agent
for the account of the Lenders the additional amount, if any, required under
Section 4.5. All prepayments of Syndicated Loans made by the Borrower shall be
in the amount of $5,000,000 or such greater amount which is an integral multiple
of $1 ,000,000, or the amount equal to all Revolving Credit Outstandings, as the
case may be, or such other amount as necessary to comply with Section 2.1(b) or
Section 2.9.
2.5. Non-Conforming Payments. (a) Each payment of principal (including any
prepayment) and payment of interest and fees, and any other amount required to
be paid to the Lenders with respect to the Loans, shall be made to the Agent at
the Principal Office, for the account of each Lender, in Dollars and in
immediately available funds, without setoff, deduction or counterclaim before
10:00 A.M. on the date such payment is due. The 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, if any, of the Borrower with the Agent.
The Agent shall promptly notify the Borrower of any such debit; however, failure
to give such notice shall not affect the validity of such debit.
(b) The Agent shall deem any payment made by or on behalf of the Borrower
hereunder that is not made both in Dollars and in immediately available funds
and prior to 10:00 A.M. to be a non-conforming payment. Any such payment shall
not be deemed to be received by the Agent until the later of (i) the time such
funds become available funds and (ii) the next Business Day. Any non-conforming
payment may constitute or become a Default or Event of Default. Interest shall
continue to accrue on any principal as to which a non-conforming payment is made
until the later of (x) the date such funds become available funds or (y) the
next Business Day at the Default Rate from the date such amount was due and
payable.
(c) In the event that any payment hereunder or under the Notes becomes due
and payable on a day other than a Business Day, then such due date shall be
extended to the next succeeding Business Day unless provided otherwise under the
definition of "Interest Period"; provided that interest shall continue to accrue
during the period of any such extension and
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provided further, that in no event shall any such due date be extended beyond
the Stated Termination Date.
2.6. Notes. (a) Syndicated Loans made by each Lender shall be evidenced by
the Revolving Note payable to the order of such Lender in the respective amount
of its Applicable Commitment Percentage of the Total Revolving Credit
Commitment, which Revolving Note shall be dated the Closing Date or a later date
pursuant to an Assignment and Acceptance and shall be duly completed, executed
and delivered by the Borrower.
(b) Competitive Bid Loans made by each Lender shall be evidenced by the
Competitive Bid Note payable to the order of such Lender and representing the
obligation of the Borrower to pay the Lesser of (i) the aggregate amount of the
Revolving Credit Commitment of such Lender and (ii) the unpaid principal amount
of all Competitive Bid Loans made by such Lender, with interest on the unpaid
principal amount from time to time outstanding of each Competitive Bid Loan
evidenced thereby as prescribed in Section 2.3. Each Lender is hereby authorized
to record the date and amount of each Competitive Bid Loan made by such Lender,
the maturity date thereof, the date and amount of each payment of principal
thereof and the interest rate with respect thereto on the schedule attached to
and constituting part of its Competitive Bid Note, and any such recordation
shall constitute prima face evidence of the accuracy of the information so
recorded; provided, however, that the failure to make any such recordation shall
not affect the obligations of the Borrower hereunder or under any Competitive
Bid Note. Each Competitive Bid Note shall be dated the Closing Date or a later
date pursuant to an Assignment and Acceptance and shall be duly completed,
executed and delivered by the Borrower.
2.7. Pro Rata Payments. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the Syndicated Loans and
the fees described in Section 2.10 and the first sentence of Section 3.3(a)
shall be made to the Agent for the account of the Lenders pro rata based on
their Applicable Commitment Percentages, (b) all payments to be made by the
Borrower for the account of each of the Lenders on account of principal,
interest and fees, shall be made without diminution, setoff, recoupment or
counterclaim, and (c) the Agent will promptly distribute to the Lenders in
immediately available funds payments received in fully collected, immediately
available funds from the Borrower.
2.8. Reductions. The Borrower shall, by irrevocable notice from an
Authorized Representative, have the right from time to time but not more
frequently than once each calendar month, upon not less than three (3) Business
Days' written notice to the Agent, effective upon receipt, to permanently reduce
the Total Revolving Credit Commitment. The Agent shall give each Lender, within
one (1) Business Day of receipt of such notice, telefacsimile notice, or
telephonic notice (confirmed in writing), of such reduction. Each such reduction
shall be in the aggregate amount of $10,000,000 or such greater amount which is
in an integral multiple of $1,000,000, or the entire remaining Total Revolving
Credit Commitment, and shall permanently reduce the Total Revolving Credit
Commitment. Each reduction of the Total Revolving Credit Commitment shall be
accompanied by payment of Syndicated Loans and Competitive Bid Loans to the
extent that the principal amount of Revolving Credit Outstandings plus Letter of
Credit
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Outstandings plus outstanding Competitive Bid Loans exceeds the Total Revolving
Credit Commitment after giving effect to such reduction, together with accrued
and unpaid interest on the amounts prepaid. If any such reduction shall result
in the payment of any Fixed Rate Loan other than on the last day of the Interest
Period of such Fixed Rate Loan such prepayment shall be accompanied by amounts
due, if any, under Section 4.5.
2.9. Conversions and Elections of Subsequent Interest Periods. Subject to
the limitations set forth below and in Article IV, the Borrower may:
(a) upon delivery, effective upon receipt, of a properly completed
Interest Rate Selection Notice to the Agent on or before 10:30 A.M. on any
Business Day, Convert all or a part of Eurodollar Rate Loans to Base Rate Loans
on the last day of the Interest Period for such Eurodollar Rate Loans; and
(b) provided that no Default or Event of Default shall have occurred
and be continuing upon delivery, effective upon receipt, of a properly completed
Interest Rate Selection Notice to the Agent on or before 10:30 A.M. three (3)
Business Days prior to the date of such election or Conversion:
(i) elect a subsequent Interest Period for all or a portion of
Eurodollar Rate Loans to begin on the last day of the then current
Interest Period for such Eurodollar Rate Loans; and
(ii) Convert Base Rate Loans to Eurodollar Rate Loans on any
Business Day.
Each election and Conversion pursuant to this Section 2.9 shall be subject
to the limitations on Eurodollar Rate Loans set forth in the definition of
"Interest Period" herein and in Sections 2.1 and 2.4 and Article IV. The Agent
shall give written notice to each Lender of such notice of election or
Conversion prior to 3:00 P.M. on the day such notice of election or Conversion
is received. All such Continuations or Conversions of Loans shall be effected
pro rata based on the Applicable Commitment Percentages of the Lenders.
2.10. Unused Fees.
(a) For the period beginning on the Closing Date and ending on the
Revolving Credit Termination Date, the Borrower agrees to pay to the Agent, for
the benefit of each Lender, an unused fee equal to the Applicable Unused Fee
multiplied by the average daily Unused Amount of such Lender. Such fees shall be
due in arrears on the last Business Day of each March, June, September and
December commencing September 30, 1998 to and on the Revolving Credit
Termination Date.
(b) Notwithstanding the foregoing, so long as any Lender fails to make
available any portion of its Revolving Credit Commitment when requested, such
Lender shall not be entitled to receive payment of its pro rata share of such
fees until such Lender shall make available such
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portion. All fees payable pursuant to this Section 2.10 shall be calculated on
an Actual/360 Basis.
2.11. Deficiency Advances. No Lender shall be responsible for any default
of any other Lender in respect of such other Lender's obligation to make any
Loan or fund its purchase of any Participation hereunder nor shall the Revolving
Credit Commitment of any Lender hereunder be increased as a result of such
default of any other Lender. Without limiting the generality of the foregoing,
in the event any Lender shall fail to advance funds to the Borrower under the
Revolving Credit Facility as herein provided, the Agent may in its discretion,
but shall not be obligated to, advance under the Note in its favor as a Lender
all or any portion of such amount or amounts (each, a "deficiency advance") and
shall thereafter be entitled to payments of principal of and interest on such
deficiency advance in the same manner and at the same interest rate or rates to
which such other Lender would have been entitled had it made such advance under
its Note; provided that, upon payment to the Agent from such other Lender of the
entire outstanding amount of each such deficiency advance, together with accrued
and unpaid interest thereon, from the most recent date or dates interest was
paid to the Agent by the Borrower on each Loan comprising such deficiency
advance at the interest rate per annum for overnight borrowing by the Agent from
the Federal Reserve Bank of Richmond, Virginia, then such payment shall be
credited against the applicable Note of the Agent in full payment of such
deficiency advance and the Borrower shall be deemed to have borrowed the amount
of such deficiency advance from such other Lender as of the most recent date or
dates, as the case may be, upon which any payments of interest were made by the
Borrower thereon.
2.12. Use of Proceeds. The proceeds of the Loans made pursuant to this
Agreement shall be used by the Borrower to repay existing indebtedness and for
general corporate purposes, including working capital needs, capital
expenditures and permitted Acquisitions.
2.13. Increase and Decrease in Amounts. The amount of the Total Revolving
Credit Commitment which shall be available to the Borrower as Advances shall be
reduced by the aggregate amount of Letter of Credit Outstandings.
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ARTICLE III
Letters of Credit
3.1. Letters of Credit. The Issuing Bank agrees, subject to the terms and
conditions of this Agreement, upon request of the Borrower to issue from time to
time for the account of the Borrower Letters of Credit upon delivery to the
Issuing Bank of an Application and Agreement for Letter of Credit relating
thereto in form and content acceptable to the Issuing Bank; provided, that (i)
the Letter of Credit Outstandings shall not exceed the Total Letter of Credit
Commitment, (ii) no Letter of Credit shall be issued so long as a Default or an
Event of Default has occurred or is continuing or if the applicable conditions
set forth in Article V shall not have been satisfied, and (iii) no Letter of
Credit shall be issued if, after giving effect thereto, Letter of Credit
Outstandings plus the aggregate principal amount of Revolving Credit
Outstandings and outstanding Competitive Bid Loans shall exceed the Total
Revolving Credit Commitment. No Letter of Credit shall have an expiry date
(including all rights of the Borrower or any beneficiary named in such Letter of
Credit to require renewal) or payment date occurring later than the fifth
Business Day prior to the Revolving Credit Termination Date.
3.2. Reimbursement.
(a) The Borrower hereby unconditionally agrees to pay to the Issuing
Bank immediately on demand at the Principal Office all amounts required to pay
all drafts drawn or purporting to be drawn under the Letters of Credit and all
reasonable expenses incurred by the Issuing Bank in connection with the Letters
of Credit, and in any event and without demand to place in possession of the
Issuing Bank (which shall include Advances under the Revolving Credit Facility
if permitted by Section 2.1(c)) sufficient funds to pay all debts and
liabilities arising in respect of any Letter of Credit. The Issuing Bank agrees
to give the Borrower prompt notice of any request for a draw under a Letter of
Credit. The Issuing Bank may charge any account the Borrower may have with it
for any and all amounts the Issuing Bank pays under a Letter of Credit, plus
charges and reasonable expenses as from time to time agreed to by the Issuing
Bank and the Borrower; provided that to the extent permitted by Section
2.1(c)(iv), amounts shall be paid pursuant to Advances under the Revolving
Credit Facility. The Borrower agrees to pay the Issuing Bank interest on any
Reimbursement Obligations not paid when due hereunder at the Default Rate.
(b) In accordance with the provisions of Section 2.1(c), the Issuing
Bank shall notify the Agent of any drawing under any Letter of Credit promptly
following the receipt by the Issuing Bank of such drawing.
(c) Each Lender (other than the Issuing Bank) shall automatically
acquire on the date of issuance thereof a Participation in the liability of the
Issuing Bank in respect of each Letter of Credit in an amount equal to such
Lender's Applicable Commitment Percentage of such liability, and to the extent
that the Borrower is obligated to pay the Issuing Bank under Section 3.2(a),
each Lender (other than the Issuing Bank) thereby shall absolutely,
unconditionally and irrevocably assume, and shall be unconditionally obligated
to pay to the Issuing Bank as
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hereinafter described, its Applicable Commitment Percentage of the liability of
the Issuing Bank under such Letter of Credit.
(i) Each Lender (including the Issuing Bank in its capacity as a
Lender) shall, subject to the terms and conditions of Article II, pay
to the Agent for the account of the Issuing Bank at the Principal
Office in Dollars and in immediately available funds, an amount equal
to its Applicable Commitment Percentage of any drawing under a Letter
of Credit, such funds to be provided in the manner described in
Section 2.1(c)(iv).
(ii) Simultaneously with the making of each payment by a Lender
to the Issuing Bank pursuant to Section 2.1(c)(iv)(B), such Lender
shall, automatically and without any further action on the part of the
Issuing Bank or such Lender, acquire a Participation in an amount
equal to such payment (excluding the portion thereof constituting
interest accrued prior to the date such Lender made its payment) in
the related Reimbursement Obligation of the Borrower. The
Reimbursement Obligations of the Borrower shall be immediately due and
payable whether by Advances made in accordance with Section 2.1(c)(iv)
or otherwise.
(iii) Each Lender's obligation to make payment to the Agent for
the account of the Issuing Bank pursuant to Section 2.1(c)(iv) and
this Section 3.2(c), and the right of the Issuing Bank to receive the
same, shall be absolute and unconditional, shall not be affected by
any circumstance whatsoever and shall be made without any offset,
abatement, withholding or reduction whatsoever. If any Lender is
obligated to pay but does not pay amounts to the Agent for the account
of the Issuing Bank in full upon such request as required by Section
2.1(c)(iv) or this Section 3.2(c), such Lender shall, on demand, pay
to the Agent for the account of the Issuing Bank interest on the
unpaid amount for each day during the period commencing on the date of
notice given to such Lender pursuant to Section 2.1(c) until such
Lender pays such amount to the Agent for the account of the Issuing
Bank in full at the interest rate per annum for overnight borrowing by
the Agent from the Federal Reserve Bank of Richmond, Virginia.
(iv) In the event the Lenders have purchased Participations in
any Reimbursement Obligation as set forth in clause (ii) above, then
at any time payment (in fully collected, immediately available funds)
of such Reimbursement Obligation, in whole or in part, is received by
the Issuing Bank from the Borrower, the Issuing Bank shall promptly
pay to each Lender an amount equal to its Applicable Commitment
Percentage of such payment from the Borrower.
(d) Promptly following the end of each calendar quarter, the Issuing
Bank shall deliver to the Agent and the Agent shall deliver to each Lender a
notice describing the aggregate undrawn amount of all Letters of Credit at the
end of such quarter. The Agent shall promptly notify each Lender of the issuance
of a Letter of Credit.
(e) The issuance by the Issuing Bank of each Letter of Credit shall,
in addition to the conditions precedent set forth in Article V, be subject to
the conditions that such Letter of Credit be in such form and contain such terms
as shall be reasonably satisfactory to the Issuing
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Bank consistent with the then current practices and procedures of the Issuing
Bank with respect to similar letters of credit, and the Borrower shall have
executed and delivered such other instruments and agreements relating to such
Letters of Credit as the Issuing Bank shall have reasonably requested consistent
with such practices and procedures and shall not be in conflict with any of the
express terms herein contained. All Letters of Credit shall be issued pursuant
to and subject to the Uniform Customs and Practice for Documentary Credits, 1993
revision, International Chamber of Commerce Publication No. 500 and all
subsequent amendments and revisions thereto.
(f) The Borrower agrees that the Issuing Bank may, in its sole
discretion, accept or pay, as complying with the terms of any Letter of Credit,
any drafts or other documents otherwise in order which may be signed or issued
by an administrator, executor, trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, liquidator, receiver, attorney in fact or
other legal representative of a party who is authorized under such Letter of
Credit to draw or issue any drafts or other documents.
(g) Without limiting the generality of the provisions of Section
11.12, the Borrower hereby agrees to indemnify and hold harmless the Issuing
Bank, each other Lender and the Agent from and against any and all claims and
damages, losses, liabilities, reasonable costs and expenses which the Issuing
Bank, such other Lender or the Agent may incur (or which may be claimed against
the Issuing Bank, such other Lender or the Agent) by any Person by reason of or
in connection with the issuance or transfer of or payment or failure to pay
under any Letter of Credit; provided that the Borrower shall not be required to
indemnify the Issuing Bank, any other Lender or the Agent for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the
extent, (i) caused by the willful misconduct or negligence of the party to be
indemnified or (ii) in the case of the Issuing Bank, caused by the failure of
the Issuing Bank to pay under any Letter of Credit after the presentation to it
of a request for payment strictly complying with the terms and conditions of
such Letter of Credit, unless such payment is prohibited by any law, regulation,
court order or decree. The indemnification and hold harmless provisions of this
Section 3.2(g) shall survive repayment of the Obligations, occurrence of the
Revolving Credit Termination Date and expiration or termination of this
Agreement.
