---------------------------------------------------------------------------
SHORT TERM CREDIT AGREEMENT
by and among
HEALTHSOUTH CORPORATION,
as Borrower,
BANK OF AMERICA, N. A.,
as Administrative Agent and as Lender,
and
CITICORP USA, INC.,
as Syndication Agent and as Lender,
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
BANC OF AMERICA SECURITIES LLC,
Lead Arranger and Book Manager
December 15, 1999
---------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Terms
1.1. Definitions.............................................................2
1.2. Rules of Interpretation................................................19
1.3. Classes and Types of Loans.............................................21
ARTICLE II
The Loans
2.1. Loans..................................................................22
2.2. Payment of Interest....................................................23
2.3. Payment of Principal...................................................23
2.4. Non-Conforming Payments................................................23
2.5. Notes..................................................................24
2.6. Pro Rata Payments......................................................24
2.7. Reductions.............................................................24
2.8. Conversions and Elections of Subsequent Interest Periods...............25
2.9. Unused Fees and Utilization Fees.......................................25
2.10. Deficiency Advances....................................................25
2.11. Use of Proceeds........................................................26
2.12. Intraday Funding.......................................................26
ARTICLE III
Change in Circumstances
3.1. Increased Cost and Reduced Return. ....................................27
3.2. Limitation on Types of Loans...........................................28
3.3. Illegality.............................................................28
3.4. Treatment of Affected Loans............................................28
3.5. Compensation...........................................................29
3.6. Taxes..................................................................29
ARTICLE IV
Conditions to Making Loans
4.1. Conditions of Initial Advance..........................................32
4.2. Conditions of Loans....................................................33
<PAGE>
ARTICLE V
Representations and Warranties
5.1. Organization and Authority.............................................34
5.2. Loan Documents.........................................................34
5.3. Solvency...............................................................35
5.4. Subsidiaries...........................................................35
5.5. Ownership Interests....................................................35
5.6. Financial Condition....................................................35
5.7. Title to Properties....................................................35
5.8. Taxes..................................................................35
5.9. Other Agreements.......................................................36
5.10. Litigation.............................................................36
5.11. Margin Stock...........................................................36
5.12. Investment Company.....................................................37
5.13. Patents, Etc...........................................................37
5.14. No Untrue Statement....................................................37
5.15. No Consents, Etc.......................................................37
5.16. ERISA Requirement......................................................37
5.17. No Default.............................................................37
5.18. Hazardous Materials....................................................38
5.19. Employment Matters.....................................................38
5.20. RICO...................................................................38
5.21. Reimbursement from Third Party Payors..................................38
5.22. Year 2000 Compliance...................................................38
ARTICLE VI
Affirmative Covenants
6.1. Financial Statements, Reports, Etc.....................................40
6.2. Maintain Properties....................................................41
6.3. Existence, Qualification, Etc..........................................41
6.4. Regulations and Taxes..................................................41
6.5. Insurance..............................................................41
6.6. True Books.............................................................42
6.7. Right of Inspection....................................................42
6.8. Observe all Laws.......................................................42
6.9. Governmental Licenses..................................................42
6.10. Covenants Extending to Other Persons...................................42
6.11. Officer's Knowledge of Default.........................................42
6.12. Suits or Other Proceedings.............................................42
6.13. Notice of Discharge of Hazardous Material or Environmental Complaint...43
6.14. Environmental Compliance...............................................43
6.15. Continuation of Current Business.......................................43
6.16. Management Contracts...................................................43
6.17. Year 2000 Compliance...................................................43
ARTICLE VII
Negative Covenants
7.1. Financial Covenants....................................................44
7.2. Investments and Loans..................................................44
ii
<PAGE>
7.3. Indebtedness...........................................................45
7.4. Disposition of Assets..................................................45
