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SHORT TERM CREDIT AGREEMENT
by and among
HEALTHSOUTH CORPORATION,
as Borrower,
NATIONSBANK, N. A.,
as Administrative Agent,
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ SECURITIES LLC,
as Lead Arranger
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
September 28, 1998
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions and Terms
1.1. Definitions....................................................................2
1.2. Rules of Interpretation.......................................................25
1.3. Classes and Types of Loans....................................................26
ARTICLE II
The Loans
2.1. Loans.........................................................................27
2.2. Payment of Interest...........................................................29
2.3. Payment of Principal..........................................................29
2.4. Non-Conforming Payments.......................................................30
2.5. Notes.........................................................................30
2.6. Pro Rata Payments.............................................................30
2.7. Reductions....................................................................31
2.8. Conversions and Elections of Subsequent Interest Periods......................31
2.9. Unused Fees...................................................................31
2.10. Deficiency Advances...........................................................32
2.11. Use of Proceeds...............................................................32
2.12. Increase and Decrease in Amounts..............................................32
ARTICLE III
Letters of Credit
3.1. Letters of Credit.............................................................33
3.2. Reimbursement.................................................................33
3.3. Letter of Credit Facility Fees................................................36
3.4. Administrative Fees...........................................................37
ARTICLE IV
Change in Circumstances
4.1. Increased Cost and Reduced Return. ...........................................38
4.2. Limitation on Types of Loans..................................................39
i
4.3. Illegality....................................................................40
4.4. Treatment of Affected Loans...................................................40
4.5. Compensation..................................................................40
4.6. Taxes.........................................................................41
ARTICLE V
Conditions to Making Loans and Issuing Letters of Credi
5.1. Conditions of Initial Advance.................................................43
5.2. Conditions of Loans and Letters of Credit.....................................44
ARTICLE VI
Representations and Warranties
6.1. Organization and Authority....................................................46
6.2. Loan Documents................................................................46
6.3. Solvency......................................................................47
6.4. Subsidiaries..................................................................47
6.5. Ownership Interests...........................................................47
6.6. Financial Condition...........................................................47
6.7. Title to Properties...........................................................48
6.8. Taxes.........................................................................48
6.9. Other Agreements..............................................................48
6.10. Litigation....................................................................49
6.11. Margin Stock..................................................................49
6.12. Investment Company............................................................49
6.13. Patents, Etc..................................................................49
6.14. No Untrue Statement...........................................................50
6.15. No Consents, Etc..............................................................50
6.16. ERISA Requirement.............................................................50
6.17. No Default....................................................................50
6.18. Hazardous Materials...........................................................50
6.19. Employment Matters............................................................50
6.20. RICO..........................................................................51
6.21. Reimbursement from Third Party Payors.........................................51
6.22. Year 2000 Compliance..........................................................51
ARTICLE VII
Affirmative Covenants
7.1. Financial Statements, Reports, Etc............................................52
ii
7.2. Maintain Properties...........................................................53
7.3. Existence, Qualification, Etc.................................................53
7.4. Regulations and Taxes.........................................................54
7.5. Insurance.....................................................................54
7.6. True Books....................................................................54
7.7. Right of Inspection...........................................................54
7.8. Observe all Laws..............................................................54
7.9. Governmental Licenses.........................................................54
7.10. Covenants Extending to Other Persons..........................................55
7.11. Officer's Knowledge of Default................................................55
7.12. Suits or Other Proceedings....................................................55
7.13. Notice of Discharge of Hazardous Material or Environmental Complaint..........55
7.14. Environmental Compliance......................................................55
7.15. Continuation of Current Business..............................................56
7.16. Management Contracts..........................................................56
7.17. Year 2000 Compliance..........................................................56
ARTICLE VIII
Negative Covenants
8.1. Financial Covenants...........................................................57
8.2. Investments and Loans.........................................................57
8.3. Indebtedness..................................................................57
8.4. Disposition of Assets.........................................................58
8.5. Consolidation or Merger.......................................................58
8.6. Liens.........................................................................58
8.7. Dividends and Distributions...................................................58
8.8. Acquisitions..................................................................58
8.9. Restricted Payments...........................................................58
8.10. Compliance with ERISA.........................................................58
8.11. Fiscal Year...................................................................59
8.12. Dissolution, etc..............................................................59
8.13. Transactions with Affiliates..................................................59
ARTICLE IX
Events of Default and Acceleration
9.1. Events of Default.............................................................61
9.2. Agent to Act..................................................................63
9.3. Cumulative Rights.............................................................64
9.4. No Waiver.....................................................................64
9.5. Allocation of Proceeds........................................................64
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ARTICLE X
The Agent
10.1. Appointment, Powers, and Immunities...........................................65
10.2. Reliance by Agent.............................................................65
10.3. Defaults......................................................................65
10.4. Rights as Lender..............................................................66
10.5. Indemnification...............................................................66
10.6. Non-Reliance on Agent and Other Lenders.......................................66
10.7. Resignation of Agent..........................................................67
10.8. Fees..........................................................................67
ARTICLE XI
Miscellaneous
11.1. Assignments and Participations................................................68
11.2. Notices.......................................................................69
11.3. No Waiver.....................................................................70
11.4. Rights of Setoff; Adjustments.................................................70
11.5. Survival......................................................................71
11.6. Expenses......................................................................71
11.7. Amendments and Waivers........................................................72
11.8. Counterparts..................................................................72
11.9. Waivers by Borrower...........................................................72
11.10. Termination...................................................................73
11.11. Governing Law.................................................................73
11.12. Indemnification...............................................................74
11.13. Agreement Controls............................................................74
11.14. Integration...................................................................75
11.15. Successors and Assigns........................................................75
11.16. Severability..................................................................75
11.17. Usury Savings Clause..........................................................75
EXHIBIT A Applicable Commitment Percentages.......................................A-1
EXHIBIT B Form of Assignment and Acceptance.......................................B-1
EXHIBIT C Notice of Appointment (or Revocation) of Authorized
Representative..........................................................C-1
EXHIBIT D Form of Borrowing Notice................................................D-1
EXHIBIT E Form of Interest Rate Selection Notice..................................E-1
EXHIBIT F Form of Note............................................................F-1
EXHIBIT G Investments.............................................................G-1
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EXHIBIT H Form of Opinion of Borrower's Counsel.................................H-1
EXHIBIT I Compliance Certificate................................................I-1
EXHIBIT J Executive Officers....................................................J-1
Schedule 6.4 Subsidiaries......................................................... S-1
Schedule 6.13 Patent Issue..........................................................S-2
Schedule 6.19 Employment Matters....................................................S-3
Schedule 8.3 Existing Subsidiary Indebtedness......................................S-4
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SHORT TERM CREDIT AGREEMENT
THIS SHORT TERM CREDIT AGREEMENT dated as of September 28, 1998 (this
"Agreement") is entered into by and among HEALTHSOUTH CORPORATION, a Delaware
corporation (the "Borrower"), NATIONSBANK, N.A., a national banking association
organized and existing under the laws of the United States, in its capacity as a
Lender ("NationsBank"), and each other financial institution executing and
delivering a signature page hereto and each other financial institution which
may hereafter execute and deliver an instrument of assignment with respect to
this Agreement pursuant to Section 11.1 (hereinafter such financial institutions
may be referred to individually as a "Lender" or collectively as the "Lenders"),
and NATIONSBANK, N.A., a national banking association organized and existing
under the laws of the United States, in its capacity as agent for the Lenders
(in such capacity, and together with any successor agent appointed in accordance
with the terms of Section 10.7, the "Agent").
RECITAL:
The Borrower has requested that the Lenders make a short term revolving
credit facility of up to $500,000,000, including a $25,000,000 sublimit for the
issuance of standby letters of credit, to the Borrower, the proceeds of which
shall be used as set forth in Section 2.11, and the Lenders have agreed to make
such short term revolving credit facility available to the Borrower on the
following terms and conditions:
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ARTICLE I
Definitions and Terms
1.1. Definitions. For the purposes of this Agreement, in addition to
the definitions set forth above, the following terms shall have the respective
meanings set forth below:
"Acquisition" means the acquisition, whether with cash,
property, stock or promise to pay, of all or a portion of a Person or a
Facility or Facilities of a Person, permitted under Section 8.8;
provided such Person or Facilities is in substantially the same line of
business engaged in by Borrower or its Consolidated Entities.
"Actual/360 Basis" shall mean a method of computing interest
or other charges hereunder on the basis of an assumed year of 360 days
for actual number of days elapsed, meaning that interest or other
charges accrued for each day will be computed by multiplying the rate
applicable on that day by the unpaid principal balance (or other
relevant sum) on that day and dividing the result by 360.
"Advance" means a borrowing under the Short Term Credit
Facility consisting of the aggregate principal amount of a Loan.
"Affiliate" of any specified Person means any other Person (i)
which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such
specified Person; or (ii) which beneficially owns or holds 5% or more
of any class of the outstanding voting stock (or in the case of a
Person which is not a corporation, 5% or more of the equity interest)
of such specified Person; or 5% or more of any class of the outstanding
voting stock (or in the case of a Person which is not a corporation, 5%
or more of the equity interest) of which is beneficially owned or held
by such specified Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction
of the management and policies of a Person, whether through ownership
of voting stock, by contract or otherwise.
"Applicable Commitment Percentage" means, with respect to each
Lender, that portion of the Total Short Term Credit Commitment
allocable to such Lender (a) with respect to Lenders as of the Closing
Date, as set forth on Exhibit A, and (b) with respect to any Person who
becomes a Lender thereafter, as reflected in each Assignment and
Acceptance to which such Lender is a party assignee; provided that the
Applicable Commitment Percentage of each Lender shall be increased or
decreased to reflect any assignments to or by such Lender effected in
accordance with Section 11.1.
"Applicable Lending Office" means, for each Lender and for
each Type of Loan, the "Lending Office" of such Lender (or an affiliate
of such Lender) designated for such Type of Loan on the signature pages
hereof or such other office of such Lender (or an affiliate of such
Lender) as such Lender may from time to time specify to the Agent and
the Borrower
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by written notice in accordance with the terms hereof as the office by
which its Loans of such Type are to be made and maintained.
"Applicable Margin" means that number of basis points per
annum set forth below determined based upon the more favorable to the
Borrower of either (i) the highest Rating of outstanding senior
unsecured Indebtedness of the Borrower from time to time as specified
in Table I below (provided that in the event of a Rating split between
Tiers, then the Tier next above the Tier corresponding to the lower
Rating shall apply) or (ii) the ratio of Consolidated Indebtedness at
the date of determination to Consolidated EBITDA for the Four-Quarter
Period most recently ended as specified in Table II below:
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TABLE I
Tier Rating Applicable Margin
S&P or ▇▇▇▇▇'▇
I A- A3 40 b.p.
II BBB+ Baa1 45
III BBB ▇▇▇▇ ▇▇
▇▇ ▇▇▇- ▇▇▇▇ 60
V BB+ Ba1 80
VI BB Ba2 115
or lower or lower
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TABLE II
Tier Ratio of Consolidated Indebtedness to Applicable Margin
Consolidated EBITDA
I Less than 1.50 to 1.00 45 b.p.
II Equal to or greater than 1.50 to 1.00 50
but less than 2.00 to 1.00
III Equal to or greater than 2.00 to 1.00 60
but less than 2.50 to 1.00
IV Equal to or greater than 2.50 to 1.00 80
but less than 3.00 to 1.00
V Equal to or greater than 3.00 to 1.00 115
================================================================================
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; provided, however, that any time during which the sum of Short Term
Credit Outandings, and Letter of Credit Outstandings exceed
$166,666,500, 7.5 basis points shall automatically be added to the
Applicable Margin set forth in Tables I and II above; provided,
further, that any time during which the sum of Short Term Credit
Outstandings and Letter of Credit Outstandings exceed $333,333,000,
another 7.5 basis points (in addition to the 7.5 basis points added
pursuant to the preceding proviso) shall automatically be added to the
Applicable Margin set forth in Tables I and II above.
The Applicable Margin shall be established in the case of a Rating from
time to time based upon the Rating then in effect and, in the case of
the ratio, at the end of each fiscal quarter of the Borrower (the
"Ratio Determination Date"). Any change in the Applicable Margin
following each Ratio Determination Date shall be determined based upon
the computations set forth in the Compliance Certificate, subject to
review and approval of such computations by the Agent, and shall be
effective commencing on the date following the date such certificate is
received until the date following the date on which a new Compliance
Certificate is delivered or is required to be delivered, whichever
shall first occur; provided however, if the Borrower shall fail to
deliver any such certificate within the time period required by Section
7.1, then the Applicable Margin shall be 2% until the appropriate
certificate is so delivered. From the Closing Date to the first Ratio
Determination Date, the Applicable Margin shall be 50 basis points
(subject to the provisos in the first sentence of this definition).
"Applicable Unused Fee" means that number of basis points per
annum set forth below determined based upon the more favorable to the
Borrower of either (i) the highest Rating of outstanding senior
unsecured Indebtedness of the Borrower from time to time as specified
in Table III below (provided that in the event of a Rating split
between Tiers, then the Tier next above the Tier corresponding to the
lower Rating shall apply) or (ii) the ratio of Consolidated
Indebtedness at the date of determination to Consolidated EBITDA for
the Four-Quarter Period most recently ended as specified in Table IV
below:
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TABLE III
Tier Rating Applicable Unused
S&P or ▇▇▇▇▇'▇ Fee
I A- A3 9.0 b.p.
II BBB+ Baa1 10.0
III BBB Baa2 12.5
IV BBB- Baa3 15.0
V BB+ Ba1 20.0
VI BB Ba2 25.0
or lower or lower
================================================================================
4
================================================================================
TABLE IV
Tier Ratio of Consolidated Indebtedness to Applicable Unused
Consolidated EBITDA Fee
I Less than 1.50 to 1.00 10.0 b.p.
II Equal to or greater than 1.50 to 1.00 12.5
but less than 2.00 to 1.00
III Equal to or greater than 2.00 to 1.00 15.0
but less than 2.50 to 1.00
IV Equal to or greater than 2.50 to 1.00 20.0
but less than 3.00 to 1.00
V Equal to or greater than 3.00 to 1.00 25.0
================================================================================
The Applicable Unused Fee shall be established in the case of a Rating
from time to time based upon the Rating then in effect, and in the case
of the ratio, at the end of each fiscal quarter of the Borrower (the
"Ratio Determination Date"). Any change in the Applicable Unused Fee
following each Ratio Determination Date shall be determined based upon
the computations set forth in the Compliance Certificate, subject to
review and approval of such computations by the Agent and shall be
effective commencing on the date following the date such certificate is
received until the date following the date on which a new Compliance
Certificate is delivered or is required to be delivered, whichever
shall first occur; provided however, if the Borrower shall fail to
deliver any such certificate within the time period required by Section
7.1, then the Applicable Unused Fee shall be 2%. From the Closing Date
to the first Ratio Determination Date, the Applicable Unused Fee shall
be 12.5 basis points.
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit, or
similar documentation, executed by the Borrower from time to time and
delivered to the Issuing Bank to support the issuance of Letters of
Credit.
"Assignment and Acceptance" shall mean an Assignment and
Acceptance in the form of Exhibit B (with blanks appropriately filled
in) delivered to the Agent in connection with an assignment of a
Lender's interest under this Agreement pursuant to Section 11.1.
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"Authorized Representative" means any of the Executive
Officers of the Borrower or, with respect to financial matters, the
Treasurer or the Chief Financial Officer of the Borrower, or any other
Person expressly designated by the Board of Directors of the Borrower
(or the appropriate committee thereof) as an Authorized Representative
of the Borrower, as set forth from time to time in a certificate in the
form of Exhibit C.
"Base Rate" means, for any day, the rate per annum equal to
the higher of (i) the Prime Rate for such day or (ii) the Federal Funds
Rate for such day plus one-half of one percent (1/2%). Any change in
the Base Rate due to a change in the Prime Rate or the Federal Funds
Rate shall be effective on the effective date of such change in the
Prime Rate or Federal Funds Rate.
"Base Rate Loan" means a Loan for which the rate of interest
is determined by reference to the Base Rate.
"Base Rate Refunding Loan" means an Advance under the Short
Term Credit Facility which bears interest at a Base Rate made to
satisfy Reimbursement Obligations arising from a drawing under a Letter
of Credit.
"Board" means the Board of Governors of the Federal Reserve
System (or any successor body).
"Borrowing Notice" means the notice delivered by an Authorized
Representative in connection with an Advance under the Short Term
Credit Facility, in the form of Exhibit D.
"Business Day" means, (i) except in the case of a Eurodollar
Rate Loan, any day which is not a Saturday, Sunday or a day on which
banks in the States of New York and North Carolina are authorized or
obligated by law, executive order or governmental decree to be closed
and, (ii) with respect to any Eurodollar Rate Loan, any day which is a
Business Day, as described above, and on which the relevant
international financial markets are open for the transaction of
business contemplated by this Agreement in London, England, New York,
New York and Charlotte, North Carolina.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time
including Statement No. 13 of the Financial Accounting Standards Board
and any successor thereof.
"Capital Stock" of any Person means any and all shares, rights
to purchase, warrants or options (whether or not currently
exercisable), participation or other equivalents of or interest in
(however designated) the equity (including without limitation common
stock, preferred stock and partnership and joint venture interests) of
such Person (excluding any debt securities that are convertible into,
or exchangeable for, such equity).
"Change of Control" means, at any time:
6
(i) any "person" or "group" (each as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act), who are not as of
the Closing Date owners of one percent (1%) or more of the
Voting Stock of the Borrower, either (A) becomes the
"beneficial owner" (as defined in Rule 13d-3 of the Exchange
Act), directly or indirectly, of Voting Stock of the Borrower
(or securities convertible into or exchangeable for such
Voting Stock) representing 15% or more of the combined voting
power of all Voting Stock of the Borrower (on a fully diluted
basis) or (B) otherwise has the ability, directly or
indirectly, to elect a majority of the board of directors of
the Borrower;
(ii) during any period of up to 24 consecutive
months, commencing on the Closing Date, individuals who at the
beginning of such period were directors of the Borrower shall
cease for any reason (other than the death, disability or
retirement of an officer of the Borrower that is serving as a
director at such time so long as another officer of the
Borrower replaces such Person as a director) to constitute a
majority of the board of directors of the Borrower; or
(iii) any Person or two or more Persons acting in
concert shall have acquired by contract or otherwise, or shall
have entered into a contract or arrangement that, upon
consummation thereof, will result in its or their acquisition,
of the power to exercise, directly or indirectly, a
controlling influence on the management or policies of the
Borrower.
"Closing Date" means the date as of which this Agreement is
executed by the Borrower, the Lenders and the Agent and on which the
conditions set forth in Section 5.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder.
"Common Stock" means the common stock, par value $.01 per
share, of the Borrower.
"Compliance Certificate" shall have the meaning attributed to
that term in Section 7.1(c).
"Consistent Basis" in reference to the application of GAAP
means the accounting principles observed in the period referred to are
comparable in all material respects to those applied in the preparation
of the audited financial statements of the Borrower referred to in
Section 6.6(a).
"Consolidated Amortization Expense" of the Borrower for any
period means the amortization expense of the Borrower and its
Consolidated Entities for such period (to the
7
extent included in the computation of Consolidated Net Income),
determined on a consolidated basis in accordance with GAAP.
"Consolidated Depreciation Expense" of the Borrower means the
depreciation expense of the Borrower and its Consolidated Entities for
such period (to the extent included in the computation of Consolidated
Net Income of the Borrower), determined on a consolidated basis in
accordance with GAAP.
"Consolidated EBITDA" means, with respect to the Borrower and
its Consolidated Entities for any Four-Quarter Period ending on the
date of computation thereof, the sum of, without duplication, (i)
Consolidated Net Income, (ii) Consolidated Interest Expense, (iii)
Consolidated Income Tax Expense, (iv) Consolidated Amortization
Expense, (v) Consolidated Depreciation Expense and (vi) the minority
interest of any Person or Persons in the income of Consolidated
Entities for such period, all determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis.
"Consolidated Entity" shall mean any Person whose financial
statements are appropriately consolidated with the Borrower's financial
statements under GAAP.
"Consolidated Indebtedness" means all Indebtedness of the
Borrower and its Consolidated Entities, all determined on a
consolidated basis.
"Consolidated Interest Expense" means, with respect to any
Four-Quarter Period ending on the date of computation thereof, the
gross interest expense of the Borrower and its Consolidated Entities,
including without limitation (i) the current amortized portion of debt
discounts to the extent included in gross interest expense, (ii) the
current amortized portion of all fees (including fees payable in
respect of any Rate Hedging Obligation) payable in connection with the
incurrence of Indebtedness to the extent included in gross interest
expense, (iii) the portion of any payments made in connection with
Capital Leases allocable to interest expense, and (iv) lease payments,
other than the Headquarters Obligations, made pursuant to the
Headquarters Lease, all determined on a consolidated basis in
accordance with GAAP applied on a Consistent Basis.
