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BRIDGE CREDIT AGREEMENT
by and among
HEALTHSOUTH CORPORATION,
as Borrower,
NATIONSBANK, NATIONAL ASSOCIATION,
as Agent
and
THE LENDERS PARTY HERETO FROM TIME TO TIME
October 22, 1997
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<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Terms
1.1. Definitions...........................................................2
1.2. Rules of Interpretation..............................................25
1.3. Types of Loans.......................................................26
ARTICLE II
The Loans
2.1. Bridge Loans.........................................................27
2.2. Payment of Interest..................................................29
2.3. Payment of Principal.................................................29
2.4. Non-Conforming Payments..............................................29
2.5. Notes................................................................30
2.6. Pro Rata Payments....................................................30
2.7. Reductions...........................................................30
2.8. Conversions and Elections of Subsequent Interest Periods.............31
2.9. Unused Fees..........................................................32
2.10. Deficiency Advances..................................................32
2.11. Use of Proceeds......................................................33
ARTICLE III
Letters of Credit
3.1. Letters of Credit....................................................34
3.2. Reimbursement........................................................34
3.3. Letter of Credit Facility Fees.......................................37
3.4. Administrative Fees..................................................38
ARTICLE IV
Termination of Eurodollar Rate and Yield Protection
4.1. Suspension of Loans..................................................39
4.2. Compensation.........................................................40
4.3. Taxes................................................................40
<PAGE>
ARTICLE V
Conditions to Making Loans and Issuing Letters of Credit
5.1. Conditions of Initial Advance........................................43
5.2. Conditions of Loans and Letters of Credit............................44
ARTICLE VI
Representations and Warranties
6.1. Organization and Authority...........................................47
6.2. Loan Documents.......................................................47
6.3. Solvency.............................................................48
6.4. Subsidiaries.........................................................48
6.5. Ownership Interests..................................................48
6.6. Financial Condition..................................................48
6.7. Title to Properties..................................................49
6.8. Taxes................................................................49
6.9. Other Agreements.....................................................49
6.10. Litigation...........................................................50
6.11. Margin Stock.........................................................50
6.12. Investment Company...................................................50
6.13. Patents, Etc.........................................................51
6.14. No Untrue Statement..................................................51
6.15. No Consents, Etc.....................................................51
6.16. ERISA Requirement....................................................51
6.17. No Default...........................................................51
6.18. Hazardous Materials..................................................51
6.19. Employment Matters...................................................52
6.20. RICO.................................................................52
6.21. Reimbursement from Third Party Payors................................52
6.22. Representations and Warranties from the Related Acquisition
Transaction Documents................................................52
ARTICLE VII
Affirmative Covenants
7.1. Financial Statements, Reports, Etc...................................53
7.2. Maintain Properties..................................................54
7.3. Existence, Qualification, Etc........................................54
7.4. Regulations and Taxes................................................55
7.5. Insurance............................................................55
7.6. True Books...........................................................55
7.7. Right of Inspection..................................................55
<PAGE>
7.8. Observe all Laws.....................................................55
7.9. Governmental Licenses................................................55
7.10. Covenants Extending to Other Persons.................................56
7.11. Officer's Knowledge of Default.......................................56
7.12. Suits or Other Proceedings...........................................56
7.13. Notice of Discharge of Hazardous Material or Environmental Complaint.56
7.14. Environmental Compliance.............................................56
7.15. Continuation of Current Business.....................................57
7.16. Management Contracts.................................................57
ARTICLE VIII
Negative Covenants
8.1. Financial Covenants..................................................58
8.2. Investments and Loans................................................58
8.3. Indebtedness.........................................................58
8.4. Existing Facility....................................................59
8.5. Consolidation or Merger..............................................59
8.6. Liens................................................................59
8.7. Dividends and Distributions..........................................59
8.8. Acquisitions.........................................................59
8.9. Restricted Payments..................................................59
8.10. Compliance with ERISA................................................59
8.11. Fiscal Year..........................................................60
8.12. Dissolution, etc.....................................................60
ARTICLE IX
Events of Default and Acceleration
9.1. Events of Default....................................................61
9.2. Agent to Act.........................................................63
9.3. Cumulative Rights....................................................63
9.4. No Waiver............................................................64
9.5. Allocation of Proceeds...............................................64
ARTICLE X
The Agent
10.1. Appointment..........................................................65
10.2. Attorneys-in-fact....................................................65
10.3. Limitation on Liability..............................................65
10.4. Reliance.............................................................65
10.5. Notice of Default....................................................66
<PAGE>
10.6. No Representations...................................................66
10.7. Indemnification......................................................66
10.8. Lender...............................................................67
10.9. Resignation..........................................................67
10.10. Sharing of Payments, etc.............................................67
10.11. Fees.................................................................68
10.12. Independent Agreements...............................................68
ARTICLE XI
Miscellaneous
11.1. Assignments and Participations.......................................69
11.2. Notices..............................................................70
11.3. No Waiver............................................................71
11.4. Setoff...............................................................72
11.5. Survival.............................................................72
11.6. Expenses.............................................................72
11.7. Amendments...........................................................73
11.8. Counterparts.........................................................74
11.9. Waivers by Borrower..................................................74
11.10. Termination..........................................................74
11.11. Governing Law........................................................75
11.12. Indemnification......................................................75
11.13. Agreement Controls...................................................76
11.14. Integration..........................................................76
11.15. Successors and Assigns...............................................76
11.16. Severability.........................................................76
11.17. Usury Savings Clause.................................................76
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 Bridge 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 1.1 Closing Date Prepayable Debt
Schedule 6.4 Subsidiaries
Schedule 6.19 Employment Matters
<PAGE>
Schedule 8.3 Existing Subsidiary Indebtedness
<PAGE>
BRIDGE CREDIT AGREEMENT
THIS BRIDGE CREDIT AGREEMENT dated as of October 22, 1997 (this
"Agreement") is entered into by and among HEALTHSOUTH CORPORATION, a Delaware
corporation (the "Borrower"), the Lenders signatories hereto (the "Lenders") and
NATIONSBANK, N.A., a national banking association, as agent for the Lenders (the
"Agent").
RECITAL:
The Borrower has requested that the Lenders make bridge loans of up to
$1,250,000,000 to the Borrower, the proceeds of which shall be used (i) to repay
existing short-term indebtedness owed to NationsBank, National Association, (ii)
to purchase ASC Network Corporation, (iii) to repay existing indebtedness of
Horizon/CMS Healthcare Corporation, Borrower's Subsidiary, and (iv) for other
general corporate purposes and the Lenders have agreed to make such loans
available to the Borrower on the following terms and conditions:
<PAGE>
ARTICLE XXIV
Definitions and Terms
24.1. Definitions. For the purposes of this Agreement, in addition to the
definitions set forth above, the following terms shall have the respective
meanings set forth below:
"Acquisition" means the acquisition, whether with cash, property,
stock or promise to pay, of all or a portion of a Person or a Facility or
Facilities of a Person, permitted under Section 8.8; provided such Person
or Facilities is in substantially the same line of business engaged in by
Borrower or its Consolidated Entities.
"Actual/360 Basis" shall mean a method of computing interest or other
charges hereunder on the basis of an assumed year of 360 days for actual
number of days elapsed, meaning that interest or other charges accrued for
each day will be computed by multiplying the rate applicable on that day by
the unpaid principal balance (or other relevant sum) on that day and
dividing the result by 360.
"Advance" means a borrowing under the Bridge Facility consisting of
the aggregate principal amount of a Bridge 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 Bridge Commitment allocable to such Lender (a)
with respect to Lenders as of the Closing Date, as set forth on Exhibit A,
and (b) with respect to any Person who becomes a Lender thereafter, as
reflected in each Assignment and Acceptance to which such Lender is a party
assignee; provided that the Applicable Commitment Percentage of each Lender
shall be increased or decreased to reflect any assignments to or by such
Lender effected in accordance with Section 11.1.