7.5. Consolidation or Merger................................................45
7.6. Liens..................................................................45
7.7. Dividends and Distributions............................................45
7.8. Acquisitions...........................................................45
7.9. Restricted Payments....................................................45
7.10. Compliance with ERISA..................................................45
7.11. Fiscal Year............................................................46
7.12. Dissolution, etc.......................................................46
7.13. Transactions with Affiliates...........................................46
ARTICLE VIII
Events of Default and Acceleration
8.1. Events of Default......................................................47
8.2. Agent to Act...........................................................49
8.3. Cumulative Rights......................................................49
8.4. No Waiver..............................................................49
8.5. Allocation of Proceeds.................................................49
ARTICLE IX
The Agent
9.1. Appointment, Powers, and Immunities....................................51
9.2. Reliance by Agent......................................................51
9.3. Defaults...............................................................51
9.4. Rights as Lender.......................................................52
9.5. Indemnification........................................................52
9.6. Non-Reliance on Agent and Other Lenders................................52
9.7. Resignation of Agent...................................................52
9.8. Fees...................................................................53
9.9. Syndication Agent......................................................53
iii
<PAGE>
ARTICLE X
Miscellaneous
10.1. Assignments and Participations.........................................54
10.2. Notices................................................................55
10.3. No Waiver..............................................................56
10.4. Rights of Setoff; Adjustments..........................................56
10.5. Survival...............................................................56
10.6. Expenses...............................................................57
10.7. Amendments and Waivers.................................................57
10.8. Counterparts...........................................................58
10.9. Waivers by Borrower....................................................58
10.10. Termination............................................................58
10.11. Governing Law..........................................................59
10.12. Indemnification........................................................59
10.13. Agreement Controls.....................................................59
10.14. Integration............................................................60
10.15. Successors and Assigns.................................................60
10.16. Severability...........................................................60
10.17. Usury Savings Clause...................................................60
EXHIBIT A Applicable Commitment Percentages............................A-1
EXHIBIT B Form of Assignment and Acceptance............................B-1
EXHIBIT C Notice of Appointment (or Revocation) of Authorized
Representative...............................................C-1
EXHIBIT D Form of Borrowing Notice.....................................D-1
EXHIBIT E Form of Interest Rate Selection Notice.......................E-1
EXHIBIT F Form of Note.................................................F-1
EXHIBIT G Investments..................................................G-1
EXHIBIT H Form of Opinion of Borrower's Counsel........................H-1
EXHIBIT I Compliance Certificate.......................................I-1
EXHIBIT J Executive Officers...........................................J-1
Schedule 5.4 Subsidiaries.................................................S-1
Schedule 5.13 Patent Issue.................................................S-2
Schedule 5.19 Employment Matters...........................................S-3
Schedule 7.3 Existing Subsidiary Indebtedness.............................S-4
iv
<PAGE>
SHORT TERM CREDIT AGREEMENT
THIS SHORT TERM CREDIT AGREEMENT dated as of December 15, 1999 (this
"Agreement") is entered into by and among:
HEALTHSOUTH CORPORATION, a Delaware corporation (the "Borrower"),
BANK OF AMERICA, N.A., a national banking association organized and
existing under the laws of the United States, in its capacity as a Lender ("Bank
of America"), 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 10.1 (hereinafter such financial institutions may be
referred to individually as a "Lender" or collectively as the "Lenders"),
BANK OF AMERICA, N.A., a national banking association organized and
existing under the laws of the United States, in its capacity as Administrative
Agent for the Lenders (in such capacity, and together with any successor agent
appointed in accordance with the terms of Section 9.7, the "Agent"), and
CITICORP USA, INC., a Delaware corporation, in its capacity as Syndication
Agent.
RECITAL:
The Borrower has requested that the Lenders make a short term revolving
credit facility of up to $250,000,000 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:
<PAGE>
ARTICLE I
Definitions and Terms
1.1. Definitions. For the purposes of this Agreement, in addition to the
definitions set forth above, the following terms shall have the respective
meanings set forth below:
"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 7.8; 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 10.1.