"Consolidated Net Income" of the Borrower for any period means
the net income (or loss) of the Borrower and its Consolidated Entities
for such period determined on a consolidated basis in accordance with
GAAP, without giving effect to dividends on any series of preferred
stock of any Consolidated Entity, whether or not in cash, to the extent
such consolidated net income was reduced thereby; provided that there
shall be excluded from such net income (for all purposes, other than
compliance with Section 8.1(a), to the extent otherwise included
therein), without duplication, (i) the net income of any Person (other
than a Consolidated Entity) to the extent that any such income has not
actually been received by the Borrower or a Consolidated Entity in the
form of dividends or similar distributions during such period, but
including, in any event, net income of any Person who becomes a
Consolidated Entity whose Acquisition is accounted for on a "pooling of
8
interests" basis; (ii) except to the extent includable in the
consolidated net income of the Borrower or a Consolidated Entity
pursuant to the foregoing clause (i), the net income of any Person that
accrued prior to the date that (a) such Person becomes a Consolidated
Entity or is merged into or consolidated with a Consolidated Entity or
(b) the assets of such Person are acquired by the Borrower or a
Consolidated Entity; (iii) the net income of any Consolidated Entity to
the extent that the declaration or payment of dividends or similar
distributions by such Consolidated Entity of that income is not
permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Consolidated Entity during such period;
(iv) any gain (or loss), together with any related provisions for taxes
on any such gain, realized during such period by the Borrower or its
Consolidated Entities upon (a) the acquisition of any securities, or
the extinguishment of any Indebtedness, of the Borrower or its
Consolidated Entities or (b) any asset sale by the referent person or
any of its Subsidiaries; (v) any extraordinary gain (or extraordinary
loss), together with any related provision for taxes or tax benefit
resulting from any such extraordinary gain or loss, realized by the
Borrower or its Consolidated Entities during such period; and (vi) in
the case of a successor to any Person by consolidation, merger or
transfer of its assets, any earnings of the successor prior to such
merger, consolidation or transfer of assets; provided, further,
however, that there shall be added back to net income non-recurring,
non-cash expenses and cash transaction costs relating to professional
fees arising in conjunction with an Acquisition provided such expenses
do not exceed 10% of the Cost of Acquisition.
"Consolidated Net Worth" of the Borrower as of any date means
the Consolidated Stockholders' Equity (including any preferred stock
that is classified as equity under GAAP, other than Disqualified Stock)
of the Borrower and its Consolidated Entities (excluding any equity
adjustment for foreign currency translation for any period subsequent
to the Closing Date) on a consolidated basis at such date, as
determined in accordance with GAAP, less all write-ups subsequent to
the Closing Date in the book value of any asset owned by the Borrower
or any of its Consolidated Entities.
"Consolidated Stockholders' Equity" shall mean at any time as
at which the amount thereof is to be determined, the sum of the
following amounts in respect of the Borrower and the Consolidated
Entities: (i) the par or stated value of all Capital Stock of the
Borrower, (ii) retained earnings, (iii) additional paid in capital,
(iv) capital surplus and (v) earned surplus minus treasury stock.
"Consolidated Tangible Net Worth" means, as of any date on
which the amount thereof is to be determined, Consolidated
Stockholders' Equity minus (without duplication of deductions in
respect of items already deducted in arriving at surplus and retained
earnings) (i) all reserves (other than contingency reserves not
allocated to any particular purpose), including without limitation
reserves for depreciation, depletion, amortization, obsolescence,
deferred income taxes, insurance and inventory valuation and (ii) the
net book value of all assets which would be treated as intangible
assets, such as (without limitation) goodwill (whether representing the
excess of cost over book value of assets acquired or
9
otherwise), capitalized expenses, unamortized debt discount and
expense, consignment inventory rights, patents, trademarks, trade
names, copyrights, franchises and licenses, all as determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis.
"Consolidated Total Assets" means, as of any date on which the
amount thereof is to be determined, the net book value of all assets of
the Borrower and its Consolidated Entities as determined on a
consolidated basis in accordance with GAAP applied on a Consistent
Basis.
"Consolidated Total Capital" means, as of any date on which
the amount thereof is to be determined, the sum of Consolidated
Indebtedness plus Consolidated Stockholders' Equity of the Borrower and
its Consolidated Entities.
"Continue", "Continuation", and "Continued" shall refer to the
continuation pursuant to Section 2.8 hereof of a Eurodollar Rate Loan
of one Type as a Eurodollar Rate Loan of the same Type from one
Interest Period to the next Interest Period.
"Convert", "Conversion" and "Converted" shall refer to a
conversion pursuant to Section 2.8 or Article IV of one Type of Loan
into another Type of Loan.
"Contract Provider" means any Person who provides professional
health care services under or pursuant to any contract with the
Borrower or any Subsidiary.
"Controlled Partnership" shall mean a general partnership of
which the Borrower or a Subsidiary is a general partner (but not
including Alabama World Football), or a limited partnership whose
general partners include the Borrower or a Subsidiary (but not
including Vanderbilt), or a limited liability company whose members
include the Borrower or a Subsidiary or another Controlled Partnership,
which partnership, whether general or limited, or limited liability
company has assets with a value in excess of $2,000.00, and with
respect to which partnership or limited liability company the Borrower
or a Subsidiary is entitled to receive not less than 50% of any
distributions of cash made to the partners or members thereof, other
than any preferred cash distribution arrangement in existence at the
Closing Date or approved by the Required Lenders in writing, or which
is otherwise a Consolidated Entity.
"Cost of Acquisition" means, in respect of any Acquisition,
the sum of (i) the amount of cash paid by the Borrower and its
Consolidated Entities in connection with such Acquisition, (ii) the
Fair Market Value of all Capital Stock or other ownership interests of
the Borrower or any Consolidated Entity issued or given in connection
with such Acquisition, (iii) the amount (determined by using the face
amount or the amount payable at maturity, whichever is greater) of all
Indebtedness incurred, assumed or acquired in connection with such
Acquisition, (iv) all additional purchase price amounts in the form of
earnouts and other contingent obligations that should be recorded on
the financial statements
10
of the Borrower and its Consolidated Entities in connection with
Generally Accepted Accounting Principles, (v) all amounts paid in
respect of covenants not to compete, consulting agreements and other
affiliated contracts in connection with such Acquisition and (vi) the
aggregate fair market value of all other consideration given by the
Borrower and its Consolidated Entities in connection with such
Acquisition.
"Default" means any event or condition which, with the giving
or receipt of notice or lapse of time or both, would constitute an
Event of Default.
"Default Rate" means (i) with respect to each Eurodollar Rate
Loan, until the end of the Interest Period applicable thereto, a rate
of two percent (2%) plus the Eurodollar Rate applicable to such Loan,
and thereafter at a rate of interest per annum which shall be two
percent (2%) plus the Base Rate, (ii) with respect to Base Rate Loans,
at a rate of interest per annum which shall be two percent (2%) plus
the Base Rate and (iii) in any case, the maximum rate permitted by
applicable law, if lower.
"Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event,
matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder
thereof, in whole or in part, on or prior to the Short Term Credit
Termination Date.
"Dollars" and the symbol "$" mean dollars constituting legal
tender for the payment of public and private debts in the United States
of America.
"Eligible Assignee" means (i) a Lender, (ii) an affiliate of a
Lender, and (iii) any other Person approved by the Agent and, unless an
Event of Default has occurred and is continuing at the time any
assignment is effected in accordance with Section 11.1, the Borrower,
such approval not to be unreasonably withheld or delayed by the
Borrower or the Agent and such approval to be deemed given by the
Borrower if no objection is received by the assigning Lender and the
Agent from the Borrower within two Business Days after written notice
of such proposed assignment has been provided by the assigning Lender
to the Borrower; provided, however, that neither the Borrower nor an
affiliate of the Borrower shall qualify as an Eligible Assignee.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which (i) is maintained for
employees of the Borrower or any of its ERISA Affiliates or is assumed
by the Borrower or any of its ERISA Affiliates in connection with any
Acquisition or (ii) has at any time been maintained for the employees
of the Borrower or any current or former ERISA Affiliate.
"Environmental Laws" means any federal, state or local
statute, law, ordinance, code, rule, regulation, order, decree, permit
or license regulating, relating to, or imposing liability or standards
of conduct concerning any environmental matters or conditions,
environmental
11
protection or conservation, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended; the Superfund Amendments and Reauthorization Act of
1986, the Resource Conservation and Recovery Act, as amended; the Toxic
Substances Control Act, as amended; the Clean Air Act, as amended; the
Clean Water Act, as amended; together with all regulations promulgated
thereunder, and any other "Superfund" or "Superlien" law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute and all
rules and regulations promulgated thereunder.
"ERISA Affiliate", as applied to the Borrower, means any
Person or trade or business which is a member of a group which is under
common control with the Borrower, who together with the Borrower, is
treated as a single employer within the meaning of Section 414(b) and
(c) of the Code.
"Eurodollar Rate" means the interest rate per annum calculated
according to the following formula:
Eurodollar = Interbank Offered Rate + Applicable
----------------------
Rate 1- Reserve Requirement Margin
"Eurodollar Rate Loan" means a Loan for which the rate of
interest is determined by reference to the Eurodollar Rate.
"Event of Default" means any of the occurrences set forth as
such in Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
"Executive Officer" means any Person who from time to time
holds the offices with Borrower listed on Exhibit J.
"Existing Availability" means that, at any point in time,
there shall be available to the Borrower under the Existing Credit
Agreement for borrowing or issuance of letters of credit an amount of
$5,000,000 or more.
"Existing Credit Agreement" means the Credit Agreement dated
June 23, 1998 among the Borrower, NationsBank, N.A. as agent, and the
lenders party thereto from time to time, as amended, modified,
supplemented or amended and restated.
"Facility" shall mean an inpatient or outpatient
rehabilitation facility, certified outpatient rehabilitation facility,
skilled nursing facility, specialty medical center, specialty
orthopedic hospital or acute care hospital, subacute inpatient
facility, transitional living
12
center, medical office building, outpatient surgery center or
outpatient diagnostic center with all buildings and improvements
associated therewith, that is owned or leased, in whole or part, by the
Borrower or a Subsidiary or any Controlled Partnership.
"Fair Market Value" shall mean, with respect to any capital
stock or other ownership interests issued or given by the Borrower or
any Consolidated Entity in connection with an Acquisition, (i) in the
case of capital stock that is Common Stock and such Common Stock is
then designated as a national market system security by the National
Association of Securities Dealers, Inc. ("NASD") or is listed on a
national securities exchange, the average of the last reported bid and
ask quotations or prices reported thereon for Common Stock or such
other value as may be ascribed to the Common Stock in a definitive
merger or acquisition agreement provided such value is determined
according to customary methods for like transactions and is approved
(to the extent required by Borrower's charter or bylaws) by the
Borrower's Board of Directors or (ii) in the case of capital stock that
is not Common Stock or in the event that Common Stock is not so
designated by NASD or listed on such national exchange, or in the case
of any other ownership interests, the determination of the fair market
value thereof in good faith by a majority of disinterested members of
the board of directors of the Borrower or such Consolidated Entity, in
each case effective as of the close of business on the Business Day
immediately preceding the closing date of such Acquisition.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100th of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day, provided
that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and
(b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate
charged to the Agent (in its individual capacity) on such day on such
transaction as determined by the Agent.
"Fiscal Year" means, with respect to the Borrower, the twelve
month fiscal period of the Borrower commencing on January 1 of each
calendar year and ending on December 31 of each calendar year.
"Four-Quarter Period" means a period of four full consecutive
fiscal quarters of the Borrower and its Subsidiaries, taken together as
one accounting period.
"GAAP" or "Generally Accepted Accounting Principles" means
generally accepted accounting principles, being those principles of
accounting set forth in pronouncements of the Financial Accounting
Standards Board or the American Institute of Certified Public
Accountants or which have other substantial authoritative support and
are applicable in the circumstances as of the date of a report.
13
"Governmental Authority" shall mean any Federal, state,
municipal, national or other governmental department, commission,
board, bureau, court, agency or instrumentality or political
subdivision thereof or any entity or officer exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to any government or any court, in each case whether
associated with a state of the United States, the United States, or a
foreign entity or government.
"Guaranteed Obligations" of any Person shall mean all
guaranties (including guaranties of guaranties and guaranties of
dividends and other monetary obligations), endorsements, assumptions
and other contingent obligations with respect to, or to purchase or to
otherwise pay or acquire, Indebtedness of others; provided, however,
that such term shall not include obligations under leases and other
contracts initially incurred directly by another Person and
subsequently directly assumed by the Person in question, but such term
shall include obligations that, if the same had been initially incurred
directly by the Person in question, would have constituted Guaranteed
Obligations.
"Hazardous Material" means and includes any pollutant,
contaminant, or hazardous, toxic or dangerous waste, substance or
material (including without limitation petroleum products,
asbestos-containing materials, and lead), the generation, handling,
storage, disposal, treatment or emission of which is subject to any
Environmental Law.
"HCFA" means the United States Health Care Financing
Administration and any successor thereto.
"Headquarters Lease" means the Lease Agreement between
HEALTHSOUTH Holdings, Inc., as Lessee, and First Security Bank of Utah,
N.A., as Lessor, dated as of November 16, 1995 providing for the lease
to HEALTHSOUTH Holdings, Inc. of the land and improvements thereon
located on the property described therein, as such Lease Agreement may
be amended, modified, supplemented or restated in its entirety from
time to time.
"Headquarters Obligations" means all of the Holder Advances
and Loans, as each such term is defined in the Participation Agreement.
"Indebtedness" of any Person at any date means, without
duplication: (i) all indebtedness of such Person for borrowed money
(whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof); (ii) all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments; (iii) all obligations (contingent or
otherwise) of such Person in respect of letters of credit or other
similar instruments (or reimbursement obligations with respect
thereto); (iv) all obligations of such Person with respect to Rate
Hedging Obligations (other than those that fix the interest rate on
variable rate indebtedness otherwise permitted hereunder or that
protect the Borrower and or its Consolidated Entities against changes
in foreign exchange rates); (v) obligations of such Person to pay the
deferred and unpaid purchase price of property or
14
services, except trade payables and accrued expenses incurred in the
ordinary course of business; (vi) all Capitalized Lease Obligations of
such Person; (vii) all indebtedness of others secured by a Lien on any
assets of such Person, whether or not such indebtedness is assumed by
such Person; (viii) all Guaranteed Obligations; (ix) the Headquarters
Obligations; and (x) all obligations of a like nature to those
described in clauses (i) through (ix) above of a partnership of which
such Person is a general partner or of a limited liability company of
which such Person is a member. The amount of Indebtedness of any Person
at any date shall be the outstanding balance at such date of all
unconditional obligations as described above, the maximum liability of
such Person for any such contingent obligations at such date and, in
the case of clause (vii), the amount of the Indebtedness secured.
"Interbank Offered Rate" means, for any Eurodollar Rate Loan
for the Interest Period applicable thereto, the rate per annum (rounded
upwards, if necessary, to the nearest one-one hundredth (1/100) of one
percent) appearing on Dow ▇▇▇▇▇ Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such
Interest Period. If for any reason such rate is not available, the term
"Interbank Offered Rate" shall mean, for any Eurodollar Rate Loan for
the Interest Period applicable thereto, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters
Screen LIBO Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business Days
prior to the first day of such Interest Period for a term comparable to
such Interest Period; provided, however, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates (rounded upwards, if necessary, to
the nearest 1/100 of 1%).
"Interest Period" means, with respect to any Eurodollar Rate
Loan, each period commencing on the date such Eurodollar Rate Loan is
made or Converted from a Loan of another Type or the last day of the
next preceding Interest Period for such Loan and ending on the
numerically corresponding day in the first, second, third or sixth
calendar month thereafter, as the Borrower may select as provided in
Section 2.2, except that each Interest Period that commences on the
last Business Day of a calendar month (or on any day for which there is
no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Business Day of the appropriate subsequent
calendar month. Notwithstanding the foregoing: (i) if any Interest
Period for any Eurodollar Rate Loan would otherwise end after the Short
Term Credit Termination Date, such Interest Period shall end on the
Short Term Credit Termination Date; (ii) each Interest Period that
would otherwise end on a day which is not a Business Day shall end on
the next succeeding Business Day (or, in the case of an Interest Period
for a Eurodollar Rate Loan if such next succeeding Business Day falls
in the next succeeding calendar month, on the next preceding Business
Day); and (iii) notwithstanding clauses (i) and (ii) above, no Interest
Period for any Loan shall have a duration of less than one month (in
the case of a Eurodollar Rate Loan) and, if the Interest Period for any
Eurodollar Rate Loan would otherwise be a shorter period, such Loan
shall not be available hereunder for such period.
15
"Interest Rate Selection Notice" means the written notice
delivered by an Authorized Representative in connection with the
election of a subsequent Interest Period for any Eurodollar Rate Loan
or the Conversion of any Eurodollar Rate Loan into a Base Rate Loan or
the Conversion of any Base Rate Loan into a Eurodollar Rate Loan, in
the form of Exhibit E.
"Issuing Bank" means NationsBank as issuer of Letters of
Credit under Article III.
"LC Account Agreement" means the LC Account Agreement dated as
of the date hereof between the Borrower and the Issuing Bank, as
amended, modified or supplemented from time to time.
"Letter of Credit" means a standby letter of credit issued by
the Issuing Bank pursuant to Article III for the account of the
Borrower in favor of a Person advancing credit or securing an
obligation on behalf of the Borrower.
"Letter of Credit Commitment" means, with respect to each
Lender, the obligation of such Lender to acquire Participations in
respect of Letters of Credit and Reimbursement Obligations up to an
aggregate amount at any one time outstanding equal to such Lender's
Applicable Commitment Percentage of the Total Letter of Credit
Commitment as the same may be increased or decreased from time to time
pursuant to this Agreement.
"Letter of Credit Facility" means the facility described in
Article III providing for the issuance by the Issuing Bank for the
account of the Borrower of Letters of Credit in an aggregate stated
amount at any time outstanding not exceeding, together with all
Reimbursement Obligations, the Total Letter of Credit Commitment.
"Letter of Credit Outstandings" means, as of any date of
determination, the aggregate amount remaining undrawn under all Letters
of Credit plus Reimbursement Obligations then outstanding.
"Lien" means any interest in property securing any obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on the common law, statute or contract,
and including but not limited to the lien or security interest arising
from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes. For the purposes of this Agreement, the Borrower and any
Subsidiary shall be deemed to be the owner of any property which it has
acquired or holds subject to a conditional sale agreement, financing
lease, or other arrangement pursuant to which title to the property has
been retained by or vested in some other Person for security purposes.
"Loan" or "Loans" means any borrowing made pursuant to an
Advance under the Short Term Credit Facility in accordance with Section
2.1(a) and all extensions and renewals thereof.
16
"Loan Documents" means this Agreement, the Notes, the LC
Account Agreement, the Applications and Agreements for Letter of Credit
and all other instruments and documents heretofore or hereafter
executed or delivered to or in favor of any Lender or the Agent in
connection with the Loans made, Letters of Credit issued and
transactions contemplated under this Agreement, as the same may be
amended, supplemented or replaced from time to time.
"Material Adverse Effect" means a material adverse effect on
(i) the business, properties, operations or condition, financial or
otherwise, of the Borrower and its Consolidated Entities, taken as a
whole, (ii) the ability of the Borrower to pay or perform its
obligations, liabilities and indebtedness under the Loan Documents as
such payment or performance becomes due in accordance with the terms
thereof, or (iii) the rights, powers and remedies of the Agent or any
Lender under any Loan Document or the validity, legality or
enforceability thereof (including for purposes of clauses (ii) and
(iii) the imposition of burdensome conditions thereon).
"Material Group" shall mean, at any time, any group, whether
one or more, or combination of Consolidated Entities (a) whose assets,
in the aggregate, constitute 5% or more of the assets of the Borrower
and the Consolidated Entities on a consolidated basis or (b) whose net
revenues, in the aggregate, constitute 5% or more of the net revenues
of the Borrower and the Consolidated Entities on a consolidated basis.
"Medicaid Certification" means certification by HCFA or a
state agency or entity under contract with HCFA that a health care
operation is in compliance with all the conditions of participation set
forth in the Medicaid Regulations.
"Medicaid Provider Agreement" means an agreement entered into
between a state agency or other entity administering the Medicaid
program and a health care operation under which the health care
operation agrees to provide services for Medicaid patients in
accordance with the terms of the agreement and Medicaid Regulations.
"Medicaid Regulations" means, collectively, (i) all federal
statutes (whether set forth in Title XIX of the Social Security Act or
elsewhere) affecting the medical assistance program established by
Title XIX of the Social Security Act and any statutes succeeding
thereto; (ii) all applicable provisions of all federal rules,
regulations, manuals and orders of all Governmental Authorities
promulgated pursuant to or in connection with the statutes described in
clause (i) above and all federal administrative, reimbursement and
other guidelines of all Governmental Authorities having the force of
law promulgated pursuant to or in connection with the statutes
described in clause (i) above; (iii) all state statutes and plans for
medical assistance enacted in connection with the statutes and
provisions described in clauses (i) and (ii) above; and (iv) all
applicable provisions of all rules, regulations, manuals and orders of
all Governmental Authorities promulgated pursuant to or in connection
with the statutes described in clause (iii) above and all state
administrative, reimbursement and other guidelines of all Governmental
Authorities having the force of law
17
promulgated pursuant to or in connection with the statutes described in
clause (ii) above, in each case as may be amended, supplemented or
otherwise modified from time to time.
"Medicare Certification" means certification by HCFA or a
state agency or entity under contract with HCFA that a health care
operation is in compliance with all the conditions of participation set
forth in the Medicare Regulations.
"Medicare Provider Agreement" means an agreement entered into
between a state agency or other entity administering the Medicare
program and a health care operation under which the health care
operation agrees to provide services for Medicare patients in
accordance with the terms of the agreement and Medicare Regulations.
"Medicare Regulations" means, collectively, all federal
statutes (whether set forth in Title XVIII of the Social Security Act
or elsewhere) affecting the health insurance program for the aged and
disabled established by Title XVIII of the Social Security Act and any
statutes succeeding thereto; together with all applicable provisions of
all rules, regulations, manuals and orders and administrative,
reimbursement and other guidelines having the force of law of all
Governmental Authorities (including without limitation, Health and
Human Services ("HHS"), HCFA, the Office of the Inspector General for
HHS, or any Person succeeding to the functions of any of the foregoing)
promulgated pursuant to or in connection with any of the foregoing
having the force of law, as each may be amended, supplemented or
otherwise modified from time to time.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA to which the Borrower or any ERISA
Affiliate is making, or is accruing an obligation to make,
contributions or has made, or been obligated to make, contributions
within the preceding six (6) Fiscal Years.
"NationsBank" means NationsBank, N.A.
"1997 10-K" means the Borrower's Annual Report on Form 10-K
for the Fiscal Year Ended December 31, 1997.
