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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
<TABLE>
<C> <S>
MARK ONE:
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
</TABLE>
FOR THE TRANSITION PERIOD FROM ___________________ TO ___________________.
COMMISSION FILE NUMBER 1-11239
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COLUMBIA/HCA HEALTHCARE CORPORATION
(FORMERLY COLUMBIA HEALTHCARE CORPORATION)
(Exact Name of Registrant as Specified in its Charter)
------------------------
<TABLE>
<S> <C>
DELAWARE 75-2497104
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Indentification No.)
201 WEST MAIN STREET
LOUISVILLE, KENTUCKY 40202
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
Registrant's Telephone Number, Including Area Code: (502) 572-2000
Securities Registered Pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Common Stock, $.01 Par Value New York Stock Exchange
</TABLE>
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
As of February 28, 1994, there were outstanding 318,289,550 shares of the
Registrant's Common Stock and 18,989,999 shares of the Registrant's Nonvoting
Common Stock. As of February 28, 1994 the aggregate market value of the Common
Stock held by non-affiliates was $12,304,680,760. For purposes of the foregoing
calculation only, the Registrant's directors, executive officers, and The
Hospital Corporation of America Stock Bonus Plan have been deemed to be
affiliates.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's definitive Proxy Statement for its 1994 Annual
Meeting of Stockholders are incorporated by reference into Part III hereof.
The Exhibit Index is on page 39.
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<PAGE>
PART I
ITEM 1. BUSINESS.
GENERAL
Columbia/HCA Healthcare Corporation (the "Company") is a health care
services company that is primarily engaged in buying, selling, owning and
operating general, acute care and specialty hospitals and related health care
facilities. As of March 28, 1994, the Company operated 196 hospitals located in
26 states and two foreign countries.
On February 10, 1994, the Company acquired HCA-Hospital Corporation of
America ("HCA") pursuant to a merger transaction accounted for as a pooling of
interests (the "HCA Merger"). HCA was one of the leading hospital management
companies in the United States. Effective September 1, 1993, the Company
acquired Galen Health Care, Inc. ("Galen") pursuant to a merger transaction
accounted for as a pooling of interests (the "Galen Merger"). Galen was a health
care services company that primarily owned and operated acute care hospitals.
Galen began operations as an independent publicly held corporation upon the
distribution of all of its common stock (the "Spinoff") by its then 100% owner,
Humana Inc. ("Humana"), on March 1, 1993. Unless otherwise noted, the historical
financial and operating data contained in this Annual Report on Form 10-K have
been restated to include the relevant data for both HCA and Galen for all
periods presented.
The Company, through various predecessor entities, began operations on July
1, 1988. The Company was incorporated in Nevada in January 1990 and
reincorporated in Delaware in September 1993. The Company's principal executive
offices are located at 201 West Main Street, Louisville, Kentucky 40202, and its
telephone number at such address is (502) 572-2000.
BUSINESS STRATEGY
The Company's strategy is to become a significant, comprehensive provider of
quality health care services in targeted markets. The Company pursues its
strategy by acquiring the health care facilities necessary to develop a
comprehensive health care network with wide geographic presence throughout the
market. Typically, the Company enters a market by acquiring one or more mid-to
large-size general, acute care hospitals (over 150 licensed beds), which have
either desirable physical plants or ones which can be upgraded on an
economically feasible basis. The Company then upgrades equipment and facilities
and adds new services to increase the attractiveness of the hospital to local
physicians and patient populations. The Company typically develops a network by
acquiring additional health care facilities including additional general, acute
care hospitals, psychiatric hospitals and outpatient facilities such as surgery
centers, diagnostic centers, physical therapy centers and other treatment or
wellness facilities including home health care services. By developing a
comprehensive health care network in a local market, the Company achieves
greater visibility and is better able to attract physicians and patients by
offering a full range of services in the entire market area. The Company is also
able to reduce operating costs by sharing certain services among several
facilities in the same market and is better positioned to work with health
maintenance organizations ("HMOs"), preferred provider organizations ("PPOs")
and employers.
Upon acquisition of a facility, the Company hires experienced executives to
manage its operations and decentralizes operational decision making to the local
level, while providing local physicians and managers the opportunity to purchase
equity interests in the operations through a partnership or corporate structure.
The Company is currently implementing this strategy with certain of the former
Galen and HCA facilities. Management believes the Company's strategy of
co-ownership of its facilities with physicians produces significant operational
advantages. Physicians who have an ownership interest in a facility take a more
active role in recruiting other physicians and in improving efficiency by
containing costs and making more rational capital expenditure decisions, and
often are more active supporters of operations and medical staff quality
assurance activities, as they have a direct personal interest in the success and
reputation of the facility. Moreover, because the Company's facilities are co-
owned with and operated by prominent members of the local medical community,
both community
2
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support for the facilities and the Company's ability to recruit physicians to
the facilities are enhanced. In addition, by giving local managers of its
facilities the opportunity to purchase equity interests in such facilities, the
Company creates incentives on the part of its local managers to operate their
facilities successfully with a long-term perspective.
HEALTH CARE FACILITIES
The Company currently operates hospitals, ambulatory surgery centers,
diagnostic centers, cardiac rehabilitation centers, physical therapy centers,
radiation oncology centers, comprehensive outpatient rehabilitation centers and
home health care agencies and programs.
The Company currently operates 168 general, acute care hospitals with 39,886
licensed beds. Most of the Company's general, acute care hospitals provides
medical and surgical services, including inpatient care, intensive and cardiac
care, diagnostic services and emergency services. The general, acute care
hospitals also provide outpatient services such as outpatient surgery,
laboratory, radiology, respiratory therapy, cardiology and physical therapy. A
local advisory board, which usually includes members of the hospital's medical
staff, generally makes recommendations concerning the medical, professional and
ethical practices at each hospital and monitors such practices. However, the
hospital is ultimately responsible for ensuring that these practices conform to
established standards. When the Company acquires a hospital, it establishes
quality assurance programs to support and monitor quality of care standards and
to meet accreditation and regulatory requirements. Patient care evaluations and
other quality of care assessment activities are monitored on a continuing basis.
Like most hospitals, the Company's hospitals do not engage in extensive
medical research and medical education programs. However, some of the Company's
hospitals have an affiliation with medical schools, including the clinical
rotation of medical students.
The Company currently operates 28 psychiatric hospitals with 3,285 licensed
beds. The Company's psychiatric hospitals provide therapeutic programs tailored
to child psychiatric, adolescent psychiatric, adult psychiatric, adolescent
alcohol or drug abuse and adult alcohol or drug abuse patients. The hospitals
use the treatment team concept whereby the admitting physician, team
psychologist, social workers, nurses, therapists and counselors coordinate each
phase of therapy. Services provided by this team include crisis intervention,
individual psychotherapy, group and family therapy, social services, chemical
dependency counseling, behavioral modification and physical medicine. Family
aftercare plans are actively promoted from the time of admission, through
hospitalization and after discharge. An aftercare plan measures each patient's
post-program progress and utilizes one or more self-help groups. Program
procedures are designed to ensure that quality standards are achieved and
maintained. Certain of the Company's general, acute care hospitals also have a
limited number of licensed psychiatric beds.
Other outpatient or related health care services operated by the Company
include ambulatory surgery centers, diagnostic centers, outpatient physical
therapy/rehabilitation centers, outpatient radiation therapy centers, cardiac
rehabilitation centers, skilled nursing services and home health/ infusion
services. These outpatient and related services are an integral component of the
Company's strategy to develop a comprehensive health care network in each of its
target markets.
In addition to providing capital resources, the Company makes available a
variety of management services to its health care facilities, most
significantly: national supply and equipment purchasing and leasing contracts;
financial policies; accounting, financial and clinical systems; governmental
reimbursement assistance; construction planning and coordination; information
systems; legal; personnel management; and internal audit.
SOURCES OF REVENUE
Hospital revenues depend upon inpatient occupancy levels, the extent to
which ancillary services and therapy programs are ordered by physicians and
provided to patients, the volume of outpatient procedures and the charges or
negotiated payment rates for such services. Charges and reimbursement rates for
inpatient routine services vary significantly depending on the type of service
(e.g.,
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medical/surgical, intensive care or psychiatric) and the geographic location of
the hospital. The Company has experienced an increase in the percentage of
patient revenues attributable to outpatient services. This increase is primarily
the result of advances in technology, which allow more services to be provided
on an outpatient basis, acquisitions of additional outpatient facilities and
increased pressures from Medicare, Medicaid, HMOs and PPOs and insurers to
reduce hospital stays and provide services, where possible, on a less expensive
outpatient basis.
The Company receives payment for patient services from the federal
government primarily under the Medicare program, state governments under their
respective Medicaid programs, HMOs, PPOs and other private insurers and directly
from patients. The approximate percentages of patient revenues of the Company's
facilities from such sources during the periods specified below were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1993 1992 1991
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<S> <C> <C> <C>
Medicare........................................................... 34% 30% 29%
Medicaid........................................................... 4 4 4
Other sources...................................................... 62 66 67
--- --- ---
Total.............................................................. 100% 100% 100%
--- --- ---
--- --- ---
</TABLE>
Medicare is a federal program that provides certain hospital and medical
insurance benefits to persons age 65 and over, some disabled persons and persons
with end-stage renal disease. Medicaid is a federal-state program administered
by the states which provides hospital benefits to qualifying individuals who are
unable to afford care. Substantially all of the Company's hospitals are
certified as providers of Medicare and Medicaid services. Amounts received under
the Medicare and Medicaid programs are generally significantly less than the
hospital's customary charges for the services provided.
To attract additional volume, most of the Company's hospitals offer
discounts from established charges to certain large group purchasers of health
care services, including Blue Cross, other private insurance companies,
employers, HMOs, PPOs and other managed care plans. Blue Cross is a private
health care program that funds hospital benefits through independent plans that
vary in each state. These discount programs limit the Company's ability to
increase charges in response to increasing costs. See "Competition." Patients
are generally not responsible for any difference between customary hospital
charges and amounts reimbursed for such services under Medicare, Medicaid, some
Blue Cross plans and HMOs or PPOs, but are responsible to the extent of any
exclusions, deductibles or co-insurance features of their coverage. The amount
of such exclusions, deductibles and co-insurance has generally been increasing
each year. Collection of amounts due from individuals is more difficult than
from governmental or business payors.
MEDICARE
Beginning in 1983, reimbursement to hospitals under the Medicare program
changed significantly and these changes have had, and are expected to continue
to have, significant effects on the Company's hospitals and the health care
industry in general. Prior to 1983, Medicare reimbursed medical/surgical
hospitals on a cost-based system. In 1983, Medicare established a prospective
payment system under which inpatient discharges from medical/surgical hospitals
are classified into categories of treatments, known as Diagnosis Related Groups
("DRGs"), which classify illnesses according to the estimated intensity of
hospital resources necessary to furnish care for each principal diagnosis. At
December 31, 1993, there were 489 DRGs. Hospitals generally receive a fixed
amount per Medicare discharge based upon the assigned DRG (the "DRG rate")
regardless of how long the patient remains in the hospital or the volume of
ancillary services ordered by the attending physician. However, the DRG rate is
adjusted for each hospital to reflect the relative severity of diagnosis, higher
cost of certain geographical areas, disproportionate share of low income
patients and indirect medical education costs. Also, Medicare pays an additional
"outlier" payment for extraordinary Medicare
4
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cases involving long hospital stays or significant amounts of costs incurred.
Under the prospective payment system, hospitals generally are encouraged to
operate with greater efficiency, since they may retain payments in excess of
costs but must absorb costs in excess of such payments.
The Secretary of the Department of Health and Human Services ("HHS") is
required to establish annual increases in the DRG rates, effective October 1 of
each year, to counter inflationary pressure after considering the
recommendations of an independent panel of experts. In each year since 1984,
however, the increases in the DRG rates have been determined by Congress as part
of the federal budget process. The index used to adjust the DRG rates gives
consideration to the inflation experienced by hospitals in purchasing the goods
and services they need to provide inpatient services (the "market basket"). For
several years the percentage increases to the DRG rates have been lower than the
percentage increases in the market basket. Substantially all of the Company's
general, acute care hospitals are classified as urban for Medicare purposes. For
federal fiscal year ("FY") 1992 the net update of the DRG rates for urban
hospitals set by Congress was 2.8% (market basket minus 1.6%); for FY 1993 the
net update of the DRG rates for urban hospitals was 2.6% (market basket minus
1.6%); and for FY 1994 the net update of the DRG rates for urban hospitals will
be 1.8% (market basket minus 2.5%). As a result of the Omnibus Budget
Reconciliation Act of 1993 ("OBRA 1993"), the net update of DRG rates for future
fiscal years is as follows: (i) FY 1995 -- urban hospitals will equal the market
basket minus 2.5%; (ii) FY 1996 -- all hospitals will equal the market basket
minus 2.0%; (iii) FY 1997 -- all hospitals will equal the market basket minus
0.5%; and (iv) FY 1998 and thereafter -- all hospitals will equal the market
basket.
Medicare payments for the majority of outpatient services generally are the
lower of 94.2% of hospital costs, customary charges or a blend of 94.2% of
hospital costs and a fee schedule (such fee schedule generally being lower than
hospital costs). OBRA 1993 extended the 94.2% provision through FY 1998. HHS has
indicated its intention to change reimbursement procedures for Medicare
outpatients to a prospective payment system. The effect of a change to a
prospective payment system or other changes to the existing payment system, if
implemented, cannot be predicted by the Company at this time. Medicare
outpatient revenues were approximately 21% of the Company's total outpatient
revenues, or approximately 6% of the Company's total operating revenues, for the
year ended December 31, 1993.
In addition to the operating payments described above, the Medicare program
provides reimbursement to hospitals for certain costs of capital (such as
depreciation, property taxes, rent and interest). Pursuant to final HHS
regulations issued in August 1991, reimbursement for capital expenditures
related to inpatient care was incorporated into the prospective payment system
and will be phased in over a ten-year period beginning October 1, 1991. The
regulations establish a standard federal rate per discharge for capital-related
inpatient hospital costs. The standard federal rate is based on the estimated FY
1992 national average Medicare inpatient capital-related cost per discharge
under cost reimbursement. The rate will be adjusted for each hospital to reflect
the relative severity of diagnosis, higher cost of certain geographic areas,
disproportionate share of low income patients, indirect medical education costs
and extremely high cost cases. As required by law, however, the standard federal
rate will be adjusted in FY 1992 through FY 1995 so that aggregate payments for
capital will not exceed 90% of the amounts that would have been payable under a
reasonable cost reimbursement basis. High capital cost-per-discharge hospitals
may qualify to continue to be paid based on a blend of old and new capital, with
old capital being paid at 85% of reasonable cost. Based upon its analysis of the
manner in which these regulations will be applied, the Company does not believe
that, in the aggregate, its hospitals were materially affected by the
regulations for the year ended December 31, 1993. Payments for future years,
however, including those related to new capital expenditures, will be affected
by annual updates in the federal payment rate. Management cannot predict the
effect of such changes on the Company's results of operations or financial
condition.
The Medicare program reimburses each hospital on a reasonable cost basis for
the Medicare program's pro rata share of the hospital's allowable capital costs
related to outpatient services. Outpatient capital reimbursement was reduced by
15% (i.e., 85% of outpatient capital costs) during
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FY 1990 and the Omnibus Budget Reconciliation Act of 1990 (the "1990 Budget
Act") extended the 15% reduction through FY 1991. The 1990 Budget Act further
directed that outpatient capital reimbursement be reduced by only 10% beginning
in FY 1992 through FY 1995. OBRA 1993 extended the 10% reduction through FY
1998.
In December 1985, the Gramm-Rudman-Hollings Amendment ("Gramm-Rudman") was
enacted by Congress mandating progressively smaller projected federal budget
deficits for FYs between 1986 and 1991. Gramm-Rudman provides for automatic
spending cuts in governmental programs (including Medicare) if certain deficit
targets are not met. Under Gramm-Rudman, Medicare payments were reduced in each
of the FYs 1986 through 1988 and in 1990. The 1990 Budget Act restructured
Gramm-Rudman and extended its term of effectiveness. For FY 1991 through FY
1993, fixed deficit targets were eliminated, but will be applied for FY 1994 and
FY 1995 unless the President orders such targets eliminated. In addition to the
possible fixed deficit targets for FY 1994 and FY 1995, the 1990 Budget Act
created two new limitations on federal spending, the Discretionary Spending
Limits and the "Pay As You Go" requirement. Each of the three spending
limitations is enforceable by sequestration, and under the "Pay As You Go"
limitation, the maximum reduction in Medicare payments is 4%. Management is
unable to determine what effect, if any, such provisions of the 1990 Budget Act
might have on the Company if implemented.
Certain specialized hospitals, including psychiatric hospitals, are exempt
from the Medicare prospective payment system and continue to be reimbursed on a
cost-based system. Under the Tax Equity and Fiscal Responsibility Act of 1982,
base year costs per Medicare case were determined for the Company's psychiatric
hospitals in 1982. The target rate of permitted increases in cost per case is
established each year by the increase in the cost of a market basket of hospital
goods and services (the "Target Rate"). If a hospital's costs increase less than
the Target Rate, the hospital receives a bonus of 50% of the difference between
its allowed increase and its actual increase (limited to 5% of the Target Rate).
These limits apply only to operating costs and do not apply to capital costs.
The effective increase in the Target Rate per discharge was 4.3% for the year
commencing October 1, 1993 and is expected to be market basket minus 1% for FYs
1995 through 1997. Beginning in FY 1998, the update will equal the percentage
increase in the market basket. The 1990 Budget Act, however, reduces the penalty
for hospitals that incur actual operating costs in excess of the Target Rate by
reimbursing 50% of the cost in excess of the limit up to 110% of the limit,
effective for cost reporting periods beginning on or after October 1, 1991. The
1990 Budget Act directed the Secretary of HHS to develop a new prospective
payment methodology for exempt hospitals and to report to Congress on this
matter by April 1, 1992. The report had not been made as of March 28, 1994.
Considerable uncertainty surrounds the future determination of payment
levels for DRGs and for other services currently being reimbursed on a cost
basis. Congress could consider further legislation in the prospective payment
area, such as further reducing or eliminating DRG rate increases or otherwise
revising DRG rates. In addition, any automatic spending cuts mandated under
Gramm-Rudman will further reduce payments to the Company's hospitals under the
Medicare program. Also, substantial areas of the Medicare program are subject to
legislative and regulatory changes, administrative rulings, interpretations,
administrative discretion, governmental funding restrictions and requirements
for utilization review (such as second opinions for surgery and preadmission
criteria). These matters, as well as more general governmental budgetary
concerns, may significantly reduce payments made to the Company's hospitals
under such programs, and there can be no assurance that future Medicare payment
rates will be sufficient to cover cost increases in providing services to
Medicare patients.
MEDICAID
Most state Medicaid payments are made under a prospective payment system or
under programs to negotiate payment levels with individual hospitals. Medicaid
reimbursement is generally substantially less than a hospital's cost of
services. Medicaid is currently funded approximately 50% by the states and
approximately 50% by the federal government. The federal government and many
states
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are currently considering significant reductions in the level of Medicaid
funding while at the same time expanding Medicaid benefits, which could
adversely affect future levels of Medicaid reimbursement received by the
Company's hospitals.
On November 27, 1991, Congress enacted the Medicaid Voluntary Contribution
and Provider-Specific Tax Amendments of 1991 (the "Medicaid Amendments"), which
limit the amount of voluntary contributions and provider-specific taxes that can
be used by states to fund Medicaid and require the use of broad-based taxes for
such funding. As a result of enactment of the Medicaid Amendments, certain
states in which the Company operates have adopted broad-based provider taxes to
fund their Medicaid programs. To date, the impact upon the Company of these new
taxes has not been materially adverse. However, the Company is unable to predict
whether any additional broad-based provider taxes will be adopted by the states
in which it operates and, accordingly, is unable to assess the effect thereof on
its results of operations or financial condition.
ANNUAL COST REPORTS
The Company's annual cost reports which are required under the Medicare and
Medicaid programs are subject to audit which may result in adjustments to the
amounts ultimately determined to be due the Company under these reimbursement
programs. These audits often require several years to reach the final
determination of amounts earned under the programs. Providers also have rights
of appeal, and the Company is currently contesting certain issues raised in
audits of prior years' reports. Management believes that adequate provision has
been made in its financial statements for any material retroactive adjustments
that might result from all of such audits and that final resolution of all of
these issues will not have a material adverse effect upon the Company's results
of operations or financial position. Since the inception of the Medicare
prospective payment system in 1983, the amount of reimbursement to the Company's
general, acute care hospitals potentially affected by audit adjustments has
substantially diminished.
COMMERCIAL INSURANCE
The Company's hospitals provide services to individuals covered by private
health care insurance. Private insurance carriers either reimburse their policy
holders or make direct payments to the Company's hospitals based upon the
particular hospital's established charges and the particular coverage provided
in the insurance policy. Blue Cross is a health care financing program that
provides its subscribers with hospital benefits through independent
organizations that vary from state to state. The Company's hospitals are paid
directly by local Blue Cross organizations on the basis agreed to by each
hospital and Blue Cross by a written contract.
Recently, several commercial insurers have undertaken efforts to limit the
costs of hospital services by adopting prospective payment or DRG based systems.
To the extent such efforts are successful, and to the extent that the insurers'
systems fail to reimburse hospitals for the costs of providing services to their
beneficiaries, such efforts may have a negative impact on the Company's
hospitals.
HOSPITAL UTILIZATION
The Company believes that the two most important factors relating to the
overall utilization of a hospital are the quality and market position of the
hospital and the number and quality of physicians providing patient care within
the facility. Generally, the Company believes that the ability of a hospital to
be a market leader is determined by its breadth of services, level of
technology, emphasis on quality of care and convenience for patients and
physicians. Other factors which impact utilization include the growth in local
population, local economic conditions and market penetration of managed care
programs.
The following table sets forth certain operating statistics for hospitals
owned and operated by the Company for each of the five most recent years.
Medical/surgical hospital operations are subject to certain seasonal
fluctuations, including decreases in patient utilization during holiday periods
and
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increases in the cold weather months. Psychiatric hospital operations are also
subject to certain seasonal fluctuations, including decreases in patient
occupancy during the summer months and holiday periods.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
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1993 1992 1991 1990 1989
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Number of hospitals (1)...................... 193 200 219 221 218
Weighted average licensed beds (2)........... 41,263 40,608 42,437 42,264 41,452
Admissions (3)............................... 1,158,400 1,161,100 1,189,700 1,174,700 1,139,300
Average length of stay (days)................ 5.9 6.1 6.5 6.6 6.8
Average daily census......................... 18,702 19,253 21,255 21,351 21,155
Occupancy rate (4)........................... 45% 47% 50% 51% 51%
Emergency room visits........................ 3,139,700 3,042,900 3,028,600 2,894,800 2,756,900
Outpatient revenues as a % of patient
revenues.................................... 27% 26% 24% 22% 21%
<FN>
- ------------------------
(1) End of period.
(2) Weighted average licensed beds is defined as the number of licensed beds
after giving effect to the length of time the beds have been licensed
during the period.
(3) Admissions represent the number of patients admitted for inpatient
treatment.
(4) Occupancy rates are calculated by dividing average daily census by
weighted average licensed beds.
</TABLE>
Beginning in 1983, hospitals began experiencing significant shifts from
inpatient to outpatient care as well as decreases in average lengths of
inpatient stay primarily as a result of hospital payment changes by Medicare,
insurance carriers and self-insured employers. These changes generally
encouraged the utilization of outpatient, rather than inpatient, services
whenever possible, and shortened lengths of stay for inpatient care. Another
factor affecting hospital utilization levels is improved treatment protocols as
a result of medical technology and pharmacological advances.
COMPETITION
Generally, other hospitals in the local markets served by most of the
Company's hospitals provide services that are offered by the Company's
hospitals. Additionally, in the past several years, the number of free-standing
outpatient surgery and diagnostic centers in the geographic areas in which the
Company operates has increased significantly. As a result, most of the Company's
hospitals operate in an increasingly competitive environment. The rates charged
by the Company's hospitals are intended to be competitive with those charged by
other local hospitals for similar services. In some cases, competing hospitals
are more established than the Company's hospitals. Also, some competing
hospitals are owned by tax-supported government agencies and many others by
tax-exempt corporations which may be supported by endowments and charitable
contributions and which are exempt from sales, property and income taxes. Such
exemptions and support are not available to the Company's hospitals. In
addition, in certain localities served by the Company there are large teaching
hospitals which provide highly specialized facilities, equipment and services
which may not be available at most of the Company's hospitals. Psychiatric
hospitals frequently attract patients from areas outside their immediate locale
and, therefore, the Company's psychiatric hospitals compete with both local and
regional hospitals, including the psychiatric units of general, acute care
hospitals.
The Company believes that its hospitals compete within local markets on the
basis of many factors, including the quality of care, ability to attract and
retain quality physicians, location, breadth of services and technology offered
and prices charged. The competition among hospitals and other health care
providers has intensified in recent years as hospital occupancy rates have
declined. The Company's strategies are designed, and management believes that
its hospitals are positioned, to be competitive under these changing
circumstances.
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One of the most significant factors in the competitive position of a
hospital is the number and quality of physicians affiliated with the hospital.
Although physicians may at any time terminate their affiliation with a hospital
operated by the Company, the Company seeks to retain physicians of varied
specialties on its hospitals' medical staffs and to attract other qualified
physicians. The Company believes that physicians refer patients to a hospital
primarily on the basis of the quality of services it renders to patients and
physicians, the quality of other physicians on the medical staff, the location
of the hospital and the quality of the hospital's facilities, equipment and
employees. Accordingly, the Company strives to maintain high ethical and
professional standards and quality facilities, equipment, employees and services
for physicians and their patients.
Another major factor in the competitive position of a hospital is its
management's ability to negotiate service contracts with purchasers of group
health care services. HMOs and PPOs attempt to direct and control the use of
hospital services through managed care programs and to obtain discounts from
hospitals' established charges. In addition, employers and traditional health
insurers are increasingly interested in containing costs through negotiations
with hospitals for managed care programs and discounts from established charges.
Generally, hospitals compete for service contracts with group health care
service purchasers on the basis of price, market reputation, geographic
location, quality and range of services, quality of the medical staff and
convenience. The importance of obtaining contracts with managed care
organizations varies from market to market depending on the market strength of
such organizations.
State certificate of need ("CON") laws, which place limitations on a
hospital's ability to expand hospital services and add new equipment, may also
have the effect of restricting competition. The application process for approval
of covered services, facilities, changes in operations and capital expenditures
is, therefore, highly competitive. In those states which have no CON laws or
which set relatively high levels of expenditures before they become reviewable
by state authorities, competition in the form of new services, facilities and
capital spending is more prevalent. The Company has not experienced, and does
not expect to experience, any material adverse effects from state CON
requirements or from the imposition, elimination or relaxation of such
requirements. See "Regulation and Other Factors."
REGULATION AND OTHER FACTORS
LICENSURE, CERTIFICATION AND ACCREDITATION
Health care facility construction and operation is subject to federal, state
and local regulation relating to the adequacy of medical care, equipment,
personnel, operating policies and procedures, fire prevention, rate-setting and
compliance with building codes and environmental protection laws. Facilities are
subject to periodic inspection by governmental and other authorities to assure
continued compliance with the various standards necessary for licensing and
accreditation. All of the Company's health care facilities are properly licensed
under appropriate state laws. Substantially all of the Company's general, acute
care hospitals are certified under the Medicare program or are accredited by the
Joint Commission on Accreditation of Health Care Organizations ("Joint
Commission"), the effect of which is to permit the facilities to participate in
the Medicare and Medicaid programs. A few of the Company's psychiatric hospitals
do not participate in these programs. Should any facility lose its Joint
Commission accreditation, or otherwise lose its certification under the Medicare
program, the facility would be unable to receive reimbursement from the Medicare
and Medicaid programs. Management believes that the Company's facilities are in
substantial compliance with current applicable federal, state, local and
independent review body regulations and standards. The requirements for
licensure, certification and accreditation are subject to change and, in order
to remain qualified, it may be necessary for the Company to effect changes in
its facilities, equipment, personnel and services.
CERTIFICATES OF NEED
The construction of new facilities, the acquisition of existing facilities,
and the addition of new beds or services may be reviewable by state regulatory
agencies under a CON program. The Company operates hospitals in some states that
require approval under a CON program. Such laws generally
9
<PAGE>
require appropriate state agency determination of public need and approval prior
to beds or services being added, or a related capital amount being spent.
Failure to obtain necessary state approval can result in the inability to
complete an acquisition or change of ownership, the imposition of civil or, in
some cases, criminal sanctions, the inability to receive Medicare or Medicaid
reimbursement or the revocation of a facility's license.
STATE RATE REVIEW
A few states in which the Company owns hospitals have adopted legislation
mandating rate or budget review for hospitals or have adopted taxes on hospital
revenues, assessments or licensure fees to fund indigent health care within the
state.
In Florida, a budget review process and a ceiling on net revenue increases
per admission has been in effect with respect to the Company's hospitals since
January 1, 1986. The ceiling on net revenue increases per admission limits
hospital net revenue per admission increases to an annually-determined
percentage increase in costs that Florida hospitals pay for goods and services
plus a statutory 2%, plus additional amounts to recognize the hospital's
Medicare patient days and Medicaid and uncompensated charity care days. This law
limits the ability of Florida hospitals to increase rates to maintain operating
margins. The Company owned 47 hospitals aggregating 11,596 beds in Florida as of
March 28, 1994.
In the aggregate, state rate or budget review and indigent tax provisions
have not materially adversely affected the Company's results of operations. The
Company is unable to predict whether any additional state rate or budget review
or indigent tax provisions will be adopted and, accordingly, is unable to assess
the effect thereof on its results of operations or financial condition.
UTILIZATION REVIEW
Federal law contains numerous provisions designed to ensure that services
rendered by hospitals to Medicare and Medicaid patients meet professionally
recognized standards, are medically necessary and that claims for reimbursement
are properly filed. These provisions include a requirement that a sampling of
admissions of Medicare and Medicaid patients must be reviewed by peer review
organizations ("PROs"), which review the appropriateness of Medicare and
Medicaid patient admissions and discharges, the quality of care provided, the
validity of DRG classifications and the appropriateness of cases of
extraordinary length of stay or cost. While no PROs have ever taken any material
adverse action against any of the Company's hospitals, PROs may deny payment for
services provided, assess fines and also have the authority to recommend to HHS
that a provider which is in substantial noncompliance with the standards of the
PRO be excluded from participating in the Medicare program.
MEDICARE REGULATIONS AND FRAUD AND ABUSE
Participation in the Medicare program is heavily regulated by federal
statute and regulation. If a hospital provider fails substantially to comply
with the numerous conditions of participation in the Medicare program or
performs certain prohibited acts (e.g., (i) making false claims to Medicare for
services not rendered or misrepresenting actual services rendered in order to
obtain higher reimbursement; (ii) paying remuneration for Medicare referrals (so
called "fraud and abuse" which is prohibited by the "anti-kickback" provisions
of the Social Security Act); (iii) failing to stabilize all individuals who come
to its emergency room who have an "emergency medical condition," whether or not
any such individual is eligible for Medicare; (iv) transferring any stabilized
patient to another health care facility before such other facility has agreed to
the transfer of such patient, while such other facility does not have sufficient
room and staff to treat the patient, without the patient's emergency department
medical records, or without appropriate life support equipment; and (v)
transferring any unstabilized patient except those transferred at the patient's
request or with physician certification that the medical risks from the transfer
are less harmful than continued treatment at the transferring facility), such
hospital's participation in the Medicare program may be terminated or civil or
criminal penalties may be imposed upon such hospital under certain provisions of
the Social Security Act.
10
<PAGE>
Moreover, HHS and the courts have interpreted the "fraud and abuse"
anti-kickback provisions of the Social Security Act (presently codified in
Section 1128B(b) of the Social Security Act) broadly to include the intentional
offer, payment, solicitation or receipt of anything of value if one purpose of
the payment is to induce the referral of Medicare business. Health care
providers generally are concerned that many relatively innocuous, or even
beneficial, commercial arrangements with their physicians may technically
violate this strict interpretation of Section 1128B(b).
In 1976 Congress established the Office of Inspector General ("OIG") at HHS
to identify and eliminate fraud, abuse and waste in HHS programs and to promote
efficiency and economy in HHS departmental operations. The OIG carries out this
mission through a nationwide program of audits, investigations and inspections.
In order to provide guidance to health care providers on ways to engage in
legitimate business practices and avoid scrutiny under the fraud and abuse
statute, the OIG has from time to time issued "fraud alerts" identifying
features of transactions, which, if present, may indicate that the transaction
violates the fraud and abuse law. In May 1992, the OIG issued a special fraud
alert regarding hospital incentives to physicians. The alert identified the
following incentive arrangements as potential violations of the statute: (a)
payment of any sort of incentive by the hospital each time a physician refers a
patient to the hospital, (b) the use of free or significantly discounted office
space or equipment (in facilities usually located close to the hospital), (c)
provision of free or significantly discounted billing, nursing or other staff
services, (d) free training for a physician's office staff in areas such as
management techniques, CPT coding and laboratory techniques, (e) guarantees
which provide that, if the physician's income fails to reach a predetermined
level, the hospital will supplement the remainder up to a certain amount, (f)
low-interest or interest-free loans, or loans which may be forgiven if a
physician refers patients (or some number of patients) to the hospital, (g)
payment of the costs of a physician's travel and expenses for conferences, (h)
coverage on the hospital's group health insurance plans at an inappropriately
low cost to the physician and (i) payment for services (which may include
consultations at the hospital) which require few, if any, substantive duties by
the physician, or payment for services in excess of the fair market value of
services rendered. In this fraud alert the OIG encouraged persons having
information about hospitals who offer the above types of incentives to
physicians to contact any of the eleven regional OIG offices or to report
information to the OIG.
In addition, on July 29, 1991, the OIG issued final regulations outlining
certain "safe harbor" practices, which, although potentially capable of inducing
prohibited referrals of business under Medicare or state health programs, would
not be subject to enforcement action under the Social Security Act. The
practices covered by the regulations include certain physician joint venture
transactions, rental of space and equipment, personal services and management
contracts, sales of physician practices, referral services, warranties,
discounts, payments to employees, group purchasing organizations and waivers of
beneficiary deductibles and co-payments. Additional proposed safe harbors are
expected to be published in the near future by the OIG, including a safe harbor
regulation for physician recruitment. Certain of the Company's current
arrangements with physicians, including joint ventures, do not qualify for the
current safe harbor exemptions.
Although the Company exercises care in an effort to structure its
arrangements with physicians to comply in all material respects with these laws,
and although management believes that the Company is in compliance with Section
1128B(b) of the Social Security Act, there can be no assurance that (i)
government officials charged with responsibility for enforcing the prohibitions
of Section 1128B(b) of the Social Security Act will not assert that the Company
or certain transactions in which it is involved are in violation of Section
1128B(b) of the Social Security Act and (ii) such statute will ultimately be
interpreted by the courts in a manner consistent with the practices of the
Company.
The federal Medicaid regulations also prohibit fraudulent and abusive
practices and authorize the exclusion from such program of providers in
violation of such regulations.
11
<PAGE>
STATE LEGISLATION
Some of the states in which the Company operates also have laws that
prohibit corporations and other entities from employing physicians and
practicing medicine for a profit or that prohibit certain direct and indirect
payments or fee-splitting arrangements between health care providers that are
designed to induce or encourage the referral of patients to, or the
recommendation of, particular providers for medical products and services. In
addition, some states restrict certain business relationships between physicians
and pharmacies. Possible sanctions for violation of these restrictions include
loss of licensure and civil and criminal penalties. These statutes vary from
state to state, are often vague and have seldom been interpreted by the courts
or regulatory agencies. Although the Company exercises care in an effort to
structure its arrangements with health care providers to comply with the
relevant state statutes, and although management believes that the Company is in
compliance with these laws, there can be no assurance that (i) governmental
officials charged with responsibility for enforcing these laws will not assert
that the Company or certain transactions in which it is involved are in
violation of such laws and (ii) such state laws will ultimately be interpreted
by the courts in a manner consistent with the practices of the Company.
HEALTH CARE REFORM
In recent years, an increasing number of legislative proposals have been
introduced or proposed in Congress and in some state legislatures that would
affect major changes in the health care system, either nationally or at the
state level. Among the proposals under consideration are cost controls on
hospitals, insurance market reforms to increase the availability of group health
insurance to small businesses, requirements that all businesses offer health
insurance coverage to their employees and the creation of a single government
health insurance plan that would cover all citizens. President Clinton has
stated that one of his primary objectives is to reform the nation's health care
system to insure universal coverage and address the rising costs of care. In
early 1993, President Clinton appointed Hillary Rodham Clinton to lead a health
care reform task force with the objective of developing a health care reform
proposal which could be submitted by the President. On September 22, 1993,
before a Joint Session of Congress, President Clinton outlined the basic
principles of his upcoming health care reform proposal. President Clinton's
health care reform bill, introduced as legislation on November 22, 1993,
includes certain measures that could be viewed as advancing the scope of
government regulation on the health care industry. Key elements in the
President's proposal include various insurance market reforms, the requirement
that businesses provide health insurance coverage for their full-time and
part-time employees, significant reductions in future Medicare and Medicaid
payments to providers, and stringent government cost controls that would
directly control insurance premiums and indirectly affect the fees of hospitals,
physicians and other health care providers. In addition to the President's
reform proposal, several other health care reform bills have recently been
introduced, including The Managed Competition Act of 1993, Affordable Health
Care Now Act of 1993 and Health Equity & Access Reform Today. While the Company
cannot predict whether any such proposals will be adopted, or if adopted what
effect, if any, such proposals would have on its business, the Company believes
that it is implementing measures to respond to such prospective changes by
expanding its network strategy, building integrated health care delivery
systems, negotiating with managed care providers and controlling its costs.
ENVIRONMENTAL MATTERS
The Company is subject to various federal, state and local statutes and
ordinances regulating the discharge of materials into the environment.
Management does not believe that the Company will be required to expend any
material amounts in order to comply with these laws and regulations or that
compliance will materially affect its capital expenditures, earnings or
competitive position.
INSURANCE
As is typical in the health care industry, the Company is subject to claims
and legal actions by patients in the ordinary course of business. Through two
wholly-owned insurance subsidiaries, the Company insures substantially all of
its general and professional liability risks. Subject to various
12
<PAGE>
deductibles, the Company's hospitals are insured by these insurance subsidiaries
for losses of up to $25 million per occurrence for the former HCA hospitals and
up to $5 million per occurrence for the former Columbia Healthcare Corporation
hospitals. The Company currently carries general and professional liability
insurance from unrelated commercial carriers for losses in excess of amounts
insured by its insurance subsidiaries.
The Company and its insurance subsidiaries maintain allowances for loss for
professional and general liability risks which totalled $817 million at December
31, 1993. Management considers such allowances, which are based on actuarially
determined estimates, to be adequate for such liability risks. Any losses
incurred in excess of the established allowances for loss will be reflected as a
charge to earnings of the Company. Any losses incurred within the deductible(s)
or in excess of amounts funded and commercial excess liability insurance will be
funded from the Company's working capital. While the Company's cash flow has
been adequate to provide for alleged and unforeseen liability claims in the
past, there can be no assurance that such amounts will continue to be adequate.
If payments for general and professional liabilities exceed anticipated losses,
the results of operations and financial condition of the Company could be
adversely affected.
EMPLOYEES AND MEDICAL STAFFS
At December 31, 1993, the Company had approximately 131,600 employees,
including approximately 33,500 part-time employees. Three hospitals have
employees represented by various labor unions. The Company considers its
employee relations to be satisfactory. While the Company's hospitals experience
union organizational activity from time to time, the Company does not expect
such efforts to materially affect its future operations. The Company's
hospitals, like most hospitals, have experienced labor costs rising faster than
the general inflation rate. In recent years, the Company generally has not
experienced material difficulty in recruiting and retaining employees, including
nurses and professional staff members, primarily as a result of staff retention
programs and general economic conditions. There can be no assurance as to future
availability and cost of qualified medical personnel.
As of December 31, 1993, approximately 56,000 licensed physicians were
active members of the medical staffs of the Company's hospitals. With limited
exceptions, physicians generally are not employees of the Company's hospitals.
However, some physicians provide services in the Company's hospitals under
contracts, which generally describe a term of service, provide and establish the
duties and obligations of such physicians, require the maintenance of certain
performance criteria and fix compensation for such services. Any licensed
physician may apply to be admitted to the medical staff of any of the Company's
hospitals, but admission to the staff must be approved by the hospital's medical
staff and the appropriate governing board of the hospital in accordance with
established credentialling criteria. Members of the medical staffs of the
Company's hospitals often also serve on the medical staffs of other hospitals,
and may terminate their affiliation with a hospital at any time.
INTERNAL REVENUE SERVICE EXAMINATIONS AND TAX LITIGATION
As a result of examinations by the Internal Revenue Service (the "Service")
of HCA's federal income tax returns, HCA received statutory notices of
deficiency for the years 1981 through 1988. HCA has filed petitions in the U.S.
Tax Court opposing these claimed deficiencies. Additionally, the Service
completed its examination for the years 1989 and 1990 and has issued proposed
adjustments, which HCA has protested. The principal issues involved are:
(a) METHOD OF ACCOUNTING. For the taxable years 1981 through 1986,
most of HCA's hospital subsidiaries (the "Subsidiaries") reported taxable
income using primarily the cash method of accounting. The cash method was
prevalent within the hospital industry and the Subsidiaries applied the
method in accordance with prior agreements reached with the Service. The
Service now asserts that the accrual method of accounting should have been
used. The Tax Reform Act of 1986 (the "1986 Act") requires most large
corporate taxpayers (including the Company) to use the accrual method of
accounting beginning in 1987. Consequently, the Subsidiaries changed to the
accrual method beginning January 1, 1987. In accordance with the provisions
of the 1986 Act,
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<PAGE>
income that was deferred by use of the cash method at the end of 1986 is
being recognized as taxable income by the Subsidiaries in equal annual
installments over ten years (1987 through 1996). If the Service should
ultimately prevail in its claim that the Subsidiaries should have used the
accrual method for 1981 through 1986, HCA would be entitled to an offset as
a result of the prior inclusion of such installments for 1987 and
thereafter. Furthermore, the sale by HCA of numerous Subsidiaries in 1987
that had used the cash method resulted in the recognition of substantial
gain which would not have been recognized had they been using the accrual
method. Giving effect to these offsets, as of December 31, 1993, the net
effect to HCA of the Service prevailing would be $110 million in additional
income taxes plus interest of $432 million.
(b) HOSPITAL ACQUISITIONS. (i) In connection with hospitals acquired
by HCA in 1981, the Service asserts that certain assets claimed by HCA to
have an ascertainable useful life have no ascertainable useful life and are
therefore nonamortizable, and that the values assigned by HCA's independent
appraisers to certain assets acquired were excessive and that such amounts
actually constitute goodwill, a nondepreciable and nonamortizable asset. If
the Service ultimately prevails with regard to every assertion, the
additional income taxes owed through December 31, 1993 would be $55 million
plus interest of $97 million.
(ii) Similarly, in connection with assets acquired in 1985, the Service
is asserting that the relevant appraised values were excessive, with a
corresponding limitation on the resulting deductions. With regard to these
issues, the Service claims $58 million of additional income taxes and $42
million of interest through December 31, 1993.
(c) INSURANCE SUBSIDIARY. (i) Based on a Sixth Circuit Court of
Appeals decision (the Court having jurisdiction over HCA's issues), HCA has
claimed that insurance premiums paid to Parthenon Insurance Company
("Parthenon"), a wholly-owned subsidiary of HCA, are deductible, while the
Service maintains that such premiums are not deductible and that
corresponding losses are only deductible at the time and to the extent that
claims are actually paid. HCA has claimed the additional deductions in its
Tax Court petitions. Through December 31, 1993, HCA is seeking an income tax
refund of $51 million, plus interest of $93 million with respect to this
issue.
(ii) As an alternative to HCA's position set forth in (c)(i) above, HCA
has taken the position that in connection with its sale of hospitals to
HealthTrust, Inc. -- The Hospital Company ("HealthTrust") in 1987, premiums
paid to Parthenon by the hospitals sold, if not deductible as described in
(c)(i) above, became deductible by HCA upon the sale and HCA claimed such
deduction in its 1987 federal income tax return. The Service has disallowed
the deduction and is claiming an additional $5 million in income taxes and
$15 million in interest. A final determination that the premiums are not
deductible either when paid or upon the sale would increase HCA's taxable
basis in the hospitals sold, reducing HCA's gain realized on the sale.
(d) HEALTHTRUST SALE. (i) In its 1987 sale of certain hospitals to
HealthTrust in exchange for cash, HealthTrust preferred stock and stock
purchase warrants, HCA calculated its gain based on the valuation of such
stock and warrants by an independent appraiser. The Service claims a higher
aggregate valuation, based on the face amount of the preferred stock and a
separate appraisal HealthTrust obtained for the stock purchase warrants.
Application of the higher valuation would increase the gain recognized by
HCA on the sale. If, however, the Service succeeds in its assertion, HCA's
tax basis in its HealthTrust preferred stock and warrants will be increased
accordingly, thereby substantially reducing the tax from the sale of such
preferred stock and warrants by a corresponding amount. By the end of 1992,
HCA had sold its entire interest in the HealthTrust preferred stock and
warrants. Taking into consideration the sales, the Service is claiming
interest of $64 million through December 31, 1993.
(ii) Also in connection with the 1987 sale of certain hospitals to
HealthTrust, the Service claims that HCA's basis in the stock of the
subsidiaries owning such hospitals sold to HealthTrust should be calculated
by adjusting such basis to reflect accelerated rather than straight-line
depreciation. This would reduce HCA's basis in the stock sold, increasing
its taxable gain on the
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<PAGE>
sale. The Service's position is contrary to a Tax Court decision which HCA
believes to be controlling. The Service is claiming additional income taxes
of $79 million and interest of $66 million through December 31, 1993 based
on its position.
(iii) In connection with the 1987 HealthTrust transactions, the Service
further asserts that, to the extent the Subsidiaries were properly on the
cash method through 1986, and therefore were properly including deferred
income over a 10-year transition period, HCA should have additional income
in 1987 equal to the unamortized portion of the deferred income. It is HCA's
position that no additional income need be included in 1987 and that the
deferred income continues to qualify for the 10-year transition period after
the sale. Should the Service prevail, HCA would owe $11 million of
additional income taxes and $17 million of interest through December 31,
1993. This position of the Service is an alternative to its denial of the
use of the cash method of accounting as discussed in (a) above.
(e) DOUBTFUL ACCOUNTS. For 1986 the Service asserts that HCA is not
entitled to include charity care writeoffs in the formula used to calculate
its deduction for doubtful accounts. For the years 1987 and 1988, the
Service asserts that HCA is not entitled to exclude from income amounts
which are unlikely to be collected. Management believes that such exclusions
are permissible under an accrual method of accounting, and furthermore,
because HCA is a "service business" and not a "merchandising business", it
is entitled to a special exclusion provided to service businesses by the
1986 Act. The Service disagrees, asserting that HCA is engaged, at least in
part, in a "merchandising business" and that even if HCA is engaged in a
"service business," the exclusion taken by HCA is excessive under applicable
Temporary Treasury Regulations. HCA believes that the formula in the
Temporary Treasury Regulations which provides for the calculation of the
exclusion is inaccurate, in that it does not permit HCA to calculate the
exclusion in accordance with the controlling statute. If the Service
prevails, HCA would owe additional income taxes of $102 million and interest
of $48 million through December 31, 1993.
(f) LEVERAGED BUY-OUT EXPENSES. With respect to 1989 and 1990, the
Service has claimed that certain expense and amortization deductions claimed
with respect to the leveraged buy-out of HCA are not deductible. If the
Service were to prevail with respect to all of these items, additional
income taxes of $94 million would be owed, together with interest in the
amount of $24 million as of December 31, 1993.
(g) OTHER ISSUES. Additional federal income tax issues primarily
concern disputes over the depreciable lives utilized by HCA for constructed
hospital facilities, investment tax credits, vacation pay deductions and
income from foreign operations. Many of these items, such as depreciation,
investment tax credits and foreign issues, have been resolved favorably in
previous settlements and management believes the previous settlement
methodology should be followed again by the Service. The Service is claiming
an additional $44 million in income taxes and $28 million in interest
through December 31, 1993 with respect to these issues.
Management is of the opinion that HCA has properly reported its income and
paid its taxes in accordance with applicable laws and in accordance with
agreements established with the Service during previous examinations. In
management's opinion, the final outcome resulting from the Service's
examinations of prior years' income taxes will not have a material adverse
effect on the Company's results of operations, financial position or liquidity.
If all or a majority of the positions of the Service are upheld, however, the
results of operations, financial position and liquidity of the Company would be
materially adversely affected. Management believes that any cash payments
necessary as a result of such final outcome would be funded with cash from
operations and, if necessary, with amounts available under the Company's
revolving credit or other borrowing facilities.
15
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company as of March 28, 1994, were as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ------------------------------ --- ----------------------------------------------------------------------------
<S> <C> <C>
Thomas F. Frist, Jr., M.D. 55 Chairman of the Board
Richard L. Scott 41 President and Chief Executive Officer
David T. Vandewater 43 Chief Operating Officer
Stephen T. Braun 38 Senior Vice President and General Counsel
Victor L. Campbell 47 Senior Vice President
Thomas H. Cato 51 Senior Vice President -- Information Systems
David C. Colby 40 Senior Vice President, Chief Financial Officer and Treasurer
Samuel A. Greco 42 Senior Vice President -- Financial Operations
Neil D. Hemphill 40 Senior Vice President -- Human Resources
Richard A. Lechleiter 35 Vice President and Controller
Joseph D. Moore 47 Senior Vice President -- Development
Lindy B. Richardson 47 Senior Vice President -- Marketing/Public Affairs
Russell D. Schneider 40 Senior Vice President -- Market Organization
Richard A. Schweinhart 44 Senior Vice President -- Finance
</TABLE>
Thomas F. Frist, Jr., M.D. has served as Chairman of the Board of the
Company since February 1994. Dr. Frist, a founder of HCA, served as Chairman of
the Board, President and Chief Executive Officer of HCA from September 1987 to
February 1994. Dr. Frist was Chairman and Chief Executive Officer of HCA from
August 1985 until September 1987. Dr. Frist is also a director of International
Business Machines Corporation.
Richard L. Scott has served as President, Chief Executive Officer and a
director of the Company since September 1993. Mr. Scott was Chairman, Chief
Executive Officer and a director of the Company or its predecessors from July
1988 to September 1993.
David T. Vandewater has served as Chief Operating Officer of the Company
since September 1993. Mr. Vandewater was President of the Company from February
1991 to September 1993 and served as its Executive Vice President from May 1990
until February 1991. From July 1988 until February 1990, Mr. Vandewater was an
Executive Vice President and Chief Operating Officer of Republic Health
Corporation (presently called OrNda Healthcorp).
Stephen T. Braun has served as Senior Vice President and General Counsel of
the Company since September 1993. Mr. Braun served as Vice President and General
Counsel of the Company from October 1991 until September 1993. From July 1987 to
October 1991, Mr. Braun practiced law with the law firm of Doherty, Rumble &
Butler, Professional Association, Saint Paul, Minnesota.
Victor L. Campbell has served as Senior Vice President of the Company since
February 1994. For more than five years prior to that time, Mr. Campbell served
as HCA's Vice President for Investor, Corporate, and Government Relations. Mr.
Campbell is currently Chairman of the Board of the Federation of American Health
Systems.
Thomas H. Cato has served as Senior Vice President -- Information Systems of
the Company since February 1994. Mr. Cato was Senior Vice President --
Information Services of HCA from April 1992 to February 1994. Mr. Cato was Vice
President -- Information Services of HCA from 1987 until April 1992.
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<PAGE>
David C. Colby has served as Senior Vice President, Chief Financial Officer
and Treasurer of the Company since February 1994. Mr. Colby has served as Chief
Financial Officer of the Company or its predecessors since July 1988. Mr. Colby
was elected Treasurer of the Company in November 1991.
Samuel A. Greco has served as Senior Vice President -- Financial Operations
of the Company since July 1992. Mr. Greco served as Senior Vice President of
Finance -- South Florida Division of the Company from November 1990 to July
1992. Mr. Greco was Chief Financial Officer of University Hospital, Tamarac,
Florida, which is owned and operated by the Company, from January 1990 to
November 1990. From 1980 to 1989, Mr. Greco held various administrative
positions with Florida Medical Center and several diagnostic centers and
physician offices.
Neil D. Hemphill has served as Senior Vice President -- Human Resources of
the Company since February 1994. Mr. Hemphill served as Vice President -- Human
Resources of the Company from June 1992 to February 1994. Mr. Hemphill was a
Director of Human Resources of OrNda Healthcorp from January 1985 to June 1992.
Richard A. Lechleiter has served as Vice President and Controller of the
Company since September 1993. Mr. Lechleiter served in the same capacity at both
Galen and Humana from September 1990 to September 1993. From July 1988 until
September 1990, Mr. Lechleiter was the Controller of Humana.
Joseph D. Moore has served as Senior Vice President -- Development of the
Company since February 1994. Mr. Moore was Senior Vice President -- Finance and
Development of HCA from January 1993 to February 1994. Mr. Moore was Senior Vice
President -- Development of HCA from April 1992 until January 1993 and Vice
President -- Development of HCA from 1980 until April 1992.
Lindy B. Richardson has served as Senior Vice President -- Marketing/Public
Affairs of the Company since February 1994. Ms. Richardson served as Vice
President -- Marketing/Public Affairs of the Company from September 1993 to
February 1994. Ms. Richardson served as Director of Marketing/Public Affairs for
both Galen and Humana from 1988 to September 1993.
Russell D. Schneider has served as Senior Vice President -- Market
Organization of the Company since September 1993. Mr. Schneider served as
President of the Company's Southwest Division from May 1990 to September 1993,
and as President of the Company's El Paso Division from May 1988 to May 1990.
Richard A. Schweinhart has served as Senior Vice President -- Finance of the
Company since September 1993. Mr. Schweinhart served as Senior Vice President --
Finance for both Galen and Humana from November 1992 to September 1993. Mr.
Schweinhart also served as Vice President -- Finance of Humana from 1988 until
November 1992.
17
<PAGE>
ITEM 2. PROPERTIES.
The location and name of, and the number of licensed beds in, each of the
health care facilities owned by the Company or its subsidiaries at March 28,
1994, grouped by state, are set forth in the following table:
<TABLE>
<CAPTION>
NUMBER OF
STATE CITY NAME LICENSED BEDS TYPE
- --------- ------------------------- -------------------------------------------------------- ------------- ---------
<S> <C> <C> <C> <C>
AK Anchorage Alaska Regional Hospital 238 M
AL Enterprise Medical Center Enterprise 135 M
Florence Florence Hospital 155 M
Montgomery East Montgomery Medical Center 150 M
Montgomery Montgomery Regional Medical Center 250 M
Muscle Shoals Medical Center Shoals 128 M
Russellville Northwest Medical Center 100 M
AR Little Rock Doctors Hospital (1) 341 M
AZ Phoenix Healthwest Regional Medical Center 302 M
Phoenix Paradise Valley Hospital 140 M
CA Anaheim West Anaheim Medical Center 243 M
Canoga Park West Hills Regional Medical Center 236 M
Huntington Beach Huntington Beach Medical Center 135 M
Pasadena Las Encinas Hospital 153 P
San Leandro San Leandro Hospital 136 M
Thousand Oaks Los Robles Regional Medical Center 204 M
CO Aurora Aurora Regional Medical Center 200 M
Littleton Columbine Psychiatric Center 80 P
Thornton North Suburban Medical Center 200 M
DE Newark Rockford Center 74 P
FL Aventura Aventura Hospital and Medical Center 458 M
Bradenton L.W. Blake Hospital 383 M
Brandon Brandon Hospital 250 M
Coral Springs Outpatient Surgery Center at Coral Springs -- OS
Crestview Okaloosa Cancer Care Center -- O
Dade City Dade City Hospital 120 M
Daytona Beach Daytona Medical Center 214 M
Destin Destin Hospital 50 M
Englewood Englewood Community Hospital 100 M
Ft. Myers Southwest Florida Regional Medical Center 400 M
Ft. Myers Gulf Coast Hospital 120 M
Ft. Pierce Lawnwood Regional Medical Center 335 M
Ft. Walton Beach Ft. Walton Beach Medical Center 247 M
Gainesville North Florida Regional Medical Center 267 M
Hudson Bayonet Point/Hudson Medical Center 256 M
Kissimmee Osceola Regional Hospital 169 M
Largo Medical Center Hospital 256 M
Margate Northwest Regional Hospital 150 M
Miami Cedars Medical Center 585 M
Miami Deering Hospital 260 M
Miami Grant Center of Deering 140 P
Miami Kendall Regional Medical Center (1) 412 M
Miami Kendall Therapy Center -- O
Miami Medical Park Diagnostic Center -- OD
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
STATE CITY NAME LICENSED BEDS TYPE
- --------- ------------------------- -------------------------------------------------------- ------------- ---------
<S> <C> <C> <C> <C>
FL Miami Surgical Park Center -- OS
Miami Victoria Pavilion 300 M
Miami Beach Miami Heart Institute-North 273 M
Miami Beach Miami Heart Institute-South 258 M
Naples Naples Rehab Center -- R
New Port Richey New Port Richey Hospital 414 M
Niceville Twin Cities Hospital 75 M
North Miami Beach North Miami Beach Surgical Center -- OS
Ocala Marion Community Hospital 230 M
Okeechobee Raulerson Hospital 101 M
Orange Park Orange Park Medical Center 224 M
Orlando Lucerne Medical Center 267 M
Palatka Putnam Community Hospital 161 M
Panama City Gulf Coast Hospital 176 M
Pembroke Pines Pembroke Pines Hospital 301 M
Pensacola West Florida Regional Medical Center 547 M
Plantation Westside Regional Medical Center 204 M
Pompano Beach Pompano Beach Medical Center 273 M
Port Charlotte Fawcett Memorial Hospital 254 M
Port St. Lucie Medical Center of Port St. Lucie 150 M
Sanford Central Florida Regional Hospital 226 M
Sarasota Doctors Hospital of Sarasota (2) 168 M
Spring Hill Oak Hill Hospital 204 M
St. Petersburg Northside Hospital 301 M
St. Petersburg St. Petersburg General Hospital 219 M
Tallahassee Tallahassee Community Hospital 180 M
Tamarac University Hospital 269 M
Tamarac University Pavilion 60 P
West Palm Beach Palm Beaches Medical Center 250 M
Winter Park Winter Park Memorial Hospital 339 M
GA Albany Palmyra Medical Centers 248 M
Atlanta Northlake Regional Medical Center 120 M
Atlanta West Paces Medical Center (1)(3) 294 M
Augusta Augusta Oncology Center -- O
Augusta Augusta Regional Medical Center 374 M
Augusta Columbia County Ambulatory Surgery Center -- OS
Augusta West Augusta Imaging Center -- OD
Cartersville Cartersville Medical Center 80 M
Columbus Hughston Sports Medicine Hospital 100 M
Dublin Fairview Park Hospital (3) 190 M
Lithia Springs Parkway Medical Center 304 M
Macon Coliseum Medical Centers 250 M
Macon Coliseum Psychiatric Hospital 92 P
Newnan Peachtree Regional Hospital 144 M
Rome Redmond Regional Medical Center 201 M
Snellville Eastside Medical Center 122 M
IL Chicago Chicago Lakeshore Hospital 150 P
Chicago Grant Hospital 479 M
Chicago Michael Reese Hospital and Medical Center 955 M
Forest Park Riveredge Hospital 210 P
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
STATE CITY NAME LICENSED BEDS TYPE
- --------- ------------------------- -------------------------------------------------------- ------------- ---------
<S> <C> <C> <C> <C>
IL Hoffman Estates Hoffman Estates Medical Center 356 M
Hoffman Estates Woodland Hospital 100 P
IN Indianapolis The Women's Hospital -- Indianapolis 182 M
KS Dodge City Western Plains Regional Hospital 100 M
Overland Park Overland Park Regional Medical Center 400 M
Wichita Wesley Medical Center 760 M
KY Bowling Green Greenview Hospital 211 M
Frankfort King's Daughters Memorial Hospital 190 M
Louisville Audubon Regional Medical Center 480 M
Louisville Southwest Hospital 150 M
Louisville Suburban Medical Center 380 M
Louisville University of Louisville Hospital (1) 404 M
Somerset Lake Cumberland Regional 227 M
LA Lafayette Cypress Hospital 116 P
Lake Charles Lake Area Medical Center 80 M
Lake Charles Surgicare of Lake Charles -- OS
Marksville Avoyelles Hospital 55 M
Monroe North Monroe Hospital 228 M
New Orleans DePaul Hospital 309 P
New Orleans Lakeland Medical Center 150 M
Oakdale Oakdale Community Hospital 60 M
Shreveport Highland Hospital 126 M
Springhill Springhill Medical Center 86 M
Ville Platte Ville Platte Medical Center 124 M
Winnfield Winn Parish Medical Center 103 M
MO Independence Independence Regional Health Center 366 M
Kansas City Research Psychiatric Center 100 P
NH Derry Parkland Medical Center 86 M
Portsmouth Portsmouth Regional Hospital (3) 144 M
Portsmouth Portsmouth Pavilion 65 P
NM Albuquerque Heights Psychiatric Hospital 92 P
Carlsbad Guadalupe Medical Center 138 M
Hobbs Lea Regional Hospital 250 M
NV Las Vegas Sunrise Hospital & Medical Center 688 M
NC Fayetteville Highsmith-Rainey Memorial Hospital (1) 150 M
Raleigh Holly Hill Hospital 108 P
Raleigh Raleigh Community Hospital 230 M
OK Enid St. Mary's Hospital (1)(3) 277 M
Oklahoma City Presbyterian Hospital 396 M
SC Aiken Aiken Regional Medical Center 225 M
Charleston Trident Regional Medical Center 281 M
Myrtle Beach Grand Strand General Hospital 172 M
Summerville Summerville Medical Center 80 M
Summerville Summerville Medical Center -- Downtown -- O
TN Athens Athens Community Hospital 118 M
Chattanooga Parkridge Medical Center 296 M
Chattanooga Valley Psychiatric Hospital 118 P
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
STATE CITY NAME LICENSED BEDS TYPE
- --------- ------------------------- -------------------------------------------------------- ------------- ---------
<S> <C> <C> <C> <C>
TN East Ridge East Ridge Hospital 128 M
Jackson Regional Hospital of Jackson 166 M
Kingsport Indian Path Medical Center 295 M
Kingsport Indian Path Pavilion 61 P
Martin Volunteer General Hospital 100 M
Nashville Centennial Medical Center 656 M
Nashville Centennial Medical Center/Parthenon Pavilion 162 P
Nashville Donelson Hospital 218 M
Nashville Southern Hills Medical Center 180 M
Nashville Vanderbilt Child and Adolescent Psychiatric Hospital
(1)(3) 88 P
TX Abilene Abilene Regional Medical Center 160 M
Arlington Arlington Medical Center 287 M
Austin South Austin Medical Center 164 M
Beaumont Beaumont Neurological Hospital 131 P
Beaumont Beaumont Regional Medical Center 250 M
Bryan Brazos Valley Medical Center 100 M
Bryan Brazos Valley Surgical Center -- OS
Corpus Christi Bay Area Medical Center 144 M
Corpus Christi Bayview Hospital 68 P
Corpus Christi Doctors Regional Medical Center 271 M
Corpus Christi Rehabilitation Hospital of South Texas 80 R
Corpus Christi Surgicare Specialty Hospital of Corpus Christi -- OS
Corsicana Navarro Regional Hospital 185 M
Dallas Medical City Dallas Hospital (1) 555 M
Denton Denton Community Hospital 104 M
El Paso Columbia Back Institute -- O
El Paso Columbia Behavioral Center 125 P
El Paso Columbia Diagnostic Centers -- OD
El Paso Columbia Life Care Center -- O
El Paso Columbia Medical Center -- East 235 M
El Paso Columbia Medical Center -- West 252 M
El Paso Columbia Physical Therapy Centers -- R
El Paso Columbia Regional Oncology Center -- O
El Paso Columbia Rehabilitation Hospital 40 R
Ft. Worth Medical Plaza Hospital 338 M
Houston Bellaire General Hospital 349 M
Houston Champions Residential Treatment Center 48 P
Houston Heights Hospital 209 M
Houston Medical Center Hospital 281 M
Houston MRI Southwest -- OD
Houston Rosewood Medical Center 231 M
Houston Sam Houston Memorial Hospital 256 M
Houston Spring Branch Medical Center 365 M
Houston West Houston Medical Center 232 M
Houston Women's Hospital of Texas 198 M
Lewisville Lewisville Hospital (1) 148 M
McAllen Rio Grande Regional Hospital 220 M
North Richland Hills North Hills Medical Center 152 M
Plano Medical Center of Plano 267 M
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
STATE CITY NAME LICENSED BEDS TYPE
- --------- ------------------------- -------------------------------------------------------- ------------- ---------
<S> <C> <C> <C> <C>
TX San Antonio Metropolitan Hospital 273 M
San Antonio San Antonio Regional Hospital 416 M
San Antonio Village Oaks Medical Center 112 M
San Antonio Women's and Children's Hospital 150 M
Silsbee Silsbee Doctors Hospital 69 M
Webster Clear Lake Regional Medical Center 459 M
UT Layton Davis Hospital and Medical Center 120 M
Salt Lake City St. Mark's Hospital 306 M
VA Falls Church Dominion Hospital 100 P
Hampton Peninsula Hospital 125 P
Petersburg Poplar Springs Hospital 100 P
Reston Reston Hospital Center 127 M
Richlands Clinch Valley Medical Center 200 M
Richmond Chippenham Hospital 470 M
Richmond Henrico Doctors Hospital 340 M
Richmond Johnston-Willis Hospital 292 M
Salem Lewis-Gale Hospital 406 M
Salem Lewis-Gale Psychiatric Center (1) 145 P
WV Beckley Raleigh General Hospital 275 M
Bluefield St. Luke's Hospital 79 M
Huntington River Park Hospital 165 P
Hurricane Putnam General Hospital 68 M
Ronceverte Greenbrier Valley Medical Center 122 M
INTERNATIONAL
UK London The Wellington Hospital 121 M
London The Wellington Hospital II 124 M
SZ Geneva Hopital de la Tour et Pavillon Gourgas 242 M
</TABLE>
<TABLE>
<S> <C> <C>
M -- General, Acute Care
P -- Psychiatric
OD -- Outpatient Diagnostics/Imaging
OS -- Outpatient Surgery
O -- Outpatient Care
R -- Rehabilitation/Physical Therapy
<FN>
- ------------------------
(1) Held pursuant to lease. The Company has options to purchase many of its
leased hospitals at the end of the lease terms.
(2) On October 1, 1990 the Company contributed this hospital to a limited
partnership (the "LP") in which it is a 35% limited partner. The LP
currently is seeking regulatory approval to build a replacement facility
for the current hospital facility. The Company receives a fixed percentage
of cash flow from the current hospital and will receive 35% of all cash
distributions from operations of the replacement hospital and any
ancillary businesses of the LP. The Company also manages the current
hospital and will manage the replacement hospital on a fixed fee basis. On
March 4, 1994, the Company entered into an agreement to purchase the
assets of the hospital from the LP.
(3) The former owner of this hospital or a successor thereto or affiliate
thereof either has a current option to purchase the hospital from the
Company at a previously agreed-upon amount or will have such option during
certain future periods.
</TABLE>
22
<PAGE>
The Company owns and maintains its headquarters in approximately 110,000
square feet of office space located in Louisville, Kentucky. In addition, the
Company maintains offices in approximately 400,000 square feet of office space
in four office buildings owned by the Company in Nashville, Tennessee.
The Company also operates medical office buildings in conjunction with its
hospitals. These office buildings are primarily occupied by physicians who
practice at the Company's hospitals. These office buildings are generally
operated at a loss.
The Company's headquarters, hospitals and other facilities are suitable for
their respective uses and are, in general, adequate for the Company's present
needs.
ITEM 3. LEGAL PROCEEDINGS.
The Company is currently, and from time to time, subject to claims and suits
arising in the ordinary course of business, including claims for damages for
personal injuries or for wrongful restriction of, or interference with,
physicians' staff privileges. In certain of these actions the claimants have
asked for punitive damages against the Company, which are usually not covered by
insurance. In the opinion of management, the ultimate resolution of any of these
pending claims and legal proceedings will not have a material adverse effect on
the Company's results of operations or financial position.
On December 10, 1992 and December 15, 1992, respectively, two virtually
identical purported class action lawsuits (BERGER V. ROGER E. MICK ET AL., 92
CIV. 8960, United States District Court, Southern District of New York and FOX
V. ROGER E. MICK ET AL., 92 CIV 9139, United States District Court, Southern
District of New York) were filed by, respectively, holders of 400 and 500 shares
of HCA's Class A Common Stock against HCA, three of its officers and/or
directors (Messrs. Thomas F. Frist, Jr., Roger E. Mick and Donald J. Israel) and
the underwriters of its February 1992 initial public offering of Class A Common
Stock, on behalf of all purchasers of HCA's Class A Common Stock from the time
of the initial public offering (February 26, 1992) until HCA issued a press
release in respect of its psychiatric division restructuring on September 18,
1992. In the lawsuits it is alleged that HCA failed to disclose material adverse
financial information regarding its psychiatric division in its February 1992
offering prospectus in respect of such initial public offering and in HCA's
subsequent Forms 10-Q for the quarters ended March 31 and June 30, 1992.
Violations of the Securities Act of 1933 and of the Securities Exchange Act of
1934 are alleged. Damages are unspecified. In June 1993 the court granted HCA's
motion to transfer both lawsuits to the United States District Court for the
Middle District of Tennessee. After such transfer, the Tennessee District Court
dismissed the FOX lawsuit and joined the plaintiff of the FOX lawsuit as a party
plaintiff to the BERGER lawsuit. HCA's motion to dismiss the BERGER lawsuit is
still pending. While the Company cannot predict with certainty the outcome of
this proceeding, the Company, based upon information currently available,
believes that this proceeding is without merit.
A class action styled MARY FORSYTH ET AL. V. HUMANA INC. ET AL., Case
#CV-S-89-249-PMP (L.R.L.), was filed on March 29, 1989, in the United States
District Court for the District of Nevada (the "Forsyth" case). On August 12,
1991, a Second Amended Complaint was filed in the Forsyth case which
significantly increased the amount of damages claimed by the plaintiffs in
previously filed complaints. The claimed damages increased from $10 million to
$84,520,143 in connection with a count which alleges a violation of the Employee
Retirement Income Security Act (the "ERISA Count"); from $10 million to
$181,034,570 (before trebling) in connection with an alleged violation of the
Sherman Anti-Trust Act (the "Anti-Trust Count"); and from $10 million to
$181,034,570 (before trebling) for an alleged violation of the Racketeer
Influenced and Corrupt Organization Act (the "RICO Count"). In late March 1992,
as part of the discovery process, the plaintiffs provided information in regard
to their calculation of damages which indicates they are seeking recovery of
$49,440,000 of damages plus approximately $15,396,000 of interest in the ERISA
Count and $103,562,165 of damages (before trebling) plus approximately
$31,800,000 of interest in the RICO Count. Specific amounts were not readily
apparent for the Anti-Trust Count but it appears the plaintiffs believe their
23
<PAGE>
claimed damages in the Anti-Trust Count would be similar to those in the RICO
Count. The ERISA Count, which is being asserted by the Co-Payer Class, claims
that Humana Inc. ("Humana") violated a fiduciary duty in connection with (i) the
calculation of co-insurance payments required under policies issued by Humana's
insurance subsidiary ("Humana Insurance") for insureds who were treated at
Sunrise Hospital in Las Vegas (now owned by the Company), and (ii) payments to
the hospital by Humana Insurance. The Anti-Trust Count, which is being asserted
by the Premium Payer Class, alleges that Sunrise Hospital has monopolized or has
attempted to monopolize the for-profit, acute care hospital services market in
Clark County, Nevada, and that Humana Insurance engaged in predatory pricing in
connection with the sale of insurance policies to members of such class. The
plaintiffs have also indicated damages with respect to the Co-Payer Class. The
RICO Count, which is being asserted by both the Premium Payer and Co-Payer
Classes, alleges fraud in connection with (i) the sale of insurance policies to
members of the Premium Payer Class and (ii) the calculation of the co-insurance
payments. On June 22, 1992, defendants filed a Motion for Summary Judgment on
all three counts of the Complaint. On July 21, 1993, Summary Judgment was
entered in favor of defendants on all counts, although the Court allowed the
Co-Payer Class to file a Third Amended Complaint. On August 24, 1993, the
plaintiffs filed a Third Amended Complaint against Humana Insurance, seeking to
recover at least $2,000,000, plus interest, which represents the difference
between their co-insurance payments and what the payments would have been if
calculated based on the discounted payments made by Humana Insurance to Sunrise
Hospital. Pursuant to an Assumption of Liabilities and Indemnification Agreement
entered into in connection with the Spinoff, Humana assumed approximately 39%
and Galen assumed approximately 61% of all liabilities, costs and expenses
arising out of certain identified legal proceedings and claims, including the
Forsyth case.
On April 22, 1993, an alleged stockholder of Galen filed a purported
stockholder derivative action in the Court of Chancery of the State of Delaware,
County of New Castle, styled LEWIS V. AUSTEN, ET AL., Civil Action No. 12937.
The action was purportedly brought on behalf of Galen and Humana against all of
the directors of both companies at the time of the Spinoff alleging, among other
things, that the defendants had improperly amended Humana's existing stock
option plans in connection with the Spinoff. The plaintiff claims that the
amendment to the stock option plans constituted a waste of corporate assets to
the extent that employees of such company received options in the stock of the
other company. (The challenged amendment to the plans was approved by Humana's
stockholders at the 1993 Annual Meeting of Stockholders, at which time Galen was
a wholly owned subsidiary of Humana.) The plaintiff requests, among other
things, an injunction prohibiting the exercise of Humana stock options by
Company personnel and the exercise of Company stock options by Humana personnel
and an award of damages. The Company believes that the complaint is without
merit.
A purported class action has been filed against HCA, the directors of HCA,
and the Company, in the Delaware Court of Chancery entitled 7547 PARTNERS V. HCA
HOSPITAL CORP. OF AMERICA, JACK O. BOVENDER, JR., THOMAS F. FRIST, JR., CHARLES
T. HARRIS, III, CHARLES J. KANE, RICHARD E. RAINWATER, CARL E. REICHARDT, FRANK
S. ROYAL AND COLUMBIA HEALTHCARE CORPORATION, C.A. No. 13159. The complaint,
brought by a purported stockholder of HCA, alleges that the defendants breached
their fiduciary duties to plaintiff and other members of the purported class and
also alleges that the defendants aided and abetted a gross abuse of trust. The
complaint alleges that the directors of HCA wrongfully failed to hold an open
auction and encourage bona fide bids for HCA and failed to take action to
maximize value to HCA stockholders. The complaint seeks rescission of the HCA
Merger or rescissionary damages. The complaint also seeks monetary damages of an
unspecified amount and attorneys' and experts' fees. The Company believes that
the complaint is without merit.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of 1993.
24
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock has been primarily traded on the New York Stock
Exchange (the "NYSE") (symbol "COL") since July 14, 1993. Prior to that date,
the Company's Common Stock was traded through the National Association of
Securities Dealers Automated Quotation National Market System ("NASDAQ/NMS").
The table below sets forth, for the calendar quarters indicated, the high and
low sales prices per share reported on the NYSE Composite Tape or NASDAQ/NMS for
the Company's Common Stock. The information with respect to NASDAQ/NMS
quotations was obtained from the National Association of Securities Dealers,
Inc. and reflects interdealer prices, without retail markup, markdown or
commissions and may not represent actual transactions.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
1992:
First Quarter.................................................................. $ 21.25 $ 16.50
Second Quarter................................................................. 22.00 16.25
Third Quarter.................................................................. 19.25 16.25
Fourth Quarter................................................................. 21.75 13.75
1993:
First Quarter.................................................................. 24.50 16.25
Second Quarter................................................................. 27.75 19.25
Third Quarter.................................................................. 31.00 25.38
Fourth Quarter................................................................. 33.88 27.00
</TABLE>
The Company's registrar and transfer agent for its Common Stock is First
Union National Bank of North Carolina. At the close of business on February 28,
1994, there were 15,600 holders of record of the Company's Common Stock and one
holder of record of the Company's Nonvoting Common Stock.
The Company commenced the payment of a quarterly dividend of $.03 per share
in the fourth quarter of 1993. Prior to that time, the Company did not pay any
cash dividends. While it is the present intention of the Company's Board of
Directors to continue paying a quarterly dividend of $.03 per share, the
declaration and payment of future dividends by the Company will depend upon many
factors, including the Company's earnings, financial condition, business needs,
capital and surplus and regulatory considerations.
25
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
COLUMBIA HEALTHCARE CORPORATION
SELECTED FINANCIAL DATA
AS OF AND FOR THE YEARS ENDED DECEMBER 31
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Revenues................................ $ 5,130 $ 4,806 $ 4,612 $ 4,010 $ 3,450
---------- ---------- ---------- ---------- ----------
Salaries, wages and benefits............ 2,217 2,069 2,004 1,666 1,366
Supplies................................ 842 788 720 624 513
Other operating expenses................ 916 833 717 653 600
Provision for doubtful accounts......... 282 285 277 233 203
Depreciation and amortization........... 298 276 248 220 196
Interest expense........................ 129 117 111 119 147
Investment income....................... (34) (39) (34) (34) (34)
Non-recurring transactions.............. 151 138 - - (13)
---------- ---------- ---------- ---------- ----------
4,801 4,467 4,043 3,481 2,978
---------- ---------- ---------- ---------- ----------
Income from continuing operations before
minority interests and income taxes.... 329 339 569 529 472
Minority interests in earnings of
consolidated entities.................. 9 10 9 4 4
---------- ---------- ---------- ---------- ----------
Income from continuing operations before
income taxes........................... 320 329 560 525 468
Provision for income taxes.............. 127 118 202 190 167
---------- ---------- ---------- ---------- ----------
Income from continuing operations....... 193 211 358 335 301
Discontinued operations:
Income (loss) from operations of
discontinued health plan segment, net
of income tax (benefit).............. 16 (108) 16 (6) (18)
Costs associated with discontinuance
of health plan segment, net of income
tax benefit.......................... - (17) - - -
Extraordinary loss on extinguishment of
debt, net of income tax benefit........ (70) - - - (9)
Cumulative effect on prior years of a
change in accounting for income
taxes.................................. - 51 - - -
---------- ---------- ---------- ---------- ----------
Net income.......................... $ 139 $ 137 $ 374 $ 329 $ 274
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Earnings per common share (a):
Income from continuing operations..... $ 1.28 $ 1.45 $ 2.58 $ 2.51
Discontinued operations:
Income (loss) from operations of
discontinued health plan segment... .10 (.75) .11 (.04)
Costs associated with discontinuance
of health plan segment............. - (.12) - -
Extraordinary loss on extinguishment
of debt.............................. (.46) - - -
Cumulative effect on prior years of a
change in accounting for income
taxes................................ - .36 - -
---------- ---------- ---------- ----------
Net income.......................... $ .92 $ .94 $ 2.69 $ 2.47
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Shares used in earnings per common share
computations (in thousands)............ 150,017 144,897 138,936 134,128
Net cash provided by continuing
operations............................. $ 493 $ 668 $ 655 $ 552 $ 456
Cash dividends per common share......... .06 - - - -
FINANCIAL POSITION:
Assets.................................. $ 4,619 $ 4,891 $ 4,541 $ 4,100 $ 3,583
Working capital......................... 374 392 374 374 353
Net assets of discontinued operations... - 376 411 303 312
Long-term debt, including amounts due
within one year........................ 1,651 1,288 1,159 1,144 1,239
Minority interests in equity of
consolidated entities.................. 57 31 23 16 10
Common stockholders' equity............. 1,656 2,276 2,168 1,836 1,371
OPERATING DATA:
Number of hospitals at end of period.... 97 101 91 93 87
Number of licensed beds at end of
period................................. 21,742 21,922 19,992 19,393 18,254
Weighted average licensed beds.......... 21,733 21,019 20,132 19,237 18,288
Average daily census.................... 9,249 9,277 9,502 9,145 8,719
Occupancy............................... 43% 44% 47% 48% 48%
Admissions.............................. 596,300 586,500 587,800 566,200 529,800
Length of stay.......................... 5.7 5.8 5.9 5.9 6.0
Surgery cases........................... 424,200 437,300 425,900 399,000 374,000
Emergency room visits................... 1,563,200 1,537,400 1,519,700 1,432,000 1,330,900
Outpatient registrations................ 2,541,900 2,537,100 2,401,600 1,899,300 1,666,400
Outpatient revenues as a percentage of
patient revenues....................... 26% 26% 24% 23% 22%
<FN>
- ------------------------------
(a) Earnings per common share are not presented for periods prior to the
initial public offering of Columbia Hospital Corporation common stock in
May 1990.
</TABLE>
26
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL SELECTED FINANCIAL DATA
AS OF AND FOR THE YEARS ENDED DECEMBER 31
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1993 1992 1991 1990 1989
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS:
Revenues................................................................... $ 10,252 $ 9,932 $ 9,598 $ 8,641 $ 7,724
--------- --------- --------- --------- ---------
Salaries, wages and benefits............................................... 4,215 4,112 3,976 3,510 3,066
Supplies................................................................... 1,664 1,613 1,467 1,314 1,135
Other operating expenses................................................... 1,893 1,849 1,739 1,586 1,483
Provision for doubtful accounts............................................ 542 515 508 444 407
Depreciation and amortization.............................................. 554 541 524 499 468
Interest expense........................................................... 321 401 597 694 667
Investment income.......................................................... (66) (81) (64) (69) (103)
Non-recurring transactions................................................. 151 439 300 22 (10)
--------- --------- --------- --------- ---------
9,274 9,389 9,047 8,000 7,113
--------- --------- --------- --------- ---------
Income from continuing operations before minority interests and income
taxes..................................................................... 978 543 551 641 611
Minority interests in earnings of consolidated entities.................... 9 10 9 4 4
--------- --------- --------- --------- ---------
Income from continuing operations before income taxes...................... 969 533 542 637 607
Provision for income taxes................................................. 394 294 189 240 223
--------- --------- --------- --------- ---------
Income from continuing operations.......................................... 575 239 353 397 384
Discontinued operations:
Income (loss) from operations of discontinued health plan segment, net of
income tax (benefit).................................................... 16 (108) 16 (6) (18)
Costs associated with discontinuance of health plan segment, net of
income tax benefit...................................................... - (17) - - -
Extraordinary loss on extinguishment of debt, net of income tax
benefit................................................................. (84) - - - (9)
Cumulative effect on prior years of a change in accounting for income
taxes................................................................... - 51 - - -
--------- --------- --------- --------- ---------
Net income............................................................. $ 507 $ 165 $ 369 $ 391 $ 357
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Earnings per common and common equivalent share (a):
Income from continuing operations........................................ $ 1.70 $ .73 $ 1.20 $ 1.28
Discontinued operations:
Income (loss) from operations of discontinued health plan segment........ .04 (.33) .05 (.02)
Costs associated with discontinuance of health plan segment.............. - (.06) - -
Extraordinary loss on extinguishment of debt............................. (.24) - - -
Cumulative effect on prior years of a change in accounting for income
taxes................................................................... - .16 - -
--------- --------- --------- ---------
Net income............................................................. $ 1.50 $ .50 $ 1.25 $ 1.26
--------- --------- --------- ---------
--------- --------- --------- ---------
Shares used in earnings per common and common equivalent share computations
(in thousands)............................................................ 339,222 328,564 279,954 262,552
Net cash provided by continuing operations................................. $ 1,298 $ 1,287 $ 1,257 $ 1,191 $ 919
FINANCIAL POSITION:
Assets................................................................... $ 10,216 $ 10,347 $ 10,843 $ 10,391 $ 10,461
Working capital.......................................................... 573 606 635 482 379
Net assets of discontinued operations.................................... - 376 411 303 312
Long-term debt, including amounts due within one year.................... 3,698 3,656 5,158 5,139 6,022
Minority interests in equity of consolidated entities.................... 57 31 23 16 10
Common stockholders' equity.............................................. 3,471 3,691 2,822 2,099 1,585
OPERATING DATA (B):
Number of hospitals at end of period..................................... 193 200 219 221 218
Number of licensed beds at end of period................................. 42,237 42,245 43,231 42,789 42,433
Weighted average licensed beds........................................... 41,263 40,608 42,437 42,264 41,452
Average daily census..................................................... 18,702 19,253 21,255 21,351 21,155
Occupancy................................................................ 45% 47% 50% 51% 51%
Admissions............................................................... 1,158,400 1,161,100 1,189,700 1,174,700 1,139,300
Length of stay........................................................... 5.9 6.1 6.5 6.6 6.8
Emergency room visits.................................................... 3,139,700 3,042,900 3,028,600 2,894,800 2,756,900
Outpatient revenues as a percentage of patient revenues.................. 27% 26% 24% 22% 21%
<FN>
- ------------------------------
(a) Earnings per common and common equivalent share are not presented for
periods prior to the initial public offering of Columbia Hospital
Corporation common stock in May 1990. Earnings per common and common
equivalent share include the effect of preferred stock dividend
requrements totaling $18 million in 1991 and $63 million in 1990.
(b) Operating data for 1992 exclude the twenty-two divested psychiatric
hospitals discussed in Note 5 of the Notes to Supplemental Consolidated
Financial Statements.
</TABLE>
27
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
COLUMBIA HEALTHCARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Selected Financial Data in Item 6 set forth certain information with
respect to the financial position, results of operations and cash flows of
Columbia Healthcare Corporation ("Columbia") which should be read in conjunction
with the following discussion and analysis.
HCA MERGER
The HCA Merger was completed on February 10, 1994. Although the HCA Merger
will be treated as a pooling of interests for accounting purposes, the
accompanying consolidated financial statements and financial and operating data
included in this discussion and analysis do not include the retroactive effect
of the HCA Merger. See Note 3 of the Notes to Consolidated Financial Statements
of Columbia and the Supplemental Consolidated Financial Statements of
Columbia/HCA Healthcare Corporation ("Columbia/HCA") included herein for further
information.
BACKGROUND INFORMATION AND BUSINESS STRATEGY
As discussed in Notes 1 and 2 of the Notes to the Consolidated Financial
Statements, Columbia began operations on September 1, 1993 as a result of a
merger involving Columbia Hospital Corporation ("CHC") and Galen Health Care,
Inc. ("Galen") (the "Galen Merger"), which was accounted for as a pooling of
interests. Accordingly, the accompanying financial statements and financial and
operating data included in this discussion and analysis give retroactive effect
to the Galen Merger and include the combined operations of CHC and Galen for all
periods presented. In addition, the historical financial information related to
Galen (which prior to the Galen Merger was reported on a fiscal year ending
August 31) has been recast to conform to Columbia's annual reporting period
ending December 31.
Prior to the merger with CHC, Galen became a publicly held corporation as a
result of a spinoff transaction by Humana Inc. ("Humana") which was completed on
March 1, 1993 (the "Spinoff"). The Spinoff separated Humana's previously
integrated hospital and managed care health plan businesses and was effected
through the distribution of Galen common stock to then current Humana common
stockholders on a one-for-one basis. For accounting purposes, because of the
relative significance of the hospital business, the pre-Spinoff financial
statements of Galen (and now those of Columbia) include the separate results of
Humana's hospital business, while the operating results and net assets of
Humana's managed care health plans have been classified as discontinued
operations.
At the time of the Galen Merger, CHC operated 22 hospitals (5,226 licensed
beds) and certain ancillary health care facilities in five major markets located
in Florida and Texas. Annualized revenues of CHC were in excess of $1 billion.
Galen operated 71 hospitals (16,251 licensed beds) located in 18 states and two
foreign countries with annualized revenues of approximately $4 billion.
Columbia primarily operates hospitals and ancillary health care facilities
through either (i) wholly owned subsidiaries or (ii) ownership of controlling
interests in various partnerships in which subsidiaries of Columbia serve as the
managing general partner. Columbia's business strategy centers on the
development of comprehensive, integrated health care delivery networks with
physicians and other health care providers in targeted markets, which typically
involves significant health care facility acquisition and consolidation
activities.
During the past several years, hospital inpatient admission trends have been
adversely impacted by cost containment efforts initiated by federal and state
governments and various third-party payers, including HMOs, PPOs, commercial
insurance companies and employer-sponsored networks. In addition, a significant
number of medical procedures have shifted from inpatient to less expensive
outpatient settings as a result of both cost containment pressures and advances
in medical technology.
28
<PAGE>
In response to changes in the health care industry, Columbia has developed
the following operating strategy to provide the highest quality health care
services at the lowest possible cost:
BECOME A SIGNIFICANT PROVIDER OF SERVICES -- Columbia attempts to (i)
consolidate services to reduce costs and (ii) develop the geographic
coverage necessary for inclusion in most managed care and
employer-sponsored networks in each market.
PROVIDE A COMPREHENSIVE RANGE OF SERVICES -- In addition to the
operation of general, acute care hospitals, Columbia also operates
psychiatric and rehabilitation facilities, outpatient surgery and
diagnostic centers, home health agencies and other services. This
strategy enables Columbia to attract business from managed care plans
and major employers seeking efficient access to a wide array of health
care services.
DELIVER HIGH QUALITY SERVICES -- Through the use of clinical information
systems, Columbia focuses on patient outcomes and strives to
continuously improve the quality of care and service provided to
patients.
INTEGRATE FRAGMENTED DELIVERY SYSTEMS -- Through its networks, Columbia
focuses on coordinating pricing, contracting, information systems and
quality assurance activities among providers in each market.
Management intends to implement its strategy discussed above in a
substantial number of former Galen markets as well as new markets, and further
develop the integrated health care networks in its five pre-Galen Merger
markets.
29
<PAGE>
RESULTS OF OPERATIONS
Revenues increased 7% to $5.1 billion in 1993 and 4% to $4.8 billion in
1992. Increases in both periods resulted primarily from price increases,
acquisitions and, in 1992, growth in outpatient services.
During 1992 and 1993, Columbia acquired or constructed 21 hospitals
containing 3,474 licensed beds and sold or closed 14 hospitals containing 1,682
licensed beds. The following table summarizes percentage changes in
same-hospital admissions and outpatient registrations for each respective period
of 1993 compared to the same period of 1992, and changes in same-hospital
admissions and outpatient registrations for each period of 1992 compared to the
same period of 1991.
<TABLE>
<CAPTION>
1993 VS. 1992 1992 VS. 1991
------------------------------------- ---------------------------------------
CHC GALEN COMBINED CHC GALEN COMBINED
--------- ----------- ------------- ----- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
ADMISSIONS:
Quarter:
First...................... 6.7 (2.1) (1.5) 8.4 - 0.6
Second..................... 8.9 (1.3) (0.5) 2.4 (4.8) (4.3)
Third...................... 5.9 (1.0) (0.4) 4.6 (4.1) (3.5)
Fourth..................... 5.9 1.3 1.7 4.6 (3.6) (3.0)
Year..................... 6.8 (0.8) (0.2) 5.0 (3.1) (2.5)
OUTPATIENT REGISTRATIONS:
Quarter:
First...................... 10.1 (7.2) (5.0) 54.5 4.6 8.7
Second..................... 8.0 (4.2) (2.6) 35.1 (3.6) (0.2)
Third...................... 13.3 (2.1) (0.1) 35.8 (4.4) (1.5)
Fourth..................... 6.8 (0.9) 0.2 31.9 (2.3) 0.9
Year..................... 9.5 (3.6) (1.9) 39.0 (1.5) 1.9
</TABLE>
Since it began operations in 1988, CHC had experienced significant growth in
patient volumes, revenues and net income, primarily as a result of successful
implementation of its strategy.
The historical operating results of Galen's hospitals (which include the
hospital operations of Humana prior to the Spinoff) had been adversely impacted
as a result of such hospitals' pre-Spinoff relationship with Humana's managed
care health plan business in certain markets. Management believes that this
relationship caused some physicians to discontinue referrals of their patients
to the company's hospitals, and had precluded these hospitals from contracting
with unaffiliated insurers. In addition, Galen's volume of patients covered by
traditional insurance (who pay amounts which more closely approximate
established charges) declined significantly in 1992 due in part to increased
price consciousness of patients and physicians with respect to Galen's pricing
policies. Same-hospital volume trends at former Galen facilities have improved
in 1993 primarily as a result of increased volumes from discounted managed care
health plans other than Humana.
Income from continuing operations before non-recurring transactions,
depreciation, interest, minority interests, income taxes and amortization
("EBDITA") increased 4% to $907 million in 1993 from $870 million in 1992. The
decline in EBDITA margins to 17.7% from 18.1% resulted primarily from
deterioration in payer mix. Medicare admissions as a percentage of total
admissions increased from 35% in 1992 to 36% in 1993, while discounted and
managed care admissions grew from 44% to 45%, respectively. EBDITA declined 6%
in 1992 from 1991 due to a decline in same-hospital admissions at former Galen
facilities and deterioration in Galen's payer mix.
During the third quarter of 1993, Columbia recorded non-recurring charges of
$151 million ($98 million net of tax) of costs related to the Galen Merger.
Results of operations in 1992 include $138 million ($86 million net of tax) of
costs incurred in connection with the Spinoff. See Note 5 of the Notes to
Consolidated Financial Statements.
30
<PAGE>
Excluding the effects of the non-recurring transactions, income from
continuing operations declined 2% to $291 million ($1.95 per share) in 1993 and
17% to $297 million ($2.05 per share) in 1992.
During the third quarter of 1993, in an effort to reduce future interest
expense and eliminate certain restrictive covenants, Columbia effected the
refinancing of $787 million of its long-term debt bearing interest at an average
rate of 8.5% primarily through the issuance of commercial paper. After-tax
losses from these refinancing activities aggregated $70 million or $.46 per
share.
DISCONTINUED OPERATIONS
Results of operations include income from discontinued operations of $16
million in 1993, a loss of $125 million in 1992 and income of $16 million in
1991. Losses from discontinued operations in 1992 include costs of $135 million
(net of tax) incurred by Humana in connection with the Spinoff.
LIQUIDITY
Cash provided by continuing operations totaled $493 million in 1993 compared
to $668 million in 1992 and $655 million in 1991. The decrease in 1993 resulted
primarily from a slower decline in the number of days of revenues in accounts
receivable, and an acceleration in the payment of income taxes and funding of
retirement plan obligations.
Working capital totaled $374 million at December 31, 1993 compared to $392
million at December 31, 1992. Management believes that cash flows from
operations and amounts available under Columbia's revolving credit facilities
and related commercial paper programs are sufficient to meet expected future
liquidity needs.
Investments of Columbia's professional liability insurance subsidiary to
maintain statutory equity and pay claims totaled $376 million and $347 million
at December 31, 1993 and 1992, respectively.
In September 1993 the Board of Directors initiated the payment of a regular
quarterly cash dividend of $.03 per common share. Management anticipates that
this dividend policy will continue after consummation of the HCA Merger.
CAPITAL RESOURCES
Excluding acquisitions, capital expenditures totaled $382 million in 1993
compared to $359 million in 1992 and $453 million in 1991. Planned capital
expenditures in 1994 (excluding acquisitions) are expected to approximate $400
million. Management believes that its capital expenditure program is adequate to
expand, improve and equip existing health care facilities.
In addition, Columbia expended $79 million, $36 million and $96 million for
acquisitions during 1993, 1992 and 1991, respectively. See Note 6 of the Notes
to Consolidated Financial Statements for a description of these activities.
As part of its business strategy, Columbia intends to acquire additional
health care facilities in the future. Since December 31, 1993, Columbia has
expended $114 million toward the purchase of four hospitals (or controlling
interests therein) containing 1,264 licensed beds. These transactions, which
will be accounted for by the purchase method, were financed through the use of
internally generated funds and issuance of long-term debt.
Columbia expects to finance all capital expenditures with internally
generated and borrowed funds. Available sources of capital include public or
private debt, commercial paper, unused bank revolving credits and equity. At
December 31, 1993, there were projects under construction which had an estimated
additional cost to complete of approximately $149 million.
In connection with the Spinoff, common stockholders' equity was reduced by
$802 million in 1993 as a result of the following transactions with Humana: (i)
distribution of the net assets of the health plan business ($392 million) and
the net assets of a hospital facility ($25 million), (ii) payment of cash
31
<PAGE>
($135 million) and (iii) issuance of notes ($250 million). The notes were
refinanced in September 1993. Including the pro forma effect of the Spinoff, the
ratio of debt to debt plus common stockholders' equity improved from 53% at
December 31, 1992 to 50% at December 31, 1993.
Upon consummation of the HCA Merger in February 1994, Columbia entered into
revolving credit agreements in the aggregate amount of $3 billion and refinanced
certain HCA and other long-term debt. The refinancings were effected primarily
through the issuance of commercial paper, $175 million of 6 1/2% Notes due 1999
and $150 million of 7.15% Notes due 2004. Management anticipates that losses
resulting from these refinancing activities will reduce the combined entity's
first quarter 1994 net income by approximately $80 million.
Columbia's credit facilities contain customary covenants which include (i)
limitations on additional debt, (ii) limitations on sales of assets, mergers and
changes of ownership and (iii) maintenance of certain interest coverage ratios.
Columbia was in compliance with all such covenants at December 31, 1993.
EFFECTS OF INFLATION AND CHANGING PRICES
Various federal, state and local laws have been enacted that, in certain
cases, limit Columbia's ability to increase prices. Revenues for hospital
services rendered to Medicare patients are established under the federal
government's prospective payment system. Medicare revenues approximated 33%, 31%
and 30% of revenues in 1993, 1992 and 1991, respectively.
Management believes that hospital operating margins have been, and may
continue to be, under significant pressure because of deterioration in inpatient
volumes and payer mix, and growth in operating expenses in excess of the
increase in prospective payments under the Medicare program. Columbia expects
that the average rate of increase in Medicare prospective payments will
approximate 2% in 1994. In addition, as a result of increasing regulatory and
competitive pressures, Columbia's ability to maintain operating margins through
price increases to non-Medicare patients is limited.
HEALTH CARE REFORM
In recent years, an increasing number of legislative proposals have been
introduced or proposed in Congress and some state legislatures that would
significantly affect health care systems in Columbia's markets. Proposals under
consideration include cost controls on hospitals, insurance market reforms that
increase the availability of group health insurance to small businesses,
requirements that all businesses offer health insurance to their employees and
creation of a single government health insurance plan that would cover all
citizens.
President Clinton's health care reform bill, introduced as legislation in
November 1993, includes certain measures that could significantly reduce future
payments to providers of health care services.
OTHER INFORMATION
Resolution of various loss contingencies, including litigation pending
against Columbia in the ordinary course of business, is not expected to have a
material adverse effect on its financial position or results of operations.
During 1992 Columbia adopted the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," which increased
last year's first quarter net income by $51 million or $.36 per share. See Note
7 of the Notes to Consolidated Financial Statements.
Columbia expects to incur certain expenses related to the HCA Merger, the
amounts of which have not been determined. These costs will include, among other
things, amounts for investment advisory and professional fees, expenses of
printing and distributing proxy materials, severance payments and provisions for
loss related to the consolidation of the operations of Columbia and HCA.
Management anticipates that these expenses will be recorded in the first quarter
of 1994.
32
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Supplemental Selected Financial Data in Item 6 set forth certain
information with respect to the financial position, results of operations and
cash flows of Columbia/HCA which should be read in conjunction with the
following discussion and analysis.
BACKGROUND INFORMATION AND BUSINESS STRATEGY
HCA MERGER
As discussed in Notes 1 and 2 of the Notes to Supplemental Consolidated
Financial Statements of Columbia/HCA, on October 2, 1993, Columbia entered into
a definitive agreement to merge with HCA. This transaction was completed on
February 10, 1994 and will be accounted for as a pooling of interests.
Accordingly, the accompanying supplemental consolidated financial statements and
financial and operating data included in this supplemental discussion and
analysis give retroactive effect to the combined operations of Columbia and HCA
for all periods presented.
GALEN MERGER
The Galen Merger was completed on September 1, 1993 and was also accounted
for as a pooling of interests. Accordingly, the accompanying financial
statements and financial and operating data included in this supplemental
discussion and analysis give retroactive effect to the Galen Merger and include
the combined operations of CHC and Galen for all periods presented. In addition,
the historical financial information related to Galen (which prior to the Galen
Merger was reported on a fiscal year ending August 31) has been recast to
conform to Columbia/HCA's annual reporting period ending December 31.
SPINOFF TRANSACTION
Prior to the merger with CHC, Galen became a publicly held corporation as a
result of the Spinoff which was completed on March 1, 1993. The Spinoff
separated Humana's previously integrated hospital and managed care health plan
businesses and was effected through the distribution of Galen common stock to
then current Humana common stockholders on a one-for-one basis. For accounting
purposes, because of the relative significance of the hospital business, the
pre-Spinoff financial statements of Galen (and now those of Columbia/HCA)
include the separate results of Humana's hospital business, while the operating
results and net assets of Humana's managed care health plans have been
classified as discontinued operations.
BUSINESS STRATEGY
Columbia/HCA primarily operates hospitals and ancillary health care
facilities through either (i) wholly owned subsidiaries or (ii) ownership of
controlling interests in various partnerships in which subsidiaries of
Columbia/HCA serve as the managing general partner. Columbia/HCA's business
strategy centers on the development of comprehensive, integrated health care
delivery networks with physicians and other health care providers in targeted
markets, which typically involves significant health care facility acquisition
and consolidation activities.
During the past several years, hospital inpatient admission trends have been
adversely impacted by cost containment efforts initiated by federal and state
governments and various third-party payers, including HMOs, PPOs, commercial
insurance companies and employer-sponsored networks. In addition, a significant
number of medical procedures have shifted from inpatient to less expensive
outpatient settings as a result of both cost containment pressures and advances
in medical technology.
In response to changes in the health care industry, Columbia/HCA has
developed the following operating strategy to provide the highest quality health
care services at the lowest posible cost:
33
<PAGE>
BECOME A SIGNIFICANT PROVIDER OF SERVICES -- Columbia/HCA attempts to
(i) consolidate services to reduce costs and (ii) develop the geographic
coverage necessary for inclusion in most managed care and employer-sponsored
networks in each market.
PROVIDE A COMPREHENSIVE RANGE OF SERVICES -- In addition to the
operation of general, acute care hospitals, Columbia/HCA also operates
psychiatric and rehabilitation facilities, outpatient surgery and diagnostic
centers, home health agencies and other services. This strategy enables
Columbia/HCA to attract business from managed care plans and major employers
seeking efficient access to a wide array of health care services.
DELIVER HIGH QUALITY SERVICES -- Through the use of clinical
information systems, Columbia focuses on patient outcomes and strives to
continuously improve the quality of care and service provided to patients.
INTEGRATE FRAGMENTED DELIVERY SYSTEMS -- Through its networks,
Columbia/HCA focuses on coordinating pricing, contracting, information
systems and quality assurance activities among providers in each market.
Management intends to implement its strategy discussed above in a
substantial number of former Galen and HCA markets as well as new markets, and
further develop the integrated health care networks in its five pre-Galen Merger
markets.
RESULTS OF OPERATIONS
At the time of the HCA Merger, Columbia/HCA operated 195 hospitals (43,075
licensed beds) and certain ancillary health care facilities in forty major
markets located in twenty-six states and two foreign countries. Operating data
related to the pre-HCA Merger entities follows (dollars in millions):
<TABLE>
<CAPTION>
COLUMBIA HCA COMBINED
---------- ---------- -----------
<S> <C> <C> <C>
Revenues:
1993........................................................... $ 5,130 $ 5,122 $ 10,252
1992........................................................... 4,806 5,126 9,932
1991........................................................... 4,612 4,986 9,598
EBDITA (a):
1993........................................................... $ 907 $ 1,097 $ 2,004
1992........................................................... 870 1,054 1,924
1991........................................................... 928 1,044 1,972
Income from continuing operations (b):
1993........................................................... $ 291 $ 382 $ 673
1992........................................................... 297 300 597
1991........................................................... 358 156 514
Admissions (in thousands):
1993........................................................... 596.3 562.1 1,158.4
1992........................................................... 586.5 574.6 1,161.1
1991........................................................... 587.8 601.9 1,189.7
Emergency room visits (in thousands):
1993........................................................... 1,563.2 1,576.5 3,139.7
1992........................................................... 1,537.4 1,505.5 3,042.9
1991........................................................... 1,519.7 1,508.9 3,028.6
<FN>
- ------------------------
(a) Income from continuing operations before non-recurring transactions,
depreciation, interest, minority interests, income taxes and amortization.
(b) Excludes the after-tax effect of non-recurring transactions. See Note 5 of
the Notes to Supplemental Consolidated Financial Statements for a
description of these transactions.
</TABLE>
Revenues increased 3% to $10.3 billion in 1993 and 3% to $9.9 billion in
1992. Increases in both periods resulted primarily from price increases,
acquisitions and growth in outpatient services.
34
<PAGE>
During 1992 and 1993, Columbia/HCA completed numerous acquisitions and
divestitures of hospitals, most of which are discussed in Notes 5 and 6 of the
Notes to Supplemental Consolidated Financial Statements. The following table
summarizes percentage changes in same-hospital volumes for each respective
period of 1993 compared to the same period of 1992, and changes in same-hospital
volumes in for period of 1992 compared to the same period of 1991.
<TABLE>
<CAPTION>
1993 VS 1992 1992 VS 1991
-------------------------------- --------------------------------
COLUMBIA COLUMBIA
------------ ------------
CHC GALEN HCA COMBINED CHC GALEN HCA COMBINED
---- ------ ----- --------- ---- ------ ----- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ADMISSIONS:
Quarter:
First................ 6.7 (2.1) (1.5) (1.5) 8.4 -- 3.5 2.1
Second............... 8.9 (1.3) (2.5) (1.6) 2.4 (4.8) 1.2 (1.5)
Third................ 5.9 (1.0) (3.0) (1.8) 4.6 (4.1) (0.4) (1.9)
Fourth............... 5.9 1.3 (0.4) 0.6 4.6 (3.6) (2.2) (2.6)
Year............... 6.8 (0.8) (1.8) (1.1) 5.0 (3.1) 0.6 (1.0)
EMERGENCY ROOM VISITS:
Quarter:
First................ 19.2 4.4 9.0 7.3 6.3 2.2 0.9 1.7
Second............... 11.7 (0.1) 4.2 2.6 8.0 (1.8) -- (0.5)
Third................ 5.8 (2.2) 1.9 0.3 16.5 0.2 7.0 4.0
Fourth............... 6.9 2.4 5.7 4.3 8.9 (2.2) (0.5) (1.0)
Year............... 10.6 1.1 5.1 3.6 9.1 (0.4) 1.8 1.0
</TABLE>
In addition to the above, same-hospital outpatient volumes for CHC
facilities increased 9.5% in 1993 and 39% in 1992, while such volumes for Galen
facilities declined 3.6% and 1.5%, respectively. Same-hospital outpatient
volumes for HCA (denominated differently than those of CHC and Galen) increased
9.6% in 1993 and 14.6% in 1992 compared to the respective prior year.
Since it began operations in 1988, CHC had experienced significant growth in
patient volumes, revenues and net income, primarily as a result of successful
implementation of its strategy.
The historical operating results of Galen's hospitals (which include the
hospital operations of Humana prior to the Spinoff) had been adversely impacted
as a result of such hospitals' pre-Spinoff relationship with Humana's managed
care health plan business in certain markets. Management believes that this
relationship caused some physicians to discontinue referrals of their patients
to the company's hospitals, and had precluded these hospitals from contracting
with unaffiliated insurers. In addition, Galen's volume of patients covered by
traditional insurance (who pay amounts which more closely approximate
established charges) declined significantly in 1992 due in part to increased
price consciousness of patients and physicians with respect to Galen's pricing
policies. Same-hospital volume trends at former Galen facilities have improved
in 1993 primarily as a result of increased volumes from discounted managed care
health plans other than Humana.
During 1993 HCA facilities experienced declines in inpatient admissions and
increases in outpatient volumes primarily as a result of the previously
discussed cost containment efforts and outpatient utilization trends. In
addition, volumes in HCA's psychiatric facilities had been adversely impacted in
both 1992 and 1993 as a result of negative publicity in the psychiatric hospital
industry.
Despite declines in same-hospital admissions and deterioration in payer mix,
EBDITA for Columbia/HCA increased 4% to $2 billion in 1993 from $1.9 billion in
1992. EBDITA margins improved slightly to 19.5% from 19.4% primarily as a result
of improvements in staffing levels and increased medical supply discounts.
Medicare admissions as a percentage of total admissions increased from 37% in
1992 to 39% in 1993, while discounted and managed care admissions grew from 32%
to 35%, respectively. EBDITA declined 3% in 1992 from 1991 due to a decline in
same-hospital admissions at former Galen facilities and deterioration in Galen's
payer mix.
35
<PAGE>
During the third quarter of 1993, Columbia/HCA recorded non-recurring
charges of $151 million ($98 million net of tax) of costs related to the Galen
Merger.
Results of operations in 1992 include (i) $394 million ($330 million net of
tax) of losses associated with divestitures of certain hospitals, (ii) $138
million ($86 million net of tax) of costs related primarily to the Spinoff and
(iii) a gain of $93 million ($58 million net of tax) on the sale of HealthTrust
common stock.
Income from continuing operations in 1991 includes (i) a charge of $413
million ($256 million net of tax) in connection with the acceleration of vesting
of stock options under the HCA Nonqualified Stock Option Plan and the
establishment of exercise prices at levels substantially less than the then fair
value of the underlying common stock, (ii) a charge of $159 million ($99 net of
tax) primarily in connection with the anticipated loss on the disposition of
certain hospitals and other assets, (iii) a gain of $51 million ($32 million net
of tax) on the sale of a hospital, and (iv) a gain of $221 million ($162 million
net of tax) on the sale of an investment in preferred stock and warrants of
HealthTrust.
See Note 5 of the Notes to Supplemental Consolidated Financial Statements
for a discussion of non-recurring transactions.
Excluding the effects of the non-recurring transactions, income from
continuing operations increased 13% to $673 million ($1.99 per share) in 1993
and 16% to $597 million ($1.82 per share) in 1992. Improvements in both years
resulted primarily from reductions in interest expense, and in 1993, growth in
EBDITA.
During the third quarter of 1993, in an effort to reduce future interest
expense and eliminate certain restrictive covenants, Columbia/HCA effected the
refinancing of $787 million of its long-term debt (bearing interest at an
average rate of 8.5%) primarily through the issuance of commercial paper, and
renegotiated HCA's bank credit agreement (subsequently replaced upon
consummation of the HCA Merger). After-tax losses from these refinancing
activities aggregated $84 million or $.24 per share.
DISCONTINUED OPERATIONS
Results of operations include income from discontinued operations of $16
million in 1993, a loss of $125 million in 1992 and income of $16 million in
1991. Losses from discontinued operations in 1992 include costs of $135 million
(net of tax) incurred by Humana in connection with the Spinoff.
LIQUIDITY
Cash provided by continuing operations totaled $1.3 billion in each of the
last three years. Cash flows in excess of Columbia/HCA's capital expenditure
program were used primarily to reduce long-term debt. Working capital totaled
$573 million at December 31, 1993 compared to $606 million at December 31, 1992.
Management believes that cash flows from operations and amounts available under
Columbia/HCA's revolving credit facilities and related commercial paper programs
are sufficient to meet expected future liquidity needs.
Investments of the Columbia/HCA's professional liability insurance
subsidiaries to maintain statutory equity and pay claims totaled $778 million
and $709 million at December 31, 1993 and 1992, respectively.
In September 1993 the Board of Directors initiated the payment of a regular
quarterly cash dividend of $.03 per common share. Management anticipates that
this dividend policy will continue after consummation of the HCA Merger.
CAPITAL RESOURCES
Excluding acquisitions, capital expenditures totaled $836 million in 1993
compared to $668 million in 1992 and $645 million in 1991. Planned capital
expenditures in 1994 (excluding acquisitions) are expected to approximate $800
million. Management believes that its capital expenditure program is adequate to
expand, improve and equip existing health care facilities.
36
<PAGE>
In addition, Columbia/HCA expended $79 million, $36 million and $96 million
for acquisitions during 1993, 1992 and 1991, respectively. See Note 6 of the
Notes to Supplemental Consolidated Financial Statements for a description of
these activities.
As part of its business strategy, Columbia/HCA intends to acquire additional
health care facilities in the future. Since December 31, 1993, Columbia/HCA has
expended $114 million toward the purchase of four hospitals (or a controlling
interest therein) containing 1,264 licensed beds. These transactions, which will
be accounted for by the purchase method, were financed through the use of
internally generated funds and issuance of long-term debt.
Columbia/HCA expects to finance all capital expenditures with internally
generated and borrowed funds. Available sources of capital include public or
private debt, commercial paper, unused bank revolving credits and equity. At
December 31, 1993, there were projects under construction which had an estimated
additional cost to complete of approximately $299 million.
In connection with the Spinoff, common stockholders' equity was reduced by
$802 million in 1993 as a result of the following transactions with Humana: (i)
distribution of the net assets of the health plan business ($392 million) and
the net assets of a hospital facility ($25 million), (ii) payment of cash ($135
million) and (iii) issuance of notes ($250 million). The notes were refinanced
in September 1993. Including the pro forma effect of the Spinoff, the ratio of
debt to debt plus common stockholders' equity improved from 58% at December 31,
1992 to 52% at December 31, 1993.
Upon consummation of the HCA Merger in February 1994, Columbia/HCA entered
into revolving credit agreements in the aggregate amount of $3 billion and
refinanced certain HCA and other long-term debt. The refinancings were effected
primarily through the issuance of commercial paper, $175 million of 6 1/2% Notes
due 1999 and $150 million of 7.15% Notes due 2004. Management anticipates that
losses resulting from these refinancing activities will reduce Columbia/HCA's
first quarter 1994 net income by approximately $80 million.
Columbia's credit facilities contain customary covenants which include (i)
limitations on additional debt, (ii) limitations on sales of assets, mergers and
changes of ownership and (iii) maintenance of certain interest coverage ratios.
Columbia/HCA was in compliance with all such covenants at December 31, 1993.
EFFECTS OF INFLATION AND CHANGING PRICES
Various federal, state and local laws have been enacted that, in certain
cases, limit Columbia/ HCA's ability to increase prices. Revenues for hospital
services rendered to Medicare patients are established under the federal
government's prospective payment system. Medicare revenues approximated 34%, 30%
and 29% of revenues in 1993, 1992 and 1991, respectively.
Management believes that hospital operating margins have been, and may
continue to be, under significant pressure because of deterioration in inpatient
volumes and payer mix, and growth in operating expenses in excess of the
increase in prospective payments under the Medicare program. Columbia expects
that the average rate of increase in Medicare prospective payments will
approximate 2% in 1994. In addition, as a result of increasing regulatory and
competitive pressures, Columbia/HCA's ability to maintain operating margins
through price increases to non-Medicare patients is limited.
HEALTH CARE REFORM
In recent years, an increasing number of legislative proposals have been
introduced or proposed in Congress and some state legislatures that would
significantly affect health care systems in Columbia/HCA's markets. Proposals
under consideration include cost controls on hospitals, insurance market reforms
that increase the availability of group health insurance to small businesses,
requirements that all businesses offer health insurance to their employees and
creation of a single government health insurance plan that would cover all
citizens.
37
<PAGE>
President Clinton's health care reform bill, introduced as legislation in
November 1993, includes certain measures that could significantly reduce future
payments to providers of health care services.
OTHER INFORMATION
As discussed in Note 7 of the Notes to Supplemental Consolidated Financial
Statements, Columbia/HCA is contesting certain income taxes and related interest
aggregating $1.3 billion at December 31, 1993 proposed by the Internal Revenue
Service (the "Service") for prior years. Management believes that final
resolution of these disputes will not have a material adverse effect on the
financial position, results of operations or liquidity of Columbia/HCA. However,
if all or a majority of the positions of the Service are upheld, the financial
position, results of operations and liquidity of Columbia/HCA would be
materially adversely affected.
On March 24, 1994, Columbia/HCA made an advance payment to the IRS of
approximately $75 million in connection with certain disputed prior year income
taxes and related interest. This transaction will not have a material effect on
1994 earnings.
Resolution of various other loss contingencies, including litigation pending
against Columbia/ HCA in the ordinary course of business, is not expected to
have a material adverse effect on its financial position or results of
operations.
During 1992 Columbia/HCA adopted the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," which increased
last year's first quarter net income by $51 million or $.16 per share. See Note
7 of the Notes to Supplemental Consolidated Financial Statements.
Columbia/HCA expects to incur certain expenses related to the HCA Merger,
the amounts of which have not been determined. These costs will include, among
other things, amounts for investment advisory and professional fees, expenses of
printing and distributing proxy materials, severance payments and provisions for
loss related to the consolidation of the operations of Columbia and HCA.
Management anticipates that these expenses will be recorded in the first quarter
of 1994.
38
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Information with respect to this Item 8 is contained in the Consolidated
Financial Statements and Financial Statement Schedules of Columbia Healthcare
Corporation and the Supplemental Consolidated Financial Statements and Financial
Statement Schedules of the Company included in the Indexes on Pages F-1 and
F-30, respectively, of this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required by this Item is set forth under the heading
"Election of Directors" in the definitive proxy materials of the Company to be
filed in connection with its 1994 Annual Meeting of Stockholders, except for the
information regarding executive officers of the Company, which is contained in
Item 1 of Part I of this Annual Report on Form 10-K. The information required by
this Item contained in such definitive proxy materials is incorporated herein by
reference.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item is set forth under the heading
"Executive Compensation" in the definitive proxy materials of the Company to be
filed in connection with its 1994 Annual Meeting of Stockholders, which
information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this Item is set forth under the heading
"Principal Stockholders" in the definitive proxy materials of the Company to be
filed in connection with its 1994 Annual Meeting of Stockholders, which
information is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this Item is set forth under the heading
"Certain Transactions" in the definitive proxy materials of the Company to be
filed in connection with its 1994 Annual Meeting of Stockholders, which
information is incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Documents filed as part of the report:
1. and 2.LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.
The accompanying Index to Consolidated Financial Statements and
Financial Statement Schedules of Columbia Healthcare Corporation
and Index to Supplemental Consolidated Financial Statements and
Financial Statement Schedules of the Company on Pages F-1 and
F-30, respectively, of this Annual Report on Form 10-K are
provided in response to this Item.
3. LIST OF EXHIBITS.
<TABLE>
<S> <C>
3.1 Restated Certificate of Incorporation of the Company (filed as
Exhibit 3(a) to the Company's Current Report on Form 8-K dated
February 11, 1994, and incorporated herein by reference).
3.2(a) By-laws of the Company (filed as Exhibit 2.2 to the Company's
Registration Statement on Form 8-A dated August 31, 1993, and
incorporated herein by reference).
3.2(b) Amendment to By-laws of the Company (filed as Exhibit 3(b).1 to the
Company's Current Report on Form 8-K dated February 11, 1994, and
incorporated herein by reference).
</TABLE>
39
<PAGE>
<TABLE>
<S> <C>
4.1 Specimen Certificate for shares of Common Stock, par value $.01 per
share, of the Company (filed as Exhibit 4.1 to the Company's Form
SE to Form 10-K for the fiscal year ended December 31, 1993, and
incorporated herein by reference).
4.2 Columbia Hospital Corporation 9% Subordinated Mandatory Convertible
Note Due June 30, 1999 (filed as Exhibit 4.4 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1990, and incorporated herein by reference).
4.3 Registration Rights Agreement between the Company and The 1818
Fund, L.P. dated March 18, 1991 (filed as Exhibit 4.5 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1990, and incorporated herein by reference).
4.4 Securities Purchase Agreement by and between the Company and The
1818 Fund, L.P. dated as of March 18, 1991 (filed as Exhibit 4.6 to
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1990, and incorporated herein by reference).
4.5 Warrant to purchase shares of Common Stock, par value $.01 per
share, of the Company (filed as Exhibit 4.7 to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1990,
and incorporated herein by reference).
4.6 Registration Rights Agreement dated as of March 16, 1989, by and
among HCA-Hospital Corporation of America and the persons listed on
the signature pages thereto (filed as Exhibit (g)(24) to Amendment
No. 3 to the Schedule 13E-3 filed by HCA-Hospital Corporation of
America, Hospital Corporation of America and The HCA Profit Sharing
Plan on March 22, 1989, and incorporated herein by reference).
4.7 Assignment and Assumption Agreement dated as of February 10, 1994,
between HCA-Hospital Corporation of America and the Company
relating to the Registration Rights Agreement, as amended.
4.8 Amended and Restated Rights Agreement dated February 10, 1994
between the Company and Mid-America Bank of Louisville and Trust
Company.
4.9 $1 Billion Credit Agreement dated as of February 10, 1994, among
the Company, the Several Banks and Other Financial Institutions,
and Chemical Bank as Agent and as CAF Loan Agent.
4.10 $2 Billion Credit Agreement dated as of February 10, 1994, among
the Company, the Several Banks and Other Financial Institutions,
and Chemical Bank as Agent and as CAF Loan Agent.
4.11 Indenture dated as of December 15, 1993 between the Company and The
First National Bank of Chicago, as Trustee.
10.1 Agreement and Plan of Merger among the Company, CHOS Acquisition
Corporation and HCA-Hospital Corporation of America dated as of
October 2, 1993 (filed as Exhibit 2 to the Company's Registration
Statement on Form S-4 (File No. 33-50735), and incorporated herein
by reference).
10.2 Agreement and Plan of Merger between Galen Health Care, Inc. and
the Company dated as of June 10, 1993 (filed as Exhibit 2 to the
Company's Registration Statement on Form S-4 (File No. 33-49773),
and incorporated herein by reference).
</TABLE>
40
<PAGE>
<TABLE>
<S> <C>
10.3 Agreement and Plan of Merger among Hospital Corporation of America,
HCA-Hospital Corporation of America and TF Acquisition, Inc. dated
November 21, 1988 PLUS a list identifying the contents of all
omitted exhibits to the Agreement and Plan of Merger PLUS an
agreement of Hospital Corporation of America to furnish
supplementally to the Securities and Exchange Commission upon
request a copy of all omitted exhibits (filed as Exhibit 2 to
Hospital Corporation of America's Current Report on Form 8-K dated
November 21, 1988, and incorporated herein by reference).
10.4 Amendment No. 1 to Agreement and Plan of Merger dated as of
February 7, 1989, among Hospital Corporation of America,
HCA-Hospital Corporation of America and TF Acquisition, Inc. (filed
as Exhibit 2(b) to Hospital Corporation of America's Annual Report
on Form 10-K for the year ended December 31, 1988, and incorporated
herein by reference).
10.5 Columbia Hospital Corporation Stock Option Plan (filed as Exhibit
10.13 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1990, and incorporated herein by
reference).*
10.6 Columbia Hospital Corporation 1992 Stock and Incentive Plan (filed
as Exhibit 10.14 to the Company's Registration Statement on Form
S-1 (Reg. No. 33-48886), and incorporated herein by reference).*
10.7 Columbia Hospital Corporation Outside Directors Nonqualified Stock
Option Plan (filed as Exhibit 28.1 to the Company's Registration
Statement on Form S-8 (File No. 33-55272), and incorporated herein
by reference).*
10.8 HCA-Hospital Corporation of America 1989 Nonqualified Stock Option
Plan, as amended through December 16, 1991 (filed as Exhibit 10(g)
to HCA-Hospital Corporation of America's Registration Statement on
Form S-1 (File No. 33-44906), and incorporated herein by
reference).*
10.9 Form of Stock Option Agreement under the HCA-Hospital Corporation
of America 1989 Nonqualified Stock Option Plan (filed as Exhibit
10(j) to HCA-Hospital Corporation of America's Annual Report on
Form 10-K for the year ended December 31, 1989, and incorporated
herein by reference).*
10.10 HCA-Hospital Corporation of America Nonqualified Initial Option
Plan (filed as Exhibit 4.6 to the Company's Registration Statement
on Form S-3 (File No. 33-52379), and incorporated herein by
reference).*
10.11 Termination Agreement between the Company and Carl F. Pollard dated
December 16, 1993.*
10.12 Termination Agreement between the Company and James D. Bohanon
dated December 16, 1993.*
10.13 Form of Indemnity Agreement between Galen Health Care, Inc. and
certain officers and directors (filed as Exhibit 10(kk) to Galen
Health Care, Inc.'s Registration Statement on Form 10, as amended,
and incorporated herein by reference).