"Applicable Lending Office" means, for each Lender and for each Type
of Loan, the "Lending Office" of such Lender (or an affiliate of such
Lender) designated for such Type of Loan on the signature pages hereof or
such other office of such Lender (or an affiliate of such Lender) as such
Lender may from time to time specify to the Agent and the Borrower by
written notice in accordance with the terms hereof as the office by which
its Loans of such Type are to be made and maintained.
"Applicable Margin" means that percent per annum set forth below under
the heading "Applicable Margin for Eurodollar Rate Loans" or "Applicable
Margin for Base Rate Loans", as appropriate, opposite the applicable Tier
determined by the highest Rating as in effect at the time of determination:
2
<PAGE>
<TABLE>
<CAPTION>
---------- -------------------------------------- ------------------------------ ----------------------------
Tier Rating Applicable Margin for Applicable Margin for Base
S&P or Moody's Eurodollar Rate Loans Rate Loans
---------- -------------------------------------- ------------------------------ ----------------------------
<S> <C> <C> <C>
I BBB+ Baa1 1.125% 0.000%
or higher or higher
---------- -------------------------------------- ------------------------------ ----------------------------
II BBB Baa2 1.375% 0.375%
---------- -------------------------------------- ------------------------------ ----------------------------
III BBB- Baa3 1.500% 0.500%
---------- -------------------------------------- ------------------------------ ----------------------------
IV Less than Less than 1.750% 0.750%
BBB- Baa3
---------- -------------------------------------- ------------------------------ ----------------------------
</TABLE>
The Applicable Margin shall be established from time to time based upon the
Rating then in effect. Any change in the Applicable Margin due to a change
in any Rating shall be effective on the date of such change in such Rating.
In the event (i) of a split Rating where the Ratings are more than one Tier
apart, then the Tier next above the Tier corresponding to the lower Rating
shall apply and, (ii) either Rating is Tier IV, then the Applicable Margin
shall be Tier IV. In the event that the Borrower shall not have a Rating by
either S&P or Moody's, the Applicable Margin shall be mutually agreed to by
the Borrower, the Agent and the Lenders and shall be Tier IV until such
mutual agreement is reached.
"Applicable Unused Fee" means that percent per annum set forth below
under the heading "Applicable Unused Fee" opposite the applicable Tier
determined by the highest Rating as in effect at the time of determination
(subject to the provisions of this definition following the table):
<TABLE>
<CAPTION>
------------------- ----------------------------------------------------- --------------------------
Tier Rating Applicable Unused
S&P or Moody's Fee
------------------- ----------------------------------------------------- --------------------------
<S> <C> <C>
I BBB+ Baa1 0.300%
or higher or higher
------------------- ----------------------------------------------------- --------------------------
II BBB Baa2 0.375%
------------------- ----------------------------------------------------- --------------------------
III BBB- Baa3 0.500%
------------------- ----------------------------------------------------- --------------------------
IV Less than Less than 0.500%
BBB- Baa3
------------------- ----------------------------------------------------- --------------------------
</TABLE>
The Applicable Unused Fee shall be established from time to time based upon
the Rating then in effect. Any change in the Applicable Unused Fee due to a
change in any Rating shall be effective on the date of such change in such
Rating. In the event (i) of a split Rating where the Ratings are more than
one Tier apart, then the Tier next above the Tier corresponding to the
lower Rating shall apply and, (ii) either Rating is Tier IV, then the
Applicable Unused Fee shall be Tier IV. In the event that the Borrower
shall not have a Rating by either S&P or Moody's, the Applicable Unused Fee
shall be mutually agreed to
3
<PAGE>
by the Borrower, the Agent and the Lenders and shall be Tier IV until such
mutual agreement is reached.
"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 10.1.
"Authorized Representative" means any of the Executive Officers of the
Borrower or, with respect to financial matters, the Treasurer or the Chief
Financial Officer of the Borrower, or any other Person expressly designated
by the Board of Directors of the Borrower (or the appropriate committee
thereof) as an Authorized Representative of the Borrower, as set forth from
time to time in a certificate in the form of Exhibit C.