"Notes" means, collectively, the promissory notes of the
Borrower evidencing Loans executed and delivered to the Lenders as
provided in Section 2.5, substantially in the form of Exhibit F, with
appropriate insertions as to amounts, dates and names of Lenders.
"Obligations" means the obligations, liabilities and
Indebtedness of the Borrower with respect to (i) the principal and
interest on the Loans as evidenced by the Notes, (ii) the Reimbursement
Obligations and otherwise in respect of the Letters of Credit, (iii)
all liabilities of the Borrower to any Lender which arise under a Swap
Agreement, and (iv) the payment and performance of all other
obligations, liabilities and Indebtedness of the
18
Borrower to the Lenders or the Agent hereunder, under any one or more
of the other Loan Documents or with respect to the Loans.
"Participation" means, with respect to any Lender (other than
the Issuing Bank) and a Letter of Credit, the extension of credit
represented by the participation of such Lender hereunder in the
liability of the Issuing Bank in respect of a Letter of Credit issued
by the Issuing Bank in accordance with the terms hereof.
"Participation Agreement" means the Participation Agreement
dated November 16, 1995 among HEALTHSOUTH Corporation, as Construction
Agent, HEALTHSOUTH Holdings, Inc., as Lessee, First Security Bank of
Utah, N.A., as Trustee, the Holders identified therein, the Lenders
identified therein, and NationsBank, National Association, as Agent, as
such Participation Agreement may be amended, modified, supplemented or
restated in its entirety from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" means any employee pension benefit plan within
the meaning of Section 3(2) of ERISA, other than a Multiemployer Plan,
which is subject to the provisions of Title IV of ERISA or Section 412
of the Code and which (i) is maintained for employees of the Borrower
or any of its ERISA Affiliates or is assumed by the Borrower or any of
its ERISA Affiliates in connection with any Acquisition or (ii) has at
any time been maintained for the employees of the Borrower or any
current or former ERISA Affiliate.
"Permitted Encumbrances" shall mean:
(1) liens for taxes, assessments and other
governmental charges that are not delinquent or that are being
contested in good faith by appropriate proceedings duly
pursued;
(2) mechanic's, materialmen's, contractor's,
landlord's or other similar liens arising in the ordinary
course of business, securing obligations that are not
delinquent or that are being contested in good faith by
appropriate proceedings duly pursued;
(3) restrictions, exceptions, reservations,
easements, conditions, limitations and other matters of record
that do not materially adversely affect the value or utility
of the affected property;
(4) Liens on assets securing Indebtedness the
proceeds of which are used to acquire such assets;
(5) Liens and other matters approved in writing by
the Required Lenders; and
19
(6) Liens in favor of landlords, the amount secured
by which landlords' Liens, in the aggregate, would not
materially adversely affect the Borrower or a Material Group.
"Permitted Investments" shall mean:
(1) direct obligations of, or obligations the payment
of which is guaranteed by, the United States of America or an
interest in any trust or fund that invests solely in such
obligations or repurchase agreements, properly secured, with
respect to such obligations.
(2) direct obligations of agencies or
instrumentalities of the United States of America having a
rating of A or higher by S&P or A2 or higher by Moody's;
(3) a certificate of deposit issued by, or other
interest-bearing deposits with, a bank which is a Lender or an
affiliate of a Lender, or a bank having its principal place of
business in the United States of America and having equity
capital of not less than $250,000,000;
(4) a certificate of deposit issued by, or other
interest-bearing deposits with, any other bank organized under
the laws of the United States of America or any state thereof,
provided that such deposit is either (i) insured by the
Federal Deposit Insurance Corporation or (ii) properly secured
by such bank by pledging direct obligations of the United
States of America having a market value not less than the face
amount of such deposits;
(5) the capital stock of and partnership interests
in, and loans made by the Borrower to, Controlled Partnerships
and Subsidiaries;
(6) prime commercial paper maturing within 270 days
of the acquisition thereof and, at the time of acquisition,
having a rating of A-1 or higher by S&P, or P-1 or higher by
Moody's;
(7) eligible banker's acceptances, repurchase
agreements and tax-exempt municipal bonds having a maturity of
less than one year, in each case having a rating, or that is
the full recourse obligation of a person whose senior debt is
rated, A or higher by S&P or A2 or higher by Moody's;
(8) loans made by the Borrower or a Consolidated
Entity in an aggregate amount of $2,000,000 or less to
employees of the Borrower or of a Consolidated Entity;
(9) loans made by the Borrower or a Controlled
Partnership in an aggregate amount of $1,000,000 or less to
limited partners (or potential limited
20
partners) of Controlled Partnerships for the purpose of
enabling such limited partners to acquire limited partnership
interests in Controlled Partnerships, to operate their
practices or to restructure partnership interests;
(10) loans in an aggregate amount of up to
$20,000,000 made by the Borrower to the HEALTHSOUTH Employee
Stock Benefit Plan;
(11) scholarship loans made by the Borrower in an
aggregate amount not exceeding $1,000,000 to individuals who
meet certain eligibility requirements as established by the
Borrower from time to time;
(12) up to 100% of the outstanding shares of stock of
Caretenders Healthcorp (formerly known as Senior Services,
Inc.) provided that aggregate costs incurred to purchase such
shares shall not exceed $12,000,000;
(13) other investments of less than $5,000,000 in the
aggregate expressly approved in writing by the Agent and
investments of $5,000,000 or greater expressly approved in
writing by the Required Lenders;
(14) any other investment having a rating of A or
higher or A-1 or higher by S&P or A2 or higher or P-1 or
higher by Moody's;
(15) loans to health care practitioners and other
persons not to exceed in the aggregate $5,000,000;
(16) investments in Acacia Venture Partners,
HEALTHSMART, MedPartners and Austin Medical Office Building
which in the aggregate do not exceed $5,000,000; and
(17) additional investments existing on the Closing
Date and described in Exhibit G.
"Person" means an individual, partnership, corporation,
limited liability company, trust, unincorporated organization,
association, joint venture or a government or agency or political
subdivision thereof.
"Prime Rate" means the per annum rate of interest established
from time to time by NationsBank as its prime rate, which rate may not
be the lowest rate of interest charged by NationsBank to its Customers.
"Principal Office" means the office of the Agent at
NationsBank, N.A., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, 15th Floor, NC1-001-15-04,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Agency Services, or such
other office and address as the Agent may from time to time designate.
21
"Rate Hedging Obligations" means any and all obligations of
the Borrower or any Consolidated Entity, whether absolute or contingent
and howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and
substitutions therefor), under (i) any and all agreements, devices or
arrangements designed to protect the Borrower or such Consolidated
Entity from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or
exchange transactions, including, but not limited to,
Dollar-denominated or cross-currency interest rate exchange agreements,
forward currency exchange agreements, interest rate cap or collar
protection agreements, forward rate currency or interest rate options,
puts, warrants and those commonly known as interest rate "swap"
agreements; and (ii) any and all cancellations, buybacks, reversals,
terminations or assignments of any of the foregoing.
"Rating" means the rating of senior unsecured Indebtedness of
the Borrower in effect at any time which rating is made by either of
Moody's or S&P.
"Regulation D" means Regulation D of the Board as the same may
be amended or supplemented from time to time.
"Reimbursement Obligation" shall mean, at any time, the
obligation of the Borrower with respect to any Letter of Credit to
reimburse the Issuing Bank and the Lenders to the extent of their
respective Participations (including by the receipt by the Issuing Bank
of proceeds of Loans pursuant to Section 3.2) for amounts theretofore
paid by the Issuing Bank pursuant to a drawing under such Letter of
Credit.
"Required Lenders" means, as of any date, Lenders on such date
having Credit Exposures (as defined below) aggregating at least 51% of
the aggregate Credit Exposures of all the Lenders on such date. For
purposes of the preceding sentence, the amount of the "Credit Exposure"
of each Lender shall be equal to the aggregate principal amount of the
Loans, so long as there exists no Event of Default, owing to such
Lender plus the aggregate unutilized amounts of such Lender's Short
Term Credit Commitment plus the amount of such Lender's Applicable
Commitment Percentage of Letter of Credit Outstandings; provided that,
if any Lender shall have failed to pay to the Issuing Bank its
Applicable Commitment Percentage of any drawing under any Letter of
Credit resulting in an outstanding Reimbursement Obligation, such
Lender's Credit Exposure attributable to Letters of Credit and
Reimbursement Obligations shall be deemed to be held by the Issuing
Bank for purposes of this definition.
"Reserve Requirement" means, at any time, the maximum rate at
which reserves (including, without limitation, any marginal, special,
supplemental, or emergency reserves) are required to be maintained
under regulations issued from time to time by the Board by member banks
of the Federal Reserve System (or any successor) by member banks of the
Federal Reserve System against "Eurocurrency liabilities" (as such term
is used in Regulation D). Without limiting the effect of the foregoing,
the Reserve Requirement shall reflect any other reserves required to be
maintained by such member banks with respect to
22
(i) any category of liabilities which includes deposits by reference to
which the Eurodollar Rate is to be determined, or (ii) any category of
extensions of credit or other assets which include Eurodollar Rate
Loans. The Eurodollar Rate shall be adjusted automatically on and as of
the effective date of any change in the Reserve Requirement.
"Restricted Payment" means (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class
of stock of Borrower or any of its Consolidated Entities (other than
those payable or distributable solely to the Borrower) now or hereafter
outstanding, except a dividend payable solely in shares of a class of
stock to the holders of that class; (b) any redemption, conversion,
exchange, retirement or similar payment, purchase or other acquisition
for value, direct or indirect, of any shares of any class of stock of
the Borrower or any of its Consolidated Entities (other than those
payable or distributable solely to the Borrower) now or hereafter
outstanding; (c) any payment made to retire, or to obtain the surrender
of, any outstanding warrants, options or other rights to acquire shares
of any class of stock of the Borrower or any of its Consolidated
Entities now or hereafter outstanding; and (d) any issuance and sale of
capital stock of any Consolidated Entity of the Borrower (or any
option, warrant or right to acquire such stock) other than to the
Borrower.
"S&P" means Standard & Poor's Rating Group, a division of The
McGraw Hill Companies.
"Short Term Credit Commitment" means, with respect to each
Lender, the obligation of such Lender to make Loans to the Borrower up
to an aggregate principal amount at any one time outstanding equal to
such Lender's Applicable Commitment Percentage of the Total Short Term
Credit Commitment.
"Short Term Credit Facility" means the facility described in
Article II providing for Loans to the Borrower by the Lenders in the
aggregate principal amount of the Total Short Term Credit Commitment.
"Short Term Credit Outstandings" means, as of any date of
determination, the aggregate principal amount of all Loans then
outstanding.
"Short Term Credit Termination Date" means (i) the Stated
Termination Date or (ii) such earlier date of termination of Lenders'
Obligations as may be determined pursuant to Section 9.1 upon the
occurrence of an Event of Default, or (iii) such date as the Borrower
may voluntarily and permanently terminate the Short Term Credit
Facility by payment in full of all Short Term Credit Outstandings and
all Letter of Credit Outstandings and cancellation of all Letters of
Credit, together with all accrued and unpaid interest and fees thereon.
"Single Employer Plan" means any employee pension benefit plan
covered by Title IV of ERISA in respect of which the Borrower or any
Subsidiary is an "employer" as described in Section 4001(b) of ERISA
and which is not a Multiemployer Plan.
23
"Solvent" means, when used with respect to any Person, that at
the time of determination:
(i) the fair value of its assets (both at fair
valuation and at present fair saleable value on an orderly
basis) is in excess of the total amount of its liabilities,
including contingent obligations; and
(ii) it is then able and expects to be able to pay
its debts as they mature; and
(iii) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted.
"Stated Termination Date" means September 27, 1999.
"Subordinated Debt" means any unsecured Indebtedness of the
Borrower or any Consolidated Entity (other than inter-company
Indebtedness) which is subordinated in right of payment in all respects
to the Obligations in a manner reasonably acceptable to the Agent.
"Subsidiary" means any corporation or other entity in which
more than 50% of its outstanding voting stock or more than 50% of all
equity interests is owned directly or indirectly by the Borrower and/or
by one or more of the Borrower's Subsidiaries.
"Swap Agreement" means one or more agreements between the
Borrower and any Person with respect to Indebtedness evidenced by any
or all of the Notes, on terms mutually acceptable to Borrower and such
Person and approved by each of the Lenders, which agreements create
Rate Hedging Obligations; provided, however, that no such approval of
the Lenders shall be required to the extent such agreements are entered
into between the Borrower and any Lender.
"Termination Event" means: (i) a "Reportable Event" described
in Section 4043 of ERISA and the regulations issued thereunder (unless
the notice requirement has been waived by applicable regulation); or
(ii) the withdrawal of the Borrower or any ERISA Affiliate from a
Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA or was deemed such
under Section 4062(e) of ERISA; or (iii) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA; or (iv) the institution of proceedings to
terminate a Pension Plan by the PBGC; or (v) any other event or
condition which would constitute grounds under Section 4042(a) of ERISA
for the termination of, or the appointment of a trustee to administer,
any Pension Plan; or (vi) the partial or complete withdrawal of the
Borrower or any ERISA Affiliate from a Multiemployer Plan; or (vii) the
imposition of a Lien pursuant to Section 412 of the Code or Section 302
of ERISA; or (viii) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan under Section 4241
or Section 4245 of ERISA,
24
respectively; or (ix) any event or condition which results in the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by the PBGC of proceedings to terminate a Multiemployer
Plan under Section 4042 of ERISA.
"Total Letter of Credit Commitment" means an amount not to
exceed $25,000,000.
"Total Short Term Credit Commitment" means a principal amount
equal to $500,000,000, as reduced from time to time in accordance with
Section 2.1(a) and Section 2.7.
"Vanderbilt" shall mean Vanderbilt ▇▇▇▇▇▇▇▇▇▇ Rehabilitation
Hospital, L.P., the partners of which are the Borrower, Vanderbilt
University and Vanderbilt Health Services.
"Voting Stock" means shares of Capital Stock issued by a
corporation, or equivalent interests in any other Person, the holders
of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing similar
functions) of such Person, even if the right so to vote has been
suspended by the happening of such a contingency.
1.2. Rules of Interpretation.
(a) All accounting terms not specifically defined herein shall
have the meanings assigned to such terms and shall be interpreted in
accordance with GAAP applied on a Consistent Basis.
(b) The headings, subheadings and table of contents used
herein or in any other Loan Document are solely for convenience of
reference and shall not constitute a part of any such document or
affect the meaning, construction or effect of any provision thereof.
(c) Except as otherwise expressly provided, references herein
to articles, sections, paragraphs, clauses, annexes, appendices,
exhibits and schedules are references to articles, sections,
paragraphs, clauses, annexes, appendices, exhibits and schedules in or
to this Agreement.
(d) All definitions set forth herein or in any other Loan
Document shall apply to the singular as well as the plural form of such
defined term, and all references to the masculine gender shall include
reference to the feminine or neuter gender, and vice versa, as the
context may require.
(e) When used herein or in any other Loan Document, words such
as "hereunder", "hereto", "hereof" and "herein" and other words of like
import shall, unless the context clearly indicates to the contrary,
refer to the whole of the applicable document and not to any particular
article, section, subsection, paragraph or clause thereof.
25
(f) References to "including" means including without limiting
the generality of any description preceding such term, and for purposes
hereof the rule of ejusdem generis shall not be applicable to limit a
general statement, followed by or referable to an enumeration of
specific matters, to matters similar to those specifically mentioned.
(g) All dates and times of day specified herein shall refer to
such dates and times at Charlotte, North Carolina.
(h) Each of the parties to the Loan Documents and their
counsel have reviewed and revised, or requested (or had the opportunity
to request) revisions to, the Loan Documents, and any rule of
construction that ambiguities are to be resolved against the drafting
party shall be inapplicable in the construing and interpretation of the
Loan Documents and all exhibits, schedules and appendices thereto.
(i) Any reference to an officer of the Borrower or any other
Person by reference to the title of such officer shall be deemed to
refer to each other officer of such Person, however titled, exercising
the same or substantially similar functions.
(j) All references to any agreement or document as amended,
modified or supplemented, or words of similar effect, shall mean such
document or agreement, as the case may be, as amended, modified or
supplemented from time to time only as and to the extent permitted
therein and in the Loan Documents.
1.3. Classes and Types of Loans. Loans hereunder are distinguished by
"Type". The "Type" of a Loan refers to whether such Loan is a Base Rate Loan or
a Eurodollar Rate Loan, each of which constitutes a Type.
26
ARTICLE II
The Loans
2.1. Loans.
(a) Commitment. Subject to the terms and conditions of this
Agreement, each Lender severally agrees to make Advances to the Borrower under
the Short Term Credit Facility from time to time from the Closing Date until the
Short Term Credit Termination Date on a pro rata basis as to the total borrowing
requested by the Borrower on any day determined by such Lender's Applicable
Commitment Percentage up to but not exceeding the Short Term Credit Commitment
of such Lender, provided, however, that the Lenders will not be required and
shall have no obligation to make any such Advance (i) so long as a Default or an
Event of Default has occurred and is continuing or (ii) if the maturity of any
of the Notes has been accelerated as a result of an Event of Default or (iii)
there is Existing Availability; provided further, however, that immediately
after giving effect to each such Advance, the principal amount of Short Term
Credit Outstandings plus Letters of Credit Outstandings shall not exceed the
Total Short Term Credit Commitment. Within such limits, the Borrower may borrow,
repay and reborrow under the Short Term Credit Facility on a Business Day from
the Closing Date until, but (as to borrowings and reborrowings) not including,
the Short Term Credit Termination Date; provided, however, that (y) no Loan that
is a Eurodollar Rate Loan shall be made which has an Interest Period that
extends beyond the Short Term Credit Termination Date and (z) each Loan that is
a Eurodollar Rate Loan may, subject to the provisions of Section 2.3, be repaid
only on the last day of the Interest Period with respect thereto unless such
payment is accompanied by the additional payment, if any, required by Section
4.5.
(b) Amounts. The aggregate unpaid principal amount of the
Short Term Credit Outstandings plus Letter of Credit Outstandings shall not
exceed the Total Short Term Credit Commitment and, in the event there shall be
outstanding any such excess, the Borrower shall immediately make such payments
and prepayments as shall be necessary to comply with this restriction. Each Loan
hereunder, other than Base Rate Refunding Loans, and each Conversion under
Section 2.8, shall be in an amount of at least $5,000,000, and, if greater than
$5,000,000, an integral multiple of $1,000,000.
(c) Advances. (i) An Authorized Representative shall give the
Agent (1) at least three (3) Business Days' irrevocable written notice by
telefacsimile transmission of a Borrowing Notice or Interest Rate Selection
Notice (as applicable) with appropriate insertions, effective upon receipt, of
each Loan that is a Eurodollar Rate Loan (whether representing an additional
borrowing hereunder or the Conversion of a borrowing hereunder from Base Rate
Loans to Eurodollar Rate Loans) prior to 10:30 A.M. and (2) irrevocable written
notice by telefacsimile transmission of a Borrowing Notice or Interest Rate
Selection Notice (as applicable) with appropriate insertions, effective upon
receipt, of each Loan (other than Base Rate Refunding Loans to the extent the
same are effected without notice pursuant to Section 2.1(c)(iv)) that is a Base
Rate Loan (whether representing an additional borrowing hereunder or the
Conversion of borrowing hereunder from Eurodollar Rate Loans to Base Rate Loans)
prior to 10:30 A.M. on the day of such proposed Loan.
27
Each such notice shall specify the amount of the borrowing, the Type of Loan
(Base Rate or Eurodollar Rate), the date of borrowing and, if a Eurodollar Rate
Loan, the Interest Period to be used in the computation of interest. Notice of
receipt of such Borrowing Notice or Interest Rate Selection Notice, as the case
may be, together with the amount of each Lender's portion of an Advance
requested thereunder, shall be provided by the Agent to each Lender by
telefacsimile transmission with reasonable promptness, but (provided the Agent
shall have received such notice by 10:30 A.M.) not later than 1:00 P.M. on the
same day as the Agent's receipt of such notice.
(ii) Not later than 2:00 P.M. on the date specified for each borrowing
under this Section 2.1, each Lender shall, pursuant to the terms and subject to
the conditions of this Agreement, make the amount of the Loan or Loans to be
made by it on such day available by wire transfer to the Agent in the amount of
its pro rata share, determined according to such Lender's Applicable Commitment
Percentage of the Loan or Loans to be made on such day. Such wire transfer shall
be directed to the Agent at the Principal Office and shall be in the form of
Dollars constituting immediately available funds. The amount so received by the
Agent shall, subject to the terms and conditions of this Agreement, be made
available to the Borrower by delivery of the proceeds thereof as shall be
directed in the applicable Borrowing Notice by the Authorized Representative and
reasonably acceptable to the Agent.
(iii) The Borrower shall have the option to elect the duration of the
initial and any subsequent Interest Periods and to Convert the Loans in
accordance with Section 2.8. Eurodollar Rate Loans and Base Rate Loans may be
outstanding at the same time, provided, however, there shall not be outstanding
at any one time Loans having more than eight (8) different Interest Periods. If
the Agent does not receive a Borrowing Notice or an Interest Rate Selection
Notice giving notice of election of the duration of an Interest Period or of
Conversion of any Loan to or Continuation of a Loan as a Eurodollar Rate Loan by
the time prescribed by Section 2.1(c) or 2.8, the Borrower shall be deemed to
have elected to Convert such Loan to (or Continue such Loan as) a Base Rate Loan
until the Borrower notifies the Agent in accordance with Section 2.8.