10.14 Form of Severance Pay Agreement between Galen Health Care, Inc. and
certain executives (filed as Exhibit 10(jj) to Galen Health Care,
Inc.'s Registration Statement on Form 10, as amended, and
incorporated herein by reference).*
10.15 Form of Severance Agreement between HCA-Hospital Corporation of
America and certain executives dated as of November 1, 1993.*
10.16 Assumption Agreement among the Company, CHOS Acquisition
Corporation and HCA-Hospital Corporation of America dated as of
February 10, 1994, relating to the Severance Agreements.*
</TABLE>
41
<PAGE>
<TABLE>
<S> <C>
10.17 Form of Severance Pay Agreement between the Company and certain
executives dated as of June 10, 1993.*
10.18 Form of Galen Health Care, Inc. 1993 Adjustment Plan (filed as
Exhibit 4.15 to the Company's Registration Statement on Form S-8
(File No. 33-50147), and incorporated herein by reference).*
10.19 Columbia/HCA Healthcare Corporation Annual Incentive Plan.*
10.20 Columbia/HCA Healthcare Corporation Directors' Retirement Policy.*
10.21 Baxter Supply Agreement dated as of December 1, 1989, among
Hospital Corporation of America, Baxter Healthcare Corporation,
HealthTrust, Inc. -- The Hospital Company and Healthcare Management
Corporation (filed as Exhibit 10(u) filed with Hospital Corporation
of America's Annual Report on Form 10-K, for the year ended
December 31, 1989, and incorporated herein by reference).
10.22 HCA-Hospital Corporation of America 1992 Stock Compensation Plan
(filed as Exhibit 10(t) to HCA-Hospital Corporation of America's
Registration Statement on Form S-1 (File No. 33-44906), and
incorporated herein by reference).*
11 Supplemental Statement re Computation of Earnings Per Common and
Common Equivalent Share.
12.1 Statement re Computation of Ratio of Earnings to Fixed Charges.
12.2 Supplemental Statement re Computation of Ratio of Earnings to Fixed
Charges.
21 List of Subsidiaries.
23 Consent of Coopers & Lybrand.
<FN>
- ------------------------
* Management compensatory plan or arrangement.
</TABLE>
(b) Reports on Form 8-K.
<TABLE>
<CAPTION>
DATE OF CURRENT REPORT ITEM(S) REPORTED
- ----------------------- -----------------------------------------------------------------------------------
<S> <C>
October 4, 1993 Announced approval by the Board of Directors of the HCA Merger
November 5, 1993 Earnings release for the quarter and nine months ended September 30, 1993 and 1992
November 10, 1993 Consolidated financial statements of HCA for the years ended December 31, 1993,
1992 and for the six months ended June 30, 1993 and 1992
November 15, 1993 Consolidated financial statements of the Company for the quarter and nine months
ended September 30, 1993 and 1992
December 15, 1993 Underwriting Agreement in connection with the Company's 6 1/8% Notes due December
15, 2000 and the Company's 7 1/2% Debentures due December 15, 2023
February 11, 1994 Announced completion of the HCA Merger, the composition of the Company's Board of
Directors and a Bylaw amendment
February 21, 1994 Supplemental pro forma consolidated financial statements of the Company for the
three years ended December 31, 1992, 1991 and 1990, and for the nine months ended
September 30, 1993 and 1992
March 1, 1994 Earnings release for the quarter and year ended December 31, 1993 and 1992
March 14, 1994 Underwriting Agreement in connection with the Company's 6 1/2% Notes due March 15,
1999
March 18, 1994 Underwriting Agreement in connection with the Company's 7.15% Notes due March 30,
2004
March 22, 1994 Assumption of HCA long-term debt
</TABLE>
42
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 31, 1994
COLUMBIA/HCA HEALTHCARE CORPORATION
By: _______/s/_RICHARD L. SCOTT_______
Richard L. Scott
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ------------------------------------ -------------------
<C> <S> <C>
/s/ THOMAS F. FRIST, JR., M.D.
------------------------------------------- Chairman of the Board March 31, 1994
Thomas F. Frist, Jr., M.D.
/s/ RICHARD L. SCOTT
------------------------------------------- President, Chief Executive March 31, 1994
Richard L. Scott Officer and Director
/s/ DAVID C. COLBY Senior Vice President, Chief
------------------------------------------- Financial Officer and Treasurer March 31, 1994
David C. Colby (Principal Financial Officer)
/s/ RICHARD A. LECHLEITER Vice President and Controller
------------------------------------------- (Principal Accounting March 31, 1994
Richard A. Lechleiter Officer)
/s/ MAGDALENA AVERHOFF, M.D.
------------------------------------------- Director March 31, 1994
Magdalena Averhoff, M.D.
/s/ J. DAVID GRISSOM
------------------------------------------- Director March 31, 1994
J. David Grissom
/s/ ETHAN JACKSON
------------------------------------------- Director March 31, 1994
Ethan Jackson
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ------------------------------------ -------------------
<C> <S> <C>
/s/ CHARLES J. KANE
------------------------------------------- Director March 31, 1994
Charles J. Kane
/s/ JOHN W. LANDRUM
------------------------------------------- Director March 31, 1994
John W. Landrum
/s/ T. MICHAEL LONG
------------------------------------------- Director March 31, 1994
T. Michael Long
/s/ DARLA D. MOORE
------------------------------------------- Director March 31, 1994
Darla D. Moore
/s/ RODMAN W. MOORHEAD III
------------------------------------------- Director March 31, 1994
Rodman W. Moorhead III
/s/ CARL F. POLLARD
------------------------------------------- Director March 31, 1994
Carl F. Pollard
/s/ CARL E. REICHARDT
------------------------------------------- Director March 31, 1994
Carl E. Reichardt
/s/ FRANK S. ROYAL, M.D.
------------------------------------------- Director March 31, 1994
Frank S. Royal, M.D.
/s/ ROBERT D. WALTER
------------------------------------------- Director March 31, 1994
Robert D. Walter
/s/ WILLIAM T. YOUNG
------------------------------------------- Director March 31, 1994
William T. Young
</TABLE>
44
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Report of Independent Accountants.......................................................................... F-2
Consolidated Financial Statements:
Consolidated Statement of Income for the years ended
December 31, 1993, 1992 and 1991........................................................................ F-3
Consolidated Balance Sheet, December 31, 1993 and 1992................................................... F-4
Consolidated Statement of Common Stockholders' Equity for the years ended December 31, 1993, 1992 and
1991.................................................................................................... F-5
Consolidated Statement of Cash Flows for the years ended
December 31, 1993, 1992 and 1991........................................................................ F-6
Notes to Consolidated Financial Statements............................................................... F-7
Quarterly Consolidated Financial Information (Unaudited)................................................. F-21
Financial Statement Schedules (a):
Schedule I -- Marketable Securities -- Other Security Investments, December 31, 1993..................... F-22
Schedule II -- Amounts Receivable From Related Parties and Underwriters, Promoters and Employees Other
Than Related Parties for the years ended December 31, 1993, 1992 and 1991............................... F-23
Schedule V -- Property, Plant and Equipment for the years ended December 31, 1993, 1992 and 1991......... F-26
Schedule VI -- Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment for
the years ended December 31, 1993, 1992 and 1991........................................................ F-27
Schedule VIII -- Valuation and Qualifying Accounts for the years ended December 31, 1993, 1992 and
1991.................................................................................................... F-28
Schedule X -- Supplementary Income Statement Information for the years ended December 31, 1993, 1992 and
1991.................................................................................................... F-29
<FN>
- ------------------------
(a) All other schedules have been omitted because the required information is
not present or not present in material amounts.
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Columbia/HCA Healthcare Corporation
We have audited the consolidated financial statements and financial
statement schedules of Columbia Healthcare Corporation listed in the index on
page F-1 of this Form 10-K. These financial statements and financial statement
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and financial statement
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Columbia
Healthcare Corporation as of December 31, 1993 and 1992, and the consolidated
results of operations and cash flows for each of the three years in the period
ended December 31, 1993 in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedules
referred to above, when considered in relation to the basic financial statements
taken as a whole, present fairly, in all material respects, the information
required to be included therein.
As discussed in Note 7 to the consolidated financial statements, effective
January 1, 1992, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes."
COOPERS & LYBRAND
Louisville, Kentucky
February 28, 1994
F-2
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Revenues........................................................................... $ 5,130 $ 4,806 $ 4,612
--------- --------- ---------
Salaries, wages and benefits....................................................... 2,217 2,069 2,004
Supplies........................................................................... 842 788 720
Other operating expenses........................................................... 916 833 717
Provision for doubtful accounts.................................................... 282 285 277
Depreciation and amortization...................................................... 298 276 248
Interest expense................................................................... 129 117 111
Investment income.................................................................. (34) (39) (34)
Non-recurring transactions......................................................... 151 138 -
--------- --------- ---------
4,801 4,467 4,043
--------- --------- ---------
Income from continuing operations before minority interests and income taxes....... 329 339 569
Minority interests in earnings of consolidated entities............................ 9 10 9
--------- --------- ---------
Income from continuing operations before income taxes.............................. 320 329 560
Provision for income taxes......................................................... 127 118 202
--------- --------- ---------
Income from continuing operations.................................................. 193 211 358
Discontinued operations:
Income (loss) from operations of discontinued health plan segment, net of income
tax (benefit) of $9 in 1993, ($46) in 1992 and $9 in 1991....................... 16 (108) 16
Costs associated with discontinuance of health plan segment,
net of income tax benefit of $2................................................. - (17) -
Extraordinary loss on extinguishment of debt, net of income tax benefit of $42..... (70) - -
Cumulative effect on prior years of a change in accounting for
income taxes...................................................................... - 51 -
--------- --------- ---------
Net income................................................................... $ 139 $ 137 $ 374
--------- --------- ---------
--------- --------- ---------
Earnings per common share:
Income from continuing operations................................................ $ 1.28 $ 1.45 $ 2.58
Discontinued operations:
Income (loss) from operations of discontinued health plan
segment....................................................................... .10 (.75) .11
Costs associated with discontinuance of health plan segment.................... - (.12) -
Extraordinary loss on extinguishment of debt..................................... (.46) - -
Cumulative effect on prior years of a change in accounting for income taxes...... - .36 -
--------- --------- ---------
Net income................................................................... $ .92 $ .94 $ 2.69
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
F-3
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993 AND 1992
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................................................. $ 72 $ 95
Accounts receivable less allowance for loss of $160 -- 1993 and
$166 -- 1992............................................................................. 787 827
Inventories............................................................................... 139 138
Other..................................................................................... 217 204
--------- ---------
1,215 1,264
Property and equipment, at cost:
Land...................................................................................... 273 268
Buildings................................................................................. 2,402 2,269
Equipment................................................................................. 1,785 1,663
Construction in progress (estimated cost to complete and equip after December 31, 1993 --
$149).................................................................................... 121 109
--------- ---------
4,581 4,309
Accumulated depreciation.................................................................. (1,792) (1,651)
--------- ---------
2,789 2,658
Net assets of discontinued operations....................................................... - 376
Investments of professional liability insurance subsidiary.................................. 318 302
Intangible assets........................................................................... 225 195
Other....................................................................................... 72 96
--------- ---------
$ 4,619 $ 4,891
--------- ---------
--------- ---------
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................................................... $ 232 $ 199
Salaries, wages and other compensation.................................................... 141 124
Other accrued expenses.................................................................... 375 425
Income taxes.............................................................................. 22 92
Long-term debt due within one year........................................................ 71 32
--------- ---------
841 872
Long-term debt.............................................................................. 1,580 1,256
Deferred credits and other liabilities...................................................... 485 456
Minority interests in equity of consolidated entities....................................... 57 31
Contingencies
Common stockholders' equity:
Common stock $.01 par; authorized 400,000,000 shares; issued and outstanding 151,060,400
shares -- 1993 and 148,927,400 shares -- 1992............................................ 2 1
Capital in excess of par value............................................................ 784 740
Other..................................................................................... (2) (9)
Retained earnings......................................................................... 872 1,544
--------- ---------
1,656 2,276
--------- ---------
$ 4,619 $ 4,891
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
F-4
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
CONSOLIDATED STATEMENT OF COMMON STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK
-------------- CAPITAL IN
SHARES PAR EXCESS OF RETAINED
(000) VALUE PAR VALUE OTHER EARNINGS TOTAL
------- ----- ---------- ----- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1990........................... 136,122 $ 1 $ 523 $ (2) $ 1,314 $1,836
Net income.......................................... 374 374
Cash dividends (Galen Health Care, Inc.)............ (138) (138)
Issuance of common stock............................ 4,310 61 61
Stock options exercised and related tax
benefits, net of 224,000 shares
tendered in partial payment therefor............... 797 24 24
Other............................................... 24 2 9 11
------- ----- ----- ----- -------- ------
Balances, December 31, 1991........................... 141,253 1 610 7 1,550 2,168
Net income.......................................... 137 137
Cash dividends (Galen Health Care, Inc.)............ (143) (143)
Issuance of common stock............................ 7,227 119 119
Stock options exercised and related tax
benefits, net of 30,000 shares
tendered in partial payment therefor............... 430 9 9
Other............................................... 17 2 (16) (14)
------- ----- ----- ----- -------- ------
Balances, December 31, 1992........................... 148,927 1 740 (9) 1,544 2,276
Net income.......................................... 139 139
Cash dividends (Columbia Healthcare Corporation --
$.06 per share).................................... (9) (9)
Stock options exercised and related tax
benefits, net of 81,000 shares
tendered in partial payment therefor............... 1,728 1 30 31
Spinoff transaction with Humana Inc.:
Cash payment to Humana Inc........................ (135) (135)
Noncash transactions:
Issuance of notes payable....................... (250) (250)
Distribution of net investment in
discontinued health plan operations............ (392) (392)
Transfer of a hospital facility................. (25) (25)
Net unrealized gains on investment securities....... 9 9
Other............................................... 405 14 (2) 12
------- ----- ----- ----- -------- ------
Balances, December 31, 1993........................... 151,060 $ 2 $ 784 $ (2) $ 872 $1,656
------- ----- ----- ----- -------- ------
------- ----- ----- ----- -------- ------
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
F-5
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from continuing operations:
Net income.......................................................................... $ 139 $ 137 $ 374
Adjustments to reconcile net income to net cash provided by operating activities:
Discontinued operations........................................................... (16) 127 (16)
Minority interests in earnings of consolidated entities........................... 9 10 9
Non-recurring transactions........................................................ 151 138 -
Depreciation and amortization..................................................... 298 276 248
Deferred income taxes............................................................. (51) (41) 27
Change in operating assets and liabilities:
(Increase) decrease in accounts receivable...................................... 9 115 (17)
(Increase) decrease in inventories and other assets............................. 1 (49) (28)
Decrease in income taxes........................................................ (50) (12) (15)
Increase (decrease) in other liabilities........................................ (99) 36 82
Change in accounting for income taxes............................................. - (51) -
Extraordinary loss on extinguishment of debt...................................... 112 - -
Other............................................................................. (10) (18) (9)
--------- --------- ---------
Net cash provided by continuing operations...................................... 493 668 655
--------- --------- ---------
Cash flows from investing activities:
Purchase of property and equipment.................................................. (382) (359) (453)
Acquisition of hospitals and health care facilities................................. (79) (36) (96)
Sale of assets...................................................................... 130 53 116
Investment in discontinued operations............................................... - (71) (76)
Change in investments............................................................... 33 3 (35)
Other............................................................................... (22) (2) (6)
--------- --------- ---------
Net cash used in investing activities........................................... (320) (412) (550)
--------- --------- ---------
Cash flows from financing activities:
Issuance of long-term debt.......................................................... 400 239 194
Net change in commercial paper borrowings and lines of credit....................... 342 (143) 161
Repayment of long-term debt......................................................... (779) (150) (354)
Payment to Humana Inc. in spinoff transaction....................................... (135) - -
Payment of cash dividends........................................................... (40) (143) (134)
Issuance of common stock............................................................ 30 7 71
Other............................................................................... (14) (13) (6)
--------- --------- ---------
Net cash used in financing activities........................................... (196) (203) (68)
--------- --------- ---------
Change in cash and cash equivalents................................................... (23) 53 37
Cash and cash equivalents at beginning of period...................................... 95 42 5
--------- --------- ---------
Cash and cash equivalents at end of period............................................ $ 72 $ 95 $ 42
--------- --------- ---------
--------- --------- ---------
Interest payments..................................................................... $ 122 $ 111 $ 114
Income tax payments, net of refunds................................................... 186 169 190
</TABLE>
The accompanying notes are an integral part of
the consolidated financial statements.
F-6
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- ACCOUNTING POLICIES
Columbia Healthcare Corporation ("Columbia") is a Delaware corporation which
began operations on September 1, 1993 as a result of a merger involving Columbia
Hospital Corporation ("CHC") and Galen Health Care, Inc. ("Galen") (the "Galen
Merger"). See Note 2 for a description of the specific terms of the Galen
Merger. Columbia primarily operates hospitals and ancillary health care
facilities through either (i) wholly owned subsidiaries or (ii) ownership of
controlling interests in various partnerships in which subsidiaries of Columbia
serve as the managing general partner.
BASIS OF PRESENTATION
The consolidated financial statements include all subsidiaries and
partnerships controlled by Columbia as the managing general partner. Significant
intercompany transactions have been eliminated.
For accounting purposes, the Galen Merger has been treated as a pooling of
interests. Accordingly, the consolidated financial statements included herein
give retroactive effect to the transaction and include the combined operations
of CHC and Galen for all periods presented. In addition, the historical
financial information related to Galen (which prior to the Galen Merger was
reported on a fiscal year ending August 31) has been recast to conform to
Columbia's annual reporting period ending December 31.
On February 10, 1994, Columbia consummated a merger with HCA -- Hospital
Corporation of America ("HCA") (the "HCA Merger"). Although the HCA Merger will
be treated as a pooling of interests for accounting purposes, the accompanying
consolidated financial statements do not give retroactive effect to this
transaction. See Note 3 for a description of the HCA Merger.
REVENUES
Columbia's health care facilities have entered into agreements with
third-party payers, including government programs and managed care health plans,
under which Columbia is paid based upon established charges, cost of providing
services, predetermined rates by diagnosis, fixed per diem rates or discounts
from established charges.
Revenues are recorded at estimated amounts due from patients and third-party
payers for health care services provided, including anticipated settlements
under reimbursement agreements with third-party payers.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include highly liquid investments with an original
maturity of three months or less. Carrying values of cash and cash equivalents
approximate fair value due to the short-term nature of these instruments.
ACCOUNTS RECEIVABLE
Accounts receivable consist primarily of amounts due from the Medicare and
Medicaid programs, other government programs, managed care health plans,
commercial insurance companies and individual patients.
INVENTORIES
Inventories are stated at the lower of cost (last-in, first-out) or market.
PROPERTY AND EQUIPMENT
Depreciation expense, computed by the straight-line method, was $279 million
in 1993, $264 million in 1992 and $241 million in 1991. Columbia uses component
depreciation for buildings. Depreciation rates for buildings are equivalent to
useful lives ranging generally from 20 to 25 years. Estimated useful lives of
equipment vary from 3 to 10 years.
F-7
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- ACCOUNTING POLICIES (CONTINUED)
INVESTMENTS
On December 31, 1993, Columbia adopted the provisions of Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" ("SFAS 115"), which requires that investments in
debt and equity securities be classified according to certain criteria.
INTANGIBLE ASSETS
Intangible assets consist primarily of costs in excess of the fair value of
identifiable net assets of acquired entities and are amortized using the
straight-line method over periods ranging from 10 to 40 years. Noncompete
agreement and debt issuance costs are amortized based upon the lives of the
respective contracts or loans.
PROFESSIONAL LIABILITY INSURANCE CLAIMS
Provisions for loss for professional liability risks are based upon
actuarially determined estimates. To the extent that subsequent claims
information varies from management's estimates, earnings are charged or
credited.
MINORITY INTERESTS IN CONSOLIDATED ENTITIES
The consolidated financial statements include all assets, liabilities and
earnings of Columbia's partnerships, certain partnership interests of which are
not owned by Columbia. Accordingly, management has recorded minority interests
in the earnings and equity of such partnerships.
EARNINGS PER COMMON SHARE
Earnings per common share are based upon the weighted average number of
common shares outstanding, retroactively adjusted for the exchange of common
shares in connection with the Galen Merger.
Shares used in computing earnings per common share in 1993 were 150,017,000.
The following is a summary of shares used in the computation for periods prior
to the Galen Merger (amounts in thousands):
<TABLE>
<CAPTION>
1992 1991
--------- ---------
<S> <C> <C>
CHC weighted average shares outstanding.......................................... 21,967 16,540
--------- ---------
Galen weighted average shares outstanding........................................ 158,620 157,931
Merger exchange ratio............................................................ 0.775 0.775
--------- ---------
Adjusted Galen weighted average shares outstanding............................. 122,930 122,396
--------- ---------
Shares used in computation of earnings per common share.......................... 144,897 138,936
--------- ---------
--------- ---------
</TABLE>
NOTE 2 -- GALEN MERGER
On August 31, 1993, the stockholders of both CHC and Galen approved the
Galen Merger, effective as of September 1, 1993. In connection with the Galen
Merger, CHC, a Nevada corporation, was merged into Columbia. Each CHC share of
common stock was converted on a tax-free basis into one share of Columbia common
stock. Immediately subsequent thereto, a wholly owned subsidiary of Columbia was
merged into Galen, at which time Galen became a wholly owned subsidiary of
Columbia. In connection with this transaction, Columbia issued approximately
123,830,000 shares of common stock in a tax-free exchange for all of the
outstanding common shares of Galen (an exchange ratio of 0.775 of a share of
Columbia common stock for each share of Galen common stock).
F-8
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- GALEN MERGER (CONTINUED)
The Galen Merger has been accounted for as a pooling of interests, and
accordingly, the consolidated financial statements give retroactive effect to
the combined operations of CHC and Galen for all periods presented. The
following is a summary of the results of operations of the separate entities for
periods prior to the Galen Merger (dollars in millions):
<TABLE>
<CAPTION>
CHC GALEN COMBINED
--------- --------- -----------
<S> <C> <C> <C>
Eight months ended August 31, 1993 (unaudited):
Revenues...................................................... $ 823 $ 2,600 $ 3,423
Income from continuing operations............................. 17 176 193
Net income.................................................... 17 192 209
1992:
Revenues...................................................... $ 819 $ 3,987 $ 4,806
Income from continuing operations............................. 26 185 211
Net income.................................................... 26 111 137
1991:
Revenues...................................................... $ 499 $ 4,113 $ 4,612
Income from continuing operations............................. 15 343 358
Net income.................................................... 15 359 374
</TABLE>
NOTE 3 -- HCA MERGER
On October 2, 1993, Columbia entered into a definitive agreement to merge
with HCA. This transaction was completed on February 10, 1994. In connection
with the HCA Merger, Columbia stockholders approved an amendment to Columbia's
Certificate of Incorporation changing the name of the corporation to
Columbia/HCA Healthcare Corporation ("Columbia/HCA"). HCA was then merged into a
wholly owned subsidiary of Columbia/HCA. Shares of HCA Class A voting common
stock and Class B nonvoting common stock were converted on a tax-free basis into
approximately 166,846,000 shares of Columbia/HCA voting common stock and
approximately 18,990,000 shares of Columbia/HCA nonvoting common stock,
respectively (an exchange ratio of 1.05 shares of Columbia/ HCA common stock for
each share of HCA voting and nonvoting common stock).
These financial statements do not give retroactive effect to the HCA Merger,
which will be accounted for as a pooling of interests. See the Supplemental
Consolidated Financial Statements of Columbia/HCA Healthcare Corporation
included elsewhere herein for additional information regarding the HCA Merger.
NOTE 4 -- SPINOFF TRANSACTION AND DISCONTINUED OPERATIONS
Prior to the Galen Merger, Galen began operating its hospital business as an
independent publicly held corporation on March 1, 1993 as a result of a tax-free
spinoff transaction (the "Spinoff") by Humana Inc. ("Humana"), which retained
its managed care health plan business. The Spinoff separated Humana's previously
integrated hospital and managed care health plan businesses and was effected
through the distribution of Galen common stock to then current Humana common
stockholders on a one-for-one basis.
For accounting purposes, because of the relative significance of the
hospital business, the pre-Spinoff consolidated financial statements of Galen
(and now those of Columbia) include the separate results of Humana's hospital
business, while the operations and net assets of Humana's managed care health
plans have been classified as discontinued operations.
F-9
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 -- SPINOFF TRANSACTION AND DISCONTINUED OPERATIONS (CONTINUED)
In connection with the Spinoff, Galen entered into various agreements with
Humana which were intended to facilitate orderly changes for both the hospital
and managed care health plan businesses in a way which would be minimally
disruptive to each entity. Principal contracts are summarized below:
OPERATIONS -- Certain former Galen hospitals will provide medical services
to insureds of Humana for three years subsequent to the Spinoff. The contract
includes, among other things, established payment rates for various inpatient
and outpatient services and annual increases therein, and hospital utilization
guarantees and related penalties.
LIABILITIES AND INDEMNIFICATION -- Each entity assumed liability for
specified claims. The entities will also share risks with respect to certain
litigation and other contingencies, both identified and unknown.
INCOME TAXES -- Each entity entered into risk-sharing arrangements in
connection with the ultimate resolution of various income tax disputes.
FINANCING -- In January 1993 certain subsidiaries issued $250 million of
notes payable to Humana, and paid to Humana $135 million in cash on March 1,
1993 which was financed principally through the issuance of commercial paper.
The $250 million of notes were repaid in September 1993 in connection with the
refinancing of certain long-term debt.
ADMINISTRATION -- These arrangements relate to leasing of certain
administrative facilities, division of information systems, employee benefit and
stock option plans, and various administrative service arrangements.
Revenues of the discontinued managed care health plan business (included in
discontinued operations in the accompanying consolidated statement of income)
were $523 million in 1993, $2.9 billion in 1992 and $2.5 billion in 1991.
NOTE 5 -- NON-RECURRING TRANSACTIONS
In September 1993 Columbia recorded the following charges in connection with
the Galen Merger (dollars in millions):
<TABLE>
<S> <C>
Investment advisory and professional fees, and employee benefit plan costs... $ 62
Writedown of assets in connection with the consolidation of the combined
entity's operations......................................................... 63
Administrative facility asset writedowns and conversion costs associated with
the transaction............................................................. 16
Provision for loss on planned sales of assets................................ 10
---------
$ 151
---------
---------
</TABLE>
Income from continuing operations in 1992 includes $138 million of charges
incurred primarily in connection with the Spinoff, including a provision for
loss on the planned sale of hospitals, writedowns of assets in markets with
significant declines in operations, administrative facility asset writedowns and
certain other costs associated with the separation of the hospital and health
plan businesses. Costs aggregating $171 million (before income taxes) incurred
by Humana primarily in connection with the Spinoff are included in discontinued
operations in 1992.
Continuing operations in 1991 include a gain of $51 million on the sale of a
hospital, a provision for loss of $46 million primarily in connection with the
planned disposition of certain hospitals, and charitable contributions of $5
million.
F-10
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 -- OTHER BUSINESS COMBINATIONS
During the past three years, Columbia has acquired various hospitals and
related ancillary health care facilities (or controlling interests in such
facilities), all of which have been accounted for by the purchase method.
Accordingly, the aggregate purchase price of these transactions has been
allocated to tangible and identifiable intangible assets acquired and
liabilities assumed based upon their respective fair values. The consolidated
financial statements include the operations of acquired entities since the
respective acquisition dates.
The following is a summary of acquisitions consummated during the last three
years (dollars in millions):
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Number of hospitals.................................................... 3 15 2
Number of licensed beds................................................ 903 2,345 1,420
Purchase price information:
Fair value of assets acquired........................................ $ 164 $ 490 $ 165
Liabilities assumed.................................................. (76) (279) (48)
--------- --------- ---------
Net assets acquired................................................ 88 211 117
--------- --------- ---------
Issuance of common stock............................................. - 119 1
Cash acquired........................................................ 9 15 15
Cash received from sale of certain acquired assets................... - 40 -
Other................................................................ - 1 5
--------- --------- ---------
9 175 21
--------- --------- ---------
Net cash paid for acquisitions..................................... $ 79 $ 36 $ 96
--------- --------- ---------
--------- --------- ---------
</TABLE>
In July 1992 Columbia acquired Basic American Medical, Inc. ("BAMI")
(included in the table above) through a merger into a wholly owned subsidiary.
The assets of BAMI included eight hospitals containing 1,203 licensed beds and
certain other health care businesses. The transaction was financed through the
assumption of approximately $140 million of long-term debt, issuance of
6,995,000 shares of common stock and payment of $38 million in cash to BAMI
stockholders.
The purchase price paid in excess of the fair value of identifiable net
assets of acquired entities aggregated $7 million in 1993, $97 million in 1992
and $19 million in 1991.
The pro forma effect of Columbia's acquisitions on its results of operations
was not significant.
NOTE 7 -- INCOME TAXES
Provision for income taxes consists of the following (dollars in millions):
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Current:
Federal.............................................................. $ 153 $ 135 $ 151
State................................................................ 25 24 24
--------- --------- ---------
178 159 175
--------- --------- ---------
Deferred:
Federal.............................................................. (47) (36) 19
State................................................................ (4) (5) 8
--------- --------- ---------
(51) (41) 27
--------- --------- ---------
$ 127 $ 118 $ 202
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-11
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- INCOME TAXES (CONTINUED)
Reconciliation of federal statutory rate to effective income tax rate
follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Federal statutory rate................................................... 35.0% 34.0% 34.0%
State income taxes, net of federal income
tax benefit............................................................. 3.5 2.9 2.8
Merger costs............................................................. 1.8 - -
Tax exempt investment income............................................. (1.3) (1.4) (0.6)
Other items, net......................................................... 0.6 0.3 (0.2)
--------- --------- ---------
Effective income tax rate................................................ 39.6% 35.8% 36.0%
--------- --------- ---------
--------- --------- ---------
</TABLE>
In August 1993 Congress enacted the Omnibus Budget Reconciliation Act of
1993 which included, among other things, an increase in corporate income tax
rates retroactive to January 1, 1993. This legislation had no material effect on
1993 net income.
Effective January 1, 1992, Columbia adopted the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes," which
requires, among other things, recognition of deferred income taxes using
statutory rates at which temporary differences in the tax and book bases of
assets and liabilities are expected to affect taxable income in future years.
The cumulative effect of this change as of the beginning of the year increased
1992 net income by $51 million.
A summary of deferred income taxes by source included in the consolidated
balance sheet at December 31, 1993 and 1992 follows (dollars in millions):
<TABLE>
<CAPTION>
1993 1992
---------------------- ----------------------
ASSETS LIABILITIES ASSETS LIABILITIES
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Depreciation.................................................. $ - $ 316 $ - $ 297
Professional liability risks.................................. 99 - 109 -
Doubtful accounts............................................. 30 - 32 -
Property losses............................................... 63 - 48 -
Cash basis.................................................... - 5 - 18
Compensation.................................................. 24 - 18 -
Capitalized leases............................................ 11 - 12 -
Other......................................................... 57 7 32 2
--------- ----- --------- -----
$ 284 $ 328 $ 251 $ 317
--------- ----- --------- -----
--------- ----- --------- -----
</TABLE>
Management believes that the deferred tax assets in the table above will
ultimately be realized. Management's conclusion is based primarily on its
expectation of future taxable income and the existence of sufficient taxable
income within the allowable carryback periods to realize the tax benefits of
deductible temporary differences recorded at December 31, 1993.
Deferred income taxes totaling $119 million and $96 million at December 31,
1993 and 1992, respectively, are included in other current assets. Noncurrent
deferred income taxes, included in deferred credits and other liabilities,
totaled $163 million and $162 million at December 31, 1993 and 1992,
respectively.
F-12
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 -- PROFESSIONAL LIABILITY RISKS
Columbia insures a substantial portion of its professional liability risks
through a wholly owned insurance subsidiary. Provisions for such risks
underwritten by the subsidiary and deductibles at certain hospitals, including
expenses incident to claim settlements, were $64 million for 1993 and $58
million for both 1992 and 1991. Amounts approximating the provision for loss are
funded annually.
Allowances for professional liability risks, included principally in
deferred credits and other liabilities, were $327 million and $290 million at
December 31, 1993 and 1992, respectively.
As discussed in Note 1, Columbia adopted the provisions of SFAS 115 on
December 31, 1993. Accordingly, common stockholders' equity was increased by $9
million (net of deferred income taxes) to reflect the net unrealized gain on
investments classified as available for sale. Prior to the adoption of SFAS 115,
debt securities were recorded at amortized cost (which approximated fair value),
while equity securities were recorded at the lower of aggregate cost or fair
value. The adoption of SFAS 115 had no effect on earnings in 1993.
The provisions of SFAS 115 require that investments in debt and equity
securities be classified according to the following criteria:
TRADING ACCOUNT -- Assets held for resale in anticipation of short-term
changes in market conditions are recorded at fair value and gains and losses,
both realized and unrealized, are included in income. Columbia does not maintain
a trading account portfolio.
HELD TO MATURITY -- Certain debt securities of Columbia's professional
liability insurance subsidiary are expected to be held to maturity as a result
of management's intent and ability to do so. These investments are carried at
amortized cost.
AVAILABLE FOR SALE -- Debt and equity securities not classified as either
trading securities or held to maturity are classified as available for sale and
recorded at fair value. Unrealized gains and losses are excluded from income and
recorded as a separate component of common stockholders' equity.
F-13
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 -- PROFESSIONAL LIABILITY RISKS (CONTINUED)
The following is a summary of the insurance subsidiary's investments at
December 31, 1993 and 1992 (dollars in millions):
<TABLE>
<CAPTION>
DECEMBER 31, 1993
------------------------------------------
UNREALIZED AMOUNTS
-------------------- FAIR
COST GAINS LOSSES VALUE
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Held to maturity:
United States Government obligations.............................. $ 44 $ - $ - $ 44
--------- --------- --------- ---------
Available for sale:
Bonds:
United States Government........................................ 16 1 - 17
States and municipalities....................................... 143 4 - 147
Mortgage-backed securities...................................... 47 1 - 48
Corporate and other............................................. 23 1 - 24
Redeemable preferred stocks....................................... 17 1 - 18
--------- --------- --------- ---------
246 8 - 254
--------- --------- --------- ---------
Equity securities:
Adjustable rate preferred stocks................................ 13 1 - 14
Common stocks................................................... 59 6 (1) 64
--------- --------- --------- ---------
72 7 (1) 78
--------- --------- --------- ---------
$ 362 $ 15 $ (1) 376
--------- --------- ---------
--------- --------- ---------
Amounts classified as current assets................................ (58)
---------
Investment carrying value........................................... $ 318
---------
---------
</TABLE>
F-14
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 -- PROFESSIONAL LIABILITY RISKS (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1992
------------------------------------------
UNREALIZED AMOUNTS
-------------------- FAIR
COST GAINS LOSSES VALUE
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Held to maturity:
United States Government obligations.............................. $ 19 $ - $ - $ 19
Certificates of deposit........................................... 20 - - 20
--------- --------- --------- ---------
39 - - 39
--------- --------- --------- ---------
Available for sale:
Bonds:
United States Government........................................ 22 1 - 23
States and municipalities....................................... 102 2 - 104
Mortgage-backed securities...................................... 55 - - 55
Corporate and other............................................. 25 2 - 27
Redeemable preferred stocks....................................... 18 - - 18
--------- --------- --------- ---------
222 5 - 227
--------- --------- --------- ---------
Equity securities:
Adjustable rate preferred stocks................................ 20 1 - 21
Common stocks................................................... 66 6 (4) 68
--------- --------- --------- ---------
86 7 (4) 89
--------- --------- --------- ---------
347 $ 12 $ (4) $ 355
--------- --------- ---------
--------- --------- ---------
Amounts classified as current assets................................ (45)
---------
Investment carrying value........................................... $ 302
---------
---------
</TABLE>
The cost and estimated fair value of debt and equity securities at December
31, 1993 by contractual maturity are shown below (dollars in millions). Expected
and contractual maturities will differ because the issuers of certain securities
may have the right to prepay or otherwise redeem such obligations without
penalty.
<TABLE>
<CAPTION>
FAIR
COST VALUE
----------- ---------
<S> <C> <C>
Held to maturity:
Due in one year or less......................................................... $ 44 $ 44
----- ---------
Available for sale:
Due in one year or less......................................................... 14 14
Due after one year through five years........................................... 45 47
Due after five years through ten years.......................................... 78 81
Due after ten years............................................................. 109 112
----- ---------
246 254
Equity securities............................................................... 72 78
----- ---------
318 332
----- ---------
$ 362 $ 376
----- ---------
----- ---------
</TABLE>
The fair value of the subsidiary's investments is based generally on quoted
market prices.
F-15
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 -- PROFESSIONAL LIABILITY RISKS (CONTINUED)
The average life of the above investments (excluding common stocks)
approximated four years at December 31, 1993 and three years at December 31,
1992, and the tax equivalent yield on such investments averaged 9% for the last
three years. Tax equivalent yield is the rate earned on invested assets,
excluding unrealized gains and losses, adjusted for the benefit of nontaxable
investment income.
Sales of securities for the year ended December 31, 1993 are summarized
below (dollars in millions):
<TABLE>
<CAPTION>
TYPE OF SECURITY
------------------------
DEBT EQUITY
----------- -----------
<S> <C> <C>
Cash proceeds..................................................................... $ 70 $ 67
Gross realized gains.............................................................. 2 8
Gross realized losses............................................................. - 7
</TABLE>
NOTE 9 -- LONG-TERM DEBT
A summary of long-term debt at December 31 follows (dollars in millions):
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Senior collateralized debt, 5% to 13.8% (rates generally fixed) payable in periodic
installments through 2034......................................................... $ 136 $ 338
6 1/8% Notes due 2000.............................................................. 149 -
7 1/2% Notes due 2023.............................................................. 147 -
10 7/8% Senior Subordinated Notes due 2002......................................... 2 99
11 1/2% Senior Subordinated Notes due 2002......................................... 1 134
Other senior debt, 8% to 13.3% (rates generally fixed) payable in periodic
installments through 1998......................................................... 194 132
Commercial paper (rates fixed under interest rate agreements averaging four years
at 7.9%).......................................................................... 380 380
Commercial paper (floating rates averaging 3.4%)................................... 495 153
Bank line of credit (floating rates averaging 3.6%)................................ 100 -
9% Subordinated Mandatory Convertible Note due 1999................................ 40 40
Other subordinated debt, 10% to 15% (rates generally fixed) payable
in periodic installments through 2000............................................. 7 12
--------- ---------
Total debt, average life of five years (rates averaging 5.3%)...................... 1,651 1,288
Amounts due within one year........................................................ 71 32
--------- ---------
Long-term debt..................................................................... $ 1,580 $ 1,256
--------- ---------
--------- ---------
</TABLE>
Borrowings under the commercial paper programs are classified as long-term
debt due to the credit available under the revolving credit agreements discussed
below and management's intention to refinance these borrowings on a long-term
basis.
Maturities of long-term debt (including maturities of short-term debt
supported by the revolving credit agreements) in years 1995 through 1998 are $73
million, $13 million, $32 million and $1.1 billion, respectively. Approximately
10% of Columbia's property and equipment is pledged on senior collateralized
debt.
During the past three years Columbia has reduced interest costs and
eliminated certain restrictive covenants by refinancing or prepaying high
interest rate debt, primarily through the use of
F-16
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9 -- LONG-TERM DEBT (CONTINUED)
existing cash and cash equivalents and issuance of long-term debt and commercial
paper. Amounts refinanced or prepaid totaled $787 million in 1993, $116 million
in 1992 and $275 million in 1991. After-tax losses from refinancing activities
in 1993 aggregated $70 million or $.46 per share.
In February 1994 Columbia entered into revolving credit agreements (the
"Credit Facilities") in the aggregate amount of $3 billion. The Credit
Facilities comprise a four-year $1 billion revolving credit agreement and a
364-day $2 billion revolving credit agreement. The Credit Facilities were
established to support Columbia's commercial paper programs and replace $3.2
billion of prior revolving credit agreements associated with HCA ($1.6 billion)
and Columbia ($1.6 billion). Interest is payable generally at either LIBOR plus
1/4% to 1/2% (depending on Columbia's credit rating), or the higher of prime,
the bank certificate of deposit rate plus 1% or the Federal Funds rate plus
1/2%.
In December 1993 Columbia issued $150 million of 6 1/8% Notes due 2000 and
$150 million of 7 1/2% Notes due 2023.
During 1992 Columbia sold $100 million face amount of 10 7/8% Senior
Subordinated Notes due 2002 and $135 million face amount of 11 1/2% Senior
Subordinated Notes due 2002. In September 1993 Columbia retired $232 million
face amount of these notes through the completion of a tender offer.
In connection with the acquisition of BAMI in 1992, Columbia assumed
approximately $140 million of long-term debt, including approximately $64
million of senior collateralized notes payable in quarterly installments through
1998 at interest rates ranging from 10.7% to 11.7%. In September 1993 Columbia
effected the defeasance of these notes.
In 1991 one of Columbia's partnerships issued $95 million of 11.45% Senior
Secured Notes due 2001. Proceeds from the issuance were used to repay $66
million of bank debt and finance expansion. These notes were retired in
connection with Columbia's refinancing of debt in September 1993. Columbia also
issued in 1991 a $40 million face amount 9% Subordinated Mandatory Convertible
Note due 1999. The note is convertible at the option of the holder into Columbia
common stock at a price of $18.50 per share (adjusted for stock splits,
recapitalizations and reorganizations). The note will be automatically converted
into common stock if the average per share market price for four months
preceding the July 1 anniversary exceeds a specified amount ranging from $27.00
in 1994 to $34.00 in 1996.
Columbia's credit facilities contain customary covenants which include (i)
limitations on additional debt, (ii) limitations on sales of assets, mergers and
changes of ownership and (iii) maintenance of certain interest coverage ratios.
The estimated fair value of Columbia's long-term debt was $1.7 billion and
$1.46 billion at December 31, 1993 and 1992, respectively, compared to carrying
amounts aggregating $1.65 billion and $1.29 billion. Certain subsidiaries of
Columbia have entered into agreements which reduce the impact of changes in
interest rates on $380 million of floating rate long-term debt. At December 31,
1993 and 1992, the fair value of Columbia's net payable position under these
agreements (included in the aggregate fair value amounts above) totaled $34
million and $29 million, respectively. The estimate of fair value is based upon
the quoted market prices for the same or similar issues of long-term debt, or on
rates available to Columbia as a result of the Galen Merger for debt of the same
remaining maturities.
As discussed in Note 4, in connection with the Spinoff, certain subsidiaries
issued notes payable ($250 million) and paid cash ($135 million financed
primarily through the issuance of commercial paper) to Humana in 1993. If the
Spinoff had occurred on December 31, 1992, Columbia's ratio of debt to debt plus
common stockholders' equity would have increased from 36% to 53%.
F-17
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 10 -- LEASES
Columbia leases real estate and equipment under cancelable and
non-cancelable arrangements. Future minimum payments under non-cancelable
operating leases are as follows (dollars in millions):
<TABLE>
<S> <C>
1994......................................................................... $ 50
1995......................................................................... 43
1996......................................................................... 34
1997......................................................................... 31
1998......................................................................... 21
Thereafter................................................................... 127
</TABLE>
Rent expense aggregated $79 million, $82 million and $72 million for the
years ended December 31, 1993, 1992 and 1991, respectively.
NOTE 11 -- CONTINGENCIES
Management continually evaluates contingencies based upon the best available
evidence. In addition, allowances for loss are provided currently for disputed
items that have continuing significance, such as certain third-party
reimbursements and deductions that continue to be claimed in current cost
reports and tax returns.
Management believes that allowances for loss have been provided to the
extent necessary and that its assessment of contingencies is reasonable.
Management believes that resolution of contingencies will not materially affect
Columbia's financial position or results of operations.
Principal contingencies are described below:
REVENUES -- Certain third-party payments are subject to examination by
agencies administering the programs. Columbia is contesting certain issues
raised in audits of prior year cost reports.
PROFESSIONAL LIABILITY RISKS -- Columbia has provided for loss for
professional liability risks based upon actuarially determined estimates. Actual
settlements and expenses incident thereto may differ from the provisions for
loss.
INTEREST RATE AGREEMENTS -- Certain subsidiaries of Columbia are parties to
agreements which reduce the impact of changes in interest rates on its floating
rate long-term debt. In the event of nonperformance by other parties to these
agreements, Columbia may incur a loss on the difference between market rates and
contract rates.
INCOME TAXES -- Columbia is contesting adjustments proposed by the Internal
Revenue Service for years 1987 through 1989.
SPINOFF -- Certain subsidiaries of Columbia are parties to risk-sharing
arrangements with Humana.
LITIGATION -- Various suits and claims arising in the ordinary course of
business are pending against Columbia.
F-18
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12 -- CAPITAL STOCK
The following shares of common stock were reserved at December 31, 1993
(amounts in thousands):
<TABLE>
<S> <C>
Stock option plans......................................................... 4,139
Retirement and savings plans............................................... 5,285
Other...................................................................... 2,853
---------
12,277
---------
---------
</TABLE>
Columbia has plans under which options to purchase common stock may be
granted to officers, employees and directors. Options have been granted at not
less than market price on the date of grant. Exercise provisions vary, but most
options are exercisable in whole or in part beginning one to four years after
grant and ending four to ten years after grant. Activity in the plans is
summarized below (share amounts in thousands):
<TABLE>
<CAPTION>
SHARES
UNDER OPTION PRICE
OPTION PER SHARE
--------- --------------------
<S> <C> <C>
Balances, December 31, 1990............................................. 3,631 $7.21 to $37.00
Granted............................................................... 1,188 11.75 to 25.24
Exercised............................................................. (1,021) 7.21 to 23.37
Cancelled or lapsed................................................... (51) 8.50 to 37.00
---------
Balances, December 31, 1991............................................. 3,747 8.23 to 25.71
Granted............................................................... 758 15.00 to 22.62
Conversion of BAMI stock options...................................... 466 3.18 to 11.59
Exercised............................................................. (460) 3.18 to 17.25
Cancelled or lapsed................................................... (74) 8.50 to 23.37
---------
Balances, December 31, 1992............................................. 4,437 3.18 to 25.71
Granted............................................................... 982 19.50 to 33.38
Exercised............................................................. (1,835) 3.18 to 23.37
Cancelled or lapsed................................................... (152) 3.18 to 25.71
---------
Balances, December 31, 1993............................................. 3,432 $3.18 to $33.38
---------
---------
</TABLE>
At December 31, 1993, options for 2,028,900 shares were exercisable. Shares
of common stock available for future grants were 707,300 at December 31, 1993
and 2,721,000 at December 31, 1992.
In connection with the Galen Merger, Columbia redeemed certain preferred
stock purchase rights previously issued to Galen common stockholders. The cost
of this transaction was not significant. In addition, Columbia adopted a
stockholder rights plan (similar to that of Galen) upon consummation of the
Galen Merger under which common stockholders have the right to purchase Series A
Preferred Stock in the event of accumulation of or tender offer for certain
percentages of Columbia's common stock. The rights will expire in 2003 unless
redeemed earlier by Columbia.
In September 1993 the Board of Directors initiated a regular quarterly cash
dividend on common stock of $.03 per share.
In connection with the HCA Merger, Columbia stockholders voted to increase
the aggregate number of authorized voting shares of common stock from 400
million to 800 million, and the number of authorized nonvoting shares of common
stock was established at 25 million. In addition, authorized shares of preferred
stock (none of which are outstanding) were increased from 10 million to 25
million.
F-19
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13 -- EMPLOYEE BENEFIT PLANS
Certain subsidiaries of Columbia maintain a noncontributory defined
contribution retirement plan covering substantially all Columbia employees.
Benefits are determined as a percentage of a participant's earned income and are
vested annually. Retirement plan expense was $40 million for 1993, $37 million
for 1992 and $34 million for 1991. Amounts equal to retirement plan expense are
funded annually.
Columbia maintains various contributory savings plans which are available to
employees who meet certain minimum requirements. The plans require that Columbia
match an amount ranging from 50% to 60% of a participant's contribution up to
certain maximum levels. The cost of these plans totaled $20 million for 1993,
$19 million for 1992 and $15 million for 1991. Columbia contributions are funded
periodically during the year.
NOTE 14 -- ACCRUED EXPENSES
The following is a summary of other accrued expenses at December 31 (dollars
in millions):
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Workers' compensation................................................................... $ 82 $ 70
Taxes other than income................................................................. 73 51
Professional liability risks............................................................ 54 45
Retirement plan......................................................................... 15 48
Dividends............................................................................... 5 36
Interest................................................................................ 33 37
Other................................................................................... 113 138
--------- ---------
$ 375 $ 425
--------- ---------
--------- ---------
</TABLE>
F-20
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
QUARTERLY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1993
----------------------------------------------------
FIRST SECOND THIRD FOURTH
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues................................................... $1,329 $1,262 $1,238 $1,301
Net income (loss):
Continuing operations (a)................................ 90 70 (45) 78
Discontinued operations.................................. 16 - - -
Extraordinary loss on extinguishment of debt............. - - (70) -
Net income (loss).................................... 106 70 (115) 78
Per common share:
Earnings (loss):
Continuing operations (a).............................. .61 .46 (.31) .52
Discontinued operations................................ .10 - - -
Extraordinary loss on extinguishment of debt........... - - (.46) -
Net income (loss).................................... .71 .46 (.77) .52
Market prices (b):
High................................................... 24 1/2 27 3/4 31 33 7/8
Low.................................................... 16 1/4 19 1/4 25 3/8 27
</TABLE>
<TABLE>
<CAPTION>
1992
--------------------------------------------------------
FIRST SECOND THIRD FOURTH
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues................................................... $ 1,227 $ 1,163 $ 1,182 $ 1,234
Net income (loss):
Continuing operations.................................... 97 73 (32) 73
Discontinued operations.................................. 3 (2) (132) 6
Change in accounting for income taxes.................... 51 - - -
Net income (loss) (c)................................ 151 71 (164) 79
Per common share:
Earnings (loss):
Continuing operations.................................. .69 .51 (.24) .49
Discontinued operations................................ .02 (.01) (.93) .05
Change in accounting for income taxes.................. .36 - - -
Net income (loss) (c)................................ 1.07 .50 (1.17) .54
Market prices (b):
High................................................... 21 1/4 22 19 1/4 21 3/4
Low.................................................... 16 1/2 16 1/4 16 1/4 13 3/4
<FN>
- ------------------------
(a) Third quarter loss includes $98 million ($.67 per share) of costs related
to the Galen Merger. See Note 5 of the Notes to Consolidated Financial
Statements.
(b) Represents high and low sales prices of CHC common stock for periods prior
to the Galen Merger. Columbia common stock is traded on the New York Stock
Exchange (ticker symbol -- COL).
(c) Third quarter net loss includes $221 million ($1.54 per share) related
primarily to the Spinoff, of which $86 million ($.60 per share) is
included in continuing operations and $135 million ($.94 per share) is
included in discontinued operations. See Note 5 of the Notes to
Consolidated Financial Statements.
</TABLE>
F-21
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
SCHEDULE I -- MARKETABLE SECURITIES -- OTHER SECURITY INVESTMENTS
DECEMBER 31, 1993
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
AMOUNT AT WHICH
EACH PORTFOLIO OF
NUMBER OF SHARES EQUITY SECURITY
OR UNITS -- MARKET VALUE OF ISSUE AND EACH
PRINCIPAL AMOUNT EACH ISSUE AT OTHER SECURITY
OF BONDS AND COST OF EACH BALANCE SHEET ISSUE CARRIED IN
NAME OF ISSUER AND TITLE OF EACH ISSUE NOTES ISSUE DATE THE BALANCE SHEET
- -------------------------------------------------- ----------------- ------------- --------------- -------------------
<S> <C> <C> <C> <C>
Short-term investments of professional liability
insurance subsidiary (a):
United States Government and government agency
obligations.................................... $ 44 $ 44 $ 44 $ 44
State and municipal obligations................. $ 14 14 14 14
----- ----- -----
$ 58 $ 58 $ 58
----- ----- -----
----- ----- -----
Long-term investments:
United States Government and government agency
bonds.......................................... $ 17 $ 16 $ 17 $ 17
State and municipal bonds....................... $ 139 129 133 133
Mortgage-backed securities...................... $ 46 47 48 48
Corporate and other bonds....................... $ 22 23 24 24
Redeemable preferred stocks..................... 17 18 18
Adjustable rate preferred stocks................ 13 14 14
Common stocks................................... 59 64 64
----- ----- -----
Investments of professional liability
insurance subsidiary......................... $ 304 $ 318 $ 318
----- ----- -----
----- ----- -----
<FN>
- ------------------------
(a) Included in current assets.
</TABLE>
F-22
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES
AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT END
OF PERIOD
BALANCE AT ----------------------
BEGINNING AMOUNTS NOT
OF PERIOD ADDITIONS COLLECTED CURRENT CURRENT
----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1991:
Mark Aanonson............................................ $ 46 $ (46)
James Bohanon............................................ 200 (200)
James Bohanon............................................ 16 (16)
Daniel Brothman.......................................... 135 $ 135
Craig Cooper............................................. 170 (120) 50
William Heburn........................................... $ 558 $ 558
Gary Hill................................................ 50 (50)
Samuel Holtzman.......................................... 120 20 100
Ronald Hytoff............................................ 106 (4) 102
Ira Korman............................................... 50 (50)
Ira Korman............................................... 30 (30)
Ruben Perez.............................................. 884 (144) 740
Doris Porth.............................................. 135 135
George Schneider......................................... 148 (1) 1 146
George Schneider......................................... 550 550
George Schneider......................................... 150 150
Russell Schneider........................................ 764 3 (158) 609
Donald Stewart........................................... 100 (100)
Donald Stewart........................................... 3 3
Charles Stokes........................................... 75 75
Charles Stokes........................................... 40 (1) 39
Charles Stokes........................................... 100 100
----------- ----- ----------- ----- ---------
$ 3,502 $ 931 $ (920) $ 579 $ 2,934
----------- ----- ----------- ----- ---------
----------- ----- ----------- ----- ---------
</TABLE>
F-23
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES
AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT
BALANCE AT END OF PERIOD
BEGINNING AMOUNTS ------------------------
OF PERIOD ADDITIONS COLLECTED CURRENT NOT CURRENT
----------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1992:
Daniel Brothman........................................... $ 135 $ 135
Craig Cooper.............................................. 50 $ (50)
William Heburn............................................ 558 (558)
Gary Hill................................................. $ 127 $ 127
Samuel Holtzman........................................... 120 (20) 100
Ronald Hytoff............................................. 102 (102)
Ruben Perez............................................... 740 (740)
Doris Porth............................................... 135 135
George Schneider.......................................... 147 (147)
George Schneider.......................................... 550 (550)
George Schneider.......................................... 150 (150)
Russell Schneider......................................... 609 (609)
Donald Stewart............................................ 100 100
Donald Stewart............................................ 3 (3)
Charles Stokes............................................ 75 (75)
Charles Stokes............................................ 39 (39)
Charles Stokes............................................ 100 (100)
----------- ----- --------- ----- -----
$ 3,513 $ 227 $ (3,143) $ 127 $ 470
----------- ----- --------- ----- -----
----------- ----- --------- ----- -----
</TABLE>
F-24
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES
AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT
BALANCE AT END OF PERIOD
BEGINNING AMOUNTS -------------------------
OF PERIOD ADDITIONS COLLECTED CURRENT NOT CURRENT
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Daniel Brothman......................................... $ 135 $ 135(a)
Gary Hill............................................... 127 $ (127)
Samuel Holtzman......................................... 100 100(a)
Doris Porth............................................. 135 135(a)
Donald Stewart.......................................... 100 100(a)
----- ----------- ----------- ----------- -----
$ 597 $ - $ (127) $ - $ 470
----- ----------- ----------- ----------- -----
----- ----------- ----------- ----------- -----
<FN>
- ------------------------
(a) Noninterest bearing; generally collateralized by deed of trust on personal
residence; payable either in periodic installments or upon termination of
employment, sale of residence or default on any collateralized instrument
having priority over Columbia's deed of trust.
</TABLE>
F-25
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
BALANCE AT BALANCE
BEGINNING ADDITIONS RETIREMENTS TRANSLATION AT END
OF PERIOD AT COST OR SALES ADJUSTMENTS OTHER OF PERIOD
----------- ----------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1991:
Land..................................... $ 221 $ 25 $ (8) $ - $ - $ 238
Buildings................................ 1,973 220 (56) (3) (31)(a) 2,103
Equipment................................ 1,333 262 (68) (2) - 1,525
Construction in progress................. 86 37 (1) - - 122
----------- ----- ------ ------ ------ -----------
$ 3,613 $ 544 $ (133) $ (5) $ (31) $ 3,988
----------- ----- ------ ------ ------ -----------
----------- ----- ------ ------ ------ -----------
Year ended December 31, 1992:
Land..................................... $ 238 $ 37 $ (5) $ (1) $ (1)(b) $ 268
Buildings................................ 2,103 301 (24) (13) (98)(b) 2,269
Equipment................................ 1,525 238 (67) (6) (27)(b) 1,663
Construction in progress................. 122 (12) (1) - - 109
----------- ----- ------ ------ ------ -----------
$ 3,988 $ 564 $ (97) $ (20) $ (126) $ 4,309
----------- ----- ------ ------ ------ -----------
----------- ----- ------ ------ ------ -----------
Year ended December 31, 1993:
Land..................................... $ 268 $ 14 $ (9) $ - $ - $ 273
Buildings................................ 2,269 300 (133) (1) (33)(c) 2,402
Equipment................................ 1,663 263 (119) (1) (21)(c) 1,785
Construction in progress................. 109 15 (2) - (1)(c) 121
----------- ----- ------ ------ ------ -----------
$ 4,309 $ 592 $ (263) $ (2) $ (55) $ 4,581
----------- ----- ------ ------ ------ -----------
----------- ----- ------ ------ ------ -----------
<FN>
- ------------------------
(a) During the third quarter of 1991, Columbia provided for the estimated
costs and expenses associated with the planned disposition of certain
hospitals.
(b) During the third quarter of 1992, Columbia provided for the estimated
costs and expenses associated with the planned disposition of certain
hospitals, recorded writedowns of assets in markets with significant
declines in operations and wrote off assets destroyed by Hurricane Andrew.
(c) During the third quarter of 1993, Columbia recorded provisions for loss in
connection with the Galen Merger, including writedowns of assets in
connection with the consolidation of operations and expected losses on the
sale of certain assets.
</TABLE>
F-26
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION
AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND RETIREMENTS TRANSLATION AT END
OF PERIOD EXPENSES OR SALES ADJUSTMENTS OF PERIOD
----------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1991:
Buildings........................................ $ 603 $ 96 $ (25) $ (1) $ 673
Equipment........................................ 691 145 (48) (1) 787
----------- ----- ------ ----- -----------
$ 1,294 $ 241 $ (73) $ (2) $ 1,460
----------- ----- ------ ----- -----------
----------- ----- ------ ----- -----------
Year ended December 31, 1992:
Buildings........................................ $ 673 $ 103 $ (14) $ (4) $ 758
Equipment........................................ 787 161 (52) (3) 893
----------- ----- ------ ----- -----------
$ 1,460 $ 264 $ (66) $ (7) $ 1,651
----------- ----- ------ ----- -----------
----------- ----- ------ ----- -----------
Year ended December 31, 1993:
Buildings........................................ $ 758 $ 110 $ (56) $ (1) $ 811
Equipment........................................ 893 169 (81) - 981
----------- ----- ------ ----- -----------
$ 1,651 $ 279 $ (137) $ (1) $ 1,792
----------- ----- ------ ----- -----------
----------- ----- ------ ----- -----------
</TABLE>
F-27
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND DEDUCTIONS AT END
OF PERIOD EXPENSES OR PAYMENTS OF PERIOD
----------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
Allowances for loss on accounts receivable:
Year ended December 31, 1991................................... $ 215 $ 277 $ (340) $ 152
Year ended December 31, 1992................................... 152 285 (271) 166
Year ended December 31, 1993................................... 166 282 (288) 160
</TABLE>
F-28
<PAGE>
COLUMBIA HEALTHCARE CORPORATION
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Maintenance and repairs.................................................................. $ 116 $ 105 $ 95
Taxes other than payroll and income taxes................................................ 121 106 91
</TABLE>
F-29
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
INDEX TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Report of Independent Accountants......................................................................... F-31
Supplemental Consolidated Financial Statements:
Supplemental Consolidated Statement of Income for the years ended December 31, 1993, 1992 and 1991...... F-32
Supplemental Consolidated Balance Sheet, December 31, 1993 and 1992..................................... F-33
Supplemental Consolidated Statement of Common Stockholders' Equity for the years ended December 31,
1993, 1992 and 1991.................................................................................... F-34
Supplemental Consolidated Statement of Cash Flows for the years ended December 31, 1993, 1992 and
1991................................................................................................... F-35
Notes to Supplemental Consolidated Financial Statements................................................. F-36
Supplemental Quarterly Consolidated Financial Information (Unaudited)................................... F-54
Supplemental Financial Statement Schedules (a):
Schedule I -- Marketable Securities -- Other Security Investments,
December 31, 1993...................................................................................... F-55
Schedule II -- Amounts Receivable From Related Parties and Underwriters, Promoters and Employees Other
Than Related Parties for the years ended December 31, 1993, 1992 and 1991.............................. F-56
Schedule V -- Property, Plant and Equipment for the years ended December 31, 1993, 1992 and 1991........ F-59
Schedule VI -- Accumulated Depreciation, Depletion and Amortization of Property, Plant and Equipment for
the years ended December 31, 1993, 1992 and 1991....................................................... F-60
Schedule VIII -- Valuation and Qualifying Accounts for the years ended December 31, 1993, 1992 and
1991................................................................................................... F-61
Schedule X -- Supplementary Income Statement Information for the years ended December 31, 1993, 1992 and
1991................................................................................................... F-62
<FN>
- ------------------------
(a) All other schedules have been omitted because the required information is
not present or not present in material amounts.
</TABLE>
F-30
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Columbia/HCA Healthcare Corporation
We have audited the supplemental consolidated financial statements and
financial statement schedules of Columbia/HCA Healthcare Corporation listed in
the index on page F-30 of this Form 10-K. These financial statements and
financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The supplemental consolidated financial statements and financial statement
schedules give retroactive effect to the merger of Columbia Healthcare
Corporation and HCA -- Hospital Corporation of America on February 10, 1994,
which will be accounted for as a pooling of interests as described in Notes 1
and 2 to the supplemental consolidated financial statements. Generally accepted
accounting principles proscribe giving effect to a consummated business
combination accounted for by the pooling of interests method in financial
statements that do not include the date of consummation. These financial
statements and financial statement schedules do not extend through the date of
consummation; however, they will become the historical consolidated financial
statements and financial statement schedules of Columbia/HCA Healthcare
Corporation after financial statements and financial statement schedules
covering the date of consummation of the merger are issued.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Columbia/HCA
Healthcare Corporation as of December 31, 1993 and 1992, and the consolidated
results of operations and cash flows for each of the three years in the period
ended December 31, 1993 in conformity with generally accepted accounting
principles applicable after financial statements are issued for the period which
includes the date of consummation of the merger. In addition, in our opinion,
the financial statement schedules referred to above, when considered in relation
to the basic financial statements taken as a whole, present fairly, in all
material respects, the information required to be included therein.
As discussed in Note 7 to the supplemental consolidated financial
statements, effective January 1, 1992, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes."
COOPERS & LYBRAND
Louisville, Kentucky
February 28, 1994,
except for Note 15,
as to which the date
is March 24, 1994
F-31
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL CONSOLIDATED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Revenues.......................................................................... $ 10,252 $ 9,932 $ 9,598
--------- --------- ---------
Salaries, wages and benefits...................................................... 4,215 4,112 3,976
Supplies.......................................................................... 1,664 1,613 1,467
Other operating expenses.......................................................... 1,893 1,849 1,739
Provision for doubtful accounts................................................... 542 515 508
Depreciation and amortization..................................................... 554 541 524
Interest expense.................................................................. 321 401 597
Investment income................................................................. (66) (81) (64)
Non-recurring transactions........................................................ 151 439 300
--------- --------- ---------
9,274 9,389 9,047
--------- --------- ---------
Income from continuing operations before minority interests and income taxes...... 978 543 551
Minority interests in earnings of consolidated entities........................... 9 10 9
--------- --------- ---------
Income from continuing operations before income taxes............................. 969 533 542
Provision for income taxes........................................................ 394 294 189
--------- --------- ---------
Income from continuing operations................................................. 575 239 353
Discontinued operations:
Income (loss) from operations of discontinued health plan segment, net of income
tax (benefit) of $9 in 1993, ($46) in 1992 and $9 in 1991...................... 16 (108) 16
Costs associated with discontinuance of health plan segment, net
of income tax benefit of $2.................................................... - (17) -
Extraordinary loss on extinguishment of debt, net of income tax benefit of $51.... (84) - -
Cumulative effect on prior years of a change in accounting for income taxes....... - 51 -
--------- --------- ---------
Net income.................................................................... $ 507 $ 165 $ 369
--------- --------- ---------
--------- --------- ---------
Earnings per common and common equivalent share:
Income from continuing operations............................................... $ 1.70 $ .73 $ 1.20
Discontinued operations:
Income (loss) from operations of discontinued health plan segment............. .04 (.33) .05
Costs associated with discontinuance of health plan segment................... - (.06) -
Extraordinary loss on extinguishment of debt.................................... (.24) - -
Cumulative effect on prior years of a change in accounting for income taxes..... - .16 -
--------- --------- ---------
Net income.................................................................. $ 1.50 $ .50 $ 1.25
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of
the supplemental consolidated financial statements.
F-32
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993 AND 1992
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents...................................................................... $ 224 $ 217
Accounts receivable less allowance for loss of $513 -- 1993 and $475 -- 1992................... 1,566 1,624
Inventories.................................................................................... 245 238
Other.......................................................................................... 453 496
--------- ---------
2,488 2,575
Property and equipment, at cost:
Land........................................................................................... 568 553
Buildings...................................................................................... 4,049 3,741
Equipment...................................................................................... 3,442 3,133
Construction in progress (estimated cost to complete and equip after December 31, 1993 --
$299)......................................................................................... 333 258
--------- ---------
8,392 7,685
Accumulated depreciation....................................................................... (2,792) (2,437)
--------- ---------
5,600 5,248
Net assets of discontinued operations............................................................ - 376
Investments of professional liability insurance subsidiaries..................................... 700 644
Intangible assets net of accumulated amortization of $178 -- 1993
and $233 -- 1992................................................................................ 1,232 1,247
Other............................................................................................ 196 257
--------- ---------
$ 10,216 $ 10,347
--------- ---------
--------- ---------
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................................... $ 445 $ 410
Salaries, wages and other compensation......................................................... 232 211
Other accrued expenses......................................................................... 853 903
Income taxes................................................................................... 22 92
Long-term debt due within one year............................................................. 363 353
--------- ---------
1,915 1,969
Long-term debt................................................................................... 3,335 3,303
Deferred credits and other liabilities........................................................... 1,438 1,353
Minority interests in equity of consolidated entities............................................ 57 31
Contingencies
Common stockholders' equity:
Common stock $.01 par; authorized 800,000,000 voting shares and 25,000,000 nonvoting shares;
issued and outstanding 317,686,800 voting shares and 18,990,000 nonvoting shares -- 1993 and
308,252,100 voting shares and 23,421,700 nonvoting shares -- 1992............................. 3 3
Capital in excess of par value................................................................. 2,164 2,070
Other.......................................................................................... 59 69
Retained earnings.............................................................................. 1,245 1,549
--------- ---------
3,471 3,691
--------- ---------
$ 10,216 $ 10,347
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of
the supplemental consolidated financial statements.
F-33
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL CONSOLIDATED STATEMENT OF COMMON STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
COMMON STOCK
-------------- CAPITAL IN
SHARES PAR EXCESS OF RETAINED
(000) VALUE PAR VALUE OTHER EARNINGS TOTAL
------- ----- ---------- ----- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1990......................... 255,276 $ 3 $ 734 $ 48 $ 1,314 $2,099
Net income........................................ 369 369
Cash dividends (Galen Health Care, Inc.).......... (138) (138)
Paid-in-kind dividend on cumulative exchangeable
preferred stock.................................. (18) (18)
Issuance of common stock.......................... 4,310 61 61
Stock options exercised and related tax benefits,
net of 224,000 shares tendered in partial payment
therefor......................................... 797 24 24
Accumulated credit under stock option contract.... 413 413
Other............................................. 24 2 10 12
------- ----- ---------- ----- -------- ------
Balances, December 31, 1991......................... 260,407 3 821 471 1,527 2,822
Net income........................................ 165 165
Cash dividends (Galen Health Care, Inc.).......... (143) (143)
Issuance of common stock.......................... 48,282 916 916
Stock options exercised and related tax benefits,
net of 30,000 shares tendered in partial payment
therefor......................................... 22,967 331 (386) (55)
Other............................................. 18 2 (16) (14)
------- ----- ---------- ----- -------- ------
Balances, December 31, 1992......................... 331,674 3 2,070 69 1,549 3,691
Net income........................................ 507 507
Cash dividends (Columbia Healthcare
Corporation)..................................... (9) (9)
Stock options exercised and related tax benefits,
net of 81,000 shares tendered in partial payment
therefor......................................... 4,000 71 (35) 36
Spinoff transaction with Humana Inc.:
Cash payment to Humana Inc...................... (135) (135)
Noncash transactions:
Issuance of notes payable..................... (250) (250)
Distribution of net investment in discontinued
health plan operations....................... (392) (392)
Transfer of a hospital facility............... (25) (25)
Net unrealized gains on investment securities..... 27 27
Other............................................. 1,003 23 (2) 21
------- ----- ---------- ----- -------- ------
Balances, December 31, 1993......................... 336,677 $ 3 $ 2,164 $ 59 $ 1,245 $3,471
------- ----- ---------- ----- -------- ------
------- ----- ---------- ----- -------- ------
</TABLE>
The accompanying notes are an integral part of
the supplemental consolidated financial statements.
F-34
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from continuing operations:
Net income........................................................................ $ 507 $ 165 $ 369
Adjustments to reconcile net income to net cash provided by operating activities:
Discontinued operations......................................................... (16) 127 (16)
Minority interests in earnings of consolidated entities......................... 9 10 9
Non-recurring transactions...................................................... 151 439 300
Depreciation and amortization................................................... 554 541 524
Amortization of debt discounts and loan costs................................... 45 78 116
Noncash interest on exchange debentures......................................... - 4 57
Deferred income taxes........................................................... (28) 34 (210)
Change in operating assets and liabilities:
(Increase) decrease in accounts receivable.................................... 19 98 (53)
Increase in inventories and other assets...................................... (7) (58) (42)
Increase (decrease) in income taxes........................................... 19 (160) 53
Increase (decrease) in other liabilities...................................... (87) 83 164
Change in accounting for income taxes........................................... - (51) -
Extraordinary loss on extinguishment of debt.................................... 135 - -
Other........................................................................... (3) (23) (14)
--------- --------- ---------
Net cash provided by continuing operations.................................... 1,298 1,287 1,257
--------- --------- ---------
Cash flows from investing activities:
Purchase of property and equipment................................................ (836) (668) (645)
Acquisition of hospitals and health care facilities............................... (79) (36) (96)
Sale of assets.................................................................... 191 225 860
Investment in discontinued operations............................................. - (71) (76)
Change in investments............................................................. 21 (35) (33)
Other............................................................................. (34) (8) (25)
--------- --------- ---------
Net cash used in investing activities......................................... (737) (593) (15)
--------- --------- ---------
Cash flows from financing activities:
Issuance of long-term debt........................................................ 1,586 240 216
Net change in commercial paper borrowings and lines of credit..................... 342 (176) 124
Repayment of long-term debt....................................................... (2,325) (1,799) (890)
Payment to Humana Inc. in spinoff transaction..................................... (135) - -
Payment of cash dividends......................................................... (40) (143) (134)
Issuance of common stock.......................................................... 43 741 71
Other............................................................................. (25) (15) (6)
--------- --------- ---------
Net cash used in financing activities......................................... (554) (1,152) (619)
--------- --------- ---------
Change in cash and cash equivalents................................................. 7 (458) 623
Cash and cash equivalents at beginning of period.................................... 217 675 52
--------- --------- ---------
Cash and cash equivalents at end of period.......................................... $ 224 $ 217 $ 675
--------- --------- ---------
--------- --------- ---------
Interest payments................................................................... $ 278 $ 319 $ 469
Income tax payments, net of refunds................................................. 347 360 385
</TABLE>
The accompanying notes are an integral part of
the supplemental consolidated financial statements.
F-35
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- ACCOUNTING POLICIES
Columbia/HCA Healthcare Corporation ("Columbia/HCA") is a Delaware
corporation which began operations on February 10, 1994 as a result of a merger
involving Columbia Healthcare Corporation ("Columbia") and HCA -- Hospital
Corporation of America ("HCA") (the "HCA Merger"). See Note 2 for a description
of the specific terms of the HCA Merger.
Prior to the HCA Merger, Columbia began operations on September 1, 1993 as a
result of a merger involving Columbia Hospital Corporation ("CHC") and Galen
Health Care, Inc. ("Galen") (the "Galen Merger"). See Note 3 for a description
of the specific terms of the Galen Merger.
Columbia/HCA primarily operates hospitals and ancillary health care
facilities through either (i) wholly owned subsidiaries or (ii) ownership of
controlling interests in various partnerships in which subsidiaries of
Columbia/HCA serve as the managing general partner.
BASIS OF PRESENTATION
The supplemental consolidated financial statements include substantially all
subsidiaries and partnerships controlled by Columbia/HCA as the managing general
partner. Significant intercompany transactions have been eliminated.
The HCA Merger and the Galen Merger have been accounted for by the
pooling-of-interests method. Accordingly, the supplemental consolidated
financial statements included herein give retroactive effect to these
transactions and include the combined operations of CHC, Galen and HCA for all
periods presented. In addition, the historical financial information related to
Galen (which prior to the Galen Merger was reported on a fiscal year ending
August 31) has been recast to conform to Columbia's annual reporting period
ending December 31.
Generally accepted accounting principles proscribe giving effect to a
consummated business combination accounted for by the pooling-of-interests
method in financial statements that do not include the date of consummation.
These financial statements do not extend through the date of consummation of the
HCA Merger; however, they will become the historical consolidated financial
statements of Columbia/HCA after the financial statements including the date of
consummation of the HCA Merger are issued.
REVENUES
Columbia/HCA's health care facilities have entered into agreements with
third-party payers, including government programs and managed care health plans,
under which Columbia/HCA is paid based upon established charges, cost of
providing services, predetermined rates by diagnosis, fixed per diem rates or
discounts from established charges.
Revenues are recorded at estimated amounts due from patients and third-party
payers for health care services provided, including anticipated settlements
under reimbursement agreements with third-party payers.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include highly liquid investments with an original
maturity of three months or less. Carrying values of cash and cash equivalents
approximate fair value due to the short-term nature of these instruments.
ACCOUNTS RECEIVABLE
Accounts receivable consist primarily of amounts due from the Medicare and
Medicaid programs, other government programs, managed care health plans,
commercial insurance companies and individual patients.
F-36
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- ACCOUNTING POLICIES (CONTINUED)
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market.
PROPERTY AND EQUIPMENT
Depreciation expense, computed by the straight-line method, was $504 million
in 1993, $493 million in 1992 and $478 million in 1991. Columbia/HCA uses
component depreciation for buildings. Depreciation rates for buildings are
equivalent to useful lives ranging generally from 20 to 25 years. Estimated
useful lives of equipment vary generally from 3 to 10 years.
INVESTMENTS
On December 31, 1993, Columbia/HCA adopted the provisions of Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" ("SFAS 115"), which requires that investments in
debt and equity securities be classified according to certain criteria.
INTANGIBLE ASSETS
Intangible assets consist primarily of costs in excess of the fair value of
identifiable net assets of acquired entities and are amortized using the
straight-line method over periods ranging from 10 to 40 years. Noncompete and
debt issuance costs are amortized based upon the lives of the respective
contracts or loans.
PROFESSIONAL LIABILITY INSURANCE CLAIMS
Provisions for loss for professional liability risks are based upon
actuarially determined estimates. To the extent that subsequent claims
information varies from management's estimates, earnings are charged or
credited.
MINORITY INTERESTS IN CONSOLIDATED ENTITIES
The supplemental consolidated financial statements include all assets,
liabilities and earnings of Columbia/HCA's partnerships, certain partnership
interests of which are not owned by Columbia/ HCA. Accordingly, management has
recorded minority interests in the earnings and equity of such partnerships.
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
Earnings per common and common equivalent share are based upon the weighted
average number of common shares outstanding adjusted for the dilutive effect of
common stock equivalents consisting primarily of stock options. The computation
also gives retroactive effect to the exchange of common shares in connection
with the HCA Merger.
F-37
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 -- ACCOUNTING POLICIES (CONTINUED)
The following is a summary of shares used in the computation of earnings per
common and common equivalent share (amounts in thousands):
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Columbia:
Weighted average shares outstanding................................ 150,017 144,897 138,936
Common stock equivalents........................................... 966 718 750
--------- --------- ---------
Columbia common and common equivalent shares....................... 150,983 145,615 139,686
--------- --------- ---------
HCA:
Weighted average shares outstanding................................ 175,374 149,547 113,480
Common stock equivalents........................................... 3,901 24,690 20,109
--------- --------- ---------
HCA common and common equivalent shares............................ 179,275 174,237 133,589
Merger exchange ratio.............................................. 1.05 1.05 1.05
--------- --------- ---------
Adjusted HCA common and common equivalent shares................... 188,239 182,949 140,268
--------- --------- ---------
Shares used in computation of earnings per common and common
equivalent share.................................................. 339,222 328,564 279,954
--------- --------- ---------
--------- --------- ---------
</TABLE>
Fully diluted earnings per common and common equivalent share is not
presented because it approximates earnings per common and common equivalent
share.
NOTE 2 -- HCA MERGER
On October 2, 1993, Columbia entered into a definitive agreement to merge
with HCA. This transaction was completed on February 10, 1994. In connection
with the HCA Merger, Columbia stockholders approved an amendment to Columbia's
Certificate of Incorporation changing the name of the corporation to
Columbia/HCA Healthcare Corporation. HCA was then merged into a wholly owned
subsidiary of Columbia/HCA. Shares of HCA Class A voting common stock and Class
B nonvoting common stock were converted on a tax-free basis into approximately
166,846,000 shares of Columbia/HCA voting common stock and approximately
18,990,000 shares of Columbia/HCA nonvoting common stock, respectively (an
exchange ratio of 1.05 shares of Columbia/HCA common stock for each share of HCA
voting and nonvoting common stock).
F-38
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 -- HCA MERGER (CONTINUED)
The HCA Merger has been accounted for as a pooling of interests, and
accordingly, the supplemental consolidated financial statements give retroactive
effect to the combined operations of Columbia and HCA for all periods presented.
The following is a summary of the results of operations of the separate entities
for periods prior to the HCA Merger (dollars in millions):
<TABLE>
<CAPTION>
COLUMBIA HCA COMBINED
----------- --------- ---------
<S> <C> <C> <C>
1993:
Revenues............................................................. $ 5,130 $ 5,122 $ 10,252
Income from continuing operations.................................... 193 382 575
Net income........................................................... 139 368 507
1992:
Revenues............................................................. $ 4,806 $ 5,126 $ 9,932
Income from continuing operations.................................... 211 28 239
Net income........................................................... 137 28 165
1991:
Revenues............................................................. $ 4,612 $ 4,986 $ 9,598
Income (loss) from continuing operations............................. 358 (5) 353
Net income (loss).................................................... 374 (5) 369
</TABLE>
NOTE 3 -- GALEN MERGER
On August 31, 1993, the stockholders of both CHC and Galen approved the
Galen Merger, effective as of September 1, 1993. In connection with the Galen
Merger, CHC, a Nevada corporation, was merged into Columbia. Each CHC share of
common stock was converted on a tax-free basis into one share of Columbia common
stock. Immediately subsequent thereto, a wholly owned subsidiary of Columbia was
merged into Galen, at which time Galen became a wholly owned subsidiary of
Columbia. In connection with this transaction, Columbia issued approximately
123,830,000 shares of common stock in a tax-free exchange for all of the
outstanding common shares of Galen (an exchange ratio of 0.775 of a share of
Columbia common stock for each share of Galen common stock).
The Galen Merger has been accounted for as a pooling of interests, and
accordingly, the supplemental consolidated financial statements give retroactive
effect to the combined operations of CHC and Galen for all periods presented.
The following is a summary of the results of operations of the separate entities
for periods prior to the Galen Merger (dollars in millions):
<TABLE>
<CAPTION>
CHC GALEN COMBINED
--------- --------- -----------
<S> <C> <C> <C>
Eight months ended August 31, 1993 (unaudited):
Revenues................................................................ $ 823 $ 2,600 $ 3,423
Income from continuing operations....................................... 17 176 193
Net income.............................................................. 17 192 209
1992:
Revenues................................................................ $ 819 $ 3,987 $ 4,806
Income from continuing operations....................................... 26 185 211
Net income.............................................................. 26 111 137
1991:
Revenues................................................................ $ 499 $ 4,113 $ 4,612
Income from continuing operations....................................... 15 343 358
Net income.............................................................. 15 359 374
</TABLE>
F-39
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 -- SPINOFF TRANSACTION AND DISCONTINUED OPERATIONS
Prior to the Galen Merger, Galen began operating its hospital business as an
independent publicly held corporation on March 1, 1993 as a result of a tax-free
spinoff transaction (the "Spinoff") by Humana Inc. ("Humana"), which retained
its managed care health plan business. The Spinoff separated Humana's previously
integrated hospital and managed care health plan businesses and was effected
through the distribution of Galen common stock to then current Humana common
stockholders on a one-for-one basis.
For accounting purposes, because of the relative significance of the
hospital business, the pre-Spinoff consolidated financial statements of Galen
(and now those of Columbia/HCA) include the separate results of Humana's
hospital business, while the operations and net assets of Humana's managed care
health plans have been classified as discontinued operations.
In connection with the Spinoff, Galen entered into various agreements with
Humana which were intended to facilitate orderly changes for both the hospital
and managed care health plan businesses in a way which would be minimally
disruptive to each entity. Principal contracts are summarized below:
OPERATIONS -- Certain former Galen hospitals will provide medical services
to insureds of Humana for three years subsequent to the Spinoff. The contract
includes, among other things, established payment rates for various inpatient
and outpatient services and annual increases therein, and hospital utilization
guarantees and related penalties.
LIABILITIES AND INDEMNIFICATION -- Each entity assumed liability for
specified claims. The entities will also share risks with respect to certain
litigation and other contingencies, both identified and unknown.
INCOME TAXES -- Each entity entered into risk-sharing arrangements in
connection with the ultimate resolution of various income tax disputes.
FINANCING -- In January 1993 certain subsidiaries issued $250 million of
notes payable to Humana, and paid to Humana $135 million in cash on March 1,
1993 which was financed principally through the issuance of commercial paper.
The $250 million of notes were repaid in September 1993 in connection with the
refinancing of certain long-term debt.
ADMINISTRATION -- These arrangements relate to leasing of certain
administrative facilities, division of information systems, employee benefit and
stock option plans, and various administrative service arrangements.
Revenues of the discontinued managed care health plan business (included in
discontinued operations in the accompanying supplemental consolidated statement
of income) were $523 million in 1993, $2.9 billion in 1992 and $2.5 billion in
1991.
F-40
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 -- NON-RECURRING TRANSACTIONS
1993
In September 1993 the following charges were recorded in connection with the
Galen Merger (dollars in millions):
<TABLE>
<S> <C>
Investment advisory and professional fees, and employee benefit plan
costs............................................................... $ 62
Writedown of assets in connection with the consolidation of the
combined entity's operations........................................ 63
Administrative facility asset writedowns and conversion costs
associated with the transaction..................................... 16
Provision for loss on planned sales of assets........................ 10
---------
$ 151
---------
---------
</TABLE>
1992
In September 1992 a pretax charge of $394 million was recorded in connection
with the planned divestiture of twenty-two psychiatric hospitals and the
unrelated sale of two other facilities. The charge included the writedown to
estimated net realizable value of the hospitals to be sold, a $231 million
writeoff of permanently impaired cost in excess of net assets acquired, and the
costs associated with the replacement of certain credit agreements.
Income from continuing operations in 1992 also includes a gain of $93
million on the sale of an investment in common stock of HealthTrust, Inc. -- The
Hospital Company ("HealthTrust").
Income from continuing operations in 1992 includes $138 million of charges
incurred primarily in connection with the Spinoff, including a provision for
loss on the planned sale of hospitals, writedowns of assets in markets with
significant declines in operations, administrative facility asset writedowns and
certain other costs associated with the separation of the hospital and health
plan businesses. Costs aggregating $171 million (before income taxes) incurred
by Humana primarily in connection with the Spinoff are included in discontinued
operations in 1992.
1991
Income from continuing operations in 1991 includes (i) a charge of $413
million in connection with the acceleration of vesting of stock options under
the HCA Nonqualified Stock Option Plan and the establishment of exercise prices
at levels substantially less than the then fair value of the underlying common
stock, (ii) a charge of $159 million primarily in connection with the
anticipated loss on the disposition of certain hospitals and other assets, (iii)
a gain of $51 million on the sale of a hospital, and (iv) a gain of $221 million
on the sale of an investment in preferred stock and warrants of HealthTrust.
NOTE 6 -- OTHER BUSINESS COMBINATIONS
During the past three years, Columbia/HCA has acquired various hospitals and
related ancillary health care facilities (or controlling interests in such
facilities), all of which have been accounted for by the purchase method.
Accordingly, the aggregate purchase price of these transactions has been
allocated to tangible and identifiable intangible assets acquired and
liabilities assumed based upon their respective fair values. The supplemental
consolidated financial statements include the operations of acquired entities
since the respective acquisition dates.
F-41
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 -- OTHER BUSINESS COMBINATIONS (CONTINUED)
The following is a summary of acquisitions consummated during the last three
years (dollars in millions):
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Number of hospitals........................................................ 3 15 2
Number of licensed beds.................................................... 903 2,345 1,420
Purchase price information:
Fair value of assets acquired............................................ $ 164 $ 490 $ 165
Liabilities assumed...................................................... (76) (279) (48)
--------- --------- ---------
Net assets acquired.................................................... 88 211 117
--------- --------- ---------
Issuance of common stock................................................. - 119 1
Cash acquired............................................................ 9 15 15
Cash received from sale of certain acquired assets....................... - 40 -
Other.................................................................... - 1 5
--------- --------- ---------
9 175 21
--------- --------- ---------
Net cash paid for acquisitions......................................... $ 79 $ 36 $ 96
--------- --------- ---------
--------- --------- ---------
</TABLE>
In July 1992 Columbia/HCA acquired Basic American Medical, Inc. ("BAMI")
(included in the table above) through a merger into a wholly owned subsidiary.
The assets of BAMI included eight hospitals containing 1,203 licensed beds and
certain other health care businesses. The transaction was financed through the
assumption of approximately $140 million of long-term debt, issuance of
6,995,000 shares of common stock and payment of $38 million in cash to BAMI
stockholders.
The purchase price paid in excess of the fair value of identifiable net
assets of acquired entities aggregated $7 million in 1993, $97 million in 1992
and $19 million in 1991.
The pro forma effect of these acquisitions on Columbia/HCA's results of
operations was not significant.
NOTE 7 -- INCOME TAXES
Provision for income taxes consists of the following (dollars in millions):
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Current:
Federal..................................................................... $ 357 $ 232 $ 375
State....................................................................... 69 34 64
--------- --------- ---------
426 266 439
--------- --------- ---------
Deferred:
Federal..................................................................... (36) 22 (218)
State....................................................................... 4 6 (32)
--------- --------- ---------
(32) 28 (250)
--------- --------- ---------
$ 394 $ 294 $ 189
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-42
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- INCOME TAXES (CONTINUED)
Reconciliation of federal statutory rate to effective income tax rate
follows:
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Federal statutory rate..................................................... 35.0% 34.0% 34.0%
State income taxes, net of federal income tax benefit...................... 4.6 4.4 2.9
Gain on sale of HealthTrust investments.................................... - - (3.5)
Merger costs............................................................... 0.6 - -
Costs in excess of net assets acquired..................................... 1.2 16.6 2.3
Tax exempt investment income............................................... (0.9) (1.7) (1.5)
Other items, net........................................................... 0.1 1.8 0.7
--- --- ---
Effective income tax rate.................................................. 40.6% 55.1% 34.9%
--- --- ---
--- --- ---
</TABLE>
In August 1993 Congress enacted the Omnibus Budget Reconciliation Act of
1993 which included, among other things, an increase in corporate income tax
rates retroactive to January 1, 1993. This legislation had no material effect on
1993 net income.
Columbia/HCA adopted the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"), as of January 1,
1992, the effect of which increased 1992 net income by $51 million. The
provisions of SFAS 109 require, among other things, recognition of deferred
income taxes using statutory rates at which temporary differences in the tax and
book bases of assets and liabilities are expected to affect taxable income in
future years.
A summary of deferred income taxes by source included in the consolidated
balance sheet at December 31, 1993 and 1992 follows (dollars in millions):
<TABLE>
<CAPTION>
1993 1992
---------------------- ----------------------
ASSETS LIABILITIES ASSETS LIABILITIES
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Depreciation................................................ $ - $ 766 $ - $ 748
Long-term debt.............................................. - 26 - 71
Professional liability risk................................. 329 - 336 -
Doubtful accounts........................................... 91 - 85 -
Property losses............................................. 87 - 111 -
Cash basis.................................................. - 60 - 89
Compensation................................................ 24 - 18 -
Capitalized leases.......................................... 11 - 12 -
Other....................................................... 215 167 202 106
--------- ----------- --------- -----------
$ 757 $ 1,019 $ 764 $ 1,014
--------- ----------- --------- -----------
--------- ----------- --------- -----------
</TABLE>
Management believes that the deferred tax assets in the table above will
ultimately be realized. Management's conclusion is based primarily on its
expectation of future taxable income and the existence of sufficient taxable
income within the allowable carryback periods to realize the tax benefits of
deductible temporary differences recorded at December 31, 1993.
Deferred income taxes totaling $295 million and $257 million at December 31,
1993 and 1992, respectively, are included in other current assets. Noncurrent
deferred income taxes, included in deferred credits and other liabilities,
totaled $557 million and $507 million at December 31, 1993 and 1992,
respectively.
The Internal Revenue Service (the "Service") has issued statutory notices of
deficiency in connection with its examinations of HCA's federal income tax
returns for 1981 through 1988. Columbia/HCA is currently contesting these
claimed deficiencies in the United States Tax Court. In addition, the
F-43
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- INCOME TAXES (CONTINUED)
Service has proposed certain adjustments in connection with its examinations of
HCA's 1989 and 1990 federal income tax returns. The following is a discussion of
the disputed items with respect to these years.
METHOD OF ACCOUNTING
For years 1981 through 1986, most of HCA's hospital subsidiaries (the
"Subsidiaries") reported taxable income primarily using the cash method of
accounting. This method was prevalent within the hospital industry and the
Subsidiaries applied the method in accordance with prior agreements with the
Service. The Service now asserts that the accrual method of accounting should
have been used by the Subsidiaries. The Tax Reform Act of 1986 (the "1986 Act")
requires the use of the accrual method of accounting beginning in 1987.
Consequently, the Subsidiaries changed to the accrual method beginning January
1, 1987. In accordance with the provisions of the 1986 Act, income that had been
deferred at the end of 1986 is being recognized as taxable income by the
Subsidiaries in equal annual installments over ten years. If the Service should
ultimately prevail in its claim that the Subsidiaries should have used the
accrual method for 1981 through 1986, the claim would be reduced to the extent
that HCA has recognized as taxable income a portion of such deferred income
taxes since 1986. In addition, the sale by HCA of numerous Subsidiaries in 1987
that had been using the cash method resulted in the recognition of a substantial
gain that would not have been recognized had the Subsidiaries been using the
accrual method. If the Service were successful with respect to this issue,
Columbia/HCA would owe an additional $110 million in income taxes and $432
million in interest as of December 31, 1993.
HOSPITAL ACQUISITIONS
In connection with hospitals acquired by HCA in 1981 and 1985, the Service
has asserted that a portion of the costs allocated to identifiable assets with
ascertainable useful lives should be reclassified as nondeductible goodwill. If
the Service ultimately prevails in this regard, Columbia/HCA would owe an
additional $113 million in income taxes and $139 million in interest as of
December 31, 1993.
INSURANCE SUBSIDIARY
Based on a Sixth Circuit Court of Appeals decision (the Court having
jurisdiction over the HCA issues), HCA has claimed that insurance premiums paid
to its wholly owned insurance subsidiary ("Parthenon") are deductible, while the
Service asserts that such premiums are not deductible and that corresponding
losses are only deductible at the time and to the extent that claims are
actually paid. HCA has claimed the additional deductions in its Tax Court
petitions. Through December 31, 1993, Columbia/HCA is seeking a refund totaling
$51 million in income taxes and $93 million in interest in connection with this
issue.
As an alternative to its position, HCA has asserted that in connection with
the sale of hospitals to HealthTrust in 1987, premiums paid to Parthenon by the
sold hospitals, if not deductible as discussed above, became deductible at the
time of the sale. Accordingly, HCA claimed such deduction in its 1987 federal
income tax return. The Service has disallowed the deduction and is claiming an
additional $5 million in income taxes and $15 million in interest. A final
determination that the premiums are not deductible either when paid to Parthenon
or upon the sale of certain hospitals to HealthTrust would increase the taxable
basis in the hospitals sold, thereby reducing HCA's gain realized on the sale.
HEALTHTRUST SALE
In connection with its sale of certain Subsidiaries to HealthTrust in 1987
in exchange for cash, HealthTrust preferred stock and stock purchase warrants,
HCA calculated its gain based on the valuation of such stock and warrants by an
independent appraiser. The Service claims a higher
F-44
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- INCOME TAXES (CONTINUED)
aggregate valuation, based on the face amount of the preferred stock and a
separate appraisal HealthTrust obtained for the stock purchase warrants.
Application of the higher valuation would increase the gain recognized by HCA on
the sale. However, if the Service succeeds in its assertion, HCA's tax basis in
its HealthTrust preferred stock and warrants will be increased accordingly,
thereby substantially reducing the tax from the sale of such preferred stock and
warrants by a corresponding amount. By December 31, 1992, HCA had sold its
entire interest in the HealthTrust preferred stock and warrants. Including the
effect of the sales of these securities, the Service is claiming additional
interest of $64 million through December 31, 1993.
Also in connection with the 1987 sale of certain Subsidiaries to
HealthTrust, the Service claims that HCA's basis in the stock of the
Subsidiaries sold to HealthTrust should be calculated by adjusting such basis to
reflect accelerated rather than straight-line depreciation, which would reduce
HCA's basis in the stock sold and increase the taxable gain on the sale. The
Service position is contrary to a Tax Court decision in a similar case. The
Service is claiming additional income taxes of $79 million and interest of $66
million through December 31, 1993.
In connection with the 1987 HealthTrust transactions, the Service further
asserts that, to the extent the Subsidiaries were properly on the cash method
through 1986, and therefore properly recognizing taxable income over the
ten-year transition period, HCA should have additional income in 1987 equal to
the unamortized portion of the deferred income. It is HCA's position that no
additional income need be included in 1987 and that the deferred income
continues to qualify for the ten-year transition period after the sale. Should
the Service prevail, Columbia/HCA would owe $11 million of additional income
taxes and $17 million of interest through December 31, 1993. The position of the
Service is an alternative to its denial of the use of the cash method of
accounting previously discussed.
DOUBTFUL ACCOUNTS
The IRS is asserting that in 1986 HCA was not entitled to include charity
care writeoffs in the formula used to calculate its deduction for doubtful
accounts. For years 1987 and 1988, the Service is asserting that HCA was not
entitled to exclude from income amounts which are unlikely to be collected.
Management believes that such exclusions are permissible under an accrual method
of accounting, and because HCA is a "service business" and not a "merchandising
business," it is entitled to a special exclusion provided to service businesses
by the 1986 Act. The Service disagrees, asserting that HCA is engaged, at least
in part, in a merchandising business. Notwithstanding this assertion, the
Service contends that the exclusion taken by HCA is excessive under applicable
Temporary Treasury Regulations. Columbia/HCA believes that the calculation of
the exclusion is inaccurate since it does not permit the exclusion in accordance
with the controlling statute. If the Service prevails, Columbia/HCA would owe
additional income taxes of $102 million and interest of $48 million through
December 31, 1993.
LEVERAGED BUY-OUT EXPENSES
The Service has asserted that no deduction is allowed for various expenses
incurred in connection with HCA's leveraged buy-out transaction in 1989,
including the amortization of loan costs incurred to borrow funds to acquire the
stock of the former shareholders, certain fees incurred by the Special Committee
of HCA's Board of Directors to evaluate the buy-out proposal, compensation
payments to cancel employee stock plans, and various other costs incurred after
the buy-out which have been treated as part of the transaction by the Service.
Columbia/HCA believes that all of these costs are deductible. If the Service
prevails on these issues, Columbia/HCA would owe income taxes of $94 million and
interest of $24 million through December 31, 1993.
F-45
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 -- INCOME TAXES (CONTINUED)
OTHER ISSUES
Additional federal income tax issues primarily concern disputes over the
depreciable lives utilized by HCA for constructed hospital facilities,
investment tax credits, vacation pay deductions and income from foreign
operations. Many of these items, including depreciation, investment tax credits
and foreign issues, have been resolved favorably in previous settlements. The
Service is claiming an additional $44 million in income taxes and $28 million in
interest through December 31, 1993 with respect to these issues.
Management believes that HCA had properly reported its income and paid its
taxes in accordance with applicable laws and agreements established with the
Service during previous examinations, and that final resolution of these
disputes will not have a material adverse effect on the results of operations or
financial position of Columbia/HCA.
NOTE 8 -- PROFESSIONAL LIABILITY RISKS
Columbia/HCA insures a substantial portion of its professional liability
risks through wholly owned insurance subsidiaries. Provisions for such risks
underwritten by the subsidiaries and deductibles at certain hospitals, including
expenses incident to claim settlements, were $96 million for 1993, $102 million
for 1992 and $111 million for 1991. Amounts funded to the insurance subsidiaries
were $62 million for 1993, $55 million for 1992 and $56 million for 1991.
Allowances for professional liability risks, included principally in
deferred credits and other liabilities, were $817 million and $791 million at
December 31, 1993 and 1992, respectively.
As discussed in Note 1, Columbia/HCA adopted the provisions of SFAS 115 on
December 31, 1993. Accordingly, common stockholders' equity was increased by $27
million (net of deferred income taxes) to reflect the net unrealized gain on
investments classified as available for sale. Prior to the adoption of SFAS 115,
debt securities were recorded at amortized cost (which approximated fair value),
while equity securities were recorded at the lower of aggregate cost or fair
value. The adoption of SFAS 115 had no effect on earnings in 1993.
The provisions of SFAS 115 require that investments in debt and equity
securities be classified according to the following criteria:
TRADING ACCOUNT -- Assets held for resale in anticipation of short-term
changes in market conditions are recorded at fair value and gains and losses,
both realized and unrealized, are included in income. Columbia/HCA does not
maintain a trading account portfolio.
HELD TO MATURITY -- Certain debt securities of Columbia/HCA's professional
liability insurance subsidiaries are expected to be held to maturity as a result
of management's intent and ability to do so. These investments are carried at
amortized cost.
AVAILABLE FOR SALE -- Debt and equity securities not classified as either
trading securities or held to maturity are classified as available for sale and
recorded at fair value. Unrealized gains and losses are excluded from income and
recorded as a separate component of common stockholders' equity.
F-46
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 -- PROFESSIONAL LIABILITY RISKS (CONTINUED)
The following is a summary of the insurance subsidiaries' investments at
December 31, 1993 and 1992 (dollars in millions):
<TABLE>
<CAPTION>
DECEMBER 31, 1993
----------------------------
UNREALIZED
AMOUNTS
-------------- FAIR
COST GAINS LOSSES VALUE
---- ----- ------- -----
<S> <C> <C> <C> <C>
Held to maturity:
United States Government obligations................................. $ 44 $ - $ - $ 44
---- ----- ------- -----
Available for sale:
Bonds:
United States Government........................................... 19 1 - 20
States and municipalities.......................................... 372 16 - 388
Mortgage-backed securities......................................... 54 1 - 55
Corporate and other................................................ 51 2 (1) 52
Money market funds................................................... 31 - - 31
Redeemable preferred stocks.......................................... 17 1 - 18
---- ----- ------- -----
544 21 (1) 564
---- ----- ------- -----
Equity securities:
Adjustable rate preferred stocks................................... 13 1 - 14
Common stocks...................................................... 133 27 (4) 156
---- ----- ------- -----
146 28 (4) 170
---- ----- ------- -----
$734 $ 49 $ (5) 778
---- ----- -------
---- ----- -------
Amounts classified as current assets................................... (78)
-----
Investment carrying value.............................................. $ 700
-----
-----
</TABLE>
F-47
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 -- PROFESSIONAL LIABILITY RISKS (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1992
----------------------------
UNREALIZED
AMOUNTS
--------------
FAIR
COST GAINS LOSSES VALUE
---- ----- ------- -----
<S> <C> <C> <C> <C>
Held to maturity:
United States Government obligations................................. $ 19 $ - $ - $ 19
Certificates of deposit.............................................. 20 - - 20
---- ----- ------- -----
39 - - 39
---- ----- ------- -----
Available for sale:
Bonds:
United States Government........................................... 22 1 - 23
States and municipalities.......................................... 312 9 - 321
Mortgage-backed securities......................................... 55 - - 55
Corporate and other................................................ 39 2 - 41
Money market funds................................................... 68 - - 68
Redeemable preferred stocks.......................................... 18 - - 18
---- ----- ------- -----
514 12 - 526
---- ----- ------- -----
Equity securities:
Adjustable rate preferred stocks................................... 20 1 - 21
Common stocks...................................................... 136 21 (9) 148
---- ----- ------- -----
156 22 (9) 169
---- ----- ------- -----
709 $ 34 $ (9) $ 734
----- ------- -----
----- ------- -----
Amounts classified as current assets................................... (65)
----
Investment carrying value.............................................. $644
----
----
</TABLE>
The cost and estimated fair value of debt and equity securities at December
31, 1993 by contractual maturity are shown below (dollars in millions). Expected
and contractual maturities will differ because the issuers of certain securities
may have the right to prepay or otherwise redeem such obligations without
penalty.
<TABLE>
<CAPTION>
FAIR
COST VALUE
--------- ---------
<S> <C> <C>
Held to maturity:
Due in one year or less..................................................... $ 44 $ 44
--------- ---------
Available for sale:
Due in one year or less..................................................... 34 34
Due after one year through five years....................................... 134 136
Due after five years through ten years...................................... 131 137
Due after ten years......................................................... 245 257
--------- ---------
544 564
Equity securities........................................................... 146 170
--------- ---------
690 734
--------- ---------
$ 734 $ 778
--------- ---------
--------- ---------
</TABLE>
The fair value of the subsidiaries' investments is based generally on quoted
market prices.
F-48
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 -- PROFESSIONAL LIABILITY RISKS (CONTINUED)
The average life of the above investments (excluding common stocks)
approximated five years at December 31, 1993 and four years at December 31,
1992, and the tax equivalent yield on such investments averaged 10% for the last
three years. Tax equivalent yield is the rate earned on invested assets,
excluding unrealized gains and losses, adjusted for the benefit of nontaxable
investment income.
Sales of securities for the year ended December 31, 1993 are summarized
below (dollars in millions):
<TABLE>
<CAPTION>
TYPE OF SECURITY
----------------------
DEBT EQUITY
--------- -----------
<S> <C> <C>
Cash proceeds....................................................................... $ 185 $ 106
Gross realized gains................................................................ 4 19
Gross realized losses............................................................... - 10
</TABLE>
NOTE 9 -- LONG-TERM DEBT
A summary of long-term debt at December 31 follows (dollars in millions):
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Senior collateralized debt, 5% to 13.8% (rates generally fixed) payable in periodic
installments through 2034......................................................... $ 211 $ 401
Senior debt, 8% to 13.3% (rates generally fixed) payable in periodic installments
through 2023...................................................................... 1,158 1,166
Fixed rate note agreement (13% rate)............................................... 100 100
Commercial paper (rates fixed under interest rate agreements averaging four years
at 7.9%).......................................................................... 380 380
Commercial paper (floating rates averaging 3.4%)................................... 495 153
Bank credit agreement (floating rates averaging 4.4%).............................. 1,172 1,067
Bank line of credit (floating rates averaging 3.6%)................................ 100 -
Subordinated credit agreement (floating rates averaging 5.9%)...................... - 300
Subordinated debt, 8.5% to 15% (rates generally fixed) payable in periodic
installments through 2008......................................................... 82 89
--------- ---------
Total debt, average life of six years (rates averaging 6.7%)....................... 3,698 3,656
Amounts due within one year........................................................ 363 353
--------- ---------
Long-term debt..................................................................... $ 3,335 $ 3,303
--------- ---------
--------- ---------
</TABLE>
Borrowings under the commercial paper programs are classified as long-term
debt due to the credit available under the revolving credit agreements discussed
below and management's intention to refinance these borrowings on a long-term
basis.
Maturities of long-term debt in years 1995 through 1998 are $1.1 billion,
$161 million, $64 million and $1.1 billion, respectively. Such amounts reflect
maturities of debt issued for refinancings through March 24, 1994 and, as to
short-term debt classified as long-term, are based upon maturities of the
revolving credit agreements. Approximately 8% of Columbia/HCA's property and
equipment is pledged on senior collateralized debt.
During the past three years Columbia/HCA has reduced interest costs and
eliminated certain restrictive covenants by refinancing or prepaying high
interest rate debt, primarily through the use of existing cash and cash
equivalents and issuance of long-term debt, commercial paper and equity. Amounts
refinanced or prepaid totaled $787 million in 1993, $1 billion in 1992 and $275
million in 1991. After-tax losses from refinancing activities in 1993 aggregated
$84 million or $.24 per share.
F-49
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9 -- LONG-TERM DEBT (CONTINUED)
In February 1994 Columbia/HCA entered into revolving credit agreements (the
"Credit Facilities") in the aggregate amount of $3 billion. The Credit
Facilities comprise a four-year $1 billion revolving credit agreement and a
364-day $2 billion revolving credit agreement. The Credit Facilities were
established to support Columbia/HCA's commercial paper programs and replace $3.2
billion of prior revolving credit agreements associated with HCA ($1.6 billion)
and Columbia ($1.6 billion). Interest is payable generally at either LIBOR plus
1/4% to 1/2% (depending on Columbia/HCA's credit rating), or the higher of
prime, the bank certificate of deposit rate plus 1% or the Federal Funds rate
plus 1/2%.
In December 1993 Columbia/HCA issued $150 million of 6 1/8% Notes due 2000
and $150 million of 7 1/2% Notes due 2023.
During 1992 Columbia/HCA sold $100 million face amount of 10 7/8% Senior
Subordinated Notes due 2002 and $135 million face amount of 11 1/2% Senior
Subordinated Notes due 2002. In September 1993 $232 million face amount of these
notes were retired through the completion of a tender offer.
Proceeds from the public offering of 41,055,000 shares of voting common
stock in 1992 were used to repay $352 million of debt outstanding under a bank
credit agreement and redeem the 15 3/4% Subordinated Discount Debentures and
related interest aggregating $444 million.
In connection with the acquisition of BAMI in 1992, Columbia/HCA assumed
approximately $140 million of long-term debt, including approximately $64
million of senior collateralized notes payable in quarterly installments through
1998 at interest rates ranging from 10.7% to 11.7%. In September 1993
Columbia/HCA effected the defeasance of these notes.
In 1991 one of Columbia/HCA's partnerships issued $95 million of 11.45%
Senior Secured Notes due 2001. Proceeds from the issuance were used to repay $66
million of bank debt and finance expansion. These notes were retired in
connection with the refinancing of debt in September 1993. Columbia/HCA also
issued in 1991 a $40 million face amount 9% Subordinated Mandatory Convertible
Note due 1999. The note is convertible at the option of the holder into
Columbia/HCA voting common stock at a price of $18.50 per share (adjusted for
stock splits, recapitalizations and reorganizations). The note will be
automatically converted into common stock if the average per share market price
for four months preceding the July 1 anniversary exceeds a specified amount
ranging from $27.00 in 1994 to $34.00 in 1996.
In 1991 Columbia/HCA exchanged its Cumulative Exchangeable Preferred Stock
for 17 1/2% Junior Subordinated Exchangeable Debentures due 2005. These
debentures were redeemed in 1992 from proceeds on the 1991 sale of HealthTrust
preferred stock and warrants.
Columbia/HCA's credit facilities contain customary covenants which include
(i) limitations on additional debt, (ii) limitations on sales of assets, mergers
and changes of ownership and (iii) maintenance of certain interest coverage
ratios.
The estimated fair value of Columbia/HCA's long-term debt was $4.1 billion
at both December 31, 1993 and 1992, compared to carrying amounts aggregating
$3.7 billion at the end of each year. Certain subsidiaries of Columbia/HCA have
entered into agreements which reduce the impact of changes in interest rates on
$380 million of floating rate long-term debt. At December 31, 1993 and 1992, the
fair value of Columbia/HCA's net payable position under these agreements
(included in the aggregate fair value amounts above) totaled $34 million and $29
million, respectively. The estimate of fair value is based upon the quoted
market prices for the same or similar issues of long-term debt, or on rates
available to Columbia/HCA as a result of the HCA Merger for debt of the same
remaining maturities.
F-50
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9 -- LONG-TERM DEBT (CONTINUED)
As discussed in Note 4, in connection with the Spinoff, certain subsidiaries
issued notes payable ($250 million) and paid cash ($135 million financed
primarily through the issuance of commercial paper) to Humana in 1993. If the
Spinoff had occurred on December 31, 1992, Columbia/HCA's ratio of debt to debt
plus common stockholders' equity would have increased from 50% to 58%.
NOTE 10 -- LEASES
Columbia/HCA leases real estate and equipment under cancelable and
non-cancelable arrangements. Future minimum payments under non-cancelable
operating leases are as follows (dollars in millions):
<TABLE>
<S> <C>
1994................................................................. $ 123
1995................................................................. 102
1996................................................................. 78
1997................................................................. 63
1998................................................................. 43
Thereafter........................................................... 242
</TABLE>
Rent expense aggregated $196 million, $190 million and $170 million for the
years ended December 31, 1993, 1992 and 1991, respectively.
NOTE 11 -- CONTINGENCIES
Management continually evaluates contingencies based upon the best available
evidence. In addition, allowances for loss are provided currently for disputed
items that have continuing significance, such as certain third-party
reimbursements and deductions that continue to be claimed in current cost
reports and tax returns.
Management believes that allowances for loss have been provided to the
extent necessary and that its assessment of contingencies is reasonable.
Management believes that resolution of contingencies will not materially affect
Columbia/HCA's financial position or results of operations.
Principal contingencies are described below:
REVENUES -- Certain third-party payments are subject to examination by
agencies administering the programs. Columbia/HCA is contesting certain
issues raised in audits of prior year cost reports.
PROFESSIONAL LIABILITY RISKS -- Columbia/HCA has provided for loss for
professional liability risks based upon actuarially determined estimates.
Actual settlements and expenses incident thereto may differ from the
provisions for loss.
INTEREST RATE AGREEMENTS -- Certain subsidiaries of Columbia/HCA are
parties to agreements which reduce the impact of changes in interest rates
on its floating rate long-term debt. In the event of nonperformance by other
parties to these agreements, Columbia/HCA may incur a loss on the difference
between market rates and contract rates.
INCOME TAXES -- Columbia/HCA is contesting adjustments proposed by the
IRS.
SPINOFF -- Certain subsidiaries of Columbia/HCA are parties to
risk-sharing arrangements with Humana.
REGULATORY REVIEW -- Federal regulators are investigating certain
financial arrangements with physicians at two psychiatric hospitals.
LITIGATION -- Various suits and claims arising in the ordinary course of
business are pending against Columbia/HCA.
F-51
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12 -- CAPITAL STOCK
The terms and conditions associated with each class of Columbia/HCA common
stock are substantially identical except for voting rights. All nonvoting common
stockholders may convert their shares on a one-for-one basis into voting common
stock, subject to certain limitations. In addition, certain voting common
stockholders may convert their shares on a one-for-one basis into nonvoting
common stock.
The following shares of common stock were reserved at December 31, 1993
(amounts in thousands):
<TABLE>
<S> <C>
Stock option plans......................................................... 20,118
Retirement and savings plans............................................... 8,887
Other...................................................................... 2,853
---------
31,858
---------
---------
</TABLE>
Columbia/HCA has plans under which options to purchase common stock may be
granted to officers, employees and directors. Except for those discussed in Note
5, options have been granted at not less than market price on the date of grant.
Exercise provisions vary, but most options are exercisable in whole or in part
beginning one to four years after grant and ending four to fifteen years after
grant. Activity in the plans is summarized below (share amounts in thousands):
<TABLE>
<CAPTION>
SHARES
UNDER OPTION PRICE
OPTION PER SHARE
--------- ------------------
<S> <C> <C>
Balances, December 31, 1990.......................................... 37,163 $ 0.22 to $37.00
Granted............................................................ 4,078 0.60 to 25.24
Exercised.......................................................... (1,021) 7.21 to 23.37
Cancelled or lapsed................................................ (1,142) 0.60 to 37.00
---------
Balances, December 31, 1991.......................................... 39,078 0.22 to 25.71
Granted............................................................ 3,950 0.60 to 22.62
Conversion of BAMI stock options................................... 466 3.18 to 11.59
Exercised.......................................................... (22,998) 0.22 to 17.25
Cancelled or lapsed................................................ (7,399) 0.22 to 23.37
---------
Balances, December 31, 1992.......................................... 13,097 0.22 to 25.71
Granted............................................................ 1,660 0.60 to 33.38
Exercised.......................................................... (4,018) 0.22 to 23.37
Cancelled or lapsed................................................ (709) 0.22 to 25.71
---------
Balances, December 31, 1993.......................................... 10,030 $ 0.22 to $33.38
---------
---------
</TABLE>
At December 31, 1993, options for 4,026,700 shares were exercisable. Shares
of common stock available for future grants were 10,088,000 at December 31, 1993
and 11,442,900 at December 31, 1992.
In connection with the Galen Merger, certain preferred stock purchase rights
were redeemed which were previously issued to Galen common stockholders. The
cost of this transaction was not significant. In addition, a stockholder rights
plan was adopted upon consummation of the Galen Merger (similar to that of
Galen) under which common stockholders have the right to purchase Series A
Preferred Stock in the event of accumulation of or tender offer for certain
percentages of Columbia/HCA's common stock. The rights will expire in 2003
unless redeemed earlier by Columbia/ HCA.
F-52
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12 -- CAPITAL STOCK (CONTINUED)
In September 1993 the Board of Directors initiated a regular quarterly cash
dividend on common stock of $.03 per share.
In March 1992 Columbia/HCA issued 41,055,000 shares of voting common stock,
the net proceeds from which ($796 million) were used to reduce long-term debt.
Assuming that these shares were issued and the proceeds therefrom were used to
reduce long-term debt at the beginning of the year, earnings per common and
common equivalent share would have been $.53 in 1992.
In connection with the HCA Merger, Columbia/HCA stockholders voted to
increase the aggregate number of authorized voting shares of common stock from
400 million to 800 million, and the number of authorized nonvoting common shares
was established at 25 million. In addition, authorized shares of preferred stock
(none of which are outstanding) were increased from 10 million to 25 million.
NOTE 13 -- EMPLOYEE BENEFIT PLANS
Columbia/HCA maintains noncontributory defined contribution retirement plans
covering substantially all employees. Benefits are determined as a percentage of
a participant's earned income and are vested over specified periods of employee
service. Retirement plan expense was $97 million for 1993, $102 million for 1992
and $86 million for 1991. Amounts equal to retirement plan expense are funded
annually.
Columbia/HCA maintains various contributory savings plans which are
available to employees who meet certain minimum requirements. Certain of the
plans require that Columbia/HCA match an amount ranging from 50% to 60% of a
participant's contribution up to certain maximum levels. The cost of these plans
totaled $20 million for 1993, $19 million for 1992 and $15 million for 1991.
Columbia/HCA contributions are funded periodically during the year.
NOTE 14 -- ACCRUED EXPENSES
The following is a summary of other accrued expenses at December 31 (dollars
in millions):
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Workers' compensation................................................................ $ 102 $ 90
Taxes other than income.............................................................. 143 118
Professional liability risks......................................................... 89 80
Employee benefit plans............................................................... 158 197
Interest............................................................................. 181 167
Other................................................................................ 180 251
--------- ---------
$ 853 $ 903
--------- ---------
--------- ---------
</TABLE>
NOTE 15 -- SUBSEQUENT EVENTS
INCOME TAXES
On March 24, 1994, Columbia/HCA made an advance payment to the IRS of
approximately $75 million in connection with certain disputed prior year income
taxes and related interest. This transaction will not have a material effect on
1994 earnings.
LONG-TERM DEBT
Since completion of the HCA Merger, certain HCA and other long-term debt has
been refinanced in an effort to reduce future interest expense. These
transactions were financed primarily through the issuance of commercial paper,
$175 million of 6 1/2% Notes due 1999 and $150 million of 7.15% Notes due 2004.
Management anticipates that losses resulting from these refinancing activities
will reduce Columbia/HCA's first quarter 1994 net income by approximately $80
million.
F-53
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL QUARTERLY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1993
--------------------------------------------------------
FIRST SECOND THIRD FOURTH
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues................................................... $ 2,654 $ 2,536 $ 2,491 $ 2,571
Net income (loss):
Continuing operations (a)................................ 205 166 28 176
Discontinued operations.................................. 16 - - -
Extraordinary loss on extinguishment of
debt.................................................... - - (84) -
Net income (loss)...................................... 221 166 (56) 176
Per common share:
Earnings (loss):
Continuing operations (a).............................. .61 .49 .08 .52
Discontinued operations................................ .04 - - -
Extraordinary loss on extinguishment of
debt.................................................. - - (.24) -
Net income (loss).................................... .65 .49 (.16) .52
Market prices (b):
High................................................... 24 1/2 27 3/4 31 33 7/8
Low.................................................... 16 1/4 19 1/4 25 3/8 27
<CAPTION>
1992
--------------------------------------------------------
FIRST SECOND THIRD FOURTH
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues................................................... $ 2,559 $ 2,450 $ 2,451 $ 2,472
Net income (loss):
Continuing operations (c)(d)............................. 174 158 (300) 207
Discontinued operations (c).............................. 3 (2) (132) 6
Change in accounting for income taxes.................... 51 - - -
Net income (loss)...................................... 228 156 (432) 213
Per common share:
Earnings (loss):
Continuing operations (c)(d)........................... .57 .48 (.89) .61
Discontinued operations (c)............................ .02 (.02) (.39) .02
Change in accounting for income taxes.................. .16 - - -
Net income (loss).................................... .75 .46 (1.28) .63
Market prices (b):
High................................................... 21 1/4 22 19 1/4 21 3/4
Low.................................................... 16 1/2 16 1/4 16 1/4 13 3/4
<FN>
- ------------------------
(a) Third quarter loss includes $98 million ($.29 per share) of costs related
to the Galen Merger. See Note 5 of the Notes to Supplemental Consolidated
Financial Statements.
(b) Represents high and low sales prices of CHC common stock for periods prior
to the Galen Merger and Columbia common stock prior to the HCA Merger.
Columbia/HCA common stock is traded on the New York Stock Exchange (ticker
symbol -- COL).
(c) Third quarter net loss includes charges of $221 million ($.65 per share)
related primarily to the Spinoff, of which $86 million ($.25 per share) is
included in continuing operations and $135 million ($.40 per share) is
included in discontinued operations. The loss also includes $330 million
($.98 per share) associated with divestitures of certain assets. See Note
5 of the Notes to Supplemental Consolidated Financial Statements.
(d) Fourth quarter net income includes a gain of $58 million ($.17 per share)
on the sale of HealthTrust common stock. See Note 5 of the Notes to
Supplemental Consolidated Financial Statements.
</TABLE>
F-54
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL SCHEDULE I -- MARKETABLE SECURITIES -- OTHER SECURITY INVESTMENTS
DECEMBER 31, 1993
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
AMOUNT AT WHICH
EACH PORTFOLIO OF
NUMBER OF SHARES EQUITY SECURITY
OR UNITS - MARKET VALUE ISSUE AND EACH
PRINCIPAL AMOUNT OF EACH ISSUE OTHER SECURITY
OF BONDS AND COST OF AT BALANCE ISSUE CARRIED IN
NAME OF ISSUER AND TITLE OF EACH ISSUE NOTES EACH ISSUE SHEET DATE THE BALANCE SHEET
- -------------------------------------------------------- ----------------- ----------- ------------- -----------------
<S> <C> <C> <C> <C>
Short-term investments of professional liability
insurance subsidiaries (a):
United States Government and government agency
obligations.......................................... $ 44 $ 44 $ 44 $ 44
State and municipal obligations....................... $ 14 14 14 14
Money market funds.................................... 20 20 20
----------- ------------- -------
$ 78 $ 78 $ 78
----------- ------------- -------
----------- ------------- -------
Long-term investments:
United States Government and government agency
bonds................................................ $ 20 $ 19 $ 20 $ 20
State and municipal bonds............................. $ 365 358 374 374
Mortgage-backed securities............................ $ 52 54 55 55
Corporate and other bonds............................. $ 49 51 52 52
Money market funds.................................... 11 11 11
Redeemable preferred stocks........................... 17 18 18
Adjustable rate preferred stocks...................... 13 14 14
Common stocks......................................... 133 156 156
----------- ------------- -------
Investments of professional liability insurance
subsidiaries....................................... $ 656 $ 700 $ 700
----------- ------------- -------
----------- ------------- -------
<FN>
- ------------------------
(a) Included in current assets.