"Bank of America" means Bank of America, N.A. and its successors.
"Base Rate" means, for any day, the rate per annum equal to the sum of
(a) higher of (i) the Prime Rate for such day or (ii) the Federal Funds
Rate for such day plus (A) from December 15, 1999 through and including
January 15, 2000, one and one-half percent (1 1/2%) and (B) at all other
times, one-half of one percent (1/2%) plus (b) the Applicable Margin. 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.
"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 as expressly provided in clause (ii),
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 the selection, funding, interest rate, payment and Interest Period of
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:
4
<PAGE>
(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 4.1 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 6.1(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 5.6(a).
"Consolidated Amortization Expense" of the Borrower for any period
means the amortization expense of the Borrower and its Consolidated
Entities for such period (to the extent included in the computation of
Consolidated Net Income), determined on a consolidated basis in accordance
with GAAP.
"Consolidated Depreciation Expense" of the Borrower means the
depreciation expense of the Borrower and its Consolidated Entities for such
period (to the extent included in the computation of Consolidated Net
Income of the Borrower), determined on a consolidated basis in accordance
with GAAP.
5
<PAGE>
"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 Income Tax Expense" means, with respect to the Borrower
and its Consolidated Entities for any Four-Quarter Period ending on the
date of computation thereof, the provision for taxes based on income and
profits of the Borrower and its Consolidated Entities to the extent such
income or profits were included in computing Consolidated Net Income for
such period.
"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 7.1(a), to the extent otherwise included therein), without
duplication, (i) the net income of any Person (other than a Consolidated
Entity) to the extent that any such income has not actually been received
by the Borrower or a Consolidated Entity in the form of dividends or
similar distributions during such period, but including, in any event, net
income of any Person who becomes a Consolidated Entity whose Acquisition is
accounted for on a "pooling of interests" basis; (ii) except to the extent
includable in the consolidated net income of the Borrower or a Consolidated
Entity pursuant to the foregoing clause (i), the net income of any Person
that accrued prior to the date that (a) such Person becomes a Consolidated
Entity or is merged into or consolidated with a Consolidated Entity or (b)
the assets of such Person are acquired by the Borrower or a Consolidated
Entity; (iii) the net income of any Consolidated Entity to the extent that
the declaration or payment of dividends or similar distributions by such
Consolidated Entity of that income is not permitted by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Consolidated
Entity during such period; (iv) any gain (or loss), together with any
related provisions for taxes on any such gain, realized during such period
6
<PAGE>
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 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.
7
<PAGE>
"Convert", "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 2.8 or Article III 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 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 and other amounts
payable hereunder, 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.
8
<PAGE>
"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 10.1, 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
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 8.1.
"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.
9
<PAGE>
"Existing Credit Agreement" means that certain Short Term Credit
Agreement dated as of September 28, 1998 by and among the Borrower, the
Agent and the lenders party thereto.
"Facility" shall mean an inpatient or outpatient rehabilitation
facility, certified outpatient rehabilitation facility, skilled nursing
facility, specialty medical center, specialty orthopedic hospital or acute
care hospital, subacute inpatient facility, transitional living center,
medical office building, outpatient surgery center or outpatient diagnostic
center with all buildings and improvements associated therewith, that is
owned or leased, in whole or part, by the Borrower or a Subsidiary or any
Controlled Partnership.