(iv) Notwithstanding the foregoing, if a drawing is made under any
Letter of Credit, such drawing is honored by the Issuing Bank prior to the Short
Term Credit Termination Date, and the Borrower shall not immediately fully
reimburse the Issuing Bank in respect of such drawing, (A) provided that the
conditions to making a Loan as herein provided shall then be satisfied, the
Reimbursement Obligation arising from such drawing shall be paid to the Issuing
Bank by the Agent without the requirement of notice to or from the Borrower from
immediately available funds which shall be advanced as a Base Rate Refunding
Loan by each Lender under the Short Term Credit Facility in an amount equal to
such Lender's Applicable Commitment Percentage of such Reimbursement Obligation,
and (B) if the conditions to making a Loan as herein provided shall not then be
satisfied, each of the Lenders shall fund by payment to the Agent (for the
benefit of the Issuing Bank) in immediately available funds the purchase from
the Issuing Bank of their respective Participations in the related Reimbursement
Obligation based on their respective Applicable Commitment Percentages. If a
drawing is presented under any Letter of Credit in accordance with the terms
thereof and the Borrower shall not immediately reimburse the Issuing Bank in
respect thereof, then notice of such drawing or payment shall be provided
promptly by the Issuing Bank to
28
the Agent and the Agent shall provide notice to each Lender by telephone or
telefacsimile transmission. If notice to the Lenders of a drawing under any
Letter of Credit is given by the Agent at or before 12:00 noon on any Business
Day, each Lender shall, pursuant to the conditions specified in this Section
2.1(c)(iv), either make a Base Rate Refunding Loan or fund the purchase of its
Participation in the amount of such Lender's Applicable Commitment Percentage of
such drawing or payment and shall pay such amount to the Agent for the account
of the Issuing Bank at the Principal Office in Dollars and in immediately
available funds before 2:30 P.M. on the same Business Day. If notice to the
Lenders of a drawing under a Letter of Credit is given by the Agent after 12:00
noon on any Business Day, each Lender shall, pursuant to the conditions
specified in this Section 2.1(c)(iv), either make a Base Rate Refunding Loan or
fund the purchase of its Participation in the amount of such Lender's Applicable
Commitment Percentage of such drawing or payment and shall pay such amount to
the Agent for the account of the Issuing Bank at the Principal Office in Dollars
and in immediately available funds before 12:00 noon on the next following
Business Day. Any such Base Rate Refunding Loan shall be advanced as, and shall
Continue as, a Base Rate Loan unless and until the Borrower Converts such Base
Rate Loan in accordance with the terms of Section 2.8.
2.2. Payment of Interest. (a) The Borrower shall pay interest to the
Agent for the account of each Lender on the outstanding and unpaid principal
amount of each Loan made by such Lender for the period commencing on the date of
such Loan until such Loan shall be due at the then applicable Base Rate for Base
Rate Loans or applicable Eurodollar Rate for Eurodollar Rate Loans, as
designated by the Authorized Representative pursuant to Section 2.1; provided,
however, that if any amount payable under this Agreement shall not be paid when
due (at maturity, by acceleration or otherwise, subject to the provisions of
Section 9.1(a)), all amounts outstanding hereunder shall bear interest
thereafter at the Default Rate.
(b) Interest on each Loan shall be computed on an Actual/360
Basis. Interest on each Loan shall be paid (i) quarterly in arrears on the last
Business Day of each March, June, September and December, commencing December
31, 1998, for each Base Rate Loan, (ii) on the last day of the applicable
Interest Period for each Eurodollar Rate Loan and, if such Interest Period
extends for more than three (3) months, at intervals of three (3) months after
the first day of such Interest Period, and (iii) upon the Short Term Credit
Termination Date. Interest payable at the Default Rate shall be payable on
demand.
2.3. Payment of Principal. The principal amount of each Loan shall be
due and payable to the Agent for the benefit of each Lender in full on the
Stated Termination Date, or earlier as specifically provided herein. No
principal amount shall be repaid under the Existing Credit Agreement so long as
there are Short Term Credit Outstandings. Any principal payments made to the
Agent shall be applied first to the Short Term Credit Outstandings and then to
any outstandings under the Existing Credit Agreement. The principal amount of
any Base Rate Loan may be prepaid in whole or in part at any time. The principal
amount of any Eurodollar Rate Loan may be prepaid only at the end of the
applicable Interest Period unless the Borrower shall pay to the Agent for the
account of the Lenders the additional amount, if any, required under Section
4.5. All prepayments of Loans made by the Borrower shall be in the amount of
$5,000,000 or such greater amount which
29
is an integral multiple of $1,000,000, or the amount equal to all Short Term
Credit Outstandings, as the case may be, or such other amount as necessary to
comply with Section 2.1(b) or Section 2.8.
2.4. Non-Conforming Payments. (a) Each payment of principal (including
any prepayment) and payment of interest and fees, and any other amount required
to be paid to the Lenders with respect to the Loans, shall be made to the Agent
at the Principal Office, for the account of each Lender, in Dollars and in
immediately available funds, without setoff, deduction or counterclaim before
10:00 A.M. on the date such payment is due. The Agent may, but shall not be
obligated to, debit the amount of any such payment which is not made by such
time to any ordinary deposit account, if any, of the Borrower with the Agent.
The Agent shall promptly notify the Borrower of any such debit; however, failure
to give such notice shall not affect the validity of such debit.
(b) The Agent shall deem any payment made by or on behalf of the
Borrower hereunder that is not made both in Dollars and in immediately available
funds and prior to 10:00 A.M. to be a non-conforming payment. Any such payment
shall not be deemed to be received by the Agent until the later of (i) the time
such funds become available funds and (ii) the next Business Day. Any
non-conforming payment may constitute or become a Default or Event of Default.
Interest shall continue to accrue on any principal as to which a non-conforming
payment is made until the later of (x) the date such funds become available
funds or (y) the next Business Day at the Default Rate from the date such amount
was due and payable.
(c) In the event that any payment hereunder or under the Notes becomes
due and payable on a day other than a Business Day, then such due date shall be
extended to the next succeeding Business Day unless provided otherwise under the
definition of "Interest Period"; provided that interest shall continue to accrue
during the period of any such extension and provided further, that in no event
shall any such due date be extended beyond the Stated Termination Date.
2.5. Notes. Loans made by each Lender shall be evidenced by the Note
payable to the order of such Lender in the respective amount of its Applicable
Commitment Percentage of the Total Short Term Credit Commitment, which Note
shall be dated the Closing Date or a later date pursuant to an Assignment and
Acceptance and shall be duly completed, executed and delivered by the Borrower.
2.6. Pro Rata Payments. Except as otherwise provided herein, (a) each
payment on account of the principal of and interest on the Loans and the fees
described in Section 2.9 and the first sentence of Section 3.3(a) shall be made
to the Agent for the account of the Lenders pro rata based on their Applicable
Commitment Percentages, (b) all payments to be made by the Borrower for the
account of each of the Lenders on account of principal, interest and fees, shall
be made without diminution, setoff, recoupment or counterclaim, and (c) the
Agent will promptly distribute to the Lenders in immediately available funds
payments received in fully collected, immediately available funds from the
Borrower.
30
2.7. Reductions. The Borrower shall, by irrevocable notice from an
Authorized Representative, have the right from time to time but not more
frequently than once each calendar month, upon not less than three (3) Business
Days' written notice to the Agent, effective upon receipt, to permanently reduce
the Total Short Term Credit Commitment. The Agent shall give each Lender, within
one (1) Business Day of receipt of such notice, telefacsimile notice, or
telephonic notice (confirmed in writing), of such reduction. Each such reduction
shall be in the aggregate amount of $10,000,000 or such greater amount which is
in an integral multiple of $1,000,000, or the entire remaining Total Short Term
Credit Commitment, and shall permanently reduce the Total Short Term Credit
Commitment. Each reduction of the Total Short Term Credit Commitment shall be
accompanied by payment of Loans to the extent that the principal amount of Short
Term Credit Outstandings plus Letter of Credit Outstandings exceeds the Total
Short Term Credit Commitment after giving effect to such reduction, together
with accrued and unpaid interest on the amounts prepaid. If any such reduction
shall result in the payment of any Eurodollar Rate Loan other than on the last
day of the Interest Period of such Eurodollar Rate Loan such prepayment shall be
accompanied by amounts due, if any, under Section 4.5.
2.8. Conversions and Elections of Subsequent Interest Periods. Subject
to the limitations set forth below and in Article IV, the Borrower may:
(a) upon delivery, effective upon receipt, of a properly
completed Interest Rate Selection Notice to the Agent on or before 10:30 A.M. on
any Business Day, Convert all or a part of Eurodollar Rate Loans to Base Rate
Loans on the last day of the Interest Period for such Eurodollar Rate Loans; and
(b) provided that no Default or Event of Default shall have
occurred and be continuing upon delivery, effective upon receipt, of a properly
completed Interest Rate Selection Notice to the Agent on or before 10:30 A.M.
three (3) Business Days prior to the date of such election or Conversion:
(i) elect a subsequent Interest Period for all or a
portion of Eurodollar Rate Loans to begin on the last day of
the then current Interest Period for such Eurodollar Rate
Loans; and
(ii) Convert Base Rate Loans to Eurodollar Rate Loans
on any Business Day.
Each election and Conversion pursuant to this Section 2.8 shall be
subject to the limitations on Eurodollar Rate Loans set forth in the definition
of "Interest Period" herein and in Sections 2.1 and 2.3 and Article IV. The
Agent shall give written notice to each Lender of such notice of election or
Conversion prior to 3:00 P.M. on the day such notice of election or Conversion
is received. All such Continuations or Conversions of Loans shall be effected
pro rata based on the Applicable Commitment Percentages of the Lenders.
2.9. Unused Fees.
31
(a) For the period beginning on the Closing Date and ending on the
Short Term Credit Termination Date, the Borrower agrees to pay to the Agent, for
the benefit of each Lender, an unused fee equal to the Applicable Unused Fee
multiplied by the average daily amount by which the Total Short Term Credit
Commitment exceeds the aggregate principal amount of Short Term Credit
Outstandings plus Letter of Credit Outstandings. Such fees shall be due in
arrears on the last Business Day of each March, June, September and December
commencing December 31, 1998 to and on the Short Term Credit Termination Date.
(b) Notwithstanding the foregoing, so long as any Lender fails to make
available any portion of its Short Term Credit Commitment when requested, such
Lender shall not be entitled to receive payment of its pro rata share of such
fees until such Lender shall make available such portion. All fees payable
pursuant to this Section 2.9 shall be calculated on an Actual/360 Basis.
2.10. Deficiency Advances. No Lender shall be responsible for any
default of any other Lender in respect of such other Lender's obligation to make
any Loan or fund its purchase of any Participation hereunder nor shall the Short
Term Credit Commitment of any Lender hereunder be increased as a result of such
default of any other Lender. Without limiting the generality of the foregoing,
in the event any Lender shall fail to advance funds to the Borrower under the
Short Term Credit Facility as herein provided, the Agent may in its discretion,
but shall not be obligated to, advance under the Note in its favor as a Lender
all or any portion of such amount or amounts (each, a "deficiency advance") and
shall thereafter be entitled to payments of principal of and interest on such
deficiency advance in the same manner and at the same interest rate or rates to
which such other Lender would have been entitled had it made such advance under
its Note; provided that, upon payment to the Agent from such other Lender of the
entire outstanding amount of each such deficiency advance, together with accrued
and unpaid interest thereon, from the most recent date or dates interest was
paid to the Agent by the Borrower on each Loan comprising such deficiency
advance at the interest rate per annum for overnight borrowing by the Agent from
the Federal Reserve Bank of Richmond, Virginia, then such payment shall be
credited against the applicable Note of the Agent in full payment of such
deficiency advance and the Borrower shall be deemed to have borrowed the amount
of such deficiency advance from such other Lender as of the most recent date or
dates, as the case may be, upon which any payments of interest were made by the
Borrower thereon.
2.11. Use of Proceeds. The proceeds of the Loans made pursuant to this
Agreement shall be used by the Borrower to repay existing indebtedness and for
general corporate purposes, including working capital needs, capital
expenditures and permitted Acquisitions.
2.12. Increase and Decrease in Amounts. The amount of the Total Short
Term Credit Commitment which shall be available to the Borrower as Advances
shall be reduced by the aggregate amount of Letter of Credit Outstandings.
32
ARTICLE III
Letters of Credit
3.1. Letters of Credit. The Issuing Bank agrees, subject to the terms
and conditions of this Agreement, upon request of the Borrower to issue from
time to time for the account of the Borrower Letters of Credit upon delivery to
the Issuing Bank of an Application and Agreement for Letter of Credit relating
thereto in form and content acceptable to the Issuing Bank; provided, that (i)
the Letter of Credit Outstandings shall not exceed the Total Letter of Credit
Commitment, (ii) no Letter of Credit shall be issued so long as a Default or an
Event of Default has occurred or is continuing or if the applicable conditions
set forth in Article V shall not have been satisfied, (iii) no Letter of Credit
shall be issued if, after giving effect thereto, Letter of Credit Outstandings
plus the aggregate principal amount of Short Term Credit Outstandings shall
exceed the Total Short Term Credit Commitment and (iv) no Letter of Credit shall
be issued if there is Existing Availability. No Letter of Credit shall have an
expiry date (including all rights of the Borrower or any beneficiary named in
such Letter of Credit to require renewal) or payment date occurring later than
the fifth Business Day prior to the Short Term Credit Termination Date.
3.2. Reimbursement.
(a) The Borrower hereby unconditionally agrees to pay to the
Issuing Bank immediately on demand at the Principal Office all amounts required
to pay all drafts drawn or purporting to be drawn under the Letters of Credit
and all reasonable expenses incurred by the Issuing Bank in connection with the
Letters of Credit, and in any event and without demand to place in possession of
the Issuing Bank (which shall include Advances under the Short Term Credit
Facility if permitted by Section 2.1(c)) sufficient funds to pay all debts and
liabilities arising in respect of any Letter of Credit. The Issuing Bank agrees
to give the Borrower prompt notice of any request for a draw under a Letter of
Credit. The Issuing Bank may charge any account the Borrower may have with it
for any and all amounts the Issuing Bank pays under a Letter of Credit, plus
charges and reasonable expenses as from time to time agreed to by the Issuing
Bank and the Borrower; provided that to the extent permitted by Section
2.1(c)(iv), amounts shall be paid pursuant to Advances under the Short Term
Credit Facility. The Borrower agrees to pay the Issuing Bank interest on any
Reimbursement Obligations not paid when due hereunder at the Default Rate.
(b) In accordance with the provisions of Section 2.1(c), the
Issuing Bank shall notify the Agent of any drawing under any Letter of Credit
promptly following the receipt by the Issuing Bank of such drawing.
(c) Each Lender (other than the Issuing Bank) shall
automatically acquire on the date of issuance thereof a Participation in the
liability of the Issuing Bank in respect of each Letter of Credit in an amount
equal to such Lender's Applicable Commitment Percentage of such liability, and
to the extent that the Borrower is obligated to pay the Issuing Bank under
Section 3.2(a), each Lender (other than the Issuing Bank) thereby shall
absolutely, unconditionally and irrevocably assume, and shall be unconditionally
obligated to pay to the Issuing Bank as hereinafter described,
33
its Applicable Commitment Percentage of the liability of the Issuing Bank under
such Letter of Credit.
(i) Each Lender (including the Issuing Bank in its
capacity as a Lender) shall, subject to the terms and conditions of
Article II, pay to the Agent for the account of the Issuing Bank at the
Principal Office in Dollars and in immediately available funds, an
amount equal to its Applicable Commitment Percentage of any drawing
under a Letter of Credit, such funds to be provided in the manner
described in Section 2.1(c)(iv).
(ii) Simultaneously with the making of each payment
by a Lender to the Issuing Bank pursuant to Section 2.1(c)(iv)(B), such
Lender shall, automatically and without any further action on the part
of the Issuing Bank or such Lender, acquire a Participation in an
amount equal to such payment (excluding the portion thereof
constituting interest accrued prior to the date such Lender made its
payment) in the related Reimbursement Obligation of the Borrower. The
Reimbursement Obligations of the Borrower shall be immediately due and
payable whether by Advances made in accordance with Section 2.1(c)(iv)
or otherwise.
(iii) Each Lender's obligation to make payment to the
Agent for the account of the Issuing Bank pursuant to Section
2.1(c)(iv) and this Section 3.2(c), and the right of the Issuing Bank
to receive the same, shall be absolute and unconditional, shall not be
affected by any circumstance whatsoever and shall be made without any
offset, abatement, withholding or reduction whatsoever. If any Lender
is obligated to pay but does not pay amounts to the Agent for the
account of the Issuing Bank in full upon such request as required by
Section 2.1(c)(iv) or this Section 3.2(c), such Lender shall, on
demand, pay to the Agent for the account of the Issuing Bank interest
on the unpaid amount for each day during the period commencing on the
date of notice given to such Lender pursuant to Section 2.1(c) until
such Lender pays such amount to the Agent for the account of the
Issuing Bank in full at the interest rate per annum for overnight
borrowing by the Agent from the Federal Reserve Bank of Richmond,
Virginia.
(iv) In the event the Lenders have purchased
Participations in any Reimbursement Obligation as set forth in clause
(ii) above, then at any time payment (in fully collected, immediately
available funds) of such Reimbursement Obligation, in whole or in part,
is received by the Issuing Bank from the Borrower, the Issuing Bank
shall promptly pay to each Lender an amount equal to its Applicable
Commitment Percentage of such payment from the Borrower.
(d) Promptly following the end of each calendar quarter, the
Issuing Bank shall deliver to the Agent and the Agent shall deliver to each
Lender a notice describing the aggregate undrawn amount of all Letters of Credit
at the end of such quarter. The Agent shall promptly notify each Lender of the
issuance of a Letter of Credit.
(e) The issuance by the Issuing Bank of each Letter of Credit
shall, in addition to the conditions precedent set forth in Article V, be
subject to the conditions that such Letter of Credit be in such form and contain
such terms as shall be reasonably satisfactory to the Issuing Bank
34
consistent with the then current practices and procedures of the Issuing Bank
with respect to similar letters of credit, and the Borrower shall have executed
and delivered such other instruments and agreements relating to such Letters of
Credit as the Issuing Bank shall have reasonably requested consistent with such
practices and procedures and shall not be in conflict with any of the express
terms herein contained. All Letters of Credit shall be issued pursuant to and
subject to the Uniform Customs and Practice for Documentary Credits, 1993
revision, International Chamber of Commerce Publication No. 500 and all
subsequent amendments and revisions thereto.
(f) The Borrower agrees that the Issuing Bank may, in its sole
discretion, accept or pay, as complying with the terms of any Letter of Credit,
any drafts or other documents otherwise in order which may be signed or issued
by an administrator, executor, trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, liquidator, receiver, attorney in fact or
other legal representative of a party who is authorized under such Letter of
Credit to draw or issue any drafts or other documents.
(g) Without limiting the generality of the provisions of
Section 11.12, the Borrower hereby agrees to indemnify and hold harmless the
Issuing Bank, each other Lender and the Agent from and against any and all
claims and damages, losses, liabilities, reasonable costs and expenses which the
Issuing Bank, such other Lender or the Agent may incur (or which may be claimed
against the Issuing Bank, such other Lender or the Agent) by any Person by
reason of or in connection with the issuance or transfer of or payment or
failure to pay under any Letter of Credit; provided that the Borrower shall not
be required to indemnify the Issuing Bank, any other Lender or the Agent for any
claims, damages, losses, liabilities, costs or expenses to the extent, but only
to the extent, (i) caused by the willful misconduct or negligence of the party
to be indemnified or (ii) in the case of the Issuing Bank, caused by the failure
of the Issuing Bank to pay under any Letter of Credit after the presentation to
it of a request for payment strictly complying with the terms and conditions of
such Letter of Credit, unless such payment is prohibited by any law, regulation,
court order or decree. The indemnification and hold harmless provisions of this
Section 3.2(g) shall survive repayment of the Obligations, occurrence of the
Short Term Credit Termination Date and expiration or termination of this
Agreement.
(h) Without limiting the Borrower's rights as set forth in
Section 3.2(g), the obligation of the Borrower to immediately reimburse the
Issuing Bank for drawings made under Letters of Credit and to repay Loans made
under Section 2.1(c) and the Issuing Bank's and each Lender's right to receive
such payment shall be absolute, unconditional and irrevocable, and such
obligations of the Borrower shall be performed strictly in accordance with the
terms of this Agreement and such Letters of Credit and the related Applications
and Agreement for any Letter of Credit, under all circumstances whatsoever,
including the following circumstances:
(i) any lack of validity or enforceability of any
Letter of Credit, the obligation supported by any Letter of Credit or
any other agreement or instrument relating thereto (collectively, the
"Related LC Documents");
35
(ii) any amendment or waiver of or any consent to or
departure from all or any of the Related LC Documents;
(iii) the existence of any claim, setoff, defense
(other than the defense of payment in accordance with the terms of this
Agreement) or other rights which the Borrower may have at any time
against any beneficiary or any transferee of a Letter of Credit (or any
persons or entities for whom any such beneficiary or any such
transferee may be acting), the Agent, the Lenders or any other Person,
whether in connection with the Loan Documents, the Related LC Documents
or any unrelated transaction;
(iv) any breach of contract or other dispute between
the Borrower and any beneficiary or any transferee of a Letter of
Credit (or any persons or entities for whom such beneficiary or any
such transferee may be acting), the Agent, the Lenders or any other
Person;
(v) any draft, statement or any other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect whatsoever;
(vi) any delay, extension of time, renewal,
compromise or other indulgence or modification granted or agreed to by
the Agent or the requisite number of Lenders, with or without notice to
or approval by the Borrower in respect of any of Borrower's Obligations
under this Agreement; or
(vii) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing;
provided, however, that nothing in this Section 3.2(h) shall give the Issuing
Bank any right to reimbursement for drawings made under a Letter of Credit
otherwise than pursuant to a request for payment strictly complying with the
terms and conditions of such Letter of Credit unless the Borrower has
specifically waived such strict compliance in writing.