(h) Without limiting the Borrower's rights as set forth in Section
3.2(g), the obligation of the Borrower to immediately reimburse the Issuing Bank
for drawings made under Letters of Credit and to repay Loans made under Section
2.1(c) and the Issuing Bank's and each Lender's right to receive such payment
shall be absolute, unconditional and irrevocable, and such obligations of the
Borrower shall be performed strictly in accordance with the terms of this
Agreement and such Letters of Credit and the related Applications and Agreement
for any Letter of Credit, under all circumstances whatsoever, including the
following circumstances:
(i) any lack of validity or enforceability of any Letter of
Credit, the obligation supported by any Letter of Credit or any other
agreement or instrument relating thereto (collectively, the "Related
LC Documents");
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(ii) any amendment or waiver of or any consent to or departure
from all or any of the Related LC Documents;
(iii) the existence of any claim, setoff, defense (other than the
defense of payment in accordance with the terms of this Agreement) or
other rights which the Borrower may have at any time against any
beneficiary or any transferee of a Letter of Credit (or any persons or
entities for whom any such beneficiary or any such transferee may be
acting), the Agent, the Lenders or any other Person, whether in
connection with the Loan Documents, the Related LC Documents or any
unrelated transaction;
(iv) any breach of contract or other dispute between the Borrower
and any beneficiary or any transferee of a Letter of Credit (or any
persons or entities for whom such beneficiary or any such transferee
may be acting), the Agent, the Lenders or any other Person;
(v) any draft, statement or any other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;
(vi) any delay, extension of time, renewal, compromise or other
indulgence or modification granted or agreed to by the Agent or the
requisite number of Lenders, with or without notice to or approval by
the Borrower in respect of any of Borrower's Obligations under this
Agreement; or
(vii) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing;
provided, however, that nothing in this Section 3.2(h) shall give the Issuing
Bank any right to reimbursement for drawings made under a Letter of Credit
otherwise than pursuant to a request for payment strictly complying with the
terms and conditions of such Letter of Credit unless the Borrower has
specifically waived such strict compliance in writing.
3.3. Letter of Credit Facility Fees. (a) The Borrower shall pay to the
Agent, for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, a fee on the aggregate amount available to be drawn on
each outstanding Letter of Credit at a rate equal to the Applicable Margin. In
addition, the Borrower agrees to pay to the Agent for the benefit of the Issuing
Bank an issuance fee equal to one-eighth of one percent (1/8%) per annum times
the amount of outstanding Letters of Credit. Such fees shall be due with respect
to each Letter of Credit quarterly in arrears on the last Business Day of each
March, June, September and December, the first such payment to be made on June
30, 1998. The fees described in this Section 3.3 shall be calculated on an
Actual/360 Basis.
(b) The Borrower acknowledges that the Issuing Bank as issuer of each
Letter of Credit will be required by applicable rules and regulations of the
Board to maintain reserves for its liability to honor draws made pursuant to a
Letter of Credit notwithstanding the obligation of
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the Lenders for a Participation in such liability. The Borrower agrees to
promptly reimburse the Issuing Bank for all additional costs which it may
hereafter incur solely by reason of its acting as issuer of the Letters of
Credit and its being required to reserve for such liability, it being understood
by the Borrower that other interest and fees payable under this Agreement do not
include compensation of the Issuing Bank for such reserves. The Issuing Bank
shall furnish to the Borrower at the time of its demand for payment of such
additional costs, the computation of such additional cost which shall be
conclusive absent manifest error, provided that such computations are made on a
reasonable basis.
3.4. Administrative Fees. The Borrower shall pay to the Issuing Bank such
administrative fee and other fees, if any, in connection with the Letters of
Credit in such amounts and at such times as the Issuing Bank and the Borrower
shall agree from time to time.
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ARTICLE IV
Change in Circumstances
4.1. Increased Cost and Reduced Return.
(a) 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 Fixed Rate
Loans, its Note, or its obligation to make Fixed Rate Loans, or change
the basis of taxation of any amounts payable to such Lender (or its
Applicable Lending Office) under this Agreement or its Note in respect
of any Fixed Rate Loans (other than 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
Reserve Requirement utilized in the determination of the Fixed 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 Revolving Credit
Commitment of such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable Lending
Office) or on the London interbank market any other condition
affecting this Agreement or its Note 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 Fixed Rate Loans or to reduce any sum received or receivable by
such Lender (or its Applicable Lending Office) under this Agreement or its Note
with respect to any Fixed Rate 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; provided that no Lender will be entitled to any
compensation for any such increased cost or reduction if demand for payment
thereof is made by such Lender more than 180 days after the occurrence of the
circumstances giving rise to such claim. If any Lender requests compensation by
the Borrower under this Section 4.1(a), the Borrower may, by notice to such
Lender (with a copy to the Agent), suspend the obligation of such Lender to make
or Continue Loans of the Type with respect to which such compensation is
requested, or to Convert Loans of any other Type into Loans of such Type, until
the event or condition giving rise to such request ceases to be in effect (in
which case the provisions of Section 4.4 shall be
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applicable); provided that such suspension shall not affect the right of such
Lender to receive the compensation so requested.
(b) If, after the date hereof, any Lender shall have determined that
the adoption of any applicable law, rule, or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or 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 the capital of such
Lender or any corporation controlling such Lender as a consequence of such
Lender's obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction.
(c) Each Lender shall promptly notify the Borrower and the 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 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 reasonable
judgment of such Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section shall furnish to the Borrower and the 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 that such Lender uses for its customers that are similarly
situated to the Borrower.
4.2. Limitation on Types of Loans. If on or prior to the first day of any
Interest Period for any Fixed Rate Loan:
(a) the Agent reasonably 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 Fixed Rate
for such Interest Period; or
(b) the Required Lenders reasonably determine (which determination
shall be conclusive) and notify the Agent that the Fixed Rate will not
adequately and fairly reflect the cost to the Lenders of funding Fixed Rate
Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type, or to Convert Loans
of any other Type into Loans of such Type and the Borrower shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Loans of the
affected Type, either prepay such Loans or Convert such Loans into another Type
of Loan in accordance with the terms of this Agreement.
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4.3. Illegality. Notwithstanding any other provision of this Agreement, in
the event that it becomes unlawful for any Lender or its Applicable Lending
Office to make, maintain, or fund Fixed Rate Loans hereunder, then such Lender
shall promptly notify the Borrower thereof and such Lender's obligation to make
or Continue Fixed Rate Loans and to Convert other Types of Loans into Fixed Rate
Loans shall be suspended until such time as such Lender may again make,
maintain, and fund Fixed Rate Loans (in which case the provisions of Section 4.4
shall be applicable).
4.4. Treatment of Affected Loans. If the obligation of any Lender to make a
Fixed Rate Loan or to Continue, or to Convert Loans of any other Type into,
Loans of a particular Type shall be suspended pursuant to Section 4.1 or 4.3
hereof (Loans of such Type being herein called "Affected Loans" and such Type
being herein called the "Affected Type"), such Lender's Affected Loans shall be
automatically Converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for Affected Loans (or, in the case of a Conversion
required by Section 4.3 hereof, on such earlier date as such Lender may specify
to the Borrower with a copy to the Agent) and, unless and until such Lender
gives notice as provided below that the circumstances specified in Section 4.1
or 4.3 hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Affected Loans have been so
Converted, all payments and prepayments of principal that would otherwise
be applied to such Lender's Affected 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 Loans of the Affected Type shall be made or Continued instead as Base
Rate Loans, and all Loans of such Lender that would otherwise be Converted
into Loans of the Affected Type shall be Converted instead into (or shall
remain as) Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 4.1 or 4.3 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this Section 4.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type 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 Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by the Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types, and Interest Periods) in accordance with their respective Revolving
Credit Commitments.
4.5. 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
(including loss of anticipated profits) incurred by it as a result of:
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(a) any payment, prepayment, or Conversion of a Fixed Rate Loan for
any reason (including, without limitation, the acceleration of the Loans
pursuant to Section 9.1) 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 Article V
to be satisfied) to borrow, Convert, Continue, or prepay an Fixed Rate Loan
on the date for such borrowing, Conversion, Continuation, or prepayment
specified in the relevant notice of borrowing, prepayment, Continuation, or
Conversion under this Agreement.
4.6. Taxes. (a) Any and all payments by the Borrower to or for the account
of any Lender or the Agent hereunder or under any other Loan 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
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 Agent (as the case may be) is organized 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 any Taxes from
or in respect of any sum payable under this Agreement or any other Loan Document
to any Lender or the Agent, (i) the sum payable shall be increased as necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 4.6) such Lender or the 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, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law, and (iv) the Borrower
shall furnish to the Agent, at its address referred to in Section 11.2, 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 Agreement or any
other Loan Document or from the execution or delivery of, or otherwise with
respect to, this Agreement or any other Loan Document (hereinafter referred to
as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and the 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 4.6) paid by such Lender or the Agent (as the case may be) and any
liability (including penalties, interest, and expenses) arising therefrom or
with respect thereto.
(d) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
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 Agent (but only so long as such Lender remains lawfully able to do so),
shall
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provide the Borrower and the 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 party which reduces the rate
of withholding tax on payments of interest or certifying that the income
receivable pursuant to this 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 (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 Agreement
or any of the other Loan Documents.
(e) For any period with respect to which a Lender has failed to provide the
Borrower and the Agent with the appropriate form pursuant to Section 4.6(d)
(unless such failure is due to a change in treaty, law, or regulation occurring
subsequent to the date on which a form originally was required to be provided),
such Lender shall not be entitled to indemnification under Section 4.6(a),
4.6(b), or 4.6(c) 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 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 4.6, 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 judgment of such Lender, is not
otherwise disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment of Taxes, the
Borrower shall furnish to the Agent the original or a certified copy of a
receipt evidencing such payment.
(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 4.6 shall survive the termination of the Revolving Credit
Commitments and the payment in full of the Notes.
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ARTICLE V
Conditions to Making Loans and Issuing Letters of Credit
5.1. Conditions of Initial Advance. This Agreement shall not become
effective until the following conditions precedent have been satisfied in the
sole judgment of the Agent:
(a) the Agent shall have received on the Closing Date, in form and
substance satisfactory to the Agent and Lenders, the following:
(i) executed originals of each of this Agreement, the Notes, the
LC Account Agreement and the other Loan Documents, together with all
schedules and exhibits thereto;
(ii) the favorable written opinion or opinions with respect to
the Loan Documents and the transactions contemplated thereby of
counsel to the Borrower dated the Closing Date, addressed to the Agent
and the Lenders and satisfactory to Smith Helms Mulliss & Moore,
L.L.P., special counsel to the Agent, substantially in the form of
Exhibit H;
(iii) resolutions of the board of directors of the Borrower
certified by its secretary or assistant secretary as of the Closing
Date, approving and adopting the Loan Documents to be executed by the
Borrower, and authorizing the execution and delivery and performance
thereof;
(iv) specimen signatures of officers of the Borrower executing
the Loan Documents on behalf of the Borrower, certified by the
secretary or assistant secretary of the Borrower;
(v) the charter documents of the Borrower certified as of a
recent date by the Secretary of State of its state of organization;
(vi) the bylaws of the Borrower certified as of the Closing Date
as true and correct by its secretary or assistant secretary;
(vii) certificates issued as of a recent date by the Secretary of
State of the jurisdiction of formation of the Borrower as to the valid
existence and good standing of the Borrower;
(viii) notice of appointment of the initial Authorized
Representative(s);
(ix) evidence of all insurance required by the Loan Documents;
(x) a certificate in the form of Exhibit I completed as of March
31, 1998;
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(xi) evidence that all fees payable by the Borrower on the
Closing Date to the Agent and the Lenders have been paid in full;
(xii) termination of the Prior Agreement and payment of the Prior
Loans;
(xiii) such other documents, instruments, certificates and
opinions as the Agent or any Lender may reasonably request on or prior
to the Closing Date in connection with the consummation of the
transactions contemplated hereby; and
(b) In the good faith judgment of the Agent and the Lenders:
(i) there shall not have occurred or become known to the Agent or
the Lenders any event, condition, situation or status since December
31, 1997 that has had or could reasonably be expected to result in a
Material Adverse Effect;
(ii) no litigation, action, suit, investigation or other
arbitral, administrative or judicial proceeding shall be pending or
threatened which could reasonably be expected to result in a Material
Adverse Effect; and
(iii) the Borrower and its Consolidated Entities shall have
received all approvals, consents and waivers, and shall have made or
given all necessary filings and notices, as shall be required to
consummate the transactions contemplated hereby without the occurrence
of any default under, conflict with or violation of (A) any applicable
law, rule, regulation, order or decree of any Governmental Authority
or arbitral authority or (B) any agreement, document or instrument to
which any of the Borrower or any Consolidated Entity is a party or by
which any of them or their properties is bound, except for such
approvals, consents, waivers, filings and notices the receipt, making
or giving of which will not have a Material Adverse Effect.
5.2. Conditions of Loans and Letters of Credit. The obligations of the
Lenders to make any Loans, and the Issuing Bank to issue Letters of Credit,
hereunder on or subsequent to the Closing Date, are subject to the satisfaction
of the following conditions:
(a) the Agent shall have received a Borrowing Notice if required by
Article II;
(b) the representations and warranties of the Borrower and the
Subsidiaries set forth in Article VI and in each of the other Loan
Documents shall be true and correct in all material respects on and as of
the date of such Advance or Letter of Credit issuance or renewal, with the
same effect as though such representations and warranties had been made on
and as of such date, except to the extent that such representations and
warranties expressly relate to an earlier date and except that the
financial statements referred to in Section 6.6(a) shall be deemed to be
those financial statements most recently delivered to the Agent and the
Lenders pursuant to Section 7.1 from the date financial statements are
delivered to the Agent and the Lenders in accordance with such Section;
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(c) in the case of the issuance of a Letter of Credit, the Borrower
shall have executed and delivered to the Issuing Bank an Application and
Agreement for the Letter of Credit in form and content acceptable to the
Issuing Bank together with such other instruments and documents as it shall
request;
(d) at the time of (and after giving effect to) each Advance or the
issuance of a Letter of Credit, no Default or Event of Default shall have
occurred and be continuing; and
(e) immediately after giving effect to:
(i) a Loan, the aggregate principal balance of all outstanding
Loans for each Lender plus such Lender's Applicable Commitment
Percentage of the aggregate amount of Letter of Credit Outstandings
shall not exceed such Lender's Revolving Credit Commitment;
(ii) a Letter of Credit or renewal thereof, the aggregate
principal balance of all outstanding Participations in Letters of
Credit and Reimbursement Obligations (or in the case of the Issuing
Bank, its remaining interest after deduction of all Participations in
Letters of Credit and Reimbursement Obligations of other Lenders) for
each Lender and in the aggregate shall not exceed, respectively, (X)
such Lender's Letter of Credit Commitment or (Y) the Total Letter of
Credit Commitment; and
(iii) a Loan or a Letter of Credit or renewal thereof, the sum of
Letter of Credit Outstandings plus the aggregate principal amount of
Revolving Credit Outstandings plus Outstanding Competitive Bid Loans
shall not exceed the Total Revolving Credit Commitment.
Each borrowing hereunder and each issuance of a Letter of Credit hereunder
shall constitute a representation and warranty by the Borrower to the effect
that the conditions set forth in clauses (b) and (d) have been satisfied as of
the date of such borrowing.
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ARTICLE VI
Representations and Warranties
The Borrower represents and warrants with respect to itself and (to the
extent expressly set forth below) its Consolidated Entities (which
representations and warranties shall survive the delivery of the documents
mentioned herein and the making of Loans and the issuance of a Letter of
Credit), that:
6.1. Organization and Authority.
(a) The Borrower and each Consolidated Entity is a corporation,
partnership or limited liability company duly organized and validly
existing under the laws of the jurisdiction of its formation;
(b) The Borrower and each Consolidated Entity (x) has the requisite
power and authority to own its properties and assets and to carry on its
business as now being conducted and as contemplated in the Loan Documents,
and (y) is qualified to do business in every jurisdiction in which failure
so to qualify would have a Material Adverse Effect;
(c) The Borrower has the power and authority to execute, deliver and
perform this Agreement and the Notes, and to borrow and obtain other
extensions of credit hereunder, and to execute, deliver and perform each of
the other Loan Documents to which it is a party; and
(d) When executed and delivered, each of the Loan Documents to which
the Borrower is a party will be the legal, valid and binding obligation or
agreement, as the case may be, of the Borrower, enforceable against the
Borrower in accordance with its terms, subject to the effect of any
applicable bankruptcy, moratorium, insolvency, reorganization or other
similar law affecting the enforceability of creditors' rights generally and
to the effect of general principles of equity (whether considered in a
proceeding at law or in equity).
6.2. Loan Documents. The execution, delivery and performance by the
Borrower of each of the Loan Documents and the credit extensions hereunder:
(a) have been duly authorized by all requisite corporate actions
(including any required shareholder approval) of the Borrower required for
the lawful execution, delivery and performance thereof;
(b) do not violate any provisions of (i) applicable law, rule or
regulation, (ii) any judgment, writ, order, determination, decree or
arbitral award of any Governmental Authority or arbitral authority binding
on the Borrower or any Subsidiary or its or any Subsidiary's properties, or
(iii) the charter documents or bylaws of the Borrower;
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(c) do not and will not be in conflict with, result in a breach of or
constitute an event of default, or an event which, with notice or lapse of
time or both, would constitute an event of default, under any contract,
indenture, agreement or other instrument or document to which Borrower or
any Consolidated Entity is a party, or by which the properties or assets of
the Borrower or any Consolidated Entity are bound; and
(d) do not and will not result in the creation or imposition of any
Lien upon any of the properties or assets of Borrower or any Subsidiary.