</TABLE>
F-55
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES
AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT
END OF PERIOD
BALANCE AT ----------------------
BEGINNING AMOUNTS NOT
OF PERIOD ADDITIONS COLLECTED CURRENT CURRENT
----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1991:
Mark Aanonson.................................................. $ 46 $ (46)
James Bohanon.................................................. 200 (200)
James Bohanon.................................................. 16 (16)
Daniel Brothman................................................ 135 $ 135
Craig Cooper................................................... 170 (120) 50
William Heburn................................................. $ 558 $ 558
Gary Hill...................................................... 50 (50)
Samuel Holtzman................................................ 120 20 100
Ronald Hytoff.................................................. 106 (4) 102
Ira Korman..................................................... 50 (50)
Ira Korman..................................................... 30 (30)
Ruben Perez.................................................... 884 (144) 740
Doris Porth.................................................... 135 135
George Schneider............................................... 148 (1) 1 146
George Schneider............................................... 550 550
George Schneider............................................... 150 150
Russell Schneider.............................................. 764 3 (158) 609
Donald Stewart................................................. 100 (100)
Donald Stewart................................................. 3 3
Charles Stokes................................................. 75 75
Charles Stokes................................................. 40 (1) 39
Charles Stokes................................................. 100 100
----------- ----- ----------- ----- ---------
$ 3,502 $ 931 $ (920) $ 579 $ 2,934
----------- ----- ----------- ----- ---------
----------- ----- ----------- ----- ---------
</TABLE>
F-56
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES
AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT
BALANCE AT END OF PERIOD
BEGINNING AMOUNTS ------------------------
OF PERIOD ADDITIONS COLLECTED CURRENT NOT CURRENT
----------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1992:
Daniel Brothman................................................. $ 135 $ 135
Craig Cooper.................................................... 50 $ (50)
William Heburn.................................................. 558 (558)
Gary Hill....................................................... $ 127 $ 127
Samuel Holtzman................................................. 120 (20) 100
Ronald Hytoff................................................... 102 (102)
Ruben Perez..................................................... 740 (740)
Doris Porth..................................................... 135 135
George Schneider................................................ 147 (147)
George Schneider................................................ 550 (550)
George Schneider................................................ 150 (150)
Russell Schneider............................................... 609 (609)
Donald Stewart.................................................. 100 100
Donald Stewart.................................................. 3 (3)
Charles Stokes.................................................. 75 (75)
Charles Stokes.................................................. 39 (39)
Charles Stokes.................................................. 100 (100)
----------- ----- --------- ----- -----
$ 3,513 $ 227 $ (3,143) $ 127 $ 470
----------- ----- --------- ----- -----
----------- ----- --------- ----- -----
</TABLE>
F-57
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES
AND UNDERWRITERS, PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT
BALANCE AT END OF PERIOD
BEGINNING AMOUNTS ------------------------
OF PERIOD ADDITIONS COLLECTED CURRENT NOT CURRENT
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Daniel Brothman........................................... $ 135 $ 135(a)
Gary Hill................................................. 127 $ (127)
Samuel Holtzman........................................... 100 100(a)
Doris Porth............................................... 135 135(a)
Donald Stewart............................................ 100 100(a)
----- --- ----------- --- -----
$ 597 $ - $ (127) $ - $ 470
----- --- ----------- --- -----
----- --- ----------- --- -----
<FN>
- ------------------------
(a) Noninterest bearing; generally collateralized by deed of trust on personal
residence; payable either in periodic installments or upon termination of
employment, sale of residence or default on any collateralized instrument
having priority over Columbia/HCA's deed of trust.
</TABLE>
F-58
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
BALANCE
AT BALANCE
BEGINNING ADDITIONS RETIREMENTS TRANSLATION AT END
OF PERIOD AT COST OR SALES ADJUSTMENTS OTHER OF PERIOD
--------- -------- ----------- ----------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1991:
Land.................................. $ 525 $ 29 $ (10) $ - $ - $ 544
Buildings............................. 3,563 269 (96) (3) (85)(a) 3,648
Equipment............................. 2,690 396 (129) (2) - 2,955
Construction in progress.............. 130 40 (1) - - 169
--------- -------- ----------- --- ----- ---------
$ 6,908 $ 734 $ (236) $ (5) $ (85) $ 7,316
--------- -------- ----------- --- ----- ---------
--------- -------- ----------- --- ----- ---------
Year ended December 31, 1992:
Land.................................. $ 544 $ 48 $ (11) $ (1) $ (27)(b) $ 553
Buildings............................. 3,648 365 (48) (13) (211)(b) 3,741
Equipment............................. 2,955 384 (94) (6) (106)(b) 3,133
Construction in progress.............. 169 94 (4) - (1) 258
--------- -------- ----------- --- ----- ---------
$ 7,316 $ 891 $ (157) $ (20) $(345) $ 7,685
--------- -------- ----------- --- ----- ---------
--------- -------- ----------- --- ----- ---------
Year ended December 31, 1993:
Land.................................. $ 553 $ 24 $ (9) $ - $ - $ 568
Buildings............................. 3,741 476 (134) (1) (33)(c) 4,049
Equipment............................. 3,133 464 (133) (1) (21)(c) 3,442
Construction in progress.............. 258 78 (2) - (1)(c) 333
--------- -------- ----------- --- ----- ---------
$ 7,685 $ 1,042 $ (278) $ (2) $ (55) $ 8,392
--------- -------- ----------- --- ----- ---------
--------- -------- ----------- --- ----- ---------
<FN>
- ------------------------
(a) During the third and fourth quarters of 1991, Columbia/HCA provided for
the estimated costs and expenses associated with the disposition of
certain hospitals and other assets.
(b) During the third quarter of 1992, Columbia/HCA provided for the estimated
costs and expenses associated with the disposition of certain hospitals,
recorded writedowns of assets in markets with significant declines in
operations and wrote off assets destroyed by Hurricane Andrew.
(c) During the third quarter of 1993, Columbia/HCA recorded provisions for
loss in connection with the Galen Merger, including writedowns of assets
in connection with the consolidation of operations and expected losses on
the sale of certain assets.
</TABLE>
F-59
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION
AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
ADDITIONS
CHARGED
BALANCE TO
AT COSTS BALANCE
BEGINNING AND RETIREMENTS TRANSLATION AT END
OF PERIOD EXPENSES OR SALES ADJUSTMENTS OTHER OF PERIOD
--------- -------- ----------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1991:
Buildings........................... $ 719 $ 162 $ (29) $ (1) $ - $ 851
Equipment........................... 983 316 (65) (1) - 1,233
--------- -------- ----------- --- --- ---------
$ 1,702 $ 478 $ (94) $ (2) $ - $ 2,084
--------- -------- ----------- --- --- ---------
--------- -------- ----------- --- --- ---------
Year ended December 31, 1992:
Buildings........................... $ 851 $ 168 $ (19) $ (4) $(21)(a) $ 975
Equipment........................... 1,233 325 (67) (3) (26)(a) 1,462
--------- -------- ----------- --- --- ---------
$ 2,084 $ 493 $ (86) $ (7) $(47) $ 2,437
--------- -------- ----------- --- --- ---------
--------- -------- ----------- --- --- ---------
Year ended December 31, 1993:
Buildings........................... $ 975 $ 173 $ (56) $ (1) $ - $ 1,091
Equipment........................... 1,462 331 (92) - - 1,701
--------- -------- ----------- --- --- ---------
$ 2,437 $ 504 $ (148) $ (1) $ - $ 2,792
--------- -------- ----------- --- --- ---------
--------- -------- ----------- --- --- ---------
<FN>
- ------------------------
(a) During the third quarter of 1992, Columbia/HCA provided for the estimated
costs and expenses associated with the disposition of certain hospitals,
recorded writedowns of assets in markets with significant declines in
operations and wrote off assets destroyed by Hurricane Andrew.
</TABLE>
F-60
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND DEDUCTIONS AT END
OF PERIOD EXPENSES OR PAYMENTS OF PERIOD
----------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
Allowances for loss on accounts receivable:
Year ended December 31, 1991................................... $ 499 $ 508 $ (560) $ 447
Year ended December 31, 1992................................... 447 515 (487) 475
Year ended December 31, 1993................................... 475 542 (504) 513
</TABLE>
F-61
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Maintenance and repairs.................................................................. $ 220 $ 205 $ 188
Taxes other than payroll and income taxes................................................ 217 185 155
</TABLE>
F-62
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement is dated as of February 10, 1994,
by and between HCA-Hospital Corporation of America ("HCA") and Columbia
Healthcare Corporation ("Columbia").
WHEREAS, on October 2, 1993, HCA, Columbia and CHOS Acquisition Corporation
("CHOS") entered into an Agreement and Plan of Merger (the "Merger Agreement")
in which Columbia agreed to acquire HCA by means of a merger of HCA and CHOS
(the "Merger").
WHEREAS, as a result of completion of the Merger, each stockholder of HCA
will receive for each share of (i) HCA Class A Common Stock owned as of the
effective time of the Merger (the "Effective Time") 1.05 shares of the Common
Stock, $.01 par value, of Columbia (the "Columbia Common Stock") and (ii) HCA
Class B Common Stock owned as of the Effective Time 1.05 shares of the Nonvoting
Common Stock, $.01 par value, of Columbia (the "Columbia Nonvoting Common
Stock").
WHEREAS, HCA and certain of its stockholders are parties to a Registration
Rights Agreement, dated as of March 16, 1989, as amended by (i) a First
Amendment to Registration Rights Agreement, dated as of April 20, 1992 and (ii)
a Second Amendment to Registration Rights Agreement, dated as of July 15, 1993
(such Agreement as so amended called herein, collectively, the "RRA").
WHEREAS, Section 7.18 of the Merger Agreement provides that, as of the
Effective Time, Columbia shall assume all obligations of HCA under the RRA to
provide for the registration of the shares of Columbia Common Stock held by the
stockholders of HCA who are parties to the RRA.
NOW, THEREFORE, for good and valid consideration, the parties hereto hereby
agree as follows:
1. ASSIGNMENT. Effective as of the Effective Time, HCA hereby assigns to
Columbia all right, title and interest of HCA in and to the RRA.
2. ASSUMPTION. Effective as of the Effective Time, Columbia hereby
assumes the obligations of HCA under the RRA.
3. AGREED MEANING OF CERTAIN PROVISIONS OF RRA SUBSEQUENT TO EFFECTIVE
TIME. HCA and Columbia agree that, effective upon and after the Effective Time,
when the terms "Registrable Securities" and "equity securities" (in reference to
HCA's equity securities) are used in the RRA, such terms shall mean and refer to
(without altering the other provisions of the definition of "Registrable
Securities" set forth in the
<PAGE>
RRA) the equity securities of Columbia, including, without limitation, the
Columbia Common Stock and the Columbia Nonvoting Common Stock, but excluding the
debt securities of Columbia which are convertible into or exchangeable for, or
which carry warrants or rights to subscribe for or purchase, an equity security
of Columbia; PROVIDED, HOWEVER, it is understood that Columbia shall have no
obligation under the RRA and this Assignment and Assumption Agreement to
register with the Securities and Exchange Commission under the Securities Act of
1933, as amended, any shares of the Columbia Nonvoting Common Stock since the
Columbia Nonvoting Common Stock has not been registered by Columbia pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended, but Columbia
shall be required under the RRA and this Assignment and Assumption Agreement to
register shares of the Columbia Common Stock issued or issuable upon conversion
of the Columbia Nonvoting Common Stock.
4. BENEFICIARIES. This Assignment and Assumption is being made for the
benefit of, and may be enforced by, those persons that are parties to the RRA.
IN WITNESS WHEREOF, the undersigned have executed this Assignment and
Assumption Agreement as of the date first set forth above.
HCA-HOSPITAL CORPORATION OF AMERICA
By: _______________________________
COLUMBIA HEALTHCARE CORPORATION
By: _______________________________
2
<PAGE>
- --------------------------------------------------------------------------------
COLUMBIA/HCA HEALTHCARE CORPORATION
AND
MID-AMERICA BANK OF LOUISVILLE & TRUST COMPANY,
RIGHTS AGENT
AMENDED AND RESTATED
RIGHTS AGREEMENT
DATED AS OF FEBRUARY 10, 1994
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
Section 1. Certain Definitions............................................ 1
Section 2. Appointment of Rights Agent.................................... 5
Section 3. Issuance of Right Certificates................................. 5
Section 4. Form of Right Certificates..................................... 7
Section 5. Countersignature and Registration.............................. 8
Section 6. Transfer, Split-Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificate.................................................... 9
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.. 9
Section 8. Cancellation and Destruction of Right Certificates............. 12
Section 9. Reservation and Availability of Preferred Stock................ 13
Section 10. Preferred Stock Record Date.................................... 14
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights............................................... 14
Section 12. Certificate of Adjusted Purchase Price or Number of Shares..... 23
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.................................................. 24
Section 14. Fractional Rights and Fractional Shares........................ 26
Section 15. Rights of Action............................................... 28
Section 16. Agreement of Right Holders..................................... 29
Section 17. Right Certificate Holder Not Deemed a Stockholder.............. 30
Section 18. Concerning the Rights Agent.................................... 30
Section 19. Merger or Consolidation or Change of Name of Rights Agent...... 30
Section 20. Duties of Rights Agent......................................... 31
Section 21. Change of Rights Agent......................................... 34
Section 22. Issuance of New Right Certificates............................. 35
Section 23. Redemption and Termination..................................... 35
Section 24. Notice of Certain Events....................................... 37
Section 25. Notices........................................................ 38
Section 26. Supplements and Amendments..................................... 39
Section 27. Determination and Actions by the Board of Directors, etc....... 39
Section 28. Successors..................................................... 40
Section 29. Benefits of this Agreement..................................... 40
Section 30. Severability................................................... 40
Section 31. Governing Law.................................................. 40
Section 32. Counterparts................................................... 40
<PAGE>
Section 33. Descriptive Headings........................................... 41
Appendix A -- Relative rights, preferences and limitations of the Series A
Participating Preferred Stock and Series B Participating
Preferred Stock
Exhibit 1 -- Form of Right Certificate
<PAGE>
DEFINED TERM CROSS REFERENCE SHEET
Acquiring Person..................................................Section 1(a)
Act...............................................................Section 1(b)
Adjustment Shares............................................Section 11(a)(ii)
Adjusted Number of Shares...................................Section 11(a)(iii)
Adjusted Purchase Price.....................................Section 11(a)(iii)
Affiliate.........................................................Section 1(c)
Agreement..............................................................Preface
Associate.........................................................Section 1(c)
Beneficial Owner..................................................Section 1(d)
Beneficially Own..................................................Section 1(d)
Business Day......................................................Section 1(e)
capital stock equivalent....................................Section 11(a)(iii)
close of business.................................................Section 1(f)
Common Stock......................................................Section 1(g)
Corporation...........................................................Recitals
current per share market price................................Section 11(d)(i)
Distribution Date.................................................Section 3(a)
Exchange Act......................................................Section 1(c)
Final Expiration Date.............................................Section 7(a)
Nonvoting Common Stock............................................Section 1(j)
Nonvoting Right.......................................................Recitals
Permitted Offer...................................................Section 1(k)
Person............................................................Section 1(l)
Preferred Stock...................................................Section 1(m)
preferred stock equivalents......................................Section 11(b)
Principal Party..................................................Section 13(b)
Proration Factor............................................Section 11(a)(iii)
Purchase Price....................................................Section 4(a)
Record Date...........................................................Recitals
Redemption Date...................................................Section 7(a)
Redemption Price....................................................Section 23
Right.................................................................Recitals
Right Certificate.................................................Section 3(a)
Rights Agent..........................................................Recitals
Rights Agreement.....................................................Section 3
Section 11(a)(ii) Event......................................Section 11(a)(ii)
Section 13 Event.................................................Section 13(a)
Security......................................................Section 11(d)(i)
Series A Preferred Stock..........................................Section 1(m)
i
<PAGE>
Series B Preferred Stock..........................................Section 1(m)
Stock Acquisition Date............................................Section 1(q)
Subsidiary........................................................Section 1(r)
Then outstanding.............................................Section 1(d)(iii)
Trading Day...................................................Section 11(d)(i)
Triggering Event..................................................Section 1(s)
Voting Right..........................................................Recitals
voting securities................................................Section 13(a)
ii
<PAGE>
AMENDED AND RESTATED
RIGHTS AGREEMENT
AMENDED AND RESTATED RIGHTS AGREEMENT, dated as of February 10, 1994
(the "Agreement"), between COLUMBIA/HCA HEALTHCARE CORPORATION, a Delaware
corporation (the "Corporation"), and MID-AMERICA BANK OF LOUISVILLE & TRUST
COMPANY, a banking and trust corporation organized under the laws of Kentucky
(the "Rights Agent").
WHEREAS, the Board of Directors of the Corporation authorized and
declared a dividend of one preferred stock purchase right (a "Voting Right")
for each share of Common Stock, $.01 par value (the "Common Stock"), of the
Corporation outstanding on September 1, 1993 (the "Record Date"), upon the
terms and subject to the conditions set forth in the Rights Agreement dated as
of September 1, 1993, between the Corporation and the Rights Agent (the
"Original Agreement");
WHEREAS, in connection with the merger of HCA-Hospital Corporation of
America ("HCA") into a wholly owned subsidiary of the Corporation, the
Corporation is issuing in exchange for shares of nonvoting common stock of HCA
shares of Nonvoting Common Stock, $.01 par value (the "Nonvoting Common Stock"),
of the Corporation; and
WHEREAS, the Board of Directors of the Corporation has determined to
issue one nonvoting preferred stock purchase right (a "Nonvoting Right" and,
collectively with the Voting Rights, the "Rights") with each share of
Nonvoting Common Stock and accordingly desires to amend and restate the
Original Agreement to provide for the issuance of Nonvoting Rights;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial Owner of
15% or more of the then outstanding shares of Common Stock (other than as a
result of a Permitted Offer (as hereinafter defined)) or was such a Beneficial
Owner at any time after the date hereof, whether or not such Person continues
to be the Beneficial Owner of 15% or more of the then outstanding shares of
Common Stock. Notwithstanding the foregoing, (A) the term "acquiring person"
shall not include (i) the Corporation, (ii) any Subsidiary of the Corporation,
(iii) any employee benefit plan of the Corporation or of any Subsidiary of
the Corporation, (iv) any Person or entity organized, appointed or established
by the Corporation for or
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pursuant to the terms of any such plan or (v) any Person who or which,
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 15% or more of the then outstanding shares of Common Stock
as a result of the acquisition of shares of Common Stock directly from the
Corporation and (B) no Person shall be deemed to be an "Acquiring Person"
either (x) as a result of the acquisition of shares of Common Stock by the
Corporation which, by reducing the number of shares of Common Stock
outstanding, increases the proportional number of shares beneficially owned by
such Person; except that if (i) a Person would become an Acquiring Person (but
for the operation of this subclause (x)) as a result of the acquisition of
shares of Common Stock by the Corporation and (ii) after such share
acquisition by the Corporation, such Person becomes the Beneficial Owner of
any additional shares of Common Stock, then such Person shall be deemed an
Acquiring Person or (y) if (i) within 5 days after such Person would otherwise
have become an Acquiring Person (but for the operation of this subclause (y)),
such Person notifies the Board of Directors that such Person did so
inadvertently and (ii) within 2 days after such notification, such Person is
the Beneficial Owner of less than 15% of the outstanding shares of Common
Stock.
(b) "Act" shall mean the Securities Act of 1933, as amended and as in
effect on the date of this Agreement.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as amended and in effect on the
date of this Agreement (the "Exchange Act").
(d) A Person shall be deemed the "Beneficial Owner" of and shall be
deemed to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has: (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding, or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the Beneficial Owner of, or to beneficially own,
securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates
until such tendered securities are accepted for purchase or exchange; or
(B) the right to vote pursuant to any agreement,
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arrangement or understanding; provided, however, that a Person shall not
be deemed the Beneficial Owner of, or to beneficially own, any security
if the agreement, arrangement or understanding to vote such security
(1)(x) arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and (y) is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report) or (2) arises solely from actions of such Person which
are within the exemption set forth in paragraph (b)(1) of Rule 14a-2
under the Exchange Act (or any comparable or successor provision); or
(iii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate thereof) with which such
Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with respect to
a bona fide public offering of securities) relating to the acquisition,
holding, voting (except to the extent contemplated by the proviso to
Section l(d)(ii)(B)) or disposing of any securities of the Corporation.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to
a Person's Beneficial Ownership of securities of the Corporation, shall
mean the number of such securities then issued and outstanding together
with the number of such securities not then actually issued and
outstanding which such Person would be deemed to own beneficially
hereunder.
(e) "Business Day" shall mean any day other than a Saturday, Sunday or
United States federal holiday.
(f) "close of business" on any given date shall mean 5:00 P.M., New York
time, on such date; provided, however, that if such date is not a Business Day
it shall mean 5:00 P.M., New York time, on the next succeeding Business Day.
(g) "Common Stock" when used with reference to the Corporation shall
mean the shares of Common Stock of the Corporation referred to in the recitals
hereof or, in the event of a subdivision, combination or consolidation with
respect to such shares of Common Stock, the shares of Common Stock resulting
from such subdivision, combination or consolidation. "Common Stock" when used
with reference to any Person other than the Corporation shall mean the capital
stock (or equity interest) with the greatest voting power of such other Person
or, if such
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other Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.
(h) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(i) "Final Expiration Date" shall have the meaning set forth in Section
7 hereof.
(j) "Nonvoting Common Stock" shall mean the shares of Nonvoting Common
Stock of the Corporation referred to in the recitals hereof or, in the event
of a subdivision, combination or consolidation with respect to such shares of
Nonvoting Common Stock, the shares of Nonvoting Common Stock resulting from
such subdivision, combination or consolidation. "Nonvoting Common Stock" when
used with reference to any Person other than the Corporation shall mean
nonvoting capital stock of such other Person or, if such other Person is a
Subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person, which is identical to the Common Stock of such
Person or Persons, except that such stock shall have substantially the same
voting rights as the Nonvoting Common Stock of the Corporation.
(k) "Permitted Offer" shall mean a tender or exchange offer which is for
all outstanding shares of Common Stock at a price and on terms determined,
prior to the purchase of shares under such tender or exchange offer, by at
least a majority of the members of the Board of Directors who are not officers
of the Corporation and who are not Acquiring Persons or Affiliates,
Associates, nominees or representatives of an Acquiring Person, to be adequate
(taking into account all factors that such directors deem relevant including,
without limitation, prices that could reasonably be achieved if the
Corporation or its assets were sold on an orderly basis designed to realize
maximum value) and otherwise in the best interests of the Corporation and its
stockholders (other than the Person or any Affiliate or Associate thereof on
whose behalf the offer is being made) taking into account all factors that
such directors may deem relevant.
(l) "Person" shall mean any individual, firm, partnership, corporation,
trust, association, joint venture or other entity, and shall include any
successor (by merger or otherwise) of such entity.
(m) "Preferred Stock" shall mean, individually and collectively, the
shares of Series A Participating Preferred Stock ("Series A Preferred Stock")
and Series B Participating Preferred Stock ("Series B Preferred Stock"), par
value $.01 per share, of the Corporation, having the relative rights,
preferences and limitations set forth in Appendix A hereto.
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(n) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
(o) "Section 11(a)(ii) Event" shall mean any event described in Section
11(a)(ii) hereof.
(p) "Section 13 Event" shall mean any event described in clause (x), (y)
or (z) of Section 13(a) hereof.
(q) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to the Exchange Act) by the Corporation or
an Acquiring Person that an Acquiring Person has become such; provided, that,
if such Person is determined not to have become an Acquiring Person pursuant
to Section 1(a)(B)(y) hereof, then no Stock Acquisition Date shall be deemed
to have occurred.
(r) "Subsidiary" of any Person shall mean any corporation or other
Person of which a majority of the voting power of the voting equity securities
or equity interests is owned, directly or indirectly, by such Person.
(s) "Triggering Event" shall mean any Section 11(a)(ii) Event or any
Section 13 Event.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Corporation hereby
appoints the Rights Agent to act as agent for the Corporation and the holders
of the Rights (who, in accordance with Section 3 hereof, shall prior to the
Distribution Date also be the holders of shares of Common Stock or Nonvoting
Common Stock) in accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Corporation may from time to
time appoint such co-Rights Agents as it may deem necessary or desirable.
SECTION 3. ISSUANCE OF RIGHT CERTIFICATES. (a) Until the earlier
of (i) the Stock Acquisition Date or (ii) the close of business on the tenth
day (or such later date as may be determined by action of the Corporation's
Board of Directors) after the date of the commencement by any Person (other
than the Corporation, any Subsidiary of the Corporation, any employee benefit
plan of the Corporation or of any Subsidiary of the Corporation or any Person
or entity organized, appointed or established by the Corporation for or
pursuant to the terms of any such plan) of, or of the first public
announcement of the intention of any Person (other than the Corporation, any
Subsidiary of the Corporation, any employee benefit plan of the Corporation or
of any Subsidiary of the Corporation or any Person or entity
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organized, appointed or established by the Corporation for or pursuant to the
terms of any such plan) to commence (which intention to commence remains in
effect for five Business Days after such announcement), a tender or exchange
offer the consummation of which would result in any Person becoming an
Acquiring Person (including, in the case of both (i) and (ii), any such date
which is after the date of this Agreement and prior to the issuance of the
Rights), the earlier of such dates being herein referred to as the
"Distribution Date," (x) the Rights will be evidenced by the certificates for
shares of Common Stock or Nonvoting Common Stock registered in the names of
the holders thereof (which certificates shall also be deemed to be Right
Certificates and shall represent, in the case of certificates for shares of
Common Stock, the same number of Voting Rights or, in the case of certificates
for shares of Nonvoting Common Stock, the same number of Nonvoting Rights) and
not by separate Right Certificates and (y) the right to receive Right
Certificates will be transferable only in connection with the transfer of the
underlying shares of Common Stock or Nonvoting Common Stock (including a
transfer to the Corporation); provided, however, that if a tender offer is
terminated prior to the occurrence of a Distribution Date, then no
Distribution Date shall occur as a result of such tender offer. As soon as
practicable after the Distribution Date, the Corporation will prepare and
execute, the Rights Agent will countersign, and the Corporation will send or
cause to be sent by first-class, postage-prepaid mail, to each record holder
of shares of Common Stock or Nonvoting Common Stock as of the close of
business on the Distribution Date, at the address of such holder shown on the
records of the Corporation, a Right Certificate, substantially in the form of
Exhibit I hereto (a "Right Certificate"), evidencing one Voting Right for each
share of Common Stock or one Nonvoting Right for each share of Nonvoting
Common Stock so held. As of and after the Distribution Date, the Rights will
be evidenced solely by such Right Certificates.
(b) Certificates for shares of Common Stock or Nonvoting Common Stock
which are outstanding on the Record Date or which become outstanding
(including, without limitation, reacquired shares of Common Stock or Nonvoting
Common Stock referred to in the last sentence of this paragraph (b)) after the
Record Date but prior to the earliest of the Distribution Date, the Redemption
Date and the Final Expiration Date, shall be deemed also to be certificates
for Rights, and shall bear the following legend (or any similar legend required
by the original Rights Agreement dated as of September 1, 1993):
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in an Amended and Restated Rights Agreement
between Columbia/HCA Healthcare Corporation and Mid-America Bank of Louisville
& Trust Company, as Rights Agent, dated as of February 10, 1994 (the "Rights
Agreement"), the terms of which are hereby incorporated herein by reference
and a copy of which is on file at the principal executive offices of
Columbia/HCA Healthcare
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Corporation. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. Columbia/HCA Healthcare Corporation
will mail to the holder of this certificate a copy of the Rights Agreement
without charge after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or held by,
any Person who is, was or becomes an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement) and certain related
persons, whether currently held by or on behalf of such Person or by any
subsequent holder, may become null and void.
With respect to such certificates containing the foregoing legend, until
the Distribution Date, the Rights associated with the shares of Common Stock
or Nonvoting Common Stock represented by such certificates shall be evidenced
by such certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights associated with
the shares of Common Stock or Nonvoting Common Stock represented thereby. In
the event that the Corporation purchases or acquires any shares of Common
Stock or Nonvoting Common Stock after the Record Date but prior to the
Distribution Date, any Rights associated with such shares of Common Stock or
Nonvoting Common Stock shall be deemed canceled and retired so that the
Corporation shall not be entitled to exercise any Rights associated with the
shares of Common Stock or Nonvoting Common Stock which are no longer
outstanding.
SECTION 4. FORM OF RIGHT CERTIFICATES. (a) The Right Certificates
(and the forms of election to purchase and of assignment to be printed on the
reverse thereof) shall be substantially in the form set forth in Exhibit I
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Corporation may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 11 and Section 22 hereof, the
Right Certificates shall entitle the holders thereof to purchase such number
of one-hundredths of a share of, in the case of Voting Rights, Series A
Preferred Stock or, in the case of Nonvoting Rights, Series B Preferred Stock,
as shall be set forth therein at the price per one one-hundredth of a share
set forth therein (the "Purchase Price"), but the amount and type of
securities purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights which are null and void pursuant to Section 7(e)
of
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this Agreement and any Right Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of any
other Right Certificate referred to in this sentence, shall contain (to the
extent feasible) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in
the Rights Agreement). Accordingly, this Right Certificate and the Rights
represented hereby are null and void.
The provisions of Section 7(e) of this Rights Agreement shall be
operative whether or not the foregoing legend is contained on any such Right
Certificate.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION. The Right
Certificates shall be executed on behalf of the Corporation by its Chairman of
the Board, its Chief Executive Officer, its President, any of its Vice
Presidents, or its Treasurer, either manually or by facsimile signature, shall
have affixed thereto the Corporation's seal or a facsimile thereof, and shall
be attested by the Secretary or an Assistant Secretary of the Corporation,
either manually or by facsimile signature. The Right Certificates shall be
countersigned by the Rights Agent and shall not be valid for any purpose
unless so countersigned. In case any officer of the Corporation who shall have
signed any of the Right Certificates shall cease to be such officer of the
Corporation before countersignature by the Rights Agent and issuance and
delivery by the Corporation, such Right Certificates may nevertheless be
countersigned by the Rights Agent and issued and delivered by the Corporation
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Corporation; and any
Right Certificate may be signed on behalf of the Corporation by any person
who, at the actual date of the execution of such Right Certificate, shall be a
proper officer of the Corporation to sign such Right Certificate, although at
the date of the execution of this Rights Agreement any such person was not
such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal office or offices designated as the appropriate
place for surrender or transfer of such Right Certificate, books for
registration and transfer of the Right Certificates issued thereunder. Such
books shall show the names and addresses of the respective holders of the
Right Certificates, the number of Rights evidenced on its face by each of the
Right Certificates and the certificate number and the date of each of the
Right Certificates.
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SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES.
Subject to the provisions of Section 4(b), Section 7(e) and Section 14 hereof,
at any time after the close of business on the Distribution Date, and at or
prior to the close of business on the earlier of the Redemption Date or the
Final Expiration Date, any Right Certificate or Right Certificates may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number
of one one-hundredths of a share of Preferred Stock (or, following a
Triggering Event, other securities, as the case may be) as the Right
Certificate or Right Certificates surrendered then entitled such holder (or
former holder in the case of a transfer) to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate or
Right Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged at the principal office or
offices of the Rights Agent designated for such purpose. Neither the Rights
Agent nor the Corporation shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Right Certificate until
the registered holder shall have completed and signed the certificate
contained in the form of assignment on the reverse side of such Right
Certificate and shall have provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Corporation shall reasonably request. Thereupon the
Rights Agent shall, subject to Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled thereto a Right
Certificate or Right Certificates, as the case may be, as so requested. The
Corporation may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates.
Upon receipt by the Corporation and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation
of a Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, at the
Corporation's request, reimbursement to the Corporation and the Rights Agent
of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the
Corporation will make and deliver a new Right Certificate of like tenor to the
Rights Agent for countersignature and delivery to the registered holder in
lieu of the Right Certificate so lost, stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS. (a) Subject to Section 7(e) hereof, the registered holder of any
Right Certificate may
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exercise the Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time after the Distribution Date upon surrender of the
Right Certificate, with the form of election to purchase and the certificate
on the reverse side thereof duly executed, to the Rights Agent at the
principal office or offices of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price for the total number of
one one-hundredths of a share of Preferred Stock (or other securities, as the
case may be) as to which such surrendered Rights are exercised, at or prior to
the earliest of (i) the close of business on September 1, 2003 (the "Final
Expiration Date") and (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption Date").
(b) The Purchase Price for each one one-hundredth of a share of
Preferred Stock pursuant to the exercise of a Right shall initially be $100,
shall be subject to adjustment from time to time as provided in the next two
sentences and in Sections 11 and 13(a) hereof and shall be payable in
accordance with Section 7(c) below. Anything in this Agreement to the contrary
notwithstanding, in the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Corporation shall (i)
declare or pay any dividend on the Common Stock payable in shares of Common
Stock or (ii) effect a subdivision, combination or consolidation of the Common
Stock (by reclassification or otherwise than by payment of dividends in shares
of Common Stock) into a greater or lesser number of shares of Common Stock,
then in any such case, each share of Common Stock outstanding following such
subdivision, combination or consolidation shall continue to have a Right
associated therewith and the Purchase Price following any such event shall be
proportionately adjusted to equal the result obtained by multiplying the
Purchase Price immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event. The same adjustment shall be made with
respect to each share of Nonvoting Common Stock and the associated Right in
the case of (i) any dividend on the Nonvoting Common Stock payable in shares
of Nonvoting Common Stock or (ii) any subdivision, combination, or
consolidation of the Nonvoting Common Stock (by reclassification or otherwise
than by payment of dividends in shares of Nonvoting Common Stock). The
adjustments provided for in the two preceding sentences shall be made
successively whenever such a dividend is declared or paid or such a
subdivision, combination or consolidation is effected.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase and the certificate duly executed,
accompanied
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by payment of the Purchase Price for the shares of Preferred Stock (or other
securities, as the case may be) to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 6 hereof by certified check, cashier's
check or money order payable to the order of the Corporation, the Rights Agent
shall thereupon promptly (i) (A) requisition from any transfer agent of the
shares of Preferred Stock certificates for the number of shares of Preferred
Stock to be purchased and the Corporation hereby irrevocably authorizes its
transfer agent to comply with all such requests, or (B) if the Corporation, in
its sole discretion, shall have elected to deposit the shares of Preferred
Stock issuable upon exercise of the Rights thereunder into a depository,
requisition from the depository agent depository receipts representing such
number of one one-hundredths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depository agent) and the Corporation will direct the depository agent to
comply with such requests, (ii) when appropriate, requisition from the
Corporation the amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 14 hereof, (iii) after receipt of such
certificates or depository receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in
such name or names as may be designated by such holder and (iv) when
appropriate, after receipt thereof, deliver such cash to or upon the order of
the registered holder of such Right Certificate. In the event that the
Corporation is obligated to issue other securities (including Common Stock
and/or Nonvoting Common Stock) of the Corporation pursuant to Section 11(a)
hereof, the Corporation will make all arrangements necessary so that such
other securities are available for distribution by the Rights Agent, if and
when appropriate.
In addition, in the case of an exercise of the Rights by a holder
pursuant to Section 11(a)(ii), the Rights Agent shall return such Right
Certificate to the registered holder thereof after imprinting, stamping or
otherwise indicating thereon that the rights represented by such Right
Certificate no longer include the rights provided by Section 11(a)(ii) of the
Rights Agreement and if less than all the Rights represented by such Right
Certificate were so exercised, the Rights Agent shall indicate on the Right
Certificate the number of Rights represented thereby which continue to include
the rights provided by Section 11(a)(ii).
(d) In case the registered holder of any Right Certificate shall
exercise less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder of such Right Certificate
or to his duly authorized assigns, subject to the provisions of Section 14
hereof, or the Rights Agent shall place an
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appropriate notation on the Right Certificate with respect to those Rights
exercised.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any
Affiliate or Associate thereof) who becomes a transferee after the Acquiring
Person becomes such or (iii) a transferee of an Acquiring Person (or of any
Affiliate or Associate thereof) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has a continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a
transfer which the Board of Directors of the Corporation has determined is
part of a plan, arrangement or understanding which has as a primary purpose or
effect the avoidance of this Section 7(e), shall become null and void without
any further action and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise. The Corporation shall use all reasonable efforts to
insure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Right Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Corporation shall be obligated to undertake any
action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) completed and signed the certificate contained in the
form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner)
or Affiliates or Associates thereof as the Corporation shall reasonably
request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Right Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Corporation or to any
of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by
it, and no Right Certificates shall be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The
Corporation shall deliver to the Rights Agent for
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cancellation and retirement, and the Rights Agent shall so cancel and retire,
any other Right Certificate purchased or acquired by the Corporation otherwise
than upon the exercise thereof. The Rights Agent shall deliver all canceled
Right Certificates to the Corporation, or shall, at the written request of the
Corporation, destroy such canceled Right Certificates, and in such case shall
deliver a certificate of destruction thereof to the Corporation.
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED STOCK. The
Corporation covenants and agrees that at all times prior to the occurrence of
a Section 11(a)(ii) Event it will cause to be reserved and kept available out
of its authorized and unissued shares of Preferred Stock, or any authorized
and issued shares of Preferred Stock held in its treasury, the number of
shares of Preferred Stock that will be sufficient to permit the exercise in
full of all outstanding Rights and, after the occurrence of a Section
11(a)(ii) Event, shall, to the extent reasonably practicable, so reserve and
keep available a sufficient number of shares of Common Stock and Nonvoting
Common Stock (and/or other securities) which may be required to permit the
exercise in full of the Rights pursuant to this Agreement.
So long as the shares of Preferred Stock (and, after the occurrence of a
Section 11(a)(ii) Event, Common Stock, Nonvoting Common Stock or any other
securities) issuable upon the exercise of the Rights may be listed on any
national securities exchange, the Corporation shall use its best efforts to
cause, from and after such time as the Rights become exercisable, all shares
reserved for such issuance to be listed on such exchange upon official notice
of issuance upon such exercise.
The Corporation covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Preferred Stock (or Common
Stock, Nonvoting Common Stock and/or other securities, as the case may be)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares or other securities (subject to payment of the
Purchase Price), be duly and validly authorized and issued and fully paid and
non-assessable shares or securities.
The Corporation further covenants and agrees that it will pay when due
and payable any and all United States federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of the
Right Certificates or of any shares of Preferred Stock (or Common Stock,
Nonvoting Common Stock and/or other securities, as the case may be) upon the
exercise of Rights. The Corporation shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Right Certificates to a person other than, or the issuance or delivery of
certificates or depository
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receipts for the shares of Preferred Stock (or Common Stock, Nonvoting Common
Stock and/or other securities, as the case may be) in a name other than that
of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise, or to issue or to deliver any certificates or
depository receipts for shares of Preferred Stock (or Common Stock, Nonvoting
Common Stock and/or other securities, as the case may be) upon the exercise of
any Rights, until any such tax shall have been paid (any such tax being
payable by the holder of such Right Certificate at the time of surrender) or
until it has been established to the Corporation's reasonable satisfaction
that no such tax is due.
The Corporation shall use its best efforts to (i) file, as soon as
practicable following the Stock Acquisition Date, a registration statement
under the Act, with respect to the securities purchasable upon exercise of the
Rights on an appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act and the rules and regulations thereunder)
until the date of the expiration of the rights provided by Section 11(a)(ii).
The Corporation shall also take such action as may be appropriate under the
blue sky laws of the various states.
SECTION 10. PREFERRED STOCK RECORD DATE. Each person in whose name
any certificate for shares of Preferred Stock (or Common Stock, Nonvoting
Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder
of record of the shares of Preferred Stock (or Common Stock, Nonvoting Common
Stock and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Right Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that, if the
date of such surrender and payment is a date upon which the Preferred Stock
(or Common Stock, Nonvoting Common Stock and/or other securities, as the case
may be) transfer books of the Corporation are closed, such person shall be
deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock, Nonvoting Common Stock and/or other
securities, as the case may be) transfer books of the Corporation are open.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES
OR NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.
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(a) (i) In the event the Corporation shall at any time after the date
of this Agreement (A) declare a dividend on the shares of Preferred
Stock payable in Preferred Stock, (B) subdivide the outstanding shares
of Preferred Stock, (C) combine the outstanding shares of Preferred
Stock into a smaller number of shares of Preferred Stock or (D) issue
any shares of its capital stock in a reclassification of the Preferred
Stock (including any such reclassification in connection with a
consolidation or merger in which the Corporation is the continuing or
surviving corporation), except as otherwise provided in this Section
11(a) and Section 7(e) hereof, the Purchase Price in effect at the time
of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall
be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior
to such date and at a time when the Preferred Stock transfer books of
the Corporation were open, such holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that in
no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital
stock of the Corporation issuable upon exercise of one Right. If an
event occurs which would require an adjustment under both Section
11(a)(i) and Section 11(a)(ii), the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to Section 11(a)(ii).
(ii) In the event any Person, alone or together with its
Affiliates and Associates, shall become an Acquiring Person, then proper
provision shall be made so that each holder of a Right (except as
provided below and in Section 7(e) hereof) shall, for a period of 60
days after the later of the occurrence of any such event or the
effective date of an appropriate registration statement under the Act
pursuant to Section 9 hereof, have a right to receive, upon exercise
thereof at a price equal to the then current Purchase Price, in
accordance with the terms of this Agreement, such number of shares of
(in the case of Voting Rights) Common Stock or (in the case of Nonvoting
Rights) Nonvoting Common Stock (or, in the discretion of the Board of
Directors, one one-hundredths of a share of Preferred Stock (which shall
be Series A Preferred Stock in the case of Voting Rights and Series B
Preferred Stock in the case of Nonvoting Rights)) as shall equal the
result obtained by (x) multiplying the then current Purchase Price by
the then number of one one-hundredths of a share of Preferred Stock for
which a Right was exercisable immediately prior to the first occurrence
of a
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Section 11(a)(ii) Event and dividing that product by (y) 50% of the then
current per share market price of the Corporation's Common Stock
(determined pursuant to Section 11(d) hereof) on the date of such first
occurrence (such number of shares being referred to as the "Adjustment
Shares"); provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject to the
provisions of Section 13 hereof, then only the provisions of Section 13
hereof shall apply and no adjustment shall be made pursuant to this
Section 11(a)(ii).
(iii) In the event that there shall not be sufficient treasury
shares or authorized but unissued (and unreserved) shares of Common
Stock and Nonvoting Common Stock to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii) and the Rights
become so exercisable (and the Board has determined to make the Rights
exercisable into fractions of a share of Preferred Stock),
notwithstanding any other provision of this Agreement, to the extent
necessary and permitted by applicable law, each Right shall thereafter
represent the right to receive, upon exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement,
(x) a number of (or fractions of) shares of Common Stock or Nonvoting
Common Stock, as the case may be (up to the maximum number of shares of
Common Stock or Nonvoting Common Stock which may permissibly be issued),
and (y) one one-hundredths of a share of Preferred Stock (which shall be
Series A Preferred Stock in the case of Voting Rights and Series B
Preferred Stock in the case of Nonvoting Rights) or a number of, or
fractions of other equity securities of the Corporation (or, in the
discretion of the Board of Directors, debt) which the Board of Directors
of the Corporation has determined to have the same aggregate current
market value (determined pursuant to Section 11(d)(i) and (ii) hereof,
to the extent applicable) as one share of Common Stock (such number of
shares of, or fractions of a share of, Preferred Stock, debt, or other
equity securities (provided that, in the case of other equity securities
issuable upon exercise of Nonvoting Rights, the Board of Directors shall
use its best efforts to issue nonvoting equity securities) or debt of
the Corporation being referred to as a "capital stock equivalent"),
equal in the aggregate to the number of Adjustment Shares; provided,
however, if sufficient shares of Common Stock, Nonvoting Common Stock
and/or capital stock equivalents are unavailable, then the Corporation
shall, to the extent permitted by applicable law, take all such action
as may be necessary to authorize additional shares of Common Stock,
Nonvoting Common Stock or capital stock equivalents for issuance upon
exercise of the Rights, including the calling of a meeting of
stockholders; and provided, further, that if the Corporation is unable
to cause sufficient shares of Common Stock,
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Nonvoting Common Stock and/or capital stock equivalents to be available
for issuance upon exercise in full of the Rights, then each Right shall
thereafter represent the right to receive the Adjusted Number of Shares
upon exercise at the Adjusted Purchase Price (as such terms are
hereinafter defined). As used herein, the term "Adjusted Number of
Shares" shall mean that number of shares (or fractions of shares) of
Common Stock, Nonvoting Common Stock and/or capital stock equivalents
equal to the product of (x) the number of Adjustment Shares and (y) a
fraction, the numerator of which is the number of shares of Common
Stock, Nonvoting Common Stock and/or capital stock equivalents available
for issuance upon exercise of the Rights and the denominator of which is
the aggregate number of Adjustment Shares otherwise issuable upon
exercise in full of all Rights (assuming there were a sufficient number
of shares of Common Stock and Nonvoting Common Stock available) (such
fraction being referred to as the "Proration Factor"). The "Adjusted
Purchase Price" shall mean the product of the Purchase Price and the
Proration Factor. In the event that there are insufficient shares of
Common Stock, Nonvoting Common Stock and capital stock equivalents
available for issuance upon exercise of the Rights, the Board of
Directors shall establish procedures to allocate the right to receive
shares of Common Stock, Nonvoting Common Stock and capital stock
equivalents upon exercise of the Rights pro rata among holders of Voting
Rights and Nonvoting Rights, provided that, to the extent consistent
with such proration, shares of Nonvoting Common Stock and other
nonvoting capital stock shall be allocated to holders of Nonvoting
Rights and shares of Common Stock and other voting capital stock shall
be allocated to holders of Voting Rights.
(b) In case the Corporation shall fix a record date for the issuance of
rights (other than the Rights), options or warrants to all holders of shares
of Preferred Stock entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase shares of Preferred
Stock (or shares having the same rights, privileges and preferences as the
Preferred Stock ("preferred stock equivalents")) or securities convertible
into shares of Preferred Stock or preferred stock equivalents at a price per
share of Preferred Stock or preferred stock equivalent (or having a conversion
price per share, if a security convertible into shares of Preferred Stock or
preferred stock equivalents) less than the then current per share market price
of the Preferred Stock (as determined pursuant to Section 11(d) hereof) on
such record date, the Purchase Price to be in effect after such record date
shall be determined by multiplying the Purchase Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of shares of Preferred Stock outstanding on such record date plus the
number of shares of Preferred Stock which the aggregate
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offering price of the total number of shares of Preferred Stock and/or
preferred stock equivalents so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would
purchase at such current per share market price, and the denominator of which
shall be the number of shares of Preferred Stock outstanding on such record
date plus the number of additional shares of Preferred Stock and/or preferred
stock equivalents to be offered for subscription or purchase (or into which
the convertible securities so to be offered are initially convertible);
provided, however, that in no event shall the consideration to be paid upon
the exercise of one Right be less than the aggregate par value of the shares
of capital stock of the Corporation issuable upon exercise of one Right. In
case such subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such consideration
shall be determined in good faith by the Board of Directors of the
Corporation, whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent. Shares of Preferred
Stock owned by or held for the account of the Corporation shall not be deemed
outstanding for the purpose of any such computation. Such adjustments shall be
made successively whenever such a record date is fixed; and in the event that
such rights, options or warrants are not so issued, the Purchase Price shall
be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.
(c) In case the Corporation shall fix a record date for the making of a
distribution to all holders of shares of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in shares of Preferred Stock) or subscription rights or
warrants (excluding those referred to in Section 11(b) hereof), the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the then current per share
market price (as determined pursuant to Section 11(d) hereof) of the Preferred
Stock on such record date, less the fair market value (as determined in good
faith by the Board of Directors of the Corporation, whose determination shall
be described in a statement filed with the Rights Agent and shall be binding
on the Rights Agent) of the portion of the assets or evidences of indebtedness
so to be distributed or of such subscription rights or warrants applicable to
one share of Preferred Stock and the denominator of which shall be such
current per share market price of the Preferred Stock; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock of the
Corporation to be issued upon exercise of one Right. Such adjustments shall be
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made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Purchase Price shall again be adjusted
to be the Purchase Price which would then be in effect if such record date had
not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current per
share market price" of any security (a "Security" for the purpose of
this Section 11(d)(i)) on any date shall be deemed to be the average of
the daily closing prices per share of such Security for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that in the event
that the current per share market price of the Security is determined
during a period following the announcement by the issuer of such
Security of (A) a dividend or distribution on such Security payable in
shares of such Security or securities convertible into such shares or
(B) any subdivision, combination or reclassification of such Security
and prior to the expiration of thirty (30) Trading Days after the
ex-dividend date for such dividend or distribution or the record date
for such subdivision, combination or reclassification, then, and in each
such case, the current per share market price shall be appropriately
adjusted to reflect the current market price per share equivalent of
such Security. The closing price for each day shall be the last sale
price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the
New York Stock Exchange or, if the Security is not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the
Security is listed or admitted to trading or, if the Security is not
listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and
low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations
System ("NASDAQ") or such other system then in use, or, if on any such
date the Security is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market
maker making a market in the Security selected by the Board of Directors
of the Corporation. If on any such date no such market maker is making a
market in the Security, the fair value of the Security on such date as
determined in good faith by the Board of Directors of the Corporation
shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the Security is listed
or admitted to trading is
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open for the transaction of business or, if the Security is not listed
or admitted to trading on any national securities exchange, a Business
Day.
(ii) For the purpose of any computation hereunder, the "current
per share market price" of the Preferred Stock shall be determined in
accordance with the method set forth in Section 11(d)(i). If the shares
of Preferred Stock are not publicly traded, the "current per share
market price" of the Preferred Stock shall be conclusively deemed to be
the current per share market price of the shares of Common Stock as
determined pursuant to Section 11(d)(i) (appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring
after the date hereof), multiplied by one hundred. If neither the Common
Stock nor the Preferred Stock is publicly held or so listed or traded,
"current per share market price" shall mean the fair value per share as
determined in good faith by the Board of Directors of the Corporation,
whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent. For the purposes
of this Agreement, the "current per share market price" or "current
market value" of the Series B Preferred Stock shall conclusively be
deemed to equal the "current per share market price" or "current market
value" of the Series A Preferred Stock.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the
nearest cent or to the nearest one one-hundredth of a share of Preferred Stock
or one ten-thousandth of any other share or security, as the case may be.
Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i)
three (3) years from the date of the transaction which mandates such
adjustment or (ii) the Final Expiration Date.
(f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the Corporation
other than Preferred Stock, thereafter the number of other shares so
receivable upon exercise of any Right shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Section 11(a)
through (c), inclusive, and the provisions of Sections 7, 9, 10, 13 and 14
with respect to the Preferred Stock shall apply on like terms to any such
other shares.
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(g) All Rights originally issued by the Corporation subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of
a share of Preferred Stock purchasable from time to time hereunder upon
exercise of the Rights, all subject to further adjustment as provided herein.
(h) The Corporation may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any adjustment
in the number of one one-hundredths of a share of Preferred Stock purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-hundredths of a share of Preferred Stock for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Corporation shall make a public announcement of its election to
adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made. This
record date may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Right Certificates have been issued, shall be at least
ten (10) days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(h), the Corporation shall, as promptly as
practicable, cause to be distributed to holders of record of Right
Certificates on such record date Right Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Corporation,
shall cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Corporation, new
Right Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Right Certificates so to be distributed shall
be issued, executed and countersigned in the manner provided for herein and
shall be registered in the names of the holders of record of Right
Certificates on the record date specified in the public announcement.
(i) Irrespective of any adjustment or change in the Purchase Price or
the number of one one-hundredths of a share of Preferred Stock issuable upon
the exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
one-hundredths of
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a share of Preferred Stock which were expressed in the initial Right
Certificates issued hereunder.
(j) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the number of one
one-hundredths of a share of Preferred Stock, shares of Common Stock,
Nonvoting Common Stock or other securities issuable upon exercise of the
Rights, the Corporation shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Corporation may validly
and legally issue such number of fully paid and non-assessable one
one-hundredths of a share of Preferred Stock, shares of Common Stock,
Nonvoting Common Stock or other securities at such adjusted Purchase Price.
(k) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Corporation may elect to defer until the occurrence of
such event the issuance to the holder of any Right exercised after such record
date the shares of Preferred Stock, Common Stock, Nonvoting Common Stock or
other securities of the Corporation, if any, issuable upon such exercise over
and above the shares of Preferred Stock, Common Stock, Nonvoting Common Stock
or other securities of the Corporation, if any, issuable upon exercise on the
basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Corporation shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(l) Anything in this Section 11 to the contrary notwithstanding, the
Corporation shall be entitled to make such reductions in the Purchase Price,
in addition to those adjustments expressly required by this Section 11, as and
to the extent that it in its sole discretion shall determine to be advisable
in order that (i) any consolidation or subdivision of the Preferred Stock,
(ii) issuance wholly for cash of Preferred Stock at less than the current
market price, (iii) issuance wholly for cash of Preferred Stock or securities
which by their terms are convertible into or exchangeable for Preferred Stock,
(iv) stock dividend or (v) issuance of rights, options or warrants referred to
in this Section 11, hereafter made by the Corporation to holders of its
Preferred Stock shall not be taxable to such stockholders.
(m) The Corporation covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than
a Subsidiary of the Corporation in a transaction which does not violate
Section 11(n) hereof), (ii) merge with or into any other Person (other than a
Subsidiary of the Corporation
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in a transaction which does not violate Section 11(n) hereof) or (iii) sell or
transfer (or permit any Subsidiary to sell or transfer), in one transaction,
or a series of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Corporation and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Corporation and/or any of its Subsidiaries in one or more transactions each of
which does not violate Section 11(n) hereof), if (x) at the time of or
immediately after such consolidation, merger, sale or transfer there are any
charter or by-law provisions or any rights, warrants or other instruments or
securities outstanding or agreements in effect or other actions taken, which
would materially diminish or otherwise eliminate the benefits intended to be
afforded by the Rights or (y) prior to, simultaneously with or immediately
after such consolidation, merger or sale, the stockholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of
Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates. The Corporation
shall not consummate any such consolidation, merger, sale or transfer unless
prior thereto the Corporation and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement evidencing compliance
with this Section 11(m).
(n) The Corporation covenants and agrees that, after the Distribution
Date, it will not, except as permitted by Section 23 or Section 26 hereof,
take (or permit any Subsidiary to take) any action the purpose of which is to,
or if at the time such action is taken it is reasonably foreseeable that the
effect of such action is to, materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
(o) The exercise of Rights under Section 11(a)(ii) shall only result in
the loss of rights under Section 11(a)(ii) to the extent so exercised and
shall not otherwise affect the rights represented by the Rights under this
Agreement, including the rights represented by Section 13.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in Sections 11 or 13
hereof, the Corporation shall promptly (a) prepare a certificate setting forth
such adjustment, and a brief statement of the facts accounting for such
adjustment, (b) file with the Rights Agent and with each transfer agent for
the Common Stock, the Nonvoting Common Stock and the Preferred Stock a copy of
such certificate and (c) mail a brief summary thereof to each holder of a
Right Certificate in accordance with Section 25 hereof. The Rights Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein contained and shall not be deemed to
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have knowledge of such adjustment unless and until it shall have received such
certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER. (a) In the event that, on or following the Stock Acquisition
Date, directly or indirectly, (x) the Corporation shall consolidate with, or
merge with and into, any Person, (y) the Corporation shall consolidate with,
or merge with, any Person, and the Corporation shall be the continuing or
surviving corporation of such consolidation or merger (other than, in a case
of any transaction described in (x) or (y), a merger or consolidation which
would result in all of the securities generally entitled to vote in the
election of directors ("voting securities") of the Corporation outstanding
immediately prior thereto, continuing to represent (either by remaining
outstanding or by being converted into securities of the surviving entity) all
of the voting securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation and the holders of
such securities not having changed as a result of such merger or
consolidation) or (z) the Corporation shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer), in one
transaction or a series of related transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Corporation
and its Subsidiaries (taken as a whole) to any Person, then, and in each such
case (except as provided in Section 13(d) hereof), proper provision shall be
made so that (i) each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the exercise thereof
at a price equal to the then current Purchase Price, in accordance with the
terms of this Agreement and in lieu of shares of Preferred Stock, such number
of freely tradable shares of Common Stock (or, in the case of Nonvoting
Rights, shares of Nonvoting Common Stock) of the Principal Party (as
hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall equal the result obtained by (A)
multiplying the then current Purchase Price by the number of one
one-hundredths of a share of Preferred Stock for which a Right is then
exercisable (without taking into account any adjustment previously made
pursuant to Section 11(a)(ii)) and dividing that product by (B) 50% of the
then current per share market price of the Common Stock of such Principal
Party (determined pursuant to Section 11(d) hereof) on the date of
consummation of such Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13
Event, all the obligations and duties of the Corporation pursuant to this
Agreement; (iii) the term "Corporation" shall thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions of
Section 11 hereof shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; and (iv) such Principal Party shall take
such steps (including, but not limited to, the reservation of a sufficient
number of shares of its Common Stock and Nonvoting
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Common Stock) in connection with the consummation of any such transaction as
may be necessary to assure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to the shares of
Common Stock or Nonvoting Common Stock thereafter deliverable upon the
exercise of the Rights.
(b) "Principal Party" shall mean
(i) in the case of any transaction described in clause (x) or (y)
of the first sentence of Section 13(a), the Person that is the issuer of
any securities into which shares of Common Stock of the Corporation are
converted in such merger or consolidation, and if no securities are so
issued, the Person that is the other party to such merger or
consolidation (including, if applicable, the Corporation if it is the
surviving corporation); and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant
to such transaction or transactions; provided, however, that in any of
the foregoing cases, (1) if the shares of Common Stock of such Person
are not at such time and have not been continuously over the preceding
twelve (12) month period registered under Section 12 of the Exchange Act
and such Person is a direct or indirect Subsidiary of another Person the
shares of Common Stock of which are and have been so registered,
"Principal Party" shall refer to such other Person; (2) in case such
Person is a Subsidiary, directly or indirectly, of more than one Person,
the shares of Common Stock of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons
is the issuer of the shares of Common Stock having the greatest
aggregate market value; and (3) in case such Person is owned, directly
or indirectly, by a joint venture formed by two or more Persons that are
not owned, directly or indirectly, by the same Person, the rules set
forth in (1) and (2) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such party were
a "Subsidiary" of both or all of such joint ventures and the Principal
Parties in each such chain shall bear the obligations set forth in this
Section 13 in the same ratio as their direct or indirect interests in
such Person bear to the total of such interests.
(c) The Corporation shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
shares of its authorized Common Stock and Nonvoting Common Stock which have
not been issued or reserved for issuance to permit the exercise in full of the
Rights in
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accordance with this Section 13 and unless prior thereto the Corporation and
such Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a) and
(b) of this Section 13 and further providing that, as soon as practicable
after the date of any consolidation, merger, sale or transfer mentioned in
paragraph (a) of this Section 13, the Principal Party at its own expense
shall:
(i) prepare and file a registration statement under the Act with
respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form and use its best efforts to cause such
registration statement to (A) become effective as soon as practicable
after such filing and (B) remain effective (with a prospectus at all
times meeting the requirements of the Act) until the Final Expiration
Date;
(ii) use its best efforts to qualify or register the Rights and
the securities purchasable upon exercise of the Rights under the blue
sky laws of such jurisdictions as may be necessary or appropriate; and
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.
The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. The rights under this
Section 13 shall be in addition to the rights to exercise Rights and
adjustments under Section 11(a)(ii) and shall survive any exercise thereof.
(d) Notwithstanding anything in this Agreement to the contrary, Section
13 shall not be applicable to a transaction described in subparagraphs (x) and
(y) of Section 13(a) if: (i) such transaction is consummated with a Person or
Persons who acquired shares of Common Stock pursuant to a Permitted Offer (or
a wholly owned Subsidiary of any such Person or Persons); (ii) the price per
share of Common Stock offered in such transaction is not less than the price
per share of Common Stock paid to all holders of shares of Common Stock whose
shares were purchased pursuant to such Permitted Offer; and (iii) the form of
consideration offered in such transaction is the same as the form of
consideration paid pursuant to such Permitted Offer. Upon consummation of any
such transaction contemplated by this Section 13(d), all Rights thereunder
shall expire.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The
Corporation shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be
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paid to the registered holders of the Right Certificates with regard to which
such fractional Rights would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a whole Right
shall be the closing price of the Rights for the Trading Day immediately prior
to the date on which such fractional Rights would have been otherwise
issuable. The closing price for any day shall be the last sale price, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Corporation. If on any such date no
such market maker is making a market in the Rights, the fair value of the
Rights on such date as determined in good faith by the Board of Directors of
the Corporation shall be used. For the purposes of this Agreement, the
current market value of a Nonvoting Right shall conclusively be deemed to
equal the current market value of a Voting Right.
(b) The Corporation shall not be required to issue fractions of a share
of Preferred Stock (other than fractions which are one one-hundredth or
integral multiples of one one-hundredth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of Preferred Stock (other than fractions which are one one-hundredth or
integral multiples of one one-hundredth of a share of Preferred Stock).
Fractions of a share of Preferred Stock in integral multiples of one
one-hundredth of a share of Preferred Stock may, at the election of the
Corporation, be evidenced by depositary receipts, pursuant to an appropriate
agreement between the Corporation and a depositary selected by it; provided
that such agreement shall provide that the holders of such depositary receipts
shall have the rights, privileges and preferences to which they are entitled
as beneficial owners of the shares of Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of Preferred Stock that are
not one one-hundredth or integral multiples of one one-hundredth of a share of
Preferred Stock, the Corporation shall pay to the registered holders of Right
Certificates at the time such Rights are exercised as herein provided an
amount in
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cash equal to the same fraction of the current market value of one share of
Preferred Stock. For the purposes of this Section 14(b), the current market
value of a share of Preferred Stock shall be the closing price of a share of
Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof) for the
Trading Day immediately prior to the date of such exercise.
(c) Following the occurrence of one of the transactions or events
specified in Section 11 giving rise to the right to receive shares of Common
Stock, Nonvoting Common Stock, capital stock equivalents (other than Preferred
Stock) or other securities upon the exercise of a Right, the Corporation shall
not be required to issue fractions of shares or units of such Common Stock,
Nonvoting Common Stock, capital stock equivalents or other securities upon
exercise of the Rights or to distribute certificates which evidence fractions
of such Common Stock, Nonvoting Common Stock, capital stock equivalents or
other securities. In lieu of fractional shares or units of such Common Stock,
Nonvoting Common Stock, capital stock equivalents or other securities, the
Corporation may pay to the registered holders of Right Certificates at the
time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of the current market value of a share or unit of such
Common Stock, Nonvoting Common Stock, capital stock equivalents or other
securities. For purposes of this Section 14(c), the current market value shall
be determined in the manner set forth in Section 11(d) hereof for the Trading
Day immediately prior to the date of such exercise and, if such capital stock
equivalent is not traded, each such capital stock equivalent shall have the
value of one one-hundredth of a share of Preferred Stock. For the purposes of
this Agreement, the current market value of the Nonvoting Common Stock shall
conclusively be deemed to equal the current market value of the Common Stock.
(d) The holder of a Right by the acceptance of the Right expressly
waives his right to receive any fractional Right or any fractional share upon
exercise of a Right (except as provided above).
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered
holders of the Common Stock and Nonvoting Common Stock); and any registered
holder of any Right Certificate (or, prior to the Distribution Date, of the
Common Stock or Nonvoting Common Stock), without the consent of the Rights
Agent or of the holder of any other Right Certificate (or, prior to the
Distribution Date, of the Common Stock or Nonvoting Common Stock), may, in his
own behalf and for his own benefit, enforce, and may institute and maintain
any suit, action or proceeding against the Corporation to
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enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened
violations of the obligations of any Person subject to, this Agreement.
SECTION 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right,
by accepting the same, consents and agrees with the Corporation and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of the associated Common Stock or Nonvoting
Common Stock;
(b) after the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office or offices of the Rights Agent designated for such purpose, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate form fully executed;
(c) subject to Section 6 and Section 7(f) hereof, the Corporation and
the Rights Agent may deem and treat the person in whose name the Right
Certificate (or, prior to the Distribution Date, the associated Common Stock
or Nonvoting Common Stock certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificate or the associated Common Stock
or Nonvoting Common Stock certificate made by anyone other than the
Corporation or the Rights Agent) for all purposes whatsoever, and neither the
Corporation nor the Rights Agent, subject to the last sentence of Section 7(e)
hereof, shall be bound by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Corporation nor the Rights Agent shall have any liability to any holder of
a Right or a beneficial interest in a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of
any preliminary or permanent injunction or other order, decree or ruling
issued by a court of competent jurisdiction or by a governmental, regulatory
or administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority,
prohibiting or otherwise restraining
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performance of such obligation; provided, however, that the Corporation shall
use its best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Right Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the shares of Preferred
Stock or any other securities of the Corporation which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to confer upon the
holder of any Right Certificate, as such, any of the rights of a stockholder
of the Corporation or any right to vote for the election of directors or upon
any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 24
hereof), or to receive dividends or other distributions or to exercise any
preemptive or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance
with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT. The Corporation agrees to
pay to the Rights Agent reasonable compensation for all services rendered by
it hereunder and, from time to time, on demand of the Rights Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties hereunder. The Corporation also agrees to indemnify
the Rights Agent for, and to hold it harmless against, any loss, liability or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability in the
premises. The indemnity provided for herein shall survive the expiration of
the Rights and the termination of this Agreement.
The Rights Agent shall be protected and shall incur no liability for, or
in respect of, any action taken, suffered or omitted by it in connection with,
its administration of this Agreement in reliance upon any Right Certificate or
certificate for shares of Common Stock or Nonvoting Common Stock or other
securities of the Corporation, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged, by
the proper Person or Persons.
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SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT. Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
stock transfer or all or substantially all of the corporate trust business of
the Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto, provided that
such corporation would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of the
Right Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of a predecessor Rights
Agent and deliver such Right Certificates so countersigned; and in case at
that time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor or in the name of the successor Rights Agent; and in
all such cases such Right Certificates shall have the full force provided in
the Right Certificates and in this Agreement.
In case at any time the name of the Rights Agent shall be changed and at
such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in
its changed name; and in all such cases such Right Certificates shall have the
full force provided in the Right Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes
only those duties and obligations imposed by this Agreement upon the following
terms and conditions, by all of which the Corporation and the holders of Right
Certificates, by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Corporation), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of an Acquiring Person and the
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determination of the current market price of any Security) be proved or
established by the Corporation prior to taking or suffering any action
thereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board,
the Chief Executive Officer, the President, any Vice President, the Treasurer
or the Secretary of the Corporation and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable thereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature on such Right Certificates) or be
required to verify the same, but all such statements and recitals are and
shall be deemed to have been made by the Corporation only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Corporation of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall
it be responsible for any change in the exercisability of the Rights
(including the Rights becoming void pursuant to Section 7(e) hereof) or any
adjustment required under the provisions of Section 11 or Section 13 hereof or
responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Right Certificates
after receipt of the certificate described in Section 12 hereof); nor shall it
by any act hereunder be deemed to make any representation or warranty as to
the authorization or reservation of any shares of Preferred Stock, Common
Stock or Nonvoting Common Stock to be issued pursuant to this Agreement or any
Right Certificate or as to whether any shares of Preferred Stock, Common
Stock or Nonvoting Common Stock will, when issued, be validly authorized and
issued, fully paid and non-assessable.
(f) The Corporation agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required
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by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Treasurer or the Secretary of the Corporation, and to
apply to such officers for advice or instructions in connection with its
duties, and shall not be liable for any action taken or suffered by it in good
faith or lack of action in accordance with instructions of any such officer or
for any delay in acting while waiting for those instructions. Any application
by the Rights Agent for written instructions from the Corporation may, at the
option of the Rights Agent, set forth in writing any action proposed to be
taken or omitted by the Rights Agent under this Agreement and the date on or
after which such action shall be taken or such omission shall be effective.
The Rights Agent shall not be liable for any action taken by, or omission of,
the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date
shall not be less than five Business Days after the date any officer of the
Corporation actually receives such application, unless any such officer shall
have consented in writing to an earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission), the Rights Agent
shall have received written instructions in response to such application
specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Corporation or become pecuniarily interested in any
transaction in which the Corporation may be interested, or contract with or
lend money to the Corporation or otherwise act as fully and freely as though
it were not Rights Agent under this Agreement. Nothing herein shall preclude
the Rights Agent from acting in any other capacity for the Corporation or for
any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Corporation resulting from any
such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance
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of any of its duties hereunder or in the exercise of its rights if there shall
be reasonable grounds for believing that repayment of such funds or adequate
indemnification against such risk or liability is not reasonably assured to
it.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has not been
completed, the Rights Agent shall not take any further action with respect to
such requested exercise or transfer without first consulting with the
Corporation.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon thirty (30) days' notice in writing mailed to the Corporation
and to each transfer agent of the Common Stock, Nonvoting Common Stock or
Preferred Stock by registered or certified mail, and to the holders of the
Right Certificates by first-class mail. The Corporation may remove the Rights
Agent or any successor Rights Agent upon sixty (60) days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and
to each transfer agent of the Common Stock, Nonvoting Common Stock or
Preferred Stock by registered or certified mail, and to holders of the Right
Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Corporation shall
appoint a successor to the Rights Agent. If the Corporation shall fail to make
such appointment within a period of sixty (60) days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of
a Right Certificate (who shall, with such notice, submit his Right Certificate
for inspection by the Corporation), then the registered holder of any Right
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Corporation or by such a court, shall be a corporation
organized and doing business under the laws of the United States or of any
state of the United States so long as such corporation is in good standing and
is authorized under such laws to exercise corporate trust or stock transfer
powers and is subject to supervision or examination by federal or state
authority and has at the time of its appointment as Rights Agent a combined
capital and surplus of at least $100,000,000. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Not later than the effective date of any such
appointment the Corporation shall file notice thereof in writing
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with the predecessor Rights Agent and each transfer agent of the Common Stock,
Nonvoting Common Stock or Preferred Stock, and mail a notice thereof in
writing to the registered holders of the Right Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case may
be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Corporation may, at its option, issue new Right Certificates evidencing Rights
in such form as may be approved by its Board of Directors to reflect any
adjustment or change in the Purchase Price and the number or kind or class of
shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement.
In addition, in connection with the issuance or sale of shares of Common
Stock or Nonvoting Common Stock following the Distribution Date and prior to
the earlier of the Redemption Date and the Final Expiration Date, the
Corporation (a) shall with respect to shares of Common Stock or Nonvoting
Common Stock so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities, notes or debentures issued by the Corporation and (b)
may, in any other case, if deemed necessary or appropriate by the Board of
Directors of the Corporation, issue Right Certificates representing the
appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) the Corporation shall not be obligated to issue
any such Right Certificates if, and to the extent that, the Corporation shall
be advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Corporation or the Person to whom
such Right Certificate would be issued and (ii) no Right Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
SECTION 23. REDEMPTION AND TERMINATION.
(a) (i) The Board of Directors of the Corporation may, at its option,
redeem all but not less than all the then outstanding Rights at a
redemption price of $.01 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"), at any time prior to
the earlier of (x) the occurrence of a Section 11(a)(ii) Event or (y)
the Final Expiration Date.
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(ii) In addition, the Board of Directors of the Corporation may,
at its option, at any time following the occurrence of a Section
11(a)(ii) Event and the expiration of any period during which the holder
of Rights may exercise the rights under Section 11(a)(ii) but prior to
any Section 13 Event redeem all but not less than all of the then
outstanding Rights at the Redemption Price (x) in connection with any
merger, consolidation or sale or other transfer (in one transaction or
in a series of related transactions) of assets or earning power
aggregating 50% or more of the earning power of the Corporation and its
subsidiaries (taken as a whole) in which all holders of shares of Common
Stock are treated alike and not involving (other than as a holder of
shares of Common Stock being treated like all other such holders) an
Acquiring Person or (y)(aa) if and for so long as the Acquiring Person
is not thereafter the Beneficial Owner of 15% of the shares of Common
Stock and (bb) at the time of redemption no other Persons are Acquiring
Persons.
(b) In the case of a redemption permitted under Section 23(a)(i),
immediately upon the date for redemption set forth (or determined in the
manner specified) in a resolution of the Board of Directors of the Corporation
ordering the redemption of the Rights, evidence of which shall have been filed
with the Rights Agent, and without any further action and without any notice,
the right to exercise the Rights shall terminate and the only right thereafter
of the holders of Rights shall be to receive the Redemption Price for each
Right so held. In the case of a redemption permitted only under Section
23(a)(ii), evidence of which shall have been filed with the Rights Agent, the
right to exercise the Rights will terminate and represent only the right to
receive the Redemption Price upon the later of ten Business Days following the
giving of such notice or the expiration of any period during which the rights
under Section 11(a)(ii) may be exercised. The Corporation shall promptly give
public notice of any such redemption; provided, however, that the failure to
give, or any defect in, any such notice shall not affect the validity of such
redemption. Within ten (10) days after such date for redemption set forth in a
resolution of the Board of Directors ordering the redemption of the Rights,
the Corporation shall mail a notice of redemption to all the holders of the
then outstanding Rights at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Stock and Nonvoting Common
Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the Redemption
Price will be made. Neither the Corporation nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23 and other
than in connection with the
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purchase of shares of Common Stock or Nonvoting Common Stock prior to the
Distribution Date.
(c) The Corporation may, at its option, discharge all of its obligations
with respect to the Rights by (i) issuing a press release announcing the
manner of redemption of the Rights in accordance with this Agreement and (ii)
mailing payment of the Redemption Price to the registered holders of the
Rights at their last addresses as they appear on the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
Transfer Agent of the Common Stock and Nonvoting Common Stock, and upon such
action, all outstanding Rights and Right Certificates shall be null and void
without any further action by the Corporation.
SECTION 24. NOTICE OF CERTAIN EVENTS. (a) In case the Corporation
shall propose (i) to pay any dividend payable in stock of any class to the
holders of shares of its Preferred Stock or to make any other distribution to
the holders of shares of its Preferred Stock (other than a regularly quarterly
cash dividend), (ii) to offer to the holders of shares of its Preferred Stock
rights or warrants to subscribe for or to purchase any additional shares of
Preferred Stock or shares of stock of any class or any other securities,
rights or options, (iii) to effect any reclassification of its Preferred Stock
(other than a reclassification involving only the subdivision of outstanding
shares of Preferred Stock), (iv) to effect any consolidation or merger into or
with any other Person (other than a Subsidiary of the Corporation in a
transaction which does not violate Section 11(n) hereof) or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer) in one or more transactions, of 50% or more of the
assets or earning power of the Corporation and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Corporation and/or any
of its Subsidiaries in one or more transactions each of which does not violate
Section 11(n) hereof) or (v) to effect the liquidation, dissolution or winding
up of the Corporation, then, in each such case, the Corporation shall give to
each holder of a Right Certificate, in accordance with Section 25 hereof, a
notice of such proposed action to the extent feasible and file a certificate
with the Rights Agent to that effect, which shall specify the record date for
the purposes of such stock dividend, or distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of shares of Preferred Stock, if
any such date is to be fixed, and such notice shall be so given in the case of
any action covered by clause (i) or (ii) above at least twenty (20) days prior
to the record date for determining holders of the shares of Preferred Stock
for purposes of such action, and in the case of any such other action, at
least twenty (20) days prior to the date of the taking of such proposed
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action or the date of participation therein by the holders of the shares of
Preferred Stock, whichever shall be the earlier.
(b) In case of a Section 11(a)(ii) Event, then (i) the Corporation shall
as soon as practicable thereafter give to each holder of a Right Certificate,
in accordance with Section 25 hereof, a notice of the occurrence of such
event, which notice shall describe such event and the consequences of such
event to holders of Rights under Section 11(a)(ii) hereof and (ii) all
references in the preceding paragraph (a) to shares of Preferred Stock shall
be deemed thereafter to refer also to Common Stock, Nonvoting Common Stock
and/or, if appropriate, other securities of the Corporation.
SECTION 25. NOTICES. Notices or demands authorized by this
Agreement to be given or made by the Rights Agent or by the holder of any
Right Certificate to or on the Corporation shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Rights Agent) as follows:
Columbia/HCA Healthcare Corporation
201 West Main Street
Louisville, Kentucky 40202
Attention: Chief Executive Officer
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Corporation or by the
holder of any Right Certificate to or on the Rights Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Corporation) as
follows:
Mid-America Bank of Louisville & Trust Company
500 West Broadway
Louisville, Kentucky 40202
Attention: Orson Oliver, President
Notices or demands authorized by this Agreement to be given or made by
the Corporation or the Rights Agent to the holder of any Right Certificate or,
if prior to the Distribution Date, to the holder of certificates representing
shares of Common Stock or Nonvoting Common Stock shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed to such holder
at the address of such holder as shown on the registry books of the
Corporation.
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SECTION 26. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution
Date, the Corporation and the Rights Agent shall, if the Corporation so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common Stock or
Nonvoting Common Stock. From and after the Distribution Date, the Corporation
and the Rights Agent shall, if the Corporation so directs, supplement or amend
this Agreement without the approval of any holders of Right Certificates in
order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period thereunder or
(iv) to change or supplement the provisions thereunder in any manner which the
Corporation may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Right Certificates (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person);
provided, however, that this Agreement may not be supplemented or amended to
lengthen, pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the Rights are not
then redeemable or (B) any other time period unless such lengthening is for
the purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. Upon the delivery of a certificate from an
appropriate officer of the Corporation which states that the proposed
supplement or amendment is in compliance with the terms of this Section 26,
the Rights Agent shall execute such supplement or amendment, provided that
such supplement or amendment does not adversely affect the rights or
obligations of the Rights Agent under Section 18 or Section 20 of this
Agreement. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of shares
of Common Stock and Nonvoting Common Stock.
SECTION 27. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS,
ETC. The Board of Directors of the Corporation shall have the exclusive
power and authority to administer this Agreement and to exercise all rights
and powers specifically granted to the Board or the Corporation, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of
this Agreement and (ii) make all determinations deemed necessary or advisable
for the administration of this Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend the Agreement and
whether any proposed amendment adversely affects the interests of the holders
of Right Certificates). For all purposes of this Agreement, any calculation of
the number of shares of Common Stock, Nonvoting Common Stock or other
securities outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common
Stock, Nonvoting Common Stock or any other securities of
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which any Person is the Beneficial Owner, shall be made in accordance with the
last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act as in effect on the date of this Agreement. All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing)
which are done or made by the Board in good faith, shall (x) be final,
conclusive and binding on the Corporation, the Rights Agent, the holders of
the Right Certificates and all other parties and (y) not subject the Board to
any liability to the holders of the Right Certificates.
SECTION 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Corporation or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the
Corporation, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the shares of Common Stock
or Nonvoting Common Stock) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Corporation, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the shares of Common Stock
or Nonvoting Common Stock).
SECTION 30. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.
SECTION 31. GOVERNING LAW. This Agreement, each Right and each
Right Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State.
SECTION 32. COUNTERPARTS. This Agreement may be executed in
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one
and the same instrument.
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SECTION 33. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested, all as of the date and year first above
written.
COLUMBIA/HCA HEALTHCARE CORPORATION
By STEPHEN T. BRAUN
-------------------------------------
Name: Stephen T. Braun
Title: Sr. Vice President
MID-AMERICA BANK OF LOUISVILLE
& TRUST COMPANY
By LOU ANN ATLAS
-------------------------------------
Name: Lou Ann Atlas
Title: Vice President
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APPENDIX A
RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF THE SERIES A
PARTICIPATING PREFERRED STOCK AND SERIES B PARTICIPATING PREFERRED STOCK
1. ISSUANCE. The Board of Directors is authorized, subject to limitations
prescribed by law, to provide for the issuance of shares of Preferred Stock in
one or more series, to establish the number of shares to be included in each
such series, and to fix the designations, powers, preferences, and rights of the
shares of each such series, and any qualifications, limitations or restrictions
thereof.
2. SERIES A PREFERRED STOCK AND SERIES B PREFERRED STOCK.
Section 1. DESIGNATION AND AMOUNT. Eight million (8,000,000) shares of the
Preferred Stock of the Corporation shall be designated as "Series A
Participating Preferred Stock," par value $.01 per share (the "SERIES A
PREFERRED STOCK") and two hundred fifty thousand (250,000) shares of the
Preferred Stock of the Corporation shall be designated as "Series B
Participating Preferred Stock," par value $.01 per share (the "SERIES B
PREFERRED STOCK"). The number of shares of each such series of Preferred Stock
may be increased or decreased by resolution of the Board of Directors; provided
that no decrease shall reduce the number of shares of either of such series of
Preferred Stock to a number less than that of the shares of such series then
outstanding plus the number of shares issuable upon exercise of outstanding
rights, options or warrants or upon conversion of outstanding securities issued
by the Corporation.
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Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of any shares of
stock of the Corporation ranking prior and superior to the shares of Series A
Preferred Stock and Series B Preferred Stock with respect to dividends, the
holders of shares of Series A Preferred Stock and Series B Preferred Stock shall
be entitled to receive, when, as and if declared by the Board of Directors out
of assets legally available for the purpose, quarterly dividends payable in cash
on the first business day of January, April, July and October in each year (each
such date being referred to herein as a "QUARTERLY DIVIDEND PAYMENT DATE"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Preferred Stock or Series B
Preferred Stock, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $1.00 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in kind) of all
non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock (by reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series A Preferred Stock or Series B Preferred Stock;
provided that no dividend shall be declared on the shares of Series A Preferred
Stock or Series B Preferred Stock unless at the same time a dividend is declared
on the outstanding shares of the other series in the same amount and having the
same record and payment dates. In the event the Corporation shall at any time
after September 1, 1993 (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, (iii)
combine the outstanding Common Stock into a smaller number of shares, or (iv)
issue any shares of Common Stock in a reclassification or change of the
outstanding shares of Common Stock (including any such reclassification or
change in connection with a merger in which the Corporation is the continuing or
surviving Corporation), then in each such case the amount to which holders of
shares of Series A Preferred Stock and Series B Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Series A
Preferred Stock and Series B Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the
Series A Preferred Stock and Series B Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series A Preferred Stock and Series B Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
A Preferred Stock or Series B Preferred Stock, as the case may be, unless the
date of issue of such shares is prior to the record date for the first Quarterly
Dividend Payment Date for such shares, in which case dividends on such shares
shall begin to accrue from the date of issue of such shares, or unless the date
of issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred Stock or Series
B Preferred Stock entitled to receive a quarterly dividend and before such
Quarterly Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Preferred Stock and Series B Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all
shares of Series A Preferred Stock and Series B Preferred Stock at the time
outstanding. The Board of Directors may fix a record date for the
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determination of holders of shares of Series A Preferred Stock and Series B
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be not more than 30 days prior to the
date fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of shares of Series A Preferred
Stock and Series B Preferred Stock shall have the following voting rights:
(A) (i) Except as provided in paragraph C of this Section 3 and subject to
the provision for adjustment hereinafter set forth, each share of Series A
Preferred Stock shall entitle the holder thereof to 100 votes on all matters
submitted to a vote of the stockholders of the Corporation.
(ii) Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(B) (i) Except as otherwise required by applicable law, each outstanding
share of Series B Preferred Stock shall not be entitled to vote on any matter on
which the stockholders of the Corporation shall be entitled to vote, and shares
of Series B Preferred Stock shall not be included in determining the number of
shares voting or entitled to vote on any such matters.
(ii) On any matter on which the holders of shares of Common Stock are
entitled to vote and on which the holders of shares of Series B Preferred Stock
are also entitled to vote, except as otherwise required by law, the Series B
Preferred Stock shall vote together with the Common Stock (and each other class
or series of capital stock then entitled to vote with the Common Stock);
provided that each share of Series B Preferred Stock shall entitle the holder
thereof to 100 votes on any matter on which the Series B Preferred Stock shall
vote together with the Common Stock.
(C) (i) If, on the date used to determine stockholders of record for any
meeting of stockholders for the election of directors, a default in preference
dividends (as defined in subparagraph (v) below) on the Series A Preferred Stock
shall exist, the holders of the Series A Preferred Stock shall have the right,
voting as a class as described in subparagraph (ii) below, to elect two
directors (in addition to the directors elected by holders of Common Stock of
the Corporation). Such right may be exercised (a) at any meeting of stockholders
for the election of directors or (b) at a meeting of the holders of shares of
Voting Preferred Stock (as hereinafter defined), called for the purpose in
accordance with the Bylaws of the Corporation, until all such cumulative
dividends (referred to above) shall have been paid in full or until
non-cumulative dividends have been paid regularly for at least one year.
(ii) The right of the holders of Series A Preferred Stock to elect two
directors, as described above, shall be exercised as a class concurrently with
the rights of holders of any other series of any class of preferred stock of the
Corporation upon which voting rights to elect such directors have been conferred
and are then exercisable. The Series A Preferred Stock and any additional series
of such preferred stock which the Corporation may issue and which may provide
for the right to vote with the Series A Preferred Stock are collectively
referred to herein as "VOTING PREFERRED STOCK."
(iii) Each director elected by the holders of shares of Voting Preferred
Stock shall be referred to herein as a "PREFERRED DIRECTOR." A Preferred
Director so elected shall continue to serve as such director for a term of one
year, except that upon any termination of the right of all of such holders to
vote as a class for Preferred Directors, the term of office of such directors
shall terminate. Any Preferred Director may be removed by, and shall not be
removed except by, the vote of the holders of record of a majority of the
outstanding shares of Voting Preferred Stock then entitled to vote for the
election of directors, present (in person or by proxy) and voting together as a
single class (a) at a meeting of the stockholders, or (b) at a meeting of the
holders of shares of such Voting Preferred Stock, called for that purpose in
accordance with the Bylaws of the Corporation.
(iv) So long as a default in any preference dividends on the Series A
Preferred Stock shall exist or the holders of any other series of Voting
Preferred Stock shall be entitled to elect Preferred Directors, (a) any vacancy
in the office of a Preferred Director may be filled (except as provided in the
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following clause (b)) by an instrument in writing signed by the remaining
Preferred Director and filed with the Corporation and (b) in the case of the
removal of any Preferred Director, the vacancy may be filled by the vote of the
holders of a majority of the outstanding shares of Voting Preferred Stock then
entitled to vote for the election of directors, present (in person or by proxy)
and voting together as a single class, at such time as the removal shall be
effected. Each director appointed as aforesaid by the remaining Preferred
Director shall be deemed, for all purposes hereof, to be a Preferred Director.
(v) For purposes hereof, a "DEFAULT IN PREFERENCE DIVIDENDS" on the Series A
Preferred Stock shall be deemed to have occurred whenever the amount of
cumulative and unpaid dividends on the Series A Preferred Stock shall be
equivalent to six full quarterly dividends or more (whether or not consecutive),
and, having so occurred, such default shall be deemed to exist thereafter until,
but only until, all cumulative dividends on all shares of the Series A Preferred
Stock then outstanding shall have been paid through the last Quarterly Dividend
Payment Date or until, but only until, non-cumulative dividends have been paid
regularly for at least one year.
(D) Except as set forth herein (or as otherwise required by applicable law),
holders of Series A Preferred Stock and Series B Preferred Stock shall have no
general or special voting rights and their consent shall not be required for
taking any corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or distributions payable
on the Series A Preferred Stock and/or Series B Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on such shares of Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any shares
of stock ranking junior (either as to dividends or upon liquidation, dissolution
or winding up) to the Series A Preferred Stock and Series B Preferred Stock;
(ii) declare or pay dividends, or make any other distributions, on any
shares of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock and Series B
Preferred Stock, except dividends paid ratably on the Series A Preferred Stock
and Series B Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled (based upon their respective liquidation
values);
(iii) redeem or purchase or otherwise acquire for consideration (except as
provided in (iv) below) shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock and Series B Preferred Stock, provided that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any such junior
stock in exchange for shares of any stock of the Corporation ranking junior
(both as to dividends and upon dissolution, liquidation or winding up) to the
Series A Preferred Stock and Series B Preferred Stock;
(iv) redeem or purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock or Series B Preferred Stock, or any shares of stock
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock and Series B Preferred Stock,
except in accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares upon such
terms as the Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
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Section 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock or
Series B Preferred Stock purchased or otherwise acquired by the Corporation in
any manner whatsoever shall be retired and canceled promptly after the
acquisition thereof. All such shares shall upon their cancellation become
authorized but unissued shares of Preferred Stock and may be reissued as part of
a new series of Preferred Stock subject to the conditions and restrictions on
issuance set forth in this Amended and Restated Certificate of Incorporation, in
any Certificate of Amendment creating a series of Preferred Stock or as
otherwise required by law.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Subject to the prior and superior rights of holders of any shares of
stock of the Corporation ranking prior and superior to the shares of Series A
Preferred Stock and Series B Preferred Stock with respect to rights upon
liquidation, dissolution or winding up (voluntary or otherwise), no distribution
shall be made to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock and Series B Preferred Stock unless, prior thereto, the holders
of shares of Series A Preferred Stock and Series B Preferred Stock shall have
received $100.00 per share, plus an amount equal to accrued and unpaid dividends
and distributions thereon, whether or not declared, to the date of such payment
(the "SERIES LIQUIDATION PREFERENCE"). Following the payment of the full amount
of the Series Liquidation Preference, no additional distributions shall be made
to the holders of shares of Series A Preferred Stock and Series B Preferred
Stock unless, prior thereto, the holders of shares of Common Stock and Nonvoting
Common Stock shall have received an amount per share (the "CAPITAL ADJUSTMENT")
equal to the quotient obtained by dividing (i) the Series Liquidation Preference
by (ii) 100 (subject to the provision for adjustment hereinafter set forth in
subparagraph (C) below) (such number in clause (ii), the "ADJUSTMENT NUMBER").
Following the payment of the full amount of the Series Liquidation Preference
and the Capital Adjustment in respect of all outstanding shares of Series A
Preferred Stock and Series B Preferred Stock, and Common Stock and Nonvoting
Common Stock, respectively, holders of Series A Preferred Stock and Series B
Preferred Stock, and holders of Common Stock and Nonvoting Common Stock shall
receive their ratable and proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to 1 with respect to such
Series A Preferred Stock and Series B Preferred Stock, and Common Stock and
Nonvoting Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets available to
permit payment in full of the Series Liquidation Preference and the liquidation
preferences of all other series of stock of the Corporation, if any, which rank
on a parity with the Series A Preferred Stock and Series B Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of Series A
Preferred Stock and Series B Preferred Stock and the holders of such parity
stock in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Capital Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock and Nonvoting Common Stock.
(C) In the event the Corporation shall at any time after September 1, 1993
(i) declare any dividend on Common Stock payable in shares of Common Stock, (ii)
subdivide the outstanding Common Stock, (iii) combine or consolidate the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of Common Stock in a reclassification or exchange of the outstanding
shares of Common Stock (including any such reclassification or exchange in
connection with a merger in which the Corporation is the continuing or surviving
corporation), then in each such case the Adjustment Number in effect immediately
prior to such event shall be adjusted by multiplying such Adjustment Number by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 7. CONVERSION
(a) CONVERSION OF SERIES A PREFERRED STOCK. Subject to and upon compliance
with the provisions of Section 4 of Paragraph B of this Article FOURTH, any
Regulated Stockholder (as defined in
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Section 5 of Paragraph B of this Article FOURTH) shall be entitled to convert,
at any time and from time to time, any or all of the shares of Series A
Preferred Stock held by such stockholder into the same number of shares of
Series B Preferred Stock.
(b) CONVERSION OF SERIES B PREFERRED STOCK. Subject to and upon compliance
with the provisions of Section 4 of Paragraph B of this Article FOURTH, each
record holder of Series B Preferred Stock shall be entitled to convert, at any
time and from time to time, any or all of the shares of Series B Preferred Stock
held by such stockholder into the same number of shares of Series A Preferred
Stock; PROVIDED HOWEVER, that no holder of shares of Series B Preferred Stock
shall be entitled to convert any such shares to the extent that, as a result of
such conversion, such holder and its Affiliates (as defined in Section 5 of
Paragraph B of this Article FOURTH), directly or indirectly, would own, control
or have the power to vote a greater number of shares of Series A Preferred Stock
or other securities of any kind issued by the Corporation than such holder and
its Affiliates shall be permitted to own, control or have power to vote under
any law, regulation, rule or other requirement of any governmental authority at
the time applicable to such holder or its Affiliates.
(c) STOCK SPLITS; ADJUSTMENTS. If the Corporation shall in any manner
subdivide (by stock split, stock dividend or otherwise) or combine (by reverse
stock split or otherwise) the outstanding shares of Series A Preferred Stock or
Series B Preferred Stock, then the outstanding shares of Series B Preferred
Stock or Series A Preferred Stock, as the case may be, shall be subdivided or
combined, as the case may be, to the same extent, share and share alike, and
effective provision shall be made for the protection of the conversion rights
hereunder.
In the case of any reorganization, reclassification or change of shares of
Series A Preferred Stock or Series B Preferred Stock (other than a change in par
value or from par to no par value as a result of a subdivision or combination),
or in case of any consolidation of the Corporation with one or more corporations
or a merger of the Corporation with another corporation (other than a
consolidation or merger in which the Corporation is the resulting or surviving
corporation and which does not result in any reclassification or change of
outstanding shares of Series A Preferred Stock or Series B Preferred Stock),
each holder of a share of Series A Preferred Stock or Series B Preferred Stock
shall have the right at any time thereafter, so long as the conversion right
hereunder with respect to such share would exist had such event not occurred, to
convert such share into the kind and amount of shares of stock and other
securities and properties (including cash) receivable upon such reorganization,
reclassification, change, consolidation or merger by a holder of the number of
shares of Series A Preferred Stock or Series B Preferred Stock into which such
shares of Series A Preferred Stock or Series B Preferred Stock, as the case may
be, might have been converted immediately prior to such reorganization,
reclassification, change, consolidation or merger. In the event of such a
reorganization, reclassification, change, consolidation or merger, effective
provision shall be made in the certificate of incorporation of the resulting or
surviving corporation or otherwise for the protection of the conversion rights
of the shares of Series A Preferred Stock and Series B Preferred Stock that
shall be applicable, as nearly as reasonably may be, to any such other shares of
stock and other securities and property deliverable upon conversion of the
shares of Series A Preferred Stock or Series B Preferred Stock into which such
Series B Preferred Stock or Series A Preferred Stock, as the case may be, might
have been converted immediately prior to such event.
(d) RESERVATION OF SHARES. The Corporation shall at all times reserve and
keep available out of its authorized but unissued shares of Preferred Stock or
its treasury shares, solely for the purpose of issuance upon the conversion of
shares of Series A Preferred Stock and Series B Preferred Stock, such number of
shares of such class as are then issuable upon the conversion of all outstanding
shares of Series A Preferred Stock and Series B Preferred Stock.
Shares of Series A Preferred Stock and Series B Preferred Stock that are
converted into shares of another class shall not be reissued, except for
reissuances in connection with the conversion of shares of Series A Preferred
Stock held by Regulated Stockholders into shares of Series B Preferred Stock and
the conversion of shares of Series B Preferred Stock into shares of Series A
Preferred Stock.
A-6
<PAGE>
Section 8. CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, then, in any such case, (i) the shares
of Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to adjustment as set forth herein) equal
to 100 times the aggregate amount of stock, securities, cash or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged and (ii) the shares of Series B
Preferred Stock shall at the same time be similarly exchanged or changed in an
amount per share (subject to adjustment as set forth herein) equal to 100 times
the aggregate amount of stock, securities, cash or other property (payable in
kind), as the case may be, into which or for which each share of Common Stock is
changed or exchanged (or, if any shares of Nonvoting Common Stock are then
outstanding and are being exchanged or changed, 100 times the aggregate amount
of stock, securities, cash or other property into which or for which each share
of Nonvoting Common Stock is changed or exchanged).
Section 9. NO REDEMPTION. The shares of Series A Preferred Stock and
Series B Preferred Stock shall not be redeemable.
Section 10. RANKING. The Series A Preferred Stock and Series B Preferred
Stock shall rank junior to all other series of stock of the Corporation (other
than the Common Stock) as to the payment of dividends and the distribution of
assets, unless the terms of any such series shall provide otherwise.
Section 11. AMENDMENT. The Amended and Restated Certificate of
Incorporation of the Corporation shall not be amended in any manner which would
materially alter or change the powers, preferences or special rights of any
series of Preferred Stock so as to affect them adversely without the affirmative
vote of the holders of a majority or more of the outstanding shares of all
series of Preferred Stock so affected, voting together as a separate class.
A-7
<PAGE>
Exhibit I
[Form of Right Certificate]
Certificate No. R- Rights
--------
NOT EXERCISABLE AFTER SEPTEMBER 1, 2003 OR EARLIER IF NOTICE OF
REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE WERE
ISSUED TO A PERSON WHO WAS AN ACQUIRING PERSON OR AN ASSOCIATE OR
AFFILIATE OF AN ACQUIRING PERSON. THIS RIGHT CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME VOID TO THE EXTENT PROVIDED IN AND UNDER
THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
RIGHT CERTIFICATE
This certifies that , or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Amended and Restated Rights Agreement dated as of February 10, 1994
(the "Rights Agreement") between Columbia/HCA Healthcare Corporation, a
Delaware corporation (the "Company"), and Mid-America Bank of Louisville &
Trust Company (the "Rights Agent"), to purchase from the Company at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M. (New York time) on September 1, 2003 at the principal
office of the Rights Agent in Louisville, Kentucky, one one-hundredth of a
fully paid, nonassessable share of the Company's [Series A Participating
Preferred Stock]** [Series B Participating Preferred Stock]*** (the "Preferred
Stock"), at a purchase price of $ per one-hundredth of a share (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the
______________________________
* The portion of the legend in brackets shall be inserted only if
applicable.
** Include if Rights being issued are Voting Rights (as defined in the
Rights Agreement).
*** Include if Rights being issued are Nonvoting Rights (as defined in the
Rights Agreement).
<PAGE>
appropriate Form of Election to Purchase duly executed. The number of Rights
evidenced by this Right Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the Purchase Price set
forth above, are the number and Purchase Price as of , ,
based on the Preferred Stock as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number
of shares of Preferred Stock or other securities which may be purchased upon
the exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
The Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the
Rights, limitations of Rights, obligations, duties and opportunities hereunder
of the Rights Agent, the Company and the holders of the Right Certificates.
Copies of the Rights Agreement are on file at the principal office of the
Company and are also available upon written request to the Company.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exercised for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
shares of Preferred Stock as the Rights evidenced by the Right Certificate or
Right Certificates surrendered shall have entitled such holder to purchase.
If this Right Certificate shall be exercised (other than pursuant to Section
11(a)(ii) of the Rights Agreement) in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised. If this Right Certificate shall
be exercised in whole or in part pursuant to Section 11(a)(ii) of the Rights
Agreement, the holder shall be entitled to receive this Right Certificate duly
marked to indicate that such exercise has occurred as set forth in the Rights
Agreement.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a
redemption price of $.01 per Right. Subject to the provisions of the Rights
Agreement, the Company, at its option, may elect to mail payment of the
redemption price to the registered holder of the Right at the time of
redemption, in which event this Certificate may become void without any
further action by the Company.
I-2
<PAGE>
No fractional shares of Preferred Stock will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which are
integral multiples of one one-hundredth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Company which may at any
time be issuable on the exercise hereof, nor shall anything contained in the
Rights Agreement or herein be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders at
any meeting thereof, or to give or withhold consent to any corporate action,
or, to receive notice of meetings or other actions affecting stockholders
(except as provided in the Rights Agreement), or to receive dividends or
subscription rights, or otherwise, until the right or Rights evidenced by this
Right Certificate shall have been exercised as provided in the Rights
Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of .
-------------------------------
ATTEST:
By:
- ----------------------------------- -----------------------------------
Name: Name:
Title: Title:
Countersigned:
By:
--------------------------------
Name:
Title:
I-3
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Right Certificate.)
FOR VALUE RECEIVED
-------------------------------------------------------------
hereby sells, assigns and transfers unto
---------------------------------------
- -------------------------------------------------------------------------------
(Please print name and address of transferee)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint Attorney, to transfer the
within Right Certificate on the books of the within-named Company, with full
power of substitution.
Dated:
---------------------------
Signature
----------------------------
Signature(s) Guaranteed:
- ------------------------
I-4
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being sold, assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:
---------------------- ------------------------------
Signature
NOTICE
The signature to the foregoing Assignment must correspond to the
name as written upon the face of this Right Certificate in every particular,
without alteration or enlargement or any change whatsoever.
I-5
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Right
Certificate pursuant to Section 11(a)(ii) of the Rights Agreement.)
To :
---------------------------------------
The undersigned hereby irrevocably elects to exercise Rights
represented by this Right Certificate to purchase the shares of [Common
Stock]* [Nonvoting Common Stock]** (or such other securities of the Company)
issuable upon the exercise of the Rights and requests that certificates for
such shares be issued in the name of:
(Please insert social security or other identifying number)
- --------------------------------------------------------------------------------
(Please print name and address)
The Right Certificate indicating the balance, if any, of such
Rights which may still be exercised pursuant to Section 11(a)(ii) of the
Rights Agreement shall be returned to the undersigned unless such person
requests that the Right Certificate be registered in the name of and delivered
to:
- --------------------------------------------------------------------------------
(Please insert social security or other identifying number (complete only if
Right Certificate is to be registered in a name other than the undersigned))
- --------------------------------------------------------------------------------
(Please print name and address)
Dated:
---------------------------
Signature Guaranteed: --------------------------------
Signature
- ---------------------
- -------------------------
* Include if Rights being issued are Voting Rights.
** Include if Rights being issued are Nonvoting Rights.
I-6
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being exercised by or on behalf of a Person who is or was an Acquiring
Person or an Affiliate or Associate of any such Acquiring Person (as such
terms are defined in the Rights Agreement);
(2) this Right Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of a Person who is or was an Acquiring Person
or an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(3) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:
----------------------------- ---------------------------------
Signature
NOTICE
The signature to the foregoing Election to Purchase must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
I-7
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate other than pursuant to
Section 11(a)(ii) of the Rights Agreement.)
To :
---------------------------------------
The undersigned hereby irrevocably elects to exercise
Rights represented by this Right Certificate to purchase the shares of
Preferred Stock (or such other securities of the Company or any other Person)
issuable upon the exercise of the Rights and requests that certificates for
such shares be issued in the name of:
- --------------------------------------------------------------------------------
(Please insert social security or other identifying number)
- --------------------------------------------------------------------------------
(Please print name and address)
The Right Certificate indicating the balance, if any, of such
Rights which may still be exercised pursuant to Section 11(a)(ii) of the
Rights Agreement shall be returned to the undersigned unless such person
requests that the Right Certificate be registered in the name of and delivered
to:
- --------------------------------------------------------------------------------
Please insert social security or other identifying number (complete only if
Right Certificate is to be registered in a name other than the undersigned)
- --------------------------------------------------------------------------------
(Please print name and address)
Dated:
------------------------------ ----------------------------------
Signature
Signature Guaranteed:
- ---------------------
I-8
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) the Rights evidenced by this Right Certificate [ ] are [ ] are
not being sold, assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Affiliate or Associate of any such Acquiring
Person (as such terms are defined in the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned,
it [ ] did [ ] did not acquire the Rights evidenced by this Right Certificate
from any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:
------------------------- -------------------------------
Signature
NOTICE
The signature to the foregoing Election to Purchase must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
I-9
<PAGE>
- --------------------------------------------------------------------------------
$1,000,000,000 CREDIT AGREEMENT
AMONG
COLUMBIA HEALTHCARE CORPORATION,
THE SEVERAL BANKS AND OTHER FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTIES HERETO,
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION,
THE BANK OF NOVA SCOTIA,
THE CHASE MANHATTAN BANK N.A.,
CITIBANK, N.A.,
DEUTSCHE BANK AG,
THE FIRST NATIONAL BANK OF CHICAGO,
THE INDUSTRIAL BANK OF JAPAN, LIMITED, NEW YORK BRANCH,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
NATIONSBANK OF NORTH CAROLINA, N.A.,
PNC BANK, KENTUCKY, INC.,
TORONTO DOMINION (TEXAS), INC. AND
WACHOVIA BANK OF GEORGIA, N.A.,
AS CO-AGENTS
AND
CHEMICAL BANK,
AS AGENT AND AS CAF LOAN AGENT
DATED AS OF FEBRUARY 10, 1994
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions. . . . . . . . . . . . 17
SECTION 2. AMOUNT AND TERMS OF LOANS. . . . . . . . . . . . . 17
2.1 Revolving Credit Loans and Revolving Credit Notes. . 17
2.2 CAF Loans and CAF Loan Notes . . . . . . . . . . . . 18
2.3 Facility Fee . . . . . . . . . . . . . . . . . . . . 23
2.4 Termination, Reduction or Extension of
Commitments . . . . . . . . . . . . . . . . . . . . 23
2.5 Optional Prepayments . . . . . . . . . . . . . . . . 26
2.6 Conversion Options; Minimum Amount of Loans. . . . . 26
2.7 Interest Rate and Payment Dates for Revolving
Credit Loans. . . . . . . . . . . . . . . . . . . . 27
2.8 Computation of Interest and Fees . . . . . . . . . . 27
2.9 Inability to Determine Interest Rate . . . . . . . . 28
2.10 Pro Rata Borrowings and Payments . . . . . . . . . . 29
2.11 Illegality . . . . . . . . . . . . . . . . . . . . . 31
2.12 Requirements of Law. . . . . . . . . . . . . . . . . 31
2.13 Capital Adequacy . . . . . . . . . . . . . . . . . . 32
2.14 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 33
2.15 Indemnity. . . . . . . . . . . . . . . . . . . . . . 34
2.16 Application of Proceeds of Loans . . . . . . . . . . 35
2.17 Notice of Certain Circumstances; Assignment of
Commitments Under Certain Circumstances . . . . . . 35
SECTION 3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 36
3.1 Corporate Organization and Existence . . . . . . . . 36
3.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . 36
3.3 Financial Information. . . . . . . . . . . . . . . . 36
3.4 Changes in Condition . . . . . . . . . . . . . . . . 37
3.5 Assets . . . . . . . . . . . . . . . . . . . . . . . 38
3.6 Litigation . . . . . . . . . . . . . . . . . . . . . 38
3.7 Tax Returns. . . . . . . . . . . . . . . . . . . . . 39
3.8 Contracts, etc. . . . . . . . . . . . . . . . . . . 39
3.9 No Legal Obstacle to Agreement . . . . . . . . . . . 39
3.10 Defaults . . . . . . . . . . . . . . . . . . . . . . 40
3.11 Burdensome Obligations . . . . . . . . . . . . . . . 40
3.12 Pension Plans. . . . . . . . . . . . . . . . . . . . 40
3.13 Disclosure . . . . . . . . . . . . . . . . . . . . . 41
3.14 Environmental and Public and Employee Health and
Safety Matters. . . . . . . . . . . . . . . . . . . 41
3.15 Federal Regulations. . . . . . . . . . . . . . . . . 41
3.16 Investment Company Act; Other Regulations. . . . . . 42
-i-
<PAGE>
Page
----
SECTION 4. CONDITIONS . . . . . . . . . . . . . . . . . . . . 42
4.1 Loan Documents . . . . . . . . . . . . . . . . . . . 42
4.2 Legal Opinions . . . . . . . . . . . . . . . . . . . 42
4.3 Company Officers' Certificate. . . . . . . . . . . . 42
4.4 Termination of Prior Agreements. . . . . . . . . . . 43
4.5 Legality, etc. . . . . . . . . . . . . . . . . . . . 43
4.6 General. . . . . . . . . . . . . . . . . . . . . . . 43
4.7 Fees . . . . . . . . . . . . . . . . . . . . . . . . 43
4.8 Consummation of The Merger . . . . . . . . . . . . . 43
SECTION 5. GENERAL COVENANTS. . . . . . . . . . . . . . . . . 43
5.1 Taxes, Indebtedness, etc. . . . . . . . . . . . . . 44
5.2 Maintenance of Properties; Compliance with Law . . . 44
5.3 Transactions with Affiliates . . . . . . . . . . . . 45
5.4 Insurance. . . . . . . . . . . . . . . . . . . . . . 45
5.5 Financial Statements . . . . . . . . . . . . . . . . 45
5.6 Ratio of Total Debt to Tangible Net Worth. . . . . . 48
5.7 Interest Coverage Ratio. . . . . . . . . . . . . . . 48
5.8 Distributions. . . . . . . . . . . . . . . . . . . . 48
5.9 Merger or Consolidation. . . . . . . . . . . . . . . 48
5.10 Sales of Assets. . . . . . . . . . . . . . . . . . . 49
5.11 Compliance with ERISA. . . . . . . . . . . . . . . . 49
5.12 Negative Pledge. . . . . . . . . . . . . . . . . . 50
5.13 Sale-and-Lease-back Transactions . . . . . . . . . . 51
SECTION 6. DEFAULTS . . . . . . . . . . . . . . . . . . . . . 51
6.1 Events of Default. . . . . . . . . . . . . . . . . . 51
6.2 Annulment of Defaults. . . . . . . . . . . . . . . . 54
6.3 Waivers. . . . . . . . . . . . . . . . . . . . . . . 54
6.4 Course of Dealing. . . . . . . . . . . . . . . . . . 54
SECTION 7. THE AGENT. . . . . . . . . . . . . . . . . . . . . 54
7.1 Appointment. . . . . . . . . . . . . . . . . . . . . 54
7.2 Delegation of Duties . . . . . . . . . . . . . . . . 55
7.3 Exculpatory Provisions . . . . . . . . . . . . . . . 55
7.4 Reliance by Agent. . . . . . . . . . . . . . . . . . 55
7.5 Notice of Default. . . . . . . . . . . . . . . . . . 56
7.6 Non-Reliance on Agent and Other Banks. . . . . . . . 56
7.7 Indemnification. . . . . . . . . . . . . . . . . . . 57
7.8 Agent and CAF Loan Agent in Its Individual
Capacity. . . . . . . . . . . . . . . . . . . . . . 57
7.9 Successor Agent. . . . . . . . . . . . . . . . . . . 57
SECTION 8. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . 58
8.1 Amendments and Waivers . . . . . . . . . . . . . . . 58
8.2 Notices. . . . . . . . . . . . . . . . . . . . . . . 58
8.3 No Waiver; Cumulative Remedies . . . . . . . . . . . 59
8.4 Survival of Representations and Warranties . . . . . 59
8.5 Payment of Expenses and Taxes; Indemnity . . . . . . 60
8.6 Successors and Assigns; Participations;
Purchasing Banks. . . . . . . . . . . . . . . . . . 60
8.7 Adjustments; Set-off . . . . . . . . . . . . . . . . 64
-ii-
<PAGE>
Page
----
8.8 Counterparts . . . . . . . . . . . . . . . . . . . . 65
8.9 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . 65
8.10 WAIVERS OF JURY TRIAL. . . . . . . . . . . . . . . . 65
8.11 Submission To Jurisdiction; Waivers. . . . . . . . . 65
SCHEDULES
SCHEDULE I Commitment Amounts and Percentages; Lending
Offices; Addresses for Notice
SCHEDULE II Subsidiaries of the Company
SCHEDULE III Indebtedness
SCHEDULE IV Liens
SCHEDULE V Applicable Margins
EXHIBITS
EXHIBIT A Form of Revolving Credit Note
EXHIBIT B Form of Grid CAF Loan Note
EXHIBIT C Form of Individual CAF Loan Note
EXHIBIT D Form of CAF Loan Request
EXHIBIT E Form of CAF Loan Offer
EXHIBIT F Form of CAF Loan Confirmation
EXHIBIT G Form of Commitment Transfer Supplement
-iii-
<PAGE>
CREDIT AGREEMENT, dated as of February 10, 1994, among
COLUMBIA HEALTHCARE CORPORATION, a Delaware corporation and the
successor by merger to Columbia Hospital Corporation (the
"COMPANY"), the several banks and other financial institutions
from time to time parties to this Agreement (the "BANKS"), BANK
OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, THE BANK OF NOVA
SCOTIA, THE CHASE MANHATTAN BANK, N.A., CITIBANK, N.A., DEUTSCHE
BANK AG, THE FIRST NATIONAL BANK OF CHICAGO, THE INDUSTRIAL BANK
OF JAPAN, LIMITED, NEW YORK BRANCH, MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, NATIONSBANK OF NORTH CAROLINA, N.A., PNC BANK,
KENTUCKY, INC., TORONTO DOMINION (TEXAS), INC. AND WACHOVIA BANK
OF GEORGIA, N.A., as Co-Agents and CHEMICAL BANK, a New York
banking corporation, as agent for the Banks hereunder (in such
capacity, the "AGENT") and as CAF Loan agent (in such capacity,
the "CAF LOAN AGENT").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, pursuant to a Joint Proxy Statement and
Prospectus on Form S-4, dated October 22, 1993 (as amended, the
"Proxy"), the Company and HCA-Hospital Corporation of America, a
Delaware corporation ("HCA"), have solicited the approval of
their respective stockholders to adopt an Agreement and Plan of
Merger dated as of October 2, 1993 (the "MERGER AGREEMENT")
between the Company and HCA;
WHEREAS, pursuant to subsections 1.1 and 4.1 of the
Merger Agreement HCA will be merged (the "MERGER") with and into
a wholly-owned subsidiary of the Company (with such wholly-owned
subsidiary of the Company as the surviving entity), and each
stockholder of HCA will receive 1.05 shares of the Company's
voting common stock in exchange for each of its shares of HCA's
Class A common stock and 1.05 shares of the Company's nonvoting
common stock in exchange for each of its shares of HCA's Class B
common stock; and
WHEREAS, it is a condition precedent to the obligation
of the Banks to make their respective Loans (as hereinafter
defined) to the Company hereunder that the transactions
contemplated in connection with the Merger, including without
limitation, the transactions contemplated by the Proxy and
subsections 1.1 and 4.1 of the Merger Agreement, are consummated;
NOW, THEREFORE, in consideration of the promises and
mutual agreements herein contained and for other good and
valuable consideration, the undersigned hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the
following terms have the following meanings:
<PAGE>
2
"ADDITIONAL BANK": as defined in subsection 2.4(d).
"AFFILIATE": (a) any director or officer of any
corporation or partner or joint venturer or Person holding a
similar position in another Person or members of their
families, whether or not living under the same roof, or any
Person owning beneficially more than 5% of the outstanding
common stock or other evidences of beneficial interest of
the Person in question, (b) any Person of which any one or
more of the Persons described in clause (a) above is an
officer, director or beneficial owner of more than 5% of the
shares or other beneficial interest and (c) any Person
controlled by, controlling or under common control with the
Person in question.
"AGREEMENT": this Credit Agreement, as amended,
supplemented or otherwise modified from time to time.
"ALTERNATE BASE RATE": for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%)
equal to the greatest of (a) the Prime Rate in effect on
such day, (b) the Base CD Rate in effect on such day plus 1%
and (c) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. For purposes hereof: "PRIME RATE"
shall mean the rate of interest per annum publicly announced
from time to time by the Agent as its prime rate in effect
at its principal office in New York City (each change in the
Prime Rate to be effective on the date such change is
publicly announced); "BASE CD RATE" shall mean the sum of
(a) the product of (i) the Three-Month Secondary CD Rate and
(ii) a fraction, the numerator of which is one and the
denominator of which is one minus the C/D Reserve Percentage
and (b) the C/D Assessment Rate; "THREE-MONTH SECONDARY CD
RATE" shall mean, for any day, the secondary market rate for
three-month certificates of deposit reported as being in
effect on such day (or, if such day shall not be a Business
Day, the next preceding Business Day) by the Board of
Governors of the Federal Reserve System (the "BOARD")
through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current
practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such
day), or, if such rate shall not be so reported on such day
or such next preceding Business Day, the average of the
secondary market quotations for three-month certificates of
deposit of major money center banks in New York City
received at approximately 10:00 A.M., New York City time, on
such day (or, if such day shall not be a Business Day, on
the next preceding Business Day) by the Agent from three New
York City negotiable certificate of deposit dealers of
recognized standing selected by it; "C/D RESERVE PERCENTAGE"
shall mean, for any day, that percentage (expressed as a
decimal) which is in effect on such day, as prescribed by
the Board (or any successor), for determining the maximum
<PAGE>
3
reserve requirement for a member bank of the Federal Reserve
System in New York City with deposits exceeding one billion
Dollars in respect of new non-personal three-month
certificates of deposit in the secondary market in Dollars
in New York City and in an amount of $100,000 or more; "C/D
ASSESSMENT RATE" shall mean, for any day, the net annual
assessment rate (rounded upward to the nearest 1/100th of
1%) determined by Chemical Bank to be payable on such day to
the Federal Deposit Insurance Corporation or any successor
("FDIC") for FDIC's insuring time deposits made in Dollars
at offices of Chemical Bank in the United States; and
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the
weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for the day
of such transactions received by the Agent from three
federal funds brokers of recognized standing selected by it.
If for any reason the Agent shall have determined (which
determination shall be conclusive absent manifest error)
that it is unable to ascertain the Base CD Rate or the
Federal Funds Effective Rate, or both, for any reason,
including the inability or failure of the Agent to obtain
sufficient quotations in accordance with the terms thereof,
the Alternate Base Rate shall be determined without regard
to clause (b) or (c), or both, of the first sentence of this
definition, as appropriate, until the circumstances giving
rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate, the
Three-Month Secondary CD Rate or the Federal Funds Effective
Rate shall be effective on the effective day of such change
in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate, respectively.
"ALTERNATE BASE RATE LOANS": Revolving Credit Loans
hereunder at such time as they are made and/or being
maintained at a rate of interest based upon the Alternate
Base Rate.
"APPLICABLE LIBOR AUCTION ADVANCE RATE": in respect of
any CAF Loan requested pursuant to a LIBOR Auction Advance
Request, the London interbank offered rate for deposits in
Dollars for the period commencing on the date of such CAF
Loan and ending on the maturity date thereof which appears
on Telerate Page 3750 as of 11:00 A.M., London time, two
Working Days prior to the beginning of such period.
"APPLICABLE MARGIN": for each Type of Revolving Credit
Loan during a Level I Period, Level II Period, Level III
Period, Level IV Period or Level V Period, the rate per
annum set forth under the relevant column heading in
Schedule V. Increases or decreases in the Applicable Margin
<PAGE>
4
shall become effective on the first day of the Level I
Period, Level II Period, Level III Period, Level IV Period
or Level V Period, as the case may be, to which such
Applicable Margin relates.
"ATTRIBUTABLE DEBT": means (i) as to any capitalized
lease obligations, the Indebtedness carried on the balance
sheet in respect thereof in accordance with GAAP and (ii) as
to any operating leases, the total net amount of rent
required to be paid under such leases during the remaining
term thereof.
"AUDITOR": any independent certified public accountant
of nationally recognized standing and reputation selected by
the Company.
"AVAILABLE COMMITMENTS": at a particular time, an
amount equal to the difference between (a) the amount of the
Commitments at such time and (b) the aggregate unpaid
principal amount at such time of all Loans.
"BANK OBLIGATIONS": as defined in subsection 6.1.
"BENEFITTED BANK": as defined in subsection 8.7.
"BORROWING DATE": any Business Day specified in a
notice pursuant to subsection 2.1(c) or 2.2(b) as a date on
which the Company requests the Banks to make Revolving
Credit Loans or CAF Loans, as the case may be, hereunder.
"BUSINESS DAY": a day other than a Saturday, Sunday or
other day on which commercial banks in New York City are
authorized or required by law to close.
"CAF LOAN": each CAF Loan made pursuant to subsection
2.2; the aggregate amount advanced by a CAF Loan Bank
pursuant to subsection 2.2 on each CAF Loan Date shall
constitute one or more CAF Loans, as specified by such CAF
Loan Bank pursuant to subsection 2.2(b)(vi).
"CAF LOAN ASSIGNEE": as defined in subsection 8.6(c).
"CAF LOAN ASSIGNMENT": any assignment by a CAF Loan
Bank to a CAF Loan Assignee of a CAF Loan and related
Individual CAF Loan Note; any such CAF Loan Assignment to be
registered in the Register must set forth, in respect of the
CAF Loan Assignee thereunder, the full name of such CAF Loan
Assignee, its address for notices, its lending office
address (in each case with telephone and facsimile
transmission numbers) and payment instructions for all
payments to such CAF Loan Assignee, and must contain an
agreement by such CAF Loan Assignee to comply with the
provisions of subsection 8.6(c) and subsection 8.6(h) to the
same extent as any Bank.
<PAGE>
5
"CAF LOAN BANKS": Banks from time to time designated
as CAF Loan Banks by the Company by written notice to the
CAF Loan Agent (which notice the CAF Loan Agent shall
transmit to each such CAF Loan Bank).
"CAF LOAN CONFIRMATION": each confirmation by the
Company of its acceptance of one or more CAF Loan Offers,
which CAF Loan Confirmation shall be substantially in the
form of Exhibit F and shall be delivered to the CAF Loan
Agent in writing or by facsimile transmission.
"CAF LOAN DATE": each date on which a CAF Loan is made
pursuant to subsection 2.2.
"CAF LOAN NOTE": a Grid CAF Loan Note or an Individual
CAF Loan Note.
"CAF LOAN OFFER": each offer by a CAF Loan Bank to
make one or more CAF Loans pursuant to a CAF Loan Request,
which CAF Loan Offer shall contain the information specified
in Exhibit E and shall be delivered to the CAF Loan Agent by
telephone, immediately confirmed by facsimile transmission.
"CAF LOAN REQUEST": each request by the Company for
CAF Loan Banks to submit bids to make CAF Loans, which shall
contain the information in respect of such requested CAF
Loans specified in Exhibit D and shall be delivered to the
CAF Loan Agent in writing or by facsimile transmission, or
by telephone, immediately confirmed by facsimile
transmission.
"CHANGE IN CONTROL": of any corporation, (a) any
Person or "group" (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended), other than the
Company, that shall acquire more than 50% of the Voting
Stock of such corporation or (b) any Person or group (as
defined in preceding clause (a)), other than the Company,
that shall acquire more than 20% of the Voting Stock of such
corporation and, at any time following an acquisition
described in this clause (b), the Continuing Directors shall
not constitute a majority of the board of directors of such
corporation.
"CHEMICAL BANK": Chemical Bank, a New York banking
corporation.
"CLOSING DATE": the date on which all of the
conditions precedent for the Closing Date set forth in
Section 4 shall have been fulfilled, but in no event shall
the Closing Date occur later than February 28, 1994.
"CODE": the Internal Revenue Code of 1986, as amended
from time to time.
<PAGE>
6
"COMMITMENT": as to any Bank, its obligation to make
Revolving Credit Loans to the Company pursuant to subsection
2.1(a) in an aggregate amount not to exceed at any one time
outstanding the amount set forth opposite such Bank's name
in Schedule I, as such amount may be reduced from time to
time as provided herein.
"COMMITMENT PERCENTAGE": as to any Bank, the
percentage of the aggregate Commitments constituted by such
Bank's Commitment.
"COMMITMENT PERIOD": the period from and including the
Closing Date to but not including the Termination Date or
such earlier date on which the Commitments shall terminate
as provided herein.
"COMMITMENT TRANSFER SUPPLEMENT": a Commitment
Transfer Supplement, substantially in the form of Exhibit G.
"CONFIDENTIAL INFORMATION MEMORANDUM": the
Confidential Information Memorandum dated November 1993
relating to this Agreement.
"CONSOLIDATED ASSETS": the consolidated assets of the
Company and its Subsidiaries, determined in accordance with
GAAP.
"CONSOLIDATED EARNINGS BEFORE INTEREST AND TAXES": for
any period for which the amount thereof is to be determined,
Consolidated Net Income for such period plus all amounts
deducted in computing such Consolidated Net Income in
respect of interest expense on Indebtedness and income
taxes, all determined in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE": for any period for
which the amount thereof is to be determined, all amounts
deducted in computing Consolidated Net Income for such
period in respect of interest expense on Indebtedness
determined in accordance with GAAP.
"CONSOLIDATED NET INCOME": for any period, the
consolidated net income, if any, after taxes, of the Company
and its Subsidiaries for such period determined in
accordance with GAAP; PROVIDED, HOWEVER, that Consolidated
Net Income shall not include any gain or loss attributable
to extraordinary items, any sale of assets not in the
ordinary course of business or any taxes or tax savings as a
result thereof.
"CONSOLIDATED NET TANGIBLE ASSETS": means the total
amount of assets (less applicable reserves and other
properly deductible items) after deducting therefrom (i) all
current liabilities as disclosed on the consolidated balance
sheet of the Company (excluding any thereof which are by
<PAGE>
7
their terms extendable or renewable at the option of the
obligor thereon to a time more than 12 months after the time
as of which the amount thereof is being computed and
excluding any deferred income taxes that are included in
current liabilities), and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense
and other like intangible assets, all as set forth on the
most recent consolidated balance sheet of the Company and
computed in accordance with GAAP.