3.3. Letter of Credit Facility Fees. (a) The Borrower shall pay to the
Agent, for the pro rata benefit of the Lenders based on their Applicable
Commitment Percentages, a fee on the aggregate amount available to be drawn on
each outstanding Letter of Credit at a rate equal to the Applicable Margin. In
addition, the Borrower agrees to pay to the Agent for the benefit of the Issuing
Bank an issuance fee equal to one-eighth of one percent (1/8%) per annum times
the amount of outstanding Letters of Credit. Such fees shall be due with respect
to each Letter of Credit quarterly in arrears on the last Business Day of each
March, June, September and December, the first such payment to be made on June
30, 1998. The fees described in this Section 3.3 shall be calculated on an
Actual/360 Basis.
(b) The Borrower acknowledges that the Issuing Bank as issuer of each
Letter of Credit will be required by applicable rules and regulations of the
Board to maintain reserves for its liability to honor draws made pursuant to a
Letter of Credit notwithstanding the obligation of the Lenders
36
for a Participation in such liability. The Borrower agrees to promptly reimburse
the Issuing Bank for all additional costs which it may hereafter incur solely by
reason of its acting as issuer of the Letters of Credit and its being required
to reserve for such liability, it being understood by the Borrower that other
interest and fees payable under this Agreement do not include compensation of
the Issuing Bank for such reserves. The Issuing Bank shall furnish to the
Borrower at the time of its demand for payment of such additional costs, the
computation of such additional cost which shall be conclusive absent manifest
error, provided that such computations are made on a reasonable basis.
3.4. Administrative Fees. The Borrower shall pay to the Issuing Bank
such administrative fee and other fees, if any, in connection with the Letters
of Credit in such amounts and at such times as the Issuing Bank and the Borrower
shall agree from time to time.
37
ARTICLE IV
Change in Circumstances
4.1. Increased Cost and Reduced Return.
(a) If, after the date hereof, the adoption of any applicable
law, rule, or regulation, or any change in any applicable law, rule, or
regulation, or any change in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or its
Applicable Lending Office) with any request or directive (whether or not having
the force of law) of any such governmental authority, central bank, or
comparable agency:
(i) shall subject such Lender (or its Applicable
Lending Office) to any tax, duty, or other charge with respect to any
Eurodollar Rate Loans, its Note, or its obligation to make Eurodollar
Rate Loans, or change the basis of taxation of any amounts payable to
such Lender (or its Applicable Lending Office) under this Agreement or
its Note in respect of any Eurodollar Rate Loans (other than taxes
imposed on the overall net income of such Lender by the jurisdiction in
which such Lender has its principal office or such Applicable Lending
Office);
(ii) shall impose, modify, or deem applicable any
reserve, special deposit, assessment, or similar requirement (other
than the Reserve Requirement utilized in the determination of the
Eurodollar Rate) relating to any extensions of credit or other assets
of, or any deposits with or other liabilities or commitments of, such
Lender (or its Applicable Lending Office), including the Short Term
Credit Commitment of such Lender hereunder; or
(iii) shall impose on such Lender (or its Applicable
Lending Office) or on the London interbank market any other condition
affecting this Agreement or its Note or any of such extensions of
credit or liabilities or commitments;
and the result of any of the foregoing is to increase the cost to such Lender
(or its Applicable Lending Office) of making, Converting into, Continuing, or
maintaining any Eurodollar Rate Loans or to reduce any sum received or
receivable by such Lender (or its Applicable Lending Office) under this
Agreement or its Note with respect to any Eurodollar Rate Loans, then the
Borrower shall pay to such Lender on demand such amount or amounts as will
compensate such Lender for such increased cost or reduction; provided that no
Lender will be entitled to any compensation for any such increased cost or
reduction if demand for payment thereof is made by such Lender more than 180
days after the occurrence of the circumstances giving rise to such claim. If any
Lender requests compensation by the Borrower under this Section 4.1(a), the
Borrower may, by notice to such Lender (with a copy to the Agent), suspend the
obligation of such Lender to make or Continue Loans of the Type with respect to
which such compensation is requested, or to Convert Loans of any other Type into
Loans of such Type, until the event or condition giving rise to such request
ceases to be
38
in effect (in which case the provisions of Section 4.4 shall be applicable);
provided that such suspension shall not affect the right of such Lender to
receive the compensation so requested.
(b) If, after the date hereof, any Lender shall have determined that
the adoption of any applicable law, rule, or regulation regarding capital
adequacy or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank, or comparable agency
charged with the interpretation or administration thereof, or any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank, or comparable agency, has or
would have the effect of reducing the rate of return on the capital of such
Lender or any corporation controlling such Lender as a consequence of such
Lender's obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such adoption, change, request, or
directive (taking into consideration its policies with respect to capital
adequacy), then from time to time upon demand the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender for such
reduction.
(c) Each Lender shall promptly notify the Borrower and the Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Lender to compensation pursuant to this Section and will designate
a different Applicable Lending Office if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the reasonable
judgment of such Lender, be otherwise disadvantageous to it. Any Lender claiming
compensation under this Section shall furnish to the Borrower and the Agent a
statement setting forth the additional amount or amounts to be paid to it
hereunder which shall be conclusive in the absence of manifest error. In
determining such amount, such Lender may use any reasonable averaging and
attribution methods that such Lender uses for its customers that are similarly
situated to the Borrower.
4.2. Limitation on Types of Loans. If on or prior to the first day of
any Interest Period for any Eurodollar Rate Loan:
(a) the Agent reasonably determines (which determination shall
be conclusive) that by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period; or
(b) the Required Lenders reasonably determine (which
determination shall be conclusive) and notify the Agent that the
Eurodollar Rate will not adequately and fairly reflect the cost to the
Lenders of funding Eurodollar Rate Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof specifying the
relevant Type of Loans and the relevant amounts or periods, and so long as such
condition remains in effect, the Lenders shall be under no obligation to make
additional Loans of such Type, Continue Loans of such Type, or to Convert Loans
of any other Type into Loans of such Type and the Borrower shall, on the last
day(s) of the then current Interest Period(s) for the outstanding Loans of the
affected Type, either prepay such Loans or Convert such Loans into another Type
of Loan in accordance with the terms of this Agreement.
39
4.3. Illegality. Notwithstanding any other provision of this Agreement,
in the event that it becomes unlawful for any Lender or its Applicable Lending
Office to make, maintain, or fund Eurodollar Rate Loans hereunder, then such
Lender shall promptly notify the Borrower thereof and such Lender's obligation
to make or Continue Eurodollar Rate Loans and to Convert other Types of Loans
into Eurodollar Rate Loans shall be suspended until such time as such Lender may
again make, maintain, and fund Eurodollar Rate Loans (in which case the
provisions of Section 4.4 shall be applicable).
4.4. Treatment of Affected Loans. If the obligation of any Lender to
make a Eurodollar Rate Loan or to Continue, or to Convert Loans of any other
Type into, Loans of a particular Type shall be suspended pursuant to Section 4.1
or 4.3 hereof (Loans of such Type being herein called "Affected Loans" and such
Type being herein called the "Affected Type"), such Lender's Affected Loans
shall be automatically Converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for Affected Loans (or, in the case of a
Conversion required by Section 4.3 hereof, on such earlier date as such Lender
may specify to the Borrower with a copy to the Agent) and, unless and until such
Lender gives notice as provided below that the circumstances specified in
Section 4.1 or 4.3 hereof that gave rise to such Conversion no longer exist:
(a) to the extent that such Lender's Affected Loans have been
so Converted, all payments and prepayments of principal that would
otherwise be applied to such Lender's Affected Loans shall be applied
instead to its Base Rate Loans; and
(b) all Loans that would otherwise be made or Continued by
such Lender as Loans of the Affected Type shall be made or Continued
instead as Base Rate Loans, and all Loans of such Lender that would
otherwise be Converted into Loans of the Affected Type shall be
Converted instead into (or shall remain as) Base Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 4.1 or 4.3 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this Section 4.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Loans of the Affected Type made by other
Lenders are outstanding, such Lender's Base Rate Loans shall be automatically
Converted, on the first day(s) of the next succeeding Interest Period(s) for
such outstanding Loans of the Affected Type, to the extent necessary so that,
after giving effect thereto, all Loans held by the Lenders holding Loans of the
Affected Type and by such Lender are held pro rata (as to principal amounts,
Types, and Interest Periods) in accordance with their respective Short Term
Credit Commitments.
4.5. Compensation. Upon the request of any Lender, the Borrower shall
pay to such Lender such amount or amounts as shall be sufficient (in the
reasonable opinion of such Lender) to compensate it for any loss, cost, or
expense (including loss of anticipated profits) incurred by it as a result of:
40
(a) any payment, prepayment, or Conversion of a Eurodollar
Rate Loan for any reason (including, without limitation, the
acceleration of the Loans pursuant to Section 9.1) on a date other than
the last day of the Interest Period for such Loan; or
(b) any failure by the Borrower for any reason (including,
without limitation, the failure of any condition precedent specified in
Article V to be satisfied) to borrow, Convert, Continue, or prepay an
Eurodollar Rate Loan on the date for such borrowing, Conversion,
Continuation, or prepayment specified in the relevant notice of
borrowing, prepayment, Continuation, or Conversion under this
Agreement.
4.6. Taxes. (a) Any and all payments by the Borrower to or for the
account of any Lender or the Agent hereunder or under any other Loan Document
shall be made free and clear of and without deduction for any and all present or
future taxes, duties, levies, imposts, deductions, charges or withholdings, and
all liabilities with respect thereto, excluding, in the case of each Lender and
the Agent, taxes imposed on its income, and franchise taxes imposed on it, by
the jurisdiction under the laws of which such Lender (or its Applicable Lending
Office) or the Agent (as the case may be) is organized or any political
subdivision thereof (all such non-excluded taxes, duties, levies, imposts,
deductions, charges, withholdings, and liabilities being hereinafter referred to
as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable under this Agreement or any other Loan Document
to any Lender or the Agent, (i) the sum payable shall be increased as necessary
so that after making all required deductions (including deductions applicable to
additional sums payable under this Section 4.6) such Lender or the Agent
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law, and (iv) the Borrower
shall furnish to the Agent, at its address referred to in Section 11.2, the
original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any and all present or
future stamp or documentary taxes and any other excise or property taxes or
charges or similar levies which arise from any payment made under this Agreement
or any other Loan Document or from the execution or delivery of, or otherwise
with respect to, this Agreement or any other Loan Document (hereinafter referred
to as "Other Taxes").
(c) The Borrower agrees to indemnify each Lender and the Agent for the
full amount of Taxes and Other Taxes (including, without limitation, any Taxes
or Other Taxes imposed or asserted by any jurisdiction on amounts payable under
this Section 4.6) paid by such Lender or the Agent (as the case may be) and any
liability (including penalties, interest, and expenses) arising therefrom or
with respect thereto.
(d) Each Lender organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Lender listed on the signature pages hereof and on
or prior to the date on which it becomes a Lender in the case of each other
Lender, and from time to time thereafter if requested in writing by the Borrower
or the Agent (but only so long as such Lender remains lawfully able to do so),
shall provide the Borrower
41
and the Agent with (i) Internal Revenue Service Form 1001 or 4224, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
certifying that such Lender is entitled to benefits under an income tax treaty
to which the United States is a party which reduces the rate of withholding tax
on payments of interest or certifying that the income receivable pursuant to
this Agreement is effectively connected with the conduct of a trade or business
in the United States, (ii) Internal Revenue Service Form W-8 or W-9, as
appropriate, or any successor form prescribed by the Internal Revenue Service,
and (iii) any other form or certificate required by any taxing authority
(including any certificate required by Sections 871(h) and 881(c) of the
Internal Revenue Code), certifying that such Lender is entitled to an exemption
from or a reduced rate of tax on payments pursuant to this Agreement or any of
the other Loan Documents.
(e) For any period with respect to which a Lender has failed to provide
the Borrower and the Agent with the appropriate form pursuant to Section 4.6(d)
(unless such failure is due to a change in treaty, law, or regulation occurring
subsequent to the date on which a form originally was required to be provided),
such Lender shall not be entitled to indemnification under Section 4.6(a),
4.6(b), or 4.6(c) with respect to Taxes imposed by the United States; provided,
however, that should a Lender, which is otherwise exempt from or subject to a
reduced rate of withholding tax, become subject to Taxes because of its failure
to deliver a form required hereunder, the Borrower shall take such steps as such
Lender shall reasonably request to assist such Lender to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Lender pursuant to this Section 4.6, then such Lender will agree
to use reasonable efforts to change the jurisdiction of its Applicable Lending
Office so as to eliminate or reduce any such additional payment which may
thereafter accrue if such change, in the judgment of such Lender, is not
otherwise disadvantageous to such Lender.
(g) Within thirty (30) days after the date of any payment of Taxes, the
Borrower shall furnish to the Agent the original or a certified copy of a
receipt evidencing such payment.
(h) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 4.6 shall survive the termination of the Short Term Credit
Commitments and the payment in full of the Notes.
42
ARTICLE V
Conditions to Making Loans and Issuing Letters of Credit
5.1. Conditions of Initial Advance. This Agreement shall not become
effective until the following conditions precedent have been satisfied in the
sole judgment of the Agent:
(a) the Agent shall have received on the Closing Date, in form
and substance satisfactory to the Agent and Lenders, the following:
(i) executed originals of each of this Agreement,
the Notes, the LC Account Agreement and the other Loan
Documents, together with all schedules and exhibits thereto;
(ii) the favorable written opinion or opinions with
respect to the Loan Documents and the transactions
contemplated thereby of counsel to the Borrower dated the
Closing Date, addressed to the Agent and the Lenders and
satisfactory to ▇▇▇▇▇ ▇▇▇▇▇ Mulliss & ▇▇▇▇▇, L.L.P., special
counsel to the Agent, substantially in the form of Exhibit H;
(iii) resolutions of the board of directors of the
Borrower certified by its secretary or assistant secretary as
of the Closing Date, approving and adopting the Loan Documents
to be executed by the Borrower, and authorizing the execution
and delivery and performance thereof;
(iv) specimen signatures of officers of the
Borrower executing the Loan Documents on behalf of the
Borrower, certified by the secretary or assistant secretary of
the Borrower;
(v) the charter documents of the Borrower
certified as of a recent date by the Secretary of State of its
state of organization;
(vi) the bylaws of the Borrower certified as of the
Closing Date as true and correct by its secretary or assistant
secretary;
(vii) certificates issued as of a recent date by the
Secretary of State of the jurisdiction of formation of the
Borrower as to the valid existence and good standing of the
Borrower;
(viii) notice of appointment of the initial
Authorized Representative(s);
(ix) evidence of all insurance required by the Loan
Documents;
(x) evidence that all fees payable by the Borrower
on the Closing Date to the Agent and the Lenders have been
paid in full;
43
(xiii) such other documents, instruments,
certificates and opinions as the Agent or any Lender may
reasonably request on or prior to the Closing Date in
connection with the consummation of the transactions
contemplated hereby; and
(b) In the good faith judgment of the Agent and the Lenders:
(i) there shall not have occurred or become known
to the Agent or the Lenders any event, condition, situation or
status since December 31, 1997 that has had or could
reasonably be expected to result in a Material Adverse Effect;
(ii) no litigation, action, suit, investigation or
other arbitral, administrative or judicial proceeding shall be
pending or threatened which could reasonably be expected to
result in a Material Adverse Effect; and
(iii) the Borrower and its Consolidated Entities
shall have received all approvals, consents and waivers, and
shall have made or given all necessary filings and notices, as
shall be required to consummate the transactions contemplated
hereby without the occurrence of any default under, conflict
with or violation of (A) any applicable law, rule, regulation,
order or decree of any Governmental Authority or arbitral
authority or (B) any agreement, document or instrument to
which any of the Borrower or any Consolidated Entity is a
party or by which any of them or their properties is bound,
except for such approvals, consents, waivers, filings and
notices the receipt, making or giving of which will not have a
Material Adverse Effect.
5.2. Conditions of Loans and Letters of Credit. The obligations of the
Lenders to make any Loans, and the Issuing Bank to issue Letters of Credit,
hereunder on or subsequent to the Closing Date, are subject to the satisfaction
of the following conditions:
(a) the Agent shall have received a Borrowing Notice if
required by Article II;
(b) the representations and warranties of the Borrower and the
Subsidiaries set forth in Article VI and in each of the other Loan
Documents shall be true and correct in all material respects on and as
of the date of such Advance or Letter of Credit issuance or renewal,
with the same effect as though such representations and warranties had
been made on and as of such date, except to the extent that such
representations and warranties expressly relate to an earlier date and
except that the financial statements referred to in Section 6.6(a)
shall be deemed to be those financial statements most recently
delivered to the Agent and the Lenders pursuant to Section 7.1 from the
date financial statements are delivered to the Agent and the Lenders in
accordance with such Section;
(c) in the case of the issuance of a Letter of Credit, the
Borrower shall have executed and delivered to the Issuing Bank an
Application and Agreement for the Letter of Credit in form and content
acceptable to the Issuing Bank together with such other instruments and
documents as it shall request;
44
(d) at the time of (and after giving effect to) each Advance
or the issuance of a Letter of Credit, no Default or Event of Default
shall have occurred and be continuing and there shall not be any
Existing Availability; and
(e) immediately after giving effect to:
(i) a Loan, the aggregate principal balance of all
outstanding Loans for each Lender plus such Lender's
Applicable Commitment Percentage of the aggregate amount of
Letter of Credit Outstandings shall not exceed such Lender's
Short Term Credit Commitment;
(ii) a Letter of Credit or renewal thereof, the
aggregate principal balance of all outstanding Participations
in Letters of Credit and Reimbursement Obligations (or in the
case of the Issuing Bank, its remaining interest after
deduction of all Participations in Letters of Credit and
Reimbursement Obligations of other Lenders) for each Lender
and in the aggregate shall not exceed, respectively, (X) such
Lender's Letter of Credit Commitment or (Y) the Total Letter
of Credit Commitment; and
(iii) a Loan or a Letter of Credit or renewal
thereof, the sum of Letter of Credit Outstandings plus the
aggregate principal amount of Short Term Credit Outstandings
shall not exceed the Total Short Term Credit Commitment.
Each borrowing hereunder and each issuance of a Letter of Credit
hereunder shall constitute a representation and warranty by the Borrower to the
effect that the conditions set forth in clauses (b) and (d) have been satisfied
as of the date of such borrowing.
45
ARTICLE VI
Representations and Warranties
The Borrower represents and warrants with respect to itself and (to the
extent expressly set forth below) its Consolidated Entities (which
representations and warranties shall survive the delivery of the documents
mentioned herein and the making of Loans and the issuance of a Letter of
Credit), that:
6.1. Organization and Authority.
(a) The Borrower and each Consolidated Entity is a
corporation, partnership or limited liability company duly organized
and validly existing under the laws of the jurisdiction of its
formation;
(b) The Borrower and each Consolidated Entity (x) has the
requisite power and authority to own its properties and assets and to
carry on its business as now being conducted and as contemplated in the
Loan Documents, and (y) is qualified to do business in every
jurisdiction in which failure so to qualify would have a Material
Adverse Effect;
(c) The Borrower has the power and authority to execute,
deliver and perform this Agreement and the Notes, and to borrow and
obtain other extensions of credit hereunder, and to execute, deliver
and perform each of the other Loan Documents to which it is a party;
and
(d) When executed and delivered, each of the Loan Documents to
which the Borrower is a party will be the legal, valid and binding
obligation or agreement, as the case may be, of the Borrower,
enforceable against the Borrower in accordance with its terms, subject
to the effect of any applicable bankruptcy, moratorium, insolvency,
reorganization or other similar law affecting the enforceability of
creditors' rights generally and to the effect of general principles of
equity (whether considered in a proceeding at law or in equity).
6.2. Loan Documents. The execution, delivery and performance by the
Borrower of each of the Loan Documents and the credit extensions hereunder:
(a) have been duly authorized by all requisite corporate
actions (including any required shareholder approval) of the Borrower
required for the lawful execution, delivery and performance thereof;
(b) do not violate any provisions of (i) applicable law, rule
or regulation, (ii) any judgment, writ, order, determination, decree or
arbitral award of any Governmental Authority or arbitral authority
binding on the Borrower or any Subsidiary or its or any Subsidiary's
properties, or (iii) the charter documents or bylaws of the Borrower;
(c) do not and will not be in conflict with, result in a
breach of or constitute an event of default, or an event which, with
notice or lapse of time or both, would constitute an event
46
of default, under any contract, indenture, agreement or other
instrument or document to which Borrower or any Consolidated Entity is
a party, or by which the properties or assets of the Borrower or any
Consolidated Entity are bound; and
(d) do not and will not result in the creation or imposition
of any Lien upon any of the properties or assets of Borrower or any
Subsidiary.
6.3. Solvency. The Borrower is Solvent and the Borrower and its
Consolidated Entities taken as a whole are Solvent, in each case after giving
effect to the transactions contemplated by the Loan Documents.
6.4. Subsidiaries. The Borrower has no Subsidiaries other than those
Persons listed as Subsidiaries in Schedule 6.4 and additional Subsidiaries
created or acquired after the Closing Date.
6.5. Ownership Interests. Borrower owns no interest in any Person other
than the Persons listed in Schedule 6.4, equity investments in Persons not
constituting Subsidiaries permitted under Section 8.2 and additional
Subsidiaries created or acquired after the Closing Date.