"Applicable Margin" means that number of basis points per annum set
forth below determined based upon the more favorable of either (i) the
highest Rating of outstanding senior unsecured Indebtedness of the Borrower
from time to time or (ii) the ratio of Consolidated EBITDA to Consolidated
Interest Expense for the Four-Quarter Period most recently ended as
specified below:
<PAGE>
<TABLE>
<CAPTION>
Ratio of Consolidated Rating Applicable
EBITDA to Consolidated Interest S&P or Moody's Margin
<S> <C> <C> <C>
a) Greater than 7.50 to 1.00 A- A3 25 b.p.
b) Equal to or Less than 7.50
to 1.00 but Greater than
6.50 to 1.00 BBB+ Baa1 30
c) Equal to or Less than 6.50
to 1.00 but Greater than
5.50 to 1.00 BBB Baa2 35
d) Equal to or Less than 5.50
to 1.00 but Greater than
4.50 to 1.00 BBB- Baa3 45
e) Equal to or Less than 4.50
to 1.00 but Greater than
3.50 to 1.00 BB+ Ba1 55
f) Equal to or Less than 3.50
to 1.00 but Greater than
3.00 to 1.00 BB Ba2 62.5
g) Equal to or Less than 3.00
to 1.00 but Greater than BB- Ba3
2.50 to 1.00 or Lower 75
</TABLE>
The Applicable Margin shall be established in the case of a Rating from
time to time based upon the Rating then in effect and, in the case of
the ratio, at the end of each fiscal quarter of the Borrower (the
"Ratio Determination Date"). Any change in the Applicable Margin
following each Ratio Determination Date shall be determined based upon
the computations set forth in the Compliance Certificate, subject to
review and approval of such computations by the Agent, and shall be
effective commencing on the date following the date such certificate is
received until the date following the date on which a new Compliance
Certificate is delivered or is required to be delivered, whichever
shall first occur; provided however, if the Borrower shall fail to
deliver any such certificate within the time period required by Section
7.1, then the Applicable Margin shall be 2% until the appropriate
certificate is so delivered. From the Closing Date to the first Ratio
Determination Date, the Applicable Margin shall be 25 basis points.
"Applicable Unused Fee" means that number of basis points per
annum set forth below, which shall be determined based upon the more
favorable of either (i) the highest Rating of outstanding senior
unsecured Indebtedness of the Borrower from time to time
<PAGE>
or (ii) the ratio of Consolidated EBITDA to Consolidated Interest
Expense for the Four- Quarter Period most recently ended as specified
below:
<TABLE>
<CAPTION>
Ratio of Consolidated Rating
EBITDA to Consolidated Interest S&P or Moody's Applicable Unused Fees
<S> <C> <C>
a) Greater than 7.50 to 1.00 A- A3 9 b.p.
b) Equal to or Less than 7.50
to 1.00 but Greater than
6.50 to 1.00 BBB+ Baa1 10
c) Equal to or Less than 6.50
to 1.00 but Greater than
5.50 to 1.00 BBB Baa2 12.5
d) Equal to or Less than 5.50
to 1.00 but Greater than
4.50 to 1.00 BBB- Baa3 15
e) Equal to or Less than 4.50
to 1.00 but Greater than
3.50 to 1.00 BB+ Ba1 17.5
f) Equal to or Less than 3.50
to 1.00 but Greater than
3.00 to 1.00 BB Ba2 20
g) Equal to or Less than 3.00
to 1.00 but Greater than BB- Ba3
2.50 to 1.00 or Lower 25
</TABLE>
The Applicable Unused Fee shall be established in the case of a Rating
from time to time based upon the Rating then in effect, and in the
case of the ratio, at the end of each fiscal quarter of the Borrower
(the "Ratio Determination Date"). Any change in the Applicable Unused
Fee following each Ratio Determination Date shall be determined based
upon the computations set forth in the Compliance Certificate, subject
to review and approval of such computations by the Agent and shall be
effective commencing on the date following the date such certificate
is received until the date following the date on which a new
Compliance Certificate is delivered or is required to be delivered,
whichever shall first occur; provided however, if the Borrower shall
fail to deliver any such certificate within the time period required
by Section 7.1, then the Applicable Unused Fee shall be 2%. From the
Closing Date to the first Ratio Determination Date, the Applicable
Unused Fee shall be 9 basis points on the Bridge Facility.
"Applications and Agreements for Letters of Credit" means,
collectively, the Applications and Agreements for Letters of Credit,
or similar documentation, executed by the Borrower from time to time
and delivered to the Issuing Bank to support the issuance of Letters
of Credit.
"ASC" means ASC Network Corporation, a Delaware corporation.
<PAGE>
"Assignment and Acceptance" shall mean an Assignment and Acceptance in
the form of Exhibit B (with blanks appropriately filled in) delivered to
the Agent in connection with an assignment of a Lender's interest under
this Agreement pursuant to Section 11.1.
"Authorized Representative" means any of the Executive Officers of the
Borrower or, with respect to financial matters, the Treasurer or the chief
financial officer of the Borrower, or any other Person expressly designated
by the Board of Directors of the Borrower (or the appropriate committee
thereof) as an Authorized Representative of the Borrower, as set forth from
time to time in a certificate in the form of Exhibit C.
"Base Rate" means the per annum rate of interest equal to the greater
of (i) the Prime Rate or (ii) the Federal Funds Effective Rate plus
one-half of one percent (1/2%). Any change in the Base Rate resulting from
a change in the Prime Rate or the Federal Funds Effective Rate shall become
effective as of 12:01 A.M. of the Business Day on which each such change
occurs. The Base Rate is a reference rate used by the Agent in determining
interest rates on certain loans and is not intended to be the lowest rate
of interest charged on any extension of credit to any debtor.
"Base Rate Loan" means a Loan for which the rate of interest is
determined by reference to the Base Rate.
"Base Rate Refunding Loan" means an Advance under the Bridge Facility
which bears interest at a Base Rate made to satisfy Reimbursement
Obligations arising from a drawing under a Letter of Credit.
"Base Rate Segment" means a Segment bearing interest or to bear
interest at 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 Bridge Facility, in
the form of Exhibit D.
"Bridge Commitment" means, with respect to each Lender, the obligation
of such Lender to make Bridge Loans to the Borrower in a principal amount
equal to such Lender's Applicable Commitment Percentage of the Total Bridge
Commitment.
"Bridge Facility" means the facility described in Section 2.1(a)
providing for Bridge Loans to the Borrower by the Lenders in the original
principal amount of the Total Bridge Commitment.
"Bridge Loan" means a loan made pursuant to the Bridge Facility in
accordance with Section 2.1(a).
<PAGE>
"Bridge Notes" means, collectively, the promissory notes of the
Borrower evidencing Bridge 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.
"Bridge Outstandings" means, as of any date of determination, the
aggregate principal amount of Bridge Loans then outstanding and all
interest accrued thereon.
"Bridge Termination Date" means (i) the Stated Termination Date or
(ii) such earlier date of termination of Lenders' obligations as may be
determined pursuant to Section 9.1 upon the occurrence of an Event of
Default, or (iii) such date as the Borrower may voluntarily and permanently
terminate the Bridge Facility by payment in full of all Bridge Outstandings
and Letter of Credit Outstandings.
"Business Day" means, (i) except in the case of a Eurodollar Loan, any
day which is not a Saturday, Sunday or a day on which banks in the States
of New York and North Carolina are authorized or obligated by law,
executive order or governmental decree to be closed and, (ii) with respect
to any Eurodollar Rate Loan, any day which is a Business Day, as described
above, and on which the relevant international financial markets are open
for the transaction of business contemplated by this Agreement in London,
England, New York, New York and Charlotte, North Carolina.
"Capital Leases" means all leases which have been or should be
capitalized in accordance with GAAP as in effect from time to time
including Statement No. 13 of the Financial Accounting Standards Board and
any successor thereof.