"CONSOLIDATED TANGIBLE NET WORTH": Consolidated Assets
of the Company and its Subsidiaries less the following:
(a) the amount, if any, at which any treasury
stock appears on the assets side of the balance sheet;
(b) an amount equal to goodwill;
(c) any writeup in book value of assets resulting
from any revaluation made after December 31, 1992 in
the case of the Company and its Subsidiaries (excluding
Galen and its Subsidiaries) and HCA and its
Subsidiaries and August 31, 1993 in the case of Galen
and its Subsidiaries;
(d) an amount equal to all amounts which appear
or should appear as a credit on the balance sheet of
the Company in respect of any class or series of
preferred stock of the Company; and
(e) all liabilities which in accordance with GAAP
should be reflected as liabilities on such consolidated
balance sheet, but in any event including all
Indebtedness.
"CONSOLIDATED TOTAL DEBT": the aggregate of all
Indebtedness (including the current portion thereof) of the
Company and its Subsidiaries on a consolidated basis.
"CONTINUING BANK": as defined in subsection 2.4(c).
"CONTINUING DIRECTOR": any member of the Board of
Directors of the Company who is a member of such Board on
the date of this Agreement, and any Person who is a member
of such Board and whose nomination as a director was
approved by a majority of the Continuing Directors then on
such Board.
"CONTRACTUAL OBLIGATION": as to any Person, any
provision of any security issued by such Person or of any
agreement, instrument or undertaking to which such Person is
a party or by which it or any of its property is bound.
<PAGE>
8
"CONTROL GROUP PERSON": any Person which is a member
of the controlled group or is under common control with the
Company within the meaning of Section 414(b) or 414(c) of
the Code or Section 4001(b)(1) of ERISA.
"$300,000,000 CREDIT AGREEMENT": the $300,000,000
Credit Agreement, dated as of November 1, 1993, among the
Company, the several banks and other financial institutions
from time to time parties thereto and Chemical Bank, as
agent and as CAF Loan agent.
"$500,000,000 CREDIT AGREEMENT": the $500,000,000
Credit Agreement, dated as of September 1, 1993, among the
Company, the several banks and other financial institutions
from time to time parties thereto, Banque Paribas, The Chase
Manhattan Bank N.A., Citibank, N.A., Deutsche Bank AG, The
First National Bank of Chicago, The Industrial Bank of
Japan, Limited, New York Branch, Morgan Guaranty Trust
Company of New York, Nationsbank of North Carolina, N.A.,
PNC Bank, Kentucky, Inc. and Toronto Dominion (Texas), Inc.,
as Co-Agents and Chemical Bank, as agent and as CAF Loan
agent.
"$800,000,000 CREDIT AGREEMENT": the $800,000,000
Credit Agreement, dated as of September 1, 1993, among the
Company, the several banks and other financial institutions
from time to time parties thereto, Banque Paribas, The Chase
Manhattan Bank N.A., Citibank, N.A., Deutsche Bank AG, The
First National Bank of Chicago, The Industrial Bank of
Japan, Limited, New York Branch, Morgan Guaranty Trust
Company of New York, Nationsbank of North Carolina, N.A.,
PNC Bank, Kentucky, Inc. and Toronto Dominion (Texas), Inc.,
as Co-Agents and Chemical Bank, as agent and as CAF Loan
agent.
"$1,642,000,000 CREDIT AGREEMENT": the $1,642,000,000
Amended and Restated Credit Agreement, dated as of
September 2, 1993, among HCA, Hospital Corporation of
America, the several banks and other financial institutions
from time to time parties thereto and Morgan Guaranty Trust
Company of New York, as agent.
"DEFAULT": any of the events specified in subsection
6.1, whether or not any requirement for the giving of
notice, the lapse of time, or both, or any other condition,
has been satisfied.
"DISTRIBUTION": (a) the declaration or payment of any
dividend on or in respect of any shares of any class of
capital stock of the Company other than dividends payable
solely in shares of common stock of the Company; (b) the
purchase, redemption or other acquisition of any shares of
any class of capital stock of the Company directly or
indirectly through a Subsidiary or otherwise; and (c) any
<PAGE>
9
other distribution on or in respect of any shares of any
class of capital stock of the Company.
"DOLLARS" and "$": dollars in lawful currency of the
United States of America.
"DOMESTIC LENDING OFFICE": initially, the office of
each Bank designated as such in Schedule I; thereafter, such
other office of such Bank, if any, located within the United
States which shall be making or maintaining Alternate Base
Rate Loans.
"EFFECTIVE DATE": as defined in subsection 2.4(b).
"ERISA": the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"EUROCURRENCY RESERVE REQUIREMENTS": for any day as
applied to a Eurodollar Loan, the aggregate (without
duplication) of the rates (expressed as a decimal fraction)
of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of
Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect
thereto), dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) maintained by a
member bank of such System.
"EURODOLLAR LENDING OFFICE": initially, the office of
each Bank designated as such in Schedule I; thereafter, such
other office of such Bank, if any, which shall be making or
maintaining Eurodollar Loans.
"EURODOLLAR LOANS": Revolving Credit Loans hereunder
at such time as they are made and/or are being maintained at
a rate of interest based upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during
each Interest Period pertaining to a Eurodollar Loan, the
rate per annum equal to the average (rounded upwards to the
nearest whole multiple of one sixteenth of one percent) of
the respective rates notified to the Agent by the Reference
Banks as the rate at which each of their Eurodollar Lending
Offices is offered Dollar deposits two Business Days prior
to the beginning of such Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency
and exchange operations of such Eurodollar Lending Office
are then being conducted at or about 10:00 A.M., New York
City time, for delivery on the first day of such Interest
Period for the number of days comprised therein and in an
amount comparable to the amount of the Eurodollar Loan of
<PAGE>
10
such Reference Bank to be outstanding during such Interest
Period.
"EURODOLLAR TRANCHE": the collective reference to
Eurodollar Loans having the same Interest Period (whether or
not originally made on the same day).
"EVENT OF DEFAULT": any of the events specified in
subsection 6.1, provided that any requirement for the giving
of notice, the lapse of time, or both, or any other
condition, event or act has been satisfied.
"FINANCING LEASE": any lease of property, real or
personal, if the then present value of the minimum rental
commitment thereunder should, in accordance with GAAP, be
capitalized on a balance sheet of the lessee.
"FIXED RATE AUCTION ADVANCE REQUEST": any CAF Loan
Request requesting the CAF Loan Banks to offer to make CAF
Loans at a fixed rate (as opposed to a rate composed of the
Applicable LIBOR Auction Advance Rate plus or minus a
margin).
"GAAP": (a) with respect to determining compliance by
the Company with the provisions of subsections 5.6, 5.7 and
5.10, generally accepted accounting principles in the United
States of America consistent with those utilized in
preparing the audited financial statements referred to in
subsection 3.3 and (b) with respect to the financial
statements referred to in subsection 3.3 or the furnishing
of financial statements pursuant to subsection 5.5 and
otherwise, generally accepted accounting principles in the
United States of America from time to time in effect.
"GALEN": Galen Health Care, Inc., a Delaware
Corporation and a successor by spin-off to Humana Inc.
"GOVERNMENTAL AUTHORITY": any nation or government,
any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"GRID CAF LOAN NOTE": as defined in subsection 2.2(f).
"GUARANTEE OBLIGATION": any arrangement whereby credit
is extended to one party on the basis of any promise of
another, whether that promise is expressed in terms of an
obligation to pay the Indebtedness of another, or to
purchase an obligation owed by that other, to purchase
assets or to provide funds in the form of lease or other
types of payments under circumstances that would enable that
other to discharge one or more of its obligations, whether
or not such arrangement is listed in the balance sheet of
<PAGE>
11
the obligor or referred to in a footnote thereto, but shall
not include endorsements of items for collection in the
ordinary course of business.
"HCA": as defined in the Recitals hereto.
"INDEBTEDNESS": of a Person, at a particular date, the
sum (without duplication) at such date of (a) all
indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services or which is
evidenced by a note, bond, debenture or similar instrument,
(b) all obligations of such Person under Financing Leases,
(c) all obligations of such Person in respect of letters of
credit, acceptances, or similar obligations issued or
created for the account of such Person in excess of
$1,000,000, (d) all liabilities secured by any Lien on any
property owned by the Company or any Subsidiary even though
such Person has not assumed or otherwise become liable for
the payment thereof and (e) all Guarantee Obligations
relating to any of the foregoing in excess of $1,000,000.
"INDIVIDUAL CAF LOAN NOTE": as defined in subsection
2.2(g).
"INSOLVENCY" or "INSOLVENT": at any particular time, a
Multiemployer Plan which is insolvent within the meaning of
Section 4245 of ERISA.
"INTEREST PAYMENT DATE": (a) as to any Alternate Base
Rate Loan, the last day of each March, June, September and
December, commencing on the first of such days to occur
after Alternate Base Rate Loans are made or Eurodollar Loans
are converted to Alternate Base Rate Loans, (b) as to any
Eurodollar Loan in respect of which the Company has selected
an Interest Period of one, two or three months, the last day
of such Interest Period and (c) as to any Eurodollar Loan in
respect of which the Company has selected a longer Interest
Period than the periods described in clause (b), the last
day of each March, June, September and December falling
within such Interest Period and the last day of such
Interest Period.
"INTEREST PERIOD": with respect to any Eurodollar
Loans:
(i) initially, the period commencing on the
borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loans and ending one, two,
three or six months thereafter (or, with the consent of
all the Banks, nine or twelve months thereafter), as
selected by the Company in its notice of borrowing as
provided in subsection 2.1(c) or its notice of
conversion as provided in subsection 2.6(a), as the
case may be; and
<PAGE>
12
(ii) thereafter, each period commencing on the
last day of the next preceding Interest Period
applicable to such Eurodollar Loans and ending one,
two, three or six months thereafter (or, with the
consent of all the Banks, nine or twelve months
thereafter), as selected by the Company by irrevocable
notice to the Agent not less than three Business Days
prior to the last day of the then current Interest
Period with respect to such Eurodollar Loans;
PROVIDED that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(1) if any Interest Period pertaining to a
Eurodollar Loan would otherwise end on a day which is
not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless the
result of such extension would be to carry such
Interest Period into another calendar month in which
event such Interest Period shall end on the immediately
preceding Business Day;
(2) if the Company shall fail to give notice as
provided above, the Company shall be deemed to have
selected an Alternate Base Rate Loan to replace the
affected Eurodollar Loan;
(3) any Interest Period pertaining to a
Eurodollar Loan that begins on the last Business Day of
a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of a calendar month;
(4) any Interest Period pertaining to a
Eurodollar Loan that would otherwise end after the
Termination Date shall end on the Termination Date; and
(5) the Company shall select Interest Periods so
as not to require a payment or prepayment of any
Eurodollar Loan during an Interest Period for such
Loan.
"LEVEL I PERIOD": any period during which the higher
of the publicly announced ratings by S&P and Moody's of the
then current senior unsecured, non-credit enhanced, long-
term Indebtedness of the Company that has been publicly
issued are A or better or A2 or better, respectively;
PROVIDED that (i) any period during which the lower of the
publicly announced ratings by S&P or Moody's of the then
current senior unsecured, non-credit enhanced, long-term
Indebtedness of the Company that has been publicly issued
satisfies the Level III Period or Level IV Period
requirements shall be deemed to be a Level II Period or
<PAGE>
13
Level III Period, respectively, and (ii) any period during
which the Level V Period requirements are satisfied shall be
deemed to be a Level V Period.
"LEVEL II PERIOD": any period during which the higher
of the publicly announced ratings by S&P and Moody's of the
then current senior unsecured, non-credit enhanced, long-
term Indebtedness of the Company that has been publicly
issued are A- or A3, respectively; PROVIDED that (i) any
period during which the lower of the publicly announced
ratings by S&P or Moody's of the then current senior
unsecured, non-credit enhanced, long-term Indebtedness of
the Company that has been publicly issued satisfies the
Level IV Period requirements shall be deemed to be a Level
III Period and (ii) any period during which the Level V
Period requirements are satisfied shall be deemed to be a
Level V Period.
"LEVEL III PERIOD": any period during which the higher
of the publicly announced ratings by S&P and Moody's of the
then current senior unsecured, non-credit enhanced, long-
term Indebtedness of the Company that has been publicly
issued are BBB+ or Baa1, respectively; PROVIDED that any
period during which the Level V Period requirements are
satisfied shall be deemed to be a Level V Period.
"LEVEL IV PERIOD": any period during which the higher
of the publicly announced ratings by S&P and Moody's of the
then current senior unsecured, non-credit enhanced, long-
term Indebtedness of the Company that has been publicly
issued is either BBB or Baa2, respectively, or BBB- or Baa3,
respectively; PROVIDED that any period during which the
Level V Period requirements are satisfied shall be deemed to
be a Level V Period.
"LEVEL V PERIOD": any period during which either of
the publicly announced ratings by S&P or Moody's of the then
current senior unsecured, non-credit enhanced, long-term
Indebtedness of the Company that has been publicly issued is
below BBB- or unrated or below Baa3 or unrated, as the case
may be.
"LIBOR AUCTION ADVANCE REQUEST": any CAF Loan Request
requesting the CAF Loan Banks to offer to make CAF Loans at
an interest rate equal to the Applicable LIBOR Auction
Advance Rate plus or minus a margin.
"LIEN": any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien
(statutory or other), or preference, priority or other
security agreement or preferential arrangement of any kind
or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any
<PAGE>
14
financing lease having substantially the same economic
effect as any of the foregoing).
"LOAN": any loan made by any Bank pursuant to this
Agreement.
"LOAN DOCUMENTS": this Agreement and the Notes.
"MERGER": as defined in the Recitals hereto.
"MERGER AGREEMENT": as defined in the Recitals hereto.
"MOODY'S": Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.
"NOTE": any Revolving Credit Note or CAF Loan Note.
"PARTICIPANTS": as defined in subsection 8.6(b).
"PAYMENT SHARING NOTICE": a written notice from the
Company, or any Bank, informing the Agent that an Event of
Default has occurred and is continuing and directing the
Agent to allocate payments thereafter received from the
Company in accordance with subsection 2.10(c).
"PBGC": the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"PERSON": an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other
entity of whatever nature.
"PLAN": at a particular time, any employee benefit
plan which is covered by ERISA and in respect of which the
Company or a Control Group Person is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA
be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"PRINCIPAL PROPERTY": means each acute care hospital
providing general medical and surgical services (including
real property but excluding equipment, personal property and
hospitals which primarily provide specialty medical
services, such as psychiatric and obstetrical and
gynecological services) at least 50% of which is owned by
the Company and its Subsidiaries on a consolidated basis and
located in the United States of America.
"PROXY": as defined in the Recitals hereto.
"PURCHASING BANKS": as defined in subsection 8.6(d).
<PAGE>
15
"REFERENCE BANKS": Chemical Bank, Citibank, N.A., and
Morgan Guaranty Trust Company of New York.
"REGISTER": as defined in subsection 8.6(e).
"REGULATION U": Regulation U of the Board of Governors
of the Federal Reserve System.
"REORGANIZATION": with respect to any Multiemployer
Plan, the condition that such plan is in reorganization
within the meaning of such term as used in Section 4241 of
ERISA.
"REPORTABLE EVENT": any of the events set forth in
Section 4043(b) of ERISA, other than those events as to
which the thirty day notice period is waived under
subsections .13,.14,.16,.18,.19 or .20 of PBGC Reg. SECTION 2615.
"REQUESTED TERMINATION DATE": as defined in subsection
2.4(b).
"REQUIRED BANKS": (i) during the Commitment Period,
Banks whose Commitment Percentages aggregate at least 51%
and (ii) after the Commitments have expired or been
terminated, Banks whose outstanding Loans represent in the
aggregate 51% of all outstanding Loans.
"REQUIREMENT OF LAW": as to any Person, the
Certificate of Incorporation and By-Laws or other
organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any
of its property or to which such Person or any of its
property is subject.
"RESPONSIBLE OFFICER": the chief executive officer,
the president, any executive or senior vice president or
vice president of the Company, the chief financial officer,
treasurer or controller of the Company.
"REVOLVING CREDIT LOANS": as defined in subsection
2.1(a).
"REVOLVING CREDIT NOTES": as defined in subsection
2.1(b).
"S&P": Standard & Poor's Corporation.
"SALE-AND-LEASEBACK TRANSACTION": means any
arrangement entered into by the Company or any Significant
Subsidiary with any person (other than the Company or a
Significant Subsidiary), or to which any such person is a
party, providing for the leasing to the Company or any
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16
Significant Subsidiary for a period of more than three years
of any Principal Property which has been or is to be held or
transferred by the Company or such Significant Subsidiary to
such Person or to any other Person (other than the Company
or a Significant Subsidiary), to which funds have been or
are to be advanced by such Person on the security of the
leased property.
"SIGNIFICANT SUBSIDIARY": means, at any particular
time, any Subsidiary of the Company having total assets of
$5,000,000 or more at that time.
"SINGLE EMPLOYER PLAN": any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"SUBSIDIARY": as to any Person, a corporation or
partnership of which shares of stock or other ownership
interests having ordinary voting power (other than stock or
such other ownership interests having such power only by
reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such
corporation or partnership are at the time owned, or the
management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to
a "Subsidiary" or to "Subsidiaries" in this Agreement shall
refer to a Subsidiary or Subsidiaries of the Company.
"TAXES": as defined in subsection 2.14.
"TERMINATING BANK": as defined in subsection 2.4(c).
"TERMINATION DATE": the date one day before the fourth
anniversary of the Closing Date (or, if such date is not a
Business Day, the next succeeding Business Day), or such
other Business Day to which the Termination Date may be
changed pursuant to subsection 2.4).
"TRANSFER EFFECTIVE DATE": as defined in each
Commitment Transfer Supplement.
"TRANSFEREE": as defined in subsection 8.6(g).
"TYPE": as to any Revolving Credit Loan, its nature as
an Alternate Base Rate Loan or Eurodollar Loan.
"VOTING STOCK": of any corporation, shares of capital
stock or other securities of such corporation entitled to
vote generally in the election of directors of such
corporation.
"WORKING DAY": any Business Day on which dealings in
foreign currencies and exchange between banks may be carried
on in London, England.
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17
1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless
otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in the Notes or any
certificate or other document made or delivered pursuant hereto.
(b) As used herein and in the other Loan Documents,
and any certificate or other document made or delivered pursuant
hereto or thereto, accounting terms relating to the Company and
its Subsidiaries not defined in subsection 1.1 and accounting
terms partly defined in subsection 1.1, to the extent not
defined, shall have the respective meanings given to them under
GAAP.
(c) The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision
of this Agreement, and Section, subsection, Schedule and Exhibit
references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall
be equally applicable to both the singular and plural forms of
such terms.
SECTION 2. AMOUNT AND TERMS OF LOANS
2.1 REVOLVING CREDIT LOANS AND REVOLVING CREDIT NOTES.
(a) Subject to the terms and conditions hereof, each Bank
severally agrees to make loans ("REVOLVING CREDIT LOANS") to the
Company from time to time during the Commitment Period in an
aggregate principal amount at any one time outstanding not to
exceed the Commitment of such Bank, PROVIDED that the aggregate
amount of the Loans outstanding shall not at any time exceed the
aggregate amount of the Commitments. During the Commitment
Period the Company may use the Commitments by borrowing,
prepaying the Revolving Credit Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions
hereof. The Revolving Credit Loans may be (i) Eurodollar Loans,
(ii) Alternate Base Rate Loans or (iii) a combination thereof, as
determined by the Company and notified to the Agent in accordance
with subsection 2.1(c). Eurodollar Loans shall be made and
maintained by each Bank at its Eurodollar Lending Office, and
Alternate Base Rate Loans shall be made and maintained by each
Bank at its Domestic Lending Office.
(b) The Revolving Credit Loans made by each Bank shall
be evidenced by a promissory note of the Company, substantially
in the form of Exhibit A with appropriate insertions as to payee,
date and principal amount (a "REVOLVING CREDIT NOTE"), payable to
the order of such Bank and evidencing the obligation of the
Company to pay a principal amount equal to the amount of the
initial Commitment of such Bank or, if a lesser amount, the
aggregate unpaid principal amount of all Revolving Credit Loans
made by such Bank. Each Bank is hereby authorized to record the
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18
date, Type and amount of each Revolving Credit Loan made or
converted by such Bank, and the date and amount of each payment
or prepayment of principal thereof, and, in the case of
Eurodollar Loans, the Interest Period with respect thereto, on
the schedule annexed to and constituting a part of its Revolving
Credit Note, and any such recordation shall constitute PRIMA
FACIE 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 Company hereunder or
under any Revolving Credit Note. Each Revolving Credit Note
shall (x) be dated the Closing Date, (y) be stated to mature on
the Termination Date, and (z) bear interest on the unpaid
principal amount thereof from time to time outstanding at the
applicable interest rate per annum determined as provided in
subsection 2.7.
(c) The Company may borrow under the Commitments
during the Commitment Period on any Business Day; PROVIDED that
the Company shall give the Agent irrevocable notice (which notice
must be received by the Agent (i) prior to 11:30 A.M., New York
City time three Business Days prior to the requested Borrowing
Date, in the case of Eurodollar Loans, and (ii) prior to 10:00
A.M., New York City time, on the requested Borrowing Date, in the
case of Alternate Base Rate Loans), specifying (A) the amount to
be borrowed, (B) the requested Borrowing Date, (C) whether the
borrowing is to be of Eurodollar Loans, Alternate Base Rate
Loans, or a combination thereof, and (D) if the borrowing is to
be entirely or partly of Eurodollar Loans, the length of the
Interest Period therefor. Each borrowing pursuant to the
Commitments shall be in an aggregate principal amount equal to
the lesser of (i) $10,000,000 or a whole multiple of $1,000,000
in excess thereof and (ii) the then Available Commitments. Upon
receipt of such notice from the Company, the Agent shall promptly
notify each Bank thereof. Each Bank will make the amount of its
pro rata share of each borrowing available to the Agent for the
account of the Company at the office of the Agent set forth in
subsection 8.2 prior to 12:00 P.M., New York City time, on the
Borrowing Date requested by the Company in funds immediately
available to the Agent. The proceeds of all such Revolving
Credit Loans will then be made available to the Company by the
Agent at such office of the Agent by crediting the account of the
Company on the books of such office with the aggregate of the
amounts made available to the Agent by the Banks.
2.2 CAF LOANS AND CAF LOAN NOTES. (a) The Company
may borrow CAF Loans from time to time on any Business Day (in
the case of CAF Loans made pursuant to a Fixed Rate Auction
Advance Request) or any Working Day (in the case of CAF Loans
made pursuant to a LIBOR Auction Advance Request) during the
period from the Closing Date until the date occurring 14 days
prior to the Termination Date in the manner set forth in this
subsection 2.2 and in amounts such that the aggregate amount of
Loans outstanding at any time shall not exceed the aggregate
amount of the Commitments at such time.
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19
(b) (i) The Company shall request CAF Loans by
delivering a CAF Loan Request to the CAF Loan Agent, not later
than 12:00 Noon (New York City time) four Working Days prior to
the proposed Borrowing Date (in the case of a LIBOR Auction
Advance Request), and not later than 10:00 A.M. (New York City
time) one Business Day prior to the proposed Borrowing Date (in
the case of a Fixed Rate Auction Advance Request). Each CAF Loan
Request may solicit bids for CAF Loans in an aggregate principal
amount of $10,000,000 or an integral multiple thereof and for not
more than three alternative maturity dates for such CAF Loans.
The maturity date for each CAF Loan shall be not less than 7 days
nor more than 360 days after the Borrowing Date therefor (and in
any event not after the Termination Date). The CAF Loan Agent
shall promptly notify each CAF Loan Bank by facsimile
transmission of the contents of each CAF Loan Request received by
it.
(ii) In the case of a LIBOR Auction Advance Request,
upon receipt of notice from the CAF Loan Agent of the contents of
such CAF Loan Request, any CAF Loan Bank that elects, in its sole
discretion, to do so, shall irrevocably offer to make one or more
CAF Loans at the Applicable LIBOR Auction Advance Rate plus or
minus a margin for each such CAF Loan determined by such CAF Loan
Bank in its sole discretion. Any such irrevocable offer shall be
made by delivering a CAF Loan Offer to the CAF Loan Agent, before
9:30 A.M., New York City time, three Working Days before the
proposed Borrowing Date, setting forth the maximum amount of CAF
Loans for each maturity date, and the aggregate maximum amount
for all maturity dates, which such Bank would be willing to make
(which amounts may, subject to subsection 2.2(a), exceed such CAF
Loan Bank's Commitment) and the margin above the Applicable LIBOR
Auction Advance Rate at which such CAF Loan Bank is willing to
make each such CAF Loan; the CAF Loan Agent shall advise the
Company before 10:00 A.M., New York City time, three Working Days
before the proposed Borrowing Date of the contents of each such
CAF Loan Offer received by it. If the CAF Loan Agent in its
capacity as a CAF Loan Bank shall, in its sole discretion, elect
to make any such offer, it shall advise the Company of the
contents of its CAF Loan Offer before 9:00 A.M., New York City
time, three Working Days before the proposed Borrowing Date.
(iii) In the case of a Fixed Rate Auction Advance
Request, upon receipt of notice from the Agent of the contents of
such CAF Loan Request, any CAF Loan Bank that elects, in its sole
discretion, to do so, shall irrevocably offer to make one or more
CAF Loans at a rate or rates of interest for each such CAF Loan
determined by such CAF Loan Bank in its sole discretion. Any
such irrevocable offer shall be made by delivering a CAF Loan
Offer to the CAF Loan Agent, before 9:30 A.M., New York City
time, on the proposed Borrowing Date, setting forth the maximum
amount of CAF Loans for each maturity date, and the aggregate
maximum amount for all maturity dates, which such CAF Loan Bank
would be willing to make (which amounts may, subject to
subsection 2.2(a), exceed such CAF Loan Bank's Commitment) and
<PAGE>
20
the rate or rates of interest at which such CAF Loan Bank is
willing to make each such CAF Loan; the CAF Loan Agent shall
advise the Company before 10:15 A.M., New York City time, on the
proposed Borrowing Date of the contents of each such CAF Loan
Offer received by it. If the CAF Loan Agent or any affiliate
thereof in its capacity as a CAF Loan Bank shall, in its sole
discretion, elect to make any such offer, it shall advise the
Company of the contents of its CAF Loan Offer before 9:15 A.M.,
New York City time, on the proposed Borrowing Date.
(iv) The Company shall before 11:00 A.M., New York City
time, three Working Days before the proposed Borrowing Date (in
the case of CAF Loans requested by a LIBOR Auction Advance
Request) and before 10:30 A.M., New York City time, on the
proposed Borrowing Date (in the case of CAF Loans requested by a
Fixed Rate Auction Advance Request) either, in its absolute
discretion:
(A) cancel such CAF Loan Request by giving the CAF
Loan Agent telephone notice to that effect, or
(B) accept one or more of the offers made by any CAF
Loan Bank or CAF Loan Banks pursuant to clause (ii) or
clause (iii) above, as the case may be, by giving telephone
notice to the CAF Loan Agent (immediately confirmed by
delivery to the CAF Loan Agent of a CAF Loan Confirmation)
of the amount of CAF Loans for each relevant maturity date
to be made by each CAF Loan Bank (which amount for each such
maturity date shall be equal to or less than the maximum
amount for such maturity date specified in the CAF Loan
Offer of such CAF Loan Bank, and for all maturity dates
included in such CAF Loan Offer shall be equal to or less
than the aggregate maximum amount specified in such CAF Loan
Offer for all such maturity dates) and reject any remaining
offers made by CAF Loan Banks pursuant to clause (ii) or
clause (iii) above, as the case may be; PROVIDED, HOWEVER,
that (x) the Company may not accept offers for CAF Loans for
any maturity date in an aggregate principal amount in excess
of the maximum principal amount requested in the related CAF
Loan Request, (y) if the Company accepts any of such offers,
it must accept offers strictly based upon pricing for such
relevant maturity date and no other criteria whatsoever and
(z) if two or more CAF Loan Banks submit offers for any
maturity date at identical pricing and the Company accepts
any of such offers but does not wish to borrow the total
amount offered by such CAF Loan Banks with such identical
pricing, the Company shall accept offers from all of such
CAF Loan Banks in amounts allocated among them PRO RATA
according to the amounts offered by such CAF Loan Banks (or
as nearly PRO RATA as shall be practicable after giving
effect to the requirement that CAF Loans made by a CAF Loan
Bank on a Borrowing Date for each relevant maturity date
shall be in a principal amount of $5,000,000 or an integral
multiple of $1,000,000 in excess thereof PROVIDED that if
<PAGE>
21
the number of CAF Loan Banks that submit offers for any
maturity date at identical pricing is such that, after the
Company accepts such offers PRO RATA in accordance with the
foregoing, the CAF Loans to be made by such CAF Loan Banks
would be less than $5,000,000 principal amount, the number
of such CAF Loan Banks shall be reduced by the CAF Loan
Agent by lot until the CAF Loans to be made by such
remaining CAF Loan Banks would be in a principal amount of
$5,000,000 or an integral multiple of $1,000,000 in excess
thereof).
(v) If the Company notifies the CAF Loan Agent that a
CAF Loan Request is cancelled pursuant to clause (iv)(A) above,
the CAF Loan Agent shall give prompt, but in no event more than
one hour later, telephone notice thereof to the CAF Loan Banks,
and the CAF Loans requested thereby shall not be made.
(vi) If the Company accepts pursuant to clause (iv)(B)
above one or more of the offers made by any CAF Loan Bank or CAF
Loan Banks, the CAF Loan Agent shall promptly, but in no event
more than one hour later, notify each CAF Loan Bank which has
made such an offer of the aggregate amount of such CAF Loans to
be made on such Borrowing Date for each maturity date and of the
acceptance or rejection of any offers to make such CAF Loans made
by such CAF Loan Bank. Each CAF Loan Bank which is to make a CAF
Loan shall, before 12:00 Noon, New York City time, on the
Borrowing Date specified in the CAF Loan Request applicable
thereto, make available to the Agent at its office set forth in
subsection 8.2 the amount of CAF Loans to be made by such CAF
Loan Bank, in immediately available funds. The Agent will make
such funds available to the Company as soon as practicable on
such date at the Agent's aforesaid address. As soon as
practicable after each Borrowing Date, the Agent shall notify
each Bank of the aggregate amount of CAF Loans advanced on such
Borrowing Date and the respective maturity dates thereof.
(c) Within the limits and on the conditions set forth
in this subsection 2.2, the Company may from time to time borrow
under this subsection 2.2, repay pursuant to paragraph (d) below,
and reborrow under this subsection 2.2.
(d) The Company shall repay to the Agent for the
account of each CAF Loan Bank which has made a CAF Loan (or the
CAF Loan Assignee in respect thereof, as the case may be) on the
maturity date of each CAF Loan (such maturity date being that
specified by the Company for repayment of such CAF Loan in the
related CAF Loan Request) the then unpaid principal amount of
such CAF Loan. The Company shall not have the right to prepay
any principal amount of any CAF Loan.
(e) The Company shall pay interest on the unpaid
principal amount of each CAF Loan from the Borrowing Date to the
stated maturity date thereof, at the rate of interest determined
pursuant to paragraph (b) above (calculated on the basis of a
<PAGE>
22
360-day year for actual days elapsed), payable on the interest
payment date or dates specified by the Company for such CAF Loan
in the related CAF Loan Request as provided in the CAF Loan Note
evidencing such CAF Loan. If all or a portion of the principal
amount of any CAF Loan or any interest or other amount payable
hereunder in respect thereof shall not be paid when due (whether
at the stated maturity, by acceleration or otherwise), such
overdue amount shall, without limiting any rights of any Bank
under this Agreement, bear interest from the date on which such
payment was due at a rate per annum which is 2% above the rate
which would otherwise be applicable pursuant to the CAF Loan Note
evidencing such CAF Loan until the scheduled maturity date with
respect thereto as set forth in the CAF Loan Note evidencing such
CAF Loan, and for each day thereafter at rate per annum which is
2% above the Alternate Base Rate until paid in full (as well
after as before judgment).
(f) The CAF Loans made by each CAF Loan Bank shall be
evidenced initially by a promissory note of the Company,
substantially in the form of Exhibit B with appropriate
insertions (a "GRID CAF LOAN NOTE"), payable to the order of such
CAF Loan Bank and representing the obligation of the Company to
pay the unpaid principal amount of all CAF Loans made by such CAF
Loan Bank, with interest on the unpaid principal amount from time
to time outstanding of each CAF Loan evidenced thereby as
prescribed in subsection 2.2(e). Each CAF Loan Bank is hereby
authorized to record the date and amount of each CAF Loan made by
such Bank, the maturity date thereof, the date and amount of each
payment of principal thereof and the interest rate with respect
thereto on the schedule annexed to and constituting part of its
Grid CAF Loan Note, and any such recordation shall constitute
PRIMA FACIE 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 Company
hereunder or under any Grid CAF Loan Note. Each Grid CAF Loan
Note shall be dated the Closing Date and each CAF Loan evidenced
thereby shall bear interest for the period from and including the
Borrowing Date thereof on the unpaid principal amount thereof
from time to time outstanding at the applicable rate per annum
determined as provided in, and such interest shall be payable as
specified in, subsection 2.2(e).
(g) Amounts advanced by a CAF Loan Bank pursuant to
this subsection 2.2 on a Borrowing Date which have the same
maturity date and interest rate shall be deemed to constitute one
CAF Loan so long as such amounts remain evidenced by the Grid CAF
Loan Note of such CAF Loan Bank; any such CAF Loan Bank that
wishes such amounts to constitute more than one CAF Loan and to
have each such CAF Loan evidenced by a separate promissory note
payable to such CAF Loan Bank, substantially in the form of
Exhibit C with appropriate insertions as to Borrowing Date,
principal amount and interest rate (an "INDIVIDUAL CAF LOAN
NOTE"), shall notify the CAF Loan Agent and the Company by
facsimile transmission of the respective principal amounts of the
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23
CAF Loans (which principal amounts shall not be less than
$10,000,000 for any of such CAF Loans) to be evidenced by each
such Individual CAF Loan Note. Not later than three Business
Days after receipt of such notice, the Company shall deliver to
such CAF Loan Bank an Individual CAF Loan Note payable to the
order of such CAF Loan Bank in the principal amount of each such
CAF Loan and otherwise conforming to the requirements of this
Agreement. Upon receipt of such Individual CAF Loan Note, such
CAF Loan Bank shall endorse on the schedule attached to its Grid
CAF Loan Note the transfer of such CAF Loan from Grid CAF Loan
Note to such Individual CAF Loan Note.
2.3 FACILITY FEE. (a) The Company agrees to pay to
the Agent for the account of each Bank a facility fee in respect
of the period from and including the first day of the Commitment
Period to the Termination Date, computed at the rate per annum
set forth in the table below on the average daily amount of the
Commitment of such Bank during each portion of the period for
which payment is made that is a separate Level I Period, Level II
Period, Level III Period, Level IV Period or Level V Period,
payable quarterly on the last day of each March, June, September
and December and on any earlier date on which the Commitments
shall terminate as provided herein and the Revolving Credit Loans
shall have been repaid in full, commencing on the first of such
dates to occur after the date hereof:
TYPE OF PERIOD FACILITY FEE
Level I Period .1250%
Level II Period .1500%
Level III Period .2000%
Level IV Period .2500%
Level V Period .3750%
(b) The Company agrees to pay to the Agent the other
fees in the amounts, and on the dates, agreed to by the Company
and the Agent in the fee letter, dated October 20, 1993, between
the Agent and the Company. Each Bank acknowledges that the Agent
is being paid certain other fees for its own account in
connection with the financing contemplated by this Agreement in
addition to the fees described in this Agreement.
2.4 TERMINATION, REDUCTION OR EXTENSION OF
COMMITMENTS. (a) The Company shall have the right, upon not
less than five Business Days' notice to the Agent, to terminate
the Commitments or, from time to time, to reduce ratably the
amount of the Commitments, PROVIDED that no such termination or
reduction shall be permitted if, after giving effect thereto and
to any prepayments of the Loans made on the effective date
thereof, the then outstanding principal amount of the Loans would
exceed the amount of the Commitments then in effect. Any such
reduction shall be in an amount of $10,000,000 or a whole
<PAGE>
24
multiple of $1,000,000 in excess thereof, and shall reduce
permanently the amount of the Commitments then in effect.
(b) The Company may request, in a notice given as
herein provided to the Agent and each of the Banks not less than
90 days and not more than 120 days prior to the second
anniversary of the Closing Date, that the Termination Date be
extended, which notice shall specify that the requested extension
is to be effective (the "EFFECTIVE DATE") on the second
anniversary of the Closing Date, and that the new Termination
Date to be in effect following such extension (the "REQUESTED
TERMINATION DATE") is to be the sixth anniversary of the Closing
Date. Each Bank shall, not later than 30 days following such
notice, notify the Company and the Agent of its election to
extend or not to extend the Termination Date with respect to its
Commitment. The Company may, not later than 15 days following
such notice from the Banks, revoke its request to extend the
Termination Date. If the Required Banks elect to extend the
Termination Date with respect to their Commitments and the
Company has not revoked its request to extend the Termination
Date, then, subject to the provisions of this subsection 2.4, the
Termination Date shall be extended for two years.
Notwithstanding any provision of this Agreement to the contrary,
any notice by any Bank of its willingness to extend the
Termination Date with respect to its Commitment shall be
revocable by such Bank in its sole and absolute discretion at any
time prior to the date which is 15 days following such notice
from the Banks. Any Bank which shall not notify the Company and
the Agent of its election to extend the Termination Date within
30 days following such notice shall be deemed to have elected not
to extend the Termination Date with respect to its Commitment.
(c) Provided that the Required Banks shall have
elected to extend their Commitments as provided in this
subsection 2.4, if any Bank shall timely notify the Company and
the Agent pursuant to subsection 2.4(b) of its election not to
extend its Commitment or its revocation of any extension, or
shall be deemed to have elected not to extend its Commitments,
(any such Bank being called a "TERMINATING BANK"), then the
remaining Banks (the "CONTINUING BANKS") or any of them shall
have the right (but not the obligation), upon notice to the
Company and the Agent not later than 30 Business Days preceding
the Effective Date to increase their Commitments, by an amount up
to in the aggregate the Commitments of any Terminating Banks.
Each increase in the Commitment of a Continuing Bank shall be
evidenced by a written instrument executed by such Continuing
Bank, the Company and the Agent, and shall take effect on the
Effective Date. Notwithstanding any provision of this Agreement
to the contrary, any notice by any Continuing Bank of its
willingness to increase its Commitment as provided in this
subsection 2.4(c) shall be revocable by such Bank in its sole and
absolute discretion at any time prior to the Effective Date.
<PAGE>
25
(d) In the event the aggregate Commitments of any
Terminating Banks shall exceed the aggregate amount by which the
Continuing Banks have agreed to increase their Commitments
pursuant to subsection 2.4(c), the Company may, with the approval
of the Agent (which will not be unreasonably withheld), designate
one or more other banking institutions willing to extend
Commitments until the Requested Termination Date in an aggregate
amount not greater than such excess. Any such banking
institution (an "ADDITIONAL BANK") shall, on or prior to the
Effective Date, execute and deliver to the Company and the Agent
a Commitment Transfer Supplement, satisfactory to the Company and
the Agent, setting forth the amount of such Additional Bank's
Commitment and containing its agreement to become, and to perform
all the obligations of, a Bank hereunder, and the Commitment of
such Additional Bank shall become effective on the Effective
Date. Notwithstanding any provision of this Agreement to the
contrary, any notice by any Additional Bank of its willingness to
become a Bank hereunder shall be revocable by such Additional
Bank in its sole and absolute discretion at any time prior to the
Effective Date.
(e) The Company shall deliver to each Continuing Bank
and each Additional Bank, on the Effective Date, in exchange for
the Notes held by such Bank, new Notes, maturing on the Requested
Termination Date, in the principal amount of such Bank's
Commitment after giving effect to the adjustments made pursuant
to this subsection 2.4.
(f) If the Required Banks shall have elected to extend
their Commitments as provided in this subsection 2.4 and the
Company has not revoked its request to extend the Termination
Date as provided in this subsection 2.4, then (i) the Commitments
of the Continuing Banks and any Additional Banks shall continue
until the Requested Termination Date specified in the notice from
the Company, and as to such Banks the term "Termination Date", as
used herein shall mean such Requested Termination Date; (ii) the
Commitments of any Terminating Bank shall continue until the
Effective Date, and shall then terminate (as to any Terminating
Bank, the term "Termination Date", as used herein, shall mean the
Effective Date) and any such Terminating Bank shall receive
payment in full of the outstanding principal amount, together
with accrued interest to such date and any other amounts owed by
the Company to such Terminating Bank pursuant to any Loan
Document, of the Loans of such Terminating Bank; and (iii) from
and after the Effective Date, the term "Banks" shall be deemed to
include the Additional Banks and (except with respect to
subsections 2.15 and 8.5 to the extent the rights under such
subsections arise after the Termination Date in respect of
Terminating Banks) to exclude the Terminating Banks.
2.5 OPTIONAL PREPAYMENTS. The Company may on the last
day of the relevant Interest Period if the Revolving Credit Loans
to be prepaid are in whole or in part Eurodollar Loans, or at any
time and from time to time if the Revolving Credit Loans to be
<PAGE>
26
prepaid are Alternate Base Rate Loans, prepay the Revolving
Credit Loans, in whole or in part, without premium or penalty,
upon at least three Business Days' irrevocable notice to the
Agent, specifying the date and amount of prepayment and whether
the prepayment is of Eurodollar Loans or Alternate Base Rate
Loans or a combination thereof, and if of a combination thereof,
the amount of prepayment allocable to each. Upon receipt of such
notice the Agent shall promptly notify each Bank thereof. If
such notice is given, the payment amount specified in such notice
shall be due and payable on the date specified therein, together
with accrued interest to such date on the amount prepaid.
Partial prepayments shall be in an aggregate principal amount of
$5,000,000, or a whole multiple thereof, and may only be made if,
after giving effect thereto, subsection 2.6(c) shall not have
been contravened.
2.6 CONVERSION OPTIONS; MINIMUM AMOUNT OF LOANS. (a)
The Company may elect from time to time to convert Eurodollar
Loans to Alternate Base Rate Loans by giving the Agent at least
two Business Days' prior irrevocable notice of such election
(given before 10:00 A.M., New York City time, on the date on
which such notice is required), PROVIDED that any such conversion
of Eurodollar Loans shall, subject to the fourth following
sentence, only be made on the last day of an Interest Period with
respect thereto. The Company may elect from time to time to
convert Alternate Base Rate Loans to Eurodollar Loans by giving
the Agent at least three Business Days' prior irrevocable notice
of such election (given before 11:30 A.M., New York City time, on
the date on which such notice is required). Upon receipt of such
notice, the Agent shall promptly notify each Bank thereof.
Promptly following the date on which such conversion is being
made each Bank shall take such action as is necessary to transfer
its portion of such Revolving Credit Loans to its Domestic
Lending Office or its Eurodollar Lending Office, as the case may
be. All or any part of outstanding Eurodollar Loans and
Alternate Base Rate Loans may be converted as provided herein,
PROVIDED that, unless the Required Banks otherwise agree, (i) no
Revolving Credit Loan may be converted into a Eurodollar Loan
when any Event of Default has occurred and is continuing, (ii)
partial conversions shall be in an aggregate principal amount of
$5,000,000 or a whole multiple thereof, and (iii) any such
conversion may only be made if, after giving effect thereto,
subsection 2.6(c) shall not have been contravened.
(b) Any Eurodollar Loans may be continued as such upon
the expiration of an Interest Period with respect thereto by
compliance by the Company with the notice provisions contained in
subsection 2.6(a); PROVIDED that, unless the Required Banks
otherwise agree, no Eurodollar Loan may be continued as such when
any Event of Default has occurred and is continuing, but shall be
automatically converted to an Alternate Base Rate Loan on the
last day of the then current Interest Period with respect
thereto. The Agent shall notify the Banks promptly that such
<PAGE>
27
automatic conversion contemplated by this subsection 2.6(b) will
occur.
(c) All borrowings, conversions, payments, prepayments
and selection of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections so that, after
giving effect thereto, the aggregate principal amount of the
Loans comprising any Eurodollar Tranche shall not be less than
$10,000,000. At no time shall there be more than 10 Eurodollar
Tranches.
2.7 INTEREST RATE AND PAYMENT DATES FOR REVOLVING
CREDIT LOANS. (a) The Eurodollar Loans comprising each
Eurodollar Tranche shall bear interest for each day during each
Interest Period with respect thereto on the unpaid principal
amount thereof at a rate per annum equal to the Eurodollar Rate
plus the Applicable Margin.
(b) Alternate Base Rate Loans shall bear interest for
each day from and including the date thereof on the unpaid
principal amount thereof at a rate per annum equal to the
Alternate Base Rate plus the Applicable Margin.
(c) If all or a portion of the principal amount of any
Revolving Credit Loans shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), each Eurodollar
Loan shall, unless the Required Banks otherwise agree, be
converted to an Alternate Base Rate Loan at the end of the last
Interest Period with respect thereto. Any such overdue principal
amount shall bear interest at a rate per annum which is 2% above
the rate which would otherwise be applicable pursuant to
subsection 2.7(a) or (b), and any overdue interest or other
amount payable hereunder shall bear interest at a rate per annum
which is 2% above the Alternate Base Rate, in each case from the
date of such non-payment until paid in full (after as well as
before judgment).
(d) Interest shall be payable in arrears on each
Interest Payment Date.
2.8 COMPUTATION OF INTEREST AND FEES. (a) Interest
in respect of Alternate Base Rate Loans shall be calculated on
the basis of a (i) 365-day (or 366-day, as the case may be) year
for the actual days elapsed when such Alternate Base Rate Loans
are based on the Prime Rate, and (ii) a 360-day year for the
actual days elapsed when based on the Base CD Rate or the Federal
Funds Effective Rate. Interest in respect of Eurodollar Loans
shall be calculated on the basis of a 360-day year for the actual
days elapsed. The Agent shall as soon as practicable notify the
Company and the Banks of each determination of a Eurodollar Rate.
Any change in the interest rate on a Revolving Credit Loan
resulting from a change in the Alternate Base Rate or the
Applicable Margin or the Eurocurrency Reserve Requirements shall
become effective as of the opening of business on the day on
<PAGE>
28
which such change in the Alternate Base Rate is announced, such
Applicable Margin changes as provided herein or such change in or
the Eurocurrency Reserve Requirements shall become effective, as
the case may be. The Agent shall as soon as practicable notify
the Company and the Banks of the effective date and the amount of
each such change.
(b) Each determination of an interest rate by the
Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Company and the Banks in the
absence of manifest error. The Agent shall, at the request of
the Company, deliver to the Company a statement showing the
quotations used by the Agent in determining any interest rate
pursuant to subsection 2.7(a) or (c).
(c) If any Reference Bank's Commitment shall terminate
(otherwise than on termination of all the Commitments), or its
Revolving Credit Loans shall be assigned for any reason
whatsoever, such Reference Bank shall thereupon cease to be a
Reference Bank, and if, as a result of the foregoing, there shall
only be one Reference Bank remaining, then the Agent (after
consultation with the Company and the Banks) shall, by notice to
the Company and the Banks, designate another Bank as a Reference
Bank so that there shall at all times be at least two Reference
Banks.
(d) Each Reference Bank shall use its best efforts to
furnish quotations of rates to the Agent as contemplated hereby.
If any of the Reference Banks shall be unable or otherwise fails
to supply such rates to the Agent upon its request, the rate of
interest shall be determined on the basis of the quotations of
the remaining Reference Banks or Reference Bank.
(e) Facility fees shall be computed on the basis of a
365-day year for the actual days elapsed.
2.9 INABILITY TO DETERMINE INTEREST RATE. In the
event that:
(i) the Agent shall have determined (which
determination shall be conclusive and binding upon the
Company) that, by reason of circumstances affecting the
interbank eurodollar market generally, adequate and
reasonable means do not exist for ascertaining the
Eurodollar Rate for any requested Interest Period;
(ii) only one of the Reference Banks is able to obtain
bids for its Dollar deposits for such Interest Period in the
manner contemplated by the term "Eurodollar Rate"; or
(iii) the Agent shall have received notice prior to the
first day of such Interest Period from Banks constituting
the Required Banks that the interest rate determined
pursuant to subsection 2.7(a) for such Interest Period does
<PAGE>
29
not accurately reflect the cost to such Banks (as
conclusively certified by such Banks) of making or
maintaining their affected Loans during such Interest
Period;
with respect to (A) proposed Revolving Credit Loans that the
Company has requested be made as Eurodollar Loans, (B) Eurodollar
Loans that will result from the requested conversion of Alternate
Base Rate Loans into Eurodollar Loans or (C) the continuation of
Eurodollar Loans beyond the expiration of the then current
Interest Period with respect thereto, the Agent shall forthwith
give facsimile or telephonic notice of such determination to the
Company and the Banks at least one day prior to, as the case may
be, the requested Borrowing Date for such Eurodollar Loans, the
conversion date of such Loans or the last day of such Interest
Period. If such notice is given (x) any requested Eurodollar
Loans shall be made as Alternate Base Rate Loans, (y) any
Alternate Base Rate Loans that were to have been converted to
Eurodollar Loans shall be continued as Alternate Base Rate Loans
and (z) any outstanding Eurodollar Loans shall be converted, on
the last day of the then current Interest Period with respect
thereto, to Alternate Base Rate Loans. Until such notice has
been withdrawn by the Agent, no further Eurodollar Loans shall be
made, nor shall the Company have the right to convert Alternate
Base Rate Loans to Eurodollar Loans.
2.10 PRO RATA BORROWINGS AND PAYMENTS. (a) Each
borrowing by the Company of Revolving Credit Loans shall be made
ratably from the Banks in accordance with their Commitment
Percentages.
(b) Whenever any payment received by the Agent under
this Agreement or any Note is insufficient to pay in full all
amounts then due and payable to the Agent and the Banks under
this Agreement and the Notes, and the Agent has not received a
Payment Sharing Notice (or if the Agent has received a Payment
Sharing Notice but the Event of Default specified in such Payment
Sharing Notice has been cured or waived), such payment shall be
distributed and applied by the Agent and the Banks in the
following order: FIRST, to the payment of fees and expenses due
and payable to the Agent under and in connection with this
Agreement; SECOND, to the payment of all expenses due and payable
under subsection 8.5(a), ratably among the Banks in accordance
with the aggregate amount of such payments owed to each such
Bank; THIRD, to the payment of fees due and payable under
subsection 2.3, ratably among the Banks in accordance with their
Commitment Percentages; FOURTH, to the payment of interest then
due and payable under the Notes, ratably among the Banks in
accordance with the aggregate amount of interest owed to each
such Bank; and FIFTH, to the payment of the principal amount of
the Notes which is then due and payable, ratably among the Banks
in accordance with the aggregate principal amount owed to each
such Bank.
<PAGE>
30
(c) After the Agent has received a Payment Sharing
Notice which remains in effect, all payments received by the
Agent under this Agreement or any Note shall be distributed and
applied by the Agent and the Banks in the following order:
FIRST, to the payment of all amounts described in clauses FIRST
through THIRD of the foregoing paragraph (b), in the order set
forth therein; and SECOND, to the payment of the interest accrued
on and the principal amount of all of the Notes, regardless of
whether any such amount is then due and payable, ratably among
the Banks in accordance with the aggregate accrued interest plus
the aggregate principal amount owed to such Bank.
(d) All payments (including prepayments) to be made by
the Company on account of principal, interest and fees shall be
made without set-off or counterclaim and shall be made to the
Agent, for the account of the Banks, at the Agent's office set
forth in subsection 8.2, in lawful money of the United States of
America and in immediately available funds. The Agent shall
distribute such payments to the Banks promptly upon receipt in
like funds as received. If any payment hereunder (other than
payments on the Eurodollar Loans) becomes due and payable on a
day other than a Business Day, such payment shall be extended to
the next succeeding Business Day, and, with respect to payments
of principal, interest thereon shall be payable at the then
applicable rate during such extension. If any payment on a
Eurodollar Loan becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next
succeeding Business Day unless the result of such extension would
be to extend such payment into another calendar month in which
event such payment shall be made on the immediately preceding
Business Day.
(e) Unless the Agent shall have been notified in
writing by any Bank prior to a Borrowing Date that such Bank will
not make the amount which would constitute its Commitment
Percentage of the borrowing of Revolving Credit Loans on such
date available to the Agent, the Agent may assume that such Bank
has made such amount available to the Agent on such Borrowing
Date, and the Agent may, in reliance upon such assumption, make
available to the Company a corresponding amount. If such amount
is made available to the Agent on a date after such Borrowing
Date, such Bank shall pay to the Agent on demand an amount equal
to the product of (i) the daily average Federal Funds Effective
Rate during such period as quoted by the Agent, times (ii) the
amount of such Bank's Commitment Percentage of such borrowing,
times (iii) a fraction the numerator of which is the number of
days that elapse from and including such Borrowing Date to the
date on which such Bank's Commitment Percentage of such borrowing
shall have become immediately available to the Agent and the
denominator of which is 360. A certificate of the Agent
submitted to any Bank with respect to any amounts owing under
this subsection 2.10(e) shall be conclusive, absent manifest
error. If such Bank's Commitment Percentage of such borrowing is
not in fact made available to the Agent by such Bank within three
<PAGE>
31
Business Days of such Borrowing Date, the Agent shall be entitled
to recover such amount with interest thereon at the rate per
annum applicable to Alternate Base Rate Loans hereunder, on
demand, from the Company.
2.11 ILLEGALITY. Notwithstanding any other provisions
herein, if after the date hereof the adoption of or any change in
any Requirement of Law or in the interpretation or application
thereof shall make it unlawful for any Bank to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the Bank
shall, within 30 Business Days after it becomes aware of such
fact, notify the Company, through the Agent, of such fact, (b)
the commitment of such Bank hereunder to make Eurodollar Loans or
convert Alternate Base Rate Loans to Eurodollar Loans shall
forthwith be cancelled and (c) such Bank's Revolving Credit Loans
then outstanding as Eurodollar Loans, if any, shall be converted
automatically to Alternate Base Rate Loans on the respective last
days of the then current Interest Periods for such Revolving
Credit Loans or within such earlier period as required by law.
Each Bank shall take such action as may be reasonably available
to it without legal or financial disadvantage (including changing
its Eurodollar Lending Office) to prevent the adoption of or any
change in any such Requirement of Law from becoming applicable to
it.
2.12 REQUIREMENTS OF LAW. (a) If after the date
hereof the adoption of or any change in any Requirement of Law or
in the interpretation or application thereof or compliance by any
Bank with any request or directive (whether or not having the
force of law) after the date hereof from any central bank or
other Governmental Authority:
(i) shall subject any Bank to any tax of any kind
whatsoever with respect to this Agreement, any Revolving
Credit Note or any Eurodollar Loans made by it, or change
the basis of taxation of payments to such Bank of principal,
facility fee, interest or any other amount payable hereunder
in respect of Revolving Credit Loans (except for changes in
the rate of tax on the overall net income of such Bank);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar
requirement against assets held by, or deposits or other
liabilities in or for the account of, advances or loans by,
or other credit extended by, or any other acquisition of
funds by, any office of such Bank which are not otherwise
included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Bank any other condition;
and the result of any of the foregoing is to increase the cost to
such Bank, by any amount which such Bank deems to be material, of
making, renewing or maintaining advances or extensions of credit
<PAGE>
32
or to reduce any amount receivable hereunder, in each case, in
respect of its Eurodollar Loans, then, in any such case, the
Company shall promptly pay such Bank, upon its demand, any
additional amounts necessary to compensate such Bank for such
additional cost or reduced amount receivable. If a Bank becomes
entitled to claim any additional amounts pursuant to this
subsection 2.12(a), it shall, within 30 Business Days after it
becomes aware of such fact, notify the Company, through the
Agent, of the event by reason of which it has become so entitled.
A certificate as to any additional amounts payable pursuant to
the foregoing sentence submitted by such Bank, through the Agent,
to the Company shall be conclusive in the absence of manifest
error. Each Bank shall take such action as may be reasonably
available to it without legal or financial disadvantage
(including changing its Eurodollar Lending Office) to prevent any
such Requirement of Law or change from becoming applicable to it.
This covenant shall survive the termination of this Agreement and
payment of the outstanding Revolving Credit Notes.
(b) In the event that after the date hereof a Bank is
required to maintain reserves of the type contemplated by the
definition of "Eurocurrency Reserve Requirements", such Bank may
require the Company to pay, promptly after receiving notice of
the amount due, additional interest on the related Eurodollar
Loan of such Bank at a rate per annum determined by such Bank up
to but not exceeding the excess of (i) (A) the applicable
Eurodollar Rate divided by (B) one MINUS the Eurocurrency Reserve
Requirements over (ii) the applicable Eurodollar Rate. Any Bank
wishing to require payment of any such additional interest on
account of any of its Eurodollar Loans shall notify the Company
no more than 30 Business Days after each date on which interest
is payable on such Eurodollar Loan of the amount then due it
under this subsection 2.12(b), in which case such additional
interest on such Eurodollar Loan shall be payable to such Bank at
the place indicated in such notice. Each such notification shall
be accompanied by such information as the Company may reasonably
request.
2.13 CAPITAL ADEQUACY. If any Bank shall have
determined that after the date hereof the adoption of or any
change in any Requirement of Law regarding capital adequacy or in
the interpretation or application thereof or compliance by such
Bank or any corporation controlling such Bank with any request or
directive after the date hereof regarding capital adequacy
(whether or not having the force of law) from any central bank or
Governmental Authority, does or shall have the effect of reducing
the rate of return on such Bank's or such corporation's capital
as a consequence of its obligations hereunder to a level below
that which such Bank or such corporation could have achieved but
for such adoption, change or compliance (taking into
consideration such Bank's or such corporation's policies with
respect to capital adequacy) by an amount which is reasonably
deemed by such Bank to be material, then from time to time,
promptly after submission by such Bank, through the Agent, to the
<PAGE>
33
Company of a written request therefor (such request shall include
details reasonably sufficient to establish the basis for such
additional amounts payable and shall be submitted to the Company
within 30 Business Days after it becomes aware of such fact), the
Company shall promptly pay to such Bank such additional amount or
amounts as will compensate such Bank for such reduction. The
agreements in this subsection 2.13 shall survive the termination
of this Agreement and payment of the Loans and the Notes and all
other amounts payable hereunder.
2.14 TAXES. (a) All payments made by the Company
under this Agreement shall be made free and clear of, and without
reduction or withholding for or on account of, any present or
future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any
Governmental Authority excluding, in the case of the Agent and
each Bank, net income and franchise taxes imposed on the Agent or
such Bank by the jurisdiction under the laws of which the Agent
or such Bank is organized or any political subdivision or taxing
authority thereof or therein, or by any jurisdiction in which
such Bank's Domestic Lending Office or Eurodollar Lending Office,
as the case may be, is located or any political subdivision or
taxing authority thereof or therein (all such non-excluded taxes,
levies, imposts, deductions, charges or withholdings being
hereinafter called "TAXES"). If any Taxes are required to be
withheld from any amounts payable to the Agent or any Bank
hereunder or under the Notes, the amounts so payable to the Agent
or such Bank shall be increased to the extent necessary to yield
to the Agent or such Bank (after payment of all Taxes) interest
or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement and the Notes. Whenever
any Taxes are payable by the Company, as promptly as possible
thereafter, the Company shall send to the Agent for its own
account or for the account of such Bank, as the case may be, a
certified copy of an original official receipt received by the
Company showing payment thereof. If the Company fails to pay any
Taxes when due to the appropriate taxing authority or fails to
remit to the Agent the required receipts or other required
documentary evidence, the Company shall indemnify the Agent and
the Banks for any incremental taxes, interest or penalties that
may become payable by the Agent or any Bank as a result of any
such failure.
(b) Each Bank that is not incorporated under the laws
of the United States of America or a state thereof agrees that it
will deliver to the Company and the Agent (i) two duly completed
copies of United States Internal Revenue Service Form 1001 or
4224 or successor applicable form, as the case may be, certifying
in each case that such Bank is entitled to receive payments under
this Agreement and the Notes payable to it, without deduction or
withholding of any United States federal income taxes, and (ii)
an Internal Revenue Service Form W-8 or W-9 or successor
applicable form, as the case may be, to establish an exemption
<PAGE>
34
from United States backup withholding tax. Each Bank which
delivers to the Company and the Agent a Form 1001 or 4224 and
Form W-8 or W-9 pursuant to the next preceding sentence further
undertakes to deliver to the Company and the Agent two further
copies of the said letter and Form 1001 or 4224 and Form W-8 or
W-9, or successor applicable forms, or other manner of
certification, as the case may be, on or before the date that any
such letter or form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent
letter and form previously delivered by it to the Company, and
such extensions or renewals thereof as may reasonably be
requested by the Company, certifying in the case of a Form 1001
or 4224 that such Bank is entitled to receive payments under this
Agreement without deduction or withholding of any United States
federal income taxes, unless in any such cases an event
(including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Bank from duly
completing and delivering any such letter or form with respect to
it and such Bank advises the Company that it is not capable of
receiving payments without any deduction or withholding of United
Sates federal income tax, and in the case of a Form W-8 or W-9,
establishing an exemption from United States backup withholding
tax.
(c) The agreements in subsection 2.14 shall survive
the termination of this Agreement and the payment of the Notes
and all other amounts payable hereunder.
2.15 INDEMNITY. The Company agrees to indemnify each
Bank and to hold each Bank harmless from any loss or expense
(other than any loss of anticipated margin or profit) which such
Bank may sustain or incur as a consequence of (a) default by the
Company in payment when due of the principal amount of or
interest on any Eurodollar Loans of such Bank, (b) default by the
Company in making a borrowing or conversion after the Company has
given a notice of borrowing in accordance with subsection 2.1(c)
or a notice of continuation or conversion pursuant to subsection
2.6, (c) default by the Company in making any prepayment after
the Company has given a notice in accordance with subsection 2.5
or (d) the making of a prepayment of a Eurodollar Loan on a day
which is not the last day of an Interest Period with respect
thereto, including, without limitation, in each case, any such
loss or expense arising from the reemployment of funds obtained
by it to maintain its Eurodollar Loans hereunder or from fees
payable to terminate the deposits from which such funds were
obtained. Any Bank claiming any amount under this subsection
2.15 shall provide calculations, in reasonable detail, of the
amount of its loss or expense. This covenant shall survive
termination of this Agreement and payment of the outstanding
Notes.
<PAGE>
35
2.16 APPLICATION OF PROCEEDS OF LOANS. Subject to the
provisions of the following sentence, the Company may use the
proceeds of the Loans for any lawful corporate purpose. The
Company will not, directly or indirectly, apply any part of the
proceeds of any such Loan for the purpose of "purchasing" or
"carrying" any "margin stock" within the respective meanings of
each of the quoted terms under Regulation U, or to refund any
indebtedness incurred for such purpose.
2.17 NOTICE OF CERTAIN CIRCUMSTANCES; ASSIGNMENT OF
COMMITMENTS UNDER CERTAIN CIRCUMSTANCES. (a) Any Bank claiming
any additional amounts payable pursuant to subsections 2.12, 2.13
or 2.14 or exercising its rights under subsection 2.11, shall, in
accordance with the respective provisions thereof, provide notice
to the Company and the Agent. Such notice to the Company and the
Agent shall include details reasonably sufficient to establish
the basis for such additional amounts payable or the rights to be
exercised by the Bank.
(b) Any Bank claiming any additional amounts payable
pursuant to subsections 2.12, 2.13 or 2.14 or exercising its
rights under subsection 2.11, shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file any
certificate or document requested by the Company or to change the
jurisdiction of its applicable lending office if the making of
such filing or change would avoid the need for or reduce the
amount of any such additional amounts which may thereafter accrue
or avoid the circumstances giving rise to such exercise and would
not, in the sole determination of such Bank, be otherwise
disadvantageous to such Bank.
(c) In the event that the Company shall be required to
make any additional payments to any Bank pursuant to subsections
2.12, 2.13 or 2.14 or any Bank shall exercise its rights under
subsection 2.11, the Company shall have the right at its own
expense, upon notice to such Bank and the Agent, to require such
Bank to transfer and to assign without recourse (in accordance
with and subject to the terms of subsection 8.6) all its
interest, rights and obligations under this Agreement to another
financial institution (including any Bank) acceptable to the
Agent (which approval shall not be unreasonably withheld) which
shall assume such obligations; PROVIDED that (i) no such
assignment shall conflict with any Requirement of Law and (ii)
such assuming financial institution shall pay to such Bank in
immediately available funds on the date of such assignment the
outstanding principal amount of such Bank's Notes together with
accrued interest thereon and all other amounts accrued for its
account or owed to it hereunder, including, but not limited to
additional amounts payable under subsections 2.3, 2.11, 2.12,
2.13, 2.14 and 2.15.
SECTION 3. REPRESENTATIONS AND WARRANTIES
<PAGE>
36
The Company hereby represents and warrants that:
3.1 CORPORATE ORGANIZATION AND EXISTENCE. Each of the
Company and each Subsidiary is a corporation duly organized and
validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has all necessary
corporate power to carry on the business now conducted by it.
The Company has all necessary corporate power and has taken all
corporate action required to make all the provisions of this
Agreement and the Notes and all other agreements and instruments
executed in connection herewith and therewith, the valid and
enforceable obligations they purport to be. Each of the Company
and each Subsidiary is duly qualified and in good standing as a
foreign corporation in all jurisdictions other than that of its
incorporation in which the physical properties owned, leased or
operated by it are located, and is duly authorized, qualified and
licensed under all laws, regulations, ordinances or orders of
Governmental Authorities, or otherwise, to carry on its business
in the places and in the manner presently conducted.
3.2 SUBSIDIARIES. As of the date hereof, the Company
has only the Subsidiaries set forth in Schedule II, all of the
outstanding capital stock of each of which is duly authorized,
validly issued, fully paid and nonassessable and owned as set
forth in said Schedule II. Schedule II indicates all
Subsidiaries of the Company which are not wholly-owned
Subsidiaries and the percentage ownership of the Company and its
Subsidiaries in each such Subsidiary. The capital stock and
securities owned by the Company and its Subsidiaries in each of
the Company's Subsidiaries are owned free and clear of any
mortgage, pledge, lien, encumbrance, charge or restriction on the
transfer thereof other than restrictions on transfer imposed by
applicable securities laws and restrictions, liens and
encumbrances outstanding on the date hereof and listed in said
Schedule II.
3.3 FINANCIAL INFORMATION. The Company has furnished
to the Agent and each Bank copies of the following:
(a) the Annual Report of the Company for the fiscal
year ended December 31, 1992, containing the consolidated
balance sheet of the Company and its Subsidiaries as at said
date and the related consolidated statements of income,
common stockholders' equity and changes in financial
position for the fiscal year then ended, accompanied by the
opinion of Arthur Andersen & Co.;
(b) the Annual Report of the Company on Form 10-K for
the fiscal year ended December 31, 1992;
(c) quarterly financial statements of the Company,
including balance sheets, for the fiscal periods ended March
31, 1993, June 30, 1993 and September 30, 1993;
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37
(d) the current report of the Company on Form 8-K,
dated September 29, 1993;
(e) the Annual Report of Galen for the fiscal year
ended August 31, 1993, containing the consolidated balance
sheet of Galen and its Subsidiaries as at said date and the
related consolidated statements of income, common
stockholders' equity and changes in financial position for
the fiscal year then ended, accompanied by the opinion of
Coopers & Lybrand;
(f) the Annual Report of Galen on Form 10-K for the
fiscal year ended August 31, 1992;
(g) quarterly financial statements of Galen, including
balance sheets, for the fiscal periods ended November 30,
1992, February 28, 1993 and May 31, 1993;
(h) the Annual Report of HCA on Form 10-K for the
fiscal year ended December 31, 1992, containing the
consolidated balance sheet of HCA and its Subsidiaries as at
said date and the related consolidated statements of income,
common stockholders' equity and changes in financial
position for the fiscal year then ended, accompanied by the
opinion of Ernst & Young;
(i) quarterly financial statements of HCA, including
balance sheets, for the fiscal periods ended March 31, 1993,
June 30, 1993 and September 30, 1993; and
(j) the Proxy.
Such financial statements (including any notes thereto) have been
prepared in accordance with GAAP and fairly present the financial
conditions of the corporations covered thereby at the date
thereof and the results of their operations for the periods
covered thereby, subject to normal year-end adjustments in the
case of interim statements. As of the date hereof, neither the
Company nor any of its Subsidiaries has any known contingent
liabilities of any significant amount which are not referred to
in said financial statements or in the notes thereto which could
reasonably be expected to have a material adverse effect on the
business or assets or on the condition, financial or otherwise,
of the Company and its Subsidiaries, on a consolidated basis.
3.4 CHANGES IN CONDITION. Since December 31, 1992
there has been no material adverse change in the business or
assets or in the condition, financial or otherwise, of the
Company and its Subsidiaries, on a consolidated basis, or of HCA
and its Subsidiaries, on a consolidated basis. Since August 31,
1993 there has been no material adverse change in the business or
assets or in the condition, financial or otherwise, of Galen and
its Subsidiaries, on a consolidated basis.
<PAGE>
38
3.5 ASSETS. The Company and each Subsidiary have good
and marketable title to all material assets carried on their
books and reflected in the most recent balance sheet referred to
in subsection 3.3 or furnished pursuant to subsection 5.5, except
for assets held on Financing Leases or purchased subject to
security devices providing for retention of title in the vendor,
and except for assets disposed of as permitted by this Agreement.
3.6 LITIGATION. Except as disclosed (i) in the
Company's Annual Report on Form 10-K for its fiscal year ended
December 31, 1992 and its Quarterly Reports on Form 10-Q for its
fiscal quarters ended March 31, 1993, June 30, 1993 and September
30, 1993, (ii) in Galen's Annual Report on Form 10-K for its
fiscal year ended August 31, 1992 and its Quarterly Reports on
Form 10-Q for its fiscal quarters ended November 30, 1992,
February 28, 1993 and May 31, 1993 and (iii) in HCA's Annual
Report on Form 10-K for its fiscal year ended December 31, 1992
and its Quarterly Reports on Form 10-Q for its fiscal quarters
ended March 31, 1993, June 30, 1993 and September 30, 1993, in
each case as filed with the Securities and Exchange Commission
and previously distributed to the Banks, there is no litigation,
at law or in equity, or any proceeding before any federal, state,
provincial or municipal board or other governmental or
administrative agency pending or to the knowledge of the Company
threatened which, after giving effect to any applicable
insurance, may involve any material risk of a material adverse
effect on the business or assets or on the condition, financial
or otherwise, of the Company and its Subsidiaries on a
consolidated basis or which seeks to enjoin the consummation of
any of the transactions contemplated by this Agreement or any
other Loan Document and involves any material risk that any such
injunction will be issued, and no judgment, decree, or order of
any federal, state, provincial or municipal court, board or other
governmental or administrative agency has been issued against the
Company or any Subsidiary which has, or may involve a material
risk of a material adverse effect on the business or assets or on
the condition, financial or otherwise, of the Company and its
Subsidiaries on a consolidated basis. The Company does not
believe that the final resolution of the matters disclosed in its
Annual Report on Form 10-K for its fiscal year ended December 31,
1992 and its Quarterly Reports on Form 10-Q for its fiscal
quarters ended March 31, 1993, June 30, 1993 and September 30,
1993, in Galen's Annual Report on Form 10-K for its fiscal year
ended August 31, 1992 and its Quarterly Reports on Form 10-Q for
its fiscal quarters ended November 30, 1992, February 28, 1993
and May 31, 1993 or in HCA's Annual Report on Form 10-K for its
fiscal year ended December 31, 1992 and HCA's Quarterly Reports
on Form 10-Q for its fiscal quarters ended March 31, 1993, June
30, 1993 and September 30, 1993, in each case as filed with the
Securities and Exchange Commission and previously distributed to
the Banks, will have a material adverse effect on the business or
assets or condition, financial or otherwise, of the Company and
its Subsidiaries on a consolidated basis.
<PAGE>
39
3.7 TAX RETURNS. The Company and each of its
Subsidiaries have filed all tax returns which are required to be
filed and have paid, or made adequate provision for the payment
of, all taxes which have or may become due pursuant to said
returns or to assessments received. All federal tax returns of
(i) the Company and its Subsidiaries (other than Smith
Laboratories, Inc., Sutter Corporation and Basic American
Medical, Inc.) through their fiscal years ended in 1989, (ii)
Smith Laboratories, Inc., Sutter Corporation and Basic American
Medical, Inc. through their respective fiscal years ended in
1988, 1988 and 1986, respectively, (iii) Galen and its
Subsidiaries through their fiscal years ended in 1989 and (iv)
HCA and its Subsidiaries through their fiscal years ended in
1990, have been audited by the Internal Revenue Service or are
not subject to such audit by virtue of the expiration of the
applicable period of limitations, and the results of such audits
are adequately reflected in the balance sheets referred to in
subsection 3.3. The Company knows of no material additional
assessments since said date for which adequate reserves appearing
in the said balance sheet have not been established.
3.8 CONTRACTS, ETC. Attached hereto as Schedule III
is a statement of outstanding Indebtedness of the Company and its
Subsidiaries for borrowed money as of the date set forth therein
and a complete and correct list of all agreements, contracts,
indentures, instruments, documents and amendments thereto to
which the Company or any Subsidiary is a party or by which it is
bound pursuant to which any such Indebtedness of the Company and
its Subsidiaries in excess of $25,000,000 is outstanding on the
date hereof. Said Schedule III also includes a complete and
correct list of all such Indebtedness of the Company and its
Subsidiaries outstanding on the date indicated in respect of
Guarantee Obligations in excess of $1,000,000 and letters of
credit in excess of $1,000,000, and there have been no increases
in such Indebtedness since said date other than as permitted by
this Agreement.
3.9 NO LEGAL OBSTACLE TO AGREEMENT. Neither the
execution and delivery of this Agreement or of any Notes, nor the
making by the Company of any borrowings hereunder, nor the
consummation of any transaction herein or therein referred to or
contemplated hereby or thereby nor the fulfillment of the terms
hereof or thereof or of any agreement or instrument referred to
in this Agreement, has constituted or resulted in or will
constitute or result in a breach of the provisions of any
contract to which the Company or any of its Subsidiaries is a
party or by which it is bound or of the charter or by-laws of the
Company, or the violation of any law, judgment, decree or
governmental order, rule or regulation applicable to the Company
or any of its Subsidiaries, or result in the creation under any
agreement or instrument of any security interest, lien, charge or
encumbrance upon any of the assets of the Company or any of its
Subsidiaries. Other than those which have already been obtained,
no approval, authorization or other action by any governmental
<PAGE>
40
authority or any other Person is required to be obtained by the
Company or any of its Subsidiaries in connection with the
execution, delivery and performance of this Agreement or the
transactions contemplated hereby, or the making of any borrowing
by the Company hereunder.
3.10 DEFAULTS. Neither the Company nor any Subsidiary
is in default under any provision of its charter or by-laws or,
so as to affect adversely in any material manner the business or
assets or the condition, financial or otherwise, of the Company
and its Subsidiaries on a consolidated basis, under any provision
of any agreement, lease or other instrument to which it is a
party or by which it is bound or of any Requirement of Law.
3.11 BURDENSOME OBLIGATIONS. Neither the Company nor
any Subsidiary is a party to or bound by any agreement, deed,
lease or other instrument, or subject to any charter, by-law or
other corporate restriction which, in the opinion of the
management thereof, is so unusual or burdensome as to in the
foreseeable future have a material adverse effect on the business
or assets or condition, financial or otherwise, of the Company
and its Subsidiaries on a consolidated basis. The Company does
not presently anticipate that future expenditures of the Company
and its Subsidiaries needed to meet the provisions of any federal
or state statutes, orders, rules or regulations will be so
burdensome as to have a material adverse effect on the business
or assets or condition, financial or otherwise, of the Company
and its Subsidiaries on a consolidated basis.
3.12 PENSION PLANS. Each Plan maintained by the
Company, any Subsidiary or any Control Group Person or to which
any of them makes or will make contributions is in material
compliance with the applicable provisions of ERISA and the Code.
Neither the Company nor any Subsidiary nor any Control Group
Person maintains, contributes to or participates in any Plan that
is a "defined benefit plan" as defined in ERISA. Neither the
Company, any Subsidiary, nor any Control Group Person has since
August 31, 1986 maintained, contributed to or participated in any
Multiemployer Plan, with respect to which a complete withdrawal
would result in any withdrawal liability. The Company and its
Subsidiaries have met all of the funding standards applicable to
all Plans that are not Multiemployer Plans, and there exists no
event or condition which would permit the institution of
proceedings to terminate any Plan that is not a Multiemployer
Plan. The current value of the benefits guaranteed under Title
IV of ERISA of each Plan that is not a Multiemployer Plan does
not exceed the current value of such Plan's assets allocable to
such benefits.
3.13 DISCLOSURE. Neither this Agreement nor any
agreement, document, certificate or statement furnished to the
Banks by the Company in connection herewith or with the planning
or the consummation of the transactions contemplated by the
Merger, including, without limitation, the information relating
<PAGE>
41
to the Company and its Subsidiaries after the Merger included in
the Confidential Information Memorandum and Proxy, contains any
untrue statement of material fact or omits to state a material
fact necessary in order to make the statements contained herein
or therein not misleading. All pro forma financial statements
and other materials describing the structure of the transactions
contemplated by the Proxy that have been prepared by the Company
and made available to Banks have been prepared in good faith
based upon reasonable assumptions. There is no fact known to the
Company which has or in the future may have (so far as the
Company can now foresee) a material adverse effect on the
business or assets or the condition, financial or otherwise, of
the Company and its Subsidiaries on a consolidated basis, except
to the extent that they may be affected by future general
economic conditions.
3.14 ENVIRONMENTAL AND PUBLIC AND EMPLOYEE HEALTH AND
SAFETY MATTERS. The Company and each Subsidiary has complied
with all applicable Federal, state, and other laws, rules and
regulations relating to environmental pollution or to
environmental regulation or control or to public or employee
health or safety, except to the extent that the failure to so
comply would not be reasonably likely to result in a material
adverse effect on the business or assets or on the condition,
financial or otherwise, of the Company and its Subsidiaries on a
consolidated basis. The Company's and the Subsidiaries'
facilities do not contain, and have not previously contained, any
hazardous wastes, hazardous substances, hazardous materials,
toxic substances or toxic pollutants regulated under the Resource
Conservation and Recovery Act, the Comprehensive Environmental
Response Compensation and Liability Act, the Hazardous Materials
Transportation Act, the Toxic Substance Control Act, the Clean
Air Act, the Clean Water Act or any other applicable law relating
to environmental pollution or public or employee health and
safety, in violation of any such law, or any rules or regulations
promulgated pursuant thereto, except for violations that would
not be reasonably likely to result in a material adverse effect
on the business or assets or on the condition, financial or
otherwise, of the Company and its Subsidiaries on a consolidated
basis. The Company is aware of no events, conditions or
circumstances involving environmental pollution or contamination
or public or employee health or safety, in each case applicable
to it or its Subsidiaries, that would be reasonably likely to
result in a material adverse effect on the business or assets or
on the condition, financial or otherwise, of the Company and its
Subsidiaries on a consolidated basis.
3.15 FEDERAL REGULATIONS. No part of the proceeds of
any Loans will be used for "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms
under Regulation U as now and from time to time hereafter in
effect or for any purpose which violates the provisions of the
Regulations of the Board of Governors of the Federal Reserve
System. If requested by any Bank or the Agent, the Company will
<PAGE>
42
furnish to the Agent and each Bank a statement to the foregoing
effect in conformity with the requirements of FR Form U-1
referred to in said Regulation U.
3.16 INVESTMENT COMPANY ACT; OTHER REGULATIONS. The
Company is not an "investment company", or a company "controlled"
by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended. The Company is not subject to
regulation under any Federal or State statute or regulation which
limits its ability to incur Indebtedness.
SECTION 4. CONDITIONS
The obligations of each Bank to make the Loans
contemplated by subsections 2.1 and 2.2 shall be subject to the
compliance by the Company with its agreements herein contained
and to the satisfaction on or before the Closing Date and each
Borrowing Date of such of the following further conditions as are
applicable on the Closing Date or such Borrowing Date, as the
case may be:
4.1 LOAN DOCUMENTS. The Agent shall have received (i)
this Agreement, executed and delivered by a duly authorized
officer of the Company, with a counterpart for each Bank, and
(ii) for the account of each Bank, a Revolving Credit Note and a
Grid CAF Loan Note conforming to the requirements hereof and
executed by a duly authorized officer of the Company.
4.2 LEGAL OPINIONS. On the Closing Date and on any
Borrowing Date as the Agent shall request, each Bank shall have
received from any general, associate, or assistant general
counsel to the Company, such opinions as the Agent shall have
reasonably requested with respect to the transactions
contemplated by this Agreement.
4.3 COMPANY OFFICERS' CERTIFICATE. The
representations and warranties contained in Section 3 shall be
true and correct on the Closing Date and on and as of each
Borrowing Date with the same force and effect as though made on
and as of such date; no Default shall have occurred (except a
Default which shall have been waived in writing or which shall
have been cured) and no Default shall exist after giving effect
to the Loan to be made; between December 31, 1992 and such
Borrowing Date, neither the business nor assets, nor the
condition, financial or otherwise, of the Company and its
Subsidiaries on a consolidated basis or HCA and its Subsidiaries
on a consolidated basis shall have been adversely affected in any
material manner as a result of any fire, flood, explosion,
accident, drought, strike, lockout, riot, sabotage, confiscation,
condemnation, or any purchase of any property by Governmental
Authority, activities of armed forces, acts of God or the public
enemy, new or amended legislation, regulatory order, judicial
decision or any other event or development whether or not related
<PAGE>
43
to those enumerated above; and the Agent shall have received a
certificate containing a representation to these effects dated
such Borrowing Date and signed by a Responsible Officer.
4.4 TERMINATION OF PRIOR AGREEMENTS. On the Closing
Date, each of (i) the $300,000,000 Credit Agreement, (ii) the
$500,000,000 Credit Agreement, (iii) the $800,000,000 Credit
Agreement and (iv) the $1,642,000,000 Credit Agreement shall have
been terminated and the Company shall have paid in full all
indebtedness outstanding thereunder, including, without
limitation, all interest and fees owing with respect to such
indebtedness.
4.5 LEGALITY, ETC. The making of the Loan to be made
by such Bank on each Borrowing Date shall not subject such Bank
to any penalty or special tax, shall not be prohibited by any
Requirement of Law applicable to such Bank or the Company, and
all necessary consents, approvals and authorizations of any
Governmental Authority or any Person to or of any such Loan shall
have been obtained and shall be in full force and effect.
4.6 GENERAL. All instruments and legal and corporate
proceedings in connection with the Loans contemplated by this
Agreement shall be satisfactory in form and substance to the
Agent, and the Agent shall have received copies of all documents,
including the Merger Agreement executed and delivered by each of
the signatories thereto, the Proxy and all amendments and
exhibits thereto, and favorable legal opinions and records of
corporate proceedings, which the Agent may have reasonably
requested in connection with the Loans and other transactions
contemplated by this Agreement.
4.7 FEES. The Agent shall have received the fees to
be received on the Closing Date referred to in subsection 2.3.
4.8 CONSUMMATION OF THE MERGER. The Agent shall have
received evidence, which evidence shall be in form and substance
satisfactory to the Agent, that the transactions contemplated by
the Merger, including, without limitation, the transactions
contemplated by the Proxy and subsections 1.1 and 4.1 of the
Merger Agreement, have been consummated.
SECTION 5. GENERAL COVENANTS
On and after the date hereof, until all of the Notes
and all other amounts payable pursuant hereto shall have been
paid in full and so long as the Commitments shall remain in
effect, the Company covenants that the Company will comply, and
will cause each of its Subsidiaries to comply, with such of the
provisions of this Section 5 and such other provisions of this
Agreement as are applicable to the Person in question.
<PAGE>
44
5.1 TAXES, INDEBTEDNESS, ETC. (a) Each of the
Company and its Subsidiaries will duly pay and discharge, or
cause to be paid and discharged, before the same shall become in
arrears, all taxes, assessments, levies and other governmental
charges imposed upon such corporation and its properties, sales
and activities, or any part thereof, or upon the income or
profits therefrom; PROVIDED, HOWEVER, that any such tax,
assessment, charge or levy need not be paid if the validity or
amount thereof shall currently be contested in good faith by
appropriate proceedings and if the Company or the Subsidiary in
question shall have set aside on its books appropriate reserves
with respect thereto.
(b) Each of the Company and its Subsidiaries will
promptly pay when due, or in conformance with customary trade
terms, all other Indebtedness and liabilities incident to its
operations; PROVIDED, HOWEVER, that any such Indebtedness or
liability need not be paid if the validity or amount thereof
shall currently be contested in good faith and if the Company or
the Subsidiary in question shall have set aside on its books
appropriate reserves with respect thereto. The Subsidiaries will
not create, incur, assume or suffer to exist any Indebtedness,
except: (i) Indebtedness outstanding on the date hereof and
listed on Schedule III; (ii) Indebtedness that is owing to the
Company or any other Subsidiary; and (iii) additional
Indebtedness at any time outstanding in an aggregate principal
amount not to exceed 10% of Consolidated Assets.
5.2 MAINTENANCE OF PROPERTIES; COMPLIANCE WITH LAW.
Each of the Company and its Subsidiaries (a) will keep its
material properties in good repair, working order and condition
and will from time to time make all necessary and proper repairs,
renewals, replacements, additions and improvements thereto and
will comply at all times with the provisions of all material
leases and other material agreements to which it is a party so as
to prevent any loss or forfeiture thereof or thereunder unless
compliance therewith is being currently contested in good faith
by appropriate proceedings and (b) in the case of the Company or
any Subsidiary of the Company while such Person remains a
Subsidiary, will do all things necessary to preserve, renew and
keep in full force and effect and in good standing its corporate
existence and franchises necessary to continue such businesses.
The Company and its Subsidiaries will comply in all material
respects with all valid and applicable Requirements of Law
(including any such laws, rules, regulations or governmental
orders relating to the protection of environmental or public or
employee health or safety) of the United States, of the States
thereof and their counties, municipalities and other subdivisions
and of any other jurisdiction, applicable to the Company and its
Subsidiaries, except where compliance therewith shall be
contested in good faith by appropriate proceedings, the Company
or the Subsidiary in question shall have set aside on its books
appropriate reserves in conformity with GAAP with respect
thereto, and the failure to comply therewith could not reasonably
<PAGE>
45
be expected to, in the aggregate, have a material adverse effect
on the business or assets or on the condition, financial or
otherwise, of the Company and its Subsidiaries on a consolidated
basis.
5.3 TRANSACTIONS WITH AFFILIATES. Neither the Company
nor any of its Subsidiaries will enter into any transactions,
including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any of their
Affiliates (other than the Company and its Subsidiaries) unless
such transaction is otherwise permitted under this Agreement, is
in the ordinary course of the Company's or such Subsidiary's
business and is upon fair and reasonable terms no less favorable
to the Company or such Subsidiary, as the case may be, than it
would obtain in an arm's-length transaction.
5.4 INSURANCE. The Company will, and will cause each
of its Subsidiaries to, maintain or cause to be maintained, with
financially sound and reputable insurers including any Subsidiary
which is engaged in the business of providing insurance
protection, insurance (including, without limitation,
professional liability insurance against claims for malpractice)
with respect to its properties and business and the properties
and business of its Subsidiaries against loss or damage of the
kinds customarily insured against of such types and such amounts
as are customarily carried under similar circumstances by other
corporations. Such insurance may be subject to co-insurance,
deductibility or similar clauses which, in effect, result in
self-insurance of certain losses, and the Company may self-insure
against such loss or damage, PROVIDED that adequate insurance
reserves are maintained in connection with such self-insurance.
5.5 FINANCIAL STATEMENTS. The Company will and will
cause each of its Subsidiaries to maintain a standard modern
system of accounting in which full, true and correct entries will
be made of all dealings or transactions in relation to its
business and affairs in accordance with GAAP consistently
applied, and will furnish the following to each Bank (in
duplicate if so requested):
(a) ANNUAL STATEMENTS. As soon as available, and in
any event within 120 days after the end of each fiscal year,
the consolidated balance sheet as at the end of each fiscal
year and consolidated statements of profit and loss and of
retained earnings for such fiscal year of the Company and
its Subsidiaries, together with comparative consolidated
figures for the next preceding fiscal year, accompanied by
reports or certificates of an Auditor, to the effect that
such balance sheet and statements were prepared in
accordance with GAAP consistently applied and fairly present
the financial position of the Company and its Subsidiaries
as at the end of such fiscal year and the results of their
operations and changes in financial position for the year
then ended and the statement of such Auditor and of a
<PAGE>
46
Responsible Officer of the Company that such Auditor and
Responsible Officer have caused the provisions of this
Agreement to be reviewed and that nothing has come to their
attention to lead them to believe that any Default exists
hereunder or, if such is not the case, specifying such
Default or possible Default and the nature thereof. In
addition, such financial statements shall be accompanied by
a certificate of a Responsible Officer of the Company
containing computations showing compliance with subsections
5.6, 5.7 and 5.10.
(b) QUARTERLY STATEMENTS. As soon as available, and
in any event within 60 days after the close of each of the
first three fiscal quarters of the Company and its
Subsidiaries in each year, consolidated balance sheets as at
the end of such fiscal quarter and consolidated profit and
loss and retained earnings statements for the portion of the
fiscal year then ended, of the Company and its Subsidiaries,
together with computations showing compliance with
subsections 5.6, 5.7 and 5.10, accompanied by a certificate
of a Responsible Officer of the Company that such statements
and computations have been properly prepared in accordance
with GAAP, consistently applied, and fairly present the
financial position of the Company and its Subsidiaries as at
the end of such fiscal quarter and the results of their
operations and changes in financial position for such
quarter and for the portion of the fiscal year then ended,
subject to normal audit and year-end adjustments, and to the
further effect that he has caused the provisions of this
Agreement and all other agreements to which the Company or
any of its Subsidiaries is a party and which relate to
Indebtedness to be reviewed, and has no knowledge that any
Default has occurred under this Agreement or under any such
other agreement, or, if said Responsible Officer has such
knowledge, specifying such Default and the nature thereof.
(c) NOTICE OF MATERIAL LITIGATION; DEFAULTS. The
Company will promptly notify each Bank in writing, by
delivery of the Company's Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form
8-K filed with the Securities and Exchange Commission or
otherwise, as to any litigation or administrative proceeding
to which it or any of its Subsidiaries may hereafter be a
party which, after giving effect to any applicable
insurance, may involve any material risk of any material
judgment or liability or which may otherwise result in any
material adverse change in the business or assets or in the
condition, financial or otherwise, of the Company and its
Subsidiaries on a consolidated basis. Promptly upon
acquiring knowledge thereof, the Company will notify each
Bank of the existence of any Default, including, without
limitation, any default in the payment of any Indebtedness
for money borrowed of the Company or any Subsidiary or under
the terms of any agreement relating to such Indebtedness,
<PAGE>
47
specifying the nature of such Default and what action the
Company has taken or is taking or proposes to take with
respect thereto. Promptly upon acquiring knowledge thereof,
the Company will notify each Bank of a change in the
publicly announced ratings by S&P and Moody's of the then
current senior unsecured, non-credit enhanced, long-term
Indebtedness of the Company.
(d) ERISA REPORTS. The Company will furnish the Agent
with copies of any request for waiver of the funding
standards or extension of the amortization periods required
by Sections 303 and 304 of ERISA or Section 412 of the Code
promptly after any such request is submitted by the Company
to the Department of Labor or the Internal Revenue Service,
as the case may be. Promptly after a Reportable Event
occurs, or the Company or any of its Subsidiaries receives
notice that the PBGC or any Control Group Person has
instituted or intends to institute proceedings to terminate
any pension or other Plan, or prior to the Plan
administrator's terminating such Plan pursuant to Section
4041 of ERISA, the Company will notify the Agent and will
furnish to the Agent a copy of any notice of such Reportable
Event which is required to be filed with the PBGC, or any
notice delivered by the PBGC evidencing its institution of
such proceedings or its intent to institute such
proceedings, or any notice to the PBGC that a Plan is to be
terminated, as the case may be. The Company will promptly
notify each Bank upon learning of the occurrence of any of
the following events with respect to any Plan which is a
Multiemployer Plan: a partial or complete withdrawal from
any Plan which may result in the incurrence by the Company
or any of is Subsidiaries of withdrawal liability in excess
of $1,000,000 under Subtitle E of Title IV of ERISA, or of
the termination, insolvency or reorganization status of any
Plan under such Subtitle E which may result in liability to
the Company or any of its Subsidiaries in excess of
$1,000,000. In the event of such a withdrawal, upon the
request of the Agent or any Bank, the Company will promptly
provide information with respect to the scope and extent of
such liability, to the best of the Company's knowledge.
(e) REPORTS TO STOCKHOLDERS, ETC. Promptly after the
sending, making available or filing of the same, copies of
all reports and financial statements which the Company shall
send or make available to its stockholders including,
without limitation, the Proxy and all other materials
relating thereto, and all registration statements and
amendments thereto, and all reports on Form 8-K, 10-Q or 10-
K or any similar form hereafter in use which the Company
shall file with the Securities and Exchange Commission.
(f) OTHER INFORMATION. From time to time upon request
of the Agent or any Bank, the Company will furnish
information regarding the business affairs and condition,
<PAGE>
48
financial or otherwise, of the Company and its Subsidiaries.
The Company agrees that any authorized officers and
representatives of any Bank shall have the right during
reasonable business hours to examine the books and records
of the Company and its Subsidiaries, and to make notes and
abstracts therefrom, to make an independent examination of
its books and records for the purpose of verifying the
accuracy of the reports delivered by the Company and its
Subsidiaries pursuant to this Agreement or otherwise, and
ascertaining compliance with this Agreement.
(g) CONFIDENTIALITY OF INFORMATION. Each Bank
acknowledges that some of the information furnished to such
Bank pursuant to this subsection 5.5 may be received by such
Bank prior to the time it shall have been made public, and
each Bank agrees that it will keep all information so
furnished confidential and shall make no use of such
information until it shall have become public, except (i) in
connection with matters involving operations under or
enforcement of this Agreement or the Notes, (ii) in
accordance with each Bank's obligations under law or
pursuant to subpoenas or other process to make information
available to governmental agencies and examiners or to
others, (iii) to each Bank's corporate Affiliates and
Transferees and prospective Transferees so long as such
Persons agree to be bound by this subsection 5.5(g) or (iv)
with the prior consent of the Company.
5.6 RATIO OF TOTAL DEBT TO TANGIBLE NET WORTH. The
Company and its Subsidiaries will not at any time have
outstanding Consolidated Total Debt in an amount in excess of
200% of Consolidated Tangible Net Worth.
5.7 INTEREST COVERAGE RATIO. On the last day of each
fiscal quarter of the Company, the Consolidated Earnings Before
Interest and Taxes of the Company and its Subsidiaries for the
four consecutive fiscal quarters of the Company then ending will
be an amount which equals or exceeds 200% of the Consolidated
Interest Expense of the Company and its Subsidiaries for the same
four consecutive fiscal quarters.
5.8 DISTRIBUTIONS. The Company will not make any
Distribution except that, so long as no Event of Default exists
or would exist after giving effect thereto, the Company may make
a Distribution.
5.9 MERGER OR CONSOLIDATION. The Company will not
become a constituent corporation in any merger or consolidation
unless the Company shall be the surviving or resulting
corporation and immediately before and after giving effect to
such merger or consolidation there shall exist no Default;
provided that the Company may merge into another Subsidiary owned
by the Company for the purpose of causing the Company to be
incorporated in a different jurisdiction in the United States.
<PAGE>
49
5.10 SALES OF ASSETS. The Company and its
Subsidiaries may from time to time sell or otherwise dispose of
all or any part of their respective assets; PROVIDED, HOWEVER,
that in any fiscal year, the Company and its Subsidiaries will
not (a) sell or dispose of (including, without limitation, any
disposition resulting from any merger or consolidation involving
a Subsidiary of the Company, and any Sale-and-Leaseback
Transaction), outside of the ordinary course of business, assets
constituting in the aggregate more than 12% of Consolidated
Assets of the Company and its Subsidiaries as at the end of the
immediately preceding fiscal year and (b) exchange any asset or
group of assets for another asset or group of assets unless (i)
such asset or group of assets are exchanged for an asset or group
of assets of a substantially similar type or nature, (ii) on a
pro forma basis both before and after giving effect to such
exchange, no Default or Event of Default shall have occurred and
be continuing, (iii) the aggregate fair market value (as
determined in good faith by the Board of Directors of the
Company) of the asset or group of assets being transferred by the
Company or such Subsidiary and the asset or group of assets being
acquired by the Company or such Subsidiary are substantially
equal and (iv) the aggregate of (x) all assets of the Company and
its Subsidiaries sold pursuant to subsection 5.10(a) (including,
without limitation, any disposition resulting from any merger or
consolidation involving a Subsidiary of the Company, and any
Sale-and-Leaseback Transaction) and (y) the aggregate fair market
value (as determined in good faith by the Board of Directors of
the Company) of all assets of the Company and its Subsidiaries
exchanged pursuant to this subsection 5.10(b) does not exceed 20%
of Consolidated Assets of the Company and its Subsidiaries as at
the end of the immediately preceding fiscal year.
5.11 COMPLIANCE WITH ERISA. Each of the Company and
its Subsidiaries will meet, and will cause all Control Group
Persons to meet, all minimum funding requirements applicable to
any Plan imposed by ERISA or the Code (without giving effect to
any waivers of such requirements or extensions of the related
amortization periods which may be granted), and will at all times
comply, and will cause all Control Group Persons to comply, in
all material respects with the provisions of ERISA and the Code
which are applicable to the Plans. At no time shall the
aggregate actual and contingent liabilities of the Company under
Sections 4062, 4063, 4064 and other provisions of ERISA
(calculated as if the 30% of collective net worth amount referred
to in Section 4062(b)(1)(A)(i)(II) of ERISA exceeded the actual
total amount of unfunded guaranteed benefits referred to in
Section 4062(B)(1)(A)(i)(I) of ERISA) with respect to all Plans
(and all other pension plans to which the Company, any
Subsidiary, or any Control Group Person made contributions prior
to such time) exceed $7,500,000. Neither the Company nor its
Subsidiaries will permit any event or condition to exist which
could permit any Plan which is not a Multiemployer Plan to be
terminated under circumstances which would cause the lien
<PAGE>
50
provided for in Section 4068 of ERISA to attach to the assets of
the Company or any of its Subsidiaries.
5.12 NEGATIVE PLEDGE. The Company will not and will
ensure that no Subsidiary will create or have outstanding any
security on or over any Principal Property in respect of any
Indebtedness except for:
(a) any security for the purchase price or cost of
construction of real property acquired by the Company or any
of its Subsidiaries (or additions, substantial repairs,
alterations or substantial improvements thereto) or
equipment, provided that such Indebtedness and such security
are incurred within 18 months of the acquisition or
completion of construction (or alteration or repair) and
full operation;
(b) any security existing on property at the time of
acquisition of such property by the Company or a Subsidiary
or on the property of a corporation at the time of the
acquisition of such corporation by the Company or a
Subsidiary (including acquisitions through merger or
consolidation);
(c) any security created in favor of the Company or a
Subsidiary;
(d) any security existing at the date of this
Agreement set forth on Schedule IV;
(e) any security created by operation of law in favor
of government agencies of the United States of America or
any State thereof;
(f) any security created in connection with the
borrowing of funds if within 120 days such funds are used to
repay Indebtedness in at least the same principal amount as
secured by other security of Principal Property with an
independent appraised fair market value at least equal to
the appraised fair market value of the Principal Property
secured by the new security; and
(g) any extension, renewal or replacement of any
security referred to in the foregoing clauses (a) through
(f) provided that the amount thereby secured is not
increased;
unless any Loans made and/or to be made to and all other sums
payable by the Company under this Agreement shall be secured
equally and ratably with (or prior to) such Indebtedness so long
as such Indebtedness shall be so secured. Notwithstanding the
foregoing, the Company and any one or more Subsidiaries may,
without securing the Loans made and/or to be made to and all
other sums payable by the Company under this Agreement, create,
<PAGE>
51
issue or assume Indebtedness which would otherwise be subject to
the foregoing restrictions in an aggregate principal amount
which, together with all other such Indebtedness of the Company
and its Subsidiaries (not including Indebtedness permitted to be
secured pursuant to the foregoing clauses (a) through (g) and the
aggregate Attributable Debt), including Indebtedness in respect
of Sale-and-Lease-back Transactions (other than those permitted
by subsection 5.13(b)), does not exceed 10% of Consolidated Net
Tangible Assets of the Company and its Subsidiaries.
5.13 SALE-AND-LEASE-BACK TRANSACTIONS. Neither the
Company nor any Significant Subsidiary will enter into any Sale-
and-Lease-back Transaction with respect to any Principal Property
with any Person (other than the Company or a Subsidiary) unless
either (a) the Company or such Significant Subsidiary would be
entitled, pursuant to the provisions described in subsection
5.12(a) through (g) to incur Indebtedness secured by a security
on the property to be leased without equally and ratably securing
the Loans made and/or to be made to and all other sums payable by
the Company under this Agreement, or (b) the Company during or
immediately after the expiration of 120 days after the effective
date of such transaction applies to the voluntary retirement of
its Indebtedness and/or the acquisition or construction of
Principal Property an amount equal to the greater of the net
proceeds of the sale of the property leased in such transaction
or the fair value in the opinion of the chief financial officer
of the Company of the leased property at the time such
transaction was entered into.
SECTION 6. DEFAULTS
6.1 EVENTS OF DEFAULT. Upon the occurrence of any of
the following events:
(a) any default shall be made by the Company in any
payment in respect of: (i) interest on any of the Notes or
any facility fee payable hereunder as the same shall become
due and such default shall continue for a period of five
days; or (ii) principal of any of the Indebtedness evidenced
by the Notes as the same shall become due, whether at
maturity, by prepayment, by acceleration or otherwise; or
(b) any default shall be made by either the Company or
any Subsidiary of the Company in the performance or
observance of any of the provisions of subsections 5.6
through 5.10, 5.12 and 5.13; or
(c) any default shall be made in the due performance
or observance of any other covenant, agreement or provision
to be performed or observed by either the Company or any
Subsidiary under this Agreement, and such default shall not
be rectified or cured to the satisfaction of the Required
<PAGE>
52
Banks within a period expiring 30 days after written notice
thereof by the Agent to the Company; or
(d) any representation or warranty of or with respect
to the Company or any Subsidiary of the Company to the Banks
in connection with this Agreement shall have been untrue in
any material respect on or as of the date made and the facts
or circumstances to which such representation or warranty
relates shall not have been subsequently corrected to make
such representation or warranty no longer incorrect; or
(e) any default shall be made in the payment of any
item of Indebtedness of the Company or any Subsidiary or
under the terms of any agreement relating to such
Indebtedness and such default shall continue without having
been duly cured, waived or consented to, beyond the period
of grace, if any, therein specified; PROVIDED, HOWEVER, that
such default shall not constitute an Event of Default unless
(i) the outstanding principal amount of such item of
Indebtedness exceeds $10,000,000, or (ii) the aggregate
outstanding principal amount of such item of Indebtedness
and all other items of Indebtedness of the Company and its
Subsidiaries as to which such defaults exist and have
continued without being duly cured, waived or consented to
beyond the respective periods of grace, if any, therein
specified exceeds $25,000,000, or (iii) such default shall
have continued without being rectified or cured to the
satisfaction of the Required Banks for a period of 30 days
after written notice thereof by the Agent to the Company; or
(f) either the Company or any Subsidiary shall be
involved in financial difficulties as evidenced:
(i) by its commencement of a voluntary case under
Title 11 of the United States Code as from time to time
in effect, or by its authorizing, by appropriate
proceedings of its board of directors or other
governing body, the commencement of such a voluntary
case;
(ii) by the filing against it of a petition
commencing an involuntary case under said Title 11
which shall not have been dismissed within 60 days
after the date on which said petition is filed or by
its filing an answer or other pleading within said 60-
day period admitting or failing to deny the material
allegations of such a petition or seeking, consenting
or acquiescing in the relief therein provided;
(iii) by the entry of an order for relief in any
involuntary case commenced under said Title 11;
(iv) by its seeking relief as a debtor under any
applicable law, other than said Title 11, of any
<PAGE>
53
jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or
alteration of the rights of creditors, or by its
consenting to or acquiescing in such relief;
(v) by the entry of an order by a court of
competent jurisdiction (i) finding it to be bankrupt or
insolvent, (ii) ordering or approving its liquidation,
reorganization or any modification or alteration of the
rights of its creditors, or (iii) assuming custody of,
or appointing a receiver or other custodian for, all or
a substantial part of its property;
(vi) by its making an assignment for the benefit
of, or entering into a composition with, its creditors,
or appointing or consenting to the appointment of a
receiver or other custodian for all or a substantial
part of its property; or
(g) a Change in Control of the Company shall occur;
then and in each and every such case, (x) the Agent may, with the
consent of the Required Banks, or shall, at the direction of the
Required Banks, proceed to protect and enforce the rights of the
Banks by suit in equity, action at law and/or other appropriate
proceeding either for specific performance of any covenant or
condition contained in this Agreement or any Note or in any
instrument delivered to each Bank pursuant to this Agreement, or
in aid of the exercise of any power granted in this Agreement or
any Note or any such instrument or assignment, and (y) the Agent
may, with the consent of the Required Banks, or shall, at the
direction of the Required Banks, by notice in writing to the
Company terminate the obligations of the Banks to make further
Revolving Credit Loans hereunder, and thereupon such obligations
shall terminate forthwith and (z) (unless there shall have
occurred an Event of Default under subsection 6.1(f), in which
case the obligations of the Banks to make further Revolving
Credit Loans hereunder shall automatically terminate and the
unpaid balance of the Notes and accrued interest thereon and all
other amounts payable hereunder (the "BANK OBLIGATIONS") shall
automatically become due and payable) the Agent may, with the
consent of the Required Banks, or shall, at the direction of the
Required Banks, by notice in writing to the Company declare all
or any part of the unpaid balance of the Bank Obligations then
outstanding to be forthwith due and payable, and thereupon such
unpaid balance or part thereof shall become so due and payable
without presentment, protest or further demand or notice of any
kind, all of which are hereby expressly waived, the obligations
of the Banks to make further Revolving Credit Loans hereunder
shall terminate forthwith, and the Agent may, with the consent of
the Required Banks, or shall, at the direction of the Required
Banks, proceed to enforce payment of such balance or part thereof
in such manner as the Agent may elect, and each Bank may offset
and apply toward the payment of such balance or part thereof, and
<PAGE>
54
to the curing of any such Event of Default, any Indebtedness from
such Bank to the Company, including any Indebtedness represented
by deposits in any general or special account maintained with
such Bank.
6.2 ANNULMENT OF DEFAULTS. An Event of Default shall
not be deemed to be in existence for any purpose of this
Agreement if the Agent, with the consent of or at the direction
of the Required Banks, subject to subsection 8.1, shall have
waived such event in writing or stated in writing that the same
has been cured to its reasonable satisfaction, but no such waiver
shall extend to or affect any subsequent Event of Default or
impair any rights of the Agent or the Banks upon the occurrence
thereof.
6.3 WAIVERS. The Company hereby waives to the extent
permitted by applicable law (a) all presentments, demands for
performance, notices of nonperformance (except to the extent
required by the provisions hereof), protests, notices of protest
and notices of dishonor in connection with any of the
Indebtedness evidenced by the Notes, (b) any requirement of
diligence or promptness on the part of any Bank in the
enforcement of its rights under the provisions of this Agreement
or any Note, and (c) any and all notices of every kind and
description which may be required to be given by any statute or
rule of law and any defense of any kind which the Company may now
or hereafter have with respect to its liability under this
Agreement or any Note.
6.4 COURSE OF DEALING. No course of dealing between
the Company and any Bank shall operate as a waiver of any of the
Banks' rights under this Agreement or any Note. No delay or
omission on the part of any Bank in exercising any right under
this Agreement or any Note or with respect to any of the Bank
Obligations shall operate as a waiver of such right or any other
right hereunder. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right or remedy on any
future occasion. No waiver or consent shall be binding upon any
Bank unless it is in writing and signed by the Agent or such of
the Banks as may be required by the provisions of this Agreement.
The making of a Loan hereunder during the existence of a Default
shall not constitute a waiver thereof.
SECTION 7. THE AGENT
7.1 APPOINTMENT. Each Bank hereby irrevocably
designates and appoints Chemical Bank as the Agent and CAF Loan
Agent of such Bank under this Agreement, and each such Bank
irrevocably authorizes Chemical Bank, as the Agent and CAF Loan
Agent for such Bank, to take such action on its behalf under the
provisions of this Agreement and to exercise such powers and
perform such duties as are expressly delegated to the Agent or
CAF Loan Agent, as the case may be, by the terms of this
<PAGE>
55
Agreement, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, neither the Agent nor the
CAF Loan Agent shall have any duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship
with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be
read into this Agreement or otherwise exist against the Agent or
the CAF Loan Agent.
7.2 DELEGATION OF DUTIES. The Agent or the CAF Loan
Agent may execute any of its duties under this Agreement by or
through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such
duties. Neither the Agent nor the CAF Loan Agent shall be
responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
7.3 EXCULPATORY PROVISIONS. Neither the Agent nor the
CAF Loan Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates shall be (a) liable for
any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement (except for its
or such Person's own gross negligence or willful misconduct), or
(b) responsible in any manner to any of the Banks for any
recitals, statements, representations or warranties made by the
Company or any officer thereof contained in this Agreement or in
any certificate, report, statement or other document referred to
or provided for in, or received by the Agent or the CAF Loan
Agent under or in connection with, this Agreement or for the
value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or the Notes or for any failure of
the Company to perform its obligations hereunder. Neither the
Agent nor the CAF Loan Agent shall be under any obligation to any
Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions
of, this Agreement, or to inspect the properties, books or
records of the Company.
7.4 RELIANCE BY AGENT. The Agent and the CAF Loan
Agent shall be entitled to rely, and shall be fully protected in
relying, upon any Note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and
upon advice and statements of legal counsel (including, without
limitation, counsel to the Company), independent accountants and
other experts selected by the Agent or the CAF Loan Agent. The
Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the
Agent. The Agent and the CAF Loan Agent shall be fully justified
in failing or refusing to take any action under this Agreement
<PAGE>
56
unless it shall first receive such advice or concurrence of the
Required Banks as it deems appropriate or it shall first be
indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. The Agent and the
CAF Loan Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the Notes
in accordance with a request of the Required Banks, and such
request and any action taken or failure to act pursuant thereto
shall be binding upon all the Banks and all future holders of the
Notes.
7.5 NOTICE OF DEFAULT. The Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or
Event of Default hereunder unless the Agent has received notice
from a Bank or the Company referring to this Agreement,
describing 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, the Agent shall promptly give notice
thereof to the Banks. The Agent shall take such action with
respect to such Default or Event of Default as shall be
reasonably directed by the Required Banks; 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 interests
of the Banks.
7.6 NON-RELIANCE ON AGENT AND OTHER BANKS. Each Bank
expressly acknowledges that neither the Agent nor the CAF Loan
Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or
warranties to it and that no act by the Agent or the CAF Loan
Agent hereinafter taken, including any review of the affairs of
the Company, shall be deemed to constitute any representation or
warranty by the Agent to any Bank. Each Bank represents to the
Agent and the CAF Loan Agent that it has, independently and
without reliance upon the Agent or the CAF Loan Agent or any
other Bank, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation
into the business, operations, property, financial and other
condition and creditworthiness of the Company and made its own
decision to make its Loans hereunder and enter into this
Agreement. Each Bank also represents that it will, independently
and without reliance upon the Agent or the CAF Loan Agent or any
other Bank, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking
action under this Agreement, and to make such investigation as it
deems necessary to inform itself as to the business, operations,
property, financial and other condition and creditworthiness of
the Company. Except for notices, reports and other documents
expressly required to be furnished to the Banks by the Agent or
the CAF Loan Agent hereunder, neither the Agent nor the CAF Loan
<PAGE>
57
Agent shall have any duty or responsibility to provide any Bank
with any credit or other information concerning the business,
operations, property, financial and other condition or
creditworthiness of the Company which may come into the
possession of the Agent or the CAF Loan Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
7.7 INDEMNIFICATION. The Banks agree to indemnify the
Agent and the CAF Loan Agent in its capacity as such (to the
extent not reimbursed by the Company and without limiting the
obligation of the Company to do so), ratably according to the
respective amounts of their then existing Commitments, from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time
(including without limitation at any time following the payment
of the Notes) be imposed on, incurred by or asserted against the
Agent or the CAF Loan Agent in any way relating to or arising out
of this Agreement, or any documents contemplated by or referred
to herein or the transactions contemplated hereby or any action
taken or omitted by the Agent or the CAF Loan Agent under or in
connection with any of the foregoing; PROVIDED that no Bank shall
be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from the
Agent's or the CAF Loan Agent's gross negligence or willful
misconduct. The agreements in this subsection shall survive the
payment of the Notes and all other amounts payable hereunder.
7.8 AGENT AND CAF LOAN AGENT IN ITS INDIVIDUAL
Capacity. The Agent and the CAF Loan Agent and its Affiliates
may make loans to, accept deposits from and generally engage in
any kind of business with the Company as though the Agent or the
CAF Loan Agent were not the Agent or the CAF Loan Agent
hereunder. With respect to its Loans made or renewed by it and
any Note issued to it, the Agent and the CAF Loan Agent shall
have the same rights and powers under this Agreement as any Bank
and may exercise the same as though it were not the Agent, and
the terms "Bank" and "Banks" shall include the Agent or the CAF
Loan Agent in its individual capacity.
7.9 SUCCESSOR AGENT AND CAF LOAN AGENT. The Agent or
the CAF Loan Agent may resign as Agent or CAF Loan Agent, as the
case may be, upon 10 days' notice to the Banks. If the Agent or
the CAF Loan Agent shall resign as Agent or CAF Loan Agent, as
the case may be, under this Agreement, then the Required Banks
shall appoint from among the Banks a successor agent for the
Banks which successor agent shall be approved by the Company,
whereupon such successor agent shall succeed to the rights,
powers and duties of the Agent or CAF Loan Agent, as the case may
be, and the term "Agent" or "CAF Loan Agent", as the case may be,
shall mean such successor agent effective upon its appointment,
and the former Agent's or CAF Loan Agent's rights, powers and
<PAGE>
58
duties as Agent or CAF Loan Agent shall be terminated, without
any other or further act or deed on the part of such former Agent
or CAF Loan Agent or any of the parties to this Agreement or any
holders of the Notes. After any retiring Agent's or CAF Loan
Agent's resignation hereunder as Agent or CAF Loan Agent, the
provisions of this subsection 7.9 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was
Agent or CAF Loan Agent under this Agreement. The Co-Agents in
their capacities as such shall have no rights, duties or
obligations under this Agreement.
SECTION 8. MISCELLANEOUS
8.1 AMENDMENTS AND WAIVERS. Neither this Agreement,
any Note, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions
of this subsection. With the written consent of the Required
Banks, the Agent and the Company may, from time to time, enter
into written amendments, supplements or modifications hereto for
the purpose of adding any provisions to this Agreement or the
Notes or changing in any manner the rights of the Banks or of the
Company hereunder or thereunder or waiving, on such terms and
conditions as the Agent may specify in such instrument, any of
the requirements of this Agreement or the Notes or any Default or
Event of Default and its consequences; PROVIDED, HOWEVER, that no
such waiver and no such amendment, supplement or modification
shall (a) extend the maturity (whether as stated, by acceleration
or otherwise) of any Note, or reduce the rate or extend the time
of payment of interest thereon, or reduce any fee payable to the
Banks hereunder, or reduce the principal amount thereof, or
change the amount of any Bank's Commitment or amend, modify or
waive any provision of this subsection 8.1 or reduce the
percentage specified in the definition of Required Banks, or
consent to the assignment or transfer by the Company of any of
its rights and obligations under this Agreement, in each case
without the written consent of all the Banks, or (b) amend,
modify or waive any provision of Section 7 without the written
consent of the then Agent. Any such waiver and any such
amendment, supplement or modification shall apply equally to each
of the Banks and shall be binding upon the Company, the Banks,
the Agent and all future holders of the Notes. In the case of
any waiver, the Company, the Banks and the Agent shall be
restored to their former position and rights hereunder and under
the outstanding Notes, and any Default or Event of Default waived
shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event
of Default, or impair any right consequent thereon.
8.2 NOTICES. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made
when delivered by hand, or three days after being deposited in
<PAGE>
59
the mail, postage prepaid, or, in the case of telecopy notice,
when sent, confirmation of receipt received, addressed as follows
in the case of the Company, the Agent, and the CAF Loan Agent and
as set forth in Schedule I in the case of the other parties
hereto, or to such other address as may be hereafter notified by
the respective parties hereto and any future holders of the
Notes:
The Company: Columbia Healthcare Corporation
201 West Main Street
Louisville, Kentucky 40202
Attention: Treasurer, with a copy to
the General Counsel
Telecopy: 502-572-2163
The Agent and
CAF Loan Agent: Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: Carol J. Burt,
Managing Director
Telecopy: (212) 270-3279
with a copy to: Chemical Bank Agency Services
Corporation
140 East 45th Street
New York, New York 10017
Attention: Janet Belden and
Wallace Chin
Telecopy: (212) 270-0854
PROVIDED that any notice, request or demand to or upon the Agent
or the Banks pursuant to Section 2 shall not be effective until
received.
8.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to
exercise and no delay in exercising, on the part of the Agent or
any Bank, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative
and not exclusive of any rights, remedies, powers and privileges
provided by law.
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made hereunder and in any
document, certificate or statement delivered pursuant hereto or
in connection herewith shall survive the execution and delivery
of this Agreement and the Notes.
8.5 PAYMENT OF EXPENSES AND TAXES; INDEMNITY.
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60
(a) The Company agrees (i) to pay or reimburse the Agent for all
its reasonable out-of-pocket costs and expenses incurred in
connection with the development, preparation and execution of,
and any amendment, supplement or modification to, this Agreement
and the Notes and any other documents prepared in connection
herewith, and the consummation of the transactions contemplated
hereby and thereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Agent, (ii) to pay or
reimburse each Bank and the Agent for all their reasonable costs
and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the Notes and
any such other documents, including, without limitation,
reasonable fees and disbursements of counsel to the Agent and to
each of the Banks and (iii) to pay, indemnify, and hold each Bank
and the Agent harmless from, any and all recording and filing
fees and any and all liabilities with respect to, or resulting
from any delay in paying, stamp, excise and other taxes, if any,
which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation of any of the
transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of,
this Agreement, the Notes and any such other documents.
(b) The Company will indemnify each of the Agent and
the Banks and the directors, officers and employees thereof and
each Person, if any, who controls each one of the Agent and the
Banks (any of the foregoing, an "INDEMNIFIED PERSON") and hold
each Indemnified Person harmless from and against any and all
claims, damages, liabilities and expenses (including without
limitation all fees and disbursements of counsel with whom an
Indemnified Person may consult in connection therewith and all
expenses of litigation or preparation therefor) which an
Indemnified Person may incur or which may be asserted against it
in connection with any litigation or investigation involving this
Agreement, the use of any proceeds of any Loans under this
Agreement by the Company or any Subsidiary, any officer, director
or employee thereof or the announcement or consummation of the
Merger, other than litigation commenced by the Company against
any of the Agent or the Banks which (i) seeks enforcement of any
of the Company's right hereunder and (ii) is determined adversely
to any of the Agent or the Banks.
(c) The agreements in this subsection 8.5 shall
survive repayment of the Notes and all other amounts payable
hereunder.
8.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; PURCHASING
BANKS. (a) This Agreement shall be binding upon and inure to the
benefit of the Company, the Banks, the Agent, all future holders
of the Notes and their respective successors and assigns, except
that the Company may not assign or transfer any of its rights or
obligations under this Agreement without the prior written
consent of each Bank.
<PAGE>
61
(b) Any Bank may, in the ordinary course of its
commercial banking business and in accordance with applicable
law, at any time sell to one or more banks or other entities
("PARTICIPANTS") participating interests in any Loans owing to
such Bank, any Notes held by such Bank, any Commitments of such
Bank or any other interests of such Bank hereunder. In the event
of any such sale by a Bank of a participating interest to a
Participant, such Bank's obligations under this Agreement to the
other parties under this Agreement shall remain unchanged, such
Bank shall remain solely responsible for the performance thereof,
such Bank shall remain the holder of any such Notes for all
purposes under this Agreement, and the Company and the Agent
shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this
Agreement. The Company agrees that if amounts outstanding under
this Agreement and the Notes are due or unpaid, or shall have
been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be
deemed to have the right of offset in respect of its
participating interest in amounts owing under this Agreement and
any Notes to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under
this Agreement or any Notes, PROVIDED that such right of offset
shall be subject to the obligation of such Participant to share
with the Banks, and the Banks agree to share with such
Participant, as provided in subsection 8.7. The Company also
agrees that each Participant shall be entitled to the benefits of
subsections 2.12, 2.13 and 2.15 with respect to its participation
in the Commitments and the Eurodollar Loans outstanding from time
to time; PROVIDED that no Participant shall be entitled to
receive any greater amount pursuant to such subsections than the
transferor Bank would have been entitled to receive in respect of
the amount of the participation transferred by such transferor
Bank to such Participant had no such transfer occurred. No
Participant shall be entitled to consent to any amendment,
supplement, modification or waiver of or to this Agreement or any
Note, unless the same is subject to clause (a) of the proviso to
subsection 8.1.
(c) Any Bank may, in the ordinary course of its
commercial banking business and in accordance with applicable
law, at any time assign to one or more banks or other entities
("CAF LOAN ASSIGNEES") any CAF Loan owing to such Bank and any
Individual CAF Loan Note held by such Bank evidencing such CAF
Loan, pursuant to a CAF Loan Assignment executed by the assignor
Bank and the CAF Loan Assignee. Upon such execution, from and
after the date of such CAF Loan Assignment, the CAF Loan Assignee
shall, to the extent of the assignment provided for in such CAF
Loan Assignment, be deemed to have the same rights and benefits
of payment and enforcement with respect to such CAF Loan and
Individual CAF Loan Note and the same rights of offset pursuant
to subsection 6.1 and under applicable law and obligation to
share pursuant to subsection 8.7 as it would have had if it were
a Bank hereunder; PROVIDED that unless such CAF Loan Assignment
<PAGE>
62
shall otherwise specify and a copy of such CAF Loan Assignment
shall have been delivered to the Agent for its acceptance and
recording in the Register in accordance with subsection 8.6(f),
the assignor thereunder shall act as collection agent for the CAF
Loan Assignee thereunder, and the Agent shall pay all amounts
received from the Company which are allocable to the assigned CAF
Loan or Individual CAF Loan Note directly to such assignor
without any further liability to such CAF Loan Assignee. A CAF
Loan Assignee under a CAF Loan Assignment shall not, by virtue of
such CAF Loan Assignment, become a party to this Agreement or
have any rights to consent to or refrain from consenting to any
amendment, waiver or other modification of any provision of this
Agreement or any related document; PROVIDED that if a copy of
such CAF Loan Assignment shall have been delivered to the Agent
for its acceptance and recording in the Register in accordance
with subsection 8.6(f), neither the principal amount of, the
interest rate on, nor the maturity date of any CAF Loan or
Individual CAF Loan Note assigned to the CAF Loan Assignee
thereunder will be modified without the written consent of such
CAF Loan Assignee. If a CAF Loan Assignee has caused a CAF Loan
Assignment to be recorded in the Register in accordance with
subsection 8.6(f), such CAF Loan Assignee may thereafter, in the
ordinary course of its business and in accordance with applicable
law, assign such Individual CAF Loan Note to any Bank, to any
affiliate or subsidiary of such CAF Loan Assignee or to any other
financial institution that has total assets in excess of
$1,000,000,000 and that in the ordinary course of its business
extends credit of the type evidenced by such Individual CAF Loan
Note, and the foregoing provisions of this subsection 8.6(c)
shall apply, MUTATIS MUTANDIS, to any such assignment by a CAF
Loan Assignee. Except in accordance with the preceding sentence,
CAF Loans and Individual CAF Loan Notes may not be further
assigned by a CAF Loan Assignee, subject to any legal or
regulatory requirement that the CAF Loan Assignee's assets must
remain under its control.