6.3. Solvency. The Borrower is Solvent and the Borrower and its
Consolidated Entities taken as a whole are Solvent, in each case after giving
effect to the transactions contemplated by the Loan Documents.
6.4. Subsidiaries. The Borrower has no Subsidiaries other than those
Persons listed as Subsidiaries in Schedule 6.4 and additional Subsidiaries
created or acquired after the Closing Date.
6.5. Ownership Interests. Borrower owns no interest in any Person other
than the Persons listed in Schedule 6.4, equity investments in Persons not
constituting Subsidiaries permitted under Section 8.2 and additional
Subsidiaries created or acquired after the Closing Date.
6.6. Financial Condition.
(a) The Borrower has heretofore furnished to the Agent and each Lender
an audited consolidated balance sheet of the Borrower and its Consolidated
Entities as at December 31, 1997 and the notes thereto and the related
consolidated statements of income, stockholders' equity and cash flows for
the Fiscal Year then ended as examined and certified by Ernst & Young LLP.
Except as set forth therein, such financial statements (including the notes
thereto) present fairly the financial condition of the Borrower and its
Consolidated Entities as of the end of such Fiscal Year and results of
their operations and the changes in its stockholders' equity for the Fiscal
Year, all in conformity with GAAP applied on a Consistent Basis, subject
however, in the case of unaudited interim statements to year end audit
adjustments;
(b) since December 31, 1997, there has been no material adverse change
in the condition, financial or otherwise, of the Borrower or any of its
Consolidated Entities, or in the businesses, properties, performance,
prospects or operations of the Borrower or any of its Consolidated
Subsidiaries nor have such businesses or properties been materially
adversely affected as a result of any fire, explosion, earthquake,
accident, strike, lockout, combination of workers, flood, embargo or act of
God; and
(c) neither the Borrower nor any Consolidated Entity has any material
Indebtedness, Guaranteed Obligations or other obligations or liabilities,
direct or contingent, in an aggregate amount in excess of $300,000 other
than (a) the liabilities reflected in such balance sheet and the notes
thereto, (b) $567,750,000 aggregate principal amount of the Borrower's
3.25% Convertible Subordinated Debentures due 2003, (c)
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$250,000,000 aggregate principal amount of the Borrower's 6.875% Senior
Notes due 2005 and $250,000,000 aggregate principal amount of the
Borrower's 7.0% Senior Notes due 2005, (d) Obligations arising under this
Agreement, and (e) liabilities incurred in the ordinary course of business.
6.7. Title to Properties. The Borrower and each Consolidated Entity has
good and marketable title to all its real and personal properties, subject to no
transfer restrictions or Liens of any kind, except for the transfer restrictions
and Liens permitted by this Agreement.
6.8. Taxes. The Borrower and each Consolidated Entity have filed or caused
to be filed all federal, state and local tax returns which are required to be
filed by it and, except for taxes and assessments being contested in good faith
by appropriate proceedings diligently conducted and against which reserves
reflected in the financial statements described in Section 6.6(a) and
satisfactory to the Borrower's independent certified public accountants have
been established, have paid or caused to be paid all taxes as shown on said
returns or on any assessment received by it, to the extent that such taxes have
become due.
6.9. Other Agreements. Except as disclosed in or incorporated by reference
in the 1997 10-K:
(a) neither the Borrower nor any Consolidated Entity is a party to or
subject to any judgment, order, decree, agreement, lease or instrument, or
subject to other restrictions, compliance with the terms of which
individually or in the aggregate could reasonably be likely to have a
Material Adverse Effect;
(b) neither the Borrower nor any Consolidated Entity is in default in
the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in (i) any Medicaid Provider Agreement,
Medicare Provider Agreement or other agreement or instrument to which the
Borrower or any Consolidated Entity is a party, which default has resulted
in, or if not remedied within any applicable grace period could result in,
the revocation, termination, cancellation or suspension of Medicaid
Certification or Medicare Certification of Borrower or any Consolidated
Entity which could have a Material Adverse Effect or (ii) any other
agreement or instrument to which the Borrower or any Consolidated Entity is
a party, which default has, or if not remedied within any applicable grace
period could reasonably be likely to have, a Material Adverse Effect;
(c) to the knowledge of Borrower's Executive Officers, no Contract
Provider is a party to any judgment, order, decree, agreement or
instrument, or subject to restrictions, compliance with the terms of which
could individually or in the aggregate reasonably be likely to have a
Material Adverse Effect; and
(d) to the knowledge of Borrower's Executive Officers, no Contract
Provider is in default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any Medicaid
Provider Agreement, Medicare Provider Agreement or other agreement or
instrument to which such Person is a party, which default has resulted in,
or if not remedied within any applicable grace period could
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result in, the revocation, termination, cancellation or suspension of
Medicaid Certification or Medicare Certification of such Person, which
revocation, termination, cancellation or suspension could reasonably be
likely to have a Material Adverse Effect.
6.10. Litigation. Except as disclosed in or incorporated by reference in
the 1997 10-K, there is no action, suit, investigation or proceeding at law or
in equity or by or before any governmental instrumentality or agency or arbitral
body pending or, to the knowledge of the Borrower, threatened by or against the
Borrower or any Consolidated Entity or, to the knowledge of the Borrower,
pending or threatened by or against any Contract Provider, or affecting the
Borrower or any Consolidated Entity or, to the knowledge of the Borrower, any
Contract Provider or any properties or rights of the Borrower or any
Consolidated Entity or, to the knowledge of the Borrower, any Contract Provider,
which could reasonably be likley (i) to result in the revocation, termination,
cancellation or suspension of Medicaid Certification or Medicare Certification
of such Person, which revocation, termination, cancellation or suspension could
reasonably be likely to have a Material Adverse Effect, or (ii) to have a
Material Adverse Effect.
6.11. Margin Stock. The proceeds of the borrowings and other extensions of
credit made hereunder will be used by the Borrower only for the purposes
expressly authorized herein. None of such proceeds will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin stock or for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry margin stock or for any other purpose which might
constitute any of the Loans or Letters of Credit under this Agreement a "purpose
credit" within the meaning of Regulation U or Regulation X of the Board. Neither
the Borrower nor any agent acting in its behalf has taken or will take any
action which might cause this Agreement or any of the documents or instruments
delivered pursuant hereto to violate any regulation of the Board or to violate
the Exchange Act or the Securities Act of 1933, as amended, or any state
securities laws, in each case as in effect on the date hereof.
6.12. Investment Company. Neither the Borrower nor any Consolidated Entity
is an "investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company", as such terms are defined
in the Investment Company Act of 1940, as amended (15 U.S.C. ss. 80a-1, et
seq.). The application of the proceeds of the Loans and repayment thereof by the
Borrower and the issuance of Letters of Credit and the performance by the
Borrower and any Consolidated Entity of the transactions contemplated by the
Loan Documents will not violate any provision of said Act, or any rule,
regulation or order issued by the Securities and Exchange Commission thereunder,
in each case as in effect on the date hereof.
6.13. Patents, Etc. Except as set forth on Schedule 6.13, the Borrower and
each Consolidated Entity owns or has the right to use, under valid license
agreements or otherwise, all material patents, licenses, franchises, trademarks,
trademark rights, trade names, trade name rights, trade secrets, service marks,
service mark rights and copyrights necessary to or used in the conduct of its
businesses as now conducted and as contemplated by the Loan Documents, without
known conflict by, or with, any patent, license, franchise, trademark, trade
secret, trade name, service mark, copyright or other proprietary right of, any
other Person.
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6.14. No Untrue Statement. Neither (a) this Agreement nor any other Loan
Document or certificate or document executed and delivered by or on behalf of
the Borrower or any Consolidated Entity in accordance with or pursuant to any
Loan Document nor (b) any statement, representation, or warranty provided to the
Agent or any Lender in connection with the negotiation or preparation of the
Loan Documents contains any misrepresentation or untrue statement of material
fact or omits to state a material fact necessary, in light of the circumstance
under which it was made, in order to make any such warranty, representation or
statement contained therein not misleading.
6.15. No Consents, Etc. Neither the respective businesses or properties of
the Borrower or any Consolidated Entity, nor any relationship between the
Borrower or any Consolidated Entity and any other Person, nor any circumstance
in connection with the execution, delivery and performance of the Loan Documents
and the transactions contemplated thereby, is such as to require a consent,
approval or authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person on the part of the Borrower or any
Consolidated Entity as a condition to the execution, delivery and performance
of, or consummation of the transactions contemplated by, or the validity or
enforceability of, the Loan Documents, which, if not obtained or effected, would
be reasonably likely to have a Material Adverse Effect, or if so, such consent,
approval, authorization, filing, registration or qualification has been duly
obtained or effected, as the case may be;
6.16. ERISA Requirement. (i) The execution and delivery of the Loan
Documents will not involve any prohibited transaction within the meaning of
ERISA, (ii) the Borrower and each ERISA Affiliate has fulfilled its obligations
under the minimum funding standards imposed by ERISA and each is in compliance
in all material respects with the applicable provisions of ERISA, and (iii) no
"Reportable Event," as defined in Section 4043(b) of Title IV of ERISA, has
occurred with respect to any plan maintained by the Borrower or any of its ERISA
Affiliate.
6.17. No Default. As of the date hereof, there does not exist any Default
or Event of Default.
6.18. Hazardous Materials. The Borrower and each Consolidated Entity is in
compliance with all applicable Environmental Laws in all material respects.
Neither the Borrower nor any Consolidated Entity has been notified of any
action, suit, proceeding or investigation which, and neither the Borrower nor
any Consolidated Entity is aware of any facts which, (i) calls into question, or
could reasonably be expected to call into question, compliance in all material
respects by the Borrower or any Consolidated Entity with any Environmental Laws,
(ii) which seeks, or could reasonably be expected to form the basis of a
meritorious proceeding, to suspend, revoke or terminate any material license,
permit or approval necessary for the generation, handling, storage, treatment or
disposal of any Hazardous Material, or (iii) seeks to cause, or could reasonably
be expected to form the basis of a meritorious proceeding to cause, any property
of the Borrower or any Consolidated Entity material to the operations of the
Borrower or such Consolidated Entity to be subject to any material restrictions
on ownership, use, occupancy or transferability under any Environmental Law.
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6.19. Employment Matters. (a) Except as set forth on Schedule 6.19, none of
the employees of the Borrower or any Consolidated Entity is subject to any
collective bargaining agreement and there are no strikes, work stoppages,
election or decertification petitions or proceedings, unfair labor charges,
equal opportunity proceedings, or other material labor/employee related
controversies or proceedings pending or, to the best knowledge of the Borrower,
threatened against the Borrower or any Consolidated Entity or between the
Borrower or any Consolidated Entity and any of its employees, other than
employee grievances, controversies or proceedings arising in the ordinary course
of business which could not reasonably be likely, individually or in the
aggregate, to have a Material Adverse Effect; and
(b) Except to the extent a failure to maintain compliance would not have a
Material Adverse Effect, the Borrower and each Consolidated Entity is in
compliance in all respects with all applicable laws, rules and regulations
pertaining to labor or employment matters, including without limitation those
pertaining to wages, hours, occupational safety and taxation and there is
neither pending nor threatened any litigation, administrative proceeding or, to
the knowledge of the Borrower, any investigation, in respect of such matters
which, if decided adversely, could reasonably be likely, individually or in the
aggregate, to have a Material Adverse Effect.
6.20. RICO. Neither the Borrower nor any Consolidated Entity is engaged in
or has engaged in any course of conduct that could subject any of their
respective properties to any Lien, seizure or other forfeiture under any
criminal law, racketeer influenced and corrupt organizations law, civil or
criminal, or other similar laws.
6.21. Reimbursement from Third Party Payors. The accounts receivable of the
Borrower and each Consolidated Entity and each Contract Provider have been and
will continue to be adjusted to reflect reimbursement policies of third party
payors such as Medicare, Medicaid, Blue Cross/Blue Shield, private insurance
companies, health maintenance organizations, preferred provider organizations,
alternative delivery systems, managed care systems, government contracting
agencies and other third party payors. In particular, accounts receivable
relating to such third party payors do not and shall not exceed amounts any
obligee is entitled to receive under any capitation arrangement, fee schedule,
discount formula, cost-based reimbursement or other adjustment or limitation to
its usual charges.
6.22. Year 2000 Compliance. The Borrower has (i) initiated a review and
assessment of all areas within its and each of its Consolidated Entities'
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
Consolidated Entities (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) that are material to its or any of its
Consolidated Entities' business and operations are reasonably expected on a
timely basis to be able to perform proper date-sensitive functions for all dates
before and after January 1, 2000 (that is, be "Year 2000
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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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ARTICLE VII
Affirmative Covenants
Until the Revolving Credit Termination Date and termination of this
Agreement in accordance with the terms hereof, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and where applicable will cause
each Consolidated Entity to:
7.1. Financial Statements, Reports, Etc. The Borrower shall deliver or
cause to be delivered to the Agent and each Lender:
(a) Not later than 50 days after the end of each of the first three
quarters of each Fiscal Year, a balance sheet and a statement of income of
the Borrower and its Consolidated Entities on a consolidated basis and a
statement of cash flow of the Borrower and its Consolidated Entities on a
consolidated basis for such calendar quarter and for the period beginning
on the first day of such Fiscal Year and ending on the last day of such
quarter (in sufficient detail to indicate the Borrower's and each
Consolidated Entity's compliance with the financial covenants set forth in
Section 8.1), together with statements in comparative form for the
corresponding date or period in the preceding Fiscal Year as summarized in
the Borrower's Form 10-Q for the corresponding period, and certified as to
fairness, accuracy and completeness by the chief executive officer, chief
financial officer or Treasurer of the Borrower.
(b) Not later than 100 days after the end of each Fiscal Year,
financial statements (including a balance sheet, a statement of income, a
statement of changes in shareholders' equity and a statement of cash flow)
of the Borrower and its Consolidated Entities on a consolidated basis for
such Fiscal Year (in sufficient detail to indicate the Borrower's and each
Consolidated Entity's compliance with the financial covenants set forth in
Section 8.1), together with statements in comparative form as of the end of
and for the preceding Fiscal Year as summarized in the Borrower's Form 10-K
for the corresponding period, and accompanied by an opinion of certified
public accountants acceptable to the Agent, which opinion shall state in
effect that such financial statements (A) were audited using generally
accepted auditing standards, (B) were prepared in accordance with generally
accepted accounting principles applied on a Consistent Basis, and (C)
present fairly the financial condition and results of operations of the
Borrower and its Consolidated Entities for the periods covered.
(c) Together with the financial statements required by subsections (a)
and (b) above a compliance certificate duly executed by the chief executive
officer or chief financial officer or Treasurer of the Borrower in the form
of Exhibit I ("Compliance Certificate").
(d) Contemporaneously with the distribution thereof to the Borrower's
or any Consolidated Entity's stockholders or partners or the filing thereof
with the Securities and Exchange Commission, as the case may be, copies of
all statements, reports, notices and filings distributed by the Borrower or
any Consolidated Entity to its stockholders or
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partners or filed with the Securities and Exchange Commission (including
reports on SEC Forms 10-K, 10-Q and 8-K).
(e) Promptly after the Borrower knows or has reason to know of the
occurrence of any "reportable event" under Section 4043 of ERISA applicable
to the Borrower or any ERISA Affiliate, a certificate of the president or
chief financial officer of the Borrower setting forth the details as to
such "reportable event" and the action that the Borrower or the ERISA
Affiliate has taken or will take with respect thereto, and promptly after
the filing or receiving thereof, copies of all reports and notices that the
Borrower and each Consolidated Entity files under ERISA with the Internal
Revenue Service or the PBGC or the United States Department of Labor.
(f) Promptly after the Borrower or any of its Consolidated Entities
becomes aware of the commencement thereof, notice of any investigation,
action, suit or proceeding before any Governmental Authority involving the
condemnation or taking under the power of eminent domain of any of its
property or the revocation or suspension of any permit, license,
certificate of need or other governmental requirement applicable to any
Facility.
(g) Within 10 days of the receipt by the Borrower or any of its
Consolidated Entities, copies of all material deficiency notices,
compliance orders or adverse reports issued by any Governmental Authority
or accreditation commission having jurisdiction over licensing,
accreditation or operation of a Facility or by any Governmental Authority
or private insurance company pursuant to a provider agreement, which, if
not promptly complied with or cured, could result in the suspension or
forfeiture of any license, certification or accreditation necessary in
order for such Facility to carry on its business as then conducted or the
termination of any material insurance or reimbursement program available to
such Facility.
(h) Such other information regarding any Facility or the financial
condition or operations of the Borrower or its Consolidated Entities as the
Agent shall reasonably request from time to time or at any time.
7.2. Maintain Properties. Maintain all properties necessary to its
operations in good working order and condition, make all needed repairs,
replacements and renewals to such properties, and maintain free from Liens all
trademarks, trade names, service marks, patents, copyrights, trade secrets,
know-how, and other intellectual property and proprietary information (or
adequate licenses thereto), in each case as are reasonably necessary to conduct
its business as currently conducted or as contemplated hereby, all in accordance
with customary and prudent business practices.