"Fair Market Value" shall mean, with respect to any capital stock or
other ownership interests issued or given by the Borrower or any
Consolidated Entity in connection with an Acquisition, (i) in the case of
capital stock that is Common Stock and such Common Stock is then designated
as a national market system security by the National Association of
Securities Dealers, Inc. ("NASD") or is listed on a national securities
exchange, the average of the last reported bid and ask quotations or prices
reported thereon for Common Stock or such other value as may be ascribed to
the Common Stock in a definitive merger or acquisition agreement provided
such value is determined according to customary methods for like
transactions and is approved (to the extent required by Borrower's charter
or bylaws) by the Borrower's Board of Directors or (ii) in the case of
capital stock that is not Common Stock or in the event that Common Stock is
not so designated by NASD or listed on such national exchange, or in the
case of any other ownership interests, the determination of the fair market
value thereof in good faith by a majority of disinterested members of the
board of directors of the Borrower or such Consolidated Entity, in each
case effective as of the close of business on the Business Day immediately
preceding the closing date of such Acquisition.
"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 Consolidated Entities, 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.
10
<PAGE>
"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 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
11
<PAGE>
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 Jones Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately
11:00 a.m. (London time) two 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) no Interest Period for any Eurodollar Rate Loan shall be
available which would end after 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.
"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.
"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.
12
<PAGE>
"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.
"Loan Documents" means this Agreement, the Notes 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
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 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.
13
<PAGE>
"Medicare Provider Agreement" means an agreement entered into between
a state agency or other entity administering the Medicare program and a
health care operation under which the health care operation agrees to
provide services for Medicare patients in accordance with the terms of the
agreement and Medicare Regulations.
"Medicare Regulations" means, collectively, all federal statutes
(whether set forth in Title XVIII of the Social Security Act or elsewhere)
affecting the health insurance program for the aged and disabled
established by Title XVIII of the Social Security Act and any statutes
succeeding thereto; together with all applicable provisions of all rules,
regulations, manuals and orders and administrative, reimbursement and other
guidelines having the force of law of all Governmental Authorities
(including without limitation, Health and Human Services ("HHS"), HCFA, the
Office of the Inspector General for HHS, or any Person succeeding to the
functions of any of the foregoing) promulgated pursuant to or in connection
with any of the foregoing having the force of law, as each may be amended,
supplemented or otherwise modified from time to time.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is
making, or is accruing an obligation to make, contributions or has made, or
been obligated to make, contributions within the preceding six (6) Fiscal
Years.
"1998 10-K" means the Borrower's Annual Report on Form 10-K for the
Fiscal Year Ended December 31, 1998.
"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) all liabilities of the Borrower to any Lender
or affiliate of a Lender which arise under a Swap Agreement, and (iii) the
payment and performance of all other obligations, liabilities and
Indebtedness of the Borrower to the Lenders or the Agent or any of their
affiliates hereunder, under any one or more of the other Loan Documents or
with respect to the Loans.
"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 (predecessor in interest to Bank of
America), 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.
14
<PAGE>
"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;
(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; and
(7) Liens on shares of Capital Stock of the Borrower that are
owned by the Borrower.
"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;
15
<PAGE>
(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 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,
Caremark Rx 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.
16
<PAGE>
"Prime Rate" means the per annum rate of interest established from
time to time by Bank of America as its prime rate, which rate may not be
the lowest rate of interest charged by Bank of America to its customers.
"Principal Office" means the office of the Agent at Bank of America,
N.A., 101 North Tryon Street, 15th Floor, NC1-001-15-04, Charlotte, North
Carolina 28255, Attention: Agency Services, or such other office and
address as the Agent may from time to time designate.
"Rate Hedging Obligations" means any and all obligations of the
Borrower or any Consolidated Entity, whether absolute or contingent and
howsoever and whensoever created, arising, evidenced or acquired (including
all renewals, extensions and modifications thereof and substitutions
therefor), under (i) any and all agreements, devices or arrangements
designed to protect the Borrower or such Consolidated Entity from the
fluctuations of interest rates, exchange rates or forward rates applicable
to such party's assets, liabilities or exchange transactions, including,
but not limited to, Dollar-denominated or cross-currency interest rate
exchange agreements, forward currency exchange agreements, interest rate
cap or collar protection agreements, forward rate currency or interest rate
options, puts, warrants and those commonly known as interest rate "swap"
agreements; and (ii) any and all cancellations, buybacks, reversals,
terminations or assignments of any of the foregoing.