(d) Any Bank may, in the ordinary course of its
commercial banking business and in accordance with applicable
law, at any time sell to any Bank or any affiliate thereof, and,
with the consent of the Company and the Agent (which in each case
shall not be unreasonably withheld) to one or more additional
banks or financial institutions ("PURCHASING BANKS") all or any
part of its rights and obligations under this Agreement and the
Notes pursuant to a Commitment Transfer Supplement, executed by
such Purchasing Bank, such transferor Bank and the Agent (and, in
the case of a Purchasing Bank that is not then a Bank or an
affiliate thereof, by the Company); PROVIDED, HOWEVER, that (i)
the Commitments purchased by such Purchasing Bank that is not
then a Bank shall be equal to or greater than $10,000,000 and
(ii) the transferor Bank which has transferred part of its Loans
and Commitments to any such Purchasing Bank shall retain a
minimum Commitment, after giving effect to such sale, equal to or
greater than $10,000,000. Upon (i) such execution of such
Commitment Transfer Supplement, (ii) delivery of an executed copy
<PAGE>
63
thereof to the Company and (iii) payment by such Purchasing Bank,
such Purchasing Bank shall for all purposes be a Bank party to
this Agreement and shall have all the rights and obligations of a
Bank under this Agreement, to the same extent as if it were an
original party hereto with the Commitment Percentage of the
Commitments set forth in such Commitment Transfer Supplement.
Such Commitment Transfer Supplement shall be deemed to amend this
Agreement to the extent, and only to the extent, necessary to
reflect the addition of such Purchasing Bank and the resulting
adjustment of Commitment Percentages arising from the purchase by
such Purchasing Bank of all or a portion of the rights and
obligations of such transferor Bank under this Agreement and the
Notes. Upon the consummation of any transfer to a Purchasing
Bank, pursuant to this subsection 8.6(d), the transferor Bank,
the Agent and the Company shall make appropriate arrangements so
that, if required, replacement Notes are issued to such
transferor Bank and new Notes or, as appropriate, replacement
Notes, are issued to such Purchasing Bank, in each case in
principal amounts reflecting their Commitment Percentages or, as
appropriate, their outstanding Loans as adjusted pursuant to such
Commitment Transfer Supplement.
(e) The Agent shall maintain at its address referred
to in subsection 8.2 a copy of each CAF Loan Assignment and each
Commitment Transfer Supplement delivered to it and a register
(the "Register") for the recordation of (i) the names and
addresses of the Banks and the Commitment of, and principal
amount of the Loans owing to, each Bank from time to time, and
(ii) with respect to each CAF Loan Assignment delivered to the
Agent, the name and address of the CAF Loan Assignee and the
principal amount of each CAF Loan owing to such CAF Loan
Assignee. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Company, the Agent and the
Banks may treat each Person whose name is recorded in the
Register as the owner of the Loan recorded therein for all
purposes of this Agreement. The Register shall be available for
inspection by the Company or any Bank or CAF Loan Assignee at any
reasonable time and from time to time upon reasonable prior
notice.
(f) Upon its receipt of a CAF Loan Assignment executed
by an assignor Bank and a CAF Loan Assignee, together with
payment to the Agent of a registration and processing fee of
$1,000, the Agent shall promptly accept such CAF Loan Assignment,
record the information contained therein in the Register and give
notice of such acceptance and recordation to the assignor Bank,
the CAF Loan Assignee and the Company. Upon its receipt of a
Commitment Transfer Supplement executed by a transferor Bank and
a Purchasing Bank (and, in the case of a Purchasing Bank that is
not then a Bank or an affiliate thereof, by the Company and the
Agent) together with payment to the Agent of a registration and
processing fee of $2,500, the Agent shall (i) promptly accept
such Commitment Transfer Supplement (ii) on the Transfer
Effective Date determined pursuant thereto record the information
<PAGE>
64
contained therein in the Register and give notice of such
acceptance and recordation to the Banks and the Company.
(g) Subject to subsection 5.5(g), the Company
authorizes each Bank to disclose to any Participant, CAF Loan
Assignee or Purchasing Bank (each, a "TRANSFEREE") and any
prospective Transferee any and all financial information in such
Bank's possession concerning the Company which has been delivered
to such Bank by the Company pursuant to this Agreement or which
has been delivered to such Bank by the Company in connection with
such Bank's credit evaluation of the Company prior to entering
into this Agreement.
(h) If, pursuant to this subsection 8.6, any interest
in this Agreement or any Note is transferred to any Transferee
which is organized under the laws of any jurisdiction other than
the United States or any State thereof, the transferor Bank shall
cause such Transferee, concurrently with the effectiveness of
such transfer, (i) to represent to the transferor Bank (for the
benefit of the transferor Bank, the Agent and the Company) that
under applicable law and treaties no taxes will be required to be
withheld by the Agent, the Company or the transferor Bank with
respect to any payments to be made to such Transferee in respect
of the Loans, (ii) to furnish to the transferor Bank (and, in the
case of any Purchasing Bank and any CAF Loan Assignee registered
in the Register, the Agent and the Company) either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service Form
1001 (wherein such Transferee claims entitlement to complete
exemption from U.S. federal withholding tax on all interest
payments hereunder) and (iii) to agree (for the benefit of the
transferor Bank, to provide the transferor Bank (and, in the case
of any Purchasing Bank and any CAF Loan Assignee registered in
the Register, the Agent and the Company) a new form 4224 or Form
1001 upon the obsolescence of any previously delivered form and
comparable statements in accordance with applicable U.S. laws and
regulations and amendments duly executed and completed by such
Transferee, and to comply from time to time with all applicable
U.S. laws and regulations with regard to such withholding tax
exemption.
(i) Nothing herein shall prohibit any Bank or any
Affiliate thereof from pledging or assigning any Note to any
Federal Reserve Bank in accordance with applicable law.
8.7 ADJUSTMENTS; SET-OFF. If any Bank (a "BENEFITTED
BANK") shall at any time receive any payment of all or part of
its Loans, or interest thereon, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by offset,
pursuant to events or proceedings of the nature referred to in
subsection 6.1(f), or otherwise) in a greater proportion than any
such payment to and collateral received by any other Bank, if
any, in respect of such other Bank's Loans, or interest thereon,
such Benefitted Bank shall purchase for cash from the other Banks
such portion of each such other Bank's Loans, or shall provide
<PAGE>
65
such other Banks with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such Benefitted
Bank to share the excess payment or benefits of such collateral
or proceeds ratably with each of the Banks; PROVIDED, HOWEVER,
that if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefitted Bank, such purchase
shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest. The
Company agrees that each Bank so purchasing a portion of another
Bank's Loan may exercise all rights of a payment (including,
without limitation, rights of offset) with respect to such
portion as fully as if such Bank were the direct holder of such
portion.
8.8 COUNTERPARTS. This Agreement may be executed by
one or more of the parties to this Agreement on any number of
separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument. A set
of the copies of this Agreement signed by all the parties shall
be lodged with the Company and the Agent.
8.9 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT
AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.10 WAIVERS OF JURY TRIAL. THE COMPANY, THE AGENT,
THE CAF LOAN AGENT AND THE BANKS EACH HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.11 SUBMISSION TO JURISDICTION; WAIVERS. The Company
hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal
action or proceeding relating to this Agreement, or for
recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and
appellate courts from any thereof; and
(ii) consents that any such action or proceeding may be
brought in such courts, and waives any objection that it may
now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees
not to plead or claim the same.
<PAGE>
66
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
COLUMBIA HEALTHCARE CORPORATION
By:
-------------------------------------
Name:
Title:
CHEMICAL BANK, as Agent, as CAF
Loan Agent and as a Bank
By:
-------------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION, as a Co-Agent and as a Bank
By:
-------------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA, as a Co-Agent
and as a Bank
By:
-------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, N.A., as a Co-
Agent and as a Bank
By:
-------------------------------------
Name:
Title:
<PAGE>
67
CITIBANK, N.A., as a Co-Agent and as a
Bank
By:
-------------------------------------
Name:
Title:
DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN
ISLANDS BRANCHES, as a Co-Agent and as a
Bank
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO, as a
Co-Agent and as a Bank
By:
-------------------------------------
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
NEW YORK BRANCH, as a Co-Agent and as a
Bank
By:
-------------------------------------
Name:
Title:
MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as a Co-Agent and as a Bank
By:
-------------------------------------
Name:
Title:
<PAGE>
68
NATIONSBANK OF NORTH CAROLINA, N.A., as
a Co-Agent and as a Bank
By:
-------------------------------------
Name:
Title:
PNC BANK, KENTUCKY, INC., as a Co-Agent
and as a Bank
By:
-------------------------------------
Name:
Title:
TORONTO DOMINION (TEXAS), INC., as a Co-
Agent and as a Bank
By:
-------------------------------------
Name:
Title:
WACHOVIA BANK OF GEORGIA, N.A., as a Co-
Agent and as a Bank
By:
-------------------------------------
Name:
Title:
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By:
-------------------------------------
Name:
Title:
<PAGE>
69
FIRST INTERSTATE BANK OF CALIFORNIA
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
THE FUJI BANK, LIMITED, HOUSTON AGENCY
By:
-------------------------------------
Name:
Title:
SHAWMUT BANK-CONNECTICUT, N.A.
By:
-------------------------------------
Name:
Title:
NATIONAL CITY BANK
By:
-------------------------------------
Name:
Title:
THIRD NATIONAL BANK IN NASHVILLE
By:
-------------------------------------
Name:
Title:
<PAGE>
70
THE SANWA BANK, LIMITED, ATLANTA AGENCY
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
J.P. MORGAN DELAWARE
By:
-------------------------------------
Name:
Title:
THE SAKURA BANK, LTD. NEW YORK BRANCH
By:
-------------------------------------
Name:
Title:
ABN AMRO BANK N.V.
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By:
-------------------------------------
Name:
Title:
<PAGE>
71
THE LONG-TERM CREDIT BANK OF JAPAN
By:
-------------------------------------
Name:
Title:
MELLON BANK, N.A.
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
THE MITSUBISHI BANK, LTD.
By:
-------------------------------------
Name:
Title:
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
ROYAL BANK OF CANADA
By:
-------------------------------------
Name:
Title:
<PAGE>
72
THE SUMITOMO BANK, LIMITED, NEW YORK
BRANCH
By:
-------------------------------------
Name:
Title:
SWISS BANK CORPORATION
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
THE TOKAI BANK, LIMITED, NEW YORK BRANCH
By:
-------------------------------------
Name:
Title:
NBD BANK, N.A.
By:
-------------------------------------
Name:
Title:
THE BANK OF TOKYO TRUST COMPANY
By:
-------------------------------------
Name:
Title:
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By:
-------------------------------------
Name:
Title:
<PAGE>
73
AMSOUTH BANK N.A.
By:
-------------------------------------
Name:
Title:
ARAB BANK PLC, GRAND CAYMAN BRANCH
By:
-------------------------------------
Name:
Title:
BANK ONE, TEXAS, NA
By:
-------------------------------------
Name:
Title:
BARNETT BANK OF TAMPA
By:
-------------------------------------
Name:
Title:
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
By:
-------------------------------------
Name:
Title:
THE DAIWA BANK, LTD.
By:
-------------------------------------
Name:
Title:
FIRST AMERICAN NATIONAL BANK
By:
-------------------------------------
Name:
Title:
<PAGE>
74
LIBERTY NATIONAL BANK AND TRUST COMPANY
OF LOUISVILLE
By:
-------------------------------------
Name:
Title:
THE NORTHERN TRUST COMPANY
By:
-------------------------------------
Name:
Title:
UNITED STATES NATIONAL BANK OF OREGON
By:
-------------------------------------
Name:
Title:
BANK OF LOUISVILLE & TRUST CO.
By:
-------------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
COMMITMENT AMOUNTS AND PERCENTAGES;
LENDING OFFICES; ADDRESSES FOR NOTICE
A. COMMITMENT AMOUNTS AND PERCENTAGES.
<TABLE>
<CAPTION>
COMMITMENT COMMITMENT
NAME OF BANK AMOUNT PERCENTAGE
- ------------ ---------- ----------
<S> <C> <C>
CHEMICAL BANK $43,333,333.33 4.33%
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION $40,000,000.00 4.00%
THE BANK OF NOVA SCOTIA $40,000,000.00 4.00%
THE CHASE MANHATTAN BANK, N.A. $40,000,000.00 4.00%
CITIBANK, N.A. $40,000,000.00 4.00%
DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES $40,000,000.00 4.00%
THE FIRST NATIONAL BANK OF CHICAGO $40,000,000.00 4.00%
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, NEW YORK BRANCH $40,000,000.00 4.00%
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK $20,000,000.00 2.00%
NATIONSBANK OF NORTH CAROLINA, N.A. $40,000,000.00 4.00%
PNC BANK, KENTUCKY, INC. $40,000,000.00 4.00%
TORONTO DOMINION (TEXAS), INC. $40,000,000.00 4.00%
WACHOVIA BANK OF GEORGIA, N.A. $40,000,000.00 4.00%
CREDIT LYONNAIS CAYMAN
ISLAND BRANCH $25,000,000.00 2.50%
FIRST INTERSTATE BANK
OF CALIFORNIA $25,000,000.00 2.50%
THE FUJI BANK, LIMITED,
HOUSTON AGENCY $25,000,000.00 2.50%
SHAWMUT BANK-CONNECTICUT, N.A. $25,000,000.00 2.50%
NATIONAL CITY BANK $25,000,000.00 2.50%
THIRD NATIONAL BANK
IN NASHVILLE $25,000,000.00 2.50%
THE SANWA BANK, LIMITED,
ATLANTA AGENCY $23,333,333.33 2.33%
J.P. MORGAN DELAWARE $20,000,000.00 2.00%
THE SAKURA BANK, LTD.
NEW YORK BRANCH $20,000,000.00 2.00%
</TABLE>
<PAGE>
2
<TABLE>
<S> <C> <C>
ABN AMRO BANK N.V. $16,666,666.67 1.67%
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA $16,666,666.67 1.67%
THE LONG-TERM CREDIT
BANK OF JAPAN $16,666,666.67 1.67%
MELLON BANK, N.A. $16,666,666.67 1.67%
THE MITSUBISHI BANK, LTD. $16,666,666.67 1.67%
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND",
NEW YORK BRANCH $16,666,666.67 1.67%
ROYAL BANK OF CANADA $16,666,666.67 1.67%
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH $16,666,666.67 1.67%
SWISS BANK CORPORATION $16,666,666.67 1.67%
THE TOKAI BANK, LIMITED,
NEW YORK BRANCH $16,666,666.67 1.67%
NBD BANK, N.A. $10,000,000.00 1.00%
THE BANK OF TOKYO
TRUST COMPANY $10,000,000.00 1.00%
THE MITSUBISHI TRUST
AND BANKING CORPORATION $10,000,000.00 1.00%
AMSOUTH BANK N.A. $ 8,333,333.33 0.83%
ARAB BANK PLC, GRAND
CAYMAN BRANCH $ 8,333,333.33 0.83%
BANK ONE, TEXAS, NA $ 8,333,333.33 0.83%
BARNETT BANK OF TAMPA $ 8,333,333.33 0.83%
THE BOATMEN'S NATIONAL BANK
OF ST. LOUIS $ 8,333,333.33 0.83%
THE DAIWA BANK, LTD. $ 8,333,333.33 0.83%
FIRST AMERICAN NATIONAL BANK $ 8,333,333.33 0.83%
LIBERTY NATIONAL BANK AND TRUST
COMPANY OF LOUISVILLE $ 8,333,333.33 0.83%
THE NORTHERN TRUST COMPANY $ 8,333,333.33 0.83%
UNITED STATES NATIONAL
BANK OF OREGON $ 8,333,333.33 0.83%
BANK OF LOUISVILLE & TRUST CO. $ 3,333,333.33 0.33%
-------------- -------
TOTAL $1,000,000,000 100.00%
-------------- -------
-------------- -------
</TABLE>
<PAGE>
3
B. LENDING OFFICES; ADDRESSES FOR NOTICE.
CHEMICAL BANK
Domestic Lending Office: Chemical Bank
270 Park Avenue
New York, NY 10017
Eurodollar Lending Office: Chemical Bank
270 Park Avenue
New York, NY 10017
Address for Notices: See subsection 8.2 of the
Credit Agreement
ABN AMRO BANK N.V.
Domestic Lending Office: ABN AMRO Bank N.V. -
Pittsburgh Branch
One PPG Place, Suite 2950
Pittsburgh, PA 15222-5400
Eurodollar Lending Office: ABN AMRO Bank N.V. -
Pittsburgh Branch
One PPG Place, Suite 2950
Pittsburgh, PA 15222-5400
Address for Notices: ABN AMRO Bank N.V. -
Pittsburgh Branch
One PPG Place, Suite 2950
Pittsburgh, PA 15222-5400
Attention: Dennis F. Lennon
Telecopy: (412) 566-2266
Confirmation: (412) 566-2256
<PAGE>
4
AMSOUTH BANK N.A.
Domestic Lending Office: AmSouth Bank N.A.
1900 5th Ave. North
Birmingham, AL 35203
Eurodollar Lending Office: AmSouth Bank N.A.
1900 5th Ave. North
Birmingham, AL 35203
Address for Notices: AmSouth Bank N.A.
1900 5th Ave. North
Birmingham, AL 35203
Attention: William Page
Barnes
Telecopy: (205) 326-4075
Confirmation: (205) 326-4081
ARAB BANK PLC, GRAND CAYMAN BRANCH
Domestic Lending Office: Arab Bank Plc, Grand Cayman
Branch
520 Madison Avenue
New York, NY 10022
Eurodollar Lending Office: Arab Bank Plc, Grand Cayman
Branch
520 Madison Avenue
New York, NY 10022
Address for Notices: Arab Bank Plc, Grand Cayman
Branch
520 Madison Avenue
New York, NY 10022
Attention: Peter Boyadjian
Telecopy: (212) 593-4652
Confirmation: (212) 715-9714
<PAGE>
5
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION
Domestic Lending Office: Bank of America National Trust
& Savings Association
555 S. Flower Street #5618
Los Angeles, CA 90071
Eurodollar Lending Office: Bank of America National Trust
& Savings Association
1850 Gateway Blvd., 4th Floor
Concord, CA 94520
Address for Notices: Bank of America National Trust
& Savings Association
555 S. Flower Street #5618
Los Angeles, CA 90071
Attention: Katherine McNallen
Telecopy: (213) 228-2958
Confirmation: (213) 228-2756
BANK OF LOUISVILLE & TRUST CO.
Domestic Lending Office: Bank of Louisville & Trust Co.
Eurodollar Lending Office: Bank of Louisville & Trust Co.
Address for Notices: Bank of Louisville & Trust Co.
Attention:
Telecopy:
Confirmation:
THE BANK OF NOVA SCOTIA
Domestic Lending Office: The Bank of Nova Scotia
55 Park Place
Suite 650
Atlanta, GA 30808
Eurodollar Lending Office: The Bank of Nova Scotia
55 Park Place
Suite 650
Atlanta, GA 30808
Address for Notices: The Bank of Nova Scotia
Atlanta Agency
600 Peachtree Street
Suite 2700
Atlanta, GA 30308
Attention: Joe Legista
Telecopy: (404) 888-8998
Confirmation: (408) 877-1562
<PAGE>
6
THE BANK OF TOKYO TRUST COMPANY
Domestic Lending Office: The Bank of Tokyo Trust
Company
100 Broadway
New York, NY 10005
Eurodollar lending Office: The Bank of Tokyo Trust
Company
100 Broadway
New York, NY 10005
Address for Notices: The Bank of Tokyo Trust
Company
100 Broadway
New York, NY 10005
Attention:
Telecopy:
Confirmation:
BANK ONE, TEXAS, NA
Domestic Lending Office: Bank One, Texas, NA
500 Throckmorton
Fort Worth, TX 76102
Eurodollar Lending Office: Bank One, Texas, NA
500 Throckmorton
Fort Worth, TX 76102
Address for Notices: Bank One, Texas, NA
500 Throckmorton, 6th Floor
Fort Worth, TX 76102
Attention: J. Michael Wilson
Telecopy: (817) 884-5697
Confirmation: (817) 884-4283
BARNETT BANK OF TAMPA
Domestic Lending Office: Barnett Bank of Tampa
50 North Laura Street
Jacksonville, FL 32202
Eurodollar Lending Office: Barnett Bank of Tampa
50 North Laura Street
Jacksonville, FL 32202
Address for Notices: Barnett Bank
101 E. Kennedy Blvd.
P. O. Box 30014
Tampa, FL 33630
Attn: W. Thomas Bowry, Jr.
<PAGE>
7
Telecopy: (813) 225-8752
Confirmation: (813) 225-8140
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
Domestic Lending Office: The Boatmen's National Bank
of St. Louis
One Boatmen's Plaza
800 Market Street
St. Louis, MO 63166
Eurodollar Lending Office: The Boatmen's National Bank
of St. Louis
One Boatmen's Plaza
800 Market Street
St. Louis, MO 63166
Address for Notices: The Boatmen's National Bank
of St. Louis
One Boatmen's Plaza
800 Market Street
P. O. Box 236
St. Louis, MO 63166
Attention:
Telecopy:
Confirmation:
THE CHASE MANHATTAN BANK, N.A.
Domestic Lending Office: The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, NY 10081
Eurodollar Lending Office: The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, NY 10081
Address for Notices: The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
5th Floor
New York, NY 10081
Attention: Elliot Jones
Telecopy: (212) 552-1457
Confirmation: (212) 552-5302
CITIBANK, N.A.
Domestic Lending Office: Citicorp North America, Inc.
2001 Ross Ave., Suite 1400
Dallas, TX 75201
<PAGE>
8
Eurodollar Lending Office: Citicorp North America, Inc.
2001 Ross Ave., Suite 1400
Dallas, TX 75201
Address for Notices: Citicorp North America, Inc.
2001 Ross Ave., Suite 1400
Dallas, TX 75201
Attention: J. Lang Aston
Telecopy: (214) 953-3888
Confirmation: (214) 953-3833
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
Domestic Lending Office: Credit Lyonnais Cayman Island
Branch
227 W. Monroe Street
Suite 3800
Chicago, IL 60606
Eurodollar Lending Office: Credit Lyonnais Cayman Island
Branch
227 W. Monroe Street
Suite 3800
Chicago, IL 60606
Address for Notices: Credit Lyonnais Cayman Island
Branch
227 W. Monroe Street
Suite 3800
Chicago, IL 60606
Attention: Brian Jackson
Telecopy: (312) 641-0527
Confirmation: (312) 220-7309
THE DAIWA BANK, LTD.
Domestic Lending Office: The Daiwa Bank, Ltd.
75 Rockefeller Plaza
8th Floor
New York, NY 10019
Eurodollar Lending Office: The Daiwa Bank, Ltd.
75 Rockefeller Plaza
8th Floor
New York, NY 10019
Address for Notices: The Daiwa Bank, Ltd.
75 Rockefeller Plaza
8th Floor
New York, NY 10019
Attention:
Telecopy:
Confirmation:
<PAGE>
9
DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCHES
Domestic Lending Office: Deutsche Bank AG,
New York Branch
31 West 52nd Street
New York, NY 10019
Eurodollar Lending Office: Deutsche Bank, AG,
Cayman Islands Branch
31 West 52nd Street
New York, NY 10019
Address for Notices: Deutsche Bank AG,
New York Branch
31 West 52nd Street
New York, NY 10019
Attention: Robert A. Maddux,
Director
Telecopy: (212) 474-8212
Confirmation: (212) 474-8228
FIRST AMERICAN NATIONAL BANK
Domestic lending Office: First American National Bank
327 Union Street
Nashville, TN 37237
Eurodollar Lending Office: First American National Bank
327 Union Street
Nashville, TN 37237
Address for Notices: First American National Bank
First American Center
Health Care Division - 2nd FL
First Union Street
Nashville, TN 37237-0203
Attention: Mark Mattson
Telecopy: (615) 748-2812
Confirmation: (615) 748-1479
<PAGE>
10
FIRST INTERSTATE BANK OF CALIFORNIA
Domestic Lending Office: First Interstate Bank of
California
707 Wilshire Blvd.
Los Angeles, CA 90017
Eurodollar Lending Office: First Interstate Bank of
California
707 Wilshire Blvd.
Los Angeles, CA 90017
Address for Notices: First Interstate Bank of
California
707 Wilshire Blvd.
Los Angeles, CA 90017
Attention: Bruce P. McDonald
Telecopy: (213) 614-2569
Confirmation: (213) 614-4879
THE FIRST NATIONAL BANK OF CHICAGO
Domestic Lending Office: First National Bank of Chicago
One First National Plaza
Chicago, IL 60670
Eurodollar Lending Office: First National Bank of Chicago
One First National Plaza
Chicago, IL 60670
Address for Notices: First National Bank of Chicago
One First National Plaza
Mail Suite 0091
Chicago, IL 60670
Attn: L. Richard Schiller
Telecopy: (312) 732-2016
Confirmation: (312) 732-5932
<PAGE>
11
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
Domestic Lending Office: First Union National
Bank of North Carolina
301 S. College Street
Charlotte, NC 28202
Eurodollar Lending Office: First Union National
Bank of North Carolina
301 S. College Street
Charlotte, NC 28202
Address for Notices: First Union National
Bank of North Carolina
One FUNB Plaza - 19th FL
Charlotte, NC 28288-0735
Attention: John Ronson
Telecopy: (704) 374-4092
Confirmation: (704) 383-5212
THE FUJI BANK, LIMITED, HOUSTON AGENCY
Domestic Lending Office: The Fuji Bank, Limited,
Houston Agency
909 Fannin, Suite 2800
Houston, TX 77010
Eurodollar Lending Office: The Fuji Bank, Limited,
Houston Agency
909 Fannin
2 Houston Center, Suite 2800
Houston, TX 77010
Address for Notices: The Fuji Bank, Limited,
Houston Agency
909 Fannin, Suite 2800
Houston, TX 77010
Attention: Glenn Mealey
Telecopy: (713) 759-0048
Confirmation: (713) 759-1800
<PAGE>
12
THE INDUSTRIAL BANK OF JAPAN, LIMITED, NEW YORK BRANCH
Domestic Lending Office: The Industrial Bank of Japan
Trust Company
245 Park Avenue
New York, NY 10167
Eurodollar Lending Office: The Industrial Bank of Japan
Trust Company
245 Park Avenue
New York, NY 10167
Address for Notices: The Industrial Bank of Japan,
Limited
New York Branch
245 Park Avenue, 23rd FL
New York, NY 10167
Attention: Tomoya Aoki
Telecopy: (212) 856-9450
Confirmation: (212) 309-6595
J.P. MORGAN DELAWARE
Domestic Lending Office: J.P. Morgan Delaware
500 Stanton-Christiana Road
Newark, DE 19713-2007
Eurodollar Lending Office: J.P. Morgan Delaware
500 Stanton-Christiana Road
Newark, DE 19713-2007
Address for Notices: J.P. Morgan Delaware
902 Market Street
Wilmington, DE 19801-3015
Attention: David J. Morris
Telecopy: (302) 651-3788
Confirmation: (302) 654-5336
<PAGE>
13
LIBERTY NATIONAL BANK AND TRUST COMPANY OF LOUISVILLE
Domestic Lending Office: Liberty National Bank and
Trust Company of Louisville
416 West Jefferson Street
Louisville, KY 40202
Eurodollar Lending Office: Liberty National Bank and
Trust Company of Louisville
416 West Jefferson Street
Louisville, KY 40202
Address for Notices: Liberty National Bank and
Trust Company of Louisville
416 West Jefferson Street
Louisville, KY 40202
Attention: Earl A. Dorsey, Jr.
Telecopy: (502) 566-2367
Confirmation: (502) 566-2458
THE LONG-TERM CREDIT BANK OF JAPAN
Domestic Lending Office: The Long-Term Credit Bank of
Japan
165 Broadway, 49th Floor
New York, NY 10006
Eurodollar Lending Office: The Long-Term Credit Bank of
Japan
165 Broadway, 49th Floor
New York, NY 10006
Address for Notices: The Long-Term Credit Bank of
Japan
New York Branch
165 Broadway, 49th Floor
New York, NY 10006
Attention: Theodore Koerner
Telecopy: (212) 608-2371
Confirmation: (212) 335-4566
<PAGE>
14
MELLON BANK, N.A.
Domestic Lending Office: Mellon Bank, N.A.
2 Mellon Bank Center, Room 2
Pittsburgh, PA 15259
Eurodollar Lending Office: Mellon Bank, N.A.
2 Mellon Bank Center, Room 2
Pittsburgh, PA 15259
Address for Notices: Mellon Bank, N.A.
2 Mellon Bank Center, Room 270
Pittsburgh, PA 15259
Attention: Marsha Wicker
Telecopy: (412) 234-9010
Confirmation: (412) 234-3594
THE MITSUBISHI BANK, LTD.
Domestic Lending Office: The Mitsubishi Bank, Ltd.
2 World Financial Center
225 Liberty Street, 39th Floor
New York, NY 10281
Eurodollar Lending Office: The Mitsubishi Bank, Ltd.
2 World Financial Center
225 Liberty Street, 39th Floor
New York, NY 10281
Address for Notices: The Mitsubishi Bank, Ltd.
225 Liberty Street
2 World Financial Center
225 Liberty Street, 39th Floor
New York, NY 10281-1059
Attention: Hiroaki Fuchida
Telecopy: (212) 667-3562
Confirmation: (212) 667-2884
<PAGE>
15
THE MITSUBISHI TRUST AND BANKING CORPORATION
Domestic Lending Office: The Mitsubishi Trust and
Banking Corporation
520 Madison Avenue, 25th Floor
New York, NY 10022
Eurodollar Lending Office: The Mitsubishi Trust and
Banking Corporation
520 Madison Avenue, 25th Floor
New York, NY 10022
Address for Notices: The Mitsubishi Trust and
Banking Corporation
520 Madison Avenue, 25th Floor
New York, NY 10022
Attn: Randolph E. J. Medrano
Telecopy: (212) 755-2349
Confirmation: (212) 891-8212
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
Domestic Lending Office: Morgan Guaranty Trust Company
of New York
60 Wall Street
New York, NY 10260-0060
Eurodollar Lending Office: Morgan Guaranty Trust Company
of New York
Nassau, Bahamas Office
c/o J.P. Morgan Services Inc.
Euro-Loan Servicing Unit
Morgan Christiana Center
500 Stanton Christiana Road
Newark, DE 19713
Address for Notices: Morgan Guaranty Trust Company
of New York
60 Wall Street
New York, NY 10260-0060
Attention: Laura E. Reim
Telecopy: (212) 648-5336
Confirmation: (212) 648-6793
<PAGE>
16
NATIONAL CITY BANK
Domestic Lending Office: National City Bank
101 South Fifth Street
Louisville, KY 40202
Eurodollar Lending Office: National City Bank
101 South Fifth Street
Louisville, KY 40202
Address for Notices: National City Bank
P. O. Box 36000
Louisville, KY 40233
Attention: Charles Denny
Telecopy: (502) 581-4424
Confirmation: (502) 581-4212
NATIONSBANK OF NORTH CAROLINA, N.A.
Domestic Lending Office: NationsBank of North
Carolina N.A.
1 NationsBank Plaza
Charlotte, NC 28255
Eurodollar Lending Office: NationsBank of North
Carolina N.A.
1 NationsBank Plaza
Charlotte, NC 28255
Address for Notices: NationsBank of North
Carolina N.A.
Corporate Bank
1 NationsBank Plaza - 5th FL
Nashville, TN 37239-1694
Attention: Ashley Crabtree
Telecopy: (615) 749-4640
Confirmation: (615) 749-3524
<PAGE>
17
NBD BANK, N.A.
Domestic Lending Office: NBD Bank, N.A.
611 Woodward Avenue
Detroit, MI 48226
Eurodollar Lending Office: NBD Bank, N.A.
611 Woodward Avenue
Detroit, MI 48226
Address for Notices: NBD Bank, N.A.
611 Woodward Avenue
Detroit, MI 48226
Attention: Steven P. Clemens
Telecopy: (313) 225-1671
Confirmation: (313) 225-1314
THE NORTHERN TRUST COMPANY
Domestic Lending Office: The Northern Trust Company
50 South La Salle Street
Chicago, IL 60657
Eurodollar Lending Office: The Northern Trust Company
50 South La Salle Street
Chicago, IL 60657
Address for Notices: The Northern Trust Company
50 South La Salle Street
Chicago, IL 60657
Attention: Robert Jones
Telecopy: (312) 444-3508
Confirmation: (312) 444-4575
PNC BANK, KENTUCKY, INC.
Domestic Lending Office: PNC Bank, Kentucky, Inc.
Citizens Plaza
Louisville, KY 40296
Eurodollar Lending Office: PNC Bank, Kentucky, Inc.
Citizens Plaza
Louisville, KY 40296
Address for Notices: PNC Bank, Kentucky, Inc.
500 West Jefferson Street
Louisville, KY 40202
Attention: Jefferson Green
Telecopy: (502) 581-3355
Confirmation: (502) 581-3248
<PAGE>
18
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH
Domestic Lending Office: Rabobank Nederland
245 Park Avenue
New York, NY 10022
Eurodollar Lending Office: Rabobank Nederland
245 Park Avenue
New York, NY 10022
Address for Notices: Rabobank Nederland
New York Branch
245 Park Avenue
New York, NY 10022
Attention: Paul Beiboer
Telecopy: (212) 916-7837
Confirmation: (212) 916-7883
ROYAL BANK OF CANADA
Domestic Lending Office: Royal Bank of Canada
Pierrepont Plaza
300 Cadman Plaza West
Brooklyn, NY 11201
Eurodollar Lending Office: Royal Bank of Canada
Pierrepont Plaza
300 Cadman Plaza West
Brooklyn, NY 11201
Address for Notices: Royal Bank of Canada
New York Operations Center
Pierrepont Plaza
300 Cadman Plaza West
Brooklyn, NY 11201-2701
Attention: Linda Swanston
Telecopy: (718) 522-6292/6293
Confirmation: (212) 858-7176
<PAGE>
19
THE SAKURA BANK, LTD. NEW YORK BRANCH
Domestic Lending Office: The Sakura Bank, Ltd.
New York Branch
277 Park Avenue
New York, NY 10172
Eurodollar Lending Office: The Sakura Bank, Ltd.
New York Branch
277 Park Avenue
New York, NY 10172
Address for Notices: The Sakura Bank, Ltd.
New York Branch
277 Park Avenue
New York, NY 10172
Attention: Yoshikazu Nagura
Telecopy: (212) 888-7651
Confirmation: (212) 756-6804
THE SANWA BANK, LIMITED, ATLANTA AGENCY
Domestic Lending Office: The Sanwa Bank, Limited
133 Peachtree Street
Suite 4750
Atlanta, GA 30303
Eurodollar Lending Office: The Sanwa Bank, Limited
133 Peachtree Street
Suite 4750
Atlanta, GA 30303
Address for Notice: The Sanwa Bank, Limited
133 Peachtree Street
Suite 4750
Atlanta, GA 30303
Attention: Kristie Hartrampf
Telecopy: (404) 589-1629
Confirmation: (404) 586-6893
<PAGE>
20
SHAWMUT BANK - CONNECTICUT, N.A.
Domestic Lending Office: Shawmut Bank -
Connecticut, N.A.
777 Main Street, MSN 397
Hartford, CT 06115
Eurodollar Lending Office: Shawmut Bank -
Connecticut, N.A.
777 Main Street, MSN 397
Hartford, CT 06115
Address for Notice: Shawmut Bank -
Connecticut, N.A.
777 Main Street, MSN 397
Hartford, CT 06115
Attention: James Scully
Telecopy: (203) 986-5367
Confirmation: (203) 986-7005
THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH
Domestic Lending Office: The Sumitomo Bank, Limited,
New York Branch
One World Trade Center
Suite 9651
New York, NY 10048
Eurodollar Lending Office: The Sumitomo Bank, Limited,
New York Branch
One World Trade Center
Suite 9651
New York, NY 10048
Address for Notices: The Sumitomo Bank, Limited,
New York Branch
One World Trade Center
Suite 9651
New York, NY 10048
Attention: Jeff Toner
Telecopy: (212) 553-0118
Confirmation: (212) 553-1864
<PAGE>
21
SWISS BANK CORPORATION
Domestic Lending Office: Swiss Bank Corporation
10 East 50th Street
New York, NY 10022
Eurodollar Lending Office: Swiss Bank Corporation
10 East 50th Street
New York, NY 10022
Address for Notices: Swiss Bank Corporation
101 California Street
Suite 1700
San Francisco, CA 94111
Attention: Colin T. Taylor
Telecopy: (414) 774-3345
Confirmation: (415) 989-7570
THIRD NATIONAL BANK IN NASHVILLE
Domestic Lending Office: Third National Bank
In Nashville
201 Fourth Avenue North
Nashville, TN 37244
Eurodollar Lending Office: Third National Bank
In Nashville
201 Fourth Avenue North
Nashville, TN 37244
Address for Notices: Third National Bank
In Nashville
P.O. Box 305110
Nashville, TN 37230-5110
Attention: Leigh Ann Gregory
Telecopy: (615) 748-4089
Confirmation: (615) 748-5461
<PAGE>
22
THE TOKAI BANK, LIMITED, NEW YORK BRANCH
Domestic Lending Office: The Tokai Bank, Ltd.
New York Branch
55 East 52nd Street
New York, NY 10055
Eurodollar Lending Office: The Tokai Bank, Ltd.
New York Branch
55 East 52nd Street
New York, NY 10055
Address for Notices: The Tokai Bank, Ltd.
New York Branch
55 East 52nd Street
New York, NY 10055
Attention: Stuart Schulman
Telecopy: (212) 754-2170
Confirmation: (212) 339-1117
TORONTO DOMINION (TEXAS), INC.
Domestic Lending Office: The Toronto-Dominion Bank,
Houston Agency
909 Fannin Street, Suite 1700
Houston, TX 77010
Eurodollar Lending Office: The Toronto-Dominion Bank,
Houston Agency
909 Fannin Street, Suite 1700
Houston, TX 77010
Address for Notices: The Toronto-Dominion Bank,
USA Division
31 West 52nd Street
New York, NY 10019-6101
Attention: Beth Olmstead
Telecopy: (212) 262-1929
Confirmation: (212) 468-0754
<PAGE>
23
UNITED STATES NATIONAL BANK OF OREGON
Domestic Lending Office: United States National Bank
of Oregon
309 SW 6th Avenue, BB12
Portland, OR 97204
Eurodollar Lending Office: United States National Bank
of Oregon
309 SW 6th Avenue, BB12
Portland, OR 97204
Address for Notices: United States National Bank
of Oregon
309 SW 6th Avenue, BB12
Portland, OR 97204
Attention: Chris Kerlin
Telecopy: (503) 275-5428
Confirmation: (503) 275-4940
WACHOVIA BANK OF GEORGIA, N.A.
Domestic Lending Office: Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
Atlanta, GA 30303
Eurodollar Lending Office: Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
Atlanta, GA 30303
Address for Notices: Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
28th Floor
Atlanta, GA 30303
Attention: Solomon Elisha
Telecopy: (404) 332-6898
Confirmation: (404) 332-1092
<PAGE>
SCHEDULE V
APPLICABLE MARGINS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
REVOLVING CREDIT LOANS
- --------------------------------------------------------------------------------
ALTERNATE BASE RATE LOANS EURODOLLAR LOANS
- --------------------------------------------------------------------------------
<S> <C> <C>
Level I Period .0000% .2500%
- --------------------------------------------------------------------------------
Level II Period .0000% .2250%
- --------------------------------------------------------------------------------
Level III Period .0000% .2500%
- --------------------------------------------------------------------------------
Level IV Period .0000% .3750%
- --------------------------------------------------------------------------------
Level V Period .0000% .5000%
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A
[FORM OF REVOLVING CREDIT NOTE]
$_____________ New York, New York
February __, 1994
FOR VALUE RECEIVED, the undersigned, COLUMBIA HEALTHCARE CORPORATION, a
Delaware corporation (the "Company"), hereby unconditionally promises to pay to
the order of _______________________________ (the "Bank") at the office of
Chemical Bank, located at 270 Park Avenue, New York, New York 10017, in lawful
money of the United States of America and in immediately available funds, the
principal amount of (a) _______________ DOLLARS ($__________), or, if less, (b)
the aggregate unpaid principal amount of all Revolving Credit Loans made by the
Bank to the Company pursuant to subsection 2.1 of the Credit Agreement
hereinafter referred to (the "Credit Agreement"). The principal amount of each
Revolving Credit Loan evidenced hereby shall be payable on the Termination Date.
The Company further agrees to pay interest in like money at such office on the
unpaid principal amount hereof from time to time outstanding at the applicable
interest rate per annum determined as provided in, and payable as specified in,
subsection 2.7 of the Credit Agreement.
The holder of this Note is authorized to record the date, Type and amount of
each Revolving Credit Loan made by the Bank pursuant to subsection 2.1 of the
Credit Agreement, the date and amount of each repayment of principal hereof, the
date of each interest rate conversion pursuant to subsection 2.6 of the Credit
Agreement and the principal amount subject thereto, and in the case of
Eurodollar Loans, the interest rate and maturity date with respect thereto on
the schedules annexed hereto and made a part hereof or on any other record
customarily maintained by such Bank with respect to this Note and any such
recordation shall constitute PRIMA FACIE evidence of the accuracy of the
information endorsed; PROVIDED, HOWEVER, that the failure to make any such
endorsement shall not affect the obligations of the Company in respect of such
Revolving Credit Loan.
This Note is one of the Revolving Credit Notes referred to in the
$_____________ Credit Agreement dated as of February __, 1994, among the
Company, the Bank, the other banks and financial institutions from time to
time parties thereto and Chemical Bank, as Agent and CAF Loan Agent, and is
entitled to the benefits thereof.
Upon the occurrence of any one or more of the Events of Default specified in
the Credit Agreement, all amounts then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable, all as provided
therein.
<PAGE>
2
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Terms defined in the Credit Agreement are used herein with their defined
meanings unless otherwise defined herein. This Note shall be governed by, and
construed and interpreted in accordance with, the law of the State of New York.
COLUMBIA HEALTHCARE
CORPORATION
By______________________
Title:
<PAGE>
Schedule 1 to
Note
-------------
ALTERNATE BASE RATE LOANS
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Amount Amount
Converted Amount Converted
Amount to Alter- of to Euro- Unpaid
of nate Base Principal dollar Principal Notation
Date Loans Rate Loans Repaid Loans Balance Made By
____ ______ __________ _________ _________ _________ _________
<S> <C> <C> <C> <C> <C> <C>
____ ______ __________ _________ _________ _________ _________
____ ______ __________ _________ _________ _________ _________
____ ______ __________ _________ _________ _________ _________
____ ______ __________ _________ _________ _________ _________
____ ______ __________ _________ _________ _________ _________
____ ______ __________ _________ _________ _________ _________
____ ______ __________ _________ _________ _________ _________
____ ______ __________ _________ _________ _________ _________
____ ______ __________ _________ _________ _________ _________
____ ______ __________ _________ _________ _________ _________
____ ______ __________ _________ _________ _________ _________
____ ______ __________ _________ _________ _________ _________
____ ______ __________ _________ _________ _________ _________
____ ______ __________ _________ _________ _________ _________
____ ______ __________ _________ _________ _________ _________
____ ______ __________ _________ _________ _________ _________
</TABLE>
<PAGE>
2
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
____ ______ __________ _________ _________ _________ _________
____ ______ __________ _________ _________ _________ _________
____ ______ __________ _________ _________ _________ _________
____ ______ __________ _________ _________ _________ _________
</TABLE>
<PAGE>
Schedule 2 to
Note
-------------
EURODOLLAR LOANS
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Amount Amount
Converted Amount Converted
Amount to Euro- of to Alter- Unpaid
of dollar Principal nate Base Principal Notation
Date Loans Loans Repaid Rate Loans Balance Made By
____ ______ _________ _________ _________ _________ _________
<S> <C> <C> <C> <C> <C> <C>
____ ______ _________ _________ _________ _________ _________
____ ______ _________ _________ _________ _________ _________
____ ______ _________ _________ _________ _________ _________
____ ______ _________ _________ _________ _________ _________
____ ______ _________ _________ _________ _________ _________
____ ______ _________ _________ _________ _________ _________
____ ______ _________ _________ _________ _________ _________
____ ______ _________ _________ _________ _________ _________
____ ______ _________ _________ _________ _________ _________
____ ______ _________ _________ _________ _________ _________
____ ______ _________ _________ _________ _________ _________
____ ______ _________ _________ _________ _________ _________
____ ______ _________ _________ _________ _________ _________
____ ______ _________ _________ _________ _________ _________
____ ______ _________ _________ _________ _________ _________
____ ______ _________ _________ _________ _________ _________
</TABLE>
<PAGE>
2
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
____ ______ _________ _________ _________ _________ _________
____ ______ _________ _________ _________ _________ _________
____ ______ _________ _________ _________ _________ _________
____ ______ _________ _________ _________ _________ _________
</TABLE>
<PAGE>
EXHIBIT B
[FORM OF GRID CAF LOAN NOTE]
PROMISSORY NOTE
$_____________ New York, New York
February __, 1994
FOR VALUE RECEIVED, the undersigned, COLUMBIA HEALTHCARE CORPORATION,
a Delaware corporation (the "COMPANY"), hereby unconditionally promises to pay
to the order of ______________________________ (the "BANK") at the office of
Chemical Bank, located at 270 Park Avenue, New York, New York 10017, in lawful
money of the United States of America and in immediately available funds, the
principal amount of (a) ____________________ DOLLARS ($_________), or, if less,
(b) the aggregate unpaid principal amount of all CAF Loans that are (i) made by
the Bank to the Company pursuant to subsection 2.2 of the Credit Agreement
hereinafter referred to (the "CREDIT AGREEMENT") and (ii) not evidenced by an
Individual CAF Loan Note executed and delivered by the Company pursuant to
subsection 2.2(g) of the Credit Agreement. The principal amount of each CAF Loan
evidenced hereby shall be payable on the maturity date therefor set forth on the
schedule annexed hereto and made a part hereof or on a continuation thereof
which shall be attached hereto and made a part hereof (the "GRID"). The Company
further agrees to pay interest in like money at such office on the unpaid
principal amount of each CAF Loan evidenced hereby, at the rate per annum set
forth in respect of such CAF Loan on the Grid, calculated on the basis of a year
of 360 days and actual days elapsed from the date of such CAF Loan until the due
date thereof (whether at the stated maturity, by acceleration or otherwise) and
thereafter at the rates determined in accordance with subsection 2.2(e) of the
Credit Agreement. Interest on each CAF Loan evidenced hereby shall be payable on
the date or dates set forth in respect of such CAF Loan on the Grid. CAF Loans
evidenced by this Note may not be prepaid.
The holder of this Note is authorized to endorse on the Grid the date,
amount, interest rate, interest payment dates and maturity date in respect of
each CAF Loan made pursuant to subsection 2.2 of the Credit Agreement, each
payment of principal with respect thereto and any transfer of such CAF Loan from
this Note to an Individual CAF Loan Note delivered to the Bank pursuant to
subsection 2.2(g) of the Credit Agreement, which endorsement shall constitute
PRIMA FACIE evidence of the accuracy of the information endorsed; PROVIDED,
HOWEVER, that the failure to make any such endorsement shall not affect the
obligations of the Company in respect of such CAF Loan.
This Note is one of the Grid CAF Loan Notes referred to in the
$___________ Credit Agreement dated as of February __, 1994, among the Company,
the Bank, the other
<PAGE>
2
banks and financial institutions from time to time parties thereto and Chemical
Bank, as Agent and CAF Loan Agent, and is entitled to the benefits thereof.
Upon the occurrence of any one or more of the Events of Default
specified in the Credit Agreement, all amounts then remaining unpaid on this
Note shall become, or may be declared to be, immediately due and payable, all as
provided therein.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Terms defined in the Credit Agreement are used herein with their
defined meanings unless otherwise defined herein. This Note shall be governed
by, and construed and interpreted in accordance with, the law of the State of
New York.
COLUMBIA HEALTHCARE
CORPORATION
By______________________
Title:
<PAGE>
SCHEDULE OF CAF LOANS
<TABLE>
<CAPTION>
Date of
Transfer
Date Amount Interest to Indi-
of of Interest Payment Maturity Payment vidual Author-
Loan Loan Rate Dates Date Date Note ization
- ---- ------ -------- -------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
____ ______ ________ ________ ________ _______ ________ _______
____ ______ ________ ________ ________ _______ ________ _______
____ ______ ________ ________ ________ _______ ________ _______
____ ______ ________ ________ ________ _______ ________ _______
____ ______ ________ ________ ________ _______ ________ _______
____ ______ ________ ________ ________ _______ ________ _______
____ ______ ________ ________ ________ _______ ________ _______
____ ______ ________ ________ ________ _______ ________ _______
____ ______ ________ ________ ________ _______ ________ _______
____ ______ ________ ________ ________ _______ ________ _______
____ ______ ________ ________ ________ _______ ________ _______
____ ______ ________ ________ ________ _______ ________ _______
____ ______ ________ ________ ________ _______ ________ _______
____ ______ ________ ________ ________ _______ ________ _______
____ ______ ________ ________ ________ _______ ________ _______
____ ______ ________ ________ ________ _______ ________ _______
____ ______ ________ ________ ________ _______ ________ _______
____ ______ ________ ________ ________ _______ ________ _______
____ ______ ________ ________ ________ _______ ________ _______
</TABLE>
<PAGE>
EXHIBIT C
[FORM OF INDIVIDUAL CAF LOAN NOTE]
NON-NEGOTIABLE CAF LOAN NOTE
$_____________ New York, New York
____________, 19__
FOR VALUE RECEIVED, the undersigned, COLUMBIA HEALTHCARE CORPORATION,
a Delaware corporation (the "COMPANY"), hereby promises to pay on ___________,
19__ to the order of _______________________ (the "BANK") at the office of
Chemical Bank, located at 270 Park Avenue, New York, New York 10017, in lawful
money of the United States of America and in immediately available funds, the
principal sum of ______________ DOLLARS ($__________). The Company further
agrees to pay interest in like money at such office on the unpaid principal
amount hereof from time to time from the date hereof at the rate of ___% per
annum (calculated on the basis of a year of 360 days and actual days elapsed)
until the due date hereof (whether at the stated maturity, by acceleration, or
otherwise) and thereafter at the rates determined in accordance with subsection
2.2(e) of the $____________ Credit Agreement, dated as of February __, 1994 (the
"CREDIT AGREEMENT"), among the Company, the Bank, the other banks and financial
institutions from time to time parties thereto and Chemical Bank, as Agent and
CAF Loan Agent. Interest shall be payable on ____________________. This Note may
not be prepaid.
This Note is one of the Individual CAF Loan Notes referred to in, is
subject to and is entitled to the benefits of, the Credit Agreement, which
Credit Agreement, among other things, contains provisions for acceleration of
the maturity hereof upon the happening of certain stated events.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
<PAGE>
2
Terms defined in the Credit Agreement are used herein with their
defined meanings unless otherwise defined herein. This Note shall be governed by
and construed in accordance with the laws of the State of New York.
COLUMBIA HEALTHCARE
CORPORATION
By:______________________
Title:
<PAGE>
EXHIBIT D
[FORM OF CAF LOAN REQUEST]
________________, 19__
Chemical Bank, as CAF Loan Agent
270 Park Avenue
New York, New York 10017
Dear Sirs:
Reference is made to the $___________ Credit Agreement, dated as of
February __, 1994, among the undersigned, the Banks named therein and Chemical
Bank, as Agent and CAF Loan Agent (the "CREDIT AGREEMENT"). Terms defined in the
Credit Agreement are used herein as therein defined.
This is a [LIBOR Auction Advance Rate] [Fixed Rate Auction Advance]
Request pursuant to subsection 2.2 of the Credit Agreement requesting quotes for
the following CAF Loans:
<TABLE>
<S> <C> <C> <C>
Aggregate Principal Amount $_______ $_______ $_______
CAF Loan Date _______ _______ _______
[Interest Period]* _______ _______ _______
Maturity Date** _______ _______ _______
Interest Payment Dates _______ _______ _______
</TABLE>
Very truly yours,
COLUMBIA HEALTHCARE
CORPORATION
By:_______________________
Title:
[Note: Pursuant to the Credit Agreement, a CAF Loan Request may be transmitted
in writing, or by facsimile transmission, or by telephone, immediately
confirmed by facsimile transmission. In any case, a CAF Loan Request
shall contain the information specified in the second paragraph of this
form.]
- -----------------------------
*/ Insert only in a LIBOR Auction Advance Request.
**/ In a LIBOR Auction Advance Request, insert last day of Interest Period.
<PAGE>
EXHIBIT E
[FORM OF CAF LOAN OFFER]
________________, 19__
Chemical Bank, as CAF Loan Agent
270 Park Avenue
New York, New York 10017
Dear Sirs:
Reference is made to the $__________ Credit Agreement, dated as of
February __, 1994, among Columbia Healthcare Corporation, the Banks named
therein and Chemical Bank, as Agent and CAF Loan Agent (as the same may be
amended, supplemented or otherwise modified, the "CREDIT AGREEMENT"). Terms
defined in the Credit Agreement are used herein as therein defined.
In accordance with subsection 2.2 of the Credit Agreement, the
undersigned Bank offers to make CAF Loans thereunder in the following amounts
with the following maturity dates:
CAF Loan Date: _____________, 19__
Aggregate Maximum Amount: $_____________
MATURITY DATE 1 ___: MATURITY DATE 2 ___: MATURITY DATE 3 ___:
Maximum Amount $___ Maximum Amount $___ Maximum Amount $___
Rate * Amount $___ Rate * Amount $___ Rate * Amount $___
Rate * Amount $___ Rate * Amount $___ Rate * Amount $___
Very truly yours,
By:
-------------------------
Name:
Title:
Telephone No.:
Fax No.:
- -------------------------
*/ In the case of LIBOR Auction Advance Rate CAF Loans, insert margin bid.
In the case of Fixed Rate Auction Advance CAF Loans, insert fixed rate
bid.
<PAGE>
EXHIBIT F
[FORM OF CAF LOAN CONFIRMATION]
_________________, 19__
Chemical Bank, as CAF Loan Agent
270 Park Avenue
New York, New York 10017
Dear Sirs:
Reference is made to the $_________ Credit Agreement, dated as of
February __, 1994, among the undersigned, the Banks named therein and Chemical
Bank, as Agent and CAF Loan Agent (as the same may be amended, supplemented or
otherwise modified, the "CREDIT AGREEMENT"). Terms defined in the Credit
Agreement are used herein as therein defined.
In accordance with subsection 2.2 of the Credit Agreement, the
undersigned accepts and confirms the offers by the CAF Loan Bank(s) to make CAF
Loans to the undersigned on ____________, 19__ [CAF Loan Date] under said
subsection 2.2 in the (respective) amount(s) set forth on the attached list of
CAF Loans offered.
Very truly yours,
COLUMBIA HEALTHCARE
CORPORATION
By____________________________
Title:
[Company to attach CAF Loan offer list prepared by CAF Loan Agent with
accepted amount entered by the Company to right of each CAF Loan Offer].
<PAGE>
EXHIBIT G
[FORM OF COMMITMENT TRANSFER SUPPLEMENT]
COMMITMENT TRANSFER SUPPLEMENT
COMMITMENT TRANSFER SUPPLEMENT, dated as of the date set forth in Item
1 of Schedule I hereto, among the Transferor Bank set forth in Item 2 of
Schedule I hereto (the "TRANSFEROR BANK"), each Purchasing Bank set forth in
Item 3 of Schedule I hereto (each, a "PURCHASING BANK"), and CHEMICAL BANK, as
agent for the Banks under the Credit Agreement described below (in such
capacity, the "AGENT").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, this Commitment Transfer Supplement is being executed and
delivered in accordance with subsection 8.6(d) of the $_______________ Credit
Agreement, dated as of February __, 1994, among Columbia Healthcare Corporation,
a Delaware corporation and the successor by merger to Columbia Hospital
Corporation (the "COMPANY"), the Transferor Bank and the other Banks party
thereto and the Agent (as from time to time amended, supplemented or otherwise
modified in accordance with the terms thereof, the "CREDIT AGREEMENT"; terms
defined therein being used herein as therein defined);
WHEREAS, each Purchasing Bank (if it is not already a Bank party to
the Credit Agreement) wishes to become a Bank party to the Credit Agreement; and
WHEREAS, the Transferor Bank is selling and assigning to each
Purchasing Bank, rights, obligations and commitments under the Credit Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Upon receipt by the Agent of five counterparts of this Commitment
Transfer Supplement, to each of which is attached a fully completed Schedule I
and Schedule II, and each of which has been executed by the Transferor Bank,
each Purchasing Bank (and any other person required by the Credit Agreement to
execute this Commitment Transfer Supplement), the Agent will transmit to the
Company, the Transferor Bank and each Purchasing Bank a Transfer Effective
Notice, substantially in the form of Schedule III to this Commitment Transfer
Supplement (a "TRANSFER EFFECTIVE NOTICE"). Such Transfer Effective Notice shall
set forth, INTER ALIA, the date on which the transfer effected by this
Commitment Transfer Supplement shall become effective (the "TRANSFER EFFECTIVE
DATE"), which date shall be the fifth Business Day following the date of such
Transfer Effective Notice. From and
<PAGE>
2
after the Transfer Effective Date each Purchasing Bank shall be a Bank party to
the Credit Agreement for all purposes thereof.
2. At or before 12:00 Noon, local time of the Transferor Bank, on the
Transfer Effective Date, each Purchasing Bank shall pay to the Transferor Bank,
in immediately available funds, an amount equal to the purchase price, as agreed
between the Transferor Bank and such Purchasing Bank (the "PURCHASE PRICE"), of
the portion being purchased by such Purchasing Bank (such Purchasing Bank's
"PURCHASED PERCENTAGE") of the outstanding Loans and other amounts owing to the
Transferor Bank under the Credit Agreement and the Notes. Effective upon receipt
by the Transferor Bank of the Purchase Price from a Purchasing Bank, the
Transferor Bank hereby irrevocably sells, assigns and transfers to such
Purchasing Bank, without recourse, representation or warranty, and each
Purchasing Bank hereby irrevocably purchases, takes and assumes from the
Transferor Bank, such Purchasing Bank's Purchased Percentage of the Commitments
and the presently outstanding Loans and other amounts owing to the Transferor
Bank under the Credit Agreement and the Notes together with all instruments,
documents and collateral security pertaining thereto.
3. The Transferor Bank has made arrangements with each Purchasing Bank
with respect to (i) the portion, if any, to be paid, and the date or dates for
payment, by the Transferor Bank to such Purchasing Bank of any fees heretofore
received by the Transferor Bank pursuant to the Credit Agreement prior to the
Transfer Effective Date and (ii) the portion, if any, to be paid, and the date
or dates for payment, by such Purchasing Bank to the Transferor Bank of fees or
interest received by such Purchasing Bank pursuant to the Credit Agreement from
and after the Transfer Effective Date.
4. (a) All principal payments that would otherwise be payable from and
after the Transfer Effective Date to or for the account of the Transferor Bank
pursuant to the Credit Agreement and the Notes shall, instead, be payable to or
for the account of the Transferor Bank and the Purchasing Banks, as the case may
be, in accordance with their respective interests as reflected in this
Commitment Transfer Supplement.
(b) All interest, fees and other amounts that would otherwise
accrue for the account of the Transferor Bank from and after the Transfer
Effective Date pursuant to the Credit Agreement and the Notes shall, instead,
accrue for the account of, and be payable to, the Transferor Bank and the
Purchasing Banks, as the case may be, in accordance with their respective
interests as reflected in this Commitment Transfer Supplement. In the event that
any amount of interest, fees or other amounts accruing prior to the Transfer
Effective Date was included in the Purchase Price paid by any Purchasing Bank,
the Transferor Bank and each Purchasing Bank will make appropriate arrangements
for payment by the Transferor Bank to such Purchasing Bank of such amount upon
receipt thereof from the Company.
5. On or prior to the Transfer Effective Date, the Transferor Bank
will deliver to the Agent its Note[s]. On or prior to the Transfer Effective
Date, the Company will deliver to the Agent Notes for each Purchasing Bank and
the Transferor Bank, in each case in principal amounts reflecting, in accordance
with the Credit Agreement, their
<PAGE>
3
Commitments (as adjusted pursuant to this Commitment Transfer Supplement). As
provided in subsection 8.6(d) of the Credit Agreement, each such new Note shall
be dated the Closing Date. Promptly after the Transfer Effective Date, the Agent
will send to each of the Transferor Bank and the Purchasing Banks its new Notes
and will send to the Company the superseded Note of the Transferor Bank, marked
"Cancelled" or if such Note cannot be located by such Transferee Bank, a lost
note indemnification agreement in form and substance reasonably acceptable to
the Company.
6. Concurrently with the execution and delivery hereof, the
Transferor Bank will provide to each Purchasing Bank (if it is not already a
Bank party to the Credit Agreement) conformed copies of all documents delivered
to such Transferor Bank on the Closing Date in satisfaction of the conditions
precedent set forth in the Credit Agreement.
7. Each of the parties to this Commitment Transfer Supplement agrees
that at any time and from time to time upon the written request of any other
party, it will execute and deliver such further documents and do such further
acts and things as such other party may reasonably request in order to effect
the purposes of this Commitment Transfer Supplement.
8. By executing and delivering this Commitment Transfer Supplement,
the Transferor Bank and each Purchasing Bank confirm to and agree with each
other and the Agent and the Banks as follows: (i) other than the representation
and warranty that it is the legal and beneficial owner of the interest being
assigned hereby free and clear of any adverse claim, the Transferor Bank makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Agreement, the Notes or any
other instrument or document furnished pursuant thereto; (ii) the Transferor
Bank makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Company or the performance or
observance by the Company of any of its obligations under the Agreement, the
Notes or any other instrument or document furnished pursuant hereto; (iii) each
Purchasing Bank confirms that it has received a copy of the Credit Agreement,
together with copies of the financial statements referred to in subsection 3.3,
the financial statements delivered pursuant to subsection 5.5, if any, and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Commitment Transfer Supplement;
(iv) each Purchasing Bank will, independently and without reliance upon the
Agent, the Transferor Bank or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement; (v)
each Purchasing Bank appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under the Agreement as are
delegated to the Agent by the terms thereof, together with such powers as are
reasonably incidental thereto, all in accordance with Section 7 of the Credit
Agreement; and (vi) each Purchasing Bank agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Agreement are required to be performed by it as a Bank.
<PAGE>
4
9. Each party hereto represents and warrants to and agrees with the
Agent that it is aware of and will comply with the provision of subsection
8.6(h) of the Credit Agreement.
10. Schedule II hereto sets forth the revised Commitments and
Commitment Percentages of the Transferor Bank and each Purchasing Bank as well
as administrative information with respect to each Purchasing Bank.
11. This Commitment Transfer Supplement shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Commitment
Transfer Supplement to be executed by their respective duly authorized officers
on Schedule I hereto as of the date set forth in Item 1 of Schedule I hereto.
<PAGE>
SCHEDULE I
TO
COMMITMENT
TRANSFER
SUPPLEMENT
COMPLETION OF INFORMATION AND
SIGNATURES FOR COMMITMENT
TRANSFER SUPPLEMENT
Re: $_________ Credit Agreement, dated as of February __, 1994,
with Columbia Healthcare Corporation
- --------------------------------------------------------------------------------
Item 1 (Date of Commitment Transfer [Insert date of Commitment Transfer
Supplement): Supplement]
- --------------------------------------------------------------------------------
Item 2 (Transferor Bank): [Insert name of Transferor Bank]
- --------------------------------------------------------------------------------
Item 3 (Purchasing Bank[s]): [Insert name[s] of Purchasing
Bank[s]]
- --------------------------------------------------------------------------------
<PAGE>
2
- --------------------------------------------------------------------------------
Item 4 (Signatures of Parties to
Commitment Transfer
Supplement)
_____________________, as
Transferor Bank
By______________________
Title:
___________________, as a
Purchasing Bank
By______________________
Title:
___________________, as a
Purchasing Bank
By______________________
Title:
- --------------------------------------------------------------------------------
CONSENTED TO AND ACKNOWLEDGED:
COLUMBIA HEALTHCARE CORPORATION
By___________________________
Title:
CHEMICAL BANK, as Agent
By___________________________
Title:
<PAGE>
3
[Consents Required only when
Purchasing Bank is not already
a Bank or affiliate thereof]
ACCEPTED FOR RECORDATION IN
REGISTER:
CHEMICAL BANK, as Agent
By___________________________
Title:
<PAGE>
SCHEDULE II
TO COMMITMENT
TRANSFER
SUPPLEMENT
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS
[Name of Transferor
Bank] REVISED COMMITMENT AMOUNTS: $________
REVISED COMMITMENT PERCENTAGE: ________
[Name of Purchasing
Bank] NEW COMMITMENT AMOUNTS: $________
NEW COMMITMENT PERCENTAGE: ________
ADDRESS FOR NOTICES:
[Address]
Attention: _____________
Telephone: _____________
Telecopier: ____________
EURODOLLAR LENDING OFFICE:
_________________________
_________________________
_________________________
DOMESTIC LENDING OFFICE:
_________________________
_________________________
_________________________
<PAGE>
SCHEDULE III
TO COMMITMENT
TRANSFER
SUPPLEMENT
[Form of Transfer Effective Notice]
To: Columbia Healthcare Corporation, [Insert Name of Transferor
Bank and each Purchasing Bank]
The undersigned, as Agent [delegate of the Agent performing
administrative functions of the Agent] under the $__________ Credit Agreement,
dated as of February __, 1994, among Columbia Healthcare Corporation, the Banks
parties thereto and Chemical Bank, as Agent and as CAF Loan Agent, acknowledges
receipt of five executed counterparts of a completed Commitment Transfer
Supplement, as described in Schedule I hereto. [Note: attach copy of Schedule I
from Commitment Transfer Supplement.] Terms defined in such Commitment Transfer
Supplement are used herein as therein defined.
1. Pursuant to such Commitment Transfer Supplement, you are advised
that the Transfer Effective Date will be ____________ [Insert fifth business day
following date of Transfer Effective Notice].
2. Pursuant to such Commitment Transfer Supplement, the Transferor
Bank is required to deliver to the Agent on or before the Transfer Effective
Date its Note[s] or lost note indemnity.
3. Pursuant to such Commitment Transfer Supplement, the Company is
required to deliver to the Agent on or before the Transfer Effective Date the
following Notes, each dated ____________ [Insert Closing Date].
[Describe each new Note for Transferor Bank and Purchasing Bank as to
principal amount, payee and type of Note (e.g. Revolving Credit Note, Grid CAF
Loan Note, Individual CAF Loan Note etc.]
<PAGE>
2
4. Pursuant to such Commitment Transfer Supplement each Purchasing
Bank is required to pay its Purchase Price to the Transferor Bank at or before
12:00 Noon on the Transfer Effective Date in immediately available funds.
Very truly yours,
CHEMICAL BANK
By________________________
Title:
<PAGE>
$2,000,000,000 CREDIT AGREEMENT
AMONG
COLUMBIA HEALTHCARE CORPORATION,
THE SEVERAL BANKS AND OTHER FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTIES HERETO,
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION,
THE BANK OF NOVA SCOTIA,
THE CHASE MANHATTAN BANK N.A.,
CITIBANK, N.A.,
DEUTSCHE BANK AG,
THE FIRST NATIONAL BANK OF CHICAGO,
THE INDUSTRIAL BANK OF JAPAN, LIMITED, NEW YORK BRANCH,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
NATIONSBANK OF NORTH CAROLINA, N.A.,
PNC BANK, KENTUCKY, INC.,
TORONTO DOMINION (TEXAS), INC. AND
WACHOVIA BANK OF GEORGIA, N.A.,
AS CO-AGENTS
AND
CHEMICAL BANK,
AS AGENT AND AS CAF LOAN AGENT
DATED AS OF FEBRUARY 10, 1994
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions. . . . . . . . . . . . 15
SECTION 2. AMOUNT AND TERMS OF LOANS. . . . . . . . . . . . . 16
2.1 Revolving Credit Loans and Revolving Credit Notes. . 16
2.2 CAF Loans and CAF Loan Notes . . . . . . . . . . . . 17
2.3 Facility Fee . . . . . . . . . . . . . . . . . . . . 22
2.4 Termination, Reduction or Extension of
Commitments. . . . . . . . . . . . . . . . . . . . 22
2.5 Optional Prepayments . . . . . . . . . . . . . . . . 24
2.6 Conversion Options; Minimum Amount of Loans. . . . . 24
2.7 Interest Rate and Payment Dates for Revolving
Credit Loans . . . . . . . . . . . . . . . . . . . 25
2.8 Computation of Interest and Fees . . . . . . . . . . 26
2.9 Inability to Determine Interest Rate . . . . . . . . 27
2.10 Pro Rata Borrowings and Payments . . . . . . . . . . 28
2.11 Illegality . . . . . . . . . . . . . . . . . . . . . 29
2.12 Requirements of Law. . . . . . . . . . . . . . . . . 30
2.13 Capital Adequacy . . . . . . . . . . . . . . . . . . 31
2.14 Taxes. . . . . . . . . . . . . . . . . . . . . . . . 31
2.15 Indemnity. . . . . . . . . . . . . . . . . . . . . . 33
2.16 Application of Proceeds of Loans . . . . . . . . . . 33
2.17 Notice of Certain Circumstances; Assignment of
Commitments Under Certain Circumstances. . . . . . 33
SECTION 3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 34
3.1 Corporate Organization and Existence . . . . . . . . 34
3.2 Subsidiaries . . . . . . . . . . . . . . . . . . . . 35
3.3 Financial Information. . . . . . . . . . . . . . . . 35
3.4 Changes in Condition . . . . . . . . . . . . . . . . 36
3.5 Assets . . . . . . . . . . . . . . . . . . . . . . . 36
3.6 Litigation . . . . . . . . . . . . . . . . . . . . . 36
3.7 Tax Returns. . . . . . . . . . . . . . . . . . . . . 37
3.8 Contracts, etc. . . . . . . . . . . . . . . . . . . 38
3.9 No Legal Obstacle to Agreement . . . . . . . . . . . 38
3.10 Defaults . . . . . . . . . . . . . . . . . . . . . . 38
3.11 Burdensome Obligations . . . . . . . . . . . . . . . 38
3.12 Pension Plans. . . . . . . . . . . . . . . . . . . . 39
3.13 Disclosure . . . . . . . . . . . . . . . . . . . . . 39
3.14 Environmental and Public and Employee Health and
Safety Matters . . . . . . . . . . . . . . . . . . 39
3.15 Federal Regulations. . . . . . . . . . . . . . . . . 40
3.16 Investment Company Act; Other Regulations. . . . . . 40
-i-
<PAGE>
Page
SECTION 4. CONDITIONS . . . . . . . . . . . . . . . . . . . . 40
4.1 Loan Documents . . . . . . . . . . . . . . . . . . . 41
4.2 Legal Opinions . . . . . . . . . . . . . . . . . . . 41
4.3 Company Officers' Certificate. . . . . . . . . . . . 41
4.4 Termination of Prior Agreements. . . . . . . . . . . 41
4.5 Legality, etc. . . . . . . . . . . . . . . . . . . . 41
4.6 General. . . . . . . . . . . . . . . . . . . . . . . 42
4.7 Fees . . . . . . . . . . . . . . . . . . . . . . . . 42
4.8 Consummation of The Merger . . . . . . . . . . . . . 42
SECTION 5. GENERAL COVENANTS. . . . . . . . . . . . . . . . . 42
5.1 Taxes, Indebtedness, etc. . . . . . . . . . . . . . 42
5.2 Maintenance of Properties; Compliance with Law . . . 43
5.3 Transactions with Affiliates . . . . . . . . . . . . 43
5.4 Insurance. . . . . . . . . . . . . . . . . . . . . . 43
5.5 Financial Statements . . . . . . . . . . . . . . . . 44
5.6 Ratio of Total Debt to Tangible Net Worth. . . . . . 47
5.7 Interest Coverage Ratio. . . . . . . . . . . . . . . 47
5.8 Distributions. . . . . . . . . . . . . . . . . . . . 47
5.9 Merger or Consolidation. . . . . . . . . . . . . . . 47
5.10 Sales of Assets. . . . . . . . . . . . . . . . . . . 47
5.11 Compliance with ERISA. . . . . . . . . . . . . . . . 48
5.12 Negative Pledge . . . . . . . . . . . . . . . . . 48
5.13 Sale-and-Lease-back Transactions . . . . . . . . . . 49
SECTION 6. DEFAULTS . . . . . . . . . . . . . . . . . . . . . 50
6.1 Events of Default. . . . . . . . . . . . . . . . . . 50
6.2 Annulment of Defaults. . . . . . . . . . . . . . . . 52
6.3 Waivers. . . . . . . . . . . . . . . . . . . . . . . 52
6.4 Course of Dealing. . . . . . . . . . . . . . . . . . 53
SECTION 7. THE AGENT. . . . . . . . . . . . . . . . . . . . . 53
7.1 Appointment. . . . . . . . . . . . . . . . . . . . . 53
7.2 Delegation of Duties . . . . . . . . . . . . . . . . 53
7.3 Exculpatory Provisions . . . . . . . . . . . . . . . 53
7.4 Reliance by Agent. . . . . . . . . . . . . . . . . . 54
7.5 Notice of Default. . . . . . . . . . . . . . . . . . 54
7.6 Non-Reliance on Agent and Other Banks. . . . . . . . 55
7.7 Indemnification. . . . . . . . . . . . . . . . . . . 55
7.8 Agent and CAF Loan Agent in Its Individual
Capacity . . . . . . . . . . . . . . . . . . . . . 56
7.9 Successor Agent. . . . . . . . . . . . . . . . . . . 56
SECTION 8. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . 56
8.1 Amendments and Waivers . . . . . . . . . . . . . . . 56
8.2 Notices. . . . . . . . . . . . . . . . . . . . . . . 57
8.3 No Waiver; Cumulative Remedies . . . . . . . . . . . 58
8.4 Survival of Representations and Warranties . . . . . 58
8.5 Payment of Expenses and Taxes; Indemnity . . . . . . 58
8.6 Successors and Assigns; Participations;
Purchasing Banks . . . . . . . . . . . . . . . . . 59
-ii-
<PAGE>
Page
8.7 Adjustments; Set-off . . . . . . . . . . . . . . . . 63
8.8 Counterparts . . . . . . . . . . . . . . . . . . . . 64
8.9 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . 64
8.10 WAIVERS OF JURY TRIAL. . . . . . . . . . . . . . . . 64
8.11 Submission To Jurisdiction; Waivers. . . . . . . . . 64
SCHEDULES
SCHEDULE I Commitment Amounts and Percentages; Lending
Offices; Addresses for Notice
SCHEDULE II Subsidiaries of the Company
SCHEDULE III Indebtedness
SCHEDULE IV Liens
EXHIBITS
EXHIBIT A Form of Revolving Credit Note
EXHIBIT B Form of Grid CAF Loan Note
EXHIBIT C Form of Individual CAF Loan Note
EXHIBIT D Form of CAF Loan Request
EXHIBIT E Form of CAF Loan Offer
EXHIBIT F Form of CAF Loan Confirmation
EXHIBIT G Form of Commitment Transfer Supplement
-iii-
<PAGE>
CREDIT AGREEMENT, dated as of February 10, 1994, among
COLUMBIA HEALTHCARE CORPORATION, a Delaware corporation and the
successor by merger to Columbia Hospital Corporation (the
"COMPANY"), the several banks and other financial institutions
from time to time parties to this Agreement (the "BANKS"), BANK
OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, THE BANK OF NOVA
SCOTIA, THE CHASE MANHATTAN BANK, N.A., CITIBANK, N.A., DEUTSCHE
BANK AG, THE FIRST NATIONAL BANK OF CHICAGO, THE INDUSTRIAL BANK
OF JAPAN, LIMITED, NEW YORK BRANCH, MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, NATIONSBANK OF NORTH CAROLINA, N.A., PNC BANK,
KENTUCKY, INC., TORONTO DOMINION (TEXAS), INC. AND WACHOVIA BANK
OF GEORGIA, N.A., as Co-Agents and CHEMICAL BANK, a New York
banking corporation, as agent for the Banks hereunder (in such
capacity, the "AGENT") and as CAF Loan agent (in such capacity,
the "CAF LOAN AGENT").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, pursuant to a Joint Proxy Statement and
Prospectus on Form S-4, dated October 22, 1993 (as amended, the
"PROXY"), the Company and HCA-Hospital Corporation of America, a
Delaware corporation ("HCA"), have solicited the approval of
their respective stockholders to adopt an Agreement and Plan of
Merger dated as of October 2, 1993 (the "MERGER AGREEMENT")
between the Company and HCA;
WHEREAS, pursuant to subsections 1.1 and 4.1 of the
Merger Agreement HCA will be merged (the "MERGER") with and into
a wholly-owned subsidiary of the Company (with such wholly-owned
subsidiary of the Company as the surviving entity), and each
stockholder of HCA will receive 1.05 shares of the Company's
voting common stock in exchange for each of its shares of HCA's
Class A common stock and 1.05 shares of the Company's nonvoting
common stock in exchange for each of its shares of HCA's Class B
common stock; and
WHEREAS, it is a condition precedent to the obligation
of the Banks to make their respective Loans (as hereinafter
defined) to the Company hereunder that the transactions
contemplated in connection with the Merger, including without
limitation, the transactions contemplated by the Proxy and
subsections 1.1 and 4.1 of the Merger Agreement, are consummated;
NOW, THEREFORE, in consideration of the promises and
mutual agreements herein contained and for other good and
valuable consideration, the undersigned hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the
following terms have the following meanings:
<PAGE>
2
"ADDITIONAL BANK": as defined in subsection 2.4(d).
"AFFILIATE": (a) any director or officer of any
corporation or partner or joint venturer or Person holding a
similar position in another Person or members of their
families, whether or not living under the same roof, or any
Person owning beneficially more than 5% of the outstanding
common stock or other evidences of beneficial interest of
the Person in question, (b) any Person of which any one or
more of the Persons described in clause (a) above is an
officer, director or beneficial owner of more than 5% of the
shares or other beneficial interest and (c) any Person
controlled by, controlling or under common control with the
Person in question.
"AGREEMENT": this Credit Agreement, as amended,
supplemented or otherwise modified from time to time.
"ALTERNATE BASE RATE": for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%)
equal to the greatest of (a) the Prime Rate in effect on
such day, (b) the Base CD Rate in effect on such day plus 1%
and (c) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. For purposes hereof: "PRIME RATE"
shall mean the rate of interest per annum publicly announced
from time to time by the Agent as its prime rate in effect
at its principal office in New York City (each change in the
Prime Rate to be effective on the date such change is
publicly announced); "BASE CD RATE" shall mean the sum of
(a) the product of (i) the Three-Month Secondary CD Rate and
(ii) a fraction, the numerator of which is one and the
denominator of which is one minus the C/D Reserve Percentage
and (b) the C/D Assessment Rate; "THREE-MONTH SECONDARY CD
RATE" shall mean, for any day, the secondary market rate for
three-month certificates of deposit reported as being in
effect on such day (or, if such day shall not be a Business
Day, the next preceding Business Day) by the Board of
Governors of the Federal Reserve System (the "BOARD")
through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current
practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such
day), or, if such rate shall not be so reported on such day
or such next preceding Business Day, the average of the
secondary market quotations for three-month certificates of
deposit of major money center banks in New York City
received at approximately 10:00 A.M., New York City time, on
such day (or, if such day shall not be a Business Day, on
the next preceding Business Day) by the Agent from three New
York City negotiable certificate of deposit dealers of
recognized standing selected by it; "C/D RESERVE PERCENTAGE"
shall mean, for any day, that percentage (expressed as a
decimal) which is in effect on such day, as prescribed by
the Board (or any successor), for determining the maximum
<PAGE>
3
reserve requirement for a member bank of the Federal Reserve
System in New York City with deposits exceeding one billion
Dollars in respect of new non-personal three-month
certificates of deposit in the secondary market in Dollars
in New York City and in an amount of $100,000 or more; "C/D
ASSESSMENT RATE" shall mean, for any day, the net annual
assessment rate (rounded upward to the nearest 1/100th of
1%) determined by Chemical Bank to be payable on such day to
the Federal Deposit Insurance Corporation or any successor
("FDIC") for FDIC's insuring time deposits made in Dollars
at offices of Chemical Bank in the United States; and
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the
weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for the day
of such transactions received by the Agent from three
federal funds brokers of recognized standing selected by it.
If for any reason the Agent shall have determined (which
determination shall be conclusive absent manifest error)
that it is unable to ascertain the Base CD Rate or the
Federal Funds Effective Rate, or both, for any reason,
including the inability or failure of the Agent to obtain
sufficient quotations in accordance with the terms thereof,
the Alternate Base Rate shall be determined without regard
to clause (b) or (c), or both, of the first sentence of this
definition, as appropriate, until the circumstances giving
rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate, the
Three-Month Secondary CD Rate or the Federal Funds Effective
Rate shall be effective on the effective day of such change
in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate, respectively.
"ALTERNATE BASE RATE LOANS": Revolving Credit Loans
hereunder at such time as they are made and/or being
maintained at a rate of interest based upon the Alternate
Base Rate.
"APPLICABLE LIBOR AUCTION ADVANCE RATE": in respect of
any CAF Loan requested pursuant to a LIBOR Auction Advance
Request, the London interbank offered rate for deposits in
Dollars for the period commencing on the date of such CAF
Loan and ending on the maturity date thereof which appears
on Telerate Page 3750 as of 11:00 A.M., London time, two
Working Days prior to the beginning of such period.
"APPLICABLE MARGIN": (i) with respect to Alternate
Base Rate Loans, 0% per annum and (ii) with respect to
Eurodollar Loans, 0.275% per annum.
<PAGE>
4
"ATTRIBUTABLE DEBT": means (i) as to any capitalized
lease obligations, the Indebtedness carried on the balance
sheet in respect thereof in accordance with GAAP and (ii) as
to any operating leases, the total net amount of rent
required to be paid under such leases during the remaining
term thereof.
"AUDITOR": any independent certified public accountant
of nationally recognized standing and reputation selected by
the Company.
"AVAILABLE COMMITMENTS": at a particular time, an
amount equal to the difference between (a) the amount of the
Commitments at such time and (b) the aggregate unpaid
principal amount at such time of all Loans.
"BANK OBLIGATIONS": as defined in subsection 6.1.
"BENEFITTED BANK": as defined in subsection 8.7.
"BORROWING DATE": any Business Day specified in a
notice pursuant to subsection 2.1(c) or 2.2(b) as a date on
which the Company requests the Banks to make Revolving
Credit Loans or CAF Loans, as the case may be, hereunder.
"BUSINESS DAY": a day other than a Saturday, Sunday or
other day on which commercial banks in New York City are
authorized or required by law to close.
"CAF LOAN": each CAF Loan made pursuant to subsection
2.2; the aggregate amount advanced by a CAF Loan Bank
pursuant to subsection 2.2 on each CAF Loan Date shall
constitute one or more CAF Loans, as specified by such CAF
Loan Bank pursuant to subsection 2.2(b)(vi).
"CAF LOAN ASSIGNEE": as defined in subsection 8.6(c).
"CAF LOAN ASSIGNMENT": any assignment by a CAF Loan
Bank to a CAF Loan Assignee of a CAF Loan and related
Individual CAF Loan Note; any such CAF Loan Assignment to be
registered in the Register must set forth, in respect of the
CAF Loan Assignee thereunder, the full name of such CAF Loan
Assignee, its address for notices, its lending office
address (in each case with telephone and facsimile
transmission numbers) and payment instructions for all
payments to such CAF Loan Assignee, and must contain an
agreement by such CAF Loan Assignee to comply with the
provisions of subsection 8.6(c) and subsection 8.6(h) to the
same extent as any Bank.
"CAF LOAN BANKS": Banks from time to time designated
as CAF Loan Banks by the Company by written notice to the
CAF Loan Agent (which notice the CAF Loan Agent shall
transmit to each such CAF Loan Bank).
<PAGE>
5
"CAF LOAN CONFIRMATION": each confirmation by the
Company of its acceptance of one or more CAF Loan Offers,
which CAF Loan Confirmation shall be substantially in the
form of Exhibit F and shall be delivered to the CAF Loan
Agent in writing or by facsimile transmission.
"CAF LOAN DATE": each date on which a CAF Loan is made
pursuant to subsection 2.2.
"CAF LOAN NOTE": a Grid CAF Loan Note or an Individual
CAF Loan Note.
"CAF LOAN OFFER": each offer by a CAF Loan Bank to
make one or more CAF Loans pursuant to a CAF Loan Request,
which CAF Loan Offer shall contain the information specified
in Exhibit E and shall be delivered to the CAF Loan Agent by
telephone, immediately confirmed by facsimile transmission.
"CAF LOAN REQUEST": each request by the Company for
CAF Loan Banks to submit bids to make CAF Loans, which shall
contain the information in respect of such requested CAF
Loans specified in Exhibit D and shall be delivered to the
CAF Loan Agent in writing or by facsimile transmission, or
by telephone, immediately confirmed by facsimile
transmission.
"CHANGE IN CONTROL": of any corporation, (a) any
Person or "group" (as defined in Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended), other than the
Company, that shall acquire more than 50% of the Voting
Stock of such corporation or (b) any Person or group (as
defined in preceding clause (a)), other than the Company,
that shall acquire more than 20% of the Voting Stock of such
corporation and, at any time following an acquisition
described in this clause (b), the Continuing Directors shall
not constitute a majority of the board of directors of such
corporation.
"CHEMICAL BANK": Chemical Bank, a New York banking
corporation.
"CLOSING DATE": the date on which all of the
conditions precedent for the Closing Date set forth in
Section 4 shall have been fulfilled, but in no event shall
the Closing Date occur later than February 28, 1994.
"CODE": the Internal Revenue Code of 1986, as amended
from time to time.
"COMMITMENT": as to any Bank, its obligation to make
Revolving Credit Loans to the Company pursuant to subsection
2.1(a) in an aggregate amount not to exceed at any one time
outstanding the amount set forth opposite such Bank's name
<PAGE>
6
in Schedule I, as such amount may be reduced from time to
time as provided herein.
"COMMITMENT PERCENTAGE": as to any Bank, the
percentage of the aggregate Commitments constituted by such
Bank's Commitment.
"COMMITMENT PERIOD": the period from and including the
Closing Date to but not including the Termination Date or
such earlier date on which the Commitments shall terminate
as provided herein.
"COMMITMENT TRANSFER SUPPLEMENT": a Commitment
Transfer Supplement, substantially in the form of Exhibit G.
"CONFIDENTIAL INFORMATION MEMORANDUM": the
Confidential Information Memorandum dated November 1993
relating to this Agreement.
"CONSOLIDATED ASSETS": the consolidated assets of the
Company and its Subsidiaries, determined in accordance with
GAAP.
"CONSOLIDATED EARNINGS BEFORE INTEREST AND TAXES": for
any period for which the amount thereof is to be determined,
Consolidated Net Income for such period plus all amounts
deducted in computing such Consolidated Net Income in
respect of interest expense on Indebtedness and income
taxes, all determined in accordance with GAAP.
"CONSOLIDATED INTEREST EXPENSE": for any period for
which the amount thereof is to be determined, all amounts
deducted in computing Consolidated Net Income for such
period in respect of interest expense on Indebtedness
determined in accordance with GAAP.
"CONSOLIDATED NET INCOME": for any period, the
consolidated net income, if any, after taxes, of the Company
and its Subsidiaries for such period determined in
accordance with GAAP; PROVIDED, HOWEVER, that Consolidated
Net Income shall not include any gain or loss attributable
to extraordinary items, any sale of assets not in the
ordinary course of business or any taxes or tax savings as a
result thereof.
"CONSOLIDATED NET TANGIBLE ASSETS": means the total
amount of assets (less applicable reserves and other
properly deductible items) after deducting therefrom (i) all
current liabilities as disclosed on the consolidated balance
sheet of the Company (excluding any thereof which are by
their terms extendable or renewable at the option of the
obligor thereon to a time more than 12 months after the time
as of which the amount thereof is being computed and
excluding any deferred income taxes that are included in
<PAGE>
7
current liabilities), and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense
and other like intangible assets, all as set forth on the
most recent consolidated balance sheet of the Company and
computed in accordance with GAAP.
"CONSOLIDATED TANGIBLE NET WORTH": Consolidated Assets
of the Company and its Subsidiaries less the following:
(a) the amount, if any, at which any treasury
stock appears on the assets side of the balance sheet;
(b) an amount equal to goodwill;
(c) any writeup in book value of assets resulting
from any revaluation made after December 31, 1992 in
the case of the Company and its Subsidiaries (excluding
Galen and its Subsidiaries) and HCA and its
Subsidiaries and August 31, 1993 in the case of Galen
and its Subsidiaries;
(d) an amount equal to all amounts which appear
or should appear as a credit on the balance sheet of
the Company in respect of any class or series of
preferred stock of the Company; and
(e) all liabilities which in accordance with GAAP
should be reflected as liabilities on such consolidated
balance sheet, but in any event including all
Indebtedness.
"CONSOLIDATED TOTAL DEBT": the aggregate of all
Indebtedness (including the current portion thereof) of the
Company and its Subsidiaries on a consolidated basis.
"CONTINUING BANK": as defined in subsection 2.4(c).
"CONTINUING DIRECTOR": any member of the Board of
Directors of the Company who is a member of such Board on
the date of this Agreement, and any Person who is a member
of such Board and whose nomination as a director was
approved by a majority of the Continuing Directors then on
such Board.
"CONTRACTUAL OBLIGATION": as to any Person, any
provision of any security issued by such Person or of any
agreement, instrument or undertaking to which such Person is
a party or by which it or any of its property is bound.
"CONTROL GROUP PERSON": any Person which is a member
of the controlled group or is under common control with the
Company within the meaning of Section 414(b) or 414(c) of
the Code or Section 4001(b)(1) of ERISA.
<PAGE>
8
"$300,000,000 CREDIT AGREEMENT": the $300,000,000
Credit Agreement, dated as of November 1, 1993, among the
Company, the several banks and other financial institutions
from time to time parties thereto and Chemical Bank, as
agent and as CAF Loan agent.
"$500,000,000 CREDIT AGREEMENT": the $500,000,000
Credit Agreement, dated as of September 1, 1993, among the
Company, the several banks and other financial institutions
from time to time parties thereto, Banque Paribas, The Chase
Manhattan Bank N.A., Citibank, N.A., Deutsche Bank AG, The
First National Bank of Chicago, The Industrial Bank of
Japan, Limited, New York Branch, Morgan Guaranty Trust
Company of New York, Nationsbank of North Carolina, N.A.,
PNC Bank, Kentucky, Inc. and Toronto Dominion (Texas), Inc.,
as Co-Agents and Chemical Bank, as agent and as CAF Loan
agent.
"$800,000,000 CREDIT AGREEMENT": the $800,000,000
Credit Agreement, dated as of September 1, 1993, among the
Company, the several banks and other financial institutions
from time to time parties thereto, Banque Paribas, The Chase
Manhattan Bank N.A., Citibank, N.A., Deutsche Bank AG, The
First National Bank of Chicago, The Industrial Bank of
Japan, Limited, New York Branch, Morgan Guaranty Trust
Company of New York, Nationsbank of North Carolina, N.A.,
PNC Bank, Kentucky, Inc. and Toronto Dominion (Texas), Inc.,
as Co-Agents and Chemical Bank, as agent and as CAF Loan
agent.
"$1,642,000,000 CREDIT AGREEMENT": the $1,642,000,000
Amended and Restated Credit Agreement, dated as of
September 2, 1993, among HCA, Hospital Corporation of
America, the several banks and other financial institutions
from time to time parties thereto and Morgan Guaranty Trust
Company of New York, as agent.
"DEFAULT": any of the events specified in subsection
6.1, whether or not any requirement for the giving of
notice, the lapse of time, or both, or any other condition,
has been satisfied.
"DISTRIBUTION": (a) the declaration or payment of any
dividend on or in respect of any shares of any class of
capital stock of the Company other than dividends payable
solely in shares of common stock of the Company; (b) the
purchase, redemption or other acquisition of any shares of
any class of capital stock of the Company directly or
indirectly through a Subsidiary or otherwise; and (c) any
other distribution on or in respect of any shares of any
class of capital stock of the Company.
"DOLLARS" and "$": dollars in lawful currency of the
United States of America.
<PAGE>
9
"DOMESTIC LENDING OFFICE": initially, the office of
each Bank designated as such in Schedule I; thereafter, such
other office of such Bank, if any, located within the United
States which shall be making or maintaining Alternate Base
Rate Loans.
"EFFECTIVE DATE": as defined in subsection 2.4(b).
"ERISA": the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"EUROCURRENCY RESERVE REQUIREMENTS": for any day as
applied to a Eurodollar Loan, the aggregate (without
duplication) of the rates (expressed as a decimal fraction)
of reserve requirements in effect on such day (including,
without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of
Governors of the Federal Reserve System or other
Governmental Authority having jurisdiction with respect
thereto), dealing with reserve requirements prescribed for
eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) maintained by a
member bank of such System.
"EURODOLLAR LENDING OFFICE": initially, the office of
each Bank designated as such in Schedule I; thereafter, such
other office of such Bank, if any, which shall be making or
maintaining Eurodollar Loans.
"EURODOLLAR LOANS": Revolving Credit Loans hereunder
at such time as they are made and/or are being maintained at
a rate of interest based upon the Eurodollar Rate.
"EURODOLLAR RATE": with respect to each day during
each Interest Period pertaining to a Eurodollar Loan, the
rate per annum equal to the average (rounded upwards to the
nearest whole multiple of one sixteenth of one percent) of
the respective rates notified to the Agent by the Reference
Banks as the rate at which each of their Eurodollar Lending
Offices is offered Dollar deposits two Business Days prior
to the beginning of such Interest Period in the interbank
eurodollar market where the eurodollar and foreign currency
and exchange operations of such Eurodollar Lending Office
are then being conducted at or about 10:00 A.M., New York
City time, for delivery on the first day of such Interest
Period for the number of days comprised therein and in an
amount comparable to the amount of the Eurodollar Loan of
such Reference Bank to be outstanding during such Interest
Period.
"EURODOLLAR TRANCHE": the collective reference to
Eurodollar Loans having the same Interest Period (whether or
not originally made on the same day).
<PAGE>
10
"EVENT OF DEFAULT": any of the events specified in
subsection 6.1, provided that any requirement for the giving
of notice, the lapse of time, or both, or any other
condition, event or act has been satisfied.
"FINANCING LEASE": any lease of property, real or
personal, if the then present value of the minimum rental
commitment thereunder should, in accordance with GAAP, be
capitalized on a balance sheet of the lessee.
"FIXED RATE AUCTION ADVANCE REQUEST": any CAF Loan
Request requesting the CAF Loan Banks to offer to make CAF
Loans at a fixed rate (as opposed to a rate composed of the
Applicable LIBOR Auction Advance Rate plus or minus a
margin).
"GAAP": (a) with respect to determining compliance by
the Company with the provisions of subsections 5.6, 5.7 and
5.10, generally accepted accounting principles in the United
States of America consistent with those utilized in
preparing the audited financial statements referred to in
subsection 3.3 and (b) with respect to the financial
statements referred to in subsection 3.3 or the furnishing
of financial statements pursuant to subsection 5.5 and
otherwise, generally accepted accounting principles in the
United States of America from time to time in effect.
"GALEN": Galen Health Care, Inc., a Delaware
Corporation and a successor by spin-off to Humana Inc.
"GOVERNMENTAL AUTHORITY": any nation or government,
any state or other political subdivision thereof and any
entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"GRID CAF LOAN NOTE": as defined in subsection 2.2(f).
"GUARANTEE OBLIGATION": any arrangement whereby credit
is extended to one party on the basis of any promise of
another, whether that promise is expressed in terms of an
obligation to pay the Indebtedness of another, or to
purchase an obligation owed by that other, to purchase
assets or to provide funds in the form of lease or other
types of payments under circumstances that would enable that
other to discharge one or more of its obligations, whether
or not such arrangement is listed in the balance sheet of
the obligor or referred to in a footnote thereto, but shall
not include endorsements of items for collection in the
ordinary course of business.
"HCA": as defined in the Recitals hereto.
<PAGE>
11
"INDEBTEDNESS": of a Person, at a particular date, the
sum (without duplication) at such date of (a) all
indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services or which is
evidenced by a note, bond, debenture or similar instrument,
(b) all obligations of such Person under Financing Leases,
(c) all obligations of such Person in respect of letters of
credit, acceptances, or similar obligations issued or
created for the account of such Person in excess of
$1,000,000, (d) all liabilities secured by any Lien on any
property owned by the Company or any Subsidiary even though
such Person has not assumed or otherwise become liable for
the payment thereof and (e) all Guarantee Obligations
relating to any of the foregoing in excess of $1,000,000.
"INDIVIDUAL CAF LOAN NOTE": as defined in subsection
2.2(g).
"INSOLVENCY" or "INSOLVENT": at any particular time, a
Multiemployer Plan which is insolvent within the meaning of
Section 4245 of ERISA.
"INTEREST PAYMENT DATE": (a) as to any Alternate Base
Rate Loan, the last day of each March, June, September and
December, commencing on the first of such days to occur
after Alternate Base Rate Loans are made or Eurodollar Loans
are converted to Alternate Base Rate Loans, (b) as to any
Eurodollar Loan in respect of which the Company has selected
an Interest Period of one, two or three months, the last day
of such Interest Period and (c) as to any Eurodollar Loan in
respect of which the Company has selected a longer Interest
Period than the periods described in clause (b), the last
day of each March, June, September and December falling
within such Interest Period and the last day of such
Interest Period.
"INTEREST PERIOD": with respect to any Eurodollar
Loans:
(i) initially, the period commencing on the
borrowing or conversion date, as the case may be, with
respect to such Eurodollar Loans and ending one, two,
three or six months thereafter (or, with the consent of
all the Banks, nine months thereafter), as selected by
the Company in its notice of borrowing as provided in
subsection 2.1(c) or its notice of conversion as
provided in subsection 2.6(a), as the case may be; and
(ii) thereafter, each period commencing on the
last day of the next preceding Interest Period
applicable to such Eurodollar Loans and ending one,
two, three or six months thereafter (or, with the
consent of all the Banks, nine months thereafter), as
selected by the Company by irrevocable notice to the
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12
Agent not less than three Business Days prior to the
last day of the then current Interest Period with
respect to such Eurodollar Loans;
PROVIDED that, all of the foregoing provisions relating to
Interest Periods are subject to the following:
(1) if any Interest Period pertaining to a
Eurodollar Loan would otherwise end on a day which is
not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless the
result of such extension would be to carry such
Interest Period into another calendar month in which
event such Interest Period shall end on the immediately
preceding Business Day;
(2) if the Company shall fail to give notice as
provided above, the Company shall be deemed to have
selected an Alternate Base Rate Loan to replace the
affected Eurodollar Loan;
(3) any Interest Period pertaining to a
Eurodollar Loan that begins on the last Business Day of
a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of a calendar month;
(4) any Interest Period pertaining to a
Eurodollar Loan that would otherwise end after the
Termination Date shall end on the Termination Date; and
(5) the Company shall select Interest Periods so
as not to require a payment or prepayment of any
Eurodollar Loan during an Interest Period for such
Loan.
"LIBOR AUCTION ADVANCE REQUEST": any CAF Loan Request
requesting the CAF Loan Banks to offer to make CAF Loans at
an interest rate equal to the Applicable LIBOR Auction
Advance Rate plus or minus a margin.
"LIEN": any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien
(statutory or other), or preference, priority or other
security agreement or preferential arrangement of any kind
or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any
financing lease having substantially the same economic
effect as any of the foregoing).
"LOAN": any loan made by any Bank pursuant to this
Agreement.
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13
"LOAN DOCUMENTS": this Agreement and the Notes.
"MERGER": as defined in the Recitals hereto.
"MERGER AGREEMENT": as defined in the Recitals hereto.
"MULTIEMPLOYER PLAN": a Plan which is a multiemployer
plan as defined in Section 4001(a)(3) of ERISA.
"NOTE": any Revolving Credit Note or CAF Loan Note.
"PARTICIPANTS": as defined in subsection 8.6(b).
"PAYMENT SHARING NOTICE": a written notice from the
Company, or any Bank, informing the Agent that an Event of
Default has occurred and is continuing and directing the
Agent to allocate payments thereafter received from the
Company in accordance with subsection 2.10(c).
"PBGC": the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA.
"PERSON": an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other
entity of whatever nature.
"PLAN": at a particular time, any employee benefit
plan which is covered by ERISA and in respect of which the
Company or a Control Group Person is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA
be deemed to be) an employer as defined in Section 3(5) of
ERISA.
"PRINCIPAL PROPERTY": means each acute care hospital
providing general medical and surgical services (including
real property but excluding equipment, personal property and
hospitals which primarily provide specialty medical
services, such as psychiatric and obstetrical and
gynecological services) at least 50% of which is owned by
the Company and its Subsidiaries on a consolidated basis and
located in the United States of America.
"PROXY": as defined in the Recitals hereto.
"PURCHASING BANKS": as defined in subsection 8.6(d).
"REFERENCE BANKS": Chemical Bank, Citibank, N.A. and
Morgan Guaranty Trust Company of New York.
"REGISTER": as defined in subsection 8.6(e).
"REGULATION U": Regulation U of the Board of Governors
of the Federal Reserve System.
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14
"REORGANIZATION": with respect to any Multiemployer
Plan, the condition that such plan is in reorganization
within the meaning of such term as used in Section 4241 of
ERISA.
"REPORTABLE EVENT": any of the events set forth in
Section 4043(b) of ERISA, other than those events as to
which the thirty day notice period is waived under
subsections .13,.14,.16,.18,.19 or .20 of PBGC Reg. Section 2615.
"REQUESTED TERMINATION DATE": as defined in subsection
2.4(b).
"REQUIRED BANKS": (i) during the Commitment Period,
Banks whose Commitment Percentages aggregate at least 51%
and (ii) after the Commitments have expired or been
terminated, Banks whose outstanding Loans represent in the
aggregate 51% of all outstanding Loans.
"REQUIREMENT OF LAW": as to any Person, the
Certificate of Incorporation and By-Laws or other
organizational or governing documents of such Person, and
any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any
of its property or to which such Person or any of its
property is subject.
"RESPONSIBLE OFFICER": the chief executive officer,
the president, any executive or senior vice president or
vice president of the Company, the chief financial officer,
treasurer or controller of the Company.
"REVOLVING CREDIT LOANS": as defined in subsection
2.1(a).
"REVOLVING CREDIT NOTES": as defined in subsection
2.1(b).
"SALE-AND-LEASEBACK TRANSACTION": means any
arrangement entered into by the Company or any Significant
Subsidiary with any person (other than the Company or a
Significant Subsidiary), or to which any such person is a
party, providing for the leasing to the Company or any
Significant Subsidiary for a period of more than three years
of any Principal Property which has been or is to be held or
transferred by the Company or such Significant Subsidiary to
such Person or to any other Person (other than the Company
or a Significant Subsidiary), to which funds have been or
are to be advanced by such Person on the security of the
leased property.
<PAGE>
15
"SIGNIFICANT SUBSIDIARY": means, at any particular
time, any Subsidiary of the Company having total assets of
$5,000,000 or more at that time.
"SINGLE EMPLOYER PLAN": any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"SUBSIDIARY": as to any Person, a corporation or
partnership of which shares of stock or other ownership
interests having ordinary voting power (other than stock or
such other ownership interests having such power only by
reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such
corporation or partnership are at the time owned, or the
management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to
a Subsidiary or to Subsidiaries in this Agreement shall
refer to a Subsidiary or Subsidiaries of the Company.
"TAXES": as defined in subsection 2.14.
"TERMINATING BANK": as defined in subsection 2.4(c).
"TERMINATION DATE": the date which is 364 days after
the Closing Date (or, if such date is not a Business Day,
the immediately preceding Business Day), or such other
Business Day to which the Termination Date may be changed
pursuant to subsection 2.4).
"TRANSFER EFFECTIVE DATE": as defined in each
Commitment Transfer Supplement.
"TRANSFEREE": as defined in subsection 8.6(g).
"TYPE": as to any Revolving Credit Loan, its nature as
an Alternate Base Rate Loan or Eurodollar Loan.
"VOTING STOCK": of any corporation, shares of capital
stock or other securities of such corporation entitled to
vote generally in the election of directors of such
corporation.
"WORKING DAY": any Business Day on which dealings in
foreign currencies and exchange between banks may be carried
on in London, England.
1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless
otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in the Notes or any
certificate or other document made or delivered pursuant hereto.
(b) As used herein and in the other Loan Documents,
and any certificate or other document made or delivered pursuant
<PAGE>
16
hereto or thereto, accounting terms relating to the Company and
its Subsidiaries not defined in subsection 1.1 and accounting
terms partly defined in subsection 1.1, to the extent not
defined, shall have the respective meanings given to them under
GAAP.
(c) The words "hereof", "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision
of this Agreement, and Section, subsection, Schedule and Exhibit
references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall
be equally applicable to both the singular and plural forms of
such terms.
SECTION 2. AMOUNT AND TERMS OF LOANS
2.1 REVOLVING CREDIT LOANS AND REVOLVING CREDIT NOTES.
(a) Subject to the terms and conditions hereof, each Bank
severally agrees to make loans ( "REVOLVING CREDIT LOANS") to the
Company from time to time during the Commitment Period in an
aggregate principal amount at any one time outstanding not to
exceed the Commitment of such Bank, PROVIDED that the aggregate
amount of the Loans outstanding shall not at any time exceed the
aggregate amount of the Commitments. During the Commitment
Period the Company may use the Commitments by borrowing,
prepaying the Revolving Credit Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions
hereof. The Revolving Credit Loans may be (i) Eurodollar Loans,
(ii) Alternate Base Rate Loans or (iii) a combination thereof, as
determined by the Company and notified to the Agent in accordance
with subsection 2.1(c). Eurodollar Loans shall be made and
maintained by each Bank at its Eurodollar Lending Office, and
Alternate Base Rate Loans shall be made and maintained by each
Bank at its Domestic Lending Office.
(b) The Revolving Credit Loans made by each Bank shall
be evidenced by a promissory note of the Company, substantially
in the form of Exhibit A with appropriate insertions as to payee,
date and principal amount (a "REVOLVING CREDIT NOTE"), payable to
the order of such Bank and evidencing the obligation of the
Company to pay a principal amount equal to the amount of the
initial Commitment of such Bank or, if a lesser amount, the
aggregate unpaid principal amount of all Revolving Credit Loans
made by such Bank. Each Bank is hereby authorized to record the
date, Type and amount of each Revolving Credit Loan made or
converted by such Bank, and the date and amount of each payment
or prepayment of principal thereof, and, in the case of
Eurodollar Loans, the Interest Period with respect thereto, on
the schedule annexed to and constituting a part of its Revolving
Credit Note, and any such recordation shall constitute prima
facie evidence of the accuracy of the information so recorded;
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17
PROVIDED, HOWEVER, that the failure to make any such recordation
shall not affect the obligations of the Company hereunder or
under any Revolving Credit Note. Each Revolving Credit Note
shall (x) be dated the Closing Date, (y) be stated to mature on
the Termination Date, and (z) bear interest on the unpaid
principal amount thereof from time to time outstanding at the
applicable interest rate per annum determined as provided in
subsection 2.7.
(c) The Company may borrow under the Commitments
during the Commitment Period on any Business Day; PROVIDED that
the Company shall give the Agent irrevocable notice (which notice
must "be received by the Agent (i) prior to 1":30 A.M., New York
City time three Business Days prior to the requested Borrowing
Date, in the case of Eurodollar Loans, and (ii) prior to 10:00
A.M., New York City time, on the requested Borrowing Date, in the
case of Alternate Base Rate Loans), specifying (A) the amount to
be borrowed, (B) the requested Borrowing Date, (C) whether the
borrowing is to be of Eurodollar Loans, Alternate Base Rate
Loans, or a combination thereof, and (D) if the borrowing is to
be entirely or partly of Eurodollar Loans, the length of the
Interest Period therefor. Each borrowing pursuant to the
Commitments shall be in an aggregate principal amount equal to
the lesser of (i) $5,000,000 or a whole multiple of $1,000,000 in
excess thereof and (ii) the then Available Commitments. Upon
receipt of such notice from the Company, the Agent shall promptly
notify each Bank thereof. Each Bank will make the amount of its
pro rata share of each borrowing available to the Agent for the
account of the Company at the office of the Agent set forth in
subsection 8.2 prior to 12:00 P.M., New York City time, on the
Borrowing Date requested by the Company in funds immediately
available to the Agent. The proceeds of all such Revolving
Credit Loans will then be made available to the Company by the
Agent at such office of the Agent by crediting the account of the
Company on the books of such office with the aggregate of the
amounts made available to the Agent by the Banks.
2.2 CAF LOANS AND CAF LOAN NOTES. (a) The Company
may borrow CAF Loans from time to time on any Business Day (in
the case of CAF Loans made pursuant to a Fixed Rate Auction
Advance Request) or any Working Day (in the case of CAF Loans
made pursuant to a LIBOR Auction Advance Request) during the
period from the Closing Date until the date occurring 14 days
prior to the Termination Date in the manner set forth in this
subsection 2.2 and in amounts such that the aggregate amount of
Loans outstanding at any time shall not exceed the aggregate
amount of the Commitments at such time.
(b) (i) The Company shall request CAF Loans by
delivering a CAF Loan Request to the CAF Loan Agent, not later
than 12:00 Noon (New York City time) four Working Days prior to
the proposed Borrowing Date (in the case of a LIBOR Auction
Advance Request), and not later than 10:00 A.M. (New York City
time) one Business Day prior to the proposed Borrowing Date (in
<PAGE>
18
the case of a Fixed Rate Auction Advance Request). Each CAF Loan
Request may solicit bids for CAF Loans in an aggregate principal
amount of $5,000,000 or an integral multiple thereof and for not
more than three alternative maturity dates for such CAF Loans.
The maturity date for each CAF Loan shall be not less than 7 days
nor more than 360 days after the Borrowing Date therefor (and in
any event not after the Termination Date). The CAF Loan Agent
shall promptly notify each CAF Loan Bank by facsimile
transmission of the contents of each CAF Loan Request received by
it.
(ii) In the case of a LIBOR Auction Advance Request,
upon receipt of notice from the CAF Loan Agent of the contents of
such CAF Loan Request, any CAF Loan Bank that elects, in its sole
discretion, to do so, shall irrevocably offer to make one or more
CAF Loans at the Applicable LIBOR Auction Advance Rate plus or
minus a margin for each such CAF Loan determined by such CAF Loan
Bank in its sole discretion. Any such irrevocable offer shall be
made by delivering a CAF Loan Offer to the CAF Loan Agent, before
9:30 A.M., New York City time, three Working Days before the
proposed Borrowing Date, setting forth the maximum amount of CAF
Loans for each maturity date, and the aggregate maximum amount
for all maturity dates, which such Bank would be willing to make
(which amounts may, subject to subsection 2.2(a), exceed such CAF
Loan Bank's Commitment) and the margin above the Applicable LIBOR
Auction Advance Rate at which such CAF Loan Bank is willing to
make each such CAF Loan; the CAF Loan Agent shall advise the
Company before 10:00 A.M., New York City time, three Working Days
before the proposed Borrowing Date of the contents of each such
CAF Loan Offer received by it. If the CAF Loan Agent in its
capacity as a CAF Loan Bank shall, in its sole discretion, elect
to make any such offer, it shall advise the Company of the
contents of its CAF Loan Offer before 9:00 A.M., New York City
time, three Working Days before the proposed Borrowing Date.
(iii) In the case of a Fixed Rate Auction Advance
Request, upon receipt of notice from the Agent of the contents of
such CAF Loan Request, any CAF Loan Bank that elects, in its sole
discretion, to do so, shall irrevocably offer to make one or more
CAF Loans at a rate or rates of interest for each such CAF Loan
determined by such CAF Loan Bank in its sole discretion. Any
such irrevocable offer shall be made by delivering a CAF Loan
Offer to the CAF Loan Agent, before 9:30 A.M., New York City
time, on the proposed Borrowing Date, setting forth the maximum
amount of CAF Loans for each maturity date, and the aggregate
maximum amount for all maturity dates, which such CAF Loan Bank
would be willing to make (which amounts may, subject to
subsection 2.2(a), exceed such CAF Loan Bank's Commitment) and
the rate or rates of interest at which such CAF Loan Bank is
willing to make each such CAF Loan; the CAF Loan Agent shall
advise the Company before 10:15 A.M., New York City time, on the
proposed Borrowing Date of the contents of each such CAF Loan
Offer received by it. If the CAF Loan Agent or any affiliate
thereof in its capacity as a CAF Loan Bank shall, in its sole
<PAGE>
19
discretion, elect to make any such offer, it shall advise the
Company of the contents of its CAF Loan Offer before 9:15 A.M.,
New York City time, on the proposed Borrowing Date.
(iv) The Company shall before 11:00 A.M., New York City
time, three Working Days before the proposed Borrowing Date (in
the case of CAF Loans requested by a LIBOR Auction Advance
Request) and before 10:30 A.M., New York City time, on the
proposed Borrowing Date (in the case of CAF Loans requested by a
Fixed Rate Auction Advance Request) either, in its absolute
discretion:
(A) cancel such CAF Loan Request by giving the CAF
Loan Agent telephone notice to that effect, or
(B) accept one or more of the offers made by any CAF
Loan Bank or CAF Loan Banks pursuant to clause (ii) or
clause (iii) above, as the case may be, by giving telephone
notice to the CAF Loan Agent (immediately confirmed by
delivery to the CAF Loan Agent of a CAF Loan Confirmation)
of the amount of CAF Loans for each relevant maturity date
to be made by each CAF Loan Bank (which amount for each such
maturity date shall be equal to or less than the maximum
amount for such maturity date specified in the CAF Loan
Offer of such CAF Loan Bank, and for all maturity dates
included in such CAF Loan Offer shall be equal to or less
than the aggregate maximum amount specified in such CAF Loan
Offer for all such maturity dates) and reject any remaining
offers made by CAF Loan Banks pursuant to clause (ii) or
clause (iii) above, as the case may be; PROVIDED, HOWEVER,
that (x) the Company may not accept offers for CAF Loans for
any maturity date in an aggregate principal amount in excess
of the maximum principal amount requested in the related CAF
Loan Request, (y) if the Company accepts any of such offers,
it must accept offers strictly based upon pricing for such
relevant maturity date and no other criteria whatsoever and
(z) if two or more CAF Loan Banks submit offers for any
maturity date at identical pricing and the Company accepts
any of such offers but does not wish to borrow the total
amount offered by such CAF Loan Banks with such identical
pricing, the Company shall accept offers from all of such
CAF Loan Banks in amounts allocated among them PRO RATA
according to the amounts offered by such CAF Loan Banks (or
as nearly pro rata as shall be practicable after giving
effect to the requirement that CAF Loans made by a CAF Loan
Bank on a Borrowing Date for each relevant maturity date
shall be in a principal amount of $2,500,000 or an integral
multiple of $1,000,000 in excess thereof PROVIDED that if
the number of CAF Loan Banks that submit offers for any
maturity date at identical pricing is such that, after the
Company accepts such offers PRO RATA in accordance with the
foregoing, the CAF Loans to be made by such CAF Loan Banks
would be less than $2,500,000 principal amount, the number
of such CAF Loan Banks shall be reduced by the CAF Loan
<PAGE>
20
Agent by lot until the CAF Loans to be made by such
remaining CAF Loan Banks would be in a principal amount of
$2,500,000 or an integral multiple of $1,000,000 in excess
thereof).
(v) If the Company notifies the CAF Loan Agent that a
CAF Loan Request is cancelled pursuant to clause (iv)(A) above,
the CAF Loan Agent shall give prompt, but in no event more than
one hour later, telephone notice thereof to the CAF Loan Banks,
and the CAF Loans requested thereby shall not be made.
(vi) If the Company accepts pursuant to clause (iv)(B)
above one or more of the offers made by any CAF Loan Bank or CAF
Loan Banks, the CAF Loan Agent shall promptly, but in no event
more than one hour later, notify each CAF Loan Bank which has
made such an offer of the aggregate amount of such CAF Loans to
be made on such Borrowing Date for each maturity date and of the
acceptance or rejection of any offers to make such CAF Loans made
by such CAF Loan Bank. Each CAF Loan Bank which is to make a CAF
Loan shall, before 12:00 Noon, New York City time, on the
Borrowing Date specified in the CAF Loan Request applicable
thereto, make available to the Agent at its office set forth in
subsection 8.2 the amount of CAF Loans to be made by such CAF
Loan Bank, in immediately available funds. The Agent will make
such funds available to the Company as soon as practicable on
such date at the Agent's aforesaid address. As soon as
practicable after each Borrowing Date, the Agent shall notify
each Bank of the aggregate amount of CAF Loans advanced on such
Borrowing Date and the respective maturity dates thereof.
(c) Within the limits and on the conditions set forth
in this subsection 2.2, the Company may from time to time borrow
under this subsection 2.2, repay pursuant to paragraph (d) below,
and reborrow under this subsection 2.2.
(d) The Company shall repay to the Agent for the
account of each CAF Loan Bank which has made a CAF Loan (or the
CAF Loan Assignee in respect thereof, as the case may be) on the
maturity date of each CAF Loan (such maturity date being that
specified by the Company for repayment of such CAF Loan in the
related CAF Loan Request) the then unpaid principal amount of
such CAF Loan. The Company shall not have the right to prepay
any principal amount of any CAF Loan.
(e) The Company shall pay interest on the unpaid
principal amount of each CAF Loan from the Borrowing Date to the
stated maturity date thereof, at the rate of interest determined
pursuant to paragraph (b) above (calculated on the basis of a
360-day year for actual days elapsed), payable on the interest
payment date or dates specified by the Company for such CAF Loan
in the related CAF Loan Request as provided in the CAF Loan Note
evidencing such CAF Loan. If all or a portion of the principal
amount of any CAF Loan or any interest or other amount payable
hereunder in respect thereof shall not be paid when due (whether
<PAGE>
21
at the stated maturity, by acceleration or otherwise), such
overdue amount shall, without limiting any rights of any Bank
under this Agreement, bear interest from the date on which such
payment was due at a rate per annum which is 2% above the rate
which would otherwise be applicable pursuant to the CAF Loan Note
evidencing such CAF Loan until the scheduled maturity date with
respect thereto as set forth in the CAF Loan Note evidencing such
CAF Loan, and for each day thereafter at rate per annum which is
2% above the Alternate Base Rate until paid in full (as well
after as before judgment).
(f) The CAF Loans made by each CAF Loan Bank shall be
evidenced initially by a promissory note of the Company,
substantially in the form of Exhibit B with appropriate
insertions (a "GRID CAF LOAN NOTE"), payable to the order of such
CAF Loan Bank and representing the obligation of the Company to
pay the unpaid principal amount of all CAF Loans made by such CAF
Loan Bank, with interest on the unpaid principal amount from time
to time outstanding of each CAF Loan evidenced thereby as
prescribed in subsection 2.2(e). Each CAF Loan Bank is hereby
authorized to record the date and amount of each CAF Loan made by
such Bank, the maturity date thereof, the date and amount of each
payment of principal thereof and the interest rate with respect
thereto on the schedule annexed to and constituting part of its
Grid CAF Loan Note, and any such recordation shall constitute
PRIMA FACIE 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 Company
hereunder or under any Grid CAF Loan Note. Each Grid CAF Loan
Note shall be dated the Closing Date and each CAF Loan evidenced
thereby shall bear interest for the period from and including the
Borrowing Date thereof on the unpaid principal amount thereof
from time to time outstanding at the applicable rate per annum
determined as provided in, and such interest shall be payable as
specified in, subsection 2.2(e).
(g) Amounts advanced by a CAF Loan Bank pursuant to
this subsection 2.2 on a Borrowing Date which have the same
maturity date and interest rate shall be deemed to constitute one
CAF Loan so long as such amounts remain evidenced by the Grid CAF
Loan Note of such CAF Loan Bank; any such CAF Loan Bank that
wishes such amounts to constitute more than one CAF Loan and to
have each such CAF Loan evidenced by a separate promissory note
payable to such CAF Loan Bank, substantially in the form of
Exhibit C with appropriate insertions as to Borrowing Date,
principal amount and interest rate (an "INDIVIDUAL CAF LOAN
NOTE"), shall notify the CAF Loan Agent and the Company by
facsimile transmission of the respective principal amounts of the
CAF Loans (which principal amounts shall not be less than
$5,000,000 for any of such CAF Loans) to be evidenced by each
such Individual CAF Loan Note. Not later than three Business
Days after receipt of such notice, the Company shall deliver to
such CAF Loan Bank an Individual CAF Loan Note payable to the
order of such CAF Loan Bank in the principal amount of each such
<PAGE>
22
CAF Loan and otherwise conforming to the requirements of this
Agreement. Upon receipt of such Individual CAF Loan Note, such
CAF Loan Bank shall endorse on the schedule attached to its Grid
CAF Loan Note the transfer of such CAF Loan from Grid CAF Loan
Note to such Individual CAF Loan Note.
2.3 FACILITY FEE. (a) The Company agrees to pay to
the Agent for the account of each Bank a facility fee in respect
of the period from and including the first day of the Commitment
Period to the Termination Date, computed at the rate of 0.10% per
annum on the average daily amount of the Commitment of such Bank
during the period for which payment is made, payable quarterly on
the last day of each March, June, September and December and on
any earlier date on which the Commitments shall terminate as
provided herein and the Revolving Credit Loans shall have been
repaid in full, commencing on the first of such dates to occur
after the date hereof.
(b) The Company agrees to pay to the Agent such other
fees as may be mutually agreed upon by the Company and the Agent.
Each Bank acknowledges that the Agent may be paid certain other
fees for its own account in connection with the financing
contemplated by this Agreement in addition to the fees described
in this Agreement.
2.4 TERMINATION, REDUCTION OR EXTENSION OF
COMMITMENTS. (a) The Company shall have the right, upon not
less than five Business Days' notice to the Agent, to terminate
the Commitments or, from time to time, to reduce ratably the
amount of the Commitments, PROVIDED that no such termination or
reduction shall be permitted if, after giving effect thereto and
to any prepayments of the Loans made on the effective date
thereof, the then outstanding principal amount of the Loans would
exceed the amount of the Commitments then in effect. Any such
reduction shall be in an amount of $10,000,000 or a whole
multiple of $1,000,000 in excess thereof, and shall reduce
permanently the amount of the Commitments then in effect.