7.3. Existence, Qualification, Etc. Except as otherwise expressly permitted
under Section 8.4, do or cause to be done all things necessary to preserve and
keep in full force and effect its existence and all material rights and
franchises, and maintain its license or qualification to do business as a
foreign corporation and good standing in each jurisdiction in which its
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ownership or lease of property or the nature of its business makes such license
or qualification necessary.
7.4. Regulations and Taxes. Comply in all material respects with or contest
in good faith all statutes and governmental regulations and pay all taxes,
assessments, governmental charges, claims for labor, supplies, rent and any
other obligation which, if unpaid, would become a Lien against any of its
properties except liabilities being contested in good faith by appropriate
proceedings diligently conducted and against which adequate reserves acceptable
to the Borrower's independent certified public accountants have been established
unless and until any Lien resulting therefrom attaches to any of its property
and becomes enforceable by its creditors.
7.5. Insurance. At all times maintain in force, and pay all premiums and
costs related to, insurance coverages in amounts deemed by the management of the
Borrower to be sufficient in accordance with usual and customary business
practices and any other coverages required under applicable governmental
requirements. The Borrower shall deliver to the Agent annually on or before each
anniversary date of this Agreement, and at such other time or times as the Agent
may request (but not more often than monthly), a certificate of the president or
chief financial officer of the Borrower setting out in such detail as the Agent
may reasonably require a description of all insurance coverages maintained by
the Borrower and each Consolidated Entity. The Agent shall have no obligation to
give the Borrower or any Consolidated Entity notice of any notification received
by the Agent with respect to any insurance policies or take any steps to protect
the Borrower's or any Consolidated Entity's interests under such policies.
7.6. True Books. Keep true books of record and account in which full, true
and correct entries will be made of all of its dealings and transactions, and
set up on its books such reserves as may be required by GAAP with respect to
doubtful accounts and all taxes, assessments, charges, levies and claims and
with respect to its business in general, and include such reserves in interim as
well as year-end financial statements.
7.7. Right of Inspection. Permit any Person designated by the Agent to
visit and inspect any of the properties, corporate books and financial reports
of the Borrower or any Subsidiary and to discuss its affairs, finances and
accounts with its principal officers and independent certified public
accountants, all at reasonable times, at reasonable intervals and with
reasonable prior notice.
7.8. Observe all Laws. Conform to and duly observe, and cause all Contract
Providers to conform to and duly observe, in all material respects all laws,
rules and regulations and all other valid requirements of any regulatory
authority with respect to the conduct of its business, including without
limitation Titles XVIII and XIX of the Social Security Act, Medicare
Regulations, Medicaid Regulations, and all laws, rules and regulations of
Governmental Authorities pertaining to the licensing of professional and other
health care providers, except where the failure to do so could not reasonably be
likely to have a Material Adverse Effect.
7.9. Governmental Licenses. Obtain and maintain, and use reasonable effort
to cause all Contract Providers to obtain and maintain, all licenses, permits,
certifications and approvals of all applicable Governmental Authorities as are
required for the conduct of its
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business as currently conducted and herein contemplated, including without
limitation professional licenses, Medicaid Certifications and Medicare
Certifications, except where the failure to do so could not reasonably be likely
to have a Material Adverse Effect.
7.10. Covenants Extending to Other Persons. Cause each of its Consolidated
Entities to do with respect to itself, its business and its assets, each of the
things required of the Borrower in Sections 7.2 through 7.9, 7.15 and 7.16
inclusive.
7.11. Officer's Knowledge of Default. Upon any Executive Officer of the
Borrower obtaining knowledge of any Default or Event of Default or any default
or event of default under any other obligation of the Borrower or any
Consolidated Entity to any Lender, or any event, development or occurrence which
could reasonably be expected to have a Material Adverse Effect, cause such
Executive Officer or an Authorized Representative to promptly notify the Agent
of the nature thereof, the period of existence thereof, and what action the
Borrower or such Consolidated Entity proposes to take with respect thereto. The
Agent shall notify the Lenders of receipt of such notice.
7.12. Suits or Other Proceedings. Upon any Executive Officer of the
Borrower obtaining knowledge of any litigation or other proceedings being
instituted (i) against the Borrower or any Subsidiary, or any attachment, levy,
execution or other process being instituted against any assets of the Borrower
or any Subsidiary or Controlled Partnership, which if adversely determined could
reasonably be likely to have a Material Adverse Effect or (ii) against the
Borrower, any Subsidiary or any Contract Provider (but only with respect to
services provided to the Borrower or any Consolidated Entity) to suspend, revoke
or terminate any Medicaid Provider Agreement, Medicaid Certification, Medicare
Provider Agreement or Medicare Certification, which suspension, revocation or
termination could reasonably be likely to have a Material Adverse Effect, cause
such Executive Officer or an Authorized Representative to promptly deliver to
the Agent written notice thereof stating the nature and status of such
litigation, dispute, proceeding, levy, execution or other process.
7.13. Notice of Discharge of Hazardous Material or Environmental Complaint.
Promptly provide to the Agent true, accurate and complete copies of any and all
notices, complaints, orders, directives, claims, or citations received by the
Borrower or any Consolidated Entity relating to any of the following which is
likely to have a Material Adverse Effect: (a) violation or alleged violation by
the Borrower or any Consolidated Entity of any applicable Environmental Law; (b)
release or threatened release by the Borrower or any Consolidated Entity, or at
any Facility or property owned or leased or operated by the Borrower or any
Consolidated Entity, of any Hazardous Material, except where occurring legally;
or (c) liability or alleged liability of the Borrower or any Consolidated Entity
for the costs of cleaning up, removing, remediating or responding to a release
of Hazardous Materials.
7.14. Environmental Compliance. If the Borrower or any Consolidated Entity
shall receive any letter, notice, complaint, order, directive, claim or citation
from any Governmental Authority alleging that the Borrower or any Consolidated
Entity has violated any Environmental Law or is liable for the costs of cleaning
up, removing, remediating or responding to a release of Hazardous Materials
within the time period permitted by the applicable Environmental Law
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or the Governmental Authority responsible for enforcing such Environmental Law,
remove or remedy, or cause the applicable Consolidated Entity to remove or
remedy, such violation or release or satisfy such liability unless and only
during the period that the applicability of such Environmental Law, the fact of
such violation or liability or what is required to remove or remedy such
violation is being contested by the Borrower or the applicable Consolidated
Entity by appropriate proceedings diligently conducted and all reserves with
respect thereto as may be required under GAAP, if any, have been made, and no
Lien in connection therewith shall have attached to any property of the Borrower
or the applicable Consolidated Entity which shall have become enforceable
against creditors of such Person.
7.15. Continuation of Current Business. Not engage in any business other
than the business now being conducted by the Borrower (including its
Consolidated Entities) and other businesses directly related to such services.
7.16. Management Contracts. Not enter into any agreement whereby the
management, supervision or control of its business or any Facility shall be
delegated to or placed in any persons other than its governing body and
officers, the Borrower or a Consolidated Entity, except that management of the
Facility owned by Vanderbilt Stallworth Rehabilitation Hospital, L.P. is vested
in part in a Governance Committee and in part in a Subsidiary of the Borrower
pursuant to the applicable limited partnership agreement and a management
agreement.
7.17. Year 2000 Compliance. The Borrower will promptly notify the Agent in
the event the Borrower discovers or determines that any computer application
(including those of its suppliers, vendors, and customers) that is material to
its or any of its Consolidated Entities' 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.
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ARTICLE VIII
Negative Covenants
Until the Revolving Credit Termination Date and termination of this
Agreement in accordance with the terms hereof, unless the Required Lenders shall
otherwise consent in writing, the Borrower will not, nor will it permit any
Consolidated Entity to:
8.1. Financial Covenants.
(a) Minimum Net Worth. Permit Consolidated Net Worth to be less than
$2,750,000,000 plus (A) 50% of Consolidated Net Income (if positive and
including for purposes of this Section 8.1(a) only any extraordinary gain),
on an ongoing basis for each fiscal quarter beginning with the fiscal
quarter ended June 30, 1998, plus (B) the aggregate amount of all
increases, if any, in its capital accounts resulting from the issuance of
Capital Stock or conversion of debt into Capital Stock or other securities
properly classified as equity in accordance with generally accepted
accounting principles, or from the sale or other disposition of treasury
shares, from the date of this Agreement through the date of determination
plus (c) without duplication, any addition to Consolidated Stockholders'
Equity resulting from an Acquisition after the Closing Date which shall be
accounted for on a pooling-of-interests basis.
(b) Consolidated EBITDA to Consolidated Interest Expense Ratio. Permit
the ratio of Consolidated EBITDA to Consolidated Interest Expense at any
time to be less than or equal to 2.50 to 1.00.
(c) Consolidated Indebtedness to Consolidated Total Capital. Permit
the ratio of Consolidated Indebtedness to Consolidated Total Capital at any
time to equal or exceed 0.65 to 1.00.
8.2. Investments and Loans. Purchase or otherwise acquire any stock,
security, obligation or evidence of indebtedness of, make any capital
contribution to, own any equity interest in, or make any loan or advance to, any
other Person; provided, however, that the Borrower and its Consolidated Entities
may (A) continue to hold all stock of and own partnership interests in the
Persons that constitute Consolidated Entities on the Closing Date and Persons
that thereafter become Consolidated Entities as a result of Acquisitions
permitted under Section 8.8; (B) make Permitted Investments; and (C) make other
investments in an amount not exceeding 15% of Consolidated Total Assets.
8.3. Indebtedness. Permit to exist Indebtedness, howsoever evidenced, of
Subsidiaries and Controlled Partnerships (exclusive of Indebtedness to the
Borrower) in an aggregate amount at any time exceeding the greater of
$70,000,000 or 15% of Consolidated Tangible Net Worth, excluding, however,
Indebtedness of Subsidiaries and Controlled Partnerships existing as of the date
hereof and described on Schedule 8.3.
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8.4. Disposition of Assets. Sell, lease or otherwise dispose of assets in
excess of 15% of Consolidated Total Assets as at the Closing Date plus an amount
equal to 15% of assets acquired following the Closing Date.
8.5. Consolidation or Merger. Merge or consolidate with another Person
unless (i) in the case of a merger or consolidation of the Borrower, the
Borrower is the continuing or surviving entity, (ii) in the case of a merger or
consolidation involving a Consolidated Entity, the continuing or surviving
entity is majority-owned by the Borrower (with such majority ownership
constituting a controlling interest), and (iii) before and after giving effect
to the proposed merger or consolidation, no Default or Event of Default shall
exist.
8.6. Liens. Incur, create, assume or permit to exist any Lien upon any of
its accounts receivable, contract rights, chattel paper, inventory, equipment,
instruments, general intangibles or other personal or real property of any
character, whether now owned or hereafter acquired, other than (i) Liens that
constitute Permitted Encumbrances, and (ii) Liens on assets which at no time
have a book value of greater than 5% of Consolidated Total Assets.
8.7. Dividends and Distributions. Permit any Consolidated Entity to be or
become subject to any restrictions on the ability of such Consolidated Entity to
pay dividends or to make partnership distributions other than as required by
this Agreement or restrictions imposed by applicable law.
8.8. Acquisitions. Enter into any agreement to acquire any Person or
Facility unless (i) the Person or Facility to be acquired is in substantially
the same line of business presently engaged in by the Borrower or its
Consolidated Entities, and (ii) if the Cost of Acquisition exceeds $150,000,000
the Borrower shall have furnished to the Agent (A) pro forma historical
financial statements as of the end of the most recently completed Fiscal Year of
the Borrower and most recent interim fiscal quarter, if applicable, giving
effect to such Acquisition and (B) a Compliance Certificate prepared on an
historical pro forma basis giving effect to such Acquisition, which certificate
shall demonstrate that no Default or Event of Default would exist immediately
after giving effect thereto.
8.9. Restricted Payments. Make any Restricted Payment or apply or set apart
any of their assets therefor or agree to do any of the foregoing; provided,
however, the Borrower may make the Restricted Payments in any Fiscal Year (on a
non-cumulative basis, with the effect that amounts not paid in any Fiscal Year
may not be carried over for payment in a subsequent period) if immediately prior
and immediately after giving effect thereto no Default or Event of Default shall
exist or occur and be continuing.
8.10. Compliance with ERISA. With respect to any Pension Plan, Employee
Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of any Termination Event which would result
in a liability on the part of the Borrower or any ERISA Affiliate to the
PBGC which liability would have a Material Adverse Effect; or
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(b) permit the present value of all benefit liabilities under all
Pension Plans to exceed the current value of the assets of such Pension
Plans allocable to such benefit liabilities; or
(c) permit any accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the Code) with respect to any Pension Plan,
whether or not waived; or
(d) fail to make any contribution or payment to any Multiemployer Plan
which the Borrower or any ERISA Affiliate may be required to make under any
agreement relating to such Multiemployer Plan, or any law pertaining
thereto; or
(e) engage, or permit any Subsidiary or any ERISA Affiliate to engage,
in any prohibited transaction under Section 406 of ERISA or Section 4975 of
the Code for which a civil penalty pursuant to Section 502(I) of ERISA or a
tax pursuant to Section 4975 of the Code may be imposed; or
(f) permit the establishment of any Employee Benefit Plan providing
post-retirement welfare benefits or establish or amend any Employee Benefit
Plan which establishment or amendment could result in liability to the
Borrower or any ERISA Affiliate or increase the obligation of the Borrower
or any ERISA Affiliate to a Multiemployer Plan which liability or increase,
individually or together with all similar liabilities and increases, is in
excess of $5,000,000; or
(g) fail, or permit any Subsidiary or any ERISA Affiliate to fail, to
establish, maintain and operate each Employee Benefit Plan in compliance in
all material respects with the provisions of ERISA, the Code, all
applicable Foreign Benefit Laws and all other applicable laws and the
regulations and interpretations thereof.
8.11. Fiscal Year. Change its Fiscal Year (other than a change to conform
the fiscal year of a Consolidated Entity to that of the Borrower).
8.12. Dissolution, etc. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with a merger or
consolidation permitted pursuant to Section 8.5 or where the liquidation or
dissolution of a Consolidated Entity occurs in the ordinary course of business
and does not have a Material Adverse Effect.