"Rating" means the rating of senior unsecured, non-credit enhanced
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.
"Required Lenders" means, as of any date, Lenders on such date having
Credit Exposures (as defined below) aggregating more than 50% 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 (a) so long as there exists no Event of Default, the
aggregate principal amount of the Loans owing to such Lender plus the
aggregate unutilized amounts of such Lender's Short Term Credit Commitment
and (b) following the occurrence and during the continuance of an Event of
Default, the aggregate principal amount of such Lender's Applicable
Commitment Percentage of the Short Term Credit Outstandings; provided that,
for the purpose of this definition only, if any Lender shall have failed to
fund its Applicable Commitment Percentage of any Advance, then the Short
Term Credit Commitment of such Lender shall be deemed reduced by the amount
it so failed to fund for so long as such failure shall continue and such
Lender's Credit Exposure attributable to such failure shall be deemed held
by any Lender making more than its Applicable Commitment Percentage of such
Advance to the extent it covers such failure.
"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 (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
17
<PAGE>
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 8.1 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, 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.
"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
18
<PAGE>
(iii) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
"Stated Termination Date" means December 12, 2000.
"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, 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 Short Term Credit Commitment" means a principal amount equal to
$250,000,000, as reduced from time to time in accordance with Section
2.1(a) and Section 2.7.
"Vanderbilt" shall mean Vanderbilt Stallworth Rehabilitation Hospital,
L.P., the partners of which are the Borrower, Vanderbilt University and
Vanderbilt Health Services.
"Voting Stock" means shares of Capital Stock issued by a corporation,
or equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the happening of
such a contingency.
1.2. Rules of Interpretation.
19
<PAGE>
(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.
(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.
(k) Whenever interest rates or fees are established in whole or in part by
reference to a numerical percentage expressed as "__%", such arithmetic
expression shall be interpreted in accordance with the convention that 1% = 100
basis points.
20
<PAGE>
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.
21
<PAGE>
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; provided further,
however, that immediately after giving effect to each such Advance, the
principal amount of Short Term 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
3.5.
(b) Amounts. The aggregate unpaid principal amount of the Short Term 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 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 telephonic notice of each Eurodollar
Rate Loan (whether representing an additional borrowing hereunder or the
Conversion of a borrowing hereunder from a Base Rate Loan to a Eurodollar Rate
Loan) prior to 10:30 A.M. and (2) irrevocable telephonic notice of each Base
Rate Loan (whether representing an additional borrowing hereunder or the
Conversion of a borrowing hereunder from a Eurodollar Rate Loan to a Base Rate
Loan) prior to 10:30 A.M. on the day of such proposed Loan. Each such notice
shall be effective upon receipt by the Agent, 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. The Authorized Representative shall provide the Agent
written confirmation of each such telephonic notice in the form of a Borrowing
Notice or Interest Rate Selection Notice (as applicable) with appropriate
insertions, but failure to provide such confimation shall not affect the
validity of such telephonic notice. 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.
22
<PAGE>
(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.
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
8.1(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, 1999, 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. 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
3.5. All prepayments of Loans made by the Borrower shall be in the amount of
$5,000,000 or such greater amount which is an integral multiple of $1,000,000,
or the amount equal to all 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, recoupment, deduction
23
<PAGE>
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
accrue at the Default Rate on any principal as to which a non-conforming payment
is made from the date such amount was due and payable until the later of (x) the
date such funds become available funds or (y) the next Business Day.
(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 shall be made to the Agent for the account of the
Lenders pro rata based on their Applicable Commitment Percentages, (b) all
payments to be made by the Borrower for the account of each of the Lenders on
account of principal, interest and fees, shall be made without diminution,
setoff, recoupment or counterclaim, and (c) the Agent will promptly distribute
to the Lenders in immediately available funds payments received in fully
collected, immediately available funds from the Borrower.
2.7. 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 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 3.5.