(b) The Company may request, in a notice given as
herein provided to the Agent and each of the Banks not less than
60 days and not more than 90 days prior to the Termination Date,
that the Termination Date be extended, which notice shall specify
that the requested extension is to be effective (the "EFFECTIVE
DATE") on the Termination Date, and that the new Termination Date
to be in effect following such extension (the "REQUESTED
TERMINATION DATE") is to be the date 364 days after the
Termination Date. Each Bank shall, not less than 30 days and not
more than 60 days prior to the Effective Date, notify the Company
and the Agent of its election to extend or not to extend the
Termination Date with respect to its Commitment. The Company
may, not later than 30 days prior to the Effective Date, revoke
its request to extend the Termination Date. Notwithstanding any
provision of this Agreement to the contrary, any notice by any
Bank of its willingness to extend the Termination Date with
<PAGE>
23
respect to its Commitment shall be revocable by such Bank in its
sole and absolute discretion at any time prior to the date which
is 30 days prior to the Effective Date. If on the date 30 days
prior to the Effective Date the Required Banks elect to extend
the Termination Date with respect to their Commitments and the
Company has not revoked its request to extend the Termination
Date, then, subject to the provisions of this subsection 2.4, the
Termination Date shall be extended for 364 days. Any Bank which
shall not notify the Company and the Agent of its election to
extend the Termination Date on or prior to the date 30 days prior
to the Effective Date shall be deemed to have elected not to
extend the Termination Date with respect to its Commitment.
(c) Provided that the Required Banks shall have
elected to extend their Commitments as provided in this
subsection 2.4, if any Bank shall timely notify the Company and
the Agent pursuant to subsection 2.4(b) of its election not to
extend its Commitment or its revocation of any extension, or
shall be deemed to have elected not to extend its Commitments,
(any such Bank being called a "TERMINATING BANK"), then the
remaining Banks (the "CONTINUING BANKS") or any of them shall
have the right (but not the obligation), upon notice to the
Company and the Agent not later than 15 Business Days preceding
the Effective Date to increase their Commitments, by an amount up
to in the aggregate the Commitments of any Terminating Banks.
Each increase in the Commitment of a Continuing Bank shall be
evidenced by a written instrument executed by such Continuing
Bank, the Company and the Agent, and shall take effect on the
Effective Date. Notwithstanding any provision of this Agreement
to the contrary, any notice by any Continuing Bank of its
willingness to increase its Commitment as provided in this
subsection 2.4(c) shall be revocable by such Bank in its sole and
absolute discretion at any time prior to the Effective Date.
(d) In the event the aggregate Commitments of any
Terminating Banks shall exceed the aggregate amount by which the
Continuing Banks have agreed to increase their Commitments
pursuant to subsection 2.4(c), the Company may, with the approval
of the Agent (which will not be unreasonably withheld), designate
one or more other banking institutions willing to extend
Commitments until the Requested Termination Date in an aggregate
amount not greater than such excess. Any such banking
institution (an "ADDITIONAL BANK") shall, on or prior to the
Effective Date, execute and deliver to the Company and the Agent
a Commitment Transfer Supplement, satisfactory to the Company and
the Agent, setting forth the amount of such Additional Bank's
Commitment and containing its agreement to become, and to perform
all the obligations of, a Bank hereunder, and the Commitment of
such Additional Bank shall become effective on the Effective
Date. Notwithstanding any provision of this Agreement to the
contrary, any notice by any Additional Bank of its willingness to
become a Bank hereunder shall be revocable by such Additional
Bank in its sole and absolute discretion at any time prior to the
Effective Date.
<PAGE>
24
(e) The Company shall deliver to each Continuing Bank
and each Additional Bank, on the Effective Date, in exchange for
the Notes held by such Bank, new Notes, maturing on the Requested
Termination Date, in the principal amount of such Bank's
Commitment after giving effect to the adjustments made pursuant
to this subsection 2.4.
(f) If the Required Banks shall have elected to extend
their Commitments as provided in this subsection 2.4 and the
Company has not revoked its request to extend the Termination
Date as provided in this subsection 2.4, then (i) the Commitments
of the Continuing Banks and any Additional Banks shall continue
until the Requested Termination Date specified in the notice from
the Company, and as to such Banks the term "Termination Date", as
used herein shall mean such Requested Termination Date; (ii) the
Commitments of any Terminating Bank shall continue until the
Effective Date, and shall then terminate (as to any Terminating
Bank, the term "Termination Date", as used herein, shall mean the
Effective Date) and any such Terminating Bank shall receive
payment in full of the outstanding principal amount, together
with accrued interest to such date and any other amounts owed by
the Company to such Terminating Bank pursuant to any Loan
Document, of the Loans of such Terminating Bank; and (iii) from
and after the Effective Date, the term "Banks" shall be deemed to
include the Additional Banks and (except with respect to
subsections 2.15 and 8.5 to the extent the rights under such
subsections arise after the Termination Date in respect of
Terminating Banks) to exclude the Terminating Banks.
2.5 OPTIONAL PREPAYMENTS. The Company may on the last
day of the relevant Interest Period if the Revolving Credit Loans
to be prepaid are in whole or in part Eurodollar Loans, or at any
time and from time to time if the Revolving Credit Loans to be
prepaid are Alternate Base Rate Loans, prepay the Revolving
Credit Loans, in whole or in part, without premium or penalty,
upon at least three Business Days' irrevocable notice to the
Agent, specifying the date and amount of prepayment and whether
the prepayment is of Eurodollar Loans or Alternate Base Rate
Loans or a combination thereof, and if of a combination thereof,
the amount of prepayment allocable to each. Upon receipt of such
notice the Agent shall promptly notify each Bank thereof. If
such notice is given, the payment amount specified in such notice
shall be due and payable on the date specified therein, together
with accrued interest to such date on the amount prepaid.
Partial prepayments shall be in an aggregate principal amount of
$5,000,000, or a whole multiple thereof, and may only be made if,
after giving effect thereto, subsection 2.6(c) shall not have
been contravened.
2.6 CONVERSION OPTIONS; MINIMUM AMOUNT OF LOANS. (a)
The Company may elect from time to time to convert Eurodollar
Loans to Alternate Base Rate Loans by giving the Agent at least
two Business Days' prior irrevocable notice of such election
(given before 10:00 A.M., New York City time, on the date on
<PAGE>
25
which such notice is required), PROVIDED that any such conversion
of Eurodollar Loans shall, subject to the fourth following
sentence, only be made on the last day of an Interest Period with
respect thereto. The Company may elect from time to time to
convert Alternate Base Rate Loans to Eurodollar Loans by giving
the Agent at least three Business Days' prior irrevocable notice
of such election (given before 11:30 A.M., New York City time, on
the date on which such notice is required). Upon receipt of such
notice, the Agent shall promptly notify each Bank thereof.
Promptly following the date on which such conversion is being
made each Bank shall take such action as is necessary to transfer
its portion of such Revolving Credit Loans to its Domestic
Lending Office or its Eurodollar Lending Office, as the case may
be. All or any part of outstanding Eurodollar Loans and
Alternate Base Rate Loans may be converted as provided herein,
PROVIDED that, unless the Required Banks otherwise agree, (i) no
Revolving Credit Loan may be converted into a Eurodollar Loan
when any Event of Default has occurred and is continuing, (ii)
partial conversions shall be in an aggregate principal amount of
$5,000,000 or a whole multiple thereof, and (iii) any such
conversion may only be made if, after giving effect thereto,
subsection 2.6(c) shall not have been contravened.
(b) Any Eurodollar Loans may be continued as such upon
the expiration of an Interest Period with respect thereto by
compliance by the Company with the notice provisions contained in
subsection 2.6(a); PROVIDED that, unless the Required Banks
otherwise agree, no Eurodollar Loan may be continued as such when
any Event of Default has occurred and is continuing, but shall be
automatically converted to an Alternate Base Rate Loan on the
last day of the then current Interest Period with respect
thereto. The Agent shall notify the Banks promptly that such
automatic conversion contemplated by this subsection 2.6(b) will
occur.
(c) All borrowings, conversions, payments, prepayments
and selection of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections so that, after
giving effect thereto, the aggregate principal amount of the
Loans comprising any Eurodollar Tranche shall not be less than
$5,000,000. At no time shall there be more than 8 Eurodollar
Tranches.
2.7 INTEREST RATE AND PAYMENT DATES FOR REVOLVING
CREDIT LOANS. (a) The Eurodollar Loans comprising each
Eurodollar Tranche shall bear interest for each day during each
Interest Period with respect thereto on the unpaid principal
amount thereof at a rate per annum equal to the Eurodollar Rate
plus the Applicable Margin.
(b) Alternate Base Rate Loans shall bear interest for
each day from and including the date thereof on the unpaid
principal amount thereof at a rate per annum equal to the
Alternate Base Rate plus the Applicable Margin.
<PAGE>
26
(c) If all or a portion of the principal amount of any
Revolving Credit Loans shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), each Eurodollar
Loan shall, unless the Required Banks otherwise agree, be
converted to an Alternate Base Rate Loan at the end of the last
Interest Period with respect thereto. Any such overdue principal
amount shall bear interest at a rate per annum which is 2% above
the rate which would otherwise be applicable pursuant to
subsection 2.7(a) or (b), and any overdue interest or other
amount payable hereunder shall bear interest at a rate per annum
which is 2% above the Alternate Base Rate, in each case from the
date of such non-payment until paid in full (after as well as
before judgment).
(d) Interest shall be payable in arrears on each
Interest Payment Date.
2.8 COMPUTATION OF INTEREST AND FEES. (a) Interest
in respect of Alternate Base Rate Loans shall be calculated on
the basis of a (i) 365-day (or 366-day, as the case may be) year
for the actual days elapsed when such Alternate Base Rate Loans
are based on the Prime Rate, and (ii) a 360-day year for the
actual days elapsed when based on the Base CD Rate or the Federal
Funds Effective Rate. Interest in respect of Eurodollar Loans
shall be calculated on the basis of a 360-day year for the actual
days elapsed. The Agent shall as soon as practicable notify the
Company and the Banks of each determination of a Eurodollar Rate.
Any change in the interest rate on a Revolving Credit Loan
resulting from a change in the Alternate Base Rate or the
Applicable Margin or the Eurocurrency Reserve Requirements shall
become effective as of the opening of business on the day on
which such change in the Alternate Base Rate is announced, such
Applicable Margin changes as provided herein or such change in or
the Eurocurrency Reserve Requirements shall become effective, as
the case may be. The Agent shall as soon as practicable notify
the Company and the Banks of the effective date and the amount of
each such change.
(b) Each determination of an interest rate by the
Agent pursuant to any provision of this Agreement shall be
conclusive and binding on the Company and the Banks in the
absence of manifest error. The Agent shall, at the request of
the Company, deliver to the Company a statement showing the
quotations used by the Agent in determining any interest rate
pursuant to subsection 2.7(a) or (c).
(c) If any Reference Bank's Commitment shall terminate
(otherwise than on termination of all the Commitments), or its
Revolving Credit Loans shall be assigned for any reason
whatsoever, such Reference Bank shall thereupon cease to be a
Reference Bank, and if, as a result of the foregoing, there shall
only be one Reference Bank remaining, then the Agent (after
consultation with the Company and the Banks) shall, by notice to
the Company and the Banks, designate another Bank as a Reference
<PAGE>
27
Bank so that there shall at all times be at least two Reference
Banks.
(d) Each Reference Bank shall use its best efforts to
furnish quotations of rates to the Agent as contemplated hereby.
If any of the Reference Banks shall be unable or otherwise fails
to supply such rates to the Agent upon its request, the rate of
interest shall be determined on the basis of the quotations of
the remaining Reference Banks or Reference Bank.
(e) Facility fees shall be computed on the basis of a
365-day year for the actual days elapsed.
2.9 INABILITY TO DETERMINE INTEREST RATE. In the
event that:
(i) the Agent shall have determined (which
determination shall be conclusive and binding upon the
Company) that, by reason of circumstances affecting the
interbank eurodollar market generally, adequate and
reasonable means do not exist for ascertaining the
Eurodollar Rate for any requested Interest Period;
(ii) only one of the Reference Banks is able to obtain
bids for its Dollar deposits for such Interest Period in the
manner contemplated by the term "Eurodollar Rate"; or
(iii) the Agent shall have received notice prior to the
first day of such Interest Period from Banks constituting
the Required Banks that the interest rate determined
pursuant to subsection 2.7(a) for such Interest Period does
not accurately reflect the cost to such Banks (as
conclusively certified by such Banks) of making or
maintaining their affected Loans during such Interest
Period;
with respect to (A) proposed Revolving Credit Loans that the
Company has requested be made as Eurodollar Loans, (B) Eurodollar
Loans that will result from the requested conversion of Alternate
Base Rate Loans into Eurodollar Loans or (C) the continuation of
Eurodollar Loans beyond the expiration of the then current
Interest Period with respect thereto, the Agent shall forthwith
give facsimile or telephonic notice of such determination to the
Company and the Banks at least one day prior to, as the case may
be, the requested Borrowing Date for such Eurodollar Loans, the
conversion date of such Loans or the last day of such Interest
Period. If such notice is given (x) any requested Eurodollar
Loans shall be made as Alternate Base Rate Loans, (y) any
Alternate Base Rate Loans that were to have been converted to
Eurodollar Loans shall be continued as Alternate Base Rate Loans
and (z) any outstanding Eurodollar Loans shall be converted, on
the last day of the then current Interest Period with respect
thereto, to Alternate Base Rate Loans. Until such notice has
been withdrawn by the Agent, no further Eurodollar Loans shall be
<PAGE>
28
made, nor shall the Company have the right to convert Alternate
Base Rate Loans to Eurodollar Loans.
2.10 PRO RATA BORROWINGS AND PAYMENTS. (a) Each
borrowing by the Company of Revolving Credit Loans shall be made
ratably from the Banks in accordance with their Commitment
Percentages.
(b) Whenever any payment received by the Agent under
this Agreement or any Note is insufficient to pay in full all
amounts then due and payable to the Agent and the Banks under
this Agreement and the Notes, and the Agent has not received a
Payment Sharing Notice (or if the Agent has received a Payment
Sharing Notice but the Event of Default specified in such Payment
Sharing Notice has been cured or waived), such payment shall be
distributed and applied by the Agent and the Banks in the
following order: FIRST, to the payment of fees and expenses due
and payable to the Agent under and in connection with this
Agreement; SECOND, to the payment of all expenses due and payable
under subsection 8.5(a), ratably among the Banks in accordance
with the aggregate amount of such payments owed to each such
Bank; THIRD, to the payment of fees due and payable under
subsection 2.3, ratably among the Banks in accordance with their
Commitment Percentages; FOURTH, to the payment of interest then
due and payable under the Notes, ratably among the Banks in
accordance with the aggregate amount of interest owed to each
such Bank; and FIFTH, to the payment of the principal amount of
the Notes which is then due and payable, ratably among the Banks
in accordance with the aggregate principal amount owed to each
such Bank.
(c) After the Agent has received a Payment Sharing
Notice which remains in effect, all payments received by the
Agent under this Agreement or any Note shall be distributed and
applied by the Agent and the Banks in the following order:
FIRST, to the payment of all amounts described in clauses FIRST
through THIRD of the foregoing paragraph (b), in the order set
forth therein; and SECOND, to the payment of the interest accrued
on and the principal amount of all of the Notes, regardless of
whether any such amount is then due and payable, ratably among
the Banks in accordance with the aggregate accrued interest plus
the aggregate principal amount owed to such Bank.
(d) All payments (including prepayments) to be made by
the Company on account of principal, interest and fees shall be
made without set-off or counterclaim and shall be made to the
Agent, for the account of the Banks, at the Agent's office set
forth in subsection 8.2, in lawful money of the United States of
America and in immediately available funds. The Agent shall
distribute such payments to the Banks promptly upon receipt in
like funds as received. If any payment hereunder (other than
payments on the Eurodollar Loans) becomes due and payable on a
day other than a Business Day, such payment shall be extended to
the next succeeding Business Day, and, with respect to payments
<PAGE>
29
of principal, interest thereon shall be payable at the then
applicable rate during such extension. If any payment on a
Eurodollar Loan becomes due and payable on a day other than a
Business Day, the maturity thereof shall be extended to the next
succeeding Business Day unless the result of such extension would
be to extend such payment into another calendar month in which
event such payment shall be made on the immediately preceding
Business Day.
(e) Unless the Agent shall have been notified in
writing by any Bank prior to a Borrowing Date that such Bank will
not make the amount which would constitute its Commitment
Percentage of the borrowing of Revolving Credit Loans on such
date available to the Agent, the Agent may assume that such Bank
has made such amount available to the Agent on such Borrowing
Date, and the Agent may, in reliance upon such assumption, make
available to the Company a corresponding amount. If such amount
is made available to the Agent on a date after such Borrowing
Date, such Bank shall pay to the Agent on demand an amount equal
to the product of (i) the daily average Federal Funds Effective
Rate during such period as quoted by the Agent, times (ii) the
amount of such Bank's Commitment Percentage of such borrowing,
times (iii) a fraction the numerator of which is the number of
days that elapse from and including such Borrowing Date to the
date on which such Bank's Commitment Percentage of such borrowing
shall have become immediately available to the Agent and the
denominator of which is 360. A certificate of the Agent
submitted to any Bank with respect to any amounts owing under
this subsection 2.10(e) shall be conclusive, absent manifest
error. If such Bank's Commitment Percentage of such borrowing is
not in fact made available to the Agent by such Bank within three
Business Days of such Borrowing Date, the Agent shall be entitled
to recover such amount with interest thereon at the rate per
annum applicable to Alternate Base Rate Loans hereunder, on
demand, from the Company.
2.11 ILLEGALITY. Notwithstanding any other provisions
herein, if after the date hereof the adoption of or any change in
any Requirement of Law or in the interpretation or application
thereof shall make it unlawful for any Bank to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the Bank
shall, within 30 Business Days after it becomes aware of such
fact, notify the Company, through the Agent, of such fact, (b)
the commitment of such Bank hereunder to make Eurodollar Loans or
convert Alternate Base Rate Loans to Eurodollar Loans shall
forthwith be cancelled and (c) such Bank's Revolving Credit Loans
then outstanding as Eurodollar Loans, if any, shall be converted
automatically to Alternate Base Rate Loans on the respective last
days of the then current Interest Periods for such Revolving
Credit Loans or within such earlier period as required by law.
Each Bank shall take such action as may be reasonably available
to it without legal or financial disadvantage (including changing
its Eurodollar Lending Office) to prevent the adoption of or any
<PAGE>
30
change in any such Requirement of Law from becoming applicable to
it.
2.12 REQUIREMENTS OF LAW. (a) If after the date
hereof the adoption of or any change in any Requirement of Law or
in the interpretation or application thereof or compliance by any
Bank with any request or directive (whether or not having the
force of law) after the date hereof from any central bank or
other Governmental Authority:
(i) shall subject any Bank to any tax of any kind
whatsoever with respect to this Agreement, any Revolving
Credit Note or any Eurodollar Loans made by it, or change
the basis of taxation of payments to such Bank of principal,
facility fee, interest or any other amount payable hereunder
in respect of Revolving Credit Loans (except for changes in
the rate of tax on the overall net income of such Bank);
(ii) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar
requirement against assets held by, or deposits or other
liabilities in or for the account of, advances or loans by,
or other credit extended by, or any other acquisition of
funds by, any office of such Bank which are not otherwise
included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Bank any other condition;
and the result of any of the foregoing is to increase the cost to
such Bank, by any amount which such Bank deems to be material, of
making, renewing or maintaining advances or extensions of credit
or to reduce any amount receivable hereunder, in each case, in
respect of its Eurodollar Loans, then, in any such case, the
Company shall promptly pay such Bank, upon its demand, any
additional amounts necessary to compensate such Bank for such
additional cost or reduced amount receivable. If a Bank becomes
entitled to claim any additional amounts pursuant to this
subsection 2.12(a), it shall, within 30 Business Days after it
becomes aware of such fact, notify the Company, through the
Agent, of the event by reason of which it has become so entitled.
A certificate as to any additional amounts payable pursuant to
the foregoing sentence submitted by such Bank, through the Agent,
to the Company shall be conclusive in the absence of manifest
error. Each Bank shall take such action as may be reasonably
available to it without legal or financial disadvantage
(including changing its Eurodollar Lending Office) to prevent any
such Requirement of Law or change from becoming applicable to it.
This covenant shall survive the termination of this Agreement and
payment of the outstanding Revolving Credit Notes.
(b) In the event that after the date hereof a Bank is
required to maintain reserves of the type contemplated by the
definition of "Eurocurrency Reserve Requirements", such Bank may
<PAGE>
31
require the Company to pay, promptly after receiving notice of
the amount due, additional interest on the related Eurodollar
Loan of such Bank at a rate per annum determined by such Bank up
to but not exceeding the excess of (i) (A) the applicable
Eurodollar Rate divided by (B) one MINUS the Eurocurrency Reserve
Requirements over (ii) the applicable Eurodollar Rate. Any Bank
wishing to require payment of any such additional interest on
account of any of its Eurodollar Loans shall notify the Company
no more than 30 Business Days after each date on which interest
is payable on such Eurodollar Loan of the amount then due it
under this subsection 2.12(b), in which case such additional
interest on such Eurodollar Loan shall be payable to such Bank at
the place indicated in such notice. Each such notification shall
be accompanied by such information as the Company may reasonably
request.
2.13 CAPITAL ADEQUACY. If any Bank shall have
determined that after the date hereof the adoption of or any
change in any Requirement of Law regarding capital adequacy or in
the interpretation or application thereof or compliance by such
Bank or any corporation controlling such Bank with any request or
directive after the date hereof regarding capital adequacy
(whether or not having the force of law) from any central bank or
Governmental Authority, does or shall have the effect of reducing
the rate of return on such Bank's or such corporation's capital
as a consequence of its obligations hereunder to a level below
that which such Bank or such corporation could have achieved but
for such adoption, change or compliance (taking into
consideration such Bank's or such corporation's policies with
respect to capital adequacy) by an amount which is reasonably
deemed by such Bank to be material, then from time to time,
promptly after submission by such Bank, through the Agent, to the
Company of a written request therefor (such request shall include
details reasonably sufficient to establish the basis for such
additional amounts payable and shall be submitted to the Company
within 30 Business Days after it becomes aware of such fact), the
Company shall promptly pay to such Bank such additional amount or
amounts as will compensate such Bank for such reduction. The
agreements in this subsection 2.13 shall survive the termination
of this Agreement and payment of the Loans and the Notes and all
other amounts payable hereunder.
2.14 TAXES. (a) All payments made by the Company
under this Agreement shall be made free and clear of, and without
reduction or withholding for or on account of, any present or
future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any
Governmental Authority excluding, in the case of the Agent and
each Bank, net income and franchise taxes imposed on the Agent or
such Bank by the jurisdiction under the laws of which the Agent
or such Bank is organized or any political subdivision or taxing
authority thereof or therein, or by any jurisdiction in which
such Bank's Domestic Lending Office or Eurodollar Lending Office,
<PAGE>
32
as the case may be, is located or any political subdivision or
taxing authority thereof or therein (all such non-excluded taxes,
levies, imposts, deductions, charges or withholdings being
hereinafter called "TAXES"). If any Taxes are required to be
withheld from any amounts payable to the Agent or any Bank
hereunder or under the Notes, the amounts so payable to the Agent
or such Bank shall be increased to the extent necessary to yield
to the Agent or such Bank (after payment of all Taxes) interest
or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement and the Notes. Whenever
any Taxes are payable by the Company, as promptly as possible
thereafter, the Company shall send to the Agent for its own
account or for the account of such Bank, as the case may be, a
certified copy of an original official receipt received by the
Company showing payment thereof. If the Company fails to pay any
Taxes when due to the appropriate taxing authority or fails to
remit to the Agent the required receipts or other required
documentary evidence, the Company shall indemnify the Agent and
the Banks for any incremental taxes, interest or penalties that
may become payable by the Agent or any Bank as a result of any
such failure.
(b) Each Bank that is not incorporated under the laws
of the United States of America or a state thereof agrees that it
will deliver to the Company and the Agent (i) two duly completed
copies of United States Internal Revenue Service Form 1001 or
4224 or successor applicable form, as the case may be, certifying
in each case that such Bank is entitled to receive payments under
this Agreement and the Notes payable to it, without deduction or
withholding of any United States federal income taxes, and (ii)
an Internal Revenue Service Form W-8 or W-9 or successor
applicable form, as the case may be, to establish an exemption
from United States backup withholding tax. Each Bank which
delivers to the Company and the Agent a Form 1001 or 4224 and
Form W-8 or W-9 pursuant to the next preceding sentence further
undertakes to deliver to the Company and the Agent two further
copies of the said letter and Form 1001 or 4224 and Form W-8 or
W-9, or successor applicable forms, or other manner of
certification, as the case may be, on or before the date that any
such letter or form expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent
letter and form previously delivered by it to the Company, and
such extensions or renewals thereof as may reasonably be
requested by the Company, certifying in the case of a Form 1001
or 4224 that such Bank is entitled to receive payments under this
Agreement without deduction or withholding of any United States
federal income taxes, unless in any such cases an event
(including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Bank from duly
completing and delivering any such letter or form with respect to
it and such Bank advises the Company that it is not capable of
receiving payments without any deduction or withholding of United
<PAGE>
33
States federal income tax, and in the case of a Form W-8 or W-9,
establishing an exemption from United States backup withholding
tax.
(c) The agreements in subsection 2.14 shall survive
the termination of this Agreement and the payment of the Notes
and all other amounts payable hereunder.
2.15 INDEMNITY. The Company agrees to indemnify each
Bank and to hold each Bank harmless from any loss or expense
(other than any loss of anticipated margin or profit) which such
Bank may sustain or incur as a consequence of (a) default by the
Company in payment when due of the principal amount of or
interest on any Eurodollar Loans of such Bank, (b) default by the
Company in making a borrowing or conversion after the Company has
given a notice of borrowing in accordance with subsection 2.1(c)
or a notice of continuation or conversion pursuant to subsection
2.6, (c) default by the Company in making any prepayment after
the Company has given a notice in accordance with subsection 2.5
or (d) the making of a prepayment of a Eurodollar Loan on a day
which is not the last day of an Interest Period with respect
thereto, including, without limitation, in each case, any such
loss or expense arising from the reemployment of funds obtained
by it to maintain its Eurodollar Loans hereunder or from fees
payable to terminate the deposits from which such funds were
obtained. Any Bank claiming any amount under this subsection
2.15 shall provide calculations, in reasonable detail, of the
amount of its loss or expense. This covenant shall survive
termination of this Agreement and payment of the outstanding
Notes.
2.16 APPLICATION OF PROCEEDS OF LOANS. Subject to the
provisions of the following sentence, the Company may use the
proceeds of the Loans for any lawful corporate purpose. The
Company will not, directly or indirectly, apply any part of the
proceeds of any such Loan for the purpose of "purchasing" or
"carrying" any "margin stock" within the respective meanings of
each of the quoted terms under Regulation U, or to refund any
indebtedness incurred for such purpose.
2.17 NOTICE OF CERTAIN CIRCUMSTANCES; ASSIGNMENT OF
COMMITMENTS UNDER CERTAIN CIRCUMSTANCES. (a) Any Bank claiming
any additional amounts payable pursuant to subsections 2.12, 2.13
or 2.14 or exercising its rights under subsection 2.11, shall, in
accordance with the respective provisions thereof, provide notice
to the Company and the Agent. Such notice to the Company and the
Agent shall include details reasonably sufficient to establish
the basis for such additional amounts payable or the rights to be
exercised by the Bank.
(b) Any Bank claiming any additional amounts payable
pursuant to subsections 2.12, 2.13 or 2.14 or exercising its
rights under subsection 2.11, shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file any
<PAGE>
34
certificate or document requested by the Company or to change the
jurisdiction of its applicable lending office if the making of
such filing or change would avoid the need for or reduce the
amount of any such additional amounts which may thereafter accrue
or avoid the circumstances giving rise to such exercise and would
not, in the sole determination of such Bank, be otherwise
disadvantageous to such Bank.
(c) In the event that the Company shall be required to
make any additional payments to any Bank pursuant to subsections
2.12, 2.13 or 2.14 or any Bank shall exercise its rights under
subsection 2.11, the Company shall have the right at its own
expense, upon notice to such Bank and the Agent, to require such
Bank to transfer and to assign without recourse (in accordance
with and subject to the terms of subsection 8.6) all its
interest, rights and obligations under this Agreement to another
financial institution (including any Bank) acceptable to the
Agent (which approval shall not be unreasonably withheld) which
shall assume such obligations; PROVIDED that (i) no such
assignment shall conflict with any Requirement of Law and (ii)
such assuming financial institution shall pay to such Bank in
immediately available funds on the date of such assignment the
outstanding principal amount of such Bank's Notes together with
accrued interest thereon and all other amounts accrued for its
account or owed to it hereunder, including, but not limited to
additional amounts payable under subsections 2.3, 2.11, 2.12,
2.13, 2.14 and 2.15.
SECTION 3. REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants that:
3.1 CORPORATE ORGANIZATION AND EXISTENCE. Each of the
Company and each Subsidiary is a corporation duly organized and
validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has all necessary
corporate power to carry on the business now conducted by it.
The Company has all necessary corporate power and has taken all
corporate action required to make all the provisions of this
Agreement and the Notes and all other agreements and instruments
executed in connection herewith and therewith, the valid and
enforceable obligations they purport to be. Each of the Company
and each Subsidiary is duly qualified and in good standing as a
foreign corporation in all jurisdictions other than that of its
incorporation in which the physical properties owned, leased or
operated by it are located, and is duly authorized, qualified and
licensed under all laws, regulations, ordinances or orders of
Governmental Authorities, or otherwise, to carry on its business
in the places and in the manner presently conducted.
3.2 SUBSIDIARIES. As of the date hereof, the Company
has only the Subsidiaries set forth in Schedule II, all of the
outstanding capital stock of each of which is duly authorized,
<PAGE>
35
validly issued, fully paid and nonassessable and owned as set
forth in said Schedule II. Schedule II indicates all
Subsidiaries of the Company which are not wholly-owned
Subsidiaries and the percentage ownership of the Company and its
Subsidiaries in each such Subsidiary. The capital stock and
securities owned by the Company and its Subsidiaries in each of
the Company's Subsidiaries are owned free and clear of any
mortgage, pledge, lien, encumbrance, charge or restriction on the
transfer thereof other than restrictions on transfer imposed by
applicable securities laws and restrictions, liens and
encumbrances outstanding on the date hereof and listed in said
Schedule II.
3.3 FINANCIAL INFORMATION. The Company has furnished
to the Agent and each Bank copies of the following:
(a) the Annual Report of the Company for the fiscal
year ended December 31, 1992, containing the consolidated
balance sheet of the Company and its Subsidiaries as at said
date and the related consolidated statements of income,
common stockholders' equity and changes in financial
position for the fiscal year then ended, accompanied by the
opinion of Arthur Andersen & Co.;
(b) the Annual Report of the Company on Form 10-K for
the fiscal year ended December 31, 1992;
(c) quarterly financial statements of the Company,
including balance sheets, for the fiscal periods ended March
31, 1993, June 30, 1993 and September 30, 1993;
(d) the current report of the Company on Form 8-K,
dated September 29, 1993;
(e) the Annual Report of Galen for the fiscal year
ended August 31, 1993, containing the consolidated balance
sheet of Galen and its Subsidiaries as at said date and the
related consolidated statements of income, common
stockholders' equity and changes in financial position for
the fiscal year then ended, accompanied by the opinion of
Coopers & Lybrand;
(f) the Annual Report of Galen on Form 10-K for the
fiscal year ended August 31, 1992;
(g) quarterly financial statements of Galen, including
balance sheets, for the fiscal periods ended November 30,
1992, February 28, 1993 and May 31, 1993;
(h) the Annual Report of HCA on Form 10-K for the
fiscal year ended December 31, 1992, containing the
consolidated balance sheet of HCA and its Subsidiaries as at
said date and the related consolidated statements of income,
common stockholders' equity and changes in financial
<PAGE>
36
position for the fiscal year then ended, accompanied by the
opinion of Ernst & Young;
(i) quarterly financial statements of HCA, including
balance sheets, for the fiscal periods ended March 31, 1993,
June 30, 1993 and September 30, 1993; and
(j) the Proxy.
Such financial statements (including any notes thereto) have been
prepared in accordance with GAAP and fairly present the financial
conditions of the corporations covered thereby at the date
thereof and the results of their operations for the periods
covered thereby, subject to normal year-end adjustments in the
case of interim statements. As of the date hereof, neither the
Company nor any of its Subsidiaries has any known contingent
liabilities of any significant amount which are not referred to
in said financial statements or in the notes thereto which could
reasonably be expected to have a material adverse effect on the
business or assets or on the condition, financial or otherwise,
of the Company and its Subsidiaries, on a consolidated basis.
3.4 CHANGES IN CONDITION. Since December 31, 1992
there has been no material adverse change in the business or
assets or in the condition, financial or otherwise, of the
Company and its Subsidiaries, on a consolidated basis, or of HCA
and its Subsidiaries, on a consolidated basis. Since August 31,
1993 there has been no material adverse change in the business or
assets or in the condition, financial or otherwise, of Galen and
its Subsidiaries, on a consolidated basis.
3.5 ASSETS. The Company and each Subsidiary have good
and marketable title to all material assets carried on their
books and reflected in the most recent balance sheet referred to
in subsection 3.3 or furnished pursuant to subsection 5.5, except
for assets held on Financing Leases or purchased subject to
security devices providing for retention of title in the vendor,
and except for assets disposed of as permitted by this Agreement.
3.6 LITIGATION. Except as disclosed (i) in the
Company's Annual Report on Form 10-K for its fiscal year ended
December 31, 1992 and its Quarterly Reports on Form 10-Q for its
fiscal quarters ended March 31, 1993, June 30, 1993 and September
30, 1993, (ii) in Galen's Annual Report on Form 10-K for its
fiscal year ended August 31, 1992 and its Quarterly Reports on
Form 10-Q for its fiscal quarters ended November 30, 1992,
February 28, 1993 and May 31, 1993 and (iii) in HCA's Annual
Report on Form 10-K for its fiscal year ended December 31, 1992
and its Quarterly Reports on Form 10-Q for its fiscal quarters
ended March 31, 1993, June 30, 1993 and September 30, 1993, in
each case as filed with the Securities and Exchange Commission
and previously distributed to the Banks, there is no litigation,
at law or in equity, or any proceeding before any federal, state,
provincial or municipal board or other governmental or
<PAGE>
37
administrative agency pending or to the knowledge of the Company
threatened which, after giving effect to any applicable
insurance, may involve any material risk of a material adverse
effect on the business or assets or on the condition, financial
or otherwise, of the Company and its Subsidiaries on a
consolidated basis or which seeks to enjoin the consummation of
any of the transactions contemplated by this Agreement or any
other Loan Document and involves any material risk that any such
injunction will be issued, and no judgment, decree, or order of
any federal, state, provincial or municipal court, board or other
governmental or administrative agency has been issued against the
Company or any Subsidiary which has, or may involve a material
risk of a material adverse effect on the business or assets or on
the condition, financial or otherwise, of the Company and its
Subsidiaries on a consolidated basis. The Company does not
believe that the final resolution of the matters disclosed in its
Annual Report on Form 10-K for its fiscal year ended December 31,
1992 and its Quarterly Reports on Form 10-Q for its fiscal
quarters ended March 31, 1993, June 30, 1993 and September 30,
1993, in Galen's Annual Report on Form 10-K for its fiscal year
ended August 31, 1992 and its Quarterly Reports on Form 10-Q for
its fiscal quarters ended November 30, 1992, February 28, 1993
and May 31, 1993 or in HCA's Annual Report on Form 10-K for its
fiscal year ended December 31, 1992 and HCA's Quarterly Reports
on Form 10-Q for its fiscal quarters ended March 31, 1993, June
30, 1993 and September 30, 1993, in each case as filed with the
Securities and Exchange Commission and previously distributed to
the Banks, will have a material adverse effect on the business or
assets or condition, financial or otherwise, of the Company and
its Subsidiaries on a consolidated basis.
3.7 TAX RETURNS. The Company and each of its
Subsidiaries have filed all tax returns which are required to be
filed and have paid, or made adequate provision for the payment
of, all taxes which have or may become due pursuant to said
returns or to assessments received. All federal tax returns of
(i) the Company and its Subsidiaries (other than Smith
Laboratories, Inc., Sutter Corporation and Basic American
Medical, Inc.) through their fiscal years ended in 1989, (ii)
Smith Laboratories, Inc., Sutter Corporation and Basic American
Medical, Inc. through their respective fiscal years ended in
1988, 1988 and 1986, respectively, (iii) Galen and its
Subsidiaries through their fiscal years ended in 1989 and (iv)
HCA and its Subsidiaries through their fiscal years ended in
1990, have been audited by the Internal Revenue Service or are
not subject to such audit by virtue of the expiration of the
applicable period of limitations, and the results of such audits
are adequately reflected in the balance sheets referred to in
subsection 3.3. The Company knows of no material additional
assessments since said date for which adequate reserves appearing
in the said balance sheet have not been established.
3.8 CONTRACTS, ETC. Attached hereto as Schedule III
is a statement of outstanding Indebtedness of the Company and its
<PAGE>
38
Subsidiaries for borrowed money as of the date set forth therein
and a complete and correct list of all agreements, contracts,
indentures, instruments, documents and amendments thereto to
which the Company or any Subsidiary is a party or by which it is
bound pursuant to which any such Indebtedness of the Company and
its Subsidiaries in excess of $25,000,000 is outstanding on the
date hereof. Said Schedule III also includes a complete and
correct list of all such Indebtedness of the Company and its
Subsidiaries outstanding on the date indicated in respect of
Guarantee Obligations in excess of $1,000,000 and letters of
credit in excess of $1,000,000, and there have been no increases
in such Indebtedness since said date other than as permitted by
this Agreement.
3.9 NO LEGAL OBSTACLE TO AGREEMENT. Neither the
execution and delivery of this Agreement or of any Notes, nor the
making by the Company of any borrowings hereunder, nor the
consummation of any transaction herein or therein referred to or
contemplated hereby or thereby nor the fulfillment of the terms
hereof or thereof or of any agreement or instrument referred to
in this Agreement, has constituted or resulted in or will
constitute or result in a breach of the provisions of any
contract to which the Company or any of its Subsidiaries is a
party or by which it is bound or of the charter or by-laws of the
Company, or the violation of any law, judgment, decree or
governmental order, rule or regulation applicable to the Company
or any of its Subsidiaries, or result in the creation under any
agreement or instrument of any security interest, lien, charge or
encumbrance upon any of the assets of the Company or any of its
Subsidiaries. Other than those which have already been obtained,
no approval, authorization or other action by any governmental
authority or any other Person is required to be obtained by the
Company or any of its Subsidiaries in connection with the
execution, delivery and performance of this Agreement or the
transactions contemplated hereby, or the making of any borrowing
by the Company hereunder.
3.10 DEFAULTS. Neither the Company nor any Subsidiary
is in default under any provision of its charter or by-laws or,
so as to affect adversely in any material manner the business or
assets or the condition, financial or otherwise, of the Company
and its Subsidiaries on a consolidated basis, under any provision
of any agreement, lease or other instrument to which it is a
party or by which it is bound or of any Requirement of Law.
3.11 BURDENSOME OBLIGATIONS. Neither the Company nor
any Subsidiary is a party to or bound by any agreement, deed,
lease or other instrument, or subject to any charter, by-law or
other corporate restriction which, in the opinion of the
management thereof, is so unusual or burdensome as to in the
foreseeable future have a material adverse effect on the business
or assets or condition, financial or otherwise, of the Company
and its Subsidiaries on a consolidated basis. The Company does
not presently anticipate that future expenditures of the Company
<PAGE>
39
and its Subsidiaries needed to meet the provisions of any federal
or state statutes, orders, rules or regulations will be so
burdensome as to have a material adverse effect on the business
or assets or condition, financial or otherwise, of the Company
and its Subsidiaries on a consolidated basis.
3.12 PENSION PLANS. Each Plan maintained by the
Company, any Subsidiary or any Control Group Person or to which
any of them makes or will make contributions is in material
compliance with the applicable provisions of ERISA and the Code.
Neither the Company nor any Subsidiary nor any Control Group
Person maintains, contributes to or participates in any Plan that
is a "defined benefit plan" as defined in ERISA. Neither the
Company, any Subsidiary, nor any Control Group Person has since
August 31, 1986 maintained, contributed to or participated in any
Multiemployer Plan, with respect to which a complete withdrawal
would result in any withdrawal liability. The Company and its
Subsidiaries have met all of the funding standards applicable to
all Plans that are not Multiemployer Plans, and there exists no
event or condition which would permit the institution of
proceedings to terminate any Plan that is not a Multiemployer
Plan. The current value of the benefits guaranteed under Title
IV of ERISA of each Plan that is not a Multiemployer Plan does
not exceed the current value of such Plan's assets allocable to
such benefits.
3.13 DISCLOSURE. Neither this Agreement nor any
agreement, document, certificate or statement furnished to the
Banks by the Company in connection herewith or with the planning
or the consummation of the transactions contemplated by the
Merger, including, without limitation, the information relating
to the Company and its Subsidiaries after the Merger included in
the Confidential Information Memorandum and Proxy, contains any
untrue statement of material fact or omits to state a material
fact necessary in order to make the statements contained herein
or therein not misleading. All pro forma financial statements
and other materials describing the structure of the transactions
contemplated by the Proxy that have been prepared by the Company
and made available to Banks have been prepared in good faith
based upon reasonable assumptions. There is no fact known to the
Company which has or in the future may have (so far as the
Company can now foresee) a material adverse effect on the
business or assets or the condition, financial or otherwise, of
the Company and its Subsidiaries on a consolidated basis, except
to the extent that they may be affected by future general
economic conditions.
3.14 ENVIRONMENTAL AND PUBLIC AND EMPLOYEE HEALTH AND
SAFETY MATTERS. The Company and each Subsidiary has complied
with all applicable Federal, state, and other laws, rules and
regulations relating to environmental pollution or to
environmental regulation or control or to public or employee
health or safety, except to the extent that the failure to so
comply would not be reasonably likely to result in a material
<PAGE>
40
adverse effect on the business or assets or on the condition,
financial or otherwise, of the Company and its Subsidiaries on a
consolidated basis. The Company's and the Subsidiaries'
facilities do not contain, and have not previously contained, any
hazardous wastes, hazardous substances, hazardous materials,
toxic substances or toxic pollutants regulated under the Resource
Conservation and Recovery Act, the Comprehensive Environmental
Response Compensation and Liability Act, the Hazardous Materials
Transportation Act, the Toxic Substance Control Act, the Clean
Air Act, the Clean Water Act or any other applicable law relating
to environmental pollution or public or employee health and
safety, in violation of any such law, or any rules or regulations
promulgated pursuant thereto, except for violations that would
not be reasonably likely to result in a material adverse effect
on the business or assets or on the condition, financial or
otherwise, of the Company and its Subsidiaries on a consolidated
basis. The Company is aware of no events, conditions or
circumstances involving environmental pollution or contamination
or public or employee health or safety, in each case applicable
to it or its Subsidiaries, that would be reasonably likely to
result in a material adverse effect on the business or assets or
on the condition, financial or otherwise, of the Company and its
Subsidiaries on a consolidated basis.
3.15 FEDERAL REGULATIONS. No part of the proceeds of
any Loans will be used for "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms
under Regulation U as now and from time to time hereafter in
effect or for any purpose which violates the provisions of the
Regulations of the Board of Governors of the Federal Reserve
System. If requested by any Bank or the Agent, the Company will
furnish to the Agent and each Bank a statement to the foregoing
effect in conformity with the requirements of FR Form U-1
referred to in said Regulation U.
3.16 INVESTMENT COMPANY ACT; OTHER REGULATIONS. The
Company is not an "investment company", or a company "controlled"
by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended. The Company is not subject to
regulation under any Federal or State statute or regulation which
limits its ability to incur Indebtedness.
SECTION 4. CONDITIONS
The obligations of each Bank to make the Loans
contemplated by subsections 2.1 and 2.2 shall be subject to the
compliance by the Company with its agreements herein contained
and to the satisfaction on or before the Closing Date and each
Borrowing Date of such of the following further conditions as are
applicable on the Closing Date or such Borrowing Date, as the
case may be:
<PAGE>
41
4.1 LOAN DOCUMENTS. The Agent shall have received (i)
this Agreement, executed and delivered by a duly authorized
officer of the Company, with a counterpart for each Bank and (ii)
for the account of each Bank, a Revolving Credit Note and a Grid
CAF Loan Note conforming to the requirements hereof and executed
by a duly authorized officer of the Company.
4.2 LEGAL OPINIONS. On the Closing Date and on any
Borrowing Date as the Agent shall request, each Bank shall have
received from any general, associate, or assistant general
counsel to the Company, such opinions as the Agent shall have
reasonably requested with respect to the transactions
contemplated by this Agreement.
4.3 COMPANY OFFICERS' CERTIFICATE. The
representations and warranties contained in Section 3 shall be
true and correct on the Closing Date and on and as of each
Borrowing Date with the same force and effect as though made on
and as of such date; no Default shall have occurred (except a
Default which shall have been waived in writing or which shall
have been cured) and no Default shall exist after giving effect
to the Loan to be made; between (i) December 31, 1992 in the case
of the Company and its Subsidiaries and HCA and its Subsidiaries
and August 31, 1993 in the case of Galen and its Subsidiaries and
(ii) such Borrowing Date, neither the business nor assets, nor
the condition, financial or otherwise, of the Company and its
Subsidiaries on a consolidated basis or HCA and its Subsidiaries
on a consolidated basis shall have been adversely affected in any
material manner as a result of any fire, flood, explosion,
accident, drought, strike, lockout, riot, sabotage, confiscation,
condemnation, or any purchase of any property by Governmental
Authority, activities of armed forces, acts of God or the public
enemy, new or amended legislation, regulatory order, judicial
decision or any other event or development whether or not related
to those enumerated above; and the Agent shall have received a
certificate containing a representation to these effects dated
such Borrowing Date and signed by a Responsible Officer.
4.4 TERMINATION OF PRIOR AGREEMENTS. On the Closing
Date, each of (i) the $300,000,000 Credit Agreement, (ii) the
$500,000,000 Credit Agreement, (iii) the $800,000,000 Credit
Agreement and (iv) the $1,642,000,000 Credit Agreement shall have
been terminated and the Company shall have paid in full all
indebtedness outstanding thereunder, including, without
limitation, all interest and fees owing with respect to such
indebtedness.
4.5 LEGALITY, ETC. The making of the Loan to be made
by such Bank on each Borrowing Date shall not subject such Bank
to any penalty or special tax, shall not be prohibited by any
Requirement of Law applicable to such Bank or the Company, and
all necessary consents, approvals and authorizations of any
Governmental Authority or any Person to or of any such Loan shall
have been obtained and shall be in full force and effect.
<PAGE>
42
4.6 GENERAL. All instruments and legal and corporate
proceedings in connection with the Loans contemplated by this
Agreement shall be satisfactory in form and substance to the
Agent, and the Agent shall have received copies of all documents,
including the Merger Agreement executed and delivered by each of
the signatories thereto, the Proxy and all amendments and
exhibits thereto, and favorable legal opinions and records of
corporate proceedings, which the Agent may have reasonably
requested in connection with the Loans and other transactions
contemplated by this Agreement.
4.7 FEES. The Agent shall have received the fees to
be received on the Closing Date referred to in subsection 2.3.
4.8 CONSUMMATION OF THE MERGER. The Agent shall have
received evidence, which evidence shall be in form and substance
satisfactory to the Agent, that the transactions contemplated by
the Merger, including, without limitation, the transactions
contemplated by the Proxy and subsections 1.1 and 4.1 of the
Merger Agreement, have been consummated.
SECTION 5. GENERAL COVENANTS
On and after the date hereof, until all of the Notes
and all other amounts payable pursuant hereto shall have been
paid in full and so long as the Commitments shall remain in
effect, the Company covenants that the Company will comply, and
will cause each of its Subsidiaries to comply, with such of the
provisions of this Section 5 and such other provisions of this
Agreement as are applicable to the Person in question.
5.1 TAXES, INDEBTEDNESS, ETC. (a) Each of the
Company and its Subsidiaries will duly pay and discharge, or
cause to be paid and discharged, before the same shall become in
arrears, all taxes, assessments, levies and other governmental
charges imposed upon such corporation and its properties, sales
and activities, or any part thereof, or upon the income or
profits therefrom; PROVIDED, HOWEVER, that any such tax,
assessment, charge or levy need not be paid if the validity or
amount thereof shall currently be contested in good faith by
appropriate proceedings and if the Company or the Subsidiary in
question shall have set aside on its books appropriate reserves
with respect thereto.
(b) Each of the Company and its Subsidiaries will
promptly pay when due, or in conformance with customary trade
terms, all other Indebtedness and liabilities incident to its
operations; PROVIDED, HOWEVER, that any such Indebtedness or
liability need not be paid if the validity or amount thereof
shall currently be contested in good faith and if the Company or
the Subsidiary in question shall have set aside on its books
appropriate reserves with respect thereto. The Subsidiaries will
not create, incur, assume or suffer to exist any Indebtedness,
<PAGE>
43
except: (i) Indebtedness outstanding on the date hereof and
listed on Schedule III; (ii) Indebtedness that is owing to the
Company or any other Subsidiary; and (iii) additional
Indebtedness at any time outstanding in an aggregate principal
amount not to exceed 10% of Consolidated Assets.
5.2 MAINTENANCE OF PROPERTIES; COMPLIANCE WITH LAW.
Each of the Company and its Subsidiaries (a) will keep its
material properties in good repair, working order and condition
and will from time to time make all necessary and proper repairs,
renewals, replacements, additions and improvements thereto and
will comply at all times with the provisions of all material
leases and other material agreements to which it is a party so as
to prevent any loss or forfeiture thereof or thereunder unless
compliance therewith is being currently contested in good faith
by appropriate proceedings and (b) in the case of the Company or
any Subsidiary of the Company while such Person remains a
Subsidiary, will do all things necessary to preserve, renew and
keep in full force and effect and in good standing its corporate
existence and franchises necessary to continue such businesses.
The Company and its Subsidiaries will comply in all material
respects with all valid and applicable Requirements of Law
(including any such laws, rules, regulations or governmental
orders relating to the protection of environmental or public or
employee health or safety) of the United States, of the States
thereof and their counties, municipalities and other subdivisions
and of any other jurisdiction, applicable to the Company and its
Subsidiaries, except where compliance therewith shall be
contested in good faith by appropriate proceedings, the Company
or the Subsidiary in question shall have set aside on its books
appropriate reserves in conformity with GAAP with respect
thereto, and the failure to comply therewith could not reasonably
be expected to, in the aggregate, have a material adverse effect
on the business or assets or on the condition, financial or
otherwise, of the Company and its Subsidiaries on a consolidated
basis.
5.3 TRANSACTIONS WITH AFFILIATES. Neither the Company
nor any of its Subsidiaries will enter into any transactions,
including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any of their
Affiliates (other than the Company and its Subsidiaries) unless
such transaction is otherwise permitted under this Agreement, is
in the ordinary course of the Company's or such Subsidiary's
business and is upon fair and reasonable terms no less favorable
to the Company or such Subsidiary, as the case may be, than it
would obtain in an arm's-length transaction.
5.4 INSURANCE. The Company will, and will cause each
of its Subsidiaries to, maintain or cause to be maintained, with
financially sound and reputable insurers including any Subsidiary
which is engaged in the business of providing insurance
protection, insurance (including, without limitation,
professional liability insurance against claims for malpractice)
<PAGE>
44
with respect to its properties and business and the properties
and business of its Subsidiaries against loss or damage of the
kinds customarily insured against of such types and such amounts
as are customarily carried under similar circumstances by other
corporations. Such insurance may be subject to co-insurance,
deductibility or similar clauses which, in effect, result in
self-insurance of certain losses, and the Company may self-insure
against such loss or damage, PROVIDED that adequate insurance
reserves are maintained in connection with such self-insurance.
5.5 FINANCIAL STATEMENTS. The Company will and will
cause each of its Subsidiaries to maintain a standard modern
system of accounting in which full, true and correct entries will
be made of all dealings or transactions in relation to its
business and affairs in accordance with GAAP consistently
applied, and will furnish the following to each Bank (in
duplicate if so requested):
(a) ANNUAL STATEMENTS. As soon as available, and in
any event within 120 days after the end of each fiscal year,
the consolidated balance sheet as at the end of each fiscal
year and consolidated statements of profit and loss and of
retained earnings for such fiscal year of the Company and
its Subsidiaries, together with comparative consolidated
figures for the next preceding fiscal year, accompanied by
reports or certificates of an Auditor, to the effect that
such balance sheet and statements were prepared in
accordance with GAAP consistently applied and fairly present
the financial position of the Company and its Subsidiaries
as at the end of such fiscal year and the results of their
operations and changes in financial position for the year
then ended and the statement of such Auditor and of a
Responsible Officer of the Company that such Auditor and
Responsible Officer have caused the provisions of this
Agreement to be reviewed and that nothing has come to their
attention to lead them to believe that any Default exists
hereunder or, if such is not the case, specifying such
Default or possible Default and the nature thereof. In
addition, such financial statements shall be accompanied by
a certificate of a Responsible Officer of the Company
containing computations showing compliance with subsections
5.6, 5.7 and 5.10.
(b) QUARTERLY STATEMENTS. As soon as available, and
in any event within 60 days after the close of each of the
first three fiscal quarters of the Company and its
Subsidiaries in each year, consolidated balance sheets as at
the end of such fiscal quarter and consolidated profit and
loss and retained earnings statements for the portion of the
fiscal year then ended, of the Company and its Subsidiaries,
together with computations showing compliance with
subsections 5.6, 5.7 and 5.10, accompanied by a certificate
of a Responsible Officer of the Company that such statements
and computations have been properly prepared in accordance
<PAGE>
45
with GAAP, consistently applied, and fairly present the
financial position of the Company and its Subsidiaries as at
the end of such fiscal quarter and the results of their
operations and changes in financial position for such
quarter and for the portion of the fiscal year then ended,
subject to normal audit and year-end adjustments, and to the
further effect that he has caused the provisions of this
Agreement and all other agreements to which the Company or
any of its Subsidiaries is a party and which relate to
Indebtedness to be reviewed, and has no knowledge that any
Default has occurred under this Agreement or under any such
other agreement, or, if said Responsible Officer has such
knowledge, specifying such Default and the nature thereof.
(c) NOTICE OF MATERIAL LITIGATION; DEFAULTS. The
Company will promptly notify each Bank in writing, by
delivery of the Company's Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form
8-K filed with the Securities and Exchange Commission or
otherwise, as to any litigation or administrative proceeding
to which it or any of its Subsidiaries may hereafter be a
party which, after giving effect to any applicable
insurance, may involve any material risk of any material
judgment or liability or which may otherwise result in any
material adverse change in the business or assets or in the
condition, financial or otherwise, of the Company and its
Subsidiaries on a consolidated basis. Promptly upon
acquiring knowledge thereof, the Company will notify each
Bank of the existence of any Default, including, without
limitation, any default in the payment of any Indebtedness
for money borrowed of the Company or any Subsidiary or under
the terms of any agreement relating to such Indebtedness,
specifying the nature of such Default and what action the
Company has taken or is taking or proposes to take with
respect thereto. Promptly upon acquiring knowledge thereof,
the Company will notify each Bank of a change in the
publicly announced ratings by Standard & Poor's Corporation
and Moody's Investors Service, Inc. of the then current
senior unsecured, non-credit enhanced, long-term
Indebtedness of the Company.
(d) ERISA REPORTS. The Company will furnish the Agent
with copies of any request for waiver of the funding
standards or extension of the amortization periods required
by Sections 303 and 304 of ERISA or Section 412 of the Code
promptly after any such request is submitted by the Company
to the Department of Labor or the Internal Revenue Service,
as the case may be. Promptly after a Reportable Event
occurs, or the Company or any of its Subsidiaries receives
notice that the PBGC or any Control Group Person has
instituted or intends to institute proceedings to terminate
any pension or other Plan, or prior to the Plan
administrator's terminating such Plan pursuant to Section
4041 of ERISA, the Company will notify the Agent and will
<PAGE>
46
furnish to the Agent a copy of any notice of such Reportable
Event which is required to be filed with the PBGC, or any
notice delivered by the PBGC evidencing its institution of
such proceedings or its intent to institute such
proceedings, or any notice to the PBGC that a Plan is to be
terminated, as the case may be. The Company will promptly
notify each Bank upon learning of the occurrence of any of
the following events with respect to any Plan which is a
Multiemployer Plan: a partial or complete withdrawal from
any Plan which may result in the incurrence by the Company
or any of is Subsidiaries of withdrawal liability in excess
of $1,000,000 under Subtitle E of Title IV of ERISA, or of
the termination, insolvency or reorganization status of any
Plan under such Subtitle E which may result in liability to
the Company or any of its Subsidiaries in excess of
$1,000,000. In the event of such a withdrawal, upon the
request of the Agent or any Bank, the Company will promptly
provide information with respect to the scope and extent of
such liability, to the best of the Company's knowledge.
(e) REPORTS TO STOCKHOLDERS, ETC. Promptly after the
sending, making available or filing of the same, copies of
all reports and financial statements which the Company shall
send or make available to its stockholders including,
without limitation, the Proxy and all other materials
relating thereto, and all registration statements and
amendments thereto, and all reports on Form 8-K, 10-Q or 10-
K or any similar form hereafter in use which the Company
shall file with the Securities and Exchange Commission.
(f) OTHER INFORMATION. From time to time upon request
of the Agent or any Bank, the Company will furnish
information regarding the business affairs and condition,
financial or otherwise, of the Company and its Subsidiaries.
The Company agrees that any authorized officers and
representatives of any Bank shall have the right during
reasonable business hours to examine the books and records
of the Company and its Subsidiaries, and to make notes and
abstracts therefrom, to make an independent examination of
its books and records for the purpose of verifying the
accuracy of the reports delivered by the Company and its
Subsidiaries pursuant to this Agreement or otherwise, and
ascertaining compliance with this Agreement.
(g) CONFIDENTIALITY OF INFORMATION. Each Bank
acknowledges that some of the information furnished to such
Bank pursuant to this subsection 5.5 may be received by such
Bank prior to the time it shall have been made public, and
each Bank agrees that it will keep all information so
furnished confidential and shall make no use of such
information until it shall have become public, except (i) in
connection with matters involving operations under or
enforcement of this Agreement or the Notes, (ii) in
accordance with each Bank's obligations under law or
<PAGE>
47
pursuant to subpoenas or other process to make information
available to governmental agencies and examiners or to
others, (iii) to each Bank's corporate Affiliates and
Transferees and prospective Transferees so long as such
Persons agree to be bound by this subsection 5.5(g) or (iv)
with the prior consent of the Company.
5.6 RATIO OF TOTAL DEBT TO TANGIBLE NET WORTH. The
Company and its Subsidiaries will not at any time have
outstanding Consolidated Total Debt in an amount in excess of
200% of Consolidated Tangible Net Worth.
5.7 INTEREST COVERAGE RATIO. On the last day of each
fiscal quarter of the Company, the Consolidated Earnings Before
Interest and Taxes of the Company and its Subsidiaries for the
four consecutive fiscal quarters of the Company then ending will
be an amount which equals or exceeds 200% of the Consolidated
Interest Expense of the Company and its Subsidiaries for the same
four consecutive fiscal quarters.
5.8 DISTRIBUTIONS. The Company will not make any
Distribution except that, so long as no Event of Default exists
or would exist after giving effect thereto, the Company may make
a Distribution.
5.9 MERGER OR CONSOLIDATION. The Company will not
become a constituent corporation in any merger or consolidation
unless the Company shall be the surviving or resulting
corporation and immediately before and after giving effect to
such merger or consolidation there shall exist no Default;
provided that the Company may merge into another Subsidiary owned
by the Company for the purpose of causing the Company to be
incorporated in a different jurisdiction in the United States.
5.10 SALES OF ASSETS. The Company and its
Subsidiaries may from time to time sell or otherwise dispose of
all or any part of their respective assets; PROVIDED, HOWEVER,
that in any fiscal year, the Company and its Subsidiaries will
not (a) sell or dispose of (including, without limitation, any
disposition resulting from any merger or consolidation involving
a Subsidiary of the Company, and any Sale-and-Leaseback
Transaction), outside of the ordinary course of business, assets
constituting in the aggregate more than 12% of Consolidated
Assets of the Company and its Subsidiaries as at the end of the
immediately preceding fiscal year and (b) exchange any asset or
group of assets for another asset or group of assets unless (i)
such asset or group of assets are exchanged for an asset or group
of assets of a substantially similar type or nature, (ii) on a
pro forma basis both before and after giving effect to such
exchange, no Default or Event of Default shall have occurred and
be continuing, (iii) the aggregate fair market value (as
determined in good faith by the Board of Directors of the
Company) of the asset or group of assets being transferred by the
Company or such Subsidiary and the asset or group of assets being
<PAGE>
48
acquired by the Company or such Subsidiary are substantially
equal and (iv) the aggregate of (x) all assets of the Company and
its Subsidiaries sold pursuant to subsection 5.10(a) (including,
without limitation, any disposition resulting from any merger or
consolidation involving a Subsidiary of the Company, and any
Sale-and-Leaseback Transaction) and (y) the aggregate fair market
value (as determined in good faith by the Board of Directors of
the Company) of all assets of the Company and its Subsidiaries
exchanged pursuant to this subsection 5.10(b) does not exceed 20%
of Consolidated Assets of the Company and its Subsidiaries as at
the end of the immediately preceding fiscal year.
5.11 COMPLIANCE WITH ERISA. Each of the Company and
its Subsidiaries will meet, and will cause all Control Group
Persons to meet, all minimum funding requirements applicable to
any Plan imposed by ERISA or the Code (without giving effect to
any waivers of such requirements or extensions of the related
amortization periods which may be granted), and will at all times
comply, and will cause all Control Group Persons to comply, in
all material respects with the provisions of ERISA and the Code
which are applicable to the Plans. At no time shall the
aggregate actual and contingent liabilities of the Company under
Sections 4062, 4063, 4064 and other provisions of ERISA
(calculated as if the 30% of collective net worth amount referred
to in Section 4062(b)(1)(A)(i)(II) of ERISA exceeded the actual
total amount of unfunded guaranteed benefits referred to in
Section 4062(B)(1)(A)(i)(I) of ERISA) with respect to all Plans
(and all other pension plans to which the Company, any
Subsidiary, or any Control Group Person made contributions prior
to such time) exceed $7,500,000. Neither the Company nor its
Subsidiaries will permit any event or condition to exist which
could permit any Plan which is not a Multiemployer Plan to be
terminated under circumstances which would cause the lien
provided for in Section 4068 of ERISA to attach to the assets of
the Company or any of its Subsidiaries.
5.12 NEGATIVE PLEDGE. The Company will not and will
ensure that no Subsidiary will create or have outstanding any
security on or over any Principal Property in respect of any
Indebtedness except for:
(a) any security for the purchase price or cost of
construction of real property acquired by the Company or any
of its Subsidiaries (or additions, substantial repairs,
alterations or substantial improvements thereto) or
equipment, provided that such Indebtedness and such security
are incurred within 18 months of the acquisition or
completion of construction (or alteration or repair) and
full operation;
(b) any security existing on property at the time of
acquisition of such property by the Company or a Subsidiary
or on the property of a corporation at the time of the
acquisition of such corporation by the Company or a
<PAGE>
49
Subsidiary (including acquisitions through merger or
consolidation);
(c) any security created in favor of the Company or a
Subsidiary;
(d) any security existing at the date of this
Agreement set forth on Schedule IV;
(e) any security created by operation of law in favor
of government agencies of the United States of America or
any State thereof;
(f) any security created in connection with the
borrowing of funds if within 120 days such funds are used to
repay Indebtedness in at least the same principal amount as
secured by other security of Principal Property with an
independent appraised fair market value at least equal to
the appraised fair market value of the Principal Property
secured by the new security; and
(g) any extension, renewal or replacement of any
security referred to in the foregoing clauses (a) through
(f) provided that the amount thereby secured is not
increased;
unless any Loans made and/or to be made to and all other sums
payable by the Company under this Agreement shall be secured
equally and ratably with (or prior to) such Indebtedness so long
as such Indebtedness shall be so secured. Notwithstanding the
foregoing, the Company and any one or more Subsidiaries may,
without securing the Loans made and/or to be made to and all
other sums payable by the Company under this Agreement, create,
issue or assume Indebtedness which would otherwise be subject to
the foregoing restrictions in an aggregate principal amount
which, together with all other such Indebtedness of the Company
and its Subsidiaries (not including Indebtedness permitted to be
secured pursuant to the foregoing clauses (a) through (g) and the
aggregate Attributable Debt), including Indebtedness in respect
of Sale-and-Lease-back Transactions (other than those permitted
by subsection 5.13(b)), does not exceed 10% of Consolidated Net
Tangible Assets of the Company and its Subsidiaries.
5.13 SALE-AND-LEASE-BACK TRANSACTIONS. Neither the
Company nor any Significant Subsidiary will enter into any Sale-
and-Lease-back Transaction with respect to any Principal Property
with any Person (other than the Company or a Subsidiary) unless
either (a) the Company or such Significant Subsidiary would be
entitled, pursuant to the provisions described in subsection
5.12(a) through (g) to incur Indebtedness secured by a security
on the property to be leased without equally and ratably securing
the Loans made and/or to be made to and all other sums payable by
the Company under this Agreement, or (b) the Company during or
immediately after the expiration of 120 days after the effective
<PAGE>
50
date of such transaction applies to the voluntary retirement of
its Indebtedness and/or the acquisition or construction of
Principal Property an amount equal to the greater of the net
proceeds of the sale of the property leased in such transaction
or the fair value in the opinion of the chief financial officer
of the Company of the leased property at the time such
transaction was entered into.
SECTION 6. DEFAULTS
6.1 EVENTS OF DEFAULT. Upon the occurrence of any of
the following events:
(a) any default shall be made by the Company in any
payment in respect of: (i) interest on any of the Notes or
any facility fee payable hereunder as the same shall become
due and such default shall continue for a period of five
days; or (ii) principal of any of the Indebtedness evidenced
by the Notes as the same shall become due, whether at
maturity, by prepayment, by acceleration or otherwise; or
(b) any default shall be made by either the Company or
any Subsidiary of the Company in the performance or
observance of any of the provisions of subsections 5.6
through 5.10, 5.12 and 5.13; or
(c) any default shall be made in the due performance
or observance of any other covenant, agreement or provision
to be performed or observed by either the Company or any
Subsidiary under this Agreement, and such default shall not
be rectified or cured to the satisfaction of the Required
Banks within a period expiring 30 days after written notice
thereof by the Agent to the Company; or
(d) any representation or warranty of or with respect
to the Company or any Subsidiary of the Company to the Banks
in connection with this Agreement shall have been untrue in
any material respect on or as of the date made and the facts
or circumstances to which such representation or warranty
relates shall not have been subsequently corrected to make
such representation or warranty no longer incorrect; or
(e) any default shall be made in the payment of any
item of Indebtedness of the Company or any Subsidiary or
under the terms of any agreement relating to such
Indebtedness and such default shall continue without having
been duly cured, waived or consented to, beyond the period
of grace, if any, therein specified; PROVIDED, HOWEVER, that
such default shall not constitute an Event of Default unless
(i) the outstanding principal amount of such item of
Indebtedness exceeds $10,000,000, or (ii) the aggregate
outstanding principal amount of such item of Indebtedness
and all other items of Indebtedness of the Company and its
<PAGE>
51
Subsidiaries as to which such defaults exist and have
continued without being duly cured, waived or consented to
beyond the respective periods of grace, if any, therein
specified exceeds $25,000,000, or (iii) such default shall
have continued without being rectified or cured to the
satisfaction of the Required Banks for a period of 30 days
after written notice thereof by the Agent to the Company; or
(f) either the Company or any Subsidiary shall be
involved in financial difficulties as evidenced:
(i) by its commencement of a voluntary case under
Title 11 of the United States Code as from time to time
in effect, or by its authorizing, by appropriate
proceedings of its board of directors or other
governing body, the commencement of such a voluntary
case;
(ii) by the filing against it of a petition
commencing an involuntary case under said Title 11
which shall not have been dismissed within 60 days
after the date on which said petition is filed or by
its filing an answer or other pleading within said 60-
day period admitting or failing to deny the material
allegations of such a petition or seeking, consenting
or acquiescing in the relief therein provided;
(iii) by the entry of an order for relief in any
involuntary case commenced under said Title 11;
(iv) by its seeking relief as a debtor under any
applicable law, other than said Title 11, of any
jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or
alteration of the rights of creditors, or by its
consenting to or acquiescing in such relief;
(v) by the entry of an order by a court of
competent jurisdiction (i) finding it to be bankrupt or
insolvent, (ii) ordering or approving its liquidation,
reorganization or any modification or alteration of the
rights of its creditors, or (iii) assuming custody of,
or appointing a receiver or other custodian for, all or
a substantial part of its property;
(vi) by its making an assignment for the benefit
of, or entering into a composition with, its creditors,
or appointing or consenting to the appointment of a
receiver or other custodian for all or a substantial
part of its property; or
(g) a Change in Control of the Company shall occur;
<PAGE>
52
then and in each and every such case, (x) the Agent may, with the
consent of the Required Banks, or shall, at the direction of the
Required Banks, proceed to protect and enforce the rights of the
Banks by suit in equity, action at law and/or other appropriate
proceeding either for specific performance of any covenant or
condition contained in this Agreement or any Note or in any
instrument delivered to each Bank pursuant to this Agreement, or
in aid of the exercise of any power granted in this Agreement or
any Note or any such instrument or assignment, and (y) the Agent
may, with the consent of the Required Banks, or shall, at the
direction of the Required Banks, by notice in writing to the
Company terminate the obligations of the Banks to make further
Revolving Credit Loans hereunder, and thereupon such obligations
shall terminate forthwith and (z) (unless there shall have
occurred an Event of Default under subsection 6.1(f), in which
case the obligations of the Banks to make further Revolving
Credit Loans hereunder shall automatically terminate and the
unpaid balance of the Notes and accrued interest thereon and all
other amounts payable hereunder (the "BANK OBLIGATIONS") shall
automatically become due and payable) the Agent may, with the
consent of the Required Banks, or shall, at the direction of the
Required Banks, by notice in writing to the Company declare all
or any part of the unpaid balance of the Bank Obligations then
outstanding to be forthwith due and payable, and thereupon such
unpaid balance or part thereof shall become so due and payable
without presentment, protest or further demand or notice of any
kind, all of which are hereby expressly waived, the obligations
of the Banks to make further Revolving Credit Loans hereunder
shall terminate forthwith, and the Agent may, with the consent of
the Required Banks, or shall, at the direction of the Required
Banks, proceed to enforce payment of such balance or part thereof
in such manner as the Agent may elect, and each Bank may offset
and apply toward the payment of such balance or part thereof, and
to the curing of any such Event of Default, any Indebtedness from
such Bank to the Company, including any Indebtedness represented
by deposits in any general or special account maintained with
such Bank.
6.2 ANNULMENT OF DEFAULTS. An Event of Default shall
not be deemed to be in existence for any purpose of this
Agreement if the Agent, with the consent of or at the direction
of the Required Banks, subject to subsection 8.1, shall have
waived such event in writing or stated in writing that the same
has been cured to its reasonable satisfaction, but no such waiver
shall extend to or affect any subsequent Event of Default or
impair any rights of the Agent or the Banks upon the occurrence
thereof.
6.3 WAIVERS. The Company hereby waives to the extent
permitted by applicable law (a) all presentments, demands for
performance, notices of nonperformance (except to the extent
required by the provisions hereof), protests, notices of protest
and notices of dishonor in connection with any of the
Indebtedness evidenced by the Notes, (b) any requirement of
<PAGE>
53
diligence or promptness on the part of any Bank in the
enforcement of its rights under the provisions of this Agreement
or any Note, and (c) any and all notices of every kind and
description which may be required to be given by any statute or
rule of law and any defense of any kind which the Company may now
or hereafter have with respect to its liability under this
Agreement or any Note.
6.4 COURSE OF DEALING. No course of dealing between
the Company and any Bank shall operate as a waiver of any of the
Banks' rights under this Agreement or any Note. No delay or
omission on the part of any Bank in exercising any right under
this Agreement or any Note or with respect to any of the Bank
Obligations shall operate as a waiver of such right or any other
right hereunder. A waiver on any one occasion shall not be
construed as a bar to or waiver of any right or remedy on any
future occasion. No waiver or consent shall be binding upon any
Bank unless it is in writing and signed by the Agent or such of
the Banks as may be required by the provisions of this Agreement.
The making of a Loan hereunder during the existence of a Default
shall not constitute a waiver thereof.
SECTION 7. THE AGENT
7.1 APPOINTMENT. Each Bank hereby irrevocably
designates and appoints Chemical Bank as the Agent and CAF Loan
Agent of such Bank under this Agreement, and each such Bank
irrevocably authorizes Chemical Bank, as the Agent and CAF Loan
Agent for such Bank, to take such action on its behalf under the
provisions of this Agreement and to exercise such powers and
perform such duties as are expressly delegated to the Agent or
CAF Loan Agent, as the case may be, by the terms of this
Agreement, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, neither the Agent nor the
CAF Loan Agent shall have any duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship
with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be
read into this Agreement or otherwise exist against the Agent or
the CAF Loan Agent.
7.2 DELEGATION OF DUTIES. The Agent or the CAF Loan
Agent may execute any of its duties under this Agreement by or
through agents or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such
duties. Neither the Agent nor the CAF Loan Agent shall be
responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
7.3 EXCULPATORY PROVISIONS. Neither the Agent nor the
CAF Loan Agent nor any of its officers, directors, employees,
agents, attorneys-in-fact or Affiliates shall be (a) liable for
<PAGE>
54
any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement (except for its
or such Person's own gross negligence or willful misconduct), or
(b) responsible in any manner to any of the Banks for any
recitals, statements, representations or warranties made by the
Company or any officer thereof contained in this Agreement or in
any certificate, report, statement or other document referred to
or provided for in, or received by the Agent or the CAF Loan
Agent under or in connection with, this Agreement or for the
value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or the Notes or for any failure of
the Company to perform its obligations hereunder. Neither the
Agent nor the CAF Loan Agent shall be under any obligation to any
Bank to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions
of, this Agreement, or to inspect the properties, books or
records of the Company.
7.4 RELIANCE BY AGENT. The Agent and the CAF Loan
Agent shall be entitled to rely, and shall be fully protected in
relying, upon any Note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons and
upon advice and statements of legal counsel (including, without
limitation, counsel to the Company), independent accountants and
other experts selected by the Agent or the CAF Loan Agent. The
Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the
Agent. The Agent and the CAF Loan Agent shall be fully justified
in failing or refusing to take any action under this Agreement
unless it shall first receive such advice or concurrence of the
Required Banks as it deems appropriate or it shall first be
indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. The Agent and the
CAF Loan Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the Notes
in accordance with a request of the Required Banks, and such
request and any action taken or failure to act pursuant thereto
shall be binding upon all the Banks and all future holders of the
Notes.
7.5 NOTICE OF DEFAULT. The Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or
Event of Default hereunder unless the Agent has received notice
from a Bank or the Company referring to this Agreement,
describing 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, the Agent shall promptly give notice
thereof to the Banks. The Agent shall take such action with
respect to such Default or Event of Default as shall be
<PAGE>
55
reasonably directed by the Required Banks; 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 interests
of the Banks.
7.6 NON-RELIANCE ON AGENT AND OTHER BANKS. Each Bank
expressly acknowledges that neither the Agent nor the CAF Loan
Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or
warranties to it and that no act by the Agent or the CAF Loan
Agent hereinafter taken, including any review of the affairs of
the Company, shall be deemed to constitute any representation or
warranty by the Agent to any Bank. Each Bank represents to the
Agent and the CAF Loan Agent that it has, independently and
without reliance upon the Agent or the CAF Loan Agent or any
other Bank, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation
into the business, operations, property, financial and other
condition and creditworthiness of the Company and made its own
decision to make its Loans hereunder and enter into this
Agreement. Each Bank also represents that it will, independently
and without reliance upon the Agent or the CAF Loan Agent or any
other Bank, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking
action under this Agreement, and to make such investigation as it
deems necessary to inform itself as to the business, operations,
property, financial and other condition and creditworthiness of
the Company. Except for notices, reports and other documents
expressly required to be furnished to the Banks by the Agent or
the CAF Loan Agent hereunder, neither the Agent nor the CAF Loan
Agent shall have any duty or responsibility to provide any Bank
with any credit or other information concerning the business,
operations, property, financial and other condition or
creditworthiness of the Company which may come into the
possession of the Agent or the CAF Loan Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
7.7 INDEMNIFICATION. The Banks agree to indemnify the
Agent and the CAF Loan Agent in its capacity as such (to the
extent not reimbursed by the Company and without limiting the
obligation of the Company to do so), ratably according to the
respective amounts of their then existing Commitments, from and
against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time
(including without limitation at any time following the payment
of the Notes) be imposed on, incurred by or asserted against the
Agent or the CAF Loan Agent in any way relating to or arising out
of this Agreement, or any documents contemplated by or referred
to herein or the transactions contemplated hereby or any action
<PAGE>
56
taken or omitted by the Agent or the CAF Loan Agent under or in
connection with any of the foregoing; PROVIDED that no Bank shall
be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from the
Agent's or the CAF Loan Agent's gross negligence or willful
misconduct. The agreements in this subsection shall survive the
payment of the Notes and all other amounts payable hereunder.
7.8 AGENT AND CAF LOAN AGENT IN ITS INDIVIDUAL
CAPACITY. The Agent and the CAF Loan Agent and its Affiliates
may make loans to, accept deposits from and generally engage in
any kind of business with the Company as though the Agent or the
CAF Loan Agent were not the Agent or the CAF Loan Agent
hereunder. With respect to its Loans made or renewed by it and
any Note issued to it, the Agent and the CAF Loan Agent shall
have the same rights and powers under this Agreement as any Bank
and may exercise the same as though it were not the Agent, and
the terms "Bank" and "Banks" shall include the Agent or the CAF
Loan Agent in its individual capacity.
7.9 SUCCESSOR AGENT AND CAF LOAN AGENT. The Agent or
the CAF Loan Agent may resign as Agent or CAF Loan Agent, as the
case may be, upon 10 days' notice to the Banks. If the Agent or
the CAF Loan Agent shall resign as Agent or CAF Loan Agent, as
the case may be, under this Agreement, then the Required Banks
shall appoint from among the Banks a successor agent for the
Banks which successor agent shall be approved by the Company,
whereupon such successor agent shall succeed to the rights,
powers and duties of the Agent or CAF Loan Agent, as the case may
be, and the term "Agent" or "CAF Loan Agent", as the case may be,
shall mean such successor agent effective upon its appointment,
and the former Agent's or CAF Loan Agent's rights, powers and
duties as Agent or CAF Loan Agent shall be terminated, without
any other or further act or deed on the part of such former Agent
or CAF Loan Agent or any of the parties to this Agreement or any
holders of the Notes. After any retiring Agent's or CAF Loan
Agent's resignation hereunder as Agent or CAF Loan Agent, the
provisions of this subsection 7.9 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was
Agent or CAF Loan Agent under this Agreement. The Co-Agents in
their capacities as such shall have no rights, duties or
obligations under this Agreement.
SECTION 8. MISCELLANEOUS
8.1 AMENDMENTS AND WAIVERS. Neither this Agreement,
any Note, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions
of this subsection. With the written consent of the Required
Banks, the Agent and the Company may, from time to time, enter
into written amendments, supplements or modifications hereto for
the purpose of adding any provisions to this Agreement or the
<PAGE>
57
Notes or changing in any manner the rights of the Banks or of the
Company hereunder or thereunder or waiving, on such terms and
conditions as the Agent may specify in such instrument, any of
the requirements of this Agreement or the Notes or any Default or
Event of Default and its consequences; PROVIDED, HOWEVER, that no
such waiver and no such amendment, supplement or modification
shall (a) extend the maturity (whether as stated, by acceleration
or otherwise) of any Note, or reduce the rate or extend the time
of payment of interest thereon, or reduce any fee payable to the
Banks hereunder, or reduce the principal amount thereof, or
change the amount of any Bank's Commitment or amend, modify or
waive any provision of this subsection 8.1 or reduce the
percentage specified in the definition of Required Banks, or
consent to the assignment or transfer by the Company of any of
its rights and obligations under this Agreement, in each case
without the written consent of all the Banks, or (b) amend,
modify or waive any provision of Section 7 without the written
consent of the then Agent. Any such waiver and any such
amendment, supplement or modification shall apply equally to each
of the Banks and shall be binding upon the Company, the Banks,
the Agent and all future holders of the Notes. In the case of
any waiver, the Company, the Banks and the Agent shall be
restored to their former position and rights hereunder and under
the outstanding Notes, and any Default or Event of Default waived
shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event
of Default, or impair any right consequent thereon.
8.2 NOTICES. All notices, requests and demands to or
upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly
provided herein, shall be deemed to have been duly given or made
when delivered by hand, or three days after being deposited in
the mail, postage prepaid, or, in the case of telecopy notice,
when sent, confirmation of receipt received, addressed as follows
in the case of the Company, the Agent, and the CAF Loan Agent and
as set forth in Schedule I in the case of the other parties
hereto, or to such other address as may be hereafter notified by
the respective parties hereto and any future holders of the
Notes:
<PAGE>
58
The Company: Columbia Healthcare Corporation
201 West Main Street
Louisville, Kentucky 40202
Attention: Treasurer, with a copy to
the General Counsel
Telecopy: 502-572-2163
The Agent and
CAF Loan Agent: Chemical Bank
270 Park Avenue
New York, New York 10017
Attention: Carol J. Burt,
Managing Director
Telecopy: (212) 270-3279
with a copy to: Chemical Bank Agency Services
Corporation
140 East 45th Street
New York, New York 10017
Attention: Janet Belden and
Wallace Chin
Telecopy: (212) 270-0854
PROVIDED that any notice, request or demand to or upon the Agent
or the Banks pursuant to Section 2 shall not be effective until
received.
8.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to
exercise and no delay in exercising, on the part of the Agent or
any Bank, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative
and not exclusive of any rights, remedies, powers and privileges
provided by law.
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made hereunder and in any
document, certificate or statement delivered pursuant hereto or
in connection herewith shall survive the execution and delivery
of this Agreement and the Notes.
8.5 PAYMENT OF EXPENSES AND TAXES; INDEMNITY.
(a) The Company agrees (i) to pay or reimburse the Agent for all
its reasonable out-of-pocket costs and expenses incurred in
connection with the development, preparation and execution of,
and any amendment, supplement or modification to, this Agreement
and the Notes and any other documents prepared in connection
herewith, and the consummation of the transactions contemplated
hereby and thereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Agent, (ii) to pay or
reimburse each Bank and the Agent for all their reasonable costs
<PAGE>
59
and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the Notes and
any such other documents, including, without limitation,
reasonable fees and disbursements of counsel to the Agent and to
each of the Banks and (iii) to pay, indemnify, and hold each Bank
and the Agent harmless from, any and all recording and filing
fees and any and all liabilities with respect to, or resulting
from any delay in paying, stamp, excise and other taxes, if any,
which may be payable or determined to be payable in connection
with the execution and delivery of, or consummation of any of the
transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of,
this Agreement, the Notes and any such other documents.
(b) The Company will indemnify each of the Agent and
the Banks and the directors, officers and employees thereof and
each Person, if any, who controls each one of the Agent and the
Banks (any of the foregoing, an "INDEMNIFIED PERSON") and hold
each Indemnified Person harmless from and against any and all
claims, damages, liabilities and expenses (including without
limitation all fees and disbursements of counsel with whom an
Indemnified Person may consult in connection therewith and all
expenses of litigation or preparation therefor) which an
Indemnified Person may incur or which may be asserted against it
in connection with any litigation or investigation involving this
Agreement or the use of any proceeds of any Loans under this
Agreement by the Company or any Subsidiary, any officer, director
or employee thereof or the announcement or consummation of the
Merger, other than litigation commenced by the Company against
any of the Agent or the Banks which (i) seeks enforcement of any
of the Company's right hereunder and (ii) is determined adversely
to any of the Agent or the Banks.
(c) The agreements in this subsection 8.5 shall
survive repayment of the Notes and all other amounts payable
hereunder.
8.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS; PURCHASING
BANKS. (a) This Agreement shall be binding upon and inure to the
benefit of the Company, the Banks, the Agent, all future holders
of the Notes and their respective successors and assigns, except
that the Company may not assign or transfer any of its rights or
obligations under this Agreement without the prior written
consent of each Bank.
(b) Any Bank may, in the ordinary course of its
commercial banking business and in accordance with applicable
law, at any time sell to one or more banks or other entities
("Participants") participating interests in any Loans owing to
such Bank, any Notes held by such Bank, any Commitments of such
Bank or any other interests of such Bank hereunder. In the event
of any such sale by a Bank of a participating interest to a
Participant, such Bank's obligations under this Agreement to the
other parties under this Agreement shall remain unchanged, such
<PAGE>
60
Bank shall remain solely responsible for the performance thereof,
such Bank shall remain the holder of any such Notes for all
purposes under this Agreement, and the Company and the Agent
shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this
Agreement. The Company agrees that if amounts outstanding under
this Agreement and the Notes are due or unpaid, or shall have
been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be
deemed to have the right of offset in respect of its
participating interest in amounts owing under this Agreement and
any Notes to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under
this Agreement or any Notes, PROVIDED that such right of offset
shall be subject to the obligation of such Participant to share
with the Banks, and the Banks agree to share with such
Participant, as provided in subsection 8.7. The Company also
agrees that each Participant shall be entitled to the benefits of
subsections 2.12, 2.13 and 2.15 with respect to its participation
in the Commitments and the Eurodollar Loans outstanding from time
to time; PROVIDED that no Participant shall be entitled to
receive any greater amount pursuant to such subsections than the
transferor Bank would have been entitled to receive in respect of
the amount of the participation transferred by such transferor
Bank to such Participant had no such transfer occurred. No
Participant shall be entitled to consent to any amendment,
supplement, modification or waiver of or to this Agreement or any
Note, unless the same is subject to clause (a) of the proviso to
subsection 8.1.
(c) Any Bank may, in the ordinary course of its
commercial banking business and in accordance with applicable
law, at any time assign to one or more banks or other entities
("CAF LOAN ASSIGNEES") any CAF Loan owing to such Bank and any
Individual CAF Loan Note held by such Bank evidencing such CAF
Loan, pursuant to a CAF Loan Assignment executed by the assignor
Bank and the CAF Loan Assignee. Upon such execution, from and
after the date of such CAF Loan Assignment, the CAF Loan Assignee
shall, to the extent of the assignment provided for in such CAF
Loan Assignment, be deemed to have the same rights and benefits
of payment and enforcement with respect to such CAF Loan and
Individual CAF Loan Note and the same rights of offset pursuant
to subsection 6.1 and under applicable law and obligation to
share pursuant to subsection 8.7 as it would have had if it were
a Bank hereunder; PROVIDED that unless such CAF Loan Assignment
shall otherwise specify and a copy of such CAF Loan Assignment
shall have been delivered to the Agent for its acceptance and
recording in the Register in accordance with subsection 8.6(f),
the assignor thereunder shall act as collection agent for the CAF
Loan Assignee thereunder, and the Agent shall pay all amounts
received from the Company which are allocable to the assigned CAF
Loan or Individual CAF Loan Note directly to such assignor
without any further liability to such CAF Loan Assignee. A CAF
Loan Assignee under a CAF Loan Assignment shall not, by virtue of
<PAGE>
61
such CAF Loan Assignment, become a party to this Agreement or
have any rights to consent to or refrain from consenting to any
amendment, waiver or other modification of any provision of this
Agreement or any related document; PROVIDED that if a copy of
such CAF Loan Assignment shall have been delivered to the Agent
for its acceptance and recording in the Register in accordance
with subsection 8.6(f), neither the principal amount of, the
interest rate on, nor the maturity date of any CAF Loan or
Individual CAF Loan Note assigned to the CAF Loan Assignee
thereunder will be modified without the written consent of such
CAF Loan Assignee. If a CAF Loan Assignee has caused a CAF Loan
Assignment to be recorded in the Register in accordance with
subsection 8.6(f), such CAF Loan Assignee may thereafter, in the
ordinary course of its business and in accordance with applicable
law, assign such Individual CAF Loan Note to any Bank, to any
affiliate or subsidiary of such CAF Loan Assignee or to any other
financial institution that has total assets in excess of
$1,000,000,000 and that in the ordinary course of its business
extends credit of the type evidenced by such Individual CAF Loan
Note, and the foregoing provisions of this subsection 8.6(c)
shall apply, MUTATIS MUTANDIS, to any such assignment by a CAF
Loan Assignee. Except in accordance with the preceding sentence,
CAF Loans and Individual CAF Loan Notes may not be further
assigned by a CAF Loan Assignee, subject to any legal or
regulatory requirement that the CAF Loan Assignee's assets must
remain under its control.
(d) Any Bank may, in the ordinary course of its
commercial banking business and in accordance with applicable
law, at any time sell to any Bank or any affiliate thereof, and,
with the consent of the Company and the Agent (which in each case
shall not be unreasonably withheld) to one or more additional
banks or financial institutions ("PURCHASING BANKS") all or any
part of its rights and obligations under this Agreement and the
Notes pursuant to a Commitment Transfer Supplement, executed by
such Purchasing Bank, such transferor Bank and the Agent (and, in
the case of a Purchasing Bank that is not then a Bank or an
affiliate thereof, by the Company); PROVIDED, HOWEVER, that (i)
the Commitments purchased by such Purchasing Bank that is not
then a Bank shall be equal to or greater than $10,000,000 and
(ii) the transferor Bank which has transferred part of its Loans
and Commitments to any such Purchasing Bank shall retain a
minimum Commitment, after giving effect to such sale, equal to or
greater than $10,000,000. Upon (i) such execution of such
Commitment Transfer Supplement, (ii) delivery of an executed copy
thereof to the Company and (iii) payment by such Purchasing Bank,
such Purchasing Bank shall for all purposes be a Bank party to
this Agreement and shall have all the rights and obligations of a
Bank under this Agreement, to the same extent as if it were an
original party hereto with the Commitment Percentage of the
Commitments set forth in such Commitment Transfer Supplement.
Such Commitment Transfer Supplement shall be deemed to amend this
Agreement to the extent, and only to the extent, necessary to
reflect the addition of such Purchasing Bank and the resulting
<PAGE>
62
adjustment of Commitment Percentages arising from the purchase by
such Purchasing Bank of all or a portion of the rights and
obligations of such transferor Bank under this Agreement and the
Notes. Upon the consummation of any transfer to a Purchasing
Bank, pursuant to this subsection 8.6(d), the transferor Bank,
the Agent and the Company shall make appropriate arrangements so
that, if required, replacement Notes are issued to such
transferor Bank and new Notes or, as appropriate, replacement
Notes, are issued to such Purchasing Bank, in each case in
principal amounts reflecting their Commitment Percentages or, as
appropriate, their outstanding Loans as adjusted pursuant to such
Commitment Transfer Supplement.
(e) The Agent shall maintain at its address referred
to in subsection 8.2 a copy of each CAF Loan Assignment and each
Commitment Transfer Supplement delivered to it and a register
(the "REGISTER") for the recordation of (i) the names and
addresses of the Banks and the Commitment of, and principal
amount of the Loans owing to, each Bank from time to time, and
(ii) with respect to each CAF Loan Assignment delivered to the
Agent, the name and address of the CAF Loan Assignee and the
principal amount of each CAF Loan owing to such CAF Loan
Assignee. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Company, the Agent and the
Banks may treat each Person whose name is recorded in the
Register as the owner of the Loan recorded therein for all
purposes of this Agreement. The Register shall be available for
inspection by the Company or any Bank or CAF Loan Assignee at any
reasonable time and from time to time upon reasonable prior
notice.
(f) Upon its receipt of a CAF Loan Assignment executed
by an assignor Bank and a CAF Loan Assignee, together with
payment to the Agent of a registration and processing fee of
$1,000, the Agent shall promptly accept such CAF Loan Assignment,
record the information contained therein in the Register and give
notice of such acceptance and recordation to the assignor Bank,
the CAF Loan Assignee and the Company. Upon its receipt of a
Commitment Transfer Supplement executed by a transferor Bank and
a Purchasing Bank (and, in the case of a Purchasing Bank that is
not then a Bank or an affiliate thereof, by the Company and the
Agent) together with payment to the Agent of a registration and
processing fee of $2,500, the Agent shall (i) promptly accept
such Commitment Transfer Supplement (ii) on the Transfer
Effective Date determined pursuant thereto record the information
contained therein in the Register and give notice of such
acceptance and recordation to the Banks and the Company.
(g) Subject to subsection 5.5(g), the Company
authorizes each Bank to disclose to any Participant, CAF Loan
Assignee or Purchasing Bank (each, a "TRANSFEREE") and any
prospective Transferee any and all financial information in such
Bank's possession concerning the Company which has been delivered
to such Bank by the Company pursuant to this Agreement or which
<PAGE>
63
has been delivered to such Bank by the Company in connection with
such Bank's credit evaluation of the Company prior to entering
into this Agreement.
(h) If, pursuant to this subsection 8.6, any interest
in this Agreement or any Note is transferred to any Transferee
which is organized under the laws of any jurisdiction other than
the United States or any State thereof, the transferor Bank shall
cause such Transferee, concurrently with the effectiveness of
such transfer, (i) to represent to the transferor Bank (for the
benefit of the transferor Bank, the Agent and the Company) that
under applicable law and treaties no taxes will be required to be
withheld by the Agent, the Company or the transferor Bank with
respect to any payments to be made to such Transferee in respect
of the Loans, (ii) to furnish to the transferor Bank (and, in the
case of any Purchasing Bank and any CAF Loan Assignee registered
in the Register, the Agent and the Company) either U.S. Internal
Revenue Service Form 4224 or U.S. Internal Revenue Service Form
1001 (wherein such Transferee claims entitlement to complete
exemption from U.S. federal withholding tax on all interest
payments hereunder) and (iii) to agree (for the benefit of the
transferor Bank, to provide the transferor Bank (and, in the case
of any Purchasing Bank and any CAF Loan Assignee registered in
the Register, the Agent and the Company) a new form 4224 or Form
1001 upon the obsolescence of any previously delivered form and
comparable statements in accordance with applicable U.S. laws and
regulations and amendments duly executed and completed by such
Transferee, and to comply from time to time with all applicable
U.S. laws and regulations with regard to such withholding tax
exemption.
(i) Nothing herein shall prohibit any Bank or any
Affiliate thereof from pledging or assigning any Note to any
Federal Reserve Bank in accordance with applicable law.
8.7 ADJUSTMENTS; SET-OFF. If any Bank (a "BENEFITTED
BANK") shall at any time receive any payment of all or part of
its Loans, or interest thereon, or receive any collateral in
respect thereof (whether voluntarily or involuntarily, by offset,
pursuant to events or proceedings of the nature referred to in
subsection 6.1(f), or otherwise) in a greater proportion than any
such payment to and collateral received by any other Bank, if
any, in respect of such other Bank's Loans, or interest thereon,
such Benefitted Bank shall purchase for cash from the other Banks
such portion of each such other Bank's Loans, or shall provide
such other Banks with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such Benefitted
Bank to share the excess payment or benefits of such collateral
or proceeds ratably with each of the Banks; PROVIDED, HOWEVER,
that if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefitted Bank, such purchase
shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest. The
Company agrees that each Bank so purchasing a portion of another
<PAGE>
64
Bank's Loan may exercise all rights of a payment (including,
without limitation, rights of offset) with respect to such
portion as fully as if such Bank were the direct holder of such
portion.
8.8 COUNTERPARTS. This Agreement may be executed by
one or more of the parties to this Agreement on any number of
separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument. A set
of the copies of this Agreement signed by all the parties shall
be lodged with the Company and the Agent.
8.9 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT
AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.10 WAIVERS OF JURY TRIAL. THE COMPANY, THE AGENT,
THE CAF LOAN AGENT AND THE BANKS EACH HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.11 SUBMISSION TO JURISDICTION; WAIVERS. The Company
hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal
action or proceeding relating to this Agreement, or for
recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and
appellate courts from any thereof; and
(ii) consents that any such action or proceeding may be
brought in such courts, and waives any objection that it may
now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees
not to plead or claim the same.
<PAGE>
65
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and
duly authorized officers as of the day and year first above
written.
COLUMBIA HEALTHCARE CORPORATION
By:
-------------------------------------
Name:
Title:
CHEMICAL BANK, as Agent, as CAF
Loan Agent and as a Bank
By:
-------------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION, as a Co-Agent and as a Bank
By:
-------------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA, as a Co-Agent
and as a Bank
By:
-------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, N.A., as a Co-
Agent and as a Bank
By:
-------------------------------------
Name:
Title:
<PAGE>
66
CITIBANK, N.A., as a Co-Agent and as a
Bank
By:
-------------------------------------
Name:
Title:
DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN
ISLANDS BRANCHES, as a Co-Agent and as a
Bank
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO, as a
Co-Agent and as a Bank
By:
-------------------------------------
Name:
Title:
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
NEW YORK BRANCH, as a Co-Agent and as a
Bank
By:
-------------------------------------
Name:
Title:
MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as a Co-Agent and as a Bank
By:
-------------------------------------
Name:
Title:
<PAGE>
67
NATIONSBANK OF NORTH CAROLINA, N.A., as
a Co-Agent and as a Bank
By:
-------------------------------------
Name:
Title:
PNC BANK, KENTUCKY, INC., as a Co-Agent
and as a Bank
By:
-------------------------------------
Name:
Title:
TORONTO DOMINION (TEXAS), INC., as a Co-
Agent and as a Bank
By:
-------------------------------------
Name:
Title:
WACHOVIA BANK OF GEORGIA, N.A., as a Co-
Agent and as a Bank
By:
-------------------------------------
Name:
Title:
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By:
-------------------------------------
Name:
Title:
<PAGE>
68
FIRST INTERSTATE BANK OF CALIFORNIA
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
THE FUJI BANK, LIMITED, HOUSTON AGENCY
By:
-------------------------------------
Name:
Title:
SHAWMUT BANK-CONNECTICUT, N.A.
By:
-------------------------------------
Name:
Title:
NATIONAL CITY BANK
By:
-------------------------------------
Name:
Title:
THIRD NATIONAL BANK IN NASHVILLE
By:
-------------------------------------
Name:
Title:
<PAGE>
69
THE SANWA BANK, LIMITED, ATLANTA AGENCY
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
J.P. MORGAN DELAWARE
By:
-------------------------------------
Name:
Title:
THE SAKURA BANK, LTD. NEW YORK BRANCH
By:
-------------------------------------
Name:
Title:
ABN AMRO BANK N.V.
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA
By:
-------------------------------------
Name:
Title:
<PAGE>
70
THE LONG-TERM CREDIT BANK OF JAPAN
By:
-------------------------------------
Name:
Title:
MELLON BANK, N.A.
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
THE MITSUBISHI BANK, LTD.
By:
-------------------------------------
Name:
Title:
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
ROYAL BANK OF CANADA
By:
-------------------------------------
Name:
Title:
<PAGE>
71
THE SUMITOMO BANK, LIMITED, NEW YORK
BRANCH
By:
-------------------------------------
Name:
Title:
SWISS BANK CORPORATION
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
THE TOKAI BANK, LIMITED, NEW YORK BRANCH
By:
-------------------------------------
Name:
Title:
NBD BANK, N.A.
By:
-------------------------------------
Name:
Title:
THE BANK OF TOKYO TRUST COMPANY
By:
-------------------------------------
Name:
Title:
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By:
-------------------------------------
Name:
Title:
<PAGE>
72
AMSOUTH BANK N.A.
By:
-------------------------------------
Name:
Title:
ARAB BANK PLC, GRAND CAYMAN BRANCH
By:
-------------------------------------
Name:
Title:
BANK ONE, TEXAS, NA
By:
-------------------------------------
Name:
Title:
BARNETT BANK OF TAMPA
By:
-------------------------------------
Name:
Title:
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
By:
-------------------------------------
Name:
Title:
THE DAIWA BANK, LTD.
By:
-------------------------------------
Name:
Title:
FIRST AMERICAN NATIONAL BANK
By:
-------------------------------------
Name:
Title:
<PAGE>
73
LIBERTY NATIONAL BANK AND TRUST COMPANY
OF LOUISVILLE
By:
-------------------------------------
Name:
Title:
THE NORTHERN TRUST COMPANY
By:
-------------------------------------
Name:
Title:
UNITED STATES NATIONAL BANK OF OREGON
By:
-------------------------------------
Name:
Title:
BANK OF LOUISVILLE & TRUST CO.
By:
-------------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
COMMITMENT AMOUNTS AND PERCENTAGES;
LENDING OFFICES; ADDRESSES FOR NOTICE
A. COMMITMENT AMOUNTS AND PERCENTAGES.
<TABLE>
<CAPTION>
COMMITMENT COMMITMENT
NAME OF BANK AMOUNT PERCENTAGE
- ------------ ---------- ----------
<S> <C> <C>
CHEMICAL BANK $86,666,666.67 4.33%
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION $80,000,000.00 4.00%
THE BANK OF NOVA SCOTIA $80,000,000.00 4.00%
THE CHASE MANHATTAN BANK, N.A. $80,000,000.00 4.00%
CITIBANK, N.A. $80,000,000.00 4.00%
DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISLANDS BRANCHES $80,000,000.00 4.00%
THE FIRST NATIONAL BANK OF CHICAGO $80,000,000.00 4.00%
THE INDUSTRIAL BANK OF JAPAN,
LIMITED, NEW YORK BRANCH $80,000,000.00 4.00%
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK $40,000,000.00 2.00%
NATIONSBANK OF NORTH CAROLINA, N.A.$80,000,000.00 4.00%
PNC BANK, KENTUCKY, INC. $80,000,000.00 4.00%
TORONTO DOMINION (TEXAS), INC. $80,000,000.00 4.00%
WACHOVIA BANK OF GEORGIA, N.A. $80,000,000.00 4.00%
CREDIT LYONNAIS CAYMAN
ISLAND BRANCH $50,000,000.00 2.50%
FIRST INTERSTATE BANK
OF CALIFORNIA $50,000,000.00 2.50%
THE FUJI BANK, LIMITED,
HOUSTON AGENCY $50,000,000.00 2.50%
SHAWMUT BANK-CONNECTICUT, N.A. $50,000,000.00 2.50%
NATIONAL CITY BANK $50,000,000.00 2.50%
THIRD NATIONAL BANK
IN NASHVILLE $50,000,000.00 2.50%
THE SANWA BANK, LIMITED,
ATLANTA AGENCY $46,666,666.67 2.33%
J.P. MORGAN DELAWARE $40,000,000.00 2.00%
THE SAKURA BANK, LTD.
NEW YORK BRANCH $40,000,000.00 2.00%
</TABLE>
<PAGE>
2
<TABLE>
<S> <C> <C>
ABN AMRO BANK N.V. $33,333,333.33 1.67%
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA $33,333,333.33 1.67%
THE LONG-TERM CREDIT
BANK OF JAPAN $33,333,333.33 1.67%
MELLON BANK, N.A. $33,333,333.33 1.67%
THE MITSUBISHI BANK, LTD. $33,333,333.33 1.67%
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND",
NEW YORK BRANCH $33,333,333.33 1.67%
ROYAL BANK OF CANADA $33,333,333.33 1.67%
THE SUMITOMO BANK, LIMITED,
NEW YORK BRANCH $33,333,333.33 1.67%
SWISS BANK CORPORATION $33,333,333.33 1.67%
THE TOKAI BANK, LIMITED,
NEW YORK BRANCH $33,333,333.33 1.67%
NBD BANK, N.A. $20,000,000.00 1.00%
THE BANK OF TOKYO
TRUST COMPANY $20,000,000.00 1.00%
THE MITSUBISHI TRUST
AND BANKING CORPORATION $20,000,000.00 1.00%
AMSOUTH BANK N.A. $16,666,666.67 0.83%
ARAB BANK PLC, GRAND
CAYMAN BRANCH $16,666,666.67 0.83%
BANK ONE, TEXAS, NA $16,666,666.67 0.83%
BARNETT BANK OF TAMPA $16,666,666.67 0.83%
THE BOATMEN'S NATIONAL BANK
OF ST. LOUIS $16,666,666.67 0.83%
THE DAIWA BANK, LTD. $16,666,666.67 0.83%
FIRST AMERICAN NATIONAL BANK $16,666,666.67 0.83%
LIBERTY NATIONAL BANK AND TRUST
COMPANY OF LOUISVILLE $16,666,666.67 0.83%
THE NORTHERN TRUST COMPANY $16,666,666.67 0.83%
UNITED STATES NATIONAL
BANK OF OREGON $16,666,666.67 0.83%
BANK OF LOUISVILLE & TRUST CO. $ 6,666,666.67 0.33%
TOTAL $2,000,000,000 100.00%
</TABLE>
<PAGE>
3
B. LENDING OFFICES; ADDRESSES FOR NOTICE.
CHEMICAL BANK
Domestic Lending Office: Chemical Bank
270 Park Avenue
New York, NY 10017
Eurodollar Lending Office: Chemical Bank
270 Park Avenue
New York, NY 10017
Address for Notices: See subsection 8.2 of the
Credit Agreement
ABN AMRO BANK N.V.
Domestic Lending Office: ABN AMRO Bank N.V. -
Pittsburgh Branch
One PPG Place, Suite 2950
Pittsburgh, PA 15222-5400
Eurodollar Lending Office: ABN AMRO Bank N.V. -
Pittsburgh Branch
One PPG Place, Suite 2950
Pittsburgh, PA 15222-5400
Address for Notices: ABN AMRO Bank N.V. -
Pittsburgh Branch
One PPG Place, Suite 2950
Pittsburgh, PA 15222-5400
Attention: Dennis F. Lennon
Telecopy: (412) 566-2266
Confirmation: (412) 566-2256
<PAGE>
4
AMSOUTH BANK N.A.
Domestic Lending Office: AmSouth Bank N.A.
1900 5th Ave. North
Birmingham, AL 35203
Eurodollar Lending Office: AmSouth Bank N.A.
1900 5th Ave. North
Birmingham, AL 35203
Address for Notices: AmSouth Bank N.A.
1900 5th Ave. North
Birmingham, AL 35203
Attention: William Page
Barnes
Telecopy: (205) 326-4075
Confirmation: (205) 326-4081
ARAB BANK PLC, GRAND CAYMAN BRANCH
Domestic Lending Office: Arab Bank Plc, Grand Cayman
Branch
520 Madison Avenue
New York, NY 10022
Eurodollar Lending Office: Arab Bank Plc, Grand Cayman
Branch
520 Madison Avenue
New York, NY 10022
Address for Notices: Arab Bank Plc, Grand Cayman
Branch
520 Madison Avenue
New York, NY 10022
Attention: Peter Boyadjian
Telecopy: (212) 593-4652
Confirmation: (212) 715-9714
<PAGE>
5
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION
Domestic Lending Office: Bank of America National Trust
& Savings Association
555 S. Flower Street #5618
Los Angeles, CA 90071
Eurodollar Lending Office: Bank of America National Trust
& Savings Association
1850 Gateway Blvd., 4th Floor
Concord, CA 94520
Address for Notices: Bank of America National Trust
& Savings Association
555 S. Flower Street #5618
Los Angeles, CA 90071
Attention: Katherine McNallen
Telecopy: (213) 228-2958
Confirmation: (213) 228-2756
BANK OF LOUISVILLE & TRUST CO.
Domestic Lending Office: Bank of Louisville & Trust Co.
Eurodollar Lending Office: Bank of Louisville & Trust Co.
Address for Notices: Bank of Louisville & Trust Co.
Attention:
Telecopy:
Confirmation:
THE BANK OF NOVA SCOTIA
Domestic Lending Office: The Bank of Nova Scotia
55 Park Place
Suite 650
Atlanta, GA 30808
Eurodollar Lending Office: The Bank of Nova Scotia
55 Park Place
Suite 650
Atlanta, GA 30808
Address for Notices: The Bank of Nova Scotia
Atlanta Agency
600 Peachtree Street
Suite 2700
Atlanta, GA 30308
Attention: Joe Legista
Telecopy: (404) 888-8998
Confirmation: (408) 877-1562
<PAGE>
6
THE BANK OF TOKYO TRUST COMPANY
Domestic Lending Office: The Bank of Tokyo Trust
Company
100 Broadway
New York, NY 10005
Eurodollar lending Office: The Bank of Tokyo Trust
Company
100 Broadway
New York, NY 10005
Address for Notices: The Bank of Tokyo Trust
Company
100 Broadway
New York, NY 10005
Attention:
Telecopy:
Confirmation:
BANK ONE, TEXAS, NA
Domestic Lending Office: Bank One, Texas, NA
500 Throckmorton
Fort Worth, TX 76102
Eurodollar Lending Office: Bank One, Texas, NA
500 Throckmorton
Fort Worth, TX 76102
Address for Notices: Bank One, Texas, NA
500 Throckmorton, 6th Floor
Fort Worth, TX 76102
Attention: J. Michael Wilson
Telecopy: (817) 884-5697
Confirmation: (817) 884-4283
BARNETT BANK OF TAMPA
Domestic Lending Office: Barnett Bank of Tampa
50 North Laura Street
Jacksonville, FL 32202
Eurodollar Lending Office: Barnett Bank of Tampa
50 North Laura Street
Jacksonville, FL 32202
Address for Notices: Barnett Bank
101 E. Kennedy Blvd.
P. O. Box 30014
Tampa, FL 33630
Attn: W. Thomas Bowry, Jr.
<PAGE>
7
Telecopy: (813) 225-8752
Confirmation: (813) 225-8140
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
Domestic Lending Office: The Boatmen's National Bank
of St. Louis
One Boatmen's Plaza
800 Market Street
St. Louis, MO 63166
Eurodollar Lending Office: The Boatmen's National Bank
of St. Louis
One Boatmen's Plaza
800 Market Street
St. Louis, MO 63166
Address for Notices: The Boatmen's National Bank
of St. Louis
One Boatmen's Plaza
800 Market Street
P. O. Box 236
St. Louis, MO 63166
Attention:
Telecopy:
Confirmation:
THE CHASE MANHATTAN BANK, N.A.
Domestic Lending Office: The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, NY 10081
Eurodollar Lending Office: The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
New York, NY 10081
Address for Notices: The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza
5th Floor
New York, NY 10081
Attention: Elliot Jones
Telecopy: (212) 552-1457
Confirmation: (212) 552-5302
CITIBANK, N.A.
Domestic Lending Office: Citicorp North America, Inc.
2001 Ross Ave., Suite 1400
Dallas, TX 75201
<PAGE>
8
Eurodollar Lending Office: Citicorp North America, Inc.
2001 Ross Ave., Suite 1400
Dallas, TX 75201
Address for Notices: Citicorp North America, Inc.
2001 Ross Ave., Suite 1400
Dallas, TX 75201
Attention: J. Lang Aston
Telecopy: (214) 953-3888
Confirmation: (214) 953-3833
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
Domestic Lending Office: Credit Lyonnais Cayman Island
Branch
227 W. Monroe Street
Suite 3800
Chicago, IL 60606
Eurodollar Lending Office: Credit Lyonnais Cayman Island
Branch
227 W. Monroe Street
Suite 3800
Chicago, IL 60606
Address for Notices: Credit Lyonnais Cayman Island
Branch
227 W. Monroe Street
Suite 3800
Chicago, IL 60606
Attention: Brian Jackson
Telecopy: (312) 641-0527
Confirmation: (312) 220-7309
THE DAIWA BANK, LTD.
Domestic Lending Office: The Daiwa Bank, Ltd.
75 Rockefeller Plaza
8th Floor
New York, NY 10019
Eurodollar Lending Office: The Daiwa Bank, Ltd.
75 Rockefeller Plaza
8th Floor
New York, NY 10019
Address for Notices: The Daiwa Bank, Ltd.
75 Rockefeller Plaza
8th Floor
New York, NY 10019
Attention:
Telecopy:
Confirmation:
<PAGE>
9
DEUTSCHE BANK AG, NEW YORK AND/OR CAYMAN ISLANDS BRANCHES
Domestic Lending Office: Deutsche Bank AG,
New York Branch
31 West 52nd Street
New York, NY 10019
Eurodollar Lending Office: Deutsche Bank, AG,
Cayman Islands Branch
31 West 52nd Street
New York, NY 10019
Address for Notices: Deutsche Bank AG,
New York Branch
31 West 52nd Street
New York, NY 10019
Attention: Robert A. Maddux,
Director
Telecopy: (212) 474-8212
Confirmation: (212) 474-8228
FIRST AMERICAN NATIONAL BANK
Domestic lending Office: First American National Bank
327 Union Street
Nashville, TN 37237
Eurodollar Lending Office: First American National Bank
327 Union Street
Nashville, TN 37237
Address for Notices: First American National Bank
First American Center
Health Care Division - 2nd FL
First Union Street
Nashville, TN 37237-0203
Attention: Mark Mattson
Telecopy: (615) 748-2812
Confirmation: (615) 748-1479
<PAGE>
10
FIRST INTERSTATE BANK OF CALIFORNIA
Domestic Lending Office: First Interstate Bank of
California
707 Wilshire Blvd.
Los Angeles, CA 90017
Eurodollar Lending Office: First Interstate Bank of
California
707 Wilshire Blvd.
Los Angeles, CA 90017
Address for Notices: First Interstate Bank of
California
707 Wilshire Blvd.
Los Angeles, CA 90017
Attention: Bruce P. McDonald
Telecopy: (213) 614-2569
Confirmation: (213) 614-4879
THE FIRST NATIONAL BANK OF CHICAGO
Domestic Lending Office: First National Bank of Chicago
One First National Plaza
Chicago, IL 60670
Eurodollar Lending Office: First National Bank of Chicago
One First National Plaza
Chicago, IL 60670
Address for Notices: First National Bank of Chicago
One First National Plaza
Mail Suite 0091
Chicago, IL 60670
Attn: L. Richard Schiller
Telecopy: (312) 732-2016
Confirmation: (312) 732-5932
<PAGE>
11
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
Domestic Lending Office: First Union National
Bank of North Carolina
301 S. College Street
Charlotte, NC 28202
Eurodollar Lending Office: First Union National
Bank of North Carolina
301 S. College Street
Charlotte, NC 28202
Address for Notices: First Union National
Bank of North Carolina
One FUNB Plaza - 19th FL
Charlotte, NC 28288-0735
Attention: John Ronson
Telecopy: (704) 374-4092
Confirmation: (704) 383-5212
THE FUJI BANK, LIMITED, HOUSTON AGENCY
Domestic Lending Office: The Fuji Bank, Limited,
Houston Agency
909 Fannin, Suite 2800
Houston, TX 77010
Eurodollar Lending Office: The Fuji Bank, Limited,
Houston Agency
909 Fannin
2 Houston Center, Suite 2800
Houston, TX 77010
Address for Notices: The Fuji Bank, Limited,
Houston Agency
909 Fannin, Suite 2800
Houston, TX 77010
Attention: Glenn Mealey
Telecopy: (713) 759-0048
Confirmation: (713) 759-1800
<PAGE>
12
THE INDUSTRIAL BANK OF JAPAN, LIMITED, NEW YORK BRANCH
Domestic Lending Office: The Industrial Bank of Japan
Trust Company
245 Park Avenue
New York, NY 10167
Eurodollar Lending Office: The Industrial Bank of Japan
Trust Company
245 Park Avenue
New York, NY 10167
Address for Notices: The Industrial Bank of Japan,
Limited
New York Branch
245 Park Avenue, 23rd FL
New York, NY 10167
Attention: Tomoya Aoki
Telecopy: (212) 856-9450
Confirmation: (212) 309-6595
J.P. MORGAN DELAWARE
Domestic Lending Office: J.P. Morgan Delaware
500 Stanton-Christiana Road
Newark, DE 19713-2007
Eurodollar Lending Office: J.P. Morgan Delaware
500 Stanton-Christiana Road
Newark, DE 19713-2007
Address for Notices: J.P. Morgan Delaware
902 Market Street
Wilmington, DE 19801-3015
Attention: David J. Morris
Telecopy: (302) 651-3788
Confirmation: (302) 654-5336
<PAGE>
13
LIBERTY NATIONAL BANK AND TRUST COMPANY OF LOUISVILLE
Domestic Lending Office: Liberty National Bank and
Trust Company of Louisville
416 West Jefferson Street
Louisville, KY 40202
Eurodollar Lending Office: Liberty National Bank and
Trust Company of Louisville
416 West Jefferson Street
Louisville, KY 40202
Address for Notices: Liberty National Bank and
Trust Company of Louisville
416 West Jefferson Street
Louisville, KY 40202
Attention: Earl A. Dorsey, Jr.
Telecopy: (502) 566-2367
Confirmation: (502) 566-2458
THE LONG-TERM CREDIT BANK OF JAPAN
Domestic Lending Office: The Long-Term Credit Bank of
Japan
165 Broadway, 49th Floor
New York, NY 10006
Eurodollar Lending Office: The Long-Term Credit Bank of
Japan
165 Broadway, 49th Floor
New York, NY 10006
Address for Notices: The Long-Term Credit Bank of
Japan
New York Branch
165 Broadway, 49th Floor
New York, NY 10006
Attention: Theodore Koerner
Telecopy: (212) 608-2371
Confirmation: (212) 335-4566
<PAGE>
14
MELLON BANK, N.A.
Domestic Lending Office: Mellon Bank, N.A.
2 Mellon Bank Center, Room 2
Pittsburgh, PA 15259
Eurodollar Lending Office: Mellon Bank, N.A.
2 Mellon Bank Center, Room 2
Pittsburgh, PA 15259
Address for Notices: Mellon Bank, N.A.
2 Mellon Bank Center, Room 270
Pittsburgh, PA 15259
Attention: Marsha Wicker
Telecopy: (412) 234-9010
Confirmation: (412) 234-3594
THE MITSUBISHI BANK, LTD.
Domestic Lending Office: The Mitsubishi Bank, Ltd.
2 World Financial Center
225 Liberty Street, 39th Floor
New York, NY 10281
Eurodollar Lending Office: The Mitsubishi Bank, Ltd.
2 World Financial Center
225 Liberty Street, 39th Floor
New York, NY 10281
Address for Notices: The Mitsubishi Bank, Ltd.
225 Liberty Street
2 World Financial Center
225 Liberty Street, 39th Floor
New York, NY 10281-1059
Attention: Hiroaki Fuchida
Telecopy: (212) 667-3562
Confirmation: (212) 667-2884
<PAGE>
15
THE MITSUBISHI TRUST AND BANKING CORPORATION
Domestic Lending Office: The Mitsubishi Trust and
Banking Corporation
520 Madison Avenue, 25th Floor
New York, NY 10022
Eurodollar Lending Office: The Mitsubishi Trust and
Banking Corporation
520 Madison Avenue, 25th Floor
New York, NY 10022
Address for Notices: The Mitsubishi Trust and
Banking Corporation
520 Madison Avenue, 25th Floor
New York, NY 10022
Attn: Randolph E. J. Medrano
Telecopy: (212) 755-2349
Confirmation: (212) 891-8212
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
Domestic Lending Office: Morgan Guaranty Trust Company
of New York
60 Wall Street
New York, NY 10260-0060
Eurodollar Lending Office: Morgan Guaranty Trust Company
of New York
Nassau, Bahamas Office
c/o J.P. Morgan Services Inc.
Euro-Loan Servicing Unit
Morgan Christiana Center
500 Stanton Christiana Road
Newark, DE 19713
Address for Notices: Morgan Guaranty Trust Company
of New York
60 Wall Street
New York, NY 10260-0060
Attention: Laura E. Reim
Telecopy: (212) 648-5336
Confirmation: (212) 648-6793
<PAGE>
16
NATIONAL CITY BANK
Domestic Lending Office: National City Bank
101 South Fifth Street
Louisville, KY 40202
Eurodollar Lending Office: National City Bank
101 South Fifth Street
Louisville, KY 40202
Address for Notices: National City Bank
P. O. Box 36000
Louisville, KY 40233
Attention: Charles Denny
Telecopy: (502) 581-4424
Confirmation: (502) 581-4212
NATIONSBANK OF NORTH CAROLINA, N.A.
Domestic Lending Office: NationsBank of North
Carolina N.A.
1 NationsBank Plaza
Charlotte, NC 28255
Eurodollar Lending Office: NationsBank of North
Carolina N.A.
1 NationsBank Plaza
Charlotte, NC 28255
Address for Notices: NationsBank of North
Carolina N.A.
Corporate Bank
1 NationsBank Plaza - 5th FL
Nashville, TN 37239-1694
Attention: Ashley Crabtree
Telecopy: (615) 749-4640
Confirmation: (615) 749-3524
<PAGE>
17
NBD BANK, N.A.
Domestic Lending Office: NBD Bank, N.A.
611 Woodward Avenue
Detroit, MI 48226
Eurodollar Lending Office: NBD Bank, N.A.
611 Woodward Avenue
Detroit, MI 48226
Address for Notices: NBD Bank, N.A.
611 Woodward Avenue
Detroit, MI 48226
Attention: Steven P. Clemens
Telecopy: (313) 225-1671
Confirmation: (313) 225-1314
THE NORTHERN TRUST COMPANY
Domestic Lending Office: The Northern Trust Company
50 South La Salle Street
Chicago, IL 60657
Eurodollar Lending Office: The Northern Trust Company
50 South La Salle Street
Chicago, IL 60657
Address for Notices: The Northern Trust Company
50 South La Salle Street
Chicago, IL 60657
Attention: Robert Jones
Telecopy: (312) 444-3508
Confirmation: (312) 444-4575
PNC BANK, KENTUCKY, INC.
Domestic Lending Office: PNC Bank, Kentucky, Inc.
Citizens Plaza
Louisville, KY 40296
Eurodollar Lending Office: PNC Bank, Kentucky, Inc.
Citizens Plaza
Louisville, KY 40296
Address for Notices: PNC Bank, Kentucky, Inc.
500 West Jefferson Street
Louisville, KY 40202
Attention: Jefferson Green
Telecopy: (502) 581-3355
Confirmation: (502) 581-3248
<PAGE>
18
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK NEDERLAND", NEW YORK BRANCH
Domestic Lending Office: Rabobank Nederland
245 Park Avenue
New York, NY 10022
Eurodollar Lending Office: Rabobank Nederland
245 Park Avenue
New York, NY 10022
Address for Notices: Rabobank Nederland
New York Branch
245 Park Avenue
New York, NY 10022
Attention: Paul Beiboer
Telecopy: (212) 916-7837
Confirmation: (212) 916-7883
ROYAL BANK OF CANADA
Domestic Lending Office: Royal Bank of Canada
Pierrepont Plaza
300 Cadman Plaza West
Brooklyn, NY 11201
Eurodollar Lending Office: Royal Bank of Canada
Pierrepont Plaza
300 Cadman Plaza West
Brooklyn, NY 11201
Address for Notices: Royal Bank of Canada
New York Operations Center
Pierrepont Plaza
300 Cadman Plaza West
Brooklyn, NY 11201-2701
Attention: Linda Swanston
Telecopy: (718) 522-6292/6293
Confirmation: (212) 858-7176
<PAGE>
19
THE SAKURA BANK, LTD. NEW YORK BRANCH
Domestic Lending Office: The Sakura Bank, Ltd.
New York Branch
277 Park Avenue
New York, NY 10172
Eurodollar Lending Office: The Sakura Bank, Ltd.
New York Branch
277 Park Avenue
New York, NY 10172
Address for Notices: The Sakura Bank, Ltd.
New York Branch
277 Park Avenue
New York, NY 10172
Attention: Yoshikazu Nagura
Telecopy: (212) 888-7651
Confirmation: (212) 756-6804
THE SANWA BANK, LIMITED, ATLANTA AGENCY
Domestic Lending Office: The Sanwa Bank, Limited
133 Peachtree Street
Suite 4750
Atlanta, GA 30303
Eurodollar Lending Office: The Sanwa Bank, Limited
133 Peachtree Street
Suite 4750
Atlanta, GA 30303
Address for Notice: The Sanwa Bank, Limited
133 Peachtree Street
Suite 4750
Atlanta, GA 30303
Attention: Kristie Hartrampf
Telecopy: (404) 589-1629
Confirmation: (404) 586-6893
<PAGE>
20
SHAWMUT BANK - CONNECTICUT, N.A.