6.6. Financial Condition.
(a) The Borrower has heretofore furnished to the Agent and
each Lender an audited consolidated balance sheet of the Borrower and
its Consolidated Entities as at December 31, 1997 and the notes thereto
and the related consolidated statements of income, stockholders' equity
and cash flows for the Fiscal Year then ended as examined and certified
by Ernst & Young LLP. Except as set forth therein, such financial
statements (including the notes thereto) present fairly the financial
condition of the Borrower and its Consolidated Entities as of the end
of such Fiscal Year and results of their operations and the changes in
its stockholders' equity for the Fiscal Year, all in conformity with
GAAP applied on a Consistent Basis, subject however, in the case of
unaudited interim statements to year end audit adjustments;
(b) since December 31, 1997, there has been no material
adverse change in the condition, financial or otherwise, of the
Borrower or any of its Consolidated Entities, or in the businesses,
properties, performance, prospects or operations of the Borrower or any
of its Consolidated Subsidiaries nor have such businesses or properties
been materially adversely affected as a result of any fire, explosion,
earthquake, accident, strike, lockout, combination of workers, flood,
embargo or act of God; and
(c) neither the Borrower nor any Consolidated Entity has any
material Indebtedness, Guaranteed Obligations or other obligations or
liabilities, direct or contingent, in an aggregate amount in excess of
$300,000 other than (a) the liabilities reflected in such balance sheet
and the notes thereto, (b) $567,750,000 aggregate principal amount of
the Borrower's 3.25% Convertible Subordinated Debentures due 2003, (c)
$250,000,000 aggregate principal amount of the Borrower's 6.875% Senior
Notes due 2005 and $250,000,000 aggregate principal amount of the
Borrower's 7.0% Senior Notes due 2005,
47
(d) Obligations arising under this Agreement, and (e) liabilities
incurred in the ordinary course of business.
6.7. Title to Properties. The Borrower and each Consolidated Entity has
good and marketable title to all its real and personal properties, subject to no
transfer restrictions or Liens of any kind, except for the transfer restrictions
and Liens permitted by this Agreement.
6.8. Taxes. The Borrower and each Consolidated Entity have filed or
caused to be filed all federal, state and local tax returns which are required
to be filed by it and, except for taxes and assessments being contested in good
faith by appropriate proceedings diligently conducted and against which reserves
reflected in the financial statements described in Section 6.6(a) and
satisfactory to the Borrower's independent certified public accountants have
been established, have paid or caused to be paid all taxes as shown on said
returns or on any assessment received by it, to the extent that such taxes have
become due.
6.9. Other Agreements. Except as disclosed in or incorporated by
reference in the 1997 10-K:
(a) neither the Borrower nor any Consolidated Entity is a
party to or subject to any judgment, order, decree, agreement, lease or
instrument, or subject to other restrictions, compliance with the terms
of which individually or in the aggregate could reasonably be likely to
have a Material Adverse Effect;
(b) neither the Borrower nor any Consolidated Entity is in
default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in (i) any Medicaid
Provider Agreement, Medicare Provider Agreement or other agreement or
instrument to which the Borrower or any Consolidated Entity is a party,
which default has resulted in, or if not remedied within any applicable
grace period could result in, the revocation, termination, cancellation
or suspension of Medicaid Certification or Medicare Certification of
Borrower or any Consolidated Entity which could have a Material Adverse
Effect or (ii) any other agreement or instrument to which the Borrower
or any Consolidated Entity is a party, which default has, or if not
remedied within any applicable grace period could reasonably be likely
to have, a Material Adverse Effect;
(c) to the knowledge of Borrower's Executive Officers, no
Contract Provider is a party to any judgment, order, decree, agreement
or instrument, or subject to restrictions, compliance with the terms of
which could individually or in the aggregate reasonably be likely to
have a Material Adverse Effect; and
(d) to the knowledge of Borrower's Executive Officers, no
Contract Provider is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any Medicaid Provider Agreement, Medicare Provider
Agreement or other agreement or instrument to which such Person is a
party, which default has resulted in, or if not remedied within any
applicable grace period could result in, the revocation, termination,
cancellation or suspension of Medicaid Certification or Medicare
Certification
48
of such Person, which revocation, termination, cancellation or
suspension could reasonably be likely to have a Material Adverse
Effect.
6.10. Litigation. Except as disclosed in or incorporated by reference
in the 1997 10-K, there is no action, suit, investigation or proceeding at law
or in equity or by or before any governmental instrumentality or agency or
arbitral body pending or, to the knowledge of the Borrower, threatened by or
against the Borrower or any Consolidated Entity or, to the knowledge of the
Borrower, pending or threatened by or against any Contract Provider, or
affecting the Borrower or any Consolidated Entity or, to the knowledge of the
Borrower, any Contract Provider or any properties or rights of the Borrower or
any Consolidated Entity or, to the knowledge of the Borrower, any Contract
Provider, which could reasonably be likely (i) to result in the revocation,
termination, cancellation or suspension of Medicaid Certification or Medicare
Certification of such Person, which revocation, termination, cancellation or
suspension could reasonably be likely to have a Material Adverse Effect, or (ii)
to have a Material Adverse Effect.
6.11. Margin Stock. The proceeds of the borrowings and other extensions
of credit made hereunder will be used by the Borrower only for the purposes
expressly authorized herein. None of such proceeds will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin stock or for
the purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry margin stock or for any other purpose which might
constitute any of the Loans or Letters of Credit under this Agreement a "purpose
credit" within the meaning of Regulation U or Regulation X of the Board. Neither
the Borrower nor any agent acting in its behalf has taken or will take any
action which might cause this Agreement or any of the documents or instruments
delivered pursuant hereto to violate any regulation of the Board or to violate
the Exchange Act or the Securities Act of 1933, as amended, or any state
securities laws, in each case as in effect on the date hereof.
6.12. Investment Company. Neither the Borrower nor any Consolidated
Entity is an "investment company," or an "affiliated person" of, or "promoter"
or "principal underwriter" for, an "investment company", as such terms are
defined in the Investment Company Act of 1940, as amended (15 U.S.C. ss. 80a-1,
et seq.). The application of the proceeds of the Loans and repayment thereof by
the Borrower and the issuance of Letters of Credit and the performance by the
Borrower and any Consolidated Entity of the transactions contemplated by the
Loan Documents will not violate any provision of said Act, or any rule,
regulation or order issued by the Securities and Exchange Commission thereunder,
in each case as in effect on the date hereof.
6.13. Patents, Etc. Except as set forth on Schedule 6.13, the Borrower
and each Consolidated Entity owns or has the right to use, under valid license
agreements or otherwise, all material patents, licenses, franchises, trademarks,
trademark rights, trade names, trade name rights, trade secrets, service marks,
service ▇▇▇▇ rights and copyrights necessary to or used in the conduct of its
businesses as now conducted and as contemplated by the Loan Documents, without
known conflict by, or with, any patent, license, franchise, trademark, trade
secret, trade name, service ▇▇▇▇, copyright or other proprietary right of, any
other Person.
49
6.14. No Untrue Statement. Neither (a) this Agreement nor any other
Loan Document or certificate or document executed and delivered by or on behalf
of the Borrower or any Consolidated Entity in accordance with or pursuant to any
Loan Document nor (b) any statement, representation, or warranty provided to the
Agent or any Lender in connection with the negotiation or preparation of the
Loan Documents contains any misrepresentation or untrue statement of material
fact or omits to state a material fact necessary, in light of the circumstance
under which it was made, in order to make any such warranty, representation or
statement contained therein not misleading.
6.15. No Consents, Etc. Neither the respective businesses or properties
of the Borrower or any Consolidated Entity, nor any relationship between the
Borrower or any Consolidated Entity and any other Person, nor any circumstance
in connection with the execution, delivery and performance of the Loan Documents
and the transactions contemplated thereby, is such as to require a consent,
approval or authorization of, or filing, registration or qualification with, any
Governmental Authority or any other Person on the part of the Borrower or any
Consolidated Entity as a condition to the execution, delivery and performance
of, or consummation of the transactions contemplated by, or the validity or
enforceability of, the Loan Documents, which, if not obtained or effected, would
be reasonably likely to have a Material Adverse Effect, or if so, such consent,
approval, authorization, filing, registration or qualification has been duly
obtained or effected, as the case may be;
6.16. ERISA Requirement. (i) The execution and delivery of the Loan
Documents will not involve any prohibited transaction within the meaning of
ERISA, (ii) the Borrower and each ERISA Affiliate has fulfilled its obligations
under the minimum funding standards imposed by ERISA and each is in compliance
in all material respects with the applicable provisions of ERISA, and (iii) no
"Reportable Event," as defined in Section 4043(b) of Title IV of ERISA, has
occurred with respect to any plan maintained by the Borrower or any of its ERISA
Affiliate.
6.17. No Default. As of the date hereof, there does not exist any
Default or Event of Default.
6.18. Hazardous Materials. The Borrower and each Consolidated Entity is
in compliance with all applicable Environmental Laws in all material respects.
Neither the Borrower nor any Consolidated Entity has been notified of any
action, suit, proceeding or investigation which, and neither the Borrower nor
any Consolidated Entity is aware of any facts which, (i) calls into question, or
could reasonably be expected to call into question, compliance in all material
respects by the Borrower or any Consolidated Entity with any Environmental Laws,
(ii) which seeks, or could reasonably be expected to form the basis of a
meritorious proceeding, to suspend, revoke or terminate any material license,
permit or approval necessary for the generation, handling, storage, treatment or
disposal of any Hazardous Material, or (iii) seeks to cause, or could reasonably
be expected to form the basis of a meritorious proceeding to cause, any property
of the Borrower or any Consolidated Entity material to the operations of the
Borrower or such Consolidated Entity to be subject to any material restrictions
on ownership, use, occupancy or transferability under any Environmental Law.
6.19. Employment Matters. (a) Except as set forth on Schedule 6.19,
none of the employees of the Borrower or any Consolidated Entity is subject to
any collective bargaining agreement and there are no strikes, work stoppages,
election or decertification petitions or proceedings, unfair labor
50
charges, equal opportunity proceedings, or other material labor/employee related
controversies or proceedings pending or, to the best knowledge of the Borrower,
threatened against the Borrower or any Consolidated Entity or between the
Borrower or any Consolidated Entity and any of its employees, other than
employee grievances, controversies or proceedings arising in the ordinary course
of business which could not reasonably be likely, individually or in the
aggregate, to have a Material Adverse Effect; and
(b) Except to the extent a failure to maintain compliance would not
have a Material Adverse Effect, the Borrower and each Consolidated Entity is in
compliance in all respects with all applicable laws, rules and regulations
pertaining to labor or employment matters, including without limitation those
pertaining to wages, hours, occupational safety and taxation and there is
neither pending nor threatened any litigation, administrative proceeding or, to
the knowledge of the Borrower, any investigation, in respect of such matters
which, if decided adversely, could reasonably be likely, individually or in the
aggregate, to have a Material Adverse Effect.
6.20. RICO. Neither the Borrower nor any Consolidated Entity is engaged
in or has engaged in any course of conduct that could subject any of their
respective properties to any Lien, seizure or other forfeiture under any
criminal law, racketeer influenced and corrupt organizations law, civil or
criminal, or other similar laws.
6.21. Reimbursement from Third Party Payors. The accounts receivable of
the Borrower and each Consolidated Entity and each Contract Provider have been
and will continue to be adjusted to reflect reimbursement policies of third
party payors such as Medicare, Medicaid, Blue Cross/Blue Shield, private
insurance companies, health maintenance organizations, preferred provider
organizations, alternative delivery systems, managed care systems, government
contracting agencies and other third party payors. In particular, accounts
receivable relating to such third party payors do not and shall not exceed
amounts any obligee is entitled to receive under any capitation arrangement, fee
schedule, discount formula, cost-based reimbursement or other adjustment or
limitation to its usual charges.
6.22. Year 2000 Compliance. The Borrower has (i) initiated a review and
assessment of all areas within its and each of its Consolidated Entities'
business and operations (including those affected by suppliers, vendors, and
customers) that could be adversely affected by the "Year 2000 Problem" (that is,
the risk that computer applications used by the Borrower or any of its
Consolidated Entities (or suppliers, vendors and customers) may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999), (ii) developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis, and (iii) to
date, implemented that plan in accordance with that timetable. Based on the
foregoing, the Borrower believes that all computer applications (including those
of its suppliers, vendors and customers) that are material to its or any of its
Consolidated Entities' business and operations are reasonably expected on a
timely basis to be able to perform proper date-sensitive functions for all dates
before and after January 1, 2000 (that is, be "Year 2000 compliant"), except to
the extent that a failure to do so could not reasonably be expected to have a
Material Adverse Effect.
51
ARTICLE VII
Affirmative Covenants
Until the Short Term Credit Termination Date and termination of this
Agreement in accordance with the terms hereof, unless the Required Lenders shall
otherwise consent in writing, the Borrower will, and where applicable will cause
each Consolidated Entity to:
7.1. Financial Statements, Reports, Etc. The Borrower shall deliver or
cause to be delivered to the Agent and each Lender:
(a) Not later than 50 days after the end of each of the first
three quarters of each Fiscal Year, a balance sheet and a statement of
income of the Borrower and its Consolidated Entities on a consolidated
basis and a statement of cash flow of the Borrower and its Consolidated
Entities on a consolidated basis for such calendar quarter and for the
period beginning on the first day of such Fiscal Year and ending on the
last day of such quarter (in sufficient detail to indicate the
Borrower's and each Consolidated Entity's compliance with the financial
covenants set forth in Section 8.1), together with statements in
comparative form for the corresponding date or period in the preceding
Fiscal Year as summarized in the Borrower's Form 10-Q for the
corresponding period, and certified as to fairness, accuracy and
completeness by the chief executive officer, chief financial officer or
Treasurer of the Borrower.
(b) Not later than 100 days after the end of each Fiscal Year,
financial statements (including a balance sheet, a statement of income,
a statement of changes in shareholders' equity and a statement of cash
flow) of the Borrower and its Consolidated Entities on a consolidated
basis for such Fiscal Year (in sufficient detail to indicate the
Borrower's and each Consolidated Entity's compliance with the financial
covenants set forth in Section 8.1), together with statements in
comparative form as of the end of and for the preceding Fiscal Year as
summarized in the Borrower's Form 10-K for the corresponding period,
and accompanied by an opinion of certified public accountants
acceptable to the Agent, which opinion shall state in effect that such
financial statements (A) were audited using generally accepted auditing
standards, (B) were prepared in accordance with generally accepted
accounting principles applied on a Consistent Basis, and (C) present
fairly the financial condition and results of operations of the
Borrower and its Consolidated Entities for the periods covered.
(c) Together with the financial statements required by
subsections (a) and (b) above a compliance certificate duly executed by
the chief executive officer or chief financial officer or Treasurer of
the Borrower in the form of Exhibit I ("Compliance Certificate").
(d) Contemporaneously with the distribution thereof to the
Borrower's or any Consolidated Entity's stockholders or partners or the
filing thereof with the Securities and Exchange Commission, as the case
may be, copies of all statements, reports, notices and filings
distributed by the Borrower or any Consolidated Entity to its
stockholders or partners
52
or filed with the Securities and Exchange Commission (including reports
on SEC Forms 10-K, 10-Q and 8-K).
(e) Promptly after the Borrower knows or has reason to know of
the occurrence of any "reportable event" under Section 4043 of ERISA
applicable to the Borrower or any ERISA Affiliate, a certificate of the
president or chief financial officer of the Borrower setting forth the
details as to such "reportable event" and the action that the Borrower
or the ERISA Affiliate has taken or will take with respect thereto, and
promptly after the filing or receiving thereof, copies of all reports
and notices that the Borrower and each Consolidated Entity files under
ERISA with the Internal Revenue Service or the PBGC or the United
States Department of Labor.
(f) Promptly after the Borrower or any of its Consolidated
Entities becomes aware of the commencement thereof, notice of any
investigation, action, suit or proceeding before any Governmental
Authority involving the condemnation or taking under the power of
eminent domain of any of its property or the revocation or suspension
of any permit, license, certificate of need or other governmental
requirement applicable to any Facility.
(g) Within 10 days of the receipt by the Borrower or any of
its Consolidated Entities, copies of all material deficiency notices,
compliance orders or adverse reports issued by any Governmental
Authority or accreditation commission having jurisdiction over
licensing, accreditation or operation of a Facility or by any
Governmental Authority or private insurance company pursuant to a
provider agreement, which, if not promptly complied with or cured,
could result in the suspension or forfeiture of any license,
certification or accreditation necessary in order for such Facility to
carry on its business as then conducted or the termination of any
material insurance or reimbursement program available to such Facility.
(h) Such other information regarding any Facility or the
financial condition or operations of the Borrower or its Consolidated
Entities as the Agent shall reasonably request from time to time or at
any time.
7.2. Maintain Properties. Maintain all properties necessary to its
operations in good working order and condition, make all needed repairs,
replacements and renewals to such properties, and maintain free from Liens all
trademarks, trade names, service marks, patents, copyrights, trade secrets,
know-how, and other intellectual property and proprietary information (or
adequate licenses thereto), in each case as are reasonably necessary to conduct
its business as currently conducted or as contemplated hereby, all in accordance
with customary and prudent business practices.
7.3. Existence, Qualification, Etc. Except as otherwise expressly
permitted under Section 8.4, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence and all material rights
and franchises, and maintain its license or qualification to do business as a
foreign corporation and good standing in each jurisdiction in which its
ownership or lease of property or the nature of its business makes such license
or qualification necessary.
53
7.4. Regulations and Taxes. Comply in all material respects with or
contest in good faith all statutes and governmental regulations and pay all
taxes, assessments, governmental charges, claims for labor, supplies, rent and
any other obligation which, if unpaid, would become a Lien against any of its
properties except liabilities being contested in good faith by appropriate
proceedings diligently conducted and against which adequate reserves acceptable
to the Borrower's independent certified public accountants have been established
unless and until any Lien resulting therefrom attaches to any of its property
and becomes enforceable by its creditors.
7.5. Insurance. At all times maintain in force, and pay all premiums
and costs related to, insurance coverages in amounts deemed by the management of
the Borrower to be sufficient in accordance with usual and customary business
practices and any other coverages required under applicable governmental
requirements. The Borrower shall deliver to the Agent annually on or before each
anniversary date of this Agreement, and at such other time or times as the Agent
may request (but not more often than monthly), a certificate of the president or
chief financial officer of the Borrower setting out in such detail as the Agent
may reasonably require a description of all insurance coverages maintained by
the Borrower and each Consolidated Entity. The Agent shall have no obligation to
give the Borrower or any Consolidated Entity notice of any notification received
by the Agent with respect to any insurance policies or take any steps to protect
the Borrower's or any Consolidated Entity's interests under such policies.
7.6. True Books. Keep true books of record and account in which full,
true and correct entries will be made of all of its dealings and transactions,
and set up on its books such reserves as may be required by GAAP with respect to
doubtful accounts and all taxes, assessments, charges, levies and claims and
with respect to its business in general, and include such reserves in interim as
well as year-end financial statements.
7.7. Right of Inspection. Permit any Person designated by the Agent to
visit and inspect any of the properties, corporate books and financial reports
of the Borrower or any Subsidiary and to discuss its affairs, finances and
accounts with its principal officers and independent certified public
accountants, all at reasonable times, at reasonable intervals and with
reasonable prior notice.
7.8. Observe all Laws. Conform to and duly observe, and cause all
Contract Providers to conform to and duly observe, in all material respects all
laws, rules and regulations and all other valid requirements of any regulatory
authority with respect to the conduct of its business, including without
limitation Titles XVIII and XIX of the Social Security Act, Medicare
Regulations, Medicaid Regulations, and all laws, rules and regulations of
Governmental Authorities pertaining to the licensing of professional and other
health care providers, except where the failure to do so could not reasonably be
likely to have a Material Adverse Effect.
7.9. Governmental Licenses. Obtain and maintain, and use reasonable
effort to cause all Contract Providers to obtain and maintain, all licenses,
permits, certifications and approvals of all applicable Governmental Authorities
as are required for the conduct of its business as currently conducted and
herein contemplated, including without limitation professional licenses,
Medicaid Certifications and Medicare Certifications, except where the failure to
do so could not reasonably be likely to have a Material Adverse Effect.
54
7.10. Covenants Extending to Other Persons. Cause each of its
Consolidated Entities to do with respect to itself, its business and its assets,
each of the things required of the Borrower in Sections 7.2 through 7.9, 7.15
and 7.16 inclusive.
7.11. Officer's Knowledge of Default. Upon any Executive Officer of the
Borrower obtaining knowledge of any Default or Event of Default or any default
or event of default under any other obligation of the Borrower or any
Consolidated Entity to any Lender, or any event, development or occurrence which
could reasonably be expected to have a Material Adverse Effect, cause such
Executive Officer or an Authorized Representative to promptly notify the Agent
of the nature thereof, the period of existence thereof, and what action the
Borrower or such Consolidated Entity proposes to take with respect thereto. The
Agent shall notify the Lenders of receipt of such notice.
7.12. Suits or Other Proceedings. Upon any Executive Officer of the
Borrower obtaining knowledge of any litigation or other proceedings being
instituted (i) against the Borrower or any Subsidiary, or any attachment, levy,
execution or other process being instituted against any assets of the Borrower
or any Subsidiary or Controlled Partnership, which if adversely determined could
reasonably be likely to have a Material Adverse Effect or (ii) against the
Borrower, any Subsidiary or any Contract Provider (but only with respect to
services provided to the Borrower or any Consolidated Entity) to suspend, revoke
or terminate any Medicaid Provider Agreement, Medicaid Certification, Medicare
Provider Agreement or Medicare Certification, which suspension, revocation or
termination could reasonably be likely to have a Material Adverse Effect, cause
such Executive Officer or an Authorized Representative to promptly deliver to
the Agent written notice thereof stating the nature and status of such
litigation, dispute, proceeding, levy, execution or other process.
7.13. Notice of Discharge of Hazardous Material or Environmental
Complaint. Promptly provide to the Agent true, accurate and complete copies of
any and all notices, complaints, orders, directives, claims, or citations
received by the Borrower or any Consolidated Entity relating to any of the
following which is likely to have a Material Adverse Effect: (a) violation or
alleged violation by the Borrower or any Consolidated Entity of any applicable
Environmental Law; (b) release or threatened release by the Borrower or any
Consolidated Entity, or at any Facility or property owned or leased or operated
by the Borrower or any Consolidated Entity, of any Hazardous Material, except
where occurring legally; or (c) liability or alleged liability of the Borrower
or any Consolidated Entity for the costs of cleaning up, removing, remediating
or responding to a release of Hazardous Materials.