"Capital Stock" of any Person means any and all shares, rights to
purchase, warrants or options (whether or not currently exercisable),
participation or other equivalents of or interest in (however designated)
the equity (including without limitation common stock, preferred stock and
partnership and joint venture interests) of such Person (excluding any debt
securities that are convertible into, or exchangeable for, such equity).
"Change of Control" means, at any time:
(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
<PAGE>
of the Borrower shall cease for any reason (other than the death,
disability or retirement of an officer of the Borrower that is serving as a
director at such time so long as another officer of the Borrower replaces
such Person as a director) to constitute a majority of the board of
directors of the Borrower; or
(iii) any Person or two or more Persons acting in concert shall have
acquired by contract or otherwise, or shall have entered into a contract or
arrangement that, upon consummation thereof, will result in its or their
acquisition, of the power to exercise, directly or indirectly, a
controlling influence on the management or policies of the Borrower.
"Closing Date" means the date as of which this Agreement is executed by the
Borrower, the Lenders and the Agent and on which the conditions set forth in
Section 5.1 have been satisfied.
"Code" means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
"Common Stock" means the common stock, par value $.01 per share, of the
Borrower.
"Compliance Certificate" shall have the meaning attributed to that term in
Section 7.1(c).
"Consistent Basis" in reference to the application of GAAP means the
accounting principles observed in the period referred to are comparable in all
material respects to those applied in the preparation of the audited financial
statements of the Borrower referred to in Section 6.6(a).
"Consolidated Amortization Expense" of the Borrower for any period means
the amortization expense of the Borrower and its Consolidated Entities for such
period (to the extent included in the computation of Consolidated Net Income),
determined on a consolidated basis in accordance with GAAP.
"Consolidated Depreciation Expense" of the Borrower means the depreciation
expense of the Borrower and its Consolidated Entities for such period (to the
extent included in the computation of Consolidated Net Income of the Borrower),
determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITDA" means, with respect to the Borrower and its
Consolidated Entities for any Four-Quarter Period ending on the date of
computation thereof, the sum of, without duplication, (i) Consolidated Net
Income, (ii) Consolidated Interest Expense, (iii) Consolidated Income Tax
Expense, (iv) Consolidated Amortization Expense, (v) Consolidated Depreciation
Expense and (vi) the minority interest of any Person or Persons in Consolidated
Entities, all determined on a consolidated basis in accordance with GAAP applied
on a Consistent Basis.
<PAGE>
"Consolidated Entity" shall mean any Person whose financial statements are
appropriately consolidated with the Borrower's financial statements under GAAP.
"Consolidated Indebtedness" means all Indebtedness of the Borrower and its
Consolidated Entities, all determined on a consolidated basis.
"Consolidated Interest Expense" means, with respect to any Four-Quarter
Period ending on the date of computation thereof, the gross interest expense of
the Borrower and its Consolidated Entities, including without limitation (i) the
current amortized portion of debt discounts to the extent included in gross
interest expense, (ii) the current amortized portion of all fees (including fees
payable in respect of any Rate Hedging Obligation) payable in connection with
the incurrence of Indebtedness to the extent included in gross interest expense,
(iii) the portion of any payments made in connection with Capital Leases
allocable to interest expense, and (iv) lease payments, other than the
Headquarters Obligations, made pursuant to the Headquarters Lease, all
determined on a consolidated basis in accordance with GAAP applied on a
Consistent Basis.
"Consolidated Net Income" of the Borrower for any period means the net
income (or loss) of the Borrower and its Consolidated Entities for such period
determined on a consolidated basis in accordance with GAAP, without giving
effect to dividends on any series of preferred stock of any Consolidated Entity,
whether or not in cash, to the extent such consolidated net income was reduced
thereby; provided that there shall be excluded from such net income (for all
purposes, other than compliance with Section 8.1(a), to the extent otherwise
included therein), without duplication, (i) the net income of any Person (other
than a Consolidated Entity) to the extent that any such income has not actually
been received by the Borrower or a Consolidated Entity in the form of dividends
or similar distributions during such period, but including, in any event, net
income of any Person who becomes a Consolidated Entity whose Acquisition is
accounted for on a "pooling of interests" basis; (ii) except to the extent
includable in the consolidated net income of the Borrower or a Consolidated
Entity pursuant to the foregoing clause (i), the net income of any Person that
accrued prior to the date that (a) such Person becomes a Consolidated Entity or
is merged into or consolidated with a Consolidated Entity or (b) the assets of
such Person are acquired by the Borrower or a Consolidated Entity; (iii) the net
income of any Consolidated Entity to the extent that the declaration or payment
of dividends or similar distributions by such Consolidated Entity of that income
is not permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Consolidated Entity during such period; (iv) any gain (or
loss), together with any related provisions for taxes on any such gain, realized
during such period by the Borrower or its Consolidated Entities upon (a) the
acquisition of any securities, or the extinguishment of any Indebtedness, of the
Borrower or its Consolidated Entities or (b) any asset sale by the referent
person or any of its Subsidiaries; (v) any extraordinary gain (or extraordinary
loss), together with any related provision for taxes or tax benefit resulting
from any such extraordinary gain or loss, realized by the Borrower or its
Consolidated Entities during such period; and (vi) in the case of a successor to
any Person by consolidation, merger or transfer of its assets, any earnings of
the successor prior to such merger, consolidation
<PAGE>
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 Shareholders' Equity of the Borrower and its Consolidated Entities.
"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
<PAGE>
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 and
Eurodollar Rate Segment, until the end of the Interest Period applicable
thereto, a rate of two percent (2%) plus the Eurodollar Rate applicable to such
Loan or Segment, 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
Base Rate Segments, 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
Bridge 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.
"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
<PAGE>
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, collectively, 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, any other
"Superfund" or "Superlien" law or any other federal, or applicable state or
local statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to, or imposing liability or standards of conduct
concerning, any Hazardous Material.
"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- Eurodollar Reserve Percentage Margin
"Eurodollar Rate Loan" means a Loan or Segment of a Loan for which the rate
of interest is determined by reference to the Eurodollar Rate.
"Eurodollar Rate Segment" means a Segment bearing interest or to bear
interest at the Eurodollar Rate.
"Eurodollar Reserve Percentage" means, for any day, that percentage
(expressed as a decimal) which is in effect from time to time under Regulation D
or any successor regulation, as the maximum reserve requirement (including any
basic, supplemental, emergency, special, or marginal reserves) applicable with
respect to Eurocurrency liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by reference to
which the interest rate on Eurodollar Rate Loans is determined), whether or not
the Agent or any Lender has any Eurocurrency liabilities subject to such
requirements, without benefits of credits or proration, exceptions or offsets
that may be available from time to time to the Agent or any Lender. The
Eurodollar Rate shall be adjusted automatically on and as of the effective date
of any change in the Eurodollar Reserve Percentage.
"Event of Default" means any of the occurrences set forth as such in
Section 9.1.
<PAGE>
"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 M.
"Existing Availability" means that, at any point in time, there shall be
available to the Borrower under the Existing Credit Agreement for borrowing or
issuance of letters of credit an amount of $5,000,000 or more.
"Existing Credit Agreement" means the Third Amended and Restated Credit
Agreement dated April 18, 1996 among the Borrower, NationsBank, National
Association, as Agent and the lenders party thereto from time to time, as
amended, modified or supplemented.
"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 partnership controlled
directly or indirectly by the Borrower.
"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 Effective Rate" means, for any day, the rate per annum
(rounded upward 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
Effective Rate for such day shall be such rate
<PAGE>
on such transactions on the next preceding Business Day, and (b) if no such rate
is so published on such next succeeding Business Day, the Federal Funds
Effective Rate for such day shall be the average rate quoted to the Agent 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, or with respect to Horizon, the twelve
month fiscal period of Horizon commencing on June 1 of each calendar year and
ending on May 31 of the next succeeding calendar year.
"Four-Quarter Period" means a period of four full consecutive fiscal
quarters of the Borrower and its Subsidiaries, taken together as one accounting
period.