Domestic Lending Office: Shawmut Bank -
Connecticut, N.A.
777 Main Street, MSN 397
Hartford, CT 06115
Eurodollar Lending Office: Shawmut Bank -
Connecticut, N.A.
777 Main Street, MSN 397
Hartford, CT 06115
Address for Notice: Shawmut Bank -
Connecticut, N.A.
777 Main Street, MSN 397
Hartford, CT 06115
Attention: James Scully
Telecopy: (203) 986-5367
Confirmation: (203) 986-7005
THE SUMITOMO BANK, LIMITED, NEW YORK BRANCH
Domestic Lending Office: The Sumitomo Bank, Limited,
New York Branch
One World Trade Center
Suite 9651
New York, NY 10048
Eurodollar Lending Office: The Sumitomo Bank, Limited,
New York Branch
One World Trade Center
Suite 9651
New York, NY 10048
Address for Notices: The Sumitomo Bank, Limited,
New York Branch
One World Trade Center
Suite 9651
New York, NY 10048
Attention: Jeff Toner
Telecopy: (212) 553-0118
Confirmation: (212) 553-1864
<PAGE>
21
SWISS BANK CORPORATION
Domestic Lending Office: Swiss Bank Corporation
10 East 50th Street
New York, NY 10022
Eurodollar Lending Office: Swiss Bank Corporation
10 East 50th Street
New York, NY 10022
Address for Notices: Swiss Bank Corporation
101 California Street
Suite 1700
San Francisco, CA 94111
Attention: Colin T. Taylor
Telecopy: (414) 774-3345
Confirmation: (415) 989-7570
THIRD NATIONAL BANK IN NASHVILLE
Domestic Lending Office: Third National Bank
In Nashville
201 Fourth Avenue North
Nashville, TN 37244
Eurodollar Lending Office: Third National Bank
In Nashville
201 Fourth Avenue North
Nashville, TN 37244
Address for Notices: Third National Bank
In Nashville
P.O. Box 305110
Nashville, TN 37230-5110
Attention: Leigh Ann Gregory
Telecopy: (615) 748-4089
Confirmation: (615) 748-5461
<PAGE>
22
THE TOKAI BANK, LIMITED, NEW YORK BRANCH
Domestic Lending Office: The Tokai Bank, Ltd.
New York Branch
55 East 52nd Street
New York, NY 10055
Eurodollar Lending Office: The Tokai Bank, Ltd.
New York Branch
55 East 52nd Street
New York, NY 10055
Address for Notices: The Tokai Bank, Ltd.
New York Branch
55 East 52nd Street
New York, NY 10055
Attention: Stuart Schulman
Telecopy: (212) 754-2170
Confirmation: (212) 339-1117
TORONTO DOMINION (TEXAS), INC.
Domestic Lending Office: The Toronto-Dominion Bank,
Houston Agency
909 Fannin Street, Suite 1700
Houston, TX 77010
Eurodollar Lending Office: The Toronto-Dominion Bank,
Houston Agency
909 Fannin Street, Suite 1700
Houston, TX 77010
Address for Notices: The Toronto-Dominion Bank,
USA Division
31 West 52nd Street
New York, NY 10019-6101
Attention: Beth Olmstead
Telecopy: (212) 262-1929
Confirmation: (212) 468-0754
<PAGE>
23
UNITED STATES NATIONAL BANK OF OREGON
Domestic Lending Office: United States National Bank
of Oregon
309 SW 6th Avenue, BB12
Portland, OR 97204
Eurodollar Lending Office: United States National Bank
of Oregon
309 SW 6th Avenue, BB12
Portland, OR 97204
Address for Notices: United States National Bank
of Oregon
309 SW 6th Avenue, BB12
Portland, OR 97204
Attention: Chris Kerlin
Telecopy: (503) 275-5428
Confirmation: (503) 275-4940
WACHOVIA BANK OF GEORGIA, N.A.
Domestic Lending Office: Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
Atlanta, GA 30303
Eurodollar Lending Office: Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
Atlanta, GA 30303
Address for Notices: Wachovia Bank of Georgia, N.A.
191 Peachtree Street, N.E.
28th Floor
Atlanta, GA 30303
Attention: Solomon Elisha
Telecopy: (404) 332-6898
Confirmation: (404) 332-1092
<PAGE>
___________________________________________________________________________
___________________________________________________________________________
COLUMBIA HEALTHCARE CORPORATION
TO
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
______________________
______________________
INDENTURE
DATED AS OF DECEMBER 15, 1993
______________________
______________________
DEBT SECURITIES
___________________________________________________________________________
___________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<C> <S> <C>
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION . . . . . . . . 1
SECTION 101. DEFINITIONS. . . . . . . . . . . . . . . . 1
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS. . . 12
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE. . 13
SECTION 104. NOTICES, ETC., TO TRUSTEE AND COMPANY. . . 13
SECTION 105. NOTICE TO HOLDERS; WAIVER. . . . . . . . . 14
SECTION 106. CONFLICT WITH TRUST INDENTURE ACT. . . . . 14
SECTION 107. EFFECT OF HEADINGS AND TABLE OF
CONTENTS. . . . . . . . . . . . . . . 15
SECTION 108. SUCCESSORS AND ASSIGNS. . . . . . . . . . 15
SECTION 109. SEPARABILITY CLAUSE. . . . . . . . . . . . 15
SECTION 110. BENEFITS OF INDENTURE. . . . . . . . . . . 15
SECTION 111. GOVERNING LAW. . . . . . . . . . . . . . . 15
SECTION 112. LEGAL HOLIDAYS . . . . . . . . . . . . . . 15
SECTION 113. NO SECURITY INTEREST CREATED. . . . . . . 16
SECTION 114. LIABILITY SOLELY CORPORATE. . . . . . . . 16
SECTION 115. COUNTERPARTS. . . . . . . . . . . . . . . 16
ARTICLE TWO
DEBT SECURITY FORMS . . . . . . . . . 16
SECTION 201. FORMS GENERALLY. . . . . . . . . . . . . . 16
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF
AUTHENTICATION . . . . . . . . . . . . 17
ARTICLE THREE
THE DEBT SECURITIES . . . . . . . . . 18
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES. . . 18
SECTION 302. DENOMINATIONS. . . . . . . . . . . . . . . 21
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND
DATING . . . . . . . . . . . . . . . . 21
SECTION 304. TEMPORARY DEBT SECURITIES; GLOBAL NOTES. . 23
SECTION 305. REGISTRATION, TRANSFER AND EXCHANGE. . . . 25
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN
DEBT SECURITIES. . . . . . . . . . . . 26
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS
PRESERVED. . . . . . . . . . . . . . . 26
SECTION 308. CANCELLATION . . . . . . . . . . . . . . . 28
SECTION 309. COMPUTATION OF INTEREST. . . . . . . . . . 28
SECTION 310. CURRENCY OF PAYMENTS IN RESPECT OF DEBT
SECURITIES . . . . . . . . . . . . . . 28
SECTION 311. JUDGMENTS. . . . . . . . . . . . . . . . . 32
</TABLE>
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<TABLE>
<C> <S> <C>
ARTICLE FOUR
SATISFACTION AND DISCHARGE . . . . . . . 32
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE. . 32
SECTION 402. APPLICATION OF TRUST MONEY. . . . . . . . 34
ARTICLE FIVE
REMEDIES . . . . . . . . . . . . 34
SECTION 501. EVENTS OF DEFAULT. . . . . . . . . . . . . 34
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND
ANNULMENT. . . . . . . . . . . . . . . 35
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE. . . . . . . . 36
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM. . . . . 37
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT
POSSESSION OF DEBT SECURITIES. . . . . 38
SECTION 506. APPLICATION OF MONEY COLLECTED . . . . . . 38
SECTION 507. LIMITATION ON SUITS. . . . . . . . . . . . 39
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
PRINCIPAL, PREMIUM AND INTEREST. . . . 39
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES . . . . 40
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE. . . . . . 40
SECTION 511. DELAY OR OMISSION NOT WAIVER. . . . . . . 40
SECTION 512. CONTROL BY HOLDERS. . . . . . . . . . . . 40
SECTION 513. WAIVER OF PAST DEFAULTS. . . . . . . . . . 41
SECTION 514. UNDERTAKING FOR COSTS. . . . . . . . . . . 41
SECTION 515. WAIVER OF STAY OR EXTENSION LAWS. . . . . 42
ARTICLE SIX
THE TRUSTEE . . . . . . . . . . . 42
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES. . . . 42
SECTION 602. NOTICE OF DEFAULT. . . . . . . . . . . . . 43
SECTION 603. CERTAIN RIGHTS OF TRUSTEE. . . . . . . . . 44
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE
OF DEBT SECURITIES . . . . . . . . . . 45
SECTION 605. MAY HOLD DEBT SECURITIES. . . . . . . . . 45
SECTION 606. MONEY HELD IN TRUST. . . . . . . . . . . . 45
SECTION 607. COMPENSATION, INDEMNIFICATION AND
REIMBURSEMENT. . . . . . . . . . . . . 45
SECTION 608. RESIGNATION AND REMOVAL; APPOINTMENT OF
SUCCESSOR. . . . . . . . . . . . . . . 46
SECTION 609. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. . 48
SECTION 610. MERGER, CONVERSION, CONSOLIDATION OR
SUCCESSION TO BUSINESS . . . . . . . . 49
SECTION 611. APPOINTMENT OF AUTHENTICATING AGENT. . . . 50
SECTION 612. PREFERENTIAL COLLECTION OF CLAIMS
AGAINST COMPANY . . . . . . . . . . . 51
</TABLE>
ii
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<TABLE>
<C> <S> <C>
ARTICLE SEVEN
CONCERNING THE HOLDERS . . . . . . . . 52
SECTION 701. ACTS OF HOLDERS. . . . . . . . . . . . . . 52
SECTION 702. PROOF OF OWNERSHIP; PROOF OF EXECUTION OF
INSTRUMENTS BY HOLDERS. . . . . . . . 52
SECTION 703. PERSONS DEEMED OWNERS. . . . . . . . . . . 53
SECTION 704. REVOCATION OF CONSENTS; FUTURE HOLDERS
BOUND. . . . . . . . . . . . . . . . . 53
ARTICLE EIGHT
HOLDERS' MEETINGS . . . . . . . . . . 53
SECTION 801. PURPOSES OF MEETINGS. . . . . . . . . . . 53
SECTION 802. CALL OF MEETINGS BY TRUSTEE. . . . . . . . 54
SECTION 803. CALL OF MEETINGS BY COMPANY OR HOLDERS. . 54
SECTION 804. QUALIFICATIONS FOR VOTING. . . . . . . . . 54
SECTION 805. REGULATIONS. . . . . . . . . . . . . . . . 55
SECTION 806. VOTING . . . . . . . . . . . . . . . . . . 55
SECTION 807. NO DELAY OF RIGHTS BY MEETING. . . . . . . 56
ARTICLE NINE
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE . 56
SECTION 901. COMPANY MAY CONSOLIDATE, ETC., ONLY ON
CERTAIN TERMS. . . . . . . . . . . . . 56
SECTION 902. SUCCESSOR CORPORATION SUBSTITUTED. . . . . 57
ARTICLE TEN
SUPPLEMENTAL INDENTURES . . . . . . . . 57
SECTION 1001. SUPPLEMENTAL INDENTURES WITHOUT CONSENT
OF HOLDERS. . . . . . . . . . . . . . 57
SECTION 1002. SUPPLEMENTAL INDENTURES WITH CONSENT OF
HOLDERS . . . . . . . . . . . . . . . 58
SECTION 1003. EXECUTION OF SUPPLEMENTAL INDENTURES. . . 59
SECTION 1004. EFFECT OF SUPPLEMENTAL INDENTURES. . . . 60
SECTION 1005. CONFORMITY WITH TRUST INDENTURE ACT. . . 60
SECTION 1006. REFERENCE IN DEBT SECURITIES TO
SUPPLEMENTAL INDENTURES. . . . . . . 60
SECTION 1007. NOTICE OF SUPPLEMENTAL INDENTURE. . . . . 60
ARTICLE ELEVEN
COVENANTS . . . . . . . . . . . . 60
SECTION 1101. PAYMENT OF PRINCIPAL, PREMIUM AND
INTEREST. . . . . . . . . . . . . . . 60
SECTION 1102. MAINTENANCE OF OFFICE OR AGENCY. . . . . 61
SECTION 1103. MONEY FOR DEBT SECURITIES; PAYMENTS TO
BE HELD IN TRUST. . . . . . . . . . . 61
SECTION 1104. CORPORATE EXISTENCE. . . . . . . . . . . 62
SECTION 1105. LIMITATION ON MORTGAGES. . . . . . . . . 62
</TABLE>
iii
<PAGE>
<TABLE>
<C> <S> <C>
SECTION 1106. LIMITATION ON SALE AND LEASE-BACK. . . . 64
SECTION 1107. LIMITATION ON INCURRENCE OF INDEBTEDNESS
OR ISSUANCE OF PREFERRED STOCK BY
RESTRICTED SUBSIDIARIES . . . . . . . 65
SECTION 1108. EXEMPTED TRANSACTIONS. . . . . . . . . . 66
SECTION 1109. OFFICERS' CERTIFICATE AS TO DEFAULT. . . 66
ARTICLE TWELVE
REDEMPTION OF DEBT SECURITIES. . . . . . . 67
SECTION 1201. APPLICABILITY OF ARTICLE. . . . . . . . . 67
SECTION 1202. ELECTION TO REDEEM; NOTICE TO TRUSTEE. . 67
SECTION 1203. SELECTION BY TRUSTEE OF DEBT SECURITIES
TO BE REDEEMED. . . . . . . . . . . . 67
SECTION 1204. NOTICE OF REDEMPTION. . . . . . . . . . . 68
SECTION 1205. DEPOSIT OF REDEMPTION PRICE. . . . . . . 68
SECTION 1206. DEBT SECURITIES PAYABLE ON REDEMPTION
DATE. . . . . . . . . . . . . . . . . 69
SECTION 1207. DEBT SECURITIES REDEEMED IN PART. . . . . 69
ARTICLE THIRTEEN
SINKING FUNDS . . . . . . . . . . . 70
SECTION 1301. APPLICABILITY OF ARTICLE. . . . . . . . . 70
SECTION 1302. SATISFACTION OF MANDATORY SINKING FUND
PAYMENTS WITH DEBT SECURITIES . . . . 70
SECTION 1303. REDEMPTION OF DEBT SECURITIES FOR
SINKING FUND. . . . . . . . . . . . . 70
ARTICLE FOURTEEN
DEFEASANCE . . . . . . . . . . . 72
SECTION 1401. APPLICABILITY OF ARTICLE. . . . . . . . . 72
SECTION 1402. DEFEASANCE UPON DEPOSIT OF MONEYS OR
U.S. GOVERNMENT OBLIGATIONS . . . . . 72
SECTION 1403. DEPOSIT MONEYS AND U.S. GOVERNMENT
OBLIGATIONS TO BE HELD IN TRUST . . . 74
SECTION 1404. REPAYMENT TO COMPANY. . . . . . . . . . . 74
</TABLE>
iv
<PAGE>
INDENTURE dated as of December 15, 1993, between
COLUMBIA HEALTHCARE CORPORATION, a Delaware corporation
(hereinafter called the "Company"), having its principal
executive office at 201 West Main Street, Louisville, Kentucky
40202 and The First National Bank of Chicago (hereinafter called
the "Trustee"), having its Corporate Trust Office at One First
National Plaza, Suite 0126, Chicago, Illinois 60670-0126.
RECITALS OF THE COMPANY
The Company has duly authorized the execution and
delivery of this Indenture to provide for the issuance from time
to time of its debentures, notes, bonds or other evidences of
indebtedness (herein generally called the "Debt Securities"), to
be issued in one or more series, as in this Indenture provided.
All things necessary have been done to make this
Indenture a valid agreement of the Company, in accordance with
its terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the
purchase of Debt Securities by the Holders thereof, it is
mutually covenanted and agreed, for the equal and proportionate
benefit of all Holders of Debt Securities or of Debt Securities
of any series, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(1) the terms defined in this Article have the
meanings assigned to them in this Article, and include the
plural as well as the singular;
(2) all other terms used herein which are defined in
the Trust Indenture Act, either directly or by reference
therein, have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with
generally accepted accounting principles, and, except as
otherwise herein expressly provided, the term "generally
accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such
accounting principles as are generally accepted in the
United States of America at the date of such computation;
and
<PAGE>
(4) 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.
Certain terms, used principally in ARTICLE THREE or
ARTICLE SIX, are defined in those respective Articles.
"Act" when used with respect to any Holder has the
meaning specified in SECTION 701.
"Affiliate" of any specified Person means any other
Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified
Person. For the purposes of this definition, "control" when used
with respect to any specified Person means the power to direct
the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities,
by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Affiliated Corporation" means any corporation that is
controlled by the Company but which is not a Subsidiary of the
Company pursuant to the definition of the term "Subsidiary."
"Attributable Debt" means as of the date of
determination, (i) as to any capitalized lease obligations, the
indebtedness carried on the balance sheet in accordance with
generally accepted accounting principles and (ii) as to any
operating leases, the total net amount of rent required to be
paid under such leases during the remaining term thereof,
discounted at the rate of 1% per annum over the weighted average
yield to Stated Maturity of the Outstanding Debt Securities
compounded semi-annually. The net amount of rent required to be
paid under any such lease for any such period shall be the
aggregate amount of the rent payable by the lessee with respect
to such period after excluding amounts required to be paid on
account of maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges. The net amount of
rent required to be paid shall also exclude contingent rent
payments that are based on factors, such as revenue growth, that
are not part of required minimum rent payments. In the case of
any lease which is terminable by the lessee upon the payment of a
penalty, such net amount shall also include the amount of such
penalty, but no rent shall be considered as required to be paid
under such lease subsequent to the first date upon which it may
be so terminated. "Attributable Debt" does not include any
obligation to make payments arising from the transfer of tax
benefits under the United States Economic Recovery Tax Act of
1981 to the extent such obligation is conditioned upon receipt of
payments from another Person.
"Authenticating Agent" has the meaning specified in
SECTION 611.
"Board of Directors" means either the board of
directors of the Company, or any committee of that board duly
authorized to act in respect hereof.
2
<PAGE>
"Board Resolution" means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the
Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification,
and delivered to the Trustee.
"Business Day" when used with respect to any Place of
Payment or any other particular location referred to in this
Indenture or in the Debt Securities means any day that is not a
Saturday, a Sunday or a legal holiday or a day on which banking
institutions or trust companies in that Place of Payment or other
location are authorized or obligated by law to close, except as
otherwise specified pursuant to SECTION 301.
"Code" means the Internal Revenue Code of 1986, as
amended and as in effect on the date hereof.
"Commission" means the Securities and Exchange
Commission, as from time to time constituted, created under the
Securities Exchange Act of 1934, as amended, or if at any time
after the execution of this instrument 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.
"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 Request" and "Company Order" mean,
respectively, a written request or order signed in the name of
the Company by the Chairman, a Vice Chairman, the President, the
Chief Financial Officer or a Vice President and by the Treasurer,
an Assistant Treasurer, the Controller, the Director of Finance,
the Secretary or an Assistant Secretary of the Company, and
delivered to the Trustee.
"Component Currency" has the meaning specified in
SECTION 310(H).
"Consolidated Net Tangible Assets" means the total
amount of assets (less applicable reserves and other properly
deductible items) after deducting therefrom (a) all current
liabilities as disclosed on the consolidated balance sheet of the
Company (excluding any thereof which are by their terms
extendible or renewable at the option of the obligor thereon to a
time more than 12 months after the time as of which the amount
thereof is being computed and further excluding any deferred
income taxes that are included in current liabilities) and (b)
all goodwill, trade names, trademarks, patents, unamortized debt
discount and expense and other like intangible assets, all as set
forth on the most recent consolidated balance sheet of the
Company and computed in accordance with generally accepted
accounting principles.
"Consolidated Stockholders' Equity" means the total
stockholders' equity of the Company and its Consolidated
Subsidiaries, which under generally accepted accounting
principles would appear on a consolidated balance sheet of the
Company and its Subsidiaries, excluding the separate component of
stockholders' equity attributable to foreign currency
3
<PAGE>
translation adjustments pursuant to "Statement of Financial
Accounting Standards No. 52 -- Foreign Currency Translation"
or any successor provision or principle of generally accepted
accounting principles.
"Consolidated Subsidiaries" means those Subsidiaries
that are consolidated with the Company for financial reporting
purposes.
"Conversion Date" has the meaning specified in SECTION
310(D).
"Conversion Event" means the cessation of (i) a Foreign
Currency to be used both by the government of the country which
issued such Currency and for the settlement of transactions by
public institutions of or within the international banking
community, (ii) the ECU to be used both within the European
Monetary System and for the settlement of transactions by public
institutions of or within the European communities, or (iii) any
Currency unit other than the ECU to be used for the purposes for
which it was established.
"Corporate Trust Office" means the principal corporate
trust office of the Trustee at which at any particular time its
corporate trust business shall be administered, which office at
the date of execution of this instrument is located at The First
National Bank of Chicago, One First National Plaza, Suite 0126,
Chicago, Illinois 60670-0126, Attention: Corporate Trust Services
Division.
"Corporation" includes corporations, associations,
companies and business trusts.
"Currency" means Dollars or Foreign Currency.
"Currency Determination Agent" means the New York
Clearing House bank, if any, from time to time selected by the
Company for purposes of SECTION 310; provided that such agent
shall accept such appointment in writing and the terms of such
appointment shall be acceptable to the Company and shall, in the
opinion of the Company at the time of such appointment, require
such agent to make the determinations required by this Indenture
by a method consistent with the method provided in this Indenture
for the making of such decision or determination.
"Debt" means (i) indebtedness for borrowed money by the
Company or a Restricted Subsidiary, (ii) indebtedness of the
Company or a Restricted Subsidiary (including capitalized lease
obligations) for the deferred payment of the purchase price of
property or assets purchased, and (iii) guarantees or other
contingent obligations of the Company or a Restricted Subsidiary
of or for borrowed money of another person or indebtedness of
another person for the deferred payment of the purchase price of
property or assets purchased (other than indebtedness owed by a
Restricted Subsidiary to the Company, by a Restricted Subsidiary
to a Subsidiary or by the Company to a Subsidiary).
4
<PAGE>
"Debt Securities" has the meaning stated in the first
recital of this Indenture and more particularly means any Debt
Securities (including any Global Notes) authenticated and
delivered under this Indenture.
"Defaulted Interest" has the meaning specified in
SECTION 307.
"Depositary" means a clearing agency registered under
the Securities Exchange Act of 1934, as amended, or any successor
thereto, which shall in either case be designated by the Company
pursuant to SECTION 301 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 Debt Securities of any series shall mean the
Depositary with respect to the Debt Securities of that series.
"Discharged" has the meaning specified in SECTION 1402.
"Discount Security" means any Debt Security that is
issued with "original issue discount" within the meaning of
Section 1273(a) of the Code and the regulations thereunder.
"Dollar" or "$" means a dollar or other equivalent unit
in such 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.
"Dollar Equivalent of the Currency Unit" has the
meaning specified in SECTION 310(G).
"Dollar Equivalent of the Foreign Currency" has the
meaning specified in SECTION 310(F).
"ECU" means the European Currency Unit as defined and
revised from time to time by the Council of the European
Communities.
"Election Date" has the meaning specified in SECTION
310(H).
"Event of Default" has the meaning specified in SECTION
501.
"Exchange Rate Officer's Certificate" means a telex or
a certificate setting forth (i) the applicable Market Exchange
Rate and (ii) the Dollar, Foreign Currency or Currency unit
amounts of principal, premium, if any, and any interest
respectively (on an aggregate basis and on the basis of a Debt
Security having the lowest denomination principal amount pursuant
to SECTION 302 in the relevant Currency or Currency unit),
payable on the basis of such Market Exchange Rate sent (in the
case of a telex) or signed (in the case of a certificate) by the
Chief Financial Officer, a Vice President, the Treasurer or any
Assistant Treasurer of the Company.
5
<PAGE>
"Fixed Rate Security" means a Debt Security that
provides for the payment of interest at a fixed rate.
"Floating Rate Security" means a Debt Security that
provides for the payment of interest at a variable rate
determined periodically by reference to an interest rate index or
any other index specified pursuant to SECTION 301.
"Foreign Currency" means a currency issued by the
government of any country other than the United States or a
composite currency or currency unit the value of which is
determined by reference to the values of the currencies of any
group of countries.
"Funded Debt" means any indebtedness for money
borrowed, created, issued, incurred, assumed or guaranteed that
would, in accordance with generally accepted accounting
principles, be classified as long-term debt, but in any event
including all indebtedness for money borrowed, whether secured or
unsecured, maturing more than one year, or extendible at the
option of the obligor to a date more than one year, after the
date of determination thereof (excluding any amount thereof
included in current liabilities).
"Global Note" means a Debt Security evidencing all or
part of a series of Debt Securities that is executed by the
Company and authenticated and delivered to the Depositary or
pursuant to the Depositary's instructions, all in accordance with
this Indenture and pursuant to a Company order, which shall be
registered in the name of the Depositary or its nominee and that
shall represent the amount of uncertificated securities as
specified therein.
"Holder" means a person in whose name a Debt Security
of any series is registered in the Security Register.
"Indenture" means this instrument as originally
executed, or as it may from time to time be supplemented or
amended by one or more indentures supplemental hereto entered
into pursuant to the applicable provisions hereof and, unless the
context otherwise requires, shall include the terms of a
particular series of Debt Securities as established pursuant to
SECTION 301.
"Independent" when used with respect to any specified
Person means such a Person who (i) is in fact independent with
respect to the Company, (ii) does not have any direct financial
interest or any material indirect financial interest in the
Company or in any other obligor upon the Debt Securities or in
any Affiliate of the Company or of such other obligor, and (iii)
is not connected with the Company or such other obligor or any
Affiliate of the Company or of such other obligor, as an officer,
employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.
The term "Interest", when used with respect to a
Discount Security which by its terms bears interest only after
Maturity, means interest payable after Maturity.
"Interest Payment Date" with respect to any Debt
Security means the Stated Maturity of an installment of interest
on such Debt Security.
6
<PAGE>
"Joint Venture Subsidiary" means a Subsidiary of the
Company as of the date of the Indenture of which the Company,
directly or indirectly, owns less than 100% of the voting
securities entitling the holders thereof to elect a majority of
the directors (or, in the case of a partnership, of which the
Company, directly or indirectly, owns less than 100% of the
general partnership interests therein).
"Market Exchange Rate" means (i) for any conversion
involving a Currency unit on the one hand and Dollars or any
Foreign Currency on the other, the exchange rate between the
relevant Currency unit and Dollars or such Foreign Currency
calculated by the method specified pursuant to SECTION 301 for
the securities of the relevant series, (ii) for any conversion of
Dollars into any Foreign Currency, the noon (New York City time)
buying rate for such Foreign Currency for cable transfers quoted
in New York City as certified for customs purposes by the Federal
Reserve Bank of New York, and (iii) for any conversion of one
Foreign currency into Dollars or another Foreign Currency, the
spot rate at noon local time in the relevant market at which, in
accordance with normal banking procedures, the Dollars or Foreign
Currency into which conversion is being made could be purchased
with the Foreign Currency from which conversion is being made
from major banks located in New York City, London or any other
principal market for Dollars or such purchased Foreign Currency.
In the event of the unavailability of any of the exchange rates
provided for in the foregoing clauses (i), (ii) and (iii) the
Currency Determination Agent shall use, in its sole discretion
and without liability on its part, such quotation of the Federal
Reserve Bank of New York as of the most recent available date, or
quotations from one or more major banks in New York City, London
or any other principal market for such Currency or Currency unit
in question, or such other quotations as the Currency
Determination Agent shall deem appropriate. Unless otherwise
specified by the Currency Determination Agent if there is more
than one market for dealing in any currency or Currency unit by
reason of foreign exchange regulations or otherwise, the market
to be used in respect of such Currency or Currency unit shall be
that upon which a nonresident issuer of securities designated in
such Currency or Currency unit would purchase such Currency or
Currency unit in order to make payments in respect of such
securities.
"Maturity" when used with respect to any Debt Security
means the date on which the principal of such Debt Security or an
installment of principal becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration
of acceleration, call for redemption, repayment at the option of
the Holder thereof or otherwise.
"Mortgages" means mortgages, liens, pledges or other
encumbrances.
"Officers' Certificate" means a certificate signed by
the Chairman, a Vice Chairman, the President, the Chief Financial
Officer or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Controller, the Secretary or an Assistant
Secretary of the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of
counsel, who may be counsel to the Company (including an employee
of the Company) and who shall be reasonably satisfactory to the
Trustee, which is delivered to the Trustee.
7
<PAGE>
"Outstanding" when used with respect to Debt
Securities, means, as of the date of determination, all Debt
Securities theretofore authenticated and delivered under this
Indenture, except:
(i) Debt Securities theretofore canceled by the
Trustee or delivered to the Trustee for cancellation;
(ii) Debt Securities for whose payment or redemption
money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by
the Company (if the Company shall act as its own Paying
Agent) for the Holders of such Debt Securities and any
coupons thereto appertaining; PROVIDED, HOWEVER, that if
such Debt Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or
provision therefor satisfactory to the Trustee has been
made; and
(iii) Debt Securities which have been surrendered
pursuant to SECTION 306 or in exchange for or in lieu of
which other Debt Securities have been authenticated and
delivered pursuant to this Indenture, other than any such
Debt Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such
Debt Securities are held by a BONA FIDE purchaser in whose
hands such Debt Securities are valid obligations of the
Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the
requisite principal amount of Debt Securities outstanding have
performed any Act hereunder, Debt Securities owned by the Company
or any other obligor upon the Debt Securities or any Affiliate of
the Company or of such other obligor shall be disregarded and
deemed not to be Outstanding, except that, in determining whether
the Trustee shall be protected in relying upon any such Act, only
Debt Securities that the Trustee knows to be so owned shall be so
disregarded. Debt Securities so owned that 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 to act with respect to such Debt Securities and that the
pledgee is not the Company or any other obligor upon the Debt
Securities or any Affiliate of the Company or of such other
obligor. In determining whether the Holders of the requisite
principal amount of Outstanding Debt Securities have performed
any Act hereunder, the principal amount of a Discount Security
that shall be deemed to be Outstanding for such purpose 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 502 and
the principal amount of a Debt Security denominated in a Foreign
Currency that shall be deemed to be Outstanding for such purpose
shall be the amount calculated pursuant to SECTION 310(j).
"Overdue Rate," when used with respect to any series of
the Debt Securities, means the rate designated as such in or
pursuant to the Board Resolution or the supplemental indenture,
as the case may be, relating to such series as contemplated by
SECTION 301.
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"Paying Agent" means any Person authorized by the
Company to pay the principal of (and premium, if any) or interest
on any Debt Securities on behalf of the Company.
"Permitted Subsidiary Refinancing Debt" means Debt of
any Subsidiary, the proceeds of which are used to renew, extend,
refinance or refund outstanding Debt of such Subsidiary, PROVIDED
that such Debt is scheduled to mature no earlier than the Debt
being renewed, extended, refinanced or refunded; PROVIDED,
FURTHER, that such Debt shall be Permitted Subsidiary Refinancing
Debt only to the extent that the aggregate principal amount of
such Debt (or, if such Debt is issued at a price less than the
principal amount thereof, the aggregate amount of gross proceeds
therefrom) does not exceed the aggregate principal amount then
outstanding under the Debt being renewed, extended, refinanced or
refunded (or if the Debt being renewed, extended, refinanced or
refunded, was issued at a price less than the principal amount
thereof, then not in excess of the amount of liability in respect
thereof determined in accordance with generally accepted
accounting principles.)
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, estate, unincorporated organization or government or any
agency or political subdivision thereof.
"Place of Payment" when used with respect to the Debt
Securities of any series means the place or places where the
principal of (and premium, if any) and interest on the Debt
Securities of that series are payable as specified pursuant to
SECTION 301.
"Predecessor Security" of any particular Debt Security
means every previous Debt Security evidencing all or a portion of
the same debt as that evidenced by such particular Debt Security;
and, for the purposes of this definition, any Debt Security
authenticated and delivered under SECTION 306 in lieu of a
mutilated, lost, destroyed or stolen Debt Security or a Debt
Security to which a mutilated, lost, destroyed or stolen Coupon
appertains shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Debt Security or the Debt
Security to which the mutilated, lost, destroyed or stolen Coupon
appertains, as the case may be.
"Preferred Stock" of any Person means any capital stock
of such Person which by its terms or by the terms of any security
into which it is convertible or exchangeable is preferred as to
the payment of dividends or upon liquidation to any class of the
common stock of such Person or which matures or is mandatorily
redeemable at the option of the holder thereof, in whole or in
part, on or prior to the maturity date of any Outstanding Debt
Securities.
"Principal Property" means each acute care hospital
providing general medical and surgical services (excluding
equipment, personal property and hospitals that primarily provide
specialty medical services, such as psychiatric and obstetrical
and gynecological services) owned solely by the Company and/or
one or more of its Subsidiaries and located in the United States
of America.
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"Redemption Date" means the date fixed for redemption
of any Debt Security pursuant to this Indenture which, in the
case of a Floating Rate Security, unless otherwise specified
pursuant to SECTION 301, shall be an Interest Payment Date only.
"Redemption Price" means, in the case of a Discount
Security, the amount of the principal thereof that would be due
and payable as of the Redemption Date upon a declaration of
acceleration of the maturity thereof pursuant to SECTION 502, and
in the case of any other Debt Security, the principal amount
thereof, plus, in each case, premium, if any, and accrued and
unpaid interest, if any, to the Redemption Date.
"Regular Record Date" for the interest payable on the
Debt Securities of any series on any Interest Payment Date means
the date specified for the purpose pursuant to SECTION 301 for
such Interest Payment Date.
"Responsible Officer" when used with respect to the
Trustee means any Vice President, the Secretary, any Assistant
Secretary, any Trust Officer or Assistant Trust Officer, or any
other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular
subject.
"Restricted Subsidiary" means (a) any Subsidiary other
than an Unrestricted Subsidiary and (b) any Subsidiary which was
an Unrestricted Subsidiary but which, subsequent to the date
hereof, is designated by the Company (by Board Resolution) to be
a Restricted Subsidiary; PROVIDED, HOWEVER, that the Company may
not designate any such Subsidiary to be a Restricted Subsidiary
if the Company would thereby breach any covenant or agreement
contained in the Indenture (on the assumption that any
transaction to which such Subsidiary was a party at the time of
such designation and which would have given rise to Debt or
Preferred Stock or constituted a Sale and Leaseback Transaction
at the time it was entered into had such Subsidiary then been a
Restricted Subsidiary was entered into at the time of such
designation).
"Security Register" and "Security Registrar" have the
respective meanings specified in SECTION 305(A).
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to SECTION
307.
"Specified Amount" has the meaning specified in SECTION
310(H).
"Stated Maturity" when used with respect to any Debt
Security or any installment of principal thereof or premium
thereon or interest thereon means the date specified in such Debt
Security as the date on which the principal of such Debt Security
or such installment of principal, premium or interest is due and
payable.
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"Subsidiary" means (i) any corporation of which at
least a majority of the outstanding stock having by the terms
thereof ordinary voting power to elect a majority of the
directors of such corporation, irrespective of whether or not at
the time stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening
of any contingency, is at the time, directly or indirectly, owned
or controlled by the Company or by one or more Subsidiaries
thereof, or by the Company and one or more Subsidiaries or (ii)
any partnership or joint venture of which at least a majority of
the equity ownership, whether in the form of membership, general,
special or limited partnership interests or otherwise, is
directly or indirectly owned or controlled by the Company or by
one or more Subsidiaries thereof, or by the Company and one or
more Subsidiaries; PROVIDED, HOWEVER, that said term shall not
include any corporation or partnership controlled by the Company
(herein referred to as an "Affiliated Entity") which:
(a) does not transact any substantial portion of its
business or regularly maintain any substantial portion of
its operating assets within the continental limits of the
United States of America;
(b) is principally engaged in the business of
financing (including, without limitation, the purchase,
holding, sale or discounting of or lending upon any notes,
contracts, leases or other forms of obligations) the sale or
lease of merchandise, equipment or services (1) by the
Company, or (2) by a Subsidiary (whether such sales or
leases have been made before or after the date when such
corporation or partnership became a Subsidiary), or (3) by
another Affiliated Entity, or (4) by any corporation or
partnership prior to the time when substantially all its
assets have heretofore been or shall hereafter have been
acquired by the Company;
(c) is principally engaged in the business of owning,
leasing, dealing in or developing real property;
(d) is principally engaged in the holding of stock in,
and/or the financing of operations of, an Affiliated Entity;
or
(e) is principally engaged in the business of (i)
offering health benefit products or (ii) insuring against
professional and general liability risks of the Company.
"Trust Indenture Act" means the Trust Indenture Act of
1939 as in force at the date as of which this instrument was
executed, except as provided in SECTION 1005.
"Trustee" means the Person named as the "Trustee" in
the first paragraph of this instrument until a successor Trustee
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Trustee" shall 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 Debt Securities of any series, shall mean the
Trustee with respect to Debt Securities of such series.
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"U.S. Government Obligations" has the meaning specified
in SECTION 1402.
"Unrestricted Subsidiary" means (a) any Subsidiary
acquired or organized after the date hereof, PROVIDED, HOWEVER,
that such Subsidiary is not a successor, directly or indirectly,
to, and does not directly or indirectly own any equity interest
in, any Restricted Subsidiary; (b) any Subsidiary the principal
business of which consists of obtaining financing in capital
markets outside the United States of America or financing the
acquisition or disposition of machinery, equipment, inventory,
accounts receivable and other real, personal and intangible
property by Persons including the Company or a Subsidiary; (c)
any Subsidiary the principal business of which is owning,
leasing, dealing in or developing real property for residential
or office building purposes or land, buildings or related real
property owned by the Company or any Subsidiary as of the date of
the Indenture; (d) any Joint Venture Subsidiary; or (e) stock or
other securities of an Unrestricted Subsidiary of the character
described in clauses (a) through (d) of this definition, unless
and until, in each of the cases specified in this paragraph, any
such Subsidiary shall have been designated to be a Restricted
Subsidiary pursuant to clause (b) of the definition of
"Restricted Subsidiary."
"Valuation Date" has the meaning specified in SECTION
310(C).
"Vice President" includes with respect to the Company
and the Trustee, any Vice President of the Company or the
Trustee, as the case may be, whether or not designated by a
number or word or words added before or after the title "Vice
President."
"Wholly Owned Subsidiary" means a Subsidiary of which
all of the stock (other than directors' qualifying shares) is at
the time, directly or indirectly, owned by the Company, and/or by
one or more Wholly Owned Subsidiaries of the Company.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the
Trustee to take any action under any provision of this Indenture,
the Company shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent, if any, 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, if any, have been
complied with, except that in the case of any such application or
request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating
to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance
with a condition or covenant provided for in this Indenture shall
include:
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition
and the definitions herein relating thereto;
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(2) 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;
(3) a statement that, in the opinion of each such
individual, 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
(4) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been
complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Any certificate 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, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with
respect to the matters upon which his certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect
to such factual matters is in the possession of the Company,
unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated and form one instrument.
SECTION 104. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any Act of Holders or other document provided or
permitted by this Indenture to be made upon, given or furnished
to, or filed with:
(1) the Trustee by any Holder or by the Company shall
be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if made, given, furnished or
filed in writing to or with the Trustee at its Corporate
Trust Office, Attention: Corporate Trust Services Division;
or
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(2) the Company by the Trustee or by any Holder shall
be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing and mailed,
first-class postage prepaid or airmail postage prepaid if
sent from outside the United States, to the Company
addressed to it at the address of its principal office
specified in the first paragraph of this instrument, to the
attention of its Treasurer, or at any other address
previously furnished in writing to the Trustee by the
Company.
Any such Act or other document shall be in the English
language, except that any published notice may be in an official
language of the country of publication.
SECTION 105. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice to Holders of
any event, such notice shall be sufficiently given to Holders
(unless otherwise herein expressly provided) if in writing and
mailed, first-class postage prepaid, to such Holders as their
names and addresses appear in the Security Register, within the
time prescribed; provided, however, that any notice to Holders of
Floating Rate Securities regarding the determination of a
periodic rate of interest, if such notice is required pursuant to
SECTION 301, shall be sufficiently given if given in the manner
specified pursuant to SECTION 301.
In the event of suspension of regular mail service or
by reason of any other cause it shall be impracticable to give
notice by mail, such notification shall be given by telex,
telecopy or other facsimile transmission.
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 on such waiver. In any case where notice to 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, and any notice which is mailed in the manner herein
provided shall be conclusively presumed to have been duly given.
SECTION 106. CONFLICT WITH TRUST INDENTURE ACT.
If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with another provision
included in this Indenture by operation of Sections 310 to 317,
inclusive, of the Trust Indenture Act (an "incorporated
provision"), such incorporated provision shall control.
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SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table
of Contents are for convenience only and shall not affect the
construction hereof.
SECTION 108. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the
parties hereto shall bind their respective successors and assigns
and inure to the benefit of their permitted successors and
assigns, whether so expressed or not.
SECTION 109. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Debt
Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
SECTION 110. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Debt Securities,
express or implied, shall give to any Person, other than the
parties hereto, any Security Registrar, any Paying Agent and
their successors hereunder, and the Holders, any benefit or any
legal or equitable right, remedy or claim under this Indenture.
SECTION 111. GOVERNING LAW.
This Indenture and the Debt Securities shall be deemed
to be contracts made and to be performed entirely in the State of
New York, and for all purposes shall be governed by and construed
in accordance with the laws of said State without regard to the
conflicts of law rules of said State.
SECTION 112. LEGAL HOLIDAYS.
Unless otherwise specified pursuant to SECTION 301 or
in any Debt Security, in any case where any Interest Payment
Date, Redemption Date or Stated Maturity of any Debt Security of
any series shall not be a Business Day at any Place of Payment
for the Debt Securities of that series, then (notwithstanding any
other provision of this Indenture or of the Debt Securities)
payment of principal (and premium, if any) or interest need not
be made at such Place of Payment on such date, but may be made on
the next succeeding Business Day at such Place of Payment with
the same force and effect as if made on the Interest Payment
Date, Redemption Date or at the Stated Maturity, and no interest
shall accrue on the amount so payable for the period from and
after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be, to such Business Day if such
payment is made or duly provided for on such Business Day.
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SECTION 113. NO SECURITY INTEREST CREATED.
Nothing in this Indenture or in the Debt Securities,
express or implied, shall be construed to constitute a security
interest under the Uniform Commercial Code or similar
legislation, as now or hereafter enacted and in effect in any
jurisdiction where property of the Company or its Subsidiaries is
or may be located.
SECTION 114. LIABILITY SOLELY CORPORATE.
No recourse shall be had for the payment of the
principal of (or premium, if any) or the interest on any Debt
Securities, or any part thereof, or of the indebtedness
represented thereby, or upon any obligation, covenant or
agreement of this Indenture, against any incorporator, or against
any stockholder, officer or director, as such, past, present or
future, of the Company (or any incorporator, stockholder, officer
or director of any predecessor or successor corporation), either
directly or through the Company (or any such predecessor or
successor corporation), whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment
or penalty or otherwise; it being expressly agreed and understood
that this Indenture and all the Debt Securities are solely
corporate obligations, and that no personal liability whatsoever
shall attach to, or be incurred by, any such incorporator,
stockholder, officer or director, past, present or future, of the
Company (or any incorporator, stockholder, officer or director of
any such predecessor or successor corporation), either directly
or indirectly through the Company or any such predecessor or
successor corporation, because of the indebtedness hereby
authorized or under or by reason of any of the obligations,
covenants, promises or agreements contained in this Indenture or
in any of the Debt Securities or to be implied herefrom or
therefrom; and that any such personal liability is hereby
expressly waived and released as a condition of, and as part of
the consideration for, the execution of this Indenture and the
issue of securities; PROVIDED, HOWEVER, that nothing herein or in
the Debt Securities contained shall be taken to prevent recourse
to and the enforcement of the liability, if any, of any
stockholder or subscriber to capital stock upon or in respect of
the shares of capital stock not fully paid.
SECTION 115. 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.
ARTICLE TWO
DEBT SECURITY FORMS
SECTION 201. FORMS GENERALLY.
The Debt Securities of each series shall be
substantially in one of the forms (including global form)
established in or pursuant to a Board Resolution or one or more
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indentures supplemental hereto, and shall have such appropriate
insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification or designation
and such legends or endorsements placed thereon as the Company
may deem appropriate and as are not inconsistent with the
provisions of this Indenture, or as may be required to comply
with any law or with any rule or regulation made pursuant thereto
or with any rule or regulation of any securities exchange on
which any series of the Debt Securities may be listed, or to
conform to usage, all as determined by the officers executing
such Debt Securities as conclusively evidenced by their execution
of such Debt Securities. If the form of a series of Debt
Securities (or any Global Note) is established in or pursuant to
a Board Resolution, a copy of such Board Resolution shall be
delivered to the Trustee, together with an Officers' Certificate
setting forth the form of such series, at or prior to the
delivery of the Company Order contemplated by SECTION 303 for the
authentication and delivery of such Debt Securities (or any such
Global Note).
The definitive Debt Securities of each series shall be
printed, lithographed or engraved or produced by any combination
of these methods on steel engraved borders or may be produced in
any other manner, all as determined by the officers executing
such Debt Securities, as conclusively evidenced by their
execution of such Debt Securities.
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The form of the Trustee's certificate of authentication
to be borne by the Debt Securities shall be substantially as
follows:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the series of Debt Securities issued
under the within mentioned Indenture.
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By _________________________________
Authorized Signatory
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ARTICLE THREE
THE DEBT SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.
The aggregate principal amount of Debt Securities that
may be authenticated and delivered under this Indenture is
unlimited.
The Debt Securities may be issued in one or more
series. There shall be established in or pursuant to a Board
Resolution and (subject to SECTION 303) set forth in an Officers'
Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Debt Securities of
any series:
(1) the title of the Debt Securities of the series
(which shall distinguish the Debt Securities of such series
from all other series of Debt Securities);
(2) the limit, if any, upon the aggregate principal
amount of the Debt Securities of the series that may be
authenticated and delivered under this Indenture (except for
Debt Securities authenticated and delivered upon transfer
of, or in exchange for, or in lieu of, other Debt Securities
of such series pursuant to SECTIONS 304, 305, 306, 1006 or
1207);
(3) the date or dates on which or periods during which
the Debt Securities of the series may be issued, and the
date or dates (or the method of determination thereof) on
which the principal of (and premium, if any, on) the Debt
Securities of such series are or may be payable (which, if
so provided in such Board Resolution or supplemental
indenture may be determined by the Company from time to time
and set forth in the Debt Securities of the series issued
from time to time);
(4) the rate or rates (or the method of determination
thereof) at which the Debt Securities of the series shall
bear interest, if any, and the dates from which such
interest shall accrue (which, in either case or both, if so
provided in such Board Resolution or supplemental indenture
may be determined by the Company from time to time and set
forth in the Debt Securities of the series issued from time
to time), the Interest Payment Dates on which such interest
shall be payable (or the method of determination thereof),
and the Regular Record Dates for the interest payable on
such Interest Payment Dates and, in the case of Floating
Rate Securities, the notice, if any, to Holders regarding
the determination of interest and the manner of giving such
notice, and the extent to which, or the manner in which, any
interest payable on any Global Note on an Interest Payment
Date will be paid if other than in the manner provided in
SECTION 307;
(5) the place or places, if any, in addition to or
instead of the Corporate Trust Office of the Trustee, where
the principal of (and premium, if any) and interest on Debt
Securities of the series shall be payable;
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(6) the obligation, if any, of the Company to redeem
or purchase Debt Securities of the series pursuant to any
sinking fund or analogous provisions or at the option of the
Holder and the period or periods within which or the dates
on which, the prices at which and the terms and conditions
upon which Debt Securities of the series shall be redeemed,
repaid or purchased, in whole or in part, pursuant to such
obligation;
(7) the period or periods within which or the date or
dates on which, the price or prices at which and the terms
and conditions upon which Debt Securities of the series may
be redeemed, if any, in whole or in part, at the option of
the Company or otherwise;
(8) if the coin or Currency in which the Debt
Securities shall be issuable is in Dollars, the
denominations of such Debt Securities if other than
denominations of $1,000 and any integral multiple thereof
(except as provided in SECTION 304);
(9) whether the Debt Securities of the series are to
be issued as Discount Securities and the amount of discount
with which such Debt Securities may be issued and, if other
than the principal amount thereof, the portion of the
principal amount of Debt Securities of the series which
shall be payable upon declaration of acceleration of the
Maturity thereof pursuant to SECTION 502;
(10) provisions, if any, for the defeasance of Debt
Securities of the series;
(11) If other than Dollars, the Foreign Currency or
Currencies in which Debt Securities of the series shall be
denominated, or in which payment of the principal of (and/or
premium, if any) and/or interest on the Debt Securities of
the series may be made, and the particular provisions
applicable thereto and, if applicable, the amount of Debt
Securities of the series which entitles the Holder of a Debt
Security of the series or proxy to one vote for purposes of
SECTION 805;
(12) if the principal of (and premium, if any) or
interest on Debt Securities of the series are to be payable,
at the election of the Company or a Holder thereof, in a
Currency other than that in which the Debt Securities are
denominated or payable without such election, in addition or
in lieu of the provisions of SECTION 310, the period or
periods within which and the terms and conditions upon which
such election may be made and the time and the manner of
determining the exchange rate or rates between the Currency
or Currencies in which the Debt Securities are denominated
or payable without such election and the Currency or
Currencies in which the Debt Securities are to be paid if
such election is made;
(13) the date as of which any global Debt Security
representing any Outstanding Debt Securities of the series
shall be dated if other than the date of original issuance
of the first Debt Security of the series to be issued;
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(14) if the amount of payments of principal of (and
premium, if any) or interest on the Debt Securities of the
series may be determined with reference to an index
including, but not limited to, an index based on a Currency
or Currencies other than that in which the Debt Securities
are denominated or payable, or any other type of index, the
manner in which such amounts shall be determined;
(15) if the Debt Securities of the series are
denominated or payable in a Foreign Currency, any other
terms concerning the payment of principal of (and premium,
if any) or any interest on such Debt Securities (including
the Currency or Currencies of payment thereof);
(16) the designation of the original Currency
Determination Agent;
(17) the applicable Overdue Rate, if any;
(18) if the Debt Securities of the series do not bear
interest, the applicable dates for purposes of SECTION
312(a) of the Trust Indenture Act;
(19) any addition to, or modification or deletion of,
any Events of Default or covenants provided for with respect
to Debt Securities of the series;
(20) whether the Debt Securities of the series shall be
issued in whole or in part in the form of one or more Global
Notes and, in such case, the Depositary for such Global Note
or Notes; and
(21) any other terms of the series (which terms shall
not be inconsistent with the provisions of this Indenture).
All Debt Securities of any one series shall be
substantially identical except as to denomination, rate of
interest, Stated Maturity and the date from which interest, if
any, shall accrue, which, as set forth above, may be determined
by the Company from time to time as to Debt Securities of a
series if so provided in or established pursuant to the authority
granted in a Board Resolution or in any such indenture
supplemental hereto, and except as may otherwise be provided in
or pursuant to such Board Resolution and (subject to SECTION 303)
set forth in such Officers' Certificate, or in any such indenture
supplemental hereto. All Debt Securities of any one series need
not be issued at the same time, and unless otherwise provided, a
series may be reopened for issuance of additional Debt Securities
of such series.
If any of the terms of a series of Debt Securities is
established in or pursuant to a Board Resolution, a copy of such
Board Resolution shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee
at or prior to the delivery of the Officers' Certificate setting
forth the terms of the series.
SECTION 302. DENOMINATIONS.
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In the absence of any specification pursuant to SECTION
301 with respect to Debt Securities of any series, the Debt
Securities of such series shall be issuable only in registered
form and in denominations of $1,000 and any integral multiple
thereof and shall be payable only in Dollars.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Debt Securities of any series shall be executed on
behalf of the Company by its Chairman, a Vice Chairman, its
President, its Chief Financial Officer, one of its Vice
Presidents or its Treasurer, under its corporate seal reproduced
thereon and attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers may be
manual or facsimile.
Debt Securities bearing the manual or facsimile
signatures of individuals who were at any time the proper
officers of the Company shall bind the Company, notwithstanding
that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Debt
Securities or did not hold such offices at the date of such Debt
Securities.
At any time and from time to time after the execution
and delivery of this Indenture, the Company may deliver Debt
Securities of any series, executed by the Company, to the Trustee
for authentication, together with a Company Order for the
authentication and delivery of such Debt Securities, and the
Trustee in accordance with the Company Order shall authenticate
and deliver such Debt Securities. If all the Debt Securities of
any one series are not to be issued at one time and if a Board
Resolution or supplemental indenture relating to such series
shall so permit, such Company Order may set forth procedures
acceptable to the Trustee for the issuance of such Debt
Securities such as interest rate, Stated Maturity, date of
issuance and date from which interest, if any, shall accrue.
The Trustee shall be entitled to receive, and (subject
to any incorporated provisions) shall be fully protected in
relying upon, prior to the authentication and delivery of the
Debt Securities of a particular series, (i) the supplemental
indenture or the Board Resolution by or pursuant to which the
form and terms of such Debt Securities have been approved and
(ii) an Opinion of Counsel stating that:
(1) all instruments furnished by the Company to the
Trustee in connection with the authentication and delivery
of such Debt Securities conform to the requirements of this
Indenture and constitute sufficient authority hereunder for
the Trustee to authenticate and deliver such Debt
Securities;
(2) the forms and terms of such Debt Securities have
been established in conformity with the provisions of this
Indenture;
(3) in the event that the forms or terms of such Debt
Securities have been established in a supplemental
indenture, the execution and delivery of such supplemental
indenture has been duly authorized by all necessary
corporate action of the Company,
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such supplemental indenture has been duly executed and
delivered by the Company and, assuming due authorization,
execution and delivery by the Trustee, is a valid and
binding obligation enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights
generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law);
(4) the execution and delivery of such Debt Securities
have been duly authorized by all necessary corporate action
of the Company and such Debt Securities have been duly
executed by the Company, and, assuming due authentication by
the Trustee and delivery by the Company, are valid and
binding obligations enforceable against the Company in
accordance with their terms, entitled to the benefit of the
Indenture, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and
subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a
proceeding in equity or at law) and subject to such other
exceptions as counsel shall request and as to which the
Trustee shall not reasonably object; and
(5) the amount of Debt Securities Outstanding of such
series, together with the amount of such Debt Securities,
does not exceed any limit established under the terms of
this Indenture on the amount of Debt Securities of such
series that may be authenticated and delivered.
The Trustee shall not be required to authenticate such
Debt Securities if the issuance of such Debt Securities pursuant
to this Indenture will affect the Trustee's own rights, duties or
immunities under the Debt Securities and this Indenture in a
manner which is not reasonably acceptable to the Trustee.
Each Debt Security shall be dated the date of its
authentication.
No Debt Security shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless
there appears on such Debt Security a certificate of
authentication substantially in one of the forms provided for
herein duly executed by the Trustee or by an Authenticating
Agent, and such certificate upon any Debt Security shall be
conclusive evidence, and the only evidence, that such Debt
Security has been duly authenticated and delivered hereunder and
is entitled to the benefits of this Indenture. Notwithstanding
the foregoing, if any Debt Security shall have been duly
authenticated and delivered hereunder but never issued and sold
by the Company, and the Company shall deliver such Debt Security
to the Trustee for cancellation as provided in SECTION 308
together with a written statement (which need not comply with
SECTION 102) stating that such Debt Security has never been
issued and sold by the Company, for all purposes of this
Indenture such Debt Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled
to the benefits of this Indenture.
SECTION 304. TEMPORARY DEBT SECURITIES; GLOBAL NOTES.
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(a) Pending the preparation of definitive Debt
Securities of any series, the Company may execute, and upon
Company Order the Trustee shall authenticate and deliver,
temporary Debt Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any
authorized denomination for Debt Securities of such series,
substantially of the tenor of the definitive Debt Securities in
lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the
officers executing such Debt Securities may determine, as
conclusively evidenced by their execution of such Debt
Securities. Every such temporary Debt Security shall be executed
by the Company and shall be authenticated and delivered by the
Trustee upon the same conditions and in substantially the same
manner, and with the same effect, as the definitive Debt
Securities in lieu of which they are issued.
If temporary Debt Securities of any series are issued,
the Company will cause definitive Debt Securities of such series
to be prepared without unreasonable delay. After the preparation
of definitive Debt Securities of such series, the temporary Debt
Securities of such series shall be exchangeable for definitive
Debt Securities of such series, of a like Stated Maturity and
with like terms and provisions, upon surrender of the temporary
Debt Securities of such series at the office or agency of the
Company in a Place of Payment for such series, without charge to
the Holder, except as provided in SECTION 305 in connection with
a transfer. Upon surrender for cancellation of any one or more
temporary Debt Securities of any series, the Company shall
execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Debt
Securities of the same series of authorized denominations and of
a like Stated Maturity and like terms and provisions. Until so
exchanged, the temporary Debt Securities of any series shall in
all respects be entitled to the same benefits under this
Indenture as definitive Debt Securities of such series.
(b) If the Company shall establish pursuant to SECTION
301 that the Debt Securities of a series are to be issued in
whole or in part in the form of one or more Global Notes, then
the Company shall execute and the Trustee shall, in accordance
with SECTION 303 and the Company Order with respect to such
series, authenticate and deliver one or more Global Notes in
temporary or permanent form that (i) shall represent and shall be
denominated in an amount equal to the aggregate principal amount
of the outstanding Debt Securities of such series to be
represented by one or more Global Notes, (ii) shall be registered
in the name of the Depositary for such Global Note or Notes or
the nominee of such Depositary, (iii) shall be delivered by the
Trustee to such Depositary or pursuant to such Depositary's
instruction, and (iv) shall bear a legend substantially to the
following effect: "Unless and until it is exchanged in whole or
in part for Debt Securities in definitive form, this Debt
Security may not be transferred except 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
or by the Depositary or any such nominee to a successor
Depositary or a nominee of such successor Depositary."
Notwithstanding any other provision of this Section or
SECTION 305, unless and until it is exchanged in whole or in part
for Debt Securities in definitive form, a Global Note
representing all or a portion of the Debt 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
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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.
If at any time the Depositary for the Debt Securities
of a series notifies the Company that it is unwilling or unable
to continue as Depositary for the Debt Securities of such series
or if at any time the Depositary for Debt Securities of a series
shall no longer be registered or in good standing under the
Securities Exchange Act of 1934, as amended, or other applicable
statute or regulation, the Company shall appoint a successor
Depositary with respect to the Debt Securities of such series.
If a successor Depositary for the Debt Securities of such series
is not appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such condition, the
Company will execute, and the Trustee, upon receipt of a Company
Order for the authentication and delivery of definitive Debt
Securities of such series, will authenticate and deliver, Debt
Securities of such series in definitive form in an aggregate
principal amount equal to the principal amount of the Global Note
or Notes representing such series in exchange for such Global
Note or Notes.
The Company may at any time and in its sole discretion
determine that the Debt Securities of any series issued in the
form of one or more Global Notes shall no longer be represented
by such Global Note or Notes. In such event, the Company will
execute, and the Trustee, upon receipt of a Company Order for the
authentication and delivery of definitive Debt Securities of such
series, will authenticate and deliver, Debt Securities of such
series in definitive form and in an aggregate principal amount
equal to the principal amount of the Global Note or Notes
representing such series in exchange for such Global Note or
Notes.
If specified by the Company pursuant to SECTION 301
with respect to Debt Securities of a series, the Depositary for
such series of Debt Securities may surrender a Global Note for
such series of Debt Securities in exchange in whole or in part
for Debt Securities of such series in definitive 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 charge:
(i) to each Person specified by the Depositary a new
Debt Security or Securities of the same series of any
authorized denomination as requested by such Person in
aggregate principal amount equal to and in exchange for such
Person's beneficial interest in the Global Note; and
(ii) to the Depositary a new Global Note in a
denomination equal to the difference, if any, between the
principal amount of the surrendered Global Note and the
aggregate principal amount of Debt Securities delivered to
Holders thereof.
Upon the exchange of a Global Note for Debt Securities
in definitive form, such Global Note shall be canceled by the
Trustee. Debt Securities issued in exchange for a Global Note
pursuant to this SECTION 304 shall be registered in such names
and in such authorized denominations as the Depositary for such
Global Note, pursuant to instructions from its direct
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or indirect participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Debt Securities to the
persons in whose names such Debt Securities are so registered.
SECTION 305. REGISTRATION, TRANSFER AND EXCHANGE.
(a) The Company shall cause to be kept at the
Corporate Trust Office of the Trustee a register (the registers
maintained in such office and in any other office or agency of
the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which,
subject to such reasonable regulations as it may prescribe, the
Company shall provide for the registration of the Debt Securities
and of transfers and exchanges of the Debt Securities. The
Trustee is hereby appointed "Security Registrar" for the purpose
of registering the Debt Securities and registering transfers and
exchanges of the Debt Securities as herein provided; PROVIDED,
HOWEVER, that the Company may appoint co-Security Registrars.
Upon surrender for registration of transfer of any Debt
Security of any series at the office or agency of the Company
maintained for such purpose, the Company shall execute, and the
Trustee shall authenticate and deliver, in the name of the
designated transferee, one or more new Debt Securities of the
same series of like aggregate principal amount of such
denominations as are authorized for Debt Securities of such
series and of a like Stated Maturity and with like terms and
conditions.
At the option of the Holder, Debt Securities of any
series (except Global Notes) may be exchanged for other Debt
Securities of the same series of like aggregate principal amount
and of a like Stated Maturity and with like terms and conditions,
upon surrender of the Debt Securities to be exchanged at such
office or agency. Whenever any Debt Securities are surrendered
for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Debt Securities that the Holder
making the exchange is entitled to receive.
(b) All Debt Securities issued upon any transfer or
exchange of Debt Securities shall be valid obligations of the
Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Debt Securities surrendered
for such transfer or exchange.
Every Debt Security presented or surrendered for
transfer or exchange shall (if so required by the Company or the
Trustee) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company, the
Trustee and the Security Registrar, duly executed by the Holder
thereof or his attorney duly authorized in writing.
No service charge will be made for any transfer or
exchange of Debt Securities except as provided in SECTION 306.
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 registration, transfer or exchange of Debt
Securities, other than those expressly provided in this Indenture
to be made at the Company's own expense or without expense or
without charge to the Holders.
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The Company shall not be required (i) to register,
transfer or exchange Debt Securities of any series during a
period beginning at the opening of business 15 days before the
day of the transmission of a notice of redemption of Debt
Securities of such series selected for redemption under SECTION
1204 and ending at the close of business on the day of such
transmission, or (ii) to register, transfer or exchange any Debt
Security so selected for redemption in whole or in part, except
the unredeemed portion of any Debt Security being redeemed in
part.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN DEBT
SECURITIES.
If (i) any mutilated Debt Security is surrendered to
the Trustee at its Corporate Trust Office, or (ii) the Company
and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Debt Security, and there is
delivered to the Company and the Trustee such security or
indemnity as may be required by them to save each of them and any
Paying Agent harmless, and neither the Company nor the Trustee
receives notice that such Debt Security has been acquired by a
BONA FIDE purchaser, then the Company shall execute and upon
Company Request the Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Debt Security, a new Debt Security of the same series of
like Stated Maturity and with like terms and conditions and like
principal amount, bearing a number not contemporaneously
Outstanding.
In case any such mutilated, destroyed, lost or stolen
Debt Security has become or is about to become due and payable,
the Company in its discretion may, instead of issuing a new Debt
Security, pay the amount due on such Debt Security in accordance
with its terms.
Upon the issuance of any new Debt Security under this
Section, the Company may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed
in respect thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith.
Every new Debt Security of any series issued pursuant
to this Section shall constitute an original additional
contractual obligation of the Company, whether or not the
destroyed, lost or stolen Debt Security shall be at any time
enforceable by anyone, and shall be entitled to all the benefits
of this Indenture equally and proportionately with any and all
other Debt Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Debt Securities or Coupons.
SECTION 307. Payment of Interest; Interest Rights Preserved.
(a) Interest on any Debt Security that is payable and
is punctually paid or duly provided for on any Interest Payment
Date shall be paid to the Person in whose name such Debt Security
(or one or more Predecessor Securities) is registered at the
close of business on the
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Regular Record Date for such interest notwithstanding the
cancellation of such Debt Security upon any transfer or exchange
subsequent to the Regular Record Date. Payment of interest
on Debt Securities shall be made at the offices of the Paying
Agent or Paying Agents specified pursuant to SECTION 301 or, at
the option of the Company, by check mailed to the address of the
Person entitled thereto as such address shall appear in the
Security Register or, if provided pursuant to SECTION 301, by
wire transfer to an account designated by the Holder.
(b) Any interest on any Debt Security that 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 his 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 such Debt
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 such Debt Security and the date
of the proposed payment, and at the same time the Company
shall deposit with the Trustee an amount of money in the
Currency or Currency unit in which the Debt Securities of
such series are payable (except as otherwise specified
pursuant to SECTIONS 301 or 310) 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 date 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 the Holders of such Debt
Securities at their addresses as they appear 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
mailed as aforesaid, such Defaulted Interest shall be paid
to the Persons in whose names such Debt 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 clause (2).
(2) The Company may make payment of any Defaulted
Interest on Debt Securities in any other lawful manner not
inconsistent with the requirements of any securities
exchange on which such Debt Securities may be listed, and
upon such notice as may be required by such exchange, if,
after notice given by the Company to the
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Trustee of the proposed payment pursuant to this clause,
such manner of payment shall be deemed practicable by the
Trustee.
(c) Subject to the foregoing provisions of this
Section, each Debt Security delivered under this Indenture upon
transfer of or in exchange for or in lieu of any other Debt
Security shall carry the rights to interest accrued and unpaid,
and to accrue, which were carried by such other Debt Security.
SECTION 308. CANCELLATION.
Unless otherwise specified pursuant to SECTION 301 for
Debt Securities of any series, all Debt Securities surrendered
for payment, redemption, transfer, exchange or credit against any
sinking fund, if surrendered to any Person other than the
Trustee, shall be delivered to the Trustee. All Debt Securities
so delivered shall be promptly canceled by the Trustee. The
Company may at any time deliver to the Trustee for cancellation
any Debt Securities previously authenticated and delivered
hereunder that the Company may have acquired in any manner
whatsoever, and may deliver to the Trustee (or to any other
Person for delivery to the Trustee) for cancellation any Debt
Securities previously authenticated hereunder which the Company
has not issued, and all Debt Securities or Coupons so delivered
shall be promptly canceled by the Trustee. No Debt Securities
shall be authenticated in lieu of or in exchange for any Debt
Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Debt
Securities held by the Trustee shall be destroyed by the Trustee,
and the Trustee shall deliver a certificate to such effect to the
Company. The acquisition of any Debt Securities by the Company
shall not operate as a redemption or satisfaction of the
indebtedness represented thereby unless and until such Debt
Securities are surrendered to the Trustee for cancellation.
SECTION 309. COMPUTATION OF INTEREST.
Except as otherwise specified pursuant to SECTION 301
for Debt Securities of any series, interest on the Debt
Securities of each series shall be computed on the basis of a
360-day year of twelve 30-day months.
SECTION 310. CURRENCY OF PAYMENTS IN RESPECT OF DEBT SECURITIES.
(a) With respect to Debt Securities of any series not
permitting the election provided for in paragraph (b) below or
the Holders of which have not made the election provided for in
paragraph (b) below, except as provided in paragraph (d) below,
payment of the principal of (and premium, if any) and any
interest on any Debt Security of such series will be made in the
Currency in which such Debt Security is payable.
(b) It may be provided pursuant to SECTION 301 with
respect to the Debt Securities of any series that Holders shall
have the option, subject to paragraphs (d) and (e) below, to
receive payments of principal of (and premium, if any) and any
interest on such Debt Securities in any of the Currencies that
may be designated for such election by delivering to the
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Trustee and the Currency Determination Agent a written election,
to be in form and substance satisfactory to the Trustee, not
later than the close of business on the Election Date immediately
preceding the applicable payment date. If a Holder so elects to
receive such payments in any such Currency, such election will
remain in effect for such Holder or any transferee of such Holder
until changed by such Holder or such transferee by written notice
to the Trustee and the Currency Determination Agent (but any such
change must be made not later than the close of business on the
Election Date immediately preceding the next payment date to be
effective for the payment to be made on such payment date and no
such change or election may be made with respect to payments to
be made on any Debt Security of such series with respect to which
an Event of Default has occurred or notice of redemption has been
given by the Company pursuant to ARTICLE TWELVE). Any Holder of
any such Debt Security who shall not have delivered any such
election to the Trustee and the Currency Determination Agent by
the close of business on the applicable Election Date will be
paid the amount due on the applicable payment date in the
relevant Currency as provided in paragraph (a) of this SECTION
310.
(c) If the election referred to in paragraph (b) above
has been provided for pursuant to SECTION 301, then not later
than the fourth Business Day after the Election Date for each
payment date, the Trustee or the Currency Determination Agent
will deliver to the Company a written notice specifying, in the
Currency in which each series of the Debt Securities are payable,
the respective aggregate amounts of principal of (and premium, if
any) and any interest on the Debt Securities to be paid on such
payment date, specifying the amounts so payable in respect of the
Debt Securities as to which the Holders of Debt Securities
denominated in any Currency shall have elected to be paid in
another Currency as provided in paragraph (b) above. If the
election referred to in paragraph (b) above has been provided for
pursuant to SECTION 301 and if at least one Holder has made such
election, then, on the second Business Day preceding each payment
date, the Company will deliver to the Trustee and the Currency
Determination Agent an Exchange Rate Officer's Certificate in
respect of the Currency payments to be made on such payment date.
The Currency amount receivable by Holders of Debt Securities who
have elected payment in a Currency as provided in paragraph (b)
above shall be determined by the Company on the basis of the
applicable Market Exchange Rate in effect on the third Business
Day (the "Valuation Date") immediately preceding each payment
date.
(d) If a Conversion Event occurs with respect to a
Foreign Currency, the ECU or any other Currency unit in which any
of the Debt Securities are denominated or payable other than
pursuant to an election provided for pursuant to paragraph (b)
above, then with respect to each date for the payment of
principal of (and premium, if any) and any interest on the
applicable Foreign Currency, the ECU or such other Currency unit
occurring after the last date on which such Foreign Currency, the
ECU or such other Currency unit was used (the "Conversion Date"),
the Dollar shall be the Currency of payment for use on each such
payment date. The Dollar amount to be paid by the Company to the
Trustee and by the Trustee or any Paying Agent to the Holders of
such Debt Securities with respect to such payment date shall be
the Dollar Equivalent of the Foreign Currency or, in the case of
a Currency unit, the Dollar Equivalent of the Currency Unit, in
each case as determined by the Currency Determination Agent in
the manner provided in paragraph (f) or (g) below.
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(e) If the Holder of a Debt Security denominated in
any Currency shall have elected to be paid in another Currency as
provided in paragraph (b) above, and a Conversion Event occurs
with respect to such elected Currency, such Holder shall receive
payment in the Currency in which payment would have been made in
the absence of such election. If a Conversion Event occurs with
respect to the Currency in which payment would have been made in
the absence of such election, such Holder shall receive payment
in Dollars as provided in paragraph (d) of this SECTION 310.
(f) The "Dollar Equivalent of the Foreign Currency"
shall be determined by the Currency Determination Agent and shall
be obtained for each subsequent payment date by converting the
specified Foreign Currency into Dollars at the Market Exchange
Rate on the Conversion Date.
(g) The "Dollar Equivalent of the Currency Unit" shall
be determined by the Currency Determination Agent and subject to
the provisions of paragraph (h) below, shall be the sum of each
amount obtained by converting the Specified Amount of each
Component Currency into Dollars at the Market Exchange Rate for
such Component Currency on the Valuation Date with respect to
each payment.
(h) For purposes of this SECTION 310 the following
terms shall have the following meanings:
A "Component Currency" shall mean any Currency which,
on the Conversion Date, was a Component Currency of the relevant
Currency unit, including, but not limited to, the ECU.
A "Specified Amount" of a Component Currency shall mean
the number of units of such Component Currency or fractions
thereof which were represented in the relevant currency unit,
including, but not limited to, the ECU, on the Conversion Date.
If after the Conversion Date the official unit of any Component
Currency is altered by way of combination or subdivision, the
Specified Amount of such Component Currency shall be divided or
multiplied in the same proportion. If after the Conversion Date
two or more Component Currencies are consolidated into a single
Currency, the respective Specified Amounts of such Component
Currencies shall be replaced by an amount in such single Currency
equal to the sum of the respective Specified Amounts of such
consolidated Component Currencies expressed in such single
Currency, and such amount shall thereafter be a Specified Amount
and such single Currency shall thereafter be a Component
Currency. If after the Conversion Date any Component Currency
shall be divided into two or more Currencies, the Specified
Amount of such Component Currency shall be replaced by amounts of
such two or more Currencies with appropriate Dollar equivalents
at the Market Exchange Rate on the date of such replacement equal
to the dollar equivalent of the Specified Amount of such former
Component Currency at the Market Exchange Rate on such date, and
such amounts shall thereafter be Specified Amounts and such
Currencies shall thereafter be Component Currencies. If after
the Conversion Date of the relevant Currency unit, including but
not limited to, the ECU, a Conversion Event (other than any event
referred to above in this definition of "Specified Amount")
occurs with respect
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to any Component Currency of such Currency unit, the Specified
Amount of such Component Currency shall, for purposes of
calculating the Dollar Equivalent of the Currency Unit, be
converted into Dollars at the Market Exchange Rate in effect on
the Conversion Date of such Component Currency.
"Election Date" shall mean the record date with respect
to any payment date, and with respect to the Maturity shall mean
the record date (if within 16 or fewer days prior to the
Maturity) immediately preceding the Maturity, and with respect to
any series of Debt Securities whose record date immediately
preceding the Maturity is more than 16 days prior to the Maturity
or any series of Debt Securities for which no record dates are
provided with respect to interest payments, shall mean the date
that is 16 days prior to the Maturity.
(i) All decisions and determinations of the Currency
Determination Agent regarding the Dollar Equivalent of the
Foreign Currency, the Dollar Equivalent of the Currency Unit and
the Market Exchange Rate shall be in its sole discretion and
shall, in the absence of manifest error, be conclusive for all
purposes and irrevocably binding upon the Company and all Holders
of the Debt Securities denominated or payable in the relevant
Currency. In the event of a Conversion Event with respect to a
Foreign Currency, the Company, after learning thereof, will
immediately give written notice thereof to the Trustee and the
Currency Determination Agent (and the Trustee will promptly
thereafter give notice in the manner provided in SECTION 105 to
the Holders) specifying the Conversion Date. In the event of a
Conversion Event with respect to the ECU or any other Currency in
which Securities are denominated or payable, the Company, after
learning thereof, will immediately give notice thereof to the
Trustee (and the Trustee will promptly thereafter give written
notice in the manner provided in SECTION 105 to the Holders)
specifying the Conversion Date and the Specified Amount of each
Component Currency on the Conversion Date. In the event of any
subsequent change in any Component Currency as set forth in the
definition of Specified Amount above, the Company, after learning
thereof, will similarly give written notice to the Trustee. The
Trustee shall be fully justified and protected in relying and
acting upon information received by it from the Company and the
Currency Determination Agent and shall not otherwise have any
duty or obligation to determine such information independently.
(j) For purposes of any provision of the Indenture
where the Holders of Outstanding Debt Securities may perform an
Act that requires that a specified percentage of the Outstanding
Debt Securities of all series perform such Act and for purposes
of any decision or determination by the Trustee of amounts due
and unpaid for the principal of (and premium, if any) and
interest on the Debt Securities of all series in respect of which
moneys are to be disbursed ratably, the principal of (and
premium, if any) and interest on the Outstanding Debt Securities
denominated in a Foreign Currency will be the amount in Dollars
based upon the Market Exchange Rate for Debt Securities of such
series, as of the date for determining whether the Holders
entitled to perform such Act have performed it, or as of the date
of such decision or determination by the Trustee, as the case may
be.
SECTION 311. JUDGMENTS.
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If for the purpose of obtaining a judgment in any court
with respect to any obligation of the Company hereunder or under
any Debt Security, it shall become necessary to convert into any
other Currency any amount in the Currency due hereunder or under
such Debt Security, then such conversion shall be made at the
Market Exchange Rate as in effect on the date the Company shall
make payment to any Person in satisfaction of such judgment. If
pursuant to any such judgment, conversion shall be made on a date
other than the date payment is made and there shall occur a
change between such Market Exchange Rate and the Market Exchange
Rate as in effect on the date of payment, the Company agrees to
pay such additional amounts (if any) as may be necessary to
ensure that the amount paid is equal to the amount in such other
Currency which, when converted at the Market Exchange Rate as in
effect on the date of payment or distribution, is the amount then
due hereunder or under such Debt Security. Any amount due from
the Company under this SECTION 311 shall be due as a separate
debt and is not to be affected by or merged into any judgment
being obtained for any other sums due hereunder or in respect of
any Debt Security. In no event, however, shall the Company be
required to pay more in the Currency or Currency unit due
hereunder or under such Debt Security at the Market Exchange Rate
as in effect when payment is made than the amount of Currency
stated to be due hereunder or under such Debt Security so that in
any event the Company's obligations hereunder or under such Debt
Security will be effectively maintained as obligations in such
Currency, and the Company shall be entitled to withhold (or be
reimbursed for, as the case may be) any excess of the amount
actually realized upon any such conversion over the amount due
and payable on the date of payment or distribution.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture, with respect to the Debt Securities of
any series (if all series issued under this Indenture are not to
be affected), shall, upon Company Request, cease to be of further
effect (except as to any surviving rights of registration of
transfer or exchange of such Debt Securities herein expressly
provided for and rights to receive payments of principal (and
premium, if any) and interest on such Debt Securities) and the
Trustee, at the expense of the Company, shall execute proper
instruments acknowledging satisfaction and discharge of this
Indenture, when
(1) either
(A) all Debt Securities of such series theretofore
authenticated and delivered (other than (i) Debt Securities
of such series which have been destroyed, lost or stolen and
which have been replaced or paid as provided in SECTION 306
and (ii) Debt Securities of such series for whose payment
money has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid to
the Company or
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discharged from such trust, as provided in SECTION 1103)
have been delivered to the Trustee for cancellation; or
(B) all Debt Securities of such series not theretofore
delivered to the Trustee for cancellation,
(i) have become due and payable; or
(ii) will become due and payable at their Stated
Maturity within one year; or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for
the giving of notice by the Trustee in the name, and at
the expense, of the Company, and the Company, in the
case of (i), (ii) or (iii) of this subclause (B), has
irrevocably deposited or caused to be deposited with
the Trustee as trust funds in trust for such purpose an
amount in the Currency in which such Debt Securities
are denominated (except as otherwise provided pursuant
to SECTIONS 301 or 310), sufficient to pay and
discharge the entire indebtedness on such Debt
Securities for principal (and premium, if any) and
interest to the date of such deposit (in the case of
Debt Securities which have become due and payable) or
to the Stated Maturity or Redemption Date, as the case
may be; PROVIDED, HOWEVER, in the event a petition for
relief under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable federal
or state bankruptcy, insolvency or other similar law,
is filed with respect to the Company within 91 days
after the deposit and the Trustee is required to return
the deposited money to the Company, the obligations of
the Company under this Indenture with respect to such
Debt Securities shall not be deemed terminated or
discharged;
(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all
conditions precedent herein provided for relating to the
satisfaction and discharge of this Indenture with respect to such
series have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under SECTION 607,
the obligations of the Trustee to any Authenticating Agent under
SECTION 611 and, if money shall have been deposited with the
Trustee pursuant to subclause (B) of clause (1) of this Section,
the obligations of the Trustee under SECTION 402 and the last
paragraph of SECTION 1103 shall survive. If, after the deposit
referred to in this SECTION 401 has been made, (x) the Holder of
a Debt Security is entitled to, and does, elect pursuant to
SECTION 310(b), to receive payment in a Currency other than that
in which the deposit pursuant to this SECTION 401 was made, or
(y) if a Conversion Event occurs with respect to the Currency in
which the deposit was made or elected to be received by the
Holder pursuant to SECTION
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310(b), then the indebtedness represented by such Debt Security
shall be fully discharged to the extent that the deposit made
with respect to such Debt Security shall be converted into
the Currency in which such payment is made.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of
SECTION 1103, all money deposited with the Trustee pursuant to
SECTION 401 shall be held in trust and applied by it, in
accordance with the provisions of the Debt Securities and this
Indenture, to the payment, either directly or through any Paying
Agent (including the Company acting as its own Paying Agent) as
the Trustee may determine, to the Persons entitled thereto, of
the principal (and premium, if any) and interest for whose
payment such money has been deposited with the Trustee.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default" wherever used herein with respect to
Debt Securities of any series means any one of the following
events (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation
of law, pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or
governmental body):
(1) default in the payment of any interest upon any
Debt Security of such series when it becomes due and
payable, and continuance of such default for a period of 30
days; or
(2) default in the payment of the principal of (and
premium, if any, on) any Debt Security of such series at its
Maturity; or
(3) default in the deposit of any sinking fund payment
or analogous obligation, when and as due by the terms of a
Debt Security of such series; or
(4) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture (other
than a covenant or warranty a default in whose performance
or whose breach is elsewhere in this Section specifically
dealt with or which expressly has been included in this
Indenture solely for the benefit of Debt Securities of a
series other than such series), and continuance of such
default or breach for a period of 60 days after there has
been given, by registered or certified mail, to the Company
by the Trustee or to the Company and the Trustee by the
Holders of at least 10% in principal amount of the
Outstanding Debt Securities of such series, a written notice
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specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of
Default" hereunder; or
(5) the entry of a decree or order for relief in
respect of the Company by a court having jurisdiction in the
premises in an involuntary case under the federal bankruptcy
laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other
similar law, or a decree or order adjudging the Company a
bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company under any
applicable federal or state law, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or
other similar official) of the Company or of any substantial
part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60
consecutive days; or
(6) the commencement by the Company of a voluntary
case under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law, or the consent
by it to the entry of an order for relief in an involuntary
case under any such law or to the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or
other similar official) of the Company or of any substantial
part of its property, or the making by it of an assignment
for the benefit of its creditors, or the admission by it in
writing of its inability to pay its debts generally as they
become due, or the taking of corporate action by the Company
in furtherance of any such action; or
(7) any other Event of Default provided with respect
to Debt Securities of that series pursuant to SECTION 301.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default with respect to Debt Securities
of any series at the time Outstanding occurs and is continuing,
then in every such case the Trustee or the Holders of not less
than 25% in principal amount of Outstanding Debt Securities of
such series may declare the principal amount (or, if any Debt
Securities of such series are Discount Securities, such portion
of the principal amount of such Discount Securities as may be
specified in the terms of such Discount Securities) of all the
Debt Securities of such series to be due and payable immediately,
by a notice in writing to the Company (and to the Trustee if
given by Holders), and upon any such declaration such principal
amount (or specified amount) shall become immediately due and
payable. Upon payment of such amount in the Currency in which
such Debt Securities are denominated (except as otherwise
provided pursuant to SECTIONS 301 or 310), all obligations of the
Company in respect of the payment of principal of the Debt
Securities of such series shall terminate.
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At any time after such a declaration of acceleration
with respect to Debt Securities of any series has been made and
before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article provided,
the Holders of a majority in principal amount of the Outstanding
Debt Securities of such series, by written notice to the Company
and the Trustee, may rescind and annul such declaration and its
consequences if:
(1) the Company has paid or deposited with the
Trustee a sum in the Currency in which such Debt Securities
are denominated (except as otherwise provided pursuant to
SECTIONS 301 or 310) sufficient to pay
(A) all overdue installments of interest on all
Debt Securities of such series;
(B) the principal of (and premium, if any, on)
any Debt Securities of such series which have become
due otherwise than by such declaration of acceleration
and interest thereon at the rate or rates prescribed
therefor in such Debt Securities;
(C) to the extent that payment of such interest
is lawful, interest upon overdue installments of
interest on each Debt Security at the Overdue Rate; and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents
and counsel; PROVIDED, HOWEVER, that all sums payable
under this clause (D) shall be paid in Dollars;
and
(2) all Events of Default with respect to Debt
Securities of such series, other than the nonpayment of the
principal of Debt Securities of such series which have
become due solely by such declaration of acceleration, have
been cured or waived as provided in SECTION 513.
No such rescission and waiver shall affect any subsequent default
or impair any right consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY TRUSTEE.
The Company covenants that if:
(1) default is made in the payment of any installment
of interest on any Debt Security when such interest becomes
due and payable and such default continues for a period of
30 days;
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(2) default is made in the payment of principal of (or
premium, if any, on) any Debt Security at the Maturity
thereof; or
(3) default is made in the making or satisfaction of
any sinking fund payment or analogous obligation when the
same becomes due pursuant to the terms of the Debt
Securities of any series;
the Company will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of such Debt Securities the amount then
due and payable on such Debt Securities for the principal (and
premium, if any) and interest, if any, and, to the extent that
payment of such interest shall be legally enforceable, interest
upon the overdue principal (and premium, if any) and upon overdue
installments of interest, at the Overdue Rate; and, in addition
thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
If the Company fails to pay such amount forthwith upon
such demand, the Trustee, in its own name and as trustee of an
express trust, may institute a judicial proceeding for the
collection of the sums so due and unpaid, and may prosecute such
proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Debt
Securities, and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the property of the
Company or any other obligor upon such Debt Securities wherever
situated.
If an Event of Default with respect to Debt Securities
of any series occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the
rights of the Holders of Debt Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein,
or to enforce any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership,
insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceedings, or any
voluntary or involuntary case under the federal bankruptcy laws,
as now or hereafter constituted, relative to the Company or any
other obligor upon the Debt Securities, if any, of a particular
series or the property of the Company or of such other obligor or
their creditors, the Trustee (irrespective of whether the
principal of such Debt Securities shall then be due and payable
as therein expressed or by declaration of acceleration or
otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in
such proceeding or otherwise:
(i) to file and prove a claim for the whole amount of
principal (or, if the Debt Securities of such series are
Discount Securities, such portion of the principal amount as
may be due and payable with respect to such series pursuant
to a declaration in
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accordance with SECTION 502) (and premium, if any) and
interest owing and unpaid in respect of the Debt Securities
of such 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 the
reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel) and of
the Holders of such Debt Securities and Coupons allowed in
such judicial proceeding; and
(ii) to collect and receive any moneys or other
property payable or deliverable on any such claims and to
distribute the same;
and any receiver, assignee, trustee, custodian, liquidator,
sequestrator or other similar official in any such proceeding is
hereby authorized by each such Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to
the making of such payments directly to such Holders, to pay to
the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under SECTION
607.
Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Debt Securities of such
series or the rights of any Holder thereof, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
DEBT SECURITIES.
All rights of action and claims under this Indenture or
the Debt Securities of any series may be prosecuted and enforced
by the Trustee without the possession of any of such Debt
Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall
be brought in its own name, as trustee of an express trust, and
any recovery of judgment shall, after provision for the payment
of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Debt Securities in respect
of which such judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this
Article shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of
such money on account of principal (and premium, if any) or
interest, upon presentation of the Debt Securities of any series
in respect of which money has been collected and the notation
thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee
under SECTION 607;
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SECOND: To the payment of the amounts then due and
unpaid for principal of (and premium, if any) and interest
on the Debt Securities of such series, in respect of which
or for the benefit of which such money has been collected
ratably, without preference or priority of any kind,
according to the amounts due and payable on such Debt
Securities for principal (and premium, if any) and interest,
respectively; and
THIRD: The balance, if any, to the Person or Persons
entitled thereto.
SECTION 507. LIMITATION ON SUITS.
No Holder of any Debt Security of any series shall have
any right to institute any proceeding, judicial or otherwise,
with respect to this Indenture, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to
the Trustee of a continuing Event of Default with respect to
such series;
(2) the Holders of not less than 25% in principal
amount of the Outstanding Debt Securities of such series
shall have made written request to the Trustee to institute
proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered to the
Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to
institute any such proceeding; and
(5) no direction inconsistent with such written
request has been given to the Trustee during such 60-day
period by the Holders of a majority in principal amount of
the Outstanding Debt Securities of such series;
it being understood and intended that no one or more of such
Holders shall have any right in any manner whatever by virtue of,
or by availing of, any provision of this Indenture to affect,
disturb or prejudice the rights of any other such Holders or of
the Holders of Outstanding Debt Securities of any other series,
or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal
and ratable benefit of all of such Holders. For the protection
and enforcement of the provisions of this SECTION 507, each and
every Holder of Debt Securities of any series and the Trustee for
such series shall be entitled to such relief as can be given at
law or in equity.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST.
Notwithstanding any other provision in this Indenture,
the Holder of any Debt Security shall have the right, which is
absolute and unconditional, to receive payment of the
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principal of (and premium, if any) and (subject to SECTION 307)
interest on such Debt Security on the respective Stated
Maturity or Maturities expressed in such Debt Security (or, in
the case of redemption, on the Redemption Date) and to institute
suit for the enforcement of any such payment and interest
thereon, and such right shall not be impaired without the consent
of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case the Company, the Trustee
and the Holders shall, subject to any determination in such
proceeding, be restored severally and respectively to their
former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise expressly provided elsewhere in
this Indenture, no right or remedy herein conferred upon or
reserved to the Trustee or to the Holders 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 not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder to
exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of
any such Event of Default or any acquiescence therein. Every
right and remedy given by this Indenture or by law to the Trustee
or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the
Holders, as the case may be.
SECTION 512. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the
Outstanding Debt Securities of any series 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 Debt
Securities of such series, PROVIDED, that
(1) such direction shall not be in conflict with any
rule of law or with this Indenture;
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(2) subject to any incorporated provisions, the
Trustee shall have the right to decline to follow any such
direction if the Trustee in good faith shall, by a
Responsible Officer or Responsible Officers of the Trustee,
determine that the proceeding so directed would be unjustly
prejudicial to the Holders of Debt Securities of such series
not joining in any such direction; and
(3) the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such
direction.
SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal
amount of the Outstanding Debt Securities of any series may on
behalf of the Holders of all the Debt Securities of any such
series waive any past default hereunder with respect to such
series and its consequences, except a default
(1) in the payment of the principal of (or premium,
if any) or interest on any Debt Security of such series, or
in the payment of any sinking fund installment or analogous
obligation with respect to the Debt Securities of such
series, or
(2) in respect of a covenant or provision hereof which
pursuant to ARTICLE TEN cannot be modified or amended
without the consent of the Holder of each outstanding Debt
Security of such series affected.
Upon any such waiver, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed
to have been cured, for every purpose of the Debt Securities of
such series under this Indenture; but no such waiver shall extend
to any subsequent or other default or impair any right consequent
thereon.
SECTION 514. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of
any Debt Security by his acceptance thereof shall be deemed to
have agreed, that any court may in its discretion 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 other than the Trustee 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 Holder or group of
Holders holding in the aggregate more than 10% in principal
amount of the Outstanding Debt Securities of any series, or to
any suit instituted by any Holder of a Debt Security for the
enforcement of the payment of the principal of (or premium, if
any) or interest on such Debt Security on or after the respective
Stated Maturity or Maturities expressed in such Debt Security
(or, in the case of redemption, on or after the Redemption Date).
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SECTION 515. 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 SIX
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of
Default with respect to the Debt Securities of any series,
(1) the Trustee undertakes to perform such duties as
are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or
opinions which by any provisions hereof are specifically
required to be furnished to the Trustee, the Trustee shall
be under a duty to examine the same to determine whether
they conform to the requirements of this Indenture.
(b) In case an Event of Default with respect to Debt
Securities of any series has occurred and is continuing, the
Trustee shall, with respect to the Debt Securities of such
series, exercise such of the rights and powers vested in it by
this Indenture, 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.
(c) 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, PROVIDED that
(1) this subsection shall not be construed to limit
the effect of subsection (a) of this Section;
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(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless
it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to
any action taken, suffered or omitted to be taken by it with
respect to Debt Securities of any series in good faith in
accordance with the direction of the Holders of a majority
in principal amount of the Outstanding Debt Securities of
such series relating to the time, method and place of
conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture; and
(4) the Trustee shall not be required to expend or
risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it
shall have reasonable grounds for believing that repayment
of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section.
SECTION 602. NOTICE OF DEFAULTS.
Within 90 days after the occurrence of any default
hereunder with respect to Debt Securities of any series the
Trustee shall give notice to all Holders of Debt Securities of
such series of such default hereunder known to the Trustee,
unless such default shall have been cured or waived; PROVIDED,
HOWEVER, that, except in the case of a default in the payment of
the principal of (or premium, if any) or interest on any Debt
Security of such series or in the payment of any sinking fund
installment with respect to Debt Securities of 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 and/or Responsible Officers of the
Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders of Debt Securities of
such series; and PROVIDED, FURTHER, that in the case of any
default of the character specified in SECTION 501(4) with respect
to Debt Securities of such series no such notice to Holders shall
be given until at least 30 days after the occurrence thereof.
For the purpose of this Section, the term "default" means any
event which is, or after notice or lapse of time or both would
become, an Event of Default with respect to Debt Securities of
such series.
Notice given pursuant to this SECTION 602 shall be
transmitted by mail:
(1) to all Holders, as the names and addresses of the
Holders appear in the Security Register; and
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(2) to each Holder of a Debt Security of any series
whose name and address appear in the information preserved
at the time by the Trustee in accordance with the Trust
Indenture Act.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Except as otherwise provided in the Trust Indenture
Act:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note 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 or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request
or Company Order and any resolution of the Board of
Directors shall be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this Indenture
the Trustee shall deem it desirable that a matter be proved
or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be
herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the
advice of such counsel or any opinion of counsel shall be
full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Indenture at the request or direction of any of the Holders
of Debt Securities of any series pursuant to this Indenture,
unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses
and liabilities that might be incurred by it in compliance
with such request or direction;
(f) 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, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it
shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney;
(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 and the
Trustee
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shall not be responsible for any misconduct or
negligence on the part of any agent (including any agent
appointed pursuant to SECTION 310(I)) or attorney appointed
with due care by it hereunder; and
(h) the Trustee shall not be required to take notice
or be deemed to have notice of any default hereunder (except
failure by the Company to pay principal of or interest on
any series of Securities so long as the Trustee is also
acting as Paying Agent for such series of Securities) unless
the Trustee shall be specifically notified in writing of
such default by the Company by the Holders of at least a 10%
in aggregate principal amount of all Securities then
outstanding, and all such notices or other instruments
required by this Indenture to be delivered to the Trustee
must, in order to be effective, be delivered at the
principal Corporate Trust Office of the Trustee, and in the
absence of such notice the Trustee may conclusively assume
there is no default except as aforesaid; and
(i) The permissive right of the Trustee to do things
enumerated in this Indenture shall not be construed as a
duty.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF DEBT
SECURITIES.
The recitals contained herein and in the Debt
Securities, except the Trustee's certificates of authentication,
shall be taken as the statements of the Company, and the Trustee
assumes no responsibility for their correctness. The Trustee
makes no representations as to the validity or sufficiency of
this Indenture or of the Debt Securities or Coupons, if any, of
any series. The Trustee shall not be accountable for the use or
application by the Company of any Debt Securities or the proceeds
thereof.
SECTION 605. MAY HOLD DEBT SECURITIES.
The Trustee, any Paying Agent, the Security Registrar
or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Debt Securities,
and, subject to any incorporated provisions, may otherwise deal
with the Company with the same rights it would have if it were
not the Trustee, Paying Agent, Security Registrar or such other
agent.
SECTION 606. MONEY HELD IN TRUST.
Money in any Currency held by the Trustee or any Paying
Agent in trust hereunder need not be segregated from other funds
except to the extent required by law. Neither the Trustee nor
any Paying Agent shall be under any liability for interest on any
money received by it hereunder except as otherwise agreed with
the Company.
SECTION 607. COMPENSATION, INDEMNIFICATION AND REIMBURSEMENT.
The Company agrees:
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(1) to pay to the Trustee from time to time
reasonable compensation in Dollars for all services rendered
by it hereunder (which compensation shall not be limited by
any provision of law in regard to the compensation of a
trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee in Dollars upon its request for all
reasonable expenses, disbursements and advances incurred or
made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the
expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(3) to indemnify in Dollars the 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 trust or performance of its duties
hereunder, including the costs and expenses of defending
itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties
hereunder.
As security for the performance of the obligations of
the Company under this Section, the Trustee shall have a claim
prior to the Debt Securities upon all property and funds held or
collected by the Trustee as such, except funds held in trust for
the payment of amounts due on the Debt Securities.
The obligations of the Company under this SECTION 607
to compensate and indemnify the Trustee for expenses,
disbursements and advances shall constitute additional
indebtedness under this Indenture and shall survive the
satisfaction and discharge of this Indenture.
SECTION 608. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee under SECTION 609.
(b) The Trustee may resign at any time with respect to
the Debt Securities of one or more series by giving written
notice thereof to the Company. If an instrument of acceptance by
a successor Trustee shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation,
the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with
respect to the Debt Securities of such series.
(c) The Trustee may be removed at any time with
respect to the Debt Securities of any series and a successor
Trustee appointed by Act of the Holders of a majority in
principal amount of the Outstanding Debt Securities of such
series, delivered to the Trustee and to the Company.
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(d) If at any time:
(1) the Trustee shall fail to comply with Section
310(b) of the Trust Indenture Act with respect to the Debt
Securities of any series after written request therefor by
the Company or by any Holder who has been a BONA FIDE Holder
of a Debt Security of such series for at least six months;
or
(2) the Trustee shall cease to be eligible under
Section 310(a) of the Trust Indenture Act with respect to
the Debt Securities of any series and shall fail to resign
after written request therefor by the Company or by any such
Holder; or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver 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, (i) the Company by a Board Resolution may
remove the Trustee with respect to all Debt Securities, or (ii)
subject to SECTION 514, any Holder who has been a BONA FIDE
Holder of a Debt Security of any 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 for the
Debt Securities of such series;
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, with respect to the Debt Securities of one
or more series, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee or Trustees with respect to
the Debt Securities of that or those series (it being understood
that any such successor Trustee may be appointed with respect to
the Debt Securities of one or more or all of such series and that
at any time there shall be only one Trustee with respect to the
Debt Securities of any particular series) and shall comply with
the applicable requirements of SECTION 609. If, within one year
after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee with respect to
the Debt Securities of any series shall be appointed by Act of
the Holders of a majority in principal amount of the Outstanding
Debt Securities of such series delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall,
forthwith upon its acceptance of such appointment, become the
successor Trustee with respect to the Debt Securities of such
series and to that extent supersede the successor Trustee
appointed by the Company. If no successor Trustee with respect
to the Debt Securities of any series shall have been so appointed
by the Company or the Holders of such series and accepted
appointment in the manner hereinafter provided, any Holder who
has been a BONA FIDE Holder of a Debt Security of such series for
at least six months may, subject to SECTION 514, on behalf of
himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee
with respect to the Debt Securities of such series.
(f) The Company shall give notice of each resignation
and each removal of the Trustee with respect to the Debt
Securities of any series and each appointment of a successor
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Trustee with respect to the Debt Securities of any series in the
manner and to the extent provided in SECTION 105 to the Holders
of Debt Securities of such series. Each notice shall include the
name of the successor Trustee with respect to the Debt Securities
of such series and the address of its Corporate Trust Office.
(g) If the Trustee has or shall acquire any
conflicting interest within the meaning of the Trust Indenture
Act with respect to the Debt Securities of any series, it shall
either eliminate such conflicting interest or resign with respect
to the Debt Securities of that series in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and
this Indenture, and the Company shall take prompt action to have
a successor Trustee with respect to the Debt Securities of that
series appointed in the manner provided herein.
(h) There shall at all times be a Trustee hereunder
with respect to the Debt Securities of each series, which shall
be a Person that is eligible pursuant to the Trust Indenture
Act to act as such, having a combined capital and surplus of at
least $50,000,000, subject to supervision or examination by
Federal or State authority and having its Corporate Trust Office
in Chicago, Illinois or New York, New York. If such corporation
publishes reports of condition at least annually, pursuant to law
or the requirements of said supervising or examining authority,
then for the 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. If at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section,
it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
SECTION 609. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In the case of an appointment hereunder of a
successor Trustee with respect to all Debt Securities, each such
successor Trustee so appointed shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on request of the Company or
the successor Trustee, such retiring Trustee shall, upon payment
of its charges, execute and deliver an instrument transferring to
such successor Trustee all the rights, powers and trusts of the
retiring Trustee, and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such
retiring Trustee hereunder, subject nevertheless to its claim, if
any, provided for in SECTION 607.
(b) In case of the appointment hereunder of a
successor Trustee with respect to the Debt Securities of one or
more (but not all) series, the Company, the retiring Trustee and
each successor Trustee with respect to the Debt Securities of one
or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept
such appointment and which (1) shall contain such provisions as
shall be necessary or desirable to transfer and confirm to, and
to vest in, each successor Trustee all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Debt
Securities of that or those series to which
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the appointment of such successor Trustee relates, (2) if the
retiring Trustee is not retiring with respect to all Debt
Securities, shall contain such provisions as shall be deemed
necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the
Debt Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) 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 any 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 hereunder separate and
apart from any other trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of
any such supplemental indenture the resignation or removal of
the retiring Trustee shall become effective to the extent
provided therein and each such successor Trustee, without any
further act, deed or conveyance, shall become vested with all
the rights, powers, trusts and duties of the retiring Trustee
with respect to the Debt Securities of that or those series to
which the appointment of such successor Trustee relates; but, on
request of the Company or any successor Trustee, such retiring
Trustee shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring
Trustee hereunder with respect to the Debt Securities of that or
those series to which the appointment of such successor Trustee
relates.
(c) Upon request of any such successor Trustee, the
Company shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts referred to in paragraph (a) or
(b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment
unless at the time of such acceptance such successor Trustee
shall be qualified and eligible under this Article.
SECTION 610. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS.
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 all or substantially all of the
corporate trust business of the Trustee, shall be the successor
of the Trustee hereunder, provided that such corporation shall be
otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part
of any of the parties hereto. In case any Debt Securities shall
have been authenticated, but not delivered, by the Trustee then
in office, any successor by merger, conversion or consolidation
to such authenticating Trustee may adopt such authentication and
deliver the Debt Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Debt
Securities. In case any Debt Securities shall not have been
authenticated by such predecessor Trustee, any such successor
Trustee may authenticate and deliver such Debt Securities, in
either its own name or that of its predecessor Trustee, with the
full force and effect which this Indenture provides for the
certificate of authentication of the Trustee.
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SECTION 611. APPOINTMENT OF AUTHENTICATING AGENT.
As long as any Debt Securities of a series remain
Outstanding, upon a Company Request, there shall be an
authenticating agent (the "Authenticating Agent") appointed, for
such period as the Company shall elect, by the Trustee for such
series of Debt Securities to act as its agent on its behalf and
subject to its direction in connection with the authentication
and delivery of each series of Debt Securities for which it is
serving as Trustee. Debt 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 such Trustee. Wherever
reference is made in this Indenture to the authentication and
delivery of Debt Securities of any series by the Trustee for such
series or to the Trustee's Certificate of Authentication, such
reference shall be deemed to include authentication and delivery
on behalf of the Trustee for such series by an Authenticating
Agent for such series and a Certificate of Authentication
executed on behalf of such Trustee by such Authenticating Agent
except that only the Trustee may authenticate Debt Securities
upon original issuance and pursuant to SECTION 306 hereof. 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 $25,000,000 and subject to supervision or
examination by federal or state authority. If such
Authenticating Agent publishes reports of condition at least
annually, pursuant to law or to the requirements of said
supervising or examining authority, then for purposes of this
Section, the combined capital and surplus of such Authenticating
Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and
with the effect specified in this Section.
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 Debt 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 for such
series 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 applicable
Trustee and to the Company.
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 611 with respect to one or more of all
series of Debt Securities, the Trustee for such series shall upon
Company Request appoint a successor Authenticating Agent, and the
Company shall provide notice of such appointment to all Holders
of Debt Securities of such series in the manner and to the extent
provided in SECTION 105. 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
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as Authenticating Agent herein. The Trustee for the Debt
Securities of such series agrees to pay to the Authenticating
Agent for such series from time to time reasonable compensation
for its services, and the Trustee shall be entitled to be
reimbursed for such payment, subject to the provisions of
SECTION 607. The Authenticating Agent for the Debt Securities of
any series shall have no responsibility or liability for any
action taken by it as such at the direction of the Trustee for
such series.
If an appointment with respect to one or more series is
made pursuant to this Section, the Debt 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 series of Debt Securities issued
under the within mentioned Indenture.
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By ________________________________
As Authenticating Agent
By ________________________________
Authorized Signatory
SECTION 612. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee becomes a creditor of the Company
(or any other obligor upon the Debt Securities), the Trustee
shall be subject to the provisions of the Trust Indenture Act
regarding the collection of claims against the Company (or any
such other obligor). A Trustee that has resigned or been removed
is subject to such provisions of the Trust Indenture Act to the
extent provided therein.
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ARTICLE SEVEN
CONCERNING THE HOLDERS
SECTION 701. ACTS OF HOLDERS.
Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be
given or taken by Holders may be embodied in and evidenced by one
or more instruments of substantially similar tenor signed by such
Holders in person or by an agent or proxy 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, and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such
instrument or instruments. Whenever in this Indenture it is
provided that the Holders of a specified percentage in aggregate
principal amount of the Outstanding Debt Securities of any series
may take any Act, the fact that the Holders of such specified
percentage have joined therein may be evidenced (a) by the
instrument or instruments executed by Holders in person or by
agent or proxy appointed in writing, or (b) by the record of
Holders voting in favor thereof at any meeting of such Holders
duly called and held in accordance with the provisions of ARTICLE
EIGHT, or (c) by a combination of such instrument or instruments
and any such record of such a meeting of Holders.
SECTION 702. PROOF OF OWNERSHIP; PROOF OF EXECUTION OF
INSTRUMENTS BY HOLDERS.
The ownership of Debt Securities of any series shall be
proved by the Security Register for such series or by a
certificate of the Security Registrar for such series.
Subject to the provisions of SECTION 603 and 805, proof
of the execution of a writing appointing an agent or proxy and of
the execution of any instrument by a Holder or his agent or proxy
shall be sufficient and conclusive in favor of the Trustee and
the Company if made in the following manner:
The fact and date of the execution by any such person
of any instrument may be proved by the certificate of any notary
public or other officer authorized to take acknowledgement of
deeds, that the person executing such instrument acknowledged to
him the execution thereof, or by an affidavit of a witness to
such execution sworn to before any such notary or other such
officer. Where such execution is by an officer of a corporation
or association or a member of a partnership on behalf of such
corporation, association or partnership, as the case may be, or
by any other person acting in a representative capacity, such
certificate or affidavit shall also constitute sufficient proof
of his authority.
The record of any Holders' meeting shall be proved in
the manner provided in SECTION 806.
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The Trustee may in any instance require further proof
with respect to any of the matters referred to in this Section so
long as the request is a reasonable one.
SECTION 703. PERSONS DEEMED OWNERS.
The Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name any Debt
Security is registered as the owner of such Debt Security for the
purpose of receiving payment of the principal of (and premium, if
any) and (subject to SECTION 307) interest, if any, on such Debt
Security and for all other purposes whatsoever, whether or not
such Debt Security be overdue, and neither the Company, the
Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary. All payments made to any
Holder, or upon his order, shall be valid, and, to the extent of
the sum or sums paid, effectual to satisfy and discharge the
liability for moneys payable upon such Debt Security.
SECTION 704. REVOCATION OF CONSENTS; FUTURE HOLDERS BOUND.
At any time prior to (but not after) the evidencing to
the Trustee, as provided in SECTION 701, of the taking of any Act
by the Holders of the percentage in aggregate principal amount of
the Outstanding Debt Securities specified in this Indenture in
connection with such Act, any Holder of a Debt Security the
number, letter or other distinguishing symbol of which is shown
by the evidence to be included in the Debt Securities the Holders
of which have consented to such Act may, by filing written notice
with the Trustee at the Corporate Trust Office and upon proof of
ownership as provided in SECTION 702, revoke such Act so far as
it concerns such Debt Security. Except as aforesaid, any such
Act taken by the Holder of any Debt Security shall be conclusive
and binding upon such Holder and upon all future Holders of such
Debt Security and of any Debt Securities issued on transfer or in
lieu thereof or in exchange or substitution therefor,
irrespective of whether or not any notation in regard thereto is
made upon such Debt Security or such other Debt Securities.
ARTICLE EIGHT
HOLDERS' MEETINGS
SECTION 801. PURPOSES OF MEETINGS.
A meeting of Holders of any or all series may be called
at any time and from time to time pursuant to the provisions of
this ARTICLE EIGHT for any of the following purposes:
(1) to give any notice to the Company or to the
Trustee for such series, or to give any directions to the
Trustee for such series, or to consent to the waiving of any
default hereunder and its consequences, or to take any other
action authorized to be taken by Holders pursuant to any of
the provisions of ARTICLE FIVE;
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(2) to remove the Trustee for such series and appoint
a successor Trustee pursuant to the provisions of ARTICLE
SIX;
(3) to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the provisions of
SECTION 1002; or
(4) to take any other action authorized to be taken by
or on behalf of the Holders of any specified aggregate
principal amount of the Outstanding Debt Securities of any
one or more or all series, as the case may be, under any
other provision of this Indenture or under applicable law.
SECTION 802. CALL OF MEETINGS BY TRUSTEE.
The Trustee for any series may at any time call a
meeting of Holders of such series to take any action specified in
SECTION 801, to be held at such time or times and at such place
or places as the Trustee for such series shall determine. Notice
of every meeting of the Holders of any series, setting forth the
time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be given to
Holders of such series in the manner and to the extent provided
in SECTION 105. Such notice shall be given not less than 20 days
nor more than 90 days prior to the date fixed for the meeting.
SECTION 803. CALL OF MEETINGS BY COMPANY OR HOLDERS.
In case at any time the Company, pursuant to a Board
Resolution, or the Holders of at least 10% in aggregate principal
amount of the Outstanding Debt Securities of a series or of all
series, as the case may be, shall have requested the Trustee for
such series to call a meeting of Holders of any or all such
series by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall
not have given the notice of such meeting within 20 days after
the receipt of such request, then the Company or such Holders may
determine the time or times and the place or places for such
meetings and may call such meetings to take any action authorized
in SECTION 801, by giving notice thereof as provided in SECTION
802.
SECTION 804. QUALIFICATIONS FOR VOTING.
To be entitled to vote at any meeting of Holders a
Person shall be (a) a Holder of a Debt Security of the series
with respect to which such meeting is being held or (b) a Person
appointed by an instrument in writing as agent or proxy by such
Holder. The only Persons who shall be entitled to be present or
to speak at any meeting of Holders shall be the Persons entitled
to vote at such meeting and their counsel and any representatives
of the Trustee for the series with respect to which such meeting
is being held and its counsel and any representatives of the
Company and its counsel.
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SECTION 805. REGULATIONS.
Notwithstanding any other provisions of this Indenture,
the Trustee for any series may make such reasonable regulations
as it may deem advisable for any meeting of Holders of such
series, in regard to proof of the holding of Debt Securities of
such series and of the appointment of proxies, and in regard to
the appointment and duties of inspectors of votes, the submission
and examination of proxies, certificates and other evidence of
the right to vote, and such other matters concerning the conduct
of the meeting as it shall deem appropriate.
The Trustee shall, by an instrument in writing, appoint
a temporary chairman of the meeting, unless the meeting shall
have been called by the Company or by Holders of such series as
provided in SECTION 803, in which case the Company or the Holders
calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by a majority
vote of the meeting.
Subject to the provisos in the definition of
"Outstanding," at any meeting each Holder of a Debt Security of
the series with respect to which such meeting is being held or
proxy therefor shall be entitled to one vote for each $1,000
principal amount (or such other amount as shall be specified as
contemplated by SECTION 301) of Debt Securities of such series
held or represented by him; PROVIDED, HOWEVER, that no vote shall
be cast or counted at any meeting in respect of any Debt Security
challenged as not Outstanding and ruled by the chairman of the
meeting to be not Outstanding. The chairman of the meeting shall
have no right to vote other than by virtue of Outstanding Debt
Securities of such series held by him or instruments in writing
duly designating him as the person to vote on behalf of Holders
of Debt Securities of such series. Any meeting of Holders with
respect to which a meeting was duly called pursuant to the
provisions of SECTION 802 or 803 may be adjourned from time to
time by a majority of such Holders present and the meeting may be
held as so adjourned without further notice.
SECTION 806. VOTING.
The vote upon any resolution submitted to any meeting
of Holders with respect to which such meeting is being held shall
be by written ballots on which shall be subscribed the signatures
of such Holders or of their representatives by proxy and the
serial number or numbers of the Debt Securities held or
represented by them. The permanent chairman of the meeting shall
appoint two inspectors of votes who shall count all votes cast at
the meeting for or against any resolution and who shall make and
file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record
in duplicate of the proceedings of each meeting of Holders shall
be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of
votes on any vote by ballot taken thereat and affidavits by one
or more persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that said notice
was transmitted as provided in SECTION 802. The record shall
show the serial numbers of the Debt Securities voting in favor of
or against any resolution. The record shall be signed and
verified by the
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affidavits of the permanent chairman and secretary of the
meeting and one of the duplicates shall be delivered to the
Company and the other to the Trustee to be preserved by the
Trustee.
Any record so signed and verified shall be conclusive
evidence of the matters therein stated.
SECTION 807. NO DELAY OF RIGHTS BY MEETING.
Nothing contained in this ARTICLE EIGHT shall be deemed
or construed to authorize or permit, by reason of any call of a
meeting of Holders or any rights expressly or impliedly conferred
hereunder to make such call, any hindrance or delay in the
exercise of any right or rights conferred upon or reserved to the
Trustee or to any Holder under any of the provisions of this
Indenture or of the Debt Securities of any series.
ARTICLE NINE
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 901. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN
TERMS.
The Company shall not consolidate with or merge into
any other corporation or convey, transfer or lease its properties
and assets substantially as an entirety to any Person, unless:
(1) the corporation formed by such consolidation or
into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, the
properties and assets of the Company substantially as an
entirety (the "successor corporation") shall be a
corporation organized and existing under the laws of the
United States of America or any state or the District of
Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee,
in form reasonably satisfactory to the Trustee, the due and
punctual payment of the principal of (and premium, if any)
and interest on all the Debt Securities and the performance
of every covenant of this Indenture on the part of the
Company to be performed or observed;
(2) immediately after giving effect to 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; and
(3) if, as a result of any such consolidation or
merger or such conveyance, transfer or lease, properties or
assets of the Company would become subject to a mortgage,
pledge, lien, security interest or other encumbrance that
would not be permitted by this Indenture, the Company or
such successor corporation or Person, as the case may be,
shall take such steps as shall be necessary effectively to
secure all Debt Securities equally and ratably with (or
prior to) all indebtedness secured thereby; and
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(4) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating
that such consolidation, merger, conveyance, transfer or
lease and such supplemental indenture comply with this
Article and that all conditions precedent herein provided
for relating to such transaction have been complied with.
SECTION 902. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation with or merger into any other
corporation, or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety
in accordance with SECTION 901, the successor corporation 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 corporation had been named as the Company
herein, and thereafter the predecessor corporation shall be
relieved of all obligations and covenants under this Indenture
and the Debt Securities.
ARTICLE TEN
SUPPLEMENTAL INDENTURES
SECTION 1001. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF
HOLDERS.
Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time
and from time to time, may enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any
of the following purposes:
(1) to evidence the succession of another corporation
to the Company and the assumption by such successor of the
covenants of the Company herein and in the Debt Securities
contained; or
(2) to add to the covenants of the Company, for the
benefit of the Holders of all or any series of Debt
Securities appertaining thereto (and if such covenants are
to be for the benefit of less than all series, stating that
such covenants are expressly being included solely for the
benefit of such series), or to surrender any right or power
herein conferred upon the Company; or
(3) to add any additional Events of Default (and if
such Events of Default are to be applicable to less than all
series, stating that such Events of Default are expressly
being included solely to be applicable to such series); or
(4) to change or eliminate any of the provisions of
this Indenture, PROVIDED that any such change or elimination
shall become effective only when there is no Outstanding
Debt Security of any series created prior to the execution
of such
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supplemental indenture that is entitled to the benefit of
such provision and as to which such supplemental indenture
would apply; or
(5) to secure the Debt Securities; or
(6) to supplement any of the provisions of this
Indenture to such extent as shall be necessary to permit or
facilitate the defeasance and discharge of any series of
Debt Securities pursuant to ARTICLE FOUR OR ARTICLE
FOURTEEN, PROVIDED that any such action shall not adversely
affect the interests of the Holders of Debt Securities of
such series or any other series of Debt Securities in any
material respect; or
(7) to establish the form or terms of Debt Securities
of any series as permitted by SECTIONS 201 and 301; or
(8) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to
one or more series of Debt Securities 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 609; or
(9) to cure any ambiguity, to correct or supplement
any provision herein which may be defective or inconsistent
with any other provision herein, or to make any other
provisions with respect to matters or questions arising
under this Indenture which shall not be inconsistent with
any provision of this Indenture, PROVIDED such other
provisions shall not adversely affect the interests of the
Holders of Outstanding Debt Securities of any series created
prior to the execution of such supplemental indenture in any
material respect; or
(10) to change any place or places where (1) the
principal of and premium, if any, and interest, if any, on
all or any series of Debt Securities shall be payable, (2)
all or any series of Debt Securities may be surrendered for
registration or transfer, (3) all or any series of Debt
Securities may be surrendered for exchange, and (4) notices
and demands to or upon the Company in respect of all or any
series of Debt Securities and this Indenture may be served.
SECTION 1002. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a
majority in principal amount of the Outstanding Debt Securities
of each series affected by such supplemental indenture voting
separately, by Act of said Holders delivered to the Company and
the Trustee, the Company, when authorized by a Board Resolution,
and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the
Holders under this Indenture of such Debt Securities; PROVIDED,
HOWEVER, that no
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such supplemental indenture shall, without the consent of the
Holder of each outstanding Debt Security of each such series
affected thereby,
(1) change the Stated Maturity of the principal of,
or installment of interest, if any, on, any Debt Security,
or reduce the principal amount thereof or the interest
thereon or any premium payable upon redemption thereof, or
change the Currency or Currencies in which the principal of
(and premium, if any) or interest on such Debt Security is
denominated or payable, or reduce the amount of the
principal of a Discount Security that would be due and
payable upon a declaration of acceleration of the Maturity
thereof pursuant to SECTION 502, or adversely affect the
right of repayment or repurchase, if any, at the option of
the Holder, or reduce the amount of, or postpone the date
fixed for, any payment under any sinking fund or analogous
provisions for any Debt Security, or impair the right to
institute suit for the enforcement of any payment on or
after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date); or
(2) reduce the percentage in principal amount of the
Outstanding Debt Securities of any series, the consent of
whose Holders is required for any supplemental indenture, or
the consent of whose Holders is required for any waiver of
compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided
for in this Indenture; or
(3) modify any of the provisions of this Section,
SECTION 513 or SECTION 1109, except to increase any such
percentage or to provide that certain other provisions of
this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Debt Security
affected thereby; PROVIDED, HOWEVER, that this clause shall
not be deemed to require the consent of any Holder with
respect to changes in the references to "the Trustee" and
concomitant changes in this Section and SECTION 1109, or the
deletion of this proviso, in accordance with the
requirements of SECTIONS 609 and 1001(7).
It shall not be necessary for any Act of Holders under
this Section to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such Act
shall approve the substance thereof.
A supplemental indenture which changes or eliminates
any covenant or other provision of this Indenture with respect to
one or more particular series of Debt Securities or which
modifies the rights of the Holders of Debt Securities of such
series with respect to such covenant or other provision, shall be
deemed not to affect the rights under this Indenture of the
Holders of Debt Securities of any other series.
SECTION 1003. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts
created by, any supplemental indenture permitted by this Article
or the modifications thereby of the trusts created by this
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Indenture, the Trustee shall be entitled to receive, and (subject
to any incorporated provisions) shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of
such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter
into any such supplemental indenture which adversely affects the
Trustee's own rights, duties or immunities under this Indenture
or otherwise in a material way.
SECTION 1004. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under
this Article, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Debt
Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 1005. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture
Act as then in effect.
SECTION 1006. REFERENCE IN DEBT SECURITIES TO SUPPLEMENTAL
INDENTURES.
Debt Securities of any series authenticated and delivered
after the execution of any supplemental indenture pursuant to
this Article may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company
shall so determine, new Debt Securities of any series so modified
as to conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Debt Securities of such
series.
SECTION 1007. NOTICE OF SUPPLEMENTAL INDENTURE.
Promptly after the execution by the Company and the
appropriate Trustee of any supplemental indenture pursuant to
SECTION 1002, the Company shall transmit, in the manner and to
the extent provided in SECTION 105, to all Holders of any series
of the Debt Securities affected thereby, a notice setting forth
in general terms the substance of such supplemental indenture.
ARTICLE ELEVEN
COVENANTS
SECTION 1101. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company covenants and agrees for the benefit of
each series of Debt Securities that it will duly and punctually
pay the principal of (and premium, if any) and interest on the
Debt Securities in accordance with the terms of the Debt
Securities and this Indenture.
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SECTION 1102. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in each Place of Payment for
each series of Debt Securities an office or agency where Debt
Securities of that series may be presented or surrendered for
payment, where Debt Securities of that series may be surrendered
for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Debt Securities
of that series and this Indenture may be served. The Company
will give prompt written notice to the Trustee of the location,
and any change in the location, of such office or agency. If at
any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of
the Trustee, and the Company hereby appoints the Trustee as its
agent to receive all presentations, surrenders, notices and
demands.
SECTION 1103. MONEY FOR DEBT SECURITIES; PAYMENTS TO BE HELD IN
TRUST.
If the Company shall at any time act as its own Paying
Agent with respect to any series of Debt Securities, it will, on
or before each due date of the principal of (and premium, if any)
or interest on any of the Debt Securities of such series,
segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein
provided, and will promptly notify the Trustee of its action or
failure so to act.
Whenever the Company shall have one or more Paying
Agents with respect to any series of Debt Securities, it will, by
or on each due date of the principal (and premium, if any) or
interest on any Debt Securities of such series, deposit with any
such Paying Agent a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled thereto, and
(unless any such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
The Company will cause each Paying Agent with respect
to any series of Debt Securities other than the Trustee to
execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee, subject to the
provisions of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest on Debt
Securities of such series in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the
Company (or any other obligor upon the Debt Securities of
such series) in the making of any payment of principal (and
premium, if any) or interest on the Debt Securities of such
series; and
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(3) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such Paying
Agent.
The Company may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or for
any other purpose, pay, or by Company Order direct any Paying
Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by
the Company or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of
the principal of (and premium, if any) or interest on any Debt
Security of any series and remaining unclaimed for two years
after such principal (and premium, if any) or interest has became
due and payable shall be paid to the Company upon Company
Request, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Debt Security shall
thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon
cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the
expense of the Company cause to be transmitted in the manner and
to the extent provided by SECTION 105, notice that such money
remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such
notification, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 1104. CORPORATE EXISTENCE.
Subject to ARTICLE NINE, the Company will do or cause
to be done all things necessary to preserve and keep in full
force and effect its corporate existence, rights (charter and
statutory) and franchises; PROVIDED, HOWEVER, that the Company
shall not be required to preserve any such right or franchise if
the Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company.
SECTION 1105. LIMITATIONS ON MORTGAGES.