8.13. Transactions with Affiliates. Other than transactions permitted under
Sections 8.2 and 8.5, enter into any transaction after the Closing Date,
including, without limitation, the purchase, sale, lease or exchange of
property, real or personal, or the rendering of any service, with any Affiliate
of the Borrower, except (a) that such Persons may render services to the
Borrower for compensation at the same rates generally paid by Persons engaged in
the same or similar businesses for the same or similar services, (b) that the
Borrower may render services to such Persons for compensation at the same rates
generally charged by the Borrower and (c) in either case in the ordinary course
of business and pursuant to the reasonable requirements of the
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Borrower's business consistent with past practice of the Borrower and upon fair
and reasonable terms no less favorable to the Borrower than would be obtained in
a comparable arm's-length transaction with a Person not an Affiliate;
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ARTICLE IX
Events of Default and Acceleration
9.1. Events of Default. If any one or more of the following events (herein
called "Events of Default") shall occur for any reason whatsoever (and whether
such occurrence shall be voluntary or involuntary or come about or be effected
by operation of law or pursuant to or in compliance with any judgment, decree or
order of any court or any order, rule or regulation of any Governmental
Authority), that is to say:
(a) the Borrower shall fail to pay (i) when due any principal payable
under the terms of any Note or any Reimbursement Obligation or (ii) not
later than five Business Days of the date when due any interest or fees
payable under the terms of any Note or any other amount payable under this
Agreement or any other of the other Obligations or any other amount owed to
the Agent or any of the Lenders under or in connection with the Loan
Documents; or
(b) The Borrower or any Material Group shall default in the
performance or observance of any other provision of this Agreement (other
than the provisions of Article VII and Article VIII), except as covered by
clause (a) above, and shall not cure such default within thirty days after
the first to occur of (i) the date the Agent or any Lender gives written or
telephonic notice of such default to the Borrower or (ii) the date the
Borrower otherwise has notice thereof; or
(c) the Borrower or any Material Group shall default in the observance
or performance of any provision in Article VII or Article VIII; or
(d) the Agent shall reasonably determine that any statement,
certification, representation or warranty contained herein, or in any of
the other Loan Documents or in any report, financial statement, certificate
or other instrument delivered to the Agent or any Lender by or on behalf of
the Borrower or any Consolidated Entity, was misleading or untrue in any
material respect at the time it was made or deemed made; or
(e) default shall be made (i) in the payment of any Indebtedness
exceeding $5,000,000 (other than the Obligations) of the Borrower or any
Consolidated Entity when due or (ii) in the performance, observance or
fulfillment of any term or covenant contained in any agreement or
instrument under or pursuant to which any such Indebtedness may have been
issued, created, assumed, guaranteed or secured by Borrower or any
Consolidated Entity, if the effect of such default in the performance,
observance or fulfillment is to accelerate the maturity of such
Indebtedness or to permit the holder thereof to cause such Indebtedness to
become due prior to its stated maturity, and such default shall not be
cured within 10 days after the occurrence of such default, and the amount
of the Indebtedness involved exceeds $5,000,000; or
(f) the Borrower or any Material Group shall fail to pay or admit in
writing its inability to pay its or their debts generally as they come due,
or a receiver, trustee,
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liquidator or other custodian shall be appointed for the Borrower or any
Material Group or for any of the property of the Borrower or any Material
Group or a petition in bankruptcy, or under any insolvency law, shall be
filed by or against the Borrower or any Material Group or the Borrower or
any Material Group shall apply for the benefit of, or take advantage of,
any law for relief of debtors, or enter into an arrangement or composition
with, or make an assignment for the benefit of, creditors; or
(g) final judgment for the payment of money in excess of any aggregate
of $500,000 shall be rendered against the Borrower or any Material Group,
and the same shall remain undischarged for a period of 30 days during which
execution shall not be effectively stayed; or
(h) an event of default, as therein defined, shall occur under any
other Loan Document; or
(i) any of the Notes or LC Account Agreement shall be deemed
unenforceable by a court of competent jurisdiction or shall no longer be
effective; or
(j) the Borrower or any Consolidated Entity shall, other than in the
ordinary course of business (as determined by past practices), suspend all
or any part of its operations material to the conduct of the business of
the Borrower and its Consolidated Entities, taken as a whole, for a period
of more than 60 days;
(k) the Borrower or any Consolidated Entity shall breach any of the
material terms or conditions of any agreement under which any Rate Hedging
Obligations are created and such breach shall continue beyond any grace
period, if any, relating thereto pursuant to the terms of such agreement,
or the Borrower or any Consolidated Entity shall disaffirm or seek to
disaffirm any such agreement or any of its obligations thereunder;
(l) there shall occur (i) any cancellation, revocation, suspension or
termination of any Medicare Certification, Medicare Provider Agreement,
Medicaid Certification or Medicaid Provider Agreement affecting the
Borrower, any Subsidiary or any Contract Provider, or (ii) the loss of any
other permits, licenses, authorizations, certifications or approvals from
any federal, state or local Governmental Authority or termination of any
contract with any such authority, in either case which cancellation,
revocation, suspension, termination or loss (X) in the case of any
suspension or temporary loss only, continues for a period greater than 60
days and (Y) results in the suspension or termination of operations of the
Borrower or any Subsidiary or in the failure of the Borrower or any
Subsidiaries or any Contract Provider to be eligible to participate in
Medicare or Medicaid programs or to accept assignments of rights to
reimbursement under Medicaid Regulations or Medicare Regulations, if and
only if such Person, in the ordinary course of business, participates in
the Medicare or Medicare programs or accepts assignments of rights to
reimbursement thereunder; provided that any such events described in this
Section 9.1(l) shall constitute an Event of Default only if such event
shall result either singly or in the aggregate in the termination,
cancellation, suspension or material impairment of operations
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or rights to reimbursement which produce 5% or more of the Borrower's gross
revenues (on an annualized basis); or
(m) there shall occur a Change of Control;
then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall then be continuing and shall have not been
waived,
(A) either or both of the following actions may be taken: (i) the
Agent, with the consent of the Required Lenders, may, and at the direction
of the Required Lenders shall, declare any obligation of the Lenders and
the Issuing Bank to make further Loans or to issue additional Letters of
Credit terminated, whereupon the obligation of each Lender to make further
Loans and of the Issuing Bank to issue additional Letters of Credit
hereunder shall terminate immediately, and (ii) the Agent shall at the
direction of the Required Lenders, at their option, declare by notice to
the Borrower any or all of the Obligations to be immediately due and
payable, and the same, including all interest accrued thereon and all other
obligations of the Borrower to the Agent and the Lenders, shall forthwith
become immediately due and payable without presentment, demand, protest,
notice or other formality of any kind, all of which are hereby expressly
waived, anything contained herein or in any instrument evidencing the
Obligations to the contrary notwithstanding; provided, however, that
notwithstanding the above, if there shall occur an Event of Default under
clause (f) above, then the obligation of the Lenders to make Loans and of
the Issuing Bank to issue Letters of Credit hereunder shall automatically
terminate and any and all of the Obligations shall be immediately due and
payable without the necessity of any action by the Agent or the Required
Lenders or notice to the Agent or the Lenders; and
(B) the Borrower shall, upon demand of the Agent or the Required
Lenders, deposit cash with the Agent in an amount equal to the aggregate
amount remaining undrawn under all outstanding Letters of Credit, as
collateral security for the repayment of any future drawings or payments
under such Letters of Credit, and such amounts shall be held by the Agent
pursuant to the terms of the LC Account Agreement; and
(C) the Agent and each of the Lenders shall have all of the rights and
remedies available under the Loan Documents or under any applicable law.
9.2. Agent to Act. In case any one or more Events of Default shall occur
and be continuing and not have been waived, the Agent may, and at the direction
of the Required Lenders shall, proceed to protect and enforce their rights or
remedies either by suit in equity or by action at law, or both, whether for the
specific performance of any covenant, agreement or other provision contained
herein or in any other Loan Document, or to enforce the payment of the
Obligations or any other legal or equitable right or remedy.
9.3. Cumulative Rights. No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or remedies
contained herein or in any other Loan Document, and every such right or remedy
shall be cumulative and shall be in addition to
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every other such right or remedy contained herein and therein or now or
hereafter existing at law or in equity or by statute, or otherwise.
9.4. No Waiver. No course of dealing between the Borrower and any Lender or
the Agent or any failure or delay on the part of any Lender or the Agent in
exercising any rights or remedies under any Loan Document or otherwise available
to it shall operate as a waiver of any rights or remedies and no single or
partial exercise of any rights or remedies shall operate as a waiver or preclude
the exercise of any other rights or remedies hereunder or of the same right or
remedy on a future occasion.
9.5. Allocation of Proceeds. If an Event of Default has occurred and not
been waived, and the maturity of the Notes has been accelerated pursuant to this
Article IX, all payments received by the Agent hereunder, in respect of any
principal of or interest on the Obligations or any other amounts payable by the
Borrower hereunder, shall be applied by the Agent in the following order:
(i) amounts due to the Lenders pursuant to Section 2.10 or Section
11.6;
(ii) amounts due to the Agent and the Issuing Bank pursuant to Section
10.8, Section 3.3 and Section 3.4;
(iii) payments of interest, to be applied pro rata based on the
proportion which the principal amount of outstanding Loans and
Reimbursement Obligations of each Lender bears to the total of all
outstanding Loans and Reimbursement Obligations;
(iv) payments of principal, to be applied pro rata based on the
proportion which the principal amount of outstanding Loans and
Reimbursement Obligations of each Lender bears to the total of all
outstanding Loans and Reimbursement Obligations;
(v) payment of cash amounts to the Agent pursuant to Section 9.1(B);
(vi) payments of all other amounts due under this Agreement, if any,
to be applied in accordance with each Lender's pro rata share of all such
other amounts due to the Lenders; and
(vii) any surplus remaining after application as provided for herein,
to the Borrower or otherwise as may be required by applicable law.
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ARTICLE X
The Agent
10.1. Appointment, Powers, and Immunities. Each Lender hereby irrevocably
appoints and authorizes the Agent to act as its agent under this Agreement and
the other Loan Documents with such powers and discretion as are specifically
delegated to the Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
The Agent (which term as used in this sentence and in Section 10.5 and the first
sentence of Section 10.6 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 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 in or in connection with any Loan
Document or any certificate or other document referred to or provided for in, or
received by any of them under, any Loan Document, or for the value, validity,
effectiveness, genuineness, enforceability, or sufficiency of any Loan Document,
or any other document referred to or provided for therein or for any failure by
any 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 Person or the
satisfaction of any condition or to inspect the property (including the books
and records) of any Person; (d) shall not be required to initiate or conduct any
litigation or collection proceedings under any Loan Document; and (e) shall not
be responsible for any action taken or omitted to be taken by it under or in
connection with any Loan Document, except for its own negligence or willful
misconduct. The 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. The Co-Arrangers and
Syndication Agents shall have no responsibilities under this Agreement other
than as a Lender.
10.2. Reliance by Agent. The Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or telefacsimile) 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,
independent accountants, and other experts selected by the Agent. The Agent may
deem and treat the payee of any Note as the holder thereof for all purposes
hereof unless and until the Agent receives and accepts an Assignment and
Acceptance executed in accordance with Section 11.1 hereof. As to any matters
not expressly provided for by this Agreement, the 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
Agent shall not be required to take any action that exposes the Agent to
personal liability or that is contrary to any Loan 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.
10.3. Defaults. The Agent shall not be deemed to have knowledge or notice
of the occurrence of a Default or Event of Default unless the Agent has received
written notice from
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a Lender or the Borrower specifying such Default or Event of Default and stating
that such notice is a "Notice of Default". In the event that the Agent receives
such a notice of the occurrence of a Default or Event of Default, the Agent
shall give prompt notice thereof to the Lenders. The Agent shall (subject to
Section 10.2 hereof) take such action with respect to such Default or Event of
Default as shall reasonably be directed by the Required Lenders, provided that,
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interest of the Lenders.
10.4. Rights as Lender. With respect to its Revolving Credit Commitment and
the Loans made by it, NationsBank (and any successor acting as 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 Agent, and the term "Lender" or "Lenders" shall, unless the context
otherwise indicates, include the Agent in its individual capacity. NationsBank
(and any successor acting as 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 the Borrower or any of its Subsidiaries
or affiliates as if it were not acting as Agent, and NationsBank (and any
successor acting as Agent) and its affiliates may accept fees and other
consideration from the Borrower or any of its Subsidiaries or affiliates for
services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.
10.5. Indemnification. The Lenders agree to indemnify the Agent (to the
extent not reimbursed under Section 11.12 hereof, but without limiting the
obligations of the Borrower under such Section) ratably in accordance with their
respective Revolving Credit Commitments, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, reasonable
costs and expenses (including attorneys' fees), or disbursements of any kind and
nature whatsoever that may be imposed on, incurred by or asserted against the
Agent (including by any Lender) in any way relating to or arising out of any
Loan Document or the transactions contemplated thereby or any action taken or
omitted by the Agent under any Loan 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 Agent promptly
upon demand for its ratable share of any costs or expenses payable by the
Borrower under Section 11.6, to the extent that the Agent is not promptly
reimbursed for such costs and expenses by the Borrower. The agreements contained
in this Section shall survive payment in full of the Loans and all other amounts
payable under this Agreement.
10.6.Non-Reliance on Agent and Other Lenders. Each Lender agrees that it
has, independently and without reliance on the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Borrower and its Subsidiaries and decision to enter
into this Agreement and that it will, independently and without reliance upon
the 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 Loan Documents. Except for
notices, reports, and other documents and information expressly required to be
furnished to the
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Lenders by the Agent hereunder, the 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 the Borrower or any
of its Subsidiaries or affiliates that may come into the possession of the Agent
or any of its affiliates.
10.7. Resignation of Agent. The Agent may resign at any time by giving
notice thereof to the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent subject to
the approval of the Borrower so long as no Default or Event of Default shall
have occurred and be continuing, such approval not to be unreasonably withheld.
If no successor Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent which shall be a commercial bank
organized under the laws of the United States of America having combined capital
and surplus of at least $100,000,000. Upon the acceptance of any appointment as
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 Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article X 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 Agent.
10.8. Fees. The Borrower agrees to pay to the Agent, for its individual
account, an annual Administrative Agent's fee as from time to time agreed to by
the Borrower and Agent in writing.
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ARTICLE XI
Miscellaneous
11.1. Assignments and Participations. (a) Each Lender may assign to one or
more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its Loans,
its Note, and its Revolving Credit Commitment); provided, however, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender or an
assignment of all of a Lender's rights and obligations under this Agreement, any
such partial assignment shall be in an amount at least equal to $5,000,000 or an
integral multiple of $1,000,000 in excess thereof;
(iii) each such assignment by a Lender shall be of a constant, and not
varying, percentage of all of its rights and obligations under this Agreement
and the Note; and
(iv) the parties to such assignment shall execute and deliver to the
Agent for its acceptance an Assignment and Acceptance in the form of Exhibit B
hereto, together with any Note subject to such assignment and a processing fee
of $3,000.
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 Agreement. Upon the
consummation of any assignment pursuant to this Section, the assignor, the 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
incorporated under the laws of the United States of America or a state thereof,
it shall deliver to the Borrower and the Agent certification as to exemption
from deduction or withholding of Taxes in accordance with Section 4.6.
(b) The Agent shall maintain at its address referred to in Section 11.2 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
Revolving Credit 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 Agent and the Lenders may treat each Person whose name is recorded
in the Register as a Lender hereunder for all purposes of this 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.
(c) 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 Agent shall, if such Assignment and Acceptance has
been completed and is in substantially the form
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of Exhibit 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.
(d) 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
Agreement (including all or a portion of its Revolving Credit Commitment or its
Loans); provided, however, that (i) any such participation in a Revolving Credit
Commitment, but not its Loans, shall be in an amount at least equal to
$5,000,000 or an integral multiple of $1,000,000 in excess thereof, (ii) such
Lender's obligations under this Agreement shall remain unchanged, (iii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iv) the participant shall be entitled to the
benefit of the yield protection provisions contained in Article IV and the right
of set-off contained in Section 11.4, and (v) the Borrower shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement, and such Lender shall retain the
sole right to enforce the obligations of the Borrower relating to its Loans and
its Note and to approve any amendment, modification, or waiver of any provision
of this Agreement (other than amendments, modifications, or waivers decreasing
the amount of principal of or the rate at which interest is payable on such
Loans or Note, extending any scheduled principal payment date or date fixed for
the payment of interest on such Loans or Note, or extending its Revolving Credit
Commitment).
(e) Notwithstanding any other provision set forth in this Agreement, any
Lender may at any time assign and pledge all or any portion of its Loans and its
Note to any Federal Reserve Bank as collateral security pursuant to Regulation A
and any Operating Circular issued by such Federal Reserve Bank. No such
assignment shall release the assigning Lender from its obligations hereunder.
(f) Any Lender may furnish any information concerning the Borrower or any
of its Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants);
provided, however that such Lender shall (a) take reasonable and customary
measures to safeguard the confidentiality of non-public information, (b) advise
such assignees or participants of the confidentiality of such non-public
information and (c) obtain the agreement of such assignees or participants to
maintain the confidentiality thereof.
11.2. Notices. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of receipt at such address, telefacsimile
number or telex number as may from time to time be specified by such party in
written notice to the other parties hereto or otherwise received), in the case
of notice by telegram, telefacsimile or telex, respectively (where the receipt
of such message is verified by return), or (iii) on the fifth Business Day after
the day on which mailed, if sent prepaid by certified or registered mail, return
receipt requested, in each case delivered, transmitted or mailed, as the case
may be, to the address, telex number or telefacsimile number, as appropriate,
set forth below or such other address or number as such party shall specify by
notice hereunder:
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(a) if to the Borrower:
Michael D. Martin, Executive Vice President, Chief
Financial Officer and Treasurer
HEALTHSOUTH Corporation
One HealthSouth Parkway
Birmingham, Alabama 35243
with a copy to:
William W. Horton
HEALTHSOUTH Corporation
One HealthSouth Parkway
Birmingham, Alabama 35243
(b) if to the Agent at:
One Independence Center, 15th Floor
101 North Tryon Street
Charlotte, North Carolina 28255
Attention: Agency Services
Reference: HEALTHSOUTH Corporation
(c) if to the Lenders:
At the addresses set forth on the signature pages hereof and on
the signature page of each Assignment and Acceptance.
11.3. No Waiver. No failure or delay on the part of the Agent, any Lender
or the Borrower in the exercise of any right, power or privilege hereunder shall
operate as a waiver of any such right, power or privilege nor shall any such
failure or delay preclude any other or further exercise thereof. The rights and
remedies herein provided are cumulative and not exclusive of any rights or
remedies provided by law.
11.4. Rights of Setoff; Adjustments. (a) The Borrower agrees that the Agent
and each Lender shall have a Lien for all the Obligations of the Borrower upon
all deposits or deposit accounts, of any kind, or any interest in any deposits
or deposit accounts thereof, now or hereafter pledged, mortgaged, transferred or
assigned to the Agent or such Lender or otherwise in the possession or control
of the Agent or such Lender (other than for safekeeping) for any purpose for the
account or benefit of the Borrower and including any balance of any deposit
account or of any credit of the Borrower with the Agent or such Lender, whether
now existing or hereafter established, hereby authorizing the Agent and each
Lender at any time or times from and after the occurrence of a Default or an
Event of Default with or without prior notice to set off against and apply such
balances or any part thereof to such of the Obligations of the Borrower to the
Lenders then past due and in such amounts as they may elect, and whether or not
the collateral or the responsibility of other Person primarily, secondarily or
otherwise liable may be
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deemed adequate. For the purposes of this paragraph, all remittances and
property shall be deemed to be in the possession of the Agent or such Lender as
soon as the same may be put in transit to it by mail or carrier or by other
bailee.