"GAAP" or "Generally Accepted Accounting Principles" means generally
accepted accounting principles, being those principles of accounting set forth
in pronouncements of the Financial Accounting Standards Board or the American
Institute of Certified Public Accountants or which have other substantial
authoritative support and are applicable in the circumstances as of the date of
a report.
"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 hazardous, toxic or dangerous
waste, substance or material, 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
<PAGE>
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.
"Horizon" means Horizon/CMS Healthcare Corporation, a Delaware corporation.
"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. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above, the maximum liability
of such Person for any such contingent obligations at such date and, in the case
of clause (vii), the amount of the Indebtedness secured.
"Interbank Offered Rate" means, with respect to any Eurodollar Rate Loan or
Eurodollar Rate Segment or Eurodollar Market Loans for the Interest Period
applicable thereto, the average (rounded upward to the nearest one-sixteenth
(1/16) of one percent) per annum rate of interest determined by the Agent (each
such determination to be conclusive and binding absent manifest error) as of two
Business Days prior to the first day of such Interest Period, as the effective
rate at which deposits in immediately available funds in Dollars are being, have
been, or would be offered or quoted by the Agent to major banks in the
applicable interbank market for Eurodollar deposits at any time during the
Business Day which is the second Business Day immediately preceding the first
day of such Interest Period, for a term comparable to such Interest Period and
in the amount of such Eurodollar Rate Loan or Eurodollar Rate Segment or
Eurodollar Market Loan. If no such offers or quotes are generally available for
such amount, then the Agent shall be entitled to determine the Eurodollar Rate
by estimating in its reasonable judgment the per annum rate (as described above)
that would be applicable if such quote or offers were generally available.
<PAGE>
"Interest Period" shall mean with respect to any Eurodollar Rate Loan, each
period commencing on the date such Eurodollar Rate Loan is made or converted
from a Loan of another Type or the last day of the next preceding Interest
Period for such Loan and ending on the numerically corresponding day in the
first, second, third or sixth calendar month thereafter, as the Borrower may
select as provided in Section 2.2, except that each Interest Period that
commences on the last Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Business Day of the appropriate subsequent calendar
month. Notwithstanding the foregoing: (i) if any Interest Period for any
Eurodollar Rate Loan would otherwise end after the Bridge Termination Date, such
Interest Period shall end on the Bridge 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 Eurodollar Rate Segment or the
conversion of any Eurodollar Rate Loan or Eurodollar Rate Segment into a Base
Rate Loan or Base Rate Segment or the conversion of any Base Rate Loan or Base
Rate Segment into a Eurodollar Rate Loan or Eurodollar Rate Segment, in the form
of Exhibit E.
"Issuing Bank" means NationsBank as issuer of Letters of Credit under
Article III.
"LC Account Agreement" means the LC Account Agreement dated as of the date
hereof between the Borrower and the Issuing Bank, as amended, modified or
supplemented from time to time.
"Lending Office" means, as to 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 in an Assignment and
Acceptance or such other office of such Lender (or of an affiliate of such
Lender) as such Lender may from time to time specify to an Authorized
Representative and the Agent as the office by which its Loans are to be made and
maintained.
"Letter of Credit" means a standby letter of credit issued by the Issuing
Bank pursuant to Article IV for the account of the Borrower in favor of a Person
advancing credit or securing an obligation on behalf of the Borrower.
"Letter of Credit Commitment" means, with respect to each Lender, the
obligation of such Lender to acquire Participations in respect of Letters of
Credit and Reimbursement Obligations up to an aggregate amount at any one time
outstanding equal to such Lender's
<PAGE>
Applicable Commitment Percentage of the Total Letter of Credit Commitment as the
same may be increased or decreased from time to time pursuant to this Agreement.
"Letter of Credit Facility" means the facility described in Article III
providing for the issuance by the Issuing Bank for the account of the Borrower
of Letters of Credit in an aggregate stated amount at any time outstanding not
exceeding, together with all Reimbursement Obligations, the Total Letter of
Credit Commitment.
"Letter of Credit Outstandings" means, as of any date of determination, the
aggregate amount remaining undrawn under all Letters of Credit plus
Reimbursement Obligations then outstanding.
"Lien" means any interest in property securing any obligation owed to, or a
claim by, a Person other than the owner of the property, whether such interest
is based on the common law, statute or contract, and including but not limited
to the lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes. For the purposes of this Agreement, the Borrower
and any Subsidiary shall be deemed to be the owner of any property which it has
acquired or holds subject to a conditional sale agreement, financing lease, or
other arrangement pursuant to which title to the property has been retained by
or vested in some other Person for security purposes.
"Line of Business" means, with respect to the Borrower and its
Subsidiaries, any separate and distinguishable type of business carried on by
the Borrower or its Subsidiaries, including (but not limited to) long-term care,
institutional pharmacy services, physician placement and contract therapy
services.
"Loan" or "Loans" means any Bridge Loans and all extensions and renewals
thereof.
"Loan Documents" means this Agreement, the Notes, the LC Account Agreement,
the Applications and Agreements for Letter of Credit and all other instruments
and documents heretofore or hereafter executed or delivered to or in favor of
any Lender or the Agent in connection with the Loans made, Letters of Credit
issued and transactions contemplated under this Agreement, as the same may be
amended, supplemented or replaced from time to time.
"Material Adverse Effect" means a material adverse effect on (i) the
business, properties, operations or condition, financial or otherwise, of the
Borrower and its Consolidated Entities, taken as a whole, (ii) the ability of
the Borrower to pay or perform its obligations, liabilities and indebtedness
under the Loan Documents as such payment or performance becomes due in
accordance with the terms thereof, or (iii) the rights, powers and remedies of
the Agent or any Lender under any Loan Document or the validity, legality or
enforceability thereof (including for purposes of clauses (ii) and (iii) the
imposition of burdensome conditions thereon).
<PAGE>
"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.
"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
<PAGE>
having the force of law of all Governmental Authorities (including without
limitation, Health and Human Services ("HHS"), HCFA, the Office of the Inspector
General for HHS, or any Person succeeding to the functions of any of the
foregoing) promulgated pursuant to or in connection with any of the foregoing
having the force of law, as each may be amended, supplemented or otherwise
modified from time to time.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making, or
is accruing an obligation to make, contributions or has made, or been obligated
to make, contributions within the preceding six (6) Fiscal Years.
"NationsBank" means NationsBank, National Association.
"Notes" means the Bridge Notes.
"Obligations" means the obligations, liabilities and Indebtedness of the
Borrower with respect to (i) the principal and interest on the Loans as
evidenced by the Notes, (ii) the Reimbursement Obligations and otherwise in
respect of the Letters of Credit, and (iii) the payment and performance of all
other obligations, liabilities and Indebtedness of the Borrower to the Lenders
or the Agent hereunder, under any one or more of the other Loan Documents or
with respect to the Loans.
"Participation" means, with respect to any Lender (other than the Issuing
Bank) and a Letter of Credit, the extension of credit represented by the
participation of such Lender hereunder in the liability of the Issuing Bank in
respect of a Letter of Credit issued by the Issuing Bank in accordance with the
terms hereof.
"Participation Agreement" means the Participation Agreement dated November
16, 1995 among HEALTHSOUTH Corporation, as Construction Agent, HEALTHSOUTH
Holdings, Inc., as Lessee, First Security Bank of Utah, N.A., as Trustee, the
Holders identified therein, the Lenders identified therein, and NationsBank,
National Association, as Agent, as such Participation Agreement may be amended,
modified, supplemented or restated in its entirety from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation and any successor
thereto.
"Pension Plan" means any employee pension benefit plan within the meaning
of Section 3(2) of ERISA, other than a Multiemployer Plan, which is subject to
the provisions of Title IV of ERISA or Section 412 of the Code and which (i) is
maintained for employees of the Borrower or any of its ERISA Affiliates or is
assumed by the Borrower or any of its ERISA Affiliates in connection with any
Acquisition or (ii) has at any time been maintained for the employees of the
Borrower or any current or former ERISA Affiliate.
<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) mechanics', 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 other than Liens that do not
materially adversely affect the value or utility of the affected property;
(4) Liens on assets securing Indebtedness the proceeds of which are used to
acquire such assets;
(5) Liens and other matters approved in writing by the Required Lenders;
and
(6) Liens in favor of landlords, the amount secured by which landlords'
Liens, in the aggregate, would not materially adversely affect the Borrower
or a Material Group.
"Permitted Investments" shall mean:
(1) direct obligations of, or obligations the payment of which is
guaranteed by, the United States of America or an interest in any trust or
fund that invests solely in such obligations or repurchase agreements,
properly secured, with respect to such obligations.
(2) direct obligations of agencies or instrumentalities of the United
States of America having a rating of A or higher by S&P or A2 or higher by
Moody's;
(3) a certificate of deposit issued by, or other interest-bearing deposits
with, a bank 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;
<PAGE>
(5) the capital stock of and partnership interests in, and loans made by
the Borrower to, Controlled Partnerships and Subsidiaries;
(6) prime commercial paper maturing within 270 days of the acquisition
thereof and, at the time of acquisition, having a rating of A-1 or higher
by S&P, or P-1 or higher by Moody's;
(7) eligible banker's acceptances, repurchase agreements and tax-exempt
municipal bonds having a maturity of less than one year, in each case
having a rating, or that is the full recourse obligation of a person whose
senior debt is rated, A or higher by S&P or A2 or higher by Moody's;
(8) loans made by the Borrower or a Consolidated Entity in an aggregate
amount of $2,000,000 or less to employees of the Borrower or of a
Consolidated Entity;
(9) loans made by the Borrower or a Controlled Partnership in an aggregate
amount of $1,000,000 or less to limited partners (or potential limited
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, Wellmark, HEALTHSMART,
MedPartners and Austin Medical Office Building which in the aggregate do
not exceed $5,000,000; and
<PAGE>
(17) additional investments existing on the Closing Date and described in
Exhibit H.
"Person" means an individual, partnership, corporation, limited liability
company, trust, unincorporated organization, association, joint venture or a
government or agency or political subdivision thereof.
"Prepayable Debt" means the Indebtedness described in Schedule
1.1--Prepayable Debt.
"Prime Rate" means the rate of interest per annum announced publicly by the
Agent as its prime rate from time to time.
"Principal Office" means the office of the Agent at NationsBank, National
Association, Independence Center, 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.
"Pro Forma Historical Statements" means (i) the pro forma consolidated
balance sheet as at March 31, 1997 and (ii) the pro forma consolidated income
statements for Fiscal Year ended December 31, 1994, December 31, 1995 and
December 31, 1996 prepared in accordance with GAAP by independent certified
public accountants of national reputation, of the Borrower and its Subsidiaries,
giving historical pro forma effect to the Related Acquisition, which shall be
furnished to the Agent and the Lenders prior to the Closing Date.
"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 at least one of
the parties thereto from the fluctuations of interest rates, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited to, Dollar-denominated or
cross-currency interest rate exchange agreements, forward currency exchange
agreements, interest rate cap or collar protection agreements, forward rate
currency or interest rate options, puts, warrants and those commonly known as
interest rate "swap" agreements; and (ii) any and all cancellations, buybacks,
reversals, terminations or assignments of any of the foregoing.
"Rating" means the rating of senior unsecured Indebtedness of the Borrower
in effect at any time which rating is made by either of Moody's or S&P.
"Registration Statement" means the Borrower's Registration Statement on
Form S-4 Registration No. 33336419, as filed with the Securities and Exchange
Commission on September 25, 1997, as amended, including all documents
incorporated therein by reference.
<PAGE>
"Regulation D" means Regulation D of the Board as the same may be amended
or supplemented from time to time.
"Reimbursement Obligation" shall mean, at any time, the obligation of the
Borrower with respect to any Letter of Credit to reimburse the Issuing Bank and
the Lenders to the extent of their respective Participations (including by the
receipt by the Issuing Bank of proceeds of Loans pursuant to Section 3.2) for
amounts theretofore paid by the Issuing Bank pursuant to a drawing under such
Letter of Credit.
"Related Acquisition" means the acquisition by the Borrower of Horizon in
accordance with the terms of the Related Acquisition Agreement, as such
transaction is further described in the Registration Statement.
"Related Acquisition Agreement" means that certain Plan and Agreement of
Merger dated as of February 17, 1997 by and among the Borrower, Horizon and Reid
Acquisition Corporation, and all schedules, annexes and exhibits thereto, as the
same may be amended or supplemented in a manner acceptable to the Administrative
Agent and the Required Lenders in their discretion.
"Related Acquisition Transaction Documents" means the Related Acquisition
Agreement and each document, agreement, instrument, opinion or certificate
incorporated therein or delivered in connection therewith, including in each
case all annexes, schedules and exhibits thereto, as any of the same may be
amended or supplemented in a manner acceptable to the Agent and the Required
Lenders in their discretion.
"Required Lenders" means, as of any date, Lenders on such date having
Credit Exposures (as defined below) aggregating at least 51% of the aggregate
Credit Exposures of all the Lenders on such date. For purposes of the preceding
sentence, the amount of the "Credit Exposure" of each Lender shall be equal to
the aggregate principal amount of the Loans, owing to such Lender plus the
aggregate unutilized amounts of such Lender's Bridge Commitment plus the amount
of such Lender's Applicable Commitment Percentage of Letter of Credit
Outstandings; provided that, if any Lender shall have failed to pay to the
Issuing Bank its Applicable Commitment Percentage of any drawing under any
Letter of Credit resulting in an outstanding Reimbursement Obligation, such
Lender's Credit Exposure attributable to Letters of Credit and Reimbursement
Obligations shall be deemed to be held by the Issuing Bank for purposes of this
definition.
"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
<PAGE>
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, a division of The McGraw Hill Companies.
"Segment" means a portion of a Loan (or all thereof) with respect to which
a particular interest rate is (or is proposed to be) applicable.
"Short Term Credit Facility" means the short-term loan of $500,000,000 made
by NationsBank, National Association to the Borrower evidenced by a promissory
note dated September 25, 1997.
"Single Employer Plan" means any employee pension benefit plan covered by
Title IV of ERISA in respect of which the Borrower or any Subsidiary is an
"employer" as described in Section 4001(b) of ERISA and which is not a
Multiemployer Plan.
"Solvent" means, when used with respect to any Person, that at the time of
determination:
(i) the fair value of its assets (both at fair valuation and at
present fair saleable value on an orderly basis) is in excess of the total
amount of its liabilities, including contingent obligations; and
(ii) it is then able and expects to be able to pay its debts as they
mature; and
(iii) it has capital sufficient to carry on its business as conducted
and as proposed to be conducted.
"Stated Termination Date" means October 21, 1998.
"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
<PAGE>
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 4068(f) of ERISA; or (iii) the termination of a
Pension Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under Section 4041 of
ERISA; or (iv) the institution of proceedings to terminate a Pension Plan by the
PBGC; or (v) any other event or condition which would constitute grounds under
Section 4042(a) of ERISA for the termination of, or the appointment of a trustee
to administer, any Pension Plan; or (vi) the partial or complete withdrawal of
the Borrower or any ERISA Affiliate from a Multiemployer Plan; or (vii) the
imposition of a Lien pursuant to Section 412 of the Code or Section 302 of
ERISA; or (viii) any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or Section 4245 of ERISA,
respectively; or (ix) any event or condition which results in the termination of
a Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC
of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA.
"Total Letter of Credit Commitment" means an amount not to exceed
$50,000,000.
"Total Bridge Commitment" means a principal amount equal to $1,250,000,000,
as reduced from time to time in accordance with Section 2.1(a) and Section 2.7.