7.14. Environmental Compliance. If the Borrower or any Consolidated
Entity shall receive any letter, notice, complaint, order, directive, claim or
citation from any Governmental Authority alleging that the Borrower or any
Consolidated Entity has violated any Environmental Law or is liable for the
costs of cleaning up, removing, remediating or responding to a release of
Hazardous Materials within the time period permitted by the applicable
Environmental Law or the Governmental Authority responsible for enforcing such
Environmental Law, remove or remedy, or cause the applicable Consolidated Entity
to remove or remedy, such violation or release or satisfy such liability unless
and only during the period that the applicability of such Environmental Law, the
fact of such violation or liability or what is required to remove or remedy such
violation is being
55
contested by the Borrower or the applicable Consolidated Entity by appropriate
proceedings diligently conducted and all reserves with respect thereto as may be
required under GAAP, if any, have been made, and no Lien in connection therewith
shall have attached to any property of the Borrower or the applicable
Consolidated Entity which shall have become enforceable against creditors of
such Person.
7.15. Continuation of Current Business. Not engage in any business
other than the business now being conducted by the Borrower (including its
Consolidated Entities) and other businesses directly related to such services.
7.16. Management Contracts. Not enter into any agreement whereby the
management, supervision or control of its business or any Facility shall be
delegated to or placed in any persons other than its governing body and
officers, the Borrower or a Consolidated Entity, except that management of the
Facility owned by Vanderbilt ▇▇▇▇▇▇▇▇▇▇ Rehabilitation Hospital, L.P. is vested
in part in a Governance Committee and in part in a Subsidiary of the Borrower
pursuant to the applicable limited partnership agreement and a management
agreement.
7.17. Year 2000 Compliance. The Borrower will promptly notify the Agent
in the event the Borrower discovers or determines that any computer application
(including those of its suppliers, vendors, and customers) that is material to
its or any of its Consolidated Entities' business and operations will not be
Year 2000 compliant, except to the extent that such failure could not reasonably
be expected to have a Material Adverse Effect.
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ARTICLE VIII
Negative Covenants
Until the Short Term Credit Termination Date and termination of this
Agreement in accordance with the terms hereof, unless the Required Lenders shall
otherwise consent in writing, the Borrower will not, nor will it permit any
Consolidated Entity to:
8.1. Financial Covenants.
(a) Minimum Net Worth. Permit Consolidated Net Worth to be
less than $2,750,000,000 plus (A) 50% of Consolidated Net Income (if
positive and including for purposes of this Section 8.1(a) only any
extraordinary gain), on an ongoing basis for each fiscal quarter
beginning with the fiscal quarter ended June 30, 1998, plus (B) the
aggregate amount of all increases, if any, in its capital accounts
resulting from the issuance of Capital Stock or conversion of debt into
Capital Stock or other securities properly classified as equity in
accordance with generally accepted accounting principles, or from the
sale or other disposition of treasury shares, from the date of this
Agreement through the date of determination plus (c) without
duplication, any addition to Consolidated Stockholders' Equity
resulting from an Acquisition after the Closing Date which shall be
accounted for on a pooling-of-interests basis.
(b) Consolidated EBITDA to Consolidated Interest Expense
Ratio. Permit the ratio of Consolidated EBITDA to Consolidated Interest
Expense at any time to be less than or equal to 2.50 to 1.00.
(c) Consolidated Indebtedness to Consolidated Total Capital.
Permit the ratio of Consolidated Indebtedness to Consolidated Total
Capital at any time to equal or exceed 0.65 to 1.00.
8.2. Investments and Loans. Purchase or otherwise acquire any stock,
security, obligation or evidence of indebtedness of, make any capital
contribution to, own any equity interest in, or make any loan or advance to, any
other Person; provided, however, that the Borrower and its Consolidated Entities
may (A) continue to hold all stock of and own partnership interests in the
Persons that constitute Consolidated Entities on the Closing Date and Persons
that thereafter become Consolidated Entities as a result of Acquisitions
permitted under Section 8.8; (B) make Permitted Investments; and (C) make other
investments in an amount not exceeding 15% of Consolidated Total Assets.
8.3. Indebtedness. Permit to exist Indebtedness, howsoever evidenced,
of Subsidiaries and Controlled Partnerships (exclusive of Indebtedness to the
Borrower) in an aggregate amount at any time exceeding the greater of
$70,000,000 or 15% of Consolidated Tangible Net Worth, excluding, however,
Indebtedness of Subsidiaries and Controlled Partnerships existing as of the date
hereof and described on Schedule 8.3.
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8.4. Disposition of Assets. Sell, lease or otherwise dispose of assets
in excess of 15% of Consolidated Total Assets as at the Closing Date plus an
amount equal to 15% of assets acquired following the Closing Date.
8.5. Consolidation or Merger. Merge or consolidate with another Person
unless (i) in the case of a merger or consolidation of the Borrower, the
Borrower is the continuing or surviving entity, (ii) in the case of a merger or
consolidation involving a Consolidated Entity, the continuing or surviving
entity is majority-owned by the Borrower (with such majority ownership
constituting a controlling interest), and (iii) before and after giving effect
to the proposed merger or consolidation, no Default or Event of Default shall
exist.
8.6. Liens. Incur, create, assume or permit to exist any Lien upon any
of its accounts receivable, contract rights, chattel paper, inventory,
equipment, instruments, general intangibles or other personal or real property
of any character, whether now owned or hereafter acquired, other than (i) Liens
that constitute Permitted Encumbrances, and (ii) Liens on assets which at no
time have a book value of greater than 5% of Consolidated Total Assets.
8.7. Dividends and Distributions. Permit any Consolidated Entity to be
or become subject to any restrictions on the ability of such Consolidated Entity
to pay dividends or to make partnership distributions other than as required by
this Agreement or restrictions imposed by applicable law.
8.8. Acquisitions. Enter into any agreement to acquire any Person or
Facility unless (i) the Person or Facility to be acquired is in substantially
the same line of business presently engaged in by the Borrower or its
Consolidated Entities, and (ii) if the Cost of Acquisition exceeds $150,000,000
the Borrower shall have furnished to the Agent (A) pro forma historical
financial statements as of the end of the most recently completed Fiscal Year of
the Borrower and most recent interim fiscal quarter, if applicable, giving
effect to such Acquisition and (B) a Compliance Certificate prepared on an
historical pro forma basis giving effect to such Acquisition, which certificate
shall demonstrate that no Default or Event of Default would exist immediately
after giving effect thereto.
8.9. Restricted Payments. Make any Restricted Payment or apply or set
apart any of their assets therefor or agree to do any of the foregoing;
provided, however, the Borrower may make the Restricted Payments in any Fiscal
Year (on a non-cumulative basis, with the effect that amounts not paid in any
Fiscal Year may not be carried over for payment in a subsequent period) if
immediately prior and immediately after giving effect thereto no Default or
Event of Default shall exist or occur and be continuing.
8.10. Compliance with ERISA. With respect to any Pension Plan, Employee
Benefit Plan or Multiemployer Plan:
(a) permit the occurrence of any Termination Event which would
result in a liability on the part of the Borrower or any ERISA
Affiliate to the PBGC which liability would have a Material Adverse
Effect; or
58
(b) permit the present value of all benefit liabilities under
all Pension Plans to exceed the current value of the assets of such
Pension Plans allocable to such benefit liabilities; or
(c) permit any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code) with respect to any
Pension Plan, whether or not waived; or
(d) fail to make any contribution or payment to any
Multiemployer Plan which the Borrower or any ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto; or
(e) engage, or permit any Subsidiary or any ERISA Affiliate to
engage, in any prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code for which a civil penalty pursuant to Section
502(I) of ERISA or a tax pursuant to Section 4975 of the Code may be
imposed; or
(f) permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend any
Employee Benefit Plan which establishment or amendment could result in
liability to the Borrower or any ERISA Affiliate or increase the
obligation of the Borrower or any ERISA Affiliate to a Multiemployer
Plan which liability or increase, individually or together with all
similar liabilities and increases, is in excess of $5,000,000; or
(g) fail, or permit any Subsidiary or any ERISA Affiliate to
fail, to establish, maintain and operate each Employee Benefit Plan in
compliance in all material respects with the provisions of ERISA, the
Code, all applicable Foreign Benefit Laws and all other applicable laws
and the regulations and interpretations thereof.
8.11. Fiscal Year. Change its Fiscal Year (other than a change to
conform the fiscal year of a Consolidated Entity to that of the Borrower).
8.12. Dissolution, etc. Wind up, liquidate or dissolve (voluntarily or
involuntarily) or commence or suffer any proceedings seeking any such winding
up, liquidation or dissolution, except in connection with a merger or
consolidation permitted pursuant to Section 8.5 or where the liquidation or
dissolution of a Consolidated Entity occurs in the ordinary course of business
and does not have a Material Adverse Effect.
8.13. Transactions with Affiliates. Other than transactions permitted
under Sections 8.2 and 8.5, enter into any transaction after the Closing Date,
including, without limitation, the purchase, sale, lease or exchange of
property, real or personal, or the rendering of any service, with any Affiliate
of the Borrower, except (a) that such Persons may render services to the
Borrower for compensation at the same rates generally paid by Persons engaged in
the same or similar businesses for the same or similar services, (b) that the
Borrower may render services to such Persons for compensation at the same rates
generally charged by the Borrower and (c) in either case in the
59
ordinary course of business and pursuant to the reasonable requirements of the
Borrower's business consistent with past practice of the Borrower and upon fair
and reasonable terms no less favorable to the Borrower than would be obtained in
a comparable arm's-length transaction with a Person not an Affiliate;
60
ARTICLE IX
Events of Default and Acceleration
9.1. Events of Default. If any one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Authority), that is to say:
(a) the Borrower shall fail to pay (i) when due any principal
payable under the terms of any Note or any Reimbursement Obligation or
(ii) not later than five Business Days of the date when due any
interest or fees payable under the terms of any Note or any other
amount payable under this Agreement or any other of the other
Obligations or any other amount owed to the Agent or any of the Lenders
under or in connection with the Loan Documents; or
(b) The Borrower or any Material Group shall default in the
performance or observance of any other provision of this Agreement
(other than the provisions of Article VII and Article VIII), except as
covered by clause (a) above, and shall not cure such default within
thirty days after the first to occur of (i) the date the Agent or any
Lender gives written or telephonic notice of such default to the
Borrower or (ii) the date the Borrower otherwise has notice thereof; or
(c) the Borrower or any Material Group shall default in the
observance or performance of any provision in Article VII or Article
VIII; or
(d) the Agent shall reasonably determine that any statement,
certification, representation or warranty contained herein, or in any
of the other Loan Documents or in any report, financial statement,
certificate or other instrument delivered to the Agent or any Lender by
or on behalf of the Borrower or any Consolidated Entity, was misleading
or untrue in any material respect at the time it was made or deemed
made; or
(e) default shall be made (i) in the payment of any
Indebtedness exceeding $5,000,000 (other than the Obligations) of the
Borrower or any Consolidated Entity when due or (ii) in the
performance, observance or fulfillment of any term or covenant
contained in any agreement or instrument under or pursuant to which any
such Indebtedness may have been issued, created, assumed, guaranteed or
secured by Borrower or any Consolidated Entity, if the effect of such
default in the performance, observance or fulfillment is to accelerate
the maturity of such Indebtedness or to permit the holder thereof to
cause such Indebtedness to become due prior to its stated maturity, and
such default shall not be cured within 10 days after the occurrence of
such default, and the amount of the Indebtedness involved exceeds
$5,000,000; or
61
(f) the Borrower or any Material Group shall fail to pay or
admit in writing its inability to pay its or their debts generally as
they come due, or a receiver, trustee, liquidator or other custodian
shall be appointed for the Borrower or any Material Group or for any of
the property of the Borrower or any Material Group or a petition in
bankruptcy, or under any insolvency law, shall be filed by or against
the Borrower or any Material Group or the Borrower or any Material
Group shall apply for the benefit of, or take advantage of, any law for
relief of debtors, or enter into an arrangement or composition with, or
make an assignment for the benefit of, creditors; or
(g) final judgment for the payment of money in excess of any
aggregate of $500,000 shall be rendered against the Borrower or any
Material Group, and the same shall remain undischarged for a period of
30 days during which execution shall not be effectively stayed; or
(h) an event of default, as therein defined, shall occur under
any other Loan Document; or
(i) any of the Notes or LC Account Agreement shall be deemed
unenforceable by a court of competent jurisdiction or shall no longer
be effective; or
(j) the Borrower or any Consolidated Entity shall, other than
in the ordinary course of business (as determined by past practices),
suspend all or any part of its operations material to the conduct of
the business of the Borrower and its Consolidated Entities, taken as a
whole, for a period of more than 60 days;
(k) the Borrower or any Consolidated Entity shall breach any
of the material terms or conditions of any agreement under which any
Rate Hedging Obligations are created and such breach shall continue
beyond any grace period, if any, relating thereto pursuant to the terms
of such agreement, or the Borrower or any Consolidated Entity shall
disaffirm or seek to disaffirm any such agreement or any of its
obligations thereunder;
(l) there shall occur (i) any cancellation, revocation,
suspension or termination of any Medicare Certification, Medicare
Provider Agreement, Medicaid Certification or Medicaid Provider
Agreement affecting the Borrower, any Subsidiary or any Contract
Provider, or (ii) the loss of any other permits, licenses,
authorizations, certifications or approvals from any federal, state or
local Governmental Authority or termination of any contract with any
such authority, in either case which cancellation, revocation,
suspension, termination or loss (X) in the case of any suspension or
temporary loss only, continues for a period greater than 60 days and
(Y) results in the suspension or termination of operations of the
Borrower or any Subsidiary or in the failure of the Borrower or any
Subsidiaries or any Contract Provider to be eligible to participate in
Medicare or Medicaid programs or to accept assignments of rights to
reimbursement under Medicaid Regulations or Medicare Regulations, if
and only if such Person, in the ordinary course of business,
participates in the Medicare or Medicare programs or accepts
assignments of rights to reimbursement thereunder; provided that any
such events described in this Section 9.1(l) shall constitute an
62
Event of Default only if such event shall result either singly or in
the aggregate in the termination, cancellation, suspension or material
impairment of operations or rights to reimbursement which produce 5% or
more of the Borrower's gross revenues (on an annualized basis); or
(m) there shall occur a Change of Control;
then, and in any such event and at any time thereafter, if such Event of Default
or any other Event of Default shall then be continuing and shall have not been
waived,
(A) either or both of the following actions may be taken: (i)
the Agent, with the consent of the Required Lenders, may, and at the
direction of the Required Lenders shall, declare any obligation of the
Lenders and the Issuing Bank to make further Loans or to issue
additional Letters of Credit terminated, whereupon the obligation of
each Lender to make further Loans and of the Issuing Bank to issue
additional Letters of Credit hereunder shall terminate immediately, and
(ii) the Agent shall at the direction of the Required Lenders, at their
option, declare by notice to the Borrower any or all of the Obligations
to be immediately due and payable, and the same, including all interest
accrued thereon and all other obligations of the Borrower to the Agent
and the Lenders, shall forthwith become immediately due and payable
without presentment, demand, protest, notice or other formality of any
kind, all of which are hereby expressly waived, anything contained
herein or in any instrument evidencing the Obligations to the contrary
notwithstanding; provided, however, that notwithstanding the above, if
there shall occur an Event of Default under clause (f) above, then the
obligation of the Lenders to make Loans and of the Issuing Bank to
issue Letters of Credit hereunder shall automatically terminate and any
and all of the Obligations shall be immediately due and payable without
the necessity of any action by the Agent or the Required Lenders or
notice to the Agent or the Lenders; and
(B) the Borrower shall, upon demand of the Agent or the
Required Lenders, deposit cash with the Agent in an amount equal to the
aggregate amount remaining undrawn under all outstanding Letters of
Credit, as collateral security for the repayment of any future drawings
or payments under such Letters of Credit, and such amounts shall be
held by the Agent pursuant to the terms of the LC Account Agreement;
and
(C) the Agent and each of the Lenders shall have all of the
rights and remedies available under the Loan Documents or under any
applicable law.
9.2. Agent to Act. In case any one or more Events of Default shall
occur and be continuing and not have been waived, the Agent may, and at the
direction of the Required Lenders shall, proceed to protect and enforce their
rights or remedies either by suit in equity or by action at law, or both,
whether for the specific performance of any covenant, agreement or other
provision contained herein or in any other Loan Document, or to enforce the
payment of the Obligations or any other legal or equitable right or remedy.
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9.3. Cumulative Rights. No right or remedy herein conferred upon the
Lenders or the Agent is intended to be exclusive of any other rights or remedies
contained herein or in any other Loan Document, and every such right or remedy
shall be cumulative and shall be in addition to every other such right or remedy
contained herein and therein or now or hereafter existing at law or in equity or
by statute, or otherwise.
9.4. No Waiver. No course of dealing between the Borrower and any
Lender or the Agent or any failure or delay on the part of any Lender or the
Agent in exercising any rights or remedies under any Loan Document or otherwise
available to it shall operate as a waiver of any rights or remedies and no
single or partial exercise of any rights or remedies shall operate as a waiver
or preclude the exercise of any other rights or remedies hereunder or of the
same right or remedy on a future occasion.
9.5. Allocation of Proceeds. If an Event of Default has occurred and
not been waived, and the maturity of the Notes has been accelerated pursuant to
this Article IX, all payments received by the Agent hereunder, in respect of any
principal of or interest on the Obligations or any other amounts payable by the
Borrower hereunder, shall be applied by the Agent in the following order:
(i) amounts due to the Lenders pursuant to Section 2.9 or
Section 11.6;
(ii) amounts due to the Agent and the Issuing Bank pursuant to
Section 10.8, Section 3.3 and Section 3.4;
(iii) payments of interest, to be applied pro rata based on
the proportion which the principal amount of outstanding Loans and
Reimbursement Obligations of each Lender bears to the total of all
outstanding Loans and Reimbursement Obligations;
(iv) payments of principal, to be applied pro rata based on
the proportion which the principal amount of outstanding Loans and
Reimbursement Obligations of each Lender bears to the total of all
outstanding Loans and Reimbursement Obligations;
(v) payment of cash amounts to the Agent pursuant to Section
9.1(B);
(vi) payments of all other amounts due under this Agreement,
if any, to be applied in accordance with each Lender's pro rata share
of all such other amounts due to the Lenders; and
(vii) any surplus remaining after application as provided for
herein, to the Borrower or otherwise as may be required by applicable
law.
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ARTICLE X
The Agent
10.1. Appointment, Powers, and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent under this
Agreement and the other Loan Documents with such powers and discretion as are
specifically delegated to the Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto. The Agent (which term as used in this sentence and in Section 10.5 and
the first sentence of Section 10.6 hereof shall include its affiliates and its
own and its affiliates' officers, directors, employees, and agents): (a) shall
not have any duties or responsibilities except those expressly set forth in this
Agreement and shall not be a trustee or fiduciary for any Lender; (b) shall not
be responsible to the Lenders for any recital, statement, representation, or
warranty (whether written or oral) made in or in connection with any Loan
Document or any certificate or other document referred to or provided for in, or
received by any of them under, any Loan Document, or for the value, validity,
effectiveness, genuineness, enforceability, or sufficiency of any Loan Document,
or any other document referred to or provided for therein or for any failure by
any Person to perform any of its obligations thereunder; (c) shall not be
responsible for or have any duty to ascertain, inquire into, or verify the
performance or observance of any covenants or agreements by any Person or the
satisfaction of any condition or to inspect the property (including the books
and records) of any Person; (d) shall not be required to initiate or conduct any
litigation or collection proceedings under any Loan Document; and (e) shall not
be responsible for any action taken or omitted to be taken by it under or in
connection with any Loan Document, except for its own negligence or willful
misconduct. The Agent may employ agents and attorneys-in-fact and shall not be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care.
10.2. Reliance by Agent. The Agent shall be entitled to rely upon any
certification, notice, instrument, writing, or other communication (including,
without limitation, any thereof by telephone or telefacsimile) believed by it to
be genuine and correct and to have been signed, sent or made by or on behalf of
the proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants, and other experts selected by the Agent. The Agent may
deem and treat the payee of any Note as the holder thereof for all purposes
hereof unless and until the Agent receives and accepts an Assignment and
Acceptance executed in accordance with Section 11.1 hereof. As to any matters
not expressly provided for by this Agreement, the Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding on all of the Lenders; provided, however, that the
Agent shall not be required to take any action that exposes the Agent to
personal liability or that is contrary to any Loan Document or applicable law or
unless it shall first be indemnified to its satisfaction by the Lenders against
any and all liability and expense which may be incurred by it by reason of
taking any such action.
10.3. Defaults. The Agent shall not be deemed to have knowledge or
notice of the occurrence of a Default or Event of Default unless the Agent has
received written notice from a
65
Lender or the Borrower specifying such Default or Event of Default and stating
that such notice is a "Notice of Default". In the event that the Agent receives
such a notice of the occurrence of a Default or Event of Default, the Agent
shall give prompt notice thereof to the Lenders. The Agent shall (subject to
Section 10.2 hereof) take such action with respect to such Default or Event of
Default as shall reasonably be directed by the Required Lenders, provided that,
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable in the best interest of the Lenders.
10.4. Rights as Lender. With respect to its Short Term Credit
Commitment and the Loans made by it, NationsBank (and any successor acting as
Agent) in its capacity as a Lender hereunder shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not acting as the Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Agent in its individual capacity.
NationsBank (and any successor acting as Agent) and its affiliates may (without
having to account therefor to any Lender) accept deposits from, lend money to,
make investments in, provide services to, and generally engage in any kind of
lending, trust, or other business with the Borrower or any of its Subsidiaries
or affiliates as if it were not acting as Agent, and NationsBank (and any
successor acting as Agent) and its affiliates may accept fees and other
consideration from the Borrower or any of its Subsidiaries or affiliates for
services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.