24
<PAGE>
2.8. Conversions and Elections of Subsequent Interest Periods. Subject to
the limitations set forth below and in Article III, the Borrower may:
(a) upon delivery of telephonic notice to the Agent (which shall be
irrevocable) 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 of telephonic notice to the Agent (which shall be
irrevocable) 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 III. 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 and Utilization Fees.
(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. Such fees shall be due in arrears on the last Business Day of each
March, June, September and December commencing December 31, 1999 to and on the
Short Term Credit Termination Date.
(b) 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, a utilization fee equal to 0.150% multiplied by the
aggregate principal amount of Short Term Credit Outstandings any time during
which the Short Term Credit Outstandings exceed $125,000,000. Such fees shall be
due in arrears on the last Business Day of each March, June, September and
December commencing December 31, 1999 to and on the Short Term Credit
Termination Date.
(c) 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 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
25
<PAGE>
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 for general corporate purposes,
including working capital needs, capital expenditures and permitted share
repurchases.
2.12. Intraday Funding. Without limiting the provisions of Section 2.10,
unless the Borrower or any Lender has notified the Agent not later than 12:00
Noon of the Business Day before the date of any payment (including in the case
of Lenders any Advance) to be made by it is due, that it does not intend to
remit such payment, the Agent may, in its discretion, assume that the Borrower
or each Lender, as the case may be, has timely remitted such payment in the
manner required hereunder and may, in its discretion and in reliance thereon,
make available such payment (or portion thereof) to the Person entitled thereto
as otherwise provided herein. If such payment was not in fact remitted to the
Agent in the manner required hereunder, then:
(a) if the Borrower failed to make such payment, each Lender shall
forthwith on demand repay to the Agent the amount of such assumed payment
made available to such Lender, together with interest thereon in respect of
each day from and including the date such amount was made available by the
Agent to such Lender to the date such amount is repaid to the Agent at the
Federal Funds Rate; and
(b) if any Lender failed to make such payment, the Agent shall be
entitled to recover such corresponding amount forthwith upon the Agent's
demand therefor, the Agent promptly shall notify the Borrower, and the
Borrower shall promptly pay such corresponding amount to the Agent in
immediately available funds upon receipt of such demand. The Agent also
shall be entitled to recover interest on such corresponding amount in
respect of each day from the date such corresponding amount was made
available by the Agent to the Borrower to the date such corresponding
amount is recovered by the Agent, (A) from such Lender at a rate per annum
equal to the daily Federal Funds Rate or (without duplication) (B) from the
Borrower, at a rate per annum equal to the interest rate applicable to the
Loan which includes such corresponding amount. Until the Agent shall
recover such corresponding amount together with interest thereon, such
corresponding amount shall constitute a deficiency advance within the
meaning of Section 2.10. Nothing herein shall be deemed to relieve any
Lender from its obligation to fulfill its commitments hereunder or to
prejudice any rights which the Agent or the Borrower may have against any
Lender as a result of any default by such Lender hereunder.
26
<PAGE>
ARTICLE III
Change in Circumstances
3.1. 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 3.1(a), the
Borrower may, by notice to such Lender (with a copy to the Agent), suspend the
obligation of such Lender to make or Continue Loans of the Type with respect to
which such compensation is requested, or to Convert Loans of any other Type into
Loans of such Type, until the event or condition giving rise to such request
ceases to be in effect (in which case the provisions of Section 3.4 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
27
<PAGE>
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.
3.2. 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.
3.3. 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 3.4 shall be applicable).
3.4. 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 3.1 or 3.3
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 3.3 hereof,
28
<PAGE>
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 3.1 or 3.3 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 3.1 or 3.3 hereof that gave rise to the
Conversion of such Lender's Affected Loans pursuant to this Section 3.4 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.
3.5. 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:
(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 8.1) 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 IV
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.
3.6. 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 3.6) such Lender or the Agent
receives an
29
<PAGE>
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 10.2, 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 3.6) 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