"Type" shall have the meaning assigned to such term in Section 1.3.
"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.
24.2. Rules of Interpretation.
(a) All accounting terms not specifically defined herein shall have
the meanings assigned to such terms and shall be interpreted in accordance
with GAAP applied on a Consistent Basis.
<PAGE>
(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.
24.3. 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.
<PAGE>
ARTICLE XXV
The Loans
25.1. Bridge Loans.
(a) Bridge Facility. Subject to the terms and conditions of this Agreement,
each Lender severally agrees to make Advances to the Borrower under the Bridge
Facility from time to time from the Closing Date until the Bridge 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 Bridge Commitment of such Lender, provided, however, that the
Lenders will not be required and shall have no obligation to make any such
Advance (i) so long as a Default or an Event of Default has occurred and is
continuing or (ii) if the maturity of any of the Notes has been accelerated as a
result of an Event of Default or (iii) if there is Existing Availability;
provided further, however, that immediately after giving effect to each such
Advance, the principal amount of Bridge Outstandings plus Letters of Credit
Outstandings shall not exceed the Total Bridge Commitment. Within such limits,
the Borrower may borrow, repay and reborrow under the Bridge Facility on a
Business Day from the Closing Date until, but (as to borrowings and
reborrowings) not including, the Bridge Termination Date; provided, however,
that (y) no Bridge Loan that is a Eurodollar Rate Loan shall be made which has
an Interest Period that extends beyond the Bridge Termination Date and (z) each
Bridge Loan that is a Eurodollar Rate Loan may, subject to the provisions of
Section 2.3, be repaid only on the last day of the Interest Period with respect
thereto unless such payment is accompanied by the additional payment, if any,
required by Section 4.2.
(b) Amounts. The aggregate unpaid principal amount of the Bridge
Outstandings shall not exceed the Total Bridge 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 Bridge 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 written notice by telefacsimile
transmission of a Borrowing Notice or Interest Rate Selection Notice (as
applicable) with appropriate insertions, effective upon receipt, of each Bridge
Loan that is a Eurodollar Rate Loan (whether representing an additional
borrowing hereunder or the conversion of a borrowing hereunder from Base Rate
Loans to Eurodollar Rate Loans) prior to 10:30 A.M. and (2) irrevocable written
notice by telefacsimile transmission of a Borrowing Notice or Interest Rate
Selection Notice (as applicable) with appropriate insertions, effective upon
receipt, of each Bridge Loan that is a Base Rate Loan (whether representing an
additional borrowing hereunder or the conversion of borrowing hereunder from
Eurodollar Rate Loans to Base Rate Loans) prior to 10:30 A.M. on the day of such
proposed Bridge Loan. Each such notice shall specify the amount of the borrowing
the Type of Loan (Base Rate or Eurodollar Rate), the date of borrowing and, if a
Eurodollar Rate Loan, the Interest Period to be used in the computation of
interest. Notice of receipt of such Borrowing Notice or Interest Rate Selection
Notice, as the case may be, together with the amount
<PAGE>
of each Lender's portion of an Advance requested thereunder, shall be provided
by the Agent to each Lender by telefacsimile transmission with reasonable
promptness, but (provided the Agent shall have received such notice by 10:30
A.M.) not later than 1:00 P.M. on the same day as the Agent's receipt of such
notice.
(ii) Not later than 2:00 P.M. on the date specified for each borrowing
under this Section 2.1, each Lender shall, pursuant to the terms and subject to
the conditions of this Agreement, make the amount of the Loan or Loans to be
made by it on such day available by wire transfer to the Agent in the amount of
its pro rata share, determined according to such Lender's Applicable Commitment
Percentage of the Bridge Loan or Bridge 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 Bridge 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 Segment to (or continue such Segment as) a Base
Rate Loan until the Borrower notifies the Agent in accordance with Section 2.8.
(iv) Notwithstanding the foregoing, if a drawing is made under any Letter
of Credit, such drawing is honored by the Issuing Bank prior to the Bridge
Termination Date, and the Borrower shall not immediately fully reimburse the
Issuing Bank in respect of such drawing, (A) provided that the conditions to
making a Bridge Loan as herein provided shall then be satisfied, the
Reimbursement Obligation arising from such drawing shall be paid to the Issuing
Bank by the Agent without the requirement of notice to or from the Borrower from
immediately available funds which shall be advanced as a Base Rate Refunding
Loan by each Lender under the Bridge Facility in an amount equal to such
Lender's Applicable Commitment Percentage of such Reimbursement Obligation, and
(B) if the conditions to making a Bridge Loan as herein provided shall not then
be satisfied, each of the Lenders shall fund by payment to the Agent (for the
benefit of the Issuing Bank) in immediately available funds the purchase from
the Issuing Bank of their respective Participations in the related Reimbursement
Obligation based on their respective Applicable Commitment Percentages. If a
drawing is presented under any Letter of Credit in accordance with the terms
thereof and the Borrower shall not immediately reimburse the Issuing Bank in
respect thereof, then notice of such drawing or payment shall be provided
promptly by the Issuing Bank to the Agent and the Agent shall provide notice to
each Lender by telephone or telefacsimile transmission. If notice to the Lenders
of a drawing under any Letter of Credit is given by the Agent at or before 12:00
noon on any Business Day, each Lender shall, pursuant to the conditions
specified in this Section 2.1(c)(iv), either make a Base Rate Refunding
<PAGE>
Loan or fund the purchase of its Participation in the amount of such Lender's
Applicable Commitment Percentage of such drawing or payment and shall pay such
amount to the Agent for the account of the Issuing Bank at the Principal Office
in Dollars and in immediately available funds before 2:30 P.M. on the same
Business Day. If notice to the Lenders of a drawing under a Letter of Credit is
given by the Agent after 12:00 noon on any Business Day, each Lender shall,
pursuant to the conditions specified in this Section 2.1(c)(iv), either make a
Base Rate Refunding Loan or fund the purchase of its Participation in the amount
of such Lender's Applicable Commitment Percentage of such drawing or payment and
shall pay such amount to the Agent for the account of the Issuing Bank at the
Principal Office in Dollars and in immediately available funds before 12:00 noon
on the next following Business Day. Any such Base Rate Refunding Loan shall be
advanced as, and shall continue as, a Base Rate Loan unless and until the
Borrower converts such Base Rate Loan in accordance with the terms of Section
2.8.
25.2. Payment of Interest. (a) The Borrower shall pay interest to the Agent
for the account of each Lender on the outstanding and unpaid principal amount of
each Loan made by such Lender for the period commencing on the date of such Loan
until such Loan shall be due at the then applicable Base Rate for Base Rate
Loans or applicable Eurodollar Rate for Eurodollar Rate Loans, as designated by
the Authorized Representative pursuant to Section 2.1; provided, however, that
if any amount payable under this Agreement shall not be paid when due (at
maturity, by acceleration or otherwise, subject to the provisions of Section
9.1(a)), all amounts outstanding hereunder shall bear interest thereafter at the
Default Rate.
(b) Interest on each Loan shall be computed on an Actual/360 Basis.
Interest on each Loan shall be paid (i) quarterly in arrears on the last
Business Day of each March, June, September and December, commencing September
30, 1997, 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 Bridge Termination
Date. Interest payable at the Default Rate shall be payable on demand.
25.3. Payment of Principal. The principal amount of each Bridge 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. In
addition, if at any time there shall be any Existing Availability the Borrower
shall promptly reduce the Bridge Outstandings by an amount equal to the
difference between $1,250,000,000 and the amount of outstanding loans and
letters of credit under the Existing Credit Agreement. The principal amount of
any Base Rate Loan may be prepaid in whole or in part at any time. The principal
amount of any Eurodollar Rate Loan may be prepaid only at the end of the
applicable Interest Period unless the Borrower shall pay to the Agent for the
account of the Lenders the additional amount, if any, required under Section
4.2. All prepayments of Bridge 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 Bridge Outstandings, as the case may be,
or such other amount as necessary to comply with Section 2.1(b) or Section 2.8.
<PAGE>
25.4. 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 before 10:00 A.M. on the date such payment is due.
The Agent may, but shall not be obligated to, debit the amount of any such
payment which is not made by such time to any ordinary deposit account, if any,
of the Borrower with the Agent. The Agent shall promptly notify the Borrower of
any such debit; however, failure to give such notice shall not affect the
validity of such debit.
(b) The Agent shall deem any payment made by or on behalf of the Borrower
hereunder that is not made both in Dollars and in immediately available funds
and prior to 10:00 A.M. to be a non-conforming payment. Any such payment shall
not be deemed to be received by the Agent until the later of (i) the time such
funds become available funds and (ii) the next Business Day. Any non-conforming
payment may constitute or become a Default or Event of Default. Interest shall
continue to accrue on any principal as to which a non-conforming payment is made
until the later of (x) the date such funds become available funds or (y) the
next Business Day at the Default Rate from the date such amount was due and
payable.
(c) In the event that any payment hereunder or under the Notes becomes due
and payable on a day other than a Business Day, then such due date shall be
extended to the next succeeding Business Day unless provided otherwise under
clause (ii) of 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 Bridge
Termination Date.
25.5. Notes. Bridge Loans made by each Lender shall be evidenced by the
Bridge Note payable to the order of such Lender in the respective amount of its
Applicable Commitment Percentage of the Bridge Commitment, which Bridge 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.
25.6. 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.
25.7. Reductions. (a) 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 Bridge 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
<PAGE>
of $10,000,000 or such greater amount which is in an integral multiple of
$1,000,000, or the entire remaining Total Bridge Commitment, and shall
permanently reduce the Total Bridge Commitment. Each reduction of the Total
Bridge Commitment shall be accompanied by payment of Bridge Loans to the extent
that the principal amount of Bridge Outstandings plus Letter of Credit
Outstanding exceeds the Total Bridge Commitment after giving effect to such
reduction, together with accrued and unpaid interest on the amounts prepaid. If
any such reduction shall result in the payment of any Eurodollar Rate Loan other
than on the last day of the Interest Period of such Eurodollar Rate Loan such
prepayment shall be accompanied by amounts due, if any, under Section 4.2.
(b) The Borrower shall make the following mandatory permanent reductions of
the Total Bridge Commitment, each such payment to be made to the Agent for the
benefit of the Lenders within the time period specified below:
(i) With respect to the sale, lease, transfer or other disposition of
any Line of Business where the sales price for such Line of Business shall
exceed $35,000,000, 100% of the net cash proceeds of the first $500,000,000
derived from all such transactions in the aggregate and 50% of the net cash
proceeds of the next $500,000,000 derived from all such transactions in the
aggregate, less expenses of such sale, any taxes actually paid or payable
as a result of such sale and any secured Indebtedness required to be repaid
in connection with such sale, lease or transfer, if the sales price for
such Line of Business shall exceed $35,000,000, such reduction to be made
within 30 days of the receipt of such proceeds; the Company shall give not
less than five (5) Business Days' prior written notice to the Agent of any
such prepayment resulting as a result of such reduction, which notice shall
include a certificate of an Authorized Representative setting forth in
reasonable detail the calculations utilized in computing the amount of such
prepayment or other reduction; and
(ii) with respect to the issuance and sale for cash of any
Indebtedness or equity securities of the Borrower or (but only if the sales
proceeds shall exceed $5,000,000) any of its Subsidiaries, the principal
amount of any Indebtedness or the cash proceeds of any securities, less any
costs of issuance and any original issue discount, such reduction to be
made within 30 days of the receipt of such proceeds; the Company shall give
the Agent not less than five (5) days written notice of any such prepayment
resulting as a result of such reduction.
25.8. Conversions and Elections of Subsequent Interest Periods. Provided
that no Default or Event of Default shall have occurred and be continuing and
subject to the limitations set forth below and in Article IV, the Borrower may:
(a) upon delivery, effective upon receipt, of a properly completed
Interest Rate Selection Notice to the Agent on or before 10:30 A.M. on any
Business Day, convert all or a part of Eurodollar Rate Loans under the Bridge
Facility to Base Rate Loans on the last day of the Interest Period for such
Eurodollar Rate Loans; and
<PAGE>
(b) upon delivery, effective upon receipt, of a properly completed
Interest Rate Selection Notice to the Agent on or before 10:30 A.M. three (3)
Business Days prior to the date of such election or conversion:
(i) elect a subsequent Interest Period for all or a portion of
Eurodollar Rate Loans under the Bridge Facility to begin on the last
day of the then current Interest Period for such Eurodollar Rate
Loans; and
(ii) convert Base Rate Loans under the Bridge Facility to
Eurodollar Rate Loans on any Business Day.
Each election and conversion pursuant to this Section 2.8 shall be subject
to the limitations on Eurodollar Rate Loans set forth in the definition of
"Interest Period" herein and in Sections 2.1 and 2.3 and Article IV. The Agent
shall give written notice to each Lender of such notice of election or
conversion prior to 3:00 P.M. on the day such notice of election or conversion
is received. All such continuations or conversions of Loans shall be effected
pro rata based on the Applicable Commitment Percentages of the Lenders.
25.9. Unused Fees.
(a) For the period beginning on the Closing Date and ending on the Bridge
Termination Date, the Borrower agrees to pay to the Agent, for the pro rata
benefit of the Lenders based on their Applicable Commitment Percentages, an
unused fee equal to the Applicable Unused Fee multiplied by the average daily
amount by which the Total Bridge Commitment exceeds the aggregate principal
amount of Bridge Outstandings plus Letter of Credit Outstandings. Such fees
shall be due in arrears on the last Business Day of each March, June, September
and December commencing September 30, 1997 to and on the Bridge Termination
Date.
(b) Notwithstanding the foregoing, so long as any Lender fails to make
available any portion of its Bridge 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.
25.10. Deficiency Advances. No Lender shall be responsible for any default
of any other Lender in respect of such other Lender's obligation to make any
Loan or fund its purchase of any Participation hereunder nor shall the Bridge
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 Bridge Facility
as herein provided, the Agent may in its discretion, but shall not be obligated
to, advance under the Bridge 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 Bridge 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
<PAGE>
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.
25.11. Use of Proceeds. The proceeds of the Loans made pursuant to this
Agreement shall be used by the Borrower (i) to repay Prepayable Debt, (ii) pay
in full the Short Term Facility, (iii) to purchase ASC, to provide funding in
connection with the acquisition of Horizon and (iv) to provide for the working
capital needs and other corporate purposes of the Borrower and its Consolidated
Entities.
<PAGE>
ARTICLE XXVI
Letters of Credit
26.1. Letters of Credit. The Issuing Bank agrees, subject to the terms and
conditions of this Agreement, upon request of the Borrower to issue from time to
time for the account of the Borrower Letters of Credit upon delivery to the
Issuing Bank of an Application and Agreement for Letter of Credit relating
thereto in form and content acceptable to the Issuing Bank; provided, that (i)
the Letter of Credit Outstandings shall not exceed the Total Letter of Credit
Commitment, (ii) no Letter of Credit shall be issued so long as a Default or an
Event of Default has occurred or is continuing or if the applicable conditions
set forth in Article V shall not have been satisfied, (iii) no Letter of Credit
shall be issued if, after giving effect thereto, Letter of Credit Outstandings
plus the aggregate principal amount of Bridge Outstandings shall exceed the
Total Bridge Commitment and (iv) no Letter of Credit shall be issued if there is
Existing Availability. No Letter of Credit shall have an expiry date (including
all rights of the Borrower or any beneficiary named in such Letter of Credit to
require renewal) or payment date occurring later than the fifth Business Day
prior to the Revolving Credit Termination Date.