10.5. Indemnification. The Lenders agree to indemnify the Agent (to the
extent not reimbursed under Section 11.12 hereof, but without limiting the
obligations of the Borrower under such Section) ratably in accordance with their
respective Short Term Credit Commitments, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, reasonable
costs and expenses (including attorneys' fees), or disbursements of any kind and
nature whatsoever that may be imposed on, incurred by or asserted against the
Agent (including by any Lender) in any way relating to or arising out of any
Loan Document or the transactions contemplated thereby or any action taken or
omitted by the Agent under any Loan Document; provided that no Lender shall be
liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Person to be indemnified. Without
limitation of the foregoing, each Lender agrees to reimburse the Agent promptly
upon demand for its ratable share of any costs or expenses payable by the
Borrower under Section 11.6, to the extent that the Agent is not promptly
reimbursed for such costs and expenses by the Borrower. The agreements contained
in this Section shall survive payment in full of the Loans and all other amounts
payable under this Agreement.
10.6.Non-Reliance on Agent and Other Lenders. Each Lender agrees that
it has, independently and without reliance on the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Borrower and its Subsidiaries and decision to enter
into this Agreement and that it will, independently and without reliance upon
the Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under the Loan Documents. Except for
notices, reports, and other documents and information expressly required to be
furnished to the Lenders by the Agent hereunder, the Agent
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shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the affairs, financial condition, or business of
the Borrower or any of its Subsidiaries or affiliates that may come into the
possession of the Agent or any of its affiliates.
10.7. Resignation of Agent. The Agent may resign at any time by giving
notice thereof to the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent subject to
the approval of the Borrower so long as no Default or Event of Default shall
have occurred and be continuing, such approval not to be unreasonably withheld.
If no successor Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent which shall be a commercial bank
organized under the laws of the United States of America having combined capital
and surplus of at least $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor, such successor shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges, and duties of
the retiring Agent, and the retiring Agent shall be discharged from its duties
and obligations hereunder. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article X shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as Agent.
10.8. Fees. The Borrower agrees to pay to the Agent, for its individual
account, an annual Administrative Agent's fee as from time to time agreed to by
the Borrower and Agent in writing.
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ARTICLE XI
Miscellaneous
11.1. Assignments and Participations. (a) Each Lender may assign to one
or more Eligible Assignees all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its Loans,
its Note, and its Short Term Credit Commitment); provided, however, that
(i) each such assignment shall be to an Eligible Assignee;
(ii) except in the case of an assignment to another Lender or
an assignment of all of a Lender's rights and obligations under this Agreement,
any such partial assignment shall be in an amount at least equal to $5,000,000
or an integral multiple of $1,000,000 in excess thereof;
(iii) each such assignment by a Lender shall be of a constant,
and not varying, percentage of all of its rights and obligations under this
Agreement and the Note; and
(iv) the parties to such assignment shall execute and deliver
to the Agent for its acceptance an Assignment and Acceptance in the form of
Exhibit B hereto, together with any Note subject to such assignment and a
processing fee of $3,000.
Upon execution, delivery, and acceptance of such Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of such
assignment, have the obligations, rights, and benefits of a Lender hereunder and
the assigning Lender shall, to the extent of such assignment, relinquish its
rights and be released from its obligations under this Agreement. Upon the
consummation of any assignment pursuant to this Section, the assignor, the Agent
and the Borrower shall make appropriate arrangements so that, if required, new
Notes are issued to the assignor and the assignee. If the assignee is not
incorporated under the laws of the United States of America or a state thereof,
it shall deliver to the Borrower and the Agent certification as to exemption
from deduction or withholding of Taxes in accordance with Section 4.6.
(b) The Agent shall maintain at its address referred to in Section 11.2
a copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Short Term Credit Commitment of, and principal amount of the Loans owing to,
each Lender from time to time (the "Register"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose name is recorded
in the Register as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(c) Upon its receipt of an Assignment and Acceptance executed by the
parties thereto, together with any Note subject to such assignment and payment
of the processing fee, the Agent shall, if such Assignment and Acceptance has
been completed and is in substantially the form of
68
Exhibit B hereto, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the parties thereto.
(d) Each Lender may sell participations to one or more Persons in all
or a portion of its rights, obligations or rights and obligations under this
Agreement (including all or a portion of its Short Term Credit Commitment or its
Loans); provided, however, that (i) any such participation in a Short Term
Credit Commitment, but not its Loans, shall be in an amount at least equal to
$5,000,000 or an integral multiple of $1,000,000 in excess thereof, (ii) such
Lender's obligations under this Agreement shall remain unchanged, (iii) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iv) the participant shall be entitled to the
benefit of the yield protection provisions contained in Article IV and the right
of set-off contained in Section 11.4, and (v) the Borrower shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement, and such Lender shall retain the
sole right to enforce the obligations of the Borrower relating to its Loans and
its Note and to approve any amendment, modification, or waiver of any provision
of this Agreement (other than amendments, modifications, or waivers decreasing
the amount of principal of or the rate at which interest is payable on such
Loans or Note, extending any scheduled principal payment date or date fixed for
the payment of interest on such Loans or Note, or extending its Short Term
Credit Commitment).
(e) Notwithstanding any other provision set forth in this Agreement,
any Lender may at any time assign and pledge all or any portion of its Loans and
its Note to any Federal Reserve Bank as collateral security pursuant to
Regulation A and any Operating Circular issued by such Federal Reserve Bank. No
such assignment shall release the assigning Lender from its obligations
hereunder.
(f) Any Lender may furnish any information concerning the Borrower or
any of its Subsidiaries in the possession of such Lender from time to time to
assignees and participants (including prospective assignees and participants);
provided, however that such Lender shall (a) take reasonable and customary
measures to safeguard the confidentiality of non-public information, (b) advise
such assignees or participants of the confidentiality of such non-public
information and (c) obtain the agreement of such assignees or participants to
maintain the confidentiality thereof.
11.2. Notices. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective (i) on the day on which delivered
(including hand delivery by commercial courier service) to such party (against
receipt therefor), (ii) on the date of receipt at such address, telefacsimile
number or telex number as may from time to time be specified by such party in
written notice to the other parties hereto or otherwise received), in the case
of notice by telegram, telefacsimile or telex, respectively (where the receipt
of such message is verified by return), or (iii) on the fifth Business Day after
the day on which mailed, if sent prepaid by certified or registered mail, return
receipt requested, in each case delivered, transmitted or mailed, as the case
may be, to the address, telex number or telefacsimile number, as appropriate,
set forth below or such other address or number as such party shall specify by
notice hereunder:
(a) if to the Borrower:
69
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice President, Chief
Financial Officer and Treasurer
HEALTHSOUTH Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
HEALTHSOUTH Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
(b) if to the Agent at:
One Independence Center, 15th Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Agency Services
Reference: HEALTHSOUTH Corporation
(c) if to the Lenders:
At the addresses set forth on the signature pages
hereof and on the signature page of each Assignment
and Acceptance.
11.3. No Waiver. No failure or delay on the part of the Agent, any
Lender or the Borrower in the exercise of any right, power or privilege
hereunder shall operate as a waiver of any such right, power or privilege nor
shall any such failure or delay preclude any other or further exercise thereof.
The rights and remedies herein provided are cumulative and not exclusive of any
rights or remedies provided by law.
11.4. Rights of Setoff; Adjustments. (a) The Borrower agrees that the
Agent and each Lender shall have a Lien for all the Obligations of the Borrower
upon all deposits or deposit accounts, of any kind, or any interest in any
deposits or deposit accounts thereof, now or hereafter pledged, mortgaged,
transferred or assigned to the Agent or such Lender or otherwise in the
possession or control of the Agent or such Lender (other than for safekeeping)
for any purpose for the account or benefit of the Borrower and including any
balance of any deposit account or of any credit of the Borrower with the Agent
or such Lender, whether now existing or hereafter established, hereby
authorizing the Agent and each Lender at any time or times from and after the
occurrence of a Default or an Event of Default with or without prior notice to
set off against and apply such balances or any part thereof to such of the
Obligations of the Borrower to the Lenders then past due and in such amounts as
they may elect, and whether or not the collateral or the responsibility of other
Person primarily, secondarily or otherwise liable may be deemed adequate. For
the purposes of this
70
paragraph, all remittances and property shall be deemed to be in the possession
of the Agent or such Lender as soon as the same may be put in transit to it by
mail or carrier or by other bailee.
(b) If any Lender (a "benefited Lender") shall at any time receive any
payment of all or part of the Loans owing to it, or interest thereon, or receive
any collateral in respect thereof (whether voluntarily or involuntarily, by
set-off, or otherwise), in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of such other
Lender's Loans owing to it, or interest thereon, such benefitted Lender shall
purchase for cash from the other Lenders a participating interest in such
portion of each such other Lender's Loans owing to it, or shall provide such
other Lenders with the benefits of any such collateral, or the proceeds thereof,
as shall be necessary to cause such benefitted Lender to share the excess
payment or benefits of such collateral or proceeds ratably with each of the
Lenders; provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such benefitted Lender, such purchase
shall be rescinded, and the purchase price and benefits returned, to the extent
of such recovery, but without interest. The Borrower agrees that any Lender so
purchasing a participation from a Lender pursuant to this Section 11.4 may, to
the fullest extent permitted by law, exercise all of its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Person were the direct creditor of the Borrower in the amount of such
participation.
11.5. Survival. All covenants, agreements, representations and
warranties made herein shall survive the making by the Lenders of the Loans and
the issuance of the Letters of Credit and the execution and delivery to the
Lenders of this Agreement and the Notes and shall continue in full force and
effect so long as any of Obligations remain outstanding or any Lender has any
commitment hereunder or the Borrower has continuing obligations hereunder unless
otherwise provided herein. Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the successors and
permitted assigns of such party and all covenants, provisions and agreements by
or on behalf of the Borrower which are contained in the Loan Documents shall
inure to the benefit of the successors and permitted assigns of the Lenders or
any of them.
11.6. Expenses. The Borrower agrees (a) to pay or reimburse the Agent
for all its reasonable and customary out-of-pocket costs and expenses incurred
in connection with the preparation, negotiation and execution of, and any
amendment, supplement or modification to, this Agreement or any of the other
Loan Documents, and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable and customary fees and
disbursements of counsel to the Agent, (b) to pay or reimburse the Agent and,
after an Event of Default, each Lender for all their reasonable costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, including without limitation, the reasonable fees
and disbursements of their counsel, (c) to pay, indemnify and hold harmless the
Agent and each Lender from any and all recording and filing fees and any and all
liabilities with respect to, or resulting from any failure of Borrower to pay or
delay of Borrower in paying, documentary, stamp, excise, withholding and other
similar taxes, if any, which may be payable or determined to be payable in
connection with the execution and delivery of, or consummation of any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, and (d) from and after the occurrence of any Event of Default to
pay, and indemnify and hold harmless
71
the Agent and each Lender from and against, any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement or in any respect relating to the transactions contemplated hereby or
thereby, (all the foregoing, collectively, the "indemnified liabilities");
provided, however, that the Borrower shall have no obligation hereunder with
respect to indemnified liabilities arising from (i) the willful misconduct or
negligence of the party seeking indemnification, (ii) legal proceedings
commenced against the Agent or any Lender by any security holder or creditor
thereof arising out of and based upon rights afforded any such security holder
or creditor solely in its capacity as such, (iii) any taxes imposed upon the
Agent or any Lender other than the documentary, stamp, excise, withholding and
similar taxes described in clause (c) above or any tax resulting from any change
described in Section 4.1, which tax would be payable to Lenders by Borrower
pursuant to Article IV, (iv) taxes imposed as a result of a transfer or
assignment of any Note, participation or assignment of a portion of its rights,
(v) any taxes imposed upon any transferee of any Note, or (vi) by reason of the
failure of the Agent or any Lender to perform its or their obligations under
this Agreement. The agreements in this subsection shall survive the Short Term
Credit Termination Date.
11.7. Amendments and Waivers. Any provision of this Agreement or any
other Loan Document may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Borrower and the Required Lenders
(and, if Article X or the rights or duties of the Agent are affected thereby, by
the Agent); provided that no such amendment or waiver shall, unless signed by
all the Lenders, (i) increase the Short Term Credit Commitments or the Letter of
Credit Commitment of the Lenders, (ii) reduce the principal of or rate of
interest on any Loan or any fees or other amounts payable hereunder, (iii)
postpone any date fixed for the payment of any scheduled installment of
principal of or interest on any Loan or any fees or other amounts payable
hereunder or for termination of any Short Term Credit Commitment, (iv) change
the percentage of the Short Term Credit Commitments or of the unpaid principal
amount of the Notes, or the percentage of Lenders that constitute Required
Lenders or (v) amend the definition of "Required Lenders" or amend Section
11.15.
11.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such fully-executed counterpart.
11.9. Waivers by Borrower. IN ANY LITIGATION IN ANY COURT WITH RESPECT
TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT, THE LOANS, ANY OF THE
NOTES, ANY OF THE OTHER LOAN DOCUMENTS, THE OBLIGATIONS, OR ANY INSTRUMENT OR
DOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT, OR THE VALIDITY, PROTECTION,
INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF, OR ANY OTHER CLAIM OR DISPUTE
HOWSOEVER ARISING BETWEEN THE BORROWER AND THE LENDERS OR THE AGENT, THE
BORROWER AND EACH LENDER AND THE AGENT HEREBY WAIVE, TO THE EXTENT PERMITTED BY
LAW, TRIAL BY JURY IN CONNECTION WITH ANY SUCH LITIGATION.
72
The Borrower, the Agent and the Lenders believe that, inasmuch as this
Agreement and the transactions contemplated hereby have been entered into and
consummated outside the State of Alabama, such transactions constitute
transactions in interstate commerce, so that neither the Agent nor any of the
Lenders is required, solely by entering into this Agreement and consummating the
transactions contemplated hereby, to qualify to do business as a foreign
corporation within the State of Alabama. Notwithstanding the foregoing, however,
the Borrower hereby irrevocably waives all rights that it may have to raise, in
any action brought by any of the Lenders or the Agent to enforce the rights of
the Lenders and the Agent hereunder or under any of the other Loan Documents, or
the obligations of the Borrower hereunder or thereunder, any defense which is
based upon the failure of any of the Lenders or the Agent to qualify to do
business as a foreign corporation in the State of Alabama, including, but not
limited to, any defenses based upon ss. 232 of the Alabama Constitution of 1901,
ss. 10-2B-15.01 of the Code of Alabama (1975) or ss. 40-14-4 of the Code of
Alabama (1975), or any successor provision to any thereof. The foregoing waiver
is made knowingly and voluntarily and is a material inducement for the Agent and
the Lenders to enter into the transactions contemplated by this Agreement or any
of the other Loan Documents.
11.10. Termination. The termination of this Agreement shall not affect
any rights of the Borrower, the Lenders or the Agent or any obligation of the
Borrower, the Lenders or the Agent, arising prior to the effective date of such
termination, and the provisions hereof shall continue to be fully operative
until all transactions entered into or rights created or obligations incurred
prior to such termination have been fully disposed of, concluded or liquidated
and the Obligations arising prior to or after such termination have been
irrevocably paid in full. The rights granted to the Agent for the benefit of the
Lenders hereunder and under the other Loan Documents shall continue in full
force and effect, notwithstanding the termination of this Agreement, until all
of the Obligations have been paid in full after the termination hereof or the
Borrower has furnished the Lenders and the Agent with an indemnification
satisfactory to the Agent and each Lender with respect thereto. All
representations, warranties, covenants, waivers and agreements contained herein
shall survive termination hereof until payment in full of the Obligations unless
otherwise provided herein. Notwithstanding the foregoing, if after receipt of
any payment of all or any part of the Obligations, any Lender is for any reason
compelled to surrender such payment to any Person because such payment is
determined to be void or voidable as a preference, impermissible setoff, a
diversion of trust funds or for any other reason, this Agreement shall continue
in full force and the Borrower shall be liable to, and shall indemnify and hold
such Lender harmless for, the amount of such payment surrendered until such
Lender shall have been finally and irrevocably paid in full. The provisions of
the foregoing sentence shall be and remain effective notwithstanding any
contrary action which may have been taken by the Lenders in reliance upon such
payment, and any such contrary action so taken shall be without prejudice to the
Lenders' rights under this Agreement and shall be deemed to have been
conditioned upon such payment having become final and irrevocable.
11.11. Governing Law. ALL DOCUMENTS EXECUTED PURSUANT TO THE
TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING, WITHOUT LIMITATION, THIS AGREEMENT
AND EACH OF THE OTHER LOAN DOCUMENTS SHALL BE DEEMED TO BE CONTRACTS MADE UNDER,
AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS
AND JUDICIAL DECISIONS OF THE STATE OF NORTH CAROLINA. THE BORROWER HEREBY
SUBMITS TO THE JURISDICTION AND VENUE OF THE STATE AND FEDERAL
73
COURTS OF NORTH CAROLINA FOR THE PURPOSES OF RESOLVING DISPUTES HEREUNDER OR
ARISING OUT OF THE TRANSACTION CONTEMPLATED HEREBY OR FOR THE PURPOSES OF
COLLECTION.
11.12. Indemnification. In consideration of the execution and delivery
of this Agreement by the Agent and each Lender and the extension of the Short
Term Credit Commitments, and so long as the Agent and Lenders have fulfilled
their obligations hereunder, the Borrower hereby indemnifies, exonerates and
holds free and harmless the Agent and each Lender and each of their respective
officers, directors, employees, affiliates and agents (collectively, the
"Indemnified Parties") from and against any and all actions, causes of action,
claims, suits, losses, costs, liabilities and damages, and expenses incurred in
connection therewith (irrespective of whether any such Indemnified Party is a
party to the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to, any of the following:
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan or
supported by any Letter of Credit;
(b) the entering into and performance of this Agreement and
any other Loan Document by any of the Indemnified Parties;
(c) provided Lenders have no ownership interest in real
property of Borrower, any investigation, litigation or proceeding
related to any environmental cleanup, audit, compliance or other matter
relating to the protection of the environment or the release by the
Borrower or any of its Subsidiaries or Controlled Partnerships of any
hazardous waste material; or
(d) provided Lenders have no ownership interest in real
property of Borrower, the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission, discharging or releases from
any real property owned or operated by the Borrower or any Subsidiary
or Controlled Partnership of any hazardous waste material (including
any losses, liabilities, damages, injuries, costs, expenses or claims
asserted or arising under any environmental laws), regardless of
whether caused by, or within the control of, the Borrower or such
Subsidiary or Controlled Partnerships,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's
negligence or willful misconduct, and if and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrower hereby agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law. The
agreements in this Section 11.12 shall survive the Short Term Credit Termination
Date.
11.13. Agreement Controls. In the event that any term of any of the
Loan Documents other than this Agreement conflicts with any term of this
Agreement, the terms and provisions of this Agreement shall control.
74
11.14. Integration. This Agreement and the other Loan Documents
represent the final agreement between the parties as to the subject matter
hereof or thereof and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties. There are no oral
agreements between the parties.
11.15. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that the Borrower may not assign or transfer its
rights or obligations hereunder without the prior written consent of the Agent
and all Lenders. The Agent and the Lenders may assign or transfer their interest
hereunder but only as provided herein.
11.16. Severability. If any provision of this Agreement or the other
Loan Documents shall be determined to be illegal or invalid as to one or more of
the parties hereto, then such provision shall remain in effect with respect to
all parties, if any, as to whom such provision is neither illegal nor invalid,
and in any event all other provisions hereof shall remain effective and binding
on the parties hereto.
11.17. Usury Savings Clause. Notwithstanding any other provision
herein, the aggregate interest rate charged under any of the Notes, including
all charges or fees in connection therewith deemed in the nature of interest
under North Carolina law, shall not exceed the Highest Lawful Rate (as such term
is defined below). If the rate of interest (determined without regard to the
preceding sentence) under this Agreement at any time exceeds the Highest Lawful
Rate (as defined below), the outstanding amount of the Loans made hereunder
shall bear interest at the Highest Lawful Rate until the total amount of
interest due hereunder equals the amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at all
times been in effect. In addition, if when the Loans made hereunder are repaid
in full the total interest due hereunder (taking into account the increase
provided for above) is less than the total amount of interest which would have
been due hereunder if the stated rates of interest set forth in this Agreement
had at all times been in effect, then to the extent permitted by law, the
Borrower shall pay to the Agent an amount equal to the difference between the
amount of the interest paid and the amount of interest which would have been
paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding
the foregoing, it is the intention of the Lenders and the Borrower to conform
strictly to any applicable usury laws. Accordingly, if any Lender contracts for,
charges, or receives any consideration which constitutes interest in excess of
the Highest Lawful Rate, then any such excess shall be canceled automatically
and, if previously paid, shall at such Lender's option be applied to the
outstanding amount of the Loans made hereunder or be refunded to the Borrower.
As used in this paragraph, the term "Highest Lawful Rate" means, as to any
Lender, the maximum lawful interest rate, if any, that at any time or from time
to time may be contracted for, charged, or received under the laws applicable to
such Lender which are presently in effect or, to the extent allowed by law,
under such applicable laws which may hereafter be in effect and which allow a
higher maximum nonusurious interest rate than applicable laws now allow.
75
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be made, executed and delivered by their duly authorized officers as of the day
and year first above written.
HEALTHSOUTH CORPORATION
WITNESS:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------ Title: Vice President - Finance
Signature Page
NATIONSBANK, N.A.
as Agent for the Lenders
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
NATIONSBANK, N.A.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
Applicable Lending Office:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Wire Transfer Instructions:
NationsBank, N.A.
Charlotte, North Carolina
ABA #▇▇▇▇▇▇▇▇▇
Account #136621-▇▇▇▇▇▇▇
Attention: Corporate Credit Services
Reference: HEALTHSOUTH Corporation
Signature Page
EXHIBIT A
Applicable Commitment Percentages
Applicable
Short Term Credit Commitment
Lender Commitment Percentage
------ ---------- ----------
NationsBank, N.A. $500,000,000.00 100%
--------------- -------
$500,000,000.00 100%
A-1