(b) If any Lender (a "benefited Lender") shall at any time receive any
payment of all or part of the Loans owing to it, or interest thereon, or receive
any collateral in respect thereof (whether voluntarily or involuntarily, by
set-off, or otherwise), in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of such other
Lender's Loans owing to it, or interest thereon, such benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loans owing to it, or shall provide such
other Lenders with the benefits of any such collateral, or the proceeds thereof,
as shall be necessary to cause such benefitted Lender to share the excess
payment or benefits of such collateral or proceeds ratably with each of the
Lenders; provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest. The Borrower agrees that any Lender so
purchasing a participation from a Lender pursuant to this Section 11.4 may, to
the fullest extent permitted by law, exercise all of its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Person were the direct creditor of the Borrower in the amount of such
participation.
11.5. Survival. All covenants, agreements, representations and warranties
made herein shall survive the making by the Lenders of the Loans and the
issuance of the Letters of Credit and the execution and delivery to the Lenders
of this Agreement and the Notes and shall continue in full force and effect so
long as any of Obligations remain outstanding or any Lender has any commitment
hereunder or the Borrower has continuing obligations hereunder unless otherwise
provided herein. Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
permitted assigns of such party and all covenants, provisions and agreements by
or on behalf of the Borrower which are contained in the Loan Documents shall
inure to the benefit of the successors and permitted assigns of the Lenders or
any of them.
11.6. Expenses. The Borrower agrees (a) to pay or reimburse the Agent for
all its reasonable and customary out-of-pocket costs and expenses incurred in
connection with the preparation, negotiation and execution of, and any
amendment, supplement or modification to, this Agreement or any of the other
Loan Documents, and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable and customary fees and
disbursements of counsel to the Agent, (b) to pay or reimburse the Agent and,
after an Event of Default, each Lender for all their reasonable costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, including without limitation, the reasonable fees
and disbursements of their counsel, (c) to pay, indemnify and hold harmless the
Agent and each Lender from any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any failure of Borrower to pay or
delay of Borrower in paying, documentary, stamp, excise, withholding and other
similar taxes, if any, which may be payable or determined to be payable in
connection with the execution and delivery of, or consummation of any amendment,
supplement or modification of, or any waiver or consent under or in respect
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of, this Agreement, and (d) from and after the occurrence of any Event of
Default to pay, and indemnify and hold harmless the Agent and each Lender from
and against, any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement or in any respect relating to
the transactions contemplated hereby or thereby, (all the foregoing,
collectively, the "indemnified liabilities"); provided, however, that the
Borrower shall have no obligation hereunder with respect to indemnified
liabilities arising from (i) the willful misconduct or negligence of the party
seeking indemnification, (ii) legal proceedings commenced against the Agent or
any Lender by any security holder or creditor thereof arising out of and based
upon rights afforded any such security holder or creditor solely in its capacity
as such, (iii) any taxes imposed upon the Agent or any Lender other than the
documentary, stamp, excise, withholding and similar taxes described in clause
(c) above or any tax resulting from any change described in Section 4.1, which
tax would be payable to Lenders by Borrower pursuant to Article IV, (iv) taxes
imposed as a result of a transfer or assignment of any Note, participation or
assignment of a portion of its rights, (v) any taxes imposed upon any transferee
of any Note, or (vi) by reason of the failure of the Agent or any Lender to
perform its or their obligations under this Agreement. The agreements in this
subsection shall survive the Revolving Credit Termination Date.
11.7. Amendments and Waivers. Any provision of this Agreement or any other
Loan Document may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed by the Borrower and the Required Lenders (and, if
Article X or the rights or duties of the Agent are affected thereby, by the
Agent); provided that no such amendment or waiver shall, unless signed by all
the Lenders, (i) increase the Revolving Credit Commitments or the Letter of
Credit Commitment of the Lenders, (ii) reduce the principal of or rate of
interest on any Loan or any fees or other amounts payable hereunder, (iii)
postpone any date fixed for the payment of any scheduled installment of
principal of or interest on any Loan or any fees or other amounts payable
hereunder or for termination of any Revolving Credit Commitment, (iv) change the
percentage of the Revolving Credit Commitments or of the unpaid principal amount
of the Notes, or the percentage of Lenders that constitute Required Lenders or
(v) amend the definition of "Required Lenders" or amend Section 11.15.
11.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully- executed counterpart.
11.9. Waivers by Borrower. IN ANY LITIGATION IN ANY COURT WITH RESPECT TO,
IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT, THE LOANS, ANY OF THE
NOTES, ANY OF THE OTHER LOAN DOCUMENTS, THE OBLIGATIONS, OR ANY INSTRUMENT OR
DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT, OR THE VALIDITY, PROTECTION,
INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF, OR ANY OTHER CLAIM OR DISPUTE
HOWSOEVER ARISING BETWEEN THE BORROWER AND THE LENDERS OR THE AGENT, THE
BORROWER AND EACH LENDER AND THE AGENT HEREBY WAIVE, TO THE EXTENT PERMITTED BY
LAW, TRIAL BY JURY IN CONNECTION WITH ANY SUCH LITIGATION.
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The Borrower, the Agent and the Lenders believe that, inasmuch as this
Agreement and the transactions contemplated hereby have been entered into and
consummated outside the State of Alabama, such transactions constitute
transactions in interstate commerce, so that neither the Agent nor any of the
Lenders is required, solely by entering into this Agreement and consummating the
transactions contemplated hereby, to qualify to do business as a foreign
corporation within the State of Alabama. Notwithstanding the foregoing, however,
the Borrower hereby irrevocably waives all rights that it may have to raise, in
any action brought by any of the Lenders or the Agent to enforce the rights of
the Lenders and the Agent hereunder or under any of the other Loan Documents, or
the obligations of the Borrower hereunder or thereunder, any defense which is
based upon the failure of any of the Lenders or the Agent to qualify to do
business as a foreign corporation in the State of Alabama, including, but not
limited to, any defenses based upon ss. 232 of the Alabama Constitution of 1901,
ss. 10-2B-15.01 of the Code of Alabama (1975) or ss. 40-14-4 of the Code of
Alabama (1975), or any successor provision to any thereof. The foregoing waiver
is made knowingly and voluntarily and is a material inducement for the Agent and
the Lenders to enter into the transactions contemplated by this Agreement or any
of the other Loan Documents.
11.10. Termination. The termination of this Agreement shall not affect any
rights of the Borrower, the Lenders or the Agent or any obligation of the
Borrower, the Lenders or the Agent, arising prior to the effective date of such
termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into or rights created or obligations incurred
prior to such termination have been fully disposed of, concluded or liquidated
and the Obligations arising prior to or after such termination have been
irrevocably paid in full. The rights granted to the Agent for the benefit of the
Lenders hereunder and under the other Loan Documents shall continue in full
force and effect, notwithstanding the termination of this Agreement, until all
of the Obligations have been paid in full after the termination hereof or the
Borrower has furnished the Lenders and the Agent with an indemnification
satisfactory to the Agent and each Lender with respect thereto. All
representations, warranties, covenants, waivers and agreements contained herein
shall survive termination hereof until payment in full of the Obligations unless
otherwise provided herein. Notwithstanding the foregoing, if after receipt of
any payment of all or any part of the Obligations, any Lender is for any reason
compelled to surrender such payment to any Person because such payment is
determined to be void or voidable as a preference, impermissible setoff, a
diversion of trust funds or for any other reason, this Agreement shall continue
in full force and the Borrower shall be liable to, and shall indemnify and hold
such Lender harmless for, the amount of such payment surrendered until such
Lender shall have been finally and irrevocably paid in full. The provisions of
the foregoing sentence shall be and remain effective notwithstanding any
contrary action which may have been taken by the Lenders in reliance upon such
payment, and any such contrary action so taken shall be without prejudice to the
Lenders' rights under this Agreement and shall be deemed to have been
conditioned upon such payment having become final and irrevocable.
11.11. Governing Law. ALL DOCUMENTS EXECUTED PURSUANT TO THE TRANSACTIONS
CONTEMPLATED HEREIN, INCLUDING, WITHOUT LIMITATION, THIS AGREEMENT AND EACH OF
THE OTHER LOAN DOCUMENTS SHALL BE DEEMED TO BE CONTRACTS MADE UNDER, AND FOR ALL
PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS AND JUDICIAL
DECISIONS OF THE STATE OF NORTH CAROLINA. THE BORROWER HEREBY SUBMITS TO THE
JURISDICTION AND VENUE OF THE STATE
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AND FEDERAL COURTS OF NORTH CAROLINA FOR THE PURPOSES OF RESOLVING DISPUTES
HEREUNDER OR ARISING OUT OF THE TRANSACTION CONTEMPLATED HEREBY OR FOR THE
PURPOSES OF COLLECTION.
11.12. Indemnification. In consideration of the execution and delivery of
this Agreement by the Agent and each Lender and the extension of the Revolving
Credit Commitments, and so long as the Agent and Lenders have fulfilled their
obligations hereunder, the Borrower hereby indemnifies, exonerates and holds
free and harmless the Agent and each Lender and each of their respective
officers, directors, employees, affiliates and agents (collectively, the
"Indemnified Parties") from and against any and all actions, causes of action,
claims, suits, losses, costs, liabilities and damages, and expenses incurred in
connection therewith (irrespective of whether any such Indemnified Party is a
party to the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to, any of the following:
(a) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan or supported by any
Letter of Credit;
(b) the entering into and performance of this Agreement and any other
Loan Document by any of the Indemnified Parties;
(c) provided Lenders have no ownership interest in real property of
Borrower, any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to the
protection of the environment or the release by the Borrower or any of its
Subsidiaries or Controlled Partnerships of any hazardous waste material; or
(d) provided Lenders have no ownership interest in real property of
Borrower, the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from any real
property owned or operated by the Borrower or any Subsidiary or Controlled
Partnership of any hazardous waste material (including any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or
arising under any environmental laws), regardless of whether caused by, or
within the control of, the Borrower or such Subsidiary or Controlled
Partnerships,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's
negligence or willful misconduct, and if and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. The
agreements in this Section 11.12 shall survive the Revolving Credit Termination
Date.
11.13. Agreement Controls. In the event that any term of any of the Loan
Documents other than this Agreement conflicts with any term of this Agreement,
the terms and provisions of this Agreement shall control.
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11.14. Integration. This Agreement and the other Loan Documents represent
the final agreement between the parties as to the subject matter hereof or
thereof and may not be contradicted by evidence of prior, contemporaneous, or
subsequent oral agreements of the parties. There are no oral agreements between
the parties.
11.15. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that the Borrower may not assign or transfer its
rights or obligations hereunder without the prior written consent of the Agent
and all Lenders. The Agent and the Lenders may assign or transfer their interest
hereunder but only as provided herein.
11.16. Severability. If any provision of this Agreement or the other Loan
Documents shall be determined to be illegal or invalid as to one or more of the
parties hereto, then such provision shall remain in effect with respect to all
parties, if any, as to whom such provision is neither illegal nor invalid, and
in any event all other provisions hereof shall remain effective and binding on
the parties hereto.
11.17. Usury Savings Clause. Notwithstanding any other provision herein,
the aggregate interest rate charged under any of the Notes, including all
charges or fees in connection therewith deemed in the nature of interest under
North Carolina law, shall not exceed the Highest Lawful Rate (as such term is
defined below). If the rate of interest (determined without regard to the
preceding sentence) under this Agreement at any time exceeds the Highest Lawful
Rate (as defined below), the outstanding amount of the Loans made hereunder
shall bear interest at the Highest Lawful Rate until the total amount of
interest due hereunder equals the amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at all
times been in effect. In addition, if when the Loans made hereunder are repaid
in full the total interest due hereunder (taking into account the increase
provided for above) is less than the total amount of interest which would have
been due hereunder if the stated rates of interest set forth in this Agreement
had at all times been in effect, then to the extent permitted by law, the
Borrower shall pay to the Agent an amount equal to the difference between the
amount of the interest paid and the amount of interest which would have been
paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding
the foregoing, it is the intention of the Lenders and the Borrower to conform
strictly to any applicable usury laws. Accordingly, if any Lender contracts for,
charges, or receives any consideration which constitutes interest in excess of
the Highest Lawful Rate, then any such excess shall be canceled automatically
and, if previously paid, shall at such Lender's option be applied to the
outstanding amount of the Loans made hereunder or be refunded to the Borrower.
As used in this paragraph, the term "Highest Lawful Rate" means, as to any
Lender, the maximum lawful interest rate, if any, that at any time or from time
to time may be contracted for, charged, or received under the laws applicable to
such Lender which are presently in effect or, to the extent allowed by law,
under such applicable laws which may hereafter be in effect and which allow a
higher maximum nonusurious interest rate than applicable laws now allow.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
made, executed and delivered by their duly authorized officers as of the day and
year first above written.
HEALTHSOUTH CORPORATION
WITNESS:
/S/ WILLIAM W. HORTON
----------------------
By: /S/ LEIF M. MURPHY
--------------------------------------
/S/ TAMMY TURNER Name: Leif M. Murphy
---------------------- Title: Vice President - Finance
Signature Page
<PAGE>
NATIONSBANK, NATIONAL ASSOCIATION
as Agent for the Lenders
By: /S/ MICHAEL S. SYLVESTER
--------------------------------------
Name: Michael S. Sylvester
Title: Vice President
NATIONSBANK, NATIONAL ASSOCIATION
By: /S/ MICHAEL S. SYLVESTER
--------------------------------------
Name: Michael S. Sylvester
Title: Vice President
Applicable Lending Office:
101 North Tryon Street, 15th Floor
Charlotte, North Carolina 28255
Wire Transfer Instructions:
NationsBank, N.A.
Charlotte, North Carolina
ABA #053000196
Account #136621-2250600
Attention: Corporate Credit Services
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
SCOTIABANC INC.
By: /S/ DANA MALONEY
--------------------------------------
Name: Dana Maloney
Title: Relationship Manager
Lending Office:
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Wire Transfer Instructions:
The Bank of Nova Scotia - NY
New York, New York
ABA #026002532
F/C - The Bank of Nova Scotia - Atlanta
Account #0606634
Attention: ATL/Loan Operations
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
DEUTSCHE BANK AG NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH
By: /S/ SUSAN L. PEARSON
--------------------------------------
Name: Susan L. Pearson
Title: Director
By: /S/ ROBERT WOOD
--------------------------------------
Name: Robert Wood
Title: Director
Lending Office:
31 West 52nd Street
New York, New York 10019
Wire Transfer Instructions:
Deutsche Bank AG
New York Branch
ABA #026003780
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /S/ DIANA H. IMHOF
--------------------------------------
Name: Diana H. Imhof
Title: Vice President
Lending Office:
60 Wall Street
New York, New York 10260-0060
Wire Transfer Instructions:
Morgan Guaranty Trust Company of New York
New York, New York
ABA #021000238
For Credit to: Loan Department
A/C #999-99-090
Attention: Corporate Processing - Mod 23
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
WACHOVIA BANK, N.A.
By: /S/ JOHN C. COVENTRY
--------------------------------------
Name: John C. Coventry
Title: Banking Officer
Lending Office:
191 Peachtree Street, N.E., 29th Floor
Atlanta, Georgia 30303
Wire Transfer Instructions:
Wachovia Bank, N.A.
Atlanta, Georgia
ABA #061 000 010
Account #18-171-498
Account Name: FW Money Transfer Suspense
Attention: Katrina Durrah
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
FIRST UNION NATIONAL BANK
By: /S/ JOSEPH H. TOWELL
--------------------------------------
Name: Joseph H. Towell
Title: Senior Vice President
Lending Office:
One First Union Center, Floor TW5
Charlotte, North Carolina 28288-0735
Wire Transfer Instructions:
First Union National Bank
Charlotte, North Carolina
ABA #053000219
Account #465906 0001802
Attention: Sue Patterson
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
THE BANK OF TOKYO-MITSUBISHI LTD.,
NY BRANCH
By: /S/ DOUGLAS J. WEIR
-----------------------------------------
Name: Douglas J. Weir
Title: Vice President
Lending Office:
1251 Avenue of the Americas, 12th Floor
New York, New York 10020-1104
Wire Transfer Instructions:
The Bank of Tokyo-Mitsubishi Ltd., NY Branch
ABA #0260-0963-2
Short Name: BK Tokyo Mitsubishi Ltd.
Further Credit to: Loan Operations Dept.
CIF #97770191
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
By: /S/ BENJAMIN A. WILLINGHAM
----------------------------------------
Name: Benjamin A. Willingham
Title: Vice President
Lending Office:
500 W. Jefferson, 2nd Floor
Louisville, Kentucky 40202
Wire Transfer Instructions:
PNC Bank
Louisville, Kentucky
ABA #083 000 108
Account #3000991434
Attention: Commercial Loan Operations
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
MELLON BANK, N.A.
By: /S/ MARSHA WICKER
----------------------------------------
Name: Marsha Wicker
Title: Vice President
Lending Office:
One Mellon Bank Center, Room 370
Pittsburgh, Pennsylvania 15258
Wire Transfer Instructions:
Mellon Bank, N.A.
Pittsburgh, Pennsylvania
ABA #0430-0026-1
Account #____________
Attention: _______________________
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
AMSOUTH BANK
By: /S/ ALLISON J. SANDERS
----------------------------------------
Name: Allison J. Sanders
Title: Vice President
Lending Office:
1900 5th Avenue, North
Birmingham, Alabama 35203
Wire Transfer Instructions:
AmSouth Bank
Birmingham, Alabama
ABA #062000019
Corporate Clearing Account #0011-0245-0400-100
Attention: Kristi Mann
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
SUNTRUST BANK, NASHVILLE, N.A.
By: /S/ MARK D. MATTSON
--------------------------------------------
Name: Mark D. Mattson
Title: Vice President
Lending Office:
201 4th Avenue, North
Nashville, Tennessee 37219
Wire Transfer Instructions:
SunTrust Bank, Nashville, N.A.
Nashville, Tennessee
ABA #064000046
Account #9191004800
Account Name: Commercial Loan Wire Wash Account
Attention: Leigh Anne Gregory
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
FLEET NATIONAL BANK
By: /S/ CAROL PAIGE
--------------------------------------
Name: Carol Paige
Title: Senior Vice President
Lending Office:
One Federal Street, MAOFD07B
Boston, Massachusetts 02110
Wire Transfer Instructions:
Fleet National Bank
Boston, Massachusetts
ABA #011000138
Account #1510351-03156
Account Name: G/L
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
NATIONAL CITY BANK OF KENTUCKY
By: /S/ RODERIC M. BROWN
--------------------------------------
Name: Roderic M. Brown
Title: Vice President
Lending Office:
101 S. 5th Street
Louisville, Kentucky 40202
Wire Transfer Instructions:
National City Bank of Kentucky
Louisville, Kentucky
ABA #083000056
Account G/L #151804
Attention: Tami Boston - CLO Dept.
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
THE BANK OF NEW YORK
By: /S/ ANN MARIE HUGHES
--------------------------------------
Name: Ann Marie Hughes
Title: Vice President
Lending Office:
One Wall Street, 22nd Floor
New York, new York 10286
Wire Transfer Instructions:
Bank of New York
New York, New York
ABA #021 000 018
Account #GLA 111556
Attention: Loan Department
Reference: HEALTHSOUTH Corporation
Attention: Lorna Alleyne - Southern
Signature Page
<PAGE>
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK BA "RABOBANK
NEDERLAND" NEW YORK BRANCH
By: /S/ TERRELL BOYLE /S/ IAN REECE
------------------------------------------
Name: Terrell Boyle Ian Reece
Title: Vice President Senior Credit Officer
Lending Office:
1201 W. Peachtree Street
Suite 3450
Atlanta, Georgia 30309
Wire Transfer Instructions:
The Bank of New York
for the account of Rabobank Nederland
New York, New York
ABA #021-000-018
Account #802-6002-533
Account Name: Rabobank Nederland
Attention: Corporate Services Dept.
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
FIRST AMERICAN NATIONAL BANK
By: /S/ ALLISON JONES
--------------------------------------
Name: Allison Jones
Title: Senior Vice President
Lending Office:
First American Center, NA-0203
Nashville, Tennessee 37237
Wire Transfer Instructions:
First American National Bank
Nashville, Tennessee
ABA #064 000 017
Account #0901256
Account Name: WTCA
Attention: Tina Callahan
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
HIBERNIA NATIONAL BANK
By: /S/ CHRISTOPOHER B. PITRE
--------------------------------------
Name: Christopher B. Pitre
Title: Vice President
Lending Office:
313 Carondelet Street
New Orleans, Louisiana 70124
Wire Transfer Instructions:
Hibernia National Bank
New Orleans, Louisiana
ABA #065000090
Account #36615-0520
Attention: National Accounts
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
BANCA COMMERCIALE ITALIANA
NEW YORK BRANCH
By: /S/ CHARLES DOUGHERTY
--------------------------------------
Name: Charles Dougherty
Title: Vice President
By: /S/ KAREN PURELIS
--------------------------------------
Name: Karen Purelis
Title: Vice President
Lending Office:
1 William Street
New York, New York 10004
Wire Transfer Instructions:
Via Fed Wire:
ABA #026005319
Account: BCA Italiana
Attention: Loan Dept./Alex Papace
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By: /S/ ERIK C. RACK
--------------------------------------
Name: Erik C. Rack
Title: Assistant Vice President
Lending Office:
One First National Plaza, Suite 0091/8
Chicago, Illinois 60670
Wire Transfer Instructions:
First National Bank of Chicago
Chicago, Illinois
ABA #071000013
Account #7521 7653
Account Name: DES Income Clearing A/C
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
MICHIGAN NATIONAL BANK
By: /S/ NERAN SHAYA
--------------------------------------
Name: Neran Shaya
Title: Relationship Manager
Lending Office:
27777 Inkster Road
Farmington Hills, Michigan 48334
Wire Transfer Instructions:
Michigan National Bank
Farmington Hills, Michigan
ABA #072000805
Account #115710-917000
Account Name: Clearing Account
Attention: Sylvia Mills
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
SOUTHTRUST BANK, N.A.
By: /S/ COLE TAYLOR
----------------------------------------
Name: Cole Taylor
Title: Group Vice President
Lending Office:
420 N. 20th Street
Birmingham, Alabama 35203
Wire Transfer Instructions:
SouthTrust Bank, N.A.
Birmingham, Alabama
ABA #062000080
Account #131009
Attention: Commercial Loan Operations Dept.
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
SUMMIT BANK
By: /S/ BRUCE A. GRAY
--------------------------------------
Name: Bruce A. Gray
Title: Vice President
Lending Office:
750 Walnut Avenue, 3rd Floor
Cranford, New Jersey 07016
Wire Transfer Instructions:
Summit Bank
ABA #021202162
CL02 AC47902
Attention: Commercial Loan Division
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
WELLS FARGO BANK, N.A.
By: /s/ Donald A. Hartmann /s/ Steven A. Newell
------------------------------------------------------
Name: Donald A. Hartmann Steven A. Newell
Title: Senior Vice President Assistant Vice President
Lending Office:
420 Montgomery Street, 9th Floor
MAC 0101-091
San Francisco, California 94163
Wire Transfer Instructions:
Wells Fargo Bank, N.A.
San Francisco, California
ABA #121-000-248
Account #271-2507201
Credit to: MEMSYN
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
FIFTH THIRD BANK
By: /S/ ANNE KOCH
---------------------------------------
Name: Anne Koch
Title: National Lending Officer
Lending Office:
38 Fountain Square Plaza, Mail Drop 109054
Cincinnati, Ohio 45263
Wire Transfer Instructions:
Fifth Third Bancorp
ABA #042 000 314
Account #72876175
Attention: Commercial Loan
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
WESTPAC BANKING CORPORATION
By: /S/ KATE V. PERRY
--------------------------------------
Name: Kate V. Perry
Title: Assistant Vice President
Lending Office:
575 Fifth Avenue
New York, New York 10017
Wire Transfer Instructions:
Chase Manhattan Bank
New York, New York
ABA #021-000-021
Account #001-1-910460
Account Name: Westpac Bkg Corp.
Grand Cayman Branch
Attention: Loan Services
Reference: HEALTHSOUTH Corporation
Signature Page
<PAGE>
EXHIBIT A
Applicable Commitment Percentages
<TABLE>
<CAPTION>
Applicable
Revolving Credit Commitment
Lender Commitment Percentage
- - ------ ---------- ----------
<S> <C> <C>
NationsBank, National Association $150,000,000.00 8.571428571%
Scotiabanc Inc. 150,000,000.00 8.571428571%
Deutsche Bank AG New York Branch
and/or Cayman Islands Branch 150,000,000.00 8.571428571%
Morgan Guaranty Trust Company
of New York 150,000,000.00 8.571428571%
Wachovia Bank, N.A. 135,000,000.00 7.714285714%
First Union National Bank 135,000,000.00 7.714285714%
The Bank of Tokyo-Mitsubishi Ltd.,
NY Branch 100,000,000.00 5.714285714%
PNC Bank, National Association 100,000,000.00 5.714285714%
Mellon Bank, N.A. 100,000,000.00 5.714285714%
AmSouth Bank 100,000,000.00 5.714285714%
SunTrust Bank, Nashville, N.A. 75,000,000.00 4.285714285%
Fleet National Bank 50,000,000.00 2.857142857%
National City Bank of Kentucky 50,000,000.00 2.857142857%
The Bank of New York 50,000,000.00 2.857142857%
Cooperatieve Centrale Raiffeisen-
Boerenleenbank BA "Rabobank
Nederland" New York Branch 25,000,000.00 1.428571428%
First American National Bank 25,000,000.00 1.428571428%
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
Applicable
Revolving Credit Commitment
Lender Commitment Percentage
- - ------ ---------- ----------
<S> <C> <C>
Hibernia National Bank 25,000,000.00 1.428571428%
Banca Commerciale Italiana
New York Branch 25,000,000.00 1.428571428%
The First National Bank of Chicago 25,000,000.00 1.428571428%
Michigan National Bank 25,000,000.00 1.428571428%
SouthTrust Bank, N.A. 25,000,000.00 1.428571428%
Summit Bank 25,000,000.00 1.428571428%
Wells Fargo Bank, N.A. 25,000,000.00 1.428571428%
Fifth Third Bank 15,000,000.00 .857142857%
Westpac Banking Corporation 15,000,000.00 .857142857%
------------- ------------
$1,750,000,000.00 100%
</TABLE>
A-2
<PAGE>
EXHIBIT B
Form of Assignment and Acceptance
Reference is made to the Credit Agreement dated as of June 23, 1998 (the
"Credit Agreement") among HEALTHSOUTH Corporation, a Delaware corporation (the
"Borrower"), the Lenders (as defined in the Credit Agreement) and NationsBank,
National Association, as agent for the Lenders (the "Agent"). Terms defined in
the Credit Agreement are used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1 agree as
follows:
1. The Assignor hereby sells and assigns to the Assignee, without recourse
and without representation or warranty except as expressly set forth herein, and
the Assignee hereby purchases and assumes from the Assignor, an interest in and
to the Assignor's rights and obligations under the Credit Agreement and the
other Loan Documents as of the date hereof equal to the percentage interest
specified on Schedule 1 of all outstanding rights and obligations under the
Credit Agreement and the other Loan Documents. After giving effect to such sale
and assignment, the Assignee's Revolving Credit Commitment and the amount of the
Loans owing to the Assignee will be as set forth on Schedule 1.
2. The Assignor (i) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Loan Party or the
performance or observance by any Loan Party of any of its obligations under the
Loan Documents or any other instrument or document furnished pursuant thereto;
and (iv) attaches the Revolving Note and Competitive Bid Note held by the
Assignor and requests that the Agent exchange such Revolving Note and
Competitive Bid Note for new Notes payable to the order of the Assignee in an
amount equal to the Revolving Credit Commitment assumed by the Assignee pursuant
hereto and to the Assignor in an amount equal to the Revolving Credit Commitment
retained by the Assignor, if any, as specified on Schedule 1.
3. The Assignee (i) confirms that it has received a copy of the Credit
Agreement, together with copies of the financial statements referred to in
Section 7.1 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under the Credit Agreement as are delegated
B-1
<PAGE>
to the Agent by the terms thereof, together with such powers and discretion as
are reasonably incidental thereto; (v) agrees that it will perform in accordance
with their terms all of the obligations that by the terms of the Credit
Agreement are required to be performed by it as a Lender; and (vi) attaches any
U.S. Internal Revenue Service or other forms required under Section 4.6.
4. Following the execution of this Assignment and Acceptance, it will be
delivered to the Agent for acceptance and recording by the Agent. The effective
date for this Assignment and Acceptance (the "Effective Date") shall be the date
of acceptance hereof by the Agent, unless otherwise specified on Schedule 1.
5. Upon such acceptance and recording by the Agent, as of the Effective
Date, (i) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
6. Upon such acceptance and recording by the Agent, from and after the
Effective Date, the Agent shall make all payments under the Credit Agreement and
the Notes in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment fees with respect
thereto) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and the Notes for periods
prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the laws of the State of North Carolina.
8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of Schedule 1 to this Assignment and Acceptance by telefacsimile
shall be effective as delivery of a manually executed counterpart of this
Assignment and Acceptance.
IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to
this Assignment and Acceptance to be executed by their officers thereunto duly
authorized as of the date specified thereon.
B-2
<PAGE>
SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE
Percentage interest assigned: ________%
Assignee's Revolving Credit Commitment: $_______
Aggregate outstanding principal amount
of Syndicated Loans assigned: $_______
Aggregate Outstanding principal amount
of Competitive Bid loans assigned: $_______
Principal amount of Revolving Note payable
to Assignee: $_______
Principal amount of Competitive Bid Note
payable to Assignee: $_______
Principal amount of Note payable to Assignor: $_______
Principal amount of Competitive Bid Note
payable to Assignor $_______
Effective Date (if other than date
of acceptance by Agent): *_______, 19__
[NAME OF ASSIGNOR], as Assignor
By:
----------------------------
Title:
Dated: _______________, 19 _
[NAME OF ASSIGNEE], as Assignee
By:
Title:
B-3
<PAGE>
Applicable Lending Office:
* This date should be no earlier than five Business Days after the delivery
of this Assignment and Acceptance to the Agent.
Accepted [and Approved] **
this ___ day of ___________, 19 _
NATIONSBANK, NATIONAL ASSOCIATION
By:_______________________
Title:
[Approved this ____ day
of ____________, 19__
HEALTHSOUTH Corporation
By:_______________________]**
Title:
**Required if the Assignee is an Eligible Assignee solely by reason of clause
(iii) of the definition of "Eligible Assignee".
B-4
<PAGE>
EXHIBIT C
Notice of Appointment (or Revocation) of Authorized
Representative
Reference is hereby made to the Credit Agreement dated as of June 23, 1998,
as amended (the "Agreement"), among HEALTHSOUTH Corporation, a Delaware
corporation (the "Borrower"), the Lenders (as defined in the Agreement), and
NationsBank, National Association, as Agent for the Lenders ("Agent").
Capitalized terms used but not defined herein shall have the respective meanings
therefor set forth in the Agreement.
The Borrower hereby nominates, constitutes and appoints each individual
named below as an Authorized Representative under the Loan Documents, and hereby
represents and warrants that (i) set forth opposite each such individual's name
is a true and correct statement of such individual's office (to which such
individual has been duly elected or appointed), a genuine specimen signature of
such individual and an address for the giving of notice, and (ii) each such
individual has been duly authorized by the Borrower to act as Authorized
Representative under the Loan Documents:
Name and Address Office Specimen Signature
- - ----------------- ------------------- -------------------
- - -----------------
- - -----------------
- - ----------------- ------------------- -------------------
- - -----------------
- - -----------------
- - ----------------- ------------------- -------------------
- - -----------------
- - -----------------
Borrower hereby revokes (effective upon receipt hereof by the Agent) the prior
appointment of ________________ as an Authorized Representative.
This the ___ day of __________________, 19__.
HEALTHSOUTH CORPORATION
By:
-----------------------
Name:
---------------------
Title:
--------------------
C-1
<PAGE>
EXHIBIT D
Form of Borrowing Notice
To: NationsBank, National Association,
as Agent
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704) 386-9923
Reference is hereby made to the Credit Agreement dated as of June 23, 1998,
as amended (the "Agreement"), among HEALTHSOUTH Corporation (the "Borrower"),
the Lenders (as defined in the Agreement), and NationsBank, National
Association, as Agent for the Lenders ("Agent"). Capitalized terms used but not
defined herein shall have the respective meanings therefor set forth in the
Agreement.
The Borrower through its Authorized Representative hereby gives notice to
the Agent that Loans of the Type and amount set forth below be made on the date
indicated:
Type Loan Interest Aggregate
(check one) Period(1) Amount(2) Date of Loan(3)
----------- --------- --------- ---------------
Base Rate
---
Eurodollar
Rate ___
- - ----------
(1) For any Eurodollar Rate Loan, one, two, three or six months.
(2) Must be $5,000,000 or if greater an integral multiple of $1,000,000.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan;
The Borrower hereby requests that the proceeds of Loans described in this
Borrowing Notice be made available to the Borrower as follows: [insert
transmittal instructions] .
The undersigned hereby certifies that:
1. No Default or Event of Default exists either now or after giving effect
to the borrowing described herein; and
2. All the representations and warranties set forth in Article VI of the
Agreement and in the other Loan Documents (other than those expressly stated to
refer to a particular
D-1
<PAGE>
date) are true and correct as of the date hereof except that the reference to
the financial statements in Section 6.6(a) of the Agreement are to those
financial statements most recently delivered to you pursuant to Section 7.1 of
the Agreement (it being understood that any financial statements delivered
pursuant to Section 7.1(b) have not been certified by independent public
accountants).
3. All conditions contained in the Agreement to the making of any Loan
requested hereby have been met or satisfied in full .
HEALTHSOUTH CORPORATION
BY: ______________________________
Authorized Representative
DATE: ____________________________
D-2
<PAGE>
EXHIBIT E
Form of Interest Rate Selection Notice
To: NationsBank, National Association
(Carolinas), as Agent
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704) 386-9923
Reference is hereby made to the Credit Agreement dated as of June 23, 1998,
as amended (the "Agreement"), among HEALTHSOUTH Corporation (the "Borrower"),
the Lenders (as defined in the Agreement), and NationsBank, National
Association, as Agent for the Lenders ("Agent"). Capitalized terms used but not
defined herein shall have the respective meanings therefor set forth in the
Agreement.
The Borrower through its Authorized Representative hereby gives notice to
the Agent of the following selection of a type of Loan and Interest Period:
Type Loan Interest Aggregate Date of
(check one) Period(1) Amount(2) Conversion(3)
----------- --------- --------- -------------
Loan
Base Rate Loan ___
Eurodollar Rate
Loan ___
- - ----------
(1) For any Eurodollar Rate Loan one, two, three or six months.
(2) Must be $5,000,000 or if greater an integral multiple of $1,000,000.
(3) At least three (3) Business Days later if a Eurodollar Rate Loan.
HEALTHSOUTH CORPORATION
BY: __________________________
Authorized Representative
DATE: ______________________
E-1
<PAGE>
EXHIBIT F
Form of Revolving Note
Promissory Note
(Syndicated Loan)
$______________ Birmingham, Alabama
June 23, 1998
FOR VALUE RECEIVED, HEALTHSOUTH Corporation, a Delaware corporation having
its principal place of business located in Birmingham, Alabama (the "Borrower"),
hereby promises to pay to the order of
_______________________________________________ (the "Lender"), in its
individual capacity, at the office of NATIONSBANK, NATIONAL ASSOCIATION, as
agent for the Lenders (the "Agent"), located at One Independence Center, 101
North Tryon Street, NC1-001- 15-04, Charlotte, North Carolina 28255 (or at such
other place or places as the Agent may designate in writing) at the times set
forth in the Credit Agreement dated as of June 23, 1998 among the Borrower, the
financial institutions party thereto, as amended (collectively, the "Lenders")
and the Agent (the "Agreement" -- all capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Agreement), in lawful
money of the United States of America, in immediately available funds, the
principal amount of
________________________________________ DOLLARS ($__________) or, if less
than such principal amount, the aggregate unpaid principal amount of all Loans
made by the Lender to the Borrower pursuant to the Agreement, and to pay
interest from the date hereof on the unpaid principal amount hereof, in like
money, at said office, on the dates and at the rates provided in Article II of
the Agreement. All or any portion of the principal amount of Loans may be
prepaid as provided in the Agreement.
If any amount payable under this Note is not paid when due, the then
remaining principal amount and accrued but unpaid interest shall bear interest
which shall be payable on demand at the rates per annum set forth in the proviso
to Section 2.3(a) of the Agreement. Further, in the event of such acceleration,
this Note shall become immediately due and payable, without presentment, demand,
protest or notice of any kind, all of which are hereby waived by the Borrower.
In the event this Note is not paid when due at any stated or accelerated
maturity, the Borrower agrees to pay, in addition to the principal and interest,
all costs of collection, including reasonable attorneys' fees, and interest due
hereunder thereon at the rates set forth above.
Interest hereunder shall be computed as provided in the Agreement.
F-1
<PAGE>
This Note is one of the Notes referred to in the Agreement and is issued
pursuant to and entitled to the benefits of the Agreement to which reference is
hereby made for a more complete statement of the terms and conditions upon which
the Loans evidenced hereby were or are made and are to be repaid. This Note is
subject to certain restrictions on transfer or assignment as provided in the
Agreement.
All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law the benefits of all provisions of law for
stay or delay of execution or sale of property or other satisfaction of judgment
against any of them on account of liability hereon until judgment be obtained
and execution issues against any other of them and returned satisfied or until
it can be shown that the maker or any other party hereto had no property
available for the satisfaction of the debt evidenced by this instrument, or
until any other proceedings can be had against any of them, also their right, if
any, to require the holder hereof to hold as security for this Note any
collateral deposited by any of said Persons as security. Protest, notice of
protest, notice of dishonor, diligence, presentment or any other formality are
hereby waived by all parties bound hereon.
IN WITNESS WHEREOF, the Borrower has caused this Note to be made, executed
and delivered by its duly authorized representative as of the date and year
first above written, all pursuant to authority duly granted.
HEALTHSOUTH CORPORATION
WITNESS:
______________________ By: ___________________________________
______________________ Name: _________________________________
Title: ________________________________
F-2
<PAGE>
EXHIBIT G
Investments
See attached.
G-1
<PAGE>
EXHIBIT H
Form of Opinion of Borrower's Counsel
See attached.
H-1
<PAGE>
EXHIBIT I
Compliance Certificate
NationsBank, National Association,
as Agent
Independence Center, 15th Floor
NC1-001-15-04
Charlotte, North Carolina 28255
Attention: Agency Services
Telefacsimile: (704) 386-9923
Reference is hereby made to the Credit Agreement dated as of June 23, 1998,
as amended (the "Agreement"), among HEALTHSOUTH Corporation (the "Borrower"),
the Lenders (as defined in the Agreement) and NationsBank, National Association,
as Agent for the Lenders ("Agent"). Capitalized terms used but not otherwise
defined herein shall have the respective meanings therefor set forth in the
Agreement. The undersigned, a duly authorized and acting Authorized
Representative, hereby certifies to you as of __________ (the "Determination
Date") as follows:
I. Calculations:
1. Consolidated Net Worth
A. Consolidated Net Worth at
Determination Date $___________
B. Consolidated Net Worth Required
a) At Closing Date $___________
b) Consolidated Net Income for
successive fiscal quarters
x 50% ___________
c) Net proceeds of any sale of
Capital Stock ___________
d) Additions resulting from
"pooling of interests" ___________
e) (a) + (b) + (c) + (d) (Required) $___________
I-1
<PAGE>
2. Consolidated EBITDA to Consolidated
Interest Expense
A. Consolidated Net Income ___________
B. Consolidated Interest Expense ___________
C. Consolidated Income Tax Expense ___________
D. Consolidated Amortization Expense ___________
E. Consolidated Depreciation Expense ___________
F. Minority Interest in Consolidated
Entities ___________
G. 2A + 2B + 2C + 2D + 2E + 2F ___________
H. Ratio of 2G to 2B ___ to 1.00
Required: Not less than 2.50 to 1.00
3. Consolidated Indebtedness to Consolidated
Total Capital
A. Consolidated Indebtedness ___________
B. Consolidated Total Capital ___________
C. Ratio of 3A to 3B ___ to 1.00
Required: Not to exceed .65 to 1.00
II. No Default
A. Since __________ (the date of the last similar certification),
(a) the Borrower has not defaulted in the keeping, observance,
performance or fulfillment of its obligations pursuant to any of the
Loan Documents; and (b) no Default or Event of Default has occurred
and is continuing.
B. If a Default or Event of Default has occurred since __________
(the date of the last similar certification), the Borrower proposes to
take the following action with respect to such Default or Event of
Default:______________________________________________________________
_________________________________________________________________.
(Note, if no Default or Event of Default has occurred, insert
"Not Applicable").
The Determination Date is the date of the last required financial
statements submitted to the Lenders in accordance with Section 9.1 of the
Agreement.
I-2
<PAGE>
IN WITNESS WHEREOF, I have executed this Certificate this _____ day of
__________, 19___.
By:_____________________________
Authorized Representative
Name:___________________________
Title:__________________________
I-3
<PAGE>
EXHIBIT J
Executive Officers
J-1
<PAGE>
EXHIBIT K
Form of Competitive Bid Quote Request
[Date]
To: NationsBank, N.A.
From: HEALTHSOUTH Corporation
Re: Competitive Bid Quote Request
Pursuant to Section 2.2 of the Credit Agreement dated as of June 23, 1998
(as modified and supplemented from time to time, the "Credit Agreement") among
HEALTHSOUTH Corporation, the Lenders named therein and NationsBank, N.A. as
Agent, we hereby give notice that we request Competitive Bid Quotes for the
following proposed Competitive Bid Borrowing(s):
Borrowing Quotation Interest
Date Date 1 Amount2 Type 3 Period 4
- - --------- --------- ------- -------- --------
Terms used herein have the meanings assigned to them in the Credit Agreement.
HEALTHSOUTH CORPORATION
By:________________________
Title:
- - --------
1 For use if an Absolute Rate in an Absolute Rate Auction is requested to
be submitted before the Borrowing Date.
2 Each amount must be $10,000,000 or a larger integral multiple of
$1,000,000.
3 Insert either "Eurodollar Margin" (in the case of Eurodollar Market
Loans) or "Absolute Rate" (in the case of Absolute Rate Loans).
4 One, two three or six months, in the case of a Eurodollar Market Loan or,
in the case of an Absolute Rate Loan, a period of up to 180 days after the
making of such Absolute Rate Loan and ending on a Business Day.
K-1
<PAGE>
EXHIBIT L
Form of Competitive Bid Quote
To: NationsBank, N.A., as Agent
Attention:
Re: Competitive Bid Quote to HEALTHSOUTH Corporation (the "Borrower")
This Competitive Bid Quote is given in accordance with Section 2.2(c) of
the Credit Agreement dated as of June 23, 1998 (as modified and supplemented
from time to time, the "Credit Agreement") among HEALTHSOUTH Corporation, the
lenders named therein and NationsBank, N.A., as agent. Terms defined in the
Credit Agreement are used herein as defined therein.
In response to the Borrower's invitation dated __________, 199_, we hereby
make the following Competitive Bid Quote(s) on the following terms:
1. Quoting Bank:
2. Person to contact at Quoting Bank:
3. We hereby offer to make Competitive Bid Loan(s) in the following
principal amount[s], for the following Interest Period(s) and at the
following rate(s):
Borrowing Quotation Interest
Date Date 1 Amount 2 Type 3 Period 4 Rate 5
- - --------- --------- -------- ------ -------- ------
- - --------
1 As specified in the related Competitive Bid Quote Request.
2 The principal amount bid for each Interest Period may not exceed the
principal amount requested. Bids must be made for at least $5,000,000 or a
larger integral multiple of $1,000,000.
3 Indicate "Eurodollar Margin" (in the case of Eurodollar Market Loans) or
"Absolute Rate" (in the case of Absolute Rate Loans).
4 One, two, three or six months, in the case of a Eurodollar Market Loan
or, in the case of an Absolute Rate Loan, a period of up to 180 days after the
making of such Absolute Rate Loan and ending on a Business Day, as specified in
the related Competitive Bid Quote Request.
L-1
<PAGE>
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the Credit Agreement,
irrevocably obligate[s] us to make the Competitive Bid Loan(s) for which any
offer(s) (is/are) accepted, in whole or in part (subject to the third sentence
of Section 2.2(e) of the Credit Agreement).
Very truly yours,
[NAME OF BANK]
By:_____________________________
Authorized Officer
Dated: __________, ____
- - ----------
5 For a Eurodollar Market Loan, specify margin over or under the Interbank
Offered Rate adjusted for the Eurodollar Reserve Percentage determined for the
applicable Interest Period. Specify percentage (rounded to the nearest 1/10,000
of 1%) and specify whether "PLUS" or "MINUS". For an Absolute Rate Loan, specify
rate of interest per annum (rounded to the nearest 1/10,000 of 1%).
L-2
<PAGE>
EXHIBIT M
Form of Competitive Bid Note
PROMISSORY NOTE
$_____________1 June 23, 1998
FOR VALUE RECEIVED, HEALTHSOUTH CORPORATION, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of
____________________________2 (the "Lender"), for account of its Applicable
Lending Office provided for by the Credit Agreement referred to below, at the
principal office of NationsBank, N.A., One Independence Center, 101 North Tryon
Street, NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place
or places as the Agent may designate in writing) at the times set forth in the
Credit Agreement (as herein defined), the aggregate unpaid principal amount of
the Competitive Bid Loans made by the Lender to the Borrower under the Credit
Agreement, in lawful money of the United States of America and in immediately
available funds, on the dates and in the principal amounts provided in the
Credit Agreement, and to pay interest on the unpaid principal amount of each
such Competitive Bid Loan, at such office, in like money and funds, for the
period commencing on the date of such Competitive Bid Loan until such
Competitive Bid Loan shall be paid in full, at the rates per annum and on the
dates provided in the Credit Agreement.
The date, amount, Type, interest rate and maturity date of each Competitive
Bid Loan made by the Lender to the Borrower, and each payment made on account of
the principal thereof, shall be recorded by the Borrower on its books and, prior
to any transfer of this Note, endorsed by the Borrower on the schedule attached
hereto or any continuation thereof, provided that the failure of the Lender to
make any such recordation or endorsement shall not affect the obligations of the
Borrower to make a payment when due of any amount owing under the Credit
Agreement or hereunder in respect of the Competitive Bid Loans made by the
Lender.
This Note is one of the Competitive Bid Notes referred to in the Credit
Agreement dated as of June 23, 1998 (as modified and supplemented from time to
time, the "Credit Agreement") among the Borrower, the Lenders named therein and
NationsBank, N.A., as Agent, and evidences Competitive Bid Loans made by the
Lender thereunder. Terms used but not defined in this Note have the respective
meanings assigned to them in the Credit Agreement.
- - ----------
1 Insert the amount of Lender's Revolving Credit Commitment.
2 Insert name of Lender in capital letters.
M-1
<PAGE>
The Credit Agreement provides for the acceleration of the maturity of this
Note upon the occurrence of certain events and for prepayments of Competitive
Bid Loans upon the terms and conditions specified therein. In the event this
Note is not paid when due at any stated or accelerated maturity, the Borrower
agrees to pay, in addition to the principal and interest, all costs of
collection, including reasonable attorney's fees.
Except as permitted by Section 11.1 of the Credit Agreement, this Note may
not be assigned by the Lender to any other Person.
This Note shall be governed by, and construed in accordance with, the law
of the State of North Carolina.
WITNESS: HEALTHSOUTH CORPORATION
____________________________
By:_________________________________
____________________________ Name:_______________________________
Title:______________________________
M-2
<PAGE>
SCHEDULE OF COMPETITIVE BID LOANS
This Note evidences Competitive Bid Loans made under the within-described
Credit Agreement to the Borrower, on the dates, in the principal amounts, of the
Types, bearing interest at the rates and maturing on the dates set forth below,
subject to the payments and prepayments of principal set forth below:
<TABLE>
<CAPTION>
Principal
Date Amount Type Maturity Amount Unpaid
of of of Interest Date of Paid or Principal Notation
Loan Loan Loan Rate Loan Prepaid Amount Made by
- - ---- -------- ---- -------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
M-3
EXHIBIT 11
HEALTHSOUTH CORPORATION AND SUBSIDIARIES
COMPUTATION OF INCOME PER SHARE (UNAUDITED)
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- ----------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Numerator:
Net income $117,228 $ 81,319 $226,596 $145,899
-------- -------- -------- --------
Numerator for basic earnings per share -- income available to
common stockholders 117,228 81,319 226,596 145,899
Effect of dilutive securities:
Elimination of interest and amortization on 5% Convertible
Subordinated Debentures due 2001, less the related
effect of the provision of income taxes -- -- -- 960
Elimination of interest and amortization on 3.25% Convertible
Subordinated Debentures due 2003, less the related
effect of the provision of income taxes 3,112 -- 3,492 --
-------- -------- -------- --------
Numerator for diluted earnings per share -- income available to
common stockholders after assumed conversion $120,340 $ 81,319 $230,088 $146,859
======== ======== ======== ========
Denominator:
Denominator for basic earnings per share -- weighted-average
shares 400,628 340,045 399,540 334,233
Effect of dilutive securities:
Net effect of dilutive stock options 12,086 14,937 12,123 14,994
Assumed conversion of 5% Convertible Subordinated
Debentures due 2001 -- -- -- 6,113
Assumed conversion of 3.25% Convertible Subordinated
Debentures due 2003 15,502 -- 8,585 --
-------- -------- -------- --------
Dilutive potential common shares 27,588 14,937 20,708 21,107
-------- -------- -------- --------
Denominator of diluted earnings per share -- adjusted
weighted-average shares and assumed conversions 428,216 354,982 420,248 355,340
======== ======== ======== ========
Basic earnings per share $ 0.29 $ 0.24 $ 0.57 $ 0.44
======== ======== ======== ========
Diluted earnings per share $ 0.28 $ 0.23 $ 0.55 $ 0.41
======== ======== ======== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 200,290
<SECURITIES> 4,256
<RECEIVABLES> 1,538,341
<ALLOWANCES> (646,950)
<INVENTORY> 70,237
<CURRENT-ASSETS> 1,347,604
<PP&E> 2,741,756
<DEPRECIATION> (587,414)
<TOTAL-ASSETS> 6,112,778
<CURRENT-LIABILITIES> 301,106
<BONDS> 2,190,706
0
0
<COMMON> 4,018
<OTHER-SE> 3,469,811
<TOTAL-LIABILITY-AND-EQUITY> 6,112,778
<SALES> 0
<TOTAL-REVENUES> 1,850,145
<CGS> 0
<TOTAL-COSTS> 1,192,809
<OTHER-EXPENSES> 153,713
<LOSS-PROVISION> 43,723
<INTEREST-EXPENSE> 56,918
<INCOME-PRETAX> 407,504
<INCOME-TAX> 145,484
<INCOME-CONTINUING> 226,596
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 226,596
<EPS-PRIMARY> 0.57
<EPS-DILUTED> 0.55
</TABLE>