26.2. Reimbursement.
(a) The Borrower hereby unconditionally agrees to pay to the Issuing Bank
immediately on demand at the Principal Office all amounts required to pay all
drafts drawn or purporting to be drawn under the Letters of Credit and all
reasonable expenses incurred by the Issuing Bank in connection with the Letters
of Credit, and in any event and without demand to place in possession of the
Issuing Bank (which shall include Advances under the Bridge Facility if
permitted by Section 2.1(c)) sufficient funds to pay all debts and liabilities
arising in respect of any Letter of Credit. The Issuing Bank agrees to give the
Borrower prompt notice of any request for a draw under a Letter of Credit. The
Issuing Bank may charge any account the Borrower may have with it for any and
all amounts the Issuing Bank pays under a Letter of Credit, plus charges and
reasonable expenses as from time to time agreed to by the Issuing Bank and the
Borrower; provided that to the extent permitted by Section 2.1(c)(iv), amounts
shall be paid pursuant to Advances under the Bridge Facility. The Borrower
agrees to pay the Issuing Bank interest on any Reimbursement Obligations not
paid when due hereunder at the Base Rate plus two percent (2.0%), or the maximum
rate permitted by applicable law, if lower, such rate to be calculated on an
Actual/360 Basis.
(b) In accordance with the provisions of Section 2.1(c), the Issuing Bank
shall notify the Agent of any drawing under any Letter of Credit promptly
following the receipt by the Issuing Bank of such drawing.
(c) Each Lender (other than the Issuing Bank) shall automatically acquire
on the date of issuance thereof a Participation in the liability of the Issuing
Bank in respect of each Letter of Credit in an amount equal to such Lender's
Applicable Commitment Percentage of such liability, and to the extent that the
Borrower is obligated to pay the Issuing Bank under Section 3.2(a), each Lender
(other than the Issuing Bank) thereby shall absolutely, unconditionally and
irrevocably assume, and shall be unconditionally obligated to pay to the Issuing
Bank as
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hereinafter described, its Applicable Commitment Percentage of the liability of
the Issuing Bank under such Letter of Credit.
(i) Each Lender (including the Issuing Bank in its capacity as a
Lender) shall, subject to the terms and conditions of Article II, pay
to the Agent for the account of the Issuing Bank at the Principal
Office in Dollars and in immediately available funds, an amount equal
to its Applicable Commitment Percentage of any drawing under a Letter
of Credit, such funds to be provided in the manner described in
Section 2.1(c)(iv).
(ii) Simultaneously with the making of each payment by a Lender
to the Issuing Bank pursuant to Section 2.1(c)(iv)(B), such Lender
shall, automatically and without any further action on the part of the
Issuing Bank or such Lender, acquire a Participation in an amount
equal to such payment (excluding the portion thereof constituting
interest accrued prior to the date such Lender made its payment) in
the related Reimbursement Obligation of the Borrower. The
Reimbursement Obligations of the Borrower shall be immediately due and
payable whether by Advances made in accordance with Section 2.1(c)(iv)
or otherwise.
(iii) Each Lender's obligation to make payment to the Agent for
the account of the Issuing Bank pursuant to Section 2.1(c)(iv) and
this Section 3.2(c), and the right of the Issuing Bank to receive the
same, shall be absolute and unconditional, shall not be affected by
any circumstance whatsoever and shall be made without any offset,
abatement, withholding or reduction whatsoever. If any Lender is
obligated to pay but does not pay amounts to the Agent for the account
of the Issuing Bank in full upon such request as required by Section
2.1(c)(iv) or this Section 3.2(c), such Lender shall, on demand, pay
to the Agent for the account of the Issuing Bank interest on the
unpaid amount for each day during the period commencing on the date of
notice given to such Lender pursuant to Section 2.1(c) until such
Lender pays such amount to the Agent for the account of the Issuing
Bank in full at the interest rate per annum for overnight borrowing by
the Agent from the Federal Reserve Bank of Richmond, Virginia.
(iv) In the event the Lenders have purchased Participations in
any Reimbursement Obligation as set forth in clause (ii) above, then
at any time payment (in fully collected, immediately available funds)
of such Reimbursement Obligation, in whole or in part, is received by
Issuing Bank from the Borrower, the Issuing Bank shall promptly pay to
each Lender an amount equal to its Applicable Commitment Percentage of
such payment from the Borrower.
(d) Promptly following the end of each calendar quarter, the Issuing Bank
shall deliver to the Agent and the Agent shall deliver to each Lender a notice
describing the aggregate undrawn amount of all Letters of Credit at the end of
such quarter. The Agent shall promptly notify each Lender of the issuance of a
Letter of Credit.
(e) The issuance by the Issuing Bank of each Letter of Credit shall, in
addition to the conditions precedent set forth in Article V, be subject to the
conditions that such Letter of Credit be in such form and contain such terms as
shall be reasonably satisfactory to the Issuing Bank consistent with the then
current practices and procedures of the Issuing Bank with respect
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to similar letters of credit, and the Borrower shall have executed and delivered
such other instruments and agreements relating to such Letters of Credit as the
Issuing Bank shall have reasonably requested consistent with such practices and
procedures and shall not be in conflict with any of the express terms herein
contained. All Letters of Credit shall be issued pursuant to and subject to the
Uniform Customs and Practice for Documentary Credits, 1993 revision,
International Chamber of Commerce Publication No. 500 and all subsequent
amendments and revisions thereto.
(f) The Borrower agrees that Issuing Bank may, in its sole discretion,
accept or pay, as complying with the terms of any Letter of Credit, any drafts
or other documents otherwise in order which may be signed or issued by an
administrator, executor, trustee in bankruptcy, debtor in possession, assignee
for the benefit of creditors, liquidator, receiver, attorney in fact or other
legal representative of a party who is authorized under such Letter of Credit to
draw or issue any drafts or other documents.
(g) Without limiting the generality of the provisions of Section 11.12, the
Borrower hereby agrees to indemnify and hold harmless the Issuing Bank, each
other Lender and the Agent from and against any and all claims and damages,
losses, liabilities, reasonable costs and expenses which the Issuing Bank, such
other Lender or the Agent may incur (or which may be claimed against the Issuing
Bank, such other Lender or the Agent) by any Person by reason of or in
connection with the issuance or transfer of or payment or failure to pay under
any Letter of Credit; provided that the Borrower shall not be required to
indemnify the Issuing Bank, any other Lender or the Agent for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the
extent, (i) caused by the willful misconduct or negligence of the party to be
indemnified or (ii) in the case of the Issuing Bank, caused by the failure of
the Issuing Bank to pay under any Letter of Credit after the presentation to it
of a request for payment strictly complying with the terms and conditions of
such Letter of Credit, unless such payment is prohibited by any law, regulation,
court order or decree. The indemnification and hold harmless provisions of this
Section 3.2(g) shall survive repayment of the Obligations, occurrence of the
Bridge Termination Date and expiration or termination of this Agreement.
(h) Without limiting the Borrower's rights as set forth in Section 3.2(g),
the obligation of the Borrower to immediately reimburse the Issuing Bank for
drawings made under Letters of Credit and to repay Loans made under Section
2.1(c) and the Issuing Bank's and each Lender's right to receive such payment
shall be absolute, unconditional and irrevocable, and such obligations of the
Borrower shall be performed strictly in accordance with the terms of this
Agreement and such Letters of Credit and the related Applications and Agreement
for any Letter of Credit, under all circumstances whatsoever, including the
following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit,
the obligation supported by any Letter of Credit or any other agreement or
instrument relating thereto (collectively, the "Related LC Documents");
(ii) any amendment or waiver of or any consent to or departure from
all or any of the Related LC Documents;
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(iii) the existence of any claim, setoff, defense (other than the
defense of payment in accordance with the terms of this Agreement) or other
rights which the Borrower may have at any time against any beneficiary or
any transferee of a Letter of Credit (or any persons or entities for whom
any such beneficiary or any such transferee may be acting), the Agent, the
Lenders or any other Person, whether in connection with the Loan Documents,
the Related LC Documents or any unrela