Nothing in this Indenture or in the Debt Securities
shall in any way restrict or prevent the Company or any
Subsidiary from incurring any indebtedness; PROVIDED that the
Company covenants and agrees that neither it nor any Subsidiary
will issue, assume or guarantee any indebtedness or obligation
secured by Mortgages upon any Principal Property, without
effectively providing that the Debt Securities then Outstanding
and thereafter created (together with, if the Company so
determines, any other indebtedness or obligation then existing
and any other indebtedness or obligation thereafter created
ranking equally with the Debt Securities) shall be secured
equally and ratably with (or prior to) such indebtedness or
obligation as long as such
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indebtedness or obligation shall be so secured, except that the
foregoing provisions shall not apply to:
(a)(i) Mortgages to secure all or any part of the
purchase price or the cost of construction of property
acquired or constructed by the Company or a Subsidiary,
PROVIDED such indebtedness and related Mortgage are
incurred within 18 months after acquisition, or
completion of construction and full operation,
whichever is later;
(ii) Mortgages on property owned by the Company or
a Subsidiary to secure indebtedness incurred to
construct additions, substantial repairs or alterations
or substantial improvements to such properties,
PROVIDED the amount of such indebtedness does not
exceed the expense incurred to construct such
additions, substantial repairs or alterations or
substantial improvements and PROVIDED FURTHER that such
indebtedness and related Mortgage are incurred within
18 months after the completion of such construction,
repairs, alterations or improvements;
(b) Mortgages existing on property at the time of
acquisition of such property by the Company or a Subsidiary
or on the property of a Corporation at the time of the
acquisition of such Corporation by the Company or a
Subsidiary (including acquisitions through merger or
consolidation);
(c) Mortgages to secure indebtedness on which the
interest payments to bondholders are exempt from federal
income tax under Section 103 of the Code;
(d) In the case of a Consolidated Subsidiary,
Mortgages in favor of the Company or another Consolidated
Subsidiary;
(e) Mortgages existing on the date of this Indenture;
(f) Mortgages in favor of a government or
governmental entity that:
(i) secure indebtedness which is guaranteed
by the government or governmental entity, or
(ii) secure indebtedness incurred to finance
all or some of the purchase price or cost of
construction of goods, products or facilities produced
under contract or subcontract for the government or
governmental entity, or
(iii) secure indebtedness incurred to finance
all or some of the purchase price or cost of
construction of the property subject to the Mortgage;
(g) Mortgages incurred in connection with the
borrowing of funds if within 120 days after entering into
such Mortgage, such funds are used to repay indebtedness
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in the same principal amount secured by other Mortgages on
Principal Property with a fair market value at least equal
to the fair market value of the Principal Property that
secures the new Mortgages, in each case based on an
appraisal by an Independent professional appraiser;
(h) Mortgages arising in connection with the transfer
of tax benefits in accordance with Section 168(f)(8) of the
Code (or any similar provision of law from time to time in
effect); PROVIDED, that such Mortgages (i) are incurred
within 90 days (or any longer period, not in excess of one
year, as any such provision of law may from time to time
permit) after the acquisition of the property or equipment
subject to said Mortgage, (ii) do not extend to any other
property or equipment and (iii) are solely for the purpose
of said transfer of tax benefits or otherwise permitted by
this SECTION 1105; and
(i) Any extension, renewal or replacement (or
successive extensions, renewals or replacements), in whole
or in part, of any Mortgage referred to in the foregoing
clauses (a) to (h) inclusive or of any indebtedness secured
thereby; PROVIDED that the principal amount of indebtedness
secured thereby shall not exceed the principal amount of
indebtedness so secured at the time of such extension,
renewal or replacement, and that such extension, renewal or
replacement Mortgage shall be limited to all or part of
substantially the same property that secured the Mortgage
extended, renewed or replaced (plus improvements on such
property).
SECTION 1106. LIMITATIONS ON SALE AND LEASE-BACK.
The Company covenants and agrees that neither it nor
any Subsidiary will enter into any arrangement with any Person
(other than the Company or a Subsidiary), or to which any such
Person is a party, providing for the leasing to the Company or a
Subsidiary for a period of more than three years of any Principal
Property that has been or is to be sold or transferred by the
Company or such Subsidiary to such Person or to any other Person
(other than the Company or a Subsidiary), to which the funds have
been or are to be advanced by such Person on the security of the
leased property (in this Article Eleven called "Sale and
Lease-Back Transactions") unless either:
(i) the Company or such Subsidiary would be entitled,
pursuant to SECTION 1105, to incur indebtedness secured by a
Mortgage on the property to be leased, without equally and
ratable securing the Debt Securities, or
(ii) the Company (and in any such case the Company
covenants and agrees that it will do so) during or
immediately after the expiration of 120 days after the
effective date of such Sale and Lease-Back Transaction
(whether made by the Company or a Subsidiary) applies to the
voluntary retirement of Funded Debt and/or the acquisition
or construction of Principal Property an amount equal to the
value of such Sale and Lease-Back Transaction, less the
principal amount of Debt Securities delivered, within 120
days after the effective date of such arrangement, to the
Trustee for retirement and cancellation and the principal
amount of other Funded Debt voluntarily retired by the
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Company within such 120-day period, excluding retirements of
Debt Securities and other Funded Debt as a result of
conversions or pursuant to mandatory sinking fund or
prepayment provisions or by payment at maturity.
For purposes of this SECTION 1106, the term "value"
shall mean, with respect to a Sale and Lease-Back Transaction, as
of any particular time, the amount equal to the greater of (1)
the net proceeds of the sale or transfer of the property leased
pursuant to such Sale and Lease-Back Transaction or (2) the fair
value in the opinion of the Chief Financial Officer of the
Company of such property at the time of entering into such Sale
and Lease-Back Transaction, in either case divided first by the
number of full years of the term of the lease and then multiplied
by the number of full years of such term remaining at the time of
determination, without regard to any renewal or extension options
contained in the lease.
SECTION 1107. LIMITATIONS ON INCURRENCE OF DEBT OR ISSUANCE OF
PREFERRED STOCK BY RESTRICTED SUBSIDIARIES
The Company shall not permit any Restricted Subsidiary
to, directly or indirectly, create, incur, issue, assume or
otherwise become liable with respect to, extend the maturity of
or become responsible for the payment of, as applicable, any Debt
or Preferred Stock other than:
(i) Debt outstanding on the date of this Indenture;
(ii) Debt of a Restricted Subsidiary that
represents the assumption by such Restricted Subsidiary of
Debt of another Restricted Subsidiary;
(iii) Debt or Preferred Stock of any corporation
or partnership existing at the time such corporation or
partnership becomes a Subsidiary;
(iv) Debt of a Restricted Subsidiary arising from
agreements providing for indemnification, adjustment of
purchase price or similar obligations or from guarantees,
letters of credit, surety bonds or performance bonds
securing any obligations of the Company or any of its
Subsidiaries incurred or assumed in connection with the
disposition of any business, property or Subsidiary, other
than guarantees or similar credit support by any Restricted
Subsidiary of indebtedness incurred by any Person acquiring
all or any portion of such business, property or Subsidiary
for the purpose of financing such acquisition, PROVIDED
that the maximum aggregate liability in respect of all such
Debt in the nature of such guarantees will at no time exceed
the gross proceeds (including cash and the fair market value
of property other than cash) actually received from the
disposition of such business, property or Subsidiary;
(v) Debt of a Restricted Subsidiary in respect of
performance, surety and other similar bonds, bankers
acceptances and letters of credit provided by such
Restricted Subsidiary in the ordinary course of business;
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(vi) Debt secured by a Mortgage incurred to finance the purchase
price or cost of construction of property (or additions,
substantial repairs, alterations or substantial improvements
thereto), provided that (A) such Mortgage and the Debt
secured thereby are incurred within 18 months of the later
of such acquisition or completion of construction (or such
addition, repair, alteration or improvement) and full
operation thereof and (B) such Mortgage does not relate to
any property other than the property so purchased or
constructed (or added, repaired, altered or improved);
(vii) Permitted Subsidiary Refinancing Debt;
(viii) Debt (including without limitation, Debt arising from a
guarantee) of a Restricted Subsidiary to the Company or
another Subsidiary, but only for so long as held or
owned by the Company or another Subsidiary; or
(ix) any obligation pursuant to a Sale and Lease-Back Transaction
permitted under SECTION 1106.
SECTION 1108. EXEMPTED TRANSACTIONS.
Notwithstanding the provisions of SECTIONS 1105, 1106
and 1107, the Company and any Subsidiary may issue, assume or
guarantee indebtedness secured by Mortgages and enter into Sale
and Lease-Back Transactions that would otherwise be subject to
the restrictions in SECTIONS 1105 and 1106, respectively, and any
Restricted Subsidiary may issue, assume or otherwise become
liable for any Debt or Preferred Stock that would otherwise be
subject to the restrictions in SECTION 1107, PROVIDED (a) the
aggregate outstanding principal amount of all other indebtedness
of the Company and its Subsidiaries that is subject to the
restrictions in SECTION 1105 (not including indebtedness
permitted to be secured under clauses (a) to (i), inclusive of
SECTION 1105), plus (b) the aggregate Attributable Debt in
respect of the Sale and Lease-Back Transactions in existence at
such time (not including Sale and Lease-Back Transactions
permitted by SECTION 1106(i) or (ii)), plus (c) the aggregate
principal amount of all Debt or Preferred Stock of any Restricted
Subsidiary subject to the restrictions in SECTION 1107, (not
including Debt or Preferred Stock permitted under clauses (i) to
(ix), inclusive, of SECTION 1107) does not exceed 15% of the
Consolidated Net Tangible Assets of the Company and its
Consolidated Subsidiaries.
SECTION 1109. OFFICERS' CERTIFICATE AS TO DEFAULT.
The Company will deliver to the Trustee, on or before a
date not more than four months after the end of each fiscal year
of the Company ending after the date hereof, an Officers'
Certificate stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance and
observation of any of the terms, provisions and conditions of
this Indenture, and, if the Company shall be in default,
specifying all such defaults and the nature thereof of which they
may have knowledge.
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ARTICLE TWELVE
REDEMPTION OF DEBT SECURITIES
SECTION 1201. APPLICABILITY OF ARTICLE.
Debt Securities of any series that are redeemable
before their Maturity shall be redeemable in accordance with
their terms and (except as otherwise specified pursuant to
SECTION 301 for Debt Securities of any series) in accordance with
this Article.
SECTION 1202. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem (or, in the case
of Discount Securities, to permit the Holders to elect to
surrender for redemption) any Debt Securities shall be evidenced
by a Board Resolution. In case of any redemption at the election
of the Company of less than all of the Debt Securities of any
series pursuant to SECTION 1204, the Company shall, at least 60
days prior the Redemption Date fixed by the Company (unless a
shorter notice shall be satisfactory to the Trustee), notify the
Trustee of such Redemption Date and of the principal amount of
Debt Securities of such series to be redeemed. In the case of
any redemption of Debt Securities prior to the expiration of any
restriction on such redemption provided in the terms of such Debt
Securities or elsewhere in this Indenture, the Company shall
furnish the Trustee with an Officer's Certificate evidencing
compliance with such restrictions.
SECTION 1203. SELECTION BY TRUSTEE OF DEBT SECURITIES TO BE
REDEEMED.
If less than all the Debt Securities of any series are
to be redeemed at the election of the Company, the particular
Debt Securities to be redeemed shall be selected not more than 60
days prior to the Redemption Date by the Trustee, from the
Outstanding Debt Securities of such series not previously called
for redemption, by such method as the Trustee shall deem fair and
appropriate and which may provide for the selection for
redemption of portions (equal to the minimum authorized
denomination for Debt Securities of such series or any integral
multiple thereof) of the principal amount of Debt Securities of
such series in a denomination larger than the minimum authorized
denomination for Debt Securities of such series pursuant to
SECTION 302 in the Currency in which the Debt Securities of such
series are denominated. The portions of the principal amount of
Debt Securities so selected for partial redemption shall be equal
to the minimum authorized denominations for Debt Securities of
such series pursuant to SECTION 302 in the Currency in which the
Debt Securities of such series are denominated or any integral
multiple thereof, except as otherwise set forth in the applicable
form of Debt Securities. In any case where more than one Debt
Security of such series is registered in the same name, the
Trustee in its discretion may treat the aggregate principal
amount so registered as if it were represented by one Debt
Security of such series.
The Trustee shall promptly notify the Company in
writing of the Debt Securities selected for redemption and, in
the case of any Debt Securities selected for partial redemption,
the principal amount thereof to be redeemed.
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For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of
Debt Securities shall relate, in the case of any Debt Security
redeemed or to be redeemed only in part, to the portion of the
principal amount of such Debt Security that has been or is to be
redeemed.
SECTION 1204. NOTICE OF REDEMPTION.
Notice of redemption 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, not less than 30 days and not more than
60 days prior to the Redemption Date to the Holders of Debt
Securities of any series to be redeemed in whole or in part
pursuant to this ARTICLE TWELVE, in the manner provided in
SECTION 105. Any notice so given shall be conclusively presumed
to have been duly given, whether or not the Holder receives such
notice. Failure to give such notice, or any defect in such
notice to the Holder of any Debt Security of a series designated
for redemption, in whole or in part, shall not affect the
sufficiency of any notice of redemption with respect to the
Holder of any other Debt Security of such series.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) that Debt Securities of such series are being
redeemed by the Company pursuant to provisions contained in
this Indenture or the terms of the Debt Securities of such
series or a supplemental indenture establishing such series,
if such be the case, together with a brief statement of the
facts permitting such redemption,
(4) if less than all Outstanding Debt Securities of
any series are to be redeemed, the identification (and, in
the case of partial redemption, the principal amounts) of
the particular Debt Securities to be redeemed,
(5) that on the Redemption Date the Redemption Price
will become due and payable upon each such Debt Security to
be redeemed, and that interest thereon, if any, shall cease
to accrue on and after said date,
(6) the Place or Places of Payment where such Debt
Securities are to be surrendered for payment of the
Redemption Price, and
(7) that the redemption is for a sinking fund, if
such is the case.
SECTION 1205. DEPOSIT OF REDEMPTION PRICE.
On or prior to the Redemption Date for any Debt
Securities, the Company shall deposit with the Trustee or with a
Paying Agent (or, if the Company is acting as its own Paying
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Agent, segregate and hold in trust as provided in SECTION 1103)
an amount of money in the Currency or Currencies in which such
Debt Securities are denominated (except as provided pursuant to
SECTION 301) sufficient to pay the Redemption Price of such Debt
Securities or any portions thereof that are to be redeemed on
that date.
SECTION 1206. DEBT SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid,
any Debt Securities so to be redeemed shall, on the Redemption
Date, become due and payable at the Redemption Price in the
Currency in which the Debt Securities of such series are payable
(except as otherwise specified pursuant to SECTIONS 301 or 310),
and from and after such date (unless the Company shall default in
the payment of the Redemption Price) such Debt Securities shall
cease to bear interest. Upon surrender of any such Debt Security
for redemption in accordance with said notice, such Debt Security
shall be paid by the Company at the Redemption Price; PROVIDED,
HOWEVER, that, unless otherwise specified as contemplated by
SECTION 301, installments of interest on Debt Securities that
have a Stated Maturity or on prior to the Redemption Date for
such Debt Securities shall be payable according to the terms of
such Debt Securities and the provisions of SECTION 307.
If any Debt Security called for redemption shall not be
so paid upon surrender thereof for redemption, the principal (and
premium, if any) shall, until paid, bear interest from the
Redemption Date at the rate prescribed therefor in the Debt
Security.
SECTION 1207. DEBT SECURITIES REDEEMED IN PART.
Any Debt Security that is to be redeemed only in part
shall be surrendered at the Corporate Trust Office or such other
office or agency of the Company as is specified pursuant to
SECTION 301 with, if the Company, the Security Registrar or the
Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed by, the Holder thereof or
his attorney duly authorized in writing, and the Company shall
execute, and the Trustee shall authenticate and deliver to the
Holder of such Debt Security without service charge, a new Debt
Security or Debt Securities of the same series, of like tenor and
form, of any authorized denomination as requested by such Holder
in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Debt Security so
surrendered. In the case of a Debt Security providing
appropriate space for such notation, at the option of the Holder
thereof, the Trustee, in lieu of delivering a new Debt Security
or Debt Securities as aforesaid, may make a notation on such Debt
Security of the payment of the redeemed portion thereof.
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ARTICLE THIRTEEN
SINKING FUNDS
SECTION 1301. APPLICABILITY OF ARTICLE.
The provisions of this ARTICLE THIRTEEN shall be
applicable to any sinking fund for the retirement of Debt
Securities of a series except as otherwise specified pursuant to
SECTION 301 for Debt Securities of such series.
The minimum amount of any sinking fund payment provided
for by the terms of Debt 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
terms of Debt Securities of any series is herein referred to as
an "optional sinking fund payment." If provided for by the terms
of Debt Securities of any series, the amount of any cash sinking
fund payment may be subject to reduction as provided in SECTION
1302. Each sinking fund payment shall be applied to the
redemption of Debt Securities of any series as provided for by
the terms of Debt Securities of such series.
SECTION 1302. SATISFACTION OF MANDATORY SINKING FUND PAYMENTS
WITH DEBT SECURITIES.
In lieu of making all or any part of a mandatory
sinking fund payment with respect to any Debt Securities of a
series in cash, the Company may at its option, at any time no
less than 45 days prior to the date on which such sinking fund
payment is due, deliver to the Trustee Debt Securities of such
series theretofore purchased or otherwise acquired by the
Company, except Debt Securities of such series that have been
redeemed through the application of mandatory or optional sinking
fund payments pursuant to the terms of the Debt Securities of
such series, accompanied by a Company Order instructing the
Trustee to credit such obligations and stating that the Debt
Securities of such series were originally issued by the Company
by way of bona fide sale or other negotiation for value; PROVIDED
that such Debt Securities shall not have been previously so
credited. Such Debt Securities shall be received and credited
for such purpose by the Trustee at the Redemption Price specified
in such Debt Securities for redemption through operation of the
sinking fund and the amount of such mandatary sinking fund
payment shall be reduced accordingly.
SECTION 1303. REDEMPTION OF DEBT SECURITIES FOR SINKING FUND.
Not less than 60 days prior to each sinking fund
payment date for any series of Debt Securities (unless a shorter
period shall be satisfactory to the Trustee), the Company will
deliver to the Trustee an Officer's Certificate specifying the
amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if
any, that is to be satisfied by payment of cash in the Currency
or Currencies in which the Debt Securities of such series are
denominated (except as provided pursuant to SECTION 301) and the
portion thereof, if any, that is to be satisfied by delivering
and crediting Debt Securities of such series pursuant to SECTION
1302 and whether the Company intends to exercise its rights to
make a
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permitted optional sinking fund payment with respect to such
series. Such certificate shall be irrevocable and upon its
delivery the Company shall be obligated to make the cash payment
or payments therein referred to, if any, on or before the next
succeeding sinking fund payment date. In the case of the failure
of the Company to deliver such certificate, the sinking fund
payment due on the next succeeding sinking fund payment date for
such series shall be paid entirely in cash and shall be
sufficient to redeem the principal amount of the Debt Securities
of such series subject to a mandatory sinking fund payment
without the right to deliver or credit Debt Securities as
provided in SECTION 1302 and without the right to make any
optional sinking fund payment with respect to such series at such
time.
Any sinking fund payment or payments (mandatory or
optional) made in cash plus any unused balance of any preceding
sinking fund payments made with respect to the Debt Securities of
any particular series shall be applied by the Trustee (or by the
Company if the Company is acting as its own Paying Agent) on the
sinking fund payment date on which such payment is made (or, if
such payment is made before a sinking fund payment date, on the
sinking fund payment date immediately following the date of such
payment) to the redemption of Debt Securities of such series at
the Redemption Price specified in such Debt Securities with
respect to the sinking fund. Any sinking fund moneys not so
applied or allocated by the Trustee (or by the Company if the
Company is acting as its own Paying Agent) to the redemption of
Debt Securities shall be added to the next sinking fund payment
received by the Trustee (or if the Company is acting as its own
Paying Agent, segregated and held in trust as provided in SECTION
1103) for such series and, together with such payment (or such
amount so segregated) shall be applied in accordance with the
provisions of this Section. Any and all sinking fund moneys with
respect to the Debt Securities of any particular series held by
the Trustee (or if the Company is acting as its own Paying Agent,
segregated and held in trust as provided in SECTION 1103) on the
last sinking fund payment date with respect to Debt Securities of
such series and not held for the payment or redemption of
particular Debt Securities of such series shall be applied by the
Trustee (or by the Company if the Company is acting as its own
Paying Agent), together with other moneys, if necessary, to be
deposited (or segregated) sufficient for the purpose, to the
payment of the principal of the Debt Securities of such series at
Maturity.
The Trustee shall select or cause to be selected the
Debt Securities to be redeemed upon such sinking fund payment
date in the manner specified in SECTION 1203 and the Company
shall cause notice of the redemption thereof to be given in the
manner provided in SECTION 1204. Such notice having been duly
given, the redemption of such Debt Securities shall be made upon
the terms and in the manner stated in SECTION 1206.
On or before each sinking fund payment date, the
Company shall pay to the Trustee (or, if the Company is acting as
its own Paying Agent, the Company shall segregate and hold in
trust as provided in SECTION 1103) in cash a sum, in the Currency
or Currencies in which Debt Securities of such series are
denominated (except as provided pursuant to SECTIONS 301 or 310),
equal to the principal and interest accrued to the Redemption
Date for Debt Securities or portions thereof to be redeemed on
such sinking fund payment date pursuant to this Section.
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Neither the Trustee nor the Company shall redeem any
Debt Securities of a series with sinking fund moneys or mail any
notice of redemption of Debt Securities of such series by
operation of the sinking fund for such series during the
continuance of a default in payment of interest, if any, on any
Debt Securities of such series or of any Event of Default (other
than an Event of Default occurring as a consequence of this
paragraph) with respect to the Debt Securities of such series,
except that if the notice of redemption shall have been provided
in accordance with the provisions hereof, the Trustee (or the
Company, if the Company is then acting as its own Paying Agent)
shall redeem such Debt Securities if cash sufficient for that
purpose shall be deposited with the Trustee (or segregated by the
Company) for that purpose in accordance with the terms of this
Article. 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 such sinking fund
shall, during the continuance of such default or Event of
Default, be held as security for the payment of the Debt
Securities of such series; PROVIDED, HOWEVER, that in case such
default or Event of Default shall have been cured or waived as
provided herein, such moneys shall thereafter be applied on the
next sinking fund payment date for the Debt Securities of such
series on which such moneys may be applied pursuant to the
provisions of this Section.
ARTICLE FOURTEEN
DEFEASANCE
SECTION 1401. APPLICABILITY OF ARTICLE.
If, pursuant to SECTION 301, provision is made for the
defeasance of Debt Securities of a series, and if the Debt
Securities of such series are denominated and payable only in
Dollars (except as provided pursuant to SECTION 301) then the
provisions of this Article shall be applicable except as
otherwise specified pursuant to SECTION 301 for Debt Securities
of such series. Defeasance provisions, if any, for Debt
Securities denominated in a Foreign Currency or Currencies may be
specified pursuant to SECTION 301.
SECTION 1402. DEFEASANCE UPON DEPOSIT OF MONEYS OR U.S.
GOVERNMENT OBLIGATIONS.
At the Company's option, either (a) the Company shall
be deemed to have been Discharged (as defined below) from its
obligations with respect to Debt Securities of any series on the
91st day after the applicable conditions set forth below have
been satisfied or (b) the Company shall cease to be under any
obligation to comply with any term, provision or condition set
forth in SECTIONS 901, 1105, 1106, 1107, 1108 and 1109 with
respect to Debt Securities of any series (and, if so specified
pursuant to SECTION 301, any other restrictive covenant added for
the benefit of such series pursuant to SECTION 301) at any time
after the applicable conditions set forth below have been
satisfied:
(1) the Company shall have deposited or caused to be
deposited irrevocably with the Trustee as trust funds in
trust, specifically pledged as security for, and dedicated
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solely to, the benefit of the Holders of the Debt Securities
of such series (i) money in an amount, or (ii) U.S.
Government Obligations (as defined below) which through the
payment of interest and principal in respect thereof in
accordance with their terms will provide, not later than one
day before the due date of any payment, money in an amount,
or (iii) a combination of (i) and (ii), sufficient, in the
opinion (with respect to (i) and (ii)) of a nationally
recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee,
to pay and discharge each installment of principal
(including any mandatory sinking fund payments) of and
premium, if any, and interest on, the Outstanding Debt
Securities of such series on the dates such installments of
interest or principal and premium are due;
(2) such deposit will 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;
(3) if the Debt Securities of such series are then
listed on any national securities exchange, the Company
shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Company's exercise of its option under
this Section would not cause such Debt Securities to be
delisted;
(4) no Event of Default or event (including such
deposit) which, with notice or lapse of time or both, would
become an Event of Default with respect to the Debt
Securities of such series shall have occurred and be
continuing on the date of such deposit and no Event of
Default under SECTION 501(5) or SECTION 501(6) or event
which with the giving of notice or lapse of time, or both,
would become an Event of Default under SECTION 501(5) or
SECTION 501(6) shall have occurred and be continuing on the
91st day after such date; and
(5) the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of the
Debt Securities of such series will not recognize income,
gain or loss for federal income tax purposes as a result of
such deposit, defeasance or Discharge.
"Discharged" means that the Company shall be deemed to
have paid and discharged the entire indebtedness represented by,
and obligations under, the Debt Securities of such series and to
have satisfied all the obligations under this Indenture relating
to the Debt Securities of such series (and the Trustee, at the
expense of the Company, shall execute proper instruments
acknowledging the same), except (A) the rights of Holders of Debt
Securities of such series to receive, from the trust fund
described in clause (1) above, payment of the principal of (and
premium, if any) and interest on such Debt Securities when such
payments are due, (B) the Company's obligations with respect to
the Debt Securities of such series under SECTIONS 304, 305, 306,
1103 and 1403 and (C) the rights, powers, trusts, duties and
immunities of the Trustee hereunder.
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"U.S. Government Obligations" means securities that are
(i) direct obligations of the United States of America for the
payment of which its full faith and credit is pledged, or (ii)
obligations of a Person controlled or supervised by and acting as
an agency or instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America,
which, in either case under clauses (i) or (ii), are not callable
or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust company as
custodian with respect to any such U.S. Government Obligation or
a specific payment of interest on or principal of any such U.S.
Government Obligation held by such custodian for the account of
the holder of a depository receipt; PROVIDED that (except as
required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such
depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or the specific payment
of interest on or principal of the U.S. Government Obligation
evidenced by such depository receipt.
SECTION 1403. DEPOSIT MONEYS AND U.S. GOVERNMENT OBLIGATIONS TO
BE HELD IN TRUST.
All moneys and U.S. Government Obligations deposited
with the Trustee pursuant to SECTION 1402 in respect of Debt
Securities of a series shall be held in trust and applied by it,
in accordance with the provisions of such Debt Securities and
this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying
Agent) as the Trustee may determine, to the Holders of such Debt
Securities, of all sums due and to become due thereon for
principal (and premium, if any) and interest, if any, but such
money need not be segregated from other funds except to the
extent required by law.
SECTION 1404. REPAYMENT TO COMPANY.
The Trustee and any Paying Agent shall promptly pay or
return to the Company upon Company Request any moneys or U.S.
Government Obligations held by them at any time that are not
required for the payment of the principal of (and premium, if
any) and interest on the Debt Securities of any series for which
money or U.S. Government Obligations have been deposited pursuant
to SECTION 1402.
The provisions of the last paragraph of SECTION 1103
shall apply to any money held by the Trustee or any Paying Agent
under this Article that remains unclaimed for two years after the
Maturity of any series of Debt Securities for which money or U.S.
Government Obligations have been deposited pursuant to SECTION
1402.
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IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
COLUMBIA HEALTHCARE CORPORATION
By: ________David G. Anderson______
Print Name: __David G. Anderson____
Title: _Vice President -- Finance__
Attest:
By: ______Joan O. Kroger______
Print Name: __Joan O. Kroger__
Title: __Corporate Secretary__
Seal
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By: ______John R. Prendiville______
Print Name: __John R. Prendiville__
Title: _______Vice President_______
Attest:
By: ______Grace A. Gorka______
Print Name: __Grace A. Gorka__
Title: _____Trust Officer_____
Seal
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STATE OF )
) ss:
COUNTY OF )
On the 15th day of December 1993, before me
personally came David G. Anderson to me known, who, being by me
duly sworn, did depose and say that he is Vice President of
Finance of Columbia Healthcare Corporation, one of the corpora-
tions 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.
____Margaret Wood Schneider__
Notary Public
SEAL
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STATE OF )
) ss:
COUNTY OF )
On the 16th day of December 1993, before me
personally came John R. Prendiville to me known, who, being by me
duly sworn, did depose and say that he is Vice President
of The First National Bank of Chicago, 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 association, and that
he signed his name thereto by like authority.
_______Somsri Helmer________
Notary Public
SEAL
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EXHIBIT 10.11
AGREEMENT
THIS AGREEMENT is made by and between Carl F. Pollard ("Pollard"), and
Columbia Healthcare Corporation, a Delaware corporation and successor of
Columbia Hospital Corporation, a Nevada corporation (individually or jointly
"Columbia").
W I T N E S E T H :
WHEREAS, Pollard has entered into that certain employment agreement,
dated August 31, 1993, regarding his employment with Columbia (the "Columbia
Employment Agreement"); and
WHEREAS, the parties desire to enter into this Agreement to modify,
preserve and secure certain of Pollard's benefits under the Columbia
Employment Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein contained and other valuable
consideration, the parties agree as follows:
1. CONTINUED BOARD SERVICE. Pollard agrees to continue to serve
on Columbia's Board of Directors in the capacity as Chairman of the Executive
Committee and devote his best efforts to serving Columbia in that role.
2. CONFIDENTIAL INFORMATION.
(i) Pollard recognizes and acknowledges that during the term of
his employment, he has or will develop, have access to and come into
possession of trade secrets and confidential information of Columbia,
including, without limitation, software systems, specifications,
programs and documentation, the methods and data which Columbia owns,
plans or develops, whether for its own use or for use by its clients,
developments, designs, inventions and improvements, trade secrets and
works of authorship, customer lists, supplier lists, proposals,
marketing plans and procedures, all of which are confidential and are
the property of Columbia. Pollard further recognizes and acknowledges
that in order to enable Columbia to perform services for its customers,
those customers may furnish to Columbia confidential information
concerning their business affairs, property, methods of operation or
other data and that the goodwill afforded to Columbia and its employees
requires keeping
<PAGE>
such services and information confidential. All of these materials and
information including, without limitation, those relating to Columbia's
systems and customers, will be referred to below as "Proprietary
Information."
(ii) Pollard agrees that during the term of Pollard's employment
with Columbia and thereafter, Pollard will keep any and all Proprietary
Information confidential and will not disclose any Proprietary
Information, directly or indirectly, to any third person or entity,
without the prior written consent of Columbia. Pollard further agrees
that, during the term of Pollard's employment with Columbia and
thereafter, Pollard will not use, handle, copy or duplicate, in part or
in whole, any Proprietary Information, except as directed by Columbia
and in the ordinary course of Columbia's business. This confidentiality
covenant has no temporal, geographic or territorial restriction.
(iii) Pollard agrees that upon request by Columbia, and in any
event immediately upon termination of Pollard's employment, Pollard
shall turn over to Columbia all property, keys, notes, memoranda,
writings, lists, files, reports, customer lists, correspondence, tapes,
software, cards, surveys, maps, logs, machines, technical data, work
product or any other tangible product or document which has been
produced by, received by or otherwise submitted or made available to
Pollard during or prior to Pollard's employment with Columbia.
(iv) Pollard understands and agrees that all Proprietary
Information is and shall remain the property of Columbia and that
Pollard has not and will not appropriate for Pollard's own use or for
the use of any third party any Proprietary Information. Furthermore,
Pollard hereby assigns and agrees to assign to Columbia or its
subsidiaries or affiliates, as appropriate, its successors, assigns or
nominees, Pollard's entire right, title and interest in any
developments, designs, patents, inventions and improvements, trade
secrets, trademarks, copyrightable subject matter or other Proprietary
Information which Pollard has made or conceived, or may make or
conceive, either solely or jointly with others, while providing services
to Columbia, or with the use of time, material or facilities of Columbia
or relating to any actual or anticipated business, research,
development, product, service or activity of Columbia known to Pollard
while employed at Columbia, or suggested by or resulting from any task
assigned to Pollard or work performed by Pollard for or on behalf of
Columbia, whether or not such work was performed prior to the date of
this Agreement.
(v) For purposes of the foregoing, service by the Pollard with
Galen and Humana Inc. will be deemed service with Columbia.
3. COVENANT NOT TO COMPETE. Pollard agrees that because of the
confidential and sensitive nature of the Proprietary Information and because
the use of, or even the appearance to Columbia and its reputation, or to
customers of Columbia, Pollard will not, from the date of this Agreement until
the expiration of one (1) year after the date on which
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Pollard's employment as an employee of Columbia terminates for any reason,
directly or indirectly, own, manage, operate, join, control, be employed by,
or participate in the ownership, management, operation or control of or be
connected in any manner, including as director, officer, consultant,
independent contractor, employee, partner, or investor with any business,
enterprise, organization or other individual or entity which solicits
business, performs services or delivers goods that are comparable to or
competitive with any business of Columbia; provided, however, that the
ownership of less than five percent (5%) of the outstanding capital stock of
any entity with securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended, shall not be prohibited by this Section 3.
4. NON-SOLICITATION. Pollard agrees that during the term of
Pollard's employment with Columbia and for a period of three (3) years
thereafter, Pollard will not interfere with Columbia's relationship with, or
endeavor to employ or entice away from Columbia, any business, enterprise,
organization or other individual or entity, which is an employee, customer or
supplier of Columbia, or which maintains a business relationship with any
business of Columbia.
5. BENEFITS ON AND AFTER TERMINATION. In consideration of
Pollard's promises contained herein and his termination as an employee of
Columbia, and in fulfillment of Columbia's obligations under the Columbia
Employment Agreement, the parties agree to the following:
(i) At the time of Pollard's resignation, he shall be paid a lump
sum cash payment equal to eighty nine thousand, two hundred fifty
dollars multiplied by the number of months (and fraction thereof),
remaining between the effective date of Pollard's resignation and
February 28, 1997.
(ii) Columbia shall continue to carry at its expense life
insurance coverage on Pollard's life to age sixty-five (65) in the
amount of one million, seven hundred and fifty thousand dollars
($1,750,000.00) payable to Pollard's beneficiary.
(iii) Columbia shall continue health insurance coverage for
Pollard and his family, under an insured health program available to
Columbia employees, until Pollard's age sixty-five (65). The cost to
Pollard for such coverage shall be the cost under the Consolidated
Omnibus Budget Reconciliation Act (COBRA) minus the cost for such
coverage Columbia would pay if Pollard were an employee. (i.e. The
normal Company portion shall be paid by the Company.) Pollard's spouse
shall also be entitled, as Pollard's dependent, to continuation of
health insurance coverage until she reaches age sixty-five (65) under
the same plans as Pollard and subject to the same terms and cost of
coverage under those plans as Pollard, however once Pollard reaches the
age of sixty-five and is entitled to coverage under Medicare (or its
successor), he shall not be entitled to dependent coverage under his
spouse's coverage. While Pollard is a Director of the Company, he may
choose to receive health insurance benefits under the Company's then
current Directors' plan, if any.
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(iv) There shall be immediate and full vesting of any of
Pollard's stock options which are not otherwise exercisable or payable
as of the date of termination of employment. Pollard shall be treated
as retiring from the employ of the Company so that such stock options
and any other vested but unexercised options shall not expire until two
years from the date of such retirement. This paragraph shall not apply
to the stock option referenced in subparagraph (v) below.
(v) Pollard shall be granted stock options to purchase three
hundred thousand (300,000) shares of Columbia stock at the earliest
possible date. Such options shall (A) be at a purchase price equal to
the stock's fair market value at date of grant, (B) be immediately
exercisable, and (C) have a ten (10) year term.
(vi) Pollard shall be supplied office space and equipment and
secretarial help under the following terms:
(A) Columbia shall lease office space of Pollard's
choosing (of approximately one thousand (1,000) square feet) for a
period of five (5) years from Pollard's resignation with an option
for another five (5) years; such option to renew by the Company
shall be at Pollard's sole discretion. The cost of such
(including three (3) parking spaces) shall be at Columbia's
expense except that any tenant improvements over and above the
landlord's tenant allowance shall be split equally between
Columbia and Pollard.
(B) Pollard shall have the use of all his current office
furniture and fixtures for the duration of the lease.
(C) Pollard's current secretary shall continue in such
capacity in such leased space. She shall remain an employee of
Columbia during the term of such lease with all the benefits of a
Columbia employee and shall be considered a third party
beneficiary of this Agreement. She shall be entitled to annual
pay increases equal to at least the average percentage pay
increases of all other executive secretaries. If at any time
during the ten (10) year period following Pollard's resignation,
his current secretary ceases for any reason to serve as his
secretary and elects to return to a job at the Company's corporate
headquarters or at one of its facilities, she shall be entitled to
an offer of a position comparable in grade and salary to her then
current position. Should this occur, she shall be subject to the
same terms and conditions of employment as all other Columbia
employees. Pollard shall have the use of all her current office
furniture and fixtures during the term of the lease. If she
should leave Columbia's employ or otherwise cease to serve as
Pollard's secretary during such ten (10) year period, Columbia
shall pay Pollard at the rate of twenty-five thousand per year for
him to obtain secretarial help.
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EXHIBIT 10.12
AGREEMENT
THIS AGREEMENT is made by and between James D. Bohanon ("Bohanon"
or "Employee") and Columbia Healthcare Corporation, a Delaware corporation and
the successor of Columbia Hospital Corporation, a Nevada corporation
(individually or jointly "Columbia").
W I T N E S S E T H :
WHEREAS, Bohanon has entered into that certain employment
agreement, dated September 1, 1993, regarding his employment with Columbia
(the "Columbia Employment Agreement"); and
WHEREAS, Bohanon has agreed to relinquish his position as Co-Chief
Operating Officer of Columbia; and
WHEREAS, the parties desire to enter into this Agreement to modify,
preserve and secure certain of Bohanon's benefits under the Columbia
Employment Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein contained and other
valuable consideration, the parties agree as follows:
1. TERMINATION OF EMPLOYMENT. Employee agrees to resign his
employment with Columbia.
2. CONFIDENTIAL INFORMATION.
(i) Employee recognizes and acknowledges that during the term of
employment Employee will develop, have access to and come into
possession of trade secrets and confidential information of Columbia,
including, without limitation, software systems, specifications,
programs and documentation, the methods and data which Columbia owns,
plans or develops, whether for its own use or for use by its clients,
developments, designs, inventions and improvements, trade secrets and
works of authorship, customer lists, supplier lists, proposals,
marketing plans and procedures, all of which are confidential and are
the property of Columbia. Employee further recognizes and acknowledges
that in order to enable Columbia to perform services for its customers,
those customers may furnish to Columbia confidential information
concerning their business affairs, property, methods of operation or
other data and that the goodwill afforded to Columbia and its employees
requires keeping such services and information confidential. All of
these
<PAGE>
materials and information including, without limitation, those relating
to Columbia's systems and customers, will be referred to below as
"Proprietary Information."
(ii) Employee agrees that during the term of Employee's
employment with Columbia and thereafter, Employee will keep any and all
Proprietary Information confidential and will not disclose any
Proprietary Information, directly or indirectly, to any third person or
entity, without the prior written consent of Columbia. Employee further
agrees that, during the term of Employee's employment with Columbia and
thereafter, Employee will not use, handle, copy or duplicate, in part
or in whole, any Proprietary Information, except as directed by Columbia
and in the ordinary course of Columbia's business. This confidentiality
covenant has no temporal, geographic or territorial restriction.
(iii) Employee agrees that upon request by Columbia, and in any
event immediately upon termination of Employee's employment, Employee
shall turn over to Columbia all property, keys, notes, memoranda,
writings, lists, files, reports, customer lists, correspondence, tapes,
software, cards, surveys, maps, logs, machines, technical data, work
product or any other tangible product or document which has been
produced by, received by or otherwise submitted or made available to
Employee during or prior to Employee's employment with Columbia.
(iv) Employee understands and agrees that all Proprietary
Information is and shall remain the property of Columbia and that
Employee has not and will not appropriate for Employee's own use or for
the use of any third party any Proprietary Information. Furthermore,
Employee hereby assigns or agrees to assign to Columbia or its
subsidiaries or affiliates, as appropriate, its successors, assigns or
nominees, Employee's entire right, title and interest in any
developments, designs, patents, inventions and improvements, trade
secrets, trademarks, copyrightable subject matter or other Proprietary
Information which Employee has made or conceived, or may make or
conceive, either solely or jointly with others, while providing services
to Columbia, or with the use of time, material or facilities of Columbia
or relating to any actual or anticipated business, research,
development, product, service or activity of Columbia known to Employee
while employed at Columbia, or suggested by or resulting from any task
assigned to Employee or work performed by Employee for or on behalf of
Columbia, whether or not such work was performed prior to the date of
this Agreement.
(v) For purposes of the foregoing, service by the Employee with
Galen and Humana Inc. prior to the Effective Time will be deemed service
with Columbia.
3. COVENANT NOT TO COMPETE. Employee agrees that because of the
confidential and sensitive nature of the Proprietary Information and
because the use of, or even the appearance of the use of, the
Proprietary Information in certain circumstances may cause irreparable
damage to Columbia and its reputation, or to customers of Columbia,
Employee will not, from the date of this Agreement until the expiration
of one (1) year after the date on which Employee's employment with
Columbia terminates for any reason, directly or indirectly, own, manage,
operate, join, control,
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be employed by, or participate in the ownership, management, operation
or control of or be connected in any manner, including as director,
officer, consultant, independent contractor, employee, partner, or
investor with any business, enterprise, organization or other individual
or entity which solicits business, performs services or delivers goods
that are comparable to or competitive with any business of Columbia;
provided, however, that the ownership of less than five percent (5%) of
the outstanding capital stock of any entity with securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended, shall not be prohibited by this Section 4.
4. NON-SOLICITATION. Employee agrees that during the term of
Employee's employment with Columbia and for a period of three (3) years
thereafter, Employee will not interfere with Columbia's relationship
with, or endeavor to employ or entice away from Columbia, any business,
enterprise, organization or other individual or entity, which is an
employee, customer or supplier of Columbia, or which maintains a
business relationship with any business of Columbia.
5. BENEFITS ON AND AFTER TERMINATION . In consideration of Bohanon's
promises contained herein and his termination as an employee of
Columbia, and in fulfillment of Columbia's obligations under the
Columbia Employment Agreement, the parties agree to the following:
(i) At the time of Bohanon's resignation, he shall be paid a lump
sum cash payment equal to Fifty-Three Thousand Eight Hundred and Fifty
Dollars ($53,850.00) multiplied by the number of months (and fraction
thereof), remaining between the effective date of Bohanon's resignation
and February 28, 1998.
(ii) Columbia shall continue to carry at its expense life insurance
coverage on Bohanon's life to age sixty-five (65) in the amount of One
Million, Seventy-Five Thousand Dollars ($1,075,000.00) payable to
Bohanon's beneficiary.
(iii) Columbia shall continue health insurance coverage for Bohanon
and his family, under an insured health program available to Columbia
employees, until Bohanon's age sixty-five (65). The cost to Bohanon for
such coverage shall be the cost under the Consolidated Omnibus Budget
Reconciliation Act (COBRA) minus the cost for such coverage Columbia
would pay if Bohanon were an employee. (i.e. The normal Company portion
shall be paid by the Company.) Bohanon's spouse shall also be entitled,
as Bohanon's dependent, to continuation of health insurance coverage
until she reaches age sixty-five (65) under the same plans as Bohanon
and subject to the same terms and cost of coverage under those plans as
Bohanon, however once Bohanon reaches the age of sixty-five and is
entitled to coverage under Medicare (or its successor), he shall not be
entitled to dependent coverage under his spouse's coverage.
(iv) There shall be immediate and full vesting of any of Bohanon's
stock options which are not otherwise exercisable or payable as of the
date of termination of employment. Bohanon shall be treated as retiring
from the employ of the Company
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so that such stock options and any other vested but unexercised options
shall not expire until two years from the date of such retirement. This
paragraph shall not apply to the SARs referenced in subparagraph (v)
below.
(v) Bohanon is hereby granted stock appreciation rights with respect
to 300,000 shares of Columbia Common Stock (the "Shares") at an exercise
price ("Exercise Price") of $27.1875 per share (the "SARs"). The SARs
are fully exercisable and shall expire August 31, 1997. Upon exercise
of an SAR, Employee shall be entitled to receive an amount, payable in
cash, determined by multiplying (A) the excess of the fair market value
of a Share on the date of exercise over the Exercise Price by (B) the
number of Shares as to which the SAR is being exercised (for this
purpose fair market value of a Share shall be the average between the
high and the low trading prices of a Share on the principal exchange on
which the Shares are traded). Notwithstanding the foregoing, for the
one (1) year period between September 1, 1994 and up to and including
August 31, 1995, Bohanon may, at his sole discretion, relinquish the
SARs described herein and receive in lieu thereof a lump sum payment of
one million dollars ($1,000,000) plus an additional amount sufficient to
enable Bohanon to pay all federal, state and local taxes resulting from
his receipt of such payment so that Bohanon will receive an amount, net
of all taxes, equal to one million dollars ($1,000,000) (the
"Alternative Cash Payment"). For this purpose, the amount of the
Alternative Cash Payment will be determined assuming Bohanon's effective
federal, state and local tax rates are the highest marginal tax rate
applicable. In the event of Bohanon's death or disability, the SARs
shall be exercisable by the person or persons to whom those rights pass
by will or by the laws of descent and distribution or if appropriate by
the legal representative of Bohanon or his estate under the same terms
contained herein.
6. BINDING EFFECT. This Agreement and any amendments hereto shall be
binding upon and inure to the benefit of the parties hereto and their
successors and assigns.
7. PRIOR AGREEMENT. Upon Bohanon's resignation as an employee of
Columbia, this agreement shall supersede the Columbia Employment
Agreement.
8. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Kentucky without
regard to its rules of conflict of laws. The parties hereby irrevocably
and unconditionally consent to submit to the exclusive jurisdiction of
the courts of the Commonwealth of Kentucky and of the United States of
America located in the Commonwealth of Kentucky for any litigation
arising out of or relating to this Agreement and the transactions
contemplated hereby; and agree not to commence any litigation relating
thereto except in such courts.
9. SEVERABILITY. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the
validity or enforceability of any of the terms or provisions of this
Agreement in any
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other jurisdiction. If any provision of the Agreement is so broad as to
be unenforceable, the provision shall be interpreted to be only so broad
as is enforceable.
IN WITNESS WHEREOF, Columbia has caused this Agreement to be executed
by its duly authorized officer and Bohanon has executed this Agreement,
each as of the day and year set forth below.
COLUMBIA HEALTHCARE CORPORATION
Date: ______________________ By: ___________________________________
Richard L. Scott
President and
Chief Executive Officer
Date: ______________________ Employee: _____________________________
James D. Bohanon
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AGREEMENT
THIS AGREEMENT is made by and between James D. Bohanon ("Bohanon"
or "Employee") and Columbia Healthcare Corporation, a Delaware corporation and
the successor of Columbia Hospital Corporation, a Nevada corporation
(individually or jointly "Columbia").
W I T N E S S E T H :
WHEREAS, Bohanon has entered into that certain employment
agreement, dated August 31, 1993, regarding his employment with Columbia (the
"Columbia Employment Agreement"), which was modified and superseded by an
Agreement between the parties dated December 16, 1993 (the "Employment
Termination Agreement"); and
WHEREAS, Bohanon entered into that certain agreement dated February
15, 1993 with Galen Health Care, Inc. ("Galen") regarding termination benefits
following a change in control (the "Severance Protection Agreement") which
Columbia is obligated under as successor to Galen; and
WHEREAS, the parties desire to clarify Bohanon's benefits under
such agreements;
NOW, THEREFORE, in consideration of the foregoing and of the
respective covenants and agreements of the parties herein contained and other
valuable consideration, the parties agree that upon his resignation as an
employee of Columbia, Bohanon shall be entitled to the benefits under his
Severance Protection Agreement. However, notwithstanding the above, the
parties agree that Bohanon is not entitled to the benefits described in
Section 2(a)(3)(ii) of his Severance Protection Agreement.
IN WITNESS WHEREOF, Columbia has caused this Agreement to be
executed by its duly authorized officer and Bohanon has executed this
Agreement, each as of the day and year set forth below.
COLUMBIA HEALTHCARE CORPORATION
Date: ______________________ By: ___________________________________
Richard L. Scott
President and
Chief Executive Officer
Date: ______________________ Employee: _____________________________
James D. Bohanon
6
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SEVERANCE AGREEMENT
THIS AGREEMENT is made as of November 1, 1993, by and between HCA-Hospital
Corporation of America, a Delaware corporation (the "Company"), and the
Subsidiary (as hereinafter defined) which employs the Employee, and
___________________________ (the "Employee").
WHEREAS, the Board of Directors of the company (the "Board") desires to
foster the continuous employment of the Employee and has determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of the Employee to his duties from distractions which
could arise in the event of a threatened Change in Control of the Company:
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the Company and the Employee agree as follows:
1. TERM OF AGREEMENT. This Agreement shall commence as of the date
hereof and shall continue in effect until December 31, 1994; provided, however,
that if a Change in Control (as hereinafter defined) occurs during the term of
this Agreement, the term of this Agreement shall automatically be extended for a
period of thirty-six (36) months after the end of the month in which the Change
in Control occurs. Furthermore, if the Employee's employment with the Company
shall be terminated prior to a Change in Control, this Agreement shall
automatically expire.
2. TERMINATION BENEFITS.
(a) If, following a Change in Control, and during the term of this
Agreement (including any extensions of such term as provided in Section
hereof), the Employee's employment with the Company shall be terminated,
the Employee shall be entitled to the following compensation and benefits
(in addition to any non-severance compensation and benefits provided for
under any of the Company's employee benefit plans, policies and practices
or under the terms of any other contracts, but in lieu of any severance pay
under any Company employee benefit plan, policy and practice or under the
terms of any other contract including any employment contract):
1) If the Employee's employment with the company shall be
terminated, (A) by reason of the Employee's Disability or Retirement,
(B) by reason of the Employee's death or (C) by the Employee other
than for Good Reason, the Company shall pay the Employee his full base
salary through the Date of Termination at the greater of the rate in
effect at the time the Change in Control occurred or when the Notice
of Termination was given (or the Date of Termination in the case of
the Employee's death), plus any bonuses or incentive compensation
which pursuant to the terms of any compensation or benefit plan have
been earned as of the Date of Termination.
<PAGE>
2) If the Employee's employment with the Company shall be
terminated for Cause, the Company shall pay the Employee his full base
salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given and the Company shall have no
further obligations to the Employee under this Agreement.
3) If the Employee's employment with the Company shall be
terminated, (A) by the Company other than for Cause or Disability, or
(B) by the Employee for Good Reason, then the following provisions
shall apply:
(i) The Company shall, within five (5) days after the
Date of Termination, pay the Employee (1) his full salary through
the Date of Termination at the greater of the rate in effect at
the time the Change in Control occurred or when the Notice of
Termination was given, plus (2) any bonuses or incentive
compensation which pursuant to the terms of any compensation or
benefit plan have been earned but which have not yet been paid
plus (3) as long as the Company, as a whole, is then performing,
as evidenced by its most recently available monthly operating
results, at a level not less than 90% of its budgeted level, an
amount equal to the target amount the Employee could have earned
under the Company's annual incentive plan with respect to the
fiscal year of the Company in which the Date of Termination
occurs multiplied by a fraction, the numerator of which is the
number of full months the Employee was employed by the Company
during the fiscal year of the Company in which the Date of
Termination occurs and the denominator of which is 12;
(ii) The Company shall, within five (5) days after the
Date of Termination, pay the Employee a lump sum (together with
the amounts payable pursuant to clause (iii) below, the
"Severance Payments") in an amount equal to the product of (A)
one times (B) the sum of (1) an amount equal to the Employee's
Annual Base Salary at the rate in effect on October 2, 1993 and
(2) the target amount the Employee could have earned under the
Company's annual incentive plan with respect to the fiscal year
of the Company ending December 31, 1993.
(iii) The Company shall maintain in full force and effect
for the benefit of the Employee and the Employee's dependents and
beneficiaries, at the Company's expense (less the amount such
individual would have paid for such coverage had him employment
not terminated) until the earlier of (A) the expiration of 18
months following the date of Termination or (B) the effective
date of the Employee's employment on a substantially full-time
basis by a new employer (whether as an employee, consultant or
independent contractor), all medical insurance,
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under plans and programs in which the Employee and/or the
Employee's dependents and beneficiaries participated immediately
prior to the Date of Termination, provided that continued
participation is possible under the general terms and provisions
of such plans and programs. If participation in any such plan or
program is barred, the Company shall arrange at its own expense
(less the amount such individual would have paid for such
coverage had his employment not terminated) to provide the
Employee with benefits substantially similar to those which he
was entitled to receive under such plans and programs.
(iv) Notwithstanding any other provisions of this
Agreement, in the event that any payment or benefit received or
to be received by the Employee in connection with a Change in
Control or the termination of the Employee's employment (whether
pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any person whose
actions result in a change in control of the Company or any
person affiliated with the Company or such person) (all such
payments and benefits, including the Severance Payments, being
hereinafter called "Total Payments") would not be deductible (in
whole or in part), by the Company, an affiliate or Person making
such payment or providing such benefit as a result of Section
280G of the Internal Revenue Code of 1986, as amended (the
"Code"), then, to the extent necessary to eliminate the
disallowance of the deduction under Section 280G of the Code with
respect to such portion of the Total Payments (and after taking
into account any reduction in the Total Payments provided by
reason of Section 280G of the Code in such other plan,
arrangement or agreement) the Severance Payments shall be reduced
(if necessary, to zero). For purposes of this limitation (w) no
portion of the Total Payments the receipt or enjoyment of which
the Employee shall have effectively waived in writing prior to
the Date of Termination shall be taken into account, (x) no
portion of the Total Payments shall be taken into account which
in the opinion of tax counsel selected by the Company's
independent auditors and acceptable to the Employee does not
constitute a "parachute payment" within the meaning of Section
280G(b)(2) of the Code (including by reason of Section
280G(b)(4)(A) of the Code), (y) the Severance Payments shall be
reduced only to the extent necessary so that the Total Payments
(other than those referred to in clauses (w) or (x) in their
entirety constitute reasonable compensation for services actually
rendered, within the meaning of Section 280G(B)(4)(B) of the
Code, or are not otherwise subject to disallowance as deductions
under Section 280G of the Code, in the opinion of the tax counsel
referred to in clause (x), and (z) the value of any non-cash
benefit or any deferred payment or benefit included in the Total
Payments shall be determined by the Company's independent
auditors in accordance with the principles of Sections 280G(d)(3)
and (4)
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of the Code. If it is established pursuant to a final
determination of a court or an Internal Revenue Service
proceeding that, notwithstanding the good faith of the Employee
and the Company in applying the terms of this Section
2(a)(3)(iv), the aggregate "parachute payments" paid to or for
the Employee's benefit are in an amount that would result in any
portion of such "parachute payments" not being deductible by
reason of Section 280G of the Code, then the Employee shall have
an obligation to pay the Company upon demand an amount equal to
the excess of the aggregate "parachute payments" paid to or for
the Employee's benefit over the aggregate "parachute payments"
that could have been paid to or for the Employee's benefit
without any portion of such "parachute payments" not being
deductible by reason of Section 280G of the Code.
(b) The Employee shall not be required to mitigate the amount of any
payment or benefit provided for in Paragraph 2(a) by seeking other
employment or otherwise; nor shall the amount of any payment or benefit
provided for in Paragraph 2(a) be reduced by any compensation earned by the
Employee as a result of employment or otherwise. The amount of any payment
or benefit provided for in Section 2 shall be in lieu of any compensation
or benefits for severance pay due the Employee under any other written
agreement entered into between the Company and the Employee. Payment to
the Employee pursuant to this Agreement shall constitute the entire
obligation of the Company and the Subsidiary for severance pay and full
settlement of any claim for severance pay under law or in equity that the
Employee might otherwise assert against the Company and any Subsidiary or
any of their employees, officers or directors on account of the Employee's
termination.
(c) For purposes of this Agreement the following definitions shall
apply:
1) "Change in Control" shall mean any of the following events:
(i) An acquisition (other than directly from the Company)
of any voting securities of the Company (the "Voting Securities")
by any "Person" (as the term Person is used for purposes of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act")) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of twenty percent (20%) or more
of the combined voting power of the ten outstanding Voting
Securities; provided, however, that in determining whether a
Change in Control has occurred, Voting Securities which are
acquired in a "Non-Control Acquisition" (as hereinafter defined)
shall not constitute an acquisition which would cause a Change in
Control. A "Non-Control Acquisition" shall mean an acquisition
by (i) an employee benefit plan (or a trust forming a part
thereof) maintained by (A) the Company or (B) any corporation or
other Person of which a majority of
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its voting power or its equity securities or equity interest is
owned directly or indirectly by the Company (a "Subsidiary") or
(ii) the Company or any Subsidiary.
(ii) The individuals who, as of the date hereof, are
members of the Board (the "Incumbent Board"), cease for any
reason to constitute at least two-thirds of the Board; provided,
however, that if the election, or nomination for election by the
Company's stockholders, of any new director was approved by a
vote of at least two-thirds of the Incumbent Board, such new
director shall, for purposes of this Agreement, be considered as
a member of the Incumbent Board; provided, further, however, that
no individual shall be considered a member of the Incumbent Board
if (1) such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described
in Rule 14a-11 promulgated under the 1934 Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board (a "Proxy Contest") including by
reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest or (2) such individual was designated by
a Person who has entered into an agreement with the Company to
effect a transaction in clause (i) or (iii) of this Section
2(c)(1); or
(iii) Approval by stockholders of the Company of:
(1) A merger, consolidation or reorganization
involving the Company, unless
(A) The stockholders of the Company, immediately
before such merger, consolidation or reorganization,
own directly or indirectly immediately following such
merger, consolidation or reorganization, at least
seventy-five percent (75%) of the combined voting power
of the outstanding Voting Securities of the corporation
resulting from such merger or consolidation or
reorganization or its parent corporation (the
"surviving Corporation") in substantially the same
proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or
reorganization;
(B) The individuals who were members of the
Incumbent Board immediately prior to the execution of
the agreement providing for such merger, consolidation
or reorganization constitute at least two-thirds of the
members of the board of directors of the Surviving
Corporation; and
-5-
<PAGE>
(C) No Person (other than the Company, any
Subsidiary, any employee benefit plan (or any trust
forming a part thereof) maintained by the Company, the
Surviving Corporation of any subsidiary, or any Person
who, immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of twenty
percent (20%) or more of the then outstanding Voting
Securities has Beneficial Ownership of twenty percent
(20%) or more of the combined voting power of the
Surviving Corporation's then outstanding Voting
Securities.
(2) A complete liquidation or dissolution of the
Company; or
(3) an agreement for the sale or other disposition of
all or substantially all of the assets of the Company to any
Person (other than a transfer to a Subsidiary).
Not withstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting Securities
as a result of the acquisition of Voting Securities by the Company which, by
reducing the number of Voting Securities outstanding, increases the proportional
number of shares Beneficially Owned by the Subject person, provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
share acquisition by the Company, the Subject Person becomes the Beneficial
Owner of any additional Voting Securities which increases the percentage of the
ten outstanding Voting Securities Beneficially Owned by the Subject Person,
then a Change in Control shall occur.
2) "Disability" shall mean a physical or mental illness which
impairs the Employee's ability to substantially perform his duties as
an Employee and as a result of which the Employee shall have been
absent from his duties with the Company on a full-time basis for six
(6) consecutive months.
3) "Retirement" shall mean the voluntary termination of the
Employee's employment after having attained age sixty-five (65) or
such other age as shall have been fixed in any qualified retirement
arrangement established by the Company with the Employee's consent.
4) A termination for "Cause" is a termination (i) by reason of
the conviction of the Employee, by a court of competent jurisdiction
and following the exhaustion of all possible appeals, of a criminal
act classified as a felony or involving moral turpitude or (ii)
pursuant to a determination by no less than a majority of the persons
designated by the Company prior to Change in Control
-6-
<PAGE>
to serve as members of the board of directors of the ultimate parent
company following a merger, consolidation or reorganization involving
the Company and still serving the ultimate parent company as a member
of the board of directors, that the Employee either (x) intentionally
failed substantially to perform his reasonably assigned duties with
the Company (other than a failure resulting from the Employee's
incapacity due to physical or mental illness or from the Employee's
assignment of duties that would constitute "Good Reason" as
hereinafter defined) or (y) intentionally acted in a fraudulent and
unethical manner in the course of performing his duties. No act, nor
failure to act on the Employee's part, shall be considered
"intentional" unless the Employee has acted, or failed to act, with a
lack of good faith and with a lack of reasonable belief that the
Employee's action or failure to act was in the best interest of the
Company
5) "Good Reason" shall mean the occurrence after a Change in
Control of any of the following events without the Employee's express
written consent:
(i) any change in the Employee's title, authorities
responsibilities (including reporting responsibilities) which, in
the Employee's reasonable judgement, represents an adverse change
from his status, title, position or responsibilities (including
reporting responsibilities) which were in effect immediately
prior to the Change in Control or from his status, title,
position or responsibilities (including reporting
responsibilities) which were in effect following a change in
Control pursuant to the Employee's consent to accept any such
change; the assignment to him of any duties or work
responsibilities which, in his reasonable judgment, are
inconsistent with such status, title, position or work
responsibilities; or any removal of the Employee from, or failure
to reappoint or reelect him to any of such positions, except if
any such changes are because of Disability, Retirement, death or
Cause;
(ii) a reduction by the Company in (or the failure by the
Company to pay any portion of) the Employee's Annual Base Salary
as in effect on the date hereof or as the same may be increased
from time to time;
(iii) the relocation of the Employee's office at which he
is to perform his duties, to a location more that (30) miles from
the location at which the Employee performed his duties prior to
the Change in Control, except for required travel on the
Company's business to an extent substantially consistent with his
business travel obligations prior to the Change in Control;
-7-
<PAGE>
(iv) the adverse and substantial alteration of the nature
and quality of the office space within which the Employee
performed his duties prior to a Change in Control as well as in
the secretarial and administrative support provided to the
Employee, provided however that a reasonable alteration of the
secretarial or administrative support provided to the Employee as
a result of reasonable measures implemented by the Company to
effectuate a cost-reduction or consolidation program shall not
constitute Good Reason hereunder;
(v) the failure by the Company to provide (until the
expiration of two (2) years after the occurrence of a Change in
Control) to the Employee compensation and benefits (including,
without limitation, incentive, bonus and other compensation plans
and any vacation, medical, hospitalization, life insurance,
dental or disability benefit plan), or cash compensation in lieu
thereof, which are, in the aggregate, no less favorable than
those provided by the Company to the Employee immediately prior
to the occurrence of the Change in Control;
(vi) any material breach by the Company of any provision
of this Agreement;
(vii) the failure of the Company to obtain a satisfactory
agreement from any successor or assign of the Company to assume
and agree to perform this Agreement, as contemplated in Section 3
hereof; or
(viii) any purported termination of the Employee's
employment which is not effected pursuant to a Notice of
Termination substantially satisfying the requirements of
Paragraph 2(c)(6) below; and for purposes of this Agreement, no
such purported termination shall be effective. The Employee's
right to terminate his employment for Good Reason shall not be
affected by his incapacity due to physical or mental illness.
Continuation of employment by the Employee shall not constitute consent to,
or a waiver of rights with respect to, any circumstances constituting "Good
Reason" hereunder provided, however, that the Employee's continued employment
after the expiration of sixty (60) days from any action which would constitute
Good Reason under paragraph (i) above shall constitute a waiver of rights with
respect to such action constituting Good Reason hereunder.
6) "Notice of Termination" shall mean a notice which shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Employee's employment. Any purported termination by
the Company or by the Employee shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 5 hereof.
For
-8-
<PAGE>
purposes of this Agreement, no such purported termination shall be
effective without such Notice of Termination.
7) "Date of Termination" shall mean:
(i) if the Employee's employment is terminated for
Disability, thirty (30) days after Notice of Termination is given
(provided that the Employee shall not have returned to the
performance of his duties with the Company on a full-time basis
during such thirty (30) day period);
(ii) if the Employee's employment is terminated on account
of his death, the date of his death; and
(iii) if the Employee's employment is terminated for any
other reason, the date specified in the Notice of Termination
(which in the case of a termination pursuant to Paragraph 2(c)(4)
above shall not be less than thirty (30) days, and in the case of
a termination pursuant to Paragraph 2(c)(5) above shall not be
more than sixty (60) days, after the date such Notice of
Termination is given); provided that if within thirty (30) days
after any Notice of Termination is given the party receiving such
Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall
be the date on which the dispute is finally determined either by
mutual written agreement of the parties, or by the final
judgment, order or decree of a court of competent jurisdiction
(the time for appeal therefrom having expired and no appeal
having been taken).
8) "Annual Base Salary" shall mean that yearly compensation
rate established from time to time by the Company as an employee's
regular compensation for the next succeeding twelve (12) month period,
payable to an employee by the Company's payroll checks on a periodic
basis.
3. SUCCESSORS; BINDING AGREEMENT.
(a) The Company will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent the Company would be required to perform it if no such succession or
assignment had taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor or assign to its business
and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise. For convenience only, and not as an
acknowledgement that the Company employs the Employee, "Company" is used in this
Agreement to identify either the Company, the
-9-
<PAGE>
Company and one or more of its Subsidiaries or the Subsidiary which employs the
Employee, as the context shall require.
(b) This Agreement shall inure to the benefit of and be enforceable by the
Employee's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Employee should
die while any amounts would still be payable to him hereunder if he had
continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Employee's devisee,
legatee or other designee and if there is no such devisee, legatee or designee,
to the Employees's estate.
4. FEES AND EXPENSES. Following a Change in Control, the Company shall
pay all reasonable legal fees and related expenses (including the reasonable
costs of experts, evidence and counsel), when and as incurred by the Employee,
as a result of (a) contesting or disputing any termination of employment of the
Employee whether or not such contest or dispute is resolved in the Employee's
favor but if only such contest or dispute is pursued by the Employee in good
faith or (b) the Employee seeking to obtain or enforce any right or benefit
provided by this Agreement or by any other plan or arrangement maintained by the
Company under which the Employee is or may be entitled to receive benefits (but
only if the Employee acts in good faith in seeking to obtain or enforce such
right or benefit) or (c) any tax audit or proceeding to the extent attributable
to the application of Section 4999 of the Code to any payment or benefit
hereunder.
5. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed to the respective
addresses last given by each party to the other, provided that all notices to
the Company shall be directed to the attention of the Board with a copy to the
Secretary of the Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith. All notices and
communications shall be deemed to have been received on the date of delivery
thereof or on the third business day after the mailing thereof, except that
notice of change of address shall be effective only upon receipt.
6. MISCELLANEOUS. No provision of this Agreement may be modified, waived
or discharged unless such modification, waiver or discharge is agreed to in
writing and signed by the Employee and such officer of the Company as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreement or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement. The obligations of the Company under Section 2 shall survive the
expiration of the term of this Agreement.
-10-
<PAGE>
7. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of Tennessee without giving effect to the
conflicts of laws principles thereof. Any action brought by any party to this
Agreement shall be brought and maintained in a court of competent jurisdiction
in Davidson County in the State of Tennessee and the parties hereto hereby
consent to the jurisdiction of such courts.
8. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
9. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, understandings
and arrangements, oral or written between the parties hereto with respect to the
subject matter hereof.
10. COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
11. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Employee's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company (except for any
severance or termination policies, plans, programs or practices) and for which
the Employee may qualify, nor shall anything herein limit or reduce such rights
as the Employee may have under any other agreements with the Company (except for
any severance or termination agreement). Amounts which are vested benefits or
which the Employee is otherwise entitled to receive under any plan or program of
the Company shall be payable in accordance with such plan or program, except as
explicitly modified by this Agreement.
HCA-HOSPITAL CORPORATION OF AMERICA
By:
------------------------------------
Thomas F. Frist, Jr.
Chairman of the Board,
President and Chief Executive
Officer
HOSPITAL CORPORATION OF AMERICA
By:
------------------------------------
Philip R. Patton
Senior Vice President, Human
Resources
---------------------------------------
Employee:
-11-
<PAGE>
EXHIBIT 10.16
ASSUMPTION AGREEMENT
This Assumption Agreement is made as of February 10,
1994, by and among Columbia Healthcare Corporation, a Delaware
corporation ("Columbia"), CHOS Acquisition Corporation, a
Delaware corporation and a wholly-owned subsidiary of Columbia
("New HCA"), and HCA-Hospital Corporation of America, a
Delaware corporation ("Old HCA").
WHEREAS, Old HCA, certain subsidiary corporations of Old
HCA and the 75 individuals listed on Exhibit A hereto have
entered into substantially identical Severance Agreements,
each dated as of November 1, 1993 (the "Severance
Agreements");
WHEREAS, concurrently with the execution hereof on
February 10, 1994, Old HCA was acquired by Columbia pursuant
to the merger (the "Merger") of Old HCA with and into New HCA,
with New HCA being the surviving corporation and changing its
name to HCA-Hospital Corporation of America;
WHEREAS, in Paragraph 3 of the Severance Agreements Old
HCA covenants to require any successor to assume all
obligations of Old HCA under the Severance Agreements; and
WHEREAS, it is a "Good Reason" under Paragraph
2(c)(5)(vii) of the Severance Agreements for Old HCA to fail
to obtain a satisfactory agreement from any successor of Old
HCA to assume the Severance Agreements as contemplated by
Paragraph 3 of the Severance Agreements;
WHEREAS, the parties have prepared this instrument to
constitute the assumption required by Paragraph 3 of the
Severance Agreements and to clarify, after such assumption,
where any Notice of Termination from an Employee (as defined
in the Severance Agreements) should be sent;
NOW, THEREFORE, the parties hereto agree as follows:
1. Assumption. New HCA hereby assumes all obligations
of Old HCA under the Severance Agreements and New HCA agrees
to perform the Severance Agreements in the same manner and to
the same extent that Old HCA would be required to perform the
Severance Agreements if the Merger had not occurred.
2. Notice of Termination. Any Notice of Termination
sent by an Employee may be sent addressed only to Columbia at
(i) 201 West Main Street, Louisville, Kentucky 40202,
Attention: Richard L. Scott, President and Chief Executive
Officer with a copy to the same address Attention: General
Counsel or (ii) such other address as Columbia or New HCA
shall have forwarded to an Employee in writing for this
purpose.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Assumption Agreement as of the date first set forth above.
COLUMBIA HEALTHCARE CORPORATION
By: ____________________________
CHOS ACQUISITION CORPORATION
By: ___________________________
HCA-HOSPITAL CORPORATION OF AMERICA
By: ____________________________
<PAGE>
EXHIBIT 10.17
SEVERANCE PAY AGREEMENT
THIS SEVERANCE PAY AGREEMENT ("Severance Agreement"), dated as of June 10,
1993, but effective as of the Effective Time (as defined in the Merger
Agreement), is entered into by and between __________________________
("Employee") and Columbia Hospital Corporation, a Nevada corporation
("Columbia").
WITNESSETH
WHEREAS, Columbia and Galen Health Care, Inc. ("Galen") have entered into
an Agreement and Plan of Merger, dated as of June 10, 1993 (the"Merger
Agreement"); and
WHEREAS, Schedule 6.11(E) to the Merger Agreement contemplates that
Columbia and Employee will enter into this Severance Agreement; and
WHEREAS, Employee is a valued employee of Columbia and Columbia wishes to
recognize Employee"s prior commitment to the development of Columbia and to
ensure Employee's continuing commitment to Columbia after the Merger by entering
into this Severance Agreement with Employee;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Employee and Columbia
hereby agree as follows:
1. If at any time within two years following the Effective Time,
a. Richard L. Scott does not retain the position and duties of Chief
Executive Officer of Columbia for any reason (a "Scott Constructive
Termination"), and
b. at any time prior to 12 months after the Scott Constructive
Termination, the employment of Employee with Columbia is terminated for any
reason or Employee's responsibilities are reduced from those held just
prior to the date of the Scott Constructive Termination"), then Columbia
will pay to Employee a lump sum severance payment. The severance payment
shall be in an amount equal to one times the greater of (i) Employee's
annual base salary in effect at the
1
<PAGE>
time of the Merger or (ii) Employee's annual base salary in effect at the
date of the Employee's Constructive Termination. Full payment of the
severance payment shall be made within ten days following the Employee
Constructive Termination.
2. In addition, upon a Scott Constructive Termination, Columbia will pay
to the Employee an amount in cash based on Employee's 2.7293% interest in the
unfunded bonus pool maintained by Columbia (the "Bonus Pool"). The Bonus Pool
shall initially consist of $6,327,246.00 and will be increased or decreased by
$505,625 each month for each whole dollar increase or decrease in the month-end
closing price of Columbia's Common Stock, par value $.01 per share.
3. In the event that any payment or benefit (within the meaning of Section
280(7)(b)(2) of the Internal Revenue Code at 1986, as amended (the "Code")) paid
to Employee pursuant to the terms of this Severance Agreement, would be subject
to the excise tax imposed by Section 4999 of the Code and/or any interest or
penalties (excluding any interest or penalties imposed by reason of Employee's
failure to file a timely tax return or pay taxes shown due on his or her return)
with respect to such excise tax (collectively referred to as the "Excise Tax"),
then Employee shall be entitled to receive an additional payment (a "Gross-Up
Payment"). The Gross-Up Payment shall equal the amount of the Excise Tax
imposed upon the payments, including the Gross-Up Payment.
4. Any disputes concerning this Severance Agreement and the arrangements
contemplated hereby shall be resolved and enforced through the use of
arbitration provided through the American Arbitration Association. Any
necessary arbitration meetings shall be conducted in Louisville, Kentucky. All
expenses directly related to arbitration proceedings, including reasonable
attorneys' fees for Employee's representation will be paid by Columbia or its
successors.
5. This Severance Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
6. Columbia or its successors shall pay all legal fees and related
expenses (including the costs of experts, evidence, and counsel) incurred by
Employee as a result of (a) any Employee Constructive Termination (including all
such fees and expenses incurred in contesting or disputing any such termination
whether or not such contest or dispute is resolved in Employee's favor), (b)
Employee seeking to obtain or enforce any right or benefit provided by this
Severance Agreement, or (c) Employee's challenge of any determination by the IRS
that payments would be subject to the excise tax imposed by Section 4999 of the
Code.
7. Employee shall not be required to mitigate the amount of any payment
under this Severance Agreement by seeking other employment; nor shall any
compensation earned by Employee as a result of employment or otherwise reduce
the amount of any payment pursuant to this Severance Agreement.
2
<PAGE>
IN WITNESS WHEREOF, Columbia has caused this Severance Agreement to be
executed by its duly authorized officer, and Employee has executed this
Severance Agreement, each as of the day and year first above written.
Columbia Hospital Corporation
By: _________________________
Employee
_____________________________
3
<PAGE>
EXHIBIT 10.19
COLUMBIA/HCA HEALTHCARE CORPORATION
ANNUAL INCENTIVE PLAN SUMMARY
PURPOSE AND ADMINISTRATION OF THE PLAN
The Annual Incentive Plan ("Plan") is established to encourage outstanding
performance of employees who are in a position to make substantial
contributions to the success of the Company. The SVP, Human Resources shall
be responsible for administration of the Plan. The CEO of Columbia/HCA
Healthcare Corporation shall have full power and final authority to interpret
the Plan.
PARTICIPATION
Eligibility to participate in the Plan shall be extended generally to all full
time regular/corporate employees with at least 3 months employment in the
fiscal year ("Participants") subject to approval by the CEO of Columbia/HCA
Healthcare Corporation. For a Participant added during the Fiscal Year, the
payout shall be determined pursuant to the Plan and prorated. Proration shall
also be condsidered for employees who transfer to a position eligible for a
different incentive target. Employees are not eligible to participate in more
than one plan at a time.
INCENTIVE CALCULATION AND PAYMENT
Plan payments for Participants are based on criteria detailed on Exhibit A
attached. As soon as practical, after the Fiscal Year, when the financial
results of the Company are known, the appropriate senior officer will review
and recommend plan payments. The CEO of Columbia/HCA Healthcare Corporation
may make adjustments to performance targets deemed necessary to avoid
unwarranted penalties or windfalls. Such adjustments will recognize
uncontrollable outside factors and will be kept to a minimum. Payments shall
be made as soon as practicable, after the annual audit report has been issued,
but in no event later than three months after the Fiscal Year. The Plan
payment for each Participant will be paid in accordance with a payout schedule
after it has been reviewed by the CEO of Columbia/HCA Healthcare Corporation.
This Plan is not a "qualified" plan for tax purposes, and any payments are
subject to tax withholding requirements.
TERMINATION OF PARTICIPANT
In the event a payment is due pursuant to the Plan and a Participant's
employment with the Company is terminated prior to the payment by reason of
retirement, total and permanent disability or death, such Participant (or
estate in event of death) shall receive a pro rata payment as soon as
practical after the Fiscal Year, but in no event later than three months after
the Fiscal Year. A Participant who is otherwise voluntarily or involuntarily
separated prior to the PAYMENT of any Incentive Compensation shall cease to
be a Participant and shall not have earned any right to receive any payments
pursuant to the Plan.
MISCELLANEOUS
The CEO of Columbia/HCA Healthcare Corporation may interpret, modify, amend or
terminate the Plan in whole or in part at any time, provided that no such
action shall negatively affect the payment of Incentive Compensation allocated
with respect to any Fiscal Year which has ended.
<PAGE>
EXHIBIT A
COLUMBIA/HCA HEALTHCARE CORPORATION
ANNUAL INCENTIVE PLAN
Participant:___________________________________________Title:___________________
Department:___________________________________ Incentive Target:________
INCENTIVE COMPONENT % OF TOTAL AWARD
------------------- ----------------
Acheivement of Earnings per Share 75%
(before extraordinary events)
Discretionary 25%
---
100%
EARNINGS PER SHARE COMPONENT DISCRETIONARY COMPONENT
Performance Factor Specific departmental goals
and objectives
% OF TARGET % PAYOUT may be applied to
----------- -------- completely or partially
< 95 0 replace discretionary
95 to 97 50 criteria
97 to 99 75
99 to 102 100
102 to 105 120
105 to 110 140
> 110 150
INCENTIVE CALCULATION:
STANDARD AWARD: ADJUSTED AWARD:
AWARD
__________________________
<TABLE>
<S> <C> <C> <C> <C>
Base salary (end of year): $ _______________ Component STANDARD PERF.FACTOR
TOTAL
Incentive Compensation Target:__________% EPS (75%) $___________ x __________%
= $__________
Standard Award: $_______________ Discrect. (25%) $___________ x (1)_______
% ? $__________
$
_(1) Discretionary component "pool" can be adjusted by EPS performance factor.
</TABLE>
Note: Proration of components or target due to employee transfer or change in
status will be made at the discretion of Columbia/HCA Healthcare
Corporation CEO.
<PAGE>
BOARD MANDATORY RETIREMENT POLICY
MANDATORY BOARD RETIREMENT POLICY
No person shall be nominated by the Nominating Committee of the
Company's Board of Directors to a term of office on the Company's Board of
Directors who has attained the age of 70 or more before the first day of the
proposed term of offices; provided, however, the foregoing policy shall be
inapplicable to current directors of the Company aged 70 or more whose current
term of office, on the date hereof, expires subsequent to the Company's 1994
Annual Meeting of Stockholders;
If any person aged 70 or greater is nominated for election to a term of
office at the Company's 1994 Annual Meeting of Stockholders, then any such
person shall, prior to taking office, agree to resign his or her directorship
effective June 30, 1995.
<PAGE>
EXHIBIT 11
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL COMPUTATION OF EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
PRIMARY EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE:
Earnings:
Income from continuing operations........................................................ $ 575 $ 239 $ 353
Preferred stock dividend requirements.................................................... - - (18)
--------- --------- ---------
Income applicable to common stock.................................................... 575 239 335
Discontinued operations:
Income (loss) from operations of discontinued health plan segment,
net of income tax (benefit)........................................................... 16 (108) 16
Costs associated with discontinuance of health plan segment, net of income tax
benefit............................................................................... - (17) -
Extraordinary loss on extinguishment of debt, net of income
tax benefit............................................................................. (84) - -
Cumulative effect on prior years of a change in accounting
for income taxes........................................................................ - 51 -
--------- --------- ---------
Net income......................................................................... $ 507 $ 165 $ 351
--------- --------- ---------
--------- --------- ---------
Shares used in the computation (in thousands):
Columbia:
Weighted average common shares outstanding............................................. 150,017 144,897 138,936
Dilutive effect of common stock equivalents............................................ 966 718 750
--------- --------- ---------
Columbia common and common equivalent shares........................................... 150,983 145,615 139,686
--------- --------- ---------
HCA:
Weighted average common shares outstanding............................................. 175,374 149,547 113,480
Dilutive effect of common stock equivalents............................................ 3,901 24,690 20,109
--------- --------- ---------
HCA common and common equivalent shares................................................ 179,275 174,237 133,589
Merger exchange ratio.................................................................. 1.05 1.05 1.05
--------- --------- ---------
Adjusted HCA common and common equivalent shares....................................... 188,239 182,949 140,268
--------- --------- ---------
Shares used in earnings per common and common equivalent
share computations................................................................ 339,222 328,564 279,954
--------- --------- ---------
--------- --------- ---------
Primary earnings per common and common equivalent share:
Income from continuing operations........................................................ $ 1.70 $ .73 $ 1.20
Discontinued operations:
Income (loss) from operations of discontinued health plan segment...................... .04 (.33) .05
Costs associated with discontinuance of health plan segment............................ - (.06) -
Extraordinary loss on extinguishment of debt............................................. (.24) - -
Cumulative effect on prior years of a change in accounting for income taxes.............. - .16 -
--------- --------- ---------
Net income......................................................................... $ 1.50 $ .50 $ 1.25
--------- --------- ---------
--------- --------- ---------
</TABLE>
<PAGE>
EXHIBIT 11
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL COMPUTATION OF EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
FULLY DILUTED EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE:
Earnings:
Income applicable to commmon stock..................................................... $ 575 $ 239 $ 335
Interest addback on convertible securities, net of income taxes........................ 3 2 2
--------- --------- ---------
Adjusted income applicable to common stock......................................... 578 241 337
Discontinued operations:
Income (loss) from operations of discontinued health plan segment,
net of income tax (benefit)......................................................... 16 (108) 16
Costs associated with discontinuance of health plan segment, net of income tax
benefit............................................................................. - (17) -
Extraordinary loss on extinguishment of debt, net of income
tax benefit........................................................................... (84) - -
Cumulative effect on prior years of a change in accounting
for income taxes...................................................................... - 51 -
--------- --------- ---------
Net income......................................................................... $ 510 $ 167 $ 353
--------- --------- ---------
--------- --------- ---------
Shares used in the computation (in thousands):
Columbia:
Weighted average common shares outstanding........................................... 150,017 144,897 138,936
Dilutive effect of common stock equivalents and other
dilutive securities................................................................. 3,426 3,029 2,650
--------- --------- ---------
Columbia common and common equivalent shares......................................... 153,443 147,926 141,586
--------- --------- ---------
HCA:
Weighted average common shares outstanding........................................... 175,374 149,547 113,480
Dilutive effect of common stock equivalents and other
dilutive securities................................................................. 4,352 24,941 20,290
--------- --------- ---------
HCA common and common equivalent shares.............................................. 179,726 174,488 133,770
Merger exchange ratio................................................................ 1.05 1.05 1.05
--------- --------- ---------
Adjusted HCA common and common equivalent shares..................................... 188,712 183,213 140,459
--------- --------- ---------
Shares used in earnings per common and common equivalent
share computations................................................................ 342,155 331,139 282,045
--------- --------- ---------
--------- --------- ---------
Fully diluted earnings per common and common equivalent share:
Income from continuing operations...................................................... $ 1.69 $ .73 $ 1.20
Discontinued operations:
Income (loss) from operations of discontinued health plan segment.................... .04 (.33) .05
Costs associated with discontinuance of health plan segment.......................... - (.06) -
Extraordinary loss on extinguishment of debt........................................... (.24) - -
Cumulative effect on prior years of a change in accounting for
income taxes.......................................................................... - .16 -
--------- --------- ---------
Net income......................................................................... $ 1.49 $ .50 $ 1.25
--------- --------- ---------
--------- --------- ---------
</TABLE>
<PAGE>
EXHIBIT 12.1
COLUMBIA HEALTHCARE CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------
1993 1992 1991 1990 1989
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Earnings:
Income from continuing operations before minority interests and income
taxes................................................................ $ 329 $ 339 $ 569 $ 529 $ 472
Fixed charges, exclusive of capitalized interest...................... 156 144 136 137 161
--------- --------- --------- --------- ---------
$ 485 $ 483 $ 705 $ 666 $ 633
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Fixed charges:
Interest charged to expense........................................... $ 129 $ 117 $ 111 $ 119 $ 147
One-third of rent expense and amortization of deferred loan costs
(a).................................................................. 27 27 25 18 14
--------- --------- --------- --------- ---------
Fixed charges, exclusive of capitalized interest...................... 156 144 136 137 161
Capitalized interest.................................................. 6 8 7 4 3
--------- --------- --------- --------- ---------
$ 162 $ 152 $ 143 $ 141 $ 164
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Ratio of earnings to fixed charges...................................... 2.99 3.16 4.94 4.72 3.85
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
<FN>
- ------------------------
(a) One-third of rent expense is considered representative of the underlying
interest.
</TABLE>
<PAGE>
EXHIBIT 12.2
COLUMBIA/HCA HEALTHCARE CORPORATION
SUPPLEMENTAL COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------
1993 1992 1991 1990 1989
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Earnings:
Income from continuing operations before minority interests
and income taxes........................................... $ 978 $ 543 $ 551 $ 641 $ 611
Fixed charges, exclusive of capitalized interest............ 387 465 655 737 704
--------- --------- --------- --------- ---------
$ 1,365 $ 1,008 $ 1,206 $ 1,378 $ 1,315
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Fixed charges:
Interest charged to expense................................. $ 321 $ 401 $ 597 $ 694 $ 667
One-third of rent expense and amortization of deferred loan
costs (a).................................................. 66 64 58 43 37
--------- --------- --------- --------- ---------
Fixed charges, exclusive of capitalized interest............ 387 465 655 737 704
Capitalized interest........................................ 12 12 9 8 13
--------- --------- --------- --------- ---------
$ 399 $ 477 $ 664 $ 745 $ 717
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Ratio of earnings to fixed charges............................ 3.42 2.11 1.82 1.85 1.83
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
<FN>
- ------------------------
(a) One-third of rent expense is considered representative of the underlying
interest.
</TABLE>
<PAGE>
COLUMBIA/HCA HEALTHCARE CORPORATION
SUBSIDIARY-PARTNERSHIP LIST/HOSPITAL AND OTHER
PART I
ALABAMA
Columbia/HCA Montgomery Healthcare System, Inc.
East Montgomery Medical Center, Inc.
Florence Hospital, Inc.
Galen Medical Corporation - Doing Business As:
Florence Hospital (Florence, AL)
Medical Center Enterprise (Enterprise, AL)
Medical Center Hospital (Huntsville, AL)
Medical Center Shoals (Muscle Shoals, AL)
Montgomery Regional Medical Center (Montgomery, AL)
Northwest Medical Center (Russellville, AL)
Colonial Manor Professional Building
Montgomery Regional Medical Center Allied Health Institutes
Shoals Medical Building
HCA Health Services of Alabama, Inc.
Medical Center Shoals, Inc.
Montgomery Regional Medical Center, Inc.
North Alabama Healthcare System, Inc.
Northwest Regional Hospital, Inc.
ARKANSAS
HCA Health Services of Arkansas, Inc.
HCA Health Services of Midwest, Inc. - Doing Business As:
Doctors Hospital (Little Rock, AR)
<PAGE>
ARIZONA
Galen of Arizona, Inc. - Doing Business As:
Healthwest Regional Medical Center (Phoenix, AZ)
Paradise Valley Hospital (Phoenix, AZ)
Doctors Medical Plaza South (Phoenix, AZ)
HCA Health Services of Arizona, Inc.
Paradise Valley Psychiatric Services, Inc.
CALIFORNIA
Galen-Soch, Inc.
HCA Allied Health Services of San Diego, Inc.
HCA Health Services of California, Inc.
HCA Hospital Services of San Diego, Inc.
Hospital Corporation of California
Huntington Intercommunity Hospital - Doing Business As:
Huntington Beach Medical Center (Huntington Beach, CA)
Huntington Beach Diagnostics Imaging Center
LE Corporation - Doing Business As:
The Oaks Retirement Center (Pasadena, CA)
Las Encinas Hospital - Doing Business As:
Las Encinas Hospital (Pasadena, CA)
Los Robles Regional Medical Center - Doing Business As:
Los Robles Regional Medical Center - (Thousand Oaks, CA)
Psychiatric Company of California, Inc.
SLCO, Inc. - Doing Business As:
San Leandro Hospital (San Leandro, CA)
Sutter Corporation *
<PAGE>
CALIFORNIA (Cont.)
West Anaheim Community Hospital - Doing Business As:
West Anaheim Medical Center (Anaheim, CA)
West Hills Hospital - Doing Business As:
West Hills Regional Medical Center (Canoga Park, CA)
Westminster Community Hospital
COLORADO
Columbine Psychiatric Center, Inc. - Doing Business As:
Columbine Psychiatric Center (Littleton, CO)
Galen of Aurora, Inc. - Doing Business As:
Aurora Regional Medical Center (Aurora, CO)
Aurora Physicians Building
HCA Health Services of Colorado, Inc.
Health Care Indemnity, Inc. *
MOVCO, Inc.
DELAWARE
American Medicorp Development Co. * - Doing Business As:
Columbia County Medical Plaza (GA)
Cypress Medical Office Building (FL)
Doctors Medical Plaza-North (Phoenix, AZ)
East Ridge Doctors Building (TN)
East Ridge Professional Building (TN)
Enterprise Medical Plaza (Huntsville, AL)
Sunrise Medical Tower I (3201 S. Maryland Parkway) (NV)
Sunrise Medical Tower II (3121 S. Maryland Parkway) (NV)
CHC Finance Co.
CHC Holdings, Inc.
Columbia/HCA Healthcare Corporation * - Doing Business As:
Healthcare Symposium (KY)
<PAGE>
DELAWARE (Cont.)
Columbia Hospital Corporation - Delaware
Columbia Hospital Corporation of Fort Worth *
Columbia Hospital Corporation of Houston *
Delaware Psychiatric Company, Inc. - Doing Business As:
Rockford Center (Newark, DE)
Doctors Hospital of Augusta, Inc. * - Doing Business As:
Augusta Regional Medical Center (Augusta, GA)
Augusta Diagnostic Associates (Augusta, GA)
Edison Homes-Southeast, Inc. *
Extendicare Properties, Inc. *
Galen BH, Inc. *
Galendeco, Inc. *
Galen Health Care, Inc. * - Doing Business As:
North Suburban Medical Center (Thornton, CO)
Southwest Hospital (Louisville, KY)
Southwest Medical Plaza (Louisville, KY)
San Leandro Medical Center Professional Building (San Leandro, CA)
Galen Health Institutes, Inc. * - Doing Business As:
The Health Institute of Louisville (Louisville, KY)
The Health Institute of San Antonio (San Antonio, TX)
The Health Institute of Tampa Bay (Tampa Bay, FL)
Galen Hospital Alaska, Inc. *
Alaska Regional Hospital (Anchorage, AK)
Galen Hospital Corporation, Inc. * - Doing Business As:
Clear Lake Regional Medical Center (Webster, TX)
San Antonio Regional Hospital (San Antonio, TX)
Village Oaks Medical Center (San Antonio, TX)
Women's and Children's Hospital (San Antonio, TX)
<PAGE>
DELAWARE (Cont.)
The Women's Hospital - Indianapolis (Indianapolis, IN)
Bandera Medical Clinic (Bandera, TX)
Floresville Medical Clinic (Floresville, TX)
McQueeney Medical Clinic (McQueeney, TX)
Southwest Fertility Institute (San Antonio, TX)
The Woman's Place (San Antonio, TX)
HCA - Hospital Corporation of America
HCA Health Alliance, Inc.
HCA Health Services of Midwest, Inc.
HCA Holding Corporation
HCA International, Inc.
HCA Investments, Inc.
HCA Psychiatric Company
HCA, Inc.
Health Services (Delaware), Inc.
Health Services Acquisition Corp.
H.H.U.K., Inc.
Healthcare Technology Assessment Corporation
Lakeland Manor, Inc.
Managed Prescription Network, Inc.
Medical Specialties, Inc. * - Doing Business As:
Argyle Family Practice Center (FL)
Columbia County Urgent Care Center (GA)
Coral Springs Family Medicine (FL)
Park Medical Center (FL)
Parkway Medical Associates (FL)
West Augusta Imaging Center (GA)
West Augusta Radiation Oncology Center (GA)
<PAGE>
Mobile Corps., Inc. *
PMM, Inc. * - Doing Business As:
Augusta Womens Medical Group (Augusta, GA)
Plum Creek Medical Corporation (Aurora, CO)
<PAGE>
DELAWARE (Cont.)
Primary Medical Management, Inc. * - Doing Business As:
Agoura Hills Medical Group (Los Angeles County, CA)
Biltmore Women's Health Center (Phoenix, AZ)
Saguaro Medical Center (Scottsdale, AZ)
The Carrollton Center for Family Health Care (Carrollton, TX)
Westlake Women's Health Management Center (West Lakes Village, CA)
South Florida Lithotripter Associates, L.P. (See Partnership Section)
Suburban Medical Center at Hoffman Estates, Inc. * - Doing Business As:
Hoffman Estates Medical Center (Hoffman Estates, IL)
Sun Bay Medical Office Building, Inc. *
FLORIDA
Bay Hospital, Inc. - Doing Business As:
Gulf Coast Hospital (Panama City, FL)
Broward Healthcare System, Inc.
Cedarcare, Inc.
Cedars BTW Program, Inc.
Cedars Health Care Group, Ltd. (See Partnership Section)
Cedars Medical Center (Miami, FL) (Victoria Pavilion is a division
of this hospital)
Central Florida Regional Hospital, Inc. - Doing Business As:
Central Florida Regional Hospital (Sanford, FL)
Charlotte Community Hospital, Inc. *
Collier County Home Health Agency, Inc. - Doing Business As:
Able Care
Columbia Hospital Corporation of Central Miami
Columbia Hospital Corporation of Kendall
Columbia Hospital Corporation of Miami
Columbia Hospital Corporation of Miami Beach
Columbia Hospital Corporation of North Miami Beach
<PAGE>
FLORIDA (Cont.)
Columbia Hospital Corporation of South Broward - Doing Business As:
Westside Regional Medical Center (Plantation, FL)
Columbia Hospital Corporation of South Dade
Columbia Hospital Corporation of South Florida
Columbia Hospital Corporation of South Miami
Columbia Hospital Corporation of Tamarac
Columbia Hospital Corporation-SMM
Columbia Park Healthcare System, Inc.
Community Hospital of the Palm Beaches, Inc. - Doing Business As:
Palm Beaches Medical Center (West Palm Beach, FL)
The Arthritis Center at Palm Beaches Medical Center (West Palm
Beach, FL)
Community Hospitals of Galen, Inc. - Doing Business As:
Pompano Beach Medical Center (Pompano Beach, FL)
Coral Springs Surgi-Center, Ltd. (See Partnership Section)
Outpatient Surgery Center at Coral Springs (Coral Springs, FL)
DBPCO, Inc.
Daytona Medical Center, Inc. - Doing Business As:
NSB Medical Associates
Deering Hospital, Inc.
Deering Marketing and Communication Services, Inc.
Doctors Osteopathic Medical Center, Inc.
Gulf Coast Hospital (Ft. Myers, FL)
Englewood Community Hospital, Inc.
Englewood Community Hospital (Englewood, FL)
Fawcett Memorial Hospital, Inc. *
Fawcett Memorial Hospital (Port Charlotte, FL)
Florida Home Health Services-Private Care, Inc.
<PAGE>
FLORIDA (Cont.)
Florida Medical Collection Services, Inc.
Florida Psychiatric Company, Inc.
Galencare, Inc. - Doing Business As:
Brandon Hospital (Brandon, FL)
Destin Hospital (Destin, FL)
Northside Hospital (St. Petersburg, FL)
West Central Florida-Shared Services (St. Petersburg, FL)
Galen Hospital-Pembroke Pines, Inc. - Doing Business As:
Pembroke Pines Hospital (Pembroke Pines, FL)
P & L Associates (Limited Partnership) (Pembroke Pines, FL)
Galen of Florida, Inc. - Doing Business As:
Dade City Hospital (Dade City, FL)
Daytona Medical Center (Daytona Beach, FL)
Fort Walton Beach Medical Center (Ft. Walton Beach, FL)
Orange Park Medical Center (Orange Park, FL)
Osceola Regional Hospital (Kissimmee, FL)
St. Petersburg General Hospital (St. Petersburg, FL)
Bushnell Family Practice Center (Bushnell, FL)
Dade City Professional Building (Dade City, FL)
Normandy Manor Transitional Living Facility (Orlando, FL)
Grant Center Hospital of Ocala, Inc.
HCA Development Corporation of Florida
HCA Family Care Center, Inc.
HCA Health Services of Florida, Inc. - Doing Business As:
Bayonet Point/Hudson Medical Center (Hudson, FL)
L.W. Blake Hospital (Bradenton, FL)
Medical Center of Port St. Lucie (Port St. Lucie, FL)
North Florida Regional Medical Center (Gainesville, FL)
Northwest Regional Hospital (Margate, FL)
Oak Hill Hospital (Spring Hill, FL)
HCA Healthcare - Florida, Inc.
HCA of Florida, Inc.
HCA Physician Services of Tamarac, Inc.
HSCO, Inc.
<PAGE>
FLORIDA (Cont.)
Kendall Healthcare Group, Ltd. (See Partnership Section)
Kendall Regional Medical Center (Miami, FL)
First Health Center (Miami, FL)
Kendall Therapy Center (Miami, FL)
Kendall Therapy Center, Ltd. (See Partnership Section)
Lake Forest Utilities, Inc.
Largo Medical Center, Inc. - Doing Business As:
Medical Center Hospital - Largo, FL (Largo, FL)
Lawnwood Medical Center, Inc. - Doing Business As:
Harbour Shores Hospital of Lawnwood (Ft. Pierce, FL)
Lawnwood Regional Medical Center (Ft. Pierce, FL)
Lucerne Medical Center, Inc. - Doing Business As:
Lucerne Medical Center (Orlando, FL)
M & M of Ocala, Inc.
Marion Community Hospital, Inc. - Doing Business As:
Marion Community Hospital (Ocala, FL)
Medical Park Diagnostic Multicenter, Ltd. (See Partnership Section)
Medical Park Diagnostic Center (Miami, FL)
MedPlan, Inc.
Miami Beach Healthcare Group, Ltd. (See Partnership Section)
Aventura Hospital and Medical Center (Miami, FL)
Miami Heart Institute-North (Miami Beach, FL)
Miami Heart Institute-South (Miami Beach, FL)
Naples Rehabilitative Services, Inc.
Naples Rehab Center (Naples, FL)
New Port Richey Hospital, Inc. - Doing Business As:
New Port Richey Hospital (New Port Richey, FL)
North Florida Immediate Care Center, Inc.
<PAGE>
FLORIDA (Cont.)
North Miami Beach Surgical Center, Inc. (See Partnership Section)
North Miami Beach Surgical Center (North Miami Beach, FL)
Northwest Regional Hospital, Inc.
Northwest Regional Investment, Inc.
Oak Hill Acquisition, Inc.
Okaloosa Hospital, Inc. - Doing Business As:
Twin Cities Hospital (Niceville, FL)
Okeechobee Hospital, Inc. - Doing Business As:
Raulerson Hospital (Okeechobee, FL)
Orlando Depression Center, Inc.
Orlando Depression Center (Orlando, FL)
Osceola Regional Hospital, Inc. - Doing Business As:
TRICO Home Health Agency
Palm Beach Healthcare System, Inc.
Premier Tropic Staffing, Inc.
Pulmonary Care Services, Inc.
Putnam Hospital, Inc. - Doing Business As:
Putnam Community Hospital (Palatka, FL)
Rehabilitative Health Services, Inc.
Sarasota Doctors Hospital, Inc.
South Broward Healthcare Group, Ltd (See Partnership Section)
South Dade Healthcare Group, Ltd. (See Partnership Section)
Deering Hospital (Miami, FL)
Grant Center of Deering (Ft. Myers, FL)
Southwest Florida Health System, Inc.
Southwest Florida Magnetic Imaging Services, Inc.
<PAGE>
FLORIDA (Cont.)
Southwest Florida Regional Medical Center, Inc.
Southwest Florida Regional Medical Center (Fort Myers, FL)
Systems Medical Management, Inc.
The Health Advantage Network (Orlando, FL)
Surgical Park Center, Ltd. (See Partnership Section)
Radial Keratomy Institute of Surgical Park
Surgical Park Center (Miami, FL)
TSI Investments, Inc.
Tallahassee Medical Center, Inc. - Doing Business As:
Tallahassee Community Hospital (Tallahassee, FL)
Tamarac Acquisition Corporation
Tamarac Hospital Corporation, Inc.
Turtle Creek of Florida Self-Insurance Trust
University Hospital, Ltd. (See Partnership Section)
University Hospital (Tamarac, FL)
University Pavilion (Tamarac, FL)
University Psychiatric Center, Inc.
Volusia Healthcare Network, Inc.
Victoria Hospital Partnership (See Partnership Section)
West Florida Regional Medical Center, Inc. - Doing Business As:
Okaloosa Cancer Care Center (Crestview, FL)
West Florida Regional Medical Center (Pensacola, FL)
West Lake Joint Venture Investments, Inc.
Winter Park Healthcare Group, Ltd. (See Partnership Section) - Doing
Business As:
Winter Park Memorial Hospital
GEORGIA
CMC Ventures, Inc.
Coliseum Associates, Inc.
<PAGE>
GEORGIA (Cont.)
Coliseum Park Hospital, Inc. - Doing Business As:
Coliseum Medical Centers (Macon, GA)
Dublin Community Hospital, Inc. - Doing Business As:
Fairview Park Hospital (Dublin, GA)
Georgia Psychiatric Company, Inc. - Doing Business As:
Coliseum Psychiatric Hospital (Macon, GA)
Gwinnett Community Hospital, Inc. - Doing Business As:
Eastside Medical Center (Snellville, GA)
HCA Health Services of Georgia, Inc. - Doing Business As:
Hughston Sports Medicine Hospital (Columbus, GA)
Northlake Regional Medical Center (Atlanta, GA)
HCA Health Services of Gwinnett County, Inc.
HCA Parkway Investments, Inc.
Health Care Management Corporation
Med Corp., Inc.
MedFirst, Inc.
Medical Center-West, Inc. - Doing Business As:
Parkway Medical Center (Lithia Springs, GA)
Palmyra Park Hospital, Inc. - Doing Business As:
Palmyra Medical Centers (Albany, GA)
Redmond Oncology Services, Inc.
Redmond Park Health Services, Inc.
Redmond Park Hospital, Inc. - Doing Business As:
Redmond Regional Medical Center (Rome, GA)
West Paces Ferry Hospital, Inc. - Doing Business As:
West Paces Medical Center (Atlanta, GA)
West Paces Services, Inc.
IDAHO
HCA Health Services of Idaho, Inc.
HCA of Idaho, Inc.
ILLINOIS
Chicago Grant Hospital, Inc. - Doing Business As:
Grant Hospital (*of Chicago) *Pending
<PAGE>
Galen Hospital Illinois, Inc. - Doing Business As:
Michael Reese Hospital and Medical Center (Chicago, IL)
f/k/a HH-Michael Reese
Michael Reese - North
Michael Reese - One Day Surgery
Michael Reese Sears Tower
Galen of Illinois, Inc. - Doing Business As:
Community Medical Plaza
Illinois Psychiatric Hospital Company, Inc. - Doing Business As:
Chicago Lakeshore Hospital (Chicago, IL)
Riveredge Hospital (Forest Park, IL)
Woodland Hospital (Hoffman Estates, IL)
Smith Laboratories, Inc.
INDIANA
BAMI-COL, Inc. *
Basic American Medical, Inc. *
F & E Community Developers of Florida, Inc. *
Thomasville Hospital, Inc. *
IOWA
HCA Health Services of Iowa, Inc.
KANSAS
Galen of Kansas, Inc.* - Doing Business As:
Independence Regional Health Center (Independence, MO)
Overland Park Regional Medical Center (Overland Park, KS)
Columbia School - Adult Day Care Center
Galichia Laboratories, Inc.
HCA Health Services of Kansas, Inc. - Doing Business As:
Wesley Medical Center (Wichita, KS)
OB-GYN Diagostics, Inc.
Western Plains Regional Hospital, Inc. - Doing Business As:
Western Plains Regional Hospital (Dodge City, KS)
<PAGE>
KENTUCKY
A. C. Medical, Inc.
B.G. MRI, Inc.
Frankfort Hospital, Inc. - Doing Business As:
King's Daughters Memorial Hospital (Frankfort, KY)
GALENCO, Inc.
GSD, Inc. *
Galen International Holdings, Inc.
Galen of Kentucky, Inc. * - Doing Business As:
Audubon Regional Medical Center (Louisville, KY)
Lake Cumberland Regional Hospital (Somerset, KY)
Cumberland
Suburban Medical Center (Louisville, KY)
Advanced Cardiovascular Institute
Audubon Medical Plaza
Lake Cumberland Home Health Agency
Regional Hospital Services
Suburban Medical Plaza
Greenview Hospital, Inc. - Doing Business As:
Greenview Hospital (Bowling Green, KY)
Same Day Surgery (Bowling Green, KY)
LACO, Inc.
South Central Kentucky Corp.
Subco of Kentucky, Inc.
Tri-County Community Hospital, Inc. *
(Owns the real property known as Miami Heart Institute-South,
leases to Miami Beach Healthcare Group, Ltd.)
LOUISIANA
Galen of Louisiana, Inc. - Doing Business As:
Avoyelles Hospital (Marksville, LA)
Oakdale Community Hospital (Oakdale, LA)
Springhill Medical Center (Springhill, LA)
Ville Platte Medical Center (Ville Platte, LA)
HCA Health Services of Louisiana, Inc. - Doing Business As:
North Monroe Hospital (Monroe, LA)
HCA Highland Hospital, Inc. - Doing Business As:
<PAGE>
Highland Hospital (Shreveport, LA)
Lake Area Medical Center, Inc.
Lake Charles Surgery Center, Inc. - Doing Business As:
Surgicare of Lake Charles
Lakeside Associates, Inc.
Louisiana Psychiatric Company, Inc. - Doing Business As:
Cypress Hospital (Lafayette, LA)
DePaul Hospital (New Orleans, LA)
WGH, Inc. - Doing Business As:
Winn Parish Medical Center (Winnfield, LA)
MISSISSIPPI
Galen of Mississippi, Inc.
MISSOURI
Business Health Services, Inc.
Clinical Management Services, Inc.
Clinical Specialities, Inc.
Forum Springfield, Inc.
HCA Health Services of Missouri, Inc.
HEI Missouri, Inc. *
HEI Sullivan, Inc.
Kensington Care Services, Inc.
M.W.A., Inc.
Midwest Psychiatric Center, Inc. - Doing Business As:
Research Psychiatric Center (Kansas City, MO)
Oak Grove Medical Clinic, Inc.
Precise Imaging, Inc.
PRI-MED, Inc.
Regional Multicare Group, Inc.
<PAGE>
Truman-Forest Pharmacy, Inc.
NEVADA
CHC Venture Co.
Columbia Hospital Corporation of West Houston *
HCA Health Services of Nevada, Inc.
National Care Services Corp. of Nevada - Doing Business As:
Sunrise Diagnostic Center
Sunrise Medical Tower III (3006 S. Maryland Parkway) (NV)
Sunrise Medical Tower IV (3196 S. Maryland Parkway) (NV)
Sunrise Professional Pharmacy
Nevada Psychiatric Company, Inc.
Sunrise Hospital - Doing Business As:
Sunrise Hospital and Medical Center (Las Vegas, NV)
Sunrise Children's Hospital (Las Vegas, NV)
NEW HAMPSHIRE
HCA Health Services of New Hampshire, Inc. - Doing Business As:
Parkland Medical Center (Derry, NH)
Portsmouth Hospital (Portsmouth, NH)
Portsmouth Pavilion (Portsmouth, NH)
Regional Psychiatric Company, Inc.
NEW JERSEY
HCA Health Services of New Jersey, Inc.
<PAGE>
NEW MEXICO
Guadalupe Medical Center, Inc. - Doing Business As:
Guadalupe Medical Center (Carlsbad, NM)
HCA Health Services of New Mexico, Inc.
Hobbs Community Hospital, Inc. - Doing Business As:
Lea Regional Hospital (Hobbs, NM)
New Mexico Psychiatric Company, Inc. - Doing Business As:
Heights Psychiatric Hospital (Albuquerque, NM)
NORTH CAROLINA
Cumberland Medical Center, Inc. - Doing Business As:
Highsmith-Rainey Memorial Hospital (Fayetteville, NC)
Galen of North Carolina, Inc.
HCA-Raleigh Community Hospital, Inc. - Doing Business As:
Raleigh Community Hospital (Raleigh, NC)
Raleigh Community Physical Therapy & Sports Medicine Center
Wake Psychiatric Hospital, Inc. - Doing Business As:
Holly Hill Hospital (Raleigh, NC)
OKLAHOMA
HCA Affiliated Services of Oklahoma, Inc.
HCA Health Services of Oklahoma, Inc. - Doing Business As:
Presbyterian Hospital (Oklahoma City, OK)
St. Mary's Hospital (Enid, OK)
OREGON
HCA of Oregon, Inc.
PENNSYLVANIA
Basic American Medical Equipment Company, Inc. *
RHODE ISLAND
HCA Health Services of Rhode Island, Inc.
<PAGE>
SOUTH CAROLINA
Aiken Community Hospital, Inc. - Doing Business As:
Aiken Regional Medical Center (Aiken, SC)
The Aurora Pavilion (Aiken, SC)
Aiken Health Services
HCA Healthcare - South Carolina, Inc.
HCA South Carolina Health Services, Inc.
Low Country Health Services, Inc. of the Southeast
Myrtle Beach Hospital, Inc. - Doing Business As:
Grand Strand General Hospital (Myrtle Beach, SC)
North Trident Regional Hospital, Inc. - Doing Business As:
Trident Regional Medical Center (Charleston, SC)
TENNESSEE
Athens Community Hospital, Inc. - Doing Business As:
Athens Community Hospital (Athens, TN)
Chattanooga Healthcare Network, Inc.
Community and Occupational Health Services, Inc.
Diagnostic Center Hospital Corporation
Galen of Tennessee, Inc. - Doing Business As:
East Ridge Hospital (East Ridge, TN)
General Care Corp. - Doing Business As:
Regional Hospital of Jackson (Jackson, TN)
HCA Capital Corporation
HCA Crossroads Residential Centers, Inc.
HCA Development Company, Inc.
HCA Donelson Investments, Inc.
HCA Finance, Inc.
<PAGE>
TENNESSEE (Cont.)
HCA Health Services of Tennessee, Inc. - Doing Business As:
Centennial Medical Center at West Side Hospital (Nashville, TN)
Centennial Medical Center at Park View (Nashville, TN)
Centennial Medical Center/Parthenon Pavilion (Nashville, TN)
Donelson Hospital (Nashville, TN)
Smyrna Medical Center (Smyrna, TN)
Southern Hills Medical Center (Nashville, TN)
HCA Home and Clinical Services, Inc.
HCA Information Services, Inc.
HCA International Company
HCA Medical Services, Inc.
HCA Physician Services, Inc.
HCA Properties, Inc.
HCA Psychiatric Company
HCA Realty, Inc.
HCA Southern Hills Investments, Inc.
Health Enterprises, Inc.
Hospital Capital Corporation
Hospital Corporation of Tennessee - Doing Business As:
Volunteer General Hospital (Martin, TN)
Hospital Realty Corporation
Indian Path Hospital, Inc. - Doing Business As:
Indian Path Medical Center (Kingsport, TN)
IPH, Inc.
Judy's Foods, Inc.
Medical Equipment Management Corp.
Nashville Healthcare Network, Inc.
Nashville Healthcare Properties, Inc.
Nashville Psychiatric Company, Inc.
<PAGE>
TENNESSEE (Cont.)
Park Plaza Realty, Inc.
Parkridge Hospital, Inc. - Doing Business As:
Parkridge Medical Center (Chattanooga, TN)
Parthenon Financial Services, Inc.
Parthenon Insurance Company
Parthenon Travel Services, Inc.
TCPN, Inc.
Tennessee Psychiatric Company, Inc. - Doing Business As:
Indian Path Pavilion (Kingsport, TN)
The Center for Health Services, Inc.
Valley Psychiatric Hospital Corporation - Doing Business As:
Valley Psychiatric Hospital (Chattanooga, TN)
Vanderbilt Child & Adolescent Psych. Hospital, Ltd - Doing Business As:
Vanderbilt Child and Adolescent Psychiatric Hosp. (Nashville, TN)
WDC, Inc.
TEXAS
Arlington Diagnostic South, Inc.
BMSH, Inc.
Bay Area Healthcare Group, Ltd. (See Partnership Section)
Bay Area Medical Center (Corpus Christi, TX)
Bayview Hospital (Corpus Christi, TX)
Doctors Regional Medical Center (Corpus Christi, TX)
Beaumont Hospital, Inc. - Doing Business As:
Beaumont Regional Medical Center (Beaumont, TX)
Bellaire Imaging, Inc.
Brazos Acquisition Corp.
CHC Management, Ltd. (See Partnership Section)
CHC Payroll Corporation*
<PAGE>
TEXAS (Cont.)
CHC Realty Corporation
CHC-DC, Inc.
CHC-El Paso Corporation
CHC-Miami Corporation
CHC-Psychiatric Management Ltd. (See Partnership Section)
Columbia/HCA San Antonio, Inc.
Columbia Bay Area Realty, Ltd. (See Partnership Section)
Columbia Hospital Corporation At The Medical Center
Columbia Hospital Corporation of Arlington
Columbia Hospital Corporation of Bay Area
Columbia Hospital Corporation of Beaumont
Columbia Hospital Corporation of Corpus Christi
Columbia Hospital Securities Corporation *
Columbia Hospital-Arlington (WC), Ltd. (See Partnership Section)
Columbia Hospital-El Pasco, Ltd. (See Partnership Section)
Columbia Hospital-Miami, Ltd. (See Partnership Section)
Columbia Hospital-Tarmarac, Ltd. (See Partnership Section)
Columbia Psychiatric Management Co.
Corpus Christi Healthcare Group, Ltd. (See Partnership Section)
Doctors Hospital of Corpus Christi, Inc.
E.P. Physical Therapy Centers, Inc.
El Paso Healthcare Systems, Ltd. (See Partnership Section)
Columbia Behavioral Center (El Paso, TX)
Columbia Medical Center-East (El Paso, TX)
Columbia Medical Center-West (El Paso, TX)
Columbia Back Institute (El Paso, TX)
Columbia Diagnostic Centers (El Paso, TX)
Columbia Healthcare System (El Paso, TX)
Columbia LifeCare Center (El Paso, TX)
Columbia Regional Oncology Center (El Paso, TX)
<PAGE>
TEXAS (Cont.)
El Paso Pathology Group, P.A.
El Paso Physical Therapy Center, Ltd. (See Partnership Section)
Columbia Physical Therapy Center (El Paso, TX) (2 facilities)
Fort Worth Investments, Inc.
Fort Worth Medical Plaza, Inc. - Doing Business As:
Medical Plaza Hospital (Ft. Worth, TX)
Galen Hospital of Baytown, Inc.
Galen Hospitals of Texas, Inc. - Doing Business As:
Abilene Regional Medical Center (Abilene, TX)
Brazos Valley Medical Center (College Station, TX)
Medical City Dallas Hospital (Dallas, TX)
Abilene Heart & Vascular Institute
Bryan Professional Building
Brazos Valley Surgical Center
Medical City Dallas - Ambulatory Surgery Center
WellHealth Center
West Texas Professional Building
Golden Triangle Healthcare Group, Ltd. (See Partnership Section)
Greater Houston Preferred Provider Option Inc. - Doing Business As:
Greater Houston PPO (Operates out of Clear Lake Regional Medical
Center)
HCA Health Services of Texas, Inc. - Doing Business As:
Denton Community Hospital (Denton, TX)
HCA Lewisville Hospital (Lewisville, TX)
HCA South Austin Medical Center (Austin, TX)
Medical Center Hospital - Houston, TX (Houston, TX)
North Hills Medical Center (North Richland Hills, TX)
Rio Grande Regional Hospital (McAllen, TX)
Spring Branch Medical Center (Houston, TX)
West Houston Medical Center (Houston, TX)
HCA Alliance Airport Clinic
HCA-Arlington, Inc. - Doing Business As:
HCA Arlington Medical Center (Arlington, TX)
HCA Physician Services of North Texas, Inc.
HCA Plano Imaging, Inc.
HCA-Arlington, Inc.
HEI Construction, Inc.
<PAGE>
HEI Orange, Inc.
HEI Publishing, Inc.
HEI Sealy, Inc.
HSP of Texas, Inc. - Doing Business As:
Medical Center of Plano (Plano, TX)
Lockhart Acquisition Corp.
MGH Medical, Inc. - Doing Business As:
Metropolitan Hospital (San Antonio, TX)
Metropolitan Transitional Care Unit (San Antonio, TX)
Med Plus of El Paso, Inc.
Medical Center Del Oro Hospital, Inc.
Medical Software Integration Management, Inc. *
Navarro Memorial Hospital, Inc. - Doing Business As:
Navarro Regional Hospital (Corsicana, TX)
Physicians MRI Services, Inc.
Quantum/Belliare Imaging, Ltd. (See Partnership Section)
Rio Grande Development Corp.
Rio Grande Regional Investments, Inc.
Rosewood Professional Office Building, Ltd. (See Partnership Section)
San Antonio Regional Hospital, Inc.
Silsbee Hospital, Inc.
Silsbee Doctors Hospital (Silsbee, TX)
Sun Towers/Vista Hills Holding Co.
Texas Psychiatric Company, Inc. - Doing Business As:
Beaumont Neurological Hospital (Beaumont, TX)
<PAGE>
TEXAS (Cont.)
Village Oaks Medical Center, Inc.
W & C Hospital, Inc.
Waco Hospital Corp.
West Houston ASC, Inc.
West Houston Healthcare Group, Ltd. (See Partnership Section)
Bellaire General Hospital (Houston, TX)
Heights Hospital (Houston, TX)
Rosewood Medical Center (Houston, TX)
Sam Houston Memorial Hospital (Houston, TX)
Champions Treatment Center (Houston, TX)
Willow Creek Hospital, Ltd. (See Partnership Section)
Women's Hospital of Texas, Inc. - Doing Business As:
Women's Hospital of Texas (Houston, TX)
UTAH
General Hospitals of Galen, Inc. * - Doing Business As:
Cartersville Medical Center (Cartersville, GA)
Davis Hospital and Medical Center (Layton, UT)
Peachtree Regional Hospital (Newnan, GA)
Peachtree Health and Fitness Center (Newnan, GA)
HCA Health Services of Utah, Inc. - Doing Business As:
St. Mark's Hospital (Salt Lake City, UT)
St. Mark's Investments, Inc.
VIRGINIA
Ambulatory Services Management Corp. of Chesterfield Co
Brandermill Medical Ancillaries, Inc.
Chicago Medical School Hospital, Inc. *
Chippenham Hospital, Inc. - Doing Business As:
Chippenham Hospital (Richmond, VA)
Tucker Pavilion (Richmond, VA)
Circle Terrace Hospital Corporation
Galen-Med, Inc. * - Doing Business As:
Clinch Valley Medical Center (Richlands, VA)
East Montgomery Medical Center (Montgomery, AL)
Lake Area Medical Center (Lake Charles, LA)
Lakeland Medical Center (New Orleans, LA)
<PAGE>
Galen of Virginia, Inc. * - Doing Business As:
University of Louisville Hospital (Louisville, KY)
Galen Virginia Hospital Corporation
HCA Ambulatory Surgery Investments, Inc.
HCA Health Services of Norfolk, Inc.
HCA Health Services of Portsmouth, Inc.
HCA Health Services of Virginia, Inc. - Doing Business As:
Henrico Doctors Hospital (Richmond, VA)
Lewis-Gale Psychiatric Center (Salem, VA)
Reston Hospital Center (Reston, VA)
Health Resource Productions, Inc.
Johnston-Willis Limited - Doing Business As:
Johnston-Willis Hospital (Richmond, VA)
Lewis-Gale Hospital, Inc. - Doing Business As:
Lewis-Gale Hospital (Salem, VA)
NOCO, Inc.
Richmond West End Real Estate, Inc.
Skipfor, Inc.
United Ambulance Service, Inc.
Virginia Psychiatric Company, Inc. - Doing Business As:
Dominion Hospital (Falls Church, VA)
Peninsula Hospital (Hampton, VA)
Poplar Springs Hospital (Petersburg, VA)
WASHINGTON
ACH, Inc.
WEST VIRGINIA
Galen of West Virginia, Inc. * - Doing Business As:
Greenbrier Valley Medical Center (Ronceverte, WV)
St. Luke's Hospital (Bluefield, WV)
Galen Shared Services (Mobile Lithotripter)
HCA Health Services of West Virginia, Inc.
<PAGE>
HMC (WV), Inc.
Hospital Corporation of America
Raleigh General Hospital - Doing Business As:
Raleigh General Hospital (Beckley, WV)
Teays Valley Health Services, Inc. - Doing Business As:
Putnam General Hospital (Hurricane, WV)
Tri Cities Health Services Corp. - Doing Business As:
River Park Hospital (Huntington, WV)
WISCONSIN
Psychiatric Company of Dane County, Inc.
GRAND CAYMAN ISLANDS
Partners & Affiliates Casualty Excess Ltd.
SWITZERLAND
Societe Anonyme de l'Exploitation de l'Hopital de la Tour - Doing
Business as:
Hopital de la Tour
Permanence de l'Hopital de la Tour S.A. - Doing Business As:
Geneva Out-Patient Clinic
UNITED KINGDOM
The Wellington Private Hospital Limited - with the following
unincorporated division - Doing Business As:
The Wellington Hospital
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of Columbia/HCA Healthcare Corporation (including its predecessors)
on Form S-3 (File Nos. 33-52379 and 33-50985) of our report (which includes an
explanatory paragraph on a change in accounting for income taxes) dated
February 28, 1994, on our audit of the consolidated financial statements and
financial statement schedules of Columbia Healthcare Corporation as of
December 31, 1993 and 1992, and for each of the three years in the period ended
December 31, 1993, which report is included in this Annual Report on Form 10-K.
We also consent to the incorporation by reference in the registration
statements of Columbia/HCA Healthcare Corporation (including its predecessors)
on Form S-3 (File Nos. 33-52379 and 33-50985) of our report (which includes
explanatory paragraphs regarding the merger of Columbia Healthcare Corporation
and HCA - Hospital Corporation of America and a change in accounting for
income taxes) dated February 28, 1994, except for Note 15, as to which the
date is March 24, 1994, on our audit of the supplemental consolidated
financial statements and financial statement schedules of Columbia/HCA
Healthcare Corporation as of December 31, 1993 and 1992, and for each of the
three years in the period ended December 31, 1993, which report is included in
this Annual Report on Form 10-K.
COOPERS & LYBRAND
Louisville, Kentucky
March 31, 